SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 _X__
File No. 2-94608:
Pre-Effective Amendment No.____ ____
Post-Effective Amendment No._24_ _X__
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 _X__
File No. 811-4165:
Amendment No._26_
BENHAM TARGET MATURITIES TRUST
(Exact Name of Registrant as Specified in Charter)
1665 Charleston Road, Mountain View, CA 94043
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 415-965-8300
Douglas A. Paul
1665 Charleston Road, Mountain View, CA 94043
(Name and Address of Agent for Service)
Approximate Date of Initial Public Offering: 3/25/85
It is proposed that this filing will become effective:
_X__ immediately upon filing pursuant to paragraph (b) of Rule 485 ____
on (date), pursuant to paragraph (b) of Rule 485 ____ 60 days after
filing pursuant to paragraph (a) of Rule 485 ____ on (date) pursuant to
paragraph (a)(1) of Rule 485 ____ 75 days after filing pursuant to
paragraph (a)(2) of Rule 485 ____ on (date) pursuant to paragraph (a)
of Rule 485
Registrant continues its election to register an indefinite number of shares of
beneficial interest under the Securities Act of 1933 pursuant to Rule 24f-2
under the Investment Company Act of 1940. Registrant intends to file Rule 24f-2
Notice within 60 days after its fiscal year ending September 30, 1995.
<PAGE>
BENHAM TARGET MATURITIES TRUST
1933 Act Post-Effective Amendment No. 24
1940 Act Amendment No. 26
FORM N-1A
CROSS-REFERENCE SHEET
Part A: Prospectus
Item
Prospectus Caption
1 Cover Page
2 (a) Summary of Portfolio Expenses
(b), (c) Not Applicable
3 (a) Financial Highlights
(b) Not Applicable
(c), (d) Performance
4(a)(i) Cover Page, About the Trust
(a)(ii), (b) Investment Objectives, Investment Policies
(c) Investment Considerations
5(a) About the Trust
(b) - (f) The Benham Group, Advisory and Service Fees
(g) Not Applicable
5A Performance
6(a) About the Trust
(b) - (d) Not Applicable
(e) How to Invest
(f) Distributions
(g) Taxes
7(a) Distribution of Shares
(b) Share Price
(c) Not Applicable
(d) How to Buy Shares
(e), (f) Not Applicable
8(a) How to Redeem Your Investment, How to Redeem Shares
(b) Broker-Dealer Transactions
(c), (d) How to Redeem Your Investment
9 Not Applicable
<PAGE>
CROSS-REFERENCE SHEET
(continued)
Part B: Statement of Additional Information
Item Statement of Additional Information Caption
10 Cover Page
11 Table of Contents
12 Not Applicable
13(a) Investment Policies and Techniques
(b) Investment Restrictions
(c) Investment Policies and Techniques, Investment Restrictions
(d) Portfolio Transactions
14(a) - (b) Trustees and Officers
(c) Not Applicable
15(a) Not Applicable
(b) Additional Purchase and Redemption Information
(c) Trustees and Officers
16(a) Investment Advisory Services
(b) - (d) Investment Advisory Services, Administrative and Transfer
Agent Services, Expense Limitation Agreements
(e) - (g) Not Applicable
(h) About the Trust
(i) Administrative and Transfer Agent Services
17(a) Portfolio Transactions
(b) Not Applicable
(c) Portfolio Transactions
(d), (e) Not Applicable
18(a) About the Trust
(b) Not Applicable
19(a) Additional Purchase and Redemption Information
(b) Valuation of Portfolio Securities
(c) Not Applicable
20 Taxes
21(a) Additional Purchase and Redemption Information
(b), (c) Not Applicable
22 Performance
23 Financial Statements to be incorporated by subsequent
amendment.
<PAGE>
BENHAM TARGET
MATURITIES TRUST
1995 Portfolio * 2000 Portfolio
2005 Portfolio * 2010 Portfolio
2015 Portfolio * 2020 Portfolio
2025 Portfolio
Prospectus * November 29, 1995
[picture of bullseye
range]
[company logo] The Benham Group
Part of the Twentieth Century Family of Mutual Funds
<PAGE>
BENHAM TARGET MATURITIES TRUST
The Benham Group
1665 Charleston Rd.
Mountain View
California 94043
Fund
Information
1-800-331-8331
1-415-965-4274
Investor Services
1-800-321-8321
1-415-965-4222
TDD Service
1-800-624-6338
1-415-965-4764
Benham Group
Representatives
are available
by telephone weekdays from
5 a.m. to 5 p.m. Pacific Time.
BENHAM TARGET
MATURITIES TRUST
Prospectus o November 29, 1995
BENHAM TARGET MATURITIES TRUST is a no-load, open-end mutual fund that consists
of seven portfolios:
1995 Portfolio 2010 Portfolio 2020 Portfolio
2000 Portfolio 2015 Portfolio 2025 Portfolio
2005 Portfolio (anticipated available date of 2/15/96)
Each Portfolio seeks to provide the highest attainable investment return
consistent with the creditworthiness of U.S. Treasury securities and the
professional management of reinvestment and market risks. Each Portfolio invests
primarily in zero-coupon U.S. Treasury securities and will be liquidated shortly
after the conclusion of its target maturity year.
In all states, state tax-exempt interest income earned by the Portfolios is
passed through to the Portfolios' shareholders as state tax-free dividends. (See
page 31 for a discussion of the Portfolios' tax characteristics.)
Mutual Fund shares are not insured by the FDIC, the Federal Reserve Board, or
any other agency.
AS WITH ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
2
<PAGE>
Please read this Prospectus carefully and retain it for future reference. It is
designed to help you decide if the Portfolios' goals match your own. A Statement
of Additional Information (SAI) for the Trust (also dated November 29, 1995) has
been filed with the Securities and Exchange Commission (SEC) and is incorporated
herein by reference. For a free copy, call or write The Benham Group.
SUMMARY OF PORTFOLIO EXPENSES
The tables below illustrate the fees and expenses an investor in the Portfolios
would incur directly or indirectly. The figures shown for each Portfolio are
based on historical expenses, adjusted to reflect the expense limitation
agreement in effect as of November 29, 1995.
================================================================================
A. SHAREHOLDER TRANSACTION EXPENSES
For All Portfolios Described in This Prospectus
- --------------------------------------------------------------------------------
Sales load imposed on purchases................................... None
Sales load imposed on reinvested dividends........................ None
Deferred sales load............................................... None
Redemption fee.................................................... None
Exchange fee...................................................... None
================================================================================
B. ANNUAL PORTFOLIO OPERATING EXPENSES*
As a Percentage of Average Daily Net Assets
- --------------------------------------------------------------------------------
TOTAL
INVESTMENT PORTFOLIO
ADVISORY 12b-1 OTHER OPERATING
FEE FEE EXPENSES EXPENSES
1995 Portfolio .35 None .32 .67%
2000 Portfolio .35 None .28 .63%
2005 Portfolio .34 None .36 .70%
2010 Portfolio .26 None .44 .70%
2015 Portfolio .30 None .40 .70%
2020 Portfolio .22 None .48 .70%
*Benham Management Corporation (BMC) has agreed to limit each Portfolio's total
operating expenses to a specified percentage of each Portfolio's average daily
net assets. These expense limits are effective through May 31, 1996. The
agreement provides that BMC may recover amounts absorbed on behalf of the
Portfolio during the preceding 11 months if, and to the extent that, for any
given month, Portfolio expenses were less than the expense limit in effect at
that time. The expense limitation is subject to annual renewal in June. If the
expense limitations were not in effect, each Fund's Advisory fee, other expenses
would be as follows: 1995 Portfolio: .35%, .32% and .67%, 2000 Portfolio: .35%,
.28% and .63%, 2005 Portfolio: .35%, .36% and .71%, 2010 Portfolio: .35%, .45%
and .80%, 2015 Portfolio: .35%, .41% and .76%, 2020 Portfolio: .35%, .49% and
.84%.
3
<PAGE>
Each Portfolio pays BMC investment advisory fees equal to an annualized
percentage of Fund average daily net assets. Other expenses include
administrative and transfer agent fees paid to Benham Financial Services, Inc.
(BFS).
================================================================================
C. EXAMPLE OF EXPENSES
- --------------------------------------------------------------------------------
The following table illustrates the expenses a shareholder would pay on a $1,000
investment in each of the Portfolios over periods of one, three, five, and ten
years. These figures are based on the expenses shown in Table B-1 and assume (i)
a 5% annual return and (ii) full redemption at the end of each time period.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
1995 Portfolio $7 $21 $37 $83
2000 Portfolio 6 20 35 79
2005 Portfolio 7 22 39 87
2010 Portfolio 7 22 39 87
2015 Portfolio 7 22 39 87
2020 Portfolio 7 22 39 87
We include this table to help you understand the various costs and expenses that
you, as a shareholder, will bear either directly or indirectly. This example
should not be considered a representation of past or future expenses or
performance; actual expenses may be greater or less than those shown, and the
Fund may not realize the 5% hypothetical rate of return required by the SEC for
this example.
FINANCIAL HIGHLIGHTS - The information presented on the following pages has been
audited by KPMG Peat Marwick LLP, independent auditors. Their unqualified
reports on the financial statements and financial highlights are included in the
Fund's Annual Reports, which are incorporated by reference to the Fund's
Statement of Additional Information.
4
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================================
BENHAM TARGET MATURITIES TRUST: 1995 PORTFOLIO
Years ended September 30 (except as noted)+
- -------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989+ 1988 1987 1986
PER-SHARE DATA++
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $95.03 94.16 89.07 77.75 66.87 62.61 56.33 52.22 54.33 42.99
Income (Losses) From
Investment Operations
Net Investment Income 5.40 4.22 4.75 5.28 5.32 5.02 3.56 4.43 3.99 3.69
Net Realized and
Unrealized Gains
(Losses) on Investments .08 (3.35) .34 6.04 5.56 (.76) 2.72 (.32) (6.10) 7.65
------ ----- ------ ----- ----- ----- ----- ----- ----- -----
Total Income (Losses)
From Investment
Operations 5.48 .87 5.09 11.32 10.88 4.26 6.28 4.11 (2.11) 11.34
Less Distributions
Dividends from Net
Investment Income (4.08) (4.03) (4.65) (4.50) (2.98) (3.32) 0 (3.92) (8.99) (.83)
Distributions from Net
Realized Capital Gains 0 (3.76) (5.05) (1.51) 0 (.21) 0 0 (.49) (.83)
Distributions in
Excess of Net
Realized Capital Gains 0 (1.21) 0 0 0 0 0 0 0 0
------ ----- ------ ----- ----- ----- ----- ----- ----- -----
Total Distributions (4.08) (9.00) (9.70) (6.01) (2.98) (3.53) 0 (3.92) (9.48) (1.66)
Reverse Share Split 4.08 9.00 9.70 6.01 2.98 3.53 0 3.92 9.48 1.66
Net Asset Value
at End of Period $100.51 95.03 94.16 89.07 77.75 66.87 62.61 56.33 52.22 54.33
====== ===== ====== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN* 5.77% .93 5.70 14.56 16.27 6.80 11.15 7.87 (3.89) 26.38
- ------------
SUPPLEMENTAL DATA AND RATIOS
- ----------------------------
Net Assets at End of
Period (in thousands
of dollars) $63,568 83,372 86,697 94,535 92,391 58,350 39,169 15,603 7,019 5,104
Ratio of Expenses to
Average Daily Net Assets .67 .61 .59 .62 .65 .70 .70** .70 .70 .70
Ratio of Net Investment
Income to Average
Daily Net Assets 5.54% 4.47 5.22 6.39 7.35 7.74 7.95** 8.09 7.70 7.29
Portfolio
Turnover Rate 32.26% 177.33 133.80 139.84 109.73 120.73 95.42 108.49 86.19 89.11
- ---------
+ In 1989, the fiscal year-end for Benham Target Maturities Trust was changed
from December 31 to September 30.
++ Per-share data in this table are calculated using the average shares
outstanding during the year. Dividends and distributions shown in the table
will be different than the actual per-share distributions to shareholders.
* Total return figures assume reinvestment of dividends and capital gain
distributions and are not annualized.
** Annualized.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================================
BENHAM TARGET MATURITIES TRUST: 2000 PORTFOLIO
===========================================================================================================================
YEARS ENDED SEPTEMBER 30 (EXCEPT AS NOTED)+
1995 1994 1993 1992 1991 1990 1989+ 1988 1987 1986
PER-SHARE DATA++
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $66.93 72.40 62.16 52.67 43.11 42.79 37.16 33.33 35.44 26.77
Income (Losses) From
Investment Operations
Net Investment Income 4.37 3.99 3.94 3.90 3.69 3.40 2.36 2.94 2.68 2.40
Net Realized and
Unrealized Gains
(Losses) on Investments 5.56 (9.46) 6.30 5.59 5.87 (3.08) 3.27 .89 (4.79) 6.27
------ ----- ------ ----- ----- ----- ----- ----- ----- -----
Total Income (Losses)
From Investment
Operations 9.93 (5.47) 10.24 9.49 9.56 .32 5.63 3.83 (2.11) 8.67
Less Distributions
Dividends from Net
Investment Income (3.42) (3.25) (2.34) (2.22) (2.09) (2.35) 0 (2.23) (4.72) (.64)
Distributions from Net
Realized Capital Gains 0 (2.95) (1.83) (.16) 0 (.10) 0 0 0 (2.81)
Distributions in
Excess of Net
Realized Capital Gains 0 (1.20) 0 0 0 0 0 0 0 0
----- ----- ------ ----- ----- ----- ----- ----- ----- -----
Total Distributions (3.42) (7.40) (4.17) (2.38) (2.09) (2.45) 0 (2.23) (4.72) (3.45)
Reverse Share Split 3.42 7.40 4.17 2.38 2.09 2.45 0 2.23 4.72 3.45
Net Asset Value at
End of Period $76.86 66.93 72.40 62.16 52.67 43.11 42.79 37.16 33.33 35.44
===== ===== ====== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN* 14.84 (7.54) 16.46 18.02 22.18 .75 15.15 11.49 (5.95) 32.39
- ------------
SUPPLEMENTAL DATA AND RATIOS
- ----------------------------
Net Assets at End of
Period (in millions
of dollars) $294.7 243.9 291.4 190.1 89.7 53.2 34.8 14.1 6.3 5.1
Ratio of Expenses to
Average Daily
Net Assets .63% .59 .60 .66 .66 .70 .70** .70 .70 .70
Ratio of Net Investment
Income to Average
Daily Net Assets 6.13% 5.74 5.94 6.90 7.67 7.84 7.81** 8.33 8.08 7.34
Portfolio
Turnover Rate 52.64% 89.35 76.59 92.59 67.39 78.76 9.14 162.54 72.70 39.40
- ----------------------------
+ In 1989, the fiscal year-end for Benham Target Maturities Trust was changed
from December 31 to September 30.
++ Per-share data in this table are calculated using the average shares
outstanding during the year. Dividends and distributions shown in the table
will be different than the actual per-share distributions to shareholders.
* Total return figures assume reinvestment of dividends and capital gain
distributions and are not annualized.
** Annualized.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================================================
BENHAM TARGET MATURITIES TRUST: 2005 PORTFOLIO
Years ended September 30 (except as noted)+
- ---------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989+ 1988 1987 1986
PER-SHARE DATA++
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $45.22 51.84 41.18 35.13 27.74 28.61 24.36 21.28 23.74 16.69
Income (Losses) From
Investment Operations
Net Investment Income 3.33 3.11 2.90 2.69 2.47 2.27 1.54 1.90 1.77 1.59
Net Realized and
Unrealized Gains
(Losses) on Investments 8.06 (9.73) 7.76 3.36 4.92 (3.14) 2.71 1.18 (4.23) 5.46
------ ----- ------ ----- ----- ----- ----- ----- ----- -----
Total Income (Losses)
From Investment
Operations 11.39 (6.62) 10.66 6.05 7.39 (.87) 4.25 3.08 (2.46) 7.05
Less Distributions
Dividends from Net
Investment Income (2.41) (2.70) (2.51) (1.75) (.86) (1.60) 0 (1.53) (3.52) (.35)
Distributions from Net
Realized Capital Gains (.67) (8.47) (1.01) (.37) 0 (.07) 0 0 (.13) (2.18)
------ ----- ------ ----- ----- ----- ----- ----- ----- -----
Total Distributions (3.08) (11.17) (3.52) (2.12) (.86) (1.67) 0 (1.53) (3.65) (2.53)
Reverse Share Split 3.08 11.17 3.52 2.12 .86 1.67 0 1.53 3.65 2.53
Net Asset Value at
End of Period $56.61 45.22 51.84 41.18 35.13 27.74 28.61 24.36 21.28 23.74
====== ===== ====== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN* 25.16% (12.75) 25.89 17.22 26.64 (3.04) 17.45 14.48 (10.36) 42.24
- ------------
SUPPLEMENTAL DATA AND RATIOS
- ----------------------------
Net Assets at End of
Period (in millions
of dollars) $183.5 96.2 149.9 168.7 161.4 46.3 25.0 8.9 3.7 2.9
Ratio of Expenses to
Average Daily
Net Assets .71% .64 .62 .63 .70 .70 .70** .70 .70 .70
Ratio of Net
Investment Income
to Average Daily
Net Assets 6.58% 6.37 6.44 7.27 7.80 7.93 7.66** 8.44% 8.31 7.25
Portfolio
Turnover Rate 34.23% 68.11 49.89 64.38 85.38 186.02 71.98 27.25 68.11 50.47
- ----------------------------
+ In 1989, the fiscal year-end for Benham Target Maturities Trust was changed
from December 31 to September 30.
++Per-share data in this table are calculated using the average shares
outstanding during the year.
Dividends and distributions shown in the table will be different than the
actual per-share istributions to shareholders.
* Total return figures assume reinvestment of dividends and capital gain
distributions and are not annualized.
** Annualized.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================================================
BENHAM TARGET MATURITIES TRUST: 2010 PORTFOLIO
Years ended September 30 (except as noted)+
- ---------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989+ 1988 1987 1986
PER-SHARE DATA++
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $31.67 38.13 28.53 25.08 19.18 20.59 17.31 14.96 17.65 11.43
Income (Losses) From
Investment Operations
Net Investment Income 2.41 2.24 2.05 1.88 1.72 1.61 1.08 1.29 1.23 1.09
Net Realized and
Unrealized Gains
(Losses) on Investments 8.06 (8.70) 7.55 1.57 4.18 (3.02) 2.20 1.06 (3.92) 5.13
------ ----- ------ ----- ----- ----- ----- ----- ----- -----
Total Income (Losses)
From Investment
Operations 10.47 (6.46) 9.60 3.45 5.90 (1.41) 3.28 2.35 (2.69) 6.22
Less Distributions
Dividends from Net
Investment Income (1.48) (1.46) (1.58) (1.14) (1.05) (1.50) 0 (.42) (.90) (.16)
Distributions from
Net Realized
Capital Gains (.48) (4.31) (1.14) 0 0 (.09) 0 0 0 (1.36)
------ ----- ------ ----- ----- ----- ----- ----- ----- -----
Total Distributions (1.96) (5.77) (2.72) (1.14) (1.05) (1.59) 0 (.42) (.90) (1.52)
Reverse Share Split 1.96 5.77 2.72 1.14 1.05 1.59 0 .42 .90 1.52
Net Asset Value at
End of Period $ 42.14 31.67 38.13 28.53 25.08 19.18 20.59 17.31 14.96 17.65
====== ===== ====== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN* 33.06% (16.92) 33.61 13.76 30.76 (6.85) 18.95 15.71 (15.24) 54.42
- ------------
SUPPLEMENTAL DATA AND RATIOS
- ----------------------------
Net Assets at End of
Period (in thousands
of dollars) $95,057 46,312 70,551 55,565 47,661 37,222 42,439 9,617 9,297 4,884
Ratio of Expenses to
Average Daily
Net Assets .71% .68 .66 .70 .70 .70 .70** .70 .70 .70
Ratio of Net Investment
Income to Average
Daily Net Assets 6.56% 6.35 6.32 7.20 7.73 7.82 7.34** 8.11 8.13 6.71
Portfolio
Turnover Rate 26.00% 35.35 131.50 95.25 130.91 191.16 88.43 258.70 83.59 91.01
- ---------------------------
+ In 1989, the fiscal year-end for Benham Target Maturities Trust was changed from December 31 to September 30.
++ Per-share data in this table are calculated using the average shares outstanding during the year.
Dividends and distributions shown in the table will be different than the actual per-share distributions to shareholders.
* Total return figures assume reinvestment of dividends and capital gain distributions and are not annualized.
** Annualized.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================================================
BENHAM TARGET MATURITIES TRUST: 2015 PORTFOLIO
Years ended September 30 (except as noted)+
- ---------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989++ 1988 1987 1986+
PER-SHARE DATA+++
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $22.79 29.04 20.39 18.44 13.75 15.62 12.63 11.37 14.24 12.58
Income (Losses) From
Investment Operations
Net Investment Income 1.71 1.57 1.46 1.33 1.26 1.18 .79 .94 .90 .26
Net Realized and
Unrealized Gains
(Losses) on Investments 7.70 (7.82) 7.19 .62 3.43 (3.05) 2.20 .32 (3.77) 1.40
------ ----- ------ ----- ----- ----- ----- ----- ----- -----
Total Income (Losses)
From Investment
Operations 9.41 (6.25) 8.65 1.95 4.69 (1.87) 2.99 1.26 (2.87) 1.66
Less Distributions
Dividends from Net
Investment Income (.87) (1.19) (1.45) (1.23) (.97) (.50) 0 (.55) (.22) 0
Distributions from Net
Realized Capital Gains 0 (7.08) (.34) 0 0 (.01) 0 0 0 0
Distributions in Excess
of Net Realized
Capital Gains 0 (.37) 0 0 0 0 0 0 0 0
------ ----- ------ ----- ----- ----- ----- ----- ----- -----
Total Distributions (.87) (8.64) (1.79) (1.23) (.97) (.51) 0 (.55) (.22) 0
Reverse Share Split .87 8.64 1.79 1.23 .97 .51 0 .55 .22 0
Net Asset Value at
End of Period $32.20 22.79 29.04 20.39 18.44 13.75 15.62 12.63 11.37 14.24
====== ===== ====== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN* 41.29 (21.52) 42.42 10.57 34.11 (11.97) 23.67 11.08 (20.15) 13.20
- ------------
SUPPLEMENTAL DATA AND RATIOS
- ----------------------------
Net Assets at End of
Period (in millions
of dollars) $114.6 66.1 89.0 131.1 222.1 295.6 233.8 11.8 2.0 .528
Ratio of Expenses to
Average Daily
Net Assets .71% .68 .63 .62 .61 .70 .70** .70 .70 .70**
Ratio of Net Investment
Income to Average
Daily Net Assets 6.40% 5.97 6.28 7.04 7.79 7.74 7.02** 7.97 7.99 6.06**
Portfolio
Turnover Rate 69.97% 64.90 138.34 103.25 39.91 81.27 48.31 188.24 508.59 21.59
- ---------------------------------------
+ From September 1, 1986 (commencement of operations), through December 31, 1986.
++ In 1989, the fiscal year-end for Benham Target Maturities Trust was changed from December 31 to September 30.
+++Per-share data in this table are calculated using the average shares outstanding during the year.
Dividends and distributions shown in the table will be different than the actual per-share
distributions to shareholders.
* Total return figures assume reinvestment of dividends and capital gain distributions and are not annualized.
** Annualized.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================
BENHAM TARGET MATURITIES TRUST: 2020 PORTFOLIO
Years ended September 30 (except as noted)+
- ------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990+
PER-SHARE DATA++
- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $15.28 20.72 13.63 12.54 9.63 12.00
Income (Losses) From
Investment Operations
Net Investment Income 1.19 1.13 1.00 .92 .85 .60
Net Realized and Unrealized
Gains (Losses) on Investments 6.00 (6.57) 6.09 .17 2.06 (2.97)
----- ----- ----- ----- ----- -----
Total Income (Losses) From
Investment Operations 7.19 (5.44) 7.09 1.09 2.91 (2.37)
Less Distributions
Dividends from
Net Investment Income (.21) (0.28) (.53) (.63) (.21) 0
Distributions from
Net Realized Capital Gains 0 (1.31) (.72) (.08) 0 0
Distributions in Excess of
Net Realized Capital Gains 0 (1.18) 0 0 0 0
----- ----- ----- ----- ----- -----
Total Distributions (.21) (2.77) (1.25) (.71) (.21) 0
Reverse Share Split .21 2.77 1.25 .71 .21 0
Net Asset Value at End of Period $22.47 15.28 20.72 13.63 12.54 9.63
===== ===== ===== ===== ===== =====
TOTAL RETURN* 47.05% (26.25)% 52.02% 8.69% 30.22% (19.75)
- ----------------
SUPPLEMENTAL DATA AND RATIOS
- -----------------------------------
Net Assets at End of Period
(in thousands of dollars) $574,702 58,535 56,125 41,793 88,332 53,198
Ratio of Expenses to
Average Daily Net Assets .72% .70 .70 .66 .67 .70**
Ratio of Net Investment
Income to Average Daily Net Assets 6.24% 6.28 6.10 7.19 7.50 7.79**
Portfolio Turnover Rate 78.08% 116.46 178.52 144.05 151.44 188.60
- -------------------------------
+ From December 29, 1989 (commencement of operations), through September 30, 1990.
++ Per-share data in this table are calculated using the average shares outstanding during the year.
Dividends and distributions shown in the table will be different than the actual per-share distributions to shareholders.
* Total return figures assume reinvestment of dividends and capital gain distributions and are not annualized.
** Annualized.
</TABLE>
10
<PAGE>
INVESTMENT OBJECTIVES
Benham Target Maturities Trust currently consists of six Portfolios with target
maturity years of 1995, 2000, 2005, 2010, 2015, and 2020, respectively. In
addition, the appropriate filing will be made with federal and state regulatory
authorities to offer the new 2025 Portfolio - subject to their review, the 2025
Portfolio will be made available approximately February 15, 1996. Each Portfolio
will be liquidated shortly after the conclusion of its target maturity year.
(The 1995 Portfolio is expected to be liquidated on or about January 25, 1996.
See the section entitled "Portfolio Liquidation" on page 30 for more
information.) Additional portfolios may be introduced from time to time.
Each Portfolio seeks to provide the highest attainable investment return
consistent with the creditworthiness of U.S. Treasury securities and the
professional management of reinvestment and market risks. There is no assurance
the Portfolios will achieve their investment objective.
INVESTMENT POLICIES
Each Portfolio invests primarily in zero-coupon U.S. Treasury securities
(zeros). Unlike U.S. Treasury securities with coupons attached, which pay
interest periodically, zeros pay no interest. Instead, these securities are
issued at a substantial discount from their maturity value, and this discount is
amortized over the life of the security. Investment return comes from the
difference between the price at which a zero is issued (or purchased) and the
price at which it matures (or is sold).
To approximate the experience an investor would have if he or she purchased
zeros directly, BMC manages each Portfolio to track as closely as possible the
price behavior of a zero with the same term to maturity. To correct for factors
such as shareholder purchases and redemptions (and related transaction costs)
that differentiate investing in a portfolio of zeros from investing directly in
a zero, BMC executes portfolio transactions necessary to accommodate shareholder
activity each business day. To limit reinvestment risk, BMC adjusts each
Portfolio's weighted average maturity (WAM) to fall within the Portfolio's
target maturity year so that, normally, at least 90% of the securities held
mature within one year of the Portfolio's target maturity year.
[Each Portfolio invests primarily in zero-coupon U.S. Treasury
securities.(caption in left side of margin)]
11
<PAGE>
By adhering to these investment parameters, BMC expects that shareholders who
hold their shares until a Portfolio's WAM*, and who reinvest all dividends and
capital gain distributions, will realize an investment return and a maturity
value that does not differ substantially from the anticipated growth rate (AGR)
and anticipated value at maturity (AVM) calculated on the day the shares were
purchased.
BMC calculates each Portfolio's AGR and AVM each day the Trust is open for
business. AGR and AVM daily calculations assume, among other factors, that the
Portfolio's expense ratio and portfolio composition remain constant for the life
of the Portfolio.
Transaction costs, interest rate changes, and BMC's efforts to improve total
return by taking advantage of market opportunities also cause the Portfolios'
AGRs and AVMs to vary from day to day. Despite these so-called "destabilizing"
factors, however, each Portfolio's AGR and AVM tend to fluctuate within narrow
ranges. The following table shows each Portfolio's AVM as of September 30 for
each of the past five years. (AGRs are illustrated in the Statement of
Additional Information.)
Anticipated Value at Maturity
9/30/91 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- -------
1995 Portfolio** 100.61 101.54 101.40 101.31 101.62
2000 Portfolio 98.28 101.01 100.69 100.86 100.99
2005 Portfolio 98.72 99.78 100.21 100.58 100.32
2010 Portfolio 98.54 100.11 100.94 101.38 101.02
2015 Portfolio 105.13 107.05 106.84 107.95 109.62
2020 Portfolio 94.04 101.83 100.76 102.11 102.31
The Portfolios' share prices and growth rates are not guaranteed by the Trust,
The Benham Group, or any of their affiliates. There is no guarantee that the
Portfolios' AVMs will fluctuate as little in the future as they have in the
past.
* A Portfolio's weighted average maturity date can be calculated at any point in
time by adding its WAM to the current date. For example, if today were November
17, 1995, and the Portfolio's WAM were six years, the Portfolio's weighted
average maturity date would be November 17, 2001. Please note that a Portfolio's
weighted average maturity date typically precedes the date on which the
Portfolio will be liquidated. For details on Portfolio liquidation, see page 30.
12
<PAGE>
**The 1995 Portfolio is expected to be liquidated on or about January 25, 1996.
See the section entitled "Portfolio Liquidation" on page 30 for more
information.
Zero-Coupon Securities
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 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 a program 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
(REFCORP) 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."
Other Investments
As a Portfolio's target maturity year approaches, BMC may buy coupon-bearing
securities whose duration and price characteristics are similar to those of
aging zero-coupon securities. Towards the end of a Portfolio's target maturity
year and until the Portfolio is liquidated, the proceeds of maturing zero-coupon
securities are invested in U.S. Treasury bills.
13
<PAGE>
INVESTMENT PRACTICES
Coupon-Bearing U.S. Treasury Securities. U.S. Treasury bills, notes, and bonds
are direct obligations of the U.S. Treasury. Historically, they 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 a Portfolio's return may come from reinvesting interest earned on
these securities.
REFCORP Bonds. REFCORP issues bonds whose interest payments are guaranteed by
the U.S. Treasury and whose principal amounts are secured by zero-coupon U.S.
Treasury securities held in a separate custodial account at the Federal Reserve
Bank of New York. The principal amount and maturity date of REFCORP bonds are
the same as the par amount and maturity date of the corresponding zeros; upon
maturity, REFCORP bonds are repaid from the proceeds of the zeros.
Cash Management
For cash management purposes, each Portfolio may invest up to 5% of its total
assets in any Benham money market fund, provided that the investment is
consistent with the Portfolio's investment policies and restrictions.
Securities Lending
The Portfolios may lend portfolio securities to broker-dealers to earn
additional income. This practice could result in a loss or a delay in recovering
the Fund's securities. Securities loans are subject to guidelines prescribed by
the board of trustees, which are set forth in the Statement of Additional
Information. Loans are limited to 331/3% of the Fund's total assets and are
fully collateralized.
Portfolio Turnover Rates
To maximize total return, BMC expects to engage in regular trading on behalf of
the Portfolios. No brokerage commissions are incurred on these trades. However,
higher turnover rates can increase transaction costs and the incidence of
short-term capital gains or losses. The Portfolios' annual portfolio turnover
rates are not expected to exceed 150% and may vary from year to year. An annual
portfolio turnover rate of 100% or more is considered high.
14
<PAGE>
INVESTMENT CONSIDERATIONS
The Portfolios are designed for investors with long-term financial goals that
correspond to one or more of the target maturities offered. Investors who use
zeros or the Portfolios for short-term speculative purposes should understand
that, although most of the reinvestment risk associated with coupon-bearing
bonds has been eliminated, the prices of zeros can fluctuate dramatically
between issuance and maturity. When interest rates rise, the price of a zero
falls more sharply than the price of a coupon-bearing security of the same
maturity. Correspondingly, when interest rates fall, the price of a zero rises
more sharply than the price of a coupon-bearing security.
Each Portfolio's share price will fluctuate daily in response to portfolio
activity and changes in the market value of its investments. Due to the price
volatility of zeros, redemptions made prior to a Portfolio's target maturity
year may result in unanticipated capital gains or losses for the Portfolios.
These capital gains and losses will be distributed to shareholders regardless of
whether they have redeemed shares. Although shareholders have the option to
redeem shares on any business day, those seeking to minimize their exposure to
share price volatility should plan to hold their shares until the end of their
Portfolio's target maturity year.
Investing in a portfolio of zeros is different from investing directly in a
zero. Although BMC adheres to investment policies designed to assure close
correspondence between the price behavior of a Portfolio and that of a zero with
the same maturity characteristics, precise forecasts of maturity value and yield
to maturity are not possible.
PERFORMANCE
Mutual Fund performance is commonly measured as yield, or total return, which is
based on historical fund performance and may be quoted in advertising and sales
literature. Past performance is no guarantee of future results.
Yield calculations show the rate of income a Portfolio earns on its investments
as a percentage of its share price. To calculate yield, a Portfolio takes the
interest it earned from its portfolio of investments for a 30-day
[The Portfolios are designed for investors with long-term financial goals that
correspond to one or more of the target maturities offered. (caption in right
side of margin)]
15
<PAGE>
[Performance data and a discussion of factors that affected performance during a
Portfolio's most recent reporting period are included in the Trust's semiannual
and annual reports to shareholders. (caption in left side of margin)]
period (net of expenses), divides it by the average number of shares entitled to
receive dividends, and expresses the result as an annualized percentage rate
based on the Portfolio's share price at the end of the 30-day period.
Each Portfolio may quote state tax-equivalent yields, which show the state
taxable yields an investor would have to earn before taxes to equal the
Portfolio's state tax-free yields. You can calculate your state tax-equivalent
yield for any state tax-free fund using the following equation:
Fund's State Tax-Free Yield = Your State Tax-
--------------------------- Equivalent Yield
100% - Your State Tax Rate
For example, if your state tax rate were 11% and the fund's state tax-free yield
were 5%, your calculation would be as follows:
.05
- ---------- = .056 = 5.6%
1 - .11
In this example, your return would be higher from a state tax-free investment
yielding 5% if state taxable yields (on investments with comparable quality and
maturity characteristics) were below 5.6%. If only a portion of a Portfolio's
income were state tax-exempt, only that portion would be adjusted in the
calculation.
Total return represents the Portfolio's changes over a specified time period,
assuming reinvestment of dividends and capital gains, if any. Cumulative total
return illustrates a Portfolio's actual performance over a stated period of
time. Average annual total return is a hypothetical rate of return that
illustrates the annually compounded return that would have produced the same
cumulative total return if the Portfolio's performance had been constant over
the entire period. Average annual total returns smooth out variations in a
Portfolio's return; they are not the same as year-by-year results.
Performance data and a discussion of factors that affected performance during a
Portfolio's most recent reporting period are included in the Trust's semiannual
and annual reports to shareholders. These reports are routinely delivered to the
Portfolios' shareholders. To receive a free copy, call one of the Fund
Information numbers listed on page 18.
16
<PAGE>
SHARE PRICE
The price of your shares is their net asset value next determined after receipt
of your instruction to purchase, convert or redeem. Net asset value is
determined by calculating the total value of a Fund's assets, deducting total
liabilities and dividing the result by the number of shares outstanding. Net
asset value is determined on each day that the New York Stock Exchange is open.
Investments and requests to redeem shares will receive the share price next
determined after receipt by Benham of the investment or redemption request. For
example, investments and requests to redeem shares received by Benham before the
close of business on the New York Stock Exchange are effective on, and will
receive the price determined, that day as of the close of the Exchange.
Redemption requests received thereafter are effective on, and receive the price
determined as of the close of the Exchange on, the next day the Exchange is
open.
Investments are considered received only when your check or wired funds are
received by Benham. Wired funds are considered received on the day they are
deposited in Benham's bank account if they are deposited before the close of
business on the Exchange, usually 1 p.m. Pacific Time.
Investments by telephone pursuant to your prior authorization to Benham to draw
on your bank account are considered received at the time of your telephone call.
Investment and transaction instructions recieved by Benham on any business day
by mail at its office prior to the close of business on the Exchange, usually 1
p.m. Pacific Time, will receive that day's price. Investments and instructions
received after that time, will receive the price deteremined on the next
business day.
[Overnight and special delivery mail (e.g., Federal Express, Express Mail,
Priority Mail) should be sent to our street address: 1665 Charleston Rd.
Mountain View California 94043. Failure to do so may result in transaction
delays. (caption in right side of margin)]
17
<PAGE>
HOW TO INVEST
To open an account, you must complete and sign an application. If an application
is not enclosed with this Prospectus, you may request one by calling one of the
Fund Information numbers listed below. If you prefer, we will fill out your
application over the telephone and mail it to you for your signature. Separate
forms are required to establish Benham-Sponsored Retirement Plan accounts (see
pages 28 and 29).
Benham Group Representatives are available at the telephone numbers listed below
weekdays from 5:00 a.m. to 5:00 p.m. Pacific Time. For your protection, Benham
records all telephone conversations with its telephone representatives.
Fund Information: for information about any Benham fund or other investment
product, call 1-800-331-8331 or 1-415-965-4274.
Investor Services: to open an account, receive a Prospectus or Statement of
Additional Information for a Benham fund or make transactions in an existing
account, call 1-800-321-8321 or 1-415-965-4222.
Benham shareholders may make transactions and obtain prices, yields, and total
return information for all Benham funds with TeleServ, our 24-hour automated
telephone information service. Dial 1-800-321-8321 and press 1.
18
<PAGE>
HOW TO BUY SHARES (Retirement investors, see pages 28 and 29).
- --------------------------------------------------------------------------------
METHOD INSTRUCTIONS
- --------------------------------------------------------------------------------
By Check Minimum initial investment: $1,000
Minimum additional investment: $100
Make your investment check payable to The Benham Group. Mail
the check with your completed application to
The Benham Group
P.O. Box 7730
San Francisco, California 94120-9853
For additional investments, enclose an investment slip
preprinted with the account number to which your investment
should be credited. If the payee information provided on the
check does not agree with the information preprinted on the
investment slip, we will follow the instructions preprinted on
the slip.
If you do not have a preprinted investment slip, send your
check with separate written instructions indicating the fund
name and the account number. If the payee information provided
on the check does not agree with the written instructions, we
will follow the written instructions.
You may also invest your check in person at a Benham Investor
Center. One is located at 1665 Charleston Road in Mountain
View, California; the other is located at 2000 South Colorado
Boulevard, Suite 1000, in Denver, Colorado.
We will not accept cash investments or third-party checks. We
will, however, accept properly endorsed second-party checks
made payable to the investor(s) to whose account the investment
is to be credited.
We will also accept checks drawn on foreign banks or foreign
branches of domestic banks and checks that are not drawn in
U.S. dollars (U.S. $100 minimum). The cost of collecting
payment on such checks will be passed on to the investor. These
costs may be substantial, and settlement may involve
considerable delays.
Investors will be charged $5 for every investment check
returned unpaid.
19
<PAGE>
- --------------------------------------------------------------------------------
METHOD INSTRUCTIONS
- --------------------------------------------------------------------------------
By Bank Wire Minimum initial investment: $25,000
Minimum additional investment: $100
If you wish to open an account by bank wire, please call our
Investor Services Department for more information and an
account number. Bank wire investments should be addressed as
follows:
State Street Bank and Trust Company
Boston, Massachusetts
ABA Routing Number 011000028
Beneficiary = Benham Target Maturities Trust: [Name of
Portfolio]
AC [State Street Portfolio Account Number]
FBO [Your Name, Your Target Portfolio Account Number]
Portfolio Names and State Street Portfolio Account Numbers:
1995 Portfolio.............................0505 932 4
2000 Portfolio.............................0505 933 2
2005 Portfolio.............................0505 934 0
2010 Portfolio.............................0505 935 7
2015 Portfolio.............................0505 936 5
2020 Portfolio.............................0505 937 3
- --------------------------------------------------------------------------------
By Exchange Minimum initial investment: $1,000
Minimum additional investment: $100
You may exchange your shares for shares of any other Benham
fund registered for sale in your state if you have received the
fund's prospectus. Exchanges may be made by telephone (for
identically registered accounts only), by written request, or
in person. Certain restrictions apply; please see page 22 for
details. You may open a new account by exchange, provided that
you meet the minimum initial investment requirement.
- --------------------------------------------------------------------------------
Automatic Minimum: $25
Investment
Services These services are offered with respect to additional
investments only. See details on page 23.
20
<PAGE>
Processing Your Purchase
Shares will be purchased at the next NAV calculated after your investment is
received and accepted by The Benham Group or an authorized subtransfer agent.
Investments received and accepted before the close of business of the NYSE,
normally 1:00 p.m. Pacific Time, will be included in your account balance the
same day. After the close of business of the NYSE, usually 1:00 Pacific Time,
they will be credited the following business day. The Funds reserve the right to
refuse any investment.
Telephone Transactions
Shareholders may order certain transactions (e.g., exchanges, wires, some types
of redemptions) by telephone. This privilege is granted to Benham fund
shareholders automatically; you need not specifically request this service, and
you may not specifically decline it. Once your telephone order has been placed,
it may not be modified or cancelled.
The Benham Group will not be liable for losses resulting from unauthorized or
fraudulent instructions if it follows procedures designed to verify the caller's
identity. BMC will request personal identification, record telephone calls, and
send confirmation statements for every telephone transaction to the
shareholder's record address. The Portfolios reserve the right to revise or
terminate telephone transaction privileges at any time.
Confirmation and Quarterly Statements
All transactions are summarized on quarterly account statements. In addition,
for every transaction that you request, a confirmation statement will be mailed
to your record address. Please review these statements carefully. If you believe
we have processed the transaction you requested incorrectly, please notify us as
soon as possible. If you fail to notify us of an error with reasonable
promptness, i.e., within 30 days of the date of your confirmation statement, we
will deem you to have ratified the transaction.
21
<PAGE>
[The free exchange privilege is a convenient way to buy shares in other Benham
funds if your investment goals change. (caption in left side of margin)]
[Benham Open Orders allow investors to utilize a "buy low, sell high" investment
strategy. (caption in left side of margin)]
SHAREHOLDER SERVICES
Exchange Privilege
You may exchange your shares for shares of equivalent value in any other Benham
fund registered for sale in your state. An exchange request will be processed
the same day if it is received before the funds' NAVs are calculated (12:00 noon
Pacific Time for Benham Target Maturities Trust; 1:00 p.m. Pacific Time for all
other Benham funds).
The Benham Group discourages trading in response to short-term market
fluctuations. Such activity may interfere with BMC's ability to invest the
funds' assets in accordance with their respective investment objectives and
policies and may be disadvantageous to other shareholders. In addition, an
exchange out of variable-price funds generally will generate taxable gains or
losses to the shareholder. More than six exchanges per calendar year out of a
variable-price fund may be deemed an abuse of the exchange privilege. For
purposes of determining the number of exchanges made, accounts under common
ownership or control will be aggregated.
Each Benham fund reserves the right to modify or revoke the exchange privilege
of any shareholder or to limit or reject any exchange. Although each fund will
attempt to give shareholders prior notice whenever it is reasonably able to do
so, it may impose these restrictions at any time.
Open Order Service
The Benham Group's Open Order Service allows you to designate a price at which
to buy or sell shares of a variable-price fund by exchange from a money market
fund. To place a "buy" order, you designate a purchase price that is equal to or
lower than the current NAV. To place a "sell" order, designate a sales price
that is equal to or higher than the current NAV. If the designated price is met
within 90 calendar days, we will automatically execute your order. If you are
buying shares of a variable-price fund, we will exchange money from your money
market account to purchase them. If you are selling shares of a variable-price
fund, we will transfer the proceeds of that sale to your money market account.
If you do not have a money market account, we will open one for you when we
execute your Open Order.
22
<PAGE>
If the fund you have selected deducts a distribution from its share price, your
order price will be adjusted accordingly so that the distribution does not
inadvertently trigger an Open Order transaction on your behalf. If you close or
reregister the account from which shares are to be redeemed, your Open Order
will be canceled. Because of their time-sensitive nature, Open Order
transactions may only be made by telephone or in person. These transactions are
subject to the exchange limitations described in each fund's prospectus, except
that all orders and cancellations received before 12:00 p.m. Pacific Time are
effective the same day. After 12:00 p.m. Pacific Time, they are effective the
following business day.
Automatic Investment Services (AIS)
Treasury Direct allows you to deposit interest and principal payments from
Treasury securities directly into a Benham fund account.
Payroll Direct allows you to deposit any amount of your paycheck directly into a
Benham fund account.
Government Direct allows you to deposit your entire U.S. government payment
directly into a Benham fund account.
Bank Direct allows you to deposit a fixed amount from your bank account directly
into a Benham fund account on the 1st and/or the 15th of each month (or the next
business day).
Directed Dividends allow you to invest all or part of your dividend earnings
from one Benham fund account in one or more other Benham fund accounts. You may
choose to receive a portion of your dividends in cash and to invest the
remainder in another Benham fund account.
Systematic Exchanges allow you to exchange from one Benham fund account to
another Benham fund account on the 1st and/or the 15th of each month (or the
next business day).
For more information about any of these services, call our Investor Services
Department at 1-800-321-8321 or 1-415-965-4222.
23
<PAGE>
[You may redeem shares without charge. (caption in left side of margin)]
Broker-Dealer Transactions
The Benham Group charges no sales commissions, or "loads" of any kind. However,
investors may purchase and sell shares through registered broker-dealers, who
may charge fees for their services.
The Benham Group will accept orders for the purchase of shares from authorized
broker-dealers who agree in writing to pay in full for such shares in
immediately available funds no later than 1:00 p.m. Pacific Time the following
business day.
TDD Service for the Hearing Impaired
TDD users may contact The Benham Group at 1-800-624-6338 or 1-415-965-4764.
California residents may wish to contact us through the California Relay Service
(CRS) at 1-800-735-2929.
Your transaction requests via CRS will be handled on a recorded line. The Benham
Group cannot accept responsibility for instructions miscommunicated by CRS.
Emergency Services
The Benham Group has established an alternate operations site from which we can
access customer accounts and the mainframe computers used by the Benham funds in
the event of an emergency. Telephone lines and terminals are currently in place.
If our regular service is interrupted, the following numbers will automatically
connect you to this site.
From within the U.S., including Alaska and Hawaii:
1-800-321-8321.
From all foreign countries, call collect: 1-303-759-9337 or 1-510-820-1409. The
operator will request your Benham fund account number before accepting the call.
HOW TO REDEEM YOUR INVESTMENT
When you place an order to redeem shares, your shares will be redeemed at the
next NAV calculated after The Benham Group or an authorized subtransfer agent
has received your redemption request in good order. The Portfolios' NAVs are
usually calculated at the close of business of the NYSE, usually 1:00 p.m.
Pacific Time. See page 26 for details.
24
<PAGE>
Barring extraordinary circumstances prescribed by law, redemption proceeds are
mailed within seven calendar days. However, The Benham Group reserves the right
to withhold the proceeds until the investment has matured (i.e., your payment
has cleared); see maturity periods below.
- --------------------------------------------------------------------------------
Drawn from a Maturity Period
Type of Investment California Bank? (in business days)
- --------------------------------------------------------------------------------
Checks, cashiers' checks,
and bank money orders Yes 5 days
- --------------------------------------------------------------------------------
Same as above No 8 days
- --------------------------------------------------------------------------------
U.S. Treasury checks,
Traveler's checks,
U.S. Postal money orders,
Benham checks, bank wires,
and AIS Deposits* N/A 1 day
* Does not include bank direct deposits, which take 8 business days to
mature.
- --------------------------------------------------------------------------------
If you hold shares in certificate form, redemption requests must be accompanied
by properly endorsed certificates.
If you want to keep your account open, please maintain a balance of shares worth
at least $1,000. If your account balance falls to less than $1,000 due to
redemption, your account may be closed, but not without at least 30 days' notice
and an opportunity to increase your account balance to the $1,000 minimum. Your
shares will be redeemed at the NAV calculated on the day your account is closed.
Proceeds will be mailed to the record address.
This policy applies to Benham's Individual Retirement Accounts (IRAs), excluding
SEP-IRAs, except that shareholders will receive at least 120 days' written
notice and an opportunity to increase their account balance before their
accounts are closed. Investors wishing to open a Benham-sponsored retirement
account should see pages 28 and 29 for details.
Uncashed Checks
We may reinvest at the Portfolio's current NAV any distribution or redemption
check that remains uncashed for six months. Until we receive instructions to the
contrary, subsequent distributions will be reinvested in the original account.
Uncashed redemption checks may be reinvested in an identically registered
account if the original account is closed.
25
<PAGE>
HOW TO REDEEM SHARES (Retirement investors, see pages 28 and 29).
================================================================================
METHOD INSTRUCTIONS
- --------------------------------------------------------------------------------
By Telephone The Benham Group will accept telephone redemption requests for
any amount if the proceeds are to be sent to your
predesignated bank account. Redemptions of $25,000 or less
payable to the registered account owner(s) may also be ordered
by telephone. All other redemption requests must be made in
writing. Once your telephone order has been placed, it may not
be modified or cancelled.
- --------------------------------------------------------------------------------
In Writing Send a letter of instruction to
The Benham Group
Investor Services Department
1665 Charleston Road
Mountain View, California 94043
Your letter of instruction should specify
* Your name
* Your account number
* The name of the Fund from which you wish to redeem shares
* The dollar amount or number of shares you wish to redeem
For your protection, written redemption requests must be
accompanied by signature guarantees under the following
circumstances
* Redemption proceeds go to a party other than the
registered account owner(s)
* Redemption proceeds go to an account other than your
predesignated bank account
* Redemption proceeds go to the registered account
owner(s), but the amount exceeds $25,000
If you have instructed The Benham Group to require more than
one signature on written redemption requests, each of the
required number of signers must have his or her signature
guaranteed on the redemption requests. Signature guarantees
may be provided by banks, savings and loan associations,
savings banks, credit unions, stock brokerage firms, or a
Benham Investor Center.
26
<PAGE>
================================================================================
METHOD INSTRUCTIONS
- --------------------------------------------------------------------------------
In Writing Shareholders must appear in person with identification to
(continued) obtain a signature guarantee. Notary public certifications are
not accepted in lieu of signature guarantees.
BFS may require written consent of all account owners prior to
acting on the written instructions of any account owner.
- --------------------------------------------------------------------------------
By Bank Wire If you included bank wire information on your account
application or made subsequent arrangements to accommodate
bank wire redemptions, you may wire funds to your bank by
calling 1-800-321-8321 or 1-415-965-4222. The minimum amount
for a bank wire redemption is $1,000. Allow at least two
business days for redemption proceeds to be credited to your
bank account.
- --------------------------------------------------------------------------------
By Exchange See details on page 22.
- --------------------------------------------------------------------------------
Automatic Directed Payments. You may arrange for periodic redemp-
Redemption tions from your Benham fund account to your bank
Services account or to another designated payee.
Systematic Exchanges. You may arrange for periodic exchange
redemptions from one Benham fund account to another Benham
fund account.
27
<PAGE>
ABOUT BENHAM-SPONSORED RETIREMENT PLANS
Retirement plans offer investors a number of benefits, including the chance to
reduce current taxable income and to take advantage of tax-deferred compounding.
Retirement plan accounts require a special application; please let our Investor
Services Department know if you want to establish this type of account. We
suggest that you consult your tax advisor before establishing a retirement plan
account. The minimum account balance for all Benham Individual Retirement
Accounts (IRAs), excluding SEP-IRAs, is $1,000. If your balance falls below the
$1,000 per fund account
================================================================================
PLAN TYPE AVAILABLE TO MAXIMUM ANNUAL CONTRIBUTION
PER PARTICIPANT
- --------------------------------------------------------------------------------
Contributory An employed indi- $2,000 or 100% of compensation
IRA vidual under age 701/2. (whichever is less).
- --------------------------------------------------------------------------------
Spousal IRA A nonworking spouse $2,250 (can be split between
(under age 701/2) of a Spousal and Contributory IRAs,
wage earner. provided that no IRA receives
more than a total of $2,000).
- --------------------------------------------------------------------------------
Rollover IRA An individual with a None, as long as total amount is
distribution from an eligible.
employer's retirement
plan or a rollover IRA.
- --------------------------------------------------------------------------------
SEP-IRA A self-employed indi- $22,500 or 15% of compensation
vidual or a business. (whichever is less).*
- --------------------------------------------------------------------------------
Money Same as for SEP-IRA. $30,000 or 25% of compensation
Purchase Plan (whichever is less). Annual
(Keogh) contribution is mandatory.*
- --------------------------------------------------------------------------------
Profit Same as for SEP-IRA. $22,500 or 15% of compensation
Sharing Plan (whichever is less). Annual
(Keogh) contribution is optional.*
- --------------------------------------------------------------------------------
* Self-employed individuals should consult IRS Publication 560 for their annual
contribution limits.
28
<PAGE>
minimum, your account may be closed (see page 25 for details). This distribution
may result in a taxable event and a possible penalty for early withdrawal. The
minimum fund account balance for all other Benham-sponsored retirement plan
accounts is $100. Benham charges no fees for its IRAs but does charge low
maintenance fees for its Keoghs.
You must complete specific forms to take distributions (i.e., redeem shares)from
a Benham-sponsored retirement plan account. Please call our Investor Services
Department at 1-800-321-8321 for assistance.
================================================================================
DEADLINE FOR
OPENING ACCOUNT CONTRIBUTION DEADLINES
- --------------------------------------------------------------------------------
You may open an account anytime, Annual contributions can be made
but the deadline for establishing from January 1 through April 15 of
and funding an IRA for the prior the following tax year up to the
tax year is April 15. year you turn age 701/2.
- --------------------------------------------------------------------------------
Same as for Contributory IRA. Same as for Contributory IRA.
- --------------------------------------------------------------------------------
You may open a Rollover IRA Eligible rollover contributions must
account anytime. be made within 60 days of receiv-
ing your distribution. There is no
age limit on rollover contributions.
- --------------------------------------------------------------------------------
You may open an account anytime, Must be made by employer's tax
but the deadline for establishing and filing deadline (including
funding an account for the prior tax extensions).
year is the employer's tax deadline
(including extensions).
- --------------------------------------------------------------------------------
The end of the employer's plan Same as for SEP-IRA.
year, usually December 31.
- --------------------------------------------------------------------------------
The end of the employer's plan Same as for SEP-IRA.
year, usually December 31.
- --------------------------------------------------------------------------------
For all Benham-sponsored retirement plans, you may begin taking distributions at
age 591/2. You must begin to take required distributions by April 1 of the year
after you turn age 701/2. You may take distributions from your IRA or SEP-IRA
before you reach age 591/2; however, a penalty may apply.
29
<PAGE>
[Each January, you will be informed of the tax status of dividends and capital
gain distributions for the previous year. (caption in left side of margin)]
DISTRIBUTIONS AND TAXES
Dividends and Capital Gain Distributions
Typically, each Portfolio declares an ordinary income dividend (and a capital
gain distribution, if necessary) in December.
Reverse Share Splits
At the same time that the Portfolios' annual dividends (and capital gain
distributions, if any) are declared, the board of trustees also declares a
reverse share split for each Portfolio that exactly offsets the per-share amount
of the Portfolio's dividends (and capital gain distributions).
Following a reverse share split, shareholders who have chosen to reinvest
dividends and capital gain distributions own exactly the same number of shares
they owned prior to the distribution and reverse share split. Shareholders who
have elected to take distributions in cash own fewer shares. Reverse share
splits cause the Portfolios' share prices to behave similarly to the prices of
directly held zero-coupon securities with comparable maturity characteristics.
Although the trustees intend to declare a reverse share split each time a
dividend or capital gain distribution is declared, they reserve the right not to
do so.
Distribution Options. You may choose to receive dividends and capital gain
distributions in cash or to reinvest them in additional shares (see "Directed
Dividends" on page 23 for further information). Please indicate your choice on
your account application or contact our Investor Services Department. See page
25 for a description of our policy regarding uncashed distribution checks.
Portfolio Liquidation
The trustees expect to liquidate each Portfolio and pay cash redemptions (or
effect exchanges) on or before January 31 of the year following the Portfolio's
target maturity year. The 1995 Portfolio is expected to be liquidated on or
about January 25, 1996.
During a Portfolio's target maturity year, shareholders will be asked if they
wish to receive payment of the liquidation proceeds in cash or to exchange their
shares for those of another Benham fund or another Portfolio. If
30
<PAGE>
the Trust has not received instructions by December 31 of the Portfolio's target
maturity year, shares will be exchanged for shares of Capital Preservation Fund
(CPF) or, if CPF is not available, for shares of a similar Fund offered by The
Benham Group.
Taxes
Each Portfolio intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986 (Code), as amended, by
distributing all, or substantially all of its net investment income and net
realized capital gains to shareholders each year.
Zero-coupon securities purchased by the Portfolios accrue interest (commonly
referred to as "imputed income") for federal income tax purposes even though
zeros do not pay current interest. The Portfolios must distribute this imputed
income to shareholders as ordinary income dividends, which are subject to
federal taxes but exempt from state taxes.
Capital Gains. Under certain circumstances, a Portfolio may realize a capital
gain by selling its holdings for a net profit. In addition to trading securities
for regular portfolio management purposes, BMC may be forced to sell portfolio
holdings to raise cash. For example, if a Portfolio's daily redemptions exceed
the inflow of cash, BMC may need to sell a portion of portfolio holdings to make
up the difference. Similarly, BMC may sell portfolio holdings to increase
available cash if a Portfolio is required to pay dividends greater than the
amount of cash, interest, and other income it received during a given year.
Gains realized upon the sale of appreciated securities generally are distributed
to shareholders as taxable capital gains in December, regardless of when shares
were purchased. Because of this, even if rising interest rates cause a decline
in the value of an investment in a Portfolio, you could still receive a capital
gain distribution on securities sold by the Portfolio during that year.
The Portfolios' dividends and capital gain distributions are subject to federal
income tax whether they are received in cash or reinvested in additional shares.
Dividends from net investment income (including net short-term capital gains)
are taxable as ordinary income.
31
<PAGE>
Distributions of net long-term capital gains, if any, are taxable as long-term
capital gains, regardless of how long you have held your shares. Portfolio
distributions do not qualify for the dividends-received deduction available to
corporations.
State Taxes. The Portfolios' dividend distributions are exempt from state taxes.
Capital gain distributions, however, are generally subject to state and local
taxes. Some states and localities apply an intangibles tax on shares owned
rather than taxing dividends received. Tax laws vary from state to state; you
may wish to consult your tax advisor or state or local tax authorities regarding
the tax status of distributions from the Portfolios.
Buying a Dividend. The timing of your investment could have undesirable tax
consequences. If you open a new account or buy more shares for your current
account just before the day a dividend or distribution is reflected in your
Fund's share price, you will receive a portion of your investment back as a
taxable dividend or distribution.
Backup Withholding. The Portfolios are required by federal law to withhold 31%
of reportable dividends and capital gain distribution or redemptions payable to
shareholders who have not complied with IRS regulations. These regulations
require you to certify on your account application or on IRS Form W-9 that your
social security or taxpayer identification number (TIN) is correct and that you
are not subject to backup withholding from previous underreporting to the IRS,
or that you are exempt from backup withholding.
The Benham Group may refuse to sell shares to investors who have not complied
with the certification requirement, either before or at the time of purchase.
Until we receive your certified tax certification, we may redeem your shares at
any time.
MANAGEMENT INFORMATION
About the Trust
Benham Target Maturities Trust is a registered open-end management investment
company that was organized as a Massachusetts business trust on November 8,
1984. The Trust consists of seven series, as described in this prospectus;
additional series may be created from time to time.
32
<PAGE>
A board of trustees oversees the Portfolios' activities and is responsible for
protecting shareholders' interests in the Portfolios. The Trust is neither
required nor expected to hold annual meetings, although special meetings may be
called for purposes such as electing or removing trustees or amending a
Portfolio's advisory agreement or investment policies. The number of votes you
are entitled to is based upon the dollar value of your investment. Each
Portfolio votes separately on matters that pertain to it exclusively.
The Benham Group
Benham Management Corporation (BMC) is investment advisor to the funds in The
Benham Group, which currently constitute more than $12 billion in assets. BMC,
incorporated in California in 1971, became a wholly owned subsidiary of
Twentieth Century Companies, Inc. (TCC), a Delaware corporation, on June 1,
1995, upon the merger of Benham Management International, Inc., BMC's former
parent, into TCC. TCC is a holding company that owns the operating companies
that provide the investment management, transfer agency, shareholder service,
and other services for the Twentieth Century family of funds, which now includes
the Benham Group. The combined company offers 62 mutual funds and has combined
assets in excess of $42 billion.
BMC supervises and manages the investment portfolios of The Benham Group and
directs the purchase and sale of its investment securities. BMC utilizes teams
of portfolio managers, assistant portfolio managers and analysts acting together
to manage the assets of the portfolios. The teams meet regularly to review
portfolio holdings and to discuss purchase and sale activity. The teams adjust
holdings in the funds' portfolios deemed appropriate in pursuit of the funds'
investment objectives. Individual portfolio manager members of the team may also
adjust portfolio holdings of the funds as necessary between team meetings.
The portfolio manager member of the team managing the funds described in this
prospectus and their work experience for the last five years is as follows:
David Schroeder is a Vice President for Benham Management Corporation. He
manages Benham Target Maturities Trust, Treasury Note Fund and the Short-Term
and Long-Term Treasury and Agency Funds. Mr.
[The Benham Group serves more than 350,000 investors. (caption in right side of
margin)]
[Benham Management Corporation provides investment advice and portfolio
management services to the Funds. (caption in right side of margin)]
33
<PAGE>
[Benham Financial Services, Inc. provides administrative and transfer agent
services to the Portfolios. (caption in left side of margin)]
Schroeder joined Benham in 1990, and prior to that was a Vice President and
Proprietary Trader with Pacific Securities in San Francisco, from 1988-1990. Mr.
Schroeder has a Bachelor of Arts degree from Pomona College.
BMC has adopted a Code of Ethics (the "Code"), which restricts personal
investing practices. Among other provisions, the Code requires that employees
with access to information about the purchase and sale of securities in the
funds' portfolios obtain preclearance before executing personal trades. With
respect to portfolio managers and other investment personnel, the Code prohibits
acquisition of securities in an initial public offering, as well as profits
derived from the purchase and sale of the same security within 60 calendar days.
These provisions are designed to ensure that the interests of fund shareholders
come before the interests of the people who manage the funds.
Advisory and Service Fees
For investment advice and portfolio management services, each Portfolio pays BMC
a monthly investment advisory fee equal to its pro rata share of the dollar
amount derived from applying the Trust's average daily net assets to an
investment advisory fee schedule.
The investment advisory fee rate cannot exceed .35% of average daily net assets,
and it drops to a marginal rate of .19% of average daily net assets as Trust
assets increase.
The following table illustrates investment advisory fees paid by the Portfolios
for the fiscal year ended September 30, 1995. For each Portfolio, the figures
shown represent investment advisory fees as a percentage of the Portfolio's
average daily net assets and as a dollar amount per $1,000 of the Portfolio's
average daily net assets.
Investment Advisory Fees*
1995 Portfolio .35% $3.50
2000 Portfolio .35 3.50
2005 Portfolio .34 3.40
2010 Portfolio .26 2.60
2015 Portfolio .30 3.00
2020 Portfolio .22 2.20
* Net of expense limitation as described on page 3.
34
<PAGE>
To avoid duplicative investment advisory fees, the Portfolios do not pay BMC
investment advisory fees with respect to assets invested in shares of money
market funds advised by BMC.
BFS, a wholly owned subsidiary of TCC, is the Funds' agent for transfer and
administrative services. For administrative services, each Portfolio pays BFS a
monthly fee equal to its pro rata share of the dollar amount derived from
applying the average daily net assets of all of the funds in The Benham Group.
The administrative fee rate ranges from .11% to .08% of average daily net
assets, dropping as Benham Group assets increase. For transfer agent services,
each Portfolio pays BFS a monthly fee for each shareholder account maintained
and for each shareholder transaction executed during that month.
Each Portfolio pays certain operating expenses directly, including but not
limited to: custodian, audit, and legal fees; fees of the independent trustees;
costs of printing and mailing prospectuses, statements of additional
information, proxy statements, notices, and reports to shareholders; insurance
expenses; and costs of registering the Funds' shares for sale under federal and
state securities laws. See the Statement of Additional Information for a more
detailed discussion of independent trustee compensation.
Expense Limitation Agreement
An expense limitation agreement between BMC and the Portfolios is described on
page 3.
The following table illustrates each Portfolio's total operating expenses for
the fiscal year ended September 30, 1995, as a percentage of the Portfolio's
average daily net assets and as a dollar amount per $1000 of the Portfolio's
average daily net assets.
Total Operating Expenses*
1995 Portfolio .67% $6.70
2000 Portfolio .63 6.30
2005 Portfolio .70 7.00
2010 Portfolio .70 7.00
2015 Portfolio .70 7.00
2020 Portfolio .70 7.00
* Net of expense limitation as described on page 3.
35
<PAGE>
Distribution of Shares
Benham Distributors, Inc. (BDI), and BMC distribute and market Benham products
and services. BMC pays all expenses for promoting sales of and distributing the
Portfolios' shares. The Portfolios do not pay commissions to, or receive
compensation from, broker-dealers.
BDI is a wholly owned subsidiary of TCC.
36
<PAGE>
Investment Advisor
BENHAM MANAGEMENT CORPORATION
1665 Charleston Road
Mountain View, California 94043
Distributor
BENHAM DISTRIBUTORS, INC.
1665 Charleston Road
Mountain View, California 94043
Custodian
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, Massachusetts 02101
Transfer Agent
BENHAM FINANCIAL SERVICES, INC.
1665 Charleston Road
Mountain View, California 94043
Independent Auditors
KPMG PEAT MARWICK LLP
3 Embarcadero Center
San Francisco, California 94111
Trustees
James M. Benham
Ronald J. Gilson
Myron S. Scholes
Kenneth E. Scott
Ezra Solomon
Isaac Stein
James E. Stowers III
Jeanne D. Wohlers
37
<PAGE>
The Benham Group of Investment Companies
Capital Preservation Fund
Capital Preservation Fund II
Benham Government Agency Fund
Benham Prime Money Market Fund
Benham Short-Term Treasury and Agency Fund
Benham Treasury Note Fund
Benham Long-Term Treasury and Agency Fund
Benham Adjustable Rate Government Securities Fund
Benham GNMA Income Fund
Benham Target Maturities Trust
Benham California Tax-Free and Municipal Funds*
Benham National Tax-Free Money Market Fund
Benham National Tax-Free Intermediate-Term Fund
Benham National Tax-Free Long-Term Fund
Benham Florida Municipal Money Market Fund**
Benham Florida Municipal Intermediate-Term Fund**
Benham Arizona Municipal Intermediate-Term Fund***
Benham Gold Equities Index Fund
Benham Income & Growth Fund
Benham Equity Growth Fund
Benham Utilities Income Fund
Benham Global Natural Resources Index Fund
Benham European Government Bond Fund
Benham Capital Manager Fund
* Available only to residents of California, Arizona, Colorado, Hawaii,
Nevada, New Mexico, Oregon, Texas, Utah, and Washington.
** Available only to residents of Florida, California, Georgia, Illinois,
Michigan, New Jersey, New York, and Pennsylvania.
*** Available only to residents of Arizona, California, Colorado, Nevada,
Oregon, Washington, and Texas.
38
<PAGE>
[this page intentionally left blank]
<PAGE>
CONTENTS
Summary of Portfolio Expenses ..................................... 3
Financial Highlights .............................................. 4
Investment Objectives ............................................. 11
Investment Policies ............................................... 11
Investment Considerations ......................................... 15
Performance ....................................................... 15
Share Price ....................................................... 17
How to Invest ..................................................... 18
Shareholder Services .............................................. 22
Exchange Privilege ............................................. 22
Open Order Service ............................................. 22
Automatic Investment Services .................................. 23
Broker-Dealer Transactions ..................................... 24
TDD Service .................................................... 24
Emergency Services ............................................. 24
How to Redeem Your Investment ..................................... 24
About Benham-Sponsored Retirement Plans ........................... 28
Distributions ..................................................... 30
Dividends and Capital Gain Distributions ....................... 30
Reverse Share Splits ........................................... 30
Distribution Options ........................................... 30
Portfolio Liquidation .......................................... 30
Taxes ............................................................. 31
Capital Gains .................................................. 31
State Taxes .................................................... 32
Buying a Dividend .............................................. 32
Backup Withholding ............................................. 32
Management Information ............................................ 32
About the Trust ................................................ 32
The Benham Group ............................................... 33
Advisory and Service Fees ...................................... 34
Expense Limitation Agreement ................................... 35
Distribution of Shares ......................................... 36
H01
<PAGE>
BENHAM TARGET MATURITIES TRUST
1995 PORTFOLIO
2000 PORTFOLIO
2005 PORTFOLIO
2010 PORTFOLIO
2015 PORTFOLIO
2020 PORTFOLIO
2025 Portfolio (anticipated available date of 2/15/96)
The Benham Group (R)
1665 Charleston Road
Mountain View, California 94043
Investor Services: 1-800-321-8321 or 1-415-965-4222
Fund Information: 1-800-331-8331 or 1-415-965-4274
STATEMENT OF ADDITIONAL INFORMATION
November 29, 1995
This Statement is not a prospectus, but should be read in conjunction with the
Trust's current Prospectus dated November 29, 1995. The Trust's Annual Report
for the fiscal year ended September 30, 1995, is incorporated herein by
reference. To obtain a copy of the Prospectus or the Annual Report, call or
write The Benham Group.
TABLE OF CONTENTS
Page
----
Investment Policies and Techniques 2
Investment Restrictions 2
Portfolio Transactions 4
Valuation of Portfolio Securities 5
Predictability of Return 6
Performance 8
Taxes 10
About the Trust 11
Trustees and Officers 12
Investment Advisory Services 14
Administrative and Transfer Agent Services 15
Direct Portfolio Expenses 16
Expense Limitation Agreement 16
Additional Purchase and Redemption Information 17
Other Information 18
1
<PAGE>
INVESTMENT POLICIES AND TECHNIQUES
The following paragraphs provide a more detailed description of the securities
and investment practices identified in the Prospectus. Unless otherwise noted,
the policies described in this Statement of Additional Information are not
fundamental and may be changed by the board of trustees.
Loans of Portfolio Securities
Each Portfolio may lend its portfolio securities to earn additional income. If a
borrower defaults on a securities loan, the lending Portfolio could experience
delays in recovering the securities it loaned; if the value of the loaned
securities increased in the meantime, the Portfolio could suffer a loss. To
minimize the risk of default on securities loans, Benham Management Corporation
(BMC) adheres to the following guidelines established by the board of trustees:
Type and Amount of Collateral. At the time a loan is made, the Portfolio must
receive, from or on behalf of a borrower, collateral consisting of any
combination of cash and full faith and credit U.S. government securities equal
to not less than 102% of the market value of the securities loaned. Cash
collateral received by a Portfolio in connection with loans of portfolio
securities may be commingled by the Portfolio's custodian with other cash and
marketable securities, provided that the loan agreement expressly allows such
commingling.
Additions to Collateral. Collateral must be marked to market daily, and the
borrower must agree to add to collateral to the extent necessary to maintain the
102% level specified in guideline (1) above. The borrower must deposit
additional collateral not later than the business day following the business day
on which a collateral deficiency occurs or collateral appears to be inadequate.
Termination of Loan. The Portfolio must have the ability to terminate a loan of
portfolio securities at any time. The borrower must be obligated to redeliver
the borrowed securities within the normal settlement period following receipt of
the termination notice. The normal settlement period for U.S. government
securities is two trading days.
Reasonable Return on Loan. The borrower must agree that the Portfolio (a) will
receive all dividends, interest, or other distributions on loaned securities and
(b) will be paid a reasonable return on such loans either in the form of a loan
fee or premium or from the retention by the Portfolio of part or all of the
earnings and profits realized from the investment of cash collateral in full
faith and credit U.S. government securities.
Limitations on Percentage of Portfolio Assets on Loan. A Portfolio's loans may
not exceed 33 % of its total assets.
Credit Analysis. As part of the regular monitoring procedures it follows to
evaluate banks and broker-dealers in connection with, for example, repurchase
agreements and municipal securities credit issues, Benham Management Corporation
(BMC), the Portfolios' investment advisor, analyzes and monitors the
creditworthiness of all borrowers with whom securities lending agreements are
contemplated or entered into.
INVESTMENT RESTRICTIONS
The Portfolios' investment restrictions set forth below are fundamental and may
not be changed without approval of "a majority of the outstanding voting
securities" of the Portfolio as defined in the Investment Company Act of 1940.
2
<PAGE>
Each Portfolio may not
(1) Purchase the securities of any issuer (other than obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities) if,
as a result, (a) more than 5% of the value of its total assets would be
invested in the securities of that issuer, or (b) the Portfolio would hold
more than 10% of the outstanding voting securities of that issuer.
(2) Purchase the securities of any issuer (other than obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities) if,
as a result, 25% or more of the value of its total assets would be invested
in securities of issuers having their principal business activities in the
same industry.
(3) Purchase the securities of any issuer (other than obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities) if,
as a result, more than 5% of the value of its total assets would be
invested in the securities (taken at cost) of issuers which, at the time of
purchase, had been in operation less than three years, including
predecessors and unconditional guarantors.
(4) Purchase any equity securities in any companies, including warrants or
bonds with warrants attached, or any preferred stocks, convertible bonds,
or convertible debentures.
(5) Engage in transactions involving puts, calls, straddles, or spreads.
(6) Invest in securities that are not readily marketable or the disposition of
which is restricted under federal securities laws (collectively, "illiquid
securities") if, as a result, more than 10% of the Portfolio's net assets
would be invested in illiquid securities.
(7) Acquire or retain the securities of any other investment company if, as a
result, more than 3% of such investment company's outstanding shares would
be held by the Trust, more than 5% of the value of the Trust's assets would
be invested in shares of such investment company, or more than 10% of the
value of the Trust's assets would be invested in shares of investment
companies in the aggregate, except in connection with a merger,
consolidation, acquisition, or reorganization.
(8) Purchase or retain securities of any issuer if, to the knowledge of the
Trust's management, those officers and trustees of the Trust and of its
investment advisor, who each own beneficially more than 0.5% of the
outstanding securities of such issuer, together own beneficially more than
5% of such securities.
(9) Acquire securities for the purpose of exercising control over management of
the issuer.
(10) Issue or sell any class of senior security as defined in the Investment
Company Act of 1940.
(11) Purchase, sell, or invest in real estate, commodities, commodity contracts,
foreign exchange, or interests in oil, gas, or other mineral exploration or
development programs.
(12) Portfolio may not engage in any short-selling operations.
(13) Purchase securities on margin, except for such short-term credits as are
necessary for the clearance of purchases of portfolio securities.
3
<PAGE>
(14) Act as an underwriter of securities issued by others, except to the extent
that the purchase of portfolio securities may be deemed to be an
underwriting.
(15) Borrow money in excess of 33 % of the market value of its total assets, and
then only from a bank and as a temporary measure to satisfy redemption
requests or for extraordinary or emergency purposes, and provided that
immediately after any such borrowing there is an asset coverage of at least
300 per centum for all such borrowings. To secure any such borrowing, a
Portfolio may not mortgage, pledge, or hypothecate in excess of 33 % of the
value of its total assets. A Portfolio will not purchase any security while
borrowings representing more than 5% of its total assets are outstanding. A
Portfolio will not borrow in order to increase income (leverage), but only
to facilitate redemption requests that might require untimely disposition
of portfolio securities.
(16) Make loans to others, except for the lending of portfolio securities
pursuant to guidelines established by the board of trustees or for the
purchase of debt securities in accordance with its investment objectives
and policies.
Unless otherwise indicated, percentage limitations included in the restrictions
apply at the time the transactions are entered into. Accordingly, any later
increase or decrease beyond the specified limitation resulting from a change in
the Portfolio's net assets will not be considered in determining whether it has
complied with these investment restrictions.
PORTFOLIO TRANSACTIONS
Each Portfolio's assets are invested by BMC in a manner consistent with the
Portfolio's investment objective, policies and restrictions, and with any
instructions that the board of trustees may issue from time to time. Within this
framework, BMC is responsible for making all determinations as to the purchase
and sale of portfolio securities and for taking all steps necessary to implement
securities transactions on behalf of the Portfolios. In placing orders for the
purchase and sale of portfolio securities, BMC will use its best possible price
and execution and will otherwise place orders with broker-dealers subject to and
in accordance with any instructions that the board of trustees may issue from
time to time. BMC will select broker-dealers to execute portfolio transactions
on behalf of the Portfolios solely on the basis of best price and execution.
U.S. government securities generally are traded in the over-the-counter (OTC)
market through broker-dealers. A broker-dealer is a securities firm or bank that
makes a market for securities by offering to buy at one price and sell at a
slightly higher price. The difference between these prices is known as a spread.
BMC expects to execute most transactions on a net basis through broker-dealers
unless it is determined that a better price or execution can be obtained on a
commission basis through a broker. Portfolio securities may also be purchased
directly from the issuer. The Portfolios paid no brokerage commissions during
the fiscal years ended September 30, 1995, 1994 and 1993.
Each Portfolio may hold portfolio securities until they mature, or it may sell
or otherwise dispose of these securities, replacing them with other securities
consistent with its investment objective and policies. The Portfolios' turnover
rates for the fiscal years ended September 30, 1995 and 1994, are indicated in
the following table.
4
<PAGE>
Portfolio Turnover Rates
Fiscal Fiscal
Portfolio 1995 1994
1995 Portfolio 32.26% 177.33%
2000 Portfolio 52.64 89.35
2005 Portfolio 34.23 68.11
2010 Portfolio 26.00 35.35
2015 Portfolio 69.97 64.90
2020 Portfolio 78.08 116.46
1995 Portfolio's turnover rate exceeded 150% in fiscal 1994, because a rise in
interest rates created an opportunity to buy U.S. Treasury securities offering
higher yields than those held by the Portfolio.
VALUATION OF PORTFOLIO SECURITIES
Each Portfolio's net asset value per share (NAV) is determined by Benham
Financial Services, Inc. (BFS) at 12:00 noon Pacific Time each day the New York
Stock Exchange (NYSE) is open for business. The NYSE designated the following
holiday closings for 1996: New Year's Day (observed), Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. Although BFS
expects the same holiday schedule to be observed in the future, the NYSE may
modify its holiday schedule at any time.
BMC typically completes its trading on behalf of each Portfolio in various
markets before the NYSE closes for the day.
Each Portfolio's share price is calculated by adding the value of all portfolio
securities and other assets, deducting liabilities, and dividing the result by
the number of shares outstanding. Expenses and interest on portfolio securities
are accrued daily.
Most securities held by the Portfolios are priced at market value using prices
obtained from an independent pricing service. Because of the large number of
zero-coupon Treasury obligations available, many do not trade each day. In
valuing these securities, the pricing service generally takes into account
institutional trading, trading in similar groups of securities, and any
developments related to specific securities.
The methods used by the pricing service and the valuations so established are
reviewed by BMC under the general supervision of the board of trustees. There
are a number of pricing services available. BMC, on the basis of ongoing
evaluation of these services, may use other pricing services or discontinue the
use of any pricing service in whole or in part.
Securities maturing within 60 days of the valuation date may be valued at
amortized cost, which is cost plus or minus any amortized discount or premium,
unless the trustees determine that this would not result in fair valuation of a
given security. Other assets and securities for which quotations are not readily
available are valued in good faith at their fair market value using methods
approved by the board of trustees.
5
<PAGE>
PREDICTABILITY OF RETURN
Anticipated Value at Maturity. The maturity values of zero-coupon bonds are
specified at the time the bonds are issued, and this feature, combined with the
ability to calculate yield to maturity, has made these instruments popular
investment vehicles for investors seeking reliable investments to meet long-term
financial goals.
To provide a comparable investment opportunity while allowing investors the
flexibility to purchase or redeem shares each day the Trust is open for
business, each Portfolio consists primarily of zero-coupon bonds but is actively
managed to accommodate shareholder activity and to take advantage of perceived
market opportunities. Because of this active management approach, BMC does not
guarantee that a certain price per share will be attained by the time a
Portfolio is liquidated. Instead, BMC attempts to track the price behavior of a
directly held zero-coupon bond by
(1) Maintaining a weighted average maturity within the Portfolio's target
maturity year;
(2) Investing at least 90% of assets in securities that mature within one year
of the Portfolio's target maturity year;
(3) Investing a substantial portion of assets in Treasury STRIPS (the most
liquid Treasury zero);
(4) Under normal conditions, maintaining a cash balance of less than 1%;
(5) Executing portfolio transactions necessary to accommodate net shareholder
purchases or redemptions on a daily basis; and
(6) Whenever feasible, contacting several U.S. government securities dealers
for each intended transaction in an effort to obtain the best price on each
transaction.
These measures enable the advisor to calculate an anticipated value at maturity
(AVM) for each Portfolio that approximates the price per share the Portfolio
will achieve by its weighted average maturity date. The AVM calculation is as
follows:
AVM = P(1+AGR/2)2T
where P = the Portfolio's current price per share; T = the Portfolio's weighted
average term to maturity in years; and AGR = the anticipated growth rate.
This calculation assumes that the shareholder will reinvest all dividend and
capital gain distributions (if any). It also assumes an expense ratio and a
portfolio composition that remain constant for the life of the Portfolio.
Because Portfolio expenses and composition do not remain constant, however, BMC
calculates AVM for each Portfolio each day the Trust is open for business.
In addition to the measures described above, which BMC believes are adequate to
assure close correspondence between the price behavior of each Portfolio and the
price behavior of directly held zero-coupon bonds with comparable maturities,
the Trust has made an undertaking to the staff of the Securities and Exchange
Commission (SEC) that each Portfolio will invest at least 90% of its net assets
in zero-coupon bonds until it is within four years of its target maturity year
and at least 80%
6
<PAGE>
of its net assets in zero-coupon securities while the Portfolio is within two to
four years of its target maturity year. This undertaking may be revoked if the
market supply of zero-coupon securities diminishes unexpectedly, although it
will not be revoked without prior consultation with the SEC staff. In addition,
BMC has undertaken that any coupon-bearing bond purchased on behalf of a
Portfolio will have a duration that falls within the Portfolio's target maturity
year.
Anticipated Growth Rate. BMC also calculates an anticipated growth rate (AGR)
for each Portfolio each day the Trust is open for business. AGR is a calculation
of the annualized rate of growth an investor may expect from his or her purchase
date to the Portfolio's target maturity date. As is the case with calculations
of AVM, the AGR calculation assumes that the investor will reinvest all
dividends and capital gain distributions (if any) and that the Portfolio's
expense ratio and portfolio composition will remain constant. Each Portfolio's
AGR changes from day to day primarily because of changes in interest rates and,
to a lesser extent, to changes in portfolio composition and other factors that
affect the value of the Portfolio's investments.
BMC expects that shareholders who hold their shares until a Portfolio's weighted
average maturity date and who reinvest all dividends and capital gain
distributions (if any), will realize an investment return and maturity value
that do not differ substantially from the AGR and AVM calculated on the day his
or her shares were purchased.
The following table illustrates investor experience with the 1990 Portfolio, a
series of the Trust that was first offered on March 25, 1985, and that was
liquidated on January 25, 1991. This table is not indicative of the future
performance of the existing Portfolios.
<TABLE>
<CAPTION>
Date Share Price (P) AGR Weighted Average AVM
(in $) Maturity (T) (in $)
<S> <C> <C> <C> <C>
April 1985 56.03 10.58 5.64 100.25
June 60.62 9.68 5.42 101.17
September 62.72 9.44 5.08 100.23
December 67.75 8.26 4.95 101.15
March 1986 73.60 6.86 4.69 100.98
June 74.80 6.83 4.38 100.38
September 76.82 6.59 4.16 100.63
December 79.01 6.27 3.86 100.26
March 1987 79.88 6.34 3.59 99.93
June 79.01 7.21 3.27 99.63
September 77.28 8.57 3.14 100.62
December 81.02 7.52 2.7 99.33
March 1988 83.61 6.98 2.51 99.33
June 83.97 6.55 2.62 99.42
September 84.96 6.97 2.09 98.04
December 85.70 8.39 1.68 98.38
March 1989 86.76 9.18 1.50 99.25
June 90.47 7.57 1.23 99.16
September 91.91 7.81 0.98 99.08
December 94.00 7.38 0.74 99.17
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Date Share Price (P) AGR Weighted Average AVM
(in $) Maturity (T) (in $)
<S> <C> <C> <C> <C>
March 1990 95.62 7.68 0.52 99.44
June 97.48 7.44 0.32 99.82
September 99.32 6.73 0.15 100.31
December 101.13 4.33 0.07 101.43
</TABLE>
Calculations in the table on the previous page may not reconcile precisely due
to rounding of share price, AGR, and weighted average maturity to two decimal
points.
Note that the 1990 Portfolio's share price on December 31, 1990, was not the
same as its AVM on that date because the Portfolio had not yet been liquidated
and still held short-term Treasury securities with a 25-day maturity. The
Portfolio was liquidated on January 25, 1991, at a final share price of $101.46.
As a further demonstration of how the Portfolios have behaved over time, the
following table shows each Portfolio's AGR and AVM as of September 30 for each
of the past five years.
<TABLE>
<CAPTION>
9/30/91 9/30/92 9/30/93 9/30/94 9/30/95
AGR AVM AGR AVM AGR AVM AGR AVM AGR AVM
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
*1995 Portfolio 6.28% $100.61 4.01% $101.54 3.35% $101.40 5.40% $101.31 5.03% $101.62
2000 Portfolio 7.14 98.28 6.01 101.01 4.66 100.21 6.76 100.86 5.37 100.99
2005 Portfolio 7.49 98.72 6.89 99.78 5.53 100.21 7.33 100.58 5.75 100.32
2010 Portfolio 7.56 98.54 7.21 100.11 5.92 100.94 7.54 101.38 6.04 101.02
2015 Portfolio 7.52 105.13 7.43 107.05 6.04 106.84 7.56 107.95 6.21 109.62
2020 Portfolio 7.34 94.04 7.37 101.87 6.02 100.76 7.52 102.11 6.20 102.31
</TABLE>
The Portfolios' share prices and growth rates are not guaranteed by the Trust,
The Benham Group, or any of their affiliates. There is no guarantee that the
Portfolios' AVMs will fluctuate as little in the future as they have in the
past.
*The 1995 Portfolio is expected to be liquidated on or about January 25, 1996.
PERFORMANCE
The Funds may quote performance in various ways. Historical performance
information will be used in advertising and sales literature.
Yield quotations are based on the investment income per share earned during a
particular 30-day period, less expenses accrued during the period (net
investment income), and are computed by dividing a Portfolio's net investment
income by its share price on the last day of the period, according to the
following formula:
YIELD = 2 [(a - b + 1)6 - 1]
cd
where a = dividends and interest earned during the period, b = expenses accrued
for the period (net of reimbursements), c = the average daily number of shares
outstanding during the period that were entitled to receive dividends, and d =
the maximum offering price per share on the last day of the period.
8
<PAGE>
Each Portfolio's yield for the 30-day period ended September 30, 1995,
calculated using the SEC yield formula described above, is indicated below.
30-Day Yield
Portfolio (through 9/30/95)
1995 Portfolio 4.85%
2000 Portfolio 5.49
2005 Portfolio 5.85
2010 Portfolio 6.13
2015 Portfolio 6.29
2020 Portfolio 6.33
Total returns quoted in advertising and sales literature reflect all aspects of
a Portfolio's return, including the effect of reinvesting dividends and capital
gain distributions and any change in the Portfolio's NAV during the period.
Average annual total returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in a Portfolio over a stated
period and then calculating the annually compounded percentage rate that would
have produced the same result if the rate of growth or decline in value had been
constant throughout the period. For example, a cumulative return of 100% over
ten years would produce an average annual return of 7.18%, which is the steady
annual rate that would result in 100% growth on a compounded basis in ten years.
While average annual total returns are a convenient means of comparing
investment alternatives, investors should realize that a Portfolio's performance
is not constant over time but changes from year to year and that average annual
total returns represent averaged figures as opposed to actual year-to-year
performance.
The Portfolios' average annual total returns for the one-year, five-year,
ten-year, and life-of-portfolio periods ended September 30, 1995, are indicated
in the following table.
<TABLE>
<CAPTION>
Average Annual Total Returns
Portfolio One-Year Five-Year Ten-Year Life-of-Portfolio*
<C> <C> <C> <C> <C>
1995 Portfolio 5.77% 8.49% 10.40% 11.13%
2000 Portfolio 14.84 12.26 13.60 13.92
2005 Portfolio 25.16 15.33 16.04 16.00
2010 Portfolio 33.06 17.05 17.43 17.33
2015 Portfolio 41.29 18.55 N/A 10.90
2020 Portfolio 47.05 18.47 N/A 11.52
</TABLE>
* The 1995, 2000, 2005, and 2010 Portfolios commenced operations on March 25,
1985. The 2015 Portfolio commenced operations on September 1, 1986. The 2020
Portfolio commenced operations on December 29, 1989.
In addition to average annual total returns, each Portfolio may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total returns may
be quoted as percentages or as dollar amounts and may be calculated for a single
investment, a series of investments, or a series of redemptions over any time
9
<PAGE>
period. Total returns may be broken down into their components of income and
capital (including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions to total
return.
The Portfolios' performances may be compared with the performance of other
mutual funds tracked by mutual fund rating services or with other indexes of
market performance. This may include comparisons with funds that, unlike Benham
funds, are sold with a sales charge or deferred sales charge. Sources of
economic data that may be considered in making such comparisons may include, but
are not limited to, U.S. Treasury bill, note, and bond yields, money market fund
yields, U.S. government debt and percentage held by foreigners, the U.S. money
supply, net free reserves, and yields on current-coupon GNMAs (source: Board of
Governors of the Federal Reserve System); the federal funds and discount rates
(source: Federal Reserve Bank of New York); yield curves for U.S. Treasury
securities and AA/AAA-rated corporate securities (source: Bloomberg Financial
Markets); yield curves for AAA-rated tax-free municipal securities (source:
Telerate); yield curves for foreign government securities (sources: Bloomberg
Financial Markets and Data Resources, Inc.); total returns on foreign bonds
(source: J.P. Morgan Securities Inc.); various U.S. and foreign government
reports; the junk bond market (source: Data Resources, Inc.); the CRB Futures
Index (source: Commodity Index Report); the price of gold (sources: London
a.m./p.m. fixing and New York Comex Spot Price); rankings of any mutual fund or
mutual fund category tracked by Lipper Analytical Services, Inc. or Morningstar,
Inc.; mutual fund rankings published in major, nationally distributed
periodicals; data provided by the Investment Company Institute; Ibbotson
Associates, Stocks, Bonds, Bills, and Inflation; major indexes of stock market
performance; and indexes and historical data supplied by major securities
brokerage or investment advisory firms. The Portfolios may also utilize reprints
from newspapers and magazines furnished by third parties to illustrate the
Portfolios' historical performances.
The Portfolios' shares are sold without a sales charge (or "load"). No-load
funds offer an advantage to investors when compared to load funds with
comparable investment objectives and strategies. For example, if you invest
$10,000 in a no-load fund, 100% of your investment is used to buy shares. If you
invest $10,000 in a fund with a 5.5% load, only $9,450 ($10,000 minus $550) is
used to buy shares. Over time, this difference can have a significant effect on
total return. Assuming a compounded annual growth rate of 10% for both
investments, the no-load fund investment would be worth $25,937 after ten years,
while the load fund investment would be worth only $24,511.
The Benham Group has distinguished itself as an innovative provider of low-cost,
true no-load mutual funds. Among other innovations, The Benham Group established
the first no-load fund that invests primarily in zero-coupon U.S. Treasury
securities, the first no-load double tax-free California short-term bond fund,
the first no-load adjustable rate government securities fund, and the first
no-load utilities fund designed to pay monthly dividends.
TAXES
Each Portfolio intends to qualify annually as a "regulated investment company"
under Subchapter M of the Internal Revenue Code (the Code). By so qualifying,
each Portfolio will be exempt from federal and California income taxes to the
extent that it distributes substantially all of its net investment income and
net realized capital gains to shareholders.
As holders of zero-coupon Treasury securities (zeros), the Portfolios receive no
cash payments of interest prior to the dates these securities mature. However,
portfolio holdings that include zeros accrue interest (commonly referred to as
"imputed income") for federal income tax purposes.
10
<PAGE>
Under the Code, dividends derived from interest, imputed income, and any
short-term capital gains are federally taxable to shareholders as ordinary
income, regardless of whether such dividends are taken in cash or reinvested in
additional shares. Distributions designated as being made from a Portfolio's net
realized long-term capital gains are taxable to shareholders as long-term
capital gains, regardless of the length of time shares are held. Corporate
investors are not eligible for the dividends-received deduction with respect to
distributions from the Portfolios.
Upon redeeming, selling, or exchanging shares of a Portfolio, shareholders will
realize a taxable gain or loss depending upon their basis in the shares
liquidated. The gain or loss generally will be long-term or short-term depending
on the length of time the shares were held. However, a loss recognized by a
shareholder in the disposition of shares on which capital gain dividends were
paid (or deemed paid) before the shareholder had held his or her shares for more
than six months would be treated as a long-term capital loss for tax purposes.
Dividends paid by each Portfolio are exempt from state personal income taxes in
all states because the Portfolios derive their income from debt securities of
the U.S. government whose interest payments are state tax-exempt. Distributions
of capital gains are generally not exempt from state and local taxes.
The information above is only a summary of some of the tax considerations
affecting the Portfolios and their shareholders; no attempt has been made to
discuss individual tax consequences. A prospective investor should consult his
or her tax advisor or state or local tax authorities to determine whether the
Portfolios are suitable investments based on his or her tax situation.
ABOUT THE TRUST
Benham Target Maturities Trust was organized as a Massachusetts business trust
on November 8, 1984. The Declaration of Trust permits the trustees to issue an
unlimited number of full and fractional shares of beneficial interest without
par value, which may be issued in series (Portfolios). Currently, there are
seven series of the Trust, as follows: 1995 Portfolio, 2000 Portfolio, 2005
Portfolio, 2010 Portfolio, 2015 Portfolio, and 2020 Portfolio. The Trust's
newest series, the 2025 Portfolio, is anticipated to be available on February
15, 1996. The board of trustees may create additional series from time to time.
In addition, the board of trustees may liquidate a series at the conclusion of
its target maturity year.
Shares of each Portfolio have equal voting rights, although each Portfolio votes
separately on matters affecting it exclusively. Voting rights are not
cumulative; investors holding more than 50% of the Trust's (i.e., all
Portfolios') outstanding shares may elect a board of trustees. The number of
votes a shareholder is entitled to is based upon the dollar value of the
investment. The election of trustees is determined by the votes received from
all Trust shareholders without regard to whether a majority of shares of any one
series voted in favor of a particular nominee or all nominees as a group. Each
shareholder has rights to dividends and distributions declared by a Portfolio
and to the net assets of such Portfolio upon its liquidation or dissolution
proportionate to his or her share ownership interest in the Portfolio.
The shareholders of a Massachusetts business trust could, under certain
circumstances, be held personally liable for its obligations. However, the
Declaration of Trust contains an express disclaimer of shareholder liability for
acts or obligations of the Trust. The Declaration of Trust also provides for
indemnification and reimbursement of expenses of any shareholder held personally
11
<PAGE>
liable for obligations of the Trust. The Declaration of Trust provides that the
Trust will, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Trust and satisfy any judgment
thereon. The Declaration of Trust further provides that the Trust may maintain
appropriate insurance (for example, fidelity, bonding, and errors and omissions
insurance) for the protection of the Trust, its shareholders, trustees,
officers, employees, and agents to cover possible tort and other liabilities.
Thus, the likelihood that a shareholder would incur financial loss on account of
shareholder liability is limited to circumstances in which both inadequate
insurance exists and the Trust itself is unable to meet its obligations.
Custodian: State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02101, is custodian of the Trust's assets. Services provided by
the custodian bank include (i) settling portfolio purchases and sales, (ii)
reporting failed trades, (iii) identifying and collecting portfolio income, and
(iv) providing safekeeping of securities. The custodian takes no part in
determining the Fund's investment policies or in determining which securities
are sold or purchased by the Fund.
Independent Auditors: KPMG Peat Marwick LLP, 3 Embarcadero Center, San
Francisco, California 94111, serve as the Fund's independent auditors. KPMG
audits the annual report and provides tax and other services as auditors.
TRUSTEES AND OFFICERS
The Trust's activities are overseen by a board of trustees, including five
independent trustees. The individuals listed below whose names are marked by an
asterisk (*) are "interested persons" of the Trust (as defined in the Investment
Company Act of 1940) by virtue of, among other considerations, their affiliation
with either the Trust; the Trust's investment advisor, Benham Management
Corporation (BMC); the Trust's agent for transfer and administrative services,
Benham Financial Services, Inc. (BFS); the Trust's distribution agent, Benham
Distributors, Inc. (BDI); the parent corporation, Twentieth Century Companies,
Inc. (TCC) or TCC's subsidiaries; or other funds advised by BMC. Each trustee
listed below serves as a trustee or director of other funds in The Benham Group.
Unless otherwise noted, dates in parentheses indicate the dates the trustee or
officer began his or her service in a particular capacity. The trustees' and
officers', with the exception of Mr. Stowers III, address is 1665 Charleston
Road, Mountain View, California 94043 and Mr. Stowers III address is 4500 Main
Street, Kansas City, Missouri 64111.
*JAMES M. BENHAM, chairman of the board of trustees (1985). Mr. Benham is also
chairman of the boards of BFS (1985), BMC (1971), and BDI (1988); president of
BMC (1971), and BDI (1988); and a member of the board of governors of the
Investment Company Institute (1988). Mr. Benham has been in the securities
business since 1963, and he frequently comments through the media on economic
conditions, investment strategies, and the securities markets.
RONALD J. GILSON, independent trustee (1995); Charles J. Meyers Professor of Law
and Business at Stanford Law School (1979) and the Mark and Eva Stern Professor
of Law and Business at Columbia University School of Law (1992); counsel to
Marron, Reid & Sheehy (a San Francisco law firm, 1984).
12
<PAGE>
MYRON S. SCHOLES, independent trustee (1985). Mr. Scholes is a principal of
Long-Term Capital Management (1993). He is also Frank E. Buck Professor of
Finance at the Stanford Graduate School of Business (1983) and a director of
Dimensional Fund Advisors (1982) and the Smith Breeden Family of Funds (1992).
From August 1991 to June 1993, Mr. Scholes was a managing director of Salomon
Brothers Inc. (securities brokerage).
KENNETH E. SCOTT, independent trustee (1985). Mr. Scott is Ralph M. Parsons
Professor of Law and Business at Stanford Law School (1972) and a director of
RCM Capital Funds, Inc. (June 1994).
EZRA SOLOMON, independent trustee (1985). Mr. Solomon is Dean Witter Professor
of Finance Emeritus at the Stanford Graduate School of Business, where he served
as Dean Witter Professor of Finance from 1965 to 1990, and a director of
Encyclopedia Britannica.
ISAAC STEIN, independent trustee (1992). Mr. Stein is former chairman of the
board (1990 to 1992) and chief executive officer (1991 to 1992) of Esprit de
Corp. (clothing manufacturer). He is a member of the board of Raychem
Corporation (electrical equipment, 1993), president of Waverley Associates, Inc.
(private investment firm, 1983), and a director of ALZA Corporation
(pharmaceuticals, 1987). He is also a trustee of Stanford University (1994) and
chairman of Stanford Health Services (hospital, 1994).
*JAMES E. STOWERS III, trustee (1995); Mr. Stowers is president and director,
Twentieth Century Investors, Inc., TCI Portfolios, Inc., Twentieth Century World
Investors, Inc., Twentieth Century Premium Reserves, Inc., Twentieth Century
Capital Portfolios, Inc., Twentieth Century Companies, Inc., Investors Research
Corporation and Twentieth Century Services, Inc.
JEANNE D. WOHLERS, independent trustee (1985). Ms. Wohlers is a private investor
and an independent director and partner of Windy Hill Productions, LP.
Previously, she served as vice president and chief financial officer of Sybase,
Inc. (software company, 1988 to 1992).
*BRUCE R. FITZPATRICK, vice president (1985).
*JOHN T. KATAOKA, president, and chief executive officer (1984).
*ANN N. McCOID, controller (1987).
*DOUGLAS A. PAUL, secretary (1988), vice president (1990), and general counsel
(1990).
*MARYANNE ROEPKE, chief financial officer (1995).
As of September 30 1995, the Trust's officers and trustees, as a group, owned
less than 1% of each Portfolio's total shares outstanding.
The table on the next page summarizes the compensation that the trustees of the
Funds received for the Portfolio's fiscal year ended September 30, 1995, as well
as the compensation received for serving as a director or trustee of all other
Benham funds.
13
<PAGE>
<TABLE>
<CAPTION>
TRUSTEE COMPENSATION FOR THE FISCAL YEAR ENDED
September 30, 1995
- ---------------------------------------------------------------------------------------------------------------------
Name of Aggregate Pension or Estimated Total
Trustee Compensation Retirement Benefits Annual Benefits Compensation
From Accrued As Part of Upon Retirement From Fund and
The Fund Fund Expenses Fund Complex
Paid to Trustees
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ronald J. Gilson $ 259 (1995 Portfolio) Not Applicable Not Applicable $41,083
$ 357 (2000 Portfolio)
$ 284 (2005 Portfolio)
$ 255 (2010 Portfolio)
$ 271 (2015 Portfolio)
$ 324 (2020 Portfolio)
- ---------------------------------------------------------------------------------------------------------------------
Myron S. Scholes $ 802 (1995 Portfolio) Not Applicable Not Applicable $64,375
$ 1113 (2000 Portfolio)
$ 856 (2005 Portfolio)
$ 767 (2010 Portfolio)
$ 847 (2015 Portfolio)
$ 922 (2020 Portfolio)
- ---------------------------------------------------------------------------------------------------------------------
Kenneth E. Scott $ 770 (1995 Portfolio) Not Applicable Not Applicable $64,625
$ 1018 (2000 Portfolio)
$ 870 (2005 Portfolio)
$ 768 (2010 Portfolio)
$ 808 (2015 Portfolio)
$ 888 (2020 Portfolio)
- ---------------------------------------------------------------------------------------------------------------------
Ezra Solomon $ 809 (1995 Portfolio) Not Applicable Not Applicable $62,045
$ 1128 (2000 Portfolio)
$ 858 (2005 Portfolio)
$ 768 (2010 Portfolio)
$ 856 (2015 Portfolio)
$ 909 (2020 Portfolio)
- ---------------------------------------------------------------------------------------------------------------------
Isaac Stein $ 771 (1995 Portfolio) Not Applicable Not Applicable $62,375
$ 1007 (2000 Portfolio)
$ 862 (2005 Portfolio)
$ 763 (2010 Portfolio)
$ 808 (2015 Portfolio)
$ 866 (2020 Portfolio)
- ---------------------------------------------------------------------------------------------------------------------
Jeanne D. Wohlers $ 816 (1995 Portfolio) Not Applicable Not Applicable $66,875
$ 1161 (2000 Portfolio)
$ 876 (2005 Portfolio)
$ 777 (2010 Portfolio)
$ 868 (2015 Portfolio)
$ 946 (2020 Portfolio)
- ---------------------------------------------------------------------------------------------------------------------
* Interested trustees receive no compensation for their services as such.
</TABLE>
14
<PAGE>
INVESTMENT ADVISORY SERVICES
Each Portfolio has an investment advisory agreement with BMC dated June 1, 1995,
that was approved by shareholders on May 31, 1995.
BMC is a California corporation and a wholly owned subsidiary of Twentieth
Century Companies (TCC), a Delaware corporation. BMC, as well as BFS and BDI,
became wholly owned subsidiaries of TCC on June 1, 1995, upon the merger of
Benham Management International (BMI), the former parent of BMC, BFS and BDI,
into TCC. BMC has served as investment advisor to the Fund since the Fund's
inception. TCC is a holding company that owns all of the stock of the operating
companies that provide the investment management, transfer agency, shareholder
service, and other services for the Twentieth Century family of funds. James E.
Stowers, Jr., controls TCC by virtue of his ownership of a majority of its
common stock. BMC has been a registered investment advisor since 1971 and is
investment advisor to other funds in The Benham Group.
Each Portfolio's agreement with BMC continues for an initial period of two years
and thereafter from year to year provided that, after the initial two-year
period, it is approved at least annually by vote of a majority of the
Portfolio's outstanding shares, or by vote of a majority of the Trust's
trustees, including a majority of those trustees who are neither parties to the
agreement nor interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
Each investment advisory agreement is terminable on sixty days' written notice,
either by the Portfolio or by BMC, to the other party and terminates
automatically in the event of its assignment.
Each investment advisory agreement stipulates that BMC will provide the
Portfolio with investment advice and portfolio management services in accordance
with the Portfolio's investment objective, policies, and restrictions. Each
agreement also provides that BMC will determine what securities will be
purchased and sold by the Portfolio and assist the Trust's officers in carrying
out decisions made by the board of trustees.
Under the investment advisory agreements, each Portfolio pays BMC a monthly
investment advisory fee equal to its pro rata share of the dollar amount derived
from applying the Trust's average daily net assets to the following annual
investment advisory fee schedule:
Investment Advisory Fee Schedule for the Target Portfolios
.35% of the first $750 million
.25% of the next $750 million
.24% of the next $1 billion
.23% of the next $1 billion
.22% of the next $1 billion
.21% of the next $1 billion
.20% of the next $1 billion
.19% of net assets over $6.5 billion
Investment advisory fees paid by each Portfolio for the fiscal years ended
September 30, 1995, 1994, and 1993, are indicated in the following table. Fee
amounts are net of amounts reimbursed and recouped as described on the following
page.
15
<PAGE>
Investment Advisory Fees
Fiscal Fiscal Fiscal
Portfolio 1995 1994 1993
1995 Portfolio $286,432 $280,764 $313,799
2000 Portfolio 984,031 943,356 820,950
2005 Portfolio 420,328 400,711 564,663
2010 Portfolio 175,368 186,373 212,938
2015 Portfolio 336,887 224,852 363,795
2020 Portfolio 422,436 152,691 143,370
*Net of reimbursements
ADMINISTRATIVE AND TRANSFER AGENT SERVICES
Benham Financial Services, Inc. (BFS), a wholly owned subsidiary of TCC, is the
Trust's agent for transfer and administrative services. For administrative
services, each Portfolio pays BFS a monthly fee based on its pro rata share of
the dollar amount derived from applying the average daily net assets of all of
the funds in The Benham Group to the following annual administrative fee
schedule:
Group Assets Administrative Fee Rate
up to $4.5 billion .11%
up to $6 billion .10
up to $9 billion .09
over $9 billion .08
For transfer agent services, each Portfolio pays BFS monthly fees of $1.1875 for
each shareholder account maintained and $1.35 for each shareholder transaction
executed during that month.
Administrative service and transfer agent fees paid by each Portfolio to BFS for
the fiscal years ended September 30, 1995, 1994, and 1993, are indicated in the
following tables. Fee amounts are net of reimbursements as described below.
Administrative Fees
Fiscal Fiscal Fiscal
Portfolio 1995 1994 1993
1995 Portfolio $ 79,620 $ 79,556 $ 82,449
2000 Portfolio 274,835 265,769 217,868
2005 Portfolio 121,534 113,361 148,149
2010 Portfolio 64,928 54,429 54,803
2015 Portfolio 108,475 66,096 94,959
2020 Portfolio 185,592 50,714 39,598
16
<PAGE>
Transfer Agent Fees
Fiscal Fiscal Fiscal
Portfolio 1995 1994 1993
1995 Portfolio $91,301 $ 55,044 $ 51,722
2000 Portfolio 285,145 170,682 147,151
2005 Portfolio 183,211 104,835 113,016
2010 Portfolio 130,450 67,306 54,491
2015 Portfolio 202,013 78,543 78,654
2020 Portfolio 350,332 69,631 41,881
DIRECT PORTFOLIO EXPENSES
Each Portfolio pays certain operating expenses that are not assumed by BMC or
BFS. These include fees and expenses of the independent trustees; custodian,
audit, tax preparation, and pricing fees; fees of outside counsel and counsel
employed directly by the Trust; costs of printing and mailing prospectuses,
statements of additional information, proxy statements, notices, confirmations,
and reports to shareholders; fees for registering the Portfolio's shares under
federal and state securities laws; brokerage fees and commissions (if any);
trade association dues; costs of fidelity and liability insurance policies
covering the Portfolio; costs for incoming WATS lines maintained to receive and
handle shareholder inquiries; and organizational costs.
EXPENSE LIMITATION AGREEMENT
BMC may recover amounts absorbed on behalf of the Portfolios during the
preceding 11 months if, and to the extent that, for any given month, the
Portfolios expense limit in effect at that time. BMC has agreed to limit the
Portfolios' expenses to .70% of the Portfolios' average daily net assets during
the year ending May 31, 1996.
The Portfolios' contractual expense limit is subject to annual renewal. The
expense limit for the year ended September 30, 1995, was .70% of average daily
net assets.
Net amounts absorbed and recouped for the fiscal years ended September 30, 1995,
1994, and 1993, are indicated in the table below.
Net Reimbursements (Recoupments) by BMC and BFS
Fiscal Fiscal Fiscal
Portfolio 1995 1994 1993
1995 Portfolio $(1,536) $1,536 $0
2000 Portfolio 0 0 0
2005 Portfolio 15,078 1,904 0
2010 Portfolio 57,258 6,924 (5,399)
2015 Portfolio 51,419 9,885 0
2020 Portfolio 243,519 27,220 6,370
17
<PAGE>
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Portfolios' shares are continuously offered at net asset value. The Benham
Group may reject or limit the amount of an investment to prevent any one
shareholder or affiliated group from controlling the Trust or one of its series;
to avoid jeopardizing a series' tax status; or whenever, in management's
opinion, such rejection is in the Trust's or series' best interest.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Fund Shareholder # Of Share Hold % of Total
Name and Address Shares Outstanding
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1995 Charles Schwab & Co. 94,959.815 14.74
Portfolio 101 Montgomery Street
San Francisco, CA 94104-4122
- ----------------------------------------------------------------------------------------------------------------
2000 Charles Schwab & Co. 527,838.828 13.77
Portfolio 101 Montgomery Street
San Francisco, CA 94104-4122
- ----------------------------------------------------------------------------------------------------------------
2005 Charles Schwab & Co. 633,085.699 19.63
Portfolio 101 Montgomery Street
San Francisco, CA 94104-4122
- ----------------------------------------------------------------------------------------------------------------
2010 National Financial Services Corp. 124,541.031 5.54
Portfolio P.O. Box 3908
Church Street Station
New York, NY 10008-3908
Charles Schwab & Co. 513,815.264 22.84
101 Montgomery Street
San Francisco, CA 94104-4122
- ----------------------------------------------------------------------------------------------------------------
2015 National Financial Services Corp. 197,889.673 5.56
Portfolio P.O. Box 3908
Church Street Station
New York, NY 10008-3908
Charles Schwab & Co. 779,998.649 21.93
101 Montgomery Street
San Francisco, CA 94104-4122
- ----------------------------------------------------------------------------------------------------------------
2020 National Financial Services Corp. 3,639,710.741 14.50
Portfolio P.O. Box 3908
Church Street Station
New York, NY 10008-3908
Charles Schwab & Co. 8,540,372.863 33.97
101 Montgomery Street
San Francisco, CA 94104-4122
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
The Benham Group charges neither fees nor commissions on the purchase and sale
of Benham fund shares. However, BFS may charge fees for special services
requested by a shareholder or necessitated by acts or omissions of a
shareholder. For example, BFS may charge a fee for processing dishonored
investment checks or stop-payment requests. BFS charges $10 per hour for account
research requested by investors. This charge will be assessed, for example, when
a shareholder request requires more than one hour of research on historical
account records. The fees charged are based on the estimated costs of performing
shareholder-requested services and are not intended to increase income.
Share purchases and redemptions are governed by California law.
Portfolio Liquidations. On or before January 31 of the year following a
Portfolio's target maturity year, its investments will be sold or allowed to
mature; its liabilities will be discharged, or a provision will be made for
their discharge; and its accounts will be closed. A shareholder may choose to
redeem his or her shares in one of the following ways: (i) by receiving
redemption proceeds or (ii) by exchanging shares for shares of another Benham
fund. If the Portfolio receives no instructions from a shareholder, his or her
shares will be exchanged for shares of Capital Preservation Fund (or a similar
fund if Capital Preservation Fund is not available). The estimated expenses of
terminating and liquidating a Portfolio will be accrued ratably over its target
maturity year. These expenses, which are charged to income (as are all
expenses), are not expected to exceed significantly the ordinary annual expenses
incurred by a Portfolio and, therefore, should have little or no effect on the
maturity value of the Portfolio.
*The 1995 Portfolio is expected to be liquidated on or about January 25, 1996.
OTHER INFORMATION
The Funds' investment advisor, Benham Management Corporation (BMC), has been
continuously registered with the Securities and Exchange Commission (SEC) under
the Investment Advisers Act of 1940 since December 14, 1971. The Trust has filed
a registration statement under the Securities Act of 1933 and the Investment
Company Act of 1940 with respect to the shares offered. Such registrations do
not imply approval or supervision of the Trust or the advisor by the Securities
Exchange Commission.
For further information, refer to registration statements and exhibits on file
with the SEC in Washington, D.C. These documents are available upon payment of a
reproduction fee. Statements in the Prospectus and in this Statement of
Additional Information concerning the contents of contracts or other documents,
copies of which are filed as exhibits to the registration statement, are
qualified by reference to such contracts or documents.
19
<PAGE>
BENHAM TARGET MATURITIES TRUST
1933 Act Post-Effective Amendment No. 24
1940 Act Amendment No. 26
PART C Other Information
Item 24. Financial Statements and Exhibits
(a) Financial Statements. Audited financial statements for each series of
the Trust for the fiscal year ended September 30, 1995, are
incorporated herein by reference to the Registrant's Annual Report
dated September 30, 1995, filed via EDGAR on November 22, 1995.
The EDGAR filing accession No. is 0000757928-95-000003.
(b) Exhibits.
(1) Declaration of Trust dated November 8, 1984, is incorporated
herein by reference to Exhibit 1 to the registration
statement.
(b) Amended Declaration of Trust dated May 31, 1995, is filed
herein as EX-99.B1.
(2) (a) Original Bylaws are incorporated herein by reference to
Exhibit 2 to Pre-Effective Amendment No. 1.
(b) Amended and Restated Bylaws, dated February 13, 1992, are
incorporated herein by reference to Exhibit 2 to
Post-Effective Amendment No. 19.
(3) Not applicable.
(4) Not applicable.
(5) (a) Investment Advisory Agreement between Benham Target
Maturities Trust: 1995 Portfolio, Benham Target Maturities
Trust: 2000 Portfolio, Benham Target Maturities Trust: 2005
Portfolio, Benham Target Maturities Trust: 2010 Portfolio,
Benham Target Maturities Trust: 2015 Portfolio, Benham Target
Maturities Trust: 2020 Portfolio, and any additional series
and Benham Management Corporation, dated June 1, 1995, is
filed herein as EX-99.B5.
(6) Distribution Agreement between Benham Target Maturities Trust
and Benham Distributors, Inc., dated June 1, 1994, is filed
herein as EX-99.B6.
(7) Not applicable.
(8) 1993 Omnibus Custodian Agreement between the Benham Group of
Funds (including Benham Target Maturities Trust) and State
Street Bank and Trust Company, dated August 10, 1993, is
incorporated herein by reference to Exhibit 8 to
Post-Effective Amendment No. 22.
<PAGE>
(9) (a) Administrative Services and Transfer Agency Agreement
between Benham Target Maturities Trust and Benham Financial
Services, Inc., dated June 1, 1994, is filed herein as
EX-99.B9.
(10) Not applicable.
(11) (a) Consent of KPMG Peat Marwick, LLP, independent auditors,
is filed herein as EX-99.B11.
(b) Written Representation pursuant to Rule 485(e) under the
Securities Exchange Act of 1933 is filed herein as EX-99.B10.
(12) Not applicable.
(13) Not applicable.
(14) (a) Benham Individual Retirement Account Plan, including all
instructions and other relevant documents, dated February
1992, is incorporated by reference to Exhibit 14(a) to
Post-Effective Amendment No. 20.
(b) Benham Pension/Profit Sharing plan, including all
instructions and other relevant documents, dated February
1992, is incorporated by reference to Exhibit 14(b) to
Post-Effective Amendment No. 20.
(15) Not applicable.
(16) Schedule for computation of each performance quotation
provided in response to Item 22 is filed herein as EX-99.B16.
(17) Power of Attorney dated August 21, 1995, is filed herein as
EX-99.B17.
Item 25. Persons Controlled by or Under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
As of September 30, 1995, each Portfolio of Benham Target
Maturities Trust had the following number of shareholders of record:
1995 Portfolio 3,834
2000 Portfolio 14,888
2005 Portfolio 10,354
2010 Portfolio 6,422
2015 Portfolio 7,139
2020 Portfolio 17,062
<PAGE>
Item 27. Indemnification.
Registrant hereby incorporates by reference as though it were
set forth fully herein Article II Section 16 of Registrant's Amended and
Restated Bylaws, last amended February 13, 1992, appearing as Exhibit 2 to
Post-Effective Amendment No. 19.
Item 28. Business and Other Connections of Investment Advisor.
The Fund's investment advisor, Benham Management Corporation,
is also investment advisor to Capital Preservation Fund, Inc., Capital
Preservation Fund II, Inc., Benham California Tax-Free and Municipal Funds,
Benham Municipal Trust, Benham Government Income Trust, Benham Equity Funds,
Benham International Funds, Benham Investment Trust, and Benham Manager Funds.
Item 29. Principal Underwriters.
The Registrant's distribution agent, Benham Distributors,
Inc., is also distribution agent for Capital Preservation Fund, Inc., Capital
Preservation Fund II, Inc., Benham Municipal Trust, Benham California Tax-Free
and Municipal Funds, Benham Equity Funds, Benham Government Income Trust, Benham
International Funds, Benham Investment Trust, and Benham Manager Funds.
Item 30. Location of Accounts and Records.
The Registrant, its investment advisor, Benham Management
Corporation, and its agent for transfer and administrative services, Benham
Financial Services, Inc., maintain physical possession of each account, book, or
other document, and shareholder records as required by ss.31(a) of the 1940 Act
and rules thereunder at the Trust's principal office located at 1665 Charleston
Road, Mountain View, CA 94043. The computer and database for shareholder records
are located at Central Computer Facility, 401 North Broad Street, Sixth Floor,
Philadelphia, PA 19108.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
Registrant undertakes to furnish each person to whom a
Prospectus is delivered with a copy of the Registrant's latest report to
shareholders, upon request and without charge.
21
<PAGE>
SIGNATURES
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. 24/Amendment No. 26 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Mountain View, and the State of
California, on the 27th day of November, 1995.
Benham Target Maturities Trust
By: /s/Douglas A. Paul
Douglas A. Paul
Vice President, Secretary, and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 24/Amendment No. 26 has been signed below by the following persons
in the capacities and on the dates indicated.
/s/James M. Benham Chairman of the Board of
James M. Benham* Trustees
/s/James E. Stowers III Trustee
James E. Stowers III*
/s/Ronald J. Gilson Trustee
Ronald J. Gilson*
/s/Myron S. Scholes Trustee
Myron S. Scholes*
/s/Kenneth E. Scott Trustee
Kenneth E. Scott*
/s/Ezra Solomon Trustee
Ezra Solomon
/s/Isaac Stein Trustee
Isaac Stein*
/s/Jeanne D. Wohlers Trustee
Jeanne D. Wohlers*
/s/Maryanne Roepke Chief Financial Officer/
Maryanne Roepke* Treasurer
*By: /s/Douglas A. Paul
Douglas A. Paul
Attorney in Fact (Pursuant to a power of attorney dated August 21, 1995)
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF DOCUMENT
NUMBER
EX-99.B1 Amended Declaration of Trust dated May 31, 1995.
EX-99.B5 Investment Advisory Agreement between Benham
Target Maturities Trust and Benham Management
Corporation, dated June 1, 1995.
EX-99.B6 Distribution Agreement between Benham Target
Maturities Trust and Benham Distributors, Inc.,
dated June 1, 1994.
EX-99.B9 Administrative Services and Transfer Agency Agreement
between Benham Target Maturities Trust and Benham
Financial Services, Inc., dated June 1, 1994.
Ex-99.B10 Written representation pursuant to Rule 485(e) under
the Securities Exchange Act of 1933.
EX-99.B11 Consent of KPMG Peat Marwick, LLP, independent
auditors.
EX-99.B16 Schedule for computation of each performance quotation
provided in response to Item 22.
EX-99.B17 Power of Attorney dated August 22, 1995.
EX-27.1 FDS, 1995 Portfolio
EX-27.2 FDS, 2000 Portfolio
EX-27.3 FDS, 2005 Portfolio
EX-27.4 FDS, 2010 Portfolio
EX-27.5 FDS, 2015 Portfolio
EX-27.6 FDS, 2020 Portfolio
CERTIFICATE
I, Douglas A. Paul, hereby certify that I am the Secretary of Benham
Target Maturities Trust (the "Trust"), a registered management investment
company existing under the laws of the Commonwealth of Massachusetts as a
business trust.
I do further certify that the following is a true and correct copy of
the amendments approved by the Board of Trustees at a meeting on April 3, 1995
and by a majority of the shareholders by proxy at a shareholders meeting held on
May 31, 1995:
Article V, Section 1 and Article III, Section 6(d) of the Declaration
of Trust of Benham Target Maturities Trust to establish dollar-based voting is
hereby amended as follows: (material added is underlined, material deleted is
lined through.)
Article V Shareholders Voting Powers and Meetings
Section 1. Voting Powers. Subject to the provisions of Article III,
Section 6(d), the Shareholders shall have power to vote only (i) for
the election of Trustees as provided in Article IV, Section 1, (ii) to
the same extent as the stockholders of a California business
corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivatively or as a
class action on behalf of the Trust or the Shareholders, (iii) with
respect to the termination of the Trust or any Series to the extent and
as provided in Article VIII, Section 4, and (iv) with respect to such
additional matters relating to the Trust as may be required by this
Declaration of Trust, the Bylaws or any registration of the Trust with
the Commission (or any successor agency) or any state, or as the
Trustees may consider necessary or desirable. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote
and each fractional Share shall be entitled to a proportionate
fractional vote. A Shareholder of each Series shall be entitled to one
vote for each dollar of net asset value per Share of such Series, on
any matter on which such Shareholder is entitled to vote and each
fractional dollar amount shall be entitled to a proportionate
fractional vote. All references in this Declaration of Trust or the
Bylaws to a vote of, or the holders of, a percentage of Shares shall
mean a vote of or the holders of that percentage of total votes
representing dollars of net asset value of a Series or of the Trust, as
the case may be. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons shall be
valid if executed by any one of them unless at or prior to exercise of
the proxy the Trust receives a specific written notice to the contrary
from any one of them. A proxy purporting to be executed by or on behalf
of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest on the
challenger. At any time when no Shares of a Series are outstanding, the
Trustees may exercise all rights of Shareholders of that Series with
respect to matters affecting that Series, take any action required by
law, this Declaration of Trust or the Bylaws to be taken by the
Shareholders.
Article III Shares
Section 6. Establishment and Designation of Series
(d) Voting. All Shares of the Trust entitled to vote on a matter
shall vote separately by Series. That is, the Shareholders of
each Series shall have the right to approve or disapprove
matters affecting the Trust and each respective Series as if
the Series were separate companies. There are, however, two
exceptions to voting by separate Series. First, if the 1940
Act requires all Shares of the Trust to be voted in the
aggregate without differentiation between the separate Series,
then all the Trust's Shares shall be entitled to vote on a one
vote per Share basis Series shall vote together. Second, if
any matter affects only the interests of some but not all
Series, then only such affected Series shall be entitled to
vote on the matter.
IN WITNESS WHEREOF, I have executed this Certificate at the principal
office of the Trust in the City of Mountain View, State of California, with the
common seal of the Trust affixed hereto by the undersigned, having custody of
said seal as Secretary of the Trust, this fifteenth day of June 1995.
/s/Douglas A. Paul
--------------------------------------------
Douglas A. Paul, Secretary
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
BENHAM TARGET MATURITIES TRUST
AGREEMENTAND DECLARATION OF TRUST made at Palo Alto, California this
8th day of November, 1984 by the Trustees hereunder.
WHEREAS the Trustees desire and have agreed to manage all property
coming into their hands as trustees of a Massachusetts business trust in
accordance with the provisions hereinafter set forth,
NOW, THEREFORE, the Trustees hereby direct that this Agreement and
Declaration of Trust be filed with the Secretary of The Commonwealth of
Massachusetts and do hereby declare that they will hold all cash, securities and
other assets, which they may form time to time acquire in any manner as Trustees
hereunder, IN TRUST, and manage and dispose of the same upon the following terms
and conditions for the pro rata benefit of the holders of Shares in this Trust.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as the "Benham Target
Maturities Trust" and the Trustees shall conduct the business of the Trust under
that name or any other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise required
by the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust established
by this Agreement and Declaration of Trust, as amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust named in Article IV
hereof or elected or appointed in accordance with such Article;
(c) "Shares" means the equal proportionate units of interest into which
the beneficial interest in the Trust property belonging to any Series of the
Trust (as the context may require) shall be divided from time to time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940 Act"
refers to the Investment Company Act of 1940 and the Rules and Regulations
thereunder, all as amended from time to time;
(f) The term "Commission" shall mean the United States Securities and
Exchange Commission;
(g) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust, as amended or restated from time to time;
(h) "Bylaws" shall mean the Bylaws of the Trust as amended from time
to time;
(i) "Series Company" refers to the form of registered open-end
investment company described in Section 18(f)(2) of the 1940 Act or in any
successor statutory provision; and
(j) "Series" refers to each Series of Shares established and designated
under or in accordance with the provisions of Article III. Present and future
separate "Series" in the Trust may be referred to as "Portfolios" and these
terms may be used alternatively in future publications and communications sent
to investors.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to provide investors a managed investment
company registered under the 1940 Act and investing one or more portfolios
primarily in securities and debt instruments.
ARTICLE III
Shares
Section 1. Division of Beneficial Interest. The beneficial interest in
the Trust shall at all times be divided into an unlimited number of Shares,
without par value. Subject to the provisions of Section 6 of this Article III,
each Share shall have voting rights as provided in Article V hereof, and holders
of the Shares of any Series shall be entitled to receive dividends, when and as
declared with respect thereto in the manner provided in Article VI, Section 1
hereof. No Shares shall have any priority or preference over any other Share of
the same Series with respect to dividends or distributions upon termination of
the Trust or of such Series made pursuant to Article VIII, Section 4 hereof. All
dividends and distributions shall be made ratably among all Shareholders of a
particular Series from the assets belonging to such Series according to the
number of Shares of such Series held of record by each Shareholder on the record
date for any dividend or on the date of termination, as the case my be.
Shareholders shall have no preemptive or other right to subscribe to any
additional Shares or other securities issued by the Trust or any Series. The
Trustees may from time to time divide or combine the Shares of any particular
Series into a greater or lesser number of Shares of that Series without thereby
changing the proportionate beneficial interest of the Shares of that Series in
the assets belonging to that Series or in any way affecting the rights of Shares
of any other Series.
Section 2. Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or a transfer or similar agent for the Trust,
which books shall be maintained separately for the Shares of each Series. No
certificates certifying the ownership of Shares shall be issued except as the
Trustees may otherwise determine from time to time. The Trustees may make such
rules as they consider appropriate for the transfer of Shares of each Series and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to who are
the Shareholders of each Series and as to the number of Shares of each Series
held from time to time by each.
Section 3. Investments in the Trust. The Trustees may accept
investments in the Trust from such persons, at such times, and on such terms and
for such consideration as they from time to time authorize.
Section 4. Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the existence of
the Trust shall not operate to terminate the Trust, nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but entitles
such representative only to the right of said deceased Shareholder under this
Trust. Ownership of Shares shall not entitle the Shareholder to any title in or
to the whole or any part of the Trust property or right to call for a partition
or division of the same or for an accounting , nor shall the ownership of Shares
constitute the Shareholders as partners. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust shall have any power to bind
personally any Shareholders, nor, except as specifically provided herein, to
call upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay.
Section 5. Power of Trustees to Change Provisions Relating to Shares.
Notwithstanding any other provision of this Declaration of Trust and without
limiting the power of the Trustees to amend the Declaration of Trust as provided
elsewhere herein, the Trustees shall have the power to amend this Declaration of
Trust, at any time and from time to time, in such manner as the Trustees may
determine in their sole discretion, without the need for Shareholder action, so
as to add to, delete, replace or otherwise modify any provisions relating to the
Shares contained in this Declaration of Trust, provided that before adopting any
such amendment without Shareholder approval the Trustees shall determine that it
is consistent with the fair and equitable treatment of all Shareholders or that
Shareholder approval is not otherwise required by the 1940 Act or other
applicable law.
Without limiting the generality of the foregoing, the Trustees may, for
the above-stated purposes, amend the Declaration of Trust to:
(a) create one or more Series of Shares (in addition to any Series
already existing or otherwise) with such rights and preferences and such
eligibility requirements for investment therein as the Trustees shall determine
and reclassify any or all outstanding Shares as shares of particular Series in
accordance with such eligibility requirements;
(b) amend any of the provisions set forth in paragraphs (a)
through (i) of Section 6 of this Article III;
(c) combine one or more Series of Shares into a single Series on
such terms and conditions as the Trustees shall determine;
(d) change or eliminate any eligibility requirements for investment in
Shares of any Series, including without limitation, to provide for the issue of
Shares of any Series in connection with any merger or consolidation of the Trust
with another trust or company or any acquisition by the Trust of part or all of
the assets of another trust or investment company;
(e) change the designation of any Series of Shares;
(f) change the method of allocating dividends among the various
Series of Shares;
(g) allocate any specific assets or liabilities of the Trust or
any specific items of income or expense of the Trust to one or more Series of
Shares;
(h) specifically allocate assets to any or all Series of Shares or
create one or more additional Series of Shares which are preferred over all
other Series of Shares in respect of assets specifically allocated thereto or
any dividends paid by the Trust with respect to any net income, however
determined, earned from the investment and reinvestment of any assets so
allocated or otherwise and provide for any special voting or other rights with
respect to such Series.
Section 6. Establishment and Designation of Series. The establishment
and designation of any Series of Shares shall be effective upon the resolution
by a majority of the then Trustees, setting forth such establishment and
designation and the relative rights and preferences of such Series, or as
otherwise provided in such resolution. Such establishment and designation shall
be set forth in an amendment to this Declaration of Trust as provided in Section
8 of Article VIII.
Shares of each Series established pursuant to this Section 6, unless
otherwise provided in the resolution establishing such Series, shall have the
following relative rights and preferences:
(a) Assets Belonging to Series. All consideration received by the Trust
for the issue or sale of Shares of a particular Series, together with all assets
in which such consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall irrevocably belong to that Series for
all purposes, subject only to the rights of creditors, shall be so recorded upon
the books of account of the Trust, and are herein referred to as "assets
belonging to" that Series. In the event that there are any assets, income,
earnings, profits and proceeds thereof, funds or payments which are not readily
identifiable as belonging to any particular Series (collectively "General
Assets"), the Trustees shall allocate such General Assets to, between or among
any one or more of the Series in such manner and on such basis as they, in their
sole discretion, deem fair and equitable, and any General Assets to, between or
among any one or more of the Series in such manner and on such basis as they, in
their sole discretion, deem fair and equitable, and any General Asset so
allocated to a particular Series shall belong to that Series. Each such
allocation by the Trustees shall be conclusive and binding upon the Shareholders
of all Series for all purposes.
(b) Liabilities Belonging to Series. The assets belonging to each
particular Series shall be charged with the liabilities of the Trust in respect
to that Series and all expenses, costs, charges and reserves attributable to
that Series, and any general liabilities of the Trust which are not readily
identifiable as belonging to any particular Series shall be allocated and
charged by the Trustees to and among any one or more of the Series in such
manner and on such basis as the Trustees in their sole discretion deem fair and
equitable. The liabilities, expenses, costs, charges, and reserves so charged to
a Series are herein referred to as "liabilities belonging to" that Series. Each
allocation of liabilities, expenses, costs, charges and reserves by the Trustee
shall be conclusive and binding upon the holders of all Series for all purposes.
Under no circumstances shall the assets allocated or belonging to any particular
Series be charged with liabilities attributable to any other Series. All persons
who have extended credit which has been allocated to particular Series, or who
have a claim or contract which has been allocated to any particular Series,
shall look only to the assets of that particular Series for payment of such
credit, claim, or contract.
(c) Income, Distributions, and Redemptions. The Trustees shall have
full discretion, to the extent not inconsistent with the 1940 Act, to determine
which items shall be treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon the
Shareholders. Notwithstanding any other provision of this Declaration,
including, without limitation, Article VI, no dividend or distribution
(including, without limitation, Article VI, any distribution paid upon
termination of the Trust or of any Series) with respect to, nor any redemption
or repurchase of, the Shares of any Series shall be effected by the Trust other
than from the assets belonging to such Series, nor, except as specifically
provided in Section 7 of this Article III, shall any Shareholder of any
particular Series otherwise have any right or claim against the assets belonging
to any other Series except to the extent that such Shareholder has such a right
or claim hereunder as a Shareholder of such other Series.
(d) Voting. All Shares of the Trust entitled to vote on a matter shall
vote separately by Series. That is, the Shareholders of each Series shall have
the right to approve or disapprove matters affecting the Trust and each
respective Series as if the Series were separate companies. There are, however,
two exceptions to voting by separate Series. First, if the 1940 Act requires all
Shares of the Trust to be voted in the aggregate without differentiation between
the separate Series, then all Series shall vote together. Second, if any matter
affects only the interests of some but not all Series, then only such affected
Series shall be entitled to vote on the matter.
(e) Equality. All the Shares of each particular Series shall represent
an equal proportionate interest in the assets belonging to that Series (subject
to the liabilities belonging to that Series), and each Share of any particular
Series shall be equal to each other Share of that Series.
(f) Fractions. Any fractional Share of a Series shall carry
proportionately all the rights and obligations of a whole share of that Series,
including rights with respect to voting, receipt of dividends and distributions,
redemption of Shares and termination of the Trust.
(g) Exchange Privilege. The Trustees shall have the authority to
provide that the holders of Shares of any Series shall have the right to
exchange said Shares for Shares of one or more other Series of Shares in
accordance with such requirements and procedures as may be established by the
Trustees.
(h) Combination of Series. The Trustees shall have the authority,
without the approval of the Shareholders of any Series unless otherwise required
by applicable law, to combine the assets and liabilities belonging to any two or
more Series into assets and liabilities belonging to a single Series.
(i) Elimination of Series. At any time that there are no Shares
outstanding of any particular Series previously established and designated, the
Trustees may amend this Declaration of Trust to abolish that Series and to
rescind the establishment and designation thereof, such amendment to be effected
in the manner provided pursuant to Section 5 of this Article III.
Section 7. Indemnification of Shareholders. In case any Shareholder or
former Shareholder shall be held to be personally liable solely by reason of his
or her being or having been a Shareholder and not because of his or her acts or
omissions or for some other reasons, the Shareholder or former Shareholder (or
his or her heirs, executors, administrators, or other legal representatives or
in the case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets of the Trust to be held harmless
from and indemnified against all loss and expense arising from such liability.
Section 8. Trustees Establishment and Designation of Series. The Board
of Trustees hereby establishes and designates Series 1990, 1995, 2000, 2005,
2010, 2015 and 2020 as Series of the Trust with the relative rights and
preferences as described in Section 6 of Article III.
ARTICLE IV
The Trustees
Section 1. Number, Election and Tenure. The number of Trustees shall be
such number as shall be fixed from time to time by a written instrument signed
by a majority of the Trustees, provided, however, that the number of Trustees
shall in no event be less than three nor more than 15. The initial Trustees
shall be Donald E. Farrar, Dent N. Hand, Jr., and John T. Kataoka. The Trustees
may by vote of a majority of the remaining Trustees fill vacancies in the
Trustees or remove Trustees with or without cause by vote of a majority of the
Trustees who are "non-interested" persons (as defined in the 1940 Act) if the
Trustee to be removed is a "non-interested" Trustee, or by vote of the Trustees
who are "interested persons" if the Trustee to be removed is an "interested"
Trustee. Each Trustee shall serve during the continued lifetime of the Trust
until he dies, resigns or is removed, or, if sooner, until the next meeting of
Shareholders called for the purpose of electing Trustees and until the election
and qualification of his successor, except, that Trustees who are not
"interested persons" or employees of the Benham Capital Management Group of
companies shall retire at the end of the calendar year in which they shall have
reached the age of seventy-five (75) years. Any Trustee may resign at any time
by written instrument signed by him and delivered to any officer of the Trust or
to a meeting of the Trustees. Such resignation shall be effective upon receipt
unless specified to be effective at some other time. Except to the extent
expressly provided in a written agreement with the Trust, no Trustee resigning
and no Trustee removed shall have any right to any compensation for any period
following his resignation or removal, or any right to damages on account of such
removal. The Shareholders may fix the number of Trustees and elect Trustees at
any meeting of Shareholders called by the Trustees for that purpose.
Section 2. Effect of Death, Resignation, etc. of a Trustee. The death,
declination, resignation, retirement, removal, or incapacity of the Trustees, or
any of them, shall not operate to annual the Trust or to revoke any existing
agency created pursuant to the terms of this Declaration of Trust. Whenever a
vacancy in the number of Trustees shall occur, until such vacancy is filled as
provided in Article IV, Section 1 the Trustees in office, regardless of their
number, shall have all the powers granted to the Trustees and shall discharge
all the duties imposed upon the Trustees by this Declaration of Trust. A written
instrument certifying the existence of such vacancy signed by a majority of the
Trustees shall be conclusive evidence of such vacancy. In the event of the
death, declination, resignation, retirement, removal, or incapacity of all the
then Trustees within a short period of time and without the opportunity for at
least one Trustee being able to appoint additional Trustees to fill vacancies,
the Trust's investment advisor or investment advisors jointly, if there is more
than one, are empowered to appoint new Trustees.
Section 3. Powers. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Trustees, and they
shall have all powers necessary or convenient to carry out that responsibility
including the power to engage in securities transactions of all kinds on behalf
of the Trust. Without limiting the foregoing, the Trustees may adopt Bylaws not
inconsistent with this Declaration of Trust providing for the regulation and
management of the affairs of the Trust any may amend and repeal them to the
extent that such Bylaws do not reserve that right to the Shareholders; they may
fill vacancies in or reduce the number of Trustees, and may elect and remove
such officers and appoint and terminate such agents as they consider
appropriate; they may appoint from their own number and establish and terminate
one or more committees consisting of two or more Trustees which may exercise the
powers and authority of the Trustees to the extent that the Trustees determine;
they may employ one or more custodians of the assets of the Trust and may
authorize such custodians to employ subcustodians and to deposit all or any part
of such assets in a system or systems for the central handling of securities or
with a Federal Reserve Bank, retain a transfer agent or a shareholder servicing
agent, or both, provide for the distribution of Shares by the Trust, through one
or more principal underwriters or otherwise, set record dates for the
determination of Shareholders with respect to various matters, and in general
delegate such authority as they consider desirable to any officer of the Trust,
to any committee of the Trustees and to any agent or employee of the Trust or to
any such custodian, transfer or Shareholder servicing agent, or principal
underwriter. Any determination as to what is in the interests of the Trust made
by the Trustees in good faith shall be conclusive. In construing the provisions
of this Declaration of Trust, the presumption shall be in favor of a grant of
power to the Trustees.
Without limiting the foregoing, the Trustees shall have power and
authority:
(a) To invest and reinvest cash, to hold cast uninvested, and to
subscribe for, invest in, reinvest in, purchase or otherwise acquire, own, hold,
pledge, sell, assign, transfer, exchange, distribute, lend or otherwise deal in
or dispose of contracts for the future acquisition or delivery of fixed income
or other securities, and securities of every nature and kind, including without
limitation, all types of bonds, debentures, stocks, negotiable or non-negotiable
instruments, obligations, evidences of indebtedness, certificates of deposit or
indebtedness, commercial paper, repurchase agreements, bankers acceptances, and
other securities of any kind, issued, created, guaranteed, or sponsored by any
and all persons, including, without limitation, states, territories, and
possessions of the United States and the District of Columbia and any political
subdivision, agency, or instrumentality of the U.S. Government, any foreign
government or any political subdivision of the U.S. Government or any foreign
government, or any international instrumentality, or by any bank or savings
institution, or by any corporation or organization organized under the laws of
the United States or of any state, territory, or possession thereof, or by any
corporation or organization organized under any foreign law, or in "when issued"
contracts for any such securities, to change the investments of the assets of
the Trust; and to exercise any and all rights, powers and privileges of
ownership or interest in respect of any and all such investments of every kind
and description, including, without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or more persons,
firms, associations, or corporations to exercise any of said rights, powers, and
privileges in respect of any of said instruments;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or
write options with respect to or otherwise deal in any property rights relating
to any or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(d) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in its own
name or in the name of a custodian or subcustodian or a nominee or nominees or
otherwise;
(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security which is
held in the Trust; to consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or issuer; and to pay calls or subscriptions
with respect to any security held in the Trust;
(g) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper;
(h) To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any matter in controversy, including but not
limited to claims for taxes;
(i) To enter into joint ventures, general or limited partnerships
and any other combinations or associations;
(j) To borrow funds or other property;
(k) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof;
(l) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust or payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisors, principal underwriters, or
independent contractors of the Trust, individually against all claims and
liabilities of every nature arising by reason of holding, being or having held
any such office or position, or by reason of any action alleged to have been
taken or omitted by any such person as Trustee, officer, employee, agent,
investment advisor, principal underwriter, or independent contractor, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such person against
liability; and
(m) to pay pensions as deemed appropriate by the Trustees and to adopt,
establish and carry out pension, profit-sharing, share bonus, share purchase,
savings, thrift and other retirement, incentive and benefit plans, trusts and
provisions, including the purchasing of life insurance and annuity contracts as
a means of providing such retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust. The Trustees shall not in any way
be bound or limited by any present or future law or custom in regard to
investment by fiduciaries. The Trustees shall not be required to obtain any
court order to deal with any assets of the Trust or take any other action
hereunder.
Section 4. Payment of Expenses by the Trust. The Trustees are
authorized to pay or cause to be paid out of the principal or income of the
Trust, or partly out of the principal and partly out of income, as they deem
fair, all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the Trust, or in connection with the management thereof,
including, but not limited to, the Trustees' compensation and such expenses and
charges for the services of the Trust's officers, employees, investment advisor
or manager, principal underwriter, auditors, counsel, custodian, transfer agent,
shareholder servicing agent, and such other agents or independent contractors
and such other expenses and charges as the Trustees may deem necessary or proper
to incur.
Section 5. Payment of Expenses by Shareholders. The Trustees shall have
the power, as frequently as they may determine, to cause each Shareholder, or
each Shareholder of any particular Series, to pay directly, in advance or
arrears, for charges of the Trust's custodian or transfer, Shareholder servicing
or similar agent, an amount fixed from time to time by the Trustees, by setting
off such charges due from such Shareholder from declared but unpaid dividends
owed such Shareholder and/or by reducing the number of shares in the account of
such Shareholder by that number of full and/or fractional Shares which
represents the outstanding amount of such charges due from such Shareholder.
Section 6. Ownership of Assets of the Trust. Title to all of the
assets of the Trust shall at all times be considered as vested in the Trustees.
Section 7. Service Contracts.
(a) Subject to such requirements and restrictions as may be set forth
in the Bylaws, the Trustees may, at any time and from time to time, contract for
exclusive or nonexclusive advisory and/or management services for the Trust or
for any Series with Benham Management Corporation or any other corporation,
trust, association or other organization (the "Advisor"); and any such contract
may contain such other terms as the Trustees may determine, including without
limitation, authority for the Advisor to determine from time to time without
prior consultation with the Trustees what investments shall be purchased, held,
sold or exchanged and what portion, if any, of the assets of the Trust shall be
held uninvested and to make changes in the Trust's investments.
(b) The Trustees may also, at any time and from time to time, contract
with any corporation, trust, association, or other organization, appointing it
exclusive or nonexclusive distributor or principal underwriter for the Shares of
any, some, or all of the Series. Every such contract shall comply with such
requirements and restrictions as may be set forth in the Bylaws; and any such
contract may contain such other terms as the Trustees may determine.
(c) The Trustees are also empowered, at any time and from time to time,
to contract with any corporations, trust, associations, or other organizations,
appointing it or them the transfer agent(s) and/or shareholders servicing
agent(s) for the Trust or one or more of the Series. Specifically, the Trustees
are empowered to contract or join with other investment companies managed by the
Trust's investment advisor to have transfer agency and/or shareholder servicing
activities performed jointly by such investment companies and their employees
with an appropriate allocation between the investment companies of the costs and
expenses of providing such services. Every such contract shall comply with such
requirements and restrictions as may be set forth in the Bylaws or stipulated by
resolution of the Trustees.
(d) The fact that:
(i) any of the Shareholders, Trustees, or officers of the
Trust is a shareholder, director, officer, partner, trustee,
employee, manager, advisor, principal underwriter, distributor
or affiliate or agent of or for any corporation, trust,
association, or other organization, or for any parent or
affiliate of any organization with which an advisory or
management contract, or principal underwriter's or
distributor's contract, or transfer, Shareholder servicing or
other agency contract may have been or may hereafter be made,
or that any such organization, or any parent or affiliate
thereof, is a Shareholder or has an interest in the Trust, or
that
(ii) any corporation, trust, association or other organization
with which an advisory or management contract or principal
underwriter's or distributor's contract, or transfer,
Shareholder servicing or other agency contract may have been
or may hereafter be made also has an advisory or management
contract, or principal underwriter's or distributor's
contract, or transfer, shareholder servicing or other agency
contract with one or more other corporations, trusts,
associations, or other organizations, or has other business or
interests, shall not affect the validity of any such contract
or disqualify any Shareholder, Trustee or officer of the Trust
from voting upon or executing the same or create any liability
or accountability to the Trust or its Shareholders.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. Subject to the provisions of Article III,
Section 6(d), the Shareholders shall have power to vote only (i) for the
election of Trustees as provided in Article IV, Section 1, (ii) to the same
extent as the stockholders of a California business corporation as to whether or
not a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders, (iii) with respect to the termination of the Trust or any Series
to the extent and as provided in Article VIII, Section 4, and (iv) with respect
to such additional matters relating to the Trust as may be required by this
Declaration of Trust, the Bylaws or any registration of the Trust with the
Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable. A Shareholder of each Series shall be entitled
to one vote for each dollar of net asset value per Share of such Series, on any
matter on which such Shareholder is entitled to vote and each fractional dollar
amount shall be entitled to a proportionate fractional vote. All references in
this Declaration of Trust or the Bylaws to a vote of, or the holders of, a
percentage of Shares shall mean a vote of or the holders of that percentage of
total votes representing dollars of net asset value of a Series or of the Trust,
as the case may be. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy. A proxy with respect to
Shares held in the name of two or more persons shall be valid if executed by any
one of them unless at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of them. A proxy purporting
to be executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. At any time when no Shares of a Series are
outstanding, the Trustees may exercise all rights of Shareholders of that Series
with respect to matters affecting that Series, take any action required by law,
this Declaration of Trust or the Bylaws to be taken by the Shareholders.
Section 2. Voting Power and Meetings. Meetings of the Shareholders may
be called by the Trustees for the purpose of electing Trustees as provided in
Article IV, Section 1 and for such other purposes as may be prescribed by law,
by this Declaration of Trust or by the Bylaws. Meetings of the Shareholders may
also be called by the Trustees from time to time for the purpose of taking
action upon any other matter deemed by the Trustees to be necessary or
desirable. A meeting of Shareholders may be held at any place designated by the
Trustees. Written notice of any meeting of Shareholders shall be given or caused
to be given by the Trustees by mailing such notice at least seven days before
such meeting, postage prepaid, stating the time and place of the meeting, to
each Shareholder at the Shareholder's address as it appears on the records of
the Trust. Whenever notice of a meeting is required to be given to a Shareholder
under this Declaration of Trust or the Bylaws, a written waiver thereof,
executed before or after the meeting by such Shareholder or his attorney
thereunto authorized and filed with the records of the meeting, shall be deemed
equivalent to such notice.
Section 3. Quorum and Required Vote. Except when a larger quorum is
required by applicable law, by the Bylaws or by this Declaration of Trust, forty
percent (40%) of the Shares entitled to vote shall constitute a quorum at a
Shareholders' meeting. When any one or more Series is to vote as a single class
separate from any other Shares which are to vote on the same matters as a
separate class or classes, forty percent (40%) of the Shares of each such Series
entitled to vote shall constitute a quorum at a Shareholders' meeting of that
Series. Any meeting of Shareholders may be adjourned from time to time by a
majority of the votes properly cast upon the question, whether or not a quorum
is present, and the meeting may be held as adjourned within a reasonable time
after the date set for the original meeting without further notice. Subject to
the provisions of Article III, Section 6(d), when a quorum is present at any
meeting, a majority of the Shares voted shall decide any questions and a
plurality shall elect a Trustee, except when a larger vote is required by any
provision of this Declaration of Trust or the Bylaws or by applicable law.
Section 4. Action by Written Consent. Any action taken by Shareholders
may be taken without a meeting if Shareholders holding a majority of the Shares
entitled to vote on the matter (or such larger proportion thereof as shall be
required by any express provision of this Declaration of Trust or by the Bylaws)
and holding a majority (or such larger proportion as aforesaid) of the Shares of
any Series entitled to vote separately on the matter consent to the action in
writing and such written consents are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as a vote taken at
a meeting of Shareholders.
Section 5. Record Dates. For the purpose of determining the
Shareholders of any Series who are entitled to vote or act at any meeting or any
adjournment thereof, the Trustees may from time to time fix a time, which shall
be not more than 75 days before the date of any meeting of Shareholders, as the
record date for determining the Shareholders of such Series having the right to
notice of and to vote at such meeting and any adjournment thereof, and in such
case only Shareholders of record on such record date shall have such right,
notwithstanding any transfer of shares on the books of the Trust after the
record date. For the purpose of determining the Shareholders of any Series who
are entitled to receive payment of any dividend or of any other distribution,
the Trustees may from time to time fix a date, which shall be before the date
for the payment of such dividend or such other payment, as the record date for
determining the Shareholders of such Series having the right to receive such
dividend or distribution. Without fixing a record date the Trustees may for
voting and/or distribution purposes close the register or transfer books for one
or more Series for all or any part of the period between a record date and a
meeting of Shareholders or the payment of a distribution. Nothing in this
section shall be construed as precluding the Trustees from setting different
record dates for different Series.
Section 6. Additional Provisions. The Bylaws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions, and Redemptions
Section 1. Determination of Net Asset Value, Net Income, and
Distributions. Subject to Article III, Section 6 hereof, the Trustees, in their
absolute discretion, may prescribe and shall set forth in the Bylaws or in a
duly adopted resolution of the Shares of any Series or net income attributable
to the Shares of any Series, or the declaration and payment of dividends and
distributions on the Shares of any Series, as they may deem necessary or
desirable.
Section 2. Redemptions and Repurchases. The Trust shall purchase such
Shares as are offered by any Shareholder for redemption, upon the presentation
of a proper instrument of transfer together with a request directed to the Trust
or a person designated by the Trust that the Trust purchase such Shares or in
accordance with such other procedures for redemption as the Trustees may from
time to time authorize; and the Trust will pay therefor the net asset value
thereof, as determined in accordance with the Bylaws and applicable law, next
determined under the 1940 Act. Payment for said Shares shall be made by the
Trust to the Shareholder within seven days after the date on which the request
is made in proper form. The obligation set forth in this Section 2 is subject to
the provision that in the event that any time the New York Stock Exchange is
closed for other than weekends or holidays, or if permitted by the rules of the
Commission, during periods when trading on the Exchange is restricted or during
any emergency which makes it impracticable for the Trust to dispose of the
investments of the applicable Series or to determine fairly the value of the net
assets belonging to such Series or during any other period permitted by order of
the Commission for the protection of investors, such obligation may be suspended
or postponed by the Trustees.
Section 3. Redemptions at the Option of the Trust. The Trust shall have
the right at its option and at any time to redeem Shares of any Shareholder at
the net asset value thereof as described in Section 1 of this Article VI: (i) if
at such time such Shareholder owns Shares of any Series having an aggregate net
asset value of less than an amount, not to exceed $1,000, determined from time
to time by the Trustees; or (ii) to the extent that such Shareholder owns Shares
equal to or in excess of a percentage determined from time to time by the
Trustees of the outstanding Shares of the Trust or of any Series.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Section 1. Compensation. The Trustees as such shall be entitled to
reasonable compensation from the Trust, and they may fix the amount of such
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, legal, accounting, investment banking or other
services and payment for the same by the Trust.
Section 2. Limitation of Liability. The Trustees shall not be
responsible or liable in any event for any neglect or wrongdoing of any officer,
agent, employee, manager or Principal Underwriter of the Trust, nor shall any
Trustee be responsible for the act or omission of any other Trustee, but nothing
herein contained shall protect any Trustee against any liability to which he
would otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever issued, executed or done by or on behalf of
the Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been issued, executed or done only in or with
respect to their or his capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon.
Section 3. Indemnification. The Trustees shall be entitled and
empowered to the fullest extent permitted by law to purchase insurance for and
to provide by resolution or in the Bylaws for indemnification out of Trust
assets for liability and for all expenses reasonably incurred or paid or
expected to be paid by a Trustee or officer in connection with any claim,
action, suit or proceeding in which he becomes involved by virtue of his
capacity or former capacity with the Trust. The provisions, including any
exceptions and limitations concerning indemnification, may be set forth in
detail in the Bylaws or in a resolution of the Trustees.
ARTICLE VIII
Miscellaneous
Section 1. Trustees, Shareholders, etc. Not Personally Liable; Notice.
All persons extending credit to, contracting with or having any claim against
the Trust or any Series shall look only to the assets of the Trust, or, to the
extent that the liability of the Trust may have been expressly limited by
contract to the assets of a particular Series, only to the assets belonging to
the relevant Series, for payment under such credit, contract or claim; and
neither the Shareholders nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, shall be personally liable
therefor. Nothing in this Declaration of Trust shall protect any Trustee against
any liability to which such Trustee would otherwise be subject by reason or
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate or undertaking made
or issued on behalf of the Trust by the Trustees, by an officer or officers or
otherwise may include a notice that this Declaration of Trust is on file with
the Secretary of the Commonwealth of Massachusetts and may recite that the note,
bond, contract, instrument, certificate, or undertaking was executed or made by
or on behalf of the Trust or by them as Trustee or Trustees or as officer or
officers or otherwise and not individually and that the obligations of such
instrument are not binding upon any of them or the Shareholders individually but
are binding only upon the assets and property of the Trust or upon the assets
belonging to the Series for the benefit of which the Trustees have caused the
note, bond, contract instrument, certificate or undertaking to be made or
issued, and may contain such further recital as he or they may deem appropriate,
but the omission of any such recital shall not operate to bind any Trustee or
Trustees or officer or officers or Shareholders or any other person
individually.
Section 2. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his own
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Declaration of Trust, and shall be under no liability for
any act or omission in accordance with such advice or for failing to follow such
advice. The Trustees shall not be required to give any bond as such, nor any
surety if a bond is required.
Section 3. Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
Section 4. Termination of Trust or Series. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by vote of at least two-thirds (66-2/3%) of the
Shares of each Series entitled to vote, voting separately by Series, or by the
Trustees by written notice to the Shareholders. Any Series may be terminated at
any time by vote of at least two-thirds (66-2/3%) of the Shares of that Series
or by the Trustees by written notice to the Shareholders of that Series.
Upon termination of the Trust (or any Series, as the case may be),
after paying or otherwise providing for all charges, taxes, expenses and
liabilities belonging, severally, to each Series (or the applicable Series, as
the case may be), whether due or accrued or anticipated as may be determined by
the Trustees, the Trust shall, in accordance with such procedures as the
Trustees consider appropriate, reduce the remaining assets belonging, severally,
to each Series (or the applicable Series, as the case may be), to distributable
form in cash or shares or other securities, or any combination thereof, and
distribute the proceeds belonging to each Series or the applicable Series, as
the case may be), to the Shareholders of that Series, as a Series, ratably
according to the number of Shares of that Series held by the several
Shareholders on the date of termination.
Section 5. Merger and Consolidation. The Trustees may cause the Trust
or one or more of its Series to be merged into or consolidated with another
Trust or company or the Shares exchanged under or pursuant to any state or
Federal statute, if any, or otherwise to the extent permitted by law. Such
merger or consolidation or share exchange must be authorized by vote of a
majority of the outstanding Shares of the Trust as a whole or any affected
Series, as may be applicable; provided that in all respects not governed by
statute or applicable law, the Trustees shall have power to prescribe the
procedure necessary or appropriate to accomplish a sale of assets, merger or
consolidation.
Section 6. Filing of Copies, References, Headings. The original or a
copy of this instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of the Commonwealth of Massachusetts and with any other governmental
office where such filing may from time to time be required. Anyone dealing with
the Trust may rely on a certificate by an officer of the Trust as to whether or
not any such amendments have been made and as to any matters in connection with
the Trust hereunder; and, with the same effect as if it were the original, may
relay on a copy certified by an officer of the Trust to be a copy of this
instrument, or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions like "herein,"
"hereof" and "hereunder," shall be deemed to refer to this instrument as amended
or affected by any such amendments. Headings are placed herein for convenience
of reference only and shall not be taken as a part hereof or control or affect
the meaning, construction or effect of this instrument. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 7. Applicable Law. This Agreement and Declaration of Trust is
created under and is to be governed by and construed and administered according
to the laws of the Commonwealth of Massachusetts. The Trust shall be of the type
commonly called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
Section 8. Amendments. This Declaration of Trust may be amended
at any time by an instrument in writing signed by a majority of the then
Trustees.
Section 9. Trust Only. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment, or any form of legal relationship other than a trust.
Nothing in this Agreement and Declaration of Trust shall be construed to make
the Shareholders, either by themselves or with the Trustees, partners or members
of a joint stock association.
Section 10. Use of the Name "Benham". Benham Management Corporation
("BMC") has consented to the use by the Trust of the identifying word or name
"Benham" in the name of the Trust. Such consent is conditioned upon the
employment of BMC, its successors or any affiliate thereof, as the Advisor of
the Trust. As between the Trust and itself, BMC controls the use of the name of
the Trust insofar as such name contains "Benham." The name or identifying word
"Benham" may be used from time to time in other connections and for other
purposes by BMC or affiliated entities. BMC may require the Trust to cease using
"Benham" in the name of the Trust if the Trust ceases to employ, for any reason,
BMC, an affiliate, or any successor as Advisor of the Trust.
IN WITNESS WHEREOF, a majority of the Trustees as aforesaid do hereto
set their hands this 8th day of November, 1984.
- ----------------------------------- -----------------------------------
Donald E. Farrar Dent N. Hand, Jr.
- -----------------------------------
John T. Kataoka
INVESTMENT ADVISORY AGREEMENT
Benham Target Maturities Trust
Agreement effective this 1st day of June, 1995, between BENHAM TARGET
MATURITIES TRUST, a registered open-end management investment company organized
as a business trust in the Commonwealth of Massachusetts (the "Trust"), and
BENHAM MANAGEMENT CORPORATION, a registered investment advisor incorporated in
the State of California (the "Advisor").
Whereas, the Trust is authorized to issue shares of beneficial interest
in one or more series with each such series representing interests in a separate
portfolio of securities and other assets; and
Whereas, the Trust currently offers its shares in six series designated
as the 1995 Portfolio, 2000 Portfolio, 2005 Portfolio, 2010 Portfolio, 2015
Portfolio, and 2020 Portfolio (the "Initial Series"), (such Initial Series
together with all other series subsequently established by the Trust with
respect to which the Trust desires to retain the Advisor to render investment
advisory services hereunder and with respect to which the Advisor is willing to
do so being herein collectively referred to as the "Series"). In the event the
Trust establishes one or more series other than the Initial Series with respect
to which it desires to retain the Advisor to render management and investment
advisory services hereunder, it shall notify the Advisor in writing, whereupon
such series shall become a Series hereunder.
I. DESCRIPTION OF SERVICES TO BE PROVIDED. In consideration for
the compensation hereinafter described, the Advisor agrees to provide the
following services to the Trust and to the Series:
A. Investment Advice and Portfolio Management. The Advisor
shall manage the investment and reinvestment of the Series' assets in accordance
with the investment objectives and policies of the Series as set forth in the
Trust's registration statement with the Securities and Exchange Commission as
amended from time to time and such instructions as the Trust's board of trustees
may issue. Consistent with the foregoing, the Advisor shall make all
determinations as to the investment of the Series' assets and the purchase and
sale of its portfolio securities and take all steps necessary to implement same.
Such determinations and services shall also include determining the manner in
which voting rights, rights to consent to corporate actions and other rights
pertaining to the Series' portfolio securities shall be exercised. In placing
orders for the execution of the Series' portfolio transactions, the Advisor
shall use its best efforts to obtain the best possible price and execution and
shall otherwise place such orders subject to and in accordance with any
directions which the Trust's board of trustees may issue from time to time with
respect thereto. The Advisor shall select brokers and dealers for the execution
of portfolio transactions in accordance with the provisions of Section I.B. of
this agreement.
B. Brokerage. In executing transactions for the Series and
selecting brokers or dealers, the Advisor will use its best efforts to seek the
best price and execution available and shall execute or direct the execution of
all such transactions in a manner both permitted by law and that suits the best
interest of the Series and its shareholders. In assessing the best price and
execution available for any Series transaction, the Advisor will consider all
factors it deems relevant including, but not limited to, breadth of the market
in the security, the price of the security, the financial condition and
execution capability of the broker or dealer and the reasonableness of any
commission for the specific transaction and on a continuing basis. Consistent
with the obligation to obtain best execution, the Advisor may cause a Series to
pay a broker which provides brokerage and research services to the Advisor a
commission for effecting a securities transaction in excess of the amount
another broker might have charged. Such higher commissions may not be paid
unless the Advisor determines in good faith that the amount paid is reasonable
in relation to the services received in terms of the particular transaction or
the Advisor's overall responsibilities to the Series and any other of the
Advisor's clients.
1
<PAGE>
On occasions when the Advisor deems the purchase or sale of a security
to be in the best interest of the Series as permitted by applicable law, the
Advisor may aggregate the securities to be sold or purchased with purchases of
sales of other funds in order to obtain the best execution of the order or lower
brokerage commissions, if any. The Advisor may also on occasion purchase or sell
a particular security for one or more clients in different amounts. On either
occasion, and to the extent permitted by applicable law and regulations,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Advisor in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Trust and to such other customers.
C. Reports and Information. The Advisor shall render regular
reports to the Trust at quarterly meetings of the board of trustees and at such
other times as may reasonably be requested by the Trust's board of (i) the
decisions it has made with respect to the Series' assets and the purchase and
sale of its portfolio securities, (ii) the reasons for such decisions and
related actions and, (iii) the extent to which those decisions have been
implemented. In addition, the Advisor will provide the Trust with such
accounting and statistical data as it requires for the preparation of
registration statements, reports and other documents required by federal and
state securities, tax and other applicable laws and regulations and such
additional documents and information as the Trust may reasonably request for the
management of its affairs.
D. Promotion and Distribution. The Advisor shall promote the
sale and distribution of the Series' shares to the general public in such a
manner and at such times and places as the Advisor shall, in the exercise of
reasonable discretion, determine; and otherwise as the Advisor and the Trust's
board of trustees may from time to time agree.
II. COMPENSATION FOR SERVICES.
(a) Amount of Compensation. As compensation for the services
rendered and duties assumed by the Advisor, the Trust, on behalf of the Series,
shall, within ten (10) days after the last day of each calendar month, pay the
Advisor an advisory fee equal to the amount determined using the following
formula: (A) a Trust Fee plus an Individual Fund Fee (if any), minus (B) the
amount by which the Series' Expenses exceed the Expense Guarantee Rate as
defined below, minus (C) any further amount by which the Advisor publicly
announces it will reduce the Series' Expenses, plus (D) the amount of any
recoupment as described below.
The Advisor's compensation shall be computed and accrued daily.
Upon termination of this agreement before the end of any calendar
month, the fee for the period from the end of the calendar month preceding the
month of termination to the date of termination shall be prorated according to
the proportion which the number of calendar days in the month prior to the date
of termination bears to the number of calendar days in the month of termination,
and shall be payable within ten (10) days after the date of termination. For
this purpose, the value of the Series' net assets shall be computed by the same
method at the end of each business day as the Series uses to compute the value
of its net assets in connection with the determination of the net asset value of
Series shares, all as more fully set forth in the Series' prospectus. To the
extent that Expenses of the Series in excess of the Series' Expense Guarantee
Rate exceed the total of the Trust Fee and Individual Fund Fee (if any), plus
any recoupment due, the Advisor will reimburse the Series for such excess.
(b) Determination of Trust Fee. The Trust Fee for each Series
shall be equal to that Series' pro-rata share of the value of the aggregated
average daily net assets of the Trust, determined for each calendar day,
pursuant to the following schedule of annualized rates:
0.35% of the first $750 million;
0.25% of the next $750 million;
0.24% of the next $1 billion;
2
<PAGE>
0.23% of the next $1 billion;
0.22% of the next $1 billion;
0.21% of the next $1 billion;
0.20% of the next $1 billion;
and 0.19% of the net assets over $6.5 billion.
(c) Limitation of Fund Expenses.
1. The Expense Guarantee Rate for each Series is set
forth on Schedule A, attached hereto, as such
schedule may be amended from time to time by the
Trust's board of trustees.
2. The term "Expenses" as used in Section II of this
agreement shall mean:
A. The Trust Fee plus the Individual Fund Fee (if any).
B. Compensation for administrative and
transfer agent services as specified in
Section I.B and II.B of The Administrative
Services Agreement, as such agreement may be
amended from time to time by the Trust's
board of trustees or shareholders (the
"Administrative Services Agreement").
C. Direct expenses as specified in Section III.B of the
Administrative Services Agreement.
D. Extraordinary Expenses, as specified in Section
III.C of the Administrative Services Agreement, are
excluded from the definition of Expenses as set forth
herein.
3. The Advisor will be legally bound by any public
announcement that it will reduce, in accordance with
the terms of its announcement, the Series' Expenses
below the Expense Guarantee Rate.
(d) Recoupment. The Advisor may recover amounts (representing
Expenses in excess of the Expense Guarantee Rate) which reduced the Advisor's
compensation or that it reimbursed to a Series during the preceding 11 months
if, and to the extent that, for any given month, the Series' expense ratio (net
of reimbursements) was lower than the Expense Guarantee Rate in effect at the
time, but not during any period, during which the Advisor has agreed, pursuant
to paragraph (c)3 above, to limit the Series' Expenses to an amount less than
the Expense Guarantee Rate.
III. EXPENSES.Except as hereinafter provided, the Advisor shall pay
all of its expenses incurred in the performance of this agreement, including but
not limited to salaries and other compensation of its officers and employees and
all other costs of providing such advice, portfolio management and information
and reports to the Trust and the Series as are required hereunder, and all
expenses associated with any activity primarily intended to result in the sale
of Series' shares, such as advertising, printing and mailing of prospectuses to
other than current shareholders, printing and mailing of sales literature and
compensation of sales personnel.
IV. ACTIVITIES OF THE ADVISOR. The services of the Advisor to the
Series hereunder are not to be deemed exclusive, and the Advisor shall be free
to render similar services to others. Subject to and in accordance with the
Declaration of Trust and the Bylaws of the Trust and to Section 10(a) of the
Investment Company Act of 1940, it is understood that trustees, officers, agents
and shareholders of the Trust are or may be interested in the Advisor as
directors, officers or shareholders of the Advisor, that directors, officers,
agents or shareholders of the Advisor are or may be interested in the Trust as
trustees, officers, shareholders or otherwise, that the Advisor is or may be
interested in the
3
<PAGE>
Trust as a shareholder or otherwise, and that the effect of any such interest
shall be governed by the Trust's Declaration of Trust, its Bylaws and the
Investment Company Act of 1940.
V. LIABILITY OF THE ADVISOR. In the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of its obligations and duties
hereunder, the Advisor shall not be subject to liability to the Series or to any
shareholder of the Series for any act or omission in the course of, or connected
with, rendering advice or services hereunder or for any losses that may be
sustained in the purchase, retention or sale of any security. No provision of
this agreement shall be construed to protect any trustee or officer of the Trust
or any director or officer of the Advisor from liability in violation of
Sections 17(h) and (i) of the Investment Company Act of 1940.
VI. LIMITATION OF TRUST'S LIABILITY. The Advisor acknowledges that it
has received notice of and accepts the limitations of the Trust's liability set
forth in its Declaration of Trust. The Advisor agrees that the Trust's
obligations hereunder shall be limited to the Series and to its assets and that
the Advisor shall not seek satisfaction of any such obligation from the
shareholders of the Series nor from any trustee, officer, employee or agent of
the Trust.
VII. RENEWAL, TERMINATION AND AMENDMENT. The term of this agreement
shall be from the date first written above, and shall continue in effect, unless
sooner terminated as provided herein, for two years from such date, and shall
continue in effect with respect to a Series from year to year thereafter only so
long as such continuance is specifically approved at least annually by the vote
of either a majority of the outstanding voting securities of that Series or a
majority of the Trust's trustees, and the vote of a majority of the Trust's
trustees who are neither parties to the agreement nor interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval. "Approved at least annually" shall mean approval occurring, with
respect to the first continuance of the agreement, during the 90 days prior to
and including the date of its termination in the absence of such approval, and
with respect to any subsequent continuance, during the 90 days prior to and
including the first anniversary of the date upon which the most recent previous
annual continuance of this agreement became effective. This agreement may be
terminated at any time without payment of any penalty, by the board of trustees
of the Trust, or with respect to a Series, by a vote of the majority of the
outstanding voting securities of such Series, upon 60 days' written notice to
the Advisor, and by the Advisor upon 60 days' written notice to the Trust. This
agreement shall terminate automatically in the event of its assignment. The
terms "assignment" and "vote of a majority of the outstanding voting securities"
shall have the meanings set forth for such terms in the Investment Company Act
of 1940 and Rule 18f-2 thereunder.
VIII. SEVERABILITY.If any provision of this agreement shall be held or
made invalid by a court decision, statute, rule or similar authority, the
remainder of this agreement shall not be affected thereby.
IX. APPLICABLE LAW. This agreement shall be construed in accordance
with the laws of the State of California.
4
<PAGE>
In witness whereof, the parties hereto have caused this instrument to
be executed by their officers designated below on the day and year first written
above.
BENHAM TARGET MATURITIES TRUST
By /s/John T. Kataoka
John T. Kataoka
President
BENHAM MANAGEMENT CORPORATION
By /s/James M. Benham
James M. Benham
President
5
<PAGE>
<TABLE>
<CAPTION>
EXPENSE GUARANTEE RATES
SCHEDULE A
Expense Guarantee Rates and Effective Dates
Approved by Board of Directors/Trustees April 3, 1995
=======================================================================================================
Proposed '95) BOARD EFFECTIVE
FUND EXPENSE GUARANTEE APPROVAL DATES
RATE DATE
=======================================================================================================
<S> <C> <C> <C>
Capital Preservation Fund .54% 4/3/95 6/1/95 to
5/31/96
- -------------------------------------------------------------------------------------------------------
Capital Preservation Fund II .75% 4/3/95 6/1/95 to
5/31/96
- -------------------------------------------------------------------------------------------------------
Benham California Tax-Free and Municipal Funds
- -------------------------------------------------------------------------------------------------------
Municipal High-Yield Fund .62% 4/3/95 6/1/95 to
5/31/96
- -------------------------------------------------------------------------------------------------------
Municipal Money Market Fund .58% " "
- -------------------------------------------------------------------------------------------------------
Tax-Free Insured Fund .62% " "
- -------------------------------------------------------------------------------------------------------
Tax-Free Intermediate Fund .62% " "
- -------------------------------------------------------------------------------------------------------
Tax-Free Long-Term Fund .62% " "
- -------------------------------------------------------------------------------------------------------
Tax-Free Money Market Fund .54% " "
- -------------------------------------------------------------------------------------------------------
Tax-Free Short-Term Fund .62% " "
- -------------------------------------------------------------------------------------------------------
Benham Equity Funds
- -------------------------------------------------------------------------------------------------------
Benham Equity Growth Fund .75% 4/3/95 6/1/95 to
5/31/96
- -------------------------------------------------------------------------------------------------------
Benham Gold Equities Index Fund .75% " "
- -------------------------------------------------------------------------------------------------------
Benham Income & Growth Fund .75% " "
- -------------------------------------------------------------------------------------------------------
Benham Utilities Income Fund .75% " "
- -------------------------------------------------------------------------------------------------------
Benham Global Natural Resources Index Fund .75% " "
- -------------------------------------------------------------------------------------------------------
Benham Government Income Trust
- -------------------------------------------------------------------------------------------------------
Benham GNMA Income Fund .65% 4/3/95 6/1/95 to
5/31/96
- -------------------------------------------------------------------------------------------------------
Benham Treasury Note Fund .65% " "
- -------------------------------------------------------------------------------------------------------
Benham Government Agency Fund .50% " "
- -------------------------------------------------------------------------------------------------------
Benham Adjustable Rate Government Securities Fund .65% " "
- -------------------------------------------------------------------------------------------------------
Benham Short-Term Treasury and Agency Fund .65% " "
- -------------------------------------------------------------------------------------------------------
Benham Long-Term Treasury and Agency Fund .65% " "
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
=======================================================================================================
Proposed '95) BOARD EFFECTIVE
FUND EXPENSE GUARANTEE APPROVAL DATES
RATE DATE
=======================================================================================================
<S> <C> <C> <C>
Benham International Funds
- -------------------------------------------------------------------------------------------------------
Benham European Government Bond Fund .90% 4/3/95 6/1/95 to
5/31/96
- -------------------------------------------------------------------------------------------------------
Benham Investment Trust
- -------------------------------------------------------------------------------------------------------
Benham Prime Money Market Fund .50% 4/3/95 6/1/95 to
5/31/98
- -------------------------------------------------------------------------------------------------------
Benham Manager Funds
- -------------------------------------------------------------------------------------------------------
Benham Capital Manager Fund 1.00% 4/3/95 6/1/95 to
5/31/96
- -------------------------------------------------------------------------------------------------------
Benham Municipal Trust
- -------------------------------------------------------------------------------------------------------
Benham National Tax-Free Money Market Fund .64% 4/3/95 6/1/94 to
5/31/96
- -------------------------------------------------------------------------------------------------------
Benham National Tax-Free Intermediate-Term Fund .69% " "
- -------------------------------------------------------------------------------------------------------
Benham National Tax-Free Long-Term Fund .69% " "
- -------------------------------------------------------------------------------------------------------
Benham Florida Municipal Money Market Fund .65% " "
- -------------------------------------------------------------------------------------------------------
Benham Florida Municipal Intermediate-Term Fund .69% " "
- -------------------------------------------------------------------------------------------------------
Benham Arizona Municipal Intermediate-Term Fund .69% " "
- -------------------------------------------------------------------------------------------------------
Benham Target Maturities Trust
- -------------------------------------------------------------------------------------------------------
1995 Portfolio .70% 4/3/95 6/1/95 to
5/31/96
- -------------------------------------------------------------------------------------------------------
2000 Portfolio .70% " "
- -------------------------------------------------------------------------------------------------------
2005 Portfolio .70% " "
- -------------------------------------------------------------------------------------------------------
2010 Portfolio .70% " "
- -------------------------------------------------------------------------------------------------------
2015 Portfolio .70% " "
- -------------------------------------------------------------------------------------------------------
2020 Portfolio .70% " "
- -------------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION AGREEMENT
The Benham Group
AGREEMENT between each of the open-end management investment companies
listed on Schedule A, attached hereto, as of the dates noted on such Schedule A,
together with all other open-end management investment companies subsequently
established and made subject to this agreement in accordance with paragraph X
(each a "Fund", or, collectively, the "Funds") and BENHAM DISTRIBUTORS, INC.
("Distributor"), a wholly-owned subsidiary of TWENTIETH CENTURY COMPANIES, INC.
("TCC") and a California corporation registered as a broker-dealer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934 and
with the California Department of Corporations under the California Corporations
Code, and a member of the National Association of Securities Dealers, Inc., as
follows:
I. GENERAL RESPONSIBILITIES. Each Fund herewith engages Distributor to
act as exclusive distributor of the shares of its separate series, and
any other series which may be designated from time to time hereafter
("Series"), named and described on Schedule A. Said sales shall be
made only to Investors residing in those states in which each Fund is
registered. After effectiveness of each Fund's registration statement,
Distributor will hold itself available to receive by mail, telex
and/or telephone, orders for the purchase of shares and will receive
by mail, telex and/or telephone, orders for the purchase of shares and
will accept or reject such orders on behalf of the Funds in accordance
with the provisions of the applicable Funds prospectus, and will be
available to transmit such orders as are so accepted to the Funds'
transfer agent as promptly as possible for processing at the shares'
net asset value next determined in accordance with the prospectuses.
A. Offering Price. All shares sold by Distributor under this
Agreement shall be sold at the net asset value per share
("Offering Price") determined in the manner described in each
Fund's prospectus, as it may be amended from time to time, next
computed after the order is accepted by Distributor. Each Fund
shall determine and promptly furnish to Distributor a statement
of the Offering Price of shares of said Fund's series at least
once on each day on which the Fund is open for trading as
described in its current prospectus.
B. Promotion. Each Fund shall furnish to Distributor for use in
connection with --------- the sale of its shares such written
information with respect to said Fund as Distributor may
reasonably request. Each Fund represents and warrants that such
information, when authenticated by the signature of one of its
officers, shall be true and correct. Each Fund shall also furnish
to Distributor copies of its reports to its shareholders and such
additional information regarding said Fund's financial condition
as Distributor may reasonably request. Any and all
representations, statements and solicitations respecting a Fund's
shares made in advertisements, sales literature and in any other
manner whatsoever shall be limited to and conform in all respects
to the information provided hereunder.
C. Regulatory Compliance. Each Fund shall prepare and furnish to
Distributor ---------------------- from time to time such number
of copies of the most recent form of its prospectus filed with
the Securities and Exchange Commission as Distributor may
reasonably request and authorizes Distributor to use the
prospectus in connection with the sale of its shares. All such
sales shall be initiated by offer of, and conducted in accordance
with, such prospectus and all of the provisions of the Securities
and Exchange Act of 1933, the Investment Company Act of 1940
("1940 Act") and all the rules and regulations thereunder.
Distributor shall furnish applicable federal and state regulatory
authorities with any information or reports in connection with
its services under this Agreement which such authorities may
lawfully request in order to ascertain whether the Funds'
operations are being conducted in a manner consistent with any
applicable law or regulations.
1
<PAGE>
D. Acceptance. All orders for the purchase of its shares are subject
to acceptance by each Fund.
E. Compensation. Except for the promises of the Funds contained in
this Agreement and its performance thereof, Distributor shall not
be entitled to compensation for its services hereunder.
II. EXPENSES.
A. Each Fund shall pay all fees and expenses in connection with the
preparation, printing and distribution to shareholders of its
prospectus and reports and other communications to shareholders,
future registrations of shares under the Securities Act of 1933
and the 1940 Act, amendments of the registration statement
subsequent to the initial offering of shares, the qualification
of shares for sale in jurisdictions designated by Distributor,
the issue and transfer of shares, including the expenses of
confirming purchase and redemption orders and of supplying
information, prices and other data to be furnished by the Funds
under this Agreement.
B. Distributor shall pay all fees and expenses of printing and
distributing any prospectuses or reports prepared for its use in
connection with the distribution of shares, the preparation and
mailing of any other advertisements or sales literature used by
Distributor in connection with the distribution of such shares,
its registration as a broker and the registration and
qualification of its officers, directors and representatives
under federal and state laws.
III. INDEPENDENT CONTRACTOR. Distributor shall be an independent
contractor. Neither Distributor nor any of its officers, trustees,
employees or representatives is or shall be an employee of a Fund in
connection with the performance of Distributor's duties hereunder.
Distributor shall be responsible for its own conduct and the
employment, control, compensation and conduct of its agents and
employees and for injury to such agents or employees or to others
through its agents and employees.
IV. INDEMNIFICATION. Each of the parties to this Agreement shall defend,
indemnify and hold the other harmless from and against any and all
claims, demands, suits, actions, losses, damages and other liabilities
arising from, or as a result of, the acts or omissions or acts and
omissions of such party made or omitted in the course of performing
this Agreement.
V. AFFILIATION WITH THE FUNDS. Subject to and in accordance with each
Fund's formative documents, Section 10 of the 1940 Act and Article III
of this Agreement, it is understood that the directors/trustees,
officers, agents and shareholders of the Funds are or may be
interested in Distributor as directors, officers, or shareholders of
Distributor; that directors, officers, agents or shareholders of
Distributor are or may be interested in the Funds as
directors/trustees, officers, shareholders (directly or indirectly) or
otherwise, and that the effect of any such interest shall be governed
by said Act and Article.
VI. BOOKS AND RECORDS. It is expressly understood and agreed that all
documents, reports, records, books, files and other materials relating
to this Agreement and the services to be performed hereunder shall be
the sole property of the Funds and that such property, to the extent
held by Distributor, shall be held by Distributor as agent, during the
effective term of this Agreement. This material shall be delivered to
the applicable Fund upon the termination of this Agreement free from
any claim or retention of rights by Distributor.
2
<PAGE>
VII. SERVICES NOT EXCLUSIVE. The services of Distributor to the Funds
hereunder are not to be deemed exclusive, and Distributor shall be
free to render similar services to others.
VII. RENEWAL AND TERMINATION. The term of this Agreement shall be from the
date of its approval by the vote of a majority of the board of
directors/trustees of each Fund, and it shall continue in effect from
year to year thereafter only so long as such continuance is
specifically approved at least annually by the vote of a majority of
its directors/trustees, and the vote of a majority of those said
directors/trustees who are neither parties to the Agreement nor
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. "Approved at least
annually" shall mean approval occurring, with respect to the first
continuance of the Agreement, during the ninety (90) days prior to and
including the date of its termination in the absence of such approval,
and with respect to any subsequent continuance, during the ninety (90)
days prior to and including the first anniversary of the date upon
which the most recent previous annual continuance of the Agreement
became effective.
This Agreement may be terminated at any time without payment
of any penalty, by a Fund's board of directors/trustees, upon sixty
(60) days written notice to Distributor, and by Distributor upon sixty
(60) days written notice to the Fund. This Agreement shall terminate
automatically in the event of its assignment. The terms "assignment"
and "vote of a majority of the outstanding voting securities" shall
have the meaning set forth for such terms in the Investment 1940 Act
and Rule 18f-2 thereunder.
VIII. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or similar authority, the
remainder of this Agreement shall not be affected thereby.
IX. APPLICABLE LAW. This Agreement shall be construed in accordance with
the laws of the State of California.
3
<PAGE>
X. AMENDMENT. This Agreement and the Schedule A forming a part hereof may
be amended at any time by a writing signed by each of the Parties. In
the event that one or more additional Funds are established, and the
governing bodies of said Funds by resolution indicate that the Funds
are to be made Parties to this Agreement, Schedule A hereto shall be
amended to reflect the addition of such new Funds, and such new Funds
shall become Parties hereto. In the event that any of the Funds listed
on Schedule A terminates its registration as a management investment
company, or otherwise ceases operations, Schedule A shall be amended
to reflect the deletion of such Fund.
By __/s/James M. Benham______________ __6/1/95__________________
James M. Benham, President Date
BENHAM DISTRIBUTORS, INC.
By __/s/Douglas A. Paul______________ __6/1/95___________________
Douglas A. Paul, Secretary Date
to the FUNDS
4
<PAGE>
DISTRIBUTION AGREEMENT
SCHEDULE A
Effective as of the date herein below indicated, each of the open-end
management investment companies listed below is hereby made a party to the
Benham Group Distribution Agreement dated June 1, 1995.
================================================================================
FUND BOARD APPROVAL DATE
================================================================================
Capital Preservation Fund, Inc. April 3, 1995
================================================================================
Capital Preservation Fund II, Inc. April 3, 1995
================================================================================
Benham Target Maturities Trust
================================================================================
1995 Portfolio April 3, 1995
================================================================================
2000 Portfolio "
================================================================================
2005 Portfolio "
================================================================================
2010 Portfolio "
================================================================================
2015 Portfolio "
================================================================================
2020 Portfolio "
================================================================================
Benham Government Income Trust
================================================================================
Benham Treasury Note Fund April 3, 1995
================================================================================
Benham GNMA Income Fund "
================================================================================
Benham Government Agency Fund "
================================================================================
Benham Adjustable Rate Government Securities Fund "
================================================================================
Benham Short-Term Treasury and Agency Fund "
================================================================================
Benham Long-Term Treasury and Agency Fund "
================================================================================
Benham California Tax-Free and Municipal Funds
================================================================================
Tax-Free Money Market Fund April 3, 1995
================================================================================
Tax-Free Intermediate-Term Fund "
================================================================================
Tax-Free Long-Term Fund "
================================================================================
Municipal High Yield Fund "
================================================================================
Tax-Free Insured Fund "
================================================================================
Municipal Money Market Fund "
================================================================================
Tax-Free Short-Term Fund "
================================================================================
5
<PAGE>
================================================================================
FUND BOARD APPROVAL DATE
================================================================================
Benham Municipal Trust
================================================================================
Benham National Tax-Free Money Market Fund April 3, 1995
================================================================================
Benham National Tax-Free Intermediate-Term Fund "
================================================================================
Benham National Tax-Free Long-Term Fund "
================================================================================
Benham Florida Municipal Money Market Fund "
================================================================================
Benham Florida Municipal Intermediate-Term Fund "
================================================================================
Benham Arizona Municipal Intermediate-Term Fund "
================================================================================
Benham Equity Funds
================================================================================
Benham Global Natural Resources Index Fund April 3, 1995
================================================================================
Benham Gold Equities Index Fund "
================================================================================
Benham Income & Growth Fund "
================================================================================
Benham Equity Growth Fund "
================================================================================
Benham Utilities Income Fund "
================================================================================
Benham International Funds
================================================================================
Benham European Government Bond Fund April 3, 1995
================================================================================
Benham Manager Funds
================================================================================
Benham Capital Manager Fund April 3, 1995
================================================================================
Benham Investment Trust
================================================================================
Prime Money Market Fund April 3, 1995
================================================================================
6
ADMINISTRATIVE SERVICES AND TRANSFER AGENCY AGREEMENT
The Benham Group
AGREEMENT effective this 1st day of June, 1995, by each open-end management
investment company listed on Schedule E attached hereto and made part of this
agreement by reference, each portfolio of an open-end management investment
company listed on Schedule E and all open-end management investment companies
(or portfolios thereof) subsequently established and made subject to this
Agreement in accordance with Paragraph XI. (individually, "Fund" or
collectively, "Funds"), and BENHAM FINANCIAL SERVICES, INC. ("BFS"), a
registered transfer agent incorporated under the laws of the State of California
and a wholly-owned subsidiary of TWENTIETH CENTURY COMPANIES, INC. ("TCC"), for
general administrative, transfer agency, and dividend disbursing services as
follows:
I. ADMINISTRATIVE SERVICES.
A. Description of Services. As consideration for the compensation
described in Section I.B, BFS agrees to provide the Funds with
the services described and set forth on Schedule A attached
hereto and made a part of this Agreement by reference.
B. Compensation. As consideration for the services described in
Section I.A above, each Fund shall pay BFS a fee equal to its pro
rata share of the dollar amount derived from applying the
aggregate average daily net assets of the Funds listed on
Schedule E to the rate schedule set forth on Schedule F attached
hereto and made a part of this Agreement by reference
("fund-level fee"). Each Fund's fund-level fee, or pro rata share
of the dollar amount derived from applying the Funds' aggregate
average daily net assets to the rate schedule set forth on
Schedule F, shall be determined on the basis of its average daily
net assets relative to all other Funds listed on Schedule E. Said
fund-level fees shall be calculated and accrued daily and payable
monthly in three installments, the first on the tenth of the
month (or the next business day, if not a business day), the
second on the twentieth of the month (or the next business day,
if not a business day), and the third not later than the third
business day of the following month.
II. TRANSFER AGENT SERVICES.
A. Services to be Provided. As consideration for the compensation
described in Section II.B, BFS will provide each Portfolio with
the share transfer and dividend disbursing services described on
Schedule B attached hereto and made a part of this Agreement by
reference. BFS agrees to maintain sufficient trained personnel,
equipment, and supplies to perform such services in conformity
with the current prospectus of each Fund and such other
reasonable standards of performance as the Funds may from time to
time specify, and otherwise in an accurate, timely, and efficient
manner.
B. Compensation. As consideration for the services described in
Section II.A, each Fund agrees to pay BFS the fees specified on
Schedule F for each shareholder account maintained and each
shareholder account transaction executed by BFS each month. For
purposes of this Agreement "shareholder account transaction" is
any one of the transactions described on Schedule C attached
hereto and made a part of this Agreement by reference, as it may
be amended from time to time. Such fees shall be paid monthly in
three installments, the first on the tenth of the month (or the
next business day, if not a business day), the second on the
twentieth of the month (or the next business day, if not a
business day), and the third on the third business day of the
following month.
1
<PAGE>
C. Third Party Servicing. Subject to approval by the applicable
Fund's Board of Directors/Trustees, BFS may enter into agreements
with third parties for the performance of one or more of its
obligations under this Agreement (and such other services as BFS
may desire) for all or any portion of the shareholders of the
Fund who maintain shareholder accounts through, or who are
otherwise provided services by, any such third parties. To the
extent that such third parties perform services that BFS is
obligated to perform under this Agreement, BFS shall be entitled
to receive the fees to which it would otherwise be entitled
hereunder had it performed such services directly; provided,
however, that the Fund's Board of Directors/Trustees may limit
amounts receivable by BFS under this Agreement for services
performed on its behalf by third parties. BFS will furnish the
Fund shareholder and account records and data upon which the
Fund's obligations under this Agreement are calculated, and such
other data pertaining to any services rendered by third parties
as the Fund may reasonably require. The Fund shall be entitled to
have any and all such records audited by the Fund's independent
accountants at any time upon reasonable notice to BFS.
III. EXPENSES.
A. Expenses of BFS. BFS shall pay all expenses incurred in providing
the Funds the services and facilities described in this
Agreement, whether or not such expenses are billed to BFS or the
Funds.
B. Direct Expenses. Any provision of this Agreement to the contrary
notwithstanding, each Fund shall pay, or reimburse BFS for the
payment of, the following expenses (hereinafter "direct
expenses") whether or not such direct expenses are billed to the
Funds, BFS, or any related entity:
1. Fees and expenses of the Fund's Independent Directors/Trustees
and meetings thereof;
2. Fees and costs of investment advisory services;
3. Fees and costs of independent audits, income tax preparation,
and obtaining quotations for the purpose of calculating the
Fund's net asset value;
4. Fees and costs of outside legal counsel and legal counsel
employed directly by the Fund;
5. Fees and costs of custodian and banking services;
6. Costs (including postage) of printing and mailing
prospectuses, confirmations, proxy statements, and reports to
Fund shareholders;
7. Fees and costs for the registration of Fund shares with the
Securities and Exchange Commission and the jurisdictions in
which its shares are qualified for sale;
2
<PAGE>
8. Fees and expenses associated with membership in the Investment
Company Institute and the Mutual Fund Education Alliance;
9. Expenses of fidelity bonding and liability insurance covering
the Fund;
10.Costs for incoming telephone WATS lines;
11.Organizational costs.
C. Extraordinary Expenses. Any provision of this Agreement to the
contrary notwithstanding, each Fund, as determined by its Board
of Directors/Trustees, shall pay (or reimburse BFS for payment
of) the following expenses, which shall be categorized as
Extraordinary Expenses and shall be excluded from each Fund's
expense ratio, whether or not the expense was billed to the
Funds, BFS, or any related entity:
1. Brokerage commissions
2. Taxes
3. Interest
4. Portfolio insurance premiums
5. Rating agency fees
6. Other extraordinary expenses, as authorized from time to time
by each Fund's Board of Directors/Trustees.
IV. TERM. With respect to each Fund, this Agreement shall become effective upon
its approval by vote of a majority of the Fund's shareholders at a meeting
called for the purpose of voting on such approval and a majority of the Fund's
Directors/Trustees, including a majority of those Directors/Trustees who are not
"interested persons" of the Fund or BFS (as that term is defined in the
Investment Company Act of 1940), and shall continue until it is terminated
pursuant to the provisions of Paragraph XII.
V. INSURANCE. The Funds and BFS agree to procure and maintain, separately or as
joint insureds with their Directors/Trustees, employees, agents, and others, an
insurance policy or policies against loss arising from breaches of trust or
errors and omissions and a fidelity bond meeting the requirements of the
Investment Company Act of 1940 in such amounts and with such deductibles as are
set forth on Schedule D attached to this Agreement and made a part hereof by
reference, as it may be amended from time to time, and to pay premiums therefor,
provided that if a Fund or BFS is party to a policy in which it is named as a
joint insured, its liability for premiums on said policy shall be determined on
the basis of premiums it would pay to obtain equivalent coverage separately
relative to the premiums each other joint insured would pay to obtain equivalent
coverage separately.
VI. REGISTRATION AND COMPLIANCE.
A. BFS represents that it is registered as a transfer agent with the
Securities and Exchange Commission ("SEC") pursuant to ss.17A of
the Securities Exchange Act of 1934 and the rules and regulations
thereunder, and agrees to maintain said registration and comply
with all of the requirements of said Act, rules, and regulations
so long as this Agreement remains in force.
3
<PAGE>
B. Each Fund represents that it is an open-end management investment
company registered with the SEC under the Securities Act of 1933
and the rules and regulations thereunder and the Investment
Company Act of 1940 and the rules and regulations thereunder, and
that it is authorized to sell its shares pursuant to said Acts,
and the rules and regulations thereunder.
Each Fund will furnish BFS with a list of those
jurisdictions in the United States and elsewhere in which it
is authorized to sell its shares to the general public and
maintain the currency of said list by amendment. Each Fund
agrees to promptly advise BFS of any change in or limitation
upon its authority to carry on business as an investment
company pursuant to said Acts, and the statutes, rules, and
regulations of each and every jurisdiction in which its shares
are registered for sale.
VII. DOCUMENTATION. Each of the Funds and BFS shall supply to the other upon
request such documentation as is required by them to carry out their respective
obligations under this Agreement, including, but not limited to, declarations of
trust, articles of incorporation, bylaws, codes of ethics, registration
statements, permits, financial reports, third party audits, certificates of
authority, computer tapes, and related items.
VIII. PROPRIETARY INFORMATION. It is agreed that all records and documents,
except computer data processing programs and any related documentation used or
prepared by, or on behalf of, BFS for the performance of its services hereunder,
are the property of the Funds and shall be open to audit or inspection by the
Funds or their duly authorized agents during the normal business hours of BFS,
shall be maintained in such fashion as to preserve the confidentiality thereof
and to comply with applicable federal and state laws and regulations, and shall,
in whole or any specified part, be surrendered and turned over to the Funds or
their duly authorized agents upon receipt by BFS of reasonable notice of and
request therefor.
IX. INDEMNITY. Each Fund shall indemnify and hold BFS harmless against any
losses, claims, damages, liabilities, or expenses (including reasonable counsel
fees and expenses) resulting from any claim, demand, action, or suit brought by
any person other than the Fund (including a shareholder naming the Fund as a
party) and not resulting from BFS's bad faith, willful misfeasance, reckless
disregard of its obligations and duties, negligence, or breach of this
Agreement, and arising out of, or in connection with:
A. BFS's performance of its obligations under this Agreement;
B. Any error or omission in any record (including but not limited to
magnetic tapes, computer printouts, hard copies, and microfilm or
microfiche copies) delivered, or caused to be delivered, by a
Fund to BFS in connection with this Agreement;
C. Bad faith, willful misfeasance, reckless disregard of its
obligations and duties, or negligence on the part of the Fund, or
BFS's acting upon any instructions reasonably believed by it to
have been properly executed or communicated by any person duly
authorized by the Fund;
D. BFS's acting in reliance upon advice reasonably believed by it to
have been given by counsel for the Funds, or;
E. BFS's acting in reliance upon any instrument reasonably believed
by it to have been genuine and signed, countersigned, or executed
by the proper person(s) in accordance with the currently
effective certificate(s) of authority delivered to BFS by the
Funds
4
<PAGE>
In the event that BFS requests a Fund to indemnify or
hold it harmless hereunder, BFS shall use its best efforts to inform
the Fund of the relevant facts concerning the matter in question. BFS
shall use reasonable care to identify and promptly notify the Fund
concerning any matter which presents, or appears likely to present, a
claim for indemnification against the Fund.
Each Fund may elect to defend BFS against any claim which
may be the subject of indemnification hereunder. In the event that the
Fund makes such an election, it shall notify BFS and shall take over
defense of the claim and, if so requested by the Fund, BFS shall incur
no further legal or other expenses related thereto for which it is
entitled to indemnity hereunder; provided, however, that nothing herein
shall prevent BFS from retaining, at its own expense, counsel to defend
any claim. Except with the applicable Fund's prior consent, BFS shall
not confess to any claim or make any compromise in any matter in which
the Fund will be asked to indemnify or hold BFS harmless hereunder
without the Fund's prior consent.
X. LIABILITY.
A. Damages. BFS shall not be liable to any Fund, or any third party,
for punitive, exemplary, indirect, special, or consequential
damages (even if BFS has been advised of the possibility of such
damages) arising from the performance of its obligations under
this Agreement, including but not limited to loss of profits,
loss of use of the shareholder accounting system, cost of
capital, and expenses for substitute facilities, programs, or
services.
B. Force Majeure. Any provision in this Agreement to the contrary
notwithstanding, BFS shall not be liable for delays or errors
occurring by reason of circumstances beyond its control or the
control of any of its affiliates and not attributable to the
negligence of BFS or any of its affiliates, including, but not
limited to, acts of civil or military authority, national
emergencies, national or regional work stoppages, fire, flood,
catastrophe, earthquake, acts of God, insurrection, war, riot,
failure of communication systems, or interruption of power
supplies.
C. Trust Series Sole Obligor. BFS is expressly put on notice that,
for any Fund which is a series of a registered investment company
organized as a Massachusetts business trust (a "Trust Series"),
liability under this Agreement shall be limited to the Trust
Series incurring such liability and to the assets of such Trust
Series. BFS shall not have any rights or remedies against any
trustee, officer, employee, or shareholder of the Trust Series or
any other series of the Trust for breach of this Agreement nor
recourse to the property of any such persons or other series of
the Trust for satisfaction of any judgment or other claim against
the Trust Series.
XI. AMENDMENT. This Agreement and the Schedules forming a part hereof may be
amended at any time, with or without shareholder approval (except as otherwise
required by law), by a document signed by each of the parties hereto. In the
event that one or more additional Funds are established, and the governing
bodies of said Funds by resolution indicate that the Funds are to be made
parties to this Agreement, Schedule E hereto shall be amended to reflect the
addition of such new Funds, and such new Funds shall become parties hereto. Any
change in a Fund's registration statement or other compliance documents, or in
the forms relating to any plan, program, or service offered by its current
prospectus which would require a change in BFS's obligations hereunder shall be
subject to BFS's approval, which shall not be unreasonably withheld.
5
<PAGE>
XII. TERMINATION. This Agreement may be terminated by any Fund with respect to
said Fund, or by BFS, without cause, upon 120 days' written notice to the other
party, and at any time for cause in the event that such cause remains unremedied
for more than 30 days after receipt by the other party of written specification
of such cause.
In the event that a Fund designates a successor to perform any of
BFS's obligations hereunder, BFS shall, at the expense and pursuant to
the direction of the Fund, transfer to such successor all relevant
books, records, and other data of the Fund in the possession or under
the control of BFS.
XIII. SEVERABILITY. If any clause or provision of this Agreement is determined
to be illegal, invalid, or unenforceable under present or future laws effective
during the term hereof, then such clause or provision shall be considered
severed herefrom and the remainder of this Agreement shall continue in full
force and effect.
XIV. APPLICABLE LAW. This Agreement shall be subject to and construed in
accordance with the laws of the State of California.
XV. ENTIRE AGREEMENT. Except as otherwise provided herein, this Agreement
constitutes the entire and complete understanding of the parties hereto relating
to the subject matter hereof and supersedes all prior contracts and discussions
between the parties.
By_/s/John T. Kataoka___________ Date___6/1/95______________
John T. Kataoka, President
BENHAM FINANCIAL SERVICES, INC.
By_/s/Douglas A. Paul___________ Date___6/1/95______________
Douglas A. Paul, Secretary
to the FUNDS
6
<PAGE>
ADMINISTRATIVE SERVICES AND
TRANSFER AGENCY AGREEMENT
Schedule A
Administrative Services
Benham Financial Services, Inc. agrees to provide each Fund the following
administrative services:
1. Fund and Portfolio Accounting
A. Maintain Fund General Ledger and Journal.
B. Prepare and record disbursements for direct Fund expenses.
C. Prepare daily money transfers.
D. Reconcile all Fund bank and custodian accounts.
E. Assist Fund independent auditors as appropriate.
F. Prepare daily projections of available cash balances.
G. Record trading activity for purposes of determining net asset values
and dividend distributions.
H. Prepare daily portfolio evaluation reports to value portfolio
securities and determine daily accrued income.
I. Determine the daily net asset value per share.
J. Determine income and capital gain dividend distributions per share.
K. Prepare monthly, quarterly, semi-annual, and annual financial
statements.
L. Provide financial information for reports to the Securities and
Exchange Commission in compliance with the provisions of the
Investment Company Act of 1940 and the Securities Act of 1933, the
Internal Revenue Service, and any other regulatory agencies as
required.
M. Provide financial, yield, net asset value, etc. information to the
NASD and other survey and statistical agencies as instructed by the
Funds.
2. Internal Audit
Provide an internal audit staff for independent review of Fund operations.
Internal audit staff will assist the independent accountants as
appropriate, and report directly to the Audit Committee of the Board of
Directors/Trustees.
7
<PAGE>
3. Legal
A. Provide registration and other administrative services necessary to
qualify the Fund's shares for sale in those jurisdictions determined
from time to time by each Fund's Board of Directors/Trustees.
B. Maintain registration statements and make all other filings required
by the Securities and Exchange Commission in compliance with the
provisions of the Investment Company Act of 1940 and the Securities
Act of 1933.
C. Prepare and review Fund prospectuses.
D. Prepare proxy statements.
E. Prepare board materials and maintain minutes of board meetings.
F. Provide legal advice.
The Funds' outside counsel may provide the services listed above as a
direct Fund expense; however, the Funds have the option to employ their own
counsel to provide any or all of these services.
4. Insurance
A. Obtain errors and omissions policy.
B. Obtain fidelity bond.
5. Administrative Management
Provide each Fund with a president, a chief financial officer, a secretary,
and such other officers as are necessary to manage the Fund and administer
its affairs in accordance with law and appropriate business practice, all
subject to the approval of the Fund's Board of Directors/Trustees.
8
<PAGE>
ADMINISTRATIVE SERVICES AND
TRANSFER AGENCY AGREEMENT
Schedule B
Share Transfer and Dividend Disbursing Services
Benham Financial Services, Inc. agrees to provide each Fund the following
transfer agency and dividend disbursing services:
1. Maintain shareholder accounts, including processing of new accounts.
2. Post address changes and other file maintenance for shareholder accounts.
3. Post all monetary transactions to the shareholder file, including:
* Dividends, capital gains, and reverse share splits (BTMT) Y Direct
(including lock box) purchases Y Wire order purchases and redemptions
* Letter and telephone redemptions Y Draft redemptions
* Letter and telephone exchanges (as well as auto exchanges via VRU and
PC transmissions)
* Letter and telephone transfers
* Certificate issuances
* Certificate deposits
* Account fees
* Automated Clearing House ("ACH") transactions
* Exchanges initiated via Open Order Service
4. Conduct quality control reviews, by a separate dedicated group using
statistically reliable samples, of transactions and account maintenance
functions before mailing confirmations, checks, and/or share certificates
to shareholders.
5. Monitor fiduciary processing to ensure accuracy and proper deduction of
fees.
6. Prepare daily reconciliations of shareholder processing including money
movement instructions.
7. Process bounced check collections, including the immediate liquidation of
shares purchased and return of check, together with confirmation of entire
transaction, to investor.
8. Process all distribution and redemption checks and replace lost checks.
9. Withhold dividends and proceeds of redemptions as required by IRS
regulations.
10. Provide draft clearing services:
* Maintain signature cards and appropriate corporate resolutions
* For drafts in amounts greater than $5,000, compare signatures on
drafts with signatures on signature cards
* Receive checks presented for payment, verify negotiability, and
liquidate shares after verifying account balance
* For Funds that provide check writing privileges, process shareholder
check orders
* For Funds and retirement accounts that do not provide check writing
privileges, issue investment slip books
9
<PAGE>
11.Mail confirmations, checks, and/or certificates resulting from transaction
requests to shareholders.
12.Process all other Fund mailings, including:
* Dividend and capital gain distributions
* Quarterly, semi-annual, and annual reports
* Year-end shareholder tax forms
* Directed payments
* Quarterly statements
* Shareholder drafts (on request)
* Combined statements
* Annual Prospectus revisions
13.Answer all service-related telephone inquiries from shareholders and others,
including:
* General and policy inquiries (research and resolve problems);
* Fund yield inquiries; and
* Shareholder transaction requests and account maintenance changes
(e.g., redemptions, transfers, exchanges, address changes, and check
book orders).
In addition:
* Monitor processing production and quality; Y Monitor online
statistical performance of unit; and Y Develop reports on telephone
activity.
14.Respond to written inquiries by researching and resolving problems,
including:
* Initiating shareholder account reconciliation proceedings when
appropriate
* Writing and mailing form letters
* Responding to financial institutions regarding verification of
deposits
* Initiating proceedings regarding lost share certificates
* Logging activities related to written inquiries
* Maintaining system for correspondence control
* Notifying shareholders of unacceptable transaction requests
15.Maintain and retrieve all required account history for shareholders and
provide research services as follows:
* Daily monitoring of all processing activity
* Providing exception reports
* Microfilming
* Storing, or archiving, and retrieving historical account information
* Obtaining microfiche of various reports
* Researching shareholder inquiries
* Resolving suspense items (e.g., transactions not posted due to an
error condition on the account)
10
<PAGE>
16.Prepare materials for shareholder meetings, including:
* Addressing and mailing proxy solicitation materials
* Tabulating returned proxies and supplying daily reports to inform
management about the vote
* Providing Fund with an affidavit of mailing
* Furnishing certified list of shareholders (hard copy or microfilm) and
election inspectors
17.Report and remit assets as necessary to satisfy state escheat requirements.
18.On behalf of each Fund, file tax documents with appropriate federal and state
authorities.
11
<PAGE>
ADMINISTRATIVE SERVICES AND
TRANSFER AGENCY AGREEMENT
Schedule C
Chargeable Transactions
For purposes of determining the per-transaction portion of the transfer
agency fee, the following types of transactions are considered chargeable
transactions.
1. Monetary Transactions
In general all monetary transactions are chargeable with the exception
of reversal transactions. The only chargeable reversal transaction is for
returned investment checks. The following is a current list of chargeable
transactions:
================================================================================
Description Transaction Type Sub Code Literal Code
================================================================================
Incoming Wires PUR 01 11
================================================================================
Wire Order Purchases WOF 01 00
================================================================================
Check Purchases PUR 01 02
================================================================================
PUR 01 03
================================================================================
PUR 01 05
================================================================================
PUR 01 08
================================================================================
PUR 01 09
================================================================================
PUR 07 00
================================================================================
PUR 07 01
================================================================================
PUR 08 00
================================================================================
PUR 09 00
================================================================================
PUR 09 01
================================================================================
PUR 09 14
================================================================================
PUR 10 00
================================================================================
PUR 14 00
================================================================================
PUR 15 00
================================================================================
PUR 16 01
================================================================================
PUR 22 00
12
<PAGE>
================================================================================
Description Transaction Type Sub Code Literal Code
================================================================================
PUR 01 97
================================================================================
PUR 01 98
================================================================================
PUR 26 00
================================================================================
RPO Purchases PUR 05 00
================================================================================
ACH Purchases PUR 01 12
================================================================================
PUR 07 02
================================================================================
PUR 09 02
================================================================================
PUR 02 00
================================================================================
PUR 17 00
================================================================================
PUR 18 00
================================================================================
PUR 19 00
================================================================================
PUR 20 00
================================================================================
Direct Dividend &
Capital Gains PUR 01 50
================================================================================
PUR 09 50
================================================================================
PUR 07 50
================================================================================
PUR 31 50
================================================================================
Systematic Exchange
Purchases PUR 01 60
================================================================================
PUR 07 60
================================================================================
PUR 31 60
================================================================================
BCM Accumulation
Purchases PUR 01 32
================================================================================
PUR 01 33
================================================================================
PUR 01 42
================================================================================
PUR 01 43
================================================================================
Exchange
Purchases/Liquidations EXI/EXO 01 00
================================================================================
EXI/EXO 01 61
================================================================================
EXI/EXO 01 81
================================================================================
EXI/EXO 01 82
================================================================================
EXI/EXO 01 85
================================================================================
EXI/EXO 01 86
================================================================================
13
<PAGE>
================================================================================
Description Transaction Type Sub Code Literal Code
================================================================================
PUR 01 06
================================================================================
PUR 01 45
================================================================================
PUR 07 61
================================================================================
PUR 07 62
================================================================================
PUR 08 61
================================================================================
PUR 09 61
================================================================================
PUR 09 63
================================================================================
PUR 10 61
================================================================================
PUR 14 61
================================================================================
PUR 16 61
================================================================================
PUR 22 61
================================================================================
PUR 01 75
================================================================================
PUR 26 61
================================================================================
Check Purchases
(Reversals) PUR 04 00
================================================================================
PUR 01 02 R
================================================================================
PUR 01 03 R
================================================================================
PUR 01 05 R
================================================================================
PUR 01 08 R
================================================================================
PUR 01 09 R
================================================================================
PUR 07 00 R
================================================================================
PUR 07 01 R
================================================================================
PUR 08 00 R
================================================================================
PUR 09 00 R
================================================================================
PUR 09 01 R
================================================================================
PUR 10 00 R
================================================================================
PUR 14 00 R
================================================================================
PUR 15 00 R
================================================================================
PUR 16 01 R
================================================================================
PUR 22 00 R
================================================================================
PUR 01 97 R
================================================================================
PUR 01 98 R
================================================================================
14
<PAGE>
================================================================================
Description Transaction Type Sub Code Literal Code
================================================================================
PUR 26 00 R
================================================================================
BCM Accumulation
Liquidations LIQ 01 32
================================================================================
LIQ 01 42
================================================================================
Transfers In/Out PUR 01 35
================================================================================
PUR 07 71
================================================================================
PUR 08 71
================================================================================
PUR 14 71
================================================================================
PUR 16 71
================================================================================
PUR 22 71
================================================================================
PUR 26 03
================================================================================
PUR 26 71
================================================================================
Transfers In & Out TFI/TFO 01 00
================================================================================
TFI/TFO 01 01
================================================================================
TFI/TFO 01 81
================================================================================
TFI/TFO 01 82
================================================================================
TFI/TFO 01 85
================================================================================
TFI/TFO 01 86
================================================================================
Check Liquidations LIQ 01 00
================================================================================
LIQ 01 01
================================================================================
LIQ 01 02
================================================================================
LIQ 01 03
================================================================================
LIQ 01 04
================================================================================
LIQ 01 05
================================================================================
LIQ 01 06
================================================================================
LIQ 01 07
================================================================================
LIQ 01 08
================================================================================
LIQ 01 09
================================================================================
LIQ 01 10
================================================================================
LIQ 01 11
================================================================================
LIQ 01 12
================================================================================
LIQ 01 39
================================================================================
15
<PAGE>
================================================================================
Description Transaction Type Sub Code Literal Code
================================================================================
LIQ 01 14
================================================================================
Wire Order Redemption WOR 01 00
================================================================================
SWIP Redemption
Checks LIQ 14 00
================================================================================
RPO Liquidations LIQ 05 00
================================================================================
Wires Out LIQ 01 20
================================================================================
Drafts Paid LIQ 03 00
================================================================================
Draft Order Fees LIQ 13 11
================================================================================
Other Fees LIQ 13 08
================================================================================
LIQ 13 13
================================================================================
LIQ 13 16
================================================================================
LIQ 13 17
================================================================================
LIQ 13 18
================================================================================
LIQ 13 19
================================================================================
LIQ 13 23
================================================================================
BCM Accumulation Fees LIQ 01 33
================================================================================
LIQ 01 43
================================================================================
Non-BCMG Advisor Fees LIQ 01 75
================================================================================
WOR 01 75
================================================================================
Certificate Issue CIS 01 00
================================================================================
CIS 02 00
================================================================================
Certificate Deposit CDP 01 00
================================================================================
ADJ Credits ADJ 01 00
================================================================================
PUR 04 01
================================================================================
PUR 26 01
================================================================================
ADJ Debits ADJ 02 00
================================================================================
16
<PAGE>
2. Non-Monetary Transactions
The only chargeable non-monetary transactions will be for
shareholder-initiated account maintenance charges and one transaction
charge for each new account added to the shareholder file. The following is
a current list of non-monetary transactions:
================================================================================
DESCRIPTION TRANSACTION TYPE
================================================================================
General Account Maintenance MNT01 - MNT08
================================================================================
Draft Stop Add and Maintenance MNT009
================================================================================
Name/Address Change MNT10
================================================================================
New Account Setup N/A
================================================================================
Combined Statement Account Setup N/A
================================================================================
17
<PAGE>
ADMINISTRATIVE SERVICES AND
TRANSFER AGENCY AGREEMENT
Schedule D
Liability Insurance
Benham Financial Services, Inc. agrees to provide each Fund at a minimum with
the following insurance coverages subject to a ratable allocation:
1. Errors and Omissions and Directors Liability.
* $10 million limit.
* $150,000 deductible for all claims.
* Individual director/trustee or officer sued - $5,000
deductible to aggregate of $25,000.
2. Fidelity Insurance (Blanket Bond).
* $25,000,000 limit (each and every occurrence).
* $150,000 deductible.
18
<PAGE>
ADMINISTRATIVE SERVICES AND
TRANSFER AGENCY AGREEMENT
Schedule E
Funds and Portfolios
Effective as of the date indicated below, each of the open-end management
investment companies and the portfolios of said open-end management investment
companies listed below is hereby made a party to the Benham Group Administrative
Services and Transfer Agency Agreement dated June 1, 1995.
Name of Fund/Portfolio Board Approval of Agreement
Capital Preservation Fund, Inc. April 3, 1995
Capital Preservation Fund II, Inc. April 3, 1995
Benham Target Maturities Trust
1995 Portfolio April 3, 1995
2000 Portfolio "
2005 Portfolio "
2010 Portfolio "
2015 Portfolio "
2020 Portfolio "
Benham Government Income Trust
Benham GNMA Income Fund April 3, 1995
Benham Treasury Note Fund "
Benham Government Agency Fund "
Benham Adjustable Rate Government Securities Fund "
Benham Short-Term Treasury and Agency Fund "
Benham Long-Term Treasury and Agency Fund "
Benham California Tax-Free and Municipal Funds
Municipal Money Market Fund April 3, 1995
Tax-Free Money Market Fund "
Tax-Free Short-Term Fund "
Tax-Free Intermediate-Term Fund "
Tax-Free Long-Term Fund "
Municipal High-Yield Fund "
Tax-Free Insured Fund "
Benham Municipal Trust
Benham National Tax-Free Money Market Fund April 3, 1995
Benham National Tax-Free Intermediate-Term Fund "
Benham National Tax-Free Long-Term Fund "
Benham Florida Municipal Money Market Fund "
Benham Florida Municipal Intermediate-Term Fund "
Benham Florida Municipal Long-Term Fund "
Benham Arizona Municipal Intermediate-Term Fund "
Benham Arizona Municipal Long-Term Fund "
19
<PAGE>
Name of Fund/Portfolio Board Approval of Agreement
Benham Equity Funds
Benham Gold Equities Index Fund April 3, 1995
Benham Equity Growth Fund "
Benham Income & Growth Fund "
Benham Utilities Income Fund "
Benham Global Natural Resources Fund April 3, 1995
Benham International Funds
Benham European Government Bond Fund April 3, 1995
Benham International Equity Fund "
Benham Asian Tiger Fund "
Benham Emerging Markets Fund "
Benham Global Bond Fund "
Benham Investment Trust
Benham Prime Money Market Fund April 3, 1995
Benham Manager Funds
Benham Capital Manager Fund April 3, 1995
20
<PAGE>
ADMINISTRATIVE SERVICES AND
TRANSFER AGENCY AGREEMENT
Schedule F
Compensation
<TABLE>
<CAPTION>
=====================================================================================================================
Monthly
Per-Account Fee for Per-Transaction
Fund/Portfolio Account Maintenance Fee
=====================================================================================================================
<S> <C> <C>
Capital Preservation Fund, Inc. $1.3958 $1.35
- ---------------------------------------------------------------------------------------------------------------------
Capital Preservation Fund II, Inc. $1.3958 $1.35
- ---------------------------------------------------------------------------------------------------------------------
Benham California Tax-Free and Municipal Funds $1.3958 $1.35
Municipal Money Market Fund
Tax-Free Money Market Fund
Tax-Free Short-Term Fund
Tax-Free Intermediate-Term Fund
Tax-Free Long-Term Fund
Tax-Free Insured Fund
Municipal High-Yield Fund
- ---------------------------------------------------------------------------------------------------------------------
Benham Equity Funds $1.35
Benham Gold Equities Index Fund $1.1875
$1.1875
Benham Equity Growth Fund $1.3958
Benham Income & Growth Fund $1.3958
Benham Utilities Income Fund $1.1875
Benham Global Natural Resources Fund
- ---------------------------------------------------------------------------------------------------------------------
Benham Government Income Trust $1.3958 $1.35
Benham GNMA Income Fund
Benham Treasury Note Fund
Benham Government Agency Fund
Benham Adjustable Rate Government Securities Fund
Benham Short-Term Treasury and Agency Fund
Benham Long-Term Treasury and Agency Fund
- ---------------------------------------------------------------------------------------------------------------------
Benham International Funds
Benham European Government Bond Fund $1.1875 $1.35
- ---------------------------------------------------------------------------------------------------------------------
Benham Investment Trust $1.3958 $1.35
Benham Prime Money Market Fund
- ---------------------------------------------------------------------------------------------------------------------
Benham Manager Funds $1.1875 $1.35
Benham Capital Manager Fund
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
=====================================================================================================================
Monthly
Per-Account Fee for Per-Transaction
Fund/Portfolio Account Maintenance Fee
=====================================================================================================================
<S> <C> <C>
Benham Municipal Trust $1.3958 $1.35
Benham National Tax-Free Money Market Fund
Benham National Tax-Free Intermediate-Term Fund
Benham National Tax-Free Long-Term Fund
Benham Florida Municipal Money Market Fund
Benham Florida Municipal Intermediate-Term Fund
Benham Arizona Municipal Intermediate-Term Fund
- ---------------------------------------------------------------------------------------------------------------------
Benham Target Maturities Trust $1.1875 $1.35
1995 Portfolio
2000 Portfolio
2005 Portfolio
2010 Portfolio
2015 Portfolio
2020 Portfolio
=====================================================================================================================
</TABLE>
Administrative Services Fee Rate Schedule
Group Assets Fee Rate
up to $4.5 billion .11%
up to $6 billion .10%
up to $9 billion .09%
balance over $9 billion .08%
22
The Board of Trustees and Shareholders
Benham Target Maturity Trust:
We consent to the inclusion in Benham Target Maturity Trust's Post-Effective
Amendment No. 24 to the Registration Statement No. 2-94608 filed on Form N-1A
under the Securities Act of 1933 and Amendment No. 26 to the Registration
Statement No. 811-4165 filed on Form N-1A under the Investment Company Act of
1940 of our reports dated November 3, 1995 on the financial statements and
financial highlights of Benham Target Maturity Trust for the periods indicated
therein, which reports have been incorporated by reference in the Statements of
Additional Information of Benham Target Maturity Trust. We also consent to the
reference to our firm under the heading "Financial Highlights" in the Prospectus
of the Trust and under the heading "About the Trust" in the Statement of
Additional Information which is incorporated by reference in the Prospectus.
/s/KPMG Peat Marwick LLP
San Francisco, California
November 27, 1995
BENHAM TARGET MATURITIES TRUST
POST-EFFECTIVE AMENDMENT NO. 24
Written Representation Pursuant to Rule 485(e)
of the Securities Act of 1933.
As required by paragraph (e) of Rule 485, I hereby certify, as Vice
President, Secretary, and General Counsel of the Registrant, that this
Post-Effective Amendment No. 24 meets all of the requirements for effectiveness
set forth in paragraph (b) of Rule 485 and hereby represent that such
Post-Effective Amendment No. 24 does not contain disclosures which would render
it ineligible to become effective pursuant to paragraph (b) of Rule 485.
/s/Douglas A. Paul
Douglas A. Paul
Vice President, Secretary,
and General Counsel
Mountain View, California
27 November, 1995
BENHAM TARGET MATURITIES TRUST - 1995 PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN
SEPTEMBER 30, 1995
[GRAPHIC OMITTED]
P = A hypothetical initial payment of $1,000.
ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.
N = Number of years.
T = Average annual total return.
P ERV N T
--------- --------- --------- ------
Calculation:
One Year $1,000.00 $1,057.70 1.000000 5.77%
Five Years $1,000.00 $1,502.96 5.000000 8.49%
Ten Years $1,000.00 $2,689.62 10.000000 10.40%
Date Of Inception* $1,000.00 $3,035.96 10.523300 11.13%
*Date Of Inception: March 25, 1985
<PAGE>
BENHAM TARGET MATURITIES TRUST - 2000 PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN
SEPTEMBER 30, 1995
[GRAPHIC OMITTED]
P = A hypothetical initial payment of $1,000.
ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.
N = Number of years.
T = Average annual total return.
P ERV N T
--------- --------- --------- -------
Calculation:
One Year $1,000.00 $1,148.40 1.000000 14.84%
Five Years $1,000.00 $1,782.89 5.000000 12.26%
Ten Years $1,000.00 $3,579.18 10.000000 13.60%
Date Of Inception* $1,000.00 $3,941.11 10.523300 13.92%
*Date Of Inception: March 25, 1985
<PAGE>
BENHAM TARGET MATURITIES TRUST - 2005 PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN
SEPTEMBER 30, 1995
[GRAPHIC OMITTED]
P = A hypothetical initial payment of $1,000.
ERV = Ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the period.
N = Number of years.
T = Average annual total return.
P ERV N T
---------- --------- --------- ------
Calculation:
One Year $1,000.00 $1,251.60 1.000000 25.16%
Five Years $1,000.00 $2,040.38 5.000000 15.33%
Ten Years $1,000.00 $4,426.67 10.000000 16.04%
Date Of Inception* $1,000.00 $4,767.72 10.523300 16.00%
*Date Of Inception: March 25, 1985
<PAGE>
BENHAM TARGET MATURITIES TRUST - 2010 PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN
SEPTEMBER 30, 1995
[GRAPHIC OMITTED]
P = A hypothetical initial payment of $1,000.
ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.
N = Number of years.
T = Average annual total return.
P ERV N T
--------- --------- --------- ------
Calculation:
One Year $1,000.00 $1,330.60 1.000000 33.06%
Five Years $1,000.00 $2,197.14 5.000000 17.05%
Ten Years $1,000.00 $4,986.44 10.000000 17.43%
Date Of Inception* $1,000.00 $5,375.42 10.523300 17.33%
*Date Of Inception: March 25, 1985
<PAGE>
BENHAM TARGET MATURITIES TRUST - 2015 PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN
SEPTEMBER 30, 1995
[GRAPHIC OMITTED]
P = A hypothetical initial payment of $1,000.
ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.
N = Number of years.
T = Average annual total return.
P ERV N T
--------- --------- -------- ------
Calculation:
One Year $1,000.00 $1,412.90 1.000000 41.29%
Five Years $1,000.00 $2,341.57 5.000000 18.55%
Ten Years
Date Of Inception* $1,000.00 $2,559.04 9.082200 10.90%
*Date Of Inception: September 1, 1986
<PAGE>
BENHAM TARGET MATURITIES TRUST - 2020 PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN
SEPTEMBER 30, 1995
[GRAPHIC OMITTED]
P = A hypothetical initial payment of $1,000.
ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.
N = Number of years.
T = Average annual total return.
P ERV N T
--------- --------- -------- ------
Calculation:
One Year $1,000.00 $1,470.50 1.000000 47.05%
Five Years $1,000.00 $2,333.68 5.000000 18.47%
Ten Years
Date Of Inception* $1,000.00 $1,873.15 5.756200 11.52%
*Date Of Inception: December 29, 1989
<PAGE>
BENHAM TARGET MATURITIES TRUST - 1995 PORTFOLIO
YIELD CALCULATION
SEPTEMBER 30, 1995
[GRAPHIC OMITTED]
A = Investment income 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 per share price on the last day of the period.
Calculation:
A = $321,880.03
B = $40,721.98
C = 699,354.787
D = $100.51
Yield = 4.85%
<PAGE>
BENHAM TARGET MATURITIES TRUST - 2000 PORTFOLIO
YIELD CALCULATION
SEPTEMBER 30, 1995
[GRAPHIC OMITTED]
A = Investment income 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 per share price on the last day of the period.
Calculation:
A = $1,496,894.25
B = $158,276.30
C = 3,849,645.011
D = $76.86
Yield = 5.49%
<PAGE>
BENHAM TARGET MATURITIES TRUST - 2005 PORTFOLIO
YIELD CALCULATION
SEPTEMBER 30, 1995
[GRAPHIC OMITTED]
A = Investment income 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 per share price on the last day of the period.
Calculation:
A = $952,184.09
B = $99,826.06
C = 3,123,444.106
D = $56.61
Yield = 5.85%
<PAGE>
BENHAM TARGET MATURITIES TRUST - 2010 PORTFOLIO
YIELD CALCULATION
SEPTEMBER 30, 1995
[GRAPHIC OMITTED]
A = Investment income 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 per share price on the last day of the period.
Calculation:
A = $520,799.10
B = $52,270.03
C = 2,204,968.364
D = $42.14
Yield = 6.13%
<PAGE>
BENHAM TARGET MATURITIES TRUST - 2015 PORTFOLIO
YIELD CALCULATION
SEPTEMBER 30, 1995
[GRAPHIC OMITTED]
A = Investment income 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 per share price on the last day of the period.
Calculation:
A = $653,883.12
B = $64,089.71
C = 3,540,263.870
D = $32.20
Yield = 6.29%
<PAGE>
BENHAM TARGET MATURITIES TRUST - 2020 PORTFOLIO
YIELD CALCULATION
SEPTEMBER 30, 1995
[GRAPHIC OMITTED]
A = Investment income 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 per share price on the last day of the period.
Calculation:
A = $2,807,625.99
B = $263,123.89
C = 21,735,754.135
D = $22.47
Yield = 6.33%
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, BENHAM TARGET
MATURITIES TRUST, hereinafter called the "Trust" and certain trustees and
officers of the Trust, do hereby constitute and appoint James M. Benham, James
E. Stowers, III, William M. Lyons, Douglas A. Paul, and Patrick A. Looby, and
each of them individually, their true and lawful attorneys and agents to take
any and all action and execute any and all instruments which said attorneys and
/ or the Investment Company Act of 1940, as amended, and any rules, regulations,
orders, or other requirements of the United States Securities and Exchange
Commission thereunder, in connection with the registration under the Securities
Act of 1933 and / or the Investment Company Act of 1940, as amended, including
specifically, but without limitation of the foregoing, power and authority to
sign the name of the Trust in its behalf and to affix its seal, and to sign the
names of each of such trustees and officers in their capacities as indicated, to
any amendment or supplement to the Registration Statement filed with the
Securities and Exchange Commission under the Securities Act of 1933 and / or the
Investment Company Act of 1940, as amended, and to any instruments or documents
filed or to be filed as part of or in connection with such Registration
Statement; and each of the undersigned hereby ratifies and confirms all that
said attorneys and agents shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the Trust has caused this Power to be executed by
its duly authorized officers on this the 21st day of August, 1995.
BENHAM TARGET MATURITIES TRUST
(A Massachusetts Business Trust)
By: /s/John T. Kataoka
John T. Kataoka, President
/s/James M. Benham /s/Ezra Solomon
James M. Benham Ezra Solomon
Chairman Trustee
/s/Ronald J. Gilson /s/Isaac Stein
Ronald J. Gilson Isaac Stein
Trustee Trustee
/s/Myron S. Scholes /s/Jeanne D. Wohlers
Myron S. Scholes Jeanne D. Wohlers
Trustee Trustee
/s/Kenneth E. Scott /s/James E. Stowers, III
Kenneth E. Scott James E. Stowers, III
Trustee Trustee
/s/Maryanne Roepke
Maryanne Roepke
Treasurer
Attest:
By: /s/Douglas A. Paul
Douglas A. Paul, Secretary
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> BENHAM TARGET MATURITIES TRUST - 1995 PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 64301320
<INVESTMENTS-AT-VALUE> 64420933
<RECEIVABLES> 148922
<ASSETS-OTHER> 205587
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 64775442
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1207197
<TOTAL-LIABILITIES> 1207197
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 61223037
<SHARES-COMMON-STOCK> 632484
<SHARES-COMMON-PRIOR> 904396
<ACCUMULATED-NII-CURRENT> 3375329
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1149734)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 119613
<NET-ASSETS> 63568245
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5051227
<OTHER-INCOME> 0
<EXPENSES-NET> 535818
<NET-INVESTMENT-INCOME> 4515409
<REALIZED-GAINS-CURRENT> (109341)
<APPREC-INCREASE-CURRENT> 201775
<NET-CHANGE-FROM-OPS> 4607843
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3413439
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 27428575
<NUMBER-OF-SHARES-REDEEMED> 51658743
<SHARES-REINVESTED> 3232402
<NET-CHANGE-IN-ASSETS> (19803362)
<ACCUMULATED-NII-PRIOR> 1195180
<ACCUMULATED-GAINS-PRIOR> (1271225)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 284896
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 542272
<AVERAGE-NET-ASSETS> 81398936
<PER-SHARE-NAV-BEGIN> 95.03
<PER-SHARE-NII> 5.40
<PER-SHARE-GAIN-APPREC> .08
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 100.51
<EXPENSE-RATIO> .67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> BENHAM TARGET MATURITIES TRUST - 2000 PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 282651207
<INVESTMENTS-AT-VALUE> 294898365
<RECEIVABLES> 229938
<ASSETS-OTHER> 49513
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 295177816
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 441836
<TOTAL-LIABILITIES> 441836
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 274897729
<SHARES-COMMON-STOCK> 3834562
<SHARES-COMMON-PRIOR> 4024186
<ACCUMULATED-NII-CURRENT> 13250335
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5659242)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12247158
<NET-ASSETS> 294735980
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 19024682
<OTHER-INCOME> 0
<EXPENSES-NET> 1746359
<NET-INVESTMENT-INCOME> 17278323
<REALIZED-GAINS-CURRENT> (984607)
<APPREC-INCREASE-CURRENT> 23502271
<NET-CHANGE-FROM-OPS> 39795987
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 13492533
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 121453561
<NUMBER-OF-SHARES-REDEEMED> 110232771
<SHARES-REINVESTED> 13316579
<NET-CHANGE-IN-ASSETS> 50840823
<ACCUMULATED-NII-PRIOR> 4218913
<ACCUMULATED-GAINS-PRIOR> (6562023)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 984031
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1775063
<AVERAGE-NET-ASSETS> 281151592
<PER-SHARE-NAV-BEGIN> 66.93
<PER-SHARE-NII> 4.37
<PER-SHARE-GAIN-APPREC> 5.56
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 76.86
<EXPENSE-RATIO> .63
<AVG-DEBT-OUTSTANDING> 0
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