<PAGE>
As filed with the Securities and Exchange Commission on January 5, 1996
Reg. No. 33-25048
Reg. No. 811-5836
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 8 [x]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 11 [x]
(Check appropriate box or boxes.)
THE CRABBE HUSON INCOME FUND, INC.
(Exact Name of Registrant as Specified in Charter)
121 S.W. Morrison, Suite 1425
Portland, Oregon 97204
(Address, including Zip Code, of Principal Executive Offices)
(503) 295-0919
1-800-541-9732
(Registrant's Telephone Number, including Area Code)
Richard S. Huson
121 S.W. Morrison, Suite 1425
Portland, Oregon 97204
(Name and Address, including Zip Code, of Agent for Service)
Approximate Date of Proposed Public Offering: Commenced on January 31, 1989,
the effective date of the Registration Statement
It is proposed that this filing will become effective (check appropriate box)
___ immediately upon filing pursuant to paragraph (b)
___ on _____________________ pursuant to paragraph (b)
_x_ 60 days after filing pursuant to paragraph (a)
___ on February 28, 1996 pursuant to paragraph (a) of Rule 485
Please forward copies of communications to:
<PAGE>
David C. Baca
Davis Wright Tremaine
2300 First Interstate Tower
1300 S.W. Fifth Avenue
Portland, Oregon 97201
__________________________
An indefinite number of shares of Common Stock have been registered by the
issuer pursuant to Rule 24f-2 of the Investment Company Act of 1940. The issuer
previously filed a Rule 24f-2 Notice for the fiscal year ended October 31, 1995.
Amount of Registration Fee: $ -0-
----------
<PAGE>
THE CRABBE HUSON INCOME FUND, INC.
Cross-Reference Sheet Showing Location in Prospectus and
Statement of Additional Information of
Information Required by Items of the Registration Form
Form N-1A Item Number and Caption
- ----------------------------------
Part A Location in Prospectus
- ------ ----------------------
1 Cover Page. . . . . . . . . . . . . . . . . . . . . . . . . . . .Cover Page
2 Synopsis. . . . . . . . . . . . . . . . . .PROSPECTUS SUMMARY; EXPENSE DATA
3 Condensed Financial Information
3(a) Per share Income & Capital Changes. . . . . . . . CONDENSED FINANCIAL
INFORMATION
3(b) Debt History. . . . . . . . . . . . . . . . . . . . . .Not Applicable
3(c) Performance Data. . . . . . . . . . . . . . .PERFORMANCE INFORMATION;
YIELD; PERFORMANCE COMPARISONS
4 General Description of Registrant
4(a) Organization and Operation . . . . . . . . . . .INVESTMENT OBJECTIVES;
FUNDAMENTAL POLICIES; CAPITAL STOCK
4(b) Portfolio Emphasis. . . . . . . . . . . . . . . INVESTMENT OBJECTIVES
4(c) Risk Factors. . . . . . . . . . SPECIAL RISK FACTORS TO BE CONSIDERED
5 Management of the Fund
5(a) Board of Directors. . . . . . . . . . . . . . MANAGEMENT OF THE FUNDS
5(b) Investment Advisor. . . . . . . . . . . . . . MANAGEMENT OF THE FUNDS
5(c) Portfolio Manager(s). . . . . . . . . . . . . MANAGEMENT OF THE FUNDS
<PAGE>
Location
--------
5(d) Administrator(s). . . . . . . . . . . . . . . . . . . .Not Applicable
5(e) Transfer Agent, Dividend Paying Agent . . . CUSTODIAN, TRANSFER AGENT
AND DIVIDEND-DISBURSING AGENT
5(f) Expenses. . . . . . . . . . . . . . . . . . . MANAGEMENT OF THE FUNDS
5(g) Brokerage Commissions . . . . . . . . . . . . ALLOCATION OF BROKERAGE
5A Management's Discussion of Fund Performance . . . . . . . . .Not Applicable
6 Capital Stock and Other Securities
6(a) Rights and Restrictions . . . . . . . . . . . . . . . . CAPITAL STOCK
6(b) Control Persons . . . . . . . . . . . . . . . . . . . CONTROL PERSONS
6(c) Changes in Rights of Holders. . . . . . . . . . . . . .CAPITAL STOCK;
FUNDAMENTAL POLICIES
6(d) Other Classes of Securities . . . . . . . . . . . . . .Not Applicable
6(e) Shareholder Inquiries . . . . . . . . . . SPECIAL INVESTOR SERVICES -
Shareholder Inquiries
6(f) Dividends and Distributions . . . . . . . . . INVESTMENT OBJECTIVES -
Dividends and Distributions
6(g) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TAXES
7 Purchase of Securities Being Offered
7(a) Underwriter . . . . . . . . . . . . . . . .HOW TO INVEST IN THE FUNDS
7(b) Determination of Offering Price . . . . . . . . . . .NET ASSET VALUE;
WHEN TRANSACTIONS ARE
RECORDED IN YOUR ACCOUNT
7(c) Special Plans . . . . . . . SPECIAL INVESTOR SERVICES - Applications;
SYSTEMATIC WITHDRAWAL PLAN
<PAGE>
Location
--------
7(d) Minimum Investment. . . . . . . . . . . . .HOW TO INVEST IN THE FUNDS
- Minimum Investment
7(e) Trail Fee . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
7(f) 12b-1 Fees. . . . . . . . . . . . . . . . .HOW TO INVEST IN THE FUNDS
- Sales Load and 12b-1 Fees
8 Redemption or Repurchase
8(a) Redemption Procedures and Charges . . . . . .HOW TO SELL YOUR SHARES;
HOW TO EXCHANGE YOUR SHARES
REDEMPTION OR EXCHANGE
BY TELEPHONE
8(b) Repurchase through Broker-Dealer. . . . . . . HOW TO SELL YOUR SHARES
8(c) Involuntary Redemption. . . . . . . . . . . . HOW TO SELL YOUR SHARES
8(d) Delay of Redemption . . . . . . . . . . . . . HOW TO SELL YOUR SHARES
9 Pending Legal Proceeding. . . . . . . . . . . . . . . . . . .Not Applicable
Part B Location in SAI
- ------ ---------------
10 Cover Page. . . . . . . . . . . . . . . . . . . . . . . . . . . .Cover Page
11 Table of Contents . . . . . . . . . . . . . . . . . . . . TABLE OF CONTENTS
12 General Information and History . . . . . . . . . . . . GENERAL INFORMATION
13 Investment Objectives and Policies
13(a) Description. . . . . . . . . . . . .ADDITIONAL INFORMATION REGARDING
CERTAIN INVESTMENTS BY THE FUNDS
13(b) Fundamental Policies . . . . . . . . . . . .INVESTMENT RESTRICTIONS;
LOANS OF PORTFOLIO SECURITIES
13(c) Significant Policies . . . . . . . .ADDITIONAL INFORMATION REGARDING
CERTAIN INVESTMENTS BY THE FUNDS
<PAGE>
Location
--------
13(d) Portfolio Turnover . . . . . . . . . . . . . .PORTFOLIO TRANSACTIONS
-Portfolio Turnover
14 Management of the Fund
14(a) Directors and Officers . . . . . . . . . . . . . . . . . .MANAGEMENT
14(b) Positions with Affiliates. . . . . . . . . . . . . . . . .MANAGEMENT
14(c) Compensation . . . . . . . . . . . . . . . . . . . . . . .MANAGEMENT
15 Control Persons and Principal Holders of Securities
15(a) Names and Addresses of Control Persons . . . . . CONTROL PERSONS AND
PRINCIPAL HOLDERS OF SECURITIES
15(b) Ownership of Fund. . . . . . . . . . . . . . . . CONTROL PERSONS AND
PRINCIPAL HOLDERS OF SECURITIES
15(c) Stock Holdings of Officers and Directors . . . . CONTROL PERSONS AND
PRINCIPAL HOLDERS OF SECURITIES
16 Investment Advisory and Other Services
16(a) Control Persons, Affiliates and Fee. . . . . . .SERVICES PROVIDED BY
THE ADVISOR
16(b) Services of Advisor. . . . . . . . . . . . . . .SERVICES PROVIDED BY
THE ADVISOR
16(c) Fees and Expenses. . . . . . . . . . . . . . . .SERVICES PROVIDED BY
THE ADVISOR
16(d) Other Management-Related Contracts . . . . . . . . . .Not Applicable
16(e) Other Persons Furnishing Advice for Compensation . . .Not Applicable
16(f) Expenses of Distribution . . . . . . . . .SYSTEMATIC WITHDRAWAL PLAN
-Distribution Plan
16(g) Nonbank or Trust Custodial Services. . . . . . . . . .Not Applicable
<PAGE>
Location
--------
16(h) Custodian and Accountant . . . . . . . . . . . .AUDITORS; CUSTODIAN,
TRANSFER AGENT, AND DIVIDEND-DISBURSING AGENT
17 Brokerage and other Allocations
17(a) Effecting Transactions . . . . . . . . . . . .PORTFOLIO TRANSACTIONS
17(b) Payments of Commissions to Affiliates. . . . . . . . .Not Applicable
17(c) Selection of Brokers . . . . . . . . . . . . .PORTFOLIO TRANSACTIONS
- General Considerations
17(d) Allocation . . . . . . . . . . . . . . . . . .PORTFOLIO TRANSACTIONS
- General Considerations
17(e) Acquisition of Broker's Securities . . . . . . . . . .Not Applicable
18 Capital Stock and Other Securities
18(a) Rights of Each Class of Stock. . . . . . . . . . GENERAL INFORMATION
18(b) Securities Other than Capital Stock. . . . . . . . . .Not Applicable
19 Purchase, Redemption and Pricing of Securities Being Offered
19(a) Manner of Offering . . . . . . . . . . . . . PURCHASE AND REDEMPTION
OF FUND SHARES
19(b) Valuation of Securities and Assets . . . . . . PRICING OF SECURITIES
BEING OFFERED
19(c) 18(f) Exemption. . . . . . . . . . . . . . . . . . . .Not Applicable
20 Tax Status. . . . . . . . . . . . . . . .DIVIDENDS, DISTRIBUTIONS AND TAXES
21 Underwriters
21(a) Obligation, Offering and Commissions . . . . PURCHASE AND REDEMPTION
OF FUND SHARES
<PAGE>
Location
--------
21(b) Compensation to Affiliated Underwriters. . . . . . . .Not Applicable
21(c) Other Payments . . . . . . . . . . . . . . . . . . . .Not Applicable
22 Calculation of Performance Data
22(a) Money Market Funds . . . . . . . . . . . . . . YIELD AND PERFORMANCE
22(b) Total Return and Yields. . . . . . . . . . . . YIELD AND PERFORMANCE
23 Financial Statements. . . . . . . . . . . . . . . . . .FINANCIAL STATEMENTS
<PAGE>
__________________________________________________
CRABBE HUSON FUNDS
___________________________________________________
ADVISER
Crabbe Huson Group, Inc.
Portland, Oregon
TRANSFER AGENT
State Street Bank and Trust Company
Boston, Massachusetts
DISTRIBUTOR
Crabbe Huson Securities, Inc.
Portland, Oregon
CUSTODIAN
Investors Fiduciary Trust Co.
Kansas City, Missouri
COUNSEL
Davis Wright Tremaine
Portland, Oregon
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP
Portland, Oregon
PROSPECTUS
February 28, 1996
CRABBE HUSON
<PAGE>
CRABBE HUSON FUNDS
_________________________
PROSPECTUS
FEBRUARY 28, 1996
_________________________
This Prospectus contains information relating to eight different mutual
funds, collectively referred to as the Crabbe Huson Funds (the "Funds"), which
offer investors a range of investment opportunities with the following
objectives:
THE CRABBE HUSON SPECIAL FUND, INC. seeks to provide long-term capital
appreciation.
THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC. seeks to provide growth
of capital and current income.
THE CRABBE HUSON EQUITY FUND, INC. seeks to provide long-term capital
appreciation.
THE CRABBE HUSON ASSET ALLOCATION FUND, INC. seeks preservation of capital,
capital appreciation and income.
THE OREGON MUNICIPAL BOND FUND, INC. seeks to provide as high a level of
income exempt from federal and Oregon income taxes as is consistent with prudent
investment management and the preservation of capital.
THE CRABBE HUSON INCOME FUND, INC. seeks to provide the highest level of
current income that is consistent with preservation of capital.
THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC. seeks to provide a high
level of current income and the preservation of capital.
THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC. seeks to provide a
high level of current income and preservation of capital while maintaining
shareholder liquidity.
AN INVESTMENT IN THE U.S. GOVERNMENT MONEY MARKET FUND IS NEITHER INSURED
NOR GUARANTEED BY THE U.S. GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE
FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus concisely sets forth information about each of the Funds
that an investor ought to know, and should be retained for future reference. A
Statement of Additional Information dated February 28, 1996 has been filed with
the Securities and Exchange Commission (the "SEC"). It may be obtained free of
charge from the Funds' distributor by calling (800) 541-9732. The Statement of
Additional Information, as it may be supplemented from time to time, is
incorporated by reference in this Prospectus.
THE FUNDS CHARGE NO SALES LOAD. SHARES OF THE FUNDS ARE SOLD AND REDEEMED
AT THEIR NET ASSET VALUE.
THE SPECIAL FUND CAN LEVERAGE FOR FUND ACTIVITY. THIS ACTIVITY COULD BE
CONSIDERED SPECULATIVE AND COULD RESULT IN GREATER COST TO THE FUND. SEE PAGE
39.
________________________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION, PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
________________________________________________________________________________
<PAGE>
SHARES OF THE OREGON MUNICIPAL BOND FUND ARE ONLY AVAILABLE FOR SALE TO
RESIDENTS OF OREGON.
________________________________________________________________________________
A COPY OF THIS PROSPECTUS MUST BE DELIVERED TO RESIDENTS OF CERTAIN STATES
PRIOR TO CONSUMMATION OF A SALE OF SHARES IN THE FUNDS.
________________________________________________________________________________
PROSPECTUS SUMMARY
The information below is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus and in the Funds' Statement
of Additional Information.
THE CRABBE HUSON SPECIAL FUND, INC. (the "Special Fund") seeks to provide
long-term capital appreciation. It pursues this objective through a flexible
policy of investing in a diversified portfolio of carefully selected stocks that
have small to medium market capitalization.
THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC. (the "Real Estate Fund")
seeks to provide growth of capital and current income. It pursues this
objective by investing primarily in equity securities of real estate investment
trusts ("REITs") and other real estate industry companies.
THE CRABBE HUSON EQUITY FUND, INC. (the "Equity Fund") seeks to provide
long-term capital appreciation. It pursues this objective by investing in a
diversified portfolio of common stocks which are widely and actively traded and
that have large market capitalizations.
THE CRABBE HUSON ASSET ALLOCATION FUND, INC. (the "Asset Allocation Fund")
seeks preservation of capital, capital appreciation and income. It pursues
these objectives through a flexible policy of investing in stocks, fixed income
securities, and cash and cash equivalents.
THE OREGON MUNICIPAL BOND FUND, INC. (the "Oregon Bond Fund") seeks to
provide as high a level of income exempt from federal and Oregon income taxes as
is consistent with prudent investment management and the preservation of
capital. It pursues this objective by investing at least 80% of its assets in
tax-exempt municipal bonds issued by the State of Oregon and its political
subdivisions.
THE CRABBE HUSON INCOME FUND, INC. (the "Income Fund") seeks to provide the
highest level of current income that is consistent with preservation of capital.
It pursues this objective by investing primarily in a diversified portfolio of
fixed income securities, including convertible bonds and debentures.
THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC. (the "U.S. Government
Income Fund") seeks to provide a high level of current income and the
preservation of capital. It pursues this objective by investing substantially
all of its assets in short- and intermediate-term debt obligations of the United
States Government and its agencies or instrumentalities.
THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC. (the "U.S.
Government Money Market Fund") seeks to provide a high level of current income
and preservation of capital while maintaining shareholder liquidity. It pursues
this objective by investing in short-term money market instruments that are
direct or indirect obligations of the United States Government or its agencies
or instrumentalities, and repurchase agreements with respect to such
obligations.
Each of the Funds is an open-end, diversified registered investment company
(or mutual fund), with the exception of the Oregon Bond Fund, which is non-
diversified. Each Fund offers a single class of common stock pursuant to this
Prospectus, and each is managed by the Crabbe Huson Group, Inc. (the "Adviser").
The Funds are distributed by Crabbe Huson Securities, Inc. (the
"Distributor"), an affiliate of the Adviser. There is no sales load payable in
connection with the sale of shares of any of the Funds. For information about
-2-
<PAGE>
how to purchase shares of the Funds, see "HOW TO INVEST IN THE FUNDS." For
information about redemption and repurchase of shares, see "HOW TO SELL YOUR
SHARES."
RISK FACTORS
The Special, Equity and Asset Allocation Funds are subject to the risks of
investments in common stock, principally that the prices of stocks can fluctuate
dramatically in response to company, market, or economic news, and these Funds
historically have had turnover rates in their stock portfolios in excess of 75%
per year, resulting in potentially higher brokerage costs and the potential loss
of advantageous long-term capital gain treatment for tax purposes. See "Taxes."
In addition, the Special, Equity, Asset Allocation and Income Funds may each
invest up to 35% of their total assets in securities issued by foreign issuers.
The Real Estate Fund was incorporated in December 1993, and has a limited
operating history. In addition, the Real Estate Fund invests primarily in real
estate equity securities, and investments in that Fund are subject to certain
risks associated with the direct ownership of real estate. A significant risk
associated with investments in the Oregon Bond, Income and U.S. Government
Income Funds is that of increasing interest rates causing a decline in the net
asset value of the Fund. The Oregon Bond Fund is also subject to greater risks
resulting from economic difficulties in the State of Oregon, where most of its
securities are originated. The Special Fund may, from time to time, leverage
the assets it has by using borrowed money to increase its portfolio positions.
For additional information about specific risk factors associated with an
investment in each of the Funds, see "FUNDAMENTAL POLICIES," and "SPECIAL RISK
FACTORS TO BE CONSIDERED."
-3-
<PAGE>
EXPENSE DATA
The following table sets forth certain information about the expenses that
a shareholder of the Funds will incur, based upon their historical expenses for
the fiscal year ending October 31, 1995.
<TABLE>
<CAPTION>
U.S.
U.S. Government
Real Asset Oregon Government Money
Special Estate Equity Allocation Bond Income Income Market
Fund Fund Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
(as a percentage of offering price)
Maximum Sales Load Imposed on
Reinvested Dividends 0% 0% 0% 0% 0% 0% 0% 0%
Deferred Sales Load 0% 0% 0% 0% 0% 0% 0% 0%
Redemption Fees 0% 0% 0% 0% 0% 0% 0% 0%
Exchange Fees $0 $0 $0 $0 $0 $0 $0 $0
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (after waiver)(1) .79% .61% .90% .96% .42% 0% 0% .05%
12b(1) Fees(2) .25% .25% .23% .25% .23% .25% .25% .25%
Other Expenses (after(3)
reimbursement) .36% .64% .27% .27% .33% .55% .50% .40%
Total Fund Operating Expenses
(after reimbursement
or waiver)(4) 1.40% 1.50% 1.40% 1.48% .98% .80% .75% .70%
EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each period:(5)
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Special Fund 14 45 77 169
Real Estate Fund 15 48 82 180
Equity Fund 14 45 77 169
Asset Allocation Fund 15 47 81 178
Oregon Bond Fund 10 31 54 121
Income Fund 8 26 45 99
U.S. Government Income Fund 8 24 42 93
U.S. Government Money Market Fund 7 22 39 87
</TABLE>
-4-
<PAGE>
The purpose of the above table is to assist the investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly. Such costs and expenses include investment advisory fees and
administration costs. Additionally, a long-term shareholder should consider
that the fees and costs it will incur under the 12b-1 plan may result in the
shareholder paying more than the economic equivalent of the maximum front-end
sales charge permitted by the rules and regulations of the National Association
of Securities Dealers. See "Management of the Funds" and "Purchase of Shares."
(1) Reflects a waiver of fees by the Adviser of $697; $75,190; $-0-; $14,567;
$20,866; $49,011; $43,576; and $230,305 for the Special Fund, the Real
Estate Fund, the Equity Fund, the Asset Allocation Fund, the Oregon Bond
Fund, the Income Fund, the U.S. Government Income Fund, and the U.S.
Government Money Market Fund, respectively. If the waiver had not been
made these percentages would have been .79%, 1.00%, .90%, .97%, .50%, .75%,
.50%, and .50%, respectively.
(2) The maximum 12b-1 distribution fee that can be charged is .25% of a Fund's
average annual net assets.
(3) Reflects a reimbursement of Fund expenses by the Adviser of $33,287 and
$26,493 for the Income and the U.S. Government Income Funds, respectively.
If the reimbursement had not been made, these percentages would have been
.95% and .71%, respectively.
(4) As noted in footnotes 1 and 3, the Adviser voluntarily waived its fees
and/or reimbursed the Funds' expenses to the extent total operating
expenses exceed 1.50% for the Special, Real Estate, Equity and Asset
Allocation Funds, .98% for the Oregon Bond Fund, .80% for the Income Fund,
.75% for the U.S. Government Income Fund and .70% for the U.S. Government
Money Market Fund per annum of the Fund's net asset value. If the waivers
had not been made, total fund operating expenses would have been 1.40%,
1.89%, 1.40%, 1.49%, 1.08%, 1.95%, 1.46% and 1.16% for the Special Fund,
the Real Estate Fund, the Equity Fund, the Asset Allocation Fund, the
Oregon Bond Fund, the Income Fund, the U.S. Government Income Fund and the
U.S. Government Money Market Fund, respectively. See "Services Provided by
the Adviser" in the Fund's Statement of Additional Information. The
Adviser has terminated this waiver with respect to the Special, Equity and
Asset Allocation Funds. The Adviser has agreed that it will not terminate
this voluntary waiver except after 30 days notice to shareholders.
(5) THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
FUND EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER
THAN THOSE SHOWN. MOREOVER, WHILE THE TABLE ASSUMES A 5% ANNUAL RETURN,
THE FUNDS' ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN
GREATER OR LESSER THAN 5%.
-5-
<PAGE>
CONDENSED FINANCIAL INFORMATION
CRABBE HUSON FUNDS
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The following information has been derived from the Fund's financial statements
and notes included in the 1995 Annual Report. These financial statements and
the notes for the periods beginning after October 31, 1988 have been audited by
KPMG Peat Marwick, LLP, whose report thereon is included with the financial
statements in the Statement of Additional Information.
(a) The Fund's Fiscal Year was changed from 9/30 to 10/31, effective 10/31/87,
which represents a conformed 12-month period.
(b) Computed on an annualized basis.
(c) Commencement of operations - 4/9/87.
(d) Commencement of operations - 1/31/89.
(e) Commencement of operations - 4/4/94.
THE OREGON MUNICIPAL BOND FUND, INC.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92 10/31/91 10/31/90
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.99 $12.80 $12.20 $12.14 $11.74 $11.72
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.5480 0.5418 0.5683 0.6168 0.6385 0.6316
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.6998 (0.8001) 0.6880 0.1521 0.4831 0.0522
----------- ----------- ----------- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 1.2478 (0.2583) 1.2563 0.7689 1.1216 0.6838
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.5480 0.5419 0.5647 0.6168 0.6562 0.6401
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0003 0.0000 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0698 0.0090 0.0916 0.0921 0.0654 0.0237
----------- ----------- ----------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.6178 0.5512 0.6563 0.7089 0.7216 0.6638
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $12.62 $11.99 $12.80 $12.20 $12.14 $11.74
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
TOTAL RETURN 10.66% -2.06% 10.71% 6.51% 9.85% 6.00%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $28,070,371 $29,045,728 $29,408,110 $20,295,896 $18,382,636 $18,766,449
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.98% 0.98% 1.05% 1.11% 1.21% 1.38%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.45% 4.37% 4.51% 5.04% 5.36% 5.41%
PORTFOLIO TURNOVER RATE 22.91% 20.58% 11.62% 25.30% 53.40% 58.52%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.08% 1.08% 1.09% 1.13% 1.24% 1.55%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.35% 4.26% 4.46% 5.01% 5.34% 5.23%
-6-
<PAGE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
10/31/89 10/31/88 10/31/87(a) 09/30/87 09/30/86
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.72 $11.08 $12.15 $11.93 $10.43
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.6794 0.6386 0.7311 0.7319 0.7720
NET REALIZED & UNREALIZED ENDED
GAIN (LOSS) ON SECURITIES 0.0842 0.6411 (0.9983) (0.8051) 1.5265
----------- ----------- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 0.7636 1.2797 (0.2672) (0.0732) 2.2985
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.6711 0.6386 0.7311 0.7319 0.7720
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0925 0.0000 0.0760 0.0760 0.0255
----------- ----------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.7636 0.6386 0.8071 0.8079 0.7975
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $11.72 $11.72 $11.08 $11.05 $11.93
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
TOTAL RETURN 6.67% 12.02% -1.95% -0.95% 22.83%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $19,173,145 $20,058,295 $14,276,600 $14,165,161 $8,861,258
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.04% 1.21% 1.14% 1.31% 1.06%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.82% 5.53% 5.66% 6.43% 6.34%
PORTFOLIO TURNOVER RATE 45.25% 31.44% 19.18% 18.73% 24.20%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.16% 1.32% ---- ---- ----
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.71% 5.42% ---- ---- ----
</TABLE>
-7-
<PAGE>
CRABBE HUSON FUNDS
FINANCIAL HIGHLIGHTS
(Continued)
THE CRABBE HUSON SPECIAL FUND, INC.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $14.08 $11.82 $8.36 $12.05
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) 0.2704 0.0513 (0.0774) (0.0211)
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES (0.2894) 2.3026 3.5374 (1.6211)
------------ ------------ ----------- ----------
TOTAL FROM INVESTMENT OPERATIONS (0.0190) 2.3539 3.4600 (1.6422)
LESS DISTRIBUTIONS
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.0226 0.0000 0.0000 0.0260
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0892 0.0000 2.0218
DISTRIBUTIONS FROM CAPITAL GAINS 0.2384 0.0000 0.0000 0.0000
------------ ------------ ----------- ----------
TOTAL DISTRIBUTIONS 0.2610 0.0892 0.0000 2.0478
------------ ------------ ----------- ----------
NET ASSET VALUE, END OF PERIOD $13.80 $14.08 $11.82 $8.36
------------ ------------ ----------- ----------
------------ ------------ ----------- ----------
TOTAL RETURN 1.78% 22.40% 41.39% 8.11%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $878,559,834 $319,810,853 $23,816,912 $5,857,434
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.40% 1.44% 1.57% 1.74%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.95% 0.39% -0.73% -0.25%
PORTFOLIO TURNOVER RATE 122.97% 146.44% 73.29% 102.27%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.40% 1.54% 1.59% 2.18%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.95% 0.29% -0.75% -0.69%
-8-
<PAGE>
<CAPTION>
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 10/31/88 10/31/87(c)
------------ ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $8.78 $11.49 $9.69 $8.13 $10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) 0.0353 0.1546 0.2100 (0.0515) (0.0409)
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 4.0155 (1.4317) 1.5900 1.6115 (1.8300)
------------ ------------ ----------- ---------- -----------
TOTAL FROM INVESTMENT OPERATIONS 4.0508 (1.2771) 1.8000 1.5600 (1.8709)
LESS DISTRIBUTIONS
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.1453 0.2240 0.0000 0.0000 0.0000
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.6355 1.2089 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0000 0.0000 0.0000 0.0000 0.0000
------------ ------------ ----------- ---------- ----------
TOTAL DISTRIBUTIONS 0.7808 1.4329 0.0000 0.0000 0.0000
------------ ------------ ----------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $12.05 $8.78 $11.49 $9.69 $8.13
------------ ------------ ----------- ---------- ----------
------------ ------------ ----------- ---------- ----------
TOTAL RETURN 49.58% -10.90% 18.68% 19.63% -30.32%(b)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $3,541,797 $2,926,457 $3,356,417 $4,392,920 $1,892,038
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.92% 2.00% 2.00% 3.94% 2.60%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 0.32% 1.55% 1.96% 3.34% 0.05%(b)
PORTFOLIO TURNOVER RATE 256.68% 314.73% 275.62% 155.12% 3.90%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.40% 2.86% 2.44%(b) ---- ----
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS -0.15% 0.70% 1.53%(b) ---- ----
</TABLE>
-9-
<PAGE>
CRABBE HUSON FUNDS
FINANCIAL HIGHLIGHTS
(Continued)
THE CRABBE HUSON ASSET ALLOCATION FUND, INC.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.87 $13.52 $11.68 $11.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.3361 0.2990 0.2323 0.3468
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 1.2090 (0.0817) 2.0889 0.8175
----------- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 1.5451 0.2173 2.3212 1.1643
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.3321 0.2879 0.2373 0.3463
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.4430 0.5829 0.2439 0.1380
----------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.7751 0.8708 0.4812 0.4843
----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $13.64 $12.87 $13.52 $11.68
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
TOTAL RETURN 13.00% 2.66% 20.93% 11.25%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $136,530,057 $110,151,785 $85,390,017 $55,098,981
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.48% 1.44% 1.46% 1.52%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 2.57% 2.30% 1.85% 3.02%
PORTFOLIO TURNOVER RATE 225.70% 149.19% 116.10% 155.26%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.49% 1.52% 1.54% 1.62%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 2.56% 2.22% 1.77% 2.92%
-10-
<PAGE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 (d)
----------- ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.24 $10.69 $10.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.4143 0.4561 0.3990
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 1.8208 (1.1200) 0.2910
----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 2.2351 (0.6639) 0.6900
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.4335 0.7159 0.0000
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0415 0.0702 0.0000
----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.4750 0.7861 0.0000
----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $11.00 $9.24 $10.69
----------- ----------- -----------
----------- ----------- -----------
TOTAL RETURN 24.55% -6.40% 9.30%(b)
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $23,892,664 $13,173,923 $12,577,962
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.76% 1.90% 1.91%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 3.97% 4.51% 5.02%(b)
PORTFOLIO TURNOVER RATE 157.89% 161.72% 88.14%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.79% 1.93% 1.93%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 3.94% 4.49% 5.00%(b)
</TABLE>
-11-
<PAGE>
CRABBE HUSON FUNDS
FINANCIAL HIGHLIGHTS
(Continued)
THE CRABBE HUSON EQUITY FUND, INC.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $16.44 $16.08 $13.03 $12.57
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.2223 0.1900 0.0981 0.1980
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 1.7438 0.5668 3.4476 0.9186
------------ ------------ ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 1.9661 0.7568 3.5457 1.1166
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.0880 0.0344 0.1099 0.0937
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.1481 0.3638 0.3858 0.5629
------------ ------------ ----------- ----------
TOTAL DISTRIBUTIONS 0.2361 0.3982 0.4957 0.6566
------------ ------------ ----------- -----------
NET ASSET VALUE, END OF PERIOD $18.17 $16.44 $16.08 $13.03
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
TOTAL RETURN 13.37% 7.89% 29.90% 12.48%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $387,184,080 $153,105,296 $34,520,166 $13,429,315
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.40% 1.45% 1.49% 1.55%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.30% 1.18% 0.67% 1.57%
PORTFOLIO TURNOVER RATE 92.43% 106.49% 114.38% 180.72%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.40% 1.56% 1.64% 1.93%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.28% 1.06% 0.52% 1.18%
-12-
<PAGE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 (d)
------------ ------------ -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $8.54 $10.50 $10.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.1861 0.2533 0.3146
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 4.1511 (1.6764) 0.1854
------------ ------------ -----------
TOTAL FROM INVESTMENT OPERATIONS 4.3372 (1.4231) 0.5000
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.3072 0.3918 0.0000
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0000 0.1451 0.0000
------------ ------------ -----------
TOTAL DISTRIBUTIONS 0.3072 0.5369 0.0000
------------ ------------ -----------
NET ASSET VALUE, END OF PERIOD $12.57 $8.54 $10.50
------------ ------------ -----------
------------ ------------ -----------
TOTAL RETURN 52.44% -14.97% 6.72%(b)
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $5,929,590 $2,944,344 $5,018,337
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.84% 1.93% 1.69%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.60% 2.56% 3.98%(b)
PORTFOLIO TURNOVER RATE 171.82% 265.25% 90.54%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.41% 2.66% 1.97%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.03% 1.83% 3.68%(b)
</TABLE>
-13-
<PAGE>
CRABBE HUSON FUNDS
FINANCIAL HIGHLIGHTS
(Continued)
THE CRABBE HUSON INCOME FUND, INC.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.71 $10.75 $10.90 $10.63
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.5329 0.4995 0.4637 0.6583
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.5754 (0.7669) 0.3265 0.3569
------------ ------------ ------------ ------------
TOTAL FROM INVESTMENT OPERATIONS 1.1083 (0.2674) 0.7902 1.0152
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.5329 0.4995 0.4879 0.6588
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0254 0.0080 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0000 0.2710 0.4523 0.0864
------------ ------------ ------------ ------------
TOTAL DISTRIBUTIONS 0.5583 0.7785 0.9402 0.7452
------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD $10.26 $9.71 $10.75 $10.90
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
TOTAL RETURN 11.92% -2.71% 7.73% 9.74%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $7,190,125 $5,273,407 $5,696,555 $5,634,372
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.80% 0.80% 0.81% 0.90%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.47% 4.92% 4.34% 6.09%
PORTFOLIO TURNOVER RATE 543.15% 306.79% 260.22% 227.45%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.95% 2.16% 1.96% 1.94%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.32% 3.56% 3.19% 5.06%
-14-
<PAGE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 (d)
------------ ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.01 $10.27 $10.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.7038 0.6869 0.5545
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.6218 (0.2407) 0.2761
------------ ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 1.3256 0.4462 0.8306
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.7056 0.6840 0.5606
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0000 0.0222 0.0000
------------ ----------- -----------
TOTAL DISTRIBUTIONS 0.7056 0.7062 0.5606
------------ ----------- -----------
NET ASSET VALUE, END OF PERIOD $10.63 $10.01 $10.27
------------ ----------- -----------
------------ ----------- -----------
TOTAL RETURN 13.51% 4.43% 10.43%(b)
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $5,485,830 $2,123,203 $1,356,008
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.98% 1.51% 1.15%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.82% 6.89% 7.23%(b)
PORTFOLIO TURNOVER RATE 115.76% 73.76% 86.60%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.42% 3.07% 4.56%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.38% 5.33% 3.81%(b)
</TABLE>
-15-
<PAGE>
CRABBE HUSON FUNDS
FINANCIAL HIGHLIGHTS
(Continued)
THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.27 $11.04 $10.91 $10.69
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.5097 0.4648 0.4755 0.5801
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.4013 (0.6515) 0.2159 0.2921
------------- ------------- ------------- -------------
TOTAL FROM INVESTMENT OPERATIONS 0.9110 (0.1867) 0.6914 0.8722
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.5097 0.4647 0.4848 0.5839
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0113 0.0035 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0000 0.1120 0.0766 0.0683
------------- ------------- ------------- -------------
TOTAL DISTRIBUTIONS 0.5210 0.5802 0.5614 0.6522
------------- ------------- ------------- -------------
NET ASSET VALUE, END OF PERIOD $10.66 $10.27 $11.04 $10.91
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
TOTAL RETURN 9.12% -1.78% 6.71% 8.70%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $8,426,199 $9,249,212 $11,217,912 $8,958,757
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.75% 0.75% 0.75% 0.80%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.85% 4.39% 4.33% 5.35%
PORTFOLIO TURNOVER RATE 230.43% 76.09% 81.74% 105.52%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.46% 1.47% 1.26% 1.52%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.14% 3.66% 3.81% 4.63%
-16-
<PAGE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 (d)
------------- ------------- -------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.24 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.6722 0.6768 0.5637
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.4542 (0.0326) 0.2852
------------- ------------- -------------
TOTAL FROM INVESTMENT OPERATIONS 1.1264 0.6442 0.8489
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.6746 0.6735 0.5689
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0018 0.0106 0.0000
------------- ------------- -------------
TOTAL DISTRIBUTIONS 0.6764 0.6842 0.5689
------------- ------------- -------------
NET ASSET VALUE, END OF PERIOD 10.69 10.24 10.28
------------- ------------- -------------
------------- ------------- -------------
TOTAL RETURN 11.17% 6.40% 11.15%(b)
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $3,748,244 $2,069,435 $1,717,128
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.96% 1.42% 1.14%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.44% 6.72% 7.35%(b)
PORTFOLIO TURNOVER RATE 114.81% 87.71% 40.42%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.15% 2.84% 3.40%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.25% 5.31% 5.09%(b)
</TABLE>
-17-
<PAGE>
CRABBE HUSON FUNDS
FINANCIAL HIGHLIGHTS
(Continued)
THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.0512 0.0339 0.0250 0.0332
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.0000 0.0000 0.0000 0.0000
----------- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 0.0512 0.0339 0.0250 0.0332
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.0512 0.0339 0.0250 0.0332
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000 0.0000
----------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.0512 0.0339 0.0250 0.0332
----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
TOTAL RETURN 5.30% 3.28% 2.53% 3.36%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $54,714,219 $32,382,552 $14,784,493 $12,395,326
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.70% 0.70% 0.70% 0.75%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.21% 3.39% 2.51% 3.32%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.16% 1.29% 1.32% 1.09%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.75% 2.81% 1.88% 2.98%
-18-
<PAGE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 (d)
----------- ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.0576 0.0737 0.0633
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.0000 0.0000 0.0000
----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 0.0576 0.0737 0.0633
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.0576 0.0737 0.0633
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000
----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.0576 0.0737 0.0633
----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
----------- ----------- -----------
----------- ----------- -----------
TOTAL RETURN 13.76% 7.62% 10.05%(b)
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $14,906,733 $21,405,713 $10,735,032
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.81% 0.80% 0.60%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.76% 7.57% 8.43%(b)
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.18% 1.33% 1.34%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.38% 7.04% 7.69%(b)
</TABLE>
-19-
<PAGE>
CRABBE HUSON FUNDS
FINANCIAL HIGHLIGHTS
(Continued)
THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC.
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
10/31/95 10/31/94 (e)
----------- -----------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.50 $10.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.4436 0.3664
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.3065 (0.6394)
----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 0.7501 (0.2730)
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.4379 0.2287
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.1222 0.0000
----------- -----------
TOTAL DISTRIBUTIONS 0.5601 0.2287
----------- -----------
NET ASSET VALUE, END OF PERIOD $9.69 $9.50
----------- -----------
----------- -----------
TOTAL RETURN 8.31% -3.25%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $18,985,514 $18,279,500
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% 1.01%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.59% 6.30%(b)
PORTFOLIO TURNOVER RATE 59.53% 43.30%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.89% 2.03%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.20% 5.28%(b)
</TABLE>
-20-
<PAGE>
PERFORMANCE INFORMATION
The annual report for the Funds contains additional information about the
performance of the Funds, and is available from the Distributor upon request and
without charge.
INVESTMENT OBJECTIVES AND POLICIES
The eight Funds described in this Prospectus have different investment
objectives that will largely determine the type of investments in each Fund's
portfolio. However, there is no assurance that the Funds will achieve their
investment objectives. Except for the Real Estate Fund, each Fund's policies,
including its investment objective, may be changed without shareholder vote to
the extent they are not described in this Prospectus under "Fundamental
Policies" or under "Investment Restrictions" in the Statement of Additional
Information. The shareholders of the Real Estate Fund must approve a change in
the Fund's investment objective.
THE CRABBE HUSON SPECIAL FUND, INC. is an open-end, diversified regulated
investment company incorporated under the laws of Oregon on January 29, 1987.
It began operations on April 9, 1987.
The Special Fund seeks long-term growth of capital through a flexible
policy of investing in a diversified portfolio of selected domestic and foreign
securities representing "special" situations, as described below (principally,
common stocks and, secondarily, preferred stocks and bonds). The production of
current income is secondary to the primary objective.
The Special Fund uses a basic value, contrarian approach in selecting its
investments. In its selection process, the Fund puts primary emphasis on
balance sheet and cash flow analysis and on the relationship between the market
price of a security and its value as a share of an ongoing business. This
approach, while not unique, contrasts with certain other methods of investment
analysis, which rely upon market timing, technical analysis, earnings forecasts,
or economic predictions.
The Special Fund seeks to invest up to 100%, and under normal conditions at
least 75%, of its assets in securities of companies that have small (under
$1,000,000,000) to medium (from $1,000,000,000 to $3,000,000,000) market
capitalization. These investments represent "special" situations or
opportunities that arise when companies, whose long-term financial structure is
intact, run into short-term difficulties that present an opportunity to buy
these companies' stocks at substantial discounts. The Special Fund's basic
value approach is based on the Adviser's belief that the securities of many
companies often sell at a discount from the securities' estimated theoretical
(intrinsic) value. The Fund attempts to identify and invest in such undervalued
securities, anticipating that capital appreciation will be realized as the
securities' prices rise to their estimated intrinsic value.
The Special Fund's investment policies are adapted to changing market
conditions. The Adviser believes that common stock will generally, over the
long-term, offer the greatest
-21-
<PAGE>
potential for capital appreciation and preservation of purchasing power, and
common stocks will usually constitute at least 75% of the Fund's investment
portfolio. However, for temporary defensive purposes, the Special Fund may
reduce its ownership of common stock if, in the opinion of the Fund, it would be
assuming undue risk in its ownership of common stock. In such a situation, the
Fund could invest up to 100% of its assets in fixed income securities, cash and
cash equivalents. The fixed income securities in which the Special Fund will
invest in such a situation shall consist of corporate debt securities (bonds,
debentures and notes), asset-backed securities, bank obligations, collateralized
bonds, loan and mortgage obligations, commercial paper, preferred stocks,
repurchase agreements, savings and loan obligations and U.S. Government and
agency obligations. At no time will the Fund have in excess of 20% of its total
assets invested in fixed income securities rated below investment grade (BBB by
Standard and Poor's ("S&P") and Baa by Moody's Investors Service ("Moody's")) or
in excess of 5% of its total assets invested in fixed income securities that are
unrated. The maturities of the fixed income securities shall be three years or
less.
The Special Fund may from time to time increase its assets for investment
through bank borrowing. Such bank borrowing may be collateralized by pledging
the Fund's portfolio securities to the lending bank. In no case will such
borrowings exceed one-third of the value of the Fund's total assets immediately
after any such borrowing. If, for any reason, the current value of the Special
Fund's total assets falls below an amount equal to three times the amount of its
indebtedness from money borrowed, the Fund will, within three days (not
including Saturdays, Sundays and holidays), reduce its indebtedness to the
extent necessary to satisfy the one-third test.
Using borrowed funds to increase the amount of securities that may be
purchased is known as leverage. Investment gains realized with borrowed funds
that exceed the interest cost for such borrowings will cause the net asset value
of Fund shares to increase more dramatically than would otherwise be the case.
On the other hand, leverage can cause the net asset value of Fund shares to
decrease more rapidly than normal if the securities purchased with borrowed
money decline in value or if the investment performance of such securities does
not cover the cost of borrowing.
By itself, the Special Fund does not constitute a balanced investment plan.
Securities that the Adviser believes have the greatest growth potential may be
regarded as speculative, and an investment in the Fund may involve greater risk
than is inherent in other mutual funds. The Special Fund's focus on small to
medium market capitalization stocks may cause it to be more volatile than other
funds with different strategies. Because the Fund invests primarily in common
stocks, it may be appropriate only for investors who can afford a longer term
investment horizon or perspective. For a further description of the risks
associated with an investment in the Special Fund, please see "SPECIAL RISK
FACTORS TO BE CONSIDERED."
The Special Fund also intends to sell securities "short." The technique of
selling short is subject to certain restrictions, and involves certain risks.
See "SPECIAL RISK FACTORS TO BE CONSIDERED--Short Sales."
-22-
<PAGE>
INVESTMENT RESTRICTIONS
The Special Fund's investment restrictions prohibit, among other things,
the investment of more than 5% of the Fund's total assets in the securities of
any one issuer, and prohibit the investment of more than 25% of the Fund's total
assets in any one industry (except U.S. Government securities). In addition to
common stock, the assets of the Special Fund will sometimes be invested in
convertible and nonconvertible preferred stocks and bonds, which may or may not
be rated. However, no more than 20% of the Special Fund's total assets may be
invested in fixed income or convertible securities which are rated below the
fourth highest grade by Moody's and S&P and no more than 5% of the Fund's total
assets may be invested in unrated fixed income or convertible securities. It
should be noted that obligations rated below the fourth highest grade (Baa by
Moody's or BBB by S&P) are considered to have speculative characteristics. See
"SPECIAL RISK FACTORS TO BE CONSIDERED." The Special Fund's investment
restrictions and policies are more fully described under "FUNDAMENTAL POLICIES"
and in the Statement of Additional Information.
DIVIDENDS AND DISTRIBUTIONS
The Special Fund expects to declare and distribute to shareholders each
December, substantially all of its net investment income and net realized
capital gains, if any. The amount distributed will vary according to the income
received from securities held by the Fund and capital gains realized from the
sale of securities.
All distributions are paid and reinvested in additional shares of the
Special Fund at net asset value at the close of business on the record date,
unless the shareholder has elected to receive payments in cash.
THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC. is an open-end, diversified
regulated investment company incorporated under the laws of Oregon on December
29, 1993. It began operations on April 4, 1994.
INVESTMENT OBJECTIVE AND POLICIES
The Real Estate Fund's investment objective is to provide for its
shareholders capital appreciation and income. The Real Estate Fund seeks to
achieve this objective through a policy of investing in a diversified portfolio
consisting primarily of equity securities of REITs and other real estate
industry companies and, to a lesser extent, in debt securities of such companies
and in mortgage-backed securities.
The Real Estate Fund uses a basic value, contrarian approach in selecting
investments to the extent that such an approach is feasible in the real estate
market. In its selection process, the Real Estate Fund puts primary emphasis on
balance sheet and cash flow analysis and the relationship between the market
price of the security and its value as a share of an ongoing business, and/or on
securities which offer a high level of current income. This
-23-
<PAGE>
approach, while not unique, contrasts with certain other methods of investment
analysis which rely upon market timing, technical analysis, earnings forecasts,
or economic predictions. This Fund frequently focuses on companies or
industries that appear to be out of favor with the majority of the investment
community.
Under normal circumstances, at least 75% of the Real Estate Fund's total
assets will be invested in equity securities of REITs and other real estate
industry companies. For purposes of the Real Estate Fund's investments, a "real
estate industry company" is a company that derives at least 50% of its gross
revenues or net profits from either (a) the ownership, development,
construction, financing, management or sale of commercial, industrial or
residential real estate or (b) products or services related to the real estate
industry, like building supplies or mortgage servicing. The equity securities
of real estate industry companies in which the Real Estate Fund will invest
consist of common stock, shares of beneficial interests of real estate
investment trusts and securities with common stock characteristics, such as
preferred stock and debt securities convertible into common stock ("Real Estate
Equity Securities"). Real Estate Equity Securities are subject to unique risks.
See "SPECIAL RISK FACTORS TO BE CONSIDERED" for a discussion of these risks.
The Real Estate Fund may also invest up to 25% of its total assets in (a)
debt securities of real estate industry companies, (b) mortgage-backed
securities, such as mortgage pass-through certificates, real estate mortgage
investment conduit ("REMIC") certificates and collateralized mortgage
obligations ("CMOs"), and (c) short-term investments (as defined below). For
purposes of any investment in debt securities the Real Estate Fund does not
intend to invest any of its assets in debt securities that are unrated or that
are rated below Baa by Moody's or BBB by S&P. Investing in mortgage-backed
securities involves certain unique risks in addition to those associated with
investing in the real estate industry in general. These risks include the
failure of a counter-party to meet its commitments, adverse interest rate
changes and the effect of prepayments on mortgage cash flows and returns. For a
more complete discussion concerning mortgage-backed securities, see "SPECIAL
RISK FACTORS TO BE CONSIDERED."
Short-term investments that the Real Estate Fund may invest in consist of
the following: corporate commercial paper and other short-term commercial
obligations, in each case rated or issued by companies with similar securities
outstanding that are rated Prime-1, Aa or better by Moody's or A-1, AA or better
by S&P; obligations (including certificates of deposit, time deposits, demand
deposits and banker's acceptances) of banks with securities outstanding that are
rated Prime-1, Aa or better by Moody's, or A-1, AA or better by S&P; obligations
issued or guaranteed by the U.S. Government or its agencies or instrumentalities
with remaining maturities not exceeding 18 months; and repurchase agreements.
The Real Estate Fund's investment policies will be adapted to changing
market conditions. When as a result of market conditions the Adviser determines
that a temporary defensive position is warranted to help preserve capital, the
Real Estate Fund may invest up to 100% of its assets in fixed income securities,
cash and cash equivalents. The fixed income
-24-
<PAGE>
securities in which the Real Estate Fund will invest in such a situation shall
consist of corporate debt securities (bonds, debentures and notes), asset-backed
securities, bank obligations, collateralized bonds, loan and mortgage
obligations, commercial paper, preferred stocks, repurchase agreements, savings
and loan obligations and U.S. Government and agency obligations. The fixed
income securities will be rated investment grade or higher (BBB by S&P and Baa
by Moody's) and will have maturities of three years or less. When the Real
Estate Fund assumes a temporary defensive position, it is not invested in
securities designed to achieve its investment objective.
A more complete discussion concerning the investment objectives and
policies of the Real Estate Fund is included under "FUNDAMENTAL POLICIES" and in
the Statement of Additional Information.
INVESTMENT RESTRICTIONS
A description of the investment restrictions and policies of the Real
Estate Fund is included under "FUNDAMENTAL POLICIES" and in the Statement of
Additional Information.
DIVIDENDS AND DISTRIBUTIONS
The Real Estate Fund expects to declare and distribute to shareholders
dividends from net investment income on the last business day of each fiscal
quarter. Net capital gains realized by the Real Estate Fund, if any, will be
declared and distributed each December. The amount distributed will vary
according to the income received from securities held by the Real Estate Fund
and capital gains realized from the sale of securities.
All distributions are paid and reinvested in additional shares of the Real
Estate Fund at net asset value at the close of business on the record date,
unless the shareholder has elected to receive payments in cash.
THE CRABBE HUSON EQUITY FUND, INC. is an open-end, diversified regulated
investment company incorporated under the laws of Oregon on August 10, 1988. It
began operations on January 31, 1989.
The Equity Fund seeks long-term appreciation of shareholders' capital. The
Equity Fund will seek to achieve this objective by investing in a carefully
chosen portfolio consisting primarily of common stock. The Adviser will employ
a basic value, contrarian approach in selecting securities for purchase for the
Equity Fund's portfolio. It will focus its investments in widely and actively
traded stocks with large market capitalizations (primarily in excess of
$3,000,000,000). In the selection process, the Adviser places primary emphasis
on income statement and balance sheet analysis, and on the relationship between
the market price of a security and the Adviser's opinion of its underlying
value. This approach contrasts with certain other methods of investment
analysis, which rely upon market timing, technical analysis,
-25-
<PAGE>
earnings forecasts or economic predictions. This Fund frequently focuses on
companies or industries that appear to be out of favor with the majority of the
investment community.
Under normal market conditions, the Equity Fund intends to have at least
65% of its total assets invested in common stock. The Equity Fund will purchase
and hold for investment common stock of both domestic and foreign corporations,
and may also purchase convertible and nonconvertible preferred stocks and bonds
or debentures. The Fund may invest up to 35% of its total assets in foreign
securities. Although the Equity Fund intends to adapt to changing market
conditions, the Adviser believes that common stock will generally, over the
long-term, offer the greatest potential for capital appreciation. Therefore,
the Equity Fund may be appropriate for investors who can afford a longer term
investment horizon or perspective.
For temporary defensive purposes, the Equity Fund may reduce its ownership
of common stock substantially below the 65% level. When, as a result of market
conditions, the Adviser determines that a temporary defensive position is
warranted to help preserve capital, the Fund may, without limit, invest up to
100% of its assets in fixed income securities, cash, cash equivalents, and money
market instruments. The fixed income securities in which the Equity Fund will
invest in such a situation shall consist of corporate debt securities (bonds,
debentures and notes), asset-backed securities, bank obligations, collateralized
bonds, loan and mortgage obligations, commercial paper, preferred stocks,
repurchase agreements, savings and loan obligations and U.S. Government and
agency obligations. At no time will the Fund have in excess of 20% of its total
assets invested in fixed income securities rated below BBB by S&P and Baa by
Moody's or 5% of its total assets invested in fixed income securities that are
unrated. The maturities of the fixed income securities shall be three years or
less. In addition, for defensive purposes, the Equity Fund may purchase or
write covered put or call options on individual securities or widely traded
stock index futures. See "SPECIAL RISK FACTORS TO BE CONSIDERED."
INVESTMENT RESTRICTIONS
The Equity Fund's investment restrictions prohibit, among other things, the
investment of more than 5% of the Fund's total assets in the securities of any
one issuer, and prohibit the investment of more than 25% of the Fund's total
assets in any one industry (except U.S. Government securities). The investment
restrictions and policies of the Equity Fund are more fully described under
"FUNDAMENTAL POLICIES" and in the Statement of Additional Information.
DIVIDENDS AND DISTRIBUTIONS
The Equity Fund expects to declare and distribute to shareholders each
December, substantially all of its net investment income and net realized
capital gains, if any. The amount distributed will vary according to the income
received from securities held by the Fund and capital gains realized from the
sale of securities.
-26-
<PAGE>
All distributions are paid and reinvested in additional shares of the
Equity Fund at net asset value at the close of business on the record date,
unless the shareholder has elected to receive payments in cash.
THE CRABBE HUSON ASSET ALLOCATION FUND, INC. is an open-end, diversified
regulated investment company incorporated under the laws of Oregon on August 10,
1988. It began operations on January 31, 1989.
The Asset Allocation Fund seeks to provide for its shareholders
preservation of capital, capital appreciation and income. The Asset Allocation
Fund seeks to achieve these objectives by a flexible policy of investing in a
select portfolio of common stocks, fixed income securities and cash or cash
equivalents. Depending upon economic and market conditions, the Asset
Allocation Fund may invest as little as 20%, or as much as 75%, of its entire
portfolio in common stocks. The Adviser will purchase common stocks which, in
its opinion, have the greatest potential for capital appreciation. The
remaining portion of the portfolio will be invested in fixed income securities,
cash, or cash equivalents. The fixed income securities that the Asset
Allocation Fund will invest in shall consist of corporate debt securities
(bonds, debentures and notes) asset-backed securities, bank obligations,
collateralized bonds, loan and mortgage obligations, commercial paper, preferred
stocks, repurchase agreements, savings and loan obligations and U.S. Government
and agency obligations. There are no limitations on the average maturity of the
Fund's Portfolio of fixed income securities. Securities will be selected on the
basis of the Adviser's assessments of interest rate trends and the liquidity of
various instruments under prevailing market conditions. For a discussion of the
ratings of the fixed income securities to be held by the Fund see "FUNDAMENTAL
POLICIES."
The Adviser will employ a basic value, contrarian approach in selecting
purchases for the Asset Allocation Fund's equity portfolio. In the selection
process, the Adviser places primary emphasis on income statement and balance
sheet analysis, and the relationship between the market price of a security and
the Adviser's opinion of its underlying value. This approach contrasts with
certain other methods of investment analysis, which rely upon market timing,
technical analysis, earnings forecasts or economic predictions. This Fund
frequently focuses on companies or industries that appear to be out of favor
with the majority of the investment community.
Many factors will be considered in determining what portion of the
portfolio will be invested in stocks, fixed income securities, or cash and cash
equivalents. The Adviser will constantly monitor and adjust its weighting of
investments in any particular area to adapt to changing market and economic
conditions. The Fund's assets will be primarily invested in fixed income
securities if it is more likely to meet its objectives through such investments
rather than through investments in common stocks. Similarly, the Adviser will
primarily invest the Asset Allocation Fund's assets in cash and cash equivalents
if in its view market conditions become uncertain, such as in periods of rapidly
rising interest rates.
-27-
<PAGE>
Since its inception, the Asset Allocation Fund has generally invested its
net assets 45% to 55% in fixed income securities, 25% to 45% in common stocks,
and 5% to 30% in cash, cash equivalents or other money market instruments.
However, for temporary defensive purposes, the Fund may invest up to 100% of its
assets in fixed income securities, cash, cash equivalents or other money market
instruments. The Asset Allocation Fund may not invest more than 75% of its
total net assets in common stocks. For a description of the risks associated
with these types of investments, please see "SPECIAL RISK FACTORS TO BE
CONSIDERED" in this Prospectus.
Although it is the general policy of the Asset Allocation Fund to invest
for long-term capital appreciation and a modest amount of income, advantage will
be taken of opportunities to earn short-term profits if the Adviser believes
that such a strategy will benefit the Asset Allocation Fund's overall objective
in light of the increased tax and brokerage expenses associated with such a
strategy.
INVESTMENT RESTRICTIONS
The Asset Allocation Fund's investment restrictions include, among others,
a prohibition on investing more than 5% of its total assets in the securities of
any one issuer (except U.S. Government securities), or 25% of its total assets
in a single industry. The investment restrictions and policies of the Asset
Allocation Fund are more fully described under "FUNDAMENTAL POLICIES" in this
Prospectus and in the Statement of Additional Information.
DIVIDENDS AND DISTRIBUTIONS
The Asset Allocation Fund expects to declare and distribute dividends from
net investment income on the last business day of each fiscal quarter. Net
capital gains realized by the Asset Allocation Fund, if any, are declared and
distributed each December. The amount distributed will vary according to the
income received from securities held by the Asset Allocation Fund and capital
gains realized from the sale of securities.
All distributions are paid and reinvested in additional shares of the Asset
Allocation Fund at net asset value at the close of business on the record date,
unless the shareholder has elected to receive payments in cash.
THE OREGON MUNICIPAL BOND FUND, INC. is an open-end, non-diversified regulated
investment company incorporated under the laws of Oregon on October 24, 1983.
It began operations on October 3, 1984.
The Oregon Bond Fund's investment objective is to provide its shareholders
with as high a level of income exempt from federal and Oregon income taxes as is
consistent with prudent investment management and preservation of capital. The
Fund seeks to achieve this objective
-28-
<PAGE>
by investing primarily in a professionally managed portfolio of municipal
securities (including private activity bonds), the interest on which, in the
opinion of counsel for the issuer, is exempt from federal and Oregon income
taxes. It is the Fund's general policy to avoid purchasing bonds on which the
interest is subject to the federal alternative minimum tax. The Fund may,
however, purchase such bonds when their yield is sufficiently above the yield on
bonds not so taxed to compensate for the adverse tax consequences. For purposes
of its investment policy, the Fund considers a "bond" to be any municipal debt
security.
Under normal market conditions, at least 80% of the Oregon Bond Fund's
total assets will be invested in municipal securities, and at least 65% of its
total assets will be invested in municipal bonds issued by the state of Oregon
and its political subdivisions, agencies, authorities and instrumentalities.
Securities that are subject to the federal alternative minimum tax will not be
included in this calculation.
Municipal securities purchased for the Oregon Bond Fund's portfolio must,
at the time of purchase, be "investment-grade" municipal securities, rated no
lower than Baa by Moody's or BBB by S&P, or unrated municipal securities which
management believes to be comparable in quality to investment-grade municipal
securities. If any of the Oregon Bond Fund's securities fall below "investment
grade," the Fund will typically dispose of such securities, but it is not
required to do so. For a discussion concerning the rise factors associated with
municipal securities to be purchased by the Oregon Bond Fund, see "FUNDAMENTAL
POLICIES" and "SPECIAL RISK FACTORS TO BE CONSIDERED" in this Prospectus.
Under normal market conditions, the Oregon Bond Fund may invest up to 20%
of its net assets in the following categories of investments:
1. Municipal securities issued by entities other than the state of Oregon
or its political subdivisions, agencies, authorities, and
instrumentalities.
2. Notes of municipal issuers which have, at the time of purchase, an
issue of outstanding municipal bonds rated within the four highest
grades by Moody's or S&P and which are, if unrated, in the opinion of
the Adviser, of a quality comparable to municipal bonds rated in one
of the four highest categories by Moody's or S&P.
3. Temporary investments in fixed income obligations, the interest on
which is subject to federal income tax and which may be subject to
Oregon income tax. Investments in such taxable obligations will be in
short-term (less than one year) securities and may consist of
obligations issued or guaranteed by the United States Government, its
agencies, instrumentalities or authorities; commercial paper rated
Prime-1 by Moody's; certificates of deposit of United States banks
(including commercial banks and savings and loan associations) with
assets of at least $1 billion or more; and repurchase agreements in
respect of any of the foregoing with securities dealers or banks.
-29-
<PAGE>
Where market conditions, due to rising interest rates or other adverse
factors, would cause serious erosion of portfolio value, the Oregon Bond Fund's
assets may, on a temporary basis, as a defensive measure to preserve net asset
value, be substantially invested in temporary investments of the types described
above. There are specific risks involved in investments in municipal
securities, particularly those concentrated among issuers in a specific
geographic location. See "SPECIAL RISK FACTORS TO BE CONSIDERED" in this
Prospectus and "ADDITIONAL INFORMATION REGARDING CERTAIN INVESTMENTS BY THE
FUNDS" in the Statement of Additional Information.
In the last fiscal year, the average percentage of the Oregon Bond Fund's
assets invested in bonds of each rating was:
AAA 58.74% Non-rated 14.60%
AA 18.77% Cash 1.37%
A 6.52%
INVESTMENT RESTRICTIONS
The Oregon Bond Fund has adopted a number of restrictions on the manner in
which its assets may be invested. The investment restrictions and policies of
the Oregon Bond Fund are more fully described under "FUNDAMENTAL POLICIES" in
this Prospectus and in the Statement of Additional Information.
The Oregon Bond Fund's investment restrictions prohibits it from investing
in securities subject to legal or contractual restrictions on resale or in
repurchase agreements with a maturity of more than seven days if, as a result of
such investment, more than 10% of the Oregon Bond Fund's assets would be
invested in illiquid securities, including such agreements. The Oregon Bond
Fund's investment restrictions also prohibit it from investing more than 10% of
total assets in securities of issuers which, with their predecessors, have a
record of less than three years of continuous operation.
DIVIDENDS AND DISTRIBUTIONS
The Oregon Bond 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 income dividends are
accrued through the last business day of each month and are distributed on that
date. If an investor requests redemption of all the shares in the investor's
account at any time during the month, all income dividends declared to the date
of redemption are paid, together with the proceeds of the redemption. There is
a possibility that shareholders may lose the tax-exempt status on the accrued
income of a municipal bond if they redeem their shares before a dividend has
been declared. All income dividends will automatically be reinvested in
additional shares of the Oregon Bond Fund at the
-30-
<PAGE>
net asset value next determined following declaration of such income dividend,
unless an investor has elected to receive dividends in cash.
Net capital gains realized by the Oregon Bond Fund, if any, will be
declared and distributed each December. Capital gains distributions are
reinvested in additional shares of the Fund at the net asset value next
determined following declaration of such capital gains distribution, unless an
investor has notified the Oregon Bond Fund in writing of his election to receive
such distributions in cash.
THE CRABBE HUSON INCOME FUND, INC. is an open-end, diversified regulated
investment company incorporated under the laws of Oregon on August 10, 1988. It
began operations on January 31, 1989.
The Income Fund seeks to provide shareholders a high level of current
income by investing in a diversified portfolio of fixed income securities (such
as bonds and notes of corporate and government issuers) and preferred or
convertible preferred stock while, at the same time, attempting to preserve
capital by varying the overall average maturity of the Income Fund's portfolio.
There are no limitations on the average maturity of the Income Fund's
portfolio. In general, the Income Fund will seek to lengthen the average
maturity of its portfolio as interest rates rise, and will shorten the average
maturity as interest rates decline.
The Income Fund invests in a variety of fixed income securities, including
domestic and foreign corporate bonds, debentures, convertible bonds and
debentures, foreign and U.S. Government securities, preferred and convertible
preferred stock, and short-term money market instruments.
At least 80% of the Income Fund's total assets must be invested in (1) debt
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities; (2) investment-grade debt securities, including convertible
securities and preferred or convertible preferred stock, which are rated "A" or
higher by the major recognized bond services (for a description of ratings, see
Appendix A); or (3) cash and cash equivalents (such as certificates of deposit,
repurchase agreements maturing in one week or less, and bankers' acceptances).
No more than 20% of the Income Fund's total assets may be invested in fixed
income or convertible securities which are rated lower than the fourth highest
grade by Moody's and S&P, and no more than 5% of the Income Fund's total assets
may be invested in unrated fixed income or convertible securities that may be
below investment grade. For a discussion of the fixed income securities and
convertible securities to be held by the Income Fund, see "FUNDAMENTAL POLICIES"
in this Prospectus It should be noted that obligations rated lower than the
fourth highest grade (Baa by Moody's or BBB by S&P), commonly referred to as
"junk bonds," are considered to have risks which make an investment in such
obligations
-31-
<PAGE>
predominantly speculative. See "SPECIAL RISK FACTORS TO BE CONSIDERED" in this
Prospectus.
It should also be noted that changes in interest rates have an inverse
effect on the value of interest-bearing securities such as those the Income Fund
intends to purchase. Any interest rate increase will decrease the value of the
Income Fund's securities, and therefore its total asset value. This effect
typically is more pronounced on securities having longer maturities.
INVESTMENT RESTRICTIONS
Not more than 5% of the Income Fund's total assets can be invested in the
securities of any one issuer, nor can more than 25% of the Income Fund's total
assets be invested in the securities of a single industry (excluding U.S.
Government securities).
Not more than 35% of the Income Fund's total assets may be invested in
foreign securities. See "SPECIAL RISK FACTORS TO BE CONSIDERED" in this
Prospectus. The investment restrictions and policies of the Income Fund are
more fully described under "FUNDAMENTAL POLICIES" in this Prospectus and in the
Statement of Additional Information.
DIVIDENDS AND DISTRIBUTIONS
The Income Fund declares and distributes dividends from its net investment
income on the last business day of each month. All income dividends will
automatically be reinvested in additional shares of the Income Fund at the net
asset value next determined following declaration of such income dividend,
unless an investor has elected to receive such payments in cash.
Net capital gains realized by the Income Fund, if any, will be declared and
distributed each December. Capital gains distributions are reinvested in
additional shares of the Income Fund at the net asset value next determined
following the declaration of such a capital gains distribution, unless an
investor has notified the Income Fund in writing of his election to receive such
distributions in cash.
THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC. is an open-end, diversified
regulated investment company incorporated under the laws of Oregon on August 10,
1988. It began operations on January 31, 1989.
The U.S. Government Income Fund seeks to provide shareholders with a high
level of current income and safety of principal. Shares of the Fund are not
issued or guaranteed by the U.S. Government.
The U.S. Government Income Fund intends to concentrate its investments in
direct obligations of the U.S. Government (treasury bills, treasury notes and
treasury bonds), which are supported by the full faith and credit of the United
States. The U.S. Government Income
-32-
<PAGE>
Fund may also invest in indirect obligations of the U.S. Government which are
debt obligations of various agencies or instrumentalities of the U.S.
Government, such as debt obligations issued by the Government National Mortgage
Association ("GNMA") or the Federal National Mortgage Association ("FNMA"),
which are supported only by the credit of the issuing agency or instrumentality.
Under normal circumstances, at least 65% of the value of the U.S. Government
Income Fund's assets will be invested in these U.S. Government securities.
Certain agency obligations, such as those of GNMA, are subject to prepayment by
the issuer and, therefore, to the risk of loss of any premium paid by the U.S.
Government Income Fund to acquire them. The U.S. Government Income Fund may
invest up to 10% of its total assets in repurchase agreements covering direct
obligations of the U.S. Government.
The U.S. Government Income Fund will generally invest in U.S. Government
securities with maturities of less than five years. The U.S. Government Income
Fund will purchase securities based generally on the Adviser's assessment of
interest rate trends. If the Adviser expects interest rates to rise, the U.S.
Government Income Fund may purchase securities with shorter maturities.
Conversely, if interest rates are expected to decline, the U.S. Government
Income Fund may purchase securities with longer maturities.
It should be noted that changes in interest rates have an inverse effect on
the value of interest-bearing securities such as those the U.S. Government
Income Fund intends to purchase. Any interest rate increase will result in a
decrease in the value of the U.S. Government Income Fund's securities, and
therefore in the U.S. Government Income Fund's total asset value. This effect
typically is more pronounced on securities having longer maturities.
INVESTMENT RESTRICTIONS
The investment restrictions and policies of the U.S. Government Income Fund
are more fully described under "FUNDAMENTAL POLICIES" in this Prospectus and in
the Statement of Additional Information. These restrictions include, but are
not limited to, limiting the portion of the portfolio which may be invested in
government securities with maturities of more than five years to 25% of total
assets.
DIVIDENDS AND DISTRIBUTIONS
The U.S. Government Income Fund declares and distributes dividends from its
net investment income on the last business day of each month. All income
dividends will automatically be reinvested in additional shares of the U.S.
Government Income Fund at the net asset value next determined following
declaration of such income dividend, unless an investor has elected to receive
such payments in cash.
Net capital gains realized by the Fund, if any, will be declared and
distributed each December. Capital gains distributions are reinvested in
additional shares of the U.S. Government Income Fund at the net asset value next
determined following
-33-
<PAGE>
declaration of such capital gains distribution, unless an investor has notified
the U.S. Government Income Fund in writing of his election to receive such
distributions in cash.
THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC. is an open-end,
diversified regulated investment company incorporated under the laws of Oregon
on August 10, 1988. It began operations on January 31, 1989.
The U.S. Government Money Market Fund is designed to provide investors with
a high level of current income while, at the same time, preserving capital and
allowing liquidity by investing in direct or indirect debt obligations of the
United States Government, or its agencies or instrumentalities, and repurchase
agreements with respect to those obligations. Shares of the U.S. Government
Money Market Fund are not issued or guaranteed by the U.S. Government. It is
the U.S. Government Money Market Fund's intent to maintain a constant one dollar
per share net asset value, but there is no assurance the Fund will be able to do
so.
The dollar weighted, average maturity of the U.S. Government Money Market
Fund's portfolio may not exceed 90 days. The U.S. Government Money Market Fund
intends to hold most of the securities in its portfolio until maturity.
However, securities may be traded if, in the opinion of the Adviser, increases
in current income can be achieved consistent with the objectives and
restrictions of the U.S. Government Money Market Fund.
To achieve its objective, the U.S. Government Money Market Fund invests in
short-term money market instruments that are direct or indirect obligations of
the U.S. Government and obligations of various agencies or instrumentalities of
the U.S. Government, such as obligations issued by GNMA or FNMA. Direct
obligations of the U.S. Government are supported by the full faith and credit of
the United States, while obligations of instrumentalities or agencies of the
U.S. Government are generally supported only by the credit of the issuing agency
or instrumentality.
The U.S. Government Money Market Fund intends to invest in treasury bills
which mature within one year of the time of issuance. Historically, these
securities have involved no risk of loss of principal if held to maturity.
Between issuance and maturity, however, the prices of these securities change in
response to changes in market interest rates. Coupon-bearing securities
generate current interest payments, and part of the U.S. Government Money Market
Fund's portfolio return may come from reinvesting interest earned on these
securities.
The U.S. Government Money Market Fund also intends to invest in zero-coupon
securities. Zero-coupon securities can either be direct or indirect obligations
of the U.S. Government. Zero-coupon U.S. Treasury securities are the unmatured
interest coupons and underlying principal portions of U.S. Treasury bonds.
Originally, these securities were created by broker-dealers who bought Treasury
bonds and deposited these securities with a custodian bank. The broker-dealers
then sold receipts representing ownership interests in the coupons or principal
portions of the bonds. Some examples of zero-coupon securities sold through
-34-
<PAGE>
custodial receipt programs are CATS (Certificates of Accrual on Treasury
Securities), TIGRs (Treasury Investment Growth Receipts), and generic Trs
(Treasury Receipts).
The U.S. Treasury subsequently introduced its own form of zero-coupon
securities called Separate Trading of Registered Interest and Principal of
Securities (STRIPS), through which it exchanges eligible securities for their
component parts and then allows the component parts to trade in book-entry form.
(Book-entry trading eliminates the bank credit risks associated with broker-
dealer sponsored custodial receipt programs.) STRIPS are direct obligations of
the U.S. government and have the same credit risks as other U.S. Treasury
securities.
Principal and interest on bonds issued by the Resolution Funding
Corporation have also been separated and issued as zero-coupon securities. The
U.S. Government and its agencies may issue securities in zero-coupon form.
These securities are referred to as "original issue zero-coupon securities."
INVESTMENT RESTRICTIONS
The investment restrictions and policies of the U.S. Government Money
Market Fund are more fully described under "FUNDAMENTAL POLICIES" and in the
Statement of Additional Information. These restrictions include the prohibition
of purchasing any securities with a maturity greater than one year.
DIVIDENDS AND DISTRIBUTIONS
The U.S. Government 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. All income dividends will automatically be
reinvested in additional shares of the U.S. Government Money Market Fund at the
net asset value next determined following declaration of such income dividend.
Since the U.S. Government Money Market Fund intends to maintain a constant
one dollar per share net asset value, it does not anticipate the declaration of
capital gains distributions.
FUNDAMENTAL POLICIES
The Funds have adopted a number of fundamental investment policies and
restrictions which may not be changed without a vote of the holders of "a
majority of the voting shares" of a particular Fund, as defined in the 1940 Act.
For a listing of additional policies, see "INVESTMENT RESTRICTIONS" in the
Statement of Additional Information.
ISSUER AND INDUSTRY RESTRICTIONS. The Funds' investment restrictions
(except for those of the Real Estate Fund and the Oregon Bond Fund) include a
prohibition on investing more
-35-
<PAGE>
than 5% of the total assets of any Fund (at the time of the purchase) in the
securities of any one issuer. The Real Estate Fund's investment restrictions
include a prohibition with respect to at least 75% of its total assets from
investing in individual issuers in which it has invested 5% of the value of its
total assets, or investing in more than 10% of the outstanding voting securities
of a single issuer. These policies, however, do not include investments in U.S.
Government securities. Each Fund (except the Real Estate Fund) is also
prohibited from investing more than 25% of its total assets in any one industry.
BORROWING RESTRICTIONS. Each Fund may borrow up to one-third of the value
of its total assets, although each Fund, except the Special Fund, can only
borrow in case of emergency. Further, each Fund (except the Special Fund) is
prohibited from purchasing securities when the total borrowings of the Fund
exceed 5% of the total assets.
FIXED INCOME SECURITIES. The Funds that intend to invest in fixed income
securities on a regular basis (the Asset Allocation, Income, and U.S. Government
Income Funds) will generally invest 80% or more of any assets being invested in
such securities in investment grade securities (those rated BBB or Baa or higher
by Moody's or S&P). The Real Estate Fund may invest in debt securities
(including convertible debt securities of real estate industry companies), but
it does not intend to invest any of its assets in debt securities that are
unrated or that are rated below Baa by Moody's or BBB by S&P. In the event a
debt security purchased by the Real Estate Fund is subsequently downgraded below
Baa by Moody's or BBB by S&P, the Adviser will consider whether the Real Estate
Fund should continue to hold the security. No Fund (other than the Oregon Bond
Fund) may invest more than 20% of its total assets in fixed income securities
that are either unrated or are rated less than Baa by Moody's or BBB by S&P, or
in commercial paper that is rated less than B-1 by Moody's or A- by S&P; not
more than 5% of a Fund's total assets may be invested in fixed income securities
that are unrated (including convertible stock). Securities rated Baa by Moody's
or BBB by S&P are considered medium-grade, neither highly protected nor poorly
secured, and they may contain some elements of uncertainty over any great length
of time and may have certain speculative characteristics. Securities rated
below the fourth highest grade, commonly referred to as "junk bonds," and
unrated securities (if the Adviser has deemed these securities to be of a
similar credit quality as those securities rated below the fourth highest grade)
must be considered predominantly speculative in nature and subject to a
significant risk of default as to payments of either principal or interest, or
both. Due to its unique nature of maintaining a stable net asset value, the
fixed income securities selected by the U.S. Government Money Market Fund must
have received the highest rating (Aaa by Moody's and AAA by S&P) from a least
two rating agencies (or one if only one has rated the obligation) or have
similar credit characteristics if not rated by either of these services. Most
of the instruments issued by Federal Farm Credit Agency, The Federal Home Loan
Bank and similar agencies are not rated but are believed to be of similar credit
quality. A description of the ratings assigned to securities by Moody's and S&P
is attached as Appendix A.
Funds that are permitted to purchase cash equivalents, bank obligations,
and money market instruments will apply the same investment criteria to these
instruments as are applied
-36-
<PAGE>
to fixed income securities. Bank obligations will be purchased only with
respect to banks: (1) that have total assets in excess of one billion dollars;
(2) that are rated A or better by either Moody's or S&P (AA or better with
respect to purchases made by the U.S. Government Money Market Fund); or (3)
whose deposits are insured by the Federal Depository Insurance Corporation.
Each Fund will only invest in securities permitted by the SEC.
WHEN ISSUED AND/OR DELAYED DELIVERY. All of the Funds may purchase and
sell securities on a when-issued and/or delayed-delivery basis. When-issued or
delayed-delivery transactions arise when securities are purchased or sold by a
Fund, with payment and delivery taking place in the future in order to secure
what is considered to be an advantageous price and yield to the Fund at the time
of entering into the transaction. When-issued securities are subject to market
fluctuations, and no interest accrues to a Fund until the time of delivery. The
value of the securities may be less at the time of delivery than the value of
the securities when the commitment was made. When a Fund engages in when-issued
and delayed-delivery transactions, it relies on the buyer or seller, as the case
may be, to consummate the sale. Failure to do so may result in the Fund missing
the opportunity of obtaining a price or yield considered to be advantageous. To
the extent any Fund engages in when-issued and delayed-delivery transactions, it
will do so for the purpose of acquiring portfolio securities consistent with its
investment objectives and policies, and not for the purpose of investment
leverage. No Fund may commit more than 25% of its total assets to the purchase
of when-issued and delayed-delivery securities.
ILLIQUID SECURITIES. No Fund may invest more than 10% of its total assets
in illiquid securities such as repurchase agreements with a maturity in excess
of seven days (other than the Real Estate Fund, which may invest up to 15% of
its total assets in such securities). All Funds are permitted to engage in
repurchase agreements. Repurchase agreements are agreements under which a
person purchases a security and simultaneously commits to resell that security
to the seller (a commercial bank or recognized securities dealer) at an agreed
upon price on an agreed upon date within a number of days (usually not more than
seven) from the date of purchase. The resale price reflects the purchase price
plus an agreed upon market rate of interest that is unrelated to the coupon rate
or maturity of the purchased security. A Fund will engage in repurchase
agreements only with banks or broker-dealers whose obligations would qualify for
direct purchase by that Fund. A repurchase agreement involves the obligation of
the seller to pay an agreed-upon price, which obligation is, in effect, secured
by the value of the underlying security. All repurchase agreements are fully
collateralized and marked to market daily, and may therefore be viewed by the
SEC or the courts as loans collateralized by the underlying security. There are
some risks associated with repurchase agreements. For instance, in the case of
default by the seller, the Fund could incur a loss or, if bankruptcy proceedings
are commenced against the seller, the Fund could incur costs and delays in
realizing upon the collateral.
PUT, CALL OPTIONS. The Special, Real Estate, Equity, Asset Allocation and
Income Funds may invest up to 10% of their total assets in put or call options.
These Funds may write call options on securities they own or have the right to
acquire, and may purchase put and call
-37-
<PAGE>
options on individual securities written by others. No Fund may write an
uncovered put or uncovered call option. Purchasing put or call options involves
greater risks than buying the underlying security because put and call options
expire in a relatively short period of time, which may result in the loss of the
entire investment in the put or call option upon expiration. In addition, if a
Fund writes a covered call option, that Fund may give up some or all of its
opportunity to profit from an increase in the market price of the underlying
security.
INTEREST RATE, STOCK MARKET FUTURES. The Special, Real Estate, Equity,
Asset Allocation and Income Funds may invest up to 10% of their total assets in
interest rate futures, and the Special, Real Estate, Equity and Asset Allocation
Funds may invest up to 10% of their total assets in stock market index futures
(other than over the counter). These Funds may invest in futures for hedging,
rather than investment purposes and may either purchase or sell futures for
hedging purposes. Investments in futures, like purchases of put or call
options, involve a greater risk of loss of the entire investment upon expiration
than purchases of securities. Investments in futures and options are
particularly dependent on the Adviser's ability to accurately predict future
yields and prices. If the Adviser is incorrect in its predictions, if a Fund's
positions are not well correlated to the securities being hedged, or if a Fund
is unable to close out a position due to an illiquid secondary market, the Fund
will be exposed to the risk of loss of the entire investment.
When required by SEC guidelines, each Fund that invests in options, futures
or repurchase agreements, or purchases or sells securities on a when-issued or
delayed-delivery basis, will set aside liquid assets in a segregated account
with the Funds' custodian to secure its potential obligations under those
instruments or agreements.
OTHER INVESTMENT COMPANIES. Each of the Funds other than the U.S.
Government Income Fund and the U.S. Government Money Market Fund may invest in
the securities of other registered investment companies under the circumstances
described under "SECURITIES OF OTHER INVESTMENT COMPANIES" in the Statement of
Additional Information, and to the extent permitted under Section 12 of the 1940
Act (currently, no more than 10% of the total assets of a Fund may be so
invested, no more than 5% of total assets of a Fund may be invested in the
securities of any other single investment company, and no more than 3% of the
total outstanding voting stock of an investment company may be purchased).
Investments in the securities of other registered investment companies are or
may be subject to duplicate expenses resulting from the management of the
portfolio investment company as well as those of the acquiring Fund.
FUNDAMENTAL INVESTMENT POLICY OF REAL ESTATE FUND. Under normal
circumstances, the Real Estate Fund intends to invest at least 75% of its total
assets in equity securities of REITs and other real estate industry companies;
under all circumstances, at least 25% of the Fund's total assets will be
invested in such securities. The Real Estate Fund cannot underwrite securities
issued by other persons.
-38-
<PAGE>
SPECIAL RISK FACTORS TO BE CONSIDERED
Each of the Funds has a different investment objective. However, there can
be no guarantee or assurance that any of the Funds' investment objectives can or
will be met. Each of the Funds is responsible and may be held liable for any
material misstatement, inaccuracy or incomplete disclosure in this Prospectus,
and the registration statement of which it is part, concerning any of the Funds.
Investments of the Funds may involve additional risk, as the Funds may invest in
securities of issuers of which the officers and directors, as a group, may own
beneficially more than five percent of the securities of that issuer.
LIMITED OPERATING HISTORY OF REAL ESTATE FUND. The Real Estate Fund began
operations on April 4, 1994, and has a limited operating history.
FOREIGN SECURITIES. Four of the Funds (the Special, Equity, Asset
Allocation and Income Funds) may invest up to 35% of their total assets in
foreign securities, including securities issued by any foreign government. Such
securities may or may not be listed on a recognized domestic or foreign
exchange. Moreover, investments in foreign securities may be subject to
special, extraordinary risks including, but not limited to, foreign taxes and
restrictions, illiquidity, and fluctuations in currency values. In addition,
the financial information available regarding issuers of foreign debt securities
is frequently not as accurate or complete as would be available for a comparable
domestic issuer. See "SPECIAL INVESTMENT RISKS" in the Statement of Additional
Information.
STRIPPED SECURITIES. The U.S. Government Money Market Fund may invest in
indirect obligations of the U.S. Government, often called "stripped securities."
Such indirect obligations are derivatives of direct U.S. Government obligations.
Stripped securities are issued at a discount to their face value and generally
experience greater price volatility than ordinary debt securities because of the
manner in which the principal and interest components of the underlying U.S.
Government obligation are separated. Privately-stripped securities are not
directly issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, and are therefore not Government Securities as defined in the
1940 Act.
LEVERAGE. The Special Fund may, from time to time, use borrowed money to
increase its portfolio positions. This practice is known as leverage, and it
can cause the net asset value of Fund shares to increase or decrease in value
more dramatically than would otherwise be the case.
RESTRICTED SECURITIES. The Real Estate Fund and The Oregon Bond Fund may
invest up to 5% of its total assets in "restricted securities" (i.e., securities
that would be required to be registered prior to distribution to the public),
excluding restricted securities eligible for resale to certain institutional
investors pursuant to Rule 144A of the Securities Act of 1933. However, no more
than 15% of the Fund's total assets may be invested in restricted securities,
including securities eligible for resale under Rule 144A. In addition, the Real
Estate Fund may invest up to 15% of its net assets in illiquid investments,
which includes "restricted securities,"
-39-
<PAGE>
securities that are not readily marketable, repurchase agreements maturing in
more than seven days and privately issued stripped mortgage-backed securities
("SMBS") (based upon a determination by the Board that the SMBS is illiquid).
The Board of Directors may adopt guidelines and delegate to the Adviser the
daily function of determining and monitoring the liquidity of restricted
securities. The Board, however, will retain sufficient oversight and be
ultimately responsible for the determinations. In determining whether a
security, including a SMBS, is liquid, the Board shall consider whether the
security can be disposed of promptly in the ordinary course of business at a
value reasonably close to that used in the calculation of the net asset value
per share.
Since it is not possible to predict with assurance exactly how the market
for restricted securities sold and offered under Rule 144A will develop, the
Board will carefully monitor the Real Estate Fund's investments in these
securities, focusing on such important factors, among others, as valuation,
liquidity and availability of information. This investment practice could have
the effect of increasing the level of illiquidity in the Fund to the extent that
qualified institutional buyers become for a time uninterested in purchasing
these restricted securities.
PUT, CALL OPTIONS, STOCK INDEX FUTURES. The Special, Real Estate, Equity
and Asset Allocation Funds may invest up to 10% of their total assets in put or
call options and widely traded stock index futures, or write call options on
securities the Fund owns or has the right to acquire, or purchase interest rate
futures. The Income Fund may also invest up to 10% of its total assets in put
or call options, or write call options on securities the Fund owns or has the
right to acquire, or purchase interest rate futures. The purchase of any of
these instruments can result in the entire loss of 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. The Funds cannot write
uncovered put or call options.
FIXED INCOME SECURITIES. The Special, Equity, Asset Allocation, Income,
U.S. Government Income, and U.S. Government Money Market Funds may invest up to
20% of their total assets in fixed income securities, including convertible
securities, that are either unrated or rated below the fourth highest category
by Moody's or S&P. Not more than 5% of a Fund's total assets may be invested in
fixed income securities that are unrated. Such high-yielding, lower-rated
securities present higher risk of untimely interest and principal payments,
default, and price volatility than higher-rated securities, and may present
problems as to liquidity and valuation. The value of such securities will vary
inversely with interest rates, and their value will tend to reflect short-term
economic and corporate developments to a greater extent than higher quality
fixed income securities.
INVESTMENT IN REAL ESTATE EQUITY SECURITIES. The Real Estate Fund does not
invest directly in real estate, but does invest primarily in Real Estate Equity
Securities. Therefore, an investment in the Fund may be subject to certain
risks associated with the direct ownership of real estate. These risks include,
among others: possible declines in the value of real estate; risks related to
general and local economic conditions; possible lack of availability of mortgage
funds; overbuilding; extended vacancies of properties; increases in competition;
property taxes
-40-
<PAGE>
and operating expenses; changes in zoning laws; costs resulting from the clean-
up of, and liability to third parties for damages resulting from, environmental
problems; casualty or condemnation losses; uninsured damages from floods,
earthquakes or other natural disasters; limitations on and variations in rents;
and changes in interest rates.
INVESTMENT IN REITS. The Real Estate, Special, Equity and Asset Allocation
Funds may invest in real estate investment trusts. For the Special, Equity and
Asset Allocation Funds, such an investment would be limited by each Funds'
restriction prohibiting it from investing more than 25% of its total assets in
any one industry. The Real Estate Fund may invest without limitation in shares
of REITs. REITs are pooled investment vehicles that invest primarily in income
producing real estate or real estate related loans or interests. REITs are
generally classified as equity REITs, mortgage REITs or a combination of equity
and mortgage REITs. Equity REITs invest the majority of their assets directly
in real property and derive income primarily from the collection of rents.
Equity REITs can also realize capital gains by selling properties that have
appreciated in value. Mortgage REITs invest the majority of their assets in
real estate mortgages and derive income from the collection of interest
payments. For federal income tax purposes, REITs attempt to qualify for
beneficial tax treatment by distributing 95% of their taxable income. If a REIT
is unable to qualify for such beneficial tax treatment, it would be taxed as a
corporation and distributions to its shareholders would therefore be reduced.
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. Equity REITs
may be affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. All REITs are dependent upon management skills, are not diversified,
and are subject to the risks of financing projects. REITs are subject to heavy
cash flow dependency, default by borrowers, self-liquidation, and the
possibilities of failing to qualify for the exemption from tax for distributed
income under the Internal Revenue Code of 1986, as amended (the "Code") and
failing to maintain their exemptions from the 1940 Act.
MORTGAGE-BACKED SECURITIES. The Real Estate Fund may invest up to 25% of
its total assets in mortgage pass-through certificates and multiple-class pass-
through securities, such as REMIC pass-through certificates, CMOs and SMBS, and
other types of mortgage-backed securities that may be available in the future
(collectively, "Mortgage-Backed Securities").
Mortgage pass-through securities represent participation interests in pools
of residential mortgage loans. They are issued by U.S. Governmental or private
lenders and guaranteed by the U.S. Government or one of its agencies or
instrumentalities, including but not limited to the GNMA, the FNMA and the
Federal Home Loan Mortgage Corporation ("Freddie Mac"). They are also issued by
private lenders. GNMA certificates are guaranteed by the full faith and credit
of the United States Government for timely payment of principal and interest on
the certificates. FNMA certificates are guaranteed by the FNMA, a federally
chartered and privately-owned corporation, for full and timely payment of
principal and interest on the
-41-
<PAGE>
certificates. Freddie Mac certificates are guaranteed by Freddie Mac, a
corporate instrumentality of the United States Government, for timely payment of
interest and the ultimate collection of all principal of the related mortgage
loans.
CMOs and REMIC pass-through or participation certificates may be issued by,
among others, U.S. Government agencies and instrumentalities. CMOs and REMIC
certificates are issued in multiple classes, and the principal of and interest
on the mortgage assets may be allocated among the several classes of CMOs or
REMIC certificates in various ways. Each class of CMOs or REMIC certificates,
often referred to as a "tranche," is issued at a specific adjustable or fixed
interest rate and must be fully retired no later than its final distribution
date. Generally, interest is paid or accrues on all classes of CMOs or REMIC
certificates on a monthly basis.
Typically, CMOs are collateralized by GNMA, FNMA or Freddie Mac
certificates, but they also may be collateralized by other mortgage assets such
as whole loans or private mortgage pass-through securities. Debt service on
CMOs is provided from payments of principal and interest on collateral of
mortgaged assets and any reinvestment income thereon.
REMICs are CMOs that qualify for special tax treatment under the Code, and
they invest in certain mortgages primarily secured by interests in real property
and other permitted investments. Investors may purchase "regular" and
"residual" interest shares of beneficial interest in REMIC trusts, although the
Fund does not intend to invest in residual interests.
SMBS are derivative multiple-class mortgage-backed securities. SMBS are
usually structured with two classes that receive different proportions of
interest and principal distributions on a pool of mortgage assets. A typical
SMBS will have one class receiving some of the interest and most of the
principal, while the other class will receive most of the interest and the
remaining principal. In the most extreme case, one class will receive all of
the interest (the "interest only" class), while the other class will receive all
of the principal (the "principal only" class).
Investing in Mortgage-Backed Securities involves certain unique risks in
addition to those risks associated with investing in the real estate industry in
general. These risks include the failure of a counter-party to meet its
commitments, adverse interest rate changes and the effects of prepayment on
mortgage cash flows. In addition, investing in the lowest tranche of CMOs and
REMIC certificates involves risks similar to those associated with investing in
equity securities. When interest rates decline, the value of an investment in
fixed rate obligations can be expected to rise. Conversely, when interest rates
rise, the value of an investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on investments in such loans will gradually align
themselves to reflect changes in market interest rates, causing the value of
such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
-42-
<PAGE>
Further, the yield characteristics of Mortgage-Backed Securities, such as
those in which the Fund may invest, differ from those of traditional fixed
income securities. The major differences typically include more frequent
interest and principal payments (usually monthly), the adjustability of interest
rates, and the possibility that prepayments of principal may be made
substantially earlier than their final distribution dates.
Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social and other factors, and cannot be
predicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment, and to a lesser rate of principal
prepayments in an increasing interest rate environment. Under certain interest
rate and prepayment rate scenarios, the Fund may fail to recoup fully its
investment in Mortgage-Backed Securities, notwithstanding any direct or indirect
governmental or agency guarantee. When the Fund reinvests amounts representing
payments and unscheduled prepayments of principal, it may receive a rate of
interest that is lower than the rate on existing adjustable rate mortgage pass-
through securities. Thus, Mortgage-Backed Securities, and adjustable rate
mortgage pass-through securities in particular, may be less effective than other
types of U.S. Government securities as a means of "locking in" interest rates.
SHORT SALES. The Special Fund intends from time to time to sell securities
short. A short sale is effected when it is believed that the price of a
particular security will decline, and involves the sale of a security which the
Fund does not own in the hope of purchasing the same security at a later date at
a lower price. To make delivery to the buyer, the Special Fund must borrow the
security. The Fund is then obligated to return the security to the lender, and
therefore it must subsequently purchase the same security.
When the Special Fund makes a short sale, it must leave the proceeds from
the short sale with the broker, and it must deposit with the broker a certain
amount of cash or government securities to collateralize its obligation to
replace the borrowed securities which have been sold. In addition, the Fund
must put in a segregated account (with the Fund's custodian) an amount of cash
or U.S. Government securities equal to the difference between the market value
of the securities sold short at the time they were sold short and any cash or
government securities deposited as collateral with the broker in connection with
the short sale (not including the proceeds from the short sale). Furthermore,
until the Fund replaces the borrowed security, it must daily maintain the
segregated account at a level so that (1) the amount deposited in it plus the
amount deposited with the broker (not including the proceeds from the short
sale) will equal the current market value of the securities sold short, (2) the
amount deposited in it plus the amount deposited with the broker (not including
the proceeds from the short sale) will not be less than the market value of the
securities at the time they were sold short. As a result of these requirements,
the Special Fund will not gain any leverage merely by selling short, except to
the extent that it earns interest on the immobilized cash or government
securities while also being subject to the possibility of gain or loss from the
securities sold short. The amount of the Fund's net assets that will at any
time be in the type of deposits described above (that is, collateral deposits or
segregated accounts) will not exceed
-43-
<PAGE>
25%. These deposits do not have the effect of limiting the amount of money that
the Fund may lose on a short sale, as the Fund's possible losses may exceed the
total amount of deposits.
The Special Fund will incur a loss as a result of a short sale if the price
of a security sold short increases between the date of the short sale and the
date on which the Fund purchases a security to replace the borrowed security.
The Special Fund will realize a gain if the security declines in price between
those dates. The amount of any gain will be decreased and the amount of any
loss increased by any premium or interest that the Fund may be required to pay
in connection with a short sale. It should be noted that possible losses from
short sales differ from those that could arise from a cash investment in a
security in that the former may be limitless, while the latter cannot exceed the
total amount of the Fund's investment in the security. For example, if the Fund
purchases a $10 security, potential loss is limited to $10. However, if the
Fund sells a $10 security short, it may have to purchase the security for return
to the lender when the market value of that security is $50, thereby incurring a
loss of $40.
The Special, Real Estate, Equity, and Asset Allocation Fund may also engage
in short sales "against the box." While a short sale is made by selling a
security the Special Fund does not own, a short sale is "against the box" to the
extent that the Fund contemporaneously owns or has the right to obtain at no
added cost securities identical to those sold short.
MUNICIPAL SECURITIES. Because the Oregon Bond Fund intends to focus its
investments in Oregon municipal securities, the Fund and the value of its shares
will be significantly affected by any economic, political, or regulatory
developments that affect the ability of Oregon issuers to pay interest or repay
principal on their obligations. Historically, the Oregon economy has been
highly dependent on the recession-sensitive forest products industry. Recently
proposed federal administrative action that would impose restrictions on the
level of timber harvests on federal and private lands, if adopted, and the
application of the Endangered Species Act could have a general negative economic
effect, particularly in those counties that receive significant direct revenues
based on timber harvests. These proposed actions, and the application of the
Endangered Species Act, are currently the subject of litigation, and the outcome
is unknown.
Certain municipal securities purchased by the Oregon Bond Fund from Oregon
issuers may rely in whole or in part on ad valorem real property taxes as a
source of revenue for the payment of principal and interest. There are
constitutional and statutory limitations on the issuance of securities payable
from tax revenues. In 1990, a voter initiative in Oregon was passed which
restricts the ability of taxing entities to increase real property taxes by
placing a limit on the property tax rate. This initiative did, however, exempt
from the property tax rate limit assessments to pay bonded indebtedness.
However, implementation of this limit may adversely impact the property tax
revenues of certain issuers of Oregon municipal securities and might have an
adverse effect on the market value and marketability of some of the municipal
securities (other than general obligation bonds) held in the Fund's portfolio,
the Fund's net asset value per share, and the interest income realized by the
Fund.
-44-
<PAGE>
NONDIVERSIFIED PORTFOLIO; TRADING MARKET FOR PORTFOLIO SECURITIES. The
Oregon Bond Fund is a nondiversified investment company, meaning that it is not
subject to the provisions of the 1940 Act with respect to diversification of its
investments. However, as a matter of fundamental policy, the Fund will not (1)
invest more than 25% of its total assets in the securities of any one issuer, or
(2) with respect to at least 50% of its total assets, invest in individual
issuers (excluding United States Government securities) in which it has invested
5% of the value of its total assets. For purposes of these limitations, each
governmental subdivision (i.e., state, territory or possession of the United
States or any political subdivision of any of the foregoing, including agencies,
authorities, instrumentalities or similar entities) will be considered a
separate issuer if its assets and revenues are separate from those of the
government body creating it and if the securities are backed only by its own
assets and revenues. In the case of a private activity bond, if the security is
backed only by the assets and revenues of a nongovernmental user, then such
nongovernmental user will be deemed to be the sole issuer. However, if a
private activity bond or governmental issue is guaranteed by a governmental or
some other entity, such guarantee will be considered a separate security issued
by the guarantor as well as the nongovernmental user, subject to limited
exclusions allowed by the 1940 Act.
Because the Fund's "nondiversified status" permits the investment of a
greater portion of the Fund's assets in the securities of individual issuers
than would be permissible under a "diversified status," the Fund's shareholders
are considered to be subject to a greater degree of risk. The Fund reserves the
right to operate as a diversified investment company if such a course appears
desirable in the opinion of the Board of Directors; in that event, 75% of the
Fund's total assets would have to be invested in securities issued by entities
in which the Fund had not invested 5% or more of its total assets.
With the exception of general obligation securities issued by the state of
Oregon, most issues of municipal securities in Oregon are relatively small in
size. Due to the small size of some issues, only a limited trading market in
the securities develops following their issuance. When there is only a limited
trading market for a particular security, a small change in the supply of or
demand for that security can result in a relatively large change in the market
price of the security. If the Oregon Bond Fund is required to sell portfolio
securities for which there is only a limited trading market, the market value of
such securities (and of securities which are part of the same issue which are
retained in the Fund's portfolio) could be adversely affected, which could
result in a decrease in the net asset value of the Fund's shares. In order to
enhance the liquidity of the Fund's portfolio, a portion of its assets will be
maintained in general obligation securities of the state of Oregon and in other
issues for which an active trading market is expected to be maintained. The
Fund expects that approximately 25% of its net assets will normally be invested
in general obligation securities of the state of Oregon. A portion of the
Oregon Bond Fund's assets may also be invested, on a temporary basis, in assets
other than municipal securities in order to increase the liquidity of the Fund's
portfolio. However, there is no assurance that these strategies will completely
eliminate the risks associated with investing in municipal securities for which
only a limited trading market exists.
-45-
<PAGE>
MANAGEMENT OF THE FUNDS
The Funds are managed by their Boards of Directors, and all powers and
authorities are exercised by or under the direction of the Boards of Directors.
The Adviser is the investment adviser to the funds under investment
advisory agreements originally dated September 27, 1988 for the Special, Equity
and Oregon Bond Funds, August 7, 1988 for the Asset Allocation, Income, U.S.
Government Income and U.S. Government Money Market Funds and March 4, 1994 for
the Real Estate Fund. The Adviser was incorporated in 1980 and has been engaged
in the business of providing investment advice since July 1, 1980. The address
of the Adviser is 121 S.W. Morrison, Suite 1415, Portland, Oregon 97204, mailing
address: P.O. Box 6559, Portland, Oregon 97228-6559. The Distributor of the
Funds, is affiliated with the Adviser.
James E. Crabbe and Richard S. Huson are controlling shareholders of the
Adviser. Together, they own 100% of the stock of the Distributor of the Funds.
James E. Crabbe and Richard S. Huson are primarily responsible for the day-
to-day management of the Adviser. Mr. Crabbe is President and a Director of the
Adviser and Mr. Huson is Secretary and a Director. Mr. Crabbe and Mr. Huson
have been primarily responsible since the inception of the Adviser. Both Mr.
Crabbe and Mr. Huson have served in various management positions with the
Adviser since 1980.
Each Fund pays the Adviser a fee for its services that accrues daily and is
payable monthly. Fees are based on a percentage of the average daily net assets
of each Fund, as set forth below:
SPECIAL FUND
REAL ESTATE FUND
EQUITY FUND
ASSET ALLOCATION FUND
Net Asset Value Annual Rate
--------------- -----------
First $100 million 1.00%
Next $400 million 0.85%
Amounts over $500 million 0.60%
-46-
<PAGE>
INCOME FUND
First $100 million 0.75%
Next $400 million 0.60%
Amounts over $500 million 0.50%
OREGON BOND FUND
U.S. GOVERNMENT INCOME FUND
U.S. GOVERNMENT MONEY MARKET FUND
First $500 million 0.50%
Next $500 million 0.45%
Amounts over $1 billion 0.40%
Fees paid by the Special, Real Estate, Equity, Asset Allocation and Income Funds
are higher than those paid by most other mutual funds, although the fees charged
by these Funds are comparable to mutual funds with similar objectives and
policies. The Adviser has undertaken to reimburse a Fund or to waive all or a
portion of its management fee to the extent that the total operating expenses
exceed a stated percentage per annum of a Fund's net asset value in effect with
respect to each Fund. This undertaking may be canceled upon 30 days written
notice. Additionally, many states require that mutual funds meet certain
expense limitations. The Funds, their Adviser, Distributor, and Transfer Agent
intend to qualify, meet, or conform to any individual state requirements while
the Funds are registered in that state.
On September 6, 1995, the shareholders of the Real Estate Fund approved a
Subadvisory Agreement among the Adviser, the Real Estate Fund and Aldrich,
Eastman & Waltch, L.P. ("AEW"). Pursuant to the Subadvisory Agreement, AEW will
be responsible for the day-to-day investment management of the Real Estate Fund,
subject to the overall supervision of the Adviser and the Real Estate Fund's
Board of Directors.
AEW is a registered investment adviser founded in 1981. AEW is dedicated
exclusively to building and managing real estate investment portfolio for
institutional investors. AEW currently manages approximately $4.4 billion in
assets.
The general partner of AEW is AEW Holdings L.P. ("AEW Holdings"). The
general partner of AEW Holdings is Aldrich, Eastman & Waltch, Inc. ("AEW INC").
The Shareholders of AEW INC include certain current and former executive
employees of AEW. AEW's business address is 225 Franklin Street, Boston, MA
02110-2803.
As compensation for its services, the Adviser will pay to AEW, at the end
of each calendar month, a fee equal to the greater of (a) 37.5% of one percent
of the average daily net asset value of the Fund (the "ADNAV") up to the first
$100 million of net asset value, 31.88% of one percent of the ADNAV for the next
$400 million of net asset value, and 22.5% of one percent of the ADNAV for
amounts in excess of $500 million of net asset value, or (b) 50% of
-47-
<PAGE>
the actual fees paid by the Fund to the Adviser. The fee paid by the Adviser
will not increase any of the fees incurred by the Fund, and will not affect the
Adviser's agreement, terminable on 30 days' notice, to waive certain of its fees
and/or reimburse expenses.
The Funds' Distributor pays the marketing expenses of the Funds. A certain
portion of these expenses may be borne by the Funds under a distribution plan
adopted pursuant to Rule 12b-1 under the 1940 Act. See "HOW TO INVEST IN THE
FUNDS" in this Prospectus. The Funds bear all other expenses incurred in their
operation as they are incurred, other than those assumed by the Adviser or
Distributor.
Management of the Special Fund portfolio is handled on a day-to-day basis
by a team consisting of James E. Crabbe and John W. Johnson. Mr. Crabbe is
coordinator of the team. Mr. Crabbe has served in various management positions
with the Adviser since 1980. Mr. Crabbe has managed the Special Fund's
portfolio since January 1, 1990. Prior to joining the Adviser, Mr. Johnson was
a private investment banker from November, 1991 to May, 1995. Between August,
1988 and November 1991, Mr. Johnson was Director of Equity Investments for
Kennedy Associates.
The Oregon Bond, Income, U.S. Government Income and U.S. Government Money
Market Funds are managed on a day to day basis by a team consisting of Mr. Huson
and Garth R. Nesbit. Mr. Huson is the coordinator of the team. Mr. Nesbit
joined the Adviser in April, 1995. Between February, 1993 and March, 1995 Mr.
Nesbit worked for Capital Consultants, Inc. as a portfolio manager of its fixed
income portfolio. Prior to joining Capital Consultants, Inc., Mr. Nesbit was a
Vice President and the fixed income portfolio manager at Lincoln National
Investment Management.
The Equity and Asset Allocation Fund portfolios are managed on a day-to-day
basis by a team consisting of John E. Maack, Jr., Marian Kessler, John Anton and
Mr. Huson. Mr. Huson is the coordinator of the team. Mr. Maack has been
employed as a portfolio manager and securities analyst by the Adviser since
1988. Ms. Kessler joined the Adviser in August, 1995. From September, 1993
until July, 1995, Ms. Kessler was a portfolio manager with Safeco Asset
Management. Between August, 1986 and June, 1993, Ms. Kessler was an equity
analyst for IDS Financial Services. She brings more than 10 years experience to
the team. Mr. Anton joined the Adviser in June, 1995. Prior to joining the
Adviser, Mr. Anton served 17 years as Chief Investment Officer, Portfolio
Manager at Financial Aims Corporation.
-48-
<PAGE>
The Funds have retained State Street Bank and Trust Company ("State
Street") to provide administrative services to the Fund. Such services relate
to accounting, operations and compliance. For such services, the Funds have
agreed to pay State Street a fee based on the total Fund assets managed by the
Adviser. The fee shall be as follows: first $500 million managed by Adviser -
.06%; next $500 million - .03%; thereafter - .01%. Each Fund pays its pro rata
share of such fee.
CONTROL PERSONS
As of December 20, 1995, Enele Co. owned 50.82% of the outstanding shares
of the Real Estate Fund and 29.28% of the outstanding shares of the U.S.
Government Money Market Fund, and Charles Schwab & Co. Inc. owned 33.61% of the
outstanding shares of the Special Fund and 25.77% of the outstanding shares of
the Equity Fund. No person owned, directly or indirectly, 25% or more of the
voting securities of any other Fund. Enele Co. and Charles Schwab & Co. Inc.
holds these shares as nominee for independent investors. These independent
investors, who are the beneficial owners of the shares owned by Enele Co.,
exercise complete voting control over the shares. The Funds have no record
concerning the actual share ownership of these beneficial owners.
NET ASSET VALUE
The net asset value per share of each Fund is determined as of 4 p.m.,
Eastern Time, on each day during which securities are traded on the New York
Stock Exchange (the "NYSE"). The net asset value per share is computed by
dividing the value of all assets of the Fund, less its liabilities, by the
number of shares outstanding.
The U.S. Government Money Market Fund will value its assets using the
amortized cost method by adjusting the cost of each debt security for
amortization of discount or premium and accrued interest (unless unusual
circumstances indicate that another method of determining fair value should be
considered by the Directors of the U.S. Government Money Market Fund). The
Fund's Board of Directors has established procedures designed to stabilize, to
the extent reasonably possible, the net asset value of the shares of the U.S.
Government Money Market Fund at one dollar per share. The U.S. Government Money
Market Fund intends to maintain its net asset value at a constant one dollar per
share, although there is no assurance that it will be able to do so. See "U.S.
GOVERNMENT MONEY MARKET FUND" in the Statement of Additional Information.
The value of securities listed or traded on a registered securities
exchange are valued at the last sale price on the day of the computation. This
includes over-the-counter securities for which last sale information is
available. Where last sale information is not available, the best bid price
will be used. Securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Board of Directors of the Fund. Such valuations and procedures
will be reviewed periodically
-49-
<PAGE>
by the Board of Directors. The Funds may retain the services of an outside
pricing service to value their portfolio securities.
WHEN TRANSACTIONS ARE RECORDED IN YOUR ACCOUNT
Your trade date is the date when transactions are recorded in your account.
Your shares are purchased, redeemed or exchanged at the net asset value
determined on your trade date.
If your purchase, redemption or exchange is received in good order by the
Transfer Agent prior to 4 p.m., Eastern Time, or the close of business on the
NYSE, whichever is earlier, your trade date is the date of receipt. If your
purchase, redemption or exchange is received in good order after 4 p.m., Eastern
Time, or the close of business on the NYSE, whichever is earlier, your trade
date is the next business day.
HOW TO INVEST IN THE FUNDS
All of the Funds (with the exception of the Oregon Bond Fund) are designed
so that shareholders have the option of making fund investments within or
outside of tax-advantaged retirement accounts. The Oregon Bond Fund is only
available for investment outside of a tax-deferred retirement plan.
Crabbe Huson Securities, Inc. (the "Distributor"), Portland, Oregon, an
affiliate of the Adviser and a corporation organized under the laws of Oregon,
is the distributor of the Funds' shares.
Shares of the Funds are offered continuously with no sales load at their
next determined net asset value after receipt of an order with payment by the
Transfer Agent. The Funds' shares are offered by the Distributor directly to
the public or through broker-dealers who enter into sales agreements with the
Distributor. Each Fund reserves the right to reject any order to purchase
shares.
MINIMUM INVESTMENT: The minimum initial investment in any Fund is $2,000.
Individuals who establish an Individual Retirement Account ("IRA") using an IRA
plan available through the Transfer Agent must make a minimum initial investment
of $2,000. Additional investments in any Fund must be in amounts of at least
$500, unless the investor is enrolled in an automatic investment program such as
the "Invest-O-Matic" program described below. Additional investments should
always be identified by the shareholder's name, Fund, and account number. For
investors enrolled in "Invest-O-Matic," additional investments of as little as
$100 can be accepted by the Funds. The Adviser, in its sole discretion, may
waive any minimum purchase requirements. The Funds reserve the right to vary
the initial and subsequent investment minimums at any time. The Funds will
provide shareholders with written notice of any such change.
-50-
<PAGE>
INVESTING BY CHECK OR CRABBE HUSON INSTANT ACCESS: Investors who desire to
purchase shares directly from the Funds by check should follow these
instructions.
- INITIAL INVESTMENT: Complete the Account Application. Be sure to
indicate the Fund(s) in which you want to invest and the dollar amount
you want to invest by Fund. As noted on the Application, please make
a separate check payable to each Fund. Mail your check together with
your completed account application to the following address:
Crabbe Huson Funds
P.O. Box 8413
Boston, MA 02266-8413
Should you wish to overnight mail your investment, please use the following
address:
Crabbe Huson Funds
Two Heritage Drive
Quincy, MA 02171
- SUBSEQUENT INVESTMENTS:
By check. Detach and complete the stub attached to your statement.
Make a separate check payable to each Fund, write your shareholder
account number on your check, and include your investment stub(s) or a
note designating how the amount of your check is to be invested by
Fund and indicating your account number. A charge may be imposed if
any check used for investment does not clear.
By Crabbe Huson Instant Access. An investor who desires to purchase
additional shares may also do so by calling (800) 235-2442 and using
the Fund's "INSTANT ACCESS" automated information service. The
purchase will occur the following business day. Only investors who
have provided current ACH bank information and authorizations can
utilize this service.
In order to prevent lengthy processing delays caused by the clearing of
foreign checks, the Funds will only accept a foreign check which has been drawn
in U.S. dollars and has been issued by a foreign bank with a U.S. correspondent
bank. The name of the U.S. correspondent bank must be printed on the face of
the check.
-51-
<PAGE>
INVESTING BY WIRE: The Transfer Agent will accept wire orders for purchase
of the Funds' shares prior to 4 p.m., New York time. A wire purchase will be
made at the offering price based on the next calculation of net asset value of
the shares after the purchase order has been received by the dealer. Any dealer
submitting an order is obligated to do so promptly. The following wire
instructions should be followed and include your investment account number and
your investor shareholder registration.
State Street Bank & Trust Co.
225 Franklin Street
Boston, MA 02110
ABA No. 011 0000 28
FOR CREDIT: Crabbe Huson
DDA No. 99051039
Since the U.S. Government Money Market Fund and the U.S. Government Income
Fund invest in obligations normally requiring payment in Federal Funds, purchase
orders will not be processed unless received in Federal Funds or until converted
by or paid to the Fund in Federal Funds. Shares in these two funds are
purchased on the day Federal Funds are received by the Funds at the next
determined net asset value. Checks or negotiable U.S. drafts may require up to
three business days to convert to Federal Funds. Checks drawn on banks that are
not members of the Federal Reserve system may take up to four business days to
convert into Federal Funds. Prior to conversion into Federal Funds, funds will
not be invested. Information about Federal Funds is available from any bank
that is a member of the Federal Reserve System.
RETIREMENT AND QUALIFIED PLANS: Investors may invest in any of the Funds
(except the Oregon Bond Fund) through the Crabbe Huson IRA Pension. Investments
in the Funds may also be made in connection with established retirement plans.
For further information on these plans, call the Transfer Agent at (800) 541-
9732.
In addition, an authorized broker-dealer may offer various tax deferred
retirement plans, including 401(k) plans or "tax sheltered accounts" under
section 403(b)(7) of the Internal Revenue Code. Investments in the Funds may
also be made in connection with established retirement plans. For further
information regarding these plans, contact your broker-dealer. If you are
considering adopting such a plan, you should consult with your own legal or tax
adviser, with respect to the establishment and maintenance of such a plan.
INVESTING THROUGH AN AUTHORIZED BROKER-DEALER: Fund shares are offered
without a front end sales load through selected broker-dealers who have entered
into sales agreements with the Distributor. Investors should contact an
authorized broker-dealer directly for appropriate purchase instructions, as well
as information pertaining to accounts and any
-52-
<PAGE>
service or transaction fees that may be charged by them. It is the
responsibility of dealers to transmit such orders promptly.
CERTIFICATES: The issuance of shares is recorded on the books of the Funds
in full and fractional shares carried to the third decimal place. To avoid
additional operating costs, and for investor convenience, share certificates are
not issued.
SALES LOAD AND 12B-1 FEES: There is no front end sales load charged with
respect to any of the Funds. However, although there are no sales charges
levied directly by the Funds, approved broker-dealers or other intermediaries,
including financial institutions, may charge the investor a transaction-based
fee or other fees at either the time of purchase or the time of redemption.
Such charges may vary among broker-dealers but in all cases will be retained by
the broker-dealer and not remitted to the Funds, the Distributor, or the
Adviser.
Each Fund has adopted a distribution plan pursuant to rule 12b-1 under the
1940 Act (the "Plans"). Under the Plans, the Distributor is entitled to
reimbursement for its actual expenses incurred in the distribution and promotion
of the Funds' shares, and the Funds may reimburse directly broker-dealers,
investment advisers and others that actively promote the sale of Fund shares.
These expenses include, but are not limited to, expenses incurred in the
printing of prospectuses and statements of additional information for persons
other than then-current shareholders, expenses related to preparation and
printing of sales literature, and other distribution-related expenses. A
portion of the expenses reimbursed and paid to the Distributor are paid by the
Distributor on a quarterly basis to broker-dealers that have entered into sales
agreements with the Distributor, and may be paid to investment executives of the
Distributor. Total payments pursuant to the Plans is computed separately for
each Fund, and may not exceed .25% per annum of the average daily net assets of
each respective Fund. Distribution expenses that are not allocable to a
specific Fund are allocated to a Fund based on the percentage of new accounts
established to purchase shares in that Fund during the fiscal year.
In the event expenses for a Fund in any one year exceed the maximum
reimbursable under the Plan, such expenses may not be carried forward to the
following year. The Funds cannot be charged for any financing charges on any
unreimbursed expenses payable pursuant to the Plans.
-53-
<PAGE>
HOW TO SELL YOUR SHARES
Shares of the Funds may be redeemed at any time without charge at the net
asset value per share next determined after receipt by the Fund's Transfer Agent
of a redemption request in proper form from the investor. Payment for all
shares redeemed, except shares of the U.S. Government Money Market Fund, will be
made by a Fund within seven days after receipt of a redemption request
in proper form except (as outlined by the 1940 Act) during a period when 1)
trading on the NYSE is restricted or the NYSE is closed for other than customary
weekends and holidays, 2) the SEC has by order permitted such suspension for the
protection of the Fund's shareholders, or 3) an emergency exists making disposal
of portfolio securities or valuation of net assets of the Funds not reasonably
practicable.
Payment for redemptions of shares of the U.S. Government Money Market Fund
will be made on the day after your trade date. See "WHEN TRANSACTIONS ARE
RECORDED IN YOUR ACCOUNT." Shares of the U.S. Government Money Market Fund may
be redeemed in response to a redemption request, as set forth above, or by using
share drafts. Share drafts will be provided through the U.S. Government Money
Market Fund's bank, will be subject to the bank's rules and regulations, and may
be negotiated by shareholders of the U.S. Government Money Market Fund much like
a check is negotiated. However, share drafts are not "checks," and the bank's
intermediary status does not create an "account" between the shareholder and the
bank. Share drafts will be honored only if made payable for amounts of $500.00
or more.
When a request for redemption is made shortly after the purchase of shares,
the Funds will not distribute the redemption proceeds until the check(s)
received for the shares purchased has cleared. Under such circumstances, it may
take as long as 15 days for a shareholder to receive the proceeds of a
redemption. Investors may avoid such delays by purchasing shares of the Funds
with a certified or cashier's check or by investing by wire.
The market value of the securities in the Funds' portfolios is subject to
daily fluctuations, and the net asset value of the Funds' shares change
accordingly. The U.S. Government Money Market Fund will attempt to maintain its
net asset value at a constant one dollar per share. However, there is no
assurance that it will be able to do so.
-54-
<PAGE>
REDEMPTION BY MAIL: To be in proper form, written requests for redemption
must 1) state the total dollar value of shares or the total number of shares to
be redeemed, 2) provide the investor's account number, and 3) be signed by each
registered owner exactly as the shares are registered. If the proceeds of the
redemption (a) exceed $15,000, (b) result from a 100% redemption of the account,
(c) are to be paid to a person other than the record owner, (d) are to be sent
to an address other than the address on the Transfer Agent's records, or (e) are
to be paid to a corporation, partnership, trust or fiduciary, the signature(s)
on the redemption request and on the certificates, if any, or stock power must
be guaranteed by an "eligible guarantor institution." An "eligible guarantor
institution" includes any bank, broker, dealer or credit union that is a
participant in the STAMP and Medallion signature program. The Transfer Agent
reserves the right to request additional information from, and make reasonable
inquiries of, any eligible guarantor institution. The Transfer Agent may
require additional supporting documents for redemptions made by corporations,
executors, administrators, trustees, or guardians. A redemption request will
not be deemed to have been submitted until the Transfer Agent receives all
required documents in proper form. All documents and correspondence concerning
redemptions should be sent to the Funds' Transfer Agent at the following
address:
Crabbe Huson Funds
P.O. Box 8413
Boston, MA 02266-8413
Redemptions may also be requested by telephone. See "Redemption or Exchange by
Telephone." Depending on the purchase price or other tax basis of the shares
redeemed, the investor may realize a capital gain or loss on each redemption.
Should you wish to receive instructions on how to obtain your funds by
wire, please call the Transfer Agent at (800) 541-9732.
INVOLUNTARY REDEMPTION: In order to reduce expenses of the Funds, a Fund
may redeem all of the shares of any shareholder, other than a shareholder which
is an IRA or other tax-deferred retirement plan, in any Fund account which has a
net asset value of less than $2,000 due to a redemption. The relevant Fund will
give such shareholders 60 days' prior written notice in which to purchase
sufficient additional shares to avoid such redemption.
A Fund may also compel the redemption of shares if, in its opinion, such
action would prevent the Fund from becoming a personal holding company, as
defined by the Internal Revenue Code.
REDEMPTIONS (BY SECURITIES DEALERS): The Funds accept redemption orders by
telephone from securities dealers who have entered into sales agreements with
the Distributor. Such redemption orders should be placed by the dealer with the
Transfer Agent. Shares will be redeemed at the net asset value determined on a
shareholder's
-55-
<PAGE>
trade date. Except with respect to shares of the U.S. Government Money Market
Fund, the seven-day period within which the proceeds of the redemption will be
sent to the shareholder or shareholder's dealer will begin on the day of the net
asset value calculation, unless the Transfer Agent has not received a written
request in proper form from the dealer by the seventh day. In that event, the
proceeds of the redemption will be sent to the shareholder or the shareholder's
dealer immediately upon the Transfer Agent's receipt of the written request in
proper form. Payment for redemptions of shares of the U.S. Government Money
Market Fund will be made on the day following the trade date. Dealers are
responsible for the prompt transmittal of redemption orders to the Transfer
Agent. Dealers not affiliated with the Funds may charge a fee for handling
redemptions.
HOW TO EXCHANGE YOUR SHARES
The proceeds from the redemption of shares of any of the Funds may be used
to purchase shares of any of the other Funds on the shareholder's trade date.
See "WHEN TRANSACTIONS ARE RECORDED IN YOUR ACCOUNT."
BEFORE MAKING AN EXCHANGE TO ANOTHER FUND, THE INVESTOR SHOULD READ THE
PORTIONS OF THIS PROSPECTUS RELATING TO THE FUND OR FUNDS INTO WHICH SHARES ARE
BEING EXCHANGED.
The exchange of shares of one Fund for shares of another Fund is treated
for federal and state income tax purposes as a sale on which an investor may
realize a capital gain or loss.
In order to protect shareholders from investors that may abuse the exchange
privilege to the detriment of the Funds and their shareholders, each Fund
reserves the right to terminate or modify the exchange privilege applicable to
all shareholders at any time upon 60 days' notice. This exchange privilege may
be temporarily or permanently suspended with respect to any shareholder that
engages in more than ten exchanges in any 12-month period.
Any written exchange request, in proper form, may be mailed to the Transfer
Agent at the following address:
Crabbe Huson Funds
P.O. Box 8413
Boston, MA 02266-8413
Should you wish to overnight mail your redemption request, please use the
following address:
Crabbe Huson Funds
Two Heritage Drive
Quincy, MA 02171
-56-
<PAGE>
REDEMPTION OR EXCHANGE BY TELEPHONE
All or part of an investor's account may be redeemed or exchanged for
shares in another Fund by telephone if the investor has completed and placed on
file with the Transfer Agent the appropriate authorization.
The Funds and the Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are properly authorized.
The failure of any of the Funds to do so may result in the Fund being liable for
losses due to unauthorized or fraudulent telephone transactions. However, the
Funds and the Transfer Agent will not be liable for executing telephonic
instructions that are deemed to be authorized after following reasonable
procedures. The Funds have instituted an "Instant Access" Automated Information
Service which allows an investor to make redemptions and exchanges by telephone
by use of a 4-digit Personal Identification Number.
Telephone redemptions and exchanges may be made by calling the Crabbe Huson
"Instant Access" number, (800) 235-2442. Using the "Instant Access" system, an
investor may redeem by check or by ACH Redemption. If an investor redeems by
check, he or she must have on file with the Funds Transfer Agent the appropriate
authorization. The check will always be mailed to the address listed on the
account. The daily maximum redemption is $100,000. An investor can make an ACH
redemption by telephone if an appropriate telephone authorization and current
ACH bank information are on file with the Funds' Transfer Agent .
An investor may make an exchange from one fund to another within the same
account provided you have the appropriate telephone authorization on file with
the Funds Transfer Agent.
Exchanges or redemptions by telephone may become difficult or impossible to
effect during periods of severe economic or market changes. If a shareholder is
unable to reach the Funds by telephone, redemptions or exchanges may be effected
either through the broker-dealer from which the shares were purchased, or by
sending a written redemption or exchange request in proper form by mail directly
to the Funds' Transfer Agent at the following address:
-57-
<PAGE>
Crabbe Huson Funds
P.O. Box 8413
Boston, MA 02266-8413
Should you wish to overnight mail your redemption request, please use the
following address:
Crabbe Huson Funds
Two Heritage Drive
Quincy, MA 02171
ALLOCATION OF BROKERAGE
The Adviser is responsible for the overall management of the portfolio of
each Fund and determines which brokers will execute the purchases and sales of
the portfolio securities. The Adviser's foremost responsibility is to place
orders so as to achieve prompt execution at the most favorable price. However,
the Adviser may place orders with brokers that provide special brokerage and
research services, with brokers that promote the sale of the Funds' shares, or
with brokers that agree to pay designated Fund expenses. The Adviser is
authorized, in recognition of the value of brokerage and research services
provided, to pay commissions to a broker in excess of the amounts which another
broker might have charged for effecting the same transaction.
A broker affiliated with the Adviser may be employed to execute brokerage
transactions on behalf of the Funds, as long as commissions paid are reasonable
and fair compared to the commissions received by other brokers in connection
with comparable transactions involving similar securities being purchased or
sold on a securities exchange during a comparable period of time. Additional
information about portfolio brokerage is included in the Statement of Additional
Information.
SPECIAL INVESTOR SERVICES
SHAREHOLDER INQUIRIES: Inquiries regarding specific information that
cannot be handled directly through an authorized broker-dealer of the Fund can
be directed to the Transfer Agent at the Crabbe Huson Funds, P.O. Box 8413,
Boston, MA 02266-8413. The Transfer Agent's toll-free telephone number is (800)
541-9732.
APPLICATIONS: Applications for all of the Funds and the special programs
listed below are available through authorized broker-dealers or through the
Funds' Transfer Agent at the address and phone number listed above.
THE CRABBE HUSON IRA (INDIVIDUAL RETIREMENT ACCOUNT): Certain individuals
who earn income may establish an Individual Retirement Account using an IRA plan
adopted by the Fund. These individuals may invest up to the lesser of $2,000 or
100% of the
-58-
<PAGE>
individual's annual earnings in shares of the Funds. The plan is also available
for a Spousal IRA, transfer of an existing IRA, and for certain rollover
contributions from other qualified plans.
INVEST-O-MATIC: With Invest-O-Matic, a shareholder may make regular
monthly purchases of the Fund's shares in amounts as little as $100 via an
automatic debit to a bank account. Invest-O-Matic accounts may be modified or
terminated by the shareholder at any time.
GROUP INVESTMENT PLAN: Group Investment Plans are available for the
purchase of Fund shares by employee or other groups, using systematic payroll
deductions or other systematic payment arrangements. The Funds may, depending
upon the size of the plan, waive their minimum, initial and additional purchase
requirements.
CRABBE HUSON "INSTANT ACCESS": By calling (800) 235-2442, a current
investor can receive account information, purchase, redeem and exchange Fund
shares. See "HOW TO INVEST IN THE FUNDS" and "REDEMPTION OR EXCHANGE BY
TELEPHONE."
SYSTEMATIC WITHDRAWAL PLAN
A shareholder owning shares of any Fund with a total value of not less than
$5,000 may participate in a systematic withdrawal plan providing for fixed
payments to such shareholder of $100 or more at regular monthly intervals (the
"Systematic Withdrawal Plan"). The shareholder may realize a capital gain or
loss on each fixed-amount payment. Additional information concerning the
Systematic Withdrawal Plan is set forth in the Statement of Additional
Information. Shareholders desiring to participate in the Systematic Withdrawal
Plan may do so by completing and submitting the appropriate application to the
Transfer Agent. The Systematic Withdrawal Plan is voluntary and may be
terminated at any time by the shareholder.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
Investor's Fiduciary Trust Co., 127 West 10th Street, Kansas City, Missouri
64105, as Custodian of the cash and securities of each of the Funds.
State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110,
800-541-9732, acts as Transfer Agent and Dividend Disbursing Agent for each of
the Funds. The Transfer Agent uses Boston Financial Data Services as its
servicing agent in carrying out the Transfer Agent's responsibilities to the
Funds. The Funds may also enter into agreements with various broker-dealers and
financial institutions to act as sub-transfer agents with respect to their
customers who invest in the Funds.
-59-
<PAGE>
LENDING OF PORTFOLIO SECURITIES
The Funds may loan portfolio securities to broker-dealers or other
institutional investors if at least 100% cash (or cash equivalent) collateral is
pledged and maintained by the borrower. The Funds believe that the cash
collateral would minimize the risk of lending their portfolio securities. Such
loans of portfolio securities may not be made if the aggregate of such loans
would exceed 20% of the value of a Fund's total assets. If the borrower
defaults, there may be delays in recovery of loaned securities or even a loss of
the securities loaned, in which case the Funds would pursue the cash (or cash
equivalent) collateral. While there is some risk in loaning portfolio
securities, loans will be made only to firms or broker-dealers deemed by the
Adviser, in consultation with the Adviser, to be of good standing and will not
be made unless, in the judgment of the Adviser the consideration to be earned
from such loans would justify the risk. For additional disclosure, see
"INVESTMENT RESTRICTIONS - LOANS OF PORTFOLIO SECURITIES" in the Statement of
Additional Information.
PORTFOLIO TURNOVER
The Funds generally do not trade in securities with the goal of obtaining
short-term profits, but when circumstances warrant, securities will be sold
without regard to the length of time the security has been held.
The Funds anticipate that, except in periods of unusual market conditions,
their annual portfolio turnover (the lesser of purchase or sales of portfolio
securities for the year divided by the monthly average of the value of the
portfolio securities owned by the Funds during the year) will generally range
between 20 and 150%, although Funds with smaller portfolios may have portfolio
turnover in excess of this range. A higher portfolio turnover rate may involve
correspondingly greater transaction costs, which would be borne directly by the
Funds, as well as additional realized gains and/or losses to shareholders.
YIELD
The SEC has imposed a number of rules and policies regarding the
calculation of yield. The Funds intend to continually comply with these rules
and policies in their quotation of yield. For an explanation of the method of
yield calculation, see "Yield and Performance" in the Statement of Additional
Information.
-60-
<PAGE>
TAXES
The Funds individually intend to qualify each year as "regulated
investment companies" under the Internal Revenue Code so they will not pay
federal taxes on either income or capital gains distributed to shareholders,
although there can be no assurance that they will so qualify.
The Funds would be subject to a 4% excise tax on a portion of their
undistributed income if they fail to meet certain annual distribution
requirements. The Funds intend to make distributions in a timely manner and,
accordingly, do not expect to be subject to the excise tax.
For federal income tax purposes, all Fund distributions (except
distributions from the Oregon Bond Fund) are reportable as adjusted gross income
whether a shareholder elects to take them in cash or reinvest them in additional
shares of the Funds.
Distributions representing net investment income (including short-term
capital gains) are taxable as ordinary income. Distributions derived from net
long-term capital gains that are properly designated by the Funds as such will
be taxable to shareholders as long-term capital gains, whether received in cash
or reinvested in additional shares, regardless of how long the shareholder has
held the shares.
Under the Revenue Reconciliation Act of 1993 (the "Act"), potentially
favorable income tax treatment on distributions representing long-term capital
gains has been restored, effective for tax years beginning after 1992. Under
the Act, ordinary income may be taxed at marginal rates significantly (up to
11.6%) higher than the marginal rate at which long-term capital gains are taxed.
Accordingly, distributions representing net long-term capital gains may be
subject to a reduced rate of tax to shareholders.
The Special Fund may engage in short sales of securities. In general, a
short sale is a contract for the sale of a security that the seller does not own
or does not desire to transfer. The seller, therefore, borrows the security to
be delivered to the buyer. At a later date, the seller either (i) purchases an
identical quantity of the same security previously sold by him so that he can
"cover" the sale and delivers the security to the lender or (ii) delivers the
security which he already held but did not desire to transfer at the earlier
date. A short sale is consummated, or closed, upon the seller's delivery of the
security to the lender. The seller's gain or loss will be measured by the
difference between the amount he received upon his short sale of the security
and the amount he paid for the security ultimately used to cover the sale. The
seller's gain/loss will be realized when the short sale is closed, not when the
seller sells short and is paid by the purchaser of the security. The Code
contains various provisions governing, among other things, the characterization
of short sale gain/loss as ordinary gain/loss or capital gain/loss and the
treatment of short sale capital gain/loss as long-term gain/loss or short-term
gain/loss. The Special Fund will annually provide shareholders with a statement
concerning the appropriate characterization of any distributions of gains or
losses. Shareholders are therefore urged to consult their own tax advisers.
-61-
<PAGE>
Shareholders may be subject to a $50 penalty under the Internal Revenue
Code and the Funds may be required to withhold and remit to the U.S. Treasury a
portion (31%) of any redemption or repurchase proceeds (including the value of
shares exchanged into another fund for whom the Adviser acts as Adviser) and of
any dividend or distribution on any account, where the shareholder failed to
provide a correct taxpayer identification number or to make certain required
certifications.
The foregoing relates only to federal income tax consequences for
shareholders who are U.S. citizens or corporations. Shareholders should consult
their own tax advisers regarding these matters, and regarding state, local, and
other applicable tax laws.
The Funds will issue annually, in January, a full report to each
shareholder detailing the tax status of each distribution to the shareholder
during the calendar year. The Funds do not assume any responsibility for the
calculation of any taxable gain (or loss) from the purchase and sale of Fund
shares, including purchases made with reinvested dividends and/or capital gains.
Every shareholder should consult with their tax adviser concerning such
calculations and tax consequences.
THE OREGON MUNICIPAL BOND FUND, INC.
The Oregon Bond Fund intends to qualify under Subchapter M of the Code each
fiscal year to allow it to pay "exempt interest dividends" to its shareholders.
Shareholders receiving distributions properly designated by the Oregon Bond Fund
as exempt interest dividends representing net tax-exempt interest received on
municipal securities will not be required to include such distributions in their
gross income for federal income tax purposes. However, a portion of the
interest dividends earned by the Oregon Bond Fund may be subject to the federal
alternative minimum tax. Distributions representing net taxable income of the
Oregon Bond Fund from sources other than municipal securities, such as temporary
investments and income from securities loans, or capital gains, will be taxable
to shareholders as ordinary income.
The Oregon Bond Fund anticipates that distributions which represent tax-
exempt interest on municipal securities issued by the state of Oregon and its
political subdivisions, agencies, authorities and instrumentalities will not be
subject to the Oregon personal income tax. However, it is expected that other
types of income received from the Oregon Bond Fund will be subject to the Oregon
personal income tax. The Oregon Bond Fund anticipates that corporations which
are subject to the Oregon corporation excise tax will be subject to that tax on
all income from the Oregon Bond Fund, including income that is exempt from
federal income taxes.
Shareholders of the Oregon Bond Fund that are obligated to pay state or
local taxes outside Oregon may be required to pay such taxes on distributions
from the Oregon Bond Fund, even if such distributions are exempt from federal
and Oregon income taxes.
-62-
<PAGE>
Statements regarding the federal income tax status of each shareholder's
dividends and distributions will be mailed annually.
Interest on indebtedness incurred or continued by a shareholder to purchase
or carry shares of the Oregon Bond Fund will not be deductible for federal
income tax purposes.
PERFORMANCE COMPARISONS
The Funds may compare their performance to other mutual funds with similar
investment objectives and to the mutual fund industry as a whole, as quoted by
ranking services and publications of general interest. For example, these
services or publications may include Lipper Analytical Services, Inc.,
Schabacker's Total Investment Service, CDA Technologies, SEI, Frank Russell
Trust, BARRON'S BUSINESS WEEK, CHANGING TIMES, THE FINANCIAL TIMES, FINANCIAL
WORLD, FORBES, INVESTOR'S DAILY, MONEY, MORNINGSTAR MUTUAL FUNDS, PERSONAL
INVESTOR, THE ECONOMIST, THE WALL STREET JOURNAL, INDIVIDUAL INVESTOR, LOUIS
RUKEYSER'S WALL STREET, FINANCIAL WORLD, and USA TODAY. These ranking services
and publications rank the performance of the Funds against all other funds over
specified periods and against funds in specified categories.
The Funds may also either include presentations of, or may compare their
performance or the performance of the Funds' Adviser to, a recognized stock or
bond index, including the Standard & Poor's 500, Standard & Poor's Mid-Cap,
Value Line, Dow Jones, and NASDAQ stock indices and the Shearson Lehman and
Salomon bond indices. The comparative material found in advertisements, sales
literature, or in reports to shareholders may contain past or present
performance ratings. This is not to be considered representative or indicative
of future results or future performance.
The Funds may also compare their performance to other income-producing
securities such as (i) money market funds; (ii) various bank products (based on
average rates of bank and thrift institution certificates of deposit, money
market deposit accounts, and NOW accounts as reported by the Bank Rate Monitor
and other financial reporting services, including newspapers); and (iii) U.S.
treasury bills or notes. There are differences between these income-producing
alternatives and the Funds other than their yields, some of which are summarized
below.
The performance of a specific Fund will be calculated as required by the
rules of the SEC. Current yield for the U.S. Government Money Market Fund is
calculated by dividing the net change in the value of an account of one share
during an identified seven-calendar day period by the value of the one share
account at the beginning of the same period and multiplying that base return by
365/7. Current yield for the Real Estate, Income, U.S. Government Income and
Oregon Bond Funds is calculated by dividing the net investment income per share
earned during an identified 30-day period by the maximum offering price per
share on the last day of the same period. The Funds may also publish average
annual total return quotations for recent one, five and ten-year periods that
would equate the initial amount
-63-
<PAGE>
invested to the ending redeemable value. These standardized calculations do not
reflect the impact of federal or state income taxes. Such performance data will
include the effect of any sales or distribution charges.
The yields of each of the Funds are not fixed and will fluctuate. The
principal value of an investment in each Fund (except, under normal
circumstances, the U.S. Government Money Market Fund) at redemption may be more
or less than its original cost. In addition, investments in the Funds are not
insured and an investor's yield is not guaranteed. Although the yields of bank
money market deposit accounts and NOW accounts will fluctuate, principal will
not fluctuate and is insured by the Federal Deposit Insurance Corporation up to
$100,000. Bank passbook savings accounts normally offer a fixed rate of
interest, and their principal and interest are also guaranteed and insured.
Bank certificates of deposit offer fixed or variable rates for a set term.
Principal and fixed rates are guaranteed and insured. There is no fluctuation
in principal value. Withdrawal of these deposits prior to maturity will
normally be subject to a penalty.
The Fund's investment results will vary from time to time depending on
market conditions, the composition of the Fund's portfolio, and operating
expenses of the Fund. These factors and possible differences in the methods
used in calculating investment results should be considered when comparing
performance information regarding the Fund to information published for other
investment companies and other investment vehicles. You should also consider
return quotations relative to changes in the value of the Fund's shares and the
risks associated with the Fund's investment objectives and policies. At any
time in the future, return quotations may be higher or lower than past return
quotations, and there may be no assurance that any historical return-quotation
will continue in the future.
For more information about the calculation methods used to compute the
Fund's investment results, see "YIELD AND PERFORMANCE" in the Statement of
Additional Information.
CAPITAL STOCK
Each Fund has authorized and issued a single class of $.001 per share par
value voting common stock. Shareholders of each Fund are entitled to one vote
for each full share held and fractional votes for fractional shares held for
that particular Fund. Shareholders of each Fund vote on the election of
directors and any other matter submitted to a shareholder vote. Shares issued
are fully paid and nonassessable and have no preemptive or conversion rights.
Each share is entitled to participate equally in dividends and distributions
declared by that Fund and in the net assets of that Fund upon liquidation or
dissolution after satisfaction of outstanding liabilities. Certain rights of
shareholders may be modified, pursuant to the 1940 Act, by a vote of the
shareholders, including a vote of the lesser of (i) two-thirds of any quorum at
a shareholders' meeting of more than 50% of the shares issued and outstanding or
(ii) a majority of the shares issued and outstanding (including any change in a
Fund's fundamental policies and investment restrictions). In general, Oregon
law permits modifications to the rights of
-64-
<PAGE>
shareholders by amendment to the Articles of Incorporation of the Fund, which
requires a vote of the majority of the shares present at any meeting at which a
quorum (50% plus 1 of the outstanding shares) is present.
-65-
<PAGE>
No person has been authorized to give any information or make any
representations not contained in this Prospectus, or in the Statement of
Additional Information incorporated herein by reference, in connection with the
offering made by this Prospectus and, if given or made, such representations
must not be relied upon as having been authorized by the Funds or their
Distributor. This Prospectus does not constitute an offering by the Funds or by
their Distributor in any jurisdiction in which such offering may not lawfully be
made.
TABLE OF CONTENTS
Page
----
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
EXPENSE DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
CONDENSED FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 6
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . 21
FUNDAMENTAL POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SPECIAL RISK FACTORS TO BE CONSIDERED. . . . . . . . . . . . . . . . . . . . 39
MANAGEMENT OF THE FUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . . 46
CONTROL PERSONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
NET ASSET VALUE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
WHEN TRANSACTIONS ARE RECORDED IN YOUR ACCOUNT . . . . . . . . . . . . . . . 49
HOW TO INVEST IN THE FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . 50
HOW TO SELL YOUR SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
HOW TO EXCHANGE YOUR SHARES. . . . . . . . . . . . . . . . . . . . . . . . . 55
REDEMPTION OR EXCHANGE BY TELEPHONE. . . . . . . . . . . . . . . . . . . . . 56
ALLOCATION OF BROKERAGE. . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SPECIAL INVESTOR SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . 57
SYSTEMATIC WITHDRAWAL PLAN . . . . . . . . . . . . . . . . . . . . . . . . . 58
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT. . . . . . . . . . . 58
LENDING OF PORTFOLIO SECURITIES. . . . . . . . . . . . . . . . . . . . . . . 58
PORTFOLIO TURNOVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
YIELD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
PERFORMANCE COMPARISONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 61
CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
THE CRABBE HUSON
FUNDS
The Crabbe Huson Special Fund, Inc.
- --------------------------------------------------------
The Crabbe Huson Real Estate Investment Fund, Inc.
- --------------------------------------------------------
The Crabbe Huson Equity Fund, Inc.
- --------------------------------------------------------
The Crabbe Huson Asset Allocation Fund, Inc.
- --------------------------------------------------------
The Oregon Municipal Bond Fund, Inc.
- --------------------------------------------------------
The Crabbe Huson Income Fund, Inc.
- --------------------------------------------------------
The Crabbe Huson U.S. Government Income Fund, Inc.
- --------------------------------------------------------
The Crabbe Huson U.S. Government Money Market Fund, Inc.
- --------------------------------------------------------
PROSPECTUS
FEBRUARY 28, 1996
<PAGE>
APPENDIX A
BOND RATING AGENCIES
The following is a description of the bond ratings employed by Moody's
Investors Service, Inc. ("Moody's").
Aaa: Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or exceptionally stable margin, and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present that
make the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba: Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often ~the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
Ca: Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C: Bonds rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
Moody's applies the numerical modifiers "1", "2", and "3" in each generic
rating classification from Aa through B. The modifier "1" indicates that the
security ranks in the higher end of its generic rating category; the modifier
"2" indicates a mid-range ranking; and the modifier "3" indicates that the issue
ranks in the lower end of its generic rating category.
The following is a description of the bond ratings employed by Standards &
Poor's Corporation ("S&P").
AAA: Bonds rated AAA are highest-grade obligations. Capacity to pay
interest and repay principal is extremely strong.
AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal, and differ from the highest rated issues only in small degree.
A: Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
<PAGE>
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB, B, CCC, CC, C: Debt rated BB, B, CCC, CC, and C is regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B: Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB- rating.
CCC: Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The CCC rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating.
CC: The rating CC is typically applied to debt subordinated to senior debt
that is assigned an actual or implied CCC rating.
C: The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C1: The rating C1 is reserved for income bonds on which no interest is
being paid.
D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
C: Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarding as having extremely poor prospects of ever attaining
any real investment standing.
The S&P letter rating may be modified by the addition of a plus (+) or
minus sign (-), which is used to show relative standing within rating categories
between AA to CCC.
From time to time a bond rating agency may adjust its rating of a
particular bond issue. Subsequent to a Fund's purchase of a bond, such a bond
may have its rating reduced (down graded) to a category not permitted to be
owned by that Fund, or it may cease to be rated. Neither case would require
that a Fund eliminate such a bond from its portfolio. However, the Fund's
Adviser will consider such an event in determining whether or not the Fund
should continue to hold such a security.
<PAGE>
------------------
CRABBE HUSON FUNDS
------------------
The Crabbe Huson Special Fund, Inc.
The Crabbe Huson Real Estate Investment Fund, Inc.
The Crabbe Huson Equity Fund, Inc.
The Crabbe Huson Asset Allocation Fund, Inc.
The Oregon Municipal Bond Fund, Inc.
The Crabbe Huson Income Fund, Inc.
The Crabbe Huson U.S. Government Income Fund, Inc.
The Crabbe Huson U.S. Government Money Market Fund, Inc.
-----------------------------------
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
February 28, 1996
This Statement of Additional Information of the
Crabbe Huson Funds (the "Funds") is not a
prospectus but should be read in conjunction with
the Prospectus of the Funds, dated the same date
as this Statement of Additional Information, which
has been filed with the Securities and Exchange
Commission (the "SEC") and which is available
without charge upon request by calling (800) 541-
9732 or writing the Funds at the Crabbe Huson
Funds, P.O. Box 8413, Boston, MA 02266-8413. This
Statement of Additional Information has been
incorporated by reference into the Prospectus.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DIRECTORS AND OFFICERS OF THE FUNDS. . . . . . . . . . . . . . . . . . . 3
SERVICES PROVIDED BY THE ADVISER . . . . . . . . . . . . . . . . . . . . 5
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES. . . . . . . . . . . 8
SYSTEMATIC WITHDRAWAL PLAN . . . . . . . . . . . . . . . . . . . . . . . 11
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 14
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 17
LOANS OF PORTFOLIO SECURITIES. . . . . . . . . . . . . . . . . . . . . . 30
PURCHASE AND REDEMPTION OF FUND SHARES . . . . . . . . . . . . . . . . . 31
U.S. GOVERNMENT MONEY MARKET FUND. . . . . . . . . . . . . . . . . . . . 33
PRICING OF SECURITIES BEING OFFERED. . . . . . . . . . . . . . . . . . . 33
YIELD AND PERFORMANCE. . . . . . . . . . . . . . . . . . . . . . . . . . 34
DIVIDENDS, DISTRIBUTIONS AND TAXES . . . . . . . . . . . . . . . . . . . 40
3
<PAGE>
SPECIAL INVESTOR SERVICES. . . . . . . . . . . . . . . . . . . . . . . . 45
GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT . . . . . . . . 47
ADDITIONAL INFORMATION REGARDING CERTAIN INVESTMENTS BY THE FUNDS . . . 47
SPECIAL INVESTMENT RISKS . . . . . . . . . . . . . . . . . . . . . . . . 49
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
4
<PAGE>
----------
MANAGEMENT
----------
The directors and officers of the Funds are listed below, together
with information about their principal business occupations during the last
five years.
DIRECTORS AND OFFICERS OF THE FUNDS
- -----------------------------------
RICHARD S. HUSON,* 55, is a Director and President of each of the
----------------
Funds. Mr. Huson is a chartered financial analyst. Mr. Huson is a director
and Secretary of the Crabbe Huson Group, Inc., the Funds' Adviser. Mr. Huson
has, since 1980, served in various management positions with the Adviser.
His business address is 16 NW Oregon Avenue, Bend, Oregon 97709.
JAMES E. CRABBE,* 50, is a Director and Vice President of each of the
----------------
Funds. He is a director and President of the Crabbe Huson Group, Inc., the
Funds' Adviser. Mr. Crabbe has, since 1980, served in various management
positions with the Adviser. His business address is 121 SW Morrison, Suite
1400, Portland, Oregon 97204.
GARY L. CAPPS, 60, is a Director of each of the Funds. Mr. Capps has
-------------
been the Executive Director of the Bend Chamber of Commerce since July 1992.
Mr. Capps was the owner and Chief Executive Officer of ten radio stations in
Oregon, Idaho and Washington from 1964 until 1986. He has been a director of
Bank of the Cascades in Bend, Oregon since 1980, and has served as Chairman
since 1983. His business address is 63085 N. Hwy 97, Bend, Oregon 97701.
- -----------------------------
*The person indicated are "interested persons" of the Fund, as defined in the
Investment Company Act of 1940 (the ("1940 Act") as amended. They receive no
directors' fees or salaries from the Fund.
5
<PAGE>
CHERYL BURGERMEISTER,* 44, is Treasurer of the Funds. Ms.
--------------------
Burgermeister has been employed by the Crabbe Huson Group for the past eight
years, and has been the chief financial officer of the Group since 1989. Ms.
Burgermeister's business address is 121 SW Morrison, Suite 1400, Portland,
Oregon 97204.
LOUIS SCHERZER, 75, is a Director of each of the Funds. Mr. Scherzer
--------------
is an officer of Scherzer Partners, Inc., a real estate development and
management firm located at 5440 SW Westgate Drive, Suite 222, Portland,
Oregon 97221. Mr. Scherzer was employed by the Benjamin Franklin Federal
Savings and Loan Association from 1946 to 1980, where he served as Senior
Executive Vice President and Director from 1980 to 1985.
ROBERT L. SMITH, 57, is a Director of each of the Funds. Mr. Smith
---------------
has been President of VIP's Industries since 1968, and has been a Director of
Western Security Bank since 1980, a Director of KeyCorp since 1988 and a
Director of Blue Cross/Blue Shield of Oregon since 1984. His business
address is 280 Liberty Street S.E., Salem, Oregon 97301.
CRAIG P. STUVLAND,* 40, is a Director and Secretary of each of the
-----------------
Funds. Mr. Stuvland has been employed by the Advisor since June, 1987; he is
currently Executive Vice President and a director. Mr. Stuvland's business
address is 121 S.W. Morrison, Suite 1400, Portland, Oregon 97204. Mr.
Stuvland is President and a director of Crabbe Huson Securities, Inc., the
Funds' Distributor.
RICHARD P. WOLLENBERG, 79, is a Director of each of the Funds. Mr.
---------------------
Wollenberg has been Chairman and Chief Executive Officer of Longview Fibre
Company since 1978, and a Trustee of Reed College since 1962. His business
address is Longview Fibre Company, P.O. Box 606, Longview, Washington 98632.
WILLIAM WENDELL WYATT, Jr., 45, is a Director of each of the Funds.
---------------------
Mr. Wyatt has been Chief of Staff, Office of the Governor, State of Oregon,
since April, 1995. From 1987 to 1995, he was President of the Oregon
Business Council. From 1981 to September 1987, Mr. Wyatt was the Executive
Director of the Association for Portland Progress. His business address is
254 State Capitol, Salem, Oregon 97310-0370.
6
<PAGE>
The members of the Funds' Boards of Directors are elected annually by
the Funds' shareholders. The Boards of Directors are responsible for the
overall management of the Funds, including general supervision and review of
their investment policies and activities. The Boards of Directors elect the
officers of the Funds who are responsible for supervising and administering
the Funds' day-to-day operations. In November of 1994, each Board of
Directors created an audit committee that reviews the report and management
letters of the auditors, reviews the terms of the auditor's engagement and
makes recommendations to the Boards concerning the terms of the auditor's
engagements. The audit committees currently consist of Messrs. Scherzer,
Smith and Wyatt. The Funds currently pay each of the directors who are not
"interested persons" on a per meeting basis as described below:
<TABLE>
<CAPTION>
PER MEETING
-----------
<S> <C>
The Crabbe Huson Special Fund, Inc. $600.00
The Crabbe Huson Real Estate Investment
Fund, Inc. 150.00
The Crabbe Huson Equity Fund, Inc. 400.00
The Crabbe Huson Asset Allocation
Fund, Inc. 400.00
The Oregon Municipal Bond Fund, Inc. 150.00
The Crabbe Huson Income Fund, Inc. 50.00
The Crabbe Huson U.S. Government Income
Fund, Inc. 50.00
The Crabbe Huson U.S. Government Money
Market Fund, Inc. 150.00
</TABLE>
The Funds also reimburse directors' expenses for attending shareholder and
director meetings for directors who are not officers, directors, or employees
of the Adviser or the Distributor.
See "Control Persons and Principal Holders of Securities" in this
Statement of Additional Information.
--------------------------------
SERVICES PROVIDED BY THE ADVISER
--------------------------------
The Adviser is the investment advisor to the Funds under investment
advisory agreements originally dated September 27, 1988, for the Special,
Equity and Oregon Municipal Bond Funds, August 7, 1988 for the Asset
Allocation, Income, U.S. Government Income and U.S. Government Money Market
Funds, and March 4, 1994 for the Real Estate Investment Fund. The Adviser
was incorporated in 1980 and has been engaged in the business of providing
investment advice since July 1, 1980. The address of the Adviser is 121 SW
Morrison, Suite 1425, Portland, Oregon 97204, mailing address: P.O. Box
6559, Portland, Oregon 97228-6559.
7
<PAGE>
Crabbe Huson Securities, Inc., the Distributor of the Funds, is affiliated
with the Adviser.
James E. Crabbe and Richard S. Huson are controlling shareholders
of the Adviser. Together, they own 100% of the stock of the Distributor of
the Funds.
James E. Crabbe and Richard S. Huson are primarily responsible for the
day-to-day management of the Adviser. Mr. Crabbe is President and a Director
of the Adviser and Mr. Huson is Secretary and a Director. Mr. Crabbe and Mr.
Huson have been primarily responsible since the inception of the Adviser.
Both Mr. Crabbe and Mr. Huson have served in various management positions
with the Adviser since 1980.
The Adviser has agreed to waive its fee and/or reimburse each Fund,
other than the Special, Equity and Asset Allocation Funds, for the amount, if
any, by which the total operating expenses of such Fund (including the
Adviser's compensation and any amounts paid pursuant to the Rule 12b-1 plan)
for any fiscal year exceed certain annual rates applied to the average daily
net assets of the Funds. The annual rates in effect are as follows: 1.50% of
the average daily net assets of The Crabbe Huson Real Estate Investment Fund,
Inc. (the "Real Estate Fund"); .98% of the average daily net assets of The
Oregon Municipal Bond Fund, Inc. (the "Oregon Bond Fund"); .80% of the
average daily net assets of The Crabbe Huson Income Fund, Inc. (the "Income
Fund"); .75% of the average daily net assets of The Crabbe Huson U.S.
Government Income Fund, Inc. (the "U.S. Government Income Fund"); and .70% of
the average daily net assets of The Crabbe Huson U.S. Government Money Market
Fund, Inc. (the "U.S. Government Money Market Fund"). This waiver may be
withdrawn at any time upon 30 days' written notice to the shareholders of the
affected Fund. Even in the event of discontinuance of this agreement, the
Funds may still be subject to the laws of certain states, which require that
if a mutual fund's expenses (including advisory fees but excluding interest,
taxes, brokerage commissions and extraordinary expenses) exceed certain
percentages of average net assets, the Fund must be reimbursed for such
excess expenses.
Under the Advisory Agreements, the Adviser determines the structure of
the Funds' portfolios, the nature and timing of the changes in it, and the
manner of implementing such changes (subject to any directions it may receive
from the Funds' Board of Directors); provides the Funds with investment
advisory research and related services for the
8
<PAGE>
investment of assets; furnishes (without expense to the Funds) the
services of such members of its organization as may be duly elected officers
or directors of the Funds; and pays all executive officers' salaries and
expenses. Additional information about the services provided by the Adviser
is described under "MANAGEMENT OF THE FUNDS" in the Prospectus.
As compensation for its services under the Advisory Agreements, the
Adviser receives a semi-monthly fee based on the annual schedule of fees
outlined in the Prospectus. For the year ended October 31, 1993, the Funds
paid the following investment advisory fees to the Adviser:
<TABLE>
<CAPTION>
Amount
Fee Waived Total
---- ------- -----
<S> <C> <C> <C>
Special Fund $ 129,227 $ 2,238 $ 126,989
Equity Fund 217,212 32,826 184,386
Asset Allocation Fund 683,280 54,592 628,688
Oregon Bond Fund 120,660 11,421 109,239
Income Fund 40,195 40,195 -0-
U.S. Government
Income Fund 54,023 54,023 -0-
U.S. Government
Money Market Fund 53,882 53,882 -0-
</TABLE>
For the year ended October 31, 1994, the Funds paid the
following investment advisory fees to the Adviser:
9
<PAGE>
<TABLE>
<CAPTION>
Amount
Fee Waived Total
---- ------- ------
<S> <C> <C> <C>
Special Fund $ 963,723 $ 85,038 $878,685
Real Estate Fund 94,916 50,426 44,490
Equity Fund 782,419 68,033 714,386
Asset Allocation Fund 1,034,183 53,227 980,956
Oregon Bond Fund 152,868 31,708 121,160
Income Fund 43,957 43,957 -0-
U.S. Government
Income Fund 51,245 51,245 -0-
U.S. Government
Money Market Fund 107,853 107,853 -0-
</TABLE>
For the year ended October 31, 1995, the Funds paid the
following investment advisory fees to the Adviser:
<TABLE>
<CAPTION>
Amount
Fee Waived Total
--- ------- ------
<S> <C> <C> <C>
Special Fund $5,398,048 $ 697 $5,397,351
Real Estate Fund 190,619 75,190 115,429
Equity Fund 2,471,465 -0- 2,471,465
Asset Allocation Fund 1,183,215 14,567 1,168,648
Oregon Bond Fund 134,042 20,866 113,176
Income Fund 49,011 49,011 -0-
U.S. Government
Income Fund 43,576 43,576 -0-
U.S. Government
Money Market Fund 253,198 230,305 22,893
</TABLE>
The Real Estate Fund entered into a subadvisory agreement with Aldrich
Eastman Waltch, L.P. on September 6, 1995. In the year ending October 31,
1995, advisory fees of $11,560.07 were paid by the Adviser to this subadviser
out of the advisory fees collected from that Fund.
On August 1, 1995 the Funds entered into an Administration Agreement
with State Street Bank and Trust Company. Under this Agreement, State Street
provides a number of administrative and
10
<PAGE>
compliance services to the Funds, including maintenance of certain Fund books
and records, preparation of Fund tax returns, performing expense allocation
and payment of expenses, preparation of reports to shareholders, preparation
of Fund financial statements, preparation of reports to the directors of the
Funds, maintaining state registration of Fund shares, and monitoring
compliance with investment restrictions and Internal Revenue Code
requirements for registered investment company status. The Funds paid State
Street Bank the following fees under the Administration Agreement during the
fiscal year ended October 31, 1995:
<TABLE>
<CAPTION>
<S> <C>
Special Fund $ 62,430
Equity Fund $ 26,144
Asset Allocation Fund $ 9,297
Real Estate Fund $ 1,353
Oregon Bond Fund $ 1,889
Income Fund $ 482
U.S. Government Income Fund $ 569
U.S. Government Money Market Fund $ 3,767
Total: $105,935
</TABLE>
---------------------------------------------------
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
---------------------------------------------------
The following table shows the persons known by the Funds to
beneficially own 5% or more of any class of any of the Funds' voting
securities, and the ownership of the officers and directors of each Fund, as
a group, as of December 20, 1995. Those shareholders marked with an asterisk
are nominees holding shares for beneficial owners and the Funds have no
records concerning the actual beneficial owners. The Oregon Bond Fund has no
shareholders of record of more than 5% of the outstanding Shares of that
Fund, or who are officers or directors of that Fund as of December 20, 1995.
THE CRABBE HUSON SPECIAL FUND, INC.
<TABLE>
<CAPTION>
Approximate Approximate
Number of Shares Percent of
Beneficial Owners Beneficially Owned Shares
- ----------------- ------------------ -----------
<S> <C> <C>
Charles Schwab 22,023,954 33.61%
& Co. Inc.*
Special Custody A/C
Attn: Mutual Funds
101 Montgomery Street
San Francisco, California 94104-4122
Gary L. Capps, Director 24,116 .01%
Richard Huson, President 7,294 .01%
Robert L. Smith, Director 853 .01%
11
<PAGE>
Craig Stuvland, Secretary 2,743 .01%
Richard P. Wollenberg, Director 12,492 .01%
William Wendell Wyatt, Director 411 .01%
Officers and Directors
as a group 47,909 .01%
</TABLE>
THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC.
<TABLE>
<CAPTION>
Approximate Approximate
Number of Shares Percent of
Beneficial Owners Beneficially Owned Shares
- ----------------- ------------------ ------------
<S> <C> <C>
Enele Co. C/F* 996,057 50.82%
Copper Mountain Financial Group, Inc.
1211 SW Fifth Avenue, Suite 1900
Portland, Oregon 97204
Gary Capps, Director 1,843 .01%
Richard Huson, President 5,065 .01%
Richard P. Wollenberg, Director 2,086 .01%
Officers and Directors
as a group 8,995 .01%
</TABLE>
THE CRABBE HUSON EQUITY FUND, INC.
<TABLE>
<CAPTION>
Approximate Approximate
Number of Shares Percent of
Beneficial Owners Beneficially Owned Shares
- ----------------- ------------------- -----------
<S> <C> <C>
Charles Schwab & Co., Inc.* 5,995,144 25.77%
Special Custody A/C
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
Gary Capps, Director 5,295 .01%
Richard Huson, President 5,410 .01%
Richard P. Wollenberg, Director 5,652 .01%
12
<PAGE>
Officers and Directors
as a group 16,357 .01%
</TABLE>
THE CRABBE HUSON ASSET ALLOCATION FUND, INC.
<TABLE>
<CAPTION>
Approximate Approximate
Number of Shares Percent of
Beneficial Owners Beneficially Owned Shares
- ----------------- ------------------- ------------
<S> <C> <C>
Enele Co. C/F* 980,303 9.02%
Copper Mountain Financial Group, Inc.
1211 SW Fifth Avenue, Suite 1900
Portland, Oregon 97204
Gary L. Capps, Director 5,006 .01%
William Wendell Wyatt, Director 296 .01%
Officers and Directors 5,302 .01%
as a group
</TABLE>
13
<PAGE>
THE CRABBE HUSON INCOME FUND, INC.
<TABLE>
<CAPTION>
Approximate Approximate
Number of Shares Percent of
Beneficial Owners Beneficially Owned Shares
- ----------------- ------------------ ------------
<S> <C> <C>
Klamath Medical Service Bureau 36,936 5.20%
2500 Daggett Street
Klamath Falls, Oregon 97601
South Coast Orthopedic 43,463 6.12%
Assoc. PC 401K Plan
FBO Curtis D. Adams
4225 Cape Arago Hwy.
Coos Bay, Oregon 97420-9698
Enele Co. C/F* 41,648 5.87%
Copper Mountain Financial Group, Inc.
1211 SW Fifth Avenue, Suite 1900
Portland, Oregon 97204
Enele Co. FBO 73,398 10.34%
Blackwell NA Ret A/C 5326
121 S.W. Morrison, Suite 1450
Portland, Oregon 97204-3144
Officers and Directors,
as a group None
</TABLE>
14
<PAGE>
THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC.
<TABLE>
<CAPTION>
Approximate Approximate
Number of Shares Percent of
Beneficial Owners Beneficially Owned Shares
- ----------------- ------------------ -----------
<S> <C> <C>
Klamath Medical Service 51,746 6.59%
Bureau
2500 Daggett Street
Klamath Falls, Oregon 97601
Tillamook County 41,537 5.29%
Smoker, Inc.
15500 Miami Foley Road
Bay City, Oregon 97107-9708
Enele Co. C/F* 77,778 9.90%
Copper Mountain Financial Group, Inc.
1211 SW Fifth Avenue, Suite 1900
Portland, Oregon 97204
State Street Bank and Trust Co. 51,787 6.59%
C/F Beverly M. Hodge
369 Kubli Road
Grants Pass, Oregon 97527
Officers and Directors
as a group None
</TABLE>
THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC.
<TABLE>
<CAPTION>
Approximate Approximate
Number of Shares Percent of
Beneficial Owners Beneficially Owned Shares
- ----------------- ------------------ ------------
<S> <C> <C>
Enele Co. 15,555,108 29.28%
Copper Mountain Financial Group, Inc.
1211 SW Fifth Avenue, Suite 1900
Portland, Oregon 97204
James E. Crabbe, Vice President 617,036 1.16%
Richard S. Huson, President 470,711 .89%
Louis Scherzer, Director 29,157 .01%
Officers and Directors,
as a group 1,116,904 2.10%
</TABLE>
15
<PAGE>
--------------------------
SYSTEMATIC WITHDRAWAL PLAN
--------------------------
A shareholder owning or purchasing shares of any Fund having a net
asset value of $5,000 or more may participate in a systematic withdrawal plan
providing regular monthly payments in the amount of $100 or more from the
shares held in any Fund (the "Systematic Withdrawal Plan"). An application
form containing details of the Systematic Withdrawal Plan is available upon
request from State Street Bank and Trust Company (the "Transfer Agent"), the
Funds' transfer agent. The Plan is voluntary and may be terminated at any
time by the shareholders.
Income dividends and capital gain distributions on shares of the Funds
held in a Systematic Withdrawal Plan are automatically reinvested in
additional shares of the relevant Fund at net asset value. A Systematic
Withdrawal Plan is not an annuity and does not and cannot protect against
loss in declining markets. Amounts paid to a shareholder from the Systematic
Withdrawal Plan represent the proceeds from redemptions of Fund shares, and
the value of the shareholder's investment in a Fund will be reduced to the
extent that the payments exceed any increase in the aggregate value of the
shareholder's shares (including shares purchased through reinvestment of
dividends and distributions). If a shareholder receives payments that are
greater than the appreciation in value of his or her shares, plus the income
earned on the shares, the shareholder may eventually withdraw his or her
entire account balance. This will occur more rapidly in a declining market.
For tax purposes, depending upon the shareholder's cost basis and date of
purchase, each withdrawal will result in a capital gain or loss. See
"DIVIDENDS, DISTRIBUTIONS AND TAXES" in this Statement of Additional
Information and "TAXES" in the Funds' Prospectus.
DISTRIBUTION PLAN
- -----------------
Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act")
requires that any payments made by the Funds in connection with financing the
distribution of their shares may only be made pursuant to a written plan
describing all aspects of the proposed financing of distribution, and also
requires that all agreements with any person relating to the implementation
of the plan must be in writing. Because some of the payments described below
to be made by the Funds are distribution expenses within the meaning of Rule
12b-1, the Funds have entered into distribution agreements with Crabbe Huson
Securities, Inc. (the "Distributor") that provides for certain payments to
the Distributor pursuant to a distribution plan (the "Plan") adopted in
accordance with such Rule.
Rule 12b-1 requires that the Plan be approved by a majority of a Fund's
outstanding shares, and requires that
16
<PAGE>
the Plan, together with any related agreements, be approved by a vote of the
directors of the Funds who are not interested persons of the Funds and who
have no direct or indirect financial interest in the operation of the Plan or
in the agreements related to the Plan, cast in person at a meeting called for
the purpose of voting on such plan or agreement. The Plan and any agreement
related to it must provide, in substance:
(a) that it shall continue in effect for a period of more than
one year from the date of its execution or adoption only so long as such
continuance is specifically approved at least annually in the manner
described in the Rule;
(b) that any person authorized to direct the disposition of
moneys paid or payable by the Funds pursuant to the Plan or any related
agreement shall provide to the Funds' Board of Directors, and the
Directors shall review, at least quarterly, a written report of the
amounts so expended and the purposes for which such expenditures were
made; and
(c) in the case of the Plan, that it may be terminated at any
time by a vote of a majority of the members of the Board of Directors of
the Fund who are not interested persons of the Fund and who have no Direct
or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan, or by a vote of a majority of the
outstanding voting securities of a Fund.
The Plan may not be amended to increase materially the amount to be
spent for distribution without shareholder approval, and all material
amendments to the Plan must be approved in the manner described in the Rule.
The Funds may rely upon Rule 12b-1 only if the selection and nomination
of the Funds' disinterested directors is committed to the discretion of the
disinterested Directors. The Funds may implement or continue a plan pursuant
to Rule 12b-1 only if the directors who vote to approve such implementation
or continuation conclude, in the exercise of reasonable business judgment and
in light of their fiduciary duties under state law, and under Sections 36(a)
and (b) of the 1940 Act, that there is a reasonable likelihood that the plan
will benefit the Funds and their shareholders. The Boards of Directors have
concluded that there is a reasonable likelihood that a distribution plan will
benefit each Fund.
Pursuant to the provisions of the Plan, each participating Fund may pay
up to .25% of its average daily net assets to the Distributor to reimburse
the Distributor for actual expenses incurred in the distribution and
promotion of such Fund's shares, and to other broker-dealers,
17
<PAGE>
investment advisors or others that actively promote the sale of Fund shares.
Expenses for which the Distributor will be reimbursed under the Plan
include, but are not limited to, expenses incurred in the printing of
prospectuses and statements of additional information for persons other than
then-current shareholders, expenses related to preparation and printing of
sales literature, and other distribution-related expenses. Compensation will
be paid out on a quarterly basis to the Distributor, to broker-dealers which
have entered into sales agreements with the Distributor, to investment
executives of the Distributor, and to other entities that actively promote
the sale of Funds shares.
----------------------
PORTFOLIO TRANSACTIONS
----------------------
GENERAL CONSIDERATIONS
- ----------------------
The Adviser is responsible for decisions to buy and sell securities for
the Funds, the selection of brokers and dealers to effect the transactions
and the negotiation of brokerage commissions, if any. Purchases and sales of
securities on a securities exchange are effected through brokers who charge a
negotiated commission for their services. Orders may be directed to any
broker.
In the over-the-counter market, debt and equity securities are
generally traded on a "net" basis with dealers acting as principal for their
own accounts without a stated commission, although the price of a security
usually includes a profit to the dealer. A Fund may also pay a mark-up
(sometimes referred to as a dealer's "turn") in principal transactions and in
transactions in the over-the-counter market. In underwritten offerings,
securities are purchased at a fixed price which includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount. On occasion, certain money market instruments may be
purchased directly from an issuer, in which case no commissions or discounts
are paid.
The primary considerations in the selection of a broker or dealer for
portfolio transactions are the availability of the desired security and the
prompt execution of orders in an effective manner at the most favorable
prices. Subject to those considerations, dealers that provide supplemental
investment research and statistical or other services to the Adviser may
receive orders for portfolio transactions by the Funds. Such services may
include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities; purchasers or sellers of securities; and the furnishing of
analysis and reports concerning industries, economic facts and trends, and
portfolio strategies. There is no formula
18
<PAGE>
for such allocation. The research information received from brokers or
dealers may or may not be useful to the Funds and the Adviser in a number of
ways. The information may be in written form or may be obtained through
direct contact with individuals, and may include information on particular
issuers as well as market and general economic information. The Adviser will
not be deemed to have breached its obligations to the Funds solely by reason
of having caused the Funds to pay a broker or dealer an amount of commission
for effecting a securities transaction in excess of the amount of commission
another broker or dealer could have charged for effecting that transaction,
if the Adviser has determined in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research
services provided to the Funds and to other accounts of the Adviser.
In addition to placing the Funds' brokerage business with firms that
provide the above research, market and statistical services to the Adviser,
the Funds' brokerage business may also be placed with firms that promote the
sale of the Funds' shares or that agree to pay a portion of certain Fund
expenses, consistent with achieving the best price and execution.
In the fiscal year ended October 31, 1993, the Special Fund paid
$113,857, the Equity Fund paid $115,701, the Asset Allocation Fund paid
$225,228, the Income Fund paid $603, and the U.S. Government Income Fund paid
$384 in brokerage commissions. None of these commissions were paid to the
Funds' Distributor. The Oregon Bond Fund and the U.S. Government Money
Market Fund did not pay any brokerage commissions during the year ended
October 31, 1993, as these Funds executed all portfolio transactions on a
principal basis. The Real Estate Fund began operations in 1994.
In the fiscal year ended October 31, 1994, the Special Fund paid
$766,879, the Equity Fund paid $444,904, the Asset Allocation Fund paid
$309,181, the Income Fund paid $3,407, the U.S. Government Income Fund paid
$318, and the Real Estate Fund paid $71,851 in brokerage commissions. None
of these commissions were paid to the Funds' Distributor. The Oregon Bond
Fund and the U.S. Government Money Market Fund did not pay any brokerage
commissions in the year ended
19
<PAGE>
October 31, 1994, as these Funds executed all portfolio transactions on a
principal basis. Of the commissions paid in the fiscal year ending October
31, 1994 the Special Fund paid $550,799, the Equity Fund paid $253,908, the
Asset Allocation Fund paid $183,915, and the Real Estate Fund paid $60,795 in
commissions as a result of research provided by the brokers. None of the
other Funds directed brokerage on the basis of research provided by a broker.
In the fiscal year ended October 31, 1995, the Special Fund paid
$4,610,652, the Equity Fund paid $1,228,492, the Asset Allocation Fund paid
$279,948, the Income Fund paid $416, the U.S. Government Fund paid $144, and
the Real Estate Fund paid $60,139 in brokerage commissions. None of these
commissions were paid to the Funds' Distributor. The Oregon Bond Fund and
the U.S. Government Money Market Fund did not pay any brokerage commissions
in the year ended October 31, 1995, as these Funds executed all portfolio
transactions on a principal basis. Of the commissions paid in the fiscal
year ending October 31, 1995, the Special Fund paid $1,594,562, the Equity
Fund paid $754,846, the Asset Allocation Fund paid $180,671, and the Real
Estate Fund paid $44,614 in commissions as a result of research provided by
the brokers. None of the other Funds directed brokerage on the basis of
research provided by a broker.
Under the 1940 Act, persons affiliated with the Funds are prohibited
from dealing with the Funds as principals in the purchase or sale of
securities. The Funds or broker-dealers affiliated with the Adviser will not
deal with affiliated parties, including the Distributor, in connection with
principal transactions.
The SEC has the authority to issue and amend regulations involving
transactions with affiliates of the Funds. While there is no indication that
it will do so, the SEC may issue regulations at any time that would prohibit
the Funds from executing portfolio transactions through an affiliate. The
Funds' Boards of Directors will review all transactions with affiliates at
least quarterly and determine the overall reasonableness of any brokerage
commissions paid.
Even though investment decisions for the Funds are made independently
from those of the other accounts managed by the Adviser or its affiliates,
securities of the same issuer may be purchased, held, or sold by the Funds
and the other accounts, because the same security may be suitable for all of
them. When the Funds and such other accounts are simultaneously engaged in
purchase or sale of the same security, efforts will be made to allocate price
and amounts in an equitable manner. In some cases, this procedure may
adversely affect the price paid or received by the Funds or the size of the
position purchased or sold by the Funds.
20
<PAGE>
PORTFOLIO TURNOVER
- ------------------
The Funds generally do not trade in securities with the goal of
obtaining short-term profits, but when circumstances warrant, securities will
be sold without regard to the length of time the security has been held.
The Funds anticipate that, except in periods of unusual market
conditions, their annual portfolio turnover rate (the lesser of purchase or
sales of portfolio securities for the year divided by the monthly average of
the value of the portfolio securities owned by the Funds during the year)
will generally range between 20% and 150%, although Funds with smaller
portfolios may have portfolio turnover in excess of this range. However, the
rate of turnover will not be a limiting factor when the Funds deem it
desirable to purchase or sell securities. A higher portfolio turnover rate
may involve correspondingly greater transaction costs, which would be borne
directly by the Funds, as well as additional realized gains and/or losses to
shareholders.
-----------------------
INVESTMENT RESTRICTIONS
-----------------------
The investment restrictions described below have been adopted by the
Funds as fundamental investment policies. These fundamental investment
policies may not be changed without the approval of the holders of the lesser
of a majority of a Fund's outstanding shares or 67% of the shares represented
at a meeting of shareholders at which the holders of more than 50% of the
shares are represented.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage beyond the specified limit resulting
from a change in values of assets will not be considered a violation of the
investment restrictions relating to purchases of portfolio securities.
Each Fund, except the Special Fund, is prohibited from purchasing
securities when the total borrowings of that Fund exceed 5% of its total
assets.
Each Fund (except the Oregon Bond Fund and the Real Estate Fund) is
prohibited from investing more than 20% of its total assets in fixed income
securities, including convertible stock, that are rated less than Moody's Baa
or S&P BBB, or in commercial paper that is rated less than B-1 by Moody's or
A- by S&P; not more than 5% of a Fund's total assets may be invested in fixed
income securities that are unrated. Securities rated below the fourth
highest grade and unrated fixed income securities have speculative
characteristics and additional risks. These are described in "SPECIAL RISK
FACTORS TO BE CONSIDERED" in the Prospectus. The Oregon Bond and Real Estate
Funds are subject to more restrictive quality limitations as set forth below.
21
<PAGE>
THE CRABBE HUSON SPECIAL FUND, INC.
- -----------------------------------
THE CRABBE HUSON EQUITY FUND, INC.
- ----------------------------------
THE CRABBE HUSON ASSET ALLOCATION FUND, INC.
- --------------------------------------------
These Funds may not:
1. Invest an amount that exceeds 5% of the value
of a Fund's total assets in the securities of
any one issuer. This restriction does not
apply to holdings of U.S. Government
securities.
2. Invest more than 25% of their total assets in
any one industry. This restriction does not
apply to holdings of U.S. Government
securities.
3. Issue any senior securities, as defined in
the 1940 Act.
4. Purchase the securities of any issuer for the
purpose of exercising control of management,
and a Fund may not acquire or own more than
10% of any class of the securities of any
issuer.
5. Sell securities short, except in the case of
the Special Fund, as permitted in the
Prospectus.
6. Invest in any security that would subject a
Fund to unlimited liability, although the
Special Fund may sell securities short and
the Special, Equity and Asset Allocation may
invest in interest rate and stock market
futures.
7. Underwrite the securities of other issuers or
invest more than 10% of net assets in
illiquid securities, such as repurchase
agreements with a maturity in excess of seven
days. Notwithstanding the above, these Funds
may not invest in restricted securities
(including, but not limited to, nonpublicly
traded debt securities).
8. Invest in securities of other investment
companies, except as set forth in the
Statement of Additional Information under
"SECURITIES OF OTHER INVESTMENT COMPANIES."
9. Purchase securities on margin.
10. Write uncovered put or uncovered call
options.
22
<PAGE>
11. Purchase portfolio securities from or sell
securities directly to any of a Fund's, or
the Adviser's, officers, directors, or
employees as a principal for their own
account.
12. Purchase or sell commodities or commodity
contracts (stock index and interest rate
futures will not be considered commodity
contracts).
13. Purchase or sell real estate or real estate
mortgages, provided that the Fund may invest
in marketable securities, such as obligations
of the Government National Mortgage
Association, that are secured by real estate
or interests therein or are issued by
companies which invest in real estate or
interests therein, such as publicly traded
real estate investment trusts.
14. Purchase or sell interests in oil, gas, or
other mineral exploration or development
programs.
15. Lend portfolio securities, except as
described in the Statement of Additional
Information under "LOANS OF PORTFOLIO
SECURITIES."
16. Make loans to other persons, provided that,
for purposes of this restriction, the
acquisition of bonds, debentures, or other
corporate debt securities and investment in
government obligations, short-term commercial
paper, certificates of deposit, bankers'
acceptances, and repurchase agreements will
not be deemed to be the making of a loan.
17. Borrow money, except in an emergency or as
set forth in the Funds' Prospectus. In no
case will borrowing exceed one-third of the
value of a Fund's total assets immediately
after any such borrowing. If, for any
reason, the current value of a Fund's total
assets falls below an amount equal to three
times the amount of its indebtedness for
money borrowed, a Fund will, within three
days (not including Saturdays, Sundays and
holidays), reduce its indebtedness to the
extent necessary to satisfy the one-third
test.
18. Invest more than 10% of a Fund's total assets
in put or call options.
19. Invest more than 35% of a Fund's total assets
in foreign securities.
23
<PAGE>
20. Invest more than 10% of a Fund's total assets
in stock index futures.
21. Invest more than 10% of its total assets in
interest rate futures contracts.
THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC.
- --------------------------------------------------
This Fund may not:
1. With respect to at least 75% of the Fund's
total assets, invest an amount that exceeds
5% of the value of the Fund's total assets in
the securities of any one issuer or invest in
more than 10% of the outstanding voting
securities of any one issuer. This
restriction does not apply to holdings of
government securities.
2. Issue any senior securities, except as
permitted by paragraph 13 below. For
purposes of this restriction, the issuance of
shares of stock in multiple classes or
series, the purchase or sale of options,
future contracts and options on future
contracts, forward commitments and repurchase
agreements entered into in accordance with
the Fund's investment policy and the rules
and regulations of the SEC, and the pledge,
mortgage or hypothecation of the Fund's
assets within the meaning of paragraph 18
below, are not deemed to be senior
securities.
3. Purchase the securities of any issuer for the
purpose of exercising control of management,
and the Fund may not acquire or own more
than 10% of any class of the securities of
any company.
4. Sell securities short.
5. Invest in any security that would subject the
Fund to unlimited liability, although the
Fund may invest in interest rate and stock
market futures.
6. Purchase securities on margin.
7. Write uncovered put or uncovered call
options.
8. Purchase portfolio securities from or sell
securities directly to any of the Adviser,
officers, directors, or employees as a
principal for their own account.
24
<PAGE>
9. Purchase or sell commodities or commodity
contracts (stock index and interest rate
futures will not be considered commodity
contracts).
10. Purchase or sell real estate, real estate
limited partnership interests, or real estate
mortgages, provided that the Fund may invest
in securities that are secured by real estate
or interests therein and may purchase and
sell mortgage-related securities and may hold
and sell real estate acquired by the Fund as
a result of the ownership of securities.
11. Purchase or sell interests in oil, gas, or
other mineral exploration or development
programs.
12. Make loans to other persons, other than loans
resulting from the acquisition of bonds,
debentures, or other corporate debt
securities and investment in government
obligations, short-term commercial paper,
certificates of deposit, bankers'
acceptances, repurchase agreements (in
conformance with the Fund's investment policy
and the rules and regulations of the SEC) and
the lending of portfolio securities, as
described under "Loans of Portfolio
Securities" in the Statement of Additional
Information as set forth on the effective
date of the Registration Statement.
13. Borrow money, except as set forth below. The
Fund may borrow money from a bank as a
temporary measure for extraordinary defensive
purposes in amounts not to exceed 33-1/3% of
the Fund's total assets (including the amount
borrowed) taken at market value. The Fund
shall not use leverage to increase income and
will not purchase securities while
outstanding borrowings exceed 5% of the
Fund's total assets. If, for any reason, the
current value of the Fund's total assets
falls below an amount equal to three times
the amount of its indebtedness for money
borrowed, the Fund will, within three days
(not including Saturdays, Sundays and
holidays), reduce its indebtedness to the
extent necessary to satisfy the one-third
test.
14. Invest more than 10% of its total assets in
put or call options.
25
<PAGE>
15. Invest more than 10% of its total assets in
stock index or interest rate futures.
16. Pledge, mortgage or hypothecate its assets,
except to secure indebtedness permitted by
paragraph 13, and then only if such pledging,
mortgaging or hypothecating does not exceed
33-1/3% of the Fund's total assets taken at
market value.
17. Invest more than 5% of its total assets in
"restricted securities" (I.E., securities
that would be required to be registered prior
to distribution to the public), excluding
restricted securities eligible for resale to
certain institutional investors pursuant to
Rule 144A of the Securities Act of 1933;
provided, however, that no more than 15% of
the Fund's total assets may be invested in
restricted securities, including securities
eligible for resale under Rule 144A. In
addition, the Fund may invest up to 15% of
its net assets in illiquid investments, which
includes securities that are not readily
marketable, repurchase agreements maturing in
more than seven days and privately issued
SMBS, based upon a determination by the Board
that the SMBS is illiquid. The Board of
Directors shall adopt guidelines and delegate
to the Adviser the daily function of
determining and monitoring the liquidity of
its investments. The Board, however, will
retain sufficient oversight and will be
ultimately responsible for the
determinations.
18. Invest more than 25% of its total asset value
in the purchase of when-issued and delayed-
delivery securities.
THE OREGON MUNICIPAL BOND FUND, INC.
- ------------------------------------
This Fund may not:
1. Purchase common stocks, preferred stocks,
warrants, or other equity securities.
2. Purchase securities of any issuer (other than
obligations of, or guaranteed by, the United
States Government, its agencies, or
instrumentalities) if, as a result, more than
25% of the value of the Fund's total assets
would be invested in securities of that
issuer. For purposes of this limitation,
each governmental subdivision (I.E., state,
territory, possession of the United States,
or any
26
<PAGE>
political subdivision of any of the
foregoing, including agencies, authorities,
instrumentalities, or similar entities) will
be considered a separate issuer if its assets
and revenues are separate from those of the
government body creating it and the
securities are backed only by its own assets
and revenues. In the case of an industrial
development bond, if the security is backed
only by the assets and revenues of a
nongovernmental user, then such
nongovernmental user will be deemed to be the
sole issuer. However, if an industrial
development bond or governmental issue is
guaranteed by a governmental or some other
entity, such guaranty shall be considered a
separate security issued by the guarantor as
well as the nongovernmental user, subject to
limited exclusions allowed by the 1940 Act.
3. With respect to at least 50% of the Fund's
total assets, purchase securities of any
issuer (except securities issued or
guaranteed by the United States government or
its agencies or instrumentalities) if, as a
result, more than 5% of the value of the
Fund's total assets would be invested in
securities of that issuer.
4. Invest more than 10% of the Fund's total
assets in securities of issuers that, with
their predecessors, have a record of less
than 3 years of continuous operation.
5. Lend its funds or other assets to others
(except through the purchase of debt
obligations or repurchase agreements in
accordance with its investment objectives and
policies). Although such loans are not
presently intended, this prohibition will not
preclude the Fund from loaning securities to
broker-dealers or other institutional
investors if at least 100% cash collateral is
pledged and maintained by the borrower,
provided such security loans may not be made
if, as a result, the aggregate of such loans
exceeds 10% of the value of the Fund's total
assets.
6. Borrow money, except from banks as a
temporary measure for extraordinary or
emergency purposes, and then only in an
amount up to one-third of the value of its
total assets, in order to meet redemption
requests without immediately selling any
portfolio securities.
27
<PAGE>
If, for any reason, the current value of
the Fund's total assets falls below an
amount equal to three times the amount of
its indebtedness from money borrowed, the
Fund will, within three days (not
including Saturdays, Sundays, and
holidays), reduce its indebtedness to the
extent necessary to satisfy the one-third
test. The Fund will not borrow for
leverage purposes and will not make any
additional investments while borrowings
exceed 5% of the value of its total assets.
7. Pledge, mortgage, or hypothecate its assets,
except that, to secure borrowing permitted by
paragraph six above, the Fund may pledge up
to 10% of the value of its total assets.
8. Make short sales of securities, or purchase
any securities on margin except to obtain
such short-term credits as may be necessary
for the clearance of transactions.
9. Write, purchase, or sell puts, calls, or
combinations thereof, except rights to resell
municipal securities to the persons from whom
they are purchased.
10. Concentrate more than 25% of the value of its
total assets in any one industry; PROVIDED
HOWEVER, that, for purposes of this
limitation, tax-exempt municipal securities
and United States Government obligations are
not considered to be part of any industry.
For purposes of this restriction, industrial
development bonds, where the payment of
principal and interest is the ultimate
responsibility of companies within the same
industry, are grouped together as one
"industry."
11. Purchase or retain the securities of any
issuer if those individual officers or
directors of the Fund, the Adviser, each
owning beneficially more than 1/2 of 1% of
the securities of such issuer, together own
more than 5% of the securities of such
issuer.
12. Invest in securities subject to legal or
contractual restrictions on resale or in
repurchase agreements maturing in more than
seven days if, as a result of such
investment, more than 10% of the net assets
of the Fund would be invested in such
securities.
28
<PAGE>
13. Invest in companies for the purpose of
exercising control or management.
14. Invest in commodities or commodity futures
contracts or oil, gas, or other mineral
exploration or development programs or in
real estate or interests therein.
15. Invest in securities of other investment
companies, except as set forth in the
Statement of Additional Information under
"Securities of Other Investment Companies."
16. Underwrite securities issued by others,
except to the extent the Fund may be deemed
to be an underwriter under the federal
securities laws, in connection with the
disposition of portfolio securities.
17. Issue senior securities, as defined in the
1940 Act.
THE CRABBE HUSON INCOME FUND, INC.
- ---------------------------------
This Fund may not:
1. Buy or sell common stock.
2. Issue any senior securities, as defined in
the 1940 Act.
3. Sell securities short.
4. Purchase securities on margin.
5. Purchase or sell commodities or commodity
contracts (except interest rate futures
contracts as defined in the Statement of
Additional Information).
6. Invest an amount that exceeds 5% of the value
of the Fund's total assets in the securities
of any one issuer. This restriction does not
apply to holdings of U.S. Government
securities.
7. Invest more than 25% of its total assets in
any one industry (except U.S. Government
securities).
8. Purchase the securities of any issuer for the
purpose of exercising control of management,
and the Fund may not acquire or own more than
10% of any class of the securities of any
issuer.
29
<PAGE>
9. Invest in any security that would subject the
Fund to unlimited liability.
10. Underwrite the securities of other issuers or
invest more than 10% of its net assets in
illiquid securities, such as repurchase
agreements with a maturity in excess of seven
days. Notwithstanding the above, the Fund
may not invest in restricted securities
(including, but not limited to, nonpublicly
traded debt securities).
11. Invest in securities of other investment
companies, except as set forth in the
Statement of Additional Information under the
heading "SECURITIES OF OTHER INVESTMENT
COMPANIES."
12. Write uncovered put or uncovered call
options.
13. Purchase portfolio securities from or sell
securities directly to any of the Funds', or
the Adviser's, officers, directors, or
employees as principal for their own account.
14. Purchase or sell real estate or real estate
mortgages, provided that the Fund may invest
in marketable fixed income securities that
are secured by real estate or interests
therein.
15. Purchase or sell interests in oil, gas, or
other mineral exploration or development
programs.
16. Lend portfolio securities, except as
described in the Statement of Additional
Information under "LOANS OF PORTFOLIO
SECURITIES."
17. Make loans to other persons, provided that,
for purposes of this restriction, the
acquisition of bonds, debentures, or other
corporate debt securities and investment in
government obligations, short-term commercial
paper, certificates of deposit, bankers'
acceptances, and repurchase agreements will
not be deemed to be the making of a loan.
18. Invest more than 10% of the Fund's total
assets in interest rate futures.
19. Borrow money, except in an emergency. In no
case will borrowing exceed one-third of the
value of the Fund's total assets immediately
after any such borrowing. If, for any
reason, the current value of a Fund's total
assets
30
<PAGE>
falls below an amount equal to 3 times
the amount of its indebtedness for money
borrowed, a Fund will, within 3 days (not
including Saturdays, Sundays and holidays),
reduce its indebtedness to the extent
necessary to satisfy the one-third test.
20. Invest more than 35% of the Fund's total
assets in foreign securities.
THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC.
- --------------------------------------------------
This Fund may not:
1. Buy or sell common stock.
2. Issue any senior securities, as defined in
the 1940 Act.
3. Sell securities short.
4. Purchase securities on margin.
5. Invest in any security that would subject the
Fund to unlimited liability.
6. Underwrite the securities of other issuers or
invest more than 10% of its net assets in
illiquid securities, such as repurchase
agreements with a maturity in excess of seven
days. Notwithstanding the above, the Fund
may not invest in restricted securities
(including, but not limited to, nonpublicly
traded debt securities).
7. Invest in securities of other investment
companies.
8. Write uncovered put or uncovered call
options.
9. Purchase securities that are other than
direct or indirect obligations of the United
States Government or its agencies or
instrumentalities and repurchase agreements
with respect to those obligations.
10. Borrow money, except in an emergency. In no
case will borrowing exceed one-third of the
value of a Fund's total assets immediately
after any such borrowing. If, for any
reason, the current value of a Fund's total
assets falls below an amount equal to three
times the amount of its indebtedness of money
borrowed, a Fund will, within three days (not
including Saturdays, Sundays and holidays),
reduce its
31
<PAGE>
indebtedness to the extent
necessary to satisfy the one-third test.
11. Purchase portfolio securities from or sell
securities directly to any of the Funds', or
the Adviser's, officers, directors, or
employees as principal for their own account.
12. Purchase or sell commodities or commodity
contracts.
13. Lend portfolio securities, except as
described in the Statement of Additional
Information under "Loans of Portfolio
Securities."
14. Invest more than 10% of the Fund's total
assets in repurchase agreements.
15. Invest more than 25% of the Fund's total
assets in government securities maturing in
more than five years.
16. Purchase or sell real estate or real estate
mortgages, provided that the Fund may invest
in marketable fixed income securities that
are secured by real estate or interests
therein.
THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC.
- -------------------------------------------------------
This Fund may not:
1. Buy or sell common stock.
2. Issue any senior securities, as defined in
the 1940 Act.
3. Sell securities short.
4. Purchase securities on margin.
5. Purchase or sell commodities or commodity
contracts.
6. Invest an amount that exceeds 5% of the value
of the Fund's total assets in the securities
of any one issuer (excluding U.S. Government
securities).
7. Invest more than 25% of its total assets in
any one industry (excluding U.S. Government
securities).
8. Purchase securities that are other than
direct or indirect obligations of the United
States Government or its agencies or
32
<PAGE>
instrumentalities and repurchase agreements
with respect to those obligations.
9. Purchase the securities of any issuer for the
purpose of exercising control of management,
and the Fund may not acquire or own more than
10% of any class of the securities of any
issuer.
10. Invest in any security that would subject the
Fund to unlimited liability.
11. Underwrite the securities of other issuers or
invest more than 10% of its net assets in
illiquid securities, such as repurchase
agreements with a maturity in excess of seven
days. Notwithstanding the above, the Fund
may not invest in restricted securities
(including, but not limited to, nonpublicly
traded debt securities).
12. Invest in securities of other investment
companies.
13. Write uncovered put or uncovered call
options.
14. Purchase portfolio securities from or sell
securities directly to any of the Funds', or
the Adviser's, officers, directors, or
employees as principal for their own account.
15. Purchase or sell real estate or real estate
mortgages, provided that the Fund may invest
in marketable securities that are secured by
real estate or interests therein or are
issued by companies which invest in real
estate or interests therein, such as publicly
traded real estate investment trusts.
16. Purchase or sell interests in oil, gas, or
other mineral exploration or development
programs.
17. Lend portfolio securities, except as
described in the Statement of Additional
Information under "LOANS OF PORTFOLIO
SECURITIES."
18. Make loans to other persons, provided that,
for purposes of this restriction, the
acquisition of bonds, debentures, or other
corporate debt securities and investment in
government obligations, short-term commercial
paper, certificates of deposit, bankers'
acceptances, and repurchase agreements will
not be deemed to be the making of a loan.
33
<PAGE>
19. Borrow money, except as set forth in the
Funds' Prospectus. In no case will borrowing
exceed one third of the value of a Fund's
total assets immediately after any such
borrowing. If, for any reason, the current
value of a Fund's total assets falls below an
amount equal to three times the amount of its
indebtedness of money borrowed, a Fund will,
within three days (not including Saturdays,
Sundays and holidays), reduce its
indebtedness to the extent necessary to
satisfy the one-third test.
20. Purchase any corporate debt security rated
less than AA by S&P or Aa by Moody's.
21. Purchase any debt security with a maturity in
excess of one year from the date of purchase.
22. Purchase any short-term, unsecured promissory
notes of corporations, including variable
amount master demand notes, which at the date
of investment are rated less than A-1 by S&P
or B-1 by Moody's or, if not so rated, which
the Board has determined are of comparable
quality to such rated securities.
SECURITIES OF OTHER INVESTMENT COMPANIES
- ----------------------------------------
The Funds will not invest in securities of other investment companies
(I.E., mutual funds), except in connection with a merger, consolidation,
reorganization, or acquisition of assets, and except to the extent permitted
by Section 12 of the 1940 Act (which currently provides that no more than 10%
of the total assets of a Fund may be invested in securities of other
investment companies, no more than 5% of the total assets of a Fund may be
invested in securities of any other single investment company, and no more
than 3% of total outstanding voting stock of any one investment company may
be purchased). All such securities must be acquired by a Fund in the open
market in transactions involving no commissions or discounts to a sponsor or
dealer (other than customary brokerage commissions). The issuers of
investment company securities acquired by a Fund are not required to redeem
such securities in an amount exceeding 1% of such issuers' total outstanding
securities during any period of less than 30 days, and a Fund will vote all
proxies with respect to such securities in the same proportion as the vote of
all other holders of such securities. The U.S. Government Income Fund and
the U.S. Government Money Market Fund may not purchase the securities of
other investment companies.
34
<PAGE>
-----------------------------
LOANS OF PORTFOLIO SECURITIES
-----------------------------
Loan transactions involve the lending of securities to
a broker-dealer or institutional investor for its use in
connection with short sales, arbitrage or other securities
transactions. Loans of portfolio securities of the Funds
will be made, if at all, in strict conformity with
applicable federal and state rules and regulations. The
term of any such loans will generally not exceed nine
months.
The Funds will engage in loan transactions only if the
following conditions are met: (1) a Fund must receive at
least 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the
borrower; (2) the borrower must increase the collateral
whenever the market value of the securities loaned
(determined on a daily basis) rises above the level of the
collateral; (3) a Fund must be able to terminate the loan
after notice at any time; (4) a Fund must receive reasonable
interest on the loan or a flat fee from the borrower, as
well as amounts equivalent to any dividends, interest or
other distributions on the securities loaned and any
increase in the market value of the securities; (5) a Fund
may pay only reasonable custodian fees in connection with
the loan; and (6) voting rights on the securities loaned may
pass to the borrower. If a material event affecting the
investment occurs, the directors of a Fund must be able to
terminate the loan and vote proxies or enter into an
alternative arrangement with the borrower to enable the
directors to vote proxies. Excluding items (1) and (2),
these practices may be amended from time to time as
regulatory provisions dictate.
While there may be delays in recovery of loaned
securities or even a loss of the securities loaned should
the borrower default, loans will be made only to firms or
broker-dealers deemed by the Adviser to be of good standing
and will not be made unless, in the judgment of the Adviser,
the consideration to be earned from such loans would justify
the risk. Such loan transactions are referred to in this
section as "qualified loan transactions."
The purpose of a qualified loan transaction is to
afford a Fund the opportunity to continue to earn income on
the securities loaned and, at the same time, to earn income
on the collateral held by it. In furtherance of this
purpose, the cash collateral acquired through qualified loan
transactions may be invested in any obligation in which a
Fund is authorized to invest in accordance with its
investment objectives. The investment of the cash
collateral in other obligations subjects that investment, as
well as the security loaned, to market forces, I.E., capital
appreciation or depreciation, just like any other portfolio
security.
35
<PAGE>
--------------------------------------
PURCHASE AND REDEMPTION OF FUND SHARES
--------------------------------------
Information concerning the purchase and redemption of
each Fund's shares is set forth under "HOW TO INVEST IN THE
FUNDS" and "HOW TO SELL YOUR SHARES" in the Funds'
Prospectus.
Each Fund has entered into a distribution agreement
with the Distributor. These agreements obligate the
Distributor to pay certain expenses in connection with the
offering of shares of the Funds, including expenses related
to the printing of prospectuses and statements of additional
information, the preparation and printing of sales
literature, and other distribution-related expenses. Shares
of the Funds are offered continuously to the public by the
Distributor and broker-dealers who enter into sales
agreements with the Distributor. Additional information
about the distribution plans is provided under "HOW TO
INVEST IN THE FUNDS" in the Prospectus.
During the fiscal year ended October 31, 1993, the
Funds paid the following aggregate sales commissions and
distribution fees to the Distributor and the Dealers:
<TABLE>
<CAPTION>
Total
Paid Distributor Dealers
-------- ----------- -------
Distribution Distribution
Fees Commissions Fees Commissions
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Special Fund $ 15,061 $12,359 $ -0- $ 2,702 $ -0-
Equity Fund 39,034 29,495 -0- 9,539 -0-
Asset Allocation
Fund 166,158 86,657 -0- 79,501 -0-
Oregon Bond Fund 50,411 16,652 -0- 33,759 -0-
Income Fund 9,669 5,185 -0- 4,484 -0-
U.S. Government
Income Fund 17,014 11,416 -0- 5,598 -0-
U.S. Government
Money Market Fund 12,200 7,947 -0- 4,259 -0-
</TABLE>
During the fiscal year ended October 31, 1994, the
Funds paid the following aggregate sales commissions and
distribution fees to the Distributor and the Dealers:
36
<PAGE>
<TABLE>
<CAPTION>
Total
Paid Distributor Dealers
-------- ----------- -------
Distribution Distribution
Fees Commissions Fees Commissions
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Special Fund $100,461 $92,906 $-0- $7,555 $-0-
Real Estate Fund 11,265 11,253 -0- 12 -0-
Equity Fund 102,058 73,886 -0- 28,172 -0-
Asset Allocation
Fund 187,265 85,787 -0- 101,478 -0-
Oregon Bond Fund 56,262 23,574 -0- 32,688 -0-
Income Fund 10,978 5,812 -0- 5,166 -0-
U.S. Government
Income Fund 19,149 15,271 -0- 3,878 -0-
U.S. Government
Money Market Fund 35,927 33,321 -0- 2,606 -0-
</TABLE>
During the fiscal year ended October 31, 1995, the
Funds paid the following aggregate sales commissions and
distribution fees to the Distributor and the Dealers:
<TABLE>
<CAPTION>
Total
Paid Distributor Dealers
---------- ----------- -------
Distribution Distribution
Fees Commissions Fees Commissions
------------ ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Special Fund $1,809,820 $84,322 $-0- $1,725,498 $-0-
Real Estate Fund 81,437 475 -0- 81,912 -0-
Equity Fund 621,909 28,862 -0- 650,771 -0-
Asset Allocation
Fund 421,755 5,194 -0- 426,949 -0-
Oregon Bond Fund 61,567 479 -0- 62,046 -0-
Income Fund 26,760 794 -0- 27,554 -0-
U.S. Government
Income Fund 35,826 1,046 -0- 36,872 -0-
U.S. Government
Money Market Fund 146,868 6,091 -0- 152,959 -0-
</TABLE>
---------------------------------
U.S. GOVERNMENT MONEY MARKET FUND
---------------------------------
The U.S. Government Money Market Fund uses the amortized
cost method of valuing its investments, which facilitates the
maintenance of the Fund's per share net asset value at $1.00.
The U.S. Government Money Market Fund intends to maintain its net
asset value at a constant one dollar per share, although there is
no assurance that it will be able to do so.
The extent of deviation between the U.S. Government Money
Market Fund's net asset value based upon available market
quotations or market equivalents and $1.00 per share based on
amortized cost will be periodically examined by the Directors.
If such deviation exceeds 1/2 of 1%, the Directors will promptly
consider what action, if any, will be initiated. In the event the
37
<PAGE>
Directors determine that a deviation exists which may result
in material dilution or other unfair results to investors or
existing shareholders, they will cause the U.S. Government Money
Market Fund to take such corrective action as they regard to be
necessary and appropriate to eliminate or reduce to the extent
reasonably practicable such dilution or unfair results. Such
action may include the sale of U.S. Government Money Market Fund
instruments prior to maturity to realize capital gains or losses
or to shorten average portfolio maturity; withholding part or all
of dividends or payment of distributions from capital or capital
gains; redemptions of shares in kind; or establishing a net asset
value per share by using available market quotations or
equivalents. In addition, in order to stabilize the net asset
value per share at $1.00, the Directors have the authority (i) to
reduce or increase the number of shares outstanding on a pro rata
basis, and (ii) to offset each shareholder's pro rata portion of
the deviation between the net asset value per share and $1.00
from the shareholder's accrued dividend account or from future
dividends.
-----------------------------------
PRICING OF SECURITIES BEING OFFERED
-----------------------------------
The price for shares of a Fund is the next determined net
asset value of the Fund per share.
Each Fund's net asset value per share is computed by
dividing the value of the securities held by the Fund plus any
cash or other assets (including interest and dividends accrued
but not yet received) minus all liabilities (including accrued
expenses) by the total number of shares outstanding at such time.
Expenses, including the fees payable to the Adviser, are accrued
daily to the extent practicable.
Dividends receivable are treated as assets from the date on
which securities go ex-dividend and interest on bonds is accrued
daily.
---------------------
YIELD AND PERFORMANCE
---------------------
The Funds will from time to time advertise or quote their
respective yields and total return performance. These figures
are calculated according to SEC rules standardizing such
computations and represent historical data. The investment
return and principal value (except for the U.S. Government Money
Market Fund) will fluctuate so that shares when redeemed may be
worth more or less than their original cost.
The Funds may, from time to time, include in such
advertisements or quotes comparisons of a Fund's yield or total
return performance against one or more indices of stock or bond
performance. Such indices include, for example, the Standard &
Poor's 500 Stock Index, Dow Jones Industrial, Value Line Rates,
and the Shearson Lehman Government/Corporate Bond Index.
38
<PAGE>
THE U.S. GOVERNMENT MONEY MARKET FUND
- -------------------------------------
Current yield is calculated by dividing the net change in
the value of an account of one share during an identified seven-
calendar-day period by the value of the one share account at the
beginning of the same period ($1.00) and multiplying that base
period return by 365/7, I.E.:
net change in value of account with one share x 365 = Current
- --------------------------------------------- ---
value of account at beginning of period 7 Yield
Compounded effective yield is calculated by daily
compounding of the base period return referred to above.
This calculation is made by adding 1 to the base period
return, raising the sum to a number equal to 365 divided by
7, and subtracting 1 from the result, I.E.:
[(base period return + 1) 365/7] -1 = Compounded Effective Yield
The determination of net change in the value of an
account for purposes of the U.S. Government Money Market
Fund yield calculations reflects the value of additional
shares purchased with income dividends from the original
share, and income dividends declared on both the original
share and such additional shares. The determination of net
change does not reflect realized gains or losses from the
sale of securities or realized appreciation or depreciation.
The U.S. Government Money Market Fund includes unrealized
appreciation or depreciation, as well as unrealized gains or
losses, in the determination of actual daily dividends.
Therefore, the quoted yields as calculated above may differ
from the actual dividends paid.
The U.S. Government Money Market Fund's seven-day yield
and effective yield as of the date of the most recent
statement of assets and liabilities included in this
registration statement is 4.98% and 5.11%, respectively.
YIELD
- -----
Current yield of the Oregon Bond Fund, the Income Fund
and the U.S. Government Income Fund is calculated by
dividing the net investment income per share earned during
an identified 30-day period by the maximum offering price
per share on the last day of the same period, according to
the following formula:
6
YIELD = 2 [( a-b + 1) -1]
---
cd
39
<PAGE>
Where: a = dividends and interest earned
during the period.
b = expenses accrued for the period
(net of reimbursements).
c = the average daily number of shares
outstanding during the period that
were entitled to receive dividends.
d = the maximum offering price per
share on the last day of the
period.
The Funds use generally accepted accounting principles
in determining actual income paid, which differ in some
instances from SEC rules for computing income for the above
yield calculations. Therefore, the quoted yields as
calculated above may differ from the actual dividends paid.
The Oregon Bond, Income and U.S. Government Income
Funds' yields for the 30-day period ended the date of the
most recent statement of assets and liabilities included in
this registration statement were 7.41%, 5.60%, and 5.17%,
respectively.
The Real Estate Fund's yield is computed by dividing
the Fund's net investment income per share during a base
period of 30 days, or one month, by the maximum offering
price per share of the Fund on the last day of such base
period in accordance with the following formula:
6
YIELD = 2 [( a-b + 1) -1]
---
cd
Where: a = interest earned during the period
b = net expenses accrued for the period
c = the average daily number of shares
outstanding during the period that
were entitled to receive dividends
d = the maximum offering price per
share on the last day of the period
For purposes of calculating interest earned on debt
obligations as provided in item "a" above:
(i) The yield to maturity of each obligation held by
the Fund is computed based on the market value of the
obligation (including actual accrued interest, if any) at
the close of business each day during the 30-day base
period, or, with respect to obligations purchased during the
month, the purchase price (plus actual accrued interest, if
any) on
40
<PAGE>
settlement date, and with respect to obligations
sold during the month the sale price (plus actual accrued
interest, if any) between the trade and settlement dates.
(ii) The yield to maturity of each obligation is then
divided by 360 and the resulting quotient is multiplied by
the market value of the obligation (including actual accrued
interest, if any) to determine the interest income on the
obligation for each day. The yield to maturity calculation
has been made on each obligation during the 30-day base
period.
(iii) Interest earned on all debt obligations during
the 30-day or one month period is then totaled.
(iv) The maturity of an obligation with a call
provision(s) is the next call date on which the obligation
reasonably may be expected to be called or, if none, the
maturity date.
With respect to the treatment of discount and premium
on mortgage or other receivables-backed obligations which
are expected to be subject to monthly payments of principal
and interest ("pay downs"), the Fund accounts for gain or
loss attributable to actual monthly pay downs as an increase
or decrease to interest income during the period. In
addition, the Fund may elect (i) to amortize the discount or
premium remaining on a security, based on the cost of the
security, to the weighted average maturity date, if such
information is available, or to the remaining term of the
security, if the weighted average maturity date is not
available, or (ii) not to amortize the remaining discount or
premium on a security.
The Fund's yield for the 30-day period ended the date
of the most recent statement of assets and liabilities
included in this registration statement was 4.15%.
The Oregon Bond Fund may publish a tax equivalent yield
for Oregon shareholders that represents the yield that an
investor would have to receive on a fully taxable investment
to achieve the same after-tax results at the highest then-
existing marginal combined Oregon and Federal income tax
rates, calculated according to the following formula:
Tax Equivalent Yield = a + c + e + g
--- --- ---
1-b 1-d 1-f
Where: a = that portion of the current yield of the
Fund that is exempt from Federal and
Oregon income tax.
b = highest then-existing marginal combined
Federal and Oregon income tax rate.
41
<PAGE>
c = that portion of the current yield of the
Fund that is only exempt from Federal
gross income tax.
d = highest then-existing Federal income tax
rate.
e = that portion of the current yield of the
Fund that is only exempt from Oregon
gross income tax.
f = highest then-existing Oregon income tax
rate.
g = that portion of the current yield of the
Fund that is not tax exempt.
The tax equivalent yield for the 30-day period ended
the date of the most recent statement of assets and
liabilities included in this registration statement was
3.83%.
The Oregon Bond Fund may also publish a tax equivalent
yield for residents of Oregon that represents the yield that
an investor would have to receive on a fully taxable
investment to achieve the same after-tax results of the
highest then-existing marginal Federal income tax rate,
calculated according to the following formula:
Tax Equivalent Yield = a + c
---
1-b
Where: a = that portion of the current yield of the
Fund that is exempt from Federal income
tax.
b = highest then-existing marginal Federal
income tax rate
c = that portion of the current yield of the
Fund that is not tax exempt.
The tax equivalent yield for the Oregon Bond Fund,
calculated according to the above formula, for the 30-day
period ended the date of the most recent statement of assets
and liabilities included in this registration statement was
6.34%.
The U.S. Government Income Fund may publish a tax
equivalent yield for residents of Oregon that represents the
yield that an investor would have to receive on a fully
taxable investment to achieve the same after-tax results of
the highest then-existing marginal Oregon income tax rate,
calculated according to the following formula:
Tax Equivalent Yield = a + c
---
1-b
42
<PAGE>
Where: a = that portion of the current yield of the
Fund that is exempt from Federal income
tax.
b = highest then-existing marginal Oregon
income tax rate
c = that portion of the current yield of the
Fund that is not tax exempt.
The tax equivalent yield for the U.S. Government Income
Fund, calculated according to the above formula, for the 30-
day period ended October 31, 1995 was 5.17%.
TOTAL RETURN
- ------------
The Funds may also publish average annual total return
quotations for recent one, five and ten year periods
computed by finding the average annual compounded rates of
return over the one, five and ten year periods that would
equate the initial amount invested to the ending redeemable
value, according to the following formula:
P(1+T)(n) = ERV
Where: P = a hypothetical initial payment of
$1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a
hypothetical $1,000 payment made at
the beginning of the 1, 5 or 10
year periods (or fractional portion
thereof)
Total return figures may also be published for recent
one, five and ten year periods where the total return
figures represent the percentage return for the one, five
and ten year periods that would equate the initial amount
invested to the ending redeemable value. Total return
percentages for periods of less than one year are usually
annualized.
If a Fund's registration statement under the 1940 Act
has been in effect less than one, five or ten years, the
time period during which the registration statement has been
in effect will be substituted for the period stated.
The average annual total return for the one- and five-
year periods ended the date of the most recent statement of
assets and liabilities included in this statement was, for
the Special Fund, 1.78%, and 23.29%, respectively; for the
Equity Fund, 13.37%, and 22.19%, respectively; for the Asset
Allocation Fund,
43
<PAGE>
13.0% and 14.22%, respectively; for the
Oregon Bond Fund, 10.66% and 7.02%, respectively; for the
Income Fund, 11.92% and 7.88%, respectively; for the U.S.
Government Income Fund, 9.12% and 6.68%, respectively; and
for the U.S. Government Money Market Fund, 5.30% and 4.03%,
respectively. The average annual total return for the
Special Fund for the seven year period ended on the same
date was 17.06%. The average annual total return for the
Oregon Bond Fund for the ten-year period ended on the same
date was 7.87%. The average annualized total return for the
Real Estate Fund for the one-year period ended on the same
date was 8.31%.
OTHER QUOTATIONS, COMPARISONS AND GENERAL INFORMATION
- -----------------------------------------------------
From time to time, in advertisements, in sales
literature, or in reports to shareholders, the past
performance of the Funds may be illustrated and/or compared
with that of other mutual funds with similar investment
objectives, and to stock or other relevant indices. For
example, a Fund's total return may be compared to averages
or rankings prepared by Lipper Analytical Services, Inc., a
widely recognized independent service which monitors mutual
fund performance; the Standard & Poor's 500 Stock Index, an
unmanaged index of common stocks; or the Dow Jones
Industrial Average, a recognized unmanaged index of common
stock of 30 industrial companies listed on the New York
Stock Exchange (the "NYSE").
In addition, the performance of the Funds may be
compared to alternative investment or savings vehicles
and/or to indexes or indicators of economic activity, e.g.,
inflation or interest rates. Performance rankings and
listings reported in newspapers or national business and
financial publications, such as Barron's, Business Week,
Consumer's Digest, Consumer's Report, Financial World,
Forbes, Fortune, Investor's Business Daily, Kiplinger's,
Personal Finance Magazine, Money Magazine, the New York
Times, Smart Money, USA Today, U.S. News and World Report,
The Wall Street Journal and Worth may also be cited (if the
Fund is listed in any such publication) or used for
comparison, as well as performance listings and rankings
from various other sources, including Bloomberg Financial
Systems, CDA/Wiesenberger Investment Companies Service,
Donoghue's Mutual Fund Almanac, Investment Company Data,
Inc., Johnson's Charts, Kanon Bloch Carre & Co., Micropal,
Inc., Morningstar, Inc., Schabacker Investment Management,
Towers Data Systems and Weisenberger Investment Companies
Service.
In addition, from time to time, quotations from
articles from financial publications, such as those listed
above, may be used in advertisements, in sales literature or
in reports to shareholders of the Funds.
44
<PAGE>
----------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
----------------------------------
GENERAL
- -------
Each of the Funds intends to qualify as a regulated
investment company under Part I of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), but
there is no assurance that they will be able to do so. In
general, to qualify for this treatment, the Fund must, among
other things, derive at least 90% of its gross income from
dividends, interest, gains from the sale of securities, and
certain related income; derive less than 30% of its gross
income from the sale of securities held less than three
months; invest in securities within certain statutory
limits; and distribute to its shareholders at least 90% of
its taxable income and 90% of its net exempt interest
income, if any, for the taxable year. If the Fund does not
so qualify, it will be treated for tax purposes as an
ordinary corporation and will receive no tax deduction for
payments made to shareholders.
As regulated investment companies, the Funds will be
taxed at regular corporate rates only on the undistributed
portion of their net income and capital gains.
If a Fund is required to pay federal income taxes on
any retained Net Capital Gain (I.E., the excess of net long-
term capital gains over net short-term capital losses and
any capital loss carryover), that Fund may elect to treat
such gain as having been distributed to its shareholders.
The election will cause such amounts to be taxed to the
shareholders. Each shareholder may claim a credit against
his income taxes equal to such shareholder's proportionate
share of the federal income tax liability that is paid by
that Fund, and will generally be entitled to increase the
adjusted tax basis of his shares in that Fund by the
difference between his pro rata share of such gains and his
tax credit.
The Code requires a regulated investment company to pay
a nondeductible 4% excise tax if such company does not
distribute at least 98% of its ordinary income, determined
on a calendar year basis, and 98% of its capital gains,
determined, in general, on an October 31 year-end. The tax
is generally applied against the excess of this required
distribution over the amount actually distributed. The
Funds intend to distribute an amount of income and capital
gains that is sufficient to avoid imposition of the 4%
excise tax.
The value of any shares redeemed by the Funds or
repurchased or otherwise sold may be more or less than the
shareholder's tax basis in the shares at the time the
redemption, repurchase or sale is made. Any gain or loss
will generally be taxable for federal income tax purposes.
45
<PAGE>
Any loss realized on the sale, redemption or repurchase of
shares of the Funds that have been held by the shareholder
for six months or less will be treated for tax purposes as a
long-term capital loss to the extent of any net long-term
capital gains distributions received by the shareholder with
respect to such shares. Losses on the redemption or on the
sale of shares of the Funds are not deductible if, and to
the extent that, within a period beginning 30 days before
the date of the redemption or sale and ending 30 days after
such date, the taxpayer acquires other Fund shares.
The writing of call options and other investment
techniques and practices which some Funds may utilize, as
described in the Prospectus under "Fundamental Policies,"
may create "straddles" for United States federal income tax
purposes and may affect the character and timing of the
recognition of gains and losses by such Funds. Such
transactions may increase the amount of short-term capital
gain realized by such Funds, which is taxed as ordinary
income when distributed to shareholders.
Dividends paid by the Funds will qualify for the
dividends-received deductions for corporations to the extent
they are derived from dividends paid by domestic
corporations.
Distributions, if any, of net long-term capital gains
from the sale of the Funds' securities are taxable to
shareholders of the Funds at capital gains rates, regardless
of the length of time the shareholder has owned shares of
the Funds and regardless of whether the distributions are
reinvested in shares of the Funds.
The Funds are required by federal law to obtain from
each of their shareholders certification of the
shareholder's correct taxpayer identification number and
certain other information. If a shareholder fails to
certify such number or to provide the necessary information
to the Funds, or if the Funds receive certain notices from
the Internal Revenue Service, the Funds will be required to
withhold and pay to the United States Treasury 20% of any
reportable dividends or interest paid to such shareholder.
THE OREGON MUNICIPAL BOND FUND, INC.
- ------------------------------------
As stated in the Prospectus, the Oregon Bond Fund
expects to qualify in the current and future fiscal years as
a regulated investment company under the Code. If it does
not so qualify, it will be treated for tax purposes as an
ordinary corporation and will receive no tax deduction for
payments made to shareholders and will be unable to pay
"exempt interest dividends," as discussed in the Prospectus.
From time to time, proposals have been introduced
before Congress and the Internal Revenue Service for the
purpose of
46
<PAGE>
restricting or eliminating the federal income tax
exemption for interest on municipal securities, including
private activity bonds. It is likely that similar proposals
will be introduced in the future. If such a proposal were
enacted, the availability of municipal securities for
investment by the Fund and the value of the Fund's portfolio
could be adversely affected. In such event, the Fund would
re-evaluate its investment objectives and policies and
consider recommending to its shareholders changes in the
structure of the Fund.
Section 147 of the Code prohibits exemption from
taxation of interest on certain governmental obligations
paid to persons who are "substantial users" (or persons
related thereto) of facilities financed by such obligations.
"Substantial user" is generally defined to include a
"nonexempt person" who is entitled to use more than 5% of a
facility financed from the proceeds of industrial
development bonds. No investigation as to the substantial
users of the facilities financed by bonds in the Fund's
portfolio will be made by the Fund. Potential investors who
may be, or may be related to, substantial users of such
facilities should consult their tax advisors before
purchasing shares of the Fund.
Each distribution is accompanied by a brief explanation
of the form and character of the distribution. The Fund
provides each shareholder with an annual statement of the
federal income tax status of all distributions, including a
statement of percentage of the prior year's distributions
designated by the Fund to be treated as tax-exempt interest
or long-term capital gain. The dollar amounts of tax-exempt
and taxable dividends and distributions paid by the Fund
that are reported annually to shareholders will vary for
each shareholder, depending upon the size and duration of
the shareholder's investment in the Fund. To the extent
that the Fund derives investment income from taxable
interest, it intends to designate as the actual taxable
income the same percentage of each day's dividend as the
actual taxable income bears to the total investment income
earned on that day. The percentage of the dividend
designated as taxable (if any), therefore, may vary from day
to day.
Individuals, trusts, and estates who or which are
residents of the state of Oregon will not be subject to the
Oregon personal income tax on distributions from the Fund
representing tax-exempt interest paid on municipal
securities issued by the State of Oregon and its political
subdivisions. Distributions to Oregon residents
representing earnings of the Fund from sources other than
such tax-exempt interest will be subject to the Oregon
personal income tax. In addition, the Fund anticipates that
all distributions from the Fund, from any source, to
corporations subject to the Oregon Corporation excise tax
will be subject to that tax. For purposes of the Oregon
personal income tax and the Oregon
47
<PAGE>
corporate excise tax, income from Fund distributions of
interest paid on municipal securities issued by a state,
other than Oregon, and its political subdivisions will be
reduced by interest on indebtedness incurred to carry
such securities and expenses incurred to produce such income.
The Oregon Corporate Excise Tax Act generally taxes
corporations on income received from municipal securities,
including those issued by the state of Oregon and its
political subdivisions. Since the Fund is a corporation, it
would generally be subject to such a tax. However, the
Oregon Department of Revenue has adopted an administrative
rule (Oregon Administrative Rule 150.317,010(10)) which
provides that a registered investment company may deduct
from its income an amount equal to the exempt interest
dividends paid to its shareholders. The Fund expects to
distribute substantially all of its interest income as
dividends to its shareholders and, therefore, does not
expect to be liable for Oregon Corporate Excise tax.
Under the Code, interest on indebtedness incurred or
continued to purchase or carry shares of an investment
company paying "exempt interest dividends," such as the
Fund, is not deductible by the investor. Under rules used
by the Internal Revenue Service, the purchase of shares may
be considered to have been made with borrowed funds even
though the borrowed funds are not directly traceable to the
purchase of shares. In addition, under Sections 265 and 291
of the Code, certain financial institutions acquiring shares
may be subject to a reduction in the amount of interest
expense that would otherwise be allowable as a deduction for
federal income tax purposes.
FOREIGN TAXES
- -------------
As described below in "Special Investment Risks --
Foreign Securities," certain Funds may be subject to foreign
withholding taxes which would reduce the yield on their
investments. Tax treaties between certain countries and the
United States may reduce or eliminate such taxes. It is
expected that shareholders of the Funds who are subject to
United States federal income tax will not be entitled to
claim a federal income tax credit or deduction for foreign
taxes paid by the Funds.
Gains and losses realized by any of the Funds on
certain transactions, including sales of foreign debt
securities and certain transactions involving foreign
currency, will be treated as ordinary income or loss for
federal income tax purposes to the extent, if any, that such
gains or losses are attributable to changes in exchange
rates for foreign currencies. Accordingly, distributions
taxable as ordinary income will include the net amount, if
any, of such foreign
48
<PAGE>
exchange gains and will be reduced by the net amount, if
any, of such foreign exchange losses.
If any of the Funds purchases shares in certain foreign
investment entities, called "passive foreign investment
companies", it may be subject to United States federal
income tax on a portion of any "excess distribution" or gain
from the disposition of such share, even if such income is
distributed as a taxable dividend by such Fund to its
shareholders. Additional charges in the nature of interest
may be imposed on either the Fund or its shareholders in
respect of deferred taxes arising from such distributions or
gains.
If any of the Funds were to invest in a passive foreign
investment company with respect to which the Fund elected to
make a "qualified electing fund" election, in lieu of the
foregoing requirement, such Fund might be required to
include in income each year a portion of the ordinary
earnings and net capital gains of the qualified electing
fund, even if such amount were not distributed to such Fund.
-------------------------
SPECIAL INVESTOR SERVICES
-------------------------
The Funds offer certain shareholder services, which are
designed to facilitate investment in their shares. Each of
the options is described in the Funds' Prospectus. All of
these special services may be terminated by either the Funds
or the shareholder without any prior written notice.
-------------------
GENERAL INFORMATION
-------------------
The Funds were incorporated under Oregon law on the
dates listed below.
<TABLE>
<CAPTION>
Date
Incorporated
------------
<S> <C>
The Crabbe Huson Special Fund, Inc. 1/29/87
The Crabbe Huson Real Estate Investment Fund, Inc. 12/29/93
The Crabbe Huson Equity Fund, Inc. 8/10/88
The Crabbe Huson Asset Allocation Fund, Inc. 8/10/88
The Oregon Municipal Bond Fund, Inc. 10/24/83
The Crabbe Huson Income Fund, Inc. 8/10/88
The Crabbe Huson U.S. Government Income Fund, Inc. 8/10/88
The Crabbe Huson U.S. Government Money Market
Fund, Inc. 8/10/88
</TABLE>
During the last five years, the following Funds have
changed their names on the approximate dates indicated:
49
<PAGE>
The Crabbe Huson Special Fund, Inc.
Formerly The Crabbe Huson Growth Fund, Inc. until 2/23/93
Formerly The PNCG Growth Fund, Inc. until 6/14/90
The Crabbe Huson Equity Fund, Inc.
Formerly The PNCG Equity Fund, Inc. until 6/14/90
The Crabbe Huson Asset Allocation Fund, Inc.
Formerly The PNCG Asset Allocation Fund, Inc. until 6/14/90
The Crabbe Huson Income Fund, Inc.
Formerly The PNCG Income Fund, Inc. until 6/14/90
The Crabbe Huson U.S. Government Income Fund, Inc.
Formerly The Crabbe Huson U.S. Government Income Fund, Inc.
until 6/14/90
The Crabbe Huson U.S. Government Money Market Fund, Inc.
Formerly The Crabbe Huson Money Market Fund, Inc.
until 2/23/93
Formerly The PNCG Money Market Fund, Inc. until 6/14/90
Each Fund has an authorized capital of 100 million
shares of common stock (except the Real Estate Fund, which
has an authorized capital of 1 billion shares; the Oregon
Bond Fund, which has an authorized capital of 10 million
shares with a par value of $.001 per share; and the U.S.
Government Money Market Fund, which has an authorized
capital of 2 billion shares). All shares of each fund are
of the same class, although the Real Estate Fund may
establish other classes in the future. Shareholders of each
Fund are entitled to one vote for each full share held and
fractional votes for fractional shares held for that
particular Fund. Shareholders of each Fund vote on the
election of directors and any other matter submitted to a
shareholder vote. Shares issued are fully paid and
nonassessable, and have no preemptive or conversion rights.
Each share is entitled to participate equally in dividends
and distributions declared by that Fund, and in the net
assets of that Fund upon liquidation or dissolution after
satisfaction of outstanding liabilities.
The authorized shares of the Real Estate Fund may be
divided into such separate series as the Fund's Board of
Directors may establish. The Board of Directors may
establish additional classes or series of shares, and may
divide or combine the shares into a greater or lesser number
of shares without changing the proportionate interest of a
shareholder. The holders of any additional shares would
participate equally in the earnings, dividends and assets of
the particular series, and would be entitled to vote
separately to approve investment advisory agreements or
changes in investment restrictions, but shareholders of all
series would vote together in the election of directors and
accountants.
50
<PAGE>
-------
COUNSEL
-------
The law firm of Davis Wright Tremaine, Portland,
Oregon, will pass on certain legal matters in connection
with the issuance of shares of the Funds and will also act
as counsel to the Funds and as counsel to the Adviser and
the Distributor in connection with their relationship with
the Funds and certain matters.
--------
AUDITORS
--------
KPMG Peat Marwick LLP, Portland, Oregon, acts as the
Funds' independent auditors. In such capacity, KPMG Peat
Marwick LLP performs the annual audit of each Fund's
financial statements and assists in the preparation of tax
returns.
-------------------------------------------------------
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
-------------------------------------------------------
Investors Fiduciary Trust Co. serves as the custodian
(the "Custodian") of the Funds' cash and securities. State
Street Bank and Trust Company serves as the Funds' transfer
agent and dividend-disbursing agent (the "Transfer Agent").
Boston Financial Data Services serves as the Transfer
Agent's Servicing Agent in carrying out the Transfer Agent's
responsibilities to the Funds. The Transfer Agent processes
requests for the purchase or redemption of a Fund's shares,
sends statements of ownership to shareholders, and performs
other administrative duties on behalf of the Funds. Neither
the Custodian nor the Transfer Agent plays any role in
establishing the investment policies of the Funds or in
determining which securities are to be purchased or sold by
the Funds. All fees and expenses of the Custodian and the
Transfer Agent are paid by the Funds. For its custodial
services to the Funds, the Custodian receives monthly fees
based upon the Funds' month-end, aggregate net asset value,
plus certain charges for securities transactions. For its
services as transfer agent and dividend-disbursing agent,
the Transfer Agent receives fees from the Funds based upon
the number of shareholder accounts maintained and the number
of transactions effected. The Custodian and the Transfer
Agent are also reimbursed by the Funds for out-of-pocket
expenses, including the expense of clerical and
administrative services provided to the Funds.
51
<PAGE>
--------------------------------
ADDITIONAL INFORMATION REGARDING
CERTAIN INVESTMENTS BY THE FUNDS
--------------------------------
GOVERNMENT SECURITIES
- ---------------------
The taxable fixed-income obligations in which the Funds
may invest on a short-term basis may include obligations
issued or guaranteed by the United States government, its
agencies, instrumentalities, or authorities. Any such
obligations in which the Funds invest will consist of bills,
notes, and bonds issued by the United States Treasury or
obligations issued by other agencies of the United States
Government. Examples of other government agencies in whose
obligations the Funds may invest include Federal Home Loan
Intermediate Credit banks, Federal Land Banks, Federal Home
Loan Banks, and the Federal National Mortgage Association.
Obligations issued by the United States Treasury are
guaranteed by the full faith and credit of the United States
Government. Obligations issued by other federal agencies
are direct obligations of such agencies and are not
guaranteed by the United States Government.
MUNICIPAL SECURITIES (The Oregon Municipal Bond Fund, Inc.)
- --------------------
The term "municipal securities," as used in this
Statement of Additional Information, means obligations
issued by or on behalf of states, territories and
possessions of the United States and the District of
Columbia and their political subdivisions, agencies, or
instrumentalities or multi-state agencies, or authorities.
These obligations are issued to fund various public projects
(such as construction of airports, highways, bridges,
schools, and housing), refund outstanding municipal
obligations, obtain funds for general operating expenses,
and for loans to other public institutions and facilities.
Municipal securities are of varying maturities and differ in
investment quality, depending upon the credit worthiness of
the obligation's issuer.
The two principal classifications of municipal
securities are "general obligation bonds" and "revenue
bonds." General obligation bonds are secured by the
issuer's pledge of its full credit and taxing power for the
payment of principal and interest. Revenue bonds are
payable only from the revenues derived from a particular
facility or class of facilities or project or, in a few
cases, from the proceeds of a special excise or other tax,
but are not supported by the issuer's power to levy general
taxes.
One type of revenue bond is the "private activity bond"
(formerly referred to as "industrial development bonds").
These obligations are issued by a governmental or quasi-
governmental issuer, but all or a major portion of the
proceeds realized upon the sale of these obligations are
52
<PAGE>
used, directly or indirectly, to fund the trade or business
of a private enterprise, generally by financing the
acquisition of a facility to be used by that enterprise.
The payment of principal and interest on private activity
bonds is dependent on the ability of the private enterprise
to meet those obligations and is usually secured by an
interest in the financed facility or in payments, such as
lease payments, received with respect to that property. The
issuer of the bonds does not pledge its full credit and
taxing power for the payment of principal and interest.
Under current federal income laws, the interest received on
certain small issues and obligations used to finance certain
exempt facilities which may be leased to or used by persons
other than the issuer is exempt from federal income tax.
The Oregon Bond Fund intends to purchase tax-exempt private
activity bonds if, in the opinion of the Adviser, such
obligations are appropriate for the Fund's securities
portfolios. No limit has been placed upon the amount of
private activity bonds that may be purchased by the Oregon
Bond Fund, and a significant percentage of the Oregon Bond
Fund's total assets may be invested in such obligations.
However, no more than 25% of the Oregon Bond Fund's total
assets may be invested in private activity bonds where the
payment of principal and interest is the ultimate
responsibility of companies within the same industry.
------------------------
SPECIAL INVESTMENT RISKS
------------------------
FOREIGN SECURITIES
- ------------------
The Special, Equity, Asset Allocation and Income Funds
may invest up to 35% of their total assets in foreign
securities, which may or may not be traded on an exchange.
These Funds may purchase securities issued by issuers in any
country. Securities of foreign companies are frequently
denominated in foreign currencies, and these Funds may
temporarily hold uninvested reserves in bank deposits in
foreign currencies. As a result, these Funds will be
affected favorably or unfavorably by changes in currency
rates and in exchange control regulations, and they may
incur expenses in connection with conversion between various
currencies. Subject to their investment restrictions, these
Funds may invest in other investment companies that invest
in foreign securities. These Funds do not expect to invest
more than 5% of their respective assets in such investment
companies.
Foreign securities may be subject to foreign government
taxes that would reduce the income yield on such securities.
Certain foreign governments levy withholding taxes against
dividend and interest income. Although in some countries a
portion of these taxes is recoverable, the non-recovered
portion of any foreign withholding taxes would reduce the
53
<PAGE>
income the affected Fund received from any foreign
investments.
Foreign investments involve certain risks, such as
political or economic instability of the issuer or of the
country of the issuer, difficulty of predicting
international trade patterns, and the possibility of
imposition of exchange controls. Such securities may also
be subject to greater fluctuations in price than securities
of domestic corporations or of the United States Government.
In addition, the net asset value of these Funds is
determined and shares of these Funds can be redeemed only on
days during which securities are traded on the NYSE.
However, foreign securities held by these Funds may be
traded on Saturdays or other holidays when the NYSE is
closed. Accordingly, the net asset value of these Funds may
be significantly affected on days when an investor has no
access to these Funds.
In addition, there may be less publicly available
information about a foreign company than about a domestic
company. Foreign companies generally are not subject to
uniform accounting, auditing and financial reporting
standards comparable to those applicable to domestic
companies. There is generally less government regulation of
stock exchanges, brokers and listed companies abroad than in
the United States, and the absence of negotiated brokerage
commissions in certain countries may result in higher
brokerage fees. With respect to certain foreign countries,
there is a possibility of expropriation, nationalization, or
confiscatory taxation, which could affect investment in
those countries.
FUTURES CONTRACTS
- -----------------
Stock Index Futures
- -------------------
The Special, Real Estate, Equity and Asset Allocation
Funds may invest up to 10% of their total assets in futures
contracts of broad based stock market indices. Purchasing
such contracts involves greater risks than buying the
underlying securities because futures contracts expire in a
relatively short period of time and may result in the loss
of the entire investment in such contracts. These Funds
intend to use such contracts primarily for hedging and
defensive purposes.
Interest Rate Futures
- ---------------------
The Special, Real Estate, Equity, Asset Allocation and
Income Funds may invest up to 10% of their total assets in
futures contracts on fixed income securities such as U.S.
Government Bonds, bills or notes. These Funds intend to use
such contracts for hedging or defensive purposes.
54
<PAGE>
Interest rate futures contracts carry the risk of loss
of the entire amount of investment since they have a limited
expiration date.
--------------------
FINANCIAL STATEMENTS
--------------------
Following are the financial statements of the Crabbe
Huson Funds as of October 31, 1995.
55
<PAGE>
THE OREGON MUNICIPAL BOND FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
Face Market
Value Securities Description Value
---------- ----------------------------------------------------- -----------
<C> <S> <C>
FIXED INCOME SECURITIES - 98.3%
PRE-REFUNDED BONDS - 18.7%*
$ 40,000 Multnomah County
School District #1
9.200% 12/15/95 .................................. $ 40,255
1,000,000 Multnomah County
School District #1
9.300% 12/15/95 .................................. 1,006,490
295,000 Metropolitan Service District
5.750% 7/01/99 ................................... 314,912
270,000 Metropolitan Service District
6.600% 7/01/99 ................................... 295,987
250,000 Clackamas & Washington County
School District #003
7.200% 10/01/99 .................................. 275,937
200,000 Clackamas & Washington County
School District #003
7.250% 10/01/99 .................................. 221,000
400,000 Metropolitan Service District
7.000% 1/01/00 ................................... 446,000
353,000 Deschutes County (St.
Charles Medical Center)
6.750% 1/01/00 ................................... 390,947
100,000 Oregon State Department
General Services
7.200% 1/15/00 ................................... 112,500
150,000 Clackamas County School
District #12 6.500%
06/01/00 .......................................... 163,312
310,000 Emerald Peoples Utility
District 6.300%
11/01/00 .......................................... 339,450
125,000 Oregon Economic Development
Dept-Ser B 6.350%
1/01/01 ........................................... 137,500
250,000 Washington County School District
# 48J 6.200% 9/01/01 ........................... 272,187
250,000 Emerald Peoples Utility
District 6.500%
11/01/01 .......................................... 276,563
270,000 Port of Morrow (Pollution
Control) 6.375%
04/01/02 .......................................... 297,000
125,000 Marion & Polk County School
District #24J 5.700% 10/01/02 .................... 133,438
225,000 Marion & Polk County
School District #24-J
6.000% 10/01/02 .................................. 244,125
250,000 Oregon State Revenue
Series B 6.250%
1/01/08 ........................................... 273,750
-----------
5,241,353
-----------
INSURED BONDS - 43.8%
200,000 Jackson County School District
6.000% 6/01/01 (FSA) ............................. 215,250
250,000 Clackamas County Hospital
Facility Revenue 5.800%
3/01/02 (MBIA) .................................... 266,563
<CAPTION>
Face Market
Value Securities Description Value
------------ --------------------------------------------------------- -----------
<C> <S> <C>
$ 1,000,000 Portland Hospital Facility
Legacy Health System
6.400% 5/01/02 (AMBAC) ............................... $1,105,000
200,000 Yamhill County
School District #29J
4.800% 6/01/02 (FSA) ................................. 201,250
1,240,000 Hood River County Oregon
School District 6.000%
6/01/03 (AMBAC)........................................ 1,346,950
250,000 Emerald Peoples Utility
District 5.450%
11/01/03 (AMBAC)....................................... 263,750
500,000 Deschutes/Jefferson County
School Dist. 5.300%
6/01/04 (MBIA)......................................... 519,375
260,000 Hood River County Oregon
School Dist. 6.000%
6/01/04 (AMBAC) ...................................... 282,100
545,000 Jefferson County School District
#509J 6.500%
6/15/04 (FSA) ........................................ 609,038
400,000 University Puerto Rico Ser
5.100% 6/01/05 (MBIA)................................... 406,500
350,000 Portland Oregon Sewer System
(Revenue) 5.750%
10/01/05 (FGIC) ...................................... 377,125
500,000 Washington County Sewer System
(Revenue) 5.800%
10/01/05 (AMBAC) ..................................... 532,500
1,015,000 Crook County Oregon School
District 4.700%
2/01/06 (FSA).......................................... 984,550
400,000 Oregon State Facility
Series A 6.100%
9/01/06 (AMBAC) ...................................... 429,500
350,000 Washington County Sewer System
(Revenue) 5.900%
10/01/06 (AMBAC) ..................................... 373,625
1,065,000 McMinnville Sewer System
(Revenue) 4.700%
2/01/07 (FGIC) ....................................... 1,043,700
335,000 Jackson County School District
5.200% 6/01/07 (FSA) ................................. 340,025
1,000,000 Salem Keizer School
District #24-J 5.500%
6/01/07 (FGIC) ....................................... 1,028,750
1,100,000 Multnomah County S.D. Park Rose
5.600% 12/01/07 (FGIC)................................ 1,153,625
350,000 Portland Sewer System
6.000% 10/01/12 (FGIC)................................ 366,188
500,000 McMinnville Sewer System
(Revenue) 5.000%
2/01/14 (FGIC) ...................................... 472,500
12,317,864
CERTIFICATE OF PARTICIPATION BONDS - 1.0%
250,000 City of Portland
6.950% 04/01/99 ...................................... 272,813
</TABLE>
*Dates reflect pre-refunded dates.
See accompanying notes to financial statements.
56
<PAGE>
THE OREGON MUNICIPAL BOND FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
Face Market
Value Securities Description Value
----------- ---------------------------------------------------- -----------
<C> <S> <C>
STATE OF OREGON
GENERAL OBLIGATION - 9.4%
$ 240,000 State of Oregon G. O.
7.700% 03/01/02................................... $ 253,800
100,000 State of Oregon G. O.
9.000% 04/01/03 ................................. 126,750
205,000 State of Oregon G.O.
8.200% 07/01/04................................... 254,969
150,000 State of Oregon G.O.
7.200% 07/01/04................................... 176,250
110,000 State of Oregon G.O.
6.000% 08/01/04................................... 119,625
200,000 State of Oregon G. O.
9.000% 10/01/04 .................................. 230,500
345,000 State of Oregon G.O.
6.750% 05/01/05................................... 395,025
250,000 State of Oregon G. O.
(Veterans) 7.250% 07/01/06 ........................ 299,063
200,000 State of Oregon G. O.
(Veterans) 8.250% 01/01/07 ........................ 254,000
200,000 State of Oregon G. O.
(Veterans) 7.250% 01/01/07 ....................... 239,750
100,000 State of Oregon G.O. (Alt Energy)
6.400% 01/01/08 .................................. 106,125
130,000 State of Oregon G.O.
9.200% 04/01/08 .................................. 178,588
-----------
2,634,445
-----------
REVENUE BONDS - 2.7%
545,000 Oregon State Light Rail
7.000% 06/01/04 .................................. 627,431
125,000 Oregon State Fair & Expo
Revenue 7.375% 10/01/06 ........................... 128,154
-----------
755,585
-----------
OTHER BONDS
GENERAL OBLIGATION - 12.7%
225,000 City of Portland Water G.O.
3.700% 12/01/00 .................................. 230,062
330,000 Puerto Rico G.O.
7.125% 07/01/02 .................................. 350,625
445,000 Washington & Clackamas School
District 5.250% 6/01/03 .......................... 460,019
300,000 Deschutes G.O. School
District #1 5.800% 02/01/04 ...................... 316,875
400,000 Washington & Clackamas School
District 5.250 6/01/05 .......................... 407,000
200,000 Clackamas Community College
5.100% 12/01/05 ................................... 203,750
1,000,000 Tri-Met Light Rail
5.900% 07/01/06 .................................. 1,053,750
300,000 Salem Oregon Series A
5.875% 1/01/07 ................................... 310,875
230,000 Lane County Area Education District
4.850% 6/01/08 ................................... 224,825
-----------
3,557,781
-----------
<CAPTION>
Face Market
Value Securities Description Value
----------- --------------------------------------------------------- -----------
<C> <S> <C>
OTHER REVENUE BONDS - 10.0%
$ 200,000 City of Portland (Hydro Electric
Power) 6.500% 10/01/97 ............................ $ 201,780
335,000 Central Lincoln PUD
6.500% 01/01/02 .................................. 367,662
600,000 Clackamas County Hospital (Sisters
of Providence) 6.200% 10/01/02 .................... 646,500
350,000 City of Portland (Urban Renewal)
5.700% 06/01/04 .................................. 370,125
420,000 Multnomah County School District
5.000% 3/01/07 ................................... 417,375
765,000 Salem Educational Facility (Revenue)
6.000% 04/01/10 .................................. 797,512
-----------
2,800,954
-----------
Total Investments - 98.3% 27,580,795
(Cost $26,215,041)**
Other Assets and (Liabilities), Net - 1.7% 489,576
-----------
TOTAL NET ASSETS - 100.0% $28,070,371
-----------
-----------
</TABLE>
<TABLE>
<S> <C>
PORTFOLIO ALLOCATION TABLE:
Education................................................ 43.7%
General Obligation....................................... 10.6
General Services......................................... 8.2
Hospital................................................. 8.7
Public Utility........................................... 5.2
Transportation........................................... 6.0
Economic Development..................................... 3.8
Water & Sewer............................................ 12.1
Total Investments........................................ 98.3%
</TABLE>
**Aggregate cost for Federal income tax purposes is identical.
See accompanying notes to financial statements.
57
<PAGE>
THE CRABBE HUSON SPECIAL FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
Market
Shares Securities Description Value
- ---------------------- ----------------------------------------------- --------------
<S> <C> <C>
CONVERTIBLE PREFERRED - 0.5%
----------------------------
50,000 Olympic Financial Ltd ......................... $ 4,237,500
--------------
COMMON STOCK - 74.5%
--------------------
CONSUMER CYCLICALS
Automotive - 0.5%
91,800 Exide Corp .................................... 4,027,725
--------------
Consumer Products - 2.9%
783,100 * General Instrument Corp........................ 14,878,900
745,500 Juno Lighting, Inc ............................ 10,809,750
25,688,650
Retail - 7.6%
1,275,600 * Ann Taylor .................................... 14,031,600
1,536,900 * Bombay Co, Inc ................................ 9,029,288
1,122,100 * Burlington Coat Factory ....................... 12,483,363
753,100 Cato Corp CL A ................................ 4,612,738
1,496,000 Phillips-Van Heusen ........................... 15,147,000
631,600 Ross Stores, Inc .............................. 9,908,225
220,700 * Sports & Recreation Inc ....................... 1,627,663
--------------
66,839,877
--------------
CONSUMER STAPLES - 5.0%
771,900 * Fred Meyer Inc ................................ 14,376,638
679,200 Hudson Foods Inc CL A ......................... 9,593,700
592,400 * Paragon Trade Brands, Inc ..................... 9,404,350
1,870,400 * Payless Cashways, Inc ......................... 10,754,800
--------------
44,129,488
--------------
BASIC MATERIALS & INDUSTRIAL
Building Materials - 1.4%
164,900 Fleetwood Enterprises ......................... 3,380,450
1,393,900 Morrison Knudsen Corp ......................... 9,060,350
--------------
12,440,800
--------------
Chemicals -1.1%
781,200 Crompton & Knowles Corp ....................... 9,862,650
--------------
Equipment & Machinery - 3.4%
810,800 Giddings & Lewis, Inc ......................... 13,074,150
1,341,500 MK Rail Corp .................................. 9,558,188
213,500 Stewart & Stevenson Serv ...................... 4,857,125
89,800 Wabash National Corp .......................... 2,278,675
--------------
29,768,138
--------------
Forest Products & Packaging - 1.9%
783,900 Longview Fibre Co ............................. 11,366,550
332,800 TJ International, Inc ......................... 5,761,600
--------------
17,128,150
--------------
Metals & Mining - 5.0%
791,600 Battle Mountain Gold .......................... 6,035,950
504,600 Huntco, Inc ................................... 6,559,800
817,500 Oregon Steel Mills Inc ........................ 11,649,375
182,200 * Pegasus Gold Inc .............................. 2,004,200
1,757,500 Sante Fe Pacific Gold Co ...................... 17,355,313
--------------
43,604,638
--------------
Pollution Control - 2.0%
5,167,800 * Rollins Environmental Services ................ 17,441,325
--------------
ENERGY - 5.5%
189,600 Anadarko Petroleum Corp ....................... 8,223,900
98,400 Asarco, Inc ................................... 3,173,400
18,300 Devon Energy Corp ............................. 398,025
</TABLE>
<TABLE>
<CAPTION>
Market
Shares Securities Description Value
- ---------------------- ----------------------------------------------- --------------
<S> <C> <C>
ENERGY - (continued)
916,900 * Forcenergy Gas Exploration ..................... $ 8,939,775
589,500 Holly Corp ..................................... 12,821,625
432,500 * Oryx Energy Corp ............................... 4,973,750
983,400 Snyder Oil Corp ................................ 10,079,850
--------------
48,610,325
--------------
FINANCIAL - 8.4%
347,000 American Financial Group Inc.................... 9,716,000
544,200 * Citation Insurance Group ....................... 2,414,888
795,000 John Alden Financial Corp....................... 16,496,250
112,600 * Olympic Financial Ltd .......................... 2,054,950
620,700 * Risk Capital Holdings Inc ...................... 13,655,400
739,300 * 20th Century Industries ........................ 12,290,863
581,900 * Zurich Reinsurance Centre ...................... 16,729,625
--------------
73,357,976
--------------
HEALTHCARE - 12.7%
288,100 * Cor Therapeutices .............................. 2,989,038
1,452,800 * Coventry Corp .................................. 28,511,200
330,500 * Grancare Inc ................................... 4,833,563
291,700 Grupo Casa Autrey - ADR ........................ 3,719,175
918,100 Integrated Health Services ..................... 21,001,538
756,500 * Perrigo Co ..................................... 9,267,125
252,400 * Scherer R.P. Corp .............................. 11,231,800
720,800 * Sofamor Danek Group, Inc ....................... 17,659,600
1,073,100 * Sun Healthcare Group, Inc ...................... 12,743,063
--------------
111,956,102
--------------
REAL ESTATE INVESTMENT TRUST - 2.9%
1,626,600 * Catellus Development Corp ...................... 8,946,300
317,700 Crown American Realty .......................... 2,422,463
629,600 Prime Residential, Inc ......................... 11,018,000
217,000 Prime Retail, Inc .............................. 2,631,125
--------------
25,017,888
--------------
TECHNOLOGY - 5.1%
1,014,800 * 3D0 Co ......................................... 10,909,100
1,108,800 * Cray Research .................................. 23,007,600
1,271,700 * Zenith Electronics Corp ........................ 10,650,480
--------------
44,567,180
--------------
TRANSPORTATION - 9.1%
1,154,300 Airborne Freight Corp .......................... 30,300,375
906,600 * Alaska Air Group ............................... 13,485,675
268,600 Hunt (JB) Transportation Serv .................. 4,163,300
698,500 * Landstar System Inc ............................ 18,335,625
308,900 Teekay Shipping Corp ........................... 7,181,925
115,900 TNT Freightways Corp ........................... 2,086,200
359,900 Yellow Corp .................................... 4,723,688
--------------
80,276,788
--------------
Total Common Stocks 654,717,700
--------------
OPTIONS - 2.5%
--------------
Put Options
70,000 Cypress Semiconductor Corp
@ 45, expiring 12/15/95 ........................ 691,250
14,269,400 Morgan Stanley High Tech Index
@ 350, expiring 6/21/96 ........................ 4,913,240
15,804,800 Morgan Stanley High Tech Index
@ 316, expiring 6/21/96 ........................ 2,985,527
15,384,615 Morgan Stanley High Tech Index
@ 325, expiring 6/21/96 ........................ 3,380,000
45,839,300 Morgan Stanley High Tech Index
@ 327, expiring 6/21/96 ........................ 10,483,448
--------------
22,453,465
--------------
</TABLE>
*Non-income producing
See accompanying notes to financial statements.
58
<PAGE>
THE CRABBE HUSON SPECIAL FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
Shares
or face Market
Value Securities Description Value
- ---------------------- ----------------------------------------------- --------------
<S> <C> <C>
SHORT-TERM INVESTMENTS - 9.8% **
--------------------------------
Treasury Bills - 1.3%
U.S. Treasury Bill
$ 5,000,000 5.270% 11/24/95 ............................. $ 4,983,148
4,000,000 5.160% 12/21/95 ............................. 3,971,333
2,285,000 5.260% 10/17/96 ............................. 2,167,460
--------------
11,121,941
--------------
Discount Notes - 8.5%
Federal Farm Credit
3,000,000 5.480% 12/15/95 ............................. 2,979,907
3,500,000 5.500% 12/22/95 ............................. 3,472,729
865,000 5.520% 12/07/95 ............................. 860,225
500,000 5.530% 11/28/95 ............................. 497,926
1,000,000 5.550% 11/03/95 ............................. 999,692
4,010,000 5.560% 11/09/95 - 1/04/96 ................... 3,984,053
8,660,000 5.570% 11/27/95 - 1/04/96 ................... 8,615,496
1,000,000 5.590% 11/17/95 ............................. 997,516
305,000 5.610% 11/13/95 ............................. 304,430
Federal Home Loan
2,000,000 5.470% 1/22/96 .............................. 1,975,081
1,590,000 5.480% 12/28/95 ............................. 1,576,204
4,000,000 5.490% 1/30/96 .............................. 3,945,100
3,500,000 5.500% 12/29/95 ............................. 3,468,986
3,250,000 5.520% 12/08/95 - 12/13/95 .................. 3,230,028
3,155,000 5.540% 11/24/95 - 12/18/95 .................. 3,141,414
7,000,000 5.550% 1/02/96 - 1/3/96 ..................... 6,932,552
11,450,000 5.560% 11/07/95 - 1/25/96 ................... 11,347,657
6,000,000 5.570% 11/06/95 - 1/10/96 ................... 5,945,460
4,445,000 5.580% 1/05/96 - 1/08/96..................... 4,399,585
1,500,000 5.590% 11/13/95 ............................. 1,497,205
4,465,000 5.620% 11/01/95 - 11/15/95................... 4,463,984
--------------
74,635,230
--------------
Total Short-Term Investments 85,757,171
--------------
Total Investments -87.3% 767,165,836
(Cost 789,902,314)***
Cash - 0.2% 2,028,004
--------------
SECURITIES SOLD SHORT - (15.1%)
-------------------------------
COMMON STOCKS
Computers - 3.6%
180,700 Computer Associates Intl, Inc ................. (9,938,500)
107,700 Micro Warehouse Inc ........................... (4,792,650)
222,500 Sun Microsystems, Inc ......................... (17,355,000)
--------------
(32,086,150)
--------------
</TABLE>
<TABLE>
<CAPTION>
Shares
or face Market
Value Securities Description Value
- ---------------------- ----------------------------------------------- --------------
<S> <C> <C>
Semiconductors - 4.3%
408,150 Alliance Semiconductor ......................... ($12,550,611)
410,100 Cypress Semiconductor .......................... (14,456,025)
96,200 Microchip Technology Inc ....................... (3,817,938)
100,000 Micron Technology .............................. (7,062,500)
--------------
(37,887,074)
--------------
Software - 7.2%
150,000 Adobe Systems, Inc ............................. (8,550,000)
93,200 Broderbund Software ............................ (6,465,750)
431,900 Gartner Group Inc CL A ......................... (18,841,638)
854,000 Tellabs, Inc ................................... (29,036,000)
--------------
(62,893,388)
--------------
Total Securities Sold Short - (15.1%) (132,866,612)
--------------
(Proceeds $116,397,420)****
Other Assets and (Liabilities), Net - 27.6% 242,232,606
--------------
TOTAL NET ASSETS - 100.0% $878,559,834
--------------
--------------
</TABLE>
**Rates reflect purchase yield to maturity.
***Aggregate cost for Federal income tax purposes is $790,872,568.
****Aggregate proceeds for Federal income tax purposes is $119,775,124.
See accompanying notes to financial statements.
59
<PAGE>
THE CRABBE HUSON ASSET ALLOCATION FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
Face Market
Value Securities Description Value
- ----------------------- ---------------------------------------- --------------
FIXED INCOME SECURITIES - 50.2%
------------------------------
GOVERNMENT BONDS - 33.2%
$ 10,765,000 U.S. Treasury Note
6.000% 8/31/97 ........................ $ 10,834,218
7,465,000 U.S. Treasury Note
6.250% 8/31/00 ........................ 7,615,046
3,870,000 U.S. Treasury Note
6.500% 8/15/05 ........................ 4,005,837
21,300,000 U.S. Treasury Bond
6.875% 8/15/25 ........................ 22,861,290
-------------
45,316,391
-------------
CORPORATE BONDS - 7.4%
600,000 Baxter International
7.500% 5/01/97 ........................ 612,000
500,000 GMAC
8.000% 10/01/99 ....................... 527,500
550,000 Upjohn Co
5.875% 4/15/00 ........................ 539,687
550,000 Pepsico, Inc
5.875% 6/01/00 ........................ 543,812
400,000 American Express Credit
6.500% 8/01/00 ........................ 404,500
700,000 Ford Motor Credit
6.250% 11/08/00 ....................... 696,500
725,000 GMAC
9.000% 10/15/02 ....................... 815,625
550,000 IBM Corp
7.250% 11/01/02 ....................... 576,812
550,000 Tennessee Valley Authority
6.125% 7/15/03 ........................ 540,375
550,000 JP Morgan & Company
7.625% 9/15/04 ........................ 585,062
550,000 Pacific Bell
6.250% 3/01/05 ........................ 539,687
550,000 Anheuser Busch
7.000% 9/01/05 ........................ 566,500
550,000 Bear Stearns Co.
6.875% 10/01/05 ...................... 549,312
600,000 Snap-on, Inc
6.625% 10/01/05 ....................... 609,000
600,000 Wal-Mart Stores
8.000% 9/15/06 ........................ 672,000
550,000 Eli Lilly
8.375% 12/01/06 ....................... 633,187
600,000 AT&T Corp
7.750 3/01/07 ......................... 653,250
-------------
10,064,809
-------------
AGENCIES - 5.6%
420,000 International Bank Recon.
& Dev. Floater 5.890%**
8/07/97 ............................... 378,415
1,400,000 Federal Home Loan Bank
8.220% 12/22/97 ...................... 1,403,430
1,500,000 SLMA Treasury Ind. Floater
(10-Year Treasury - 180 BP)
4.680% 2/11/98 ....................... 1,470,000
Shares
or Face Market
Value Securities Description Value
- ----------------------- ---------------------------------------- --------------
<S> <C> <C>
$ 900,000 Federal National Mortgage Association
6.080% 9/25/00................................. $ 902,205
1,200,000 Federal National Mortgage Association
8.25% 12/18/00................................. 1,314,960
1,000,000 Federal Home Loan Bank
7.590% 3/10/05 ................................ 1,088,060
1,000,000 Federal National Mortgage Association
7.375% 3/28/05 ................................ 1,071,160
-------------
7,628,230
-------------
FHLMC - 2.9%
109,807 FHLMC Pool #281037
9.250% 11/01/16 ............................... 114,007
1,067,640 FHLMC Pool #303033
9.000% 4/01/17 ................................ 1,103,480
1,400,000 FHLMC Pool #TBA
7.000% 10/01/25 ............................... 1,388,406
1,400,000 FHLMC Pool #TBA
7.500% 10/01/25 ............................... 1,415,093
-------------
4,020,986
-------------
CMO - 1.1%
1,645,000 GCA GNMA 1993 - PO 1 - B 1,515,970
-------------
Total Fixed Income Securities 68,546,386
-------------
CONVERTIBLE PREFERRED - 0.8%
----------------------------
20,000 Delta Air Lines ................................. 1,107,500
------------
COMMON STOCK - 45.3%
---------------------
CONSUMER CYCLICALS
Automotive - 1.5%
47,300 General Motors Corp ............................. 2,069,375
------------
Consumer Products - 2.2%
23,200 Bausch & Lomb, Inc .............................. 803,300
29,300 Brunswick Corp .................................. 571,350
5,500 Quaker Oats ..................................... 187,687
15,000 Rubbermaid, Inc ................................. 391,875
72,800 Sunbeam Corporation ............................. 1,092,000
-------------
3,046,212
-------------
Retail - 3.4%
8,500 Dayton-Hudson ................................... 584,375
27,600 Limited, Inc .................................... 507,150
41,400 Liz Claiborne, Inc .............................. 1,174,725
68,300 * Price/Costco, Inc ............................... 1,161,100
34,500 Wal-Mart Stores, Inc ............................ 746,062
34,100 Woolworth Corp .................................. 498,712
-------------
4,672,124
-------------
BASIC MATERIALS AND INDUSTRIAL
Building Materials - 2.1%
100,000 * USG Corp ........................................ 2,912,500
-------------
Chemicals -0.2%
34,600 * Uniroyal Chemical Corp .......................... 263,825
-------------
Equipment & Machinery - 0.4%
27,100 * Detroit Diesel Corp ............................. 481,025
-------------
</TABLE>
*Non-income producing
**Zero-coupon bonds- rates reflect purchase yield to maturity.
See accompanying notes to financial statements.
60
<PAGE>
THE CRABBE HUSON ASSET ALLOCATION FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
Market
Shares Securities Description Value
- ----------------------- ---------------------------------------- --------------
<S> <C> <C>
COMMON STOCK - (continued)
--------------------------
BASIC MATERIALS AND INDUSTRIAL - (continued)
Forest Products & Packaging - 2.3%
56,100 * Domtar, Inc ............................. $ 511,912
111,400 Louisiana Pacific Corp .................. 2,659,675
-------------
3,171,587
-------------
Metals & Mining - 4.1%
107,200 * Bethlehem Steel Corp .................... 1,407,000
79,000 J & L Specialty Steel ................... 1,293,625
135,600 * National Steel Corp - Class B ........... 1,796,700
22,800 Nucor Corp .............................. 1,097,250
-------------
5,594,575
-------------
ENERGY - 7.1%
35,000 Apache Corp ............................. 892,500
55,900 Burlington Resources, Inc ............... 2,012,400
62,600 Dresser Industries ...................... 1,298,950
52,100 Enserch Corp ............................ 755,450
84,400 * Enserch Exploration ..................... 833,450
63,300 Occidental Petroleum Corp ............... 1,360,950
25,300 Tenneco, Inc ............................ 1,110,037
24,300 Union Texas Petro Hldgs ................. 437,400
35,300 Unocal Corp ............................. 926,625
-------------
9,627,762
-------------
FINANCIAL - 6.4%
56,700 Ahmanson (H.F.) & Co .................... 1,417,500
48,220 Bear Stearns Cos, Inc ................... 958,372
119,500 Equitable Companies ..................... 2,539,375
4,300 * Prudential Reinsurance Hlds ............. 87,612
34,600 Salomon, Inc ............................ 1,249,925
68 * Transport Holdings ...................... 2,669
13,700 Travelers, Inc .......................... 691,850
58,900 U.S. Bancorp ............................ 1,744,929
-------------
8,692,232
-------------
HEALTHCARE - 2.7%
30,500 Allergan, Inc ........................... 895,937
14,700 * Apria Healthcare Group .................. 317,887
66,700 * Humana, Inc ............................. 1,409,037
27,600 U S Healthcare .......................... 1,062,600
-------------
3,685,461
-------------
REAL ESTATE INVESTMENT TRUST - 2.0%
52,100 Debartolo Realty Corp ................... 677,300
38,200 First Industrial Realty Trust ........... 778,325
53,400 Spieker Properties ...................... 1,294,950
-------------
2,750,575
-------------
TECHNOLOGY - 1.1%
36,400 * Tandem Computers, Inc ................... 409,500
43,100 * Unisys Corp ............................. 242,437
89,900 * Zenith Electronics ...................... 752,912
-------------
1,404,849
-------------
TELECOMMUNICATIONS - 4.0%
21,800 AT&T Corp ............................... 1,395,200
65,500 Comcast Corp Special Class A ............ 1,170,812
51,703 * Cox Communications, Inc Class A ......... 969,431
22,500 Time Warner, Inc ........................ 821,250
80,700 Westinghouse Electric ................... 1,139,887
-------------
5,496,580
-------------
Shares
or Face Market
Value Securities Description Value
- ----------------------- ---------------------------------------- --------------
<S> <C> <C>
TRANSPORTATION - 5.8%
23,800 * AMR Corp ........................................ $ 1,570,800
13,800 Burlington Northern Santa Fe .................... 1,157,475
79,800 Consolidated Freightways ........................ 1,855,350
23,000 Delta Air Lines, Inc ............................ 1,509,375
38,900 Ryder System .................................... 938,462
40,707 * Southern Pacific Rail Corp ...................... 905,730
-------------
7,937,192
-------------
Total Common Stocks 61,805,874
-------------
SHORT-TERM INVESTMENTS - 0.7%
-----------------------------
TREASURY BILLS - 0.7%
1,000,000 U.S. Treasury Bill
5.070% 10/17/96 ............................... 948,560
-------------
Total Investments - 97.0% 132,408,320
(Cost $127,582,027)***
Cash - 4.6% 6,303,890
Other Assets and (Liabilities), Net - (1.6%) (2,182,153)
-------------
TOTAL NET ASSETS - 100.0% $136,530,057
-------------
-------------
</TABLE>
*Non-income producing
***Aggregate cost for Federal income tax purposes is $127,567,346.
See accompanying notes to financial statements.
61
<PAGE>
THE CRABBE HUSON EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
Market
Shares Securities Description Value
- ------------------------ -------------------------------------- --------------
<S> <C> <C>
COMMON STOCK - 84.0%
CONSUMER CYCLICALS
AUTOMOTIVE - 2.7%
240,800 General Motors Corp ................... $ 10,535,000
--------------
CONSUMER PRODUCTS - 4.2%
138,900 Bausch & Lomb, Inc .................... 4,809,413
135,300 Brunswick Corp ........................ 2,638,350
33,700 Quaker Oats ........................... 1,150,012
81,900 Rubbermaid, Inc ....................... 2,139,637
375,500 Sunbeam Corp .......................... 5,632,500
--------------
16,369,912
--------------
RETAIL - 6.5%
42,700 Dayton-Hudson Corp .................... 2,935,625
141,500 Limited, Inc .......................... 2,600,063
239,000 Liz Claiborne, Inc .................... 6,781,625
334,400 * Price/Costco, Inc ..................... 5,684,800
205,200 Wal-Mart Stores, Inc .................. 4,437,450
190,100 Woolworth Corp ........................ 2,780,212
--------------
25,219,775
--------------
BASIC MATERIALS AND INDUSTRIAL
BUILDING MATERIALS - 3.9%
523,200 * USG Corp .............................. 15,238,200
--------------
CHEMICALS - 0.3%
170,000 * Uniroyal Chemical Corp ................ 1,296,250
--------------
EQUIPMENT & MACHINERY - 0.7%
142,600 * Detroit Diesel Corp ................... 2,531,150
--------------
FOREST PRODUCTS & PACKAGING - 4.2%
288,900 * Domtar, Inc ........................... 2,636,212
562,200 Louisiana Pacific Corp ................ 13,422,525
--------------
16,058,737
--------------
METALS & MINING - 7.5%
570,500 * Bethlehem Steel Corp .................. 7,487,812
403,700 J & L Specialty Steel ................. 6,610,587
660,400 * National Steel Corp - Class B ......... 8,750,300
128,400 Nucor Corp ............................ 6,179,250
--------------
29,027,949
--------------
ENERGY - 13.8%
207,200 Apache Corp ........................... 5,283,600
282,600 Burlington Resources, Inc ............. 10,173,600
344,500 Dresser Industries, Inc ............... 7,148,375
282,100 Enserch Corp .......................... 4,090,450
472,400 * Enserch Exploration ................... 4,664,950
354,900 Occidental Petroleum Corp ............. 7,630,350
147,700 Tenneco Inc ........................... 6,480,339
151,000 Union Texas Petro Hldgs Inc ........... 2,718,000
198,200 Unocal Corp ........................... 5,202,750
--------------
53,392,414
--------------
FINANCIAL - 12.2%
337,200 Ahmanson (H.F.) & Co .................. 8,430,000
294,275 Bear Stearns Cos, Inc ................. 5,848,715
605,900 Equitable Companies ................... 12,875,375
24,500 * Prudential Reinsurance Hlds ........... 499,187
195,100 Salomon, Inc .......................... 7,047,987
327 * Transport Holdings .................... 12,834
Shares
Or Face Market
Value Securities Description Value
- ------------------------ -------------------------------------- --------------
<S> <C> <C>
FINANCIAL - (continued)
65,500 Travelers, Inc ........................ $ 3,307,750
311,400 U.S. Bancorp .......................... 9,225,225
--------------
47,247,073
--------------
HEALTHCARE - 4.8%
151,100 Allergan, Inc ......................... 4,438,563
77,000 * Apria Healthcare Group ................ 1,665,125
330,900 * Humana, Inc ........................... 6,990,263
142,500 U S Healthcare ........................ 5,486,250
--------------
18,580,201
--------------
REAL ESTATE INVESTMENT TRUST - 3.5%
255,900 DeBartolo Realty Corp ................. 3,326,700
149,300 First Industrial Realty Trust ......... 3,041,989
294,300 Spieker Properties .................... 7,136,775
--------------
13,505,464
--------------
TECHNOLOGY- 1.7%
209,600 * Tandem Computers, Inc ................. 2,358,000
216,500 * Unisys Corp ........................... 1,217,812
369,100 * Zenith Electronics Corp ............... 3,091,212
--------------
6,667,024
--------------
TELECOMMUNICATIONS - 7.6%
123,000 AT&T Corp ............................. 7,872,000
363,600 Comcast Corp Special Class A .......... 6,499,350
264,219 * Cox Communications, Inc Class A ....... 4,954,110
117,100 Time Warner, Inc ...................... 4,274,150
406,800 Westinghouse Electric Corp ............ 5,746,050
--------------
29,345,660
--------------
TRANSPORTATION - 9.6%
122,500 * AMR Corp .............................. 8,085,000
69,500 Burlington Northern RR, Inc ........... 5,829,312
413,100 Consolidated Freightways .............. 9,604,575
59,000 Delta Air Lines, Inc .................. 3,871,875
193,000 Ryder System .......................... 4,656,125
223,610 * Southern Pacific Rail Corp ............ 4,975,322
--------------
37,022,209
--------------
UTILITIES - 0.8%
94,700 BCE Inc ............................... 3,184,289
--------------
Total Common Stocks 325,221,307
--------------
CONVERTIBLE PREFERRED - 1.3%
----------------------------
92,100 Delta Air Lines ....................... 5,100,037
--------------
SHORT TERM INVESTMENTS** - 14.4%
--------------------------------
TREASURY BILLS & NOTES - 2.3%
U. S. TREASURY NOTE
$ 2,500,000 5.125% 11/15/95 ..................... $ 2,499,550
5,915,000 5.260% 10/17/96 ..................... 5,610,732
1,000,000 5.330% 12/07/95 ..................... 994,665
--------------
9,104,947
--------------
DISCOUNT NOTES - 12.1%
FEDERAL FARM CREDIT
600,000 5.510% 12/04/95 ..................... 596,970
900,000 5.520% 11/28/95 ..................... 896,274
415,000 5.530% 11/28/95 ..................... 413,279
490,000 5.540% 12/20/95 ..................... 486,305
500,000 5.500% 12/22/95 ..................... 496,104
100,000 5.560% 11/03/95 ..................... 99,969
7,945,000 5.570% 11/01/95 - 12/07/95........... 7,912,672
</TABLE>
*Non-income producing
**Rates reflect purchase yield to maturity.
See accompanying notes to financial statements.
62
<PAGE>
THE CRABBE HUSON EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
Face Market
Value Securities Description Value
- ------------------------ -------------------------------------- --------------
<S> <C> <C>
DISCOUNT NOTES - (CONTINUED)
FEDERAL HOME LOAN
$ 1,250,000 5.420% 2/16/96 ...................... $ 1,229,865
250,000 5.430% 2/20/96 ...................... 245,814
700,000 5.450% 1/22/96 ...................... 691,310
250,000 5.470% 1/22/96 ...................... 246,885
1,950,000 5.480% 12/28/95 - 1/17/96 ........... 1,928,361
1,000,000 5.490% 1/16/96 ...................... 988,410
985,000 5.500% 12/29/95 - 1/10/96 ........... 975,016
675,000 5.520% 12/13/95 ..................... 670,653
480,000 5.530% 12/05/95 ..................... 477,493
3,645,000 5.540% 11/24/95 - 12/19/95 .......... 3,624,808
7,075,000 5.550% 11/02/95 - 1/29/96 ........... 7,514,523
5,695,000 5.560% 11/02/95 - 1/29/96 ........... 5,668,512
5,470,000 5.570% 11/06/95 - 1/30/96 ........... 6,419,637
500,000 5.580% 1/08/96 ...................... 494,730
2,035,000 5.590% 11/13/95 - 1/09/96 ........... 2,018,367
1,000,000 5.620% 11/15/95 ..................... 997,814
1,600,000 5.630% 11/21/95 ..................... 1,594,996
--------------
46,688,767
--------------
Total Short Term Investments 55,793,714
--------------
Total Investments - 99.7% 386,115,058
(Cost $371,004,735)***
Cash - 1.1% 4,226,599
Other Assets and (Liabilities), Net - 0.8% (3,157,577)
--------------
TOTAL NET ASSETS - 100.0% $ 387,184,080
--------------
--------------
</TABLE>
***Aggregate cost for Federal income tax purposes is $371,627,627.
See accompanying notes to financial statements.
63
<PAGE>
THE CRABBE HUSON INCOME FUND, INC.
SCHEDULE OF INVESTMENTS
October, 31 1995
<TABLE>
<CAPTION>
Face Market
Value Securities Description Value
- ------------------------- ----------------------------------------------- -------------
<S> <C> <C>
FIXED INCOME SECURITIES - 97.1%
GOVERNMENT BONDS - 52.6%
$ 1,000,000 U.S. Treasury Note 6.000%
8/31/97 ................................... $ 1,006,430
1,000,000 U.S. Treasury Bond 7.625%
2/15/25 ................................... 1,160,390
1,500,000 U.S. Treasury Bond 6.875%
8/15/25 ................................... 1,609,950
-------------
3,776,770
-------------
CORPORATE BONDS - 20.2%
100,000 Baxter International
7.500% 5/01/97 ............................ 102,000
100,000 GMAC
8.000% 10/01/99 .......................... 105,500
100,000 Upjohn Company
5.875% 4/15/00 ............................ 98,125
100,000 Pepsico, Inc
5.875% 6/01/00 ............................ 98,875
100,000 American Express Credit
6.500% 8/01/00 ............................ 101,125
100,000 IBM Corp
7.250% 11/01/02 ........................... 104,875
100,000 JP Morgan & Company
7.625% 9/15/04 ............................ 106,375
100,000 Pacific Bell
6.250% 3/01/05 ............................ 98,125
100,000 Anheuser Busch
7.000% 9/01/05 ............................ 103,000
100,000 Bear Stearns Co
6.875% 10/01/05 .......................... 99,875
100,000 Snap-on, Inc
6.625% 10/01/05 ........................... 101,500
100,000 Wal-Mart Stores
8.000% 9/15/06 ............................ 112,000
100,000 Eli Lilly
8.375% 12/01/06 ........................... 115,125
100,000 AT&T Corp
7.750% 3/01/07 ........................... 108,875
-------------
1,455,375
-------------
INSURED BONDS - 2.2%
160,000 City of Lincoln Oregon
5.800% 6/01/97
(AMBAC) .................................... 160,000
-------------
Face Market
Value Securities Description Value
- ------------------------- ----------------------------------------------- -------------
<S> <C> <C>
AGENCIES - 22.1%
$ 320,000 International Bank Recon &
Dev Floater 6.170%*
8/07/97 .................................... $ 288,317
300,000 FHLMC Strips
11/15/99 .................................. 235,905
100,000 Tennessee Valley Authority
6.125% 7/15/03 ............................ 98,250
81,539 FNMA Pool #30333
9.250% 9/01/16 ........................... 85,264
123,549 FHLMC Pool #302029
9.500% 10/01/16 .......................... 128,952
183,090 FHLMC Pool #303033
9.000% 4/01/17 ........................... 189,236
241,386 FHLMC Pool #301538
10.000% 7/01/17 .......................... 259,625
150,000 FHLMC Pool TBA
7.000% 10/01/25 .......................... 148,758
150,000 FHLMC Pool TBA
7.500% 10/01/25 .......................... 151,617
-------------
1,585,924
Total Investments - 97.1% 6,978,069
(Cost $6,754,759)**
Cash - 5.8% 417,578
Other Assets and (Liabilities), Net - (2.9)% (205,522)
-------------
TOTAL NET ASSETS - 100.0% $ 7,190,125
-------------
-------------
</TABLE>
*Zero-coupon bonds-rates reflect purchase yield to maturity.
**Aggregate cost for Federal income tax purposes is $6,774,069.
See accompanying notes to financial statements.
64
<PAGE>
THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
Face Market
Value Securities Description Value
------------- --------------------------------------------------------- -------------
<C> <S> <C>
FIXED INCOME SECURITIES - 98.4%
U.S. GOVERNMENT AND AGENCY
$ 255,000 International Bank Recon & Dev
Floater 5.390%* 08/07/97 ............................. $ 229,752
4,655,000 U. S. Treasury Note
6.000% 8/31/97 ....................................... 4,684,932
150,000 Federal National Mortgage
Assoc. 4.950% 9/30/98 ................................ 146,148
1,045,000 U. S. Treasury Note
6.250% 8/31/00 ....................................... 1,066,005
120,000 Federal National Mortgage
Assoc. Medium Term Note
6.080% 9/25/00 ........................................ 120,294
100,000 Federal National Mortgage
Assoc. 8.250% 12/18/00 ............................... 109,580
50,000 Federal Home Loan Bank
7.590% 3/10/05 ........................................ 54,403
50,000 Federal National Mortgage
Assoc. 7.375% 3/28/05 ................................ 53,558
1,700,000 U. S. Treasury Bond
6.875% 8/15/25 ....................................... 1,824,610
-------------
8,289,282
-------------
Total Investments - 98.4% 8,289,282
(Cost $8,185,803)**
Cash - 0.4% 32,860
Other Assets and (Liabilities), Net - 1.2% 104,057
-------------
TOTAL NET ASSETS - 100.0% $ 8,426,199
-------------
-------------
</TABLE>
*Zero-coupon bond-rate reflects purchase yield to maturity.
**Aggregate cost for Federal income tax purposes is $8,186,756.
See accompanying notes to financial statements.
65
<PAGE>
THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
Face Market
Value Securities Description Value
--------------- ------------------------------------------------ -------------
<C> <S> <C>
FIXED INCOME SECURITIES* - 99.6%
U.S. GOVERNMENT & AGENCY
Treasury Bills - 10.2%
$ 1,000,000 U. S. Treasury Bill
5.540% 7/25/96 ................................ $ 958,912
4,850,000 U. S. Treasury Bill
5.260% 10/17/96 ............................... 4,601,268
-------------
5,560,180
-------------
Discount Notes - 89.4%
Federal Farm Credit
400,000 5.510% 12/04/95 ............................... 397,980
235,000 5.520% 11/28/95 - 12/07/95 .................... 233,841
585,000 5.530% 11/28/95 ............................... 582,574
510,000 5.540% 12/20/95 ............................... 506,154
1,890,000 5.560% 11/03/95 - 1/04/96 ..................... 1,888,023
7,395,000 5.570% 11/01/95 - 1/04/96 ..................... 7,363,603
695,000 5.610% 11/13/95 ............................... 693,700
Federal Home Loan
750,000 5.420% 2/16/96 ................................ 737,918
3,250,000 5.430% 1/17/96 - 2/20/96 ...................... 3,203,279
800,000 5.450% 1/22/96 ................................ 790,069
750,000 5.470% 1/22/96 ................................ 740,655
1,460,000 5.480% 12/28/95 - 1/17/96 ..................... 1,445,962
795,000 5.490% 1/16/96 ................................ 785,786
2,515,000 5.500% 12/29/95 - 1/10/96 ..................... 2,488,470
1,075,000 5.520% 12/08/95 - 12/13/95 .................... 1,068,652
2,270,000 5.530% 12/05/95 - 1/18/96 ..................... 2,249,696
3,200,000 5.540% 11/24/95 - 12/19/95 .................... 3,179,455
7,145,000 5.550% 11/02/95 - 2/01/96 ..................... 7,077,470
5,225,000 5.560% 11/08/95 - 1/26/96 ..................... 5,183,831
3,740,000 5.570% 11/16/95 - 1/30/96 ..................... 3,707,315
2,055,000 5.580% 1/05/96 - 1/08/96 ...................... 2,033,765
650,000 5.590% 11/22/95 ............................... 647,880
535,000 5.620% 11/15/95 ............................... 533,831
1,400,000 5.630% 11/21/95 ............................... 1,395,621
-------------
48,935,530
-------------
Total Investments - 99.6% 54,495,710
(Cost $54,495,710)**
Cash - 0.4% 233,521
Other Assets and (Liabilities), Net 0.0% (15,012)
-------------
TOTAL NET ASSETS - 100.0% $ 54,714,219
-------------
-------------
</TABLE>
*Rates reflect purchase yield to maturity.
**Aggregate cost for Federal income tax purposes is identical.
See accompanying notes to financial statements.
66
<PAGE>
THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
Market
Shares Securities Description Value
---------- ------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCK - 98.1%
REAL ESTATE INVESTMENT TRUST
APARTMENT - 23.5%
20,000 Camden Property Trust ........................... $ 415,000
25,000 Pacific Gulf Properties, Inc .................... 378,125
20,000 Paragon Group, Inc .............................. 345,000
15,000 Post Properties ................................. 450,000
60,000 Prime Residential, Inc .......................... 1,050,000
20,000 SouthWest Property Trust ........................ 242,500
35,000 Summit Properties, Inc .......................... 647,500
73,500 Town & Country Trust ............................ 937,125
-------------
4,465,250
-------------
INDUSTRIAL - 16.1%
10,000 Cali Realty Corp ................................ 195,000
25,900 Carr Realty Corp ................................ 492,100
33,500 First Industrial Realty Trust ................... 682,562
19,000 Liberty Property Trust .......................... 384,750
17,000 Reckson Associates Realty Corp .................. 456,875
24,000 Spieker Properties, Inc ......................... 582,000
10,000 Trinet Corp. Realty Trust ...................... 267,500
-------------
3,060,787
-------------
LODGING - 4.3%
30,000 Starwood Lodging Trust .......................... 817,500
-------------
MALLS - 12.2%
62,100 Crown American Realty ........................... 473,512
71,400 DeBartolo Realty Corp ........................... 928,200
5,000 Macerich Company ................................ 100,625
35,000 Simon Property Group Inc ........................ 813,750
-------------
2,316,087
-------------
MANUFACTURED HOUSING - 0.9%
10,000 Manufactured Home Communities.................... 165,000
-------------
OUTLET CENTERS - 10.2%
35,200 Factory Stores of America ....................... 677,600
15,000 Mills Corp ...................................... 256,875
63,000 Prime Retail, Inc ............................... 763,875
10,000 Tanger Factory Outlet Center .................... 235,000
-------------
1,933,350
-------------
SHOPPING CENTER - 30.9%
11,200 Burnham Pacific Property, Inc ................... 126,000
28,700 Commercial Net Lease Realty ..................... 365,925
12,700 Developers Diversified Realty ................... 361,950
5,000 Excel Realty Trust, Inc ......................... 94,375
36,100 Federal Realty Investment Trust ................. 731,025
44,250 Glimcher Realty Trust ........................... 796,500
43,700 JDN Realty Corp ................................. 890,387
60,000 Kranzco Realty Trust ............................ 915,000
55,000 Malan Realty Investors, Inc ..................... 770,000
28,750 Mark Centers Trust .............................. 309,064
30,000 Regency Realty Corp ............................. 510,000
-------------
5,870,226
-------------
Total Investments - 98.1% 18,628,200
(Cost $19,605,304)*
Cash - 0.5% 99,391
Other Assets and (Liabilities), Net - 1.4% 257,923
-------------
TOTAL NET ASSETS - 100.0% $ 18,985,514
-------------
-------------
</TABLE>
*Aggregate cost for Federal income tax purposes is $19,610,488.
See accompanying notes to financial statements.
67
<PAGE>
CRABBE HUSON FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1995
<TABLE>
<CAPTION>
THE OREGON THE THE
MUNICIPAL CRABBE HUSON CRABBE HUSON
BOND SPECIAL ASSET ALLOCATION
FUND, INC. FUND, INC. FUND, INC.
--------------- ---------------- ----------------
<S> <C> <C> <C>
ASSETS:
Investment securities,
at market (cost $26,215,041; $789,902,314;
$127,582,027; $371,004,735; $6,754,759;
$8,185,803; $54,495,710 and $19,605,304
respectively) $ 27,580,795 $ 767,165,836 $ 132,408,320
Cash ---- 2,028,004 6,303,890
Deposits with brokers for securities sold short ---- 184,796,646 ----
Receivables:
Dividends and Interest 509,615 849,007 857,351
Fund shares sold 25,000 4,090,362 405,209
Investment securities sold ---- 4,355,170 920,708
Due from distributor (Note 2) ---- ---- ----
Due from investment advisor (Note 2) ---- ---- ----
Proceeds from securities sold short ---- 116,397,420 ----
Organization expenses ---- ---- ----
Prepaid Expenses 1,362 44,011 6,508
--------------- ---------------- ----------------
$ 28,116,772 $ 1,079,726,456 $ 140,901,986
--------------- ---------------- ----------------
LIABILITIES:
Securities sold short,
at market (proceeds $116,397,420) ---- 132,866,612 ----
Payables:
Investment securities payable ---- 40,952,158 4,284,356
Fund shares redeemed ---- 9,144,015 42,751
Short sales closed ---- 17,711,422 ----
Payable to affiliates and directors (Note 2) 778 1,027 2,027
Accrued liabilities 45,623 491,388 42,795
--------------- ---------------- ----------------
46,401 201,166,622 4,371,929
--------------- ---------------- ----------------
NET ASSETS: $ 28,070,371 $ 878,559,834 $ 136,530,057
--------------- ---------------- ----------------
--------------- ---------------- ----------------
NET ASSETS CONSIST OF:
Capital shares 2,225 63,670 10,010
Capital paid in 26,699,373 874,136,535 120,240,658
Undistributed accumulated net
investment income ---- 11,747,830 ----
Undistributed accumulated net
realized gain (loss) on investments 3,019 31,817,469 11,453,096
Net unrealized appreciation
(depreciation) on investments and short sales(Note 5) 1,365,754 (39,205,670) 4,826,293
--------------- ---------------- ----------------
$ 28,070,371 $ 878,559,834 $ 136,530,057
--------------- ---------------- ----------------
--------------- ---------------- ----------------
CAPITAL SHARES, PAR VALUE $.001
Authorized 10,000,000 100,000,000 100,000,000
Outstanding (Note 4) 2,225,010 63,670,184 10,010,125
--------------- ---------------- ----------------
NET ASSET VALUE PER SHARE $ 12.62 $ 13.80 $ 13.64
--------------- ---------------- ----------------
--------------- ---------------- ----------------
</TABLE>
See accompanying notes to financial statements.
68
<PAGE>
CRABBE HUSON FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1995
<TABLE>
<CAPTION>
THE THE THE CRABBE HUSON
CRABBE HUSON CRABBE HUSON U.S. GOVERNMENT
EQUITY FUND, INC. INCOME FUND, INC. INCOME FUND, INC.
----------------- ----------------- -----------------
<S> <C> <C> <C>
ASSETS:
Investment securities,
at market (cost $26,215,041; $789,902,314;
$127,582,027; $371,004,735; $6,754,759;
$8,185,803; $54,495,710 and $19,605,304
respectively) $ 386,115,058 $ 6,978,069 $ 8,289,282
Cash 4,226,599 417,578 32,860
Deposits with brokers for securities sold short ---- ---- ----
Receivables:
Dividends and Interest 154,250 89,712 88,913
Fund shares sold 1,109,039 3,376 6,658
Investment securities sold 919,085 ---- ----
Due from distributor (Note 2) 60,875 ---- ----
Due from investment advisor (Note 2) ---- 7,411 8,384
Proceeds from securities sold short ---- ---- ----
Organization expenses ---- ---- ----
Prepaid Expenses 17,515 359 434
---------------- ----------------- -----------------
$ 392,602,421 $ 7,496,505 $ 8,426,531
---------------- ----------------- -----------------
LIABILITIES:
Securities sold short,
at market (proceeds $116,397,420) ---- ---- ----
Payables:
Investment securities payable 4,885,161 301,803 ----
Fund shares redeemed 393,222 4,253 ----
Short sales closed ---- ---- ----
Payable to affiliates and directors (Note 2) 2,027 277 277
Accrued liabilities 137,931 47 55
---------------- ----------------- -----------------
5,418,341 306,380 332
---------------- ----------------- -----------------
NET ASSETS: $ 387,184,080 $ 7,190,125 $ 8,426,199
---------------- ----------------- -----------------
---------------- ----------------- -----------------
NET ASSETS CONSIST OF:
Capital shares 21,309 702 790
Capital paid in 349,459,104 7,146,824 8,468,549
Undistributed accumulated net
investment income 2,666,550 ---- 690
Undistributed accumulated net
realized gain (loss) on investments 19,926,794 (180,711) (147,309)
Net unrealized appreciation
(depreciation) on investments and short sales(Note 5) 15,110,323 223,310 103,479
---------------- ----------------- -----------------
$ 387,184,080 $ 7,190,125 $ 8,426,199
---------------- ----------------- -----------------
---------------- ----------------- -----------------
CAPITAL SHARES, PAR VALUE $.001
Authorized 100,000,000 100,000,000 100,000,000
Outstanding (Note 4) 21,309,191 700,892 790,370
---------------- ----------------- -----------------
---------------- ----------------- -----------------
NET ASSET VALUE PER SHARE $ 18.17 $ 10.26 $ 10.66
---------------- ----------------- -----------------
---------------- ----------------- -----------------
<CAPTION>
THE CRABBE HUSON THE CRABBE HUSON
U.S. GOVERNMENT REAL ESTATE
MONEY MARKET INVESTMENT
FUND, INC. FUND, INC.
---------------- ----------------
<S> <C> <C>
ASSETS:
Investment securities,
at market (cost $26,215,041; $789,902,314;
$127,582,027; $371,004,735; $6,754,759;
$8,185,803; $54,495,710 and $19,605,304
respectively) $ 54,495,710 $ 18,628,200
Cash 233,521 99,391
Deposits with brokers for securities sold short ---- ----
Receivables:
Dividends and Interest 646 110,797
Fund shares sold ---- 7,204
Investment securities sold ---- 133,980
Due from distributor (Note 2) ---- ----
Due from investment advisor (Note 2) ---- ----
Proceeds from securities sold short ---- ----
Organization expenses ---- 89,606
Prepaid Expenses 2,612 219
---------------- ----------------
$ 54,732,489 $ 19,069,397
---------------- ----------------
LIABILITIES:
Securities sold short,
at market (proceeds $116,397,420) ---- ----
Payables:
Investment securities payable ---- 74,647
Fund shares redeemed ---- ----
Short sales closed ---- ----
Payable to affiliates and directors (Note 2) 778 778
Accrued liabilities 17,492 8,458
---------------- ----------------
18,270 83,883
---------------- ----------------
NET ASSETS: $ 54,714,219 $ 18,985,514
---------------- ----------------
---------------- ----------------
NET ASSETS CONSIST OF:
Capital shares 54,714 1,960
Capital paid in 54,659,505 19,720,169
Undistributed accumulated net
investment income ---- 7,309
Undistributed accumulated net
realized gain (loss) on investments ---- 233,180
Net unrealized appreciation
(depreciation) on investments and short sales(Note 5) ---- (977,104)
---------------- ----------------
$ 54,714,219 $ 18,985,514
---------------- ----------------
---------------- ----------------
CAPITAL SHARES, PAR VALUE $.001
Authorized 2,000,000,000 1,000,000,000
Outstanding (Note 4) 54,714,219 1,959,931
---------------- ----------------
---------------- ----------------
NET ASSET VALUE PER SHARE $ 1.00 $ 9.69
---------------- ----------------
---------------- ----------------
</TABLE>
See accompanying notes to financial statements.
69
<PAGE>
STATEMENTS OF OPERATIONS
For the year ended October 31, 1995
<TABLE>
<CAPTION>
THE OREGON THE THE
MUNICIPAL CRABBE HUSON CRABBE HUSON
BOND SPECIAL ASSET ALLOCATION
FUND, INC. FUND, INC. FUND, INC.
----------------- ----------------- -----------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest $ 1,455,231 $ 18,261,908 $ 3,701,179
Dividends (net of foreign taxes withheld of
$0; $3,347; $18,635; $55,166; $0; $0; $0; and
$0 respectively) -- 4,558,333 1,226,139
----------------- ----------------- -----------------
1,455,231 22,820,241 4,927,318
----------------- ----------------- -----------------
EXPENSES
Investment advisory fees (Note 2) 134,042 5,398,048 1,183,215
Transfer agent 32,241 953,607 115,803
Printing 10,074 269,190 35,347
Postage 7,606 200,609 25,533
Custody 2,860 54,216 18,637
Legal 3,836 140,115 26,247
Auditing 5,081 43,092 11,792
Insurance 1,254 27,016 5,467
Directors' fees 3,118 8,118 8,113
Registration fees 1,067 203,324 28,117
Amortization of organization expenses -- -- --
Miscellaneous 3,992 194,903 19,119
Distribution fees (Note 2) 61,567 1,701,991 303,887
Administration 16,852 57,617 33,456
Short sales dividends -- 286,184 --
----------------- ----------------- -----------------
283,590 9,538,030 1,814,733
Fees waived by investment advisor (Note 2) (20,866) (697) (14,567)
Expenses reimbursed by investment advisor (Note 2) -- -- --
----------------- ----------------- -----------------
NET EXPENSES 262,724 9,537,333 1,800,166
----------------- ----------------- -----------------
NET INVESTMENT INCOME 1,192,507 13,282,908 3,127,152
----------------- ----------------- -----------------
REALIZED AND UNREALIZED GAIN:
Net realized gain (loss) on investments 3,019 31,170,355 11,435,123
Net change in unrealized appreciation
or depreciation of investments and short sales 1,454,370 (51,415,104) 20,021
----------------- ----------------- -----------------
NET GAIN (LOSS) ON INVESTMENTS 1,457,389 (20,244,749) 11,455,144
----------------- ----------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 2,649,896 ($ 6,961,841) $ 14,582,296
----------------- ----------------- -----------------
----------------- ----------------- -----------------
See accompanying notes to financial statements.
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
THE CRABBE HUSON THE CRABBE HUSON
THE THE THE CRABBE HUSON U.S. GOVERNMENT REAL ESTATE
CRABBE HUSON CRABBE HUSON U.S. GOVERNMENT MONEY MARKET INVESTMENT
EQUITY FUND, INC. INCOME FUND, INC. INCOME FUND, INC. FUND, INC. FUND, INC.
---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 3,253,320 $ 398,333 $ 487,929 $ 2,990,307 $ 20,613
Dividends (net of foreign taxes
withheld of $0; $3,347; $18,635;
$55,166; $0; $0; $0; and $0
respectively) 4,154,003 11,688 -- -- 1,139,451
---------------- ---------------- ---------------- ---------------- ----------------
7,407,323 410,021 487,929 2,990,307 1,160,064
---------------- ---------------- ---------------- ---------------- ----------------
EXPENSES
Investment advisory fees (Note 2) 2,471,465 49,011 43,576 253,198 190,619
Transfer agent 299,262 28,160 27,224 67,713 53,365
Printing 79,105 6,057 5,146 25,002 6,313
Postage 53,732 3,328 3,200 20,094 4,249
Custody 30,335 2,294 1,817 8,789 2,960
Legal 57,142 1,938 2,392 10,985 9,089
Auditing 19,826 3,479 3,688 6,134 4,741
Insurance 11,152 294 414 2,157 869
Directors' fees 8,118 1,118 1,118 3,118 3,118
Registration fees 84,568 19,398 20,464 37,880 20,584
Amortization of organization expenses -- -- -- -- 10,868
Miscellaneous 80,371 2,827 3,944 19,022 5,085
Distribution fees (Note 2) 621,908 16,337 21,788 126,599 47,655
Administration 23,057 551 726 4,090 1,603
Short sales dividends -- -- -- -- --
---------------- ---------------- ---------------- ---------------- ----------------
3,840,041 134,792 135,497 584,781 361,118
Fees waived by investment advisor (Note 2) -- (49,011) (43,576) (230,305) (75,190)
Expenses reimbursed by investment
advisor (Note 2) -- (33,287) (26,493) -- --
---------------- ---------------- ---------------- ---------------- ----------------
NET EXPENSES 3,840,041 52,494 65,428 354,476 285,928
---------------- ---------------- ---------------- ---------------- ----------------
NET INVESTMENT INCOME 3,567,282 357,527 422,501 2,635,831 874,136
---------------- ---------------- ---------------- ---------------- ----------------
REALIZED AND UNREALIZED GAIN:
Net realized gain (loss) on investments 19,596,449 108,710 7,624 -- 51,165
Net change in unrealized appreciation
or depreciation of investments and
short sales 9,278,013 304,184 324,469 -- 565,011
---------------- ---------------- ---------------- ---------------- ----------------
NET GAIN (LOSS) ON INVESTMENTS 28,874,462 412,894 332,093 -- 616,176
---------------- ---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 32,441,744 $ 770,421 $ 754,594 $ 2,635,831 $ 1,490,312
---------------- ---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ---------------- ----------------
See accompanying notes to financial statements.
</TABLE>
71
<PAGE>
CRABBE HUSON FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
THE OREGON THE CRABBE HUSON
MUNICIPAL BOND FUND, INC. SPECIAL FUND, INC.
------------------------------------ ------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 OCTOBER 31, 1995 OCTOBER 31, 1994
------------------------------------ ------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income $ 1,192,507 $ 1,335,320 $ 13,282,908 $ 396,099
Net realized gain (loss) on investments 3,019 151,835 31,170,355 11,534,530
Net change in unrealized appreciation
or depreciation of investments and short sales 1,454,370 (2,209,050) (51,415,104) 8,747,502
----------------------------------- -----------------------------------
Increase (decrease) in net assets
resulting from operations 2,649,896 (721,895) (6,961,841) 20,678,131
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,192,507) (1,335,320) (1,107,597) --
In excess of net investment income -- (770) -- --
From net realized gain on investments (151,835) (22,243) (11,710,943) (687,990)
In excess of net realized gain on investments -- -- -- --
CAPITAL SHARE TRANSACTIONS, NET (Note 4) (2,280,911) 1,717,846 578,529,362 276,003,800
----------------------------------- -----------------------------------
Total increase (decrease) in net assets (975,357) (362,382) 558,748,981 295,993,941
FUND NET ASSETS, BEGINNING OF PERIOD 29,045,728 29,408,110 319,810,853 23,816,912
----------------------------------- -----------------------------------
FUND NET ASSETS, END OF PERIOD $ 28,070,371 $ 29,045,728 $ 878,559,834 $ 319,810,853
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
<CAPTION>
THE CRABBE HUSON
THE CRABBE HUSON U.S. GOVERNMENT
INCOME FUND, INC. INCOME FUND, INC.
------------------------------------ ------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 OCTOBER 31, 1995 OCTOBER 31, 1994
------------------------------------ ------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income $ 357,527 $ 288,002 $ 422,501 $ 449,352
Net realized gain on investments 108,710 (283,625) 7,624 (148,628)
Net change in unnrealized appreciation
or depreciation of investments and short sales 304,184 (169,542) 324,469 (480,026)
----------------------------------- -----------------------------------
Increase (decrease) in net assets
resulting from operations 770,421 (165,165) 754,594 (179,302)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (357,527) (288,002) (422,501) (449,352)
In excess of net investment income (17,066) (4,622) (9,331) (3,373)
From net realized gain on investments -- (156,271) -- (108,276)
In excess of net realized gain on investments -- -- -- --
CAPITAL SHARE TRANSACTIONS, NET (Note 4) 1,520,890 190,912 (1,145,775) (1,228,397)
----------------------------------- -----------------------------------
Total increase (decrease) in net assets 1,916,718 (423,148) (823,013) (1,968,700)
FUND NET ASSETS, BEGINNING OF PERIOD 5,273,407 5,696,555 9,249,212 11,217,912
----------------------------------- -----------------------------------
FUND NET ASSETS, END OF PERIOD $ 7,190,125 $ 5,273,407 $ 8,426,199 $ 9,249,212
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
</TABLE>
See accompanying notes to financial statements.
72
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
THE CRABBE HUSON THE CRABBE HUSON
ASSET ALLOCATION FUND, INC. EQUITY FUND, INC.
------------------------------------ ------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 OCTOBER 31, 1995 OCTOBER 31, 1994
------------------------------------ ------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income $ 3,127,152 $ 2,402,334 $ 3,567,282 $ 940,474
Net realized gain (loss) on investments 11,435,123 4,008,708 19,596,449 2,406,325
Net change in unrealized appreciation
or depreciation of investments and short sales 20,021 (3,975,212) 9,278,013 1,406,726
----------------------------------- -----------------------------------
Increase (decrease) in net assets
resulting from operations 14,582,296 2,435,830 32,441,744 4,753,525
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,090,031) (2,313,253) (1,413,080) (170,079)
In excess of net investment income -- -- -- --
From net realized gain on investments (4,120,955) (4,683,410) (2,376,723) (1,800,301)
In excess of net realized gain on investments -- -- -- --
CAPITAL SHARE TRANSACTIONS, NET (Note 4) 19,006,962 29,322,601 205,426,843 115,801,985
----------------------------------- -----------------------------------
Total increase (decrease) in net assets 26,378,272 24,761,768 234,078,784 118,585,130
FUND NET ASSETS, BEGINNING OF PERIOD 110,151,785 85,390,017 153,105,296 34,520,166
----------------------------------- -----------------------------------
FUND NET ASSETS, END OF PERIOD $ 136,530,057 $ 110,151,785 $ 387,184,080 $ 153,105,296
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
<CAPTION>
THE CRABBE HUSON THE CRABBE HUSON
U.S. GOVERNMENT REAL ESTATE
MONEY MARKET FUND, INC. INVESTMENT FUND, INC.
------------------------------------ ------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 OCTOBER 31, 1995 OCTOBER 31, 1994*
------------------------------------ ------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income $ 2,635,831 $ 731,382 $ 874,136 $ 598,957
Net realized gain on investments -- -- 51,165 206,890
Net change in unnrealized appreciation
or depreciation of investments and short sales -- -- 565,011 (1,550,914)
----------------------------------- -----------------------------------
Increase (decrease) in net assets
resulting from operations 2,635,831 731,382 1,490,312 (745,067)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (2,635,831) (731,382) (862,995) (373,869)
In excess of net investment income -- -- -- --
From net realized gain on investments -- -- (240,802) --
In excess of net realized gain on investments -- -- -- --
CAPITAL SHARE TRANSACTIONS, NET (Note 4) 22,331,667 17,598,059 319,499 19,298,436
----------------------------------- -----------------------------------
Total increase (decrease) in net assets 22,331,667 17,598,059 706,014 18,179,500
FUND NET ASSETS, BEGINNING OF PERIOD 32,382,552 14,784,493 18,279,500 100,000
----------------------------------- -----------------------------------
FUND NET ASSETS, END OF PERIOD $ 54,714,219 $ 32,382,552 $ 18,985,514 $ 18,279,500
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
</TABLE>
*For the period from April 4, 1994 (commencement of operations) to October 31,
1994.
73
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION: The Oregon Municipal Bond Fund, Inc. is registered under the
Investment Company Act of 1940, as amended, as an open-end non-diversified
investment company. The Crabbe Huson Special Fund, Inc., The Crabbe Huson Asset
Allocation Fund, Inc., The Crabbe Huson Equity Fund, Inc., The Crabbe Huson
Income Fund, Inc., The Crabbe Huson U.S. Government Income Fund, Inc., The
Crabbe Huson U.S. Government Money Market Fund, Inc. and The Crabbe Huson Real
Estate Investment Fund, Inc. are registered under the Investment Company Act of
1940, as amended, as open-end diversified investment companies.
The following is a summary of significant accounting policies consistently
followed by the Funds in preparation of financial statements.
SECURITY VALUATION--THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC.:
The Fund seeks to maintain a constant net asset value of $1.00 and values its
assets using the amortized cost method by adjusting the cost of each security
for accretion of discount or amortization of premium.
SECURITY VALUATION--OTHER FUNDS: Securities listed or traded on a registered
securities exchange are valued at the last price on the date of the computation.
This includes over-the-counter securities for which last sale information is
available. Where last sale information is not available, the best bid price is
used. Securities and assets for which market quotations are not readily
available are valued at fair market value as determined in good faith by or
under the direction of the Board of Directors of the Funds. Cash equivalents
relating to Firm Commitment Purchase Agreements are segregated by the custodian
and may not be sold while the current commitment is outstanding.
SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are
accounted for on the trade date, the date the order to buy or sell is executed.
Interest income is recorded daily on the accrual basis. Interest income
consists of interest accrued plus the accretion of original issue discount and
minus the amortization of investment premium, both calculated on an effective
interest basis. Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Net realized gains and losses on investments are
computed on the first-in, first-out, method.
DIVIDENDS AND DISTRIBUTIONS: The Oregon Municipal Bond Fund, Inc. declares
dividends from its net investment income each business day. The net investment
income for Saturdays, Sundays and holidays is declared as a dividend on the next
business day. Declared dividends are accrued through the last business day of
each month and are distributed on that date. Net capital gains realized by the
Fund, if any, are declared and distributed on an annual basis, usually in
December.
The Crabbe Huson Special Fund, Inc. and The Crabbe Huson Equity Fund, Inc.
expect to declare and distribute to shareholders, once a year in December,
substantially all of the net investment income and net realized capital gains,
if any.
The Crabbe Huson Asset Allocation Fund, Inc. and The Crabbe Huson Real Estate
Investment Fund, Inc. expect to declare and distribute dividends from net
investment income on the last business day of each fiscal quarter. Net capital
gains realized by the Funds, if any, are declared and distributed on an annual
basis, usually in December.
The Crabbe Huson Income Fund, Inc. and The Crabbe Huson U.S. Government Income
Fund, Inc. declare and distribute dividends from net investment income on the
last business day of each month. Net capital gains realized by the Funds, if
any, are declared and distributed on an annual basis, usually in December.
The Crabbe Huson U.S. Government Money Market Fund, Inc. declares dividends from
its net investment income each business day. The net investment income for
Saturdays, Sundays and holidays is declared as a dividend on the prior business
day. Declared dividends are accrued through the last business day of each month
and are distributed on that date. Net capital gains realized by the Fund, if
any, are declared and distributed on an annual basis, usually in December.
SHORT SALES: Crabbe Huson Special Fund during the year sold securities short.
A short sale is effected when it is believed that the price of a particular
security will decline, and involves the sale of a security which the Fund does
not own in the hope of purchasing the same security at a later date at a lower
price. To make delivery to the buyer, the Fund must borrow the security. The
Fund is then obligated to return the security to the lender, and therefore it
must subsequently purchase the same security.
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.
74
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1995
SHORT SALES - (CONTINUED): In addition, the Fund must put in a segregated
account (with the Fund's custodian) an amount of cash or U.S. Government
securities equal to the difference between the market value of the securities
sold short at the time they were sold short and any cash or government
securities deposited as collateral with the broker in connection with the short
sale (not including the proceeds from the short sale). Furthermore, until the
Fund replaces the borrowed security, it must daily maintain the segregated
account at a level so that (1) the amount deposited in it plus the amount
deposited with the broker (not including the proceeds from the short sale) will
equal the current market value of the securities sold short, (2) the amount
deposited in it plus the amount deposited with the broker (not including the
proceeds from the short sale) will not be less than the market value of the
securities at the time they were sold short. As a result of these requirements,
the Special Fund will not gain any leverage merely by selling short, except to
the extent that it earns interest on the immobilized cash or government
securities while also being subject to the possibility of gain or loss from the
securities sold short. The amount of the Special Fund's net assets that will at
any time be in the type of deposits described above (that is, collateral
deposits or segregated accounts) will not exceed 25%.
OPTIONS: The Special, Real Estate, Equity, Asset Allocation and Income Funds
may write call options on securities they own or have the right to acquire, and
may purchase put and call options on individual securities and indexes written
by others. The purchase of any of these instruments can result in the entire
loss on the investment in that particular instrument or, in the case of writing
covered options, can limit the opportunity to earn a profit on the underlying
security.
When an option is written (sold), an amount equal to the premium received is
recorded as a liability. The amount of liability is adjusted daily to reflect
the current market value of the option written. When an option written by the
Fund, expires on its stipulated expiration date, the Fund realizes a gain equal
to the net premium received for the option. When the Fund enters into a closing
purchase transaction, the Fund realizes a gain or loss equal to the difference
between the cost of a closing purchase transaction and the premium received when
the call option was written. In the case of either expiration of a written
option or a closing purchase transaction, the liability related to such option
is extinguished.
Call or put options purchased are accounted for in the same manner as marketable
portfolio securities. When a call or put option is exercised, the proceeds from
the underlying securities bought or sold are decreased by the premium paid in
determining the gain or loss.
Options on stock indexes differ from options on securities in that the exercise
of an option on a stock index does not involve delivery of the actual underlying
security and are settled in cash only.
During the year the Crabbe Huson Special Fund, Inc. purchased put options.
Outstanding put options at October 31, 1995 are disclosed in the schedule of
investments.
ORGANIZATION COSTS: Expenses incurred in connection with the organization of
the Funds are amortized over a sixty-month period. The amortization is
calculated based upon the projected growth in net assets of the Funds. As of
October 31, 1995 organization costs for all Funds except for The Crabbe Huson
Real Estate Investment Fund, Inc. have been fully amortized. The Crabbe Huson
Real Estate Investment Fund, Inc. has amortized $10,868 through October 31,
1995. The Crabbe Huson Group, Inc., the Fund's investment advisor, has agreed
that, in the event any of the initial shares are redeemed during the 60-month
period for amortizing the Fund's organization costs, the Fund will be reimbursed
by the investment advisor for the unamortized balances of such costs in the same
proportion as the number of shares reduced bears to the number of initial shares
outstanding at the time of redemption.
REORGANIZATION COSTS: On July 7, 1995 the Board of Directors approved the
reorganization of the Oregon Municipal Bond Fund, Inc., The Crabbe Huson Special
Fund, Inc., The Crabbe Huson Asset Allocation Fund, Inc. The Crabbe Huson Equity
Fund, Inc., The Crabbe Huson Income Fund, Inc., The Crabbe Huson U.S. Government
Income Fund, Inc., The Crabbe Huson U.S. Government Money Market Fund, Inc. and
The Crabbe Huson Real Estate Investment Fund, Inc., ("the Fund") into a single
Delaware business trust which will operate as a series company. The record date
of this reorganization is December 20, 1995 and the costs related to the
reorganization will be incurred by the Funds.
FEDERAL INCOME TAXES: It is each Fund's policy to distribute substantially all
of its taxable income to shareholders and otherwise comply with the provisions
of the Internal Revenue Code applicable to regulated investment companies.
Therefore, no provision has been made for Federal income tax or excise taxes.
75
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1995
FEDERAL INCOME TAXES - (CONTINUED): Due to the timing of dividend distributions
and the differences in accounting for income and realized gains (losses) for
financial statement and federal income tax purposes, the fiscal year in which
amounts are distributed may differ from the year in which the income and
realized gains (losses) were recorded by the funds. The differences between the
income or gains distributed on a book versus tax basis are shown as excess
distributions of net investment income and net realized gain on sales of
investments in the Statement of Changes in Net Assets.
On the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, reclassification adjustments have been made as shown in Table A.
NOTE 2. INVESTMENT ADVISOR AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISOR: The Funds have entered into an investment advisory
agreement with The Crabbe Huson Group, Inc. (the "Advisor"), an affiliated
company. The investment advisory fee of each Fund is accrued daily and paid
semi-monthly. The annual investment advisory fee for each Fund is described
below:
THE CRABBE HUSON ASSET ALLOCATION FUND, INC.
THE CRABBE HUSON SPECIAL FUND, INC.
THE CRABBE HUSON EQUITY FUND, INC.
THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC.
1.00% of daily net assets up to $100,000,000
.85 of 1% of daily net assets between $100,000,000 and $500,000,000
.60 of 1% of daily net assets over $500,000,000
THE CRABBE HUSON INCOME FUND, INC.
.75 of 1% of daily net assets up to $100,000,000
.60 of 1% of daily net assets up to $500,000,000
.50 of 1% of daily nets assets over $500,000,000
THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC.
THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC.
THE OREGON MUNICIPAL BOND FUND, INC.
.50 of 1% of daily net assets up to $500,000,000
.45 of 1% of daily net assets between $500,000,000 and $1,000,000,000
.40 of 1% of daily net assets over $1,000,000,000
The Advisor has voluntarily agreed to waive its management fee and/or reimburse
each Fund for the amount, if any, by which the total operating and management
expenses of such Fund (including the Advisor's compensation and any amounts paid
pursuant to the participating Funds' Rule 12b-1 plan but excluding interest,
taxes, brokerage fees and commissions, and extraordinary expenses) exceed
certain annual rates applied to the average daily net assets of the Funds.
The annual expense limit for each Fund is listed below:
The Oregon Municipal Bond Fund, Inc. 0.98%
The Crabbe Huson Special Fund, Inc. 1.50%
The Crabbe Huson Asset Allocation Fund, Inc. 1.50%
The Crabbe Huson Equity Fund, Inc. 1.50%
The Crabbe Huson Income Fund, Inc. 0.80%
The Crabbe Huson U.S. Government Income Fund, Inc. 0.75%
The Crabbe Huson U.S. Government Money
Market Fund, Inc. 0.70%
The Crabbe Huson Real Estate Investment Fund, Inc. 1.50%
DISTRIBUTOR: The Funds have entered into a distribution agreement with Crabbe
Huson Securities, Inc. (the "Distributor"), an affiliated company. Under the
Distribution Plan, each of the participating Funds may pay up to 1/4 of 1% of
such Fund's average daily net assets to the Distributor as reimbursement for its
actual expenses incurred in the distribution and promotion of such Fund's
shares.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TABLE A UNDISTRIBUTED UNDISTRIBUTED
ACCUMULATED ACCUMULATED NET
CAPITAL NET INVESTMENT REALIZED GAIN ON
PAID IN INCOME INVESTMENTS
------------- -------------- ---------------------
<S> <C> <C> <C>
The Oregon Municipal Bond Fund, Inc. ---- ---- ----
The Crabbe Huson Special Fund, Inc. $ 79,005 $ (726,118) $ 647,113
The Crabbe Huson Asset Allocation Fund, Inc. (108,605) (37,121) 145,726
The Oregon Equity Fund, Inc. 29,829 (360,174) 330,345
The Crabbe Huson Income Fund, Inc. 38,846 17,066 (55,912)
The Crabbe Huson U.S. Government Income Fund, Inc. (3,715) 10,021 (6,306)
The Crabbe Huson U.S. Government Money Market Fund, Inc. ---- ---- ----
The Crabbe Huson Real Estate Investment Fund, Inc. (182,383) (3,832) 177,416
</TABLE>
76
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1995
ADMINISTRATOR: State Street Bank and Trust Company (the "Administrator") serves
as administrator of the Funds. The Administrator performs certain
administrative services for the Funds. The Funds pays the Administrator a fee
at the rate of 0.06% of the Fund's average net assets up to $500 million, 0.03%
of the next $500 million, and 0.01% of those assets in excess of $1 billion,
plus certain out of pocket costs.
DIRECTORS FEES: As of October 31, 1995, fees payable to the disinterested
directors were $778, $1,027, $2,027, $2,027, $277, $277, $778 and $778 for The
Oregon Municipal Bond Fund, Inc., The Crabbe Huson Special Fund, Inc., The
Crabbe Huson Asset Allocation Fund, Inc., The Crabbe Huson Equity Fund, Inc.,
The Crabbe Huson Income Fund, Inc., The Crabbe Huson U.S. Government Income
Fund, Inc., The Crabbe Huson U.S. Government Money Market Fund, Inc. and The
Crabbe Huson Real Estate Investment Fund, Inc., respectively.
NOTE 3. DISTRIBUTIONS TO SHAREHOLDERS (Unaudited)
THE OREGON MUNICIPAL BOND FUND, INC. Of the Fund's distributions paid to
shareholders from net investment income during the fiscal year ended October 31,
1995, 99.3% was attributable to investments in municipal bonds issued by the
state of Oregon and its political subdivisions, agencies authorities and
instrumentalities and other municipal securities.
THE CRABBE HUSON SPECIAL FUND, INC. Of the Fund's net investment income earned
during the fiscal year ended October 31, 1995, 22.6% was attributable to
investments in direct or indirect debt obligations of the United States
Government, or its agencies or instrumentalities.
THE CRABBE HUSON ASSET ALLOCATION FUND, INC. Of the Fund's net investment
income earned during the fiscal year ended October 31, 1995, 60.1% was
attributable to investments in direct or indirect debt obligations of the United
States Government, or its agencies or instrumentalities.
THE CRABBE HUSON EQUITY FUND, INC. Of the Fund's net investment income earned
during the fiscal year ended October 31, 1995, 40.9% was attributable to
investments in direct or indirect debt obligations of the United States
Government, or its agencies or instrumentalities.
THE CRABBE HUSON INCOME FUND, INC. Of the Fund's net investment income earned
during the fiscal year ended October 31, 1995, 50.4% was attributable to
investments in direct or indirect debt obligations of the United States
Government, or its agencies or instrumentalities.
THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC. Of the Fund's net investment
income earned during the fiscal year ended October 31, 1995, 95.8% was
attributable to investments in direct or indirect debt obligations of the United
States Government, or its agencies or instrumentalities.
THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC. Of the Fund's net
investment income earned during the fiscal year ended October 31, 1995, 98.2%
was attributable to investments in direct or indirect debt obligations of the
United States Government, or its agencies or instrumentalities.
THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC. Of the Fund's net investment
income earned during the fiscal year ended October 31, 1995, none was
attributable to investments in direct or indirect debt obligations of the United
States Government, or its agencies or instrumentalities.
On December 6, 1995 the following distributions were declared from net realized
capital gains from investment transactions. The dividend was paid on December
6, 1995, to shareholders of record on December 5, 1995, as shown in Table B.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TABLE B PER SHARE DOLLARS
-----------------------------------------------------------------------------
SHORT-TERM LONG-TERM SHORT-TERM LONG-TERM
CAPITAL GAIN CAPITAL GAIN CAPITAL GAIN CAPITAL GAIN
DISTRIBUTION (1) DISTRIBUTION DISTRIBUTION (1) DISTRIBUTION
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Oregon Municipal Bond Fund, Inc. ---- ---- ---- ----
The Crabbe Huson Special Fund, Inc. 0.3764 0.1983 $23,686,427 $12,479,000
The Crabbe Huson Asset Allocation Fund, Inc. 0.5232 0.6046 5,306,597 6,131,818
The Crabbe Huson Equity Fund, Inc. 0.6038 0.3385 13,191,040 7,394,039
The Crabbe Huson Income Fund, Inc. ---- ---- ---- ----
The Crabbe Huson U.S. Government Income Fund, Inc. ---- ---- ---- ----
The Crabbe Huson Real Estate Investment Fund, Inc. 0.1225 ---- 238,364 ----
</TABLE>
(1)Short-term capital gains are taxable to shareholders as ordinary income
dividends.
77
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
October 31, 1995
NOTE 4. CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of the Funds were as follows:
<TABLE>
<CAPTION>
THE OREGON
MUNICIPAL BOND FUND, INC.
------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 552,364 858,058 $ 6,744,052 $10,795,284
Shares issued in
reinvestment of dividends 73,838 85,380 906,976 1,057,544
------------------------------------------------------------------------
626,202 943,438 7,651,028 11,852,828
Shares redeemed (822,850) (818,671) (9,931,939) (10,134,982)
------------------------------------------------------------------------
Net increase (decrease) (196,648) 124,767 ($ 2,280,911) $ 1,717,846
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
THE CRABBE HUSON
INCOME
FUND, INC.
------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 398,837 323,868 $3,890,790 $3,312,857
Shares issued in
reinvestment of dividends 33,473 28,426 329,268 289,053
------------------------------------------------------------------------
432,310 352,294 4,220,058 3,601,910
Shares redeemed (274,572) (338,813) (2,699,168) (3,410,998)
------------------------------------------------------------------------
Net increase (decrease) 157,738 13,481 $1,520,890 $ 190,912
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
THE CRABBE HUSON
SPECIAL FUND, INC.
------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 65,374,197 23,946,462 $928,135,711 $318,927,086
Shares issued in
reinvestment of dividends 78,213 51,007 1,030,774 610,047
------------------------------------------------------------------------
65,452,410 23,997,469 929,166,485 319,537,133
Shares redeemed (24,491,886) (3,303,144) (350,637,123) (43,533,333)
------------------------------------------------------------------------
Net increase (decrease) 40,960,524 20,694,325 $578,529,362 $276,003,800
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
THE CRABBE HUSON
U.S. GOVERNMENT
INCOME FUND, INC.
------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 320,552 318,425 $3,315,281 $3,370,107
Shares issued in
reinvestment of dividends 33,757 46,002 351,187 488,454
------------------------------------------------------------------------
354,309 364,427 3,666,468 3,858,561
Shares redeemed (464,645) (480,229) (4,812,243) (5,086,958)
------------------------------------------------------------------------
Net increase (decrease) (110,336) (115,802) ($1,145,775) ($1,228,397)
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
78
<PAGE>
<TABLE>
<CAPTION>
THE CRABBE HUSON ASSET
ALLOCATION FUND, INC.
------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 3,651,020 4,625,388 $47,567,984 $60,156,367
Shares issued in
reinvestment of dividends 213,856 460,871 2,807,183 5,964,138
------------------------------------------------------------------------
3,864,876 5,086,259 50,375,167 66,120,505
Shares redeemed (2,415,859) (2,842,271) (31,368,205) (36,797,904)
------------------------------------------------------------------------
Net increase (decrease) 1,449,017 2,243,988 $19,006,962 $29,322,601
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
THE CRABBE HUSON
U.S. GOVERNMENT
MONEY MARKET FUND, INC.
------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 166,147,604 99,391,599 $166,147,604 $99,391,599
Shares issued in
reinvestment of dividends 1,738,682 391,037 1,738,682 391,037
------------------------------------------------------------------------
167,886,286 99,782,636 167,886,286 99,782,636
Shares redeemed (145,554,619) (82,184,578) (145,554,619) (82,184,578)
------------------------------------------------------------------------
Net increase (decrease) 22,331,667 17,598,058 $ 22,331,667 $17,598,058
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
THE CRABBE HUSON
EQUITY FUND, INC.
------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 16,135,368 8,303,990 $277,119,565 $134,306,739
Shares issued in
reinvestment of dividends 79,947 105,277 1,237,639 1,635,783
------------------------------------------------------------------------
16,215,315 8,409,267 278,357,204 135,942,522
Shares redeemed (4,218,957) (1,243,034) (72,930,361) (20,140,537)
------------------------------------------------------------------------
Net increase (decrease) 11,996,358 7,166,233 $205,426,843 $115,801,985
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
THE CRABBE HUSON
REAL ESTATE
INVESTMENT FUND, INC.
------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 821,200 2,006,502 $7,937,889 $20,250,921
Shares issued in
reinvestment of dividends 36,962 33,284 357,391 323,473
------------------------------------------------------------------------
858,162 2,039,786 8,295,280 20,574,394
Shares redeemed (822,760) (125,257) (7,975,781) (1,275,958)
------------------------------------------------------------------------
Net increase (decrease) 35,402 1,914,529 $ 319,499 $19,298,436
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
*For the period from April 4, 1994 (commencement of operations) to October 31,
1994.
79
<PAGE>
80
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (continued)
October 31, 1995
NOTE 5. INVESTMENT TRANSACTIONS
For the year ended October 31, 1995, The Crabbe Huson U.S. Government Money
Market Fund, Inc. had aggregate security purchases and sales (including
maturities) of $443,976,883 and $424,658,448, respectively. Aggregate
purchases, sales and maturities for the year ended October 31, 1995
(excluding short-term securities) for the remaining funds, are as follows:
<TABLE>
<CAPTION>
THE OREGON THE CRABBE THE CRABBE THE CRABBE
MUNICIPAL HUSON HUSON ASSET HUSON
BOND SPECIAL ALLOCATION EQUITY
FUND, INC. FUND, INC. FUND, INC. FUND, INC.
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Purchases: $5,984,368 $959,620,834 $274,278,333 $397,589,397
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
Sales and Maturities: 8,735,890 572,783,341 248,155,111 200,246,630
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
Gross unrealized appreciation and depreciation on securites held by the Funds at October 31, 1995 are as follows:
Unrealized Appreciation (Depreciation):
For book purposes
Appreciation 1,399,431 65,671,560 6,773,143 27,705,429
Depreciation (33,677) (104,877,230) (1,946,850) (12,595,106)
--------------- --------------- --------------- ---------------
Net unrealized appreciation (depreciation) $1,365,754 ($ 39,205,670) $ 4,826,293 $ 15,110,323
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
Unrealized Appreciation (Depreciation):
For Federal income tax purposes
Appreciation 1,399,431 64,232,281 6,797,897 27,259,001
Depreciation (33,677) (107,785,909) (1,956,923) (12,771,570)
--------------- --------------- --------------- ---------------
Net unrealized appreciation (depreciation) $1,365,754 ($ 43,553,628) $ 4,840,974 $ 14,487,431
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
<CAPTION>
THE CRABBE THE
THE CRABBE HUSON U.S. CRABBE HUSON
HUSON GOVERNMENT REAL ESTATE
INCOME INCOME INVESTMENT
FUND, INC. FUND, INC. FUND, INC.
--------------- --------------- ---------------
<S> <C> <C> <C>
Purchases: $34,477,754 $19,009,336 $11,936,969
--------------- --------------- ---------------
--------------- --------------- ---------------
Sales and Maturities: 32,908,584 20,219,537 10,862,375
--------------- --------------- ---------------
--------------- --------------- ---------------
Gross unrealized appreciation and depreciation on securites held by the Funds at October 31, 1995 are as follows:
Unrealized Appreciation (Depreciation):
For book purposes
Appreciation 223,991 107,717 636,791
Depreciation (681) (4,238) (1,613,895)
--------------- --------------- ---------------
Net unrealized appreciation (depreciation) $ 223,310 $ 103,479 ($977,104)
--------------- --------------- ---------------
--------------- --------------- ---------------
Unrealized Appreciation (Depreciation):
For Federal income tax purposes
Appreciation 204,681 106,764 634,056
Depreciation (681) (4,238) (1,616,344)
--------------- --------------- ---------------
Net unrealized appreciation (depreciation) $ 204,000 $ 102,526 ($982,288)
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
81
<PAGE>
CRABBE HUSON FUNDS
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The following information has been derived from the Fund's financial statements
and notes included in the 1995 Annual Report. These financial statements and
the notes for the periods beginning after October 31, 1988 have been audited by
KPMG Peat Marwick, LLP, whose report thereon is included with the financial
statements in the Statement of Additional Information.
(a) The Fund's Fiscal Year was changed from 9/30 to 10/31, effective 10/31/87,
which represents a conformed 12-month period.
(b) Computed on an annualized basis.
(c) Commencement of operations - 4/9/87.
(d) Commencement of operations - 1/31/89.
(e) Commencement of operations - 4/4/94.
THE OREGON MUNICIPAL BOND FUND, INC.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/89 10/31/88 10/31/87(a) 9/30/87 9/30/86 10/31/90
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.99 $12.80 $12.20 $12.14 $11.74 $11.72
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.5480 0.5418 0.5683 0.6168 0.6385 0.6316
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.6998 (0.8001) 0.6880 0.1521 0.4831 0.0522
----------- ----------- ----------- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 1.2478 (0.2583) 1.2563 0.7689 1.1216 0.6838
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.5480 0.5419 0.5647 0.6168 0.6562 0.6401
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0003 0.0000 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0698 0.0090 0.0916 0.0921 0.0654 0.0237
----------- ----------- ----------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.6178 0.5512 0.6563 0.7089 0.7216 0.6638
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $12.62 $11.99 $12.80 $12.20 $12.14 $11.74
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
TOTAL RETURN 10.66% -2.06% 10.71% 6.51% 9.85% 6.00%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $28,070,371 $29,045,728 $29,408,110 $20,295,896 $18,382,636 $18,766,449
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.98% 0.98% 1.05% 1.11% 1.21% 1.38%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.45% 4.37% 4.51% 5.04% 5.36% 5.41%
PORTFOLIO TURNOVER RATE 22.91% 20.58% 11.62% 25.30% 53.40% 58.52%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.08% 1.08% 1.09% 1.13% 1.24% 1.55%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.35% 4.26% 4.46% 5.01% 5.34% 5.23%
82
<PAGE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
10/31/89 10/31/88 10/31/87(a) 09/30/87 09/30/86
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.72 $11.08 $12.15 $11.93 $10.43
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.6794 0.6386 0.7311 0.7319 0.7720
NET REALIZED & UNREALIZED ENDED
GAIN (LOSS) ON SECURITIES 0.0842 0.6411 (0.9983) (0.8051) 1.5265
----------- ----------- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 0.7636 1.2797 (0.2672) (0.0732) 2.2985
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.6711 0.6386 0.7311 0.7319 0.7720
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0925 0.0000 0.0760 0.0760 0.0255
----------- ----------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.7636 0.6386 0.8071 0.8079 0.7975
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $11.72 $11.72 $11.08 $11.05 $11.93
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
TOTAL RETURN 6.67% 12.02% -1.95% -0.95% 22.83%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $19,173,145 $20,058,295 $14,276,600 $14,165,161 $8,861,258
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.04% 1.21% 1.14% 1.31% 1.06%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.82% 5.53% 5.66% 6.43% 6.34%
PORTFOLIO TURNOVER RATE 45.25% 31.44% 19.18% 18.73% 24.20%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.16% 1.32% ---- ---- ----
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.71% 5.42% ---- ---- ----
</TABLE>
83
<PAGE>
CRABBE HUSON FUNDS
FINANCIAL HIGHLIGHTS
(Continued)
THE CRABBE HUSON SPECIAL FUND, INC.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $14.08 $11.82 $8.36 $12.05
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) 0.2704 0.0513 (0.0774) (0.0211)
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES (0.2894) 2.3026 3.5374 (1.6211)
------------ ------------ ----------- ----------
TOTAL FROM INVESTMENT OPERATIONS (0.0190) 2.3539 3.4600 (1.6422)
LESS DISTRIBUTIONS
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.0226 0.0000 0.0000 0.0260
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0892 0.0000 2.0218
DISTRIBUTIONS FROM CAPITAL GAINS 0.2384 0.0000 0.0000 0.0000
------------ ------------ ----------- ----------
TOTAL DISTRIBUTIONS 0.2610 0.0892 0.0000 2.0478
------------ ------------ ----------- ----------
NET ASSET VALUE, END OF PERIOD $13.80 $14.08 $11.82 $8.36
------------ ------------ ----------- ----------
------------ ------------ ----------- ----------
TOTAL RETURN 1.78% 22.40% 41.39% 8.11%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $878,559,834 $319,810,853 $23,816,912 $5,857,434
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.40% 1.44% 1.57% 1.74%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.95% 0.39% -0.73% -0.25%
PORTFOLIO TURNOVER RATE 122.97% 146.44% 73.29% 102.27%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.40% 1.54% 1.59% 2.18%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.95% 0.29% -0.75% -0.69%
84
<PAGE>
<CAPTION>
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 10/31/88 10/31/87(c)
------------ ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $8.78 $11.49 $9.69 $8.13 $10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) 0.0353 0.1546 0.2100 (0.0515) (0.0409)
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 4.0155 (1.4317) 1.5900 1.6115 (1.8300)
------------ ------------ ----------- ---------- -----------
TOTAL FROM INVESTMENT OPERATIONS 4.0508 (1.2771) 1.8000 1.5600 (1.8709)
LESS DISTRIBUTIONS
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.1453 0.2240 0.0000 0.0000 0.0000
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.6355 1.2089 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0000 0.0000 0.0000 0.0000 0.0000
------------ ------------ ----------- ---------- ----------
TOTAL DISTRIBUTIONS 0.7808 1.4329 0.0000 0.0000 0.0000
------------ ------------ ----------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $12.05 $8.78 $11.49 $9.69 $8.13
------------ ------------ ----------- ---------- ----------
------------ ------------ ----------- ---------- ----------
TOTAL RETURN 49.58% -10.90% 18.68% 19.63% -30.32%(b)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $3,541,797 $2,926,457 $3,356,417 $4,392,920 $1,892,038
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.92% 2.00% 2.00% 3.94% 2.60%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 0.32% 1.55% 1.96% 3.34% 0.05%(b)
PORTFOLIO TURNOVER RATE 256.68% 314.73% 275.62% 155.12% 3.90%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.40% 2.86% 2.44%(b) ---- ----
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS -0.15% 0.70% 1.53%(b) ---- ----
</TABLE>
85
<PAGE>
CRABBE HUSON FUNDS
FINANCIAL HIGHLIGHTS
(Continued)
THE CRABBE HUSON ASSET ALLOCATION FUND, INC.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.87 $13.52 $11.68 $11.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.3361 0.2990 0.2323 0.3468
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 1.2090 (0.0817) 2.0889 0.8175
----------- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 1.5451 0.2173 2.3212 1.1643
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.3321 0.2879 0.2373 0.3463
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.4430 0.5829 0.2439 0.1380
----------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.7751 0.8708 0.4812 0.4843
----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $13.64 $12.87 $13.52 $11.68
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
TOTAL RETURN 13.00% 2.66% 20.93% 11.25%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $136,530,057 $110,151,785 $85,390,017 $55,098,981
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.48% 1.44% 1.46% 1.52%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 2.57% 2.30% 1.85% 3.02%
PORTFOLIO TURNOVER RATE 225.70% 149.19% 116.10% 155.26%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.49% 1.52% 1.54% 1.62%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 2.56% 2.22% 1.77% 2.92%
86
<PAGE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 (d)
----------- ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.24 $10.69 $10.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.4143 0.4561 0.3990
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 1.8208 (1.1200) 0.2910
----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 2.2351 (0.6639) 0.6900
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.4335 0.7159 0.0000
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0415 0.0702 0.0000
----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.4750 0.7861 0.0000
----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $11.00 $9.24 $10.69
----------- ----------- -----------
----------- ----------- -----------
TOTAL RETURN 24.55% -6.40% 9.30%(b)
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $23,892,664 $13,173,923 $12,577,962
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.76% 1.90% 1.91%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 3.97% 4.51% 5.02%(b)
PORTFOLIO TURNOVER RATE 157.89% 161.72% 88.14%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.79% 1.93% 1.93%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 3.94% 4.49% 5.00%(b)
</TABLE>
87
<PAGE>
CRABBE HUSON FUNDS
FINANCIAL HIGHLIGHTS
(Continued)
THE CRABBE HUSON EQUITY FUND, INC.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $16.44 $16.08 $13.03 $12.57
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.2223 0.1900 0.0981 0.1980
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 1.7438 0.5668 3.4476 0.9186
------------ ------------ ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 1.9661 0.7568 3.5457 1.1166
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.0880 0.0344 0.1099 0.0937
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.1481 0.3638 0.3858 0.5629
------------ ------------ ----------- ----------
TOTAL DISTRIBUTIONS 0.2361 0.3982 0.4957 0.6566
------------ ------------ ----------- -----------
NET ASSET VALUE, END OF PERIOD $18.17 $16.44 $16.08 $13.03
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
TOTAL RETURN 13.37% 7.89% 29.90% 12.48%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $387,184,080 $153,105,296 $34,520,166 $13,429,315
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.40% 1.45% 1.49% 1.55%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.30% 1.18% 0.67% 1.57%
PORTFOLIO TURNOVER RATE 92.43% 106.49% 114.38% 180.72%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.40% 1.56% 1.64% 1.93%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.28% 1.06% 0.52% 1.18%
88
<PAGE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 (d)
------------ ------------ -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $8.54 $10.50 $10.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.1861 0.2533 0.3146
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 4.1511 (1.6764) 0.1854
------------ ------------ -----------
TOTAL FROM INVESTMENT OPERATIONS 4.3372 (1.4231) 0.5000
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.3072 0.3918 0.0000
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0000 0.1451 0.0000
------------ ------------ -----------
TOTAL DISTRIBUTIONS 0.3072 0.5369 0.0000
------------ ------------ -----------
NET ASSET VALUE, END OF PERIOD $12.57 $8.54 $10.50
------------ ------------ -----------
------------ ------------ -----------
TOTAL RETURN 52.44% -14.97% 6.72%(b)
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $5,929,590 $2,944,344 $5,018,337
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.84% 1.93% 1.69%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.60% 2.56% 3.98%(b)
PORTFOLIO TURNOVER RATE 171.82% 265.25% 90.54%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.41% 2.66% 1.97%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.03% 1.83% 3.68%(b)
</TABLE>
89
<PAGE>
CRABBE HUSON FUNDS
FINANCIAL HIGHLIGHTS
(Continued)
THE CRABBE HUSON INCOME FUND, INC.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.71 $10.75 $10.90 $10.63
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.5329 0.4995 0.4637 0.6583
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.5754 (0.7669) 0.3265 0.3569
------------ ------------ ------------ ------------
TOTAL FROM INVESTMENT OPERATIONS 1.1083 (0.2674) 0.7902 1.0152
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.5329 0.4995 0.4879 0.6588
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0254 0.0080 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0000 0.2710 0.4523 0.0864
------------ ------------ ------------ ------------
TOTAL DISTRIBUTIONS 0.5583 0.7785 0.9402 0.7452
------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD $10.26 $9.71 $10.75 $10.90
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
TOTAL RETURN 11.92% -2.71% 7.73% 9.74%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $7,190,125 $5,273,407 $5,696,555 $5,634,372
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.80% 0.80% 0.81% 0.90%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.47% 4.92% 4.34% 6.09%
PORTFOLIO TURNOVER RATE 543.15% 306.79% 260.22% 227.45%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.95% 2.16% 1.96% 1.94%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.32% 3.56% 3.19% 5.06%
90
<PAGE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 (d)
------------ ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.01 $10.27 $10.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.7038 0.6869 0.5545
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.6218 (0.2407) 0.2761
------------ ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 1.3256 0.4462 0.8306
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.7056 0.6840 0.5606
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0000 0.0222 0.0000
------------ ----------- -----------
TOTAL DISTRIBUTIONS 0.7056 0.7062 0.5606
------------ ----------- -----------
NET ASSET VALUE, END OF PERIOD $10.63 $10.01 $10.27
------------ ----------- -----------
------------ ----------- -----------
TOTAL RETURN 13.51% 4.43% 10.43%(b)
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $5,485,830 $2,123,203 $1,356,008
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.98% 1.51% 1.15%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.82% 6.89% 7.23%(b)
PORTFOLIO TURNOVER RATE 115.76% 73.76% 86.60%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.42% 3.07% 4.56%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.38% 5.33% 3.81%(b)
</TABLE>
91
<PAGE>
CRABBE HUSON FUNDS
FINANCIAL HIGHLIGHTS
(Continued)
THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.27 $11.04 $10.91 $10.69
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.5097 0.4648 0.4755 0.5801
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.4013 (0.6515) 0.2159 0.2921
------------- ------------- ------------- -------------
TOTAL FROM INVESTMENT OPERATIONS 0.9110 (0.1867) 0.6914 0.8722
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.5097 0.4647 0.4848 0.5839
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0113 0.0035 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0000 0.1120 0.0766 0.0683
------------- ------------- ------------- -------------
TOTAL DISTRIBUTIONS 0.5210 0.5802 0.5614 0.6522
------------- ------------- ------------- -------------
NET ASSET VALUE, END OF PERIOD $10.66 $10.27 $11.04 $10.91
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
TOTAL RETURN 9.12% -1.78% 6.71% 8.70%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $8,426,199 $9,249,212 $11,217,912 $8,958,757
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.75% 0.75% 0.75% 0.80%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.85% 4.39% 4.33% 5.35%
PORTFOLIO TURNOVER RATE 230.43% 76.09% 81.74% 105.52%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.46% 1.47% 1.26% 1.52%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.14% 3.66% 3.81% 4.63%
92
<PAGE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 (d)
------------- ------------- -------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.24 $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.6722 0.6768 0.5637
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.4542 (0.0326) 0.2852
------------- ------------- -------------
TOTAL FROM INVESTMENT OPERATIONS 1.1264 0.6442 0.8489
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.6746 0.6735 0.5689
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0018 0.0106 0.0000
------------- ------------- -------------
TOTAL DISTRIBUTIONS 0.6764 0.6842 0.5689
------------- ------------- -------------
NET ASSET VALUE, END OF PERIOD 10.69 10.24 10.28
------------- ------------- -------------
------------- ------------- -------------
TOTAL RETURN 11.17% 6.40% 11.15%(b)
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $3,748,244 $2,069,435 $1,717,128
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.96% 1.42% 1.14%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.44% 6.72% 7.35%(b)
PORTFOLIO TURNOVER RATE 114.81% 87.71% 40.42%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.15% 2.84% 3.40%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.25% 5.31% 5.09%(b)
</TABLE>
93
<PAGE>
CRABBE HUSON FUNDS
FINANCIAL HIGHLIGHTS
(Continued)
THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.0512 0.0339 0.0250 0.0332
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.0000 0.0000 0.0000 0.0000
----------- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 0.0512 0.0339 0.0250 0.0332
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.0512 0.0339 0.0250 0.0332
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000 0.0000
----------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.0512 0.0339 0.0250 0.0332
----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
TOTAL RETURN 5.30% 3.28% 2.53% 3.36%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $54,714,219 $32,382,552 $14,784,493 $12,395,326
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.70% 0.70% 0.70% 0.75%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.21% 3.39% 2.51% 3.32%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.16% 1.29% 1.32% 1.09%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.75% 2.81% 1.88% 2.98%
94
<PAGE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 (d)
----------- ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.0576 0.0737 0.0633
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.0000 0.0000 0.0000
----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 0.0576 0.0737 0.0633
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.0576 0.0737 0.0633
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000
----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.0576 0.0737 0.0633
----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
----------- ----------- -----------
----------- ----------- -----------
TOTAL RETURN 13.76% 7.62% 10.05%(b)
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $14,906,733 $21,405,713 $10,735,032
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.81% 0.80% 0.60%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.76% 7.57% 8.43%(b)
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.18% 1.33% 1.34%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.38% 7.04% 7.69%(b)
</TABLE>
95
<PAGE>
CRABBE HUSON FUNDS
FINANCIAL HIGHLIGHTS
(Continued)
THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC.
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
10/31/95 10/31/94 (e)
----------- -----------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.50 $10.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.4436 0.3664
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.3065 (0.6394)
----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 0.7501 (0.2730)
LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.4379 0.2287
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.1222 0.0000
----------- -----------
TOTAL DISTRIBUTIONS 0.5601 0.2287
----------- -----------
NET ASSET VALUE, END OF PERIOD $9.69 $9.50
----------- -----------
----------- -----------
TOTAL RETURN 8.31% -3.25%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $18,985,514 $18,279,500
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% 1.01%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.59% 6.30%(b)
PORTFOLIO TURNOVER RATE 59.53% 43.30%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.89% 2.03%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.20% 5.28%(b)
</TABLE>
96
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Boards of Directors
Crabbe Huson Funds -
The Oregon Municipal Bond Fund, Inc.
The Crabbe Huson Special Fund, Inc.
The Crabbe Huson Asset Allocation Fund, Inc.
The Crabbe Huson Equity Fund, Inc.
The Crabbe Huson Income Fund, Inc.
The Crabbe Huson U.S. Government Income Fund, Inc.
The Crabbe Huson U.S. Government Money Market Fund, Inc.
The Crabbe Huson Real Estate Investment Fund, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments of each of the Crabbe Huson Funds, as of October
31, 1995, and the related statements of operations for the year then ended, the
statements of changes in net assets for The Oregon Municipal Bond Fund, Inc.,
The Crabbe Huson Special Fund, Inc., The Asset Allocation Fund, Inc., The Crabbe
Huson Equity Fund, Inc., The Crabbe Huson Income Fund, Inc., The Crabbe Huson
U.S. Government Fund, Inc. and The Crabbe Huson U.S. Government Money Market
Fund, Inc. for each of the two years then ended, and for The Real Estate
Investment Fund, Inc. for the year ended October 31, 1995 and for the period
from April 4, 1994 (commencement of operations) to October 31, 1994, and the
financial highlights for The Oregon Municipal Bond Fund, Inc. and The Crabbe
Huson Special Fund, Inc. for each of the seven years ended October 31, 1995, The
Crabbe Huson Asset Allocation Fund, Inc., The Crabbe Huson Equity Fund, Inc.,
The Crabbe Huson Income Fund, Inc., The Crabbe Huson U.S. Government Income
Fund, Inc. and The Crabbe Huson U.S. Government Money Market Fund, Inc. for each
of the six years ended October 31, 1995 and for the period from January 31, 1989
(commencement of operations) to October 31, 1989 and for the Crabbe Huson Real
Estate Investment Fund, Inc. for the year ended October 31, 1995 and for the
period from April 4, 1994 (commencement of operations) to October 31, 1994.
These financial statements and financial highlights are the responsibility of
the management of the Crabbe Huson Funds. Our responsibility is to express an
opinion on these financial statements and financial highlights based upon our
audits. The financial highlights for The Oregon Municipal Bond Fund, Inc. and
The Crabbe Huson Special Fund, Inc. for the periods ended October 31, 1988 and
prior were audited by other auditors whose reports expressed unqualified
opinions on the financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included verification of
securities owned as of October 31, 1995, by examination and other appropriate
audit procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Crabbe Huson Funds as of October 31, 1995, the results of their
operations, the changes in their net assets and their financial highlights for
the periods indicated above, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Portland, Oregon
December 8, 1995
97
<PAGE>
---------------------------
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Index to Financial Statement.
The following financial information of the Registrant is included in Part A
of the Registration statement (the Prospectus):
Page
----
Per Share Income and Capital Changes
The following financial statements of the Registrant are included in Part B
of the Registration Statement (the Statement of Additional Information):
Statement of Assets and Liabilities at 10/31/95
Statement of Operations for period ended 10/31/95
Statement of Changes in Net Assets for periods ended
10/31/94 and 10/31/95
Schedule of Selected Per Share Data and Ratios
at 10/31/95
Investments in Securities at 10/31/95
Notes to the Financial Statements for period
ended 10/31/95
Report of Independent Certified Public Accountants
(b) Exhibits: Sequentially Numbered
Page
---------------------
1 Registrant's Certificate of
Incorporation (incorporated)(1)
2 Bylaws (incorporated)(2)
Amendment to Registrant's Bylaws (incorporated)(3)
3 Voting Trust Agreement (not applicable)
4 Specimen Stock Certificate (not applicable)
- --------------------
1 Included as an exhibit to Post-Effective Amendment No. 5 to the
Registration Statement.
2 Included as an exhibit to the original Registration Statement.
3 Included as an exhibit to Post-Effective Amendment No. 7 to the
Registration Statement.
<PAGE>
5 Investment Advisory Contract (incorporated)(4)
6(a) Distribution Agreement (incorporated)(1)
6(b) Form of Selected Dealer Agreement (incorporated)(4)
8 Form of Custodian Agreement (attached)
9(a) Form of Transfer Agent and Service Agreement (attached)
9(b) Accounting Services Agreement (incorporated)(2)(5)(6)
9(c) Form of Investment Accounting Agreement (attached)
9(d) Form of Administration Agreement (attached)
10 Opinion and Consent of Ragen, Tremaine, Krieger, Schmeer & Neill, Counsel
to Registrant (incorporated)(4)
11 Consent of Accountants (attached)
12 Omitted Financial Statements (not applicable)
13 Written assurance from Registrant's initial shareholder that its purchase
was made for investment purposes without any present intention of redeeming
or reselling (incorporated)(2)
14 Retirement Plans (incorporated)(1)
15 Form of Distribution Plan (attached)
16 Computation Schedule (not applicable)
17 Form of Rule 483 Financial Data Schedule (attached)
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Registrant does not have any subsidiaries and does not control any other company
or person.
- ----------------------
4 Included as an exhibit to Pre-Effective Amendment No. 1 to the
Registration Statement.
5 Amendments to these exhibits included as exhibits to Post-Effective
Amendment No. 3 to the Registration Statement.
6 These exhibits, or amendments to these exhibits, included as exhibits
to Post-Effective Amendment No. 4 to the Registration Statement.
<PAGE>
Item 26. NUMBER OF HOLDERS OF SECURITIES
On December 20, 1995, the outstanding shares of the Fund were held by 773 record
holders.
Item 27. INDEMNIFICATION
The Articles of Incorporation of the Registrant contain the following
provisions:
"(a) INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
The Corporation shall indemnify to the fullest extent provided in the Act, any
director or officer who was or is a party or is threatened to be made a party
to any proceeding by reason of or arising from the fact that he or she is or
was a director or officer of the Corporation. The determination and
authorization of indemnification shall be made as provided in the Act;
provided, however, that this Article 11 does not protect any director or
officer of the Corporation against any liability to the Corporation or its
shareholdersto which he or she would otherwise be subject by reason of willful
misfeasance,bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.
"The Corporation shall pay for or reimburse the reasonable expenses incurred by
a director or officer who is a party to a proceeding in advance of final
disposition of the proceeding as provided in the Act.
"The indemnification referred to in this Article shall be deemed to be in
addition to and not in lieu of any other rights to which those indemnified may
be entitled under a statute, rule of law or equity, agreement, vote of the
shareholder or board of directors or otherwise. The Corporation, its officers,
directors, employees or agents shall be fully protected in taking any action or
making any payment under this Article, or in refusing to do so upon the advice
of counsel. In any case in which the Corporation shall be obligated by these
Articles of Incorporation or otherwise to indemnify any person by reason of such
person having, at the Corporation's request, served as director, officer,
trustee or agent of any other enterprise or trust, in which a similar obligation
shall fall upon the other enterprise or trust by reason of such conduct or
omission, in such event, the obligation of the other enterprise or trust shall
be primary and the Corporation's obligation shall be deemed excess."
"(b) INSURANCE OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
The Corporation may purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, employee
or agent of another
<PAGE>
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred by such person in or arising
out of his or her position. However, in no event will the Corporation purchase
insurance to indemnify any such person for any Act for which the Corporation
itself is not permitted to indemnify such person."
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provision or otherwise, the Registrant has
been advised that in the opinion of the Securities & Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liability (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Registrant has made application for insurance to indemnify the directors and
officers of the registrant against liabilities incurred as a result of serving
in such capacity.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The business and other connections of the officers, directors of the
Registrant's investment advisor, Crabbe Huson Group, Inc., are listed on the
Form ADV of Crabbe Huson Group, Inc. as currently on file with the Commission
(File No. 801-15154), the text of which is incorporated herein by reference.
The following sections of Form ADV are incorporated herein by reference: (a)
Items 1 and 2 of Part 2, and (b) Section 6, Business Background of each Schedule
D.
Item 29. PRINCIPAL UNDERWRITER
(a) Registrant's Distributor, Crabbe Huson Securities, Inc., also acts as
exclusive distributor of The Crabbe Huson Special Fund, Inc., The
Oregon Municipal Bond Fund, Inc., The Crabbe Huson Equity Fund, Inc.,
The Crabbe Huson Real Estate Investment Fund, Inc., The Crabbe Huson
Asset Allocation Fund, Inc., The Crabbe Huson U.S. Government Money
Market Fund, Inc., and The Crabbe Huson U.S. Government Income Fund,
Inc., Oregon corporations registered under the Securities Act of 1933
and the Investment Company Act of 1940.
<PAGE>
b) The directors and officers of Crabbe Huson Securities, Inc., as of the
date of this Registration Statement, are as follows:
(1) (2) (3)
Positions and
Name and Principal Position and Office with Office with
Business Address Crabbe Huson Securities, Inc. Registrant
- ---------------- ----------------------------- ----------
Craig R. Stuvland President and Director Secretary and
121 SW Morrison Director
Suite 1410
Portland, OR 97204
Cheryl Burgermeister Vice President, Secretary, Treasurer
121 SW Morrison Treasurer and Director
Suite 1410
Portland, OR 97204
(c) Not applicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by the Fund
pursuant to section 31(a) of the Investment Company Act of 1940 and the rules
thereunder will be maintained at the offices of the Fund at 121 SW Morrison,
Suite 1415, Portland, Oregon 97204, and at the offices of the Custodian, First
Interstate Bank of Oregon, 1300 S.W. Fifth Avenue, Portland, Oregon 97201.
Item 31. MANAGEMENT SERVICES
Not applicable.
Item 32. UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
SIGNATURES AND CERTIFICATION
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Post
Effective Amendment No. 8 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Portland, Oregon on
December ___, 1995.
THE CRABBE HUSON INCOME FUND, INC.
By:
---------------------------------
Richard S. Huson, President
We, the undersigned Directors and Officers of THE CRABBE HUSON INCOME
FUND, INC., do hereby constitute and appoint Richard S. Huson our true and
lawful attorney and agent, to do any and all acts and things in our name and
behalf in our capacities as Directors and Officers, and to execute any and all
instruments for us and in our name in the capacities indicated below, which said
attorney and agent may deem necessary or advisable to enable said Fund to comply
with the Securities Act of 1933, as amended, the Investment Company Act of 1940
and any rules, regulations and requirements of the Securities and Exchange
Commission, in connection with this Registration Statement, including
specifically, but not without limitation, the power and authority to sign for us
or any of us in our names in the capacities indicated below, any and all
amendments (including post-effective amendment) hereto; and we do hereby ratify
and confirm that said attorney and agent shall do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 8 to the Registration Statement has been signed
below on December ___, 1995 by the following persons in the capacities
indicated:
(1) Principal Executive Officers:
---------------------------------- President
Richard S. Huson
(2) Principal Accounting and
Financial Officer
---------------------------------- Treasurer
Cheryl A. Burgermeister
Page 1 - SIGNATURES AND CERTIFICATION
<PAGE>
(3) Directors:
--------------------------------- Director
Richard P. Wollenberg
--------------------------------- Director
Bob L. Smith
--------------------------------- Director
Louis Scherzer
--------------------------------- Director
William Wendell Wyatt
--------------------------------- Director
Gary L. Capps
--------------------------------- Director
Richard S. Huson
--------------------------------- Director
James E. Crabbe
--------------------------------- Director
Craig Stuvland
Page 2 - SIGNATURES AND CERTIFICATION
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000841279
<NAME> THE CRABBE HUSON INCOME FUND, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 6754759
<INVESTMENTS-AT-VALUE> 6978069
<RECEIVABLES> 100499
<ASSETS-OTHER> 417937
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7496505
<PAYABLE-FOR-SECURITIES> 301803
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4577
<TOTAL-LIABILITIES> 306380
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7147526
<SHARES-COMMON-STOCK> 700892
<SHARES-COMMON-PRIOR> 543154
<ACCUMULATED-NII-CURRENT> (180711)
<OVERDISTRIBUTION-NII> (17066)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 223310
<NET-ASSETS> 7190125
<DIVIDEND-INCOME> 11688
<INTEREST-INCOME> 398333
<OTHER-INCOME> 0
<EXPENSES-NET> 52494
<NET-INVESTMENT-INCOME> 357527
<REALIZED-GAINS-CURRENT> 108710
<APPREC-INCREASE-CURRENT> 304184
<NET-CHANGE-FROM-OPS> 770421
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (374593)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 398837
<NUMBER-OF-SHARES-REDEEMED> (274572)
<SHARES-REINVESTED> 33473
<NET-CHANGE-IN-ASSETS> 1916718
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (233509)
<OVERDISTRIB-NII-PRIOR> (4622)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 49011
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 134792
<AVERAGE-NET-ASSETS> 6539949
<PER-SHARE-NAV-BEGIN> 9.71
<PER-SHARE-NII> 0.53
<PER-SHARE-GAIN-APPREC> 0.58
<PER-SHARE-DIVIDEND> (0.56)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.26
<EXPENSE-RATIO> .80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 99.8
CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT
THIS AGREEMENT made the _______ day of 1995, by and between
INVESTORS FIDUCIARY TRUST COMPANY, a trust company chartered under the laws of
the state of Missouri, having its trust office located at 127 West 10th Street,
Kansas City, Missouri 64105 ("Custodian"), and CRABBE HUSON MUTUAL FUNDS GROUP,
a business trust organized and existing under the laws of the State of Delaware,
having its principal office and place of business at 121 S.W. Morrison Street,
Suite 1425, Portland, Oregon 97204 ("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company as
custodian of the securities and monies of Fund's investment portfolio and as its
agent to perform certain investment accounting and recordkeeping functions; and
WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;
NOW THEREFORE, for and in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant and
agree as follows:
1. APPOINTMENT OF CUSTODIAN, Fund hereby constitutes and appoints Custodian
as:
Page 1
<PAGE>
A. Custodian of the securities and monies at any time owned by the Fund,
and
B. Agent to perform certain accounting and recordkeeping functions
relating to portfolio transactions required of a duly registered
investment company under Rule 3 la of the Investment Company Act of
1940 (the " 1940 Act") and to calculate the net asset value of the
Fund.
2. REPRESENTATIONS AND WARRANTIES.
A. Fund hereby represents, warrants and acknowledges to Custodian:
1. That it is a business trust duly organized and existing and in
good standing under the laws of its state of organization, and
that it is registered under the 1940 Act; and
2. That it has the requisite power and authority under applicable
law, its Trust Agreement and its Bylaws to enter into this
Agreement; that it has taken all requisite action necessary to
appoint Custodian as custodian and investment accounting and
recordkeeping agent for the Fund; that this Agreement has been
duly executed and delivered by Fund; and that this Agreement
constitutes a legal, valid and binding obligation of Fund,
enforceable in accordance with its terms.
B. Custodian hereby represents, warrants and acknowledges to Fund:
1. That it is a trust company duly organized and existing and in
good standing under the laws of the State of Missouri; and
Page 2
<PAGE>
2. That it has the requisite power and authority under applicable
law, its Charter and its Bylaws to enter into and perform this
Agreement that this Agreement has been duly executed and
delivered by Custodian; and that this Agreement constitutes a
legal, valid and binding obligation of Custodian, enforceable in
accordance with its terms.
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. DELIVERY OF ASSETS
Except as permitted by the 1940 Act, Fund will deliver or cause to be
delivered to Custodian on the effective date of this Agreement, or as
soon thereafter as practicable, and from time to time thereafter, all
portfolio securities acquired by it and monies then owned by it or
from time to time coming into its possession during the time this
Agreement shall continue in effect. Custodian shall have no
responsibility or liability whatsoever for or on account of securities
or monies not so delivered.
B. DELIVERY OF ACCOUNTS AND RECORDS
Fund shall turn over or cause to be turned over to Custodian all of
the Fund's relevant accounts and records previously maintained.
Custodian shall be entitled to rely conclusively on the completeness
and correctness of the accounts and records turned over to it, and
Fund shall indemnify and hold Custodian harmless of and from any and
all expenses, damages and
Page 3
<PAGE>
losses whatsoever arising out of or in connection with any error,
omission, inaccuracy or other deficiency of such accounts and records
or in the failure of Fund to provide, or to provide in a timely
manner, any accounts, records or information needed by the Custodian
to perform its functions hereunder.
C. DELIVERY OF ASSETS TO THIRD PARTIES
Custodian will receive delivery of and keep safely the assets of Fund
delivered to it from time to time segregated in a separate account,
and if Fund is comprised of more than one portfolio of investment
securities (each a "Portfolio") Custodian shall keep the assets of
each Portfolio segregated in a separate account. Custodian will not
deliver, assign, pledge or hypothecate any such assets to any person
except as permitted by the provisions of this Agreement or any
agreement executed by it according to the terms of Section 3.S. of
this Agreement. Upon delivery of any such assets to a subcustodian
pursuant to Section 3. S. of this Agreement, Custodian will create and
maintain records identifying those assets which have been delivered to
the subcustodian as belonging to the Fund, by Portfolio if applicable.
The Custodian is responsible for the safekeeping of the securities and
monies of Fund only until they have been transmitted to and received
by other persons as permitted under the terms of this Agreement,
except for securities and monies transmitted to subcustodians
Page 4
<PAGE>
appointed under Section 3.S. of this Agreement, for which Custodian
remains responsible to the extent provided in Section 3.S. hereof.
Custodian may participate directly or indirectly through a
subcustodian in the Depository Trust Company (DTC), Treasury/Federal
Reserve Book Entry System (Fed System), Participant Trust Company
(PTC) or other depository approved by the Fund (as such entities are
defined at 17 CFR Section 270.17f-4(b)) (each a "Depository" and
collectively, the "Depositories").
D. REGISTRATION OF SECURITIES
The Custodian shall at all times hold registered securities of the
Fund in the name of the Custodian, the Fund, or a nominee of either of
them, unless specifically directed by instructions to hold such
registered securities in so-called "street name," provided that, in
any event, all such securities and other assets shall be held in an
account of the Custodian containing only assets of the Fund, or only
assets held by the Custodian as a fiduciary or custodian for
customers, and provided further, that the records of the Custodian at
all times shall indicate the Fund or other customer for which such
securities and other assets are held in such account and the
respective interests therein. If, however, the Fund directs the
Custodian to maintain securities in "street name", notwithstanding
anything contained herein to the contrary, the Custodian shall be
obligated only to utilize its best efforts to timely collect income
due the Fund on such securities and
Page 5
<PAGE>
to notify the Fund of relevant corporate actions including, without
limitation, pendency of calls, maturities, tender or exchange offers.
All securities, and the ownership thereof by Fund, which are held by
Custodian hereunder, however, shall at all times be identifiable on
the records of the Custodian. The Fund agrees to hold Custodian and
its nominee less for any liability as a shareholder of record of
securities held in custody.
E. EXCHANGE OF SECURITIES
Upon receipt of instructions as defined herein in Section 4.A,
Custodian will exchange, or cause to be exchanged, portfolio
securities held by it for the account of Fund for other securities or
cash issued or paid in connection with any reorganization,
recapitalization, merger, consolidation, split-up of shares, change of
par value, conversion or otherwise, and will deposit any such
securities in accordance with the terms of any reorganization or
protective plan. Without instructions, Custodian is authorized to
exchange securities held by it in temporary form for securities in
definitive form, to effect an exchange of shares when the par value of
the share is changed, and, upon receiving payment therefor, to
surrender bonds or other securities held by it at maturity or when
advised of earlier call for redemption, except that Custodian shall
receive instructions prior to surrendering any convertible security.
Page 6
<PAGE>
F. PURCHASES OF INVESTMENTS OF THE FUND - OTHER THAN OPTIONS AND FUTURES
Fund will, on each business day on which a purchase of securities
(other than options and futures) shall be made by it, deliver to
Custodian instructions which shall specify with respect to each such
purchase:
1. If applicable, the name of the Portfolio making such purchase;
2. The name of the issuer and description of the security;
3. The number of shares and the principal amount purchased, and
accrued interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission, taxes
and other expenses payable in connection with the purchase;
7. The total amount payable upon such purchase;
8. The name of the person from whom or the broker or dealer through
whom the purchase was made; and
9. Whether the security is to be received in certificated form or
via a specified Depository.
In accordance with such instructions, Custodian will pay for out of
monies held for the account of Fund, but only insofar as such monies
are available for such purpose, and receive the portfolio securities
so purchased by or for the account of Fund, except that Custodian may
in its sole discretion
Page 7
<PAGE>
advance funds to the Fund which may result in an overdraft because the
monies held by the Custodian on behalf of the Fund are insufficient to
pay the total amount payable upon such purchase. Except as otherwise
instructed by Fund, such payment shall be made by the Custodian only
upon receipt of securities: (a) by the Custodian; (b) by a clearing
corporation of a national exchange of which the Custodian is a member;
or (c) by a Depository. Notwithstanding the foregoing, (i) in the
case of a repurchase agreement, the Custodian may release funds to a
Depository prior to the receipt of advice from the Depository that the
securities underlying such repurchase agreement have been transferred
by book-entry into the account maintained with such Depository by the
Custodian, on behalf of its customers, provided that the Custodian's
instructions to the Depository require that the Depository make
payment of such funds only upon transfer by book-entry of the
securities underlying the repurchase agreement in such account; (ii)
in the case of time deposits, call account deposits, currency deposits
and other deposits, foreign exchange transactions, futures contracts
or options, the Custodian may make payment therefor before receipt of
an advice or confirmation evidencing said deposit or entry into such
transaction; and (iii) in the case of the purchase of securities, the
settlement of which occurs outside of the United States of America,
the Custodian may make, or cause a subcustodian
Page 8
<PAGE>
appointed pursuant to Section 3.S.2. of this Agreement to make,
payment therefor in accordance with generally accepted local custom
and market practice.
G. SALES AND DELIVERIES OF INVESTMENTS OF THE FUND - OTHER THAN OPTIONS
AND FUTURES
Fund will, on each business day on which a sale of investment
securities (other than options and futures) of Fund has been made,
deliver to Custodian instructions specifying with respect to each such
sale:
1. If applicable, the name of the Portfolio making such sale:
2. The name of the issuer and description of the securities;
3. The number of shares and principal amount sold, and accrued
interest, if any;
4. The date on which the securities sold were purchased or other
information identifying the securities sold and to be delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission, taxes or
other expenses payable in connection with such sale;
8. The total amount to be received by Fund upon such sale; and
9. The name and address of the broker or dealer through whom or
person to whom the sale was made.
Page 9
<PAGE>
In accordance with such instructions, Custodian will deliver or cause
to be delivered the securities thus designated as sold for the account
of Fund to the broker or other person specified in the instructions
relating to such sale. Except as otherwise instructed by Fund, such
delivery shall be made upon receipt of payment therefor: (a) in such
form as is satisfactory to the Custodian; (b) credit to the account of
the Custodian with a clearing corporation of a national securities
exchange of which the Custodian is a member; or (c) credit to the
account of the Custodian, on behalf of its customers, with a
Depository. Notwithstanding the foregoing: (i) in the case of
securities held in physical form, such securities shall be delivered
in accordance with "street delivery custom" to a broker or ITS
clearing agent; or (ii) in the case of the sale of securities, the
settlement of which occurs outside of the United States of America,
the Custodian may make, or cause a subcustodian appointed pursuant to
Section 3.S.2. of this Agreement to make, payment therefor in
accordance with generally accepted local custom and market practice.
H. PURCHASES OR SALES OF OPTIONS AND FUTURES
Fund will, on each business day on which a purchase or sale of the
following options and/or futures shall be made by it, deliver to
Custodian instructions which shall specify with respect to each such
purchase or sale:
Page 10
<PAGE>
1. If applicable, the name of the Portfolio making such purchase or
sale;
2. Security Options
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening, exercising, expiring
or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded; and
j. Name and address of the broker or dealer through whom the
sale or purchase was made.
3. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
Page 11
<PAGE>
f. The expiration date;
g. Whether the transaction is an opening, exercising, expiring
or closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased; and
j. The name and address of the broker or dealer through whom
the sale or purchase was made, or other applicable
settlement instructions.
4. Security Index Futures Contracts
a. The last trading date specified in the contract and, when
available, the closing level, thereof;
b. The index level on the date the contract is entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in addition to
instructions, and if not already in the possession of
Custodian, Fund shall deliver a substantially complete and
executed custodial safekeeping account and procedural
agreement which shall be incorporated by reference into this
Custody Agreement); and
Page 12
<PAGE>
f. The name and address of the futures commission merchant
through whom the sale or purchase was made, or other
applicable settlement instructions.
5. Options on Index Future Contracts
a. The underlying index future contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased; and
i. The market on which the option is traded.
I. SECURITIES PLEDGED OR LOANED
If specifically allowed for in the prospectus of Fund, and subject to
such additional terms and conditions as Custodian may require:
1. Upon receipt of instructions, Custodian will release or cause to
be released securities held in custody to the pledgee designated
in such instructions by way of pledge or hypothecation to secure
any loan incurred by Fund; provided, however, that the securities
shall
Page 13
<PAGE>
be released only upon payment to Custodian of the monies
borrowed, except that in cases where additional collateral is
required to secure a borrowing already made, further securities
may be released or caused to be released for that purpose upon
receipt of instructions. Upon receipt of instructions, Custodian
will pay, but only from funds available for such purpose, any
such loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or notes
evidencing such loan.
2. Upon receipt of instructions, Custodian will release securities
held in custody to the borrower designated in such instructions;
provided, however, that the securities will be released only upon
deposit with Custodian of full cash collateral as specified in
such instructions, and that Fund will retain the right to any
dividends, interest or distribution on such loaned securities.
Upon receipt of instructions and the loaned securities, Custodian
will release the cash collateral to the borrower.
J. ROUTINE MATTERS
Custodian will, in general, attend to all routine and mechanical
matters in connection with the sale, exchange, substitution, purchase,
transfer, or other dealings with securities or other property of Fund
except as may be
Page 14
<PAGE>
otherwise provided in this Agreement or directed from time to time by
the Fund in writing.
K. DEPOSIT ACCOUNTS
Custodian will open and maintain one or more special purpose deposit
accounts in the name of Custodian ("Accounts"), subject only to draft
or order by Custodian upon receipt of instructions. All monies
received by Custodian from or for the account of Fund shall be
deposited in said Accounts. Barring events not in the control of the
Custodian such as strikes, lockouts or labor disputes, riots, war or
equipment or transmission failure or damage, fire, flood, earthquake
or other natural disaster, action or inaction of governmental
authority or other causes beyond its control, at 9:00 a.m., Kansas
City time, on the second business day after deposit of any check into
an Account, Custodian agrees to make Fed Funds available to the Fund
in the amount of the check. Deposits made by Federal Reserve wire
will be available to the Fund immediately and ACH wires will be
available to the Fund on the next business day. Income earned on the
portfolio securities will be credited to the Fund based on the
schedule attached as Exhibit A. The Custodian will be entitled to
reverse any credited amounts where credits have been made and monies
are not finally collected. If monies are collected after such
reversal, the Custodian will credit the Fund in that amount.
Custodian may open and maintain
Page 15
<PAGE>
Accounts in its own banking department, or in such other banks or
trust companies as may be designated by it or by Fund in writing, all
such Accounts, however, to be in the name of Custodian and subject
only to its draft or order. Funds received and held for the account
of different Portfolios shall be maintained in separate Accounts
established for each Portfolio.
L. INCOME AND OTHER PAYMENTS TO FUND
Custodian will:
1. Collect, claim and receive and deposit for the account of Fund
all income and other payments which become due and payable on or
after the effective date of this Agreement with respect to the
securities deposited under this Agreement, and credit the account
of Fund in accordance with the schedule attached hereto as
Exhibit A. If, for any reason, the Fund is credited with income
that is not subsequently collected, Custodian may reverse that
credited amount.
2. Execute ownership and other certificates and affidavits for all
federal, state and local tax purposes in connection with the
collection of bond and note coupons; and
3. Take such other action as may be necessary or proper in
connection with:
Page 16
<PAGE>
a. the collection, receipt and deposit of such income and other
payments, including but not limited to the presentation for
payment of:
1. all coupons and other income items requiring
presentation; and
2. all other securities which may mature or be called,
redeemed, retired or otherwise become payable and
regarding which the Custodian has actual knowledge, or
should reasonably be expected to have knowledge; and
b. the endorsement for collection, in the name of Fund, of all
checks, drafts or other negotiable instruments.
Custodian, however, will not be required to institute suit or take
other extraordinary action to enforce collection except upon receipt
of instructions and upon being indemnified to its satisfaction against
the costs and expenses of such suit or other actions. Custodian will
receive, claim and collect all share dividends, rights and other
similar items and will deal with the same pursuant to instructions.
Unless prior instructions have been received to the contrary,
Custodian will, without further instructions, sell any rights held for
the account of Fund on the last trade date prior to the date of
expiration of such rights.
Page 17
<PAGE>
M. PAYMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS
On the declaration of any dividend or other distribution on the shares
of beneficial interest of Fund ("Fund Shares") by the Trustees of
Fund, Fund shall deliver to Custodian instructions with respect
thereto. On the date specified in such instructions for the
payment of such dividend or other distribution, Custodian will pay out
of the monies held for the account of Fund, insofar as the same shall
be available for such purposes, and credit to the account of the
Dividend Disbursing Agent for Fund, such amount as may be specified in
such instructions.
N. SHARES OF FUND PURCHASED BY FUND
Whenever any Fund Shares are repurchased or redeemed by Fund, Fund or
its agent shall advise Custodian of the aggregate dollar amount to be
paid for such shares and shall confirm such advice in writing. Upon
receipt of such advice, Custodian shall charge such aggregate dollar
amount to the account of Fund and either deposit the same in the
account maintained for the purpose of paying for the repurchase or
redemption of Fund Shares or deliver the same in accordance with such
advice. Custodian shall not have any duty or responsibility to
determine that Fund Shares have been removed from the proper
shareholder account or accounts or that the proper number of Fund
Shares have been cancelled and removed from the shareholder records.
Page 18
<PAGE>
O. SHARES OF FUND PURCHASED FROM FUND
Whenever Fund Shares are purchased from Fund, Fund will deposit or
cause to be deposited with Custodian the amount received for such
shares. Custodian shall not have any duty or responsibility to
determine that Fund Shares purchased from Fund have been added to the
proper shareholder account or accounts or that the proper number of
such shares have been added to the shareholder records.
P. PROXIES AND NOTICES
Custodian will promptly deliver or mail or have delivered or mailed to
Fund all proxies properly signed, all notices of meetings, all proxy
statements and other notices, requests or announcements affecting or
relating to securities held by Custodian for Fund and will, upon
receipt of instructions, execute and deliver or cause its nominee to
execute and deliver or mail or have delivered or mailed such proxies
or other authorizations as,may be required. Except as provided by
this Agreement or pursuant to instructions hereafter received by
Custodian, neither it nor its nominee will exercise any power inherent
in any such securities, including any power to vote the same, or
execute any proxy, power of attorney, or other similar instrument
voting any of such securities, or give any consent, approval or waiver
with respect thereto, or take any other similar action.
Q. DISBURSEMENTS
Page 19
<PAGE>
Custodian will pay or cause to be paid, insofar as funds are available
for the purpose, bills, statements and other obligations of Fund
(including but not limited to obligations in connection with the
conversion, exchange or surrender of securities owned by Fund,
interest charges, dividend disbursements, taxes, management fees,
custodian fees, legal fees, auditors' fees, transfer agents' fees,
brokerage commissions, compensation to personnel, and other operating
expenses of Fund) pursuant to instructions of Fund setting forth the
name of the person to whom payment is to be made, the amount of the
payment, and the purpose of the payment.
R. DAILY STATEMENT OF ACCOUNTS
Custodian will, within a reasonable time, render to Fund a detailed
statement of the amounts received or paid and of securities received
or delivered for the account of Fund during each business day.
Custodian will, from time to time, upon request by Fund, render a
detailed statement of the securities and monies held for Fund under
this Agreement, and Custodian will maintain such books and records as
are necessary to enable it to do so. Custodian will permit such
persons as are authorized by Fund, including Fund's independent public
accountants, reasonable access to such records or will provide
reasonable confirmation of the contents of such records, and if
demanded, Custodian will permit federal and state regulatory
Page 20
<PAGE>
agencies to examine the securities, books and records. Upon the
written instructions of Fund or as demanded by federal or state
regulatory agencies, Custodian will instruct any subcustodian to
permit such persons as are authorized by Fund, including Fund's
independent public accountants, reasonable access to such records or
to provide reasonable confirmation of the contents of such records,
and to permit such agencies to examine the books, records and
securities held by such subcustodian which relate to Fund.
S. APPOINTMENT OF SUBCUSTODIANS
1. Notwithstanding any other provisions of this Agreement, all or
any of the monies or securities of Fund may be held in
Custodian's own custody or in the custody of one or more other
banks or trust companies acting as subcustodians as may be
selected by Custodian. Any such subcustodian selected by the
Custodian must have the qualifications required for a custodian
under the 1940 Act, as amended. Custodian shall be responsible
to the Fund for any loss, damage or expense suffered or incurred
by the Fund resulting from the actions or omissions of any
subcustodians selected and appointed by Custodian (except
subcustodians appointed at the request of Fund and as provided in
Subsection 2 below) to the same extent Custodian would be
responsible to the Fund under Section 5.
Page 21
<PAGE>
of this Agreement if it committed the act or omission itself.
Upon request of the Fund, Custodian shall be willing to contract
with other subcustodians reasonably acceptable to the Custodian
for purposes of (i) effecting third party repurchase transactions
with banks, brokers, dealers, or other entities through the use
of a common custodian or subcustodian, or (ii) providing
depository and clearing agency services with respect to certain
variable rate demand note securities, or (iii) for other
reasonable purposes specified by Fund; provided, however, that
the Custodian shall be responsible to the Fund for any loss,
damage or expense suffered or incurred by the Fund resulting from
the actions or omissions of any such subcustodian only to the
same extent such subcustodian is responsible to the Custodian.
The Fund shall be entitled to review the Custodian's contracts
with any such subcustodians appointed at the request of Fund.
Custodian shall be responsible to the Fund for any loss, damage
or expense suffered or incurred by the Fund resulting from the
actions or omissions of any Depository only to the same extent
such Depository is responsible to' Custodian.
2. Notwithstanding any other provisions of this Agreement, Fund's
foreign securities (as defined in Rule 17f-5(c)(1) under the 1940
Act) and Fund's cash or cash equivalents, in amounts deemed by
the
Page 22
<PAGE>
Fund to be reasonably necessary to effect Fund's foreign
securities transactions, may be held in the custody of one or
more banks or trust companies acting as subcustodians, and
thereafter, pursuant to a written contract or contracts as
approved by Fund's Trustees, may be transferred to accounts
maintained by any such subcustodian with eligible foreign
custodians, as defined in Rule 17f-5(c)(2). Custodian shall be
responsible to the Fund for any loss, damage or expense suffered
or incurred by the Fund resulting from the actions or omissions
of any foreign subcustodians only to the same extent the foreign
subcustodian is liable to the domestic subcustodian with which
the Custodian contracts for foreign subcustody purposes.
T. ACCOUNTS AND RECORDS
Custodian will prepare and maintain, with the direction and as
interpreted by the Fund, Fund's accountants and/or other advisors, in
complete, accurate and current form all accounts and records (i)
required to be maintained by Fund with respect to portfolio
transactions under Rule 31a of the 1940 Act, (ii) required to be
maintained as a basis for calculation of the Fund's net asset value,
and (iii) as otherwise agreed upon between the parties. Custodian
will preserve said records in the manner and for the periods
prescribed in the 1940 Act or for such longer period as is agreed
Page 23
<PAGE>
upon by the parties. Custodian relies upon Fund to furnish, in
writing or its electronic or digital equivalent, accurate and timely
information needed by Custodian to complete Fund's records and perform
daily calculation of the Fund's net asset value. Custodian shall
incur no liability and Fund shall indemnify and hold harmless
Custodian from and against any liability arising from any failure of
Fund to furnish such information in a timely and accurate manner, even
if Fund subsequently provides accurate but untimely information. It
shall be the responsibility of Fund to furnish Custodian with the
declaration, record and payment dates and amounts of any dividends or
income and any other special actions required concerning each of its
securities when such information is not readily available from
generally accepted securities industry services or publications.
U. ACCOUNTS AND RECORDS PROPERTY OF FUND
Custodian acknowledges that all of the accounts and records maintained
by Custodian pursuant to this Agreement are the property of Fund, and
will be made available to Fund for inspection or reproduction within a
reasonable period of time, upon demand. Custodian will assist Fund's
independent auditors, or upon approval of Fund, or upon demand, any
regulatory body, in any requested review of Fund's accounts and
records but shall be reimbursed by Fund for all expenses and employee
time invested in any such review outside of routine and normal
periodic reviews.
Page 24
<PAGE>
Upon receipt from Fund of the necessary information or instructions,
Custodian will supply information from the books and records it
maintains for Fund that Fund needs for tax returns, questionnaires,
periodic reports to shareholders and such other reports and
information requests as Fund and Custodian shall agree upon from time
to time.
V. ADOPTION OF PROCEDURES
Custodian and Fund may from time to time adopt procedures as they
agree upon, and Custodian may conclusively assume that no procedure
approved or directed by Fund or its accountants or other advisors
conflicts with or violates any requirements of its prospectus, Trust
Agreement, Bylaws, any applicable law, rule or regulation, or any
order, decree or agreement by which Fund may lie bound. Fund will be
responsible to notify Custodian of any changes in statutes,
regulations, rules, requirements or policies which might necessitate
changes in Custodian's responsibilities or procedures.
W. CALCULATION OF NET ASSET VALUE
Custodian will calculate Fund's net asset value, in accordance with
Fund's prospectus. Custodian will price the securities and foreign
currency holdings of Fund for which market quotations are available by
the use of outside services designated by Fund which are normally used
and contracted with for this purpose; all other securities and foreign
currency holdings will be priced in accordance with Fund's
instructions. Custodian
Page 25
<PAGE>
will have no responsibility for the accuracy of the prices quoted by
these outside services or for the information supplied by Fund or for
acting upon such instructions.
X. ADVANCES
In the event Custodian or any subcustodian shall, in its sole
discretion, advance cash or securities for any purpose (including but
not limited to securities settlements, purchase or sale of foreign
exchange or foreign exchange contracts and assumed settlement) for the
benefit of any Portfolio, the advance shall be payable by the Fund on
demand. Any such cash advance shall be subject to an overdraft charge
at the rate set forth in the then-current fee schedule from the date
advanced until the date repaid. As security for each such advance,
Fund hereby grants Custodian and such subcustodian a lien on and
security interest in all property at any time held for the account of
the applicable Portfolio, including without limitation all assets
acquired with the amount advanced. Should the Fund fail to promptly
repay the advance, the Custodian and such subcustodian shall be
entitled to utilize available cash and to dispose of such Portfolio's
assets pursuant to applicable law to the extent necessary to obtain
reimbursement of the amount advanced and any related overdraft
charges.
Y. EXERCISE OF RIGHT TO TENDER OFFERS
Page 26
<PAGE>
Upon receipt of instructions, the Custodian shall: (a) deliver
warrants, puts, calls, rights or similar securities to the issuer or
trustee thereof, or to the agent of such issuer or trustee, for the
purpose of exercise or sale, provided that the new securities, cash or
other assets, if any, are to be delivered to the Custodian; and (b)
deposit securities upon invitations for tenders thereof, provided that
the consideration for such securities is to be paid or delivered to
the Custodian or the' tendered securities are to be returned to the
Custodian.
4. INSTRUCTIONS.
A. The term "instructions", as used herein, means written (including
telecopied or telexed) or oral instructions which Custodian reasonably
believes were given by a designated representative of Fund. Fund
shall deliver to Custodian, prior to delivery of any assets to
Custodian and thereafter from time to time as changes therein are
necessary, written instructions naming one or more designated
representatives to give instructions in the name and on behalf of
Fund, which Installations may be received and accepted by Custodian as
conclusive evidence of the authority of any designated representative
to act for Fund and may be considered to be in full force and effect
(and Custodian will be fully protected in acting in reliance thereon)
until receipt by Custodian of notice to the contrary. Unless such
written instructions delegating authority to any person to give
instructions
Page 27
<PAGE>
specifically limit such authority to specific matters or require that
the approval of anyone else will first have been obtained, Custodian
will be under no obligation to inquire into the right of such person,
acting alone, to give any instructions whatsoever which Custodian may
receive from such person. If Fund fails to provide Custodian any such
instructions naming designated representatives, any instructions
received by Custodian from a person reasonably believed to be an
appropriate representative of Fund shall constitute valid and proper
instructions hereunder.
B. No later than the next business day immediately following each oral
instruction, Fund will send Custodian written confirmation of such
oral instruction. At Custodian's sole discretion, Custodian may
record on tape, or otherwise, any oral instruction whether given in
person or via telephone, each such recording identifying the parties,
the date and the time of the beginning and ending of such oral
instruction.
C. If Custodian shall provide Fund direct access to any computerized
recordkeeping and reporting system used hereunder or if Custodian and
Fund shall agree to utilized any electronic system of communication,
Fund shall be fully responsible for any and all consequences of the
use or misuse of the terminal device, passwords, access instructions
and other means of access to such system(s) which are utilized by,
assigned to or otherwise made available to the Fund. Fund agrees to
implement and enforce
Page 28
<PAGE>
appropriate security policies and procedures to prevent unauthorized
or improper access to or use of such system(s). Custodian shall be
fully protected in acting hereunder upon any instructions,
communications, data or other information received by Custodian by
such means as fully and to the same effect as if delivered to
Custodian by written instrument signed by the requisite authorized
representative(s) of Fund. Fund shall indemnify and hold Custodian
harmless from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability which may be suffered
or incurred by Custodian as a result of the use or misuse, whether
authorized or unauthorized, of any such system(s) by Fund or by any
person who acquires access to such system(s) through the terminal
device, passwords, access instructions or other means of access to
such system(s) which are utilized by, assigned to or otherwise made
available to the Fund, except to the extent attributable to any
negligence or willful misconduct by Custodian.
5. LIMITATION OF LIABILITY OF CUSTODIAN.
A. Custodian shall at all times use reasonable care and due diligence and
act in good faith in performing its duties under this Agreement.
Custodian shall not be responsible for, and the Fund shall indemnify
and hold Custodian harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and
liability which may be asserted
Page 29
<PAGE>
against Custodian, incurred by Custodian or for which Custodian may be
held to be liable, arising out of or attributable to:
1. All actions taken by Custodian pursuant to this Agreement or any
instructions provided to it hereunder, provided that Custodian
has acted in good faith and with due diligence and reasonable
care; and
2. The Fund's refusal or failure to comply with the terms of this
Agreement (including without limitation the Fund's failure to pay
or reimburse Custodian under this indemnification provision), the
Fund's negligence or willful misconduct, or the failure of any
representation or warranty of the Fund hereunder to be and remain
true and correct in all respects at all times.
B. Custodian may request and obtain at the expense of Fund the advice and
opinion of counsel for Fund or of its own counsel with respect to
questions or matters of law; and it shall be without liability to Fund
for any action taken or omitted by it in good faith, in conformity
with such advice or opinion. If Custodian reasonably believes that it
could not prudently act according to the instructions of the Fund or
the Fund's accountants or counsel, it may in its discretion, with
notice to the Fund, not act according to such instructions.
C. Custodian may rely upon the advice and statements of Fund, Fund's
accountants and officers or other authorized individuals, and other
persons
Page 30
<PAGE>
believed by it in good faith to be expert in matters upon which they
are consulted, and Custodian shall not be liable for any actions
taken, in good faith, upon such advice and statements.
D. If Fund requests Custodian in any capacity to take any action which
involves the payment of money by Custodian, or which might make it or
its nominee liable for payment of monies or in any other way,
Custodian shall be indemnified and held harmless by Fund against any
liability on account of such action; provided, however, that nothing
herein shall obligate Custodian to take any such action except in its
sole discretion.
E. Custodian shall be protected in acting as custodian hereunder upon any
instructions, advice, notice, request, consent, certificate or other
instrument or paper appearing to it to be genuine and to have been
properly executed. Custodian shall be entitled to receive upon
request as conclusive proof of any fact or matter required to be
ascertained from Fund hereunder a certificate signed by an officer or
designated representative of Fund. Fund shall also provide
Custodian instructions with respect to any matter concerning this
Agreement requested by Custodian.
F. Custodian shall be under no duty or obligation to inquire into, and
shall not be liable for:
1. The validity of the issue of any securities purchased by or for
Fund, the legality of the purchase of any securities or foreign
currency
Page 31
<PAGE>
positions or evidence of ownership required by Fund to be
received by Custodian, or the propriety of the decision to
purchase or amount paid therefor;
2. The legality of the sale of any securities or foreign currency
positions by or for Fund, or the propriety of the amount for
which the same are sold;
3. The legality of the issue or sale of any Fund Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the repurchase or redemption of any Fund Shares,
or the propriety of the amount to be paid therefor; or
5. The legality of the declaration of any dividend by Fund, or the
legality of the issue of any Fund Shares in payment of any stock
dividend.
G. Custodian shall not be liable for, or considered to be Custodian of,
any money represented by any check, draft, wire transfer,
clearinghouse funds, uncollected funds, or instrument for the payment
of money to be received by it on behalf of Fund until Custodian
actually receives such money; provided, however, that it shall advise
Fund promptly if it fails to receive any such money in the ordinary
course of business and shall cooperate with Fund toward the end that
such money shall be received.
Page 32
<PAGE>
H. Except as provided in Section 3.S., Custodian shall not be responsible
for loss occasioned by the acts, neglects, defaults or insolvency of
any broker, bank, trust company, or any other person with whom
Custodian may deal.
I. Custodian shall not be responsible or liable for the failure or delay
in performance of its obligations under this Agreement, or those of
any entity for which it is responsible hereunder, arising out of or
caused, directly or indirectly, by circumstances beyond the affected
entity's reasonable control, including, without limitation: any
interruption, loss or malfunction of any utility, transportation,
computer (hardware or software) or communication service; inability to
obtain labor, material, equipment or transportation, or a delay in
mails; governmental or exchange action, statute, ordinance, rulings,
regulations or direction; war, strike, riot, emergency, civil
disturbance, terrorism, vandalism, explosions, labor disputes,
freezes, floods, fires, tornados, acts of God or public enemy,
revolutions, or insurrection.
J. EXCEPT FOR VIOLATIONS OF SECTION 9, IN NO EVENT AND UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY TO THIS AGREEMENT BE LIABLE TO
ANYONE, INCLUDING, WITHOUT LIMITATION TO THE OTHER PARTY, FOR
CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES FOR ANY ACT OR FAILURE TO
ACT UNDER ANY PROVISION OF THIS AGREEMENT EVEN IF ADVISED OF THIS
POSSIBILITY THEREOF.
Page 33
<PAGE>
6. COMPENSATION. In consideration for its services hereunder as Custodian and
investment accounting and recordkeeping agent, Fund will pay to Custodian
such compensation as shall be set forth in a separate fee schedule to be
agreed to by Fund and Custodian from time to time. A copy of the initial
fee schedule is attached hereto and incorporated herein by reference.
Custodian shall also be entitled to receive, and Fund agrees to pay to
Custodian, on demand, reimbursement for Custodian's cash disbursements and
reasonable out-of-pocket costs and expenses, including attorney's fees,
incurred by Custodian in connection with the performance of services
hereunder. Custodian may charge such compensation against monies held by
it for the account of Fund. Custodian will also be entitled to charge
against any monies held by it for the account of Fund the amount of any
loss, damage, liability, advance, overdraft or expense for which it shall
be entitled to reimbursement from Fund, including but not limited to fees
and expenses dud to Custodian for other services provided to the Fund by
Custodian. Custodian will be entitled to reimbursement by the Fund for the
losses, damages, liabilities, advances, overdrafts and expenses of
subcustodians only to the extent that (i) Custodian would have been
entitled to reimbursement hereunder if it had incurred the same itself
directly, and (ii) Custodian is obligated to reimburse the subcustodian
therefor.
7. TERM AND TERMINATION. The initial term of this Agreement shall be for a
period of one year. Thereafter, either party to this Agreement may
terminate the
Page 34
<PAGE>
same by notice in writing, delivered or mailed, postage prepaid, to the
other party hereto and received not less than ninety (90) days prior to the
date upon which such termination will take effect. Upon termination of
this Agreement, Fund will pay Custodian its fees and compensation due
hereunder and its reimbursable disbursements, costs and expenses paid or
incurred to such date and Fund shall designate a successor custodian by
notice in writing to Custodian by the termination date. In the event no
written order designating a successor custodian has been delivered to
Custodian on or before the date when such termination becomes effective,
then Custodian may, at its option, deliver the securities, funds and
properties of Fund to a bank or trust company at the selection of
Custodian, and meeting the qualifications for custodian set forth in the
1940 Act and having not less that Two Million Dollars ($2,000,000)
aggregate capital, surplus and undivided profits, as shown by its last
published report, or apply to a court of competent jurisdiction for the
appointment of a successor custodian or other proper relief, or take any
other lawful action under the circumstances; provided, however, that Fund
shall reimburse Custodian for its costs and expenses, including reasonable
attorney's fees, incurred in connection therewith. Custodian will, upon
termination of this Agreement and payment of all sums due to Custodian from
Fund hereunder or otherwise, deliver to the successor custodian so
specified or appointed, or as specified by the court, at Custodian's
office, all securities then held by Custodian hereunder, duly endorsed and
in form for transfer, and all funds
Page 35
<PAGE>
and other properties of Fund deposited with or held by Custodian hereunder,
and Custodian will co-operate in effecting changes in book-entries at all
Depositories. Upon delivery to a successor custodian or as specified by
the court, Custodian will have no further obligations or liabilities under
this Agreement. Thereafter such successor will be the successor custodian
under this Agreement and will be entitled to reasonable compensation for
its services. In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of termination
hereof owing to failure of the Fund to appoint a successor custodian, the
Custodian shall be entitled to compensation as provided in the then-current
fee schedule hereunder for its services during such period as the Custodian
retains possession of such securities, funds and other properties, and the
provisions of this Agreement relating to the duties and obligations of the
Custodian shall remain in full force and effect.
8. NOTICES. Notices, requests, instructions and other writings addressed to
Fund at 121 S.W. Morrison Street, Suite 1425, Portland, Oregon 97204, or at
such other address as Fund may have designated to Custodian in writing,
will be deemed to have been properly given to Fund hereunder; and notices,
requests, instructions and other writings addressed to Custodian at its
offices at 127 West 10th Street, Kansas City, Missouri 64105, Attention:
Custody Department, or to such other address as it may have designated to
Fund in writing, will be deemed to have been properly given to Custodian
hereunder.
Page 36
<PAGE>
9. CONFIDENTIALITY.
A. Fund shall preserve the confidentiality of the computerized investment
portfolio recordkeeping and accounting system used by Custodian (the
"Portfolio Accounting System") and the tapes, books, reference
manuals, instructions, records, programs, documentation and
information of, and other materials relevant to, the Portfolio
Accounting System and the business of Custodian ("Confidential
Information"). Fund shall not voluntarily disclose any such
Confidential Information to any other person other than its own
employees who reasonably have a need to know such information pursuant
to this Agreement. Fund shall return all such Confidential
Information to Custodian upon termination or expiration of this
Agreement.
B. Fund has been informed that the Portfolio Accounting System is
licensed for use by Custodian from DST Systems, Inc. ("Licensor"), and
Fund acknowledges that Custodian and Licensor have proprietary rights
in and to the Portfolio Accounting System and all other Custodian or
Licensor programs, code, techniques, know how, data bases, supporting
documentation, data formats, and procedures, including without
limitation any changes or modifications made at the request or expense
or both of Fund (collectively, the "Protected Information"). Fund
acknowledges that the Protected Information constitutes confidential
material and trade secrets of Custodian and Licensor. Fund shall
preserve the confidentiality of the
Page 37
<PAGE>
Protected Information, and Fund hereby acknowledges that any
unauthorized use, misuse, disclosure or taking of Protected
Information, residing or existing internal or external to a computer,
computer system, or computer network, or the knowing and unauthorized
accessing or causing to be accessed of any computer, computer system,
or computer network, may be subject to civil liabilities and criminal
penalties under applicable LAW. Fund shall so inform employees and
agents who have access to the Protected Information or to any computer
equipment capable of accessing the same. Licensor is intended to be
and shall be a third party beneficiary of the Fund's obligations and
undertakings contained in this paragraph.
10. MULTIPLE PORTFOLIOS. If Fund is comprised of more than one Portfolio:
A. Each Portfolio shall be regarded for all purposes hereunder as a
separate party apart from each other Portfolio. Unless the context
otherwise requires, with respect to every transaction covered by this
Agreement, every reference herein to the Fund shall be deemed to
relate solely to the particular Portfolio to which such transaction
relates. Under no circumstances shall the rights, obligations or
remedies with respect to a particular Portfolio constitute a right,
obligation or remedy applicable to any other Portfolio. The use of
this single document to memorialize the separate agreement of each
Portfolio is understood to be for clerical
Page 38
<PAGE>
convenience only and shall not constitute any basis for joining the
Portfolios for any reason.
B. Additional Portfolios may be added to this Agreement, provided that
Custodian consents to such addition. Rates or charges for each
additional Portfolio shall be as agreed upon by Custodian and Fund in
writing.
11. LIMITATION OF LIABILITY. Notice is hereby given that a copy of Fund's
Trust Agreement and all amendments thereto is on file with the Secretary of
State of the state of its organization; that this Agreement has been
executed on behalf of Fund by the undersigned duty authorized
representative of Fund in his/her capacity as such and not individually;
and that the obligations of this Agreement shall only be binding upon the
assets and property of Fund and shall not be binding upon any trustee,
officer or shareholder of Fund individually.
12. MISCELLANEOUS.
A. This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of
the State of Missouri, without reference to the choice of laws
principles thereof.
B. All terms and provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.
C. The representations and warranties, the indemnifications extended
hereunder, and the provisions of Section 9. hereof are intended to and
shall
Page 39
<PAGE>
continue after and survive the expiration, termination or cancellation
of this Agreement.
D. No provisions of the Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed
by each party hereto.
E. The failure of either party to insist upon the performance of any
terms or conditions of this Agreement or to enforce any rights
resulting from any breach of any of the terms or conditions of this
Agreement, including the payment of damages, shall. not be construed
as a continuing or permanent waiver of any such terms, conditions,
rights or privileges, but the same shall continue and remain in full
force and effect as if no such forbearance or waiver had occurred, No
waiver, release or discharge of any party's rights hereunder shall be
effective unless contained in a written instrument signed by the party
sought to be charged.
F. The captions in the Agreement are included for convenience of
reference only, and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect.
G. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
Page 40
<PAGE>
H. If any provision of this Agreement shall be determined to be invalid
or unenforceable, the remaining provisions of this Agreement shall not
be affected thereby, and every provision of this Agreement shall
remain in FULL force and effect and shall remain enforceable to the
fullest extent permitted by applicable law.
I. This Agreement may not be assigned by either party hereto without the
prior written consent of the other party.
J. Neither the execution nor performance of this Agreement shall be
deemed to create a partnership or joint venture by and between
Custodian and Fund.
K. Except as specifically provided herein, this Agreement does not IN any
way affect any other agreements entered into among the parties hereto
and any actions taken or omitted by either party hereunder shall not
affect any rights or obligations of the other party hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By:
-----------------------
Title:
-------------------
Page 41
<PAGE>
CRABBE HUSON MUTUAL FUNDS GROUP
By:
----------------------
Title:
-------------------
Page 42
<PAGE>
EXHIBIT A
INVESTORS FIDUCIARY TRUST COMPANY
AVAILABILITY SCHEDULE BY TRANSACTION TYPE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
TRANSACTION DTC PHYSICAL FED
- ----------------------------------------------------------------------------------------------------------------------------
TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE
---- ----------- ---------- ----------- ---------- ----------- ----------
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Calls Puts As Received C or F* As Received C or F*
- ----------------------------------------------------------------------------------------------------------------------------
Maturities As Received C or F* Mat. Date C or F* Mat. Date F
- ----------------------------------------------------------------------------------------------------------------------------
Tender Reorgs. As Received C As Received C N/A
- ----------------------------------------------------------------------------------------------------------------------------
Dividends Paydate C Paydate C N/A
- ----------------------------------------------------------------------------------------------------------------------------
Floating Rate Paydate C Paydate C N/A
Int.
- ----------------------------------------------------------------------------------------------------------------------------
Floating Rate N/A As Rate Received C N/A
Int.
(No Rate)
- ----------------------------------------------------------------------------------------------------------------------------
Mtg. Backed P&I Paydate C Paydate + 1 Bus. C Paydate F
Day
- ----------------------------------------------------------------------------------------------------------------------------
Fixed Rate Int. Paydate C Paydate C Paydate F
- ----------------------------------------------------------------------------------------------------------------------------
Euroclear N/A C Paydate C
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
LEGEND
C = Clearinghouse Funds
F = Fed Funds
N/A = Not Applicable
* Availability based on how received.
Page 43
<PAGE>
EXHIBIT 99.9a
TRANSFER AGENCY AND SERVICE AGREEMENT
between
EACH OF THE PARTIES AS INDICATED ON FUND SCHEDULE
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
Article 1 TERMS OF APPOINTMENT; DUTIES OF THE BANK. . . . . . . . . . . 1
Article 2 FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . 3
Article 3 REPRESENTATIONS AND WARRANTIES OF THE BANK. . . . . . . . . . 3
Article 4 REPRESENTATIONS AND WARRANTIES OF THE FUNDS . . . . . . . . . 4
Article 5 DATA ACCESS AND PROPRIETARY INFORMATION . . . . . . . . . . . 4
Article 6 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 5
Article 7 STANDARD OF CARE. . . . . . . . . . . . . . . . . . . . . . . 6
Article 8 COVENANTS OF THE FUNDS AND THE BANK . . . . . . . . . . . . . 6
Article 9 TERMINATION OF AGREEMENT. . . . . . . . . . . . . . . . . . . 7
Article 10 ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Article 11 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Article 12 MASSACHUSETTS LAW TO APPLY. . . . . . . . . . . . . . . . . . 8
Article 13 FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . 8
Article 14 CONSEQUENTIAL DAMAGES . . . . . . . . . . . . . . . . . . . . 8
Article 15 MERGER OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . 8
Article 16 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . 9
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the _____ day of ____________________, 199___, by and
between the mutual funds listed on the attached fund schedule, all corporations,
having there principal offices and places of business at 121 SW Morrison, Suite
1410 Portland, Oregon 97204, (the "Funds"), and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company having its principal office and place of
businesses at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Funds desires to appoint the Bank as its transfer agent,
dividend disbursing agent, custodian of certain retirement plans and agent in
connection with certain other activities, and the Bank desires to accept such
appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1 TERMS OF APPOINTMENT; DUTIES OF THE BANK
1.1 Subject to the terms and conditions set forth in this Agreement, the
Funds hereby employs and appoints the Bank to act as, and the Bank agrees
to act as its transfer agent for the Funds's authorized and issued shares
of its common stock, $__________ par value, ("Shares"), dividend disbursing
agent, custodian of certain retirement plans and agent in connection with
any accumulation, open-account or similar plans provided to the
shareholders of the Funds ("Shareholders") and set out in the currently
effective prospectus and statement of additional information ("prospectus")
of the Funds, including without limitation any periodic investment plan or
periodic withdrawal program.
1.2 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time
by agreement between the Funds and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation
thereof to the Custodian of the Funds authorized pursuant to
the Articles of Incorporation of the Funds (the
"Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof
to the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Bank shall execute transactions directly with
broker-dealers authorized by the Funds who shall thereby be
deemed to be acting on behalf of the Funds;
(v) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect to any redemption, pay
over or cause to be paid over in the appropriate manner such
monies as instructed by the redeeming Shareholders;
Page 1
<PAGE>
(vi) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and
distributions declared by the Funds;
(viii) Issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon receipt
by the Bank of indemnification satisfactory to the Bank and
protecting the Bank and the Funds, and the Bank at its
option, may issue replacement certificates in place of
mutilated stock certificates upon presentation thereof and
without such indemnity;
(ix) Maintain records of account for and advise the Funds and its
Shareholders as to the foregoing; and
(x) Record the issuance of shares of the Funds and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number
of shares of the Funds which are authorized, based upon data
provided to it by the Funds, and issued and outstanding.
The Bank shall also provide the Funds on a regular basis
with the total number of shares which are authorized and
issued and outstanding and shall have no obligation, when
recording the issuance of shares, to monitor the issuance of
such shares or to take cognizance of any laws relating to
the issue or sale of such shares, which functions shall be
the sole responsibility of the Funds.
(b) In addition to and neither in lieu nor in contravention of
the services set forth in the above paragraph (a), the Bank
shall: (i) perform the customary services of a transfer
agent, dividend disbursing agent, custodian of certain
retirement plans and, as relevant, agent in connection with
accumulation, open-account or similar plans (including
without limitation any periodic investment plan or periodic
withdrawal program), including but not limited to:
maintaining all Shareholder accounts, preparing Shareholder
meeting lists, mailing proxies, mailing Shareholder reports
and prospectuses to current Shareholders, withholding taxes
on U.S. resident and non-resident alien accounts, preparing
and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders,
preparing and mailing confirmation forms and statements of
account to Shareholders for all purchases and redemptions of
Shares and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information
and (ii) provide a system which will enable the Funds to
monitor the total number of Shares sold in each State.
(c) In addition, the Funds shall (i) identify to the Bank in
writing those transactions and assets to be treated as
exempt from blue sky reporting for each State and (ii)
verify the establishment of transactions for each State on
the system prior to activation and thereafter monitor the
daily activity for each State. The responsibility of the
Bank for the Fund's blue sky State registration status is
solely limited to the initial establishment
Page 2
<PAGE>
of transactions subject to blue sky compliance by the Funds
and the reporting of such transactions to the Funds as
provided above.
(d) Procedures as to who shall provide certain of these services
in Article 1 may be established from time to time by
agreement between the Funds and the Bank per the attached
service responsibility schedule. The Bank may at times
perform only a portion of these services and the Funds or
its agent may perform these services on the Funds's behalf.
(e) The Bank shall provide additional services on behalf of the
Funds (i.e., escheatment services) which may be agreed upon
in writing between the Funds and the Bank.
Article 2 FEES AND EXPENSES
2.1 For the performance by the Bank pursuant to this Agreement, the Funds
agrees to pay the Bank an annual maintenance fee for each Shareholder
account as set out in the initial fee schedule attached hereto. Such fees
and out-of-pocket expenses and advances identified under Section 2.2 below
may be changed from time to time subject to mutual written agreement
between the Funds and the Bank.
2.2 In addition to the fee paid under Section 2.1 above, the Funds agrees
to reimburse the Bank for out-of-pocket expenses, including but not limited
to confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances incurred by
the Bank for the items set out in the fee schedule attached hereto. In
addition, any other expenses incurred by the Bank at the request or with
the consent of the Funds, will be reimbursed by the Funds.
2.3 The Funds agrees to pay all fees and reimbursable expenses within five
days following the receipt of the respective billing notice. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to the Bank by the Funds at least
seven (7) days prior to the mailing date of such materials.
Article 3 REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants to the Funds that:
3.1 It is a trust company duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.
3.3 It is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Page 3
<PAGE>
Article 4 REPRESENTATIONS AND WARRANTIES OF THE FUNDS
The Funds represents and warrants to the Bank that:
4.1 Each Fund is a corporation duly organized and existing and in good
standing under the laws of Oregon.
4.2 Each Fund is empowered under applicable laws and by their Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
4.3 All corporate proceedings required by said Articles of Incorporation
and By-Laws have been taken to authorize each Fund to enter into and
perform this Agreement.
4.4 Each Fund is an open-end and diversified management investment company
registered under the Investment Company Act of 1940, as amended.
4.5 A registration statement under the Securities Act of 1933, as amended
is currently effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be made, with
respect to all Shares of the Funds being offered for sale.
Article 5 DATA ACCESS AND PROPRIETARY INFORMATION
5.1 The Funds acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to the Funds by the Bank as part of the Fund's ability to
access certain Fund-related data ("Customer Data") maintained by the Bank
on data bases under the control and ownership of the Bank or other third
party ("Data Access Services") constitute copyrighted, trade secret, or
other proprietary information (collectively, "Proprietary Information") of
substantial value to the Bank or other third party. In no event shall
Proprietary Information be deemed Customer Data. The Funds agrees to treat
all Proprietary Information as proprietary to the Bank and further agrees
that it shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder. Without limiting the
foregoing, the Funds agrees for itself and its employees and agents:
(a) to access Customer Data solely from locations as may be
designated in writing by the Bank and solely in accordance with
the Bank's applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of
the Proprietary Information, and if such access is inadvertently
obtained, to inform in a timely manner of such fact and dispose
of such information in accordance with the Bank's instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer facility
or other location, except with the prior written consent of the
Bank;
Page 4
<PAGE>
(e) that the Funds shall have access only to those authorized
transactions agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to
protect at the Bank's expense the rights of the Bank in
Proprietary Information at common law, under federal copyright
law and under other federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Article 5. The obligations of this Article shall
survive any earlier termination of this Agreement.
5.2 If the Funds notifies the Bank that any of the Data Access Services do
not operate in material compliance with the most recently issued user
documentation for such services, the Bank shall endeavor in a timely manner
to correct such failure. Organizations from which the Bank may obtain
certain data included in the Data Access Services are solely responsible
for the contents of such data and the Funds agrees to make no claim against
the Bank arising out of the contents of such third-party data, including,
but not limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL
COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH
ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS
ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
5.3 If the transactions available to the Funds include the ability to
originate electronic instructions to the Bank in order to (i) effect the
transfer or movement of cash or Shares or (ii) transmit Shareholder
information or other information (such transactions constituting a
"COEFI"), then in such event the Bank shall be entitled to rely on the
validity and authenticity of such instruction without undertaking any
further inquiry as long as such instruction is undertaken in conformity
with security procedures established by the Bank from time to time.
Article 6 INDEMNIFICATION
6.1 The Bank shall not be responsible for, and the Funds shall indemnify
and hold the Bank harmless from and against, any and all losses, damages,
costs, charges, counsel fees, payments, expenses and liability arising out
of or attributable to:
(a) All actions of the Bank or its agent or subcontractors required
to be taken pursuant to this Agreement, provided that such
actions are taken in good faith and without negligence or willful
misconduct.
(b) The Funds's lack of good faith, negligence or willful misconduct
which arise out of the breach of any representation or warranty
of the Funds hereunder.
(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services
which (i) are received by the Bank or its agents or
subcontractors, and (ii) have been prepared, maintained or
performed by the Funds or any other person or firm on
Page 5
<PAGE>
behalf of the Funds including but not limited to any previous
transfer agent or registrar.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Funds.
(e) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws
or regulations of any state that such Shares be registered in
such state or in violation of any stop order or other
determination or ruling by any federal agency or any state with
respect to the offer or sale of such Shares in such state.
6.2 At any time the Bank may apply to any officer of the Funds for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under
this Agreement, and the Bank and its agents or subcontractors shall not be
liable and shall be indemnified by the Funds for any action taken or
omitted by it in reliance upon such instructions or upon the opinion of
such counsel. The Bank, its agents and subcontractors shall be protected
and indemnified in acting upon any paper or document furnished by or on
behalf of the Funds, reasonably believed to be genuine and to have been
signed by the proper person or persons, or upon any instruction,
information, data, records or documents provided the Bank or its agents or
subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Funds, and shall not be held to have notice
of any change of authority of any person, until receipt of written notice
thereof from the Funds. The Bank, its agents and subcontractors shall also
be protected and indemnified in recognizing stock certificates which are
reasonably believed to bear the proper manual or facsimile signatures of
the officers of the Funds, and the proper countersignature of any former
transfer agent or former registrar, or of a co-transfer agent or co-
registrar.
6.3 In order that the indemnification provisions contained in this Article
6 shall apply, upon the-assertion of a claim for which the Funds may be
required to indemnify the Bank, the Bank shall promptly notify the Funds of
such assertion, and shall keep the Funds advised with respect to all
developments concerning such claim. The Funds shall have the option to
participate with the Bank in the defense of such claim or to defend against
said claim in its own name or in the name of the Bank. The Bank shall in
no case confess any claim or make any compromise in any case in which the
Funds may be required to indemnify the Bank except with the Funds's prior
written consent.
Article 7 STANDARD OF CARE
7.1 The Bank shall at all times act in good faith and agrees to use its
best efforts within reasonable limits to insure the accuracy of all
services performed under this Agreement, but assumes no responsibility and
shall not be liable for loss or damage due to errors unless said errors are
caused by its negligence, bad faith, or willful misconduct of that of its
employees.
Article 8 COVENANTS OF THE FUNDS AND THE BANK
8.1 The Funds shall promptly furnish to the Bank the following:
Page 6
<PAGE>
(a) A certified copy of the resolution of the Board of Directors of
the Funds authorizing the appointment of the Bank and the
execution and delivery of this Agreement.
(b) A copy of the Articles of Incorporation and By-Laws of the Funds
and all amendments thereto.
8.2 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Funds for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if
any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices.
8.3 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Funds and will be preserved, maintained
and made available in accordance with such Section and Rules, and will be
surrendered promptly to the Funds on and in accordance with its request.
8.4 The Bank and the Funds agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement
shall remain confidential, and shall not be voluntarily disclosed to any
other person, except as may be required by law.
8.5 In case of any requests or demands for the inspection of the
Shareholder records of the Funds, the Bank will endeavor to notify the
Funds and to secure instructions from an authorized officer of the Funds as
to such inspection. The Bank reserves the right, however; to exhibit the
Shareholder records to any person whenever it is advised by its counsel
that it may be held liable for the failure to exhibit the Shareholder
records to such person.
Article 9 TERMINATION OF AGREEMENT
9.1 This Agreement shall continue for a period of one year (the "Initial
Term") and be renewed or terminated as stated below.
9.2 This Agreement may be terminated or renewed after the Initial Term by
either party upon sixty (60) days written notice to the other.
9.3 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne
by the Fund. Additionally, the Bank reserves the right to charge for any
other reasonable expenses associated with such termination.
9.4 Should either party terminate before the Initial Term, the terminating
party shall reimburse the other party for all reasonable costs and out-of-
pocket expenses incurred by the other party associated with the movement of
records and material from the prior transfer agent to the Bank during the
transition or conversation from the prior transfer agent.
Page 7
<PAGE>
Article 10 ASSIGNMENT
10.1 Except as provided in Section 10.3 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
10.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
10.3 The Bank may, without further consent on the part of the Funds,
subcontract for the performance hereof with (i) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly
registered as a transfer agent pursuant to Section 17A(c)(1) of the
Securities Exchange Act of 1934, as amended ("Section 17A(c)(1)"), (ii) a
BFDS subsidiary duly registered as a transfer agent pursuant to Section
17A(c)(1) or (iii) a BFDS affiliate; provided, however, that the Bank shall
be as fully responsible to the Funds for the acts and omissions of any
subcontractor as it is for its own acts and omissions.
Article 11 AMENDMENT
11.1 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the
Board of Directors of the Funds.
Article 12 MASSACHUSETTS LAW TO APPLY
12.1 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
Article 13 FORCE MAJEURE
13.1 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other
causes reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to perform
or otherwise from such causes.
Article 14 CONSEQUENTIAL DAMAGES
14.1 Neither party to this Agreement shall be liable to the other party
for Consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
Article 15 MERGER OF AGREEMENT
15.1 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
Page 8
<PAGE>
Article 16 COUNTERPARTS
16.1 This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed
to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
BY:
---------------------------------------------
ATTEST:
- ------------------------------
STATE STREET BANK AND TRUST COMPANY
BY:
---------------------------------------------
Executive Vice President
ATTEST:
- ------------------------------
Page 9
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES
SERVICE PERFORMED RESPONSIBILITY
- ----------------- --------------
BANK FUND
---- ----
1. RECEIVES ORDERS FOR THE PURCHASE OF SHARES. X
2. ISSUE SHARES AND HOLD SHARES IN
SHAREHOLDERS ACCOUNTS. X
3. RECEIVE REDEMPTION REQUESTS. X
4. EFFECT TRANSACTIONS 1-3 ABOVE DIRECTLY
WITH BROKER-DEALERS. X
5. PAY OVER MONIES TO REDEEMING SHAREHOLDERS. X
6. EFFECT TRANSFERS OF SHARES. X
7. PREPARE AND TRANSMIT DIVIDENDS AND
DISTRIBUTIONS. X
8. ISSUE REPLACEMENT CERTIFICATES. X
9. REPORTING OF ABANDONED PROPERTY. X
10. MAINTAIN RECORDS OF ACCOUNT. X
11. MAINTAIN AND KEEP A CURRENT AND ACCURATE
CONTROL BOOK FOR EACH ISSUE OF SECURITIES. X
12. MAIL PROXIES. X
13. MAIL SHAREHOLDER REPORTS. X
14. MAIL PROSPECTUSES TO CURRENT SHAREHOLDERS. X
15. WITHHOLD TAXES ON U.S. RESIDENT AND NON-
RESIDENT ALIEN ACCOUNTS. X
16. PREPARE AND FILE U.S. TREASURY DEPARTMENT FORMS. X
17. PREPARE AND MAIL ACCOUNT AND CONFIRMATION
STATEMENTS FOR SHAREHOLDERS. X
18. PROVIDE SHAREHOLDER ACCOUNT INFORMATION. X
Page 10
<PAGE>
19. BLUE SKY REPORTING. X
* SUCH SERVICES ARE MORE FULLY DESCRIBED IN ARTICLE 1.2 (a), (b) AND (c) OF
THE AGREEMENT.
BY:
---------------------------------------------
ATTEST:
- ------------------------------
STATE STREET BANK AND TRUST COMPANY
BY:
---------------------------------------------
EXECUTIVE VICE PRESIDENT
ATTEST:
- ------------------------------
Page 11
<PAGE>
FUND SCHEDULE
* The Oregon Municipal Bond Fund, Inc.
* The Crabbe Huson Special Fund, Inc.
* The Crabbe Huson Asset Allocation Fund, Inc.
* The Crabbe Huson Equity Fund, Inc.
* The Crabbe Huson Income Inc.
* The Crabbe Huson U.S. Government Income Fund, Inc.
* The Crabbe Huson U.S. Government Money Market Fund, Inc.
Page 12
<PAGE>
FEE INFORMATION FOR SERVICES AS
PLAN, TRANSFER AND DIVIDEND DISBURSING AGENT
CRABBE HUSON FAMILY OF FUNDS
- --------------------------------------------------------------------------------
ANNUAL ACCOUNT SERVICE FEES
- ---------------------------
PER ACCOUNT FEE $10.60
CLOSED ACCOUNT FEE $1.50
MINIMUM:
NEW FUNDS/CLASSES (PER CUSIP) $15,000
FEES ARE BILLABLE ON A MONTHLY BASIS AT THE RATE OF 1/12 OF THE ANNUAL FEE. A
CHARGE IS MADE FOR AN ACCOUNT IN THE MONTH THAT AN ACCOUNT OPENS OR CLOSES.
ACCOUNT SERVICE FEES ARE THE HIGHER OF: OPEN ACCOUNT CHARGES PLUS CLOSED
ACCOUNT CHARGES OR THE FUND MINIMUM.
ACTIVITY BASED FEES
- -------------------
BFDS MANUAL FINANCIAL TRANSACTIONS $1.50/EACH
NEW ACCOUNT SET-UP:
DIRECT NEW ACCOUNT $5.00/EACH
IWS LITERATURE NEW ACCOUNT $4.55/EACH
CORRESPONDENCE $5.00/EACH
TELEPHONE CALLS $1.00/PER
MINUTE
WIRE ORDER TRANSACTIONS $5.00/EACH
BANKING SERVICES
- ----------------
CHECKWRITING SETUP $5.00
CHECKWRITING (PER DRAFT) $1.00
ACH $.35
OTHER FEES
- ----------
12B-1 COMMISSIONS $.60/ACCOUNT
IRA CUSTODIAL FEES
- ------------------
*ANNUAL MAINTENANCE $25.00/PER
TAX I.D.
*NEW ACCOUNT SET-UP $25.00/EACH
TERMINATION FEE $25.00/EACH
AUDIO RESPONSE SEE ATTACHED SCHEDULE.
- --------------
OUT-OF-POCKET EXPENSES BILLED AS
- ---------------------- INCURRED
OUT-OF-POCKET EXPENSES INCLUDE BUT ARE NOT LIMITED TO: CONFIRMATION STATEMENTS,
INVESTOR PROCESSING, POSTAGE, FORMS, AUDIO RESPONSE, TELEPHONE, RECORDS
RETENTION, TRANSCRIPTS, MICROFILM, MICROFICHE, AND EXPENSES INCURRED AT THE
SPECIFIC DIRECTION OF THE FUND.
*THE ANNUAL MAINTENANCE AND NEW ACCOUNT SET-UP FEES ARE APPLICABLE TO INVESTOR
BALANCES OF LESS THAN $25,000
NOTE: THIS FEE SCHEDULE ASSUMES THAT STATE STREET BANK WILL ACT AS THE IRA
CUSTODIAN AND THAT BFDS'S REVENUE STREAM FOR THE FIDUCIARY FEE
PROCESSING WILL BE A MINIMUM OF $150,000. HOWEVER IF FIDUCIARY FEES
DO NOT EXCEED $150,000, THE DIFFERENCE WILL BE ADJUSTED AT THE END OF
THE CALENDAR YEAR.
Page 13
<PAGE>
CRABBE HUSON FAMILY OF FUNDS STATE STREET BANK AND TRUST CO.
BY BY
------------------------- ----------------------------------------
TITLE TITLE
------------------------- ----------------------------------------
DATE DATE
------------------------- ----------------------------------------
Page 14
<PAGE>
AUDIO RESPONSE
BILLING INFORMATION
*SERVICE FEE OF $0.20 PER CALL INTO AUDIO RESPONSE.
----------------------------------------------------------------------
----------------------------------------------------------------------
MINIMUM MONTHLY CHARGE CHARGE PER FUND CHARGE PER ACCOUNT
----------------------------------------------------------------------
YEAR ONE ON AUDIO RESPONSE $50 $.002
----------------------------------------------------------------------
YEAR TWO ON AUDIO RESPONSE $75 $.003
----------------------------------------------------------------------
YEAR THREE ON AUDIO RESPONSE $100 $.004
----------------------------------------------------------------------
----------------------------------------------------------------------
THIS CHARGE IS A MINIMUM AND NOT ADDED TO THE
MONTHLY SERVICE FEE
* COURTESY TRANSFER FEE - $1,500 AT&T CHARGE (ONE TIME)
$0.20 FLAT RATE PER TRANSFER (AT&T CHARGE)
* NO CHARGE IS ASSESSED IN SETTING UP AUDIO RESPONSE IF SCHEDULED RECORDING
SESSIONS ARE FOLLOWED. ALLOW 6 WEEKS FOR SETUP TIME.
Page 15
<PAGE>
EXHIBIT 99.9c
INVESTMENT ACCOUNTING AGREEMENT
THIS AGREEMENT made and effective as of this 6th day of March, 1995, by and
between each of the registered investment companies listed on Exhibit A hereto,
each having its principal place of business at 121 S.W. Morrison Street, Suite
1425, Portland, Oregon 97204 (each individually being referred to herein as the
"Fund"), and INVESTORS FIDUCIARY TRUST COMPANY, a state chartered trust company
organized and existing under the laws of the State of Missouri, having its
principal place of business at 127 West 10th Street, Kansas City, Missouri,
64105 ("IFTC").
WHEREAS, Fund is registered as an "investment company" under the Investment
Company Act of 1940 (the "1940 Act"); and
WHEREAS, IFTC performs certain investment accounting and recordkeeping
services on a computerized accounting system (the "Portfolio Accounting System")
which is suitable for maintaining certain accounting records of Fund; and
WHEREAS, Fund desires to appoint IFTC as investment accounting and
recordkeeping agent for Fund, and IFTC is willing to accept such appointment;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto, intending to be legally bound, mutually covenant and agree
as follows:
1. APPOINTMENT OF RECORDKEEPING AGENT. Fund hereby constitutes and appoints
IFTC as investment accounting and recordkeeping agent for Fund to perform
accounting and recordkeeping functions related to portfolio transactions
required of Fund under Rule 31a of the 1940 Act and to calculate the net
asset value of the Fund.
2. REPRESENTATIONS AND WARRANTIES OF FUND. Fund hereby represents, warrants
and acknowledges to IFTC:
A. That it is a corporation or trust (as specified above) duly organized
and existing and in good standing under the laws of the state of
Oregon, and that it is registered under the 1940 Act;
B. That it has the requisite power and authority under applicable law,
its charter or declaration of trust and its bylaws to enter into this
Agreement; that it has taken all requisite action necessary to appoint
IFTC as investment accounting and recordkeeping agent for Fund; that
this Agreement has been duly executed and delivered by Fund; and that
this Agreement constitutes a legal, valid and binding obligation of
Fund, enforceable in accordance with its terms; and
C. That it has determined to its satisfaction that the Portfolio
Accounting System is appropriate and suitable for its needs.
3. REPRESENTATIONS AND WARRANTIES OF IFTC. IFTC hereby represents, warrants
and acknowledges to Fund:
Page 1
<PAGE>
A. That it is a trust company duly organized and existing and in good
standing under the laws of the State of Missouri;
B. That it has the requisite power and authority under applicable law,
its charter and its bylaws to enter into and perform this Agreement;
that this Agreement has been duly executed and delivered by IFTC; and
that this Agreement constitutes a legal, valid and binding obligation
of IFTC, enforceable in accordance with its terms; and
C. That the accounts and records maintained and preserved by IFTC shall
be the property of Fund and that it will not use any information made
available to it under the terms hereof for any purpose other than
complying with its duties and responsibilities hereunder or as
specifically authorized by Fund in writing.
4. DUTIES AND RESPONSIBILITIES OF FUND.
A. Fund shall turn over to IFTC all of Fund's accounts and records
previously maintained, if any, which IFTC may need to properly perform
its duties hereunder.
B. Fund shall provide to IFTC the information necessary to perform IFTC's
duties and responsibilities hereunder in writing or its electronic or
digital equivalent prior to the close of the New York Stock Exchange
on each day on which IFTC prices the Funds' securities and foreign
currency holdings.
C. Fund shall furnish IFTC with the declaration, record and payment dates
and amounts of any dividends or income and any other special actions
required concerning the securities in the portfolio when such
information is not readily available from generally accepted
securities industry services or publications.
D. Fund shall pay to IFTC such compensation at such time as may from time
to time be agreed upon in writing by IFTC and Fund. The initial
compensation schedule is attached as Exhibit A. Fund shall also
reimburse IFTC on demand for all out-of-pocket disbursements, costs
and expenses incurred by IFTC in connection with services performed
pursuant to this Agreement.
E. Fund shall notify IFTC of any changes in statutes, rules, regulations,
requirements, or policies which may necessitate changes in IFTC's
responsibilities or procedures.
F. Fund shall provide to IFTC, as conclusive proof of any fact or matter
required to be ascertained from Fund as determined by IFTC, a
certificate signed by Fund's president or other officer of Fund, or
other authorized individual, as requested by IFTC. Fund shall also
provide to IFTC instructions with respect to any matter concerning
this Agreement requested by IFTC. IFTC may rely upon any instruction
or information furnished by any person reasonably believed by it to be
an officer or agent of Fund, and shall not be held to have notice of
any
Page 2
<PAGE>
change of authority of any such person until receipt of written notice
thereof from Fund.
G. Fund shall preserve the confidentiality of the Portfolio Accounting
System and the tapes, books, reference manuals, instructions, records,
programs, documentation and information of, and other materials
relevant to, the Portfolio Accounting System and the business of IFTC
("Confidential Information"). Fund shall not voluntarily disclose
such Confidential Information to any other person other than its own
employees who reasonably have a need to know such information pursuant
to this Agreement. Fund shall return all such Confidential
Information to IFTC upon termination or expiration of this Agreement.
H. Fund has been informed that the Portfolio Accounting System is
licensed for use by IFTC from DST Systems, Inc. ("Licensor"), and Fund
acknowledges that IFTC and Licensor have proprietary rights in and to
the Portfolio Accounting System and all other IFTC or Licensor
programs, code, techniques, know-how, data bases, supporting
documentation, data formats and procedures, including without
limitation any changes or modifications made at the request or expense
or both of Fund (collectively, the "Protected Information"). Fund
acknowledges that the Protected Information constitutes confidential
material and trade secrets of IFTC and Licensor. Fund shall preserve
the confidentiality of the Protected Information, and Fund hereby
acknowledges that any unauthorized use, misuse, disclosure or taking
of Protected Information, residing or existing internal or external to
a computer, computer system, or computer network, or the knowing and
unauthorized accessing or causing to be accessed of any computer,
computer system, or computer network, may he subject to civil
liabilities and criminal penalties under applicable law. Fund shall
so inform employees and agents who have access to the Protected
Information or to any computer equipment capable of accessing the
same. Licensor is intended to be and shall be a third party
beneficiary of the Fund's obligations and undertakings contained in
this paragraph.
I. If IFTC shall provide Fund direct access to the computerized
recordkeeping and reporting system used hereunder or if IFTC and Fund
shall agree to utilize any electronic system of communication, Fund
shall be fully responsible for any and all consequences of the use or
misuse of the terminal device, passwords, access instructions and
other means of access to such system(s) which are utilized by,
assigned to or otherwise made available to the Fund. Fund agrees to
implement and enforce appropriate security policies and procedures to
prevent unauthorized or improper access to or use of such system(s).
IFTC shall be fully protected in acting hereunder upon any
instructions, communications, data or other information received by
IFTC by such means as fully and to the same effect as if delivered to
IFTC by written instrument signed by the requisite authorized
representative(s) of the Fund.
Page 3
<PAGE>
5. DUTIES AND RESPONSIBILITIES OF IFTC.
A. IFTC shall calculate Fund's net asset value, in accordance with Fund's
prospectus. IFTC will price the securities and foreign currency
holdings of the Fund for which market quotations are available by the
use of outside services designated by Fund which are normally used and
contracted with for this purpose; all other securities and foreign
currency holdings will be priced in accordance with Fund's
instructions.
B. IFTC shall prepare and maintain, with the direction and as interpreted
by Fund or Fund's accountants and/or other advisors, in complete,
accurate, and current form, all accounts and records needed to be
maintained as a basis for calculation of Fund's net asset value, and
as further agreed upon by the parties in writing, and shall preserve
such records in the manner and for the periods required by law or for
such longer period as the parties may agree upon in writing. Fund
shall advise IFTC in writing of all applicable record retention
requirements, other than those set forth in the 1940 Act.
C. IFTC shall make available to Fund for inspection or reproduction
within a reasonable time, upon demand, all accounts and records of
Fund maintained and preserved by IFTC.
D. IFTC shall be entitled to rely conclusively on the completeness and
correctness of any and all accounts and records turned over to it by
Fund.
E. IFTC shall assist Fund's independent accountants, or upon approval of
Fund or upon demand, any regulatory body, in any requested review of
Fund's accounts and records maintained by IFTC but shall be reimbursed
by Fund for all expenses and employee time invested in any such review
outside of routine and normal periodic reviews.
F. Upon receipt from Fund of any necessary information or instructions,
IFTC shall provide information from the books and records it maintains
for Fund that Fund needs for tax returns, questionnaires, or periodic
reports to shareholders and such other reports and information
requests as Fund and IFTC shall agree upon from time to time.
G. IFTC shall act as recordkeeper for additional series or portfolios of
Fund upon 30 days notice, provided IFTC consents to such arrangement.
Rates or charges for each additional series or portfolio shall be as
agreed upon by IFTC and Fund in writing.
H. IFTC shall not have any responsibility hereunder to Fund, Fund's
shareowners or any other person or entity for moneys or securities of
Fund, whether held by Fund or custodians of Fund.
Page 4
<PAGE>
6. INDEMNIFICATION. IFTC shall not be responsible or liable for, and Fund
shall indemnify and hold IFTC harmless from and against, any and all costs,
expenses, losses, damages, charges, counsel fees, payments and liabilities,
which may be asserted against or incurred by IFTC or for which it may be
liable, arising out of or attributable to:
A. IFTC's action or omission to act pursuant hereto, except for any loss
or damage arising from any negligent act or willful misconduct of
IFTC; provided however, that IFTC shall not be liable for
consequential, special, or punitive damages in any event.
B. IFTC's payment of money as requested by Fund, or the taking of any
action which might make IFTC liable for payment of money; provided,
however, that IFTC shall not be obligated to expend its own moneys or
to take any such action except in IFTC's sole discretion.
C. IFTC's action or omission to act hereunder upon any instructions,
advice, notice, request, consent, certificate or other instrument or
paper appearing to it to be genuine and to have been properly
executed.
D. IFTC's action or omission to act in good faith reliance on the advice
or opinion of counsel for Fund or its own counsel, which advice or
opinion may be obtained by IFTC at the expense of Fund, or on the
instructions, advice and statements of Fund, Fund's accountants and
officers or other authorized individuals, and others believed by it in
good faith to be expert in matters upon which they are consulted.
E. The purchase or sale of any securities or foreign currency positions.
Without limiting the generality of the foregoing, IFTC shall be under
no duty or obligation to inquire into:
(1) The validity of the issue of any securities purchased by or for
Fund, or the legality of the purchase thereof, or the propriety
of the purchase price;
(2) The legality of the sale of any securities by or for Fund, or the
propriety of the sale price;
(3) The legality of the issue, sale or purchase of any shares of
Fund, or the sufficiency of the purchase or sale price; or
(4) The legality of the declaration of any dividend by Fund, or the
legality of the issue of any shares of Fund in payment of any
stock dividend.
F. Any error, omission, inaccuracy or other deficiency in Fund's accounts
and records or other information provided by or on behalf of Fund to
IFTC, or the failure of Fund to provide, or provide in a timely
manner, any accounts, records, or information needed by IFTC to
perform its functions hereunder.
Page 5
<PAGE>
G. The Fund's refusal or failure to comply with the terms of this
Agreement (including without limitation the Fund's failure to pay or
reimburse IFTC under this indemnification provision), the Fund's
negligence or willful misconduct, or the failure of any representation
or warranty of the Fund hereunder to be and remain true and correct in
all respects at all times.
H. The use or misuse, whether authorized or unauthorized, of the
Portfolio Accounting System or other computerized recordkeeping and
reporting system to which IFTC provides Fund direct access hereunder
or of any other electronic system of communication used hereunder by
Fund or by any person who acquires access to such system(s) through
the terminal device, passwords, access instructions or other means of
access to such system(s) which are utilized by, assigned to or
otherwise made available to the Fund, except to the extent
attributable to any negligence or willful misconduct by IFTC.
7. FORCE MAJEURE. IFTC shall not be responsible or liable for its failure or
delay in performance of its obligations under this Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its reasonable
control, including, without limitation: any interruption, loss or
malfunction of any utility, transportation, computer (hardware or software)
or communication service; inability to obtain labor, material, equipment or
transportation, or a delay in mails; governmental or exchange action,
statute, ordinance, rulings, regulations or direction; war, strike, riot,
emergency, civil disturbance, terrorism, vandalism, explosions, labor
disputes, freezes, floods, fires, tornados, acts of God or public enemy,
revolutions, or insurrection.
8. PROCEDURES. IFTC and Fund may from time to time adopt procedures as they
agree upon, and IFTC may conclusively assume that any procedure approved or
directed by Fund or its accountants or other advisors does not conflict
with or violate any requirements of Fund's prospectus, charter or
declaration of trust, bylaws, any applicable law, rule or regulation, or
any order, decree or agreement by which the Fund may be bound.
9. TERM AND TERMINATION. The initial term of this Agreement shall be a period
of one year commencing on the effective date hereof. This Agreement shall
continue thereafter until terminated by either party by notice in writing
received by the other party not less than ninety (90) days prior to the
date upon which such termination shall take effect. Upon termination of
this Agreement:
A. Fund shall pay to IFTC its fees and compensation due hereunder and its
reimbursable disbursements, costs and expenses paid or incurred to
such date.
B. Fund shall designate a successor (which may be Fund) by notice in
writing to IFTC on or before the termination date.
C. IFTC shall deliver to the successor, or if none has been designated,
to Fund, at IFTC's office, all records, funds and other properties of
Fund deposited with or held by IFTC hereunder. In the event that
neither a successor nor Fund takes delivery of all records, funds and
other properties of Fund by the termination date, IFTC's sole
obligation with respect thereto from the termination date until
Page 6
<PAGE>
delivery to a successor or Fund shall be to exercise reasonable care
to hold the same in custody in its form and condition as of the
termination date, and IFTC shall be entitled to reasonable
compensation therefor, including but not limited to all of its out-of-
pocket costs and expenses incurred in connection therewith.
10. NOTICES. Notices, requests, instructions and other writings addressed to
Fund at 121 S.W. Morrison Street, Suite 1425, Portland, Oregon 97204 or at
such address as Fund may have designated to IFTC in writing, shall be
deemed to have been properly given to Fund hereunder; and notices,
requests, instructions and other writings addressed to IFTC at its offices
at 127 West 10th Street, Kansas City, MO 64105, Attn: Allen Strain, or to
such other address as it may have designated to Fund in writing, shall be
deemed to have been properly given to IFTC hereunder.
11. MISCELLANEOUS.
A. This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of
the State of Missouri, without reference to the choice of laws
principles thereof.
B. All terms and provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.
C. The representations and warranties, the indemnification extended
hereunder, and the provisions of Section 4.G. and 4.H. are intended to
and shall continue after and survive the expiration, termination or
cancellation of this Agreement.
D. No provisions of the Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed
by each party hereto.
E. The failure of either party to insist upon the performance of any
terms or conditions of this Agreement or to enforce any rights
resulting from any breach of any of the terms or conditions of this
Agreement, including the payment of damages, shall not be construed as
a continuing or permanent waiver of any such terms, conditions, rights
or privileges, but the same shall continue and remain in full force
and effect as if no such forbearance or waiver had occurred. No
waiver, release or discharge of any party's rights hereunder shall be
effective unless
F. The captions in this Agreement are included for convenience of
reference only, and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect.
G. This Agreement may be executed in two or more separate counterparts,
each of which shall be deemed an original but all of which together
shall constitute one and the same instrument.
Page 7
<PAGE>
H. If any provision of this Agreement shall be determined to be invalid
or unenforceable, the remaining provisions of this Agreement shall not
be affected thereby, and every provision of this Agreement shall
remain in full force and effect and shall remain enforceable to the
fullest extent permitted by applicable law.
I. This Agreement may not be assigned by either party hereto without the
prior written consent of the other.
J. Neither the execution nor performance of this Agreement shall be
deemed to create a partnership or joint venture by and between Fund
and IFTC.
K. Except as specifically provided herein, this Agreement does not in any
way affect any other agreements entered into among the parties hereto
and any actions taken or omitted by any party hereunder shall not
affect any rights or obligations of any other party hereunder.
L. If Fund is a business trust, notice is hereby given that a copy of its
declaration of trust and all amendments thereto is on file with the
Secretary of State of the state of its organization; that this
Agreement has been executed on behalf of Fund by the undersigned duly
authorized representative of Fund in his/her capacity as such and not
individually; and that the obligations of this Agreement shall only be
binding upon the assets and property of Fund and shall not be binding
upon any trustee, officer or shareholder of Fund individually.
M. Each Fund shall be regarded for all purposes hereunder as a separate
party apart from each other Fund. Unless the context otherwise
requires, with respect to every transaction covered by this Agreement,
every reference herein to a Fund shall be deemed to relate solely to
the particular Fund to which such transaction relates. Under no
circumstances shall the rights, obligations or remedies with respect
to a particular Fund constitute a right, obligation or remedy
applicable to any other Fund. The use of this single document to
memorialize the separate agreement of each Fund is understood to be
for clerical convenience only and shall not constitute any basis for
joining the Funds for any reason.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective and duly authorized officers, to be effective as of the day
and year first above written.
INVESTORS FIDUCIARY TRUST COMPANY
By:
----------------------------------------------
Title:
-------------------------------------------
Page 8
<PAGE>
EACH REGISTERED INVESTMENT COMPANY LISTED ON
EXHIBIT A HERETO
By:
----------------------------------------------
Title:
-------------------------------------------
Page 9
<PAGE>
EXHIBIT A
FUNDS
The Crabbe Huson Special Fund, Inc.
The Crabbe Huson Real Estate Fund, Inc.
The Crabbe Huson Equity Fund, Inc.
The Crabbe Huson Asset Allocation Fund, Inc.
The Oregon Municipal Bond Fund, Inc.
The Crabbe Huson Income Fund, Inc.
The Crabbe Huson U.S. Government Income Fund, Inc.
The Crabbe Huson U.S. Government Money Market Fund, Inc.
Page 10
<PAGE>
EXHIBIT 99.9d
ADMINISTRATION AGREEMENT
Agreement dated as of August 1, 1995 by and between State Street Bank
and Trust Company, a Massachusetts trust company (the "Administrator"), and each
of the undersigned Crabbe Huson Funds (individually, a "Fund" and together, the
"Funds").
WHEREAS, each Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, each Fund desires to retain the Administrator to furnish
certain administrative services to the Fund, and the Administrator is willing to
furnish such services on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR
Each Fund hereby appoints the Administrator to act as administrator
with respect to the Fund for purposes of providing certain administrative
services for the period and on the terms set forth in this Agreement. The
Administrator accepts such appointment and agrees to render the services stated
herein.
2. DELIVERY OF DOCUMENTS
Each Fund will promptly deliver to the Administrator copies of each of
the following documents and all future amendments and supplements, if any:
a. The Fund's charter document and by-laws;
b. The Fund's currently effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act") and the 1940
Act and the Fund's Prospectus and Statement of Additional
Information and all amendments and supplements thereto as
presently in effect;
c. Certified copies of the resolutions of the Board of Directors of
the Fund (the "Board") authorizing (1) this Agreement and
(2) certain individuals on behalf of the Fund to (a) give
instructions to the Administrator pursuant to this Agreement and
(b) sign checks and pay expenses;
d. A copy of the investment advisory agreement between the Fund and
its investment adviser; and
e. Such other certificates, documents or opinions which the
Administrator may, in its reasonable discretion, deem necessary
or appropriate in the proper performance of its duties.
Page 1
<PAGE>
3. REPRESENTATIONS AND WARRANTIES OF THE ADMINISTRATOR
The Administrator represents and warrants to the Funds that:
a. It is a Massachusetts trust company, duly organized, existing and
in good standing under the laws of The Commonwealth of
Massachusetts;
b. It has the corporate power and authority to carry on its business
in The Commonwealth of Massachusetts;
c. All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted or
threatened which would impair the Administrator's ability to
perform its duties and obligations under this Agreement; and
e. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Administrator or any law or regulation
applicable to it.
4. REPRESENTATIONS AND WARRANTIES OF THE FUNDS
Each Fund represents and warrants to the Administrator that:
a. It is a corporation, duly organized and existing and in good
standing under the laws of Oregon;
b. It has the corporate power and authority under applicable laws
and by its charter document and by-laws to enter into and perform
this Agreement;
c. All requisite proceedings have been taken to authorize it to
enter into and perform this Agreement;
d. It is an investment company properly registered under the 1940
Act;
e. A registration statement under the 1933 Act and the 1940 Act has
been filed and will be effective and remain effective during the
term of this Agreement. The Fund also warrants to the
Administrator that as of the effective date of this Agreement,
all necessary filings under the securities laws of the states in
which the Fund offers or sells its shares have been made;
f. No legal or administrative proceedings have been instituted or
threatened which would impair the Fund's ability to perform its
duties and obligation under this Agreement;
Page 2
<PAGE>
g. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Fund or any law or regulation applicable to it;
and
h. As of the close of business on the date of this Agreement, the
Fund is authorized to issue shares of capital stock, and it will
initially offer shares in the authorized amounts as set forth in
Schedule A to this Agreement.
5. ADMINISTRATION SERVICES
The Administrator shall provide the following services, in each case,
subject to the control, supervision and direction of each Fund and the review
and comment by each Fund's auditors and legal counsel and in accordance with
procedures which may be established from time to time between each Fund and the
Administrator:
a. Oversee the determination and publication of each Fund's net
asset value in accordance with the Fund's policy as adopted from
time to time by the Board;
b. Oversee the maintenance by each Fund's custodian of certain books
and records of the Fund as required under Rule 31a-1(b) of the
1940 Act;
c. Prepare each Fund's federal, state and local income tax returns
for review by the Fund's independent accountants and filing by
the Fund's treasurer;
d. Review expense calculation and perform expense allocation subject
to approval by officers of each Fund and arrange for payment of
the Fund's expenses;
e. Prepare for review and approval by officers of each Fund
financial information for the Fund's semi-annual and annual
reports, proxy statements and other communications required or
otherwise to be sent to Fund shareholders, and arrange for the
printing and dissemination of such reports and communications to
shareholders;
f. Prepare for review by an officer of and legal counsel for each
Fund, the Fund's periodic financial reports required to be filed
with the Securities and Exchange Commission ("SEC") on Form N-SAR
and financial information (in a camera ready format) required by
Form N-1A and such other reports, forms or filings as may be
mutually agreed upon;
g. Prepare reports relating to the business and affairs of each Fund
as may be mutually agreed upon and not otherwise prepared by the
Fund's investment adviser, custodian, legal counsel or
independent accountants;
h. Make such reports and recommendations to the Board concerning the
performance of the independent accountants as the Board may
reasonably request;
Page 3
<PAGE>
i. Make such reports and recommendations to the Board concerning the
performance and fees of each Fund's custodian and transfer and
dividend disbursing agent ("Transfer Agent") as the Board may
reasonably request or deems appropriate;
j. Oversee and review calculations of fees paid to each Fund's
investment adviser, the custodian and the Transfer Agent;
k. Consult with each Fund's officers, independent accountants, legal
counsel, custodian and Transfer Agent in establishing the
accounting policies of the Fund;
l. Review implementation of any dividend reinvestment programs
authorized by the Board;
m. Respond to or refer to each Fund's officers or Transfer Agent,
shareholder inquiries relating to the Fund;
n. Provide periodic testing of portfolios to assist each Fund's
investment adviser in complying with Internal Revenue Code
mandatory qualification requirements, the requirements of the
1940 Act and Fund prospectus limitations as may be mutually
agreed upon;
o. Prepare Rule 24f-2 notices;
p. Prepare and file all state registrations of each Fund's
securities pursuant to the specific instructions of the Fund and
as detailed in Schedule C to this Agreement;
q. Monitor the amount of Fund shares sold in each jurisdiction in
which such shares are registered and notify the Fund when a
specified percentage of such shares (as determined by the Fund's
distributor) has been sold; and
r. Assist the Fund in determining the amount of Fund shares to
register in each jurisdiction.
The Administrator will also provide the office facilities and the personnel
required by it to perform the services contemplated herein.
6. FEES; EXPENSES; EXPENSE REIMBURSEMENT
The Administrator shall receive from each Fund such compensation for
the Administrator's services provided pursuant to this Agreement as may be
agreed to from time to time in a written fee schedule approved by the parties
and initially set forth in Schedule B to this Agreement. The fees are accrued
daily and billed monthly and shall be due and payable upon receipt of the
invoice. Upon the termination of this Agreement before the end of any month,
the fee for the part of the month before such termination shall be prorated
according to the proportion which such part bears to the full monthly period and
shall be payable upon the date of termination
Page 4
<PAGE>
of this Agreement. In addition, each Fund shall reimburse the Administrator for
its out-of-pocket costs incurred in connection with this Agreement as initially
set forth in Schedule B.
Each Fund agrees to promptly reimburse the Administrator for any
equipment and supplies specially ordered by or for the Fund through the
Administrator and for any other expenses not contemplated by this Agreement that
the Administrator may incur on the Fund's behalf at the Fund's request or with
the Fund's consent.
Each Fund will bear all expenses that are incurred in its operation
and not specifically assumed by the Administrator. Expenses to be borne by a
Fund, include, but are not limited to: organizational expenses; cost of
services of independent accountants and outside legal and tax counsel (including
such counsel's review of the Fund's registration statement, proxy materials,
federal and state tax qualification as a regulated investment company and other
reports and materials prepared by the Administrator under this Agreement); cost
of any services contracted for by the Fund directly from parties other than the
Administrator; cost of trading operations and brokerage fees, commissions and
transfer taxes in connection with the purchase and sale of securities for the
Fund; investment advisory fees; taxes, insurance premiums and other fees and
expenses applicable to its operation; costs incidental to any meetings of
shareholders including, but not limited to, legal and accounting fees, proxy
filing fees and the costs of preparation, printing and mailing of any proxy
materials; costs incidental to Board meetings, including fees and expenses of
Board members; the salary and expenses of any officer, director or employee of
the Fund; costs incidental to the preparation, printing and distribution of the
Fund's registration statements and any amendments thereto and shareholder
reports; cost of typesetting and printing of prospectuses; cost of preparation
(other than the preparation specified in Section 5) and filing of the Fund's tax
returns, Form N-1A and Form N-SAR, and all notices, registrations and amendments
associated with applicable federal and state tax and securities laws; all
applicable registration fees and filing fees required under federal and state
securities laws; fidelity bond and directors' and officers' liability insurance;
and cost of independent pricing services used in computing each Fund's net asset
value.
The Administrator is authorized to and may employ or associate with
such person or persons as the Administrator may deem desirable to assist it in
performing its duties under this Agreement; provided, however, that the
compensation of such person or persons shall be paid by the Administrator and
that the Administrator shall be as fully responsible to a Fund for the acts and
omissions of any such person or persons as it is for its own acts and omissions.
7. INSTRUCTIONS AND ADVICE
At any time the Administrator may apply to any officer of a Fund for
instructions and may consult with its own legal counsel or outside counsel for
the Fund or the independent accountants for the Fund at the expense of the Fund,
with respect to any matter arising in connection with the services to be
performed by the Administrator under this Agreement. The Administrator shall
advise the Fund of any such consultation with legal counsel. The Administrator
shall not be liable and shall be indemnified by each Fund for any action taken
or omitted by it in good faith in reliance upon any such instructions or advice
or upon any paper or document believed by it to be genuine and to have been
signed by the proper person or persons. The Administrator shall not be held to
have notice of any change of authority of any person until receipt of written
notice thereof from the Fund. Nothing in this paragraph shall be construed as
imposing upon the
Page 5
<PAGE>
Administrator any obligation to seek such instructions or advice, or to act in
accordance with such advice when received.
8. LIMITATION OF LIABILITY AND INDEMNIFICATION
The Administrator shall be responsible for the performance of only
such duties as are set forth in this Agreement and except as otherwise provided
under Section 6, shall have no responsibility for the actions or activities of
any other party, including other service providers. The Administrator shall
have no liability for any error of judgement or mistake of law or for any loss
or damage resulting from the performance or nonperformance of its duties
hereunder unless solely caused by or resulting from the negligence or willful
misconduct of the Administrator, its officers or employees. The Administrator
shall not be liable for any consequential damages of any kind whatsoever
(including, without limitation, attorney's fees) under any provision of this
Agreement or for any such damages arising out of any act or failure to act
hereunder. In any event, the Administrator's liability under this Agreement
shall be limited to an amount equal to its total annual compensation earned and
fees paid hereunder during the preceding twelve months multiplied by two and
one-half (2.5) for any liability or loss suffered by a Fund including, but not
limited to, any liability relating to qualification of the Fund as a regulated
investment company or any liability relating to the Fund's compliance with any
federal or state tax or securities statute, regulation or ruling.
The Administrator shall not be responsible or liable for any failure
or delay in performance of its obligations under this Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its control,
including without limitation, work stoppage, power or other mechanical failure,
computer virus, natural disaster, governmental action or communication
disruption.
Each Fund shall indemnify and hold the Administrator harmless from all
loss, cost, damage and expense, including reasonable fees and expenses for
counsel, incurred by the Administrator resulting from any claim, demand, action
or suit in connection with the Administrator's acceptance of this Agreement, any
action or omission by it in the performance of its duties hereunder, or as a
result of acting upon any instructions reasonably believed by it to have been
duly authorized by the Fund, provided that this indemnification shall not apply
to actions or omissions of the Administrator, its officers or employees in cases
of its or their own negligence or willful misconduct.
Each Fund will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any liability subject to the indemnification provided above. In the
event a Fund elects to assume the defense of any such suit and retain counsel,
the Administrator or any of its affiliated persons, named as defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) the Fund shall have specifically
authorized the retaining of such counsel or (ii) the Administrator shall have
determined in good faith that the retention of such counsel is required as a
result of a conflict of interest.
The indemnification contained herein shall survive the termination of
this Agreement.
Page 6
<PAGE>
9. CONFIDENTIALITY
The Administrator agrees that, except as otherwise required by law or
in connection with any required disclosure to a banking or other regulatory
authority, it will keep confidential all records and information in its
possession relating to a Fund or its shareholders or shareholder accounts and
will not disclose the same to any person except at the request or with the
written consent of the Fund.
10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS
Each Fund assumes full responsibility for complying with all
securities, tax, commodities and other laws, rules and regulations applicable to
it; provided, however, that the foregoing does not limit the Administrator's
responsibility to the Fund for the performance of its duties under this
Agreement as determined in accordance with Section 8 of this Agreement.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Administrator agrees that all records which it maintains for each Fund shall
at all times remain the property of the Fund, shall be readily accessible during
normal business hours, and shall be promptly surrendered upon the termination of
the Agreement or otherwise on written request. The Administrator further agrees
that all records which it maintains for each Fund pursuant to Rule 31a-1 under
the 1940 Act will be preserved for the periods prescribed by Rule 31a-2 under
the 1940 Act unless any such records are earlier surrendered as provided above.
Records shall be surrendered in usable machine-readable form.
11. SERVICES NOT EXCLUSIVE
The services of the Administrator to the Funds are not to be deemed
exclusive, and the Administrator shall be free to render similar services to
others. The Administrator shall be deemed to be an independent contractor and
shall, unless otherwise expressly provided herein or authorized by a Fund from
time to time, have no authority to act or represent the Funds in any way or
otherwise be deemed an agent of the Funds.
12. TERM, TERMINATION AND AMENDMENT
This Agreement shall become effective on August 1, 1995. The
Agreement shall remain in effect for a period of two years from the effective
date, and shall automatically continue in effect thereafter with respect to each
Fund unless terminated in writing by either party at the end of such period or
thereafter on sixty (60) days' prior written notice. Termination of this
Agreement with respect to any given Investment Fund shall in no way affect the
continued validity of this Agreement with respect to any other Investment Fund.
Upon termination of this Agreement, a Fund shall pay to the Administrator such
compensation and any reimbursable expenses as may be due under the terms hereof
as of the date of such termination, including reasonable out-of-pocket expenses
associated with such termination. This Agreement may be modified or amended
from time to time by mutual written agreement of the parties hereto.
Page 7
<PAGE>
13. NOTICES
Any notice or other communication authorized or required by this
Agreement to be given to either party shall be in writing and deemed to have
been given when delivered in person or by confirmed facsimile, or posted by
certified mail, return receipt requested, to the following address (or such
other address as a party may specify by written notice to the other): if to the
Funds: The Crabbe Huson Group, Inc., One Financial Center, 121 S.W. Morrison,
Suite 1425, Portland, OR 97204, Attn: Cheryl A. Burgermeister, fax: 503-295-
2939; if to the Administrator: State Street Bank and Trust Company, 1776
Heritage Drive, North Quincy, Massachusetts 02171, Attn: David M. Elwood, Vice
President and Senior Counsel, fax: (617)985-2497.
14. NON-ASSIGNABILITY
This Agreement shall not be assigned by any of the parties hereto
without the prior consent in writing of the other party, except that (i) the
Administrator may assign this Agreement to a successor of all or a substantial
portion of its business, or to a party controlling, controlled by or under
common control with the Administrator and (ii) upon the restructuring of the
Funds as series of a series trust, the Funds may assign this Agreement to such
trust.
15. SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit of
each Fund and the Administrator and their respective successors and permitted
assigns.
16. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties
hereto with respect to the subject matter hereof and supersedes all previous
representations, warranties or commitments regarding the services to be
performed hereunder whether oral or in writing.
17. WAIVER
The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver nor shall it
deprive such party of the right thereafter to insist upon strict adherence to
that term or any term of this Agreement. Any waiver must be in writing signed
by the waiving party.
18. SEVERABILITY
If any provision of this Agreement is invalid or unenforceable, the
balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance it shall nevertheless remain
applicable to all other persons and circumstances.
19. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
Page 8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers designated below as of the date first written above.
THE OREGON MUNICIPAL BOND FUND, INC.
THE CRABBE HUSON SPECIAL FUND, INC.
THE CRABBE HUSON ASSET ALLOCATION FUND, INC.
THE CRABBE HUSON EQUITY FUND, INC.
THE CRABBE HUSON INCOME FUND, INC.
THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC.
THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC.
THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC.
By:
------------------------------------------------------------
Name:
----------------------------------------------------------
Title:
---------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
By:
------------------------------------------------------------
Name:
----------------------------------------------------------
Title:
---------------------------------------------------------
Page 9
<PAGE>
ADMINISTRATION AGREEMENT
Crabbe Huson Funds
SCHEDULE A
LISTING OF FUNDS AND AUTHORIZED SHARES
Fund Authorized Shares
The Oregon Municipal Bond Fund, Inc.
The Crabbe Huson Special Fund, Inc.
The Crabbe Huson Asset Allocation Fund, Inc.
The Crabbe Huson Equity Fund, Inc.
The Crabbe Huson Income Fund, Inc.
The Crabbe Huson U.S. Government Income Fund, Inc.
The Crabbe Huson U.S. Government Money Market Fund, Inc.
The Crabbe Huson Real Estate Investment Fund, Inc.
Page 10
<PAGE>
SCHEDULE B
STATE STREET BANK AND TRUST COMPANY
CRABBE HUSON FAMILY OF MUTUAL FUNDS
FUND ADMINISTRATION FEE SCHEDULE
I. FUND SUB-ADMINISTRATION SERVICES
Annual Fee
Average Assets for Family Expressed in Basis Points
------------------------- -------------------------
First $500 Million 6
Next $500 Million 3
Thereafter 1
II. OUT-OF-POCKET EXPENSES - INCLUDE, BUT MAY NOT BE LIMITED TO:
- Extraordinary legal fees, audit fees and other professional fees
- Telephone and Blue Sky filing postage
- Travel and lodging for Board and Operations meetings
- Preparation of financial statements other than Annual, Semi-annual and
quarterly board reporting $3,000 per financial report
III. SPECIAL ARRANGEMENTS
Fee for activities of non-recurring nature such as fund consolidations or
reorganizations, and/or preparation of special reports will be subject to
negotiation.
IV. TERM OF THE CONTRACT
The parties agree that the fee schedule shall remain in effect for two full
years from the commencement of services and from year to year thereafter
until it is revised as a result of negotiations initiated by either party.
CRABBE HUSON FAMILY OF MUTUAL FUNDS STATE STREET BANK AND TRUST COMPANY
By: By:
--------------------------- -----------------------------------
Title: Title:
------------------------ --------------------------------
Date: Date:
------------------------ ---------------------------------
Page 11
<PAGE>
ADMINISTRATION AGREEMENT
Crabbe Huson Funds
SCHEDULE C
REGISTRATION OF FUND SHARES
WITH STATE SECURITIES ADMINISTRATORS
AT THE SPECIFIC DIRECTION OF EACH FUND, THE ADMINISTRATOR WILL PREPARE REQUIRED
DOCUMENTATION AND REGISTER FUND SHARES IN ACCORDANCE WITH THE SECURITIES LAWS OF
EACH JURISDICTION IN WHICH FUND SHARES ARE TO BE OFFERED OR SOLD PURSUANT TO
INSTRUCTIONS GIVEN TO THE ADMINISTRATOR BY THE FUND.
EACH FUND SHALL BE SOLELY RESPONSIBLE FOR THE DETERMINATION (I) OF THOSE
JURISDICTIONS IN WHICH FUND SHARES ARE TO BE REGISTERED AND (II) THE NUMBER OF
FUND SHARES TO BE REGISTERED IN EACH SUCH JURISDICTION. IN THE EVENT THAT THE
ADMINISTRATOR BECOMES AWARE OF (A) THE SALE OF FUND SHARES IN A JURISDICTION IN
WHICH FUND SHARES ARE NOT REGISTERED FOR OFFER AND SALE OR (B) THE SALE OF FUND
SHARES IN EXCESS OF THE NUMBER OF FUND SHARES REGISTERED IN SUCH JURISDICTION,
THE ADMINISTRATOR SHALL REPORT SUCH INFORMATION TO THE FUND, AND IT SHALL BE THE
FUND'S RESPONSIBILITY TO DETERMINE APPROPRIATE CORRECTIVE ACTION AND INSTRUCT
THE ADMINISTRATOR WITH RESPECT THERETO.
The registration services shall consist of the following:
1. Filing of Fund's Application to Register Securities and amendments, if
applicable;
2. Filing of amendments to the Fund's registration statement;
3. Filing Fund sales reports and advertising literature where required;
4. Payment at the expense of the Fund of all Fund state registration and
filing fees;
5. Filing the Prospectuses and Statements of Additional Information and
any amendments or supplements thereto;
6. Filing of annual reports and proxy statements where required; and
7. The performance of such additional services as the Administrator and
the Fund may agree upon in writing.
Unless otherwise specified in writing by the Administrator, registration
services by the Administrator shall not include determining the availability of
exemptions under a jurisdiction's blue sky law. Any such determination shall be
made by each Fund or its legal counsel. In connection with the services
described herein, each Fund shall cause the Fund's distributor to issue in favor
of the Administrator a power of attorney to register Fund shares on behalf of
the Fund, which power of attorney shall be substantially in the form of
Exhibit I attached hereto.
Page 12
<PAGE>
EXHIBIT I
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of August 1, 1995 that the undersigned Crabbe
Huson Securities Inc., the distributor (the "Distributor") with respect to The
Oregon Municipal Bond Fund, Inc., The Crabbe Huson Special Fund, Inc., The
Crabbe Huson Asset Allocation Fund, Inc., The Crabbe Huson Equity Fund, Inc.,
The Crabbe Huson Income Fund, Inc., The Crabbe Huson U.S. Government Income
Fund, Inc., The Crabbe Huson U.S. Government Money Market Fund, Inc., The Crabbe
Huson Real Estate Investment Fund, Inc,. (individually, the "Fund") with
principal offices at One Financial Center, 121 S.W. Morrison, Suite 1425,
Portland, OR 97204, makes, constitutes, and appoints STATE STREET BANK AND TRUST
COMPANY (the "Administrator") with principal offices at 225 Franklin Street,
Boston, Massachusetts its lawful attorney-in-fact for it to do as if it were
itself acting, the following:
1. REGISTRATION OF FUND SHARES. The power to register shares of the Fund in
each jurisdiction in which Fund shares are offered or sold and in
connection therewith the power to prepare, execute, and deliver and file
any and all Fund applications, including without limitation, applications
to register shares, consents, including consents to service of process,
reports, including without limitation, all periodic reports, claims for
exemption, or other documents and instruments now or hereafter required or
appropriate in the judgement of the Administrator in connection with the
registration of Fund shares.
2. AUTHORIZED SIGNERS. Pursuant to this Limited Power of Attorney,
individuals holding the titles of Officer, Blue Sky Manager, or Senior Blue
Sky Administrator at the Administrator shall have authority to act on
behalf of the Distributor with respect to item 1 above.
The execution of this limited power of attorney shall be deemed coupled
with an interest and shall be revocable only upon receipt by the
Administrator of such termination of authority. Nothing herein shall be
construed to constitute the appointment of the Administrator as or
otherwise authorize the Administrator to act as an officer, director or
employee of the Distributor or the Fund.
IN WITNESS WHEREOF, the Distributor has caused this Agreement to be executed in
its name and on its behalf by and through its duly authorized officer, as of the
date first written above.
CRABBE HUSON SECURITIES INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Page 13
<PAGE>
EXHIBIT 99-11
KPMG Peat Marwick LLP
Suite 2000
1211 Southwest Fifth Avenue
Portland, OR 97204
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Shareholders
The Crabbe Huson Income Fund, Inc.:
We consent to the inclusion in The Crabbe Huson Income Fund, Inc. Post-Effective
Amendment No. 8 to the Registration Statement No. 33-25048 on Form N-1A under
the Securities Act of 1933 and Amendment No. 11 to the Registration Statement
No. 811-5836 on Form N-1A under the Investment Company Act of 1940 of our report
dated December 8, 1995, on the financial statements and financial highlights of
The Crabbe Huson Income Fund, Inc. for the periods presented indicated therein,
which report has been included in the Statement of Additional Information of The
Crabbe Huson Income Fund, Inc.
We also consent to the reference to our firm under the heading "Financial
Highlights" in the Prospectus and under the heading "Auditors" in the Statement
of Additional Information.
KPMG PEAT MARWICK LLP
Portland, Oregon
December 29, 1995
<PAGE>
EXHIBIT 99-15
AMENDED
DISTRIBUTION PLAN
OF THE CRABBE HUSON FAMILY OF MUTUAL FUNDS
1. This Plan is adopted pursuant to Rule 12b-1 of the Investment Company
Act of 1940 (the "1940 Act"), and was amended effective November 28, 1995. In
the event of any conflict between the terms of this plan and the requirements of
Rule 12b-1, as those requirements may be amended or altered from time to time,
the requirements of Rule 12b-1 shall govern. All payments made by the funds
adopting this Plan (each, a "Fund") in connection with financing the
distribution of the Fund's shares shall be made only pursuant to this plan and
the Distribution Agreement between the Distributor and the Fund.
2. This plan must be approved by a vote of the Board of Directors of the
Fund, including majority approval of members of the Board who are not interested
persons of the Fund and who have no indirect or direct interest in the operation
of the plan or in the agreements related to the plan, cast in person at a
meeting called for the purpose of voting on this plan. This plan must further
be approved by a majority of the Fund's outstanding shares before it becomes
effective.
3. This plan shall continue in effect indefinitely as long as it is
approved on each anniversary date of the plan by a vote of the Directors of the
Fund who are not interested persons of the Fund and who have no direct or
indirect interest in the operation of the plan or the agreements related to the
plan, cast in person at a meeting called for the purpose of voting on this plan.
4. The President of the Fund is authorized to direct disposition of
moneys paid or payable by the Fund pursuant to this plan and pursuant to the
Distribution Agreement. The President shall provide to the Fund's Board of
Directors and the Directors will review, at least quarterly, a written report of
the amounts so expended and the purposes for which the expenditures were made.
5. This plan may be terminated at any time by a vote of a majority of the
members of the Board of Directors of the Fund who are not interested persons of
the Fund and who have no direct or indirect financial interest in the operation
of the plan or in any agreements related to the plan, or by a vote of a majority
of the outstanding securities of the Fund, without penalty to the Fund.
6. This plan may not be amended materially, except on a vote of the
Directors of the Fund who are not interested persons of the Funds and have no
direct or indirect interest in the operation of the plan or in the agreements
related to the plan, cast in person
Page 1
<PAGE>
at a meeting called for the purpose of voting on the plan amendments. This plan
may not be amended to increase materially the amount to be spent for
distribution without the approval of a majority of the outstanding voting
securities of the Fund.
7. Notwithstanding anything in the bylaws of the Fund to the contrary, as
long as this plan is in effect the selection of the Fund's disinterested
directors shall be committed to the complete discretion of the disinterested
directors holding office at the time of selection.
8. The Fund may pay up to 1/12 of .25% of the Fund's average daily net
assets on a monthly basis to the Distributor, broker dealers, investment
advisors or other persons or entities that promote the sale of Fund shares to
reimburse them for their actual expenses incurred in the distribution and
promotion of the Fund's shares, to the extent permitted by Rule 12b-1. All or
any part of the reimbursement may be waived by the Distributor in the
Distribution Agreement.
9. Expenses that are reimbursable under this plan include but are not
limited to compensation paid to registered representatives of the Distributor
and to broker/dealers which have entered into sales agreements with the
Distributor; compensation to investment advisors or other persons or entities
that promote the sale of Fund shares; expenses incurred in the printing of
prospectuses, statements of additional information and reports used for sales
purposes; expenses of preparation and printing of sales letters; advertisement,
promotion, marketing and sales expenses; and other distribution-related
expenses.
Page 2
