SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 _X__
File No. 33-19589:
Pre-Effective Amendment No.____ ____
Post-Effective Amendment No._16_ _X__
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 _X__
File No. 811-5447:
Amendment No._18_
BENHAM EQUITY FUNDS
(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: 8/17/88
It is proposed that this filing will become effective:
____ 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
__X_ 75 days after filing pursuant to paragraph (a)(2) 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 December 31, 1995.
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FORM N-1A
CROSS-REFERENCE SHEET
BENHAM EQUITY FUNDS
Benham Global Gold Fund
The Prospectus and Statement of Additional Information are incorporated herein
by reference to 1933 Act Post-Effective Amendment No. 16/1940 Act Amendment
No. 18.
PART A: PROSPECTUS
ITEM PROSPECTUS CAPTION
1 Cover Page
2 (a) Summary of Fund Expenses
(b), (c) Not Applicable
3 (a) Financial Highlights
(b) Not Applicable
(c), (d) Performance
4 (a)(i) About Benham Equity Funds, Cover Page
(a)(ii), (b) How the Fund Works, Other Investment Policies and Techniques
(c) Risk Factors and Investment Techniques
5 (a) About Benham Equity Funds
(b) - (f) The Benham Group, Advisory and Service Fees
(g) Portfolio Transactions
5A Not Applicable
6 (a) About Benham Equity Funds
(b) - (d) Not Applicable
(e) How to Invest
(f), (g) Distributions and Taxes
7 (a) Not Applicable
(b) Share Price
(c) Not Applicable
(d) How to Buy Shares, About Benham-Sponsored Retirement Plans
(e), (f) Not Applicable
8 (a) How to Redeem Your Investment, How to Redeem Shares
(b) Broker-Dealer Transactions
(c), (d) About Benham-Sponsored Retirement Plans, How to Redeem Your
Investment
9 Not Applicable
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CROSS-REFERENCE SHEET
(continued)
BENHAM EQUITY FUNDS
Benham Global Gold Fund
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) Directors and Officers
(c) Not Applicable
15 (a) Not Applicable
(b) Additional Purchase and Redemption Information
(c) Directors and Officers
16 (a) Investment Advisory Services
(b) - (d) Investment Advisory Services, Administrative and Transfer
Agent Services, Reimbursement Arrangements
(e) - (g) Not Applicable
(h) About Benham Equity Funds
(i) Administrative and Transfer Agent Services
17 (a) Portfolio Transactions
(b) Not Applicable
(c) Portfolio Transactions
(d), (e) Not Applicable
18 (a) About Benham Equity Funds
(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
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BENHAM GLOBAL
GOLD FUND
Prospectus * February ___, 1996
[photo to be inserted at a later date]
[company logo] The Benham Group
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[information in left margin of page]
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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.
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BENHAM GLOBAL GOLD FUND
A Series of Benham Equity Funds
Prospectus o February __, 1996
BENHAM GLOBAL GOLD FUND seeks to realize a total return (capital growth and
dividends) consistent with investment in securities of companies that are
engaged in mining, processing, fabricating, or distributing gold or other
precious metals throughout the world. The Fund is a non-diversified series of
Benham Equity Funds (BEF), a no-load, open-end mutual fund.
Please read this Prospectus carefully and retain it for future reference. It is
designed to help you decide if the Fund's goals match your own. A Statement of
Additional Information (also dated February __, 1996) 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.
Mutual fund shares are not insured by the FDIC, the Federal Reserve Board, or
any other agency. The value of the investment and its returns will fluctuate and
is not guaranteed.
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.
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SUMMARY OF FUND EXPENSES
The tables below illustrate the fees and expenses an investor in the Fund would
incur directly or indirectly. The figures shown are based on historical
expenses, adjusted to reflect the expense limitation agreement in effect as of
February __, 1996.
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A. SHAREHOLDER TRANSACTION EXPENSES
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Sales load imposed on purchases..........................None
Sales load imposed on reinvested dividends...............None
Deferred sales load......................................None
Redemption fee...........................................None
Exchange fee.............................................None
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B. ANNUAL FUND OPERATING EXPENSES
As a Percentage of Average Daily Net Assets
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Investment advisory fee
(net of expense limitation)...................... .32%*
12b-1 fee.............................................. None
Other expenses......................................... .29%
Total Fund operating expenses
(net of expense limitation)...................... .61%*
* Benham Management Corporation (BMC) has agreed under contract to limit the
Fund's total operating expenses to .75% of average daily net assets through May
31, 1995. The contract provides that BMC may recover amounts absorbed on behalf
of the Fund during the preceding 11 months if, and to the extent that, for any
given month, the Fund's expenses were less than the expense limit in effect at
that time. The expense limit is up for annual renewal in June. As indicated
above, the Fund's actual expenses were below its contractual expense limitation
of .75% of average daily net assets.
The Fund 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).
[information in right margin of page]
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Please read this Prospectus carefully and retain it for future reference. It is
designed to help you decide if the Fund's goals match your own.
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C. EXAMPLE OF EXPENSES
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The following table illustrates the expenses a shareholder would pay on a $1,000
investment in the Fund over periods of one, three, five, and ten years. These
figures are based on the expenses shown in Table B and assume (i) a 5% annual
return and (ii) full redemption at the end of each time period.
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
$6 $20 $34 $76
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 page has been audited by KPMG Peat
Marwick LLP, independent auditors. Their unqualified report on the financial
statements and financial highlights is included in the Fund's Annual Report,
which is incorporated by reference in the Statement of Additional Information.
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BENHAM GLOBAL GOLD FUND
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[DROP IN NEW NUMBERS FOR FISCAL YEAR ENDED DECEMBER 31, 1995]
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HOW THE FUND WORKS
INVESTMENT OBJECTIVE
The Fund's investment objective is to achieve a total return (capital
appreciation and current income) that is consistent with investing in securities
of companies that are engaged in mining, processing, fabricating, or
distributing gold or other related precious metals throughout the world. The
Fund will seek to attain the objective of capital appreciation by purchasing
securities with the potential to increase in value, so that its own shares will
in turn increase in value. Because the Fund's investment objective also includes
the pursuit of current income, the payment of dividends and interest may be a
consideration when the Fund purchases securities.
The Fund's investment objective and industry concentration policy, described on
the following pages, are fundamental and may not be changed without shareholder
approval. The other policies described in this Prospectus are not fundamental
and may be changed by the Fund's board of directors.
CORE INVESTMENT STRATEGIES
BMC intends to use quantitative management techniques in pursuit of the Fund's
investment objective. Quantitative investment management combines a disciplined
management approach with the flexibility to respond to events that may affect
the value of the Fund's investments. This approach is a combination of active
management, which allows the advisor to select investments for a fund without
reference to an index or investment model, and indexing, in which the advisor
tries to match a fund's portfolio composition to that of a particular index.
The primary management technique BMC will use to pursue the Fund's investment
objective is enhanced benchmark management. Under this technique, BMC constructs
the Fund's portfolio to match the risk characteristics of the market for gold
and gold-related equity securities and, in turn, attempt to produce performance
indicative of performance in the worldwide gold equities
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market. As part of evaluating and determining the appropriate investments for
the Fund, BMC may utilize various benchmarks, including worldwide gold market
indices, to optimize the Fund's portfolio.
The Fund will concentrate its investments in securities of companies throughout
the world which are engaged in mining, processing or dealing with gold or other
precious metals ("Gold Companies"). This means that at least 25% of the Fund's
total assets must be invested in Gold Companies. Under normal circumstances, at
least 65% of the value of the Fund's total assets will be invested in securities
of issuers engaged in gold operations, including securities of gold mining
finance companies, as well as operating companies with long-, medium- or
short-life gold mines.
The Fund may invest in common stocks, securities convertible into common stocks
and sponsored or unsponsored American Depositary Receipts ("ADRs") for the
securities of Gold Companies, all of which may be traded on a securities
exchange or over-the-counter. In seeking income or in times when a conservative
policy is warranted, the Fund may also purchase preferred stocks and debt
securities, such as notes, bonds, debentures or commercial paper, any of which
may or may not be rated by recognized securities rating agencies.
As part of its global investment strategy, the Fund will normally invest in
securities of issuers located in at least three different countries, one of
which may be the United States. For temporary defensive purposes, however, the
Fund may invest in less than three countries. BMC anticipates that a substantial
portion of the Fund's assets will be invested in securities of companies
domiciled in or operating in one or more foreign countries. There are certain
risks which are posed to the Fund when it invests in foreign securities. (See
"RISK FACTORS AND INVESTMENT TECHNIQUES--Foreign Securities," on page 9.) While
these risks exist under the Current Objective, their significance to the Fund
and its shareholders may be greater as the Fund increases its investments in
regions outside North America.
[information in right margin of page]
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The Fund will concentrate its investments in securities of companies throughout
the world which are engaged in mining, processing or dealing with gold or other
precious metals ("Gold Companies").
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BMC works to balance three goals:
[] To construct the Fund's portfolio composition so that its risk and
investment performance characteristics will match the selected benchmarks as
closely as possible while meeting IRS diversification requirements;
[] To keep enough cash on hand to meet shareholder redemption requests and pay
operational expenses; and
[] To keep portfolio transaction costs low.
The Fund is a "non-diversified company" as defined in the Investment Company Act
of 1940 (the 1940 Act), which means that the proportion of the Fund's assets
that may be invested in the securities of a single issuer is not limited by the
1940 Act. However, the Internal Revenue Code limits the proportion of assets a
fund may invest in the securities of any single issuer. The Fund intends to
follow these limits in order to qualify as a regulated investment company.
RISK FACTORS AND INVESTMENT TECHNIQUES
GENERAL
By itself, the Fund does not constitute a balanced investment plan. The Fund may
be appropriate for investors seeking to diversify their stock portfolios through
broad-based exposure to the global gold industry. The Fund works best for
long-term investors prepared to ride out the markets' ups and downs. Since the
Fund concentrates its investments in stocks of companies engaged in the gold
industry (gold company shares), its share price is likely to be more volatile
than the share price of a fund that diversifies across multiple industries.
Many investors perceive that gold investments hedge against inflation, currency
devaluations, and general stock market declines; however, there is no assurance
that these historical inverse relationships will persist. Changing market
conditions (i.e., fluctuating operating costs, political events, and changes in
interest rates and currency rates) may affect gold prices and tend to have a
more exaggerated effect on gold stocks. Because of their
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high share price volatility, gold stocks are considered speculative and may
affect the Fund's share price. Investment in the Fund's shares may involve
special considerations, including: fluctuations in the price of gold; the
potential effect of the concentration of the sources of supply of gold and over
control of the sale of gold; changes in U.S. or foreign tax, currency or mining
laws; increased environmental costs; and unpredictable monetary policies and
economic and political conditions.
CONVERTIBLE SECURITIES
In addition to common stock shares of gold companies, the Fund may buy
securities convertible into common stock, such as convertible bonds, convertible
preferred stocks, and warrants. BMC may purchase these securities if it believes
that a company's convertible securities are undervalued in the market.
Convertible securities provide a fixed-income stream and the opportunity,
through their conversion feature, to participate in the capital appreciation
resulting from a market price advance in the convertible security's underlying
common stock. A convertible security tends to increase in market value when
interest rates rise. The price of a convertible security is also influenced by
the market value of the security's underlying common stock and tends to increase
as the market value of the underlying stock rises, whereas it tends to decrease
as the market value of the underlying stock declines.
FOREIGN SECURITIES
Because of the Fund's policy of investing primarily in securities of companies
engaged in gold mining, a substantial part of the Fund's assets is generally
invested in securities of companies domiciled or operating in one or more
foreign countries.
Securities of foreign issuers may be affected by the strength of foreign
currencies relative to the U.S. dollar or by political or economic developments
in foreign countries. Foreign companies may not be subject to accounting
standards or governmental regulations comparable to those that affect U.S.
companies, and there may be less public information about their operations.
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In particular, liquidity of the Fund's portfolio may be affected by the Fund's
global exposure. While the Fund intends to acquire securities of foreign issuers
only where there are public trading markets for such securities, such
investments may tend to reduce the liquidity of the Fund's portfolio in the
event of internal problems in such foreign countries or deteriorating relations
between the United States and such countries. Restrictions and controls on
investment in the securities markets of some countries may have an adverse
effect on the availability and costs to the Fund of investments in those
countries. In addition, there may be the possibility of expropriations, foreign
withholding taxes, confiscatory taxation, political, economic or social
instability or diplomatic developments which could affect assets of the Fund
invested in issuers in foreign countries. In particular, investments in Gold
Companies located in South Africa, which comprise a significant component of the
global gold industry, may present greater risks to the Fund than investments in
other countries because of its realtively unstable internal political
conditions.
In addition, issuers of unsponsored ADRs are not obligated to disclose material
information in the United States and, therefore, there may be less information
available to the investing public than with sponsored ADRs. BMC will attempt to
independently accumulate and evaluate information with respect to the issuers of
the underlying securities of sponsored and unsponsored ADRs to attempt to limit
the Fund's exposure to the market risk associated with such investments.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
To offset the currency risks associated with investing in securities of foreign
issuers, the Fund may hold foreign currency deposits and may convert dollars and
foreign currencies in the foreign exchange markets. Currency conversion involves
dealer spreads and other costs, although commissions usually are not charged.
Currencies may be exhanged on a spot (i.e., cash) basis or by entering into
forward contracts to purchase or sell foreign currencies at a future date and
price. By entering into a forward contract to buy or sell the amount of foreign
currency involved in a security transaction for a fixed amount of U.S. dollars,
BMC can protect the Fund against losses resulting from adverse changes in the
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relationship between the U.S. dollar and the foreign currency during the period
between the date the security is purchased or sold and the date on which payment
is made or received. However, using forward contracts in this manner does not
eliminate fluctuations in the prices of the underlying securities themselves.
Forward contracts simply establish a rate of exchange that can be achieved at
some future point in time. Additionally, although forward contracts tend to
minimize the risk of loss due to a decline in the value of the hedged currency,
they also limit any gain that might result if the hedged currency's value were
to increase.
BMC uses forward contracts for currency hedging purposes only and not for
speculative purposes. The Fund is not required to enter into forward contracts
with regard to its foreign holdings and will not do so unless doing so is deemed
appropriate by the advisor.
WHEN-ISSUED SECURITIES AND FORWARD-COMMITMENT AGREEMENTS
When-issued securities and forward-commitment agreements fix a security's price
and yield for future payment and delivery. The market value of the security may
change during this period, or a party to the agreement may fail to deliver or
pay for the security. Either of these situations could affect the market value
of the Fund's assets.
GOLD INVESTMENTS
The Fund may purchase gold, gold certificates, or gold futures (referred to
collectively as "Gold Investments"), although it will not purchase gold in any
form that is not readily marketable and that cannot be stored in accordance with
custody regulations applicable to mutual funds.
BMC may use a Gold Investment when it judges the price of gold to be
artificially low. BMC may also use a Gold Investment as a hedge if it expects a
rise in the price of gold to correlate with rising prices of the Fund's other
gold-related investments. If gold prices rise as BMC predicted, proceeds from
the sale of the Gold Investment may be used to cover the increased price of the
hedged security. However, if the price of the Gold Investment declines, the Fund
may suffer a loss.
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Direct purchases of gold bullion or coins may generate higher custody and
transaction costs than other types of investments and do not generate interest
or dividend income for the Fund. The sole source of return on such investments
is from gains (or losses) realized at the time of sale. Gold coins may be
purchased for their intrinsic value only and not for their numismatic value.
The Fund purchases Gold Investments only to the extent necessary to meet IRS
income requirements and state restrictions on the purchase of gold and other
commodities.
SHORT-TERM INSTRUMENTS
For liquidity purposes, the Fund may invest in high-quality money market
instruments with remaining maturities of one year or less.
The Fund may also enter into repurchase agreements, collateralized by U.S.
government securities, with banks or broker-dealers that are deemed to present
minimal credit risk. Credit risk determinations are made by BMC pursuant to
guidelines established by the board of directors. A repurchase agreement
involves the purchase of a security and a simultaneous agreement to sell the
security back to the seller at a higher price. Delays or losses could result if
the party to the agreement defaults or becomes bankrupt.
The Fund may invest up to 5% of its total assets in any money market fund
advised by BMC, provided that the investment is consistent with the Fund's
investment policies and restrictions.
OPTIONS
As more fully discussed in the Statement of Additional Information, the Fund may
enter into options (including writing covered call options), futures and options
on financial futures transactions. For state law purposes, the Fund will commit
no more than 5% of its assets to premiums when purchasing put options. The
premium paid by the Fund when purchasing a put option will be
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recorded as an asset in the Fund's statement of assets and liabilities. This
asset will be adjusted daily to the option's current market value, which will be
the latest sale price at the time at which the net asset value per share of the
Fund is computed or, in the absence of such sale, the latest bid price.
INTEREST RATE SWAPS
The Fund may enter into interest rate swap agreements with banks or
broker-dealers. These transactions may be used to help the Fund meet IRS
diversification requirements or to improve the correlation between the Fund's
total return and that of the Index.
Swap transactions used by BMC typically involve entering into a contract with a
broker-dealer to receive the total returns of a specific Index security or
basket of Index securities (minus a fee) in exchange for periodic payments based
on a money market interest rate index such as the London Interbank Offered Rate
(LIBOR).
SECURITIES LENDING
The Fund may lend its portfolio securities to banks and broker-dealers to earn
additional income. Securities loans are subject to guidelines prescribed by the
board of directors, which are set forth in the Statement of Additional
Information.
This practice could result in a loss or a delay in recovering the Fund's
securities. Loans are limited to 33-1/3% of the Fund's total assets.
OTHER PORTFOLIO MANAGEMENT TECHNIQUES
BMC may buy other types of securities or employ other portfolio management
techniques on behalf of the Fund. When required by SEC guidelines, the Fund will
set aside cash or appropriate liquid assets in a segregated account to cover its
portfolio obligations. See the Statement of Additional Information for a more
detailed discussion of these investments and some of the risks associated with
them.
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[information in left margin of page]
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Performance data and a discussion of factors that affected performance during
the Fund's most recent reporting period are included in its semiannual reports
to shareholders.
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PORTFOLIO TRANSACTIONS
BMC selects brokerage firms solely on the basis of best net price and execution
and engages in regular trading on behalf of the Fund. The Fund's annual
portfolio turnover rate is not expected to exceed 100% and may vary from year to
year.
PERFORMANCE
Mutual fund performance is commonly measured as yield or total return. It 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 the Fund earns on its investments as
an annual percentage rate. The Fund's yield is calculated according to methods
that are standardized for all stock and bond funds.
TOTAL RETURN represents the Fund's changes over a specified time period assuming
reinvestment of dividends and capital gains, if any. CUMULATIVE TOTAL RETURN
illustrates the Fund'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 Fund's performance had been constant over a entire period. Average
annual total returns smooth out variations in the Fund's performance; they are
not the same as year-by-year results.
Performance data and a discussion of factors that affected performance during
the Fund's most recent reporting period are included in the Fund's annual and
semiannual reports to shareholders. These reports are routinely delivered to the
Fund's shareholders. To receive a free copy, call one of the Fund Information
numbers listed on page 16.
BMC does not expect the Fund's total return to differ from that of the Index by
more than five percentage points per year.
The Fund's life-of-fund cumulative and average annual total returns for the
period August 17, 1988, through December 31, 1995, were ___% and ___%,
respectively.
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SHARE PRICE
The price of your shares is the net asset value of the Fund 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 ("NAV") is determined on each day that the New York Stock
Exchange (the "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 of the Exchange are effective on, and will receive the price
determined on that day as of the close of the Exchange. Investment and
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.
Investment and transaction instructions received by Benham on any business day
by mail at its office prior to the close of business of 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 determined on the next business
day.
[information in right margin of page]
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Shares may be purchased and redeemed without any sales charge, commission,
redemption fee, 12b-1 fee, or contingent deferred sales load.
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[information in left margin of page]
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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.
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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 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 26
and 27).
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 SAI 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.
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HOW TO BUY SHARES (Retirement investors, see pages 26 and 27).
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METHOD INSTRUCTIONS
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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, CA 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 information preprinted on the
investment slip, we will follow the instructions preprinted on
the investment 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 your 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
should 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.
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================================================================================
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 Equity Funds: Benham Global
Gold Fund
AC - 0505 917 5
FBO [Your Name, Your Benham Fund Account Number]
- --------------------------------------------------------------------------------
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 20 for
details. You may open a new account by telephone
exchange, provided that you meet the minimum initial
investment requirement.
- --------------------------------------------------------------------------------
AUTOMATIC Minimum: $25
INVESTMENT These services are offered with respect to additional
SERVICES investments only. See details on page 21.
18
<PAGE>
PROCESSING YOUR PURCHASES
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. An
investment received and accepted before the close of business of the Exchange,
normally 1:00 p.m. Pacific Time, will be included in your account balance the
same day. If the investment is received after the close of business of the
Exchange, usually 1:00 p.m. Pacific Time, it will be credited to your account
the following business day. The Fund reserves 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 Fund reserves the right to refuse or terminate
telephone transactions 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. However, Automatic Investment Services transactions will
not be confirmed immediately, but rather will be confirmed on your next
consolidated quarterly statement. 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.
19
<PAGE>
[information in left margin of page]
- -----------------
The free exchange privilege is a convenient way to buy shares in other Benham
funds if your investment goals change.
- -----------------
Benham Open Orders allow investors to utilize a "buy low, sell high" investment
strategy.
- -----------------
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 which is
one hour prior to the close of the Exchange, usually 12 p.m. Pacific Time for
Benham Target Maturities Trust; and at the close of the Exchange, usually 1 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. 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.
20
<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 cancelled. All orders and cancellation of orders received by one hour
prior to the close of the Exchange, usually 12 p.m. Pacific Time, will be
considered to be effective the same day. All orders and cancellation of orders
not received one hour prior to the close of the Exchange, usually 12 p.m.
Pacific Time, will be considered 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 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 other Benham fund accounts.
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, please call our Investor
Services Department at 1-800-321-8321 or 1-415-965-4222.
[information in right margin of page]
- ---------------------
Automatic Investment Services enable you to benefit from a dollar-cost averaging
investment strategy.
21
<PAGE>
[information in left margin of page]
- --------------------
You may redeem shares without charge.
- --------------------
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, call 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 and accepted your redemption request in good order. The Fund's NAV
is usually calculated at the close of business of the NYSE, usually 1:00 p.m.
Pacific Time. See page 15 for details.
22
<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 also 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
Plan account, see pages 26 and 27 for details.
UNCASHED CHECKS. We may reinvest at the Fund's then-current NAV any distribution
or redemption checks that remain 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.
23
<PAGE>
HOW TO REDEEM SHARES (Retirement investors, see pages 26 and 27).
================================================================================
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 these redemption requests.
24
<PAGE>
================================================================================
METHOD INSTRUCTIONS
- --------------------------------------------------------------------------------
IN WRITING Signature guarantees may be provided by banks, savings and loan
(continued) associations, savings banks, credit unions, stock brokerage
firms, or a Benham Investor Center. Shareholders must appear in
person with identification to 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 20.
- --------------------------------------------------------------------------------
AUTOMATIC DIRECTED PAYMENTS. You may arrange for periodic redemp- tions
REDEMPTION from your Benham fund account to your bank account or to
SERVICES another designated payee.
SYSTEMATIC EXCHANGES. You may arrange for periodic exchange
redemptions from one Benham fund account to another Benham fund
account.
25
<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 [paragraph continues on top of next page]
================================================================================
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.*
- --------------------------------------------------------------------------------
(table continued on next page)
* Self-employed individuals should consult IRS Publication 560 for their annual
contribution limits.
26
<PAGE>
minimum, your account may be closed (see page 23 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.
<TABLE>
<CAPTION>
(continued from previous page)
=============================================================================================
PLAN TYPE DEADLINE FOR
OPENING ACCOUNT CONTRIBUTION DEADLINES
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
CONTRIBUTORY You may open an account anytime, Annual contributions can be made
and funding an IRA for the prior the following tax year up to the
tax year is April 15. year you turn age 70 1/2.
- ---------------------------------------------------------------------------------------------
SPOUSAL IRA Same as for Contributory IRA. Same as for Contributory IRA.
- ---------------------------------------------------------------------------------------------
ROLLOVER 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.
- ---------------------------------------------------------------------------------------------
SEP-IRA 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).
- ---------------------------------------------------------------------------------------------
MONEY The end of the employer's plan Same as for SEP-IRA.
PURCHASE PLAN year, usually December 31.
(KEOGH)
- ---------------------------------------------------------------------------------------------
PROFIT The end of the employer's plan Same as for SEP-IRA.
SHARING PLAN year, usually December 31.
(KEOGH)
- ---------------------------------------------------------------------------------------------
For all Benham-sponsored retirement plans, you may begin taking distributions at
age 59 1/2. You must begin to take required distributions by April 1 of the year
after you turn age 70 1/2. You may take distributions from your IRA or SEP-IRA
before you reach age 59 1/2; however, a penalty may apply.
</TABLE>
27
<PAGE>
[information in left margin of page]
- ------------------
Each January, you will be informed of the tax status of dividends and capital
gain distributions for the previous year.
- ------------------
DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Dividends, if any, will be declared semiannually in June and December. Long-term
capital gain distributions, if any, will be declared once a year, typically in
December.
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 21 for further information.) Please indicate your choice on
your account application or contact our Investor Services Department. See page
23 for a description of our policy regarding uncashed distribution checks.
TAXES
The Fund intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code of 1986, as amended, by distributing all or
substantially all of its net investment income and net realized capital gains to
shareholders each year.
The Fund's dividends and capital gain distributions are subject to federal
income tax and applicable state or local taxes whether they are received in cash
or reinvested in additional shares. Distributions are generally taxable in the
year they are declared.
Dividends from net investment income (including net short-term capital gains, if
any) are taxable as ordinary income. Distributions from net long-term capital
gains (minus net short-term capital losses) designated by the Fund as capital
gain dividends are taxable as long-term capital gains, regardless of how long
you have held your shares. Ordinary income distributions made by the Fund to
corporate shareholders may qualify for the dividends-received deduction
available to corporations. Shareholders will be notified each year of the
amount, if any, that qualifies for this deduction.
A portion of the Fund's dividends may qualify for the dividends-received
deduction available to corporations. The Fund will send you a tax statement
(Form 1099) by January 31 showing the tax status of distributions you received
in the previous year and will file a copy with the IRS.
28
<PAGE>
You may realize a taxable gain or loss when you redeem (sell) or exchange shares
of the Fund. For most types of accounts, the proceeds from your redemption
transactions will be reported to you and the IRS annually. However, because the
tax treatment depends on your purchase price and personal tax position, you
should keep your regular account statements to use in determining your taxes.
RETURN OF CAPITAL. If, during a given year, the Fund pays dividends that exceed
the income earned on investments, a portion of your dividends may be
reclassified as a "return of capital." This reclassification of dividends paid
has at least two tax implications for shareholders:
(1) The amount of taxable dividends (as reported on your 1099-DIV from the Fund)
will be less than the amount of dividends you actually received during the tax
year.
(2) The return of capital reduces your cost basis in the shares you own, so that
when you redeem shares (and calculate your gain or loss), you must reduce your
investment cost by the amount of dividends that were reclassified as a return of
capital. For example, if you invest $10,000 in the Fund, and $100 worth of
dividends are reclassified as a return of capital, you must adjust your cost
from $10,000 to $9,900 to determine the amount of gain or loss on your
investment.
BUYING A DIVIDEND. The timing of your investment could have undesirable tax
consequences. If you buy shares on or just before the day the Fund declares a
dividend, you will pay full price for the shares and may receive a portion of
your investment back as a taxable distribution.
FOREIGN TAX WITHHOLDING. The income the Fund receives from foreign stocks may be
subject to withholding taxes. If more than 50% of the Fund's total assets at the
end of any tax year consist of foreign securities, the Fund will treat any
foreign taxes it pays as taxes paid directly by shareholders. Under such
circumstances, a shareholder would be required to include as "income" his or her
proportionate share of foreign taxes paid by the Fund and might be able to claim
either a credit or a deduction for this amount. You will receive notice from the
Fund
29
<PAGE>
each year indicating (i) whether it made the election and (ii) the amount of
foreign taxes, if any, that will be treated as though they were paid by you. You
may wish to consult the Statement of Additional Information and your tax advisor
for more information regarding the tax consequences of an investment in the
Fund.
BACKUP WITHHOLDING. The Fund is required by law to withhold 31% of reportable
dividends and capital gain distributions 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 BENHAM EQUITY FUNDS
Benham Equity Funds (BEF) is a registered open-end management investment company
that was organized as a California corporation on December 31, 1987. BEF
currently consists of five series.
A board of directors oversees the Fund's activities and is responsible for
protecting shareholders' interests. The majority of the directors are not
otherwise affiliated with BMC. BEF is neither required nor expected to hold
annual meetings, although special meetings may be called for purposes such as
electing or removing directors or amending a series' advisory agreement or
investment policies. The number of votes you are entitled to is based upon the
dollar value of your investment. Each series votes separately on matters that
pertain to it exclusively. Under California corporate law, BEF shareholders have
the right to cumulate votes in the election (or removal) of directors.
30
<PAGE>
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 the
prospectus and his work experience for the last five years is as follows:
WILLIAM MARTIN, Portfolio Manager, has primary responsibility for the day-to-day
operation of the Fund. He is also Portfolio Manager for Benham Global Natural
Resources Index Fund. Prior to joining BMC in 1989, Mr. Martin was an investment
broker for A. G. Edwards of St. Louis, Missouri (1987 to 1989). Mr. Martin
received his Charter Financial Analyst designation in 1991.
[information in right margin of page]
- ----------------------
The Benham Group serves more than 350,000 investors.
31
<PAGE>
[information in left margin of page]
- ---------------------
Benham Management Corporation provides investment advice and portfolio
management services to the Fund.
- ---------------------
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, the Fund pays BMC a
monthly investment advisory fee equal to its pro rata share of the dollar amount
derived from applying BEF's average daily net assets to an investment advisory
fee schedule.
The investment advisory fee cannot exceed ___% of average daily net assets, and
it drops to a marginal rate of ___% of average daily net assets as BEF's assets
increase.
Investment advisory fees paid by the Fund to BMC for the fiscal year ended
December 31, 1995, were equal to ___% of the Fund's average daily net assets, or
$ ___ per $1,000 of average daily net assets.
To avoid duplicative investment advisory fees, the Fund does not pay BMC
investment advisory fees with respect to assets invested in shares of any Benham
money market fund.
BFS, a wholly owned subsidiary of TCC, is BEF's agent for transfer and
administrative services. For administrative services, the Fund 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
32
<PAGE>
in The Benham Group to an administrative fee schedule. The administrative fee
rate ranges from .11% to .08% of average daily net assets, dropping as Benham
Group assets increase. For transfer agent services, the Fund pays BFS a monthly
fee for each shareholder account maintained and for each shareholder transaction
executed during that month.
The Fund pays certain operating expenses directly, including but not limited to,
custodian, audit, and legal fees; fees of the independent directors; costs of
printing and mailing prospectuses, statements of additional information, proxy
statements, notices, and reports to shareholders; insurance expenses; and costs
of registering shares for sale under federal and state securities laws. See the
Statement of Additional Information for a more detailed discussion of
independent director compensation.
EXPENSE LIMITATION AGREEMENT
A contractual expense limitation agreement between BMC and the Fund is described
on page 3.
The Fund's total operating expenses for the fiscal year ended December 31, 1995,
were equal to ___ % of the Fund's average daily net assets, or $___ per $1,000
of average daily net assets.
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
Fund's shares. The Fund does not pay commissions to, or receive compensation
from, broker-dealers.
BDI is a wholly owned subsidiary of TCC.
[information in right margin of page]
- --------------------
Behnam Financial Services, Inc. provides administrative and transfer agent
services to the Fund.
33
<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
DIRECTORS
James M. Benham
Albert A. Eisenstat
Ronald J. Gilson
Myron S. Scholes
Kenneth E. Scott
Ezra Solomon
Isaac Stein
James E. Stowers III
Jeanne D. Wohlers
34
<PAGE>
THE BENHAM GROUP OF INVESTMENT COMPANIES
Capital Preservation Fund
Capital Preservation Fund II
Benham Prime Money Market Fund
Benham Government Agency 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 Global Gold 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.
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CONTENTS
Summary of Fund Expenses ................................. 3
Financial Highlights ..................................... 4
How The Fund Works ....................................... 6
Investment Objective .................................. 6
Core Investment Strategies ............................ 6
Risk Factors and Investment Techniques ................... 8
Portfolio Transactions ................................... 14
Performance .............................................. 14
Share Price .............................................. 15
How to Invest ............................................ 16
Shareholder Services ..................................... 20
Exchange Privilege .................................... 20
Open Order Service .................................... 20
Automatic Investment Services ......................... 21
Broker-Dealer Transactions ............................ 22
TDD Service ........................................... 22
Emergency Services .................................... 22
How to Redeem Your Investment ............................ 22
About Benham-Sponsored Retirement Plans .................. 26
Distributions and Taxes .................................. 28
Management Information ................................... 30
About Benham Equity Funds ............................. 30
The Benham Group ...................................... 31
Advisory and Service Fees ............................. 32
Expense Limitation Agreement .......................... 33
Distribution of Shares ................................ 33
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BENHAM GLOBAL GOLD FUND
A SERIES OF BENHAM EQUITY FUNDS
THE BENHAM GROUP(R)
1665 Charleston Road
Mountain View, CA 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
FEBRUARY ___, 1996
This Statement is not a prospectus but should be read in conjunction with the
Fund's current Prospectus dated February ___, 1996. The Fund's Annual Report for
the fiscal year ended December 31, 1995, is incorporated herein by reference. To
obtain a copy of the Prospectus, call or write The Benham Group.
TABLE OF CONTENTS
PAGE
Investment Policies and Techniques ........................... 2
Investment Restrictions ...................................... 10
Portfolio Transactions ....................................... 12
Valuation of Portfolio Securities ............................ 12
Performance .................................................. 13
Taxes ........................................................ 15
About Benham Equity Funds .................................... 16
Directors and Officers ....................................... 17
Investment Advisory Services ................................. 19
Administrative and Transfer Agent Services ................... 20
Direct Fund Expenses ......................................... 21
Expense Limitation Agreement ................................. 21
Additional Purchase and Redemption Information ............... 22
Other Information ............................................ 22
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INVESTMENT POLICIES AND TECHNIQUES
The following paragraphs provide a more detailed description of 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 directors.
U.S. GOVERNMENT SECURITIES
The Fund may invest in U.S. government securities, including bills, notes, and
bonds issued by the U.S. Treasury and securities issued or guaranteed by
agencies or instrumentalities of the U.S. government. Some U.S. government
securities are backed by the direct full faith and credit pledge of the U.S.
government; others are supported by the right of the issuer to borrow from the
U.S. Treasury; others, such as securities issued by the Federal National
Mortgage Association, are supported by the discretionary authority of the U.S.
government to purchase the agencies' obligations; and others are supported only
by the credit of the issuing or guaranteeing instrumentality. There is no
assurance that the U.S. government will provide financial support to an
instrumentality it sponsors when it is not obligated by law to do so.
WHEN-ISSUED AND FORWARD-COMMITMENT AGREEMENTS
The Fund may engage in securities transactions on a when-issued or
forward-commitment basis, in which the transaction price and yield are each
fixed at the time the commitment is made, but payment and delivery occur at a
future date (typically 15 to 45 days later).
When purchasing securities on a when-issued or forward-commitment basis, the
Fund assumes the rights and risks of ownership, including the risks of price and
yield fluctuations. While the Fund will make commitments to purchase or sell
securities on a when-issued or forward-commitment basis with the intention of
actually receiving or delivering them, it may, nevertheless, sell the securities
before the settlement date if it is deemed advisable as a matter of investment
strategy.
In purchasing securities on a when-issued or forward-commitment basis, the Fund
will establish and maintain until the settlement date a segregated account
consisting of cash, cash equivalents, or high-quality securities in an amount
sufficient to meet the purchase price. When the time comes to pay for
when-issued securities, the Fund will meet its obligations with available cash,
through the sale of securities or, although it would not normally expect to do
so, through sales of the when-issued securities themselves (which may have a
market value greater or less than the Fund's payment obligation). Selling
securities to meet when-issued or forward-commitment obligations may generate
capital gains or losses.
As an operating policy, the Fund will not commit more than 35% of its assets to
when-issued or forward-commitment agreements. If fluctuations in the value of
securities held cause more than 35% of the Fund's assets to be committed under
when-issued or forward-commitment agreements, BMC need not sell such
commitments, but it will be restricted from entering into further agreements on
behalf of the Fund until the percentage of assets committed to such agreements
is reduced to 35%. In addition, as an operating policy, the Fund will not enter
into when-issued or forward-commitment transactions with settlement dates
exceeding 120 days.
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CONVERTIBLE SECURITIES
The Fund may buy securities that are convertible into common stock. The
following is a brief description of the various types of convertible securities
the Fund may buy.
Convertible bonds are issued with lower coupons than nonconvertible bonds of the
same quality and maturity, but they give holders the option to exchange their
bonds for a specific number of shares of the company's common stock at a
predetermined price. This structure allows the convertible bond holder to
participate in share price movements in the company's common stock. The actual
return on a convertible bond may exceed its stated yield if the company's common
stock appreciates in value and the option to convert to common shares becomes
more valuable.
Convertible preferred stocks are nonvoting equity securities that pay a fixed
dividend. These securities have a convertible feature similar to convertible
bonds; however, they do not have a maturity date. Due to their fixed-income
features, convertible issues typically are more sensitive to interest rate
changes than the underlying common stock. In the event of liquidation,
bondholders would have claims on company assets senior to those of stockholders;
preferred stockholders would have claims senior to those of common stockholders.
Warrants entitle the holder to buy the issuer's stock at a specific price for a
specific period of time. The price of a warrant tends to be more volatile than,
and does not always track, the price of the underlying stock. Warrants are
issued with expiration dates. Once a warrant expires, it has no value in the
market.
REPURCHASE AGREEMENTS
In a repurchase agreement (repo), the Fund buys a security at one price and
simultaneously agrees to sell it back to the seller at an agreed upon price on a
specified date (usually within seven days from the date of purchase) or on
demand. The repurchase price exceeds the purchase price by an amount that
reflects an agreed-upon rate of return and that is unrelated to the interest
rate on the underlying security.
The advisor attempts to minimize the risks associated with repurchase agreements
by adhering to the following criteria:
(1) Limiting the securities acquired and held by the Fund under repurchase
agreements to U.S. government securities;
(2) Entering into repurchase agreements only with primary dealers in U.S.
government securities (including bank affiliates) who are deemed to be
creditworthy under guidelines established by a nationally recognized
statistical rating organization and approved by the Fund's board of
directors;
(3) Monitoring the creditworthiness of all firms involved in repurchase
agreement transactions;
(4) Requiring the seller to establish and maintain collateral equal to 102% of
the agreed-upon resale price, provided, however, that the board of
directors may determine that a broker-dealer's credit standing is
sufficient to allow collateral to fall to as low as 101% of the
agreed-upon resale price before the broker-dealer deposits additional
securities with the Fund's custodian or sub-custodian;
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(5) Investing no more than 5% of the Fund's total assets in repurchase
agreements that mature in more than seven days (together with any other
illiquid securities the Fund holds); and
(6) Taking delivery of securities subject to repurchase agreement and holding
them in a segregated account at the Fund's custodian bank.
The Fund has received permission from the Securities and Exchange Commission to
participate in pooled repurchase agreements collateralized by U.S. government
securities with other mutual funds advised by Benham Management Corporation
(BMC), the Fund's investment advisor. Pooled repos are expected to increase the
income the Fund can earn from repo transactions without increasing the risks
associated with these transactions.
FOREIGN SECURITIES
Although the Fund may buy securities of foreign issuers in foreign markets, most
of its foreign securities investments are made by purchasing American Depositary
Receipts (ADRs), "ordinary shares," or "New York shares" in the U.S. For
example, several companies represented in the Benham North American Gold
Equities Index are based in Canada, although their shares trade in U.S. dollars
on U.S. exchanges.
ADRs are dollar-denominated receipts representing interests in the securities of
a foreign issuer. They are issued by U.S. banks and traded on exchanges or over
the counter in the U.S. Ordinary shares are shares of foreign issuers that are
traded abroad and on a U.S. exchange. New York shares are shares that a foreign
issuer has allocated for trading in the U.S. ADRs, ordinary shares, and New York
shares all may be purchased with and sold for U.S. dollars, which protects the
Fund from the foreign settlement risks described below.
Investing in foreign companies may involve risks not typically associated with
investing in U.S. companies. The value of securities denominated in foreign
currencies and of dividends from such securities can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar. Foreign
securities markets generally have less trading volume and less liquidity than
U.S. markets, and prices in some foreign markets can be very volatile.
Many foreign countries lack uniform accounting and disclosure standards
comparable to those that apply to U.S. companies, and it may be more difficult
to obtain reliable information regarding a foreign issuer's financial condition
and operations. In addition, the costs of foreign investing, including
withholding taxes, brokerage commissions, and custodial fees, are generally
higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
governmental supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may involve increased
risks in the event of a failed trade or the insolvency of a broker-dealer and
may involve substantial delays. It may also be difficult to enforce legal rights
in foreign countries.
Investing abroad carries political and economic risks distinct from those
associated with investing in the U.S. Foreign investments may be affected by
actions of foreign governments that are adverse to the interests of U.S.
investors, including the possibility of expropriation or nationalization of
assets, confiscatory taxation, restrictions on U.S. investment, or restrictions
on the ability to repatriate assets or to convert currency into U.S. dollars.
There may be a greater possibility of default by foreign
4
<PAGE>
governments or foreign-government-sponsored enterprises. Investments in foreign
countries also involve a risk of local political, economic, or social
instability, military action or unrest, or adverse diplomatic developments.
The Fund may purchase or sell forward foreign currency exchange contracts. While
these contracts are not presently regulated by the Commodity Futures Trading
Commission ("CFTC"), the CFTC may in the future assert authority to regulate
forward contracts. In such event, the Fund's ability to utilize forward
contracts in the manner set forth in the Prospectus may be restricted. Forward
contracts will reduce the potential gain from a positive change in the
relationship between the U.S. dollar and foreign currencies. Unanticipated
changes in currency prices may result in poorer overall performance for the Fund
than if it had not entered into such contracts. The use of foreign currency
contracts will not eliminate fluctuations in the underlying U.S. dollar
equivalent value of, or rates of return on, the Fund's foreign currency
denominated portfolio securities and the use of such techniques will subject the
Fund to certain risks.
The matching of the increase in value of a forward contract and the decline in
the U.S. dollar equivalent value of the foreign currency denominated asset that
is the subject of the hedge generally will not be precise. In addition, the Fund
may not always be able to enter into foreign currency forward contracts at
attractive prices and this will limit the Fund's ability to use such contracts
to hedge or cross-hedge its assets. Also, with regard to the Fund's use of
cross-hedges, there can be no assurance that historical correlations between the
movement of certain foreign currencies relative to the U.S. dollar will
continue. Thus, at any time, poor correlation may exist between movements in the
exchange rates of the foreign currencies in which the Fund's assets that are the
subject of such cross-hedges are denominated.
BMC uses forward contracts for currency hedging purposes only and not for
speculative purposes. The Fund is not required to enter into forward contracts
with regard to its foreign holdings and will not do so unless doing so is deemed
appropriate by the advisor.
The Fund's assets are valued daily in U.S. dollars, although foreign currency
holdings are not physically converted into U.S. dollars on a daily basis.
INTEREST RATE SWAPS
Swap transactions contemplated by BMC typically would involve entering into a
contract with a broker-dealer to receive the total returns of a specific Index
security or basket of Index securities (minus a fee) in exchange for periodic
payments based on a money market interest rate index such as the London
Interbank Offered Rate (LIBOR).
The net amount of the excess, if any, of one party's obligations over its
entitlements with respect to the interest rate swap agreement would be accrued
on a daily basis, and an equal amount of cash, cash equivalents, or high-grade
liquid debt securities would be maintained in a segregated account by the Fund's
custodian.
The Fund would not enter into an interest rate swap transaction unless: (1) the
unsecured senior debt or claims-paying ability of the other party was rated in
the top two rating categories by at least two rating agencies at the time the
transaction was entered into, (2) unless it was so rated by one such rating
agency if unrated by the other two, or (3) if unrated by all three, it was
considered by the advisor to be of comparable quality.
5
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If the other party to a swap transaction defaulted, the Fund would have certain
contractual remedies under the agreement but would nonetheless bear a risk of
loss of unrealized income (not principal) in the event of default or bankruptcy
of the broker-dealer.
Certain restrictions imposed on the Fund by the Internal Revenue Code may limit
the Fund's ability to use swap agreements. The swap market is relatively new and
largely unregulated. It is possible that developments in the swap market,
including government regulation, could adversely affect the Fund's ability to
terminate existing agreements or to realize amounts to be received under such
agreements. BMC believes that the swap market is relatively liquid. However, as
long as the SEC staff considers swap agreements to be illiquid, the Fund intends
to treat them as such for purposes of its investment restrictions.
In the event that the unsecured senior debt or claims-paying ability of the
other party to an interest rate swap transaction ceased to be rated or was
downgraded by a rating agency, BMC would, although it would not be required to,
sell or exchange such instrument within a reasonable time thereafter, taking
into consideration such factors as price, credit risk, market conditions,
interest rates, and other hedging strategies available to the Fund.
GOLD FUTURES CONTRACTS
The Fund may enter into contracts for the future delivery of gold. A gold
futures contract is an agreement between two parties to buy and sell gold
bullion on a future date at a specified price. The purchaser of a gold futures
contract is bound by the terms of the contract to pay a fixed price for gold to
be delivered on a fixed date in the future. The seller of a gold futures
contract is obligated to deliver gold on a fixed date in the future in exchange
for a fixed price. Contracts of this type involve daily settlement, in cash, of
the gain or loss on the underlying gold. Although futures contracts, by their
terms, require actual delivery and acceptance of the underlying metal, in most
cases the contracts are closed out before the settlement date.
Gold futures contracts are standardized obligations traded on major commodities
exchanges. In the United States, gold futures contracts trade on the Commodity
Exchange, Inc. in New York, the Chicago Board of Trade, and the Mid-America
Commodity Exchange in Chicago. Gold futures contracts traded on U.S.commodity
exchanges are subject to regulation by the applicable exchange and by the
Commodity Futures Trading Commission (CFTC). The CFTC's mandate is to prevent
price manipulation and excessive speculation and to promote orderly and
effective commodity futures markets. CFTC regulations may include trading,
price, and position limits as well as margin requirements.
When the Fund purchases or sells a futures contract, it deposits an initial
margin with its custodian equal to a percentage of the contract's value. If the
value of either party's position changes, that party is required to make
maintenance margin payments to settle the change in value on a daily basis. The
Fund makes a payment if its futures position becomes less valuable, and it
receives a payment if its futures position becomes more valuable.
Positions in gold futures contracts may be closed out only on an exchange or
board of trade that provides a secondary market for such contracts. Although the
Fund intends to purchase contracts only on national exchanges or boards of trade
where there appears to be an active secondary market, there is no assurance that
a liquid secondary market will exist for any particular contract at any
particular time.
6
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Because it is possible to enter into a gold futures contract by making an
initial payment of as little as 5% of the value of the underlying gold, these
contracts can involve a high degree of risk. A small decline in the price of the
underlying gold could result in the loss of most or all of the cash invested.
Pursuant to a 1988 undertaking with the State of California, the Fund's combined
margin deposits on gold futures contracts may not exceed 5% of the Fund's net
assets. The extent to which the Fund enters into gold futures contracts (and
forward foreign currency transactions) may also be limited by the fact that the
Fund intends to meet Internal Revenue Service requirements for qualification as
a regulated investment company, including requirements regarding diversification
of assets and qualifying income. To assure that the Fund's investments in gold
futures contracts do not involve leveraging, cash or cash equivalents equal to
the underlying commodity value (at the time a contract is executed) of any gold
futures contract purchased by the Fund (less related margin deposits) will be
deposited in a segregated account with the Fund's custodian.
SECURITIES LENDING
The Fund may lend its portfolio securities to earn additional income, subject to
the following guidelines prescribed by the board of directors:
(1) The borrower must provide and maintain collateral consisting of cash or
full faith and credit U.S. government securities equal to at least 102% of
the value of the securities loaned;
(2) The Fund must have the option to terminate the loan and recover its
securities within the normal settlement period for the types of securities
loaned; and
(3) The borrower must agree that the Fund will receive all dividends,
interest, or other distributions on the loaned securities and that the
Fund will be paid a reasonable return on such loans, either in the form of
a loan fee premium or by allowing the Fund to retain part or all of the
earnings or profits realized from investing the cash collateral in full
faith and credit U.S. government securities.
RESTRICTED SECURITIES
Restricted securities held by the Fund generally can be sold in privately
negotiated transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where registration
is required, the Fund may be required to pay all or part of the registration
expense, and a considerable period may elapse between the time it decides to
seek registration of the securities and the time it is permitted to sell them
under an effective registration statement. If, during this period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to try to register the securities initially.
7
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GOLD INVESTMENTS
GOLD BULLION. As a means of seeking its principal objective of capital
appreciation and when it is felt to be appropriate as a possible hedge against
inflation, the Fund may invest a portion of its assets in gold bullion and may
hold a portion of its cash in foreign currency in the form of gold coins. There
is, of course, no assurance that such investments will provide capital
appreciation as a hedge against inflation. The Fund's ability to invest in gold
bullion is restricted by the diversification requirements which the Fund must
meet in order to qualify as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the"Code"), as well as the diversification
requirements of the Investment Company Act of 1940, as amended (the "1940 Act").
In addition, the ability of the Fund to make such investments may be further
restricted by the securities laws and regulations in effect from time to time in
the states where the Fund's shares are qualified for sale. The Fund has not
previously invested in gold bullion because of these regulations. However, at
the date of this SAI there do not appear to be any regulations currently in
effect in the states in which the Fund is qualified for sale prohibiting such
purchases. Accordingly, if otherwise consistent with the Fund's objectives, it
may purchase gold bullion.
Fund assets will be invested in gold bullion at such times as the prospects of
such investments are, in the opinion of management, attractive in relation to
other possible investments. The basic trading unit for gold bullion is a gold
bar weighing approximately 100 troy ounces with a purity of at least 995/1000,
although gold bullion is also sold in much smaller units. Gold bars and wafers
are usually numbered and bear an indication of purity and the stamp or assay
office which certifies the bar's purity. Bars of gold bullion historically have
traded primarily in New York, London, and Zurich gold markets and in terms of
volume, such gold markets have been the major markets for trading in gold
bullion. Prices in the Zurich gold market generally correspond to the prices in
the London gold market. Since the ownership of gold bullion became legal in the
United States on December 31, 1974, U.S. markets for trading gold bullion have
developed. It is anticipated that transactions in gold will generally be made in
such U.S. markets, although such transactions may be made in foreign markets
when it is deemed to be in the best interest of the Fund. Transactions in gold
bullion by the Fund are negotiated with principal bullion dealers, unless, in
the investment's manager's opinion, more favorable prices (including the costs
and expenses described below) are otherwise obtainable. Prices at which gold
bullion is purchased or sold include dealer mark-ups or mark-downs, insurance
expenses, may be a greater or lesser percentage of the price from time to time,
depending on whether the price of gold bullion decreases or increases. Since
gold bullion does not generate any investment income, the only source of return
to the Fund on such an investment will be from any gains realized upon its sale,
and negative return will be realized, of course, to the extent the Fund sells
its gold bullion at a loss.
SPECIAL CONSIDERATION AS A RESULT OF THE FUND'S INVESTMENT POLICIES
As is the case with respect to virtually all investments, there are risks
inherent in the Fund's policies of investing in securities of companies engaged
in mining, processing or dealing in gold or other precious metals and in gold
bullion. In addition to the general considerations described above, such
investments may involve the following special considerations:
FLUCTUATIONS IN THE PRICE OF GOLD. The price of gold has recently been subject
to substantial upward and downward movements over short periods of time and may
be affected by unpredictable international monetary and political policies, such
as currency devaluations or revaluations, economic conditions within an
individual country, trade imbalances or trade or currency restrictions
8
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between countries and world inflation rates and interest rates. The price of
gold, in turn, is likely to affect the market prices of securities of companies
mining, processing, or dealing in gold and, accordingly, the value of the Fund's
investments in such securities also may be affected.
POTENTIAL EFFECT OF CONCENTRATION OF SOURCE OF SUPPLY AND CONTROL OF SALES. At
the current time there are only four major sources of supply of primary gold
production, and the market share of each source cannot be readily ascertained.
One of the largest national producers of gold bullion and platinum is the
Republic of South Africa. Changes in political and economic conditions affecting
South Africa may have a direct impact on its sales of gold. Under South African
law, the only authorized sales agent for gold produced in South Africa is the
Reserve Bank of South Africa which, through its retention policies, controls the
time and place of its retention policies, controls the time and place of any
sale of South African bullion. The South African Ministry of Mines determines
gold mining policy. South Africa depends predominantly on gold sales for the
foreign exchange necessary to finance its imports, and its sales policy is
necessarily subject to national and international economic and political
developments.
TAX AND CURRENCY LAWS. Changes in the tax or currency laws of the U.S., and of
foreign countries, may inhibit the Fund's ability to pursue or may increase the
cost of pursuing its investment programs. For example, in September 1985, the
government of South Africa reimposed a two-tier currency system. While this
system may be removed within the next couple of years, it continues to
differentiate between currency which may be used in transactions involving
transfers of South African investments by foreign investors (the "financial
rand") and currency used for importing goods and remitting profits and dividends
from an operating enterprise ( the "commercial rand"). Since the reimposition of
the two-tier currency system, the volatility of the financial rand has
contributed to fluctuations in the net asset value of the Fund. These effects
may increase if the permissible uses of the financial rand are expanded.
UNPREDICTABLE MONETARY POLICIES, ECONOMIC AND POLITICAL CONDITIONS. The Fund's
assets might be less liquid or the change in the value of its assets might be
more volatile (and less related to general price movements in the U.S. markets)
than would be the case with investments in the securities of larger U.S.
companies, particularly because the price of gold and other precious metals may
be affected by unpredictable international monetary policies and economic and
political considerations, governmental controls, conditions of scarcity, surplus
or speculation. In addition, the use of gold or Special Drawing Rights (which
are also used by members of the International Monetary Fund for international
settlements) to settle net deficits and surpluses in trade and capital movements
between nations subject the supply and demand, and therefore the price, of gold
to a variety of economic factors which normally would not affect other types of
commodities.
NEW AND DEVELOPING MARKETS FOR PRIVATE GOLD OWNERSHIP. Between 1933 and December
31, 1974, a market did not exist in the United States in which gold bullion
could be purchased by individuals for investment purposes. Since it became legal
to invest in gold, markets have developed in the U.S. Any large purchases or
sales of gold bullion could have an effect on the price of gold bullion.
Recently, several Central Banks have been sellers of gold bullion from their
reserves. Sales by central banks and/or rumors of such sales have had a negative
effect on gold prices.
EXPERTISE ON THE INVESTMENT MANAGER. The successful management of the Fund's
portfolio may be more dependent upon the skills and expertise of its investment
manager than is the case for most mutual funds because of the need to evaluate
the factors identified above. Moreover, in some countries, disclosures
concerning an issuer's financial condition and results and other matters may
9
<PAGE>
be subject to less stringent regulatory provisions, or may be presented on a
less uniform basis than is the case for issuers subject to U.S. securities laws.
Issuers and securities exchanges in some countries may be subject to less
stringent governmental regulations than is the case for U.S. companies.
INVESTMENT RESTRICTIONS
The Fund's investment restrictions are set forth below are fundamental and may
not be changed without approval of "a majority of the outstanding voting
securities" of the Fund as defined in the Investment Company Act of 1940.
FUNDAMENTAL INVESTMENT POLICIES
(1) The Fund may not issue senior securities, except as permitted under the
Investment Company Act of 1940.
(2) The Fund may not borrow money, except that the Fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in an
amount not exceeding 33-1/3% of the Fund's total assets (including the
amount borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with the
33-1/3% limitation.
(3) The Fund may not lend any security or make any other loan if, as a result,
more than 33-1/3% of the Fund's total assets would be lent to other
parties, except, (i) through the purchase of a portion of an issue of debt
securities in accordance with its investment objective, policies and
limitations, or (ii) by engaging in repurchase agreements with respect to
portfolio securities.
(4) The Fund may not purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from investment in securities or other instruments backed
by real estate or securities of companies engaged in the real estate
business).
(5) The Fund may not deviate from its policy of concentrating its investments
in securities of issuers engaged in mining, fabricating, processing or
dealing in gold or other precious metals, such as silver, platinum and
palladium.
(6) The Fund may not act as underwriter of securities issued by others, except
to the extent that the Fund may be considered an underwriter within the
meaning of the Securities Act of 1933 in the disposition of restricted
securities.
NON-FUNDAMENTAL INVESTMENT POLICIES
(7) As an operating policy, the Fund does not currently intend to purchase the
securities of any one issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities) if, as
a result thereof, the Fund would own more than 10% of its outstanding
voting securities of such issuer.
(8) As an operating policy, the Fund does not currently intend to purchase any
security or enter into a repurchase agreement if, as a result, more than
15% of its net assets would be invested in repurchase agreements not
entitling the holder to payment of principal and interest within
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seven days and in securities that are illiquid by virtue of legal or
contractual restrictions on resale or the absence of a readily available
market.
(9) As an operating policy, the Fund may not, except in connection with a
merger, consolidation, acquisition, or reorganization, invest in the
securities of other investment companies, including investment companies
advised by BMC, if, immediately after such purchase or acquisition, more
than 10% of the value of the Fund's total assets would be invested in such
securities.
(10) As an operating policy, the Fund may not purchase gold bullion, gold
coins, or gold represented by certificates of ownership interest or gold
futures contracts whose underlying commodity value would cause the Fund's
aggregate investment in such commodities to exceed 10% of the Fund's net
assets.
(11) As an operating policy, the Fund may not invest in securities of an issuer
that, together with any predecessor, has been in operation for less than
three years if, as a result, more than 5% of the total assets of the Fund
would then be invested in such securities.
(12) As an operating policy, the Fund does not currently intend to purchase
warrants, valued at the lower of cost or market, in excess of 10% of the
Fund's net assets. Included in that amount but not to exceed 2% of net
assets, are warrants whose underlying securities are not traded on
principal domestic or foreign exchanges. Warrants acquired by the Fund in
units or attached to securities are not subject to these restrictions.
(13) As an operating policy, the Fund does not currently intend to invest in
oil, gas or other mineral exploration or development programs or leases.
(14) As an operating policy, the Fund does not currently intend to sell
securities short, unless it owns or has the right to obtain securities
equivalent in kind and amount to the securities sold short, and provided
that transaction in futures contracts and options are not deemed to
constitute selling securities short.
(15) As an operating policy, the Fund does not currently intend to purchase
securities on margin, except that the Fund may obtain such short-term
credits as are necessary for the clearance of transactions, and provided
that margin payments in connection with futures contracts and options on
futures contracts shall not constitute purchasing securities on margin.
(16) As an operating policy, the Fund does not currently intend to lend assets
other than securities to other parties, except by (a) lending money (up to
5% of the Fund's net assets) to a registered investment company or
portfolio for which its investment adviser or an affiliate serves as
investment adviser or (b) acquiring loans, loan participation, or other
forms of direct debt instruments and in connection therewith, assuming any
associated unfunded commitments of the sellers. (This limitation does not
apply to purchases of debt securities or to repurchase agreements.)
(17) As an operating policy, the Fund does not currently intend to purchase the
securities of any issuer if, to the knowledge of the Fund's management,
those officers and directors of the Fund and of its investment advisor,
who each own beneficially more than 0.5% of the outstanding securities of
such issuer, together own more than 5% of such issuer's securities.
(18) As an operating policy, the Fund may not purchase or sell options of any
kind.
11
<PAGE>
PORTFOLIO TRANSACTIONS
The Fund's assets are invested by BMC in a manner consistent with the Fund's
investment objective, policies and restrictions, and with any instructions from
the board of directors that may be issued 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 Fund. In placing orders for the
purchase and sale of portfolio securities, BMC will use its best efforts to
obtain the best possible price and execution and will otherwise place orders
with broker-dealers subject to and in accordance with any instructions from the
board of directors may issue from time to time. BMC will select broker-dealers
to execute portfolio transactions on behalf of the Fund solely on the basis of
best price and execution.
Under normal conditions, the Fund's annual portfolio turnover rate is not
expected to exceed 100%. The table below illustrates the Fund's portfolio
turnover rates for the fiscal years ended December 31, 1995, 1994, and 1993.
PORTFOLIO TURNOVER RATES
Fiscal Fiscal Fiscal
1995 1994 1993
41.67% 28.38%
Brokerage commissions paid by the Fund during the fiscal years ended December
31, 1995, 1994, and 1993, are indicated in the following table.
BROKERAGE COMMISSIONS
Fiscal Fiscal Fiscal
1995 1994 1993
$1,533,658 $1,465,792
VALUATION OF PORTFOLIO SECURITIES
The Fund's net asset value per share (NAV) is determined by Benham Financial
Services, Inc. (BFS) at 1:00 p.m. Pacific Time each day the New York Stock
Exchange (NYSE) is open for business. The NYSE has 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 the Fund in various markets
before the NYSE closes for the day. Securities are valued at market, depending
upon the market or exchange on which they trade. Price quotations for
exchange-listed securities are taken from the primary exchanges on which these
securities trade. Stocks traded on exchanges or over-the-counter are valued
according to last sale prices, if such prices are available, or at the current
bid price. Fixed-income securities are priced at market value on the basis of
market quotations supplied by
12
<PAGE>
independent pricing services. Foreign currency exchange rates are also
determined prior to the close of the NYSE. Trading of securities in foreign
markets may not take place on every day the NYSE is open, and trading takes
place in various foreign markets on days on which the NYSE and the Fund's
offices are not open and the Fund's net asset value is not calculated. The
Fund's net asset value may be significantly affected on days when shareholders
have no access to the Fund. Securities for which market quotations are not
readily available, or which may change in value due to events occurring after
their primary exchange has closed for the day, are valued at fair market value
as determined in good faith under the direction of the board of directors.
PERFORMANCE
The Funds may quote performance in various ways. Historical performance
information will be used in advertising and sales literature.
Total returns reflect all aspects of the Fund's return, including the effect of
reinvesting dividends and capital gain distributions and any change in the
Fund's net asset value per share during the period. The Fund's share price and
total returns will vary. Past performance should not be considered an indication
of future results.
Average annual total returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in the Fund 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 total return of 100%
over ten years would produce an average annual return of 7.18%, which is the
steady annual rate that would equal 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 the Fund's performance is
not constant over time but changes from year to year and that average annual
returns represent averaged figures as opposed to actual year-to-year
performance.
The Fund's average annual total returns for the one-year, five-year, and
life-of-fund periods ended December 31, 1995, are indicated in the table below.
AVERAGE ANNUAL TOTAL RETURNS
One Year Five Years Life of Fund*
* The Fund commenced operations on August 17, 1988.
In addition to average annual total returns, the Fund may quote unaveraged or
cumulative total returns, which reflect the simple change in value of an
investment over a stated period. Average annual and cumulative total returns may
be quoted as a percentage or as a dollar amount and may be calculated for a
single investment, a series of investments, or a series of redemptions over any
time 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.
13
<PAGE>
The Fund's performance 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 the Benham
funds, are sold with a sales charge or deferred sales charge. Sources of
economic data that may be used for such comparisons 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 tax-free municipal securities (source: Telerate); yield curves
for foreign government securities (sources: Bloomberg Financial Markets and Data
Resources, Inc.); total return 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 am/pm 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 Fund
may also utilize reprints from newspapers and magazines furnished by third
parties to illustrate the Funds' historical performance.
Indexes may assume reinvestment of dividends, but generally they do not reflect
administrative and management costs such as those incurred by a mutual fund.
The Fund's sales literature may illustrate the market for gold within the
context of historical and current economic conditions. Specific illustrations
may include the relationship of the price of gold (per London pm fixing) to
30-year U.S. Treasury bond yields, 30-year U.S. Treasury bond prices, inflation
as measured by the Consumer Price Index, or equity securities as measured by the
Standard & Poor's 500 Composite Stock Price Index (S&P 500) or the Dow Jones
Industrial Average.
Occasionally, statistics may be used to illustrate Fund volatility or risk.
Measures of volatility or risk are generally used to compare the Fund's net
asset value or performance to a market index. One measure of volatility is
"beta." Beta expresses Fund volatility relative to the total market as
represented by the S&P 500. A beta of more than 1.00 indicates volatility
greater than that of the market, and a beta of less than 1.00 indicates
volatility less than that of the market. Another measure of volatility or risk
is "standard deviation." Standard deviation is used to measure the variability
of net asset value or total return relative to an average over a specified
period of time. The premise is that greater volatility connotes greater risk
undertaken to achieve desired performance.
The Fund's 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.
14
<PAGE>
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
The Fund intends to qualify annually as a "regulated investment company" under
Subchapter M of the Internal Revenue Code. By so qualifying, the Fund 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.
Distributions from the Fund are taxable to shareholders regardless of whether
they are taken in cash or reinvested in additional shares. For federal income
tax purposes, shareholders receiving distributions in the form of additional
shares will have a basis in each such share equal to the Fund's net asset value
per share on the reinvestment date.
Distributions of net investment income and net short-term capital gains are
taxable to shareholders as ordinary income. The board of directors does not
expect to declare dividends on a regular basis. However, to the extent that
dividends are declared and to the extent that they consist of dividend income
from domestic corporations, such dividends may be eligible for the
dividends-received deduction available to corporations. Shareholders will be
notified annually of the federal tax status of distributions.
Upon redeeming, selling, or exchanging shares of the Fund, a shareholder will
realize a taxable gain or loss depending upon his or her basis in the shares
liquidated. The gain or loss generally will be long-term or short-term,
depending on the length of time 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. A
gain realized on the redemption, sale, or exchange of shares would not be
affected by the reacquisition of shares. A loss realized on the redemption,
sale, or exchange of shares would be disallowed to the extent that the shares
disposed of were replaced (whether through reinvestment of distributions or
otherwise) within a period of 61 days beginning 30 days before and ending 30
days after the date shares were disposed of. Under such circumstances, the basis
of the shares acquired would be adjusted to reflect the disallowed loss.
As described in the Prospectus, the Fund intends to elect to consider any
foreign taxes it pays as paid by shareholders if foreign securities represent
more than 50% of the value of its total assets at the close of any fiscal year.
If the Fund makes this election, shareholders will be required, when computing
their federal taxes, to include their proportionate share of the foreign taxes
paid by the Fund as income and may be entitled to claim a credit or a deduction
for this amount.
Generally, a credit for foreign taxes is subject to the limitation that it may
not exceed the shareholder's U.S. tax attributable to his or her taxable income
from foreign sources. Gains realized by the Fund from the sale of securities
will be treated as derived from U.S. sources, and certain currency gains,
including gains from foreign-currency-denominated debt securities, receivables,
and payables, will be treated as income derived from U.S. sources. The
limitation on the foreign tax
15
<PAGE>
credit is applied separately to foreign source passive income, which may include
certain dividends received from the Fund and certain other types of income.
Accordingly, shareholders may be unable to claim a credit for the full amount of
their proportionate share of the foreign taxes paid by the Fund.
The information above is only a summary of some of the tax considerations
affecting the Fund and its shareholders; no attempt has been made to discuss
individual tax consequences. Shareholders who are neither citizens nor residents
of the U.S. may be subject to a nonresident alien withholding tax of 30% or a
lower treaty rate, depending on the country in which they reside. The Fund's
distributions also may be subject to state, local, or foreign taxes. To
determine whether the Fund is a suitable investment based on his or her tax
situation, a prospective investor may wish to consult a tax advisor.
ABOUT BENHAM EQUITY FUNDS
Benham Equity Funds (BEF) was organized as a California corporation on December
31, 1987, under the name "Benham Equities, Inc." The corporation was renamed
Benham Equity Funds on September 2, 1988. BEF is authorized to issue ten classes
of shares and to issue two billion (2,000,000,000) shares of each such class.
Within each class, the directors may issue an unlimited number of series.
Currently, there are four classes of shares: Benham Gold Equities Index Fund,
Benham Income & Growth Fund, Benham Equity Growth Fund, and Benham Utilities
Income Fund. With respect to each class, shares issued are fully paid and
nonassessable and have no preemptive, conversion, or similar rights. All
consideration received by BEF for shares of any class, and all assets, income,
and gains (or losses) earned thereon, belong to that series exclusively and are
subject to the liabilities related thereto.
Shares of each class have equal voting rights, provided that each class votes
separately on matters that pertain to it exclusively. The number of votes a
shareholder is entitled to is based upon the dollar value of the investment.
Under California Corporations Code Section 708, shareholders have the right to
cumulate votes in the election (or removal) of directors. For example, if six
directors are up for election, a shareholder may cast six votes for a single
candidate, three votes for each of two candidates, etc.
CUSTODIAN BANK: State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02101, is custodian of the Fund'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 BEF's independent auditors. KPMG audits
the annual report and provides tax and other services as auditors.
16
<PAGE>
DIRECTORS AND OFFICERS
BEF's activities are overseen by a board of directors, including five
independent directors. The individuals listed below whose names are marked with
an asterisk (*) are "interested persons" of BEF (as defined in the Investment
Company Act of 1940) by virtue of, among other things, their affiliation with
either BEF; BEF's investment advisor, Benham Management Corporation (BMC); BEF's
agent for transfer and administrative services, Benham Financial Services, Inc.
(BFS); BEF'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 director 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 director or officer began his or her service
in a particular capacity. The directors' 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 directors (1988). Mr. Benham is also
chairman of the boards of BFS (1985), BMC (1971),and BDI (1988); president of
BMC (1971), BMI (1982), and BDI (1988); and a member of the board of governors
of the Investment Company Institute (1989). 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.
ALBERT A. EISENSTAT, independent director (1995). Mr. Eisenstat is an
independent director of each of Commercial Metals Co. (1982), Sungard Data
Systems (1991) and Business Objects S/A (1994). Previously, he served as vice
president of corporate development and corporate secretary of Apple Computer and
served on ite Board of Directors (1985 to 1993).
RONALD J. GILSON, independent director (1995). Mr. Gilson is the 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 Schoool of
Law (1992). He is counsel to Marron, Ried & Sheehy (a San Francisco law firm,
1984).
MYRON S. SCHOLES, independent director (1988). 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), 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 director (1988). Mr. Scott is Ralph M. Parsons
Professor of Law and Business at Stanford Law School (1972) and a director of
RCM Capital Management (June 1994).
EZRA SOLOMON, independent director (1988). 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 director (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).
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<PAGE>
*JAMES E. STOWERS III, director (1995). Mr. Stowers is the president and
director of Twentieth Century Investors, Inc., TCI Portfolios, Inc., Twentieth
Century World Investors, Inc., Twentieth Century Premium Reserves, Inc.,
Twentieth Century Capital Portfolios, Inc., Twentieth Century Institutional
Portfolios, Inc., Twentieth Century Companies, Inc., Investors Research
Corporation and Twentieth Century Services, Inc.
JEANNE D. WOHLERS, independent director (1988). 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).
*JOHN T. KATAOKA, president, and chief executive officer (1988).
*ANN N. MCCOID, controller (1988).
*DOUGLAS A. PAUL, secretary (1988), vice president (1990), and general counsel
(1990).
*MARYANNE ROEPKE, chief financial officer (1995).
As of January 31, 1996, BEF's directors and officers, as a group, owned less
than 1% of the Fund's outstanding shares.
The following table summarizes the compensation that the directors of the Fund
received for the Fund's fiscal year ended December 31, 1995, as well as the
compensation received for serving as a director or trustee of all other Benham
funds.
<TABLE>
<CAPTION>
DIRECTOR COMPENSATION FOR THE FISCAL YEAR ENDED
December 31, 1995
- -----------------------------------------------------------------------------------------------------------------
NAME OF AGGREGATE PENSION OR ESTIMATED TOTAL
DIRECTOR COMPENSATION RETIREMENT BENEFITS ANNUAL BENEFITS COMPENSATION
FROM FUND ACCRUED AS PART OF UPON RETIREMENT FROM FUND AND
FUND EXPENSES FUND COMPLEX*
PAID TO DIRECTORS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Albert A. Eisenstat $ _________ Not Applicable Not Applicable $_________
- -----------------------------------------------------------------------------------------------------------------
Ronald J. Gilson $ _________ Not Applicable Not Applicable $_________
- -----------------------------------------------------------------------------------------------------------------
Myron S. Scholes $ _________ Not Applicable Not Applicable $_________
- -----------------------------------------------------------------------------------------------------------------
Kenneth E. Scott $ _________ Not Applicable Not Applicable $_________
- -----------------------------------------------------------------------------------------------------------------
Ezra Solomon $ _________ Not Applicable Not Applicable $_________
- -----------------------------------------------------------------------------------------------------------------
Isaac Stein $ _________ Not Applicable Not Applicable $_________
- -----------------------------------------------------------------------------------------------------------------
Jeanne D. Wohlers $ _________ Not Applicable Not Applicable $_________
- -----------------------------------------------------------------------------------------------------------------
* Interested trustees receive no compensation for their services as such.
</TABLE>
18
<PAGE>
INVESTMENT ADVISORY SERVICES
The Fund 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 invesetment 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.
The Fund'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 Fund's outstanding
shares, or by vote of a majority of the Fund's directors, including a majority
of those directors 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.
The investment advisory agreement is terminable on sixty days' written notice,
either by the Fund or by BMC, to the other party and terminates automatically in
the event of its assignment.
The investment advisory agreement stipulates that BMC will provide the Fund with
investment advice and portfolio management services in accordance with the
Fund's investment objective, policies, and restrictions. The agreement also
provides that BMC will determine what securities will be purchased and sold by
the Fund and assist the Fund's officers in carrying out decisions made by the
board of directors.
Under the investment advisory agreement, the Fund pays BMC a monthly investment
advisory fee equal to its pro rata share of the dollar amount derived from
applying BEF's average daily net assets to the following investment advisory fee
rate schedule:
INVESTMENT ADVISORY FEE SCHEDULE FOR BEF
.50% of the first $100 million
.45% of the next $100 million
.40% of the next $100 million
.35% of the next $100 million
.30% of the next $100 million
.25% of the next $1 billion
.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.
19
<PAGE>
Investment advisory fees paid by the Fund to BMC for the fiscal years ended
December 31, 1995, 1994, and 1993, are indicated in the following table. Fee
amounts are net of expense limitations and recoupments as described on the
following page.
INVESTMENT ADVISORY FEES*
Fiscal Fiscal Fiscal
1995 1994 1993
$1,884,679 $1,325,964
* Net of reimbursements
ADMINISTRATIVE AND TRANSFER AGENT SERVICES
Benham Financial Services, Inc. (BFS), a wholly owned subsidiary of TCC, is
BEF's agent for transfer and administrative services. For administrative
services, the Fund 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 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
Prior to May 1, 1993, the administrative fee rate schedule ranged from .10% for
assets up to $4.5 billion to .07% for assets over $7.5 billion. This fee rate
schedule was adopted by BFS on a voluntary basis effective January 1, 1991, and
then formalized under a revised Administrative Services and Transfer Agency
Agreement that became effective on June 1, 1992.
For transfer agent services, the Fund pays BFS monthly fees of $1.1875 for each
shareholder account maintained and $1.35 for each shareholder transaction
executed during the month.
Administrative service and transfer agent fees paid by the Fund to BFS for the
fiscal years ended December 31, 1995, 1994, and 1993, are indicated in the
following table. Fee amounts are net of expense limitations as described below.
ADMINISTRATIVE FEES
Fiscal Fiscal Fiscal
1995 1994 1993
$583,896 $356,629
20
<PAGE>
TRANSFER AGENT FEES
Fiscal Fiscal Fiscal
1995 1994 1993
$645,099 $428,747
DIRECT FUND EXPENSES
The Fund pays certain operating expenses that are not assumed by BMC or BFS.
These include fees and expenses of the independent directors; custodian, audit,
tax preparation, and pricing fees; fees of outside counsel and counsel employed
directly by BEF; costs of printing and mailing prospectuses, statements of
additional information, proxy statements, notices, confirmations, and reports to
shareholders; fees for registering the Fund'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 Fund;
costs for incoming WATS lines maintained to receive and handle shareholder
inquiries; and organizational costs.
EXPENSE LIMITATION AGREEMENTS
BMC may recover amounts absorbed on behalf of the Fund during the preceding 11
months if, and to the extent that, for any given month, the Funds expense limit
in effect at that time. BMC has agreed to limit the Funds' expenses to .75% of
the Funds' average daily net assets during the year ending May 31, 1996.
The Funds' contractual expense limit is subject to annual renewal. The expense
limit for the year ended December 31, 1995, was .75% of average daily net
assets.
Net amounts absorbed and recouped for the fiscal years ended December 31, 1995,
1994, and 1993, are indicated in the table below.
NET REIMBURSEMENTS(RECOUPMENTS) BY BMC AND BFS
Fiscal Fiscal Fiscal
1995 1994 1993
$0 $47,247
21
<PAGE>
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Fund's 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 BEF or one of its series; to avoid
jeopardizing a series' tax status; or whenever, in management's opinion, such
rejection is in BEF's or a series' best interest.
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.
OTHER INFORMATION
The Fund's investment advisor, Benham Managment Corporation (BMC), has been
continuously registered with the Securities and Exchange Commission (SEC) under
the Investment Advisers Act of 1940 since December 14, 1971. BEF 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 BEF or the advisor by the SEC.
For further information, refer to the registration statement 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.
22
<PAGE>
BENHAM EQUITY FUNDS
1933 Act Post-Effective Amendment No. 16
1940 Act Amendment No. 18
PART C Other Information
Item 24. Financial Statements and Exhibits
(a) Financial Statements. Audited financial statements for the fiscal year
ended December 31, 1995, will be filed by subsequent amendment.
(b) Exhibits.
(1) a) Articles of Incorporation dated December 31, 1987, are
incorporated herein by reference to Exhibit 1 to
Post-Effective Amendment No. 1.
b) Restated Articles of Incorporation dated December 21, 1992,
are incorporated herein by reference to Exhibit 1(b) to
Post-Effective Amendment No. 11.
c) Restated Articles of Incorporation dated August 2, 1995,
are incorporated herein as EX-99.B1c.
(2) a) Bylaws dated January 6, 1988, as amended through February
13, 1992, are incorporated herein by reference to Exhibit 2 to
Post-Effective Amendment No. 7.
b) Amendment to Bylaws dated July 24, 1992, is incorporated
herein by reference to Exhibit 2(b) to Post-Effective
Amendment No. 10.
c) Amendment to Bylaws dated May 31, 1995, is incorporated
herein as EX-99.B2c.
(3) Not applicable.
(4) a) A specimen copy of the Benham Gold Equities Index Fund
share certificate is incorporated herein by reference to
Exhibit 4 to Pre-Effective Amendment No. 2.
(5) a) Investment Advisory Agreement between Benham Equity Funds:
Benham Gold Equities Index Fund and Benham Management
Corporation, dated June 1, 1995, is incorporated herein as
EX-99.B5a.
(6) Distribution Agreement between Benham Equity Funds and Benham
Distributors, Inc., dated June 1, 1995, is incorporated herein
as EX-99.B6.
(7) Not applicable.
(8) Omnibus Custodian Agreement between Benham Equity Funds and
State Street Bank and Trust Company, dated August 10, 1993, is
incorporated herein by reference to Exhibit 8 to
Post-Effective Amendment No. 12.
<PAGE>
(9) a) Administrative Services and Transfer Agency Agreement
between Benham Equity Funds and Benham Financial Services,
Inc., dated June 1, 1995, is incorporated herein as EX-99.B9a.
(10) Not applicable.
(11) (a) Not applicable.
(b) Not applicable.
(12) Not applicable.
(13) Not applicable.
(14) a) Benham Individual Retirement Account plan, including all
instructions and other relevant documents, is incorporated
herein by reference to Exhibit 14(a) to Post- Effective
Amendment No. 9.
(b) Benham Pension/Profit-Sharing plan, including all
instructions and other relevant documents, is incorporated
herein by reference to Exhibit 14(b) to Post-Effective
Amendment No. 9.
(15) Not applicable.
(16) Not applicable.
(17) Power of Attorney dated December 15, 1995, is filed herein as
EX-99.B17.
Item 25. Persons Controlled by or Under Control with Registrant.
None.
Item 26. Number of Holders of Securities.
As of November 30, 1995, the Fund had the following number of
shareholders of record:
Benham Gold Equities Index Fund 30,548
Item 27. Indemnification.
Registrant hereby incorporates by reference, as though set
forth fully herein, Article II, Section 16 of Registrant's restated bylaws,
dated February 13, 1992, and amended on July 24, 1992, appearing as Exhibit 2 to
Post-Effective Amendment No. 7, and Exhibit 2(b) to Post-Effective Amendment No.
10, respectively.
<PAGE>
Item 28. Business and Other Connections of Investment Advisor.
The Registrant's investment advisor, Benham Management
Corporation, is also investment advisor to Capital Preservation Fund, Capital
Preservation Fund II, Benham California Tax- Free and Municipal Funds, Benham
Municipal Trust, Benham Target Maturities Trust, Benham Government Income Trust,
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 California Tax-Free and Municipal Funds,
Benham Municipal Trust, Benham Target Maturities Trust, 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 Section 31(a) of the
Investment Company Act of 1940 and rules thereunder at BEF'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.
<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. 16 /Amendment No. 18 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 18th day of December, 1995.
BENHAM EQUITY FUNDS
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. _16_/ Amendment No. _18_ 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* Directors
/s/James E. Stowers, III Director ----------
James E. Stowers, III*
/s/Albert A. Eisenstat Director ----------
Albert A. Eisenstat*
/s/Ronald J. Gilson Director ----------
Ronald J. Gilson*
/s/Myron S. Scholes Director ----------
Myron S. Scholes*
/s/Kenneth E. Scott Director ----------
Kenneth E. Scott*
Director
/s/Ezra Solomon Director ----------
Ezra Solomon*
Director
/s/Isaac Stein Director ----------
Isaac Stein*
Director
/s/Jeanne D. Wohlers Director ----------
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 December 15, 1995.)
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF DOCUMENT
NUMBER
EX-99.B1c Restated Articles of Incorporation dated August 2, 1995.
EX-99.B2c Amendment to Bylaws dated May 31, 1995.
EX-99.B5a Investment Advisory Agreement between Benham
Equity Funds: Benham Gold Equities Index Fund and
Benham Management Corporation, dated June 1, 1995.
EX-99.B6 Distribution Agreement between Benham Equity Funds
and Benham Distributors, Inc., dated June 1, 1995.
EX-99.B9a Administrative Services and Transfer Agency Agreement
between Benham Equity Funds and Benham Financial
Services, Inc., dated June 1, 1995.
EX-99.B17 Power of Attorney dated December 15, 1995.
RESTATED
ARTICLES OF INCORPORATION
OF
BENHAM EQUITY FUNDS
JOHN T. KATAOKA and DOUGLAS A. PAUL certify that:
1. They are the President and Secretary, respectively, of Benham Equity
Funds, a California corporation
2. The Articles of Incorporation of this corporation are amended and
restated to read as follows:
"ARTICLES OF INCORPORATION
OF
BENHAM EQUITY FUNDS
I
The name of this corporation is
BENHAM EQUITY FUNDS
II
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III
This corporation is authorized to issue ten classes of shares of stock to
be designated as follows: A(1) Common, A(2) Common, A(3) Common, A(4) Common,
A(5) Common, A(6) Common, A(7) Common, A(8) Common, A(9) Common, and A(10)
Common. This corporation is authorized to issue two billion (2,000,000,000)
shares of each of such classes. The shares of each of such classes may be issued
in series.
The Board of Directors of this corporation is authorized to determine or
alter the rights, preferences, privileges and restrictions granted to or imposed
upon any wholly unissued series of any class, including but not limited to the
designation of any such series and the number of shares of any such series.
Of the two billion (2,000,000,000) shares of A(1) Common stock that the
corporation is authorized to issue, one billion (1,000,000,000) shares are
classified into a series designated Series 1 A(1) Common stock, to be referred
to as Benham Gold Equities Index Fund.
<PAGE>
Of the two billion (2,000,000,000) shares of A(2) Common stock that the
corporation is authorized to issue, one billion (1,000,000,000) shares are
classified into a series designated Series 1 A(2) Common stock, to be referred
to as Benham Income & Growth Fund.
Of the two billion (2,000,000,000) shares of A(3) Common stock that the
corporation is authorized to issue, one billion (1,000,000,000) shares are
classified into a series designated Series 1 A(3) Common stock, to be referred
to as Benham Equity Growth Fund.
Of the two billion (2,000,000,000) shares of A(4) Common stock that the
corporation is authorized to issue, one billion (1,000,000,000) shares are
classified into a series designated Series 1 A(4) Common stock, to be referred
to as Benham Utilities Income Fund.
Of the two billion (2,000,000,000) shares of A(5) Common stock that the
corporation is authorized to issue, one billion (1,000,000,000) shares are
classified into a series designated Series 1 A(5) Common stock, to be referred
to as Benham Global Natural Resources Index Fund.
Shares of the Benham Gold Equities Index Fund, Benham Income & Growth
Fund, Benham Equity Growth Fund, Benham Utilities Income Fund, and Benham Global
Natural Resources Index Fund (each, a "Series") shall have the following
preferences and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption:
(1) ASSETS BELONGING TO A SERIES. All consideration received by this
corporation for the issue or sale of shares of a Series of capital stock,
together with all assets in which such considerations is invested and
reinvested, income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation thereof, and any funds
or payments derived from any reinvestment of such proceeds in whatever form the
same may be, shall for all purposes irrevocably belong to the Series of capital
stock with respect to which such consideration, assets, income, earnings,
profits, proceeds, funds or payments were received by the corporation, subject
only to the rights of creditors, and shall be so treated upon the books of
account of the corporation Any assets, income, earnings, profits, proceeds,
funds or payments which are not readily attributable to any particular Series
shall be allocated among any one or more of the Series in such manner and on
such basis as the Board of Directors, in its sole discretion, shall deem fair
and equitable. All consideration, assets, income, earnings, profits, proceeds
(including any assets in whatever form derived from the reinvestment of
proceeds), funds or payments, belonging or allocated to a Series are herein
referred to as "assets belonging to" such Series.
(2) LIABILITIES BELONGING TO A SERIES. The assets belonging to a Series
of capital stock shall be charged with the liabilities in respect of such Series
and shall also be charged with such Series' share of the general liabilities of
the corporation determined as hereinafter provided. The determination of the
Board of Directors shall be conclusive as to the amount of such liabilities,
including the amount of accrued expenses and reserves; as to any allocation of
the same to a given Series; and as to whether the same are allocable to one or
more Series. Any liabilities which are not readily attributable to any
particular Series shall be allocable among any one or more of the Series in such
manner and on such basis as the Board of Directors, in its sole discretion,
shall deem fair and equitable. The liabilities so allocated to a Series are
herein referred to as "liabilities belonging to" such Series.
<PAGE>
(3) DIVIDENDS AND DISTRIBUTIONS. Shares of each Series of capital stock
shall be entitled to such dividends and distributions, in stock or in cash or
both, as may be declared with respect to such Series from time to time by the
Board of Directors, acting in its sole discretion, provided, however, that
dividends and distributions on shares of a Series of capital stock shall be paid
only out of the lawfully available assets belonging to such Series, net of
liabilities belonging to such Series.
(4) LIQUIDATING DIVIDENDS AND DISTRIBUTIONS. In the event of the
liquidation or dissolution of the corporation, shareholders of each Series of
capital stock shall be entitled to receive, as a Series, out of the assets of
the corporation available for distribution to shareholders, but other than
general assets not belonging to any particular Series of capital stock, the
assets belonging to such Series, net of liabilities belonging to such Series;
and the assets so distributable to the shareholders of any Series of capital
stock shall be distributed among such shareholders in proportion to the number
of shares of such Series held by them and recorded on the books of the
corporation. In the event that there are any general assets available for
distribution that have not been allocated by the Board of Directors to any
particular Series of capital stock, such assets will be distributed to the
holders of stock of all Series of capital stock in proportion to the asset
values of the respective Series of capital stock.
(5) VOTING. A shareholder of each Series shall be entitled to one vote
for each dollar of net asset value per share of such Series (calculated as of a
record date specified by the Board of Directors), 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 these Articles of
Incorporation 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 corporation, as
the case may be.
(6) REDEMPTION. To the extent the corporation has funds or other
property legally available therefor, each holder of shares of a Series of
capital stock of the corporation shall be entitled to require the corporation to
redeem all or any part of the shares standing in the name of such holder on the
books of the corporation, at the redemption price of such shares in effect from
time to time as may be determined by the Board of Directors of the corporation
in accordance with the provisions hereof, subject to the right of the Board of
Directors of the corporation to suspend the right of redemption of shares of
capital stock of the corporation or postpone the date of payment of such
redemption price in accordance with provisions of applicable law. Without
limiting the generality of the foregoing, the corporation shall, to the extent
permitted by applicable law, have the right at any time to redeem the shares
owned by any holder of any Series of capital stock of the corporation if (i) the
value of such shares in the account of such holder is less than the minimum
investment amount applicable to that account as set forth in the corporation's
then-current registration statement under the Investment Company Act of 1940, or
(ii) the holder fails to furnish the corporation with the holder's correct
taxpayer identification number or social security number and to make such
certifications with respect thereto as the corporation may require; provided,
however, that any such redemptions shall be subject to such further terms and
conditions as the Board of Directors of the corporation may from time to time
adopt. The redemption price of shares of a Series of capital stock of the
corporation shall be the net asset value thereof as determined by, or pursuant
to methods approved by, the Board of Directors of the corporation from time to
time in accordance with the provisions of applicable law, less such redemption
fee or other charge, if any, as may be specified in the corporation's current
registration statement under the Investment Company Act of 1940 for that Series.
Payment of the redemption price shall be made in cash by the corporation at such
time and in such manner as may be determined from time to time by the Board of
Directors unless, in the
<PAGE>
opinion of the Board of Directors, which shall be conclusive, conditions exist
which make payment wholly in cash unwise or undesirable; in such event the
corporation may make payment wholly or partly by securities or other property
included in the assets belonging or allocable to the Series of the shares
redemption of which is being sought the value of which shall be determined as
provided herein.
IV
The liability of the directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
V
The Corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California Corporations Code) through bylaw
provisions, agreements with agents, vote of shareholders or disinterested
directors or otherwise, in excess of the indemnification otherwise permitted by
Section 317, subject to the applicable limits set forth in Section 204 of the
California Corporations Code with respect to actions for breach of duty to the
corporation and its shareholders."
3. The foregoing amendment and restatement of Articles of Incorporation
has been duly approved by the Board of Directors.
4. The foregoing amendment of the articles of incorporation has been
duly approved by the required vote of shareholders in accordance with Section
902 of the Corporations Code. The total number of outstanding shares of the
corporation is 94,335,886. The percentage of outstanding shares voting in favor
of the amendment exceeded 50%, the percentage vote required.
The undersigned declare under penalty of perjury and the laws of the
State of California that the matters set forth in this certificate are true and
correct of their own knowledge.
/s/John T. Kataoka 7/28/95
John T. Kataoka, President Date
/s/Douglas A. Paul 7/28/95
Douglas A. Paul, Secretary Date
BENHAM EQUITY FUNDS
BYLAWS
AS AMENDED THROUGH MAY 31, 1995
ARTICLE I. SHAREHOLDERS
1. Place of Meetings
2. Meetings
3. Special Meetings
4. Notice of Meetings
5. Consent to Shareholder's Meetings
6. Shareholders Acting Without a Meeting
7. Quorum
8. Voting Rights; Cumulative Voting
9. Proxies
10. Organization
11. Inspectors of Election
ARTICLE II. DIRECTORS
1. Powers
2. Number and Qualification
3. Election and Tenure of Office
4. Vacancies
5. Removal of Directors
6. Place of Meetings and Meetings by Telephone
7. Organization Meetings
8. Other Regular Meetings
9. Special Meetings--Notices
10. Waiver of Notice
11. Directors Acting Without a Meeting by Unanimous
Written Consent
12. Notice of Adjournment
13. Quorum
14. Compensation of Directors
15. Executive Committee
16. Indemnification
ARTICLE III. OFFICERS
1. Officers
2. Election
3. Subordinate Officers, Etc.
4. Removal and Resignation
5. Vacancies
6. Chairman of the Board
7. President
8. Vice-President
1
<PAGE>
9. Secretary
10. Chief Financial Officer
11. Representation of Shares of Other Entitites
ARTICLE IV. RECORDS AND REPORTS
1. Records
2. Inspection of Books and Records
3. Certification and Inspection of Bylaws
4. Checks, Drafts, Etc.
5. Contracts, Etc.--How Executed
6. Annual Report
ARTICLE V. CERTIFICATES AND TRANSFER OF SHARES
1. Certificates for Shares
2. Transfer on the Books
3. Lost of Destroyed Certificates
4. Transfer Agent and Custodian
5. Legend Condition
ARTICLE VI. CORPORATE SEAL
ARTICLE VII. AMENDMENTS TO BYLAWS
1. By Shareholders
2. Powers of Directors
3. Record of Amendments
2
<PAGE>
BYLAWS
OF
BENHAM EQUITY FUNDS
a California corporation
APPROVED BY THE BOARD JANUARY 6, 1988
AS AMENDED THROUGH MAY 31, 1995
ARTICLE I
SHAREHOLDERS' MEETING
Section 1. PLACE OF MEETINGS.
All meetings of the shareholders shall be held at the offices of the
corporation, in the State of California, as may be designated for that purpose
from time to time by the Board of Directors, or at any other suitable place
designated by the Board of Directors.
Section 2. MEETINGS.
In accordance with Section 600 of the California Corporations Code,
shareholder meetings shall be held as required by the Investment Company Act of
1940 (15 U.S.C. Sec. 80a-1, et seq) or as the Board deems necessary.
Section 3. SPECIAL MEETINGS.
Special meetings of the shareholders for any purpose or purposes may
be called at any time by the president, a vice-president, the secretary, an
assistant secretary, or by the Board of Directors, or by one or more
shareholders holding not less than one-tenth (1/10) of the voting power of the
corporation. Upon request in writing by registered mail to the president, a
vice-president, the secretary or an assistant secretary, directed to such
officers at the principal office of the corporation, in California, or delivered
to such officer in person by any person entitled to call a meeting of
shareholders, it shall be the duty of such officer forthwith to cause notice to
be given to the shareholders entitled to vote of a meeting to be held at such
time as such officer may fix not less than ten nor more than sixty days after
the receipt of such request. If such notice shall not be given within seven days
after the date of mailing or date of delivery of such request, the person or
persons calling the meeting may fix the time of meeting and give notice thereof
in the manner provided by these Bylaws.
Section 4. Notice of Meetings.
Notices of meetings, annual or special, shall be given in writing to
shareholders entitled to vote by the secretary or the assistant secretary, or if
there be no such officer, or in the case of his neglect or refusal, by any
director or shareholder.
Such notices shall be sent to the shareholder's address appearing on
the books of the corporation, or supplied by him to the corporation for the
purpose of notice, but not less than seven days before such meeting.
3
<PAGE>
Notice of any meeting of shareholders shall specify the place, the
day and the hour of meeting, and in case of special meeting, as provided by the
California Corporations Code, the general nature of the business to be
transacted.
If a shareholder supplies no address, notice shall be deemed to have
been given to him if mailed to the place where the principal office of the
company, in California, is situated, or published at least once in some
newspaper of general circulation in the County of said principal office. Such
notice shall specify the place, the day and hour of the meeting, and in the case
of special meetings, the general nature of the business to be transacted.
If a meeting is adjourned for more than 45 days or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each shareholder of record entitled to
vote at the meeting. Save, as aforesaid, it shall not be necessary to give any
notice of the adjournment or of the business to be transacted at an adjourned
meeting other than by announcement at the meeting at which such adjournment is
taken.
Section 5. CONSENT TO SHAREHOLDERS' MEETINGS.
The transactions of any meeting of shareholders, however called and
noticed, shall be valid as though had a at meeting duly held after regular call
and notice, if a quorum be present either in person or by proxy, and if, either
before or after the meeting, each of the shareholders entitled to vote, not
present in person or by proxy, sign a written waiver of notice, or a consent to
the holding of such meeting, or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.
Section 6. SHAREHOLDERS ACTING WITHOUT A MEETING.
Unless otherwise provided in the Articles or in the California
Corporations Code, as amended from time to time, any action which may be taken
at any annual or special meeting of shareholders may be taken without a meeting
and without prior notice, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding shares having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted.
Section 7. QUORUM.
The holders of a majority of the shares entitled to vote thereat,
present in person, or represented by proxy, shall be requisite and shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by law, by the Articles of Incorporation,
or by these Bylaws. If, however, such majority shall not be present or
represented at any meeting of the shareholders, the shareholders entitled to
vote thereat, present in person, or by proxy, shall have the power to adjourn
the meeting from time to time, until the requisite amount of voting shares shall
be present. At such adjourned meeting at which the requisite amount of voting
shares shall be represented, any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 8. VOTING RIGHTS; CUMULATIVE VOTING.
Every shareholder entitled to vote at any election of directors may
cumulate his votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of votes to which the
shareholder's shares are normally entitled, or distribute his votes on the same
principle among as many candidates as the shareholder sees fit; provided,
however, that no shareholder shall be entitled to cumulate votes unless the
candidate or candidates' names have
4
<PAGE>
been placed in nomination prior to the voting and the shareholder has given such
notice, all shareholders may cumulate their votes for candidates in nomination.
The candidates receiving the highest number of votes of the shares
entitled to be voted for them, up to the number of directors to be elected by
such shares, are elected.
The Board of Directors may determine the shareholders entitled to
notice of any meeting, or to vote, or entitled to receive any payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any lawful actions, by fixing, in advance, a
record date, which shall not be more than 60 nor less than 10 days prior to the
date of such meeting nor more than 60 days prior to any other action. A
determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders shall apply to any adjournment of a meeting unless the
Board fixes a new record date for the adjourned meeting; but the Board shall fix
a new record date if the meeting is adjourned for more than 45 days from the
date set for the original meeting. Shareholders at the close of business are
entitled to notice and to vote or to receive the dividend, distribution or
allotment of rights or to exercise the rights, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date.
Section 9. PROXIES.
Every person entitled to vote shares may authorize another person or
persons to act by proxy with respect to such shares by executing a written proxy
in accordance with the provisions of the California Corporations Code and filing
same with the Secretary of the Corporation.
Section 10.ORGANIZATION.
The president, or in the absence of the president, any
vice-president, shall call the meeting of the shareholders to order, and shall
act as chairman of the meeting. In the absence of the president and all of the
vice-presidents, shareholders shall appoint a chairman for such meeting. The
secretary of the company shall act as secretary of all meetings of the
shareholders, but in the absence of the secretary at any meeting of the
shareholders, the presiding officer may appoint any person to act as secretary
of the meeting.
Section 11.INSPECTORS OF ELECTION.
In advance of any meeting of shareholders the Board of Directors may,
if they so elect, appoint inspectors of election to act at such meeting or any
adjournments thereof. If inspectors of election be not so appointed, the
chairman of any such meeting may, and on the request of any shareholder or his
proxy shall, make such appointment at the meeting. The number of inspectors
shall be either one or three.
ARTICLE II
DIRECTORS; MANAGEMENT
Section 1. POWERS.
Subject to the limitation of the Articles of Incorporation, of the
Bylaws, and of the laws of the State of California as to action to be authorized
or approved by the shareholders, all corporate powers shall be exercised by or
under authority of, and the business and affairs of this corporation shall be
controlled by, a Board of Directors.
5
<PAGE>
Section 2. NUMBER AND QUALIFICATION.
The authorized number of directors of the corporation shall not be
less than seven (7) nor more than eleven (11). The exact number of directors
shall be fixed from time to time by a majority of the Board of Directors or by
the shareholders as provided in the California Corporations Code; provided,
however, that the authority of the Board to fix its number of directors shall in
all events be exercised in a manner consistent with the maintenance on the Board
of a majority of directors who are not "interested persons" in the corporation
or the corporation's investment advisor as defined by the Investment Company Act
of 1940. The selection and nomination of disinterested directors is committed
solely to the discretion of a Nominating Committee consisting of all sitting
disinterested directors except where the remaining director or directors are
interested persons.
Section 3. ELECTION AND TENURE OF OFFICE.
The directors shall be elected by ballot at shareholder meetings
called for that purpose, to serve until their successors are elected and have
qualified, except that directors who are not "interested persons" as defined
above 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. Their term of office shall begin immediately after
election.
Section 4. VACANCIES.
"Vacancy" when used with respect to the Board means any authorized
position of director which is not then filled by a duly elected, appointed or
approved director, whether caused by death, resignation, or removal, of any
director, or if the shareholders shall increase the authorized number of
directors but shall fail at the meeting at which such increase is authorized, or
an adjournment thereof, to elect the additional director so provided for, or in
case the shareholders fail at any time to elect the full number of authorized
directors.
Vacancies in the Board of Directors may be filled by a majority of
the remaining directors, whether or not less than a quorum, or by a sole
remaining director; provided, however, that except as may be otherwise required
by law, such vacancies shall be filled so that a majority of the Board of
Directors are disinterested directors; and, further, that the selection and
nomination of disinterested directors hereunder is committed solely to the
discretion of the Nominating Committee (described in Section 2 of this Article),
except where the remaining director or directors are interested persons.
Vacancies occurring on the Board of Directors by reason of the
removal of directors (as provided in California Corporations Code Section 304)
may be filled only by approval of the shareholders.
Each director so appointed or approved shall hold office until he or
his successor is elected at an annual meeting of shareholders or a special
called for that purpose.
The shareholders may at any time elect a director to fill any vacancy
not filled by the directors, and may elect the additional directors at the
meeting at which an amendment of the Articles of Incorporation is voted
authorizing an increase in the number of directors.
A vacancy or vacancies shall be deemed to exist in case of death,
resignation or removal of any director, or if the shareholders shall increase
the authorized number of directors but shall fail at the meeting at which such
increase is authorized, or at an adjournment thereof, to elect
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the additional director so provided for, or in case the shareholders fail at any
time to elect the full number of authorized directors.
If the Board of Directors accepts the resignation of a Director
tendered to take effect at a future time, the Board, or the shareholders, shall
have power to elect a successor to take office when the resignation shall become
effective.
No reduction of the number of directors shall have the effect of
removing any director prior to the expiration of his term of office.
Section 5. REMOVAL OF DIRECTORS.
The entire Board of Directors or any individual director may be
removed from office as provided by Section 810 of the Corporations Code of the
State of California.
Section 6. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.
Meetings of the Board of Directors shall be held at the office of the
corporation in the State of California, as designated for that purpose, from
time to time, by resolution of the Board of Directors or written consent of all
of the members of the Board. Any meeting shall be valid, wherever held, if held
by the written consent of all members of the Board of Directors, given either
before or after the meeting and filed with the Secretary of the corporation. Any
meeting, regular or special, may be held by conference telephone or similar
communication equipment, so long as all directors participating in the meeting
can hear one another, and all such directors shall be deemed to be present in
person at the meeting; provided that, in accordance with the provisions of the
Investment Company Act of 1940, the Board may not transact by such a meeting any
business which involves the entering into, or the renewal, performance, or
approval of any contract or agreement, whereby a person undertakes regularly to
serve or act as the Fund's Investment Advisor or principal underwriter.
Section 7. ORGANIZATION MEETINGS.
The organization meetings of the Board of Directors shall be held
immediately following the adjournment of the annual meetings of the
shareholders.
Section 8. OTHER REGULAR MEETINGS.
Regular meetings of the Board of Directors shall be held at the
corporate offices, or such other place as may be designated by the Board of
Directors, as follows:
Time of Regular Meeting: 10:00 a.m.
Date of Regular Meeting: February 10, May 10, August 10
November 10
If said day shall fall upon a holiday, such meetings shall be held on
the next succeeding business day thereafter. No notice need be given of
such regular meetings.
Section 9. SPECIAL MEETINGS - NOTICES.
Special meetings of the Board of Directors for any purpose or
purposes shall be called at any time by the president or if he is absent or
unable or refuses to act, by any vice-president of by any two directors.
Written notice of the time and place of special meetings shall be
delivered personally to the directors or sent to each director by letter or by
telegram, charges prepaid, addressed to him
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at his address as it is shown upon the records of the corporation, or if it is
not so shown on such records or is not readily ascertainable, at the place in
which the meetings of the directors are regularly held. In the case such notice
is mailed or telegraphed, it shall be deposited in the United States mail or
delivered to the telegraph company, in the place in which the principal office
of the corporation is located at least forty-eight (48) hours prior to the time
of the holding of the meeting. In case such notice is delivered as above
provided, it shall be so delivered at least twenty-four (24) hours prior to the
time of the holding of the meeting. Such mailing, telegraphing or delivery as
above provided shall be due, legal and personal notice to such director.
Section 10.WAIVER OF NOTICE.
When all of the directors are present at any directors' meeting,
however called or noticed, and sign a written consent thereto on the records of
such meeting, or, if a majority of the directors are present, and if those not
present sign in writing a waiver of notice of such meeting, whether prior to or
after the holding of such meeting, which said waiver shall be filed with the
Secretary of the corporation, the transactions thereof are as valid as if had at
a meeting regularly called and noticed.
Section 11.DIRECTORS ACTING WITHOUT A MEETING BY UNANIMOUS WRITTEN CONSENT.
Any action required or permitted to be taken by the Board of
Directors may be taken without a meeting and with the same force and effect as
if taken by a unanimous vote of directors, if authorized by a writing signed by
all members of the board; provided that, in accordance with the Investment
Company Act of 1940, such written consent does not approve the entering into, or
the renewal or performance of any contract or agreement, whereby a person
undertakes regularly to serve or act as the Fund's Investment Advisor or
principal underwriter. All consents shall be filed with the regular minutes of
the board.
Section 12.NOTICE OF ADJOURNMENT.
Notice of the time and place of holding an adjourned meeting need not
be given to absent directors if the time and place be fixed at the meeting
adjourned.
Section 13.QUORUM.
A majority of the number of directors as fixed by the Articles of
Incorporation or Bylaws shall be necessary to constitute a quorum for the
transaction of business, and the action of a majority of the directors present
at any meeting at which there is a quorum, when duly assembled, is valid as a
corporate act; provided that a minority of the directors, in the absence of a
quorum, may adjourn from time to time, but may not transact any business. As to
any business which by law requires a vote of the non-affiliated, independent
directors, such business may not be transacted without such vote.
Section 14.COMPENSATION OF DIRECTORS.
Directors, as such, shall not receive any stated salary for their
services, but by resolution of the Board a fixed sum and expense of attendance,
if any, may be allowed for attendance at each regular and special meeting of the
Board, provided that nothing herein contained shall be construed to preclude any
director from serving the company in any other capacity and receiving
compensation therefor. Directors unaffiliated with the corporation's investment
advisor will be paid by the corporation. Directors affiliated with the
corporation's investment advisor shall be paid, if at all, by the Advisor.
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Section 15. EXECUTIVE COMMITTEE.
An executive committee may be appointed by resolution passed by a
majority of the whole Board. The executive committee shall be composed of
members of the Board, and shall have such powers as may be expressly delegated
to it by resolution of the Board of Directors. It shall act only in the
intervals between meetings of the Board and shall be subject at all times to the
control of the Board of Directors.
Section 16. INDEMNIFICATION.
In the event that any present or past director or officer of the Fund
is named or threatened to be named as a defendant in any civil, criminal,
administrative or investigative action or proceeding arising out of his conduct
as a director or officer of the Fund (hereinafter "proceeding"), the Fund shall
to the extent permitted by this bylaw, Section 317 of the California
Corporations Code and Section 17 of the Investment Company Act of 1940 (the
"Act") advance or reimburse such officer or director for expenses, judgments,
fines, settlements and other amounts incurred in connection therewith.
The Fund shall in no event indemnify an officer or director for
expenses and other amounts incurred, except upon a determination by:
(1) a court or other body before whom the proceeding was
brought, or
(2) in the absence of a determination by such court or other
body, by:
(a) the vote of a majority of a quorum of directors who are
neither "interested persons" of the company as defined in
Section 2(a)(19) of the Act nor a party to the proceeding,
or
(b) in independent legal counsel in a written opinion,
that such person is not liable by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of duties as described in Section 17(h)
of the Act.
The Fund shall indemnify an officer or director for any
expenses and amounts actually and reasonably incurred in connection with any
proceeding or claim other than one by or in right of the Fund, if such person
has not prevailed on the merits, upon a determination by:
(a) a majority of a quorum of directors who are not parties to
such proceeding, or
(b) the court in which such proceeding is or was pending, or
(c) approval of the shareholders as provided in Section 153 of
the California Corporations Code, with the shares owned by
the person to be indemnified not being entitled to vote,
that such person acted in good faith and in a manner such person reasonably
believed to be in the best interests of the Fund and, in the case of a criminal
proceeding, that such person had no reasonable cause to believe his conduct was
unlawful.
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The Fund shall indemnify an officer or director for expenses actually
and reasonably incurred in connection with any proceeding by or in right of the
Fund, if such person has not prevailed on the merits, upon a determination by:
(a) a majority of a quorum of directors who are not parties to
such proceeding, or
(b) the court in which such proceeding is or was pending,
(c) approval of the shareholders as provided in Section 153 of
the California Corporations Code, with the shares owned by
the person to be indemnified not being entitled to vote,
that such person acted in good faith, in a manner such person believed to be in
the best interests of the Fund and with such care, including reasonable inquiry,
as an ordinarily prudent person in a like position would use under similar
circumstances; except that no indemnification shall be made:
(a) of amounts paid in settling or otherwise disposing of a
threatened or pending action, with or without court
approval,
(b) of expenses incurred in defending a threatened or pending
action which is settled or otherwise disposed of without
court approval, or
(c) with respect to a claim for which such person shall have
been adjudged liable to the Fund, unless and to the extent
that the court in which such proceeding is or was pending
shall determine that, in view of all circumstances of the
case, such person is fairly and reasonably entitled to
indemnity for the expenses which such court shall
determine.
To the extent an officer or director of the Fund has been successful
on the merits in defense of any proceeding, or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses actually and
reasonably incurred by such person in connection therewith.
All amounts indemnified pursuant to this bylaw shall be indemnified
only upon final disposition of the proceeding in which they were incurred,
except that expenses incurred by an officer or director in defending any
proceeding shall be advanced prior to the final disposition of such proceeding
upon receipt by the Fund of an adequately secured undertaking by or on behalf of
such person to repay such amount advanced unless it be determined ultimately
that such person is entitled to indemnification pursuant to the provisions of
this bylaw.
ARTICLE III
OFFICERS
Section 1. OFFICERS.
The officers of the corporation shall be a president, a vice
president, a secretary and a chief financial officer. The corporation may also
have, at the discretion of the Board of Directors, a chairman of the board, one
or more additional vice presidents, one or more assistant secretaries, one or
more assistant chief financial officers, and such other officers as may be
appointed in accordance with the provisions of Section 3 of this Article. One
person may hold two or more offices, except those of president and secretary.
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Section 2. ELECTION.
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Section 3 or Section 5 of this
Article shall be chosen by the Board of Directors, and each shall hold his
office until he shall resign or shall be removed or otherwise disqualified to
serve, or his successor shall be elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC.
The Board of Directors may appoint such other officers as the
business of the corporation may require, each of whom shall hold office for such
period, have such authority and perform such duties as are provided in the
Bylaws or as the Board of Directors may from time to time determine.
Section 4. REMOVAL AND RESIGNATION.
Any officer may be removed, either with or without cause, by a
majority of the directors at the time in office, at any regular or special
meeting of the Board, or, except in case of an officer chosen by the Board of
Directors, by any officer upon whom such power of removal may be conferred by
the Board of Directors.
Any officer may resign at any time by giving written notice to the
Board of Directors, or to the president, or to the secretary of the corporation.
Any such resignation shall take effect at the date of the receipt of such notice
or at any later time specified therein; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
Section 5. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
the bylaws for regular appointments to such office.
Section 6. CHAIRMAN OF THE BOARD.
The Chairman of the Board, if there shall be such an officer, shall,
if present, preside at all meetings of the Board of Directors, and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the bylaws.
Section 7. PRESIDENT.
Subject to such supervisory powers, if any, as may be given by the
Board of Directors to the Chairman of the Board, if there be such an officer,
the President shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. He shall
preside at all meetings of the shareholders and in the absence of the Chairman
of the Board, or if there be none, at all meetings of the Board of Directors. He
shall be ex officio a member of all the standing committees, including the
executive committee, if any, and shall have the general powers and duties of
management usually vested in the office of president of a corporation, and shall
have such other powers and duties as may be prescribed by the Board of Directors
or the Bylaws.
Section 8. VICE-PRESIDENT.
In the absence or disability of the president, the vice-presidents,
in order of their rank as fixed by the Board of Directors, or if not ranked, the
vice-president designated by the Board of Directors, shall perform all the
duties of the president, and when so acting shall have all the powers of, and be
subject to, all the restrictions upon, the president. The vice-president shall
have such other
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powers and perform such other duties as from time to time may be prescribed for
them respectively by the Board of Directors or the Bylaws.
Section 9. SECRETARY.
The secretary shall keep, or cause to be kept, a book of minutes at
the principal office or such other place as the Board of Directors may order, of
all meetings of Directors and Shareholders, with the time and place of holding,
whether regular or special, and if special, how authorized, the notice thereof
given, the names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings and the
proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
office or at the office of the corporation's transfer agent, a share register,
or duplicate share register, showing the names of the shareholders and their
addresses; the number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all
meetings of the shareholders and of the Board of Directors required by the
bylaws or by law to be given, and he shall keep the seal of the corporation in
safe custody, and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or by the bylaws.
Section 10.CHIEF FINANCIAL OFFICER.
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, surplus and
shares. Any surplus, including earned surplus, paid-in surplus and surplus
arising from a reduction of stated capital, shall be classified according to
source and shown in a separate account. The books of account shall at all
reasonable times be open to inspection by any director.
The chief financial officer shall deposit or cause to be deposited
all moneys and other valuables in the name and to the credit of the corporation
with the corporation's custodian bank. He shall cause disbursement of funds of
the corporation as may be ordered by the Board of Directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the bylaws.
Section 11.REPRESENTATION OF SHARES OF OTHER ENTITIES.
The chairman of the board, the president or any vice president or any
other person authorized by resolution of the Board of Directors or by any of the
foregoing designated officers, is authorized to vote on behalf of the Funds any
and all shares of any corporation or corporations, partnerships, trusts, or
other entities, foreign or domestic, standing in the name of the Funds. The
authority granted to these officers to vote or represent on behalf of the Funds
any and all shares held by the Funds in any form or entity may be exercised by
any of these officers in person or by any person authorized to do so, including
duly authorized advisors and/or subadvisors of the Funds, by a proxy duly
executed by these officers.
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ARTICLE IV
CORPORATE RECORDS AND REPORTS - INSPECTION
Section 1. RECORDS.
The corporation shall maintain adequate and correct accounts, books
and records of its business and properties. All of such books, records and
accounts shall be kept at its principle place of business in the State of
California, or at the office of its transfer agent, custodian or accountant, as
determined by the president and secretary from time to time.
Section 2. INSPECTION OF BOOKS AND RECORDS.
All books and records provided for in Section 3003 of the
Corporations Code of California shall be open to inspection of the directors and
shareholders from time to time and in the manner provided in said Section 3003.
Section 3. CERTIFICATION AND INSPECTION OF BYLAWS.
The original or a copy of these Bylaws, as amended or otherwise
altered to date, certified by the Secretary, shall be open to inspection by the
shareholders of the company, as provided in Section 502 of the California
Corporations Code.
Section 4. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for payment of money, notes or
other evidences of indebtedness, issued in the name of or payable to the
corporation, shall be signed or endorsed by such person or persons and in such
manner as shall be determined from time to time by resolution of the Board of
Directors.
Section 5. CONTRACTS, ETC. -- HOW EXECUTED.
The Board of Directors, except as in the Bylaws otherwise provided,
may authorize any officer or officers, agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation. Such authority may be general or confined to specific instances.
Unless so authorized by the Board of Directors, no officer, agent or employee
shall have any power or authority to bind the corporation by any contract or
engagement, or to pledge its credit, or to render it liable for any purpose or
to any amount.
Section 6. ANNUAL REPORT.
The Board of Directors shall cause an annual report or statement to
be sent to the shareholders of this corporation not later than 120 days after
the close of the fiscal or calendar year in accordance with the provisions of
Sections 3006 - 3010 of the Corporations Code of the State of California, and
shall distribute financial reports to the shareholders as of the last days of
March, June, September and December of each year.
ARTICLE V
CERTIFICATES AND TRANSFER OF SHARES
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Section 1. CERTIFICATES FOR SHARES.
Certificates for shares shall be of such form and device as the Board
of Directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; the par value, if any, or a statement that such shares
are without par value; a statement of rights, privileges, preferences and
restrictions, if any; a statement as to the redemption or conversion, if any; a
statement of liens or restrictions upon transfer or voting, if any; if the
shares be assessable or, if assessments are collectible by personal action, a
plain statement of such facts.
Every certificate for shares must be signed by the Chairman,
president or any vice president and by the Chief Financial Officer, the
secretary, Controller, any Assistant Controller or any assistant secretary or
must be authenticated by facsimiles of the signatures of the president and
secretary or by a facsimile of the signature of its president and the written
signature of its secretary or an assistant secretary. Before it becomes
effective every certificate for shares authenticated by a facsimile of a
signature must be countersigned by a transfer agent or transfer clerk and must
be registered by an incorporated bank or trust company, either domestic or
foreign, as registrar of transfers.
Section 2. TRANSFER ON THE BOOKS.
Upon surrender to the secretary or transfer agent of the corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto; cancel
the old certificate and record the transaction upon its books.
Section 3. LOST OR DESTROYED CERTIFICATES.
Any person claiming a certificate of stock to be lost or destroyed
shall make an affidavit or affirmation of that fact and advertise the same in
such manner as the Board of Directors may require, and shall if the directors so
require give the corporation a bond of indemnity, in the form and with one or
more sureties satisfactory to the Board, in at least double the value of the
stock represented by said certificate, whereupon a new certificate may be issued
in the same tenor and for the same number of shares as the one alleged to be
lost or destroyed.
Section 4. TRANSFER AGENT AND CUSTODIAN.
The Board of Directors may authorize the president to contract for
the services of a transfer agent and custodian for the corporation.
Section 5. LEGEND CONDITION.
In the event any shares of this corporation are issued pursuant to a
permit or exemption therefrom requiring the imposition of a legend condition the
person or persons issuing or transferring said shares shall make sure said
legend appears on the certificate and on the stub relating thereto in the stock
record book and shall not be required to transfer any shares free of such legend
unless an amendment to such permit or a new permit be first issued so
authorizing such a deletion.
ARTICLE VI
CORPORATE SEAL
The corporate seal shall be circular in form, and shall have
inscribed thereon the name of the corporation, the date of its incorporation,
and the word California.
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ARTICLE VII
AMENDMENTS TO BYLAWS
Section 1. BY SHAREHOLDERS.
New Bylaws may be adopted or these bylaws may be repealed or amended
at their annual meeting, or at any other meeting of the shareholders called for
that purpose, by a vote of shareholders entitled to exercise a majority of the
voting power of the corporation, or by written assent of such shareholders.
Section 2. POWERS OF DIRECTORS.
Subject to the right of the shareholders to adopt, amend or repeal
bylaws, as provided in Section 1 of this Article VII, the Board of Directors may
adopt, amend or repeal any of these bylaws other than a bylaw or amendment
thereof changing the authorized number of directors.
Section 3. RECORD OF AMENDMENTS.
Whenever an amendment or new bylaw is adopted, it shall be copied in
the book of bylaws with the original bylaws, in the appropriate place. If any
Bylaw is repealed, the fact of repeal with the date of the meeting at which the
repeal was enacted or written assent was filed shall be stated in said book.
15
INVESTMENT ADVISORY AGREEMENT
Benham Equity Funds
Agreement effective this 1st day of June, 1995, between BENHAM EQUITY
FUNDS, a registered open-end management investment company organized as a
California Corporation (the "Company"),and BENHAM MANAGEMENT CORPORATION, a
registered investment advisor incorporated in the State of California (the
"Advisor").
Whereas, the Company is authorized to issue shares of common stock in one
or more series with each such series representing interests in a separate
portfolio of securities and other assets; and
Whereas, the Company currently offers its shares in five series designated
as the Benham Gold Equities Index Fund, Benham Income & Growth Fund, Benham
Equity Growth Fund, Benham Utilities Income Fund, and Benham Global Natural
Resources Index Fund (the "Initial Series"), (such Initial Series together with
all other series subsequently established by the Company with respect to which
the Company 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 Company 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 Company 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
Company's registration statement with the Securities and Exchange Commission as
amended from time to time and such instructions as the Company's board of
directors 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 the
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 Company's board of directors 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
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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.
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 Company and to such other customers.
C. REPORTS AND INFORMATION. The Advisor shall render regular reports
to the Company at quarterly meetings of the board of directors and at such other
times as may reasonably be requested by the Company'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 Company 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 Company 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 Company's board of
directors 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 Fund, 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 Company 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 Company Fee and Individual Fund Fee (if any), plus
any recoupment due, the Advisor will reimburse the Series for such excess.
(b) DETERMINATION OF COMPANY FEE AND INDIVIDUAL FUND FEE. The Company
Fee for each Series shall be equal to that Series' pro-rata share of the value
of the aggregated average daily net
2
<PAGE>
assets of the Company, determined for each calendar day, pursuant to the
following schedule of annualized rates:
0.50% of the first $100 million;
0.45% of the next $100 million;
0.40% of the next $100 million;
0.35% of the next $100 million;
0.30% of the next $100 million;
0.25% of the next $1 billion;
0.24% of the next $1 billion;
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.
With respect to the Benham Global Natural Resources Index Fund, the
Individual Fund Fee shall be determined based on the average daily net assets of
the Benham Global Natural Resources Index Fund, pursuant to the following
schedule of annualized rates:
0.05% of the first $500 million;
0.04% of the next $500 million; and
0.03% of the net assets over $1 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
Company's board of directors.
2. The term "Expenses" as used in Section II of this
agreement shall mean:
A. The Company 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 Company's board of
directors 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'
3
<PAGE>
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 Company 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
Articles of Incorporation and the Bylaws of the Company and to Section 10(a) of
the Investment Company Act of 1940, it is understood that directors, officers,
agents and shareholders of the Company 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 Company as
directors, officers, shareholders or otherwise, that the Advisor is or may be
interested in the Company as a shareholder or otherwise, and that the effect of
any such interest shall be governed by the Company's Articles of Incorporation,
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 director or officer of the
Company 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 COMPANY'S LIABILITY. The Advisor acknowledges that it has
received notice of and accepts the limitations of the Company's liability as set
forth in its Articles of Incorporation. The Advisor agrees that the Company'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 director, officer, employee or agent of
the Company.
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 Company's directors, and the vote of a majority of the Company's
directors 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 directors
of the Company, 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 Company.
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.
4
<PAGE>
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.
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 EQUITY FUNDS
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 APPROVAL DATES
GUARANTEE DATE
RATE
====================================================================================================================================
<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>
- ------------------------------------------------------------------------------------------------------------------------------------
<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)
* Direct (including lock box) purchases
* Wire order purchases and redemptions
* Letter and telephone redemptions
* 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.Onbehalf 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
Benham Equity Growth Fund $1.1875
Benham Income & Growth Fund $1.3958
Benham Utilities Income Fund $1.3958
Benham Global Natural Resources Fund $1.1875
- ---------------------------------------------------------------------------------------------------------------------
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
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, BENHAM EQUITY
FUNDS, INC., hereinafter called the "Corporation" and certain directors and
officers of the Corporation, 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 agents may deem necessary or advisable to enable the Corporation to comply
with the Securities Act of 1933 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 Corporation in its behalf
and to affix its corporate seal, and to sign the names of each of such directors
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 Corporation has caused this Power to be
executed by its duly authorized officers on this the 15th day of December, 1995.
BENHAM EQUITY FUND, INC.
(A California Corporation)
By: /s/John T. Kataoka
John T. Kataoka, President
/s/James M. Benham /s/Ezra Solomon
James M. Benham Ezra Solomon
Chairman Director
/s/Albert A. Eisenstat /s/Isaac Stein
Albert A. Eisenstat Isaac Stein
Director Director
/s/Ronald J. Gilson /s/Jeanne D. Wohlers
Ronald J. Gilson Jeanne D. Wohlers
Director Director
/s/Myron S. Scholes /s/James E. Stowers, III
Myron S. Scholes James E. Stowers, III
Director Director
/s/Kenneth E. Scott /s/Maryanne Roepke
Kenneth E. Scott Maryanne Roepke
Director Treasurer
Attest:
By: /s/Douglas A. Paul
Douglas A. Paul, Secretary
