BENHAM EQUITY FUNDS, 485BPOS, 1996-09-03

BENHAM EQUITY FUNDS
485BPOS, 1996-09-03

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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._18_ X
-----
and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-----

File No. 811-5447:

Amendment No._20_

BENHAM EQUITY FUNDS
(Exact Name of Registrant as Specified in Charter)

4500 Main Street, Kansas City, MO 64141-6200
(Address of Principal Executive Offices)

Registrant's Telephone Number, including Area Code: 415-965-8300

Douglas A. Paul
General Counsel
1665 Charleston Road, Mountain View, CA 94043
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: First Offered 8/17/88

It is proposed that this filing become effective:

__X__ immediately upon filing pursuant to paragraph (b) of Rule 485
_____ on (date) pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a) of Rule 485
_____ on (date) pursuant to paragraph (a)(1) of Rule 485
_____ 75 days after filing pursuant to paragraph (a) (2) of Rule 485
_____ on (date) pursuant to paragraph (a)(2) of Rule 485

- --------------------------------------------------------------------------------
Registrant has elected 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. On February 15, 1996, the Registrant filed a
Rule 24f-2 Notice on Form 24f-2 with respect to its fiscal year ended December
31, 1995.

<PAGE>
BENHAM EQUITY FUNDS
1933 Act Post-Effective Amendment No. 18
1940 Act Amendment No. 20

FORM N-1A
CROSS-REFERENCE SHEET

PART A: PROSPECTUS

ITEM PROSPECTUS CAPTION

1 Cover Page

2 Transaction and Operating Expense Table

3 Financial Highlights, Performance

4 Investment Management, Further Information About the Funds, Investment
Objectives of the Funds, Information About Investment Policies of the
Funds, Risk Factors and Investment Techniques, Other Investment
Practices

5 Investment Management

5A Not Applicable

6 Further Information About the Funds, How to Redeem Shares, Cover Page,
Distributions, Taxes

7 Cover Page, Distribution of Fund Shares, How to Open an Account, Share
Price, Transfer and Administrative Services

8 How to Redeem Shares, Transfer and Administrative Services

9 Not Applicable

PART B: STATEMENT OF ADDITIONAL INFORMATION

ITEM STATEMENT OF ADDITIONAL INFORMATION CAPTION

10 Cover Page

11 Table of Contents

12 Not Applicable

13 Investment Policies and Techniques, Investment Restrictions, Portfolio
Transactions

14 Trustee and Officers

15 Additional Purchase and Redemption Information, Trustees and Officers

16 Investment Advisory Services, Administrative and Transfer Agent
Services, Expense Limitation Agreement, About the Trust

17 Portfolio Transactions

18 About the Trust

19 Additional Purchase and Redemption Information, Valuation of Portfolio
Securities

20 Taxes

21 Additional Purchase and Redemption Information

22 Performance

23 Cover Page

<PAGE>
BENHAM
Income & Growth Fund

and
Equity Growth Fund
Prospectus

SEPTEMBER 3,
1996

BENHAM EQUITY FUNDS
- --------------------------------------------------------------------------------

The BENHAM INCOME & GROWTH FUND and BENHAM EQUITY GROWTH FUND (the "Funds")
are series of the Benham Equity Funds, a member of the Twentieth Century family
of funds, a family that includes 66 no-load mutual funds covering a variety of
investment opportunities. Two of the funds are described in this Prospectus. The
other funds are described in separate prospectuses.

INVESTMENT OBJECTIVES OF
THE FUNDS

BENHAM INCOME & GROWTH FUND seeks dividend growth, current income, and capital
appreciation by investing in common stocks.

BENHAM EQUITY GROWTH FUND seeks capital appreciation by investing in common
stocks.

MINIMUM INITIAL INVESTMENT: $2,500.

NO-LOAD MUTUAL FUNDS

Twentieth Century offers retail investors a full line of no-load funds,
investments, that have no sales charges or commissions. The Funds offered by
this Prospectus have no 12b-1 plan or other deferred sales charges.

INVESTMENTS IN THE FUNDS ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT OR ANY OTHER AGENCY.

This Prospectus gives you information about the Funds that you should know
before investing. Please read this Prospectus carefully and retain it for future
reference. Additional information is included in the Statement of Additional
Information dated September 3, 1996 and filed with the Securities and Exchange
Commission ("SEC"). It is incorporated into this Prospectus by reference. To
obtain a copy without charge,
call or write:

Twentieth Century Mutual Funds
4500 Main Street o P.O. Box 419200
Kansas City, MO 64141-6200 o 1-800-345-2021
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-634-4113 o In Missouri: 816-753-1865
Internet: http://www.twentieth-century.com

There is no assurance that the Funds will achieve their respective investment
objectives.
- --------------------------------------------------------------------------------
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.

<PAGE>

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

TRANSACTION AND OPERATING EXPENSE TABLE.............4
FINANCIAL HIGHLIGHTS................................5

INFORMATION REGARDING THE FUNDS

INVESTMENT POLICIES OF THE FUNDS....................6
Benham Income & Growth Fund......................6
Benham Equity Growth Fund........................6
RISK FACTORS AND INVESTMENT TECHNIQUES..............6
Portfolio Optimization...........................6
Investment in Stocks.............................7
OTHER INVESTMENT PRACTICES,
THEIR CHARACTERISTICS AND RISKS..................8
Portfolio Turnover...............................8
Convertible Securities...........................8
Interest Rate Futures Contracts and
Options Thereon................................8
Short-Term Instruments...........................9
Foreign Securities..............................10
Securities Lending..............................10
Other Techniques................................10
PERFORMANCE ADVERTISING............................10

HOW TO INVEST WITH TWENTIETH CENTURY AND THE BENHAM GROUP

HOW TO OPEN AN ACCOUNT.............................12
By Mail.........................................12
By Wire.........................................12
By Exchange.....................................12
In Person.......................................13
SUBSEQUENT INVESTMENTS.............................13
By Mail.........................................13
By Telephone....................................13
By Wire.........................................13
In Person.......................................13
AUTOMATIC INVESTMENT PLAN..........................13
HOW TO EXCHANGE FROM ONE ACCOUNT
TO ANOTHER......................................13
By Mail.........................................13
By Telephone....................................13
HOW TO REDEEM SHARES...............................14
By Mail.........................................14
By Telephone....................................14
By Check-A-Month................................14
Other Automatic Redemptions.....................14
REDEMPTION PROCEEDS................................14
By Check........................................14
By Wire and ACH.................................14
REDEMPTION OF SHARES IN
LOW-BALANCE ACCOUNTS............................14
SIGNATURE GUARANTEE................................15
SPECIAL INVESTOR SERVICES..........................15
Automated Information Line......................15
Open Order Service..............................15
Tax-Qualified Retirement Plans..................16
IMPORTANT POLICIES REGARDING
YOUR INVESTMENTS................................16
REPORTS TO SHAREHOLDERS............................17
EMPLOYER-SPONSORED RETIREMENT PLANS
AND INSTITUTIONAL ACCOUNTS......................17

ADDITIONAL INFORMATION YOU SHOULD KNOW

SHARE PRICE........................................18
When Share Price is Determined..................18
How Share Price is Determined...................18
Where to Find Information About Share Price.....18
DISTRIBUTIONS......................................19
TAXES..............................................19
Tax-Deferred Accounts...........................19
Taxable Accounts................................20
MANAGEMENT.........................................21
Investment Management...........................21
Code of Ethics..................................21
Transfer and Administrative Services............22
Distribution of Fund Shares.....................22
Expenses........................................22
FURTHER INFORMATION ABOUT THE FUNDS................23

- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED BY THE FUNDS TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR FOR THE FUNDS, AND YOU SHOULD NOT RELY ON ANY
OTHER INFORMATION OR REPRESENTATION.

TRANSACTION AND OPERATING EXPENSE TABLE
- --------------------------------------------------------------------------------

Benham Benham
Income & Equity
Growth Fund Growth Fund
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases none none
Maximum Sales Load Imposed on Reinvested Dividends none none
Deferred Sales Load none none
Redemption Fee(1) none none
Exchange Fee none none

ANNUAL FUND OPERATING EXPENSES:(2)
(as a percentage of net assets)
Management Fees .30% .30%
12b-1 Fees none none
Other Expenses .34% .36%
Total Fund Operating Expenses .64% .66%
Example: You would pay the following expenses
on a $1,000 investment, assuming a 5% annual
return and redemption at the end of each
time period:
1 year $ 7 $ 7
3 years 20 21
5 years 36 37
10 years 80 82

(1) Redemption proceeds sent by wire are subject to a $10 processing fee.

(2) Benham Management Corporation ( the "Manager") has agreed to limit each
Fund's total operating expenses to specified percentages of each Fund's
average daily net assets. The agreement provides that the Manager may
recover amounts absorbed on behalf of the Fund during the preceding 11
months if, and to the extent that, for any given month, Fund expenses were
less than the expense limit in effect at that time. The current expense
limit is .75% for each of the Funds. These expense limitations are subject
to annual renewal in June.

Each Fund pays the Manager management fees equal to an annualized percentage
of each Fund's average daily net assets. Other expenses include administrative
and transfer agent fees paid to Twentieth Century Services, Inc.

The purpose of the above table is to help you understand the various costs
and expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the shares of the Funds. The example set forth
above assumes reinvestment of all dividends and distributions and uses a 5%
annual rate of return as required by SEC regulations.

NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE
CONSIDERED INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS
AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
BENHAM INCOME & GROWTH FUND

The Financial Highlights for each of the periods presented have been
audited by KPMG Peat Marwick LLP, independent auditors (except as noted). Their
reports appear in the Funds' annual reports to shareholders which are
incorporated by reference into the Statement of Additional Information. The
semiannual and annual reports contain additional performance information and
will be made available upon request and without charge.

For a Share Outstanding Throughout the Six Months Ended June 30, 1996 (Unaudited),
and the Years Ended December 31 (except as noted)

June 30, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1996 1995 1994 1993 1992 1991 1990+
- ---------------------------------------------------------------------------------------------------------------------------

PER-SHARE DATA
- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of Period. $17.81 13.92 15.08 14.11 13.53 10.12 10.00
Income From Investment Operations
Net Investment Income................ .2192 .4215 .4435 .4285 .4155 .4860 .0087
Net Realized and Unrealized
Gains (Losses) on Investments........ 1.5316 4.6399 (.5302) 1.1502 .6220 3.5602 .1200
-------- ------- ------- ------- ------- ------- -------
Total Income (Losses)
From Investment Operations.......... 1.7508 5.0614 (.0867) 1.5787 1.0375 4.0462 .1287
-------- ------- ------- ------- ------- ------- -------
Less Distributions
Dividends from Net Investment Income. (.2108) (.4200) (.4350) (.4246) (.4137) (.4726) (.0087)
Distributions from Net Realized
Capital Gains...................... 0 (.7514) (.6383) (.1841) (.0438) (.1636) 0
-------- ------- ------- ------- ------- ------- -------
Total Distributions................. (.2108) (1.1714) (1.0733) (.6087) (.4575) (.6362) (.0087)
-------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD....... $19.35 17.81 13.92 15.08 14.11 13.53 10.12
======== ======= ======= ======= ======= ======= =======
TOTAL RETURN*.......................... 9.86% 36.88% (.55)% 11.31% 7.86% 39.08% 1.29%
- ------------
SUPPLEMENTAL DATA AND RATIOS
- ----------------------------
Net Assets at End of Period
(in thousands of dollars)............ $538,151 373,701 224,939 230,191 141,221 59,318 991
Ratio of Expenses to Average Daily
Net Assets++....................... .64%** .67% .73% .75% .75% .50% 0%
Ratio of Net Investment Income to
Average Daily Net Assets............. 2.33%** 2.61% 2.96% 2.90% 3.16% 4.03% 2.09%**
Portfolio Turnover Rate.............. 38.00% 69.88% 67.96% 30.75% 63.17% 140.21% 0%
Average Commission Paid per Share Traded $.038 .030 N/A N/A N/A N/A N/A

- ---------------------------------------------------------------------------------------------------------------------------

+ Commencement of operations for Benham Income & Growth Fund was December 17, 1990.

++The ratios for the periods beginning with the year ended December 31, 1995 include expenses paid through
expense offset arrangements.

* Total return figures assume reinvestment of dividend and capital gain distributions and are not annualized.

**Annualized.
</TABLE>

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
BENHAM EQUITY GROWTH FUND

For a Share Outstanding Throughout the Six Months Ended June 30, 1996 (Unaudited),
and the Years Ended December 31 (except as noted)
June 30, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1996 1995 1994 1993 1992 1991+
- ---------------------------------------------------------------------------------------------------------------------------

PER-SHARE DATA
- --------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of Period............ $14.25 11.53 12.12 11.68 11.57 10.00
Income from Investment Operations
Net Investment Income........................... .1316 .2564 .2993 .2309 .2573 .3355
Net Realized and Unrealized
Gains (Losses) on Investments................... 1.3721 3.7016 (.3315) 1.0955 .2345 1.6542
------- ------- ------- ------- ------- -------
Total Income (Losses) From Investment Operations 1.5037 3.9580 (.0322) 1.3264 .4918 1.9897
------- ------- ------- ------- ------- -------
Less Distributions
Dividends from Net Investment Income............ (.1237) (.2243) (.2990) (.2307) (.2309) (.2891)
Distributions from Net Realized Capital Gains... 0 (1.0137) (.2588) (.6557) (.1509) (.1306)
------- ------- ------- ------- ------- -------
Total Distributions............................ (.1237) (1.2380) (.5578) (.8864) (.3818) (.4197)
------- ------- ------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD.................. $15.63 14.25 11.53 12.12 11.68 11.57
======= ======= ======= ======= ======= =======
TOTAL RETURN*..................................... 10.65% 34.56% (.23)% 11.42% 4.13% 17.48%
- ------------
SUPPLEMENTAL DATA AND RATIOS
- ----------------------------
Net Assets at End of Period (in thousands
of dollars).................................. $197,070 159,450 97,437 96,284 73,592 38,951
Ratio of Expenses to Average Daily Net Assets++. .66%** .71% .75% .75% .75% .35%**
Ratio of Net Investment Income
to Average Daily Net Assets..................... 1.74%** 1.96% 2.26% 2.04% 2.33% 3.29%**
Portfolio Turnover Rate......................... 57.00% 125.86% 94.09% 96.52% 114.32% 89.22%
Average Commission Paid per Share Traded........ $.037 .032 N/A N/A N/A N/A

- ---------------------------------------------------------------------------------------------------------------------------

+ Commencement of operations for Benham Equity Growth Fund was May 9, 1991.

++ The ratios for the periods beginning with the year ended December 31, 1995 include expenses paid through
expense offset arrangements.

* Total return figures assume reinvestment of dividend and capital gain distributions and are not annualized.

** Annualized.
</TABLE>
5

INFORMATION REGARDING THE FUNDS
- --------------------------------------------------------------------------------

INVESTMENT POLICIES
OF THE FUNDS

The Funds have adopted certain investment restrictions that are set
forth in the Statement of Additional Information. Those restrictions, as well
as the investment objectives of the Funds identified on the front cover page
of this Prospectus and any other investment policies designated as
"fundamental" in this Prospectus or in the Statement of Additional
Information, cannot be changed without shareholder approval. The Funds have
implemented additional investment policies and practices to guide their
activities in the pursuit of their respective investment objectives. These
policies and practices, which are described throughout this Prospectus, are
not designated as fundamental policies and may be changed without shareholder
approval.

The descriptions that follow are designed to help you determine whether
a fund fits your investment objectives. You may want to pursue more than one
objective by investing in other funds in the Twentieth Century family of
funds.

For an explanation of the securities ratings referred to in the
following discussion, see "Other Information" in the Statement of Additional
Information.

BENHAM INCOME & GROWTH FUND ("BIGF")

BIGF's investment objective is to seek dividend growth, current income,
and capital appreciation by investing in common stocks.

BIGF is designed for income-oriented investors seeking a total return
that exceeds the total return of the Standard & Poor's 500 Composite Stock
Price Index ("S&P 500") and a dividend yield that exceeds the S&P 500's
dividend yield. Of course, the Fund's total return and dividend yield may be
higher or lower than the S&P 500's total return and dividend yield over any
period of time.

BENHAM EQUITY GROWTH FUND ("BEGF")

BEGF's investment objective is to seek capital appreciation by investing
in common stocks. BEGF is designed for investors whose financial goals
include long-term capital growth. The Manager seeks a total return for the
Fund that exceeds the total return of the S&P 500. Of course, the Fund's
total return may be higher or lower than the S&P 500's return over any period
of time.

RISK FACTORS AND INVESTMENT
TECHNIQUES

PORTFOLIO OPTIMIZATION

The Manager uses QUANTITATIVE MANAGEMENT strategies in pursuit of each
Fund's investment objective. Quantitative management combines two investment
management approaches. The first is ACTIVE MANAGEMENT, which allows the
advisor to select investments for a fund without reference to an index or
investment model. The second is INDEXING, in which the advisor tries to match
a fund's portfolio composition to that of a particular index.

The primary management technique the Manager uses is PORTFOLIO
OPTIMIZATION. The Manager constructs the Funds' portfolios to match the risk
characteristics of the S&P 500 and then optimizes each portfolio to achieve
the desired balance of risk and return potential. With respect to BIGF, this
includes targeting a dividend yield that exceeds that of the S&P 500.

The Funds' portfolio holdings are drawn primarily from equity securities
of the 1,500 largest companies traded in the United States (ranked by market
capitalization). BEGF may also invest in small capitalization stocks of
companies that, in the Manager's opinion, have growth potential consistent
with the Fund's investment objective.

Portfolio optimization may cause a Fund to be more heavily invested in
some industries than in others. However, neither Fund may invest

more than 25% of its total assets in companies whose principal business
activities are in the same industry. In addition, each Fund is a
"diversified" investment company as defined in the Investment Company Act of
1940 (the "1940 Act"). This means that investments in any single issuer are
limited to restrictions under the 1940 Act.

Each Fund may invest in securities or engage in transactions involving
instruments other than equity securities, as discussed in the section titled
"Other Investment Practices, Their Characteristics and Risks," which begins
on page 8.

INVESTMENTS IN STOCKS

The Funds may be an appropriate component of a stock portfolio for
investors seeking total return through diversified investments in stocks,
bonds, and short-term instruments. The Funds invest primarily in stocks,
which may enhance inflation-adjusted returns. The following chart illustrates
how stocks have historically outpaced inflation and produced higher returns
than bonds. Depending on your age and investment horizon, one Fund may be
more appropriate for you. If you seek a steady stream of monthly investment
income, BIGF may be best for you. If you primarily seek capital appreciation,
BEGF may be most appropriate for you. Of course, no single mutual fund can
provide a balanced investment plan.

Chart 1 - Growth of Stocks, Bonds, & Inflation
[mountain graph]

[graph data]
S&P 500 Index 20-Year U.S. Treasury Bond Inflation (CPI)
12/31/25 1 1 1
12/31/26 1.11624 1.07769 0.985103
12/31/27 1.5347 1.17391 0.96462
12/31/28 2.20396 1.17513 0.955309
12/31/29 2.01849 1.21533 0.957172
12/31/30 1.51595 1.27195 0.899445
12/31/31 0.858988 1.20442 0.813782
12/31/32 0.788613 1.40727 0.729983
12/31/33 1.21439 1.40623 0.733707
12/31/34 1.19687 1.54721 0.748606
12/31/35 1.7674 1.62433 0.770952
12/31/36 2.36692 1.7464 0.780264
12/31/37 1.53787 1.75045 0.804473
12/31/38 2.01648 1.84729 0.782127
12/31/39 2.0082 1.95702 0.778402
12/31/40 1.81171 2.07614 0.785852
12/31/41 1.60169 2.0955 0.862203
12/31/42 1.92748 2.16294 0.942275
12/31/43 2.42669 2.20802 0.972069
12/31/44 2.90603 2.27017 0.992553
12/31/45 3.96487 2.51386 1.0149
12/31/46 3.64486 2.5113 1.19926
12/31/47 3.8529 2.44543 1.30727
12/31/48 4.06486 2.52854 1.34265
12/31/49 4.82875 2.6916 1.31844
12/31/50 6.36008 2.6932 1.39479
12/31/51 7.88755 2.58732 1.47672
12/31/52 9.33629 2.61733 1.48976
12/31/53 9.24394 2.71253 1.49907
12/31/54 14.1084 2.90748 1.49162
12/31/55 18.5614 2.8699 1.49721
12/31/56 19.7783 2.70957 1.54004
12/31/57 17.6457 2.91166 1.58659
12/31/58 25.2976 2.73423 1.61453
12/31/59 28.3219 2.67251 1.63873
12/31/60 28.4549 3.04075 1.66294
12/31/61 36.106 3.07035 1.67412
12/31/62 32.9545 3.28179 1.6946
12/31/63 40.4685 3.32161 1.72254
12/31/64 47.1388 3.43807 1.74302
12/31/65 53.0081 3.46247 1.77654
12/31/66 47.6737 3.58891 1.83613
12/31/67 59.1038 3.25941 1.892
12/31/68 65.6415 3.25092 1.98139
12/31/69 60.059 3.08598 2.10243
12/31/70 62.4653 3.45957 2.21788
12/31/71 71.4058 3.91726 2.29238
12/31/72 84.9559 4.14 2.37059
12/31/73 72.5003 4.09417 2.57916
12/31/74 53.311 4.27246 2.89388
12/31/75 73.1443 4.66535 3.09686
12/31/76 90.5842 5.44702 3.24584
12/31/77 84.0767 5.40954 3.46558
12/31/78 89.5922 5.34584 3.77843
12/31/79 106.113 5.27987 4.28122
12/31/80 140.514 5.0715 4.81195
12/31/81 133.616 5.16571 5.24213
12/31/82 162.223 7.25066 5.44509
12/31/83 198.745 7.29792 5.6518
12/31/84 211.199 8.42741 5.87527
12/31/85 279.117 11.0371 6.0968
12/31/86 330.671 13.7446 6.16569
12/31/87 347.967 13.3716 6.43757
12/31/88 406.458 14.665 6.72207
12/31/89 534.455 17.3215 7.03446
12/31/90 517.499 18.3924 7.46401
12/31/91 675.592 21.9421 7.69273
12/31/92 727.412 23.7092 7.91586
12/31/93 800.078 28.0339 8.13342
12/31/94 810.538 25.8555 8.35099
12/31/95 1113.92 34.0436 8.57975

Source: Ibbotson Associates, Stocks, Bonds, Bills and Inflation.

In contrast to bond investors, common stock investors forego the
certainty of coupon interest payments. However, they enjoy the potential for
increased dividend income if the issuing company prospers. As indicated
below, Chart 2 compares the growth of dividends from S&P 500 stocks with the
rate of inflation over a 50-year period.

Chart 2 - Growth of Dividends vs. Inflation
[line graph]

[graph data]
S&P 500 Dividends. Inflation (CPI)
1 1
1.08 1.18
1.27 1.29
1.41 1.32
1.73 1.3
2.23 1.37
2.14 1.46
2.14 1.47
2.2 1.48
2.33 1.47
2.48 1.48
2.64 1.52
2.71 1.57
2.65 1.59
2.77 1.62
2.95 1.64
3.06 1.65
3.23 1.67
3.45 1.7
3.79 1.72
4.12 1.75
4.35 1.81
4.42 1.87
4.65 1.96
4.79 2.07
4.76 2.19
4.65 2.26
4.77 2.34
5.12 2.55
5.45 2.86
5.58 3.06
6.14 3.21
7.08 3.43
7.68 3.74
8.56 4.23
9.33 4.75
10.05 5.18
10.41 5.37
10.74 5.58
11.41 5.8
11.97 6.02
12.55 6.1
13.35 6.36
14.74 6.65
16.74 6.95
18.33 7.39
18.48 7.61
18.76 7.83
19.06 8.05
19.97 8.26
20.89 8.46

Sources: Ibbotson Associates, Stocks, Bonds, Bills and Inflation and Standard
and Poor's Security Price Index Record

Historical equity index returns suggest that stocks provide superior
investment returns over the long term. Over short periods of time, however,
the prices of individual stocks and the stock market as a whole can be very
volatile. The table below shows best and worst average annual total returns
for the S&P 500 over time spans of one, five,
ten and twenty years between 1926 and 1995.

- --------------------------------------------------------------------------------
VARIABILITY OF S&P 500 RETURNS
- --------------------------------------------------------------------------------

1 YR 5 YRS 10 YRS 20 YRS
Best 53.99% 23.92% 20.06% 16.86%
Worst -43.34% -12.47% -0.89% 3.11%

Source: Ibbotson Associates, Stocks, Bonds, Bills and Inflation. This
analysis is based on historical annual total return figures for the S&P 500.

Notice that the difference between the best and worst return decreases
as the measure of time increases. Stock market investing may not make sense
for you unless you are prepared to ride out the markets' ups and downs.

As indicated below, Chart 3 compares the historical risk vs. reward
characteristics of stocks (represented by the S&P 500), bonds (represented by
a 20-year U.S. Treasury bond), and Treasury bills. As you can see,
historically, stocks have provided higher returns at greater risk than
Treasury bonds and bills over the long term.

[graph with diamond points]
Chart 3 - Risk vs. Reward 1926-1995

Reward - Standard Deviation Risk - Average Annual Total Return
S&P 500 20.42 10.54
T-Bonds 9.25 5.17
T-Bills 3.27 3.72

Source: Ibbotson Associates, Stocks, Bonds, Bills and Inflation.

The historical S&P 500 data presented here are not intended to suggest
that an investor would have achieved comparable results by investing in any
one equity security or in managed portfolios of equity securities, such as
the Funds, during the periods shown. The S&P 500 is an unmanaged index
representing the performance of 500 major companies, most of which are listed
on the New York Stock Exchange. Investors cannot invest directly in the S&P
500. The historical conditions that gave rise to the patterns illustrated
here may not be repeated. Transaction costs and other expenses of managing a
common stock portfolio are not reflected in the figures shown. S&P 500 is a
registered service mark of Standard and Poor's Corporation.

OTHER INVESTMENT PRACTICES,
THEIR CHARACTERISTICS AND RISKS

For additional information regarding the investment practices of the
Funds, see the Statement of Additional Information.

PORTFOLIO TURNOVER

The portfolio turnover rates of the Funds are shown in the Financial
Highlights tables on pages 4 and 5 of this Prospectus.

With respect to each Fund, investment decisions to purchase and sell
securities are based on the anticipated contribution of the security in
question to the particular Fund's objectives. The rate of portfolio turnover
is irrelevant when management believes a change is in order to achieve those
objectives, and accordingly, the annual portfolio turnover rate cannot be
accurately anticipated.

The portfolio turnover of each Fund may be higher than other mutual
funds with similar investment objectives. A high turnover rate involves
correspondingly higher transaction costs that are borne directly by a Fund.
It may also affect the character of capital gains, if any, realized and
distributed by a Fund since short-term capital gains are taxable as ordinary
income.

CONVERTIBLE SECURITIES

Although the Funds' equity investments consist primarily of common
stock, each Fund may buy securities convertible into common stock, such as
convertible bonds, convertible preferred stocks, or warrants. The Manager may
purchase these securities if it believes that a company's convertible
securities are undervalued in the market.

INTEREST RATE FUTURES CONTRACTS AND OPTIONS THEREON

The Funds may buy or sell interest rate futures contracts relating to
debt securities

("debt futures," i.e., futures relating to indexes on types or groups of
bonds) and write or buy put and call options relating to interest rate
futures contracts.

For options sold, a Fund will segregate cash or high-quality debt
securities equal to the value of securities underlying the option unless the
option is otherwise covered.

A Fund will deposit in a segregated account with its custodian bank
high-quality debt obligations maturing in one year or less, or cash, in an
amount equal to the fluctuating market value of long futures contracts it has
purchased, less any margin deposited on its long position. It may hold cash
or acquire such debt obligations for the purpose of making these deposits.

The Funds may use futures and options transactions to maintain cash
reserves while remaining fully invested, to facilitate trading, to reduce
transaction costs, or to pursue higher investment returns when a futures
contract is priced more attractively than its underlying security or index.

Since futures contracts and options thereon can replicate movements in
the cash markets for the securities in which a fund invests without the large
cash investments required for dealing in such markets, they may subject a
fund to greater and more volatile risks than might otherwise be the case. The
principal risks related to the use of such instruments are (1) the offsetting
correlation between movements in the market price of the portfolio
investments (held or intended) being hedged and in the price of the futures
contract or option may be imperfect; (2) possible lack of a liquid secondary
market for closing out futures or option positions; (3) the need of
additional portfolio management skills and techniques; and (4) losses due to
unanticipated market price movements. For a hedge to be completely effective,
the price change of the hedging instrument should equal the price change of
the securities being hedged. Such equal price changes are not always possible
because the investment underlying the hedging instrument may not be the same
investment that is being hedged.

The ordinary spreads between prices in the cash and futures markets, due
to the differences in the nature of those markets, are subject to distortion.
Due to the possibility of distortion, a correct forecast of general interest
rate trends by management may still not result in a successful transaction.
Management may be incorrect in its expectations as to the extent of various
interest rate movements or the time span within which the movements take
place.

See the Statement of Additional Information for further information
about these instruments and their risks.

SHORT-TERM INSTRUMENTS

For liquidity purposes, each Fund may invest in high-quality money
market instruments with remaining maturities of one year or less. Such
instruments may include U.S. government securities, certificates of deposit,
commercial paper, and bankers' acceptances.

Each 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 the
Manager 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 other party to the agreement defaults or
becomes bankrupt.

Each Fund may invest up to 5% of its total assets in any money market
fund advised by the Manager, provided that the investment is consistent with
the Funds' respective investment policies and restrictions.

FOREIGN SECURITIES

Each Fund may invest in securities of foreign issuers, including
instruments that trade on domestic or foreign securities exchanges in U. S.
dollars or foreign currencies. 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.

SECURITIES LENDING

In order to realize additional income, each Fund may lend its portfolio
securities to persons not affiliated with it and who are deemed to be
creditworthy. Such loans must be secured continuously by cash collateral
maintained on a current basis in an amount at least equal to the market value
of the securities loaned, or by irrevocable letters of credit. During the
existence of the loan, the Fund making the loan must continue to receive the
equivalent of the interest and dividends paid by the issuer on the securities
loaned and interest on the investment of the collateral. The Fund must have
the right to call the loan and obtain the securities loaned at any time on
five days' notice, including the right to call the loan to enable the Fund to
vote the securities. This practice could result in a loss or a delay in
recovering the Fund's securities. Such loans may not exceed one-third of each
Fund's total assets taken at market value.

OTHER TECHNIQUES

The Manager may buy other types of securities or employ other portfolio
management techniques on behalf of the Fund. When SEC guidelines require it
to do so, the Funds will set aside cash or appropriate liquid assets in a
segregated account to cover its obligations. See the Statement of Additional
Information for a more detailed discussion of these investments and some of
the risks associated with them.

PERFORMANCE ADVERTISING

From time to time, the Funds may advertise performance data. Fund
performance may be shown by presenting one or more performance measurements,
including cumulative total return or average annual total return, yield and
effective yield.

CUMULATIVE TOTAL RETURN data is computed by considering all elements of
return, including reinvestment of dividends and capital gains distributions,
over a period of time. AVERAGE ANNUAL TOTAL RETURN over a states period of
time that would have produced a fund's cumulative total return over the same
period if the fund's performance had remained constant throughout.

A quotation of YIELD reflects a fund's income over a stated period
expressed as a percentage of the fund's share price. The EFFECTIVE YIELD is
calculated in a similar manner but, when annualized, the income earned by the
investment is assumed to be reinvested. The effective yield will be slightly
higher than the yield because of the compounding effect on the assumed
reinvestment.

Yield is calculated by adding over a 30-day (or one-month) period all
interest and dividend income (net of fund expenses) calculated on each day's
market values, dividing this sum by the average number of fund shares
outstanding during the period, and expressing the result as a percentage of
the fund's share price on the last day of the 30-day (or one month) period.
The percentage is then annualized. Capital gains and losses are not included
in the calculation.

not equal the Fund's actual income distribution rate, the income paid to a
shareholder's account, or the income reported in the Fund's financial
statements.

The Funds may also include in advertisements data comparing performance
with the performance of non-related investment media, published editorial
comments and performance rankings compiled by independent organizations (such
as Lipper Analytical Services) and publications that monitor the performance
of mutual funds. Performance information may be quoted numerically or may be
presented in a table, graph or other illustration. In addition, fund
performance may be compared to well-known indices of market performance. A
fund's performance may also be compared, on a relative basis, to the other
funds in our fund family. This relative comparison, which may be based upon
historical or expected fund performance, volatility or other fund
characteristics, may be presented numerically, graphically or in text. The
performance of a fund may also be combined or blended with other funds in our
fund family, and that combined or blended performance may be compared to the
same indices to which individual funds may be compared.

All performance information advertised by the Funds is historical in
nature and is not intended to represent or guarantee future results. The
value of Fund shares when redeemed may be more or less than their original
cost.

HOW TO INVEST WITH TWENTIETH CENTURY AND THE BENHAM GROUP
- --------------------------------------------------------------------------------

The following section explains how to invest with Twentieth Century and
The Benham Group, including purchases, redemptions, exchanges and special
services. You will find more detail about doing business with us by referring
to the Investor Services Guide that you will receive when you open an
account.

If you own or are considering purchasing Fund shares through an
employer-sponsored retirement plan or through a bank, broker-dealer or other
financial intermediary, the following sections, as well as the information
contained in our Investor Services Guide, may not apply to you. Please read
"Employer-Sponsored Retirement Plans and Institutional Accounts," page 17.

HOW TO OPEN AN ACCOUNT

To open an account, you must complete and sign an application,
furnishing your taxpayer identification number. (You must also certify
whether you are subject to withholding for failing to report income to the
IRS.) Investments received without a certified taxpayer identification number
will be returned.

The minimum investment is $2,500 ($1,000 for IRA accounts). These
minimums will be waived if you establish an automatic investment plan to your
account that is the equivalent of at least $50 per month. See "Automatic
Investment Plan," page 13.

The minimum investment requirements may be different for some types of
retirement accounts. Call one of our Investor Services Representatives for
information on our retirement plans, which are available for individual
investors or for those investing through their employers.

Please note: If you register your account as belonging to multiple
owners (e.g., as joint tenants), you must provide us with specific
authorization on your application in order for us to accept written or
telephone instructions from a single owner. Otherwise, all owners will have
to agree to any transactions that involve the account (whether the
transaction request is in writing or over the telephone).

You may invest in the following ways:

BY MAIL

Send a completed application and check or money order payable in U.S.
dollars to Twentieth Century.

BY WIRE

You may make your initial investment by wiring funds. To do so, call us
or mail a completed application and provide your bank with the following
information:

RECEIVING BANK AND ROUTING NUMBER:
Commerce Bank, N.A. (101000019)

BENEFICIARY (BNF):
Twentieth Century Services, Inc.
4500 Main St., Kansas City, MO 64111

BENEFICIARY ACCOUNT NUMBER (BNF ACCT):
2804918

REFERENCE FOR BENEFICIARY (RFB):
Twentieth Century account number into which you are investing. If more
than one, leave blank and see Bank to Bank Information below.

ORIGINATOR TO BENEFICIARY (OBI):
Name and address of owner of account into which you are investing.

BANK TO BANK INFORMATION
(BBI OR FREE FORM TEXT):
o Taxpayer identification or social security number
o If more than one account, account numbers and amount to be invested in
each account.
o Current tax year, previous tax year or rollover designation if an IRA.
Specify whether IRA, SEP-IRA or SARSEP-IRA.

BY EXCHANGE

Call 1-800-345-2021 from 7 a.m. to 7 p.m. Central time to get
information on opening an account by exchanging from another Twentieth
Century or Benham account. See page 13 for more information on exchanges.

IN PERSON

If you prefer to work with a representative in person, please visit one
of our Investors Centers, located at:

4500 Main Street
Kansas City, MO 64111
1665 Charleston Road
Mountain View, CA 94043
2000 S. Colorado Blvd.
Denver, CO 80222.

SUBSEQUENT INVESTMENTS

Subsequent investments may be made by an automatic bank, payroll or
government direct deposit (see "Automatic Investment Plan," this page) or by
any of the methods below. The minimum investment requirement for subsequent
investments: $250 for checks submitted without the remittance portion of a
previous statement or confirmation, $50 for all other types of subsequent
investments.

BY MAIL

When making subsequent investments, enclose your check with the
remittance portion of the confirmation of a previous investment. If the
remittance slip is not available, indicate your name, address and account
number on your check or a separate piece of paper. (Please be aware that the
investment minimum for subsequent investments is higher without a remittance
slip.)

BY TELEPHONE

Once your account is open, you may make investments by telephone if you
have authorized us (by choosing "Full Services" on your application) to draw
on your bank account. You may call an Investor Services Representative or use
our Automated Information Line.

BY WIRE

You may make subsequent investments by wire. Follow the wire transfer
instructions on page 12 and indicate your account number.

IN PERSON

You may make subsequent investments in person at one of our Investors
Centers. The locations of our three Investors Centers are listed on this
page.

AUTOMATIC INVESTMENT PLAN

You may elect on your application to make investments automatically by
authorizing us to draw on your bank account regularly. Such investments must
be at least the equivalent of $50 per month. You also may choose an automatic
payroll or government direct deposit. If you are establishing a new account,
check the appropriate box under "Automatic Investments" on your application
to receive more information. If you would like to add a direct deposit to an
existing account, please call one of our Investor Services Representatives.

HOW TO EXCHANGE FROM ONE
ACCOUNT TO ANOTHER

As long as you meet any minimum initial investment requirements, you may
exchange your Fund shares to our other funds up to six times per year per
account. For any single exchange, the shares of each fund being acquired must
have a value of at least $100. However, we will allow investors to set up an
Automatic Exchange Plan between any two funds in the amount of at least $50
per month. See our Investor Services Guide for further information about
exchanges.

BY MAIL

You may direct us in writing to exchange your shares from one Twentieth
Century or Benham account to another. For additional information, please see
our Investor Services Guide.

BY TELEPHONE

You can make exchanges over the phone (either with an Investor Services
Representative or using our Automated Information Line-see

page 15) if you have authorized us to accept telephone instructions. You can
authorize this by selecting "Full Services" on your application or by calling
us at 1-800-345-2021 to receive the appropriate form.

HOW TO REDEEM SHARES

We will redeem or "buy back" your shares at any time. Redemptions will
be made at the next net asset value determined after a complete redemption
request is received.

Please note that a request to redeem shares in an IRA or 403(b) plan
must be accompanied by an executed IRS Form W4-P and a reason for withdrawal
as specified by the IRS.

BY MAIL

Your written instructions to redeem shares may be made either by a
redemption form, which we will send to you upon request, or by a letter to
us. Certain redemptions may require a signature guarantee. Please see
"Signature Guarantee," page 15.

BY TELEPHONE

If you have authorized us to accept telephone instructions, you may
redeem your shares by calling an Investor Services Representative.

BY CHECK-A-MONTH

If you have at least a $10,000 balance in your account, you may redeem
shares by Check-A-Month. A Check-A-Month plan automatically redeems enough
shares each month to provide you with redemption proceeds in an amount you
choose (minimum $50). To set up a Check-A-Month plan, please call to request
our Check-A-Month brochure.

OTHER AUTOMATIC REDEMPTIONS

You may elect to make redemptions automatically by authorizing us to
send funds directly to you or your account at a bank or other financial
institution. To set up automatic redemptions, call one of our Investor
Services Representatives.

REDEMPTION PROCEEDS

Please note that shortly after a purchase of shares is made by check or
electronic draft (also known as an ACH draft) from your bank, we may wait up
to 15 days or longer to send redemption proceeds (to allow your purchase
funds to clear). No interest is paid on the redemption proceeds after the
redemption is processed but before your redemption proceeds are sent.

Redemption proceeds may be sent to you in one of the following ways:

BY CHECK

Ordinarily, all redemption checks will be made payable to the registered
owner of the shares and will be mailed only to the address of record. For
more information, please refer to our Investor Services Guide.

BY WIRE AND ACH

You may authorize us to transmit redemption proceeds by wire or ACH.
These services will be effective 15 days after we receive the authorization.

Your bank will usually receive wired funds within 48 hours of
transmission. Funds transferred by ACH may be received up to seven days after
transmission. Wired funds are subject to a $10 fee to cover bank wire
charges, which is deducted from redemption proceeds. Once the funds are
transmitted, the time of receipt and the funds' availability are not under
our control.

REDEMPTION OF SHARES IN
LOW-BALANCE ACCOUNTS

Whenever the shares held in an account have a value of less than the
required minimum, a letter will be sent advising you of the necessity to
bring the value of the shares held in the account up to the minimum. If
action is not taken within 90 days of the letter's date, the shares held in
the account will be redeemed and proceeds from the redemption will be sent by
check to

your address of record. We reserve the right to increase the investment
minimums.

SIGNATURE GUARANTEE

To protect your accounts from fraud, some transactions will require a
signature guarantee. Which transactions will require a signature guarantee
will depend on which service options you elect when you open your account.
For example, if you choose "In Writing Only," a signature guarantee will be
required when:

o Redeeming more than $25,000
o Establishing or increasing a Check-A-Month or automatic transfer on an
existing account.

You may obtain a signature guarantee from a bank or trust company,
credit union, broker- dealer, securities exchange or association, clearing
agency or savings association, as defined by federal law.

For a more in-depth explanation of our signature guarantee policy, or if
you live outside the United States and would like to know how to obtain a
signature guarantee, please consult our Investor Services Guide.

We reserve the right to require a signature guarantee on any
transaction, or to change this policy at any time.

SPECIAL INVESTOR SERVICES

We offer several service options to make your account easier to manage.
These are listed on the account application. Please make note of these
options and elect the ones that are appropriate for you. Be aware that the
"Full Services" option offers you the most flexibility. You will find more
information about each of these service options in our Investor Services
Guide.

Our special investor services include:

AUTOMATED INFORMATION LINE

We offer an Automated Information Line, 24 hours a day, seven days a
week, at 1-800-345-8765. By calling the Automated Information Line, you may
listen to fund prices, yields and total return figures. You may also use the
Automated Information Line to make investments into your accounts (if we have
your bank information on file) and obtain your share balance, value and most
recent transactions. If you have authorized us to accept telephone
instructions, you also may exchange shares from one fund to another via the
Automated Information Line. Redemption instructions cannot be given via the
Automated Information Line.

OPEN ORDER SERVICE

Through our open order service, you may designate a price at which to
buy shares of a variable-priced fund by exchange from one of our money market
funds, or a price at which to sell shares of a variable-priced fund by
exchange to one of our money market funds. The designated purchase price must
be equal to or lower, or the designated sale price equal to or higher, than
the variable-priced fund's net asset value at the time the order is placed,
If the designated price is met within 90 calendar days, we will execute your
exchange order automatically at that price (or better). Open orders not
executed within 90 days will be canceled.

If the fund you have selected deducts a distribution from its share
price, your order price will be adjusted accordingly so the distribution does
not inadvertently trigger an open order transaction on your behalf. If you
close or re-register the account from which the shares are to be redeemed,
your open order will be canceled.

Because of their time-sensitive nature, open order transactions are
accepted only by telephone or in person. These transactions are subject to
exchange limitations described in each fund's prospectus, except that orders
and cancellations received before 2 p.m. Central time are effective the same
day, and orders or cancellations received after 2 p.m. Central time are
effective the next business day.

TAX-QUALIFIED RETIREMENT PLANS

Each fund is available for your tax-deferred retirement plan. Call or
write us and request the appropriate forms for:

o Individual Retirement Accounts ("IRA"s)
o 403(b) plans for employees of public school systems and non-profit
organizations o Profit sharing plans and pension plans for corporations
and other employers.

If your IRA and 403(b) accounts do not total $10,000, each account is
subject to an annual $10 fee, up to a total of $30 per year.

You can also transfer your tax-deferred plan to us from another company
or custodian. Call or write us for a "Request to Transfer" form.

IMPORTANT POLICIES REGARDING
YOUR INVESTMENTS

(1) We reserve the right for any reason to suspend the offering of shares
for a period of time, or to reject any specific purchase order
(including purchases by exchange). Additionally, purchases may be
refused if, in the opinion of the Manager, they are of a size that
would disrupt the management of the Fund.

(2) We reserve the right to make changes to any stated investment
requirements, including those that relate to purchases, transfers and
redemptions. In addition, we may also alter, add to or terminate any
investor services and privileges. Any changes may affect all
shareholders or only certain series or classes of shareholders.

(3) Shares being acquired must be qualified for sale in your state of
residence.

(4) Transactions requesting a specific price and date, other than open
orders, will be refused.

(5) If a transaction request is made by a corporation, partnership,
trust, fiduciary, agent or unincorporated association, we will
require evidence satisfactory to us of the authority of the
individual making the request.

(6) We have established procedures designed to assure the authenticity of
instructions received by telephone. These procedures include
requesting personal identification from callers, recording telephone
calls, and providing written confirmations of telephone transactions.
These procedures are designed to protect shareholders from
unauthorized or fraudulent instructions. If we do not employ
reasonable procedures to confirm the genuineness of instructions,
then we may be liable for losses due to unauthorized or fraudulent
instructions. The company, its transfer agent and investment adviser
will not be responsible for any loss due to instructions they
reasonably believe are genuine.

(7) All signatures should be exactly as the name appears in the
registration. If the owner's name appears in the registration as Mary
Elizabeth Jones, she should sign that way and not as Mary E. Jones.

(8) Unusual stock market conditions have in the past resulted in an
increase in the number of shareholder telephone calls. If you
experience difficulty in reaching us during such periods, you may
send your transaction instructions by mail, express mail or courier
service, or you may visit one of our Investors Centers. You may also
use our Automated Information Line if you have requested and received
an access code and are not attempting to redeem shares.

(9) If you fail to provide us with the correct certified taxpayer
identification number, we may reduce any redemption proceeds by $50
to cover the penalty the IRS will impose on us for failure to report
your correct taxpayer identification number on information reports.

(10) We will perform special inquiries on shareholder accounts. A research
fee of $15 may be applied.

REPORTS TO SHAREHOLDERS

At the end of each calendar quarter, we will send you a consolidated
statement that summarizes all of your Twentieth Century and Benham holdings,
as well as an individual statement for each fund you own that reflects all
year-to-date activity in your account. You may request a statement of your
account activity at any time.

With the exception of most automatic transactions, each time you invest,
redeem, transfer or exchange shares, we will send you a confirmation of the
transactions. See the Investor Services Guide for more detail.

Carefully review all the information relating to transactions on your
statements and confirmations to ensure that your instructions were acted on
properly. Please notify us immediately in writing if there is an error. If
you fail to provide notification of an error with reasonable promptness,
i.e., within 30 days of non-automatic transactions or within 30 days of the
date of your consolidated quarterly statement, in the case of automatic
transactions, we will deem you to have ratified the transaction.

No later than January 31st of each year, we will send you reports that
you may use in completing your U.S. income tax return. See the Investor
Services Guide for more information.

Each year, we will send you an annual and a semiannual report relating
to your fund, each of which is incorporated herein by reference. The annual
report includes audited financial statements and a list of portfolio
securities as of the fiscal year end. The semiannual report includes
unaudited financial statements for the first six months of the fiscal year,
as well as a list of portfolio securities at the end of the period. You also
will receive an updated prospectus at least once each year. Please read these
materials carefully as they will help you understand your fund.

EMPLOYER-SPONSORED
RETIREMENT PLANS AND
INSTITUTIONAL ACCOUNTS

Information contained in our Investor Services Guide and in the "How to
Invest" sections beginning on page 12 pertain to shareholders who invest
directly with Twentieth Century rather than through an employer-sponsored
retirement plan or through a financial intermediary. If you own or are
considering purchasing Fund shares through an employer-sponsored retirement
plan, your ability to purchase shares of the Funds, exchange them for shares
of other Twentieth Century or Benham funds, and redeem them will depend on
the terms of your plan. If you own or are considering purchasing Fund shares
through a bank, broker-dealer, insurance company or other financial
intermediary, your ability to purchase, exchange and redeem shares will
depend on your agreement with, and the policies of, such financial
intermediary.

You may reach one of our Institutional Investor Service Representatives
by calling 1-800-345-3533 to request information about our funds, to obtain a
current prospectus or to get answers to any questions about our funds and
services that you are unable to obtain through your plan administrator or
financial intermediary.

ADDITIONAL INFORMATION YOU SHOULD KNOW
- --------------------------------------------------------------------------------

SHARE PRICE

WHEN SHARE PRICE IS DETERMINED

The price of your shares is also referred to as their net asset value.
Net asset value is determined by calculating the total value of a Fund's
assets, deducting total liabilities and dividing the result by the number of
shares outstanding. Net asset value is determined at the close of regular
trading on each day that the New York Stock Exchange (the "Exchange") is
open.

Investments and requests to redeem or exchange shares will receive the
share price next determined after receipt by us of the investment, redemption
or exchange request. For example, investments and requests to redeem or
exchange shares received by us or our authorized agents before the close of
business on the Exchange usually 3 p.m. Central time, are effective on, and
will receive the price determined, that day as of the close of the Exchange.
Investment, redemption and exchange 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 us. Wired funds are considered received on the day they are
deposited in our bank account if your telephone call is received before the
close of business on the Exchange, usually 3 p.m. Central time and the money
is deposited that day.

Investments by telephone pursuant to your prior authorization to us to
draw on your bank account are considered received at the time of your
telephone call.

Investment and transaction instructions received by us on any business
day by mail prior to the close of business on the Exchange will receive that
day's price. Investments and instructions received after that time will
receive the price determined on the next business day.

If you invest in fund shares through an employer-sponsored retirement
plan or other financial intermediary, it is the responsibility of your plan
record-keeper or financial intermediary to transmit your purchase, exchange
and redemption requests to the fund's transfer agent prior to the applicable
cut-off time for receiving orders and to make payment for any purchase
transactions in accordance with the fund's procedures or any contractual
arrangements with the fund or the fund's distributor in order for you to
receive that day's price.

HOW SHARE PRICE IS DETERMINED

The valuation of assets for determining net asset value may be
summarized as follows:

Portfolio securities of each Fund, except as otherwise noted, listed or
traded on a domestic securities exchange are valued at the last sale price on
that exchange. Portfolio securities primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on the exchange where primarily traded. If no sale is reported, or
if local convention or regulation so provides, the mean of the latest bid and
asked prices is used. Depending on local convention or regulation, securities
traded over-the-counter are priced at the mean of the latest bid and asked
prices, or at the last sale price. When market quotations are not readily
available, securities and other assets are valued at fair value as determined
in accordance with procedures adopted by the board of directors.

Debt securities not traded on a principal securities exchange are valued
through valuations obtained from a commercial pricing service or at the most
recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the board of directors.

WHERE TO FIND INFORMATION
ABOUT SHARE PRICE

The net asset values of the funds are published in leading newspapers
daily. The net asset values, as well as yield information on the Funds

and the other funds in the Twentieth Century family of funds, may be obtained
by calling us.

DISTRIBUTIONS

At the close of each day including Saturdays, Sundays and holidays, net
income of BIGF is determined and declared as a distribution. The distribution
will be paid monthly. BEGF's dividends are declared and paid quarterly in
March, June, September and December.

THE OBJECTIVE OF BEGF IS CAPITAL APPRECIATION AND NOT THE PRODUCTION OF
DISTRIBUTIONS. YOU ARE ENCOURAGED TO MEASURE THE SUCCESS OF YOUR INVESTMENT
BY THE VALUE OF YOUR INVESTMENT AT ANY GIVEN TIME AND NOT BY THE
DISTRIBUTIONS YOU RECEIVE.

You will begin to participate in the distributions the day AFTER your
purchase is effective. See "When Share Price is Determined," page 18. If you
redeem shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed, the distribution on the redeemed
shares will be included with your redemption proceeds.

Distributions from net realized securities gains, if any, generally are
declared and paid once a year, but the fund may make distributions on a more
frequent basis to comply with the distribution requirements of the Internal
Revenue Code, in all events in a manner consistent with the provisions of the
1940 Act.

Participants in employer-sponsored retirement or savings plans must
reinvest all distributions. For shareholders investing through taxable
accounts, distributions will be reinvested unless you elect to receive them
in cash. Distributions of less than $10 generally will be reinvested.
Distributions made shortly after a purchase by check or ACH may be held up to
15 days. You may elect to have distributions on shares held in Individual
Retirement Accounts and 403(b) plans paid in cash only if you are 591/2 years
old or permanently and totally disabled. Distribution checks normally are
mailed within seven days after the record date. Please consult our Investor
Services Guide for further information regarding your distribution options.

The board of directors may elect not to distribute capital gains in
whole or in part to take advantage of loss carryovers.

A distribution on shares of a Fund does not increase the value of your
shares or your total return. At any given time the value of your shares
includes the undistributed net gains, if any, realized by the Fund on the
sale of portfolio securities, and undistributed dividends and interest
received, less fund expenses.

Because such gains and dividends are included in the value of your
shares, when they are distributed the value of your shares is reduced by the
amount of the distribution. If you buy your shares through a taxable account
just before the distribution, you will pay the full price for your shares and
then receive a portion of the purchase price back as a taxable distribution.

TAXES

Each Fund has elected to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code, which means that to the
extent its income is distributed to shareholders, it pays no income taxes.

TAX-DEFERRED ACCOUNTS

If Fund shares are purchased through tax-deferred accounts, such as a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions paid by the Funds will generally not be subject to
current taxation, but will accumulate in your account under the plan on a
tax-deferred basis.

Employer-sponsored retirement and savings plans are governed by complex
tax rules. If you elect to participate in your employer's plan, consult your
plan administrator, your plan's summary plan description, or a professional
tax advisor regarding the tax consequences of participation in the plan,
contributions to, and withdrawals or distributions from the plan.

TAXABLE ACCOUNTS

If Fund shares are purchased through taxable accounts, distributions of
net investment income and net short-term capital gains are taxable to you as
ordinary income, except as described below. The dividends from net income of
the Funds do not qualify for the 70% dividends-received deduction for
corporations since they are derived from interest income. Dividends
representing income derived from tax-exempt bonds generally retain the bonds'
tax-exempt character in a shareholder's hands. Distributions from net
long-term capital gains are taxable as long-term capital gains regardless of
the length of time you have held the shares on which such distributions are
paid. However, you should note that any loss realized upon the sale or
redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain to you with respect to such shares.

Distributions of capital gains are taxable to you regardless of whether
they are taken in cash or reinvested, even if the value of your shares is
below your cost. If you purchase shares shortly before a capital gain
distribution, you must pay income taxes on the distribution, even though the
value of your investment (plus cash received, if any) will not have
increased. In addition, the share price at the time you purchase shares may
include unrealized gains in the securities held in the investment portfolio
of the fund. If these portfolio securities are subsequently sold and the
gains are realized, they will, to the extent not offset by capital losses, be
paid to you as a distribution of capital gains and will be taxable to you as
short-term or long-term capital gains.

In January of the year following the distribution, we or your financial
intermediary will send you a Form 1099-DIV notifying you of the status of
your distributions for federal income tax purposes.

Distributions may also be subject to state and local taxes, even if all
or a substantial part of such distributions are derived from interest on U.S.
government obligations which, if you received them directly, would be exempt
from state income tax. However, most but not all states allow this tax
exemption to pass through to Fund shareholders when a Fund pays distributions
to its shareholders. You should consult your tax adviser about the tax status
of such distributions in your own state.

If you have not complied with certain provisions of the Internal Revenue
Code and its Regulations, we are required by federal law to withhold and
remit to the IRS 31% of reportable payments (which may include dividends,
capital gains distributions and redemptions). Those regulations require you
to certify that the social security number or tax identification number you
provide is correct and that you are not subject to 31% withholding for
previous under-reporting to the IRS. You will be asked to make the
appropriate certification on your application. Payments reported by us that
omit your social security number or tax identification number will subject us
to a penalty of $50, which will be charged against your account if you fail
to provide the certification by the time the report is filed, and is not
refundable.

Redemption of shares of a Fund (including redemptions made in an
exchange transaction) will be a taxable transaction for federal income tax
purposes and shareholders will generally recognize a gain or loss in an
amount equal to the difference between the basis of the shares and the amount
received. Assuming that shareholders hold such shares as a capital asset, the
gain or loss will be a capital gain or loss and will generally be long term
if shareholders have held such shares for a period of more than one year. If
a loss is realized on the redemption of Fund shares, the reinvestment in
additional Fund shares within 30 days before or after the redemption may be
subject to the "wash sale" rules of the Internal Revenue Code, resulting in a
postponement of the recognition of such loss for federal income tax purposes.

MANAGEMENT

INVESTMENT MANAGEMENT

The Funds are series of the Benham Equity Funds (the "Corporation").
Under the laws of the State of California, the board of directors is
responsible for managing the business and affairs of the Corporation. Acting
pursuant to an investment management agreement entered into with the
Corporation, Benham Management Corporation (the "Manager") serves as the
investment manager of the Funds. Its principal place of business is 1665
Charleston Road, Mountain View, California 94043. The Manager has been
providing investment advisory services to investment companies and other
clients since 1971.

The Manager supervises and manages the investment portfolio of each of
the Funds and directs the purchase and sale of their investment securities.
The Manager utilizes a team of portfolio managers, assistant portfolio
managers and analysts acting together to manage the assets of the Funds. The
team meets regularly to review portfolio holdings and to discuss purchase and
sale activity. The team adjusts holdings in the Funds' portfolios and the
Funds' asset mix as it deems appropriate in pursuit of the Funds' investment
objectives. Individual portfolio manager members of the team may also adjust
portfolio holdings of the Funds or of sectors of the Funds as necessary
between team meetings.

In June 1995, Twentieth Century Companies, Inc. ("TCC") acquired Benham
Management International, Inc., the then-parent company of the Manager. TCC
is the parent company of Investors Research Corporation ("IRC"), which
provides investment management services to the Twentieth Century family of
funds. In the acquisition, the Manager became a wholly owned subsidiary of
TCC. Certain employees of the Manager provide investment management services
to the Twentieth Century family of funds, while certain Twentieth Century
employees provide investment management services to Benham funds.

The portfolio manager members of the teams managing the Funds described
in this Prospectus and their work experience for the last five years are
listed as follows:

STEVEN COLTON, Portfolio Manager, has been primarily responsible for the
day-to-day operation of the Benham Income & Growth Fund since December, 1990.
Mr. Colton joined the Manager in 1987 and has also managed the Benham
Utilities Index Fund since its inception in March, 1993.

DONG ZHANG, Portfolio Manager, has been primarily responsible for the
day-to-day management of the Benham Equity Growth Fund since June, 1996. Mr.
Zhang joined the Manager in 1993 and received his Ph.d. in Physics from
Stanford University.

The activities of the Manager are subject only to direction of the
Corporation's board of directors. For the services provided to the Funds, the
Manager receives an annual fee which cannot exceed .50% of average daily net
assets. The Manager's fee drops to a marginal rate of .19% of average daily
net assets as the Corporation's assets increase.

CODE OF ETHICS

The Corporation and the Manager have adopted a Code of Ethics, which
restricts personal investing practices by employees of the Manager and its
affiliates. Among other provisions, the Code of Ethics requires that
employees with access to information about the purchase or sale of securities
in the funds' portfolios obtain preclearance before executing personal
trades. With respect to portfolio managers and other investment personnel,
the Code of Ethics 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 the fund shareholders come before the interests of the
people who manage those funds.

TRANSFER AND ADMINISTRATIVE SERVICES

Twentieth Century Services, Inc., 4500 Main Street, Kansas City,
Missouri, 64111, ("TCS") acts as transfer, administrative services and
dividend paying agent for the funds. It provides facilities, equipment and
personnel to the Funds and is paid for such services by the Funds. For
administrative services, each Fund pays TCS 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 managed by the Manager. The administrative fee
rate ranges from .11% to .08% of average daily net assets, dropping as assets
managed by the Manager increase. For transfer agent services, each Fund pays
TCS a monthly fee for each shareholder account maintained and for each
shareholder transaction executed during that month.

The Funds charge no sales commissions, or "loads," of any kind. However,
investors who do not choose to purchase or sell Fund shares directly from TCS
may purchase or sell Fund shares through registered broker-dealers and other
qualified service providers, who may charge investors fees for their
services. These broker-dealers and service providers generally provide
shareholder, administrative and/or accounting services which would otherwise
be provided by TCS as the Funds' transfer agent. To accommodate these
investors, the Manager and its affiliates have entered into agreements with
some broker-dealers and service providers to provide these services. Fees for
such services are borne normally by the Funds at the rates normally paid to
TCS, which would otherwise provide the services. Any distribution expenses
associated with these arrangements are borne by the Manager.

From time to time, special services may be offered to shareholders who
maintain higher share balances in our family of funds. These services may
include the waiver of minimum investment requirements, expedited confirmation
of shareholder transactions, newsletters and a team of personal
representatives. Any expenses associated with these special services will be
paid by the Manager or its affiliates.

The Manager and TCS are both wholly owned by Twentieth Century
Companies, Inc. James E. Stowers Jr., Chairman of the board of directors of
TCC, controls TCC by virtue of his ownership of a majority of its common
stock.

DISTRIBUTION OF FUND SHARES

The Funds' shares are distributed by Twentieth Century Securities, Inc.
(the "Distributor"), a registered broker-dealer and an affiliate of the
Manager. The Manager pays all expenses for promoting sales of, and
distributing the Fund shares offered by this Prospectus. The Funds do not pay
any commissions or other fees to the Distributor or to any other
broker-dealers or financial intermediaries in connection with the
distribution of Fund shares.

EXPENSES

Each 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 Fund shares for
sale under federal and state securities laws. See the Statements of
Additional Information for a more detailed discussion of independent director
compensation.

FURTHER INFORMATION ABOUT
THE FUNDS

The Corporation was organized as a California corporation on December
31, 1987. The Corporation is a diversified, open-end management investment
company. Its business and affairs are managed by its officers under the
direction of its board of directors.

The principal office of the Corporation is Twentieth Century Tower,
4500 Main Street, P.O. Box 419200, Kansas City, Missouri 64141-6200. All
inquiries may be made by mail to that address, or by phone to 1-800-345-2021.
(For international callers: 816-531-5575.)

The Funds are individual series of the Corporation which issues shares
with no par value. Each series is commonly referred to as a fund. The assets
belonging to each series of shares are held separately by the custodian and
in effect each series is a separate fund.

Each share, irrespective of series, is entitled to one vote for each
dollar of net asset value applicable to such share on all questions, except
those matters which must be voted on separately by the series of shares
affected. Matters affecting only one Fund are voted upon only by that Fund.

Under California law, shares have cumulative voting rights, which means
that Corporation shareholders have the right to cumulate votes in the
election (or removal) of directors.

Unless required by the 1940 Act, it will not be necessary for the
Corporation to hold annual meetings of shareholders. As a result,
shareholders may not vote each year on the election of directors or the
appointment of auditors. However, pursuant to the Corporation's by-laws, the
holders of shares representing at least 10% of the votes entitled to be cast
may request that the Corporation hold a special meeting of shareholders. The
Corporation will assist in the communication with other shareholders.

WE RESERVE THE RIGHT TO CHANGE ANY OF OUR POLICIES, PRACTICES AND
PROCEDURES DESCRIBED IN THIS PROSPECTUS, INCLUDING THE STATEMENT OF
ADDITIONAL INFORMATION, WITHOUT SHAREHOLDER APPROVAL EXCEPT IN THOSE
INSTANCES WHERE SHAREHOLDER APPROVAL IS EXPRESSLY REQUIRED.

THIS PROSPECTUS CONSTITUTES AN OFFER TO SELL SECURITIES OF A FUND ONLY
IN THOSE STATES WHERE THE FUND'S SHARES HAVE BEEN REGISTERED OR OTHERWISE
QUALIFIED FOR SALE. A FUND WILL NOT ACCEPT APPLICATIONS FROM PERSONS RESIDING
IN STATES WHERE THE FUND'S SHARES ARE NOT REGISTERED.

BENHAM
Income & Growth Fund
and
Equity Growth Fund

Prospectus
September 3, 1996

TWENTIETH CENTURY MUTUAL FUNDS
and THE BENHAM GROUP
- --------------------------------------------

P.O. Box 419200
Kansas City, Missouri
64141-6200
- --------------------------------------------
Person-to-person assistance:
1-800-345-2021 or 816-531-5575
- --------------------------------------------
Automated Information Line:
1-800-345-8765
- --------------------------------------------
Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865
- --------------------------------------------
Fax: 816-340-7962
- --------------------------------------------
Internet: http://www.twentieth-century.com
- --------------------------------------------
BENHAM
EQUITY FUNDS
- --------------------------------------------------------------------------------
BN-BKT-5491 [recycled logo]
9608 Recycled

<PAGE>

BENHAM
Specialty Funds
Prospectus

SEPTEMBER 3,
1996

BENHAM EQUITY FUNDS
- --------------------------------------------------------------------------------

The BENHAM GLOBAL GOLD FUND (formerly known as the Benham Gold Equities
Index Fund), BENHAM GLOBAL NATURAL RESOURCES INDEX FUND and BENHAM UTILITIES
INCOME FUND (the "Funds") are series of the Benham Equity Funds, a member of the
Twentieth Century family of funds, a family that includes 66 no-load mutual
funds covering a variety of investment opportunities. Three of the funds are
described in this Prospectus. Their investment objectives are listed on the
inside cover of this Prospectus. The other funds are described in separate
prospectuses.

NO-LOAD MUTUAL FUNDS

Twentieth Century offers retail investors a full line of no-load funds,
investments that have no sales charges or commissions. The Funds offered by this
Prospectus have no 12b-1 plan or other deferred sales charges. The minimum
investment requirement for each of the Funds is listed on the inside cover of
this Prospectus.

INVESTMENTS IN THE FUNDS ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT OR ANY OTHER AGENCY.

This Prospectus gives you information about the Funds that you should know
before investing. Please read this Prospectus carefully and retain it for future
reference. Additional information is included in the Statement of Additional
Information dated September 3, 1996 and filed with the Securities and Exchange
Commission ("SEC"). It is incorporated in this Prospectus by reference. To
obtain a copy without charge, call or write:

- --------------------------------------------------------------------------------
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.

<PAGE>

INVESTMENT OBJECTIVES OF THE FUNDS
- --------------------------------------------------------------------------------

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.

BENHAM GLOBAL NATURAL
RESOURCES INDEX FUND

seeks to realize a total return (capital growth and dividends) consistent
with investment in companies that are engaged in the natural resources
industries.

The Fund invests primarily in the stocks of foreign and U.S. companies
included in the Energy and Basic Materials sectors ("Sectors") of the Dow
Jones World Stock Index* ("DJWSI"), excluding chemical companies.

BENHAM UTILITIES INCOME FUND

seeks current income and long-term growth of capital and income.

The Fund invests primarily in equity securities of companies engaged in the
utilities industry. One feature that distinguishes the Fund from other
utility funds is that it attempts to provide investors with a consistent
level of monthly dividend income, although there is no guarantee that it will
be able to do so.

THE MINIMUM INITIAL INVESTMENT FOR ALL OF THE ABOVE FUNDS IS $2,500.

THERE IS NO ASSURANCE THAT THE FUNDS WILL ACHIEVE THEIR RESPECTIVE INVESTMENT
OBJECTIVES.

For ease of reference, Funds will be referred to in this prospectus
individually by their shorthand names. Thus, the Benham Global Gold Fund is
referred to as the "Gold Fund"; the Benham Global Natural Resources Index
Fund will be referred to as the "Natural Resources Fund"; and the Benham
Utilities Income Fund will be referred to as the "Utilities Fund".

* The DJWSI is property of Dow Jones & Company, Inc. and is not affiliated
with Twentieth Century or the Benham Group.

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

TRANSACTION AND OPERATING EXPENSE TABLE.............4
FINANCIAL HIGHLIGHTS................................5

INFORMATION REGARDING THE FUNDS

INVESTMENT POLICIES OF THE FUNDS....................8
Core Investment Strategies.......................8
BENHAM SPECIALTY FUNDS
Benham Global Gold Fund..........................8
Benham Global Natural Resources
Index Fund..................................9
Benham Utilities Income Fund....................10
RISK FACTORS AND INVESTMENT TECHNIQUES.............11
Concentration Risk..............................11
Foreign Securities Risk.........................13
Risk of Using the Funds as a Hedge..............13
OTHER INVESTMENT PRACTICES,
THEIR CHARACTERISTICS AND RISKS.................14
Portfolio Turnover..............................14
Convertible Securities..........................14
When-Issued and Forward Commitment
Agreements....................................14
Forward Foreign Currency
Exchange Contracts............................14
Gold Investments................................15
Short-Term Instruments..........................16
Interest Rate Swaps.............................16
Securities Lending..............................16
Interest Rate Futures Contracts and
Options Thereon...............................16
Restricted and Illiquid Securities..............17
Indexed Securities..............................17
Other Techniques................................18
PERFORMANCE ADVERTISING............................18

HOW TO INVEST WITH TWENTIETH CENTURY AND THE BENHAM GROUP

HOW TO OPEN AN ACCOUNT.............................19
By Mail.........................................19
By Wire.........................................19
By Exchange.....................................19
In Person.......................................20
SUBSEQUENT INVESTMENTS.............................20
By Mail.........................................20
By Telephone....................................20
By Wire.........................................20
In Person.......................................20
AUTOMATIC INVESTMENT PLAN..........................20
HOW TO EXCHANGE FROM ONE ACCOUNT
TO ANOTHER......................................20
By Mail.........................................21
By Telephone....................................21
HOW TO REDEEM SHARES...............................21
By Mail.........................................21
By Telephone....................................21
By Check-A-Month................................21
Other Automatic Redemptions.....................21
REDEMPTION PROCEEDS................................21
By Check........................................21
By Wire and ACH.................................21
REDEMPTION OF SHARES IN
LOW-BALANCE ACCOUNTS............................22
SIGNATURE GUARANTEE................................22
SPECIAL INVESTOR SERVICES..........................22
Automated Information Line......................22
Open Order Service..............................22
Tax-Qualified Retirement Plans..................23
IMPORTANT POLICIES REGARDING
YOUR INVESTMENTS................................23
REPORTS TO SHAREHOLDERS............................24
EMPLOYER-SPONSORED RETIREMENT PLANS AND
INSTITUTIONAL ACCOUNTS..........................24

ADDITIONAL INFORMATION YOU SHOULD KNOW

SHARE PRICE .......................................25
When Share Price is Determined..................25
How Share Price is Determined...................25
Where to Find Information About Share Price.....25
DISTRIBUTIONS......................................26
TAXES..............................................26
Tax-Deferred Accounts...........................26
Taxable Accounts................................26
MANAGEMENT.........................................27
Investment Management...........................27
Code of Ethics..................................28
Transfer and Administrative Services............28
Distribution of Fund Shares.....................29
Expenses........................................29
FURTHER INFORMATION ABOUT THE FUNDS................29

<TABLE>
<CAPTION>
TRANSACTION AND OPERATING EXPENSE TABLE
- ----------------------------------------------------------------------------------------------------------------

Benham Global
Benham Global Natural Resources Benham Utilities
Gold Fund Index Fund Income Fund
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases none none none
Maximum Sales Load Imposed on Reinvested Dividends none none none
Deferred Sales Load none none none
Redemption Fee(1) none none none
Exchange Fee none none none

ANNUAL FUND OPERATING EXPENSES:(2)
(as a percentage of net assets)
Management Fees .30% .08% .30%
12b-1 Fees none none none
Other Expenses .34% .68% .44%
Total Fund Operating Expenses .64% .76% .74%

Example: You would pay the following expenses 1 year $ 7 $ 8 $ 8
on a $1,000 investment, assuming a 5% annual 3 years 20 24 24
return and redemption at the end of each 5 years 36 42 41
time period: 10 years 80 94 92
</TABLE>

(1) Redemption proceeds sent by wire are subject to a $10 processing fee.
(2) Benham Management Corporation (the "Manager") has agreed to limit each
Fund's total operating expenses to specified percentages of each Fund's
average daily net assets. The agreement provides that the Manager may
recover amounts absorbed on behalf of the Fund during the preceding 11
months if, and to the extent that, for any given month, Fund expenses were
less than the expense limit in effect at that time. The current expense
limit for each of the Funds is .75%. Amounts which are paid by unaffiliated
third parties do not apply to this expense limit. These expense limits are
subject to annual renewal in June. If the expense limitations were not in
effect, the Benham Global Natural Resources Index Fund's Management Fee,
Other Expenses and Total Fund Operating Expenses would be as follows,
respectively: .35%, .68% and 1.03%.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

BENHAM GLOBAL GOLD FUND

The Financial Highlights for each of the periods presented have been
audited by KPMG Peat Marwick LLP, independent auditors (except as noted). Their
reports appear in the Fund's annual reports to shareholders which are
incorporated by reference into the Statement of Additional Information. The
semiannual and annual reports contain additional performance information and
will be made available upon request and without charge.

For a Share Outstanding Throughout the Six Months Ended June 30 (unaudited) and Years Ended December 31 (except as noted)
June 30,
1996 Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
(unaudited) 1995 1994 1993 1992 1991 1990 1989 1988+
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA
- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF PERIOD........... $12.37 11.33 13.67 7.55 8.28 9.35 11.71 9.05 10.00
Income From Investment Operations
Net Investment Income....... .0101 .0226 .0299 .0124 .0181 .0247 .0006 .0372 .0895
Net Realized and Unrealized Gains
(Losses) on Investments.. .5399 1.0259 (2.3213) 6.1197 (.7324) (1.0753) (2.2691) 2.7547 (.9688)
-------- ------- -------- ------- ------- -------- -------- ------- -------
Total Income (Losses) From
Investment Operations.... .5500 1.0485 (2.2914) 6.1321 (.7143) (1.0506) (2.2685) 2.7919 (.8793)
-------- ------- -------- ------- ------- -------- -------- ------- -------
Less Distributions
Dividends from Net
Investment Income.......... 0 (.0085) (.0214) (.0114) (.0157) (.0194) (.0006) (.0372) (.0666)
Distributions from Net
Realized Capital Gains..... 0 0 0 (.0007) 0 0 (.0909) (.0947) (.0041)
Distributions in Excess of
Net Realized Capital Gains. 0 0 (.0272) 0 0 0 0 0 0
-------- ------- -------- ------- ------- -------- -------- ------- -------
Total Distributions...... 0 (.0085) (.0486) (.0121) (.0157) (.0194) (.0915) (.1319) (.0707)
-------- ------- -------- ------- ------- -------- -------- ------- -------
NET ASSET VALUE AT END
OF PERIOD $12.92 12.37 11.33 13.67 7.55 8.28 9.35 11.71 9.05
======== ======= ======== ======= ======= ======== ======== ======= =======
TOTAL RETURN*................. 4.45% 9.25% (16.75)% 81.22% (8.65)% (11.23)% (19.43)% 29.93% (9.19)%
- ------------
SUPPLEMENTAL DATA AND RATIOS
- ----------------------------
Net Assets at End of Period
(in thousands of dollars)... $513,288 537,693 568,030 616,347 163,777 124,436 104,163 61,786 7,683
Ratio of Expenses to Average
Daily Net Assets++.......... .64%** .61% .61% .72% .75% .75% .96% 1.00% 0%
Ratio of Net Investment Income
to Average Daily Net Assets. .14%** .17% .20% .23% .23% .30% .01% .36% 2.04%**
Portfolio Turnover Rate..... 35.00% 28.40% 41.67% 28.38% 52.57% 56.33% 20.96% 34.39% .92%
Average Commission Paid
per Share Traded............ $ .026 .035 N/A N/A N/A N/A N/A N/A N/A

- ------------------------------------------------------------------------------------------------------------------------------------

+ Commencement of operations for Benham Global Gold Fund was August 17, 1988.

++ The ratios for the periods beginning with the year ended December 31, 1995 include expenses paid through expense
offset arrangements.

* Total return figures assume reinvestment of dividend and capital gain distributions and are not annualized.

** Annualized. (The period ended December 31, 1988 includes .76% from nonrecurring income.)
</TABLE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS (CONTINUED)
BENHAM GLOBAL NATURAL RESOURCES INDEX FUND
For a Share Outstanding Throughout the Six Months Ended June 30 (unaudited) and Years Ended December 31 (except as noted)
June 30,
1996 Dec. 31, Dec. 31,

(UNAUDITED) 1995 1994+
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA
- --------------
<S> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...................................... $10.66 9.61 10.00
Income from Investment Operations
Net Investment Income..................................................... .11 .16 .07
Net Realized and Unrealized Gains (Losses) on Investments................. .65 1.22 (.42)
-------- ------- -------
Total Income (Losses) From Investment Operations......................... .76 1.38 (.35)
-------- ------- -------
Less Distributions
Dividends from Net Investment Income...................................... (.09) (.16) (.04)
Distributions from Net Realized Capital Gains............................. 0 (.17) 0
-------- ------- -------
Total Distributions...................................................... (.09) (.33) (.04)
-------- ------- -------
NET ASSET VALUE AT END OF PERIOD............................................ $11.33 10.66 9.61
======== ======= =======
TOTAL RETURN*............................................................... 7.13% 14.41% (3.48)%
- ------------
SUPPLEMENTAL DATA AND RATIOS
- ----------------------------
Net Assets at End of Period (in thousands of dollars)..................... $51,019 30,157 $18,972
Ratio of Expenses to Average Daily Net Assets++........................... .76%** .76% 0%
Ratio of Net Investment Income to Average Daily Net Assets................ 2.33%** 2.02% 2.74%**
Portfolio Turnover Rate................................................... 17% 39% 0%
Average Commission Paid per Share Traded.................................. $.039 .028 N/A

- ------------------------------------------------------------------------------------------------------------------------------------

+ Commencement of operations for Benham Global Natural Resources Index Fund was September 15, 1994.

++ The ratios for the periods beginning with the year ended December 31, 1995 include expenses paid through expense
offset arrangements.

* Total return figures assume reinvestment of dividend and capital gain distributions and are not annualized.

** Annualized.

</TABLE>

- ------------------------------------------------------------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS (CONTINUED)
BENHAM UTILITIES INCOME FUND

For a Share Outstanding Throughout the Six Months Ended June 30 (unaudited) and Years Ended December 31 (except as noted)
June 30,
1996 Dec. 31, Dec. 31, Dec. 31,
(unaudited) 1995 1994 1993+
- ------------------------------------------------------------------------------------------------------------------------------------

PER-SHARE DATA
- --------------
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD........................... $11.44 8.79 10.24 10.00
Income from Investment Operations
Net Investment Income.......................................... .2208 .4226 .4375 .3626
Net Realized and Unrealized Gains (Losses) on Investments...... (.1190) 2.6446 (1.4515) .2979
-------- ------- -------- -------
Total Income (Losses) From Investment Operations.............. .1018 3.0672 (1.0140) .6605
-------- ------- -------- -------
Less Distributions
Dividends from Net Investment Income........................... (.2118) (.4172) (.4360) (.3577)
Distributions from Net Realized Capital Gains.................. 0 0 0 (.0628)
-------- ------- -------- -------
Total Distributions........................................... (.2118) (.4172) (.4360) (.4205)
-------- ------- -------- -------
NET ASSET VALUE AT END OF PERIOD................................. $11.33 11.44 8.79 10.24
======== ======= ======== =======
TOTAL RETURN*.................................................... .92% 35.70% (10.03)% 6.60%
- ------------

SUPPLEMENTAL DATA AND RATIOS
- ----------------------------
Net Assets at End of Period (in thousands of dollars)............ $163,541 218,794 152,570 194,314
Ratio of Expenses to Average Daily Net Assets++ ................. .74%** .75% .75% .50%**
Ratio of Net Investment Income to Average Daily Net Assets....... 3.92%** 4.31% 4.67% 4.23%**
Portfolio Turnover Rate.......................................... 36.00% 68.17% 61.42% 38.76%
Average Commission Paid per Share Traded......................... $.040 .030 N/A N/A

- ------------------------------------------------------------------------------------------------------------------------------------

+ Commencement of operations for Benham Utilities Income Fund was March 1, 1993.

++ The ratios for the periods beginning with the year ended December 31, 1995 include expenses paid through expense
offset arrangements.

* Total return figures assume reinvestment of dividend and capital gain distributions and are not annualized.

** Annualized.

</TABLE>

INFORMATION REGARDING THE FUNDS
- --------------------------------------------------------------------------------

INVESTMENT POLICIES
OF THE FUNDS

The Funds have adopted certain investment restrictions that are set
forth in the Statement of Additional Information. Those restrictions, as well
as the investment objectives of the Funds identified on the inside front
cover page of this Prospectus and any other investment policies designated as
"fundamental" in this Prospectus or in the Statement of Additional
Information, cannot be changed without shareholder approval. The Funds have
implemented additional investment policies and practices to guide their
activities in the pursuit of their respective investment objectives. These
policies and practices, which are described throughout this Prospectus, are
not designated as fundamental policies and may be changed without shareholder
approval.

The descriptions that follow are designed to help you determine whether
a Fund fits your investment objectives. For an explanation of the securities
ratings referred to in the following discussion, see "Other Information" in
the Statement of Additional Information.

CORE INVESTMENT STRATEGIES

The Manager uses QUANTITATIVE MANAGEMENT strategies in pursuit of the
Funds' respective investment objectives. Quantitative management combines two
investment management approaches. The first is ACTIVE MANAGEMENT, which
allows the advisor to select investments for a fund without reference to an
index or investment model. The second is INDEXING, in which the advisor tries
to match a fund's portfolio composition to that of a particular index.

The primary management technique the Manager uses is PORTFOLIO
OPTIMIZATION. The Manager constructs the Fund's portfolio to match the Fund
benchmarks' risk characteristics and, in turn, the benchmarks' performance.

BENHAM SPECIALTY FUNDS

BENHAM GLOBAL GOLD FUND

The 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 Manager will construct the Gold 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 market. As part of evaluating and determining the
appropriate investments for the Gold Fund, the Manager intends to utilize
various benchmarks, including worldwide gold market indices, such as the
FT-SE(R) Gold Mines Index.

The FT-SE(R) Gold Mines Index (the "Index") is compiled and calculated
by FT-SE International Limited ("FT-SE") under the joint license of the
Financial Times Ltd. ("FT") and the London Stock Exchange Limited (the "Stock
Exchange"). FT-SE calculates the Index in conjunction with the Institute of
Actuaries and the Faculty of Actuaries. However, neither FT-SE nor the Stock
Exchange nor FT shall be liable to any person for any error in the Index and
neither FT-SE or Exchange or FT shall be under any obligation to advise any
person of any error therein. The Gold Fund is not in any way sponsored,
endorsed, sold or promoted by FT-SE, the Stock Exchange or FT. Neither FT-SE,
the Stock Exchange nor FT makes any warranty or representation whatsoever as
to the results to be obtained from the use of the Index and/or the figure at
which the said Index stands at any particular time on any particular day or
otherwise. FT-SE(R) is a trademark of the Stock Exchange and FT and is used
by FT-SE under license.

The Gold 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 Gold Fund's total
assets must be invested in Gold Companies. Under normal circumstances, at
least 65% of the value of the Gold 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 Gold 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 Gold 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 nationally recognized
securities rating agencies.

As part of its global investment strategy, the Gold 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 Gold Fund may invest in less than three countries. the
Manager anticipates that a substantial portion of the Gold 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 Gold
Fund when it invests in foreign securities. (See "Risk Factors and Investment
Techniques--Foreign Securities Risk," on page 13.) These risks may be greater
as the Gold Fund increases its investments in regions outside North America.

The Manager works to balance three goals:
o To construct the Gold 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;
o To keep enough cash on hand to meet shareholder redemption requests and
pay operational expenses; and
o To keep portfolio transaction costs low.

The Gold 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 Gold Fund's assets that may be invested in the securities
of a single issuer is not limited by the 1940 Act. However, Subchapter M of
the Internal Revenue Code of 1986, as amended, limits the proportion of
assets a fund may invest in the securities of any single issuer. The Gold
Fund intends to adhere to these limits in order to qualify as a regulated
investment company.

BENHAM GLOBAL NATURAL RESOURCES
INDEX FUND

The Natural Resources Fund seeks to realize a total return (capital
growth and dividends) consistent with investment in companies that are
engaged in the natural resources industries.

The Natural Resources Fund invests primarily in the stocks of foreign
and U.S. companies included in the Energy and Basic Materials sectors
("Sectors") of the Dow Jones World Stock Index* ("DJWSI"), excluding chemical
companies.

The DJWSI (which is market-capitalization weighted) was created on
January 5, 1993, and currently consists of approximately 2,800 stocks of U.S.
and foreign companies representing approximately 28 countries and 120
industry groups and subgroups in the DJWSI, which are grouped into nine broad
market sectors, including the Energy and the Basic Materials sectors.

*Dow Jones & Company, Inc. has not participated in any way in the
creation of the Fund or in the selection of the stocks included in the
Natural Resources Fund's portfolio and has not approved any information
included in the Prospectus relating thereto. The DJWSI is the property of Dow
Jones & Co., Inc.

The value of the DJWSI is calculated each day the New York Stock
Exchange (the "Exchange") is open for trading and is based on prices at the
close of the Exchange (usually 3 p.m. Central time). Foreign securities are
valued in U.S. dollars based on the exchange rates as of the close of the
Exchange.

The DJWSI editors select companies and stocks based entirely on their
own criteria, which they may change at any time. The DJWSI is divided into
categories determined by the editors of The Wall Street Journal, who may
alter their categorization without consulting the companies, the stock
exchanges, or any official agency. The industries currently included in the
Energy and Basic Materials sectors (excluding chemical companies) are:

ENERGY SECTOR BASIC MATERIALS SECTOR
Coal Aluminum
Oil Drilling Other Non-Ferrous Metals
Oil Companies, Major Forest Products
Oil Companies, Secondary Mining, Diversified
Oilfield Equip/Services Paper Products
Pipelines Precious Metals and Steel

Although the chemicals industry is included in the DJWSI Basic Materials
sector, the Natural Resources Fund does not invest in the chemicals industry.
Typically, chemical companies do not maintain large natural resources
inventories but rather, focus on chemical product development.

In order to minimize transaction costs, the Natural Resources Fund uses
the portfolio optimization technique (described in "Core Investment
Strategies" on page 8) instead of holding all of the securities included in
the Sectors.

Even though the Natural Resources Fund's portfolio is not constructed to
match the composition of the Sectors, the Manager does not expect the Natural
Resources Fund's total return to vary from the combined return of the Sectors
by more than five percentage points per year. However, the Manager may
periodically need to adjust the Natural Resources Fund's holdings to more
closely match the composition of the Sectors in order to reduce performance
deviation.

Sector performance is calculated monthly on a total return basis, using
beginning-of-the-month capitalization weightings and assuming reinvestment of
dividends. The Natural Resources Fund's ability to match Sector performance
may, depend in part on market conditions, shareholder activity, transaction
costs, the Natural Resources Fund's size, and tax considerations.

The Natural Resources Fund is a "non-diversified company" as defined in
the 1940 Act, which means that the proportion of the Natural Resources Fund's
assets that may be invested in the securities of a single issuer is not
limited by the 1940 Act. However, Subchapter M of the Code limits the
proportion of assets a fund may invest in the securities of any single
issuer. The Natural Resources Fund intends to adhere to these limits in order
to qualify as a regulated investment company.

As an operating policy, the Natural Resources Fund will remain as fully
invested as practicable in securities of companies included in the Sectors;
therefore, investors bear the risk of a general decline in the stock prices
of issuers included in the Sectors. Although the Natural Resources Fund
invests primarily in securities of companies included in the Sectors, it may
also invest up to 10% of its total assets in other types of securities (see
"Other Investment Practices, Their Characteristics and Risks" on page 14).
Such investments may be made to improve portfolio diversification and to
provide extra cash to meet redemptions and day-to-day operating expenses.

BENHAM UTILITIES INCOME FUND

The Utilities Fund seeks current income and long-term growth of capital
and income.

The Utilities Fund invests primarily in equity securities of companies
engaged in the utilities industry. One feature that distinguishes the Fund
from other utility funds is that it attempts to provide investors with a
consistent level of monthly dividend income, although there is no guarantee
that it will be able to do so.

Under normal market conditions, the Utilities Fund invests at least 75%
of its total assets in equity securities of companies engaged in the
utilities industry. Such companies may include: public utility companies,
whose user rates are set by a government entity such as a state utilities
commission; companies with non-regulated utility operations; or companies
with a combination of regulated and non-regulated utility operations. Within
this 75% category, the Utilities Fund will not buy shares of a company unless
50% or more of the company's revenues or net profits are derived from the
ownership or operation of facilities used to provide electricity, natural
gas, telecommunications services, pay television (e.g., cable), water, or
sanitary services to the public.

To enhance dividend income, increase portfolio diversification, or
support share price stability, the Utilities Fund may invest up to 25% of its
total assets in fixed-income securities (i.e., bonds issued by the U.S.
government or its agencies, bonds issued by companies engaged in the
utilities industry (utility bonds), or bonds issued by non-utility
corporations).

The Manager may invest up to 5% of the Utilities Fund's total assets in
non-utility corporate bonds. The Utilities Fund's corporate debt holdings
must be of investment-grade quality.

To be considered investment grade, a bond must be rated BBB/Baa or
better by a nationally recognized statistical rating organization (a "rating
agency") or be judged to be of comparable quality by the Manager under the
direction of the board of directors. If a bond held by the Utilities Fund is
downgraded by a rating agency, the Manager will not necessarily sell the bond
unless it determines that the bond is no longer of investment-grade quality.

In recent years, changes in the regulatory climate have allowed public
utility companies to provide products and services outside of their
traditional geographic areas. the Manager seeks to maximize the benefits from
both increased competition and expanded growth prospects that are expected to
arise from these changes.

The Utilities Fund is a "diversified" investment company as defined in
the 1940 Act. This means that investments in any single issuer are limited by
restrictions under the 1940 Act.

RISK FACTORS AND INVESTMENT
TECHNIQUES

The Funds may be an appropriate component of a stock portfolio for
investors seeking total return through investments in stocks (both equity and
specialized), bonds and short-term instruments. The Funds work best for
long-term investors who are prepared to endure fluctuations in the values of
the special market categories in which each of the Funds invests. Since each
Fund concentrates its investment in a specific industry, the share price of
each Fund is likely to be more volatile than the share price of a fund that
diversifies across multiple industries. An investment in any one of the Funds
does not constitute a balanced investment plan.

CONCENTRATION RISK

Because each of the Funds concentrates its investments in a particular
industry or sector, each may be subject to greater risks and market
fluctuations than a portfolio representing a broader range of industries.
Each Fund therefore serves a different purpose than a general stock fund.
Each Fund is particularly vulnerable to risks specific to those faced acutely
by those issuers in their area of specialty.

GOLD FUND

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 high share price volatility, gold stocks are considered speculative

and may affect the Gold Fund's share price. Investment in the Gold 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.

NATURAL RESOURCES FUND

The Natural Resources Fund is particularly vulnerable to risks specific
to natural resources companies. Historically, during periods of economic or
financial instability, the securities of some natural resources companies
become subject to broad price fluctuations, reflecting the volatility of
energy and basic materials prices and unstable supplies of precious and
industrial metals, oils, coal, timber or other natural resources. Price
instability may adversely affect the earnings of natural resources companies.
Natural resources companies may also be subject to risks associated with
extraction of natural resources, such as mining and oil drilling accidents,
and the hazards associated with natural resources such as fire and drought.

UTILITIES FUND

Public utilities companies have historically provided above-average
dividends, which may make their stocks appropriate for long-term,
income-oriented investors. Historically, utility stocks have generally been
considered to be among the most conservative equity securities despite their
vulnerability to inflation and regulation. However, increased competition and
a trend toward deregulation have created opportunities for growth, as well as
greater price volatility, among utilities stocks.

As indicated in the next column, Chart 1 compares the rate of dividend
growth for the Standard & Poor's Utilities Index ("S&P Utilities Index") with
the rate of inflation as measured by the Consumer Price Index ("CPI") over a
50-year period.

[mountain graph]
CHART 1 - Growth of Utility Stock Dividends vs. Inflation

Inflation (CPI) S&P Utilities Index Dividends
1946 $1 $1
1.09 1.08
1.12 1.1
1.1 1.19
1.16 1.27
1.23 1.32
1.24 1.32
1.25 1.41
1.25 1.48
1.25 1.56
1.29 1.69
1.33 1.79
1.35 1.84
1.37 1.95
1.39 2.04
1.4 2.15
1.41 2.25
1.44 2.37
1.46 2.55
1.48 2.74
1.53 2.96
1.58 3.14
1.66 3.29
1.76 3.38
1.85 3.48
1.91 3.57
1.98 3.64
2.16 3.74
2.42 3.8
2.59 3.95
2.72 4.13
2.9 4.45
3.16 4.76
3.58 5.12
4.02 5.45
4.38 5.87
4.55 6.29
4.72 6.65
4.91 7.11
5.1 7.4
5.16 7.73
5.39 8.11
5.62 8.37
5.89 8.67
6.25 9.11
6.44 9.35
6.63 9.4
6.81 9.52
6.99 9.74
1995 7.17 9.76

[mountain graph]
CHART 2 - Stock Dividend Yields
S&P Utilities Index vs. S&P 500

S&P 500 Yield S&P Utilities Index Yield
1946 4.64 4.65
5.49 6.02
6.12 6.23
6.8 5.42
7.2 5.98
5.93 5.52
5.31 4.89
5.84 5.1
4.28 4.53
3.61 4.48
3.73 4.85
4.48 5.07
3.17 3.86
3.06 3.96
3.36 3.59
2.82 3.02
3.38 3.36
3.04 3.25
2.95 3.11
2.94 3.3
3.57 3.88
3.03 4.33
2.96 4.29
3.43 5.49
3.41 5.14
3.01 5.43
2.67 5.42
3.46 7.25
5.25 10.32
4.08 8.08
3.77 6.93
4.9 7.4
5.28 8.93
5.23 9.28
4.54 9.46
5.41 10.08
4.88 9.46
4.3 9.14
4.5 8.53
3.74 7.22
3.42 6.26
3.57 7.23
3.5 6.76
3.13 5.05
3.66 5.77
2.93 5.48
2.84 5.4
2.7 5.02
2.87 5.9
1995 2.24 4.38

[graph with diamond points]
CHART 3 - Risk vs. Reward (1946-1995)

Reward - Standard Risk - Average Annual
Deviation Total Return
S&P 500 11.94 16.57
U.S. Treasury Bond 5.35 10.54
S&P Utilities 9.26 15.79

Historically, common stock dividend yields for public utility companies
have exceeded comparable figures for the broader market while offering
investors comparatively less share price volatility. Chart 2 compares common
stock dividend yields for the S&P Utilities Index with those of the broader
Standard & Poor's 500 Composite Stock Price Index ("S&P 500") from 1946 to
1995.

Chart 3 illustrates historical risk (or volatility) in the utilities
sector by comparing the historical risk and reward characteristics of the S&P
Utilities Index with comparable figures for the S&P 500 and a U.S. Treasury
bond with a remaining maturity of 20 years.

Note that while the S&P Utilities Index was less volatile than the S&P
500, it also produced lower returns than the S&P 500 during the period
illustrated above. The S&P 500 is an unmanaged index representing the
performance of 500 major companies, most of which are listed on the New York
Stock Exchange. Investors cannot invest directly in the S&P 500.

The charts on the previous page show the characteristics of utilities
stocks that have attracted investors in the past. Regulatory and competitive
factors are changing the utilities industry considerably, and there is no
assurance that these historic trends will continue. Within any one market
sector, a period of above average performance may be followed by a period of
below average performance.

FOREIGN SECURITIES RISK

Because of the Gold Fund's policy of investing primarily in securities
of companies engaged in gold mining, a substantial part of the Gold Fund's
assets is generally invested in securities of companies domiciled or
operating in one or more foreign countries. The Natural Resources Fund may,
to a limited extent, also invest in foreign securities.

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.

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 relatively 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. the
Manager 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.

RISK OF USING THE FUNDS AS A HEDGE

Many investors may perceive that the Gold Fund and the Natural Resources
Fund offer a hedge against certain economic or market events. The Gold Fund
may be perceived as a hedge against general price inflation, currency
devaluations and general stock market declines. The Natural Resources Fund
may be perceived as a hedge against commodity-price driven inflation. While
there may be some empirical support to these perceptions, there is no
assurance that these historical inverse relationships will persist.

OTHER INVESTMENT PRACTICES,
THEIR CHARACTERISTICS AND RISKS

For additional information regarding the investment practices of any of
the Funds, see the Statement of Additional Information.

PORTFOLIO TURNOVER

The portfolio turnover rates of the Funds are shown in the Financial
Highlights tables on pages 5, 6 and 7 of this Prospectus.

With respect to each series of shares, investment decisions to purchase
and sell securities are based on the anticipated contribution of the security
in question to the particular fund's objectives. The rate of portfolio
turnover is irrelevant when management believes a change is in order to
achieve those objectives and, accordingly, the annual portfolio turnover rate
cannot be accurately anticipated.

CONVERTIBLE SECURITIES

In addition to common stock, the Gold and Natural Resources Funds may
buy securities convertible into common stock, such as convertible bonds,
convertible preferred stocks, and warrants. the Manager 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.

WHEN-ISSUED AND FORWARD COMMITMENT AGREEMENTS

Each of the Funds may sometimes purchase new issues of securities on a
when-issued or forward commitment basis without the limit when, in the
opinion of the manager, such purchases will further the investment objectives
of the Fund. The price of when-issued securities is established at the time
commitment to purchase is made. Delivery and payment for these securities
typically occurs 15 to 45 days after the commitment to purchase. Market rates
of interest on debt securities at the time of delivery may be higher or lower
than those contracted for on the security. Accordingly, the value of each
security may decline prior to delivery, which could result in a loss to the
Fund.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

Some of the foreign securities held by the Gold and Natural Resources
Funds may be denominated in foreign currencies. Other securities, such as
ADRs, may be denominated in U.S. dollars, but have a value that is dependent
on the performance of a foreign security, as valued in the currency of its
home country. As a result, the value of the Gold and Natural Resources Funds'
portfolios may be affected by changes in the exchange rates between foreign
currencies and the dollar, as well as by changes in the market values of the
securities themselves. The performance of foreign currencies relative to the
dollar may be a factor in the overall performance of the Gold and Natural
Resources Funds.

To protect against adverse movements in exchange rates between
currencies, the Gold and Natural Resources Funds may, for hedging purposes
only, enter into forward currency exchange

contracts. A forward currency exchange contract obligates a fund to purchase
or sell a specific currency at a future date at a specific price.

A fund may elect to enter into a forward currency exchange contract with
respect to a specific purchase or sale of a security, or with respect to the
fund's portfolio positions generally.

By entering into a forward currency exchange contract with respect to
the specific purchase or sale of a security denominated in a foreign
currency, a fund can "lock in" an exchange rate between the trade and
settlement dates for that purchase or sale. This practice is sometimes
referred to as "transaction hedging." The Gold and Natural Resources Funds
may enter into transaction hedging contracts with respect to all or a
substantial portion of its foreign securities trades.

When the manager believes that a particular currency may decline in
value compared to the dollar, a fund may enter into forward currency exchange
contracts to sell the value of some or all of the fund's portfolio securities
either denominated in, or whose value is tied to, that currency. This
practice is sometimes referred to as "portfolio hedging." A fund may not
enter into a portfolio hedging transaction where it would be obligated to
deliver an amount of foreign currency in excess of the aggregate value of its
portfolio securities or other assets denominated in, or whose value is tied
to, that currency.

Each of the Gold and Natural Resources Funds will make use of the
portfolio hedging to the extent deemed appropriate by the manager. However,
it is anticipated that a fund will enter into portfolio hedges much less
frequently than transaction hedges.

If a fund enters into a forward contract, the fund, will instruct its
custodian bank to segregate cash or liquid high-grade securities in a
separate account in an amount sufficient to cover its obligation under the
contract. Those assets will be valued at market daily, and if the value of
the segregated securities declines, additional cash or securities will be
added so that the value of the account is not less than the amount of the
fund's commitment. At any given time, no more than 10% of a fund's assets
will be committed to a segregated account in connection with portfolio
hedging transactions.

Predicting the relative future values of currencies is very difficult,
and there is no assurance that any attempt to protect a fund against adverse
currency movements through the use of forward currency exchange contracts
will be successful. In addition, the use of forward currency exchange
contracts tends to limit the potential gains that might result from a
positive change in the relationships between the foreign currency and the
U.S. dollar.

GOLD INVESTMENTS

The Gold 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.

The Manager may use a Gold Investment when it judges the price of gold
to be artificially low. the Manager 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 Gold Fund's other gold-related investments. If gold prices rise as the
Manager 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 Gold Fund may suffer a loss.

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 Gold Fund. The sole source of return on
such investments is from gain (or losses) realized at the time of sale. Gold
coins may be purchased for their intrinsic value only and not for their
numismatic value.

Internal Revenue Service ("IRS") income tests and certain state laws
effectively limit the amount of Gold Investments the Gold Fund may

make. The Gold Fund intends to make such investments only to the extent
permitted by these limits.

SHORT-TERM INSTRUMENTS

For liquidity purposes, each Fund may invest in high-quality money
market instruments with remaining maturities of one year or less.

Each 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 the
Manager 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.

Each Fund may invest up to 5% of its total assets in money market funds
advised by the Manager, provided that the investment is consistent with the
Fund's respective investment policies and restrictions.

INTEREST RATE SWAPS

The Gold Fund may enter into interest rate swap agreements with banks or
broker-dealers. These transactions may be used to help the Gold Fund meet IRS
diversification requirements or to improve the correlation between the Gold
Fund's total return and that of the market for gold equities.

Swap transactions used by the Manager typically involve entering into a
contract with a broker-dealer to receive the total returns of a specific
security or basket of 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 Manager believes that the market for interest rate swaps is
relatively liquid. However, as long as the SEC staff considers the market to
be illiquid, the Gold Fund will treat them as such for purposes of its
investment policies.

SECURITIES LENDING

This practice could result in a loss or a delay in recovering the Fund's
securities. Such loans may not exceed one-third of the fund's total assets
taken at market. Except for the Natural Resources Fund, the portfolio lending
policy described in this paragraph is a fundamental policy that may be
changed only by a vote of a majority of a Fund's shareholders.

INTEREST RATE FUTURES CONTRACTS AND OPTIONS THEREON

The Funds may buy or sell interest rate futures contracts relating to
debt securities ("debt futures," i.e., futures relating to indexes on types
or groups of bonds) and write or buy put and call options relating to
interest rate futures contracts.

For options sold, a Fund will segregate cash or high-quality debt
securities equal to the value of securities underlying the option unless the
option is otherwise covered.

See the Statement of Additional Information for further information
about these instruments and their risks.

RESTRICTED AND ILLIQUID SECURITIES

The Funds may, from time to time, purchase Rule 144A securities when
they present attractive investment opportunities that otherwise meet
established criteria for selection. Rule 144A securities are securities that
are privately placed with and traded among qualified institutional buyers
rather than the general public. Although Rule 144A securities are considered
"restricted securities," they are not necessarily illiquid.

With respect to securities eligible for resale under Rule 144A, the
staff of the SEC has taken the position that the liquidity of such securities
in the portfolio of a fund offering redeemable securities is a question of
fact for the board of directors to determine, such determination to be based
upon a consideration of the readily available trading markets and the review
of any contractual restrictions. Accordingly, the board of directors is
responsible for developing and establishing the guidelines and procedures for
determining the liquidity of Rule 144A securities. As allowed by Rule 144A,
the board of directors of the Funds has delegated the day-to-day function of
determining the liquidity of rule 144A securities to the Manager. The board
retains the responsibility to monitor the implementation of the guidelines
and procedures it has adopted.

Since the secondary market for such securities is limited to certain
qualified institutional investors, the liquidity of such securities may be
limited accordingly and a fund may, from time to time, hold a Rule 144A
security that is illiquid. In such an event, the Manager will consider
appropriate remedies to minimize the effect on such fund's liquidity. No Fund
may invest more than 10% of its total assets in illiquid securities
(securities that may not be sold within seven days at approximately the price
used in determining the net asset value of Fund shares).

INDEXED SECURITIES

The Natural Resources Fund may invest in indexed securities whose value
is linked to commodities including, but not limited to, notes

indexed to the Goldman Sachs Commodity Index ("GSCI"). The GSCI is composed
of energy, agricultural, livestock and metals commodities. The Natural
Resources Fund may invest in notes indexed to the entire GSCI or to certain
components of the GSCI.

OTHER TECHNIQUES

The Manager may buy other types of securities or employ other portfolio
management techniques on behalf of the Funds. When SEC guidelines require it
to do so, the Funds will set aside cash or appropriate liquid assets in a
segregated account to cover its obligations. See the Funds' respective
Statements of Additional Information for a more detailed discussion of these
instruments and some of the risks associated with them.

PERFORMANCE ADVERTISING

CUMULATIVE TOTAL RETURN data is computed by considering all elements of
return, including reinvestment of dividends and capital gains distributions,
over a period of time. AVERAGE ANNUAL TOTAL RETURN is determined by computing
the annual compound return over a stated period of time that would have
produced a fund's cumulative total return over the same period if the fund's
performance had remained constant throughout.

Yields are calculated according to accounting methods that are
standardized in accordance with SEC rules for all stock and bond funds. The
SEC yield should be regarded as an estimate of the Fund's rate of investment
income, and it may not equal the Fund's actual income distribution rate, the
income paid to a shareholder's account, or the income reported in the Fund's
financial statements.

The Funds may also include in advertisements data comparing performance
with the performance of non-related investment media, published editorial
comments and performance rankings compiled by independent organizations (such
as Lipper Analytical Services or Donoghue's Money Fund Report) and
publications that monitor the performance of mutual funds. Performance
information may be quoted numerically or may be presented in a table, graph
or other illustration. In addition, fund performance may be compared to
well-known indices of market performance. A fund's performance may also be
compared, on a relative basis, to the other funds in our fund family. This
relative comparison, which may be based upon historical or expected fund
performance, volatility or other fund characteristics, may be presented
numerically, graphically or in text. The performance of a fund may also be
combined or blended with other funds in our fund family, and that combined or
blended performance may be compared to the same indices to which individual
funds may be compared.

HOW TO INVEST WITH TWENTIETH CENTURY AND THE BENHAM GROUP
- --------------------------------------------------------------------------------

HOW TO OPEN AN ACCOUNT

You may invest in the following ways:

BY MAIL

Send a completed application and check or money order payable in U.S.
dollars to Twentieth Century.

BY WIRE

You may make your initial investment by wiring funds. To do so, call us
or mail a completed application and provide your bank with the following
information:

RECEIVING BANK AND ROUTING NUMBER:
Commerce Bank, N.A. (101000019)

BENEFICIARY (BNF):
Twentieth Century Services, Inc.
4500 Main St., Kansas City, MO 64111

BENEFICIARY ACCOUNT NUMBER (BNF ACCT):
2804918

REFERENCE FOR BENEFICIARY (RFB):
Twentieth Century account number into which you are investing. If more
than one, leave blank and see Bank to Bank Information below.

ORIGINATOR TO BENEFICIARY (OBI):
Name and address of owner of account into which you are investing.

BY EXCHANGE

Call 1-800-345-2021 from 7 a.m. to 7 p.m. Central time to get
information on opening an account by exchanging from another Twentieth
Century or Benham account. See page 20 for more information on exchanges.

IN PERSON

If you prefer to work with a representative in person, please visit one
of our Investors Centers, located at:

4500 Main Street
Kansas City, MO 64111

1665 Charleston Road
Mountain View, CA 94043

2000 S. Colorado Blvd.
Denver, CO 80222.

SUBSEQUENT INVESTMENTS

BY MAIL

BY TELEPHONE

BY WIRE

You may make subsequent investments by wire. Follow the wire transfer
instructions on page 19 and indicate your account number.

IN PERSON

You may make subsequent investments in person at one of our Investors
Centers. The locations of our three Investors Centers are listed on this
page.

AUTOMATIC INVESTMENT PLAN

HOW TO EXCHANGE FROM ONE
ACCOUNT TO ANOTHER

BY MAIL

You may direct us in writing to exchange your shares from one Twentieth
Century or Benham account to another. For additional information, please see
our Investor Services Guide.

BY TELEPHONE

You can make exchanges over the phone (either with an Investor Services
Representative or using our Automated Information Line-see page 22) if you
have authorized us to accept telephone instructions. You can authorize this
by selecting "Full Services" on your application or by calling us at
1-800-345-2021 to receive the appropriate form.

HOW TO REDEEM SHARES

We will redeem or "buy back" your shares at any time. Redemptions will
be made at the next net asset value determined after a complete redemption
request is received.

Please note that a request to redeem shares in an IRA or 403(b) plan
must be accompanied by an executed IRS Form W4-P and a reason for withdrawal
as specified by the IRS.

BY MAIL

BY TELEPHONE

If you have authorized us to accept telephone instructions, you may
redeem your shares by calling an Investor Services Representative.

BY CHECK-A-MONTH

OTHER AUTOMATIC REDEMPTIONS

You may elect to make redemptions automatically by authorizing us to
send funds directly to you or to your account at a bank or other financial
institution. To set up automatic redemptions, call one of our Investor
Services Representatives.

REDEMPTION PROCEEDS

Redemption proceeds may be sent to you in one of the following ways:

BY CHECK

BY WIRE AND ACH

You may authorize us to transmit redemption proceeds by wire or ACH.
These services will be effective 15 days after we receive the authorization.

REDEMPTION OF SHARES IN
LOW-BALANCE ACCOUNTS

SIGNATURE GUARANTEE

o Redeeming more than $25,000
o Establishing or increasing a Check-A-Month or automatic transfer on an
existing account.

You may obtain a signature guarantee from a bank or trust company,
credit union, broker- dealer, securities exchange or association, clearing
agency or savings association, as defined by federal law.

We reserve the right to require a signature guarantee on any
transaction, or to change this policy at any time.

SPECIAL INVESTOR SERVICES

Our special investor services include:

AUTOMATED INFORMATION LINE

OPEN ORDER SERVICE

TAX-QUALIFIED RETIREMENT PLANS

Each Fund is available for your tax-deferred retirement plan. Call or
write us and request the appropriate forms for:

o Individual Retirement Accounts ("IRA"s)
o 403(b) plans for employees of public school systems and non-profit
organizations
o Profit sharing plans and pension plans for corporations and other
employers.

If your IRA and 403(b) accounts do not total $10,000, each account is
subject to an annual $10 fee, up to a total of $30 per year.

You can also transfer your tax-deferred plan to us from another company
or custodian. Call or write us for a "Request to Transfer" form.

IMPORTANT POLICIES REGARDING
YOUR INVESTMENTS

Every account is subject to policies that could affect your investment.
Please refer to the Investor Services Guide for further information about the
policies discussed below, as well as further detail about the services we
offer.
(1) We reserve the right for any reason to suspend the offering of shares
for a period of time, or to reject any specific purchase order
(including purchases by exchange). Additionally, purchases may be
refused if, in the opinion of the manager, they are of a size that
would disrupt the management of the Fund.

(3) Shares being acquired must be qualified for sale in your state of
residence.

(4) Transactions requesting a specific price and date, other than open
orders, will be refused.

mail or courier service, or you may visit one of our Investors
Centers. You may also use our Automated Information Line if you have
requested and received an access code and are not attempting to
redeem shares.

(10) We will perform special inquiries on shareholder accounts. A research
fee of $15 may be applied.

REPORTS TO SHAREHOLDERS

No later than January 31st of each year, we will send you reports that
you may use in completing your U.S. income tax return. See the Investor
Services Guide for more information.

EMPLOYER-SPONSORED
RETIREMENT PLANS AND
INSTITUTIONAL ACCOUNTS

Information contained in our Investor Services Guide and in the "How to
Invest" sections beginning on page 19 pertain to shareholders who invest
directly with Twentieth Century rather than through an employer-sponsored
retirement plan or through a financial intermediary. If you own or are
considering purchasing Fund shares through an employer-sponsored retirement
plan, your ability to purchase shares of the Funds, exchange them for shares
of other Twentieth Century or Benham funds, and redeem them will depend on
the terms of your plan. If you own or are considering purchasing Fund shares
through a bank, broker-dealer, insurance company or other financial
intermediary, your ability to purchase, exchange and redeem shares will
depend on your agreement with, and the policies of, such financial
intermediary.

You may reach one of our Institutional Investor Service Representatives
by calling 1-800-345-3533 to request information about our funds and
services, to obtain a current prospectus or to get answers to any questions
about our funds that you are unable to obtain through your plan administrator
or financial intermediary.

ADDITIONAL INFORMATION YOU SHOULD KNOW
- --------------------------------------------------------------------------------

SHARE PRICE

WHEN SHARE PRICE IS DETERMINED

Investments and requests to redeem or exchange shares will receive the
share price next determined after receipt by us of the investment, redemption
or exchange request. For example, investments and requests to redeem or
exchange shares received by us or our authorized agents before the close of
business on the Exchange, usually 3 p.m. Central time, are effective on, and
will receive the price determined, that day as of the close of the Exchange.
Investment, redemption and exchange 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 by telephone pursuant to your prior authorization to us to
draw on your bank account are considered received at the time of your
telephone call.

If you invest in Fund shares through an employer-sponsored retirement
plan or other financial intermediary, it is the responsibility of your plan
recordkeeper or financial intermediary to transmit your purchase, exchange
and redemption requests to the Funds' transfer agent prior to the applicable
cut-off time for receiving orders and to make payment for any purchase
transactions in accordance with the Funds' procedures or any contractual
arrangement with the Funds or the Funds' distributor in order for you to
receive that day's price.

HOW SHARE PRICE IS DETERMINED

The valuation of assets for determining net asset value may be
summarized as follows:

WHERE TO FIND INFORMATION ABOUT SHARE PRICE

The net asset values of the Funds are published in leading newspapers
daily. The net asset values, as well as yield information on all of the Funds
and other funds in the Twentieth Century family of funds, may be obtained by
calling us.

DISTRIBUTIONS

At the close of each day including Saturdays, Sundays and holidays, net
income of the Utilities Fund is determined and declared as a distribution.
The distribution will be paid monthly. The Gold Fund and the Natural
Resources Fund pay dividends, if any, on a semi-annual basis in June and
December.

You will begin to participate in the distributions the day AFTER your
purchase is effective. See "When Share Price is Determined," page 25. If you
redeem shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed, the distribution on the redeemed
shares will be included with your redemption proceeds.

Distributions from net realized securities gains, if any, generally are
declared and paid once a year, but the Funds may make distributions on a more
frequent basis to comply with the distribution requirements of the Internal
Revenue Code, in all events in a manner consistent with the provisions of the
1940 Act.

The board of trustees may elect not to distribute capital gains in whole
or in part to take advantage of loss carryovers.

TAXES

TAX-DEFERRED ACCOUNTS

If the Funds' shares are purchased through tax-deferred accounts, such
as a qualified employer-sponsored retirement or savings plan, income and
capital gains distributions paid by the Funds will generally not be subject
to current taxation, but will accumulate in your account under the plan on a
tax-deferred basis.

TAXABLE ACCOUNTS

If fund shares are purchased through taxable accounts, distributions of
net investment income and net short-term capital gains are taxable to you as
ordinary income, except as described below. The dividends from net income of
the Variable Price Funds do not qualify for the 70% dividends-received
deduction for corporations since they are derived from interest income.
Dividends representing income derived from tax-exempt bonds generally retain
the bonds' tax-exempt character in a shareholder's hands. Distributions from
net long-term capital gains are taxable as long-term capital gains regardless
of the length of time you have held the shares on which such distributions
are paid. However, you should note that any loss realized upon the sale or
redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital

gain to you with respect to such shares.

Distributions of capital gains are taxable to you regardless of whether
they are taken in cash or reinvested, even if the value of your shares is
below your cost. If you purchase shares shortly before a capital gain
distribution, you must pay income taxes on the distribution, even though the
value of your investment (plus cash received, if any) will not have
increased. In addition, the share price at the time you purchase shares may
include unrealized gains in the securities held in the investment portfolio
of the Fund. If these portfolio securities are subsequently sold and the
gains are realized, they will, to the extent not offset by capital losses, be
paid to you as a distribution of capital gains and will be taxable to you as
short-term or long-term capital gains.

In January of the year following the distribution, we or your financial
intermediary will send you a Form 1099-DIV notifying you of the status of
your distributions for federal income tax purposes. Distributions may also be
subject to state and local taxes, even if all or a substantial part of such
distributions are derived from interest on U.S. government obligations which,
if you received them directly, would be exempt from state income tax.
However, most but not all states allow this tax exemption to pass through to
Fund shareholders when the Fund pays distributions to its shareholders. You
should consult your tax adviser about the tax status of distributions in your
own state.

If you have not complied with certain provisions of the Internal Revenue
Code and its Regulations, we are required by federal law to withhold and
remit to the IRS 31% of reportable payments (which may include dividends,
capital gains distributions and redemptions). Those regulations require you
to certify that the social security number or tax identification number you
provide is correct and that you are not subject to 31% withholding for
previous under-reporting to the IRS. You will be asked to make the
appropriate certification on your application. PAYMENTS REPORTED BY US THAT
OMIT YOUR SOCIAL SECURITY NUMBER OR TAX IDENTIFICATION NUMBER WILL SUBJECT US
TO A PENALTY OF $50, WHICH WILL BE CHARGED AGAINST YOUR ACCOUNT IF YOU FAIL
TO PROVIDE THE CERTIFICATION BY THE TIME THE REPORT IS FILED, AND IS NOT
REFUNDABLE.

MANAGEMENT

INVESTMENT MANAGEMENT

The Funds are series of the Benham Equity Funds (the "Company"). Under
the laws of the State of California, the board of directors is responsible
for managing the business and affairs of the Company. Acting pursuant to an
investment management agreement entered into with the Company, Benham
Management Corporation (the "Manager") serves as the investment manager of
the Funds. Its principal place of business is 1665 Charleston Road, Mountain
View, California 94043. The Manager has been providing investment advisory
services to investment companies and other clients since 1971.

analysts acting together to manage the assets of the Funds. The
team meets regularly to review portfolio holdings and to discuss purchase and
sale activity. The team adjusts holdings in the Funds' portfolios and the
Funds' asset mix as it deems appropriate in pursuit of the Funds' investment
objectives. Individual portfolio manager members of the team may also adjusts
portfolio holdings of the Funds or of sectors of the Funds as necessary
between team meetings.

In June 1995, Twentieth Century Companies, Inc. ("TCC") acquired Benham
Management International, Inc., the then-parent company of the Manager. TCC
is the parent company of Investors Research Corporation ("IRC"), which
provides investment management services to the Twentieth Century family of
funds. In the acquisition, the Manager became a wholly owned subsidiary of
TCC. Certain employees of the Manager will be providing investment management
services to the Twentieth Century family of funds, while certain Twentieth
Century employees provide investment management services to Benham funds.

The portfolio manager members of the teams managing the Funds described
in this Prospectus and their work experience for the last five years are
listed as follows:

STEVEN COLTON, Portfolio Manager, has had primary responsibility for the
day-to-day operations of the Utilities Fund since its inception in March
1993. Mr. Colton joined the Manager in 1987 and has also managed the Benham
Income & Growth Fund since December of 1990.

WILLIAM MARTIN, Portfolio Manager, is the manager of the portfolio
management team which manages the Gold and Natural Resources Funds and has
had primary responsibility for the day-to-day operations of these Funds since
their inception.

The activities of the Manager are subject only to directions of the
Company's Board of directors. For the services provided to the Funds, the
Manager receives an annual fee which cannot exceed .50% of average daily net
assets. the Manager's fee drops to a marginal rate of .19% of average daily
net assets as Company assets increase.

CODE OF ETHICS

The Company and the Manager have adopted a Code of Ethics, which
restricts personal investing practices by employees of the Manager and its
affiliates. Among other provisions, the Code of Ethics requires that
employees with access to information about the purchase or sale of securities
in the Funds' portfolios obtain preclearance before executing personal
trades. With respect to portfolio managers and other investment personnel,
the Code of Ethics 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 the fund shareholders come before the interests of the
people who manage those funds.

TRANSFER AND ADMINISTRATIVE SERVICES

Twentieth Century Services, Inc., 4500 Main Street, Kansas City,
Missouri, 64111, ("TCS") acts as transfer, administrative services and
dividend paying agent for the funds. It provides facilities, equipment and
personnel to the Funds and is paid for such services by the Funds. For
administrative services, each Fund pays TCS 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 managed by the Manager. The administrative fee
rate ranges from .11% to .08% of average daily net assets, dropping as assets
managed by the Manager increase. For transfer agent services, each Fund pays
TCS a monthly fee for each shareholder account maintained and for each
shareholder transaction executed during that month.

The Funds charge no sales commissions, or "loads," of any kind. However,
investors who do not choose to purchase or sell Fund shares

directly from TCS may purchase or sell Fund shares through registered
broker-dealers and other qualified service providers, who may charge
investors fees for their services. These broker-dealers and service providers
generally provide shareholder, administrative and/or accounting services
which would otherwise be provided by TCS as the Funds' transfer agent. To
accommodate these investors, the Manager and its affiliates have entered into
agreements with some broker-dealers and service providers to provide these
services. Fees for such services are borne normally by the Funds at the rates
normally paid to TCS, which would otherwise provide the services. Any
distribution expenses associated with these arrangements are borne by the
Manager.

DISTRIBUTION OF FUND SHARES

EXPENSES

Each Fund pays certain operating expenses directly, including, but not
limited to: custodian, audit, and legal fees; fees of the independent
directors or trustees; costs of printing and mailing prospectuses, statements
of additional information, proxy statements, notices, and reports to
shareholders; insurance expenses; and costs of registering the Fund's shares
for sale under federal and state securities laws. See the Statements of
Additional Information for a more detailed discussion of independent director
compensation.

FURTHER INFORMATION ABOUT
THE FUNDS

The Company was organized as a California Corporation on December 31,
1987. The Company is a diversified, open-end management investment company.
Its business and affairs are managed by its officers under the direction of
its board of directors.

The principal office of the Company is Twentieth Century Tower, 4500
Main Street, P. O. Box 419200, Kansas City, Missouri 64141-6200. All
inquiries may be made by mail to that address, or by phone to 1-800-345-2021.
(For international callers: 816-531-5575.)

The Funds are individual series of the Company which issues shares with
no par value. Each series is commonly referred to as a fund. The assets
belonging to each series of shares are held separately by the custodian and
in effect each series is a separate fund.

Shares have cumulative voting rights only as prescribed by California
law. This means that the shareholders have the right to cumulate votes in the
election (or removal) of directors.

Unless required by the 1940 Act, it will not be necessary for the
Company to hold annual meetings of shareholders. As a result, shareholders
may not vote each year on the election of directors or the appointment of
auditors. However, pursuant to the Company's by-laws, the holders of shares
representing at least 10% of the votes entitled to be cast may request that
the Company hold a special meeting of shareholders. We will assist in the
communication with other shareholders.

BENHAM
Specialty Funds

Prospectus
September 3, 1996

TWENTIETH CENTURY MUTUAL FUNDS
and THE BENHAM GROUP
- -------------------------------------------

P.O. Box 419200
Kansas City, Missouri
64141-6200
- -------------------------------------------
Person-to-person assistance:
1-800-345-2021 or 816-531-5575
- -------------------------------------------
Automated Information Line:
1-800-345-8765
- -------------------------------------------
Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865
- -------------------------------------------
Fax: 816-340-7962
- -------------------------------------------
Internet: http://www.twentieth-century.com
- -------------------------------------------
BENHAM
EQUITY FUNDS
- --------------------------------------------------------------------------------
BN-BKT-5490 [recycled logo]
9608 Recycled

<PAGE>
BENHAM INCOME & GROWTH FUND
BENHAM EQUITY GROWTH FUND

SERIES OF BENHAM EQUITY FUNDS

4500 Main Street
Kansas City, MO 64111

Person-to-Person Assistance: 1-800-345-2021 or 816-531-5575
Automated: 1-800-345-8765

STATEMENT OF ADDITIONAL INFORMATION

September 3, 1996

This Statement is not a prospectus but should be read in conjunction with the
Funds' current Prospectus dated September 3, 1996. The Funds' Annual Report for
the fiscal year ended December 31, 1995 and Semiannual Report for the period
ended June 30, 1996 are incorporated herein by reference. To obtain a copy of
the Prospectus, Annual Report or Semiannual Report call or write Twentieth
Century Mutual Funds.

TABLE OF CONTENTS

Page

Investment Policies and Techniques 2
Investment Restrictions 11
Portfolio Transactions 13
Valuation of Portfolio Securities 13
Performance 14
Taxes 16
About Benham Equity Funds 17
Directors and Officers 17
Investment Advisory Services 19
Transfer and Administrative Services 21
Direct Fund Expenses 22
Expense Limitation Agreement 22
Additional Purchase and Redemption Information 23
Other Information 23

INVESTMENT POLICIES AND TECHNIQUES

The following paragraphs provide a more detailed description of the securities
and investment practices identified in the Prospectus. Unless otherwise noted,
the policies described in this Statement of Additional Information are not
fundamental and may be changed by the board of directors.

U.S. GOVERNMENT SECURITIES

The Funds 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 supported 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.

REPURCHASE AGREEMENTS

In a repurchase agreement (a "Repo"), a 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. Delays or losses could result if the other
party to the agreement defaults or becomes bankrupt.

Benham Management Corporation (BMC), the Funds' investment advisor, attempts to
minimize the risks associated with repurchase agreements by adhering to the
following criteria:

(1) Limiting the securities acquired and held by a Fund under repurchase
agreement 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 Funds' 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;

(5) Investing no more than 5% of a Fund's total assets in repurchase agreements
that mature in more than seven days (together with any other illiquid
security the Fund holds); and

(6) Taking delivery of all securities subject to repurchase agreement and
holding them in an account at the Funds' custodian bank.

The Funds have received permission from the Securities and Exchange Commission
(SEC) to participate in pooled repurchase agreements collateralized by U.S.
government securities with other mutual funds advised by its investment advisor,
Benham Management Corporation (BMC). Pooled repos are expected to increase the
income the Funds can earn from repo transactions without increasing the risks
associated with these transactions.

WHEN-ISSUED AND FORWARD-COMMITMENT AGREEMENTS

Each 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, a Fund
assumes the rights and risks of ownership, including the risks of price and
yield fluctuations. While a 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, a 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, each 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 a 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 at least 35%. In addition, as an operating policy, each Fund will
not enter into when-issued or forward-commitment transactions with settlement
dates exceeding 120 days.

CONVERTIBLE SECURITIES

Each Fund may buy securities that are convertible into common stock. Listed
below is a brief description of the various types of convertible securities the
Funds 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 its underlying stock. Warrants are
issued with expiration dates. Once a warrant expires, it has no value in the
market.

FOREIGN SECURITIES

Although the Funds may buy securities of foreign issuers in foreign markets,
most of their foreign securities investments are made by purchasing American
Depositary Receipts (ADRs), "ordinary shares," or "New York Shares" in the U.S.
The Funds may invest in foreign-currency-denominated securities that trade in
foreign markets if BMC believes that such investments will be advantageous to
the Funds.

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.

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 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.

To offset the currency risks associated with investing in securities of foreign
issuers, a 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 exchanged 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 a Fund against losses resulting from adverse changes in the
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, it should be noted that using forward contracts to
protect a Fund's foreign investments from currency fluctuations 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
increases.

Foreign exchange dealers do not charge fees for currency conversions. Instead,
they realize a profit based on the difference (the spread) between the prices at
which they are buying and selling various currencies. A dealer may offer to sell
a foreign currency at one rate while simultaneously offering a lesser rate of
exchange on the purchase of that currency.

BMC uses forward contracts for currency hedging purposes only and not for
speculative purposes. The Funds are not required to enter into forward contracts
with regard to their foreign holdings and will not do so unless it is deemed
appropriate by the advisor.

Each 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.

DEPOSITARY RECEIPTS

American Depositary Receipts and European Depositary Receipts ("ADR"s and
"EDR"s) are receipts representing ownership of shares of a foreign-based issuer
held in trust by a bank or similar financial institution. These are designed for
U.S. and European securities markets as alternatives to purchasing underlying
securities in their corresponding national markets and currencies. ADRs and EDRs
can be sponsored or unsponsored.

Sponsored ADRs and EDRs are certificates in which a bank or financial
institution participates with a custodian. Issuers of unsponsored ADRs and EDRS
are not contractually obligated to disclose material information in the United
States. Therefore, there may not be a correlation between such information and
the market value of the unsponsored ADR or EDR.

RESTRICTED SECURITIES

Restricted securities held by the Funds 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, a Fund may be required to pay all or a 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.

SECURITIES LENDING

The Fund may lend its portfolio securities to earn additional income. If a
borrower defaulted on a securities loan, the Fund could experience delays in
recovering the securities it loaned; if the value of the loaned securities
increased in the meantime, the Fund could suffer a loss.

To minimize the risk of default on securities loans, BMC adheres to the
following guidelines prescribed by the board of directors:

(1) TYPE AND AMOUNT OF COLLATERAL. At the time a loan is made, the Fund must
receive, from or on behalf of the borrower, collateral consisting of any
combination of cash and full faith and credit U.S. government securities
equal to not less than 102% of the market value of the securities loaned.
Cash collateral received by the Fund in connection with loans of portfolio
securities may be commingled by the Fund's custodian with other cash and
marketable securities, provided that the loan agreement expressly allows
such commingling. The loan must not reduce the risk of loss or opportunity
for gain in the securities loaned.

(2) ADDITIONS TO COLLATERAL. Collateral must be marked to market daily, and
the borrower must agree to add collateral to the extent necessary to
maintain the 102% level specified in guideline (1). The borrower must
deposit additional collateral no later than the business day following the
business day on which a collateral deficiency occurs or collateral appears
to be inadequate.

(3) TERMINATION OF LOAN. The Fund must have the ability to terminate any loan
of portfolio securities at any time. The borrower must be obligated to
redeliver the borrowed securities within the normal settlement period
following receipt of the termination notice.

(4) REASONABLE RETURN ON LOAN. The borrower must agree that the Fund (a) will
receive all dividends, interest, or other distributions on loaned
securities and (b) will be paid a reasonable return on such loans either
in the form of a loan fee or premium or from the retention by the Fund of
part or all of the earnings and profits realized from the investment of
cash collateral in full faith and credit U.S government securities.

(5) LIMITATIONS ON PERCENTAGE OF PORTFOLIO SECURITIES ON LOAN. The Fund's
loans may not exceed 33-1/3% of its total assets.

(6) CREDIT ANALYSIS. As part of the regular monitoring procedures set forth by
the board of directors that BMC follows to evaluate banks and
broker-dealers in connection with, for example, repurchase agreements and
municipal securities credit issues, BMC will analyze and monitor the
creditworthiness of all borrowers with which portfolio lending
arrangements are contemplated or entered into.

If a borrower fails financially, there may be delays in recovering loaned
securities and a loss in the value of collateral. However, loans will only be
made to parties that meet the guidelines prescribed by the board of directors.

PUT OPTIONS ON INDIVIDUAL SECURITIES

Each Fund may buy puts with respect to stocks underlying its convertible
security holdings. For example, if BMC anticipates a decline in the price of the
stock underlying a convertible security a Fund holds, it may purchase a put
option on the stock. If the stock price subsequently declines, an increase in
the value of the put option could be expected to offset all or a portion of the
effect of the stock's decline on the value of the convertible security.

FUTURES AND OPTIONS TRANSACTIONS

FUTURES CONTRACTS provide for the sale by one party and purchase by another
party of a specific security at a specified future time and price. Futures
contracts are traded on national futures exchanges. Futures exchanges and
trading are regulated under the Commodity Exchange Act by the Commodity Futures
Trading Commission (CFTC), a U.S. government agency.

Although futures contracts, by their terms, call for actual delivery or
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date. Closing out a futures position is done by taking
an opposite position in an identical contract (i.e., buying a contract that has
previously been sold, or selling a contract that has previously been bought).

To initiate and maintain open positions in futures contracts, a Fund is required
to make a good faith margin deposit in cash or government securities with a
broker or custodian. A margin deposit is intended to assure completion of the
contract (delivery or acceptance of the underlying security) if it is not
terminated prior to the specified delivery date. Minimum initial margin
requirements are established by the futures exchanges and may be revised. In
addition, brokers may establish deposit requirements that are higher than the
exchange minimums.

After a futures contract position is opened, the value of the contract is marked
to market daily. If the futures contract price changes to the extent that the
margin on deposit does not satisfy margin requirements, the contract holder is
required to pay an additional "variation" margin. Conversely, changes in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to or
from the futures broker as long as the contract remains open and do not
constitute margin transactions for purposes of the Funds' investment
restrictions.

Those who trade futures contracts may be broadly classified as either "hedgers"
or "speculators." Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities they hold or expect to acquire
for investment purposes. Speculators are less likely to own the securities
underlying the futures contracts they trade and are more likely to use futures
contracts with the expectation of realizing profits from fluctuations in the
prices of the underlying securities.

Although techniques other than trading futures contracts can be used to control
a Fund's exposure to market fluctuations, the use of futures contracts may be a
more effective means of hedging this exposure. While the Funds pay brokerage
commissions in connection with opening and closing out futures positions, these
costs are generally lower than the transaction costs incurred in the purchase
and sale of the underlying securities.

PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a Fund obtains the
right (but not the obligation) to sell the option's underlying instrument at a
fixed strike price. In return for this right, the Fund pays the current market
price for the option (known as the option premium). Options have various types
of underlying instruments, including specific securities, indexes of securities
prices, and futures contracts. A Fund may terminate its position in a put option
it has purchased by allowing it to expire or by exercising the option. If the
option is allowed to expire, the Fund will lose the entire premium it paid. If
the Fund exercises the option, it completes the sale of the underlying
instrument at the strike price. The Fund may also terminate a put option
position by closing it out in the secondary market at its current price if a
liquid secondary market exists.

The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price does
not fall enough to offset the cost of purchasing the option, a put buyer can
expect to suffer a loss (limited to the amount of the premium paid, plus related
transaction costs).

The features of call options are essentially the same as those of put options,
except that the purchaser of a call option obtains the right to purchase, rather
than sell, the underlying instrument at the option's strike price. A call buyer
typically attempts to participate in potential price increases of the underlying
instrument with risk limited to the cost of the option if security prices fall.
At the same time, the buyer can expect to suffer a loss if security prices do
not rise sufficiently to offset the cost of the option.

WRITING PUT AND CALL OPTIONs. If a Fund writes a put option, it takes the
opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the Fund assumes the obligation to pay the strike price
for the option's underlying instrument if the other party chooses to exercise
the option. When writing an option on a futures contract, the Fund will be
required to make margin payments to a broker or custodian as described above for
futures contracts. The Fund may seek to terminate its position in a put option
before it is exercised by closing out the option in the secondary market at its
current price. If the secondary market is not liquid for a put option the Fund
has written, however, the Fund must continue to be prepared to pay the strike
price while the option is outstanding, regardless of price changes, and must
continue to set aside assets to cover its position.

If security prices rise, a put writer would generally expect to profit, although
the gain would be limited to the amount of the premium received. If security
prices remain the same over time, it is likely that the writer will also profit
by being able to close out the option at a lower price. If security prices fall,
the put writer would expect to suffer a loss. This loss should be less than the
loss from purchasing the underlying instrument directly, however, because the
premium received for writing the option should mitigate the effects of the
decline.

Writing a call option obligates a Fund to sell or deliver the option's
underlying instrument in return for the strike price upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the same
time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price even if its current value is greater,
a call writer gives up some ability to participate in security price increases.

COMBINED POSITIONS. A Fund may purchase and write options in combination with
one another, or in combination with futures or forward contracts, in order to
adjust the risk and return characteristics of the overall position. For example,
a Fund may purchase a put option and write a call option on the same underlying
instrument in order to construct a combined position whose risk and return
characteristics are similar to a futures contract. Another possible combined
position would involve writing a call option at one strike price and buying a
call option at a lower price in order to reduce the risk of the written call
option in the event of a substantial price increase. Because combined options
positions involve multiple trades, they result in higher transaction costs and
may be more difficult to open and close out.

OTC OPTIONS. Unlike exchange-traded options, which are standardized with respect
to the underlying instrument, expiration date, contract size, and strike price,
the terms of over-the-counter options (options not traded on exchanges)
generally are established through negotiation with the other party to the option
contract. While this type of arrangement allows a Fund greater flexibility in
tailoring an option to its needs, OTC options generally involve greater credit
risk than exchange-traded options, which are guaranteed by the clearing
organizations of the exchanges where they are traded. The risk of illiquidity is
also greater with OTC options because these options generally can be closed out
only by negotiation with the other party to the option.

OPTIONS ON FUTURES. By purchasing an option on a futures contract, a Fund
obtains the right, but not the obligation, to sell the futures contract (a put
option) or to buy the contract (a call option) at a fixed "strike" price. The
Fund can terminate its position in a put option by allowing it to expire or by
exercising the option. If the option is exercised, the Fund completes the sale
of the underlying security at the strike price. Purchasing an option on a
futures contract does not require a Fund to make margin payments unless the
option is exercised.

CORRELATION OF PRICE CHANGES. Price changes of a Fund's futures and options
positions may not be well correlated with price changes of its other
investments. This may be because of differences between the underlying indexes
and the types of securities the Fund invests in. For example, if a Fund sold a
broad-based index futures contract to hedge against a stock market decline while
completing sales of specific securities in its investment portfolio, the prices
of the securities could move in a different direction than the broad market
index represented by the index futures contract. In the case of an S&P 500
futures contract purchased by a Fund, either in anticipation of stock purchases
or in an effort to be fully invested, failure of the contract to track the Index
accurately could hinder the Fund from achieving its investment objective.

Options and futures prices can also diverge from the prices of their underlying
instruments even if the underlying instruments match the Fund's investments.
Options and futures prices are affected by factors such as current and
anticipated short-term interest rates, changes in volatility of the underlying
instrument, and the time remaining until expiration of the contract; these
factors may not affect security prices the same way. Imperfect correlation may
also result from differing levels of demand in the options and futures markets
and the securities markets, from structural differences in how options and
futures and securities are traded, or from the imposition of daily price
fluctuation limits or trading halts. A Fund may purchase or sell options and
futures contracts with a greater or lesser value than the securities it wishes
to hedge or intends to purchase in an effort to compensate for differences in
volatility between the contract and the securities, although this strategy may
not be successful in all cases. If price changes in a Fund's options or futures
positions are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not offset by
gains in other investments.

LIQUIDITY OF FUTURES CONTRACTS AND OPTIONS. There is no assurance a liquid
secondary market will exist for any particular futures contract or option at any
particular time. Options may have relatively low trading volume and liquidity if
their strike prices are not close to the underlying instrument's current price.
In addition, exchanges may establish daily price fluctuation limits for futures
contracts and options and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days when the
price fluctuation limit is reached or a trading halt is imposed, it may be
impossible for a Fund to enter into new positions or close out existing
positions. If the secondary market for a contract were not liquid because of
price fluctuation limits or otherwise, prompt liquidation of unfavorable
positions could be difficult or impossible, and the Fund could be required to
continue holding a position until delivery or expiration regardless of changes
in value. Under these circumstances, the Fund's access to assets held to cover
its futures and options positions also could be impaired.

RESTRICTIONS ON THE USE OF FUTURES CONTRACTS AND OPTIONS.

The Funds have filed a notice of eligibility for exclusion as a "commodity pool
operator" with the CFTC and the National Futures Association, which regulates
trading in the futures markets. The Funds intend to comply with Section 4.5 of
the regulations under the Commodity Exchange Act, which limits the extent to
which the Funds can commit assets to initial margin deposits and options
premiums.

Each Fund may enter into futures contracts, options, or options on futures
contracts, provided that such obligations represent no more than 20% of the
Fund's net assets. Under the Commodity Exchange Act, a Fund may enter into
futures and options transactions for hedging purposes without regard to the
percentage of assets committed to initial margin and option premiums and for
other than hedging purposes provided that assets committed to initial margin and
option premiums do not exceed 5% of the Fund's net assets. To the extent
required by law, each Fund will set aside cash and appropriate liquid assets in
a segregated account to cover its obligations related to futures contracts and
options.

The Funds intend to comply with tax rules applicable to regulated investment
companies, including a requirement that capital gains from the sale of
securities held less than three months constitute less than 30% of a Fund's
gross income for each fiscal year. Gains on some futures contracts and options
are included in this 30% calculation, which may limit the Funds' investments in
such instruments.

FUTURES AND OPTIONS RELATING TO FOREIGN CURRENCIES. Each Fund may purchase and
sell currency futures and purchase and write currency options to increase or
decrease its exposure to different foreign currencies. Each Fund may also
purchase and write currency options in conjunction with each other or with
currency futures or forward contracts.

Currency futures contracts are similar to forward currency exchange contracts,
except that they are traded on exchanges (and have margin requirements) and have
standard contract sizes and delivery dates. Most currency futures contracts call
for payment or delivery in U.S. dollars. The underlying instrument of a currency
option may be a foreign currency, which generally is purchased or delivered in
exchange for U.S. dollars, although it may be a futures contract. The purchaser
of a currency call obtains the right to purchase the underlying currency, and
the purchaser of a currency put obtains the right to sell the underlying
currency.

The uses and risks of currency futures and options are similar to those of
futures and options relating to securities or indexes, as described above.
Currency futures and option values can be expected to correlate with exchange
rates, but may not reflect other factors that affect the value of a Fund's
investments. A currency hedge, for example, should protect a
deutsche-mark-denominated security from a decline in the deutsche mark, but it
will not protect the Fund against a price decline resulting from a deterioration
in the issuer's creditworthiness. Because the value of a Fund's
foreign-currency-denominated investments will change in response to many factors
other than exchange rates, it may not be possible to match the amount of
currency options and futures to the value of the Fund's foreign investments over
time.

INVESTMENT RESTRICTIONS

The Funds' investment restrictions are set forth below. These restrictions are
fundamental and may not be changed without approval of a majority of the votes
of shareholders of the Fund as determined in accordance with the Investment
Company Act of 1940. Unless otherwise indicated, percentage limitations included
in the restrictions apply at the time transactions are entered into.
Accordingly, any later increase or decrease beyond the specified limitation
resulting from a change in the Fund's net assets will not be considered in
determining whether it has complied with its investment restrictions.

EACH FUND MAY NOT

(1) With respect to 75% of its total assets, purchase the securities of any
issuer (other than securities issued or guaranteed by the U.S. government
or its agencies or instrumentalities) if, as a result, more than 5% of its
total assets would be invested in securities of that issuer.

(2) Purchase the securities of any one issuer if immediately after such
purchase the Fund would hold more than 10% of the outstanding voting
securities of that issuer.

(3) Borrow money except from a bank as a temporary measure to satisfy
redemption requests or for extraordinary or emergency purposes and then
only in an amount not exceeding 33-1/3% of the market value of the Fund's
total assets so that immediately after any such borrowing asset coverage
of at least 300% for all such borrowings exists. To secure any such
borrowing, the Fund may not mortgage, pledge, or hypothecate in excess of
33-1/3% of the value of its total assets. The Fund will not purchase any
security while borrowings representing more than 5% of its total assets
are outstanding. The Fund may also borrow money for temporary or emergency
purposes from other funds or portfolios for which Benham Management
Corporation is the investment advisor, or from a joint account of such
funds or portfolios, as permitted by federal regulatory agencies.

(4) Act as an underwriter of securities issued by others.

(5) Purchase real estate, real estate mortgage loans, interests in real estate
limited partnerships, or interests in oil, gas or mineral exploration or
development programs or leases, provided that this limitation shall not
prohibit (i) the purchase of U.S. Government securities and other debt
securities secured by real estate or interests therein; (ii) the purchase
of marketable securities issued by companies or investment trusts that
deal in real estate or interests therein; or (iii)

purchase of marketable securities issued by companies or other entities or
investment vehicles that engage in businesses relating to the development,
exploration, mining, processing or distributing of oil, gas, or minerals.

(6) Engage in any short-selling operations (except by selling futures
contracts).

(7) Make loans to others, except for the lending of portfolio securities
pursuant to guidelines established by the board of directors or in
connection with purchase of debt securities in accordance with the Fund's
investment objective and policies. The Fund may also lend money to other
funds or portfolios for which BMC is the investment advisor, as permitted
under investment restriction (3) above.

(8) Purchase warrants, valued at the lower of cost or market, in excess of 5%
of the value of the Fund's net assets. Included within that amount, but
not to exceed 2% of the value of the Fund's net assets, may be warrants
which are not listed on the New York or American Stock Exchanges. Warrants
acquired by the Fund at any time in units or attached to securities are
not subject to this restriction.

(9) Purchase securities on margin, except for such short-term credits as may
be necessary for the clearance of transactions, provided that the Fund may
make initial and variation margin payments in connection with purchases or
sales of futures contracts or options on futures contracts.

(10) Invest in securities that are not readily marketable or the disposition of
which is restricted under federal securities laws (collectively "illiquid
securities") if, as a result, more than 5% of the Fund's net assets would
be invested in illiquid securities.

(11) Issue or sell any class of senior security as defined in the Investment
Company Act of 1940 except for notes or other evidences of indebtedness
permitted under investment restriction (3) above and except to the extent
that notes evidencing temporary borrowings or the purchase of securities
on a when-issued or delayed delivery basis might be deemed such.

(12) 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 in the aggregate or more than
5% in any one such security.

(13) Purchase or retain 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 beneficially more than
5% of such securities.

(14) 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.

(15) Invest in the securities of any one issuer if, immediately after such
purchase, more than 25% of the Fund's total assets would be invested in
the securities of issuers having their principal business activities in
the same industry.

PORTFOLIO TRANSACTIONS

Each Fund's assets are invested by BMC in a manner consistent with the Fund's
investment objectives, 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 Funds. 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 that may be issued from time to time. BMC will select
broker-dealers to execute portfolio transactions on behalf of the Funds solely
on the basis of best price and execution.

The Funds' annual portfolio turnover rates are not expected to exceed 150%.
Because a higher turnover rate increases transaction costs and may increase
taxable capital gains, the advisor carefully weighs the potential benefits of
short-term investing against these considerations.

The following table illustrates the Funds' portfolio turnover rates for the
fiscal years ended December 31, 1995 and 1994.

PORTFOLIO TURNOVER RATES
FISCAL FISCAL
FUND 1995 1994

Income & Growth Fund 69.88% 67.96%
Equity Growth Fund 125.86 94.09

Brokerage commissions paid by each Fund during the fiscal years ended December
31, 1995, 1994, and 1993, are indicated in the following table.

BROKERAGE COMMISSIONS
FISCAL FISCAL FISCAL
FUND 1995 1994 1993

Income & Growth Fund $367,093 $236,642 $214,496
Equity Growth Fund 320,306 178,344 134,712

VALUATION OF PORTFOLIO SECURITIES

Each Fund's net asset value per share ("NAV") is calculated by Twentieth Century
Services, Inc. (TCS), as of the close of business of the New York Stock Exchange
(the "Exchange") each day the Exchange is open for business, usually at 3:00
p.m. Central Time. The Exchange has designated the following holiday closings
for 1996: New Year's Day (observed), Presidents` Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day (observed).
Although TCS expects the same holiday schedule to be observed in the future, the
Exchange may modify its holiday schedule at any time.

BMC typically completes its trading on behalf of the Funds in various markets
before the Exchange 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. Securities traded on exchanges will
be valued at their last sale prices. If no sale is reported, the mean between
the latest bid and asked prices is used. Securities traded over-the-counter will
be valued at the mean between the latest bid and asked prices. Fixed-income
securities are priced at market value on the basis of market quotations supplied
by independent pricing services. Trading of securities in foreign markets may
not take place on every day the Exchange is open, and trading takes place in
various foreign markets on days on which the Exchange and the Funds' offices are
not open and the Funds' net asset values are not calculated. The Funds' net
asset values may be significantly affected on days when shareholders have no
access to the Funds. Securities for which market quotations are not readily
available, or which may change in value due to events occuring 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.

Yield quotations for each Fund are based on the investment income per share
earned during a particular 30-day period, less expenses accrued during the
period (net investment income), and are computed by dividing the Fund's net
investment income by its share price on the last day of the period, according to
the following formula:
6
YIELD = 2 [(a - b + 1) - 1]
-----
cd

where a = dividends and interest earned during the period, b = expenses accrued
for the period (net of reimbursements), c = the average daily number of shares
outstanding during the period that were entitled to receive dividends, and d =
the maximum offering price per share on the last day of the period.

Total returns quoted in advertising and sales literature reflect all aspects of
a Fund's return, including the effect of reinvesting dividends and capital gain
distributions and any change in the Fund's net asset value during the period.

Average annual total returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in a 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 a 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 Funds' average annual total returns for the one-year and life-of-fund
periods ended June 30, 1996, are indicated in the following table.

AVERAGE ANNUAL TOTAL RETURNS

FUND ONE YEAR 5 YEAR LIFE OF FUND*

Income & Growth Fund 26.36% 16.51% 18.26%
Equity Growth Fund 24.23 16.00 14.70

* Income & Growth Fund commenced operations on December 17, 1990. Equity Growth
Fund commenced operations on May 9, 1991.

In addition to average annual total returns, each 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.

The Funds' 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 Twentieth
Century funds, are sold with a sales charge or deferred sales charge. Economic
data that may be used for such comparisons may include, but are not limited to:
U.S. Treasury bill, note, and bond yields, money market fund yields, U.S.
government debt and percentage held by foreigners, the U.S. money supply, net
free reserves, and yields on current-coupon GNMAs (source: Board of Governors of
the Federal Reserve System); the federal funds and discount rates (source:
Federal Reserve Bank of New York); yield curves for U.S. Treasury securities and
AA/AAA-rated corporate securities (source: Bloomberg Financial Markets); yield
curves for AAA-rated tax-free municipal securities (source: Telerate); yield
curves for foreign government securities (sources: Bloomberg Financial Markets
and Data Resources, Inc.); total returns on foreign bonds (source: J.P. Morgan
Securities Inc.); various U.S. and foreign government reports; the junk bond
market (source: Data Resources, Inc.); the CRB Futures Index (source: Commodity
Index Report); the price of gold (sources: London 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
funds may also utilize reprints from newspapers and magazines furnished by third
parties to illustrate 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.

Occasionally statistics may be used to illustrate Fund volatility or risk.
Measures of volatility or risk generally are used to compare a 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 the
market, and a beta of less than 1.00 indicates volatility less than the market.
Another measure of volatility or risk is "standard deviation." Standard
deviation is used to measure 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 Funds' shares are sold without a sales charge (load). No-load funds offer an
advantage to investors when compared to load funds with comparable investment
objectives and strategies. For example, if you invest $10,000 in a no-load fund,
100% of your investment is used to buy shares. If you invest $10,000 in a fund
with a 5.5% load, only $9,450 ($10,000 minus $550) is used to buy shares. Over
time, this difference can have a significant effect on total return. Assuming a
compounded annual growth rate of 10% for both investments, the no-load fund
investment would be worth $25,937 after ten years, while the load fund
investment would be worth only $24,511.

The Benham Group has distinguished itself as an innovative provider of low-cost,
true no-load mutual funds. Among other innovations, The Benham Group established
the first no-load fund that invests primarily in zero-coupon U.S. Treasury
securities; the first no-load double tax-free California short-term bond fund;
the first no-load adjustable rate government securities fund; and the first
no-load utilities fund designed to pay monthly dividends.

TAXES

Each Fund intends to qualify annually as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986 (the "Code"), as amended. By
so qualifying, a Fund will not be subject to federal and California income taxes
to the extent that it distributes substantially all of its net investment income
and net realized capital gains distributed to shareholders.

Distributions from the Funds 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. To the extent that a Fund's
dividends 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, 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 the shares were held. However, a loss recognized by a
shareholder in the disposition of shares on which capital gain dividends were
paid (or deemed paid) before the shareholder had held his or her shares 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.

The information above is only a summary of some of the tax considerations
affecting the Funds and their 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 Funds'
distributions also may be subject to state, local, or foreign taxes. A
prospective investor may wish to consult a tax advisor to determine whether
either Fund is a suitable investment based on his or her tax situation.

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 series
and to issue two billion (2,000,000,000) shares of each such series. Within each
series, the directors may issue an unlimited number of shares. Currently, there
are five series: Benham Global Gold Fund, Benham Income & Growth Fund, Benham
Equity Growth Fund, Benham Utilities Income Fund, and Benham Global Natural
Resources Index Fund. With respect to each series, shares issued are fully paid
and nonassessable and have no preemptive, conversion, or similar rights. All
consideration received by BEF for shares of any series, 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 series have equal voting rights, provided that each series votes
separately on matters that pertain to it exclusively. BEF has instituted
dollar-based voting, meaning the number of votes you are entitled to is based
upon the dollar value of their 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 proposed for election,
a shareholder may cast six votes for a single candidate, or three votes for each
of two candidates, etc.

CUSTODIAN BANK: State Street Bank and Trust Company, 225 Franklin Street,
Boston, MA 02101, is custodian of the Fund's assets. Services provided by the
custodian bank include (a) settling portfolio purchases and sales, (b) reporting
failed trades, (c) identifying and collecting portfolio income, and (d)
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. Effective October 7, 1996, Chase Manhattan Bank, 4 Chase
Metrotech Center, Brooklyn, NY 11245 will provide the custodian services for the
Fund.

INDEPENDENT AUDITORS: KPMG Peat Marwick LLP, 1000 Walnut, Suite 1600, Kansas
City, Missouri 64106, serves as the Fund's independent auditors and provides
services including (a) audit of annual financial statements and (b) preparation
of annual federal income tax returns filed on behalf of the Fund.

DIRECTORS AND OFFICERS

Each Fund's activities are overseen by a board of directors, including seven
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 considerations, their affiliation
with either BEF; BEF's investment advisor, Benham Management Corporation (BMC);
BEF's agent for transfer and administrative services, Twentieth Century
Services, Inc. (TCS); BEF's distribution agent, Twentieth Century Securities,
Inc.; the parent corporation, Twentieth Century Companies, Inc. (TCC) or TCC's
subsidiaries; or other funds advised by BMC. Each director listed below also
serves as a trustee or director of other funds advised by BMC. Unless otherwise
noted, a date in parentheses indicates the date the director or officer began
his or her service in a particular capacity. The directors' and officers'
address with the exception of Mr. Stowers III and Ms. Roepke is 1665 Charleston
Road, Mountain View, California 94043. The address of Mr. Stowers III and Ms.
Roepke is 4500 Main Street, Kansas City, Missouri 64111.

DIRECTORS

*JAMES M. BENHAM, chairman of the board of directors (1988), president and chief
executive officer (1996). Mr. Benham is also chairman of the boards of Benham
Financial Services, Inc. (BFS) (1985), BMC (1971), and Benham Distributors, Inc.
(BDI) (1988); president of BMC (1971), and BDI (1988); and a member of the board
of governors of the Investment Company Institute (1988). Mr. Benham has been in
the securities business since 1963, and he frequently comments through the media
on economic conditions, investment strategies, and the securities markets.

ALBERT A. EISENSTAT, independent trustee (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
its Board of Directors (1985 to 1993).

RONALD J. GILSON, independent director (1995); Charles J. Meyers Professor of
Law and Business at Stanford Law School (1979) and the Mark and Eva Stern
Professor of Law and Business at Columbia University School of Law (1992);
counsel to Marron, Reid & Sheehy (a San Francisco law firm, 1984).

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) and a director of
Dimensional Fund Advisors (1982) and the Smith Breeden Family of Funds (1992).
From August 1991 to June 1993, Mr. Scholes was a managing director of Salomon
Brothers Inc. (securities brokerage).

KENNETH E. SCOTT, independent director (1988). Mr. Scott is Ralph M. Parsons
Professor of Law and Business at Stanford Law School (1972) and a director of
RCM Capital Funds, Inc. (June 1994).

EZRA SOLOMON, independent 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).

*JAMES E. STOWERS III, director (1995). Mr. Stowers III is 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 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).

OFFICERS

*JAMES M. BENHAM, president and chief executive officer (1996).

*DOUGLAS A. PAUL, secretary (1988), vice president (1990), and general counsel
(1990); secretary, vice president and general counsel of BMC, BFS, BDI and all
of the funds in the Benham Group.

*ANN N. McCOID, CPA, controller (1988); controller of BFS and all of the funds
in the Benham Group.

*MARYANNE ROEPKE, CPA, chief financial officer and treasurer (1995); vice
president, treasurer and principal accounting officer, Twentieth Century
Strategic Asset Allocations; vice president and treasurer, Twentieth Century
Investors, Inc., Twentieth Century World Investors, Inc., Twentieth Century
Capital Portfolios, Inc., Twentieth Century Premium Reserves, Inc. and TCI
Portfolios, Inc.; vice president, Twentieth Century Services, Inc.

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 director or trustee of all other funds
managed by BMC.

<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 ACCRUED AS PART OF UPON RETIREMENT FROM FUND AND
EACH FUND FUND EXPENSES FUND COMPLEX**
PAID TO DIRECTORS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Albert A. Eisenstat $ 0 (BIGF) Not Applicable Not Applicable $ 0
0 (BEGF)
- ---------------------------------------------------------------------------------------------------------------------------
Ronald J. Gilson $ 861 (BIGF) Not Applicable Not Applicable $48,833
781 (BEGF)
- ---------------------------------------------------------------------------------------------------------------------------
Myron S. Scholes $1578 (BIGF) Not Applicable Not Applicable $65,625
1376 (BEGF)
- ---------------------------------------------------------------------------------------------------------------------------
Kenneth E. Scott $1578 (BIGF) Not Applicable Not Applicable $65,125
1375 (BEGF)
- ---------------------------------------------------------------------------------------------------------------------------
Ezra Solomon $1597 (BIGF) Not Applicable Not Applicable $58,792
1382 (BEGF)
- ---------------------------------------------------------------------------------------------------------------------------
Isaac Stein $1587 (BIGF) Not Applicable Not Applicable $63,625
1376 (BEGF)
- ---------------------------------------------------------------------------------------------------------------------------
Jeanne D. Wohlers $1601(BIGF) Not Applicable Not Applicable $67,375
1384 (BEGF)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Interested directors receive no compensation for their services as such.

** Twentieth Century family of funds includes 66 no-load mutual funds.

As of July 31, 1996, the officers and directors, as a group, owned less than 1%
of the outstanding shares of each Fund.

INVESTMENT ADVISORY SERVICES

Each 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 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 BFS and BDI, into TCC. BMC has served as investment advisor
to the Fund since the Fund's inception. TCC is a holding company that owns all
of the stock of the operating companies that provide the investment management,
transfer agency, shareholder service, and other services for the Twentieth
Century funds. James E. Stowers, Jr., controls TCC by virtue of his ownership of
a majority of its common stock. BMC has been a registered investment advisor
since 1971 and is investment advisor to other funds in The Benham Group.

Each 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 either a majority of the Fund's
outstanding voting securities 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.

Each Fund's 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.

Pursuant to the investment advisory agreements, BMC provides each Fund with
investment advice and portfolio management services in accordance with the
Fund's investment objectives, policies, and restrictions. BMC determines what
securities will be purchased and sold by the Funds and assist the Funds'
officers in carrying out decisions made by the board of directors.

For these services, each Fund pays BMC a monthly investment advisory fee equal
to its pro rata share of the dollar amount derived from offering a percentage of
BEF's average daily net assets to the following investment advisory fee rate
schedule:

.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

Investment advisory fees paid by each 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 reimbursements as described below.

INVESTMENT ADVISORY FEES

FISCAL FISCAL FISCAL
FUND 1995 1994 1993

Income & Growth Fund $857,968 $778,787 $538,545
Equity Growth Fund 412,627 303,587 222,347

TRANSFER AND ADMINISTRATIVE SERVICES

Twentieth Century Services, Inc., 4500 Main Street, Kansas City, Missouri,
64111, (TCS) acts as transfer, administrative services and dividend paying agent
for the Funds. TCS provides facilities, equipment and personnel to the Funds and
is paid for such services by the Funds. For administrative services, each Fund
pays TCS 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 Fund managed by the
Manager to the following administrative fee rate schedule:

GROUP ASSETS ADMINISTRATIVE FEE RATE

up to $4.5 billion .11%
up to $6 billion .10
up to $9 billion .09
over $9 billion .08

For transfer agent services, each Fund pays TCS a monthly fee of $1.3958 (Income
& Growth Fund) or $1.1875 (Equity Growth Fund) for each shareholder account
maintained and $1.35 (both Funds) for each shareholder transaction executed
during that month.

Administrative service and transfer agent fees paid by each Fund for the fiscal
years ended December 31, 1995, 1994, and 1993, are indicated in the following
tables. Fee amounts are net of expense limitations as described on the next
page.

ADMINISTRATIVE FEES
FISCAL FISCAL FISCAL
FUND 1995 1994 1993

Income & Growth Fund $264,645 $229,311 $174,067
Equity Growth Fund 126,295 86,954 76,262

TRANSFER AGENT FEES
FISCAL FISCAL FISCAL
FUND 1995 1994 1993

Income & Growth Fund $472,699 $476,007 $408,480
Equity Growth Fund 240,686 207,987 167,147

DIRECT FUND EXPENSES

Each Fund pays certain operating expenses that are not assumed by BMC or TCS.
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 AGREEMENT

As part of the investment advisory agreement between BEF and BMC, the directors
set an expense limitation, pursuant to which BMC limited each Fund's expenses to
.75% of the Fund's average daily net assets until May 31, 1997. The agreement
provided that BMC could recoup amounts absorbed on behalf of each Fund during
the preceding 11 months if, and to the extent that, for any given month, the
Fund's expense ratio (net reimbursements) was lower than the expense guarantee
rate in effect at the time, but not during any period, during which BMC has
agreed, pursuant to the expense limitation, to limit the Fund's expenses to an
amount less than the expense guarantee rate.

VOLUNTARY BMC EXPENSE LIMITATION. BMC voluntarily absorbed all expenses for
Benham Income & Growth Fund and Benham Equity Growth Fund through September 30,
1991, and October 31, 1991, respectively.

Net amounts absorbed and recouped for the fiscal years ended December 31, 1995,
1994, and 1993, are indicated in the table below.

NET AMOUNTS ABSORBED (RECOUPED)

FISCAL FISCAL FISCAL
FUND 1995 1994 1993

Income & Growth Fund 0 ($38,345) $114,063
Equity Growth Fund (2,726) 2,871 66,494

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The Funds' shares are continuously offered at NAV. Share certificates are issued
(without charge) only when requested in writing. Certificates are not issued for
fractional shares. Dividend and voting rights are not affected by the issuance
of certificates.

- --------------------------------------------------------------------------------
FUND SHAREHOLDER # OF SHARES HELD % OF TOTAL
NAME AND ADDRESS SHARES OUTSTANDING

- --------------------------------------------------------------------------------

Benham Charles Schwab & Co. 4,627,365.087 16.7%
Income & Growth 101 Montgomery Street
Fund San Francisco, CA 94104-4122

- --------------------------------------------------------------------------------
Benham Charles Schwab & Co. 1,390,293.034 11.1%
Equity Growth 101 Montgomery Street
Fund San Francisco, CA 94104-4122

- --------------------------------------------------------------------------------

As of July 31, 1996, to BEF`s knowledge, no other shareholder was the record
holder or beneficial owner of 5% or more of the Fund`s total shares outstanding.

TCS charges neither fees nor commissions on the purchase and sale of fund
shares. However, TCS may charge fees for special services requested by a
shareholder or necessitated by acts or omissions of a shareholder. For example,
TCS may charge a fee for processing dishonored investment checks or stop-payment
requests. See the Investor Services Guide for more information.

Share purchases and redemptions are governed by California law.

OTHER INFORMATION

The Fund's investment advisor, BMC, has been continuously registered with the
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
Securities and Exchange Commission.

For further information, please 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.

23
<PAGE>
BENHAM GLOBAL NATURAL RESOURCES INDEX FUND

A SERIES OF BENHAM EQUITY FUNDS

4500 Main Street
Kansas City, MO 64111

Person-to-Person Assistance: 1-800-345-2021 or 816-531-5575
Automated: 1-800-345-8765

STATEMENT OF ADDITIONAL INFORMATION

September 3, 1996

This Statement is not a Prospectus but should be read in conjunction with the
Fund's current Prospectus dated September 3, 1996. The Fund's Annual Report for
the fiscal year ended December 31, 1995 and Semiannual Report for the period
ended June 30, 1996 are incorporated herein by reference. To obtain a copy of
the Prospectus, Annual Report or Semiannual Report, call or write Twentieth
Century Mutual Funds.

TABLE OF CONTENTS

Page

Investment Policies and Techniques 2
Investment Restrictions 12
Portfolio Transactions 14
Valuation of Portfolio Securities 14
Performance 14
Taxes 17
About Benham Equity Funds 20
Directors and Officers 20
Investment Advisory Services 22
Transfer and Administrative Services 24
Direct Fund Expenses 24
Expense Limitation Agreements 24
Additional Purchase and Redemption Information 25
Other Information 25

INVESTMENT POLICIES AND TECHNIQUES

The Fund may purchase and sell indexed securities and may engage in futures and
options transactions for investment as well as hedging purposes to the extent
permitted by applicable law. Indexed securities, as described below, are a type
of investment security and, accordingly, may fluctuate in value.

U.S. GOVERNMENT SECURITIES

U.S. government securities include 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 supported 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.

REPURCHASE AGREEMENTS

In a repurchase agreement (a "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. Delays or losses could result if the other
party to the agreement defaults or becomes bankrupt.

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) that are deemed to be
creditworthy under guidelines established by a nationally recognized
statistical rating organization (a "rating agency") and approved by the
Fund's board of directors;

(3) Monitoring the creditworthiness of all firms involved in repurchase
agreement transactions;

price before the broker-dealer deposits additional securities with the
Fund's custodian or sub-custodian;

(5) Investing no more than 15% of the Fund's net assets in repurchase
agreements that mature in more than seven days; and

(6) Taking delivery of all securities subject to a repurchase agreement and
holding them in an account at the Fund's custodian bank.

The Fund has received permission from the Securities and Exchange Commission
(SEC) to participate in pooled repurchase agreements collateralized by U.S.
government securities with other mutual funds advised by its investment advisor
Benham Management Corporation (BMC). Pooled repos are expected to increase the
income the Fund can earn from repo transactions without increasing the risks
associated with these transactions.

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).

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.

On the settlement date, the market value of the security may be more or less
than its purchase or sale price under the agreement. If the other party to a
when-issued or forward-commitment agreement fails to deliver or pay for the
security, the Fund could miss a favorable price or yield opportunity or suffer a
loss. The Fund does not earn interest on purchased securities until the
settlement date.

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.

As an operating policy, the Fund will not commit more than 35% of its total
assets to when-issued or forward-commitment agreements. If fluctuations in the
value of securities held cause more than 35% of a Fund's total assets to be
committed under when-issued or forward-commitment agreements, the advisor (BMC)
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%.
However, BMC need not sell such commitments. In addition, as an operating
policy, the Fund will not enter into when-issued or forward-commitment
transactions with settlement dates exceeding 120 days.

CONVERTIBLE SECURITIES

The Fund may buy securities that are convertible into common stock. Listed below
is a brief descriptions 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 provide 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.

FOREIGN SECURITIES

The Fund's investments in securities of foreign issuers may subject the Fund to
additional investment risks.

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 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 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.

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 exchanged 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,
the advisor can protect the Fund against losses resulting from adverse changes
in the relationship between the U.S. dollar and the foreign currency between the
date the security is purchased or sold and the date on which payment is made or
received. However, it should be noted that using forward contracts to protect
the Fund's foreign investments from currency fluctuations 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.

Foreign exchange dealers do not charge fees for currency conversions. Instead,
they realize a profit based on the difference (the spread) between the prices at
which they are buying and selling various currencies. A dealer may offer to sell
a foreign currency at one rate, while simultaneously offering a lesser rate of
exchange on the purchase of that currency.

The Fund 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 it 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.

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 a 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.

SECURITIES LENDING

To minimize the risk of default on securities loans, BMC adheres to the
following guidelines prescribed by the board of directors:

(5) LIMITATIONS ON PERCENTAGE OF PORTFOLIO SECURITIES ON LOAN. The Fund's
loans may not exceed 33-1/3% of its total assets.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS

BMC may engage in foreign currency exchange transactions on behalf of the Fund
in order to manage currency risk. Foreign currencies will be purchased and sold
regularly, either in the spot (i.e., cash) market or in the forward market
(through forward foreign currency exchange contracts, or "forward contracts").

A forward foreign currency exchange contract is an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
agreed upon by the parties, commencing

with the date of the contract, at a price set at the time of the contract. When
the Fund agrees to buy or sell a security denominated in a foreign currency, it
may enter into a forward contract to "lock in" the U.S. dollar price of the
security. By entering into a forward contract for the purchase or sale, for a
fixed amount of U.S. dollars, of the amount of foreign currency involved in the
underlying securities transaction, BMC can protect the Fund against a possible
loss resulting from an adverse change in the relationship between the U.S.
dollar and the subject foreign currency between the date the security is
purchased or sold and the date payment is made or received. This type of
transaction is sometimes referred to as a "position hedge."

Successful use of forward contracts depends on BMC's skill in analyzing and
predicting currency values. Although they are used for settlement purposes,
forward contracts alter the Fund's exposure to currency exchange rate activity
and could result in losses to the Fund if currencies do not perform as BMC
anticipates. The Fund may also incur significant costs when converting assets
from one currency to another.

The currency management techniques discussed above are limited by various
constraints, including the intention to protect the U.S. tax status of the Fund
as a regulated investment company.

NON-SECTOR EQUITY SECURITIES

The Fund may invest in companies engaged in the natural resources industry that
do not meet all of the criteria for inclusion in the Energy and Basic Materials
sectors (excluding chemical companies) of the Dow Jones World Stock Index. These
may include small companies that do not meet the capitalization requirement for
inclusion in the Energy and Basic Materials sectors ("Sectors") but that BMC
believes represent significant investment opportunities for the Fund.

Within this category, BMC attempts to select securities of issuers whose
revenues and earnings are expected to be influenced by changes in the prices of
natural resources and that are expected to perform in a manner that causes the
Fund s performance to closely track the performance of the Sectors.

DEPOSITARY RECEIPTS

American Depositary Receipts ("ADR"s) and European Depositary Receipts and
("EDR"s) are receipts representing ownership of a foreign-based issuer's shares
held in trust by a bank or similar financial institution. These are designed for
the U.S. and European securities markets as alternatives to the purchase of
underlying securities in their corresponding national markets and currencies.
ADRs and EDRs can be sponsored or unsponsored.

FUTURES AND OPTIONS TRANSACTIONS

FUTURES TRANSACTIONS. The Fund may engage in futures transactions. Such
transactions may be used to maintain cash reserves while remaining fully
invested, to facilitate trading, to reduce transaction costs, or to pursue
higher investment returns when a futures contract is priced more attractively
than its underlying security or index.

Futures contracts provide for the sale by one party and purchase by another
party of a security at a specified future time and price. Although futures
contracts, by their terms, generally call for actual delivery or acceptance of
the underlying securities, in most cases the contracts are closed out before the
settlement date. The Fund can close out a futures position by taking an opposite
position in an identical contract (i.e., buying a contract that has previously
been sold or selling a contract that has previously been bought).

To initiate and maintain open positions in futures contracts, the Fund is
required to make a good faith margin deposit in cash or government securities
with a broker or custodian. A margin deposit is intended to assure completion of
the contract (delivery or acceptance of the underlying security) if it is not
terminated prior to the specified delivery date. Minimum initial margin
requirements are established by the futures exchanges and may be revised. In
addition, brokers may establish deposit requirements that are higher than the
exchange minimums.

Once a futures contract position is opened, the value of the contract is marked
to market daily. If the futures contract price changes to the extent that the
margin on deposit does not satisfy margin requirements, the contract holder is
required to pay additional "variation" margin. Conversely, changes in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to or
from the futures broker as long as the contract remains open and do not
constitute margin transactions for purposes of the Fund's investment
restrictions.

Some futures contract strategies carry a substantial risk of loss, due to both
the low margin deposits required and the high degree of leverage involved in
futures pricing. A relatively small movement in a futures contract may result in
immediate, substantial gains or losses to the Fund.

Although techniques other than trading futures contracts can be used to control
a Fund's exposure to market fluctuations, the use of futures contracts may be a
more effective means of hedging this exposure. While the Fund pays brokerage
commissions in connection with opening and closing out futures positions, these
costs are lower than the transaction costs incurred in the purchase and sale of
the underlying securities.

PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the Fund obtains
the right (but not the obligation) to sell the option's underlying instrument at
a fixed strike price. In return for this right, the Fund pays the current market
price for the option (known as the option premium). Options have various types
of underlying instruments, including specific securities, indexes of securities
prices, and futures contracts. The Fund may terminate its position in a put
option it has purchased by allowing it to expire or by exercising the option. If
the option is allowed to expire, the Fund will lose the entire premium it paid.
If the Fund exercises the option, it completes the sale of the underlying
instrument at the strike price. The Fund may also terminate a put option
position by closing it out in the secondary market at its current price if a
liquid secondary market exists.

The features of call options are essentially the same as those of put options,
except that the purchaser of a call option obtains the right to purchase, rather
than sell, the underlying instrument at

the option's strike price. A call buyer typically attempts to participate in
potential price increases of the underlying instrument with risk limited to the
cost of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to offset
the cost of the option.

WRITING PUT AND CALL OPTIONS. If the Fund writes a put option, it takes the
opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the Fund assumes the obligation to pay the strike price
for the option's underlying instrument if the other party chooses to exercise
the option. When writing an option on a futures contract, the Fund will be
required to make margin payments to a broker or custodian as described above for
futures contracts. The Fund may seek to terminate its position in a put option
it writes before exercise by closing out the option in the secondary market at
its current price. If the secondary market is not liquid for a put option the
Fund has written, however, the Fund must continue to be prepared to pay the
strike price while the option is outstanding, regardless of price changes, and
must continue to set aside assets to cover its position.

If security prices rise, a put writer will generally expect to profit, although
the gain will be limited to the amount of the premium received. If security
prices remain the same over time, it is likely that the writer will also profit
by being able to close out the option at a lower price. If security prices fall,
the put writer will expect to suffer a loss. This loss should be less than the
loss from purchasing the underlying instrument directly, however, because the
premium received for writing the option should mitigate the effects of the
decline.

Writing a call option obligates the Fund to sell or deliver the option's
underlying instrument in return for the strike price upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the same
time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price even if its current value is greater,
a call writer gives up some ability to participate in security price increases.

COMBINED POSITIONS. The Fund may purchase and write options in combination with
one another or in combination with futures or forward contracts in order to
adjust the risk and return characteristics of the overall position. For example,
the Fund may purchase a put option and write a call option on the same
underlying instrument in order to construct a combined position whose risk and
return characteristics are similar to selling a futures contract. Another
possible combined position would involve writing a call option at one strike
price and buying a call option at a lower price in order to reduce the risk of
the written call option in the event of a substantial price increase. Because
combined options positions involve multiple trades, they result in higher
transaction costs and may be more difficult to open and close out.

OVER-THE-COUNTER OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter ("OTC") options (options not traded
on exchanges) generally are established through negotiation with the other party
to the option contract. While this type of arrangement allows the Fund greater
flexibility in tailoring an option to its needs, OTC options generally involve
greater credit risk than exchange-traded options, which are guaranteed by the
clearing organizations of the exchanges where they are traded. The risk of
illiquidity is also greater with OTC options because these options generally can
be closed out only by negotiation with the other party to the option.

OPTIONS ON FUTURES. By purchasing an option on a futures contract, the Fund
obtains the right, but not the obligation, to sell the futures contract (a put
option) or to buy the contract (a call option) at a fixed "strike" price. The
Fund can terminate its position in a put option by allowing it to expire or by
exercising the option. If the option is exercised, the Fund completes the sale
of the underlying security at the strike price. Purchasing an option on a
futures contract does not require the Fund to make margin payments unless the
option is exercised.

CORRELATION OF PRICE CHANGES. Because there are a limited number of types of
exchange-traded futures and options contracts, it is likely that the
standardized contracts available will not match the Fund's current or
anticipated investments exactly. The Fund may invest in futures and options
contracts based on securities with different issuers, maturities, or other
characteristics than the securities in which they typically invest (for example,
hedging intermediate-term securities with a futures contract based on an index
of long-term bond prices); this strategy involves a risk that the futures
position will not track the performance of the Fund's other investments.

Options and futures prices can diverge from the prices of their underlying
instruments even if the underlying instruments correlate well with the Fund's
investments. Options and futures prices are affected by factors such as current
and anticipated short-term interest rates, changes in volatility of the
underlying instrument, and the time remaining until expiration of the contract,
all of which may not affect security prices the same way. Imperfect correlation
may also result from differing levels of demand in the options and futures
markets and the securities markets, from structural differences in how options
and futures and securities are traded, or from the imposition of daily price
fluctuation limits or trading halts. The Fund may purchase or sell options and
futures contracts with a greater or lesser value than the securities it wishes
to hedge or intends to purchase in an effort to compensate for differences in
volatility between the contract and the securities, although this may not be
successful in all cases. If price changes in the Fund's options or futures
positions are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not offset by
gains in other investments.

FUTURES AND OPTIONS CONTRACTS RELATING TO FOREIGN CURRENCIES. The Fund may
purchase and sell currency futures and purchase and write currency options to
increase or decrease its exposure to different foreign currencies. The Fund may
also purchase and write currency options in conjunction with currency futures or
forward contracts.

Currency futures contracts are similar to forward currency exchange contracts,
except that they are traded on exchanges and have standard contract sizes and
delivery dates. Most currency futures contracts call for payment or delivery in
U.S. dollars.

The uses and risks of currency futures and options are similar to those of
futures and options relating to securities or indexes, as described above.
Currency futures' and options' values can be expected to correlate with exchange
rates, but may not reflect other factors (such as exchange rates) that affect
the value of the Fund's investments. A currency hedge, for example, should
protect a German mark-denominated security from a decline in the German mark,
but it will not protect the Fund against a price decline resulting from a
deterioration in the issuer's creditworthiness. It may not always be possible to
match currency futures to the Fund's foreign securities holdings.

RISKS AND LIQUIDITY OF FUTURES CONTRACTS AND OPTIONS. Futures and options have
risks associated with their use: possible default by the other party to the
transaction; illiquidity; and, to the extent BMC's interpretation of certain
market movements is incorrect, the risk that the use of such

transactions could result in losses greater than if they had not been used.
Losses resulting from the use of these transactions would reduce net asset value
and possibly income.

There is no assurance a liquid secondary market will exist for any particular
futures contract or option at any particular time. Options may have a relatively
low trading volume and liquidity if their strike prices are not close to the
underlying instrument's current price. In addition, exchanges may establish
daily price fluctuation limits for futures contracts and options and may halt
trading if a contract's price moves upward or downward more than the limit on a
given day. On volatile trading days when the price fluctuation limit is reached
or a trading halt is imposed, it may be impossible for the Fund to enter into
new positions or close out existing positions. If the secondary market for a
contract were not liquid, because of price fluctuation limits or otherwise,
prompt liquidation of unfavorable positions could be difficult or impossible,
and the Fund could be required to continue holding a position until delivery or
expiration regardless of changes in the value of the position. Under these
circumstances, the Fund's access to assets held to cover future positions could
also be impaired.

Futures and options trading on foreign exchanges may not be regulated as
effectively as similar transactions in the U.S. and may not involve clearing
mechanisms or guarantees similar to those available in the U.S. The value of a
futures contract or option traded on a foreign exchange may be adversely
affected by lesser trading volume and the imposition of different exercise and
settlement terms, trading procedures, and margin requirements.

RESTRICTIONS ON THE USE OF FUTURES CONTRACTS AND OPTIONS.

The Fund has filed a notice of eligibility for exclusion as a "commodity pool
operator" with the Commodity Futures Trading Commission (CFTC) and the National
Futures Association, which regulates trading in the futures markets. The Fund
intends to comply with Section 4.5 of the regulations under the Commodity
Exchange Act, which limits the extent to which the Fund can commit assets to
initial margin deposits and options premiums.

The Fund may enter into futures transactions (including related options) for
hedging purposes without regard to the percentage of assets committed to initial
margin and for other than hedging purposes provided that assets committed to
initial margin deposits on such instruments, plus premiums paid for open futures
options positions, less the amount by which any such positions are
"in-the-money," do not exceed 5% of the Fund's total assets. To the extent
required by law, the Fund will set aside cash and appropriate liquid assets in a
segregated account to cover its obligations related to futures contracts and
options. Financial futures or options purchased or sold by the Fund will be
standardized and traded through the facilities of a U.S. or foreign securities
association or listed on a U.S. or foreign securities or commodities exchange,
board of trade, or similar entity, or quoted on an automatic quotation system,
except that the Fund may effect transactions in over-the-counter options with
primary U.S. Government securities dealers recognized by the Federal Reserve
Bank of New York. In addition, the Fund has undertaken to limit aggregate
premiums paid on all options purchased by the Fund to no more than 5% of the
Fund's total net asset value.

The Fund intends to comply with tax rules applicable to regulated investment
companies, including a requirement that capital gains from the sale of
securities held less than three months constitute less than 30% of the Fund's
gross income for each fiscal year. Gains on some futures contracts and options
are included in this 30% calculation, which may limit the Fund's investments in
these instruments.

INDEXED SECURITIES

The Fund may invest in indexed securities whose value is linked to commodities,
including, but not limited to, notes indexed to the Goldman Sachs Commodity
Index (GSCI). The GSCI is composed of energy, agricultural, livestock, and
metals commodities. The Fund may invest in notes indexed to the entire GSCI or
to certain components of the GSCI.

A commodity-linked note enables the investor to purchase a note whose coupons or
redemption value is linked to the performance of a particular commodity price.
The Fund may purchase and sell indexed securities for investment purposes as
well as hedging purposes to the extent permitted by applicable law. Indexed
securities may have return characteristics similar to direct investments in the
underlying commodity or to one or more options on the underlying commodity.
Indexed securities may be more volatile than the underlying commodity itself and
present many of the same risks as investing in futures and options. Indexed
securities are also subject to credit risks associated with the issuer of the
security.

The Fund may invest in indexed securities to track the Sectors at lower
transaction costs or to take advantage of investment opportunities not
represented by the Sectors.

INVESTMENT RESTRICTIONS

The Fund's investment restrictions set forth below are fundamental and may not
be changed without approval of a majority of the outstanding votes of the
shareholders of the Fund as determined in accordance with the Investment Company
Act of 1940 (the "1940 Act").

THE FUND MAY NOT:

(1) Borrow money except from a bank as a temporary measure to satisfy
redemption requests or for extraordinary or emergency purposes provided
that the Fund maintains asset coverage of at least 300% for all such
borrowings. The Fund may borrow money for temporary or emergency purposes
from other funds or portfolios for which BMC is the investment advisor or
from a joint account of such funds or portfolios, as permitted by federal
regulatory agencies.

(2) Act as an 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.

(3) 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
investing in securities or other instruments backed by real estate or
securities related to the real estate business); physical commodities or
contracts relating to physical commodities; or interests in oil, gas
and/or mineral exploration development programs or leases. This
restriction shall not be deemed to prohibit the Fund from purchasing or
selling currencies; entering into futures contracts on securities,
currencies, or indexes of such securities or currencies, or any other
financial instruments; purchasing and selling options on such futures
contracts; and investing in securities or other instruments backed by
physical commodities.

(4) Make loans to others, except for the lending of portfolio securities
pursuant to guidelines established by the board of directors and except
those otherwise in accordance with the Fund's investment objective and
policies.

(5) Issue senior securities, except as permitted under the 1940 Act.

(6) Purchase any security if, as a result, 25% or more of the Fund's total
assets will be invested in the securities of issuers having their
principal business in the same industry, except that the Fund will invest
more than 25% of its assets in securities of issuers in the natural
resources industry. This limitation does not apply to securities issued by
the U.S. government or any of its agencies or instrumentalities.

The Fund is also subject to the following restrictions that are not fundamental
and may, therefore, be changed by the board of directors without shareholder
approval.

THE FUND MAY NOT:

(a) 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 transactions in options and futures contracts are not deemed to
constitute short sales of securities.

(b) Purchase warrants, valued at the lower of cost or market, in excess of 10%
of the Fund's net assets. Included within that amount, but not to exceed
2% of the Fund's 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.

(c) 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 the purchase of
securities on margin.

(d) Invest in securities that are not readily marketable or that are illiquid
because they are subject to legal or contractual restrictions on resale
(collectively, "illiquid securities") if, as a result, more than 15% of
the Fund's net assets would be invested in illiquid securities.

(e) Acquire or retain the securities of any other investment company if, as a
result, more than 3% of such investment company's outstanding shares would
be held by the Fund, more than 5% of the value of the Fund's assets would
be invested in shares of such investment company or more than 10% of the
value of the Fund's assets would be invested in shares of investment
companies in the aggregate, or except in connection with a merger,
consolidation, acquisition, or reorganization.

(f) Invest in securities of an issuer that, together with any predecessor or
unconditional guarantor, 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, except for obligations issued or
guaranteed by the U.S. government or its agencies.

Unless otherwise indicated, percentage limitations included in the restrictions
apply at the time transactions are entered into. Accordingly, any later increase
or decrease beyond the specified limitation resulting from a change in the
Fund's net assets will not be considered in determining whether the Fund has
complied with its investment restrictions.

PORTFOLIO TRANSACTIONS

The Fund's assets are invested by BMC in a manner consistent with the Fund's
investment objectives, 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 relating 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 with
broker-dealers orders subject to and in accordance with any instructions from
the board of directors that may be issued 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.

The Fund's annual portfolio turnover rate is not expected to exceed 100%.
Because a higher turnover rate increases transaction costs and may increase
taxable capital gains, the advisor carefully weighs the potential benefits of
short-term investing against these considerations. There was no portfolio
turnover for the period from September 15, 1994 (commencement of operations),
through December 31, 1994. The Fund`s portfolio turnover rate for the period
ended December 31, 1995 was 39%.

VALUATION OF PORTFOLIO SECURITIES

The Fund's net asset value per share ("NAV") is calculated by Twentieth Century
Services, Inc. (TCS), as of the close of business of the New York Stock Exchange
(the "Exchange") each day the Exchange is open for business, usually at 3:00
p.m. Central Time. The Exchange has designated the following holiday closings
for 1996: New Year's Day (observed), Presidents` Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day (observed).
Although TCS expects the same holiday schedule to be observed in the future, the
Exchange may modify its holiday schedule at any time.

BMC typically completes its trading on behalf of the Fund in various markets
before the Exchange 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. Securities traded on exchanges will be valued at their last
sale prices. If no sale is reported, the mean between the latest bid and asked
prices is used. Securities traded over-the-counter will be valued at the mean
between the latest bid and asked prices. Fixed-income securities are priced at
market value on the basis of market quotations supplied by independent pricing
services. Trading of securities in foreign markets may not take place on every
day the Exchange is open, and trading takes place in various foreign markets on
days on which the Exchange 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 occuring 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 Fund's yield and total return may be quoted in advertising and sales
literature. These figures, as well as the Fund's share prices, will vary. Past
performance should not be considered an indication of future results.

Yield quotations for the Fund are based on the investment income per share
earned during a particular 30-day period, less expenses accrued during the
period (net investment income), and are computed by dividing the Fund's net
investment income by its share price on the last day of the period, according to
the formula on the next page:

6
YIELD = 2 [(a - b + 1) - 1]
-----
cd

Total returns quoted in advertising and sales literature reflect all aspects of
the Fund's return, including the effect of reinvesting dividends and capital
gain distributions (if any) and any change in the Fund's NAV during the period.

Average annual total returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in 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.

In addition to average annual total returns, the Fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Average annual and cumulative total returns may be quoted
as 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. Performance information may be quoted numerically or in a table, graph,
or similar illustration. The Fund's average annual total return for the one-year
and life-of-fund periods ended June 30, 1996 are indicated in the following
table.

AVERAGE ANNUAL TOTAL RETURN

One Year 14.57%
Since Inception* 9.86

* The Fund commenced operations on September 15, 1994.

deferred sales charge. Sources of economic data that may be considered in making
such comparisons may include, but are not limited to, U.S. Treasury bill, note,
and bond yields, money market fund yields, U.S. government debt and percentage
held by foreigners, the U.S. money supply, net free reserves, and yields on
current-coupon Government National Mortgage Association securities (GNMAs)
(source: Board of Governors of the Federal Reserve System); the federal funds
and discount rates (source: Federal Reserve Bank of New York); yield curves for
U.S. Treasury securities and AA/AAA-rated corporate securities (source:
Bloomberg Financial Markets); yield curves for AAA-rated tax-free municipal
securities (source: Telerate); yield curves for foreign government securities
(sources: Bloomberg Financial Markets and Data Resources, Inc.); total returns
on foreign bonds (source: J.P. Morgan Securities Inc.); various U.S. and foreign
government reports; the junk bond market (source: Data Resources, Inc.); the CRB
Futures Index (source: Commodity Index Report); the price of gold (sources:
London a.m./p.m. fixing and New York Comex Spot Price); rankings of any mutual
fund or mutual fund category tracked by Lipper Analytical Services, Inc. or
Morningstar, Inc.; mutual fund rankings published in major nationally
distributed periodicals; data provided by the Investment Company Institute;
Ibbotson Associates, Stocks, Bonds, Bills, and Inflation; major indexes of stock
market performance; and indexes and historical data supplied by major securities
brokerage or investment advisory firms. The Fund may also utilize reprints from
newspapers and magazines furnished by third parties to illustrate historical
performance.

Indexes may assume reinvestment of coupon interest or dividends, but, generally,
they do not reflect administrative and management costs such as those incurred
by a mutual fund.

Statistics may be used in advertising and sales literature to illustrate
historical and projected demand for commodities owned or processed by companies
in which the Fund invests. This may include illustrations such as a chart that
shows historical and projected demand for multiple energy sources measured in
barrels of oil equivalents, or "BOEs."

Occasionally statistics may be used to illustrate Fund volatility or risk.
Measures of volatility or risk generally are 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 an investor pays $10,000
to buy shares of a load fund with an 8.5% sales charge, $850 of that $10,000 is
paid as a commission to a salesperson, leaving only $9,150 to put to work for
the investor. Over time, the difference between paying a sales load and not
paying one can have a significant effect on an investor's total return. The
Mutual Fund Education Alliance provides a comparison of $10,000 invested in each
of two mutual funds, one with an 8.5% sales load and one without a sales load.
Assuming a compounded annual growth rate of 10% for both investments, the
no-load fund investment is worth $25,937 over ten years, and the load fund
investment is worth only $23,732.

BMC may obtain Fund ratings from one or more rating agencies and may publish
such ratings in advertisements and sales literature.

TAXES

The Fund will be treated as a separate corporation for federal income tax
purposes, and the Fund intends to qualify annually as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986 (the "Code"),
as amended. By so qualifying, the Fund will not incur federal or state income
taxes on its net investment income and net realized capital gains distributed to
shareholders.

The Fund may be subject to a 4% excise tax on a portion of its undistributed
income. To avoid the tax, the Fund must timely distribute annually at least 98%
of its ordinary income (not taking into account any capital gains or losses) for
the calendar year and at least 98% of its capital gain net income for the
12-month period ending, as a general rule, on October 31 of the calendar year.
Any distributions declared by the Fund in December and paid in January of the
following year are taxable as if they were paid on December 31.

The Fund's transactions in foreign currencies, forward contracts, options and
futures contracts (including options and futures contracts on foreign
currencies) will be subject to special provisions of the Code that, among other
things, may affect the character of gains and losses realized by the Fund (i.e.,
may affect whether gains or losses are ordinary or capital), accelerate
recognition of income to the Fund, defer Fund losses, and affect the
determination of whether capital gains and losses are characterized as long-term
or short-term capital gains or losses. These rules could therefore affect the
character, amount, and timing of distributions to shareholders. These provisions
also may require a Fund to mark to market certain types of the positions in its
portfolio (i.e., treat them as if they were sold at the Fund s fiscal year-end),
which may cause the Fund to recognize income without receiving sufficient cash
for making distributions in amounts necessary to satisfy the 90% and 98%
distribution requirements for relief from income and excise taxes. The Fund will
monitor its transactions and may make such tax elections as Fund management
deems appropriate with respect to foreign currency, options, futures contracts,
forward contracts, or hedged investments. The Fund's status as a regulated
investment company may limit its transactions involving foreign currency,
futures, options and forward contracts.

Under the Code, gains or losses attributable to fluctuations in exchange rates
that occur between the time the Fund accrues income or other receivables or
accrues expenses or other liabilities denominated in a foreign currency and the
time the Fund actually collects such receivables or pays such liabilities
generally are treated as ordinary income or loss. Similarly, in disposing of
debt securities denominated in foreign currencies and certain other instruments,
gains or losses attributable to fluctuations in the value of a foreign currency
between the date the security or contract is acquired and the date it is
disposed of are also usually treated as ordinary income or loss. Under Section
988 of the Code, these gains or losses may increase or decrease the amount of
the Fund's investment company taxable income distributed to shareholders as
ordinary income.

The Fund may invest in shares of foreign corporations that may be classified
under the Code as passive foreign investment companies ("PFIC"s). In general, a
foreign corporation is classified as a PFIC if at least one-half of its assets
constitute investment-type assets or 75% or more of its gross income is
investment-type income. Certain distributions from a PFIC and gains from the
sale of PFIC shares are treated as excess distributions. These excess
distributions and gains may be subject to federal income tax. Interest charges
may also be imposed on the fund with respect to deferred taxes arising from such
excess distributions or gains.

The Fund's intention to qualify annually as a regulated investment company may
limit its elections with respect to PFIC shares.

Because the application of the PFIC rules may affect, among other things, the
character of gains, the amount of gain or loss, and the timing of the
recognition of income with respect to PFIC shares, as well as subject the Fund
itself to tax on certain income from PFIC shares, the amount that must be
distributed to shareholders, which will be taxed to shareholders as ordinary
income or long-term capital gain, may be increased or decreased substantially
compared to that of a fund that did not invest in PFIC shares.

Earnings derived by the Fund from sources outside the U.S. may be subject to
non-U.S. withholding and possibly other taxes. Such taxes might be reduced or
eliminated under the terms of a U.S. income tax treaty, and the Fund would
undertake any procedural steps required to claim the benefits of such a treaty.
With respect to any non-U.S. taxes actually paid by a Fund, if more than 50% of
the value of the Fund's total assets at the close of any taxable year consists
of securities of foreign corporations, the Fund will elect to treat any non-U.S.
income and similar taxes it pays as though the taxes were paid by its
shareholders.

Some of the debt securities that may be acquired by the Fund may be treated in
the same way as debt securities that are originally issued at a discount.
Generally, the amount of the original issue discount ("OID") is treated as
interest income and is included in income over the term of the debt security,
even though payment of that amount is not received until a later time, usually
when the debt security matures.

Some of the debt securities may be purchased by the Fund at a discount that
exceeds the original issue discount on such debt securities, if any. This
additional discount represents market discount for federal income tax purposes.
The gain realized on the disposition of any taxable debt security having market
discount will be treated as ordinary income to the extent that it does not
exceed the accrued market discount on such debt security. Generally, market
discount accrues on a daily basis for each day the debt security is held by the
Fund and at a constant rate over the time remaining to the debt security's
maturity or, at the election of the Fund, at a constant yield to maturity that
takes into account the semiannual compounding of interest.

Generally, the Fund will be required to distribute dividends representing
discounts on debt securities that are currently includable in income to
shareholders, even if cash representing such income has not been received by the
Fund. Cash to pay such dividends may be obtained from proceeds of sales of
securities held by the Fund.

Exchange control regulations that may restrict repatriation of investment
income, capital, or the proceeds of securities sales by foreign investors may
limit the Fund's ability to make sufficient distributions to satisfy the 90% and
calendar-year distribution requirements.

TAXATION OF U.S. SHAREHOLDERS

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 a capital gain or loss if the
shares are capital assets in the shareholder's hands and will be long-term or
short-term depending on the length of time the shares were held. However, a loss
recognized by a

shareholder in the disposition of shares on which capital gain dividends were
paid (or deemed paid) before the shareholder had held his or her shares for more
than six months would be treated as a long-term capital loss for tax purposes.

A gain realized on the redemption, sale, or exchange of shares would not be
affected by the reacquisition of shares. A loss realized on a 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.

TAXATION OF NON-U.S. SHAREHOLDERS

U.S. taxation of a shareholder who is a nonresident alien individual or a
non-U.S. corporation, partnership, trust, or estate depends on whether the
payments received from the Fund are "effectively connected" with a U.S. trade or
business carried on by such a shareholder. Ordinarily, income from the Fund will
not be treated as "effectively connected."

If the payments received from the Fund are effectively connected with a U.S.
trade or business of the shareholder, all distributions of net investment income
and net capital gains of the Fund and gains realized upon the redemption,
exchange, or other taxable disposition of shares will be subject to U.S. federal
income tax at the graduated rates applicable to U.S. citizens, residents, or
domestic entities, although the tax may be eliminated under the terms of an
applicable U.S. income tax treaty. Non-U.S. corporate shareholders also may be
subject to a branch profits tax with respect to payments from the Fund.

If the shareholder is not engaged in a U.S. trade or business, or the payments
received from the Fund are not effectively connected with the conduct of such a
trade or business, the shareholder will generally be subject to U.S. tax
withholding at the rate of 30% (or a lower rate under an applicable U.S. income
tax treaty) on distributions of net investment income and net realized
short-term capital gain received. Non-U.S. shareholders not engaged in a U.S.
trade or business or having no effectively connected income may also be subject
to U.S. taxes at the rate of 30% (or a lower treaty rate) on additional
distributions as a result of the Fund's election to treat any non-U.S. taxes it
pays as though the taxes were paid by its shareholders.

Distributions of net realized long-term capital gains and any capital gains
realized by non-U.S. shareholders upon the redemption or other taxable
disposition of shares generally will not be subject to U.S. tax. In the case of
individuals and other nonexempt non-U.S. shareholders who fail to furnish the
Fund with required certifications regarding their foreign status on IRS Form W-8
or an appropriate substitute, the Fund may be required to impose backup
withholding of U.S. tax at the rate of 31% on distributions of net realized
capital gains and proceeds of redemptions and exchanges.

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. The Fund and its distributions may also be subject
to state, local, or foreign taxes. Prospective investors may wish to consult a
tax advisor to determine whether the Fund is a suitable investment relative to
their tax situation.

ABOUT BENHAM EQUITY FUNDS

BEF is authorized to issue ten series and to issue two billion (2,000,000,000)
shares of each series. Within each series, the directors may issue an unlimited
number of shares. Currently, there are five series: Benham Global Natural
Resources Index Fund, Benham Global Gold Fund, Benham Income & Growth Fund,
Benham Equity Growth Fund, and Benham Utilities Income Fund. With respect to
each series, shares issued are fully paid and nonassessable and have no
preemptive, conversion, or similar rights. All consideration received by BEF for
shares of any series, 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 series have equal voting rights, provided that each series votes
separately on matters affecting only that series. The number of votes you are
entitled to is based upon the dollar value of your investment as of the record
date for a shareholder meeting. 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 proposed for election, a
shareholder may cast six votes for a single candidate or three votes for each of
two candidates, etc.

CUSTODIAN BANK: State Street Bank and Trust Company, 225 Franklin Street,
Boston, MA 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, 1000 Walnut, Suite 1600, Kansas
City, Missouri 64106, serves as BEF's auditors. KPMG audits the annual report
and provides tax and other services as auditors.

DIRECTORS AND OFFICERS

The Fund's activities are overseen by a board of directors, including seven
independent directors. The individuals listed below whose names are marked by an
asterisk(*) are "interested persons" of the Fund (as defined in the 1940 Act) by
virtue of, among other considerations, their affiliation with either the Fund;
the Fund's investment advisor, BMC; the Fund's agent for transfer and
administrative services, Twentieth Century Services, Inc. (TCS); the Fund's
distribution agent, Twentieth Century Securities, Inc.; the parent corporation,
Twentieth Century Companies, Inc. (TCC) or TCC's subsidiaries; or other funds
advised by BMC. Each director listed below also serves as a trustee or director
of other funds advised by BMC. Unless otherwise noted, a date in parentheses
indicates the date the director or officer began his or her service in a
particular capacity. The directors' and officers' address with the exception of
Mr. Stowers III and Ms. Roepke is 1665 Charleston Road, Mountain View,
California 94043. The address of Mr. Stowers III and Ms. Roepke is 4500 Main
Street, Kansas City, Missouri 64111.

DIRECTORS

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 its 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, a principal of
Long-Term Capital Management (1993), is also Frank E. Buck Professor of Finance
at the Stanford Graduate School of Business (1983), and a director of
Dimensional Fund Advisors (1982) and the Smith Breeden Family of Funds (1992).
From August 1991 to June 1993, Mr. Scholes was a managing director of Salomon
Brothers Inc. (securities brokerage).

KENNETH E. SCOTT, independent 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).

*JAMES E. STOWERS III, director (1995). Mr. Stowers III 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.

OFFICERS

*JAMES M. BENHAM, president and chief executive officer (1996).

*DOUGLAS A. PAUL, secretary (1988), vice president (1990), and general counsel
(1990).

*ANN N. MCCOID, controller (1988).

*MARYANNE ROEPKE, chief financial officer and treasurer (1995).

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 funds
managed by BMC.

<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 $ 0 Not Applicable Not Applicable $ 0
- ---------------------------------------------------------------------------------------------------------------------------
Ronald J. Gilson $ 716 Not Applicable Not Applicable $48,833
- ---------------------------------------------------------------------------------------------------------------------------
Myron S. Scholes $1234 Not Applicable Not Applicable $65,625
- ---------------------------------------------------------------------------------------------------------------------------
Kenneth E. Scott $1261 Not Applicable Not Applicable $65,125
- ---------------------------------------------------------------------------------------------------------------------------
Ezra Solomon $1235 Not Applicable Not Applicable $58,792
- ---------------------------------------------------------------------------------------------------------------------------
Isaac Stein $1260 Not Applicable Not Applicable $63,625
- ---------------------------------------------------------------------------------------------------------------------------
Jeanne D. Wohlers $1236 Not Applicable Not Applicable $67,375
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Interested directors receive no compensation for their services as such.

** Twentieth Century family of funds includes 66 no-load mutual funds.

As of July 31, 1996, the directors and officers, as a group, owned less than 1%
of the Fund's outstanding shares.

INVESTMENT ADVISORY SERVICES

The Fund has an investment advisory agreement with BMC, dated June 1, 1995, that
was approved by the Fund's shareholders on May 31, 1995.

management, transfer agency, shareholder service, and other services for the
Twentieth Century 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 either a majority of the Fund's
outstanding voting securities 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 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.

Pursuant to the investment advisory agreement, BMC provides the Fund with
investment advice and portfolio management services in accordance with the
Fund's investment objective, policies, and restrictions. BMC determines which
securities will be purchased and sold by the Fund. It also assists BEF's
officers in carrying out decisions made by the board of directors.

For these services, the Fund pays BMC a monthly investment advisory fee equal to
the sum of two components: (i) a group fee based on BEF's average daily net
assets and (ii) an individual fund fee based on the Fund's average daily net
assets. The group fee is derived from applying BEF's average daily net assets to
the schedule below:

.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; and
.19% of net assets over $6.5 billion.

The individual fund fee is derived from applying the Fund's average daily net
assets to the following schedule of annualized rates:

.05% of the first $500 million;
.04% of the next $500 million; and
.03% of net assets over $1 billion.

No investment advisory fees have been paid by the Fund to BMC since the
inception of the Fund in September, 1994.

TRANSFER AND ADMINISTRATIVE SERVICES

Twentieth Century Services, Inc., 4500 Main Street, Kansas City, Missouri,
64111, (TCS) acts as transfer, administrative services and dividend paying agent
for the Fund. TCS provides facilities, equipment and personnel to the Fund and
is paid for such services by the Fund. For administrative services, each Fund
pays TCS 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 Fund managed by the
Manager to the following administrative fee rate schedule:

GROUP ASSETS ADMINISTRATIVE FEE RATE

up to $4.5 billion .11%
up to $6.0 billion .10
up to $9.0 billion .09
over $9.0 billion .08

For transfer agent services, the Fund pays TCS a monthly fee of $1.1875 for each
shareholder account maintained and $1.35 for each shareholder transaction
executed during that month.

For the fiscal year ended December 31, 1995, the Fund paid $7049 for
administrative services and $62,844 for transfer agent services. The fee paid
for administrative services was reduced by a fee waiver of $14,030.

DIRECT FUND EXPENSES

The Fund pays certain operating expenses that are not assumed by BMC or TCS.
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 AGREEMENT

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 limitation in effect at that time. BMC has agreen under
contract to limit the Fund expenses to .75% of the Fund's average daily net
assets until May 31, 1997. The Fund's contractual expense limitation is subject
to annual renewal.

BMC absorbed $93,050 of the Fund's expenses for the fiscal year ended December
31, 1995.

VOLUNTARY EXPENSE LIMITATION. As a supplement to the contractual expense
guarantee rate, BMC voluntarily agreed to absorb all of the Fund`s expenses
through December 31, 1994. BMC`s voluntary expense limitations are not eligible
for recoupment (as described above with respect to the contractual expense
limitation agreement).

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The Fund's shares are continuously offered at NAV. Share certificates are issued
(without charge) only when requested in writing. Certificates are not issued for
fractional shares. Dividend and voting rights are not affected by the issuance
of certificates.

Twentieth Century 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. As of June 30,
1996, Charles Schwab & Co., 101 Montgomery Street, San Francisco, California
94104, was the omnibus record holder of 39.6% of the Fund's outstanding shares.

Share purchases and redemptions are governed by California law.

OTHER INFORMATION

BEF's investment advisor has been continuously registered with the 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 1940 Act with
respect to the shares offered. Such registrations do not imply approval or
supervision of BEF or the advisor by the SEC.

25
<PAGE>
BENHAM GLOBAL GOLD FUND

A SERIES OF BENHAM EQUITY FUNDS

4500 Main Street
Kansas City, MO 64111

Person-to-Person Assistance: 1-800-345-2021 or 816-531-5575
Automated: 1-800-345-8765

STATEMENT OF ADDITIONAL INFORMATION

September 3, 1996

This Statement is not a prospectus but should be read in conjunction with the
Fund's current Prospectus dated September 3, 1996. The Fund's Annual Report for
the fiscal year ended December 31, 1995 and Semiannual Report for the period
ended June 30, 1996 are incorporated herein by reference. To obtain a copy of
the Prospectus, Annual Report or Semiannual Report, call or write Twentieth
Century Mutual Funds.

TABLE OF CONTENTS

Page

Investment Policies and Techniques 2
Special Considerations as a Result of
the Fund`s Investment Policies 9
Investment Restrictions 10
Portfolio Transactions 12
Valuation of Portfolio Securities 13
Performance 13
Taxes 15
About Benham Equity Funds 16
Directors and Officers 17
Investment Advisory Services 19
Transfer and Administrative Services 20
Direct Fund Expenses 21
Expense Limitation Agreement 22
Additional Purchase and Redemption Information 22
Other Information 23

INVESTMENT POLICIES AND TECHNIQUES

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, Benham Management Corporation
("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.

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

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;

(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;

(5) Investing no more than 5% of the Fund's total assets in repurchase
agreements that mature in more than seven days; 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
(SEC) to participate in pooled repurchase agreements collateralized by U.S.
government securities with other mutual funds advised by 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 ("ADR"s), "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.

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

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.

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 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.

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

To minimize the risk of default on securities loans, BMC adheres to the
following guidelines prescribed by the board of directors:

(5) LIMITATIONS ON PERCENTAGE OF PORTFOLIO SECURITIES ON LOAN. The Fund's
loans may not exceed 33-1/3% of its total assets.

(6) CREDIT ANALYSIS. As part of the regular monitoring procedures set forth by
the board of trustees that BMC follows to evaluate banks and
broker-dealers in connection with, for example, repurchase agreements and
municipal securities credit issues, BMC will analyze and monitor the
creditworthiness of all borrowers with which portfolio lending
arrangements are contemplated or entered into.

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.

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 Subchapter M of
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 Statement of Additional Information 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 of the 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 CONSIDERATIONS 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 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, and 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 OF 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 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 votes of
shareholders of the Fund as determined in accordance with the 1940 Act.

THE FUND MAY NOT:

(1) Issue senior securities, except as permitted under the 1940 Act.

(2) 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) 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) 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) 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) 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.

The Fund is also subject to the following restrictions that are not fundamental
and may, therefore, be changed by the board of directors without shareholder
approval.

THE FUND MAY NOT:

(a) 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.

(b) 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 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.

(c) 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.

(d) 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.

(e) 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.

(f) 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.

(g) Invest in oil, gas or other mineral exploration or development programs or
leases.

(h) 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.

(i) 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.

(j) 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.)

(k) 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.

(l) Purchase or sell options of any kind.

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

28.40% 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

$1,122,431 $1,533,658 $1,465,792

VALUATION OF PORTFOLIO SECURITIES

BMC typically completes its trading on behalf of the Fund in various markets
before the Exchange 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 independent pricing services. Foreign currency
exchange rates are also determined prior to the close of the Exchange. Trading
of securities in foreign markets may not take place on every day the Exchange is
open, and trading takes place in various foreign markets on days on which the
Exchange 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 Fund's total returns may be quoted in advertising and sales literature.
These figures, as well as the Fund"s share price will vary. Past performance
should not be considered as indicative of future results.

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 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 June 30, 1996, are indicated in the table below.

AVERAGE ANNUAL TOTAL RETURNS

One Year Five Years Life of Fund*

3.93% 7.98% 3.66%

* 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.

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 Twentieth
Century 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.

TAXES

The Fund intends to qualify annually as a "regulated investment company" under
the Code. By so qualifying, the Fund will not be subject to federal income or
state taxes on its net investment income and net realized capital gains
distributed 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.

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 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.

Gains attributable to the disposition of the Fund`s direct investments in gold
bullion or coins do not qualify as income for purposes of satisfying
diversification tests under the Code. If the Fund realizes greater than 10% of
its income from such non-qualifying sources, the Fund would incur federal income
and state taxes on the net investment income and capital gains it distributes to
shareholders.

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

shares. Currently, there are five series: Benham Global Gold Fund, Benham Income
& Growth Fund, Benham Equity Growth Fund, Benham Utilities Income Fund, and
Benham Global Natural Resources Index Fund. With respect to each series, shares
issued are fully paid and nonassessable and have no preemptive, conversion, or
similar rights. All consideration received by BEF for shares of any series, 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 series have equal voting rights, provided that each series votes
separately on matters that pertain to it exclusively. BEF has instituted dollar
based voting, meaning that the number of votes you are entitled to is based upon
the dollar amount of their investment. The election of directors is determined
by the votes received from all BEF shareholders without regard to whether a
majority of shareholders voted in favor of a particular nominee or all nominees
of a group. 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.

DIRECTORS AND OFFICERS

DIRECTORS

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).

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).

OFFICERS

*JAMES M. BENHAM, president, and chief executive officer (1996).

*ANN N. MCCOID, controller (1988).

*DOUGLAS A. PAUL, secretary (1988), vice president (1990), and general counsel
(1990).

*MARYANNE ROEPKE, chief financial officer and treasurer (1995).

As of July 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 funds
managed by BMC.

<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 $ 0 Not Applicable Not Applicable $ 0
- ---------------------------------------------------------------------------------------------------------------------------
Ronald J. Gilson $1054 Not Applicable Not Applicable $48,833
- ---------------------------------------------------------------------------------------------------------------------------
Myron S. Scholes $2008 Not Applicable Not Applicable $65,625
- ---------------------------------------------------------------------------------------------------------------------------
Kenneth E. Scott $1798 Not Applicable Not Applicable $65,125
- ---------------------------------------------------------------------------------------------------------------------------
Ezra Solomon $2152 Not Applicable Not Applicable $58,792
- ---------------------------------------------------------------------------------------------------------------------------
Isaac Stein $1818 Not Applicable Not Applicable $63,625
- ---------------------------------------------------------------------------------------------------------------------------
Jeanne D. Wohlers $2119 Not Applicable Not Applicable $67,375
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Interested directors receive no compensation for their services as such.

** Twentieth Century family of funds includes 66 no-load mutual funds.

INVESTMENT ADVISORY SERVICES

The Fund has an investment advisory agreement with BMC, dated June 1, 1995, that
was approved by the Fund`s shareholders on May 31, 1995.

BMC is a California corporation and a wholly owned subsidiary of 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

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

$1,776,728 $1,884,679 $1,325,964

* Net of reimbursements

TRANSFER AND ADMINISTRATIVE SERVICES

Twentieth Century Services, Inc., 4500 Main Street, Kansas City, Missouri,
64111, (TCS) acts as transfer, administrative services and dividend paying agent
for the Fund. TCS provides facilities, equipment and personnel to the Fund and
is paid for such services by the Fund. For administrative services, each Fund
pays TCS 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 managed by the
Manager to the following administrative fee rate 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 TCS 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 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

$549,463 $583,896 $356,629

TRANSFER AGENT FEES

Fiscal Fiscal Fiscal
1995 1994 1993

$702,149 $645,099 $428,747

DIRECT FUND EXPENSES

The Fund pays certain operating expenses that are not assumed by BMC or TCS.
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 AGREEMENT

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, 1997. The
Funds' contractual expense limit is subject to annual renewal.

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)

Fiscal Fiscal Fiscal
1995 1994 1993

$0 $0 $47,247

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.

- --------------------------------------------------------------------------------
FUND SHAREHOLDER # OF SHARES HELD % OF TOTAL
NAME AND ADDRESS SHARES OUTSTANDING

- --------------------------------------------------------------------------------

Benham Charles Schwab & Co. 6,151,884.461 15.8%
Global Gold 101 Montgomery Street
Fund San Francisco, CA 94104-4122

- --------------------------------------------------------------------------------

As of July 31, 1996, to BEF`s knowledge, no other shareholder was the record
holder or beneficial owner of 5% or more of the Fund`s total shares outstanding.

Share purchases and redemptions are governed by California law.

OTHER INFORMATION

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.

23
<PAGE>
BENHAM UTILITIES INCOME FUND

A Series of Benham Equity Funds

4500 Main Street
Kansas City, MO 64111

Person-to-Person Assistance: 1-800-345-2021 or 816-531-5575
Automated: 1-800-345-8765

STATEMENT OF ADDITIONAL INFORMATION

September 3, 1996

TABLE OF CONTENTS

Page

Investment Policies and Techniques 2
Investment Restrictions 11
Risk Factors 13
Portfolio Transactions 14
Valuation of Portfolio Securities 14
Performance 15
Taxes 17
About Benham Equity Funds 18
Directors and Officers 18
Investment Advisory Services 21
Transfer and Administrative Services 22
Direct Fund Expenses 23
Expense Limitation Agreement 23
Additional Purchase and Redemption Information 23
Other Information 24

INVESTMENT POLICIES AND TECHNIQUES

U.S. GOVERNMENT SECURITIES

WHEN-ISSUED AND FORWARD-COMMITMENT AGREEMENTS

As an operating policy, the Fund will not commit greater than 35% of its total
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, the advisor 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.

CONVERTIBLE SECURITIES

The Fund may buy securities that are convertible into common stock shares of
utility companies. Listed below 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 if the option to convert to common shares becomes
more valuable.

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

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;

(3) Monitoring the creditworthiness of all firms involved in repurchase
agreement transactions;

(5) Investing no more than 15% of the Fund's net assets in repurchase
agreements that mature in more than seven days; and

(6) Taking delivery of securities subject to a 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
(SEC) 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 ("ADR"s), "ordinary shares," or "New York shares." The Fund may invest
in foreign-currency-denominated debt or equity securities of companies engaged
in the utilities industry if BMC believes that such investments will be
advantageous to the Fund.

or to convert currency into U.S. dollars. There may be a greater possibility of
default by foreign 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.

Currencies may be exchanged 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,
the advisor can protect the Fund against losses resulting from adverse changes
in the 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, it should be noted that using forward
contracts to protect the Fund's foreign investments from currency fluctuations
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.

Foreign exchange dealers do not charge fees for currency conversions. Instead,
they realize a profit based on the difference (i.e., the spread) between the
prices at which they are buying and selling various currencies. A dealer may
offer to sell a foreign currency at one rate while simultaneously offering a
lesser rate of exchange on the purchase of that currency.

The advisor 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 this
procedure 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.

DEPOSITARY RECEIPTS

American Depositary Receipts and European Depositary Receipts ("EDR"s) are
receipts representing ownership of shares of a foreign-based issuer held in
trust by a bank or similar financial institution. These are designed for U.S.
and European securities markets as alternatives to purchasing underlying
securities in their corresponding national markets and currencies. ADRs and EDRs
can be sponsored or unsponsored.

RESTRICTED SECURITIES

SECURITIES LENDING

To minimize the risk of default on securities loans, BMC adheres to the
following guidelines prescribed by the board of directors:

(1) Type and Amount of Collateral. At the time a loan is made, the Fund must
receive, from or on behalf of the borrower, collateral consisting of any
combination of cash and full faith and credit U.S. government securities
equal to not less than 102% of the market value of the securities loaned.
Cash collateral received by the Fund in connection with loans of portfolio
securities may be commingled by the Fund's custodian with other cash and
marketable securities, provided that the loan agreement expressly allows
such commingling. The loan must not reduce the risk of loss or opportunity
for gain in the securities loaned.

(2) Additions to Collateral. Collateral must be marked to market daily, and
the borrower must agree to add collateral to the extent necessary to
maintain the 102% level specified in guideline (1). The borrower must
deposit additional collateral no later than the business day following the
business day on which a collateral deficiency occurs or collateral appears
to be inadequate.

(3) Termination of Loan. The Fund must have the ability to terminate any loan
of portfolio securities at any time. The borrower must be obligated to
redeliver the borrowed securities within the normal settlement period
following receipt of the termination notice.

(4) Reasonable Return on Loan. The borrower must agree that the Fund (a) will
receive all dividends, interest, or other distributions on loaned
securities and (b) will be paid a reasonable return on such loans either
in the form of a loan fee or premium or from the retention by the Fund of
part or all of the earnings and profits realized from the investment of
cash collateral in full faith and credit U.S government securities.

(5) Limitations on Percentage of Portfolio Securities on Loan. The Fund's
loans may not exceed 33-1/3% of its total assets.

(6) Credit Analysis. As part of the regular monitoring procedures set forth by
the board of directors that BMC follows to evaluate banks and
broker-dealers in connection with, for example, repurchase agreements and
municipal securities credit issues, BMC will analyze and monitor the
creditworthiness of all borrowers with which portfolio lending
arrangements are contemplated or entered into.

SHORT SALES AND PUT OPTIONS ON INDIVIDUAL SECURITIES

The Fund may buy puts and enter into short sales with respect to stocks
underlying its convertible security holdings. For example, if the advisor
anticipates a decline in the price of the stock underlying a convertible
security the Fund holds, it may purchase a put option on the stock or sell the
stock short. If the stock price subsequently declines, the proceeds of the short
sale or an increase in the value of the put option could be expected to offset
all or a portion of the effect of the stock's decline on the value of the
convertible security.

When the Fund enters into a short sale, it will be required to set aside
securities equivalent in kind and amount to those sold short (or securities
convertible or exchangeable into such securities) and will be required to
continue to hold them while the short sale is outstanding. The Fund will incur
transaction costs, including interest expenses, in connection with opening,
maintaining, and closing short sales.

FUTURES AND OPTIONS TRANSACTIONS

Futures contracts provide for the sale by one party and purchase by another
party of a specific security at a specified future time and price. Futures
contracts are traded on national futures exchanges. Futures exchanges and
trading are regulated under the Commodity Exchange Act by the Commodity Futures
Trading Commission (CFTC), a U.S. government agency.

After a futures contract position is opened, the value of the contract is marked
to market daily. If the futures contract price changes to the extent that the
margin on deposit does not satisfy margin requirements, the contract holder is
required to pay additional "variation" margin. Conversely, changes in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to or
from the futures broker as long as the contract remains open and do not
constitute margin transactions for purposes of the Fund's investment
restrictions.

Although techniques other than trading futures contracts can be used to control
the Fund's exposure to market fluctuations, the use of futures contracts may be
a more effective means of hedging this exposure. While the Fund pays brokerage
commissions in connection with opening and closing out futures positions, these
costs are lower than the transaction costs incurred in the purchase and sale of
the underlying securities.

Purchasing Put and Call Options. By purchasing a put option, the Fund obtains
the right (but not the obligation) to sell the option's underlying instrument at
a fixed "strike" price. In return for this right, the Fund pays the current
market price for the option (known as the option premium). Options have various
types of underlying instruments, including specific securities, indexes of
securities prices, and futures contracts. The Fund may terminate its position in
a put option it has purchased by allowing it to expire or by exercising the
option. If the option is allowed to expire, the Fund will lose the entire
premium it paid. If the Fund exercises the option, it completes the sale of the
underlying instrument at the strike price. The Fund may also terminate a put
option position by closing it out in the secondary market at its current price
if a liquid secondary market exists.

Writing Put and Call Options. If the Fund writes a put option, it takes the
opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the Fund assumes the obligation to pay the strike price
for the option's underlying instrument if the other party chooses to exercise
the option. When writing an option on a futures contract, the Fund will be
required to make margin payments to a broker or custodian as described above for
futures contracts. The Fund may seek to terminate its position in a put option
it writes before exercise by closing out the option in the secondary market at
its current price. If the secondary market is not liquid for a put option the
Fund has written, however, the Fund must continue to be prepared to pay the
strike price while the option is outstanding, regardless of price changes, and
must continue to set aside assets to cover its position.

If security prices were to rise, a put writer would generally expect to profit,
although the gain would be limited to the amount of the premium received. If
security prices were to remain the same over time, it would be likely that the
writer would also profit by being able to close out the option at a lower price.
If security prices were to fall, the put writer would expect to suffer a loss.
This loss should be less than the loss from purchasing the underlying instrument
directly, however, because the premium received for writing the option should
mitigate the effects of the decline.

Writing a call option obligates the Fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are

similar to those of writing put options, except that writing calls generally is
a profitable strategy if prices remain the same or fall. Through receipt of the
option premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price even if its current value is greater,
a call writer gives up some ability to participate in security price increases.

Combined Positions. The Fund may purchase and write options in combination with
one another, or in combination with futures or forward contracts, in order to
adjust the risk and return characteristics of the overall position. For example,
the Fund may purchase a put option and write a call option on the same
underlying instrument in order to construct a combined position whose risk and
return characteristics are similar to a futures contract. Another possible
combined position would involve writing a call option at one strike price and
buying a call option at a lower price, in order to reduce the risk of the
written call option in the event of a substantial price increase. Because
combined options positions involve multiple trades, they result in higher
transaction costs and may be more difficult to open and close out.

Over-the-Counter Options. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter ("OTC") options (options not traded
on exchanges) generally are established through negotiation with the other party
to the option contract. While this type of arrangement allows the Fund greater
flexibility in tailoring an option to its needs, OTC options generally involve
greater credit risk than exchange-traded options, which are guaranteed by the
clearing organizations of the exchanges where they are traded. The risk of
illiquidity is also greater with OTC options, because these options generally
can be closed out only by negotiation with the other party to the option.

Options on Futures. By purchasing an option on a futures contract, the Fund
obtains the right, but not the obligation, to sell the futures contract (a put
option) or to buy the contract (a call option) at a fixed strike price. The Fund
can terminate its position in a put option by allowing it to expire or by
exercising the option. If the option is exercised, the Fund completes the sale
of the underlying security at the strike price. Purchasing an option on a
futures contract does not require the Fund to make margin payments unless the
option is exercised.

Correlation of Price Changes. Because there are a limited number of types of
exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the Fund's current or
anticipated investments exactly. The Fund may invest in options and futures
contracts based on securities with issuers, maturities, or other characteristics
different from those of the securities in which it typically invests for
example, it may hedge intermediate-term securities with a futures contract based
on an index of long-term bond prices or hedge stock holdings with futures
contracts on a broad-based stock index such as the Standard & Poor's 500
Composite Stock Price Index (S&P 500) which involves a risk that the options or
futures position will not track the performance of the Fund's other investments.

Options and futures prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments are well correlated with the
Fund's investments. Options and futures prices are affected by factors such as
current and anticipated short-term interest rates, changes in the volatility of
the underlying instrument, and the time remaining until expiration of the
contract; these factors may not affect security prices in the same way.
Imperfect correlation may also result from differing levels of demand in the
options and futures markets and the securities markets, from

structural differences in how options and futures and securities are traded, or
from the imposition of daily price fluctuation limits or trading halts. The Fund
may purchase or sell options and futures contracts with a greater or lesser
value than the securities it wishes to hedge or intends to purchase in an effort
to compensate for differences in volatility between the contract and the
securities, although this strategy may not be successful in all cases. If price
changes in the Fund's options or futures positions are poorly correlated with
its other investments, the positions may fail to produce anticipated gains or
result in losses that are not offset by gains in other investments.

Liquidity of Futures Contracts and Options. There is no assurance a liquid
secondary market will exist for any particular futures contract or option at any
particular time. Options may have relatively low trading volume and liquidity if
their strike prices are not close to the underlying instrument's current price.
In addition, exchanges may establish daily price fluctuation limits for futures
contracts and options and may halt trading if a contract's price increases or
decreases more than the limit in a given day. On volatile trading days when the
price fluctuation limit is reached or a trading halt is imposed, it may be
impossible for the Fund to enter into new positions or close out existing
positions. If the secondary market for a contract were not liquid, because of
price fluctuation limits or otherwise, prompt liquidation of unfavorable
positions could be difficult or impossible, and the Fund could be required to
continue holding a position until delivery or expiration regardless of changes
in its value. Under these circumstances, the Fund's access to assets held to
cover its future and options positions also could be impaired.

Restrictions on the Use of Futures Contracts and Options. The Fund has filed a
notice of eligibility for exclusion as a "commodity pool operator" with the CFTC
and the National Futures Association which regulates trading in the futures
markets. The Fund intends to comply with Section 4.5 of the regulations under
the extent to which the Fund can commit assets to initial margin deposits and
options premiums.

The Fund may enter into futures contracts, options, or options on futures
contracts, provided that such obligations represent no more than 20% of the
Fund's net assets. Under the Commodity Exchange Act, the Fund may enter into
futures and options transactions for hedging purposes without regard to the
percentage of assets committed to initial margin and option premiums and for
other than hedging purposes, provided that assets committed to initial margin
and option premiums do not exceed 5% of the Fund's net assets. To the extent
required by law, the Fund will set aside cash and appropriate liquid assets in a
segregated account to cover its obligations related to futures contracts and
options.

The Fund intends to comply with tax rules applicable to regulated investment
companies, including a requirement that capital gains from the sale of
securities held less than three months constitute less than 30% of a Fund's
gross income for each fiscal year. Gains on some futures contracts and options
are included in this 30% calculation, which may limit the Fund's investments in
such instruments.

Futures and Options Relating to Foreign Currencies. The Fund may purchase and
sell currency futures and purchase and write currency options to increase or
decrease its exposure to different foreign currencies. The Fund may also
purchase and write currency options in conjunction with each other or with
currency futures or forward contracts.

instrument of a currency option may be a foreign currency, which generally is
purchased or delivered in exchange for U.S. dollars, although it may be a
futures contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the right
to sell the underlying currency.

The uses and risks of currency futures and options are similar to those of
futures and options relating to securities or indexes, as described above.
Currency futures and options values can be expected to correlate with exchange
rates but may not reflect other factors that affect the value of the Fund's
investments. A currency hedge, for example, should protect a German
mark-denominated security from a decline in the German mark, but it will not
protect the Fund against a price decline resulting from a deterioration in the
issuer's creditworthiness. Because the value of the Fund's
foreign-currency-denominated investments will change in response to many factors
other than exchange rates, it may not be possible to match the amount of
currency options and futures to the value of the Fund's investments over time.

INVESTMENT RESTRICTIONS

The Fund's investment restrictions, set forth below, are fundamental and may not
be changed without approval of a majority of the outstanding votes of the
shareholders of the Fund as determined in accordance with the Investment Company
Act of 1940 (the "1940 Act"). Unless otherwise indicated, percentage limitations
included in the restrictions apply at the time transactions are entered into.
Accordingly, any later increase or decrease beyond the specified limitation
resulting from a change in the Fund's net assets will not be considered in
determining whether it has complied with its investment restrictions.

The Fund may not:

(1) With respect to 75% of its total assets, purchase the securities of any
issuer (other than securities issued or guaranteed by the U.S. government
or its agencies or instrumentalities) if, as a result, (a) more than 5% of
its total assets would be invested in securities of that issuer, or (b)
the Fund would hold more than 10% of the outstanding voting securities of
that issuer.

(2) Issue senior securities, except as permitted under the 1940 Act.

(3) Borrow money except for temporary or emergency purposes (not for
leveraging or investment) in an amount exceeding 33-1/3% of its total
assets (including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that 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.

(4) Underwrite 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.

(5) Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this will not prevent the Fund from
investing in securities or other instruments backed by real estate or the
securities of companies engaged in the real estate business).

(6) Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this will not prevent
the Fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities).

(7) Lend any security or make any other loan if, as a result, more than
33-1/3% of its total assets would be lent to other parties, provided that
this restriction does not apply to purchases of debt securities or to
repurchase agreements.

The Fund is also subject to the following restrictions that are not fundamental
and may therefore be changed by the board of directors without shareholder
approval.

The Fund may not:

(a) 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 transactions in futures contracts and options are not deemed
to constitute selling securities short.

(b) 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 will not constitute purchasing securities on
margin.

(c) Purchase any security if, as a result, more than 15% of its net assets
would be invested in securities that are illiquid by virtue of legal or
contractual restrictions on resale or the absence of a readily available
market.

(d) Purchase securities of other investment companies, except in the open
market where no commission except the ordinary broker's commission is paid
or purchase or retain securities issued by other open-end investment
companies. These restrictions do not apply to securities received as
dividends, through offers of exchange, or as a result of a reorganization,
consolidation, or merger.

(e) Purchase securities of any issuer (other than securities issued or
guaranteed by domestic or foreign governments or political subdivisions
thereof) if, as a result, more than 5% of its total assets would be
invested in the securities of business enterprises that, including
predecessors, have a record of less than three years of continuous
operation.

(f) Purchase warrants, valued at the lower of cost or market, in excess of 5%
of the Fund's net assets. Included in that amount, but not to exceed 2% of
the Fund's net assets, may be warrants that are not listed on the New York
Stock Exchange or the American Stock Exchange. Warrants acquired by the
Fund in units or attached to securities are not subject to these
restrictions.

(g) Invest in oil, gas, or other mineral exploration or development programs
or leases.

(h) Purchase the securities of any issuer if those officers and directors of
BEF and those officers and directors of BMC who individually own more than
1/2 of 1% of the securities of such issuer together own more than 5% of
such issuer's securities.

(i) Invest in securities of real estate investment trusts that are not readily
marketable or invest in securities of real estate limited partnerships
that are not listed on the New York Stock Exchange or the American Stock
Exchange or traded on the NASDAQ National Market System.

(j) Purchase any security when borrowings representing more than 5% of its
total assets are outstanding.

RISK FACTORS

Because the Fund concentrates its assets in the utilities industry, its
performance depends in part on how favorably investors perceive this sector of
the market relative to other sectors (such as transportation or technology). Of
course, investor perceptions of the utilities industry are driven not only by
comparisons with other market sectors but by trends and events within the
utilities industry. The following is a brief outline of risk factors associated
with investment in the utilities industry.

Regulatory Risks. Regulators (primarily at the state level) monitor and control
public utility company revenues and costs. Regulators can limit profits and
dividends paid to investors; they may also restrict a company's access to new
markets. Some analysts observe that state regulators have become increasingly
active in developing and promoting energy policy through the regulatory process.

Natural Resource Risks. Swift and unpredictable changes in the price and supply
of natural resources can hamper utility company profitability. These changes may
be caused by political events, energy conservation programs, the success of
exploration projects, or tax and other regulatory policies of various
governments.

Environmental Risks. There are considerable costs associated with environmental
compliance, nuclear waste cleanup, and safety regulation. For example,
coal-burning utilities are under pressure to curtail sulfur emissions, and
utilities in general increasingly are called upon by regulators to bear
environmental costs, which may not be easily recovered through rate increases or
business growth.

Changing weather patterns and natural disasters affect consumer demand for
utility services (e.g., electricity, heat, and air conditioning), which, in
turn, affects utility revenues.

Technology and Competitive Risks. The introduction and phase-in of new
technologies can affect a utility company's competitive strength. The race by
long-distance telephone providers to incorporate fiber optic technology is one
example of competitive risk within the utilities industry.

The increasing role of independent power producers ("IPP"s) in the natural gas
and electric utility segments of the utilities industry is another example of
competitive risk. Typically, IPPs wholesale power to established local
providers, but there is a trend toward letting them sell power directly to
industrial consumers. Co-generation facilities, such as those of landfill
operators that produce

methane gas as a byproduct of their core business, pose another competitive
challenge to gas and electric utilities. In addition to offering a less
expensive source of power, these companies may receive more favorable regulatory
treatment than utilities seeking to expand facilities that consume nonrenewable
energy sources.

Interest Rate Risks. Utility companies usually finance capital expenditures
(e.g., new plant construction) by issuing long-term debt. Rising long-term
interest rates increase interest expenses and reduce company earnings.

PORTFOLIO TRANSACTIONS

The Fund's assets are invested by BMC in a manner consistent with the Fund's
investment objectives, 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 otherwise will place orders
with broker-dealers subject to and in accordance with any instructions from the
board of directors. BMC will select broker-dealers to execute portfolio
transactions on behalf of the Fund solely on the basis of best price and
execution.

The Fund's annual portfolio turnover rate is not expected to exceed 150%.
Because a higher turnover rate increases transaction costs and may increase
taxable capital gains, BMC carefully weighs the potential benefits of short-term
investing against these considerations.

The Fund's portfolio turnover rates for the fiscal years ended December 31, 1995
and December 31, 1994 were 68.17% and 61.42%, respectively. For the fiscal years
ended December 31, 1995, December 31, 1994, and December 31, 1993, the Fund paid
brokerage commissions of $205,544, $180,145 and $266,365, respectively.

VALUATION OF PORTFOLIO SECURITIES

BMC typically completes its trading on behalf of the Fund in various markets
before the Exchange closes for the day. Securities are priced at market value,
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. Securities traded on exchanges will be valued at their last
sale prices. If no sale is reported, the mean between the latest bid and asked
prices is used. Securities traded over-the-counter will be valued at the mean
between the latest bid and asked prices. Fixed-income securities are priced at
market value on the basis of market quotations supplied by independent pricing
services. Trading of securities in foreign markets may not take place every day
the Exchange is open, and trading takes place in various foreign markets on days
on which the

Exchange 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
occuring 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 Fund's yields and total returns may be quoted in advertising and sales
literature. These figures, as well as the Fund's share price, will vary. Past
performance should not be considered an indication of future results.

For the 30-day period ended June 30, 1996, the Fund's yield was 4.11%.

Total returns quoted in advertising and sales literature 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.

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 10 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 10
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
total returns represent averaged figures as opposed to actual year-to-year
performance.

Average annual total returns for periods of less than one year are calculated by
determining the Fund's total return for the period, extending that return for a
full year (assuming that performance remains constant throughout the year), and
quoting the result as an annual return. Because the Fund's return may not remain
constant over the course of a year, these performance figures should be viewed
as strictly hypothetical.

In addition to average annual returns, the Fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Average annual and cumulative total returns may be quoted
as 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. The Fund's average annual total return for the one-year and life-of-fund
periods ended June 30, 1996 was 20.91% and 8.53%, respectively. The Fund
commenced operations on March 1, 1993. Performance information may be quoted
numerically or in a table, graph, or similar illustration.

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 Benham funds,
are sold with a sales charge or deferred sales charge. Sources of economic data
that may be considered in making such comparisons may include, but are not
limited to: U.S. Treasury bill, note, and bond yields, money market fund yields,
U.S. government debt and percentage held by foreigners, the U.S. money supply,
net free reserves, and yields on current-coupon Government National Mortgage
Association securities (GNMAs) (source: Board of Governors of the Federal
Reserve System); the federal funds and discount rates (source: Federal Reserve
Bank of New York); yield curves for U.S. Treasury securities and AA/AAA-rated
corporate securities (source: Bloomberg Financial Markets); yield curves for
AAA-rated tax-free municipal securities (source: Telerate); yield curves for
foreign government securities (sources: Bloomberg Financial Markets and Data
Resources, Inc.); total returns on foreign bonds (source: J.P. Morgan Securities
Inc.); various U.S. and foreign government reports; the junk bond market
(source: Data Resources, Inc.); the CRB Futures Index (source: Commodity Index
Report); the price of gold (sources: London a.m./p.m. fixing and New York Comex
Spot Price); rankings of any mutual fund or mutual fund category tracked by
Lipper Analytical Services, Inc. or Morningstar, Inc.; mutual fund rankings
published in major, nationally distributed periodicals; data provided by the
Investment Company Institute; Ibbotson Associates, Stocks, Bonds, Bills, and
Inflation; major indexes of stock market performance; and indexes and historical
data supplied by major securities brokerage or investment advisory firms. The
Fund may also utilize reprints from newspapers and magazines furnished by third
parties to illustrate 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.

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 the market, and a beta of less than 1.00 indicates volatility less
than 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 a desired
performance.

The Fund's shares are sold without a sales charge (a "load"). No-load funds
offer an advantage to investors when compared to load funds with comparable
investment objectives and strategies. For example, if an investor pays $10,000
to buy shares of a load fund with an 8.5% sales charge, $850 of that $10,000 is
paid as a commission to a salesperson, leaving only $9,150 to put to work for
the

investor. Over time, the difference between paying a sales load and not
paying one can have a significant effect on an investor's total return. The
Mutual Fund Education Alliance provides a comparison of $10,000 invested in each
of two mutual funds, one with an 8.5% sales load and one without a sales load.
Assuming a compounded annual growth rate of 10% for both investments, the
no-load fund investment is worth $25,937 after ten years, and the load fund
investment is worth only $23,732.

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 money market and
short-term bond funds; the first no-load adjustable rate government securities
fund; and the first no-load utilities fund designed to pay monthly dividends.

The advisor may obtain ratings on the safety of Fund shares from one or more
rating agencies and may publish such ratings in advertisements and sales
literature.

TAXES

The Fund intends to qualify each year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not incur federal or state income taxes on its net investment
income and net realized capital gains distributed to shareholders.

Distributions of net investment income and net short-term capital gains are
taxable to shareholders as ordinary income. To the extent that the Fund's
dividends 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.

As of December 31, 1995, the Fund had a capital loss carryover of $7,035,543
that will expire on December 31, 2002 and $4,356,683 that will expire on
December 31, 2003. No capital gain distributions will be made by the Fund until
its capital loss carryovers have been offset or have expired.

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 the shares were held. However, a loss recognized
by a shareholder in the disposition of shares on which capital gain dividends
were paid (or deemed paid) before the shareholder had held his or her shares for
more than six months would be treated as a long-term capital loss for tax
purposes. 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.

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. A
prospective investor may wish to consult a tax advisor to determine whether the
Fund is a suitable investment based on the investor's tax situation.

ABOUT BENHAM EQUITY FUNDS

Shares of each series have equal voting rights, provided that each series votes
separately on matters that pertain to it exclusively. Each shareholder is
entitled to vote based on the total dollar interest in the Fund as of the record
date for a shareholder meeting. 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 proposed for election, a
shareholder may cast six votes for a single candidate, three votes for each of
two candidates, etc.

DIRECTORS AND OFFICERS

BEF's distribution agent, Twentieth Century Securities, Inc.; the parent
corporation, Twentieth Century Companies, Inc. (TCC) or TCC's subsidiaries; or
other funds advised by BMC. Each director listed below also serves as a trustee
or director of other funds advised by BMC. Unless otherwise noted, a date in
parentheses indicates the date the director or officer began his or her service
in a particular capacity. The directors' and officers' address with the
exception of Mr. Stowers III and Ms. Roepke is 1665 Charleston Road, Mountain
View, California 94043. The address of Mr. Stowers III and Ms. Roepke is 4500
Main Street, Kansas City, Missouri 64111.

DIRECTORS

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).

JEANNE D. WOHLERS, independent trustee (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).

Officers

*JAMES M. BENHAM, president and chief executive officer (1996).

*DOUGLAS A. PAUL, secretary (1988), vice president (1990), and general counsel
(1990).

*ANN N. McCOID, controller (1988).

*MARYANNE ROEPKE, chief financial officer and treasurer (1995).

<TABLE>
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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 $ 0 Not Applicable Not Applicable $ 0
- -------------------------------------------------------------------------------------------------------------------
Ronald J. Gilson $ 801 Not Applicable Not Applicable $48,833
- -------------------------------------------------------------------------------------------------------------------
Myron S. Scholes $1452 Not Applicable Not Applicable $65,625
- -------------------------------------------------------------------------------------------------------------------
Kenneth E. Scott $1394 Not Applicable Not Applicable $65,125
- -------------------------------------------------------------------------------------------------------------------
Ezra Solomon $1465 Not Applicable Not Applicable $58,792
- -------------------------------------------------------------------------------------------------------------------
Isaac Stein $1402 Not Applicable Not Applicable $63,625
- -------------------------------------------------------------------------------------------------------------------
Jeanne D. Wohlers $1469 Not Applicable Not Applicable $67,375
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

* Interested directors receive no compensation for their services as such.

** Twentieth Century family of funds includes 66 no-load mutual funds.

As of July 31, 1996, the Fund's directors and officers as a group owned less
than 1% of the Fund's outstanding shares.

INVESTMENT ADVISORY SERVICES

The Fund has an investment advisory agreement with BMC, dated June 1, 1995, that
was approved by the Fund's shareholders on May 31, 1995.

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.

Pursuant to the investment advisory agreement, BMC provides the Fund with
investment advice and portfolio management services in accordance with the
Fund's investment objectives, policies, and restrictions. BMC determines which
securities will be purchased and sold by the Fund. It also assists the Fund's
officers in carrying out decisions made by the board of directors.

For these services, the Fund pays BMC a monthly investment advisory fee based on
the dollar amount derived from applying BEF's average daily net assets to the
following investment advisory fee rate schedule:

For the fiscal years ending December 31, 1995, and December 31, 1994, the Fund
paid $540,339 and $415,129, respectively, in investment advisory fees net of the
fee waiver to BMC. The Funds paid no investment advisory fees to BMC for the
fiscal period March 1, 1993 (commencement of operations), through December 31,
1993.

TRANSFER AND ADMINISTRATIVE SERVICES

Twentieth Century Services, Inc., 4500 Main Street, Kansas City, Missouri,
64111, (TCS) acts as transfer, administrative services and dividend paying agent
for the Fund. TCS provides facilities, equipment and personnel to the Fund and
is paid for such services by the Fund. For administrative services, each Fund
pays TCS 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 managed by the
Manager to the following administrative fee rate schedule:

Group Assets Administrative Fee Rate

up to $4.5 billion .11%
up to $6 billion .10
up to $9 billion .09
over $9 billion .08

For transfer agent services, the Fund pays TCS monthly fees of $1.3958 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 for the fiscal
years ended December 31, 1995, 1994 and 1993 are indicated in the tables below.
Fee amounts are net of expense limitations as described on the next page.

ADMINISTRATIVE FEES

Fiscal Fiscal Fiscal
1995 1994 1993*

$170,950 $163,339 $113,358

TRANSFER AGENT FEES

Fiscal Fiscal Fiscal
1995 1994 1993*

$414,319 $447,668 $184,307

*For the fiscal period March 1, 1993 (commencement of operations), through
December 31, 1993.

DIRECT FUND EXPENSES

EXPENSE LIMITATION AGREEMENT

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 limitation in effect at that time. BMC has agreed to limit
the Fund expenses to .75% of the Fund's average daily net assets until May 31,
1997. The Fund's contractual expense limitation is subject to annual renewal.

For the fiscal years ended 1995 and 1994, BMC reimbursed $8,882 and $112,324.00
respectively, of the Fund's expenses. For the fiscal period March 1, 1993
(commencement of operations) through December 31, 1993, BMC and BFS reimbursed
$515,240.00 of the Fund's expenses.

Voluntary Expense Limitation. BMC voluntarily agreed to absorb all the Fund's
expenses through May 31, 1993. On June 1, 1993, the Fund began absorbing
expenses equal to .15% of average daily net assets. This expense cap was raised
by .15% of average daily net assets as of the first day of each subsequent month
until the .75% contractual cap was reached on October 1, 1993. BMC's voluntary
expense limitations are not eligible for recoupment (as described above with
respect to the contractual expense limitation agreement).

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The Fund's shares are continuously offered at net asset value. Share
certificates are issued (without charge) only when requested in writing.
Certificates are not issued for fractional shares. Dividend and voting rights
are not affected by the issuance of certificates.

Twentieth Century 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. As of July 31,
1996, Charles Schwab & Company, 101 Montgomery Street, San Francisco, California
94104, was the omnibus record holder of 2,108,868.410 shares or 15.0% of the
Fund's total outstanding shares.

Share purchases and redemptions are governed by California law.

OTHER INFORMATION

BEF's investment advisor, BMC, has been continuously registered with the 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 1940 Act with
respect to the shares offered. These 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 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.

<PAGE>
BENHAM EQUITY FUNDS

1933 Act Post-Effective Amendment No. 18
1940 Act Amendment No. 20
- --------------------------------------------------------------------------------

PART C OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) FINANCIAL STATEMENTS. Audited financial statements for the fiscal year
ended December 31, 1995, for Benham Gold Equities Index Fund, Benham
Income & Growth Fund, Benham Equity Growth Fund, Benham Utilities Index
Fund, and Benham Global Natural Resources Index Fund are filed herein
as included in the Statement of Additional Information by reference to
the Annual Reports dated December 31, 1995, filed on February 22,
1996, (Accession # 827060-96-000007).

(b) EXHIBITS.

(1) Amended and Restated Articles of Incorporation dated August 2,
1995, are incorporated herein by reference to Exhibit 1(c) of
Post-Effective Amendment No. 17 filed on February 26, 1996
(Accession # 828060-96-000009).

(2) Amended and Restated Bylaws dated May 31, 1995, are
incorporated herein by reference to Exhibit 2(c) of
Post-Effective Amendment No. 17 filed on February 26, 1996
(Accession # 827060-96-000009).

(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 filed July 12,1988.

b) A specimen copy of the Benham Income & Growth Fund share
certificate is incorporated herein by reference to Exhibit 4
to Post-Effective Amendment No 5 filed March 1, 1991.

c) A specimen copy of the Benham Equity Growth Fund share
certificate is incorporated herein by reference to Exhibit 4
to Post-Effective Amendment No 5 filed March 1, 1991.

d) A specimen copy of the Benham Utilities Index Fund share
certificate is incorporated herein by reference to Exhibit
4(d) to Post-Effective Amendment No. 11 filed February 28,
1993.

e) A specimen copy of the Benham Global Natural Resources
Index Fund share certificate is incorporated herein by
reference to Exhibit 4(e) to Post-Effective Amendment No. 13
filed.

(5) Investment Advisory Agreement between Benham Equity Funds and
Benham Management Corporation, dated June 1, 1995, is
incorporated herein by reference to Exhibit 5 of
Post-Effective Amendment No. 17 filed on February 26, 1996
(Accession # 828060-96-000009).

(6) Distribution Agreement between Benham Equity Funds and
Twentieth Century Securities, Inc. dated as of September 3,
1996, is incorporated herein by reference to Exhibit 6 of
Post-Effective Amendment No. 29 to the Registration Statement
of the Benham Government Income Trust filed on August 30, 1996
(Accession # 773674-96-000007).

(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.

(9) Administrative Services and Transfer Agency Agreement between
Benham Equity Funds and Twentieth Century Services, Inc. dated
as of September 3, 1996,. is incorporated herein by reference
to Exhibit 9 of Post-Effective Amendment No. 29 to the
Registration Statement of the Benham Government Income Trust
filed on August 30, 1996 (Accession # 773674-96-000007).

(10) Opinion and consent of counsel as to the legality of the
securities being registered, dated February 15, 1996, is
incorporated herein by reference to Rule 24f-2 Notice filed on
February 15, 1996 (Accession # 827060-96-000005).

(11) Consent of KPMG Peat Marwick, LLP, independent auditors, is
included herein.

(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 filed October 3, 1992.

(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 filed October 3, 1992.

(15) Not applicable.

(16) Schedule for computation of each performance quotation
provided in response to Item 22 is included herein.

(17) Power of Attorney dated December 15, 1995, is incorporated
herein by reference to Exhibit 17 of Post-Effective Amendment
No. 17 filed on February 26, 1996 (Accession
# 828060-96-000009).

Item 25. Persons Controlled by or Under Control with Registrant.

None.

Item 26. Number of Holders of Securities.

As of July 31, 1996, the Funds had the following number of shareholders of
record:

Benham Gold Equities Index Fund 29,486
Benham Income & Growth Fund 28,863
Benham Equity Growth Fund 13,857
Benham Utilities Index Fund 13,474

Item 27. Indemnification.

Under the laws of the State of California, the Directors are entitled and
empowered to purchase insurance for and to provide by resolution or in the
Bylaws for indemnification out of Corporation assets for liability and for all
expenses reasonably incurred or paid or expected to be paid by a Director or
officer in connection with any claim, action, suit, or proceeding in which he or
she becomes involved by virtue of his or her capacity or former capacity with
the Corporation. The provisions, including any exceptions and limitations
concerning indemnification, may be set forth in detail in the Bylaws or in a
resolution adopted by the Board of Directors.

Registrant hereby incorporates by reference, as though set forth fully herein,
Article II, Section 16 of Registrant's Amended and Restated Bylaws, dated May
31, 1995, appearing as Exhibit 2(c) of Post-Effective Amendment No. 17 filed on
February 26, 1996 (Accession # 827060-96-000009).

Item 28. Business and Other Connections of Investment Advisor.

The Registrant's investment advisor, Benham Management Corporation, provides
investment advisory services for various collective investment vehicles and
institutional clients and serves as investment advisor to a number of open-end
investment companies.

Item 29. Principal Underwriters.

The Registrant's distribution agent, Twentieth Century Securities, Inc., is
distribution agent to Capital Preservation Fund, Inc., Capital Preservation Fund
II, Inc., Benham California Tax-Free and Municipal Funds, Benham Government
Income Trust, Benham Municipal Trust, Benham Target Maturities Trust, Benham
Equity Funds, Benham International Funds, Benham Investment Trust, Benham
Manager Funds, TCI Portfolios, Inc., Twentieth Century Capital Portfolios, Inc.,
Twentieth Century Investors, Inc., Twentieth Century Premium Reserves, Inc.,
Twentieth Century Strategic Allocations, Inc. and Twentieth Century World
Investors, Inc. The information required with respect to each director, officer
or partner of Twentieth Century Securities is incorporated herein by reference
to Twentieth Century Securities' Form B-D filed on November 21, 1985 (SEC File
No. 8-35220; Firm CRD No. 17437).

Item 30. Location of Accounts and Records.

Benham Management Corporation, the Registrant's investment advisor, maintains
its principal office at 1665 Charleston Road, Mountain View, CA 94043. The
Registrant and its agent for transfer and administrative services, Twentieth
Century Services, maintain their principal office at 4500 Main St., Kansas City,
MO 64111. Twentieth Century Services maintains physical possession of each
account, book, or other document, and shareholder records as required by
ss.31(a) of the 1940 Act and rules thereunder. The computer and data base 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. 18/Amendment No. 20 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Mountain View, and State of
California, on the 30th day of August, 1996. I hereby certify that this
Amendment meets the requirements for immediate effectiveness pursuant to Rule
485(b).

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. 18/Amendment No. 20 has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Date
<S> <C> <C>
* Chairman of the Board of Directors, August 30, 1996
- --------------------------------- President, and
James M. Benham Chief Executive Officer

* Director August 30, 1996
- ---------------------------------
Albert A. Eisenstat

* Director August 30, 1996
- ---------------------------------
Ronald J. Gilson

* Director August 30, 1996
- ---------------------------------
Myron S. Scholes

* Director August 30, 1996
- ---------------------------------
Kenneth E. Scott

* Director August 30, 1996
- ---------------------------------
Ezra Solomon

* Director August 30, 1996
- ---------------------------------
Isaac Stein

* Director August 30, 1996
- ---------------------------------
James E. Stowers III

* Director August 30, 1996
- ---------------------------------
Jeanne D. Wohlers

* Chief Financial Officer, Treasurer August 30, 1996
- ---------------------------------
Maryanne Roepke
</TABLE>

/s/ Douglas A. Paul
*by Douglas A. Paul, Attorney in Fact (pursuant to a Power of Attorney dated
March 4, 1996).

EXHIBIT DESCRIPTION

EX-99.B1 Amended and Restated Articles of Incorporation dated August 2, 1995,
1995, are incorporated herein by reference to Exhibit 1(c) of
Post-Effective Amendment No. 17 filed on February 26, 1996
(Accession # 827060-96-000009).

EX-99.B2 Amended and Restated Bylaws dated May 31, 1995, are incorporated
herein by reference to Exhibit 2(c) of Post-Effective Amendment No.
17 filed on February 26, 1996 (Accession # 827060-96-000009).

EX-99.B3 Not applicable.

EX-99.B4 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 filed July 12, 1988.

b) A specimen copy of the Benham Income & Growth Fund share
certificate is incorporated herein by reference to Exhibit 4 to
Post-Effective Amendment No 5 filed March 1, 1991.

c) A specimen copy of the Benham Equity Growth Fund share
certificate is incorporated herein by reference to Exhibit 4 to
Post-Effective Amendment No 5 filed March 1, 1991.

d) A specimen copy of the Benham Utilities Index Fund share
certificate is incorporated herein by reference to Exhibit 4(d) to
Post-Effective Amendment No. 11 filed February 28, 1993.

e) A specimen copy of the Benham Global Natural Resources Index Fund
share certificate is incorporated herein by reference to Exhibit
4(e) to Post-Effective Amendment No. 13 filed.

EX-99.B5 Investment Advisory Agreement between Benham Equity Funds and
Benham Management Corporation, dated June 1, 1995, is incorporated
herein by reference to Exhibit 5 of Post-Effective Amendment No. 17
filed on February 26, 1996 (Accession # 827060-96-000009).

EX-99.B6 Distribution Agreement between Benham Equity Funds and Twentieth
Century Securities, Inc. dated as of September 3, 1996, is
incorporated herein by reference to Exhibit 6 of Post-Effective
Amendment No. 29 to the Registration Statement of the Benham
Government Income Trust filed on August 30, 1996 (Accession #
773674-96-000007).).

EX-99.B8 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.

EX-99.B9 Administrative Services and Transfer Agency Agreement between Benham
Equity Funds and Twentieth Century Services, Inc. dated as of
September 3, 1996,. is incorporated herein by reference to Exhibit 9
of Post-Effective Amendment No. 29 to the Registration Statement of
the Benham Government Income Trust filed on August 30, 1996
(Accession # 773674-96-000007).

EX-99.B10 Opinion and consent of counsel as to the legality of the securities
being registered, dated February 15, 1996, is incorporated herein by
reference to Rule 24f-2 Notice filed on February 15, 1996 (Accession
# 827060-96-000005).

EX-99.B11 Consent of KPMG Peat Marwick, LLP, independent auditors, is included
herein.

EX-99.B14 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 filed
October 3, 1992.

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 filed October 3,
1992.

EX-99.B16 Schedule for computation of each performance quotation provided in
response to Item 22 is included herein.

EX-99.B17 Power of Attorney dated December 15, 1995, is incorporated herein by
reference to Exhibit 17 of Post-Effective Amendment No. 17 filed on
February 26, 1996 (Accession # 827060-96-000009).

EX-27.1.1 FDS - Globol Gold Fund

EX-27.1.2 FDS - Income & Growth Fund

EX-27.1.3 FDS - Equity Growth Fund

EX-27.1.4 FDS - Utilities Income Fund

EX-27.1.5 FDS - Global Natural Resources Index Fund

Consent of Independent Auditors

The Board of Directors and Shareholders
Benham Equity Funds:

We consent to the inclusion in Benham Equity Funds' Post-Effective Amendment No.
18 to the Registration Statement No. 33-19589 on Form N-1A under the Securities
Act of 1933 and Amendment No. 20 to the Registration Statement No. 811-5447
filed on Form N-1A under the Investment Company Act of 1940 of our reports dated
February 5, 1996 on the financial statements and financial highlights of the
Benham Income & Growth Fund, Benham Equity Growth Fund, Benham Global Gold Fund,
Benham Global Natural Resources Index Fund and Benham Utilities Income Fund (the
five funds comprising the Benham Equity Funds) for the periods indicated
therein, which reports have been incorporated by reference into the Statements
of Additional Information of Benham Equity Funds. We also consent to the
reference to our firm under the heading "Financial Highlights" in the Prospectus
and under the heading "About Benham Equity Funds" in the Statements of
Additional Information which are incorporated by reference in the Prospectus.

/s/KPMG Peat Marwick LLP

Kansas City, Missouri
August 30, 1996

BENHAM GOLD EQUITY INDEX FUND
AVERAGE ANNUAL TOTAL RETURN

DECEMBER 31, 1995

ERV 1/N
Formula: T = ( --- ) - 1
p

P = A hypothetical initial payment of $1,000.

ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.

N = Number of years.

T = Average annual total return.

P ERV N T
-------- --------- -------- ---------
Calculation:

One Year $1,000.00 $1,092.50 1.000000 9.25%

Five Years $1,000.00 $1,336.33 5.000000 5.97%

Ten Years

Date Of Inception* $1,000.00 $1,269.88 7.358900 3.30%

TR=Total return for period. TR=(ERV/P) - 1 26.99%

*Date Of Inception: August 17, 1988

<PAGE>

BENHAM GLOBAL NATURAL RESOURCES FUND
AVERAGE ANNUAL TOTAL RETURN

DECEMBER 31, 1995

ERV 1/N
Formula: T = ( --- ) - 1
P

P = A hypothetical initial payment of $1,000.

ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.

N = Number of years.

T = Average annual total return.

P ERV N T
-------- -------- -------- --------
Calculation:

One Year $1,000.00 $1,144.10 1.000000 14.41%

Five Years $1,000.00 5.000000

Ten Years

Date Of Inception* $1,000.00 $1,104.88 1.295890 8.00%

TR=Total return for period. TR=(ERV/P) - 1 10.49%

*Date Of Inception: September 15, 1994

<PAGE>

BENHAM INCOME & GROWTH FUND
AVERAGE ANNUAL TOTAL RETURN

DECEMBER 31, 1995

ERV 1/N
Formula: T = ( --- ) - 1
P

P = A hypothetical initial payment of $1,000.

ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.

N = Number of years.

T = Average annual total return.

P ERV N T
-------- -------- -------- --------
Calculation:

One Year $1,000.00 $1,368.80 1.000000 36.88%

Five Years $1,000.00 $2,273.25 5.000000 17.85%

Ten Years

Date Of Inception* $1,000.00 $2,303.33 5.038400 18.01%

TR=Total return for period. TR=(ERV/P) - 1 130.33%

*Date Of Inception: December 17, 1990

<PAGE>

BENHAM EQUITY GROWTH FUND
AVERAGE ANNUAL TOTAL RETURN

DECEMBER 31, 1995

ERV 1/N
Formula: T = ( --- ) - 1
P

P = A hypothetical initial payment of $1,000.

ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.

N = Number of years.

T = Average annual total return.

P ERV N T
-------- -------- -------- --------
Calculation:

One Year $1,000.00 $1,345.60 1.000000 34.56%

Five Years $1,000.00 5.000000

Ten Years

Date Of Inception* $1,000.00 $1,830.81 4.646600 13.09%

TR=Total return for period. TR=(ERV/P) - 1 83.08%

*Date Of Inception: May 9, 1991

<PAGE>

BENHAM UTILTIES INCOME FUND
AVERAGE ANNUAL TOTAL RETURN

DECEMBER 31, 1995

ERV 1/N
Formula: T = ( --- ) - 1
P

P = A hypothetical initial payment of $1,000.

ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.

N = Number of years.

T = Average annual total return.

P ERV N T
-------- -------- -------- --------
Calculation:

One Year $1,000.00 $1,357.00 1.000000 35.70%

Five Years $1,000.00 5.000000

Ten Years

Date Of Inception* $1,000.00 $1,302.56 2.838400 9.76%

TR=Total return for period. TR=(ERV/P) - 1 30.26%

*Date Of Inception: March 1, 1993

<PAGE>
BENHAM UTILTIES INCOME FUND
YIELD CALCULATION
DECEMBER 31, 1995

Formula:

Yield = 2 * [ ({A - B} OVER {C * D} + 1 ) SUP 6 - 1 ]

A = Investment income earned during the period.

B = Expenses accrued for the period (net of reimbursements).

C = The average daily number of shares outstanding during the period that
were entitled to receive dividends.

D = The per share price on the last day of the period.

Calculation:

A = $806,958.78

B = $128,405.69

C = 18,973,147.664

D = $11.43

Yield = 3.78%

<PAGE>

BENHAM INCOME & GROWTH FUND
YIELD CALCULATION
DECEMBER 31, 1995

Formula:

Yield= 2 * [ ({A - B} OVER {C * D} + 1 ) SUP 6 - 1 ]

A = Investment income earned during the period.

B = Expenses accrued for the period (net of reimbursements).

C = The average daily number of shares outstanding during the period that
were entitled to receive dividends.

D = The per share price on the last day of the period.

Calculation:

A = $867,884.73

B = $195,708.27

C = 20,062,034.908

D = $17.79

Yield = 2.27%

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> BENHAM GLOBAL GOLD FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 442,215,042
<INVESTMENTS-AT-VALUE> 512,713,602
<RECEIVABLES> 298,985
<ASSETS-OTHER> 1,830,324
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 514,842,911
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,554,495
<TOTAL-LIABILITIES> 1,554,495
<SENIOR-EQUITY> 397,368,950
<PAID-IN-CAPITAL-COMMON> 31,415,991
<SHARES-COMMON-STOCK> 39,736,895
<SHARES-COMMON-PRIOR> 43,484,012
<ACCUMULATED-NII-CURRENT> 430,416
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 13,573,286
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 70,499,773
<NET-ASSETS> 513,288,416
<DIVIDEND-INCOME> 1,804,829
<INTEREST-INCOME> 541,040
<OTHER-INCOME> 0
<EXPENSES-NET> 1,915,453
<NET-INVESTMENT-INCOME> 430,416
<REALIZED-GAINS-CURRENT> 52,189,441
<APPREC-INCREASE-CURRENT> (25,818,030)
<NET-CHANGE-FROM-OPS> 26,801,827
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24,765,157
<NUMBER-OF-SHARES-REDEEMED> 28,512,274
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (24,404,724)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 96,317,803
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 920,112
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,949,059
<AVERAGE-NET-ASSETS> 603,070,940
<PER-SHARE-NAV-BEGIN> 12.37
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 0.54
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.92
<EXPENSE-RATIO> 0.64
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> BENHAM INCOME & GROWTH FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 460,460,994
<INVESTMENTS-AT-VALUE> 530,605,087
<RECEIVABLES> 4,651,098
<ASSETS-OTHER> 8,413,579
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 543,669,764
<PAYABLE-FOR-SECURITIES> 4,936,222
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 582,124
<TOTAL-LIABILITIES> 5,518,346
<SENIOR-EQUITY> 278,083,510
<PAID-IN-CAPITAL-COMMON> 155,396,444
<SHARES-COMMON-STOCK> 27,808,351
<SHARES-COMMON-PRIOR> 20,984,716
<ACCUMULATED-NII-CURRENT> 545,191
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 34,072,874
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 70,053,399
<NET-ASSETS> 538,151,418
<DIVIDEND-INCOME> 6,217,510
<INTEREST-INCOME> 630,845
<OTHER-INCOME> 0
<EXPENSES-NET> 1,457,099
<NET-INVESTMENT-INCOME> 5,391,256
<REALIZED-GAINS-CURRENT> 24,074,606
<APPREC-INCREASE-CURRENT> 12,274,138
<NET-CHANGE-FROM-OPS> 41,713,000
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,168,327
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,280,493
<NUMBER-OF-SHARES-REDEEMED> 3,714,102
<SHARES-REINVESTED> 257,244
<NET-CHANGE-IN-ASSETS> 164,450,275
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 682,806
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,484,547
<AVERAGE-NET-ASSETS> 462,433,389
<PER-SHARE-NAV-BEGIN> 17.81
<PER-SHARE-NII> 0.22
<PER-SHARE-GAIN-APPREC> 1.53
<PER-SHARE-DIVIDEND> 0.21
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.35
<EXPENSE-RATIO> 0.64
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> BENHAM EQUITY GROWTH FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 173,807,309
<INVESTMENTS-AT-VALUE> 198,160,984
<RECEIVABLES> 403,688
<ASSETS-OTHER> 501,857
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 199,066,529
<PAYABLE-FOR-SECURITIES> 510,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,486,098
<TOTAL-LIABILITIES> 1,996,098
<SENIOR-EQUITY> 126,078,600
<PAID-IN-CAPITAL-COMMON> 28,532,130
<SHARES-COMMON-STOCK> 12,607,860
<SHARES-COMMON-PRIOR> 11,193,129
<ACCUMULATED-NII-CURRENT> 133,282
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 17,920,944
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24,405,475
<NET-ASSETS> 197,070,431
<DIVIDEND-INCOME> 1,914,477
<INTEREST-INCOME> 251,480
<OTHER-INCOME> 0
<EXPENSES-NET> 588,001
<NET-INVESTMENT-INCOME> 1,577,956
<REALIZED-GAINS-CURRENT> 13,228,656
<APPREC-INCREASE-CURRENT> 2,771,203
<NET-CHANGE-FROM-OPS> 17,577,815
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,508,678
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,273,521
<NUMBER-OF-SHARES-REDEEMED> 2,953,999
<SHARES-REINVESTED> 95,209
<NET-CHANGE-IN-ASSETS> 37,620,137
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 269,974
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 604,385
<AVERAGE-NET-ASSETS> 181,611,435
<PER-SHARE-NAV-BEGIN> 14.25
<PER-SHARE-NII> 0.13
<PER-SHARE-GAIN-APPREC> 1.37
<PER-SHARE-DIVIDEND> 0.12
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.63
<EXPENSE-RATIO> 0.66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> BENHAM UTILITIES INCOME FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 146,631,965
<INVESTMENTS-AT-VALUE> 162,403,989
<RECEIVABLES> 1,071,751
<ASSETS-OTHER> 306,973
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 163,782,713
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 241,351
<TOTAL-LIABILITIES> 241,351
<SENIOR-EQUITY> 144,360,660
<PAID-IN-CAPITAL-COMMON> 4,245,801
<SHARES-COMMON-STOCK> 14,436,066
<SHARES-COMMON-PRIOR> 19,130,376
<ACCUMULATED-NII-CURRENT> 410,109
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,247,221)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15,772,013
<NET-ASSETS> 163,541,362
<DIVIDEND-INCOME> 4,256,159
<INTEREST-INCOME> 137,799
<OTHER-INCOME> 0
<EXPENSES-NET> 696,508
<NET-INVESTMENT-INCOME> 3,697,450
<REALIZED-GAINS-CURRENT> 10,367,628
<APPREC-INCREASE-CURRENT> (14,123,315)
<NET-CHANGE-FROM-OPS> (58,237)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,512,277
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,285,967
<NUMBER-OF-SHARES-REDEEMED> 9,252,191
<SHARES-REINVESTED> 271,914
<NET-CHANGE-IN-ASSETS> (55,253,099)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 282,621
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 688,827
<AVERAGE-NET-ASSETS> 188,656,268
<PER-SHARE-NAV-BEGIN> 11.44
<PER-SHARE-NII> 0.22
<PER-SHARE-GAIN-APPREC> (0.12)
<PER-SHARE-DIVIDEND> 0.21
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.33
<EXPENSE-RATIO> 0.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> BENHAM GLOBAL NATURAL RESOURCES INDEX FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 46,926,909
<INVESTMENTS-AT-VALUE> 50,452,227
<RECEIVABLES> 410,986
<ASSETS-OTHER> 232,218
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 51,095,431
<PAYABLE-FOR-SECURITIES> 40,546
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 35,557
<TOTAL-LIABILITIES> 76,103
<SENIOR-EQUITY> 45,012,830
<PAID-IN-CAPITAL-COMMON> 2,241,205
<SHARES-COMMON-STOCK> 4,501,283
<SHARES-COMMON-PRIOR> 2,829,544
<ACCUMULATED-NII-CURRENT> 113,252
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 126,328
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,525,713
<NET-ASSETS> 51,019,328
<DIVIDEND-INCOME> 603,646
<INTEREST-INCOME> 65,516
<OTHER-INCOME> 0
<EXPENSES-NET> 162,215
<NET-INVESTMENT-INCOME> 506,947
<REALIZED-GAINS-CURRENT> 87,282
<APPREC-INCREASE-CURRENT> 1,887,373
<NET-CHANGE-FROM-OPS> 2,481,602
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 399,493
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,364,420
<NUMBER-OF-SHARES-REDEEMED> 1,726,645
<SHARES-REINVESTED> 33,964
<NET-CHANGE-IN-ASSETS> 20,861,870
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 75,919
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 223,488
<AVERAGE-NET-ASSETS> 43,678,693
<PER-SHARE-NAV-BEGIN> 10.66
<PER-SHARE-NII> 0.11
<PER-SHARE-GAIN-APPREC> 0.65
<PER-SHARE-DIVIDEND> 0.09
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.33
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>