BENHAM CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS
                       Supplement Dated December 15, 1995
                       to the Prospectus and Statement of
                  Additional Information Dated October 27, 1995


1. The following individual has been appointed to the Board of Trustees of the
Funds in addition to those listed in the current Prospectus:

     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).

2. On page 28 of the Prospectus, the fourth paragraph under the heading "SHARE
PRICE" is deleted. All remaining references in the Prospectus and Statement of
Additional Information to the net asset value being calculated at "12 p.m.
Pacific Time for Benham Target Maturities Trust and 1 p.m. Pacific Time for all
other Benham funds" are hereby changed to "the close of the Exchange, usually 12
p.m. Pacific Time for Benham Target Maturities Trust and 1 p.m. Pacific Time for
all other Benham funds."

3. On page 32 of the Prospectus, the following sentence is to be inserted under
the sub-heading "Telephone Transactions" after the last sentence of the first
paragraph:

     Once your telephone order has been placed, it may not be modified or
     cancelled.

4. On page 32 of the Prospectus, the following sentence is to be inserted under
the sub-heading "Confirmation and Quarterly Statements" after the second
sentence:

     However, beginning September of 1996, Automatic Investment Services
     transactions will not be confirmed immediately but rather will be confirmed
     on your next consolidated quarterly statement.

5. On page 34 of the Prospectus, the following replaces the last two sentences
of the last paragraph under the sub-heading "Open Order Service":

     All orders and cancellation of orders received by one hour prior to the
     close of the Exchange, usually 12 p.m. Pacific Time, will be considered to
     be effective the same day. All orders and cancellation of orders not
     received one hour prior to the close of the Exchange, usually 12 p.m.
     Pacific Time, will be considered effective the following business day.