SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
-----
File No. 33-65170:
Pre-Effective Amendment No.____
Post-Effective Amendment No._4_ X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-----
File No. 811-7822:
Amendment No._5_
BENHAM INVESTMENT TRUST
(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: Immediately, upon effectiveness
(first offered 11/17/93)
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 April 8, 1996, the Registrant filed a Rule
24f-2 Notice on Form 24f-2 with respect to its fiscal year ended February 29,
1996.
<PAGE>
BENHAM INVESTMENT TRUST
1933 Act Post-Effective Amendment No. 4
1940 Act Amendment No. 5
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 Fund, Investment
Objectives of the Fund, Information About Investment Policies of the
Fund, Risk Factors and Investment Techniques, Other Investment
Practices
5 Investment Management
5A Not Applicable
6 Further Information About the Fund, 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
Prime Money Market Fund
Prospectus
SEPTEMBER 3,
1996
BENHAM INVESTMENT TRUST
- --------------------------------------------------------------------------------
The BENHAM PRIME MONEY MARKET FUND (the "Fund") is a series of the Benham
Investment Trust, a member of the Twentieth Century family of funds, a family
that includes 66 no-load mutual funds covering a variety of investment
opportunities. One of the funds is described in this Prospectus. The other funds
are described in separate prospectuses.
INVESTMENT OBJECTIVE OF
THE FUND
The Fund is a money market fund which seeks the highest level of current
income consistent with preservation of capital.
The Fund buys high-quality, U.S. dollar-denominated money market
instruments and other short-term obligations of banks, governments and
corporations.
MINIMUM INITIAL INVESTMENT: $2,500.
INVESTMENTS IN THE FUND ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT OR ANY OTHER AGENCY. THERE IS NO ASSURANCE THAT THE FUND WILL BE ABLE
TO MAINTAIN A $1.00 SHARE PRICE.
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 Fund offered by this
Prospectus has no 12b-1 plan or other deferred sales charges.
This Prospectus gives you information about the Fund 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:
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 Fund will achieve its investment objective.
- --------------------------------------------------------------------------------
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........... 3
Financial Highlights.............................. 4
INFORMATION REGARDING THE FUND
Investment Policies of the Fund.....................5
Investment Objective.............................5
Eligible Investments.............................5
Portfolio Investment Quality and
Maturity Criteria..............................5
Diversification..................................6
Industry Concentration...........................6
Risk Factors and Investment Techniques..............6
Corporate Obligations............................6
Bank Obligations.................................7
Government Obligations...........................7
Variable and Floating-Rate Instruments...........8
Restricted and Illiquid Securities...............8
U.S. Dollar-Denominated Foreign Securities.......8
Other Investment Practices,
Their Characteristics and Risks..................9
Repurchase Agreements............................9
When-Issued and Forward Commitment
Agreements.....................................9
Borrowing........................................9
Other Techniques.................................9
Performance Advertising.............................9
HOW TO INVEST WITH TWENTIETH CENTURY AND THE BENHAM GROUP
How to Open an Account.............................11
By Mail.........................................11
By Wire.........................................11
By Exchange.....................................11
In Person.......................................12
Subsequent Investments.............................12
By Mail.........................................12
By Telephone....................................12
By Wire.........................................12
In Person.......................................12
Automatic Investment Plan..........................12
How to Exchange from One Account to
Another.........................................12
By Mail.........................................13
By Telephone....................................13
How to Redeem Shares...............................13
By Mail.........................................13
By Telephone....................................13
By Check-A-Month................................13
Other Automatic Redemptions.....................13
Redemption Proceeds................................13
By Check........................................13
By Wire and ACH.................................13
Redemption of Shares in
Low-Balance Accounts............................14
Signature Guarantee................................14
Special Investor Services..........................14
Automated Information Line......................14
CheckWriting....................................14
Tax-Qualified Retirement Plans..................15
Important Policies Regarding Your
Investments.....................................15
Reports to Shareholders............................16
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.....19
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 Fund.................23
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED BY THE FUND 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 FUND, AND YOU SHOULD NOT RELY ON ANY
OTHER INFORMATION OR REPRESENTATION.
2
TRANSACTION AND OPERATING EXPENSE TABLE
- --------------------------------------------------------------------------------
Benham
Prime
Money Market
Fund
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases none
Maximum Sales Load Imposed on Reinvested Dividends none
Deferred Sales Load none
Redemption Fee(1) none
Exchange Fee none
ANNUAL FUND OPERATING EXPENSES:(2)
(as a percentage of net assets)
Management Fees .19%
12b-1 Fees none
Other Expenses .31%
Total Fund Operating Expenses .50%
Example: You would pay the following expenses on a 1 year $ 5
$1,000 investment, assuming a 5% annual return and 3 years 16
redemption at the end of each time period: 5 years 28
10 years 63
(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 limitation for the Fund is
.50%. This expense limitation is subject to annual renewal in June, 1998. If
the expense limitation was not in effect, the Fund's Management Fee, Other
Expenses and Total Fund Operating Expenses would be as follows, respectively:
.31%, .31% and .62%.
The Fund pays the Manager management fees equal to an annualized percentage
of the 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 Fund. 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.
3
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
BENHAM PRIME MONEY MARKET FUND
The Financial Highlights for each of the periods presented have been
audited by KPMG Peat Marwick LLP, independent auditors. Their report on these
Financial Highlights appears in the Fund's annual report to shareholders which
is incorporated by reference into the Statement of Additional Information. The
annual report contains additional performance information and will be made
available upon request and without charge.
For a Share Outstanding Throughout the Years Ended February 29 and February 28 (except as noted)
1996 1995 1994+
---------- ---------- ----------
PER-SHARE DATA
- --------------
<S> <C> <C> <C>
Net Asset Value at Beginning of Period................................. $1.00 1.00 1.00
Income from Investment Operations
Net Investment Income ............................................... .0560 .0493 .0095
------ ------ ------
Less Distributions
Dividends From Net Investment Income................................. (.0560) (.0493) (.0095)
------ ------ ------
NET ASSET VALUE AT END OF PERIOD....................................... $1.00 1.00 1.00
====== ====== ======
TOTAL RETURN*.......................................................... 5.60% 4.93% .96%
- ------------
SUPPLEMENTAL DATA AND RATIOS
- ----------------------------
Net Assets at End of Period (in thousands)......................... $1,270,653 1,509,863 75,168
Ratio of Expenses to Average Daily Net Assets++...................... .48% .04% 0%
Ratio of Expenses to Average Daily Net Assets
(Before Reimbursement)++........................................... .62% .71% 1.49%**
Ratio of Net Investment Income to Average Daily Net Assets........... 5.43% 5.28% 3.35%**
Ratio of Net Investment Income to Average Daily Net Assets
(Before Reimbursement) ............................................ 5.29% 4.61% 1.86%**
- ----------------------------------------------------------------------------------------------------------------------
+ Commencement of operations for the Benham Prime Money Market Fund was November 17, 1993.
++ The ratios for the year ended February 29, 1996 include expenses paid through expense offset arrangements.
* Total return figures assume reinvestment of dividends and are not annualized.
** Annualized.
</TABLE>
4
INFORMATION REGARDING THE FUND
- --------------------------------------------------------------------------------
INVESTMENT POLICIES
OF THE FUND
The Fund has adopted certain investment restrictions that are set forth
in the Statement of Additional Information. Those restrictions, as well as
the investment objective of the Fund 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 Fund has
implemented additional investment policies and practices to guide its
activities in the pursuit of its investment objective. 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
the Fund fits your investment objective. An investment in the Fund by itself
does not constitute a balanced investment plan.
For an explanation of the securities ratings referred to in the
following discussion, see "Other Information" in the Statement of Additional
Information.
INVESTMENT OBJECTIVE
The Fund's investment objective is to seek the highest level of current
income consistent with preservation of capital. As with any mutual fund,
there is no guarantee that the Fund will achieve its investment objective.
ELIGIBLE INVESTMENTS
The Fund buys high-quality ("first-tier"), U.S. dollar-denominated money
market instruments and other short-term obligations of banks, governments,
and corporations. The table below provides a brief overview of the Fund's
possible investments. The obligations referenced in the table and the risks
associated with investing in them are described in the section titled "Risk
Factors and Investment Techniques", which begins on page 6.
- --------------------------------------------------------------------------------
ISSUERS TYPES OF OBLIGATIONS
- --------------------------------------------------------------------------------
Domestic and foreign financial Negotiable certificates
institutions (e.g., banks, broker-dealers, of deposit, bankers'
insurance companies, leasing and acceptances, bank notes, and
financing corporations) commercial paper (including
floating-rate agency securities)
- --------------------------------------------------------------------------------
Domestic and foreign nonfinancial Commercial paper and
corporations short-term corporate debt
obligations (including fixed-
and variable-rate notes
and bonds)
- --------------------------------------------------------------------------------
U.S. government U.S. Treasury bills, notes,
and its agencies and bonds, and U.S. government
instrumentalities agency obligations (including
floating-rate agency securities)
- --------------------------------------------------------------------------------
Foreign governments Commercial paper and
and their agencies and discount notes
instrumentalities
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENT
QUALITY AND MATURITY CRITERIA
BMC follows regulatory guidelines on quality and maturity for the Fund's
investments, which are designed to help maintain a stable $1.00 share price.
In particular, the Fund:
1. Buys only U.S. dollar-denominated obligations with remaining
maturities of 13 months or less (and variable- and floating-rate
obligations with demand features that effectively shorten their
maturities to 13 months or less);
5
2. Maintains a dollar-weighted average portfolio maturity of 90 days or
less;
3. Restricts its investments to high-quality obligations determined by
the Manager to present minimal credit risks, pursuant to guidelines
established by the board of trustees.
To be considered high-quality, an obligation must be one of the
following:
1. A U.S. government obligation;
2. Rated (or issued by an issuer rated with respect to a class of
short-term debt obligations) within the two highest rating categories
for short-term debt obligations by at least two nationally recognized
statistical rating organizations ("rating agencies") (or one if only
one has rated the obligation);
3. An unrated obligation judged by the Manager, pursuant to guidelines
established by the board of trustees, to be of comparable quality.
The Fund intends to buy only obligations which are designated as
first-tier securities as defined by the SEC; that is, securities with the
highest rating.
The acquisition of securities that are unrated or rated by only one
rating agency must be approved or ratified by the board of trustees.
DIVERSIFICATION
In order to reduce investment risks, the Manager is required by law to
diversify the Fund's investment portfolio. As a general rule, the Manager may
not invest more than 5% of the Fund's total assets in securities issued by a
single institution. In addition, the Fund must also limit its investments in
securities subject to puts of a single institution.
This policy does not apply to U.S. government securities, in which the
Fund may invest without limitation. See the Statement of Additional
Information for a more detailed description.
INDUSTRY CONCENTRATION
Under normal market conditions, 25% or more of the Fund's total assets
are invested in obligations of issuers in the financial services industry.
This industry concentration reflects that of the markets in which the Fund
invests. More than half of the markets' commercial paper is issued by
companies or organizations in the financial services industry.
For temporary defensive purposes, less than 25% of the Fund's total
assets may be invested in obligations of issuers in the financial services
industry. The manager will not invest more than 25% of the Fund's total
assets in any other industry.
RISK FACTORS AND INVESTMENT
TECHNIQUES
The Fund may be appropriate for investors who seek to (1) earn income at
current money market rates while preserving their investments; (2) use the
Fund as part of a long-term, balanced investment portfolio consisting of
money market instruments, bonds, and stocks; or (3) use the Fund to place
investment monies as part of a dollar-cost averaging investment program.
Because the Fund emphasizes stability, it will not generate as much
income as a bond fund. No single fund constitutes a balanced investment plan.
Corporations and governments address their short-term borrowing and
cash-flow management needs in a highly liquid, worldwide financial market
called the "money market." The following is a brief description of the types
of money market instruments the Fund may buy.
CORPORATE OBLIGATIONS
COMMERCIAL PAPER is issued by large corporations to raise cash. The
maximum maturity for commercial paper is 270 days, although most commercial
paper is issued with maturities of
6
60 days or less. Commercial paper is offered at a discount with its full face
value paid at maturity.
Although commercial paper rates generally fluctuate with the value of
the London Interbank Offered Rate (LIBOR), Treasury bills, bankers'
acceptances, and certificates of deposit, they are also influenced by (1) the
issuer's size and credit rating and (2) the commercial paper maturity date.
Smaller or lower-rated corporations may tap the commercial paper market
through ASSET-BACKED COMMERCIAL PAPER PROGRAMS. In a typical program, a
special purpose corporation (a "SPC"), created and/or serviced by a bank,
uses the proceeds from an issuance of commercial paper to purchase
receivables from one or more corporations (sellers). The sellers transfer
their interest in the cash flow from the receivables to the SPC, and this
cash is used to pay interest and repay principal on the commercial paper.
Letters of credit may be available to cover the risk that the cash flow from
the receivables will not be sufficient to cover the maturing commercial
paper.
The Fund may purchase CORPORATE NOTES AND BONDS with remaining
maturities of 13 months or less in the secondary market provided that each of
these securities has characteristics consistent with regulatory requirements
for money market funds.
BANK OBLIGATIONS
NEGOTIABLE CERTIFICATES OF DEPOSIT (CDs) evidence a bank's obligation to
repay money deposited with it for a specified period of time. The table below
identifies the types of CDs the Fund may buy.
- --------------------------------------------------------------------------------
CD Type Issuer
- --------------------------------------------------------------------------------
Domestic Domestic offices of U.S. banks
Yankee U.S. branches of foreign banks
Eurodollar Issued in London by U.S.,
Canadian, European, and
Japanese banks
Schedule B Canadian subsidiaries of non
Canadian banks
BANKERS' ACCEPTANCES are used to finance foreign commercial trade.
Issued by a bank with an importer's name on them, these instruments allow the
importer to back up its own pledge to pay for imported goods with a bank's
obligation to cover the transaction if the importer fails to do so.
BANK NOTES are senior unsecured promissory notes issued in the U.S. by
domestic commercial banks.
The bank obligations the Fund may buy generally are not insured by the
FDIC or any other insurer.
GOVERNMENT OBLIGATIONS
U.S. TREASURY SECURITIES differ from one another in their interest
rates, maturities, and issuance and interest payment schedules. Treasury
bills have initial maturities of one year or less; Treasury notes, two to ten
years; and Treasury bonds, more than ten years.
A number of U.S. government agencies and government-sponsored
organizations issue debt securities. These agencies generally are created by
Congress to fulfill a specific need, such as providing credit for home buyers
or farmers. Among these agencies are the Federal Home Loan Banks, the Federal
Farm Credit System, the Student Loan Marketing Association, and the
Resolution Funding Corporation.
Some obligations issued or guaranteed by U.S. government agencies or
instrumentalities are supported by the full faith and credit of the U.S.
government; others are supported by the right of the issuer to borrow from
the Treasury; others are supported by the U.S. government's discretionary
authority to purchase certain obligations of the agency or instrumentality,
and others are supported only by the credit of the issuing agency or
instrumentality.
SUPRANATIONAL ORGANIZATIONS (generally, multilateral lending
institutions, or "MLI"s) are created by governments to promote economic
reconstruction and development. An MLI's creditworthiness is based not only
on its own financial performance, but on the willingness and
7
ability of member governments to support its lending activities.
While maintaining strict financial controls to ensure liquidity and
strong creditworthiness, MLIs finance their operations in the same manner as
any other financial institution, with a combination of short- and long-term
debt obligations. Short-term debt is usually issued in the form of short-term
discount notes and commercial paper.
VARIABLE AND FLOATING-RATE INSTRUMENTS
Variable- and floating-rate instruments are issued by corporations,
financial institutions, and government agencies and instrumentalities.
Floating-rate instruments have interest rates that change whenever there
is a change in a designated base rate, whereas variable-rate instruments
provide for specified periodic interest rate adjustments. The interest rate
on variable- and floating-rate instruments is ordinarily determined by
reference to (or is a percentage of) an objective standard, such as the
Federal Funds effective rate, the 90-day U.S. Treasury bill rate, or LIBOR.
Although the Fund typically limits its investments to securities with
remaining maturities of 13 months or less, it may invest in variable- and
floating-rate instruments that have nominal (or stated) maturities in excess
of 13 months, provided that such instruments (1) have demand features
consistent with regulatory requirements for money market funds, or (2) are
securities issued by the U.S. government or a U.S.
government agency that meet certain regulatory requirements for money market
funds.
RESTRICTED AND ILLIQUID SECURITIES
The Funds may, from time to time, purchase Rule 144A securities when
they present attractive investment opportunities that otherwise meet the
Fund's 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 trustees 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 trustees 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 trustees 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 Fund's manager will consider
appropriate remedies to minimize the effect on such fund's liquidity. The
Fund may not 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).
U.S. DOLLAR-DENOMINATED
FOREIGN SECURITIES
The Fund invests exclusively in U.S. dollar-denominated instruments,
some of which may be issued by foreign entities as described in the table on
page 5. Consequently, the Fund may be subject to risks different than those
incurred by a fund that invests only in debt obligations of domestic issuers.
Currently, the only securities held outside the United States in which
the Fund expects to invest are EuroCDs, which are held in England.
8
As a result, the Fund's exposure to these foreign investment risks is
expected to be lower than funds which invest more broadly in securities held
outside the United States. Regulatory limits specified in the section titled
"Portfolio Investment Quality and Maturity Criteria" on page 5 apply equally
to securities of foreign and domestic issuers.
OTHER INVESTMENT PRACTICES,
THEIR CHARACTERISTICS AND RISKS
For additional information regarding the investment practices of the
Fund, see the Fund's Statement of Additional Information.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements, collateralized by U.S.
government securities, with banks or broker-dealers that are deemed to
present minimum credit risk. 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. At the direction of the board of trustees, the
Manager has established procedures to minimize potential losses due to credit
risk. Delays or losses could result if the other party to the agreement
defaults or becomes bankrupt.
WHEN-ISSUED AND FORWARD COMMITMENT AGREEMENTS
The Fund may sometimes purchase new issues of securities on a
when-issued or forward commitment basis 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 of and payment for these securities typically occurs 1 to 7
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 such security may
decline prior to delivery, which could result in a loss to the Fund.
BORROWING
The Fund may borrow money only for temporary or emergency purposes.
Borrowings are not expected to exceed 5% of the Fund's total assets.
OTHER TECHNIQUES
The Manager may buy other types of securities or employ other portfolio
management techniques on behalf of the Fund including reverse repurchase
agreements. When SEC guidelines require it to do so, the Fund will set aside
cash or appropriate liquid assets in a segregated account to cover the Fund's
obligations.
PERFORMANCE ADVERTISING
From time to time, the Fund 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 stated 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.
A quotation of YIELD reflects a fund's income over a stated period
expressed as a percentage of the fund's share price. Yield is calculated by
measuring the income generated by an investment in the fund over a seven-day
period (net of Fund expenses). This income is then annualized, that is, the
amount of income generated by the investment over the seven-day period is
assumed to be
9
generated over each similar period each week throughout a full
year and is shown as a percentage of the investment. 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.
Yields are calculated according to accounting methods that are
standardized in accordance with SEC rules. 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 Fund 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 including the Donoghue's Money Fund
Average and Bank Rate Monitor National Index of 21/2-year CD rates. The
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 the 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 Fund 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.
10
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).
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 12 for more information on exchanges.
11
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 13 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.
12
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 14) 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 14.
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 and request
our Check-A-Month brochure.
OTHER AUTOMATIC REDEMPTIONS
You may elect to make redemptions automatically by authorizing us to
send funds 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
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.
13
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.
CHECKWRITING
We offer CheckWriting as a service option for your account. CheckWriting
allows you to redeem shares in your account by writing a draft ("check")
against your account balance. (Shares held in certificate form may not be
redeemed by check.) There is no limit on the number of checks you can write,
but each one must be for at least $100.
When you write a check, you will continue to receive dividends on all
shares until your check is presented for payment to our clearing bank. If you
redeem all shares in your account by check, any accrued distributions on the
redeemed shares will be paid to you in cash on the next monthly distribution
date.
14
If you want to add CheckWriting to an existing account that offers
CheckWriting, contact us by phone or mail for an appropriate form. For a new
account, you may elect CheckWriting on your purchase application by choosing
the "Full Services" option. CheckWriting is not available for any account
held in an IRA or 403(b) plan.
CheckWriting redemptions may only be made on checks provided by us.
Currently, there is no charge for checks or for the CheckWriting service.
We will return checks drawn on insufficient funds or on funds from
investments made by means other than by wire within the previous 15 days.
Neither the company nor our clearing bank will be liable for any loss or
expenses associated with returned checks. Your account may be assessed a $15
service charge for checks drawn on insufficient funds.
A stop payment may be ordered on a check written against your account.
We will use reasonable efforts to stop a payment, but we cannot guarantee
that we will be able to do so. If we are successful in fulfilling a
stop-payment order, your account may be assessed a $15 fee.
TAX-QUALIFIED RETIREMENT PLANS
The Fund is available for your tax-deferred retirement plan. Call or
write us and request the appropriate forms for:
o Individual Retirement Accounts (IRAs)
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.
(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, 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
15
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 and transactions by
CheckWriting, each time you invest, redeem, transfer or exchange shares, we
will send you a confirmation of the transactions. Transactions initiated by
CheckWriting will be confirmed on a monthly basis. 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.
16
EMPLOYER-SPONSORED
RETIREMENT PLANS AND
INSTITUTIONAL ACCOUNTS
Information contained in our Investor Services Guide and in the "How to
Invest" sections beginning on page 11 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 Fund, 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 Services 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.
17
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 the 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 or
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
recordkeeper 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
arrangement 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 the 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 trustees.
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 trustees.
18
Pursuant to a determination by the Fund's board of trustees and Rule
2a-7 under the Investment Company Act of 1940 (the "1940 Act"), portfolio
securities of the Fund are valued at amortized cost. When a security is
valued at amortized cost, it is valued at its cost when purchased, and
thereafter by assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument.
WHERE TO FIND INFORMATION
ABOUT SHARE PRICE
The net asset value of the Fund is published in leading newspapers
daily. The yield of the Fund is published weekly in leading financial
publications and daily in many local newspapers. The net asset values, as
well as yield information on all of 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 the Fund is declared and credited (i.e., available for redemption)
as a dividend daily and distributed monthly.
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 (other than by CheckWriting), 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 trustees may elect not to distribute capital gains in whole
or in part to take advantage of loss carryovers.
TAXES
The 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 the Fund's 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 Fund 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.
19
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 do
not qualify for the 70% dividends-received deduction for corporations since
they are derived from interest income. 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 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 distribution 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 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 the 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.
20
MANAGEMENT
INVESTMENT MANAGEMENT
The Fund is the sole series of the Benham Investment Trust (the
"Trust"). Under the laws of the Commonwealth of Massachusetts, the board of
trustees is responsible for managing the business and affairs of the Trust.
Acting pursuant to an investment management agreement entered into with the
Trust, Benham Management Corporation (the "Manager") serves as the investment
manager of the Fund. 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 the Fund
and directs the purchase and sale of its investment securities. The Manager
utilizes a team of portfolio managers, assistant portfolio managers and
analysts acting together to manage the assets of the Fund. The team meets
regularly to review portfolio holdings and to discuss purchase and sale
activity. The team adjusts holdings in the Fund's portfolios and the Fund's
asset mix as it deems appropriate in pursuit of the Fund's investment
objective. Individual portfolio manager members of the team may also adjust
portfolio holdings of the Fund or of sectors of the Fund 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 Fund described
in this Prospectus and their work experience for the last five years are
listed as follows:
AMY O'DONNELL, Portfolio Manager, the Manager, has been primarily
responsible for the day-to-day operation of the Fund since its inception in
November of 1993. Ms. O'Donnell joined Benham in 1987, and was promoted to
her present position as a portfolio manager in 1992. She has a B.S. in
business administration and an M.B.A. in Finance from California State
University, Hayward.
ROBERT V. GAHAGAN, Vice President and Portfolio Manager, IRC, oversees
the portfolio manager's operation of the Fund. Mr. Gahagan has a B.A. and
M.B.A. from the University of Missouri in Kansas City and has over 12 years
of investment experience. He joined IRC in 1983 and manages the following
Twentieth Century funds in Mountain View, California, the fixed income
headquarters for the new combined Twentieth Century/Benham company: Cash
Reserve, Premium Capital Reserve, U.S. Government Reserve, U.S. Government
Short-Term U.S. Government Intermediate-Term, and Short-Term Treasury and
Agency Fund.
The activities of the Manager are subject only to direction of the
Trust's board of trustees. For the services provided to the Fund, 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 Trust's assets increase. Currently, however, the Fund is the
sole series of the Trust. As a result, the fee rate is effectively applied to
the Fund's average daily net assets.
CODE OF ETHICS
The Trust 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
21
information about the purchase or sale of securities in the Fund's
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 the
Fund.
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, the 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, the Fund pays
TCS a monthly fee for each shareholder account maintained and for each
shareholder transaction executed during that month.
The Fund charges 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 Fund's 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 Fund 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 Fund's 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 Fund does 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
The Fund pays certain operating expenses directly, including, but not
limited to: custodian, audit, and legal fees; fees of the independent
trustees; costs of printing and mailing prospectuses, statements of
additional information, proxy statements, notices, and reports to
shareholders; insurance expenses; and costs of registering the Fund's shares
for sale under federal and state securities laws. See the Statement of
Additional Information for a more detailed discussion of independent trustee
compensation.
22
FURTHER INFORMATION ABOUT
THE FUND
The Trust was organized as a Massachusetts business trust on June 16,
1993. The Trust is a diversified, open-end management investment company. Its
business and affairs are managed by its officers under the direction of its
board of trustees.
The principal office of the Trust 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 Fund is the sole series of the Trust which issues shares with no par
value. Additional series of the Trust may be created in the future. In the
event that such other series are created, the assets belonging to each series
of shares will be held separately by the custodian and in effect each series
will be 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.
Shares have non-cumulative voting rights, which means that the holders
of more than 50% of the shares voting for the election of trustees can elect
all of the trustees if they choose to do so, and in such event the holders of
the remaining less-than 50% of the shares will not be able to elect any
person or persons to the board of trustees.
Unless required by the 1940 Act, it will not be necessary for the Trust
to hold annual meetings of shareholders. As a result, shareholders may not
vote each year on the election of trustees or the appointment of auditors.
However, pursuant to the Trust's by-laws, the holders of shares representing
at least 10% of the votes entitled to be cast may request that the Trust hold
a special meeting of shareholders. The Trust will assist in the communication
with other shareholders.
WE RESERVE THE RIGHT TO CHANGE ANY OF ITS 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 THE 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.
23
BENHAM
Prime Money
Market 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
INVESTMENT TRUST
- --------------------------------------------------------------------------------
BN-BKT-5484 [recycled logo]
9608 Recycled
<PAGE>
BENHAM PRIME MONEY MARKET FUND
A SERIES OF BENHAM INVESTMENT TRUST
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 February 29, 1996 is incorporated herein by reference. To
obtain a copy of the Prospectus or Annual Report, call or write Twentieth
Century Mutual Funds.
TABLE OF CONTENTS
PAGE
Investment Policies and Techniques 2
Investment Restrictions 8
Portfolio Transactions 11
Valuation of Portfolio Securities 11
Performance 12
Taxes 14
About Benham Investment Trust 14
Trustees and Officers 15
Investment Advisory Services 17
Transfer and Administrative Services 18
Direct Fund Expenses 19
Expense Limitation Agreement 19
Additional Purchase and Redemption Information 20
Other Information 20
1
INVESTMENT POLICIES AND TECHNIQUES
The following paragraphs provide a more detailed discussion 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 Fund's board of trustees.
PORTFOLIO DIVERSIFICATION
In order to reduce investment risks, Benham Management Corporation (BMC), the
Fund's investment advisor, is required by law to broadly diversify the Fund's
investment portfolio. As a general rule, BMC may not invest more than 5% of the
Fund's total assets in securities issued by, or subject to puts of, a single
institution. However, there are three exceptions to this policy, as follows:
(1) The Fund may invest without limitation in U.S. government securities.
(2) The Fund may invest more than 5% of its total assets in the first-tier
securities of a single issuer for up to three business days, provided that
it does so with respect to just one issuer at a time.
(3) This diversification policy does not apply to unconditional puts if no more
than 10% of the Fund's total assets are invested in securities issued or
guaranteed by the issuer of the unconditional put. (An unconditional put is
a put or demand feature that can be readily exercised in the event of a
default on the underlying obligation on no more than 30 days' notice.)
COMMERCIAL PAPER
Commercial paper ("CP") is issued by utility, financial, and industrial
companies and supranational organizations. Nationally recognized statistical
rating organizations ("rating agencies") assign ratings to CP issuers indicating
the agencies' assessment of credit risk. Investment grade CP ratings assigned by
four rating agencies are provided in the following table.
MOODY'S STANDARD FITCH
INVESTORS & POOR'S DUFF & INVESTORS
SERVICE, INC. CORPORATION PHELPS, INC. SERVICE, INC.
HIGHEST RATINGS PRIME-1 A-1/A-1+ D-1/D-1+ F-1/F-1+
Prime-2 A-2 D-2 F-2
Prime-3 A-3 D-3 F-3
If an obligation has been assigned different ratings by multiple rating
agencies, at least two rating agencies must have assigned their highest rating
as indicated above in order for BMC to determine that the obligation is eligible
for purchase by the Fund or if unrated, the obligation must be determined to be
of comparable quality by the advisor.
Some examples of CP and CP issuers are provided in the following paragraphs.
DOMESTIC CP is issued by U.S. industrial and finance companies, utility
companies, "thrifts," and bank holding companies. FOREIGN CP is issued by
non-U.S. industrial and finance companies and
2
financial institutions. Domestic and foreign corporate issuers occasionally have
the underlying support of a well-known, highly rated commercial bank or
insurance company. Bank support is provided in the form of a letter of credit (a
"LOC") or irrevocable revolving credit commitment (an "IRC"). Insurance support
is provided in the form of a surety bond.
BANK HOLDING COMPANY CP is issued by the holding companies of many well-known
domestic banks, including Citicorp, J.P. Morgan & Company Incorporated, and
First Union National Bank. Bank holding company CP may be issued by the parent
of a money center or regional bank.
THRIFT CP is issued by major federal or state-chartered savings and loan
associations and savings banks.
SCHEDULE B BANK CP is short-term, U.S. dollar-denominated CP issued by Canadian
subsidiaries of non-Canadian banks (Schedule B banks). Whether issued as
commercial paper, a certificate of deposit, or a promissory note, each
instrument issued by a Schedule B bank ranks equally with any other deposit
obligation. Paper issued by Schedule B banks provides an investor with the
comfort and reduced risk of a direct and unconditional parental guarantee.
Schedule B instruments generally offer higher rates than the short-term
instruments of the parent bank or holding company.
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 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 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 rating agency and approved
by the Fund's board of trustees;
(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
trustees 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;
(5) Investing no more than 10% of the Fund's net assets in repurchase
agreements that mature in more than seven days; and
3
(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 joint repurchase agreements collateralized by U.S.
government securities with other mutual funds advised by its investment advisor
BMC. Joint repos are expected to increase the income the Fund can earn from repo
transactions without increasing the risks associated with these transactions.
Under the Investment Company Act of 1940 (the "1940 Act"), repurchase agreements
are considered to be loans.
REVERSE REPURCHASE AGREEMENTS
In a reverse repurchase agreement, the Fund transfers possession of (or sells)
securities to another party, such as a bank or broker-dealer, for cash and
agrees to later repay cash plus interest for the return (or repurchase) of the
same securities. To collateralize the transaction, the value of the securities
transferred is slightly greater than the amount of cash the Fund receives in
exchange for the securities.
If the purchaser reneged on the agreement and failed to return the securities,
the Fund might suffer a loss. The Fund's loss could be even greater if the
market value of the securities transferred increased in the meantime. To protect
against these risks, the Fund will enter into reverse repurchase agreements only
with parties whose creditworthiness is determined to be satisfactory by BMC.
While a reverse repurchase agreement is outstanding, the Fund will maintain
sufficient liquid assets in a segregated custodial account to cover its
obligation under the agreement.
TAXABLE MUNICIPAL OBLIGATIONS
Taxable municipal obligations are state and local obligations whose interest
payments are subject to federal income tax because of the degree of
non-government involvement in the transaction or because federal tax code
limitations on the issuance of tax-exempt bonds that benefit private entities
have been exceeded. Some typical examples of taxable municipal obligations
include industrial revenue bonds and economic development bonds issued by state
or local governments to aid private enterprise. The interest on a taxable
municipal bond is often exempt from state taxation in the issuing state. The
Fund may purchase taxable municipal obligations although it does not currently
intend to do so.
TIME DEPOSITS
Time deposits are nonnegotiable bank deposits maintained for up to seven days at
a stated interest rate. These instruments may be withdrawn on demand, although
early withdrawals may be subject to penalties.
WHEN-ISSUED SECURITIES, FORWARD COMMITMENTS AND ROLL TRANSACTIONS
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 1 to 7 days later).
4
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 on a when-issued or
forward commitment basis to purchase or sell securities with the intention of
actually receiving or delivering them, it may sell the securities before the
settlement date if doing so is deemed advisable as a matter of investment
strategy.
In purchasing securities on a when-issued or forward commitment basis, the Fund
will maintain until the settlement date a segregated account consisting of cash,
cash equivalents, or other high-quality liquid debt 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, by selling 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.
The Fund may sell a security and at the same time make a commitment to purchase
the same security at a future date and specified price. Conversely, the Fund may
purchase a security and at the same time make a commitment to sell the same
security at a future date and specified price. These types of transactions are
executed simultaneously in what are known as "dollar-rolls", "cash and carry" or
financing transactions. For example, a broker-dealer may seek to purchase a
particular security that the Fund owns. The Fund will sell that security to the
broker-dealer and simultaneously enter into an agreement to buy it back at a
future date. This type of transaction generates income for the Fund if the
dealer is willing to execute the transaction at a favorable price in order to
acquire a specific security.
There is a risk that the party with whom the Fund enters into a forward
commitment agreement will not uphold its commitment, which could cause the Fund
to miss a favorable price or yield opportunity or to suffer a loss. To minimize
this risk, BMC limits when-issued and forward commitment transactions (including
roll transactions) to 30% of the Fund's net assets. In addition, no more than
10% of the Fund's net assets may be committed to transactions in which the
settlement date occurs more than 30 days after the trade date. The Fund will
establish a segregated account as described above to meet all payment
obligations arising as a result of these types of transactions.
INTEREST RATE RESETS ON VARIABLE- AND FLOATING-RATE INSTRUMENTS
The interest rate on variable- and floating-rate instruments is ordinarily
determined by reference to (or is a percentage of) an objective standard. There
are two types of indexes that provide the basis for interest rate
adjustments--those based on market rates and those based on a calculated measure
such as a cost-of-funds index. Commonly used indexes include the three-month
Treasury bill rate, the Federal Funds effective rate (the "Fed Funds rate"), or
the one-month or three-month London Interbank Offered Rate (LIBOR), each of
which is highly correlated with changes in market interest rates.
Three-month Treasury bill rates are calculated by the Federal Reserve Bank of
New York based on weekly auction averages.
LIBOR is the rate at which banks in London offer Eurodollars in trades between
banks. LIBOR has become a key rate in the U.S. domestic money market because it
is perceived to reflect the true global cost of money.
5
The Fed Funds rate is the overnight rate at which banks lend funds to each
other, usually as unsecured loans from regional banks to money center banks. The
Fed Funds rate is the average dollar-weighted rate of overnight funds. It is
reported with a one-day lag (Monday's rate is reported Tuesday morning) and may
be found in reports issued by various financial information services.
BMC may invest in instruments whose interest rate adjustments are based on new
indexes as these indexes become available.
Variable-rate demand instruments include master demand notes. These obligations
permit the Fund to invest amounts that may change daily without penalty under
direct arrangements between the Fund and the issuer.
The issuer normally has a corresponding right, after a given period and on a
specified number of days notice, to prepay the outstanding principal amount of
the obligation plus accrued interest. Although there is no secondary market for
master demand notes, these instruments are repayable by the borrower at par plus
accrued interest on seven days' notice.
Variable- and floating-rate demand instruments frequently are not rated. The
Fund may invest in these unrated instruments if BMC determines, at the time of
investment, that they are of a quality comparable to other obligations the Fund
buys.
LOAN PARTICIPATIONS
Although the Fund does not currently intend to do so, it may buy loan
participations, which represent interests in the cash flow generated by
commercial loans. Each loan participation requires three parties: a participant
(or investor), a lending bank, and a borrower. The investor purchases a share in
a loan originated by a lending bank, and this participation entitles the
investor to a percentage of the principal and interest payments made by the
borrower.
Loan participations are attractive because they typically offer higher yields
than other money market instruments. However, along with these higher yields
come certain risks, not least of which is the risk that the borrower will be
unable to repay the loan. Generally, since the lending bank does not guarantee
payment, the investor is directly exposed to risk of default by the borrower.
Secondly, the investor is not a direct creditor of the borrower. The
participation represents an interest in assets owned by the lending bank. If the
lending bank becomes insolvent, the investor could be considered an unsecured
creditor of the bank instead of the holder of a participating interest in a
loan. Because of these risks, BMC must carefully consider the creditworthiness
of both the borrower and the lender.
Another concern is liquidity. Because there is no established secondary market
for loan participations, the Fund's ability to sell them for cash is limited.
Some participation agreements place limitations on the investor's right to
resell the loan participation, even when a buyer can be found. To alleviate
these liquidity concerns, the Fund generally limits its investments in loan
participations to those with terms of 7 days or less, although it may invest in
loan participations with terms of up to 30 days.
6
SECURITIES LENDING
The Fund may lend its portfolio securities to banks and broker-dealers to earn
additional income. If a borrower defaulted on a securities loan, the Fund could
experience delays in recovering loaned securities; or if the value of the loaned
securities increased over the value of the collateral, 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 trustees:
(1) TYPE AND AMOUNT OF COLLATERAL. At the time a loan is made, the Fund must
receive, from or on behalf of a borrower, collateral consisting of any
combination of cash and full faith and credit U.S. government securities
equal to not less than 102% of the market value of the securities loaned.
Cash collateral received by 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.
(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) above. 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 option to terminate any loan
of a portfolio security at any time and recover its securities (from the
borrower) within the normal settlement period for the types of securities
loaned following the receipt of the termination notice.
(4) REASONABLE RETURN ON LOAN. The borrower must agree that the Fund (i) will
receive all dividends, interest, or other distributions on loaned
securities and (ii) 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 investment of cash
collateral in full faith and credit U.S. government securities.
(5) LIMITATIONS ON PERCENTAGE OF FUND ASSETS 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 whom portfolio lending arrangements
are proposed or made.
ILLIQUID SECURITIES
Illiquid securities are investments that cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued. Pursuant to guidelines established by the board of trustees, BMC
determines the liquidity of the Fund's investments, and through reports from
BMC, the board monitors trading activity in illiquid securities.
7
In determining the liquidity of the Fund's investments, BMC may consider various
factors including (i) the frequency of trades and quotations, (ii) the number of
dealers and prospective purchasers in the marketplace, (iii) dealer undertakings
to make a market, (iv) the nature of the security (including any demand or
tender features), and (v) the marketplace for trades.
In the absence of market quotations, illiquid securities are valued for purposes
of monitoring amortized cost valuation at fair market value as determined in
good faith by a committee appointed by the board of trustees. If through a
change in values, net assets, or other circumstances, more than 10% of the
Fund's net assets were invested in illiquid securities, BMC would take
appropriate steps to protect the Fund's liquidity.
RESTRICTED SECURITIES
Restricted securities generally can be sold (i) in privately negotiated
transactions, (ii) pursuant to an exemption from registration under the
Securities Act of 1933, or (iii) in a registered public offering. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expense, and a considerable period may elapse between the time it
decides to seek registration and the time it is permitted to sell a security
under an effective registration statement. If during such a period adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to seek registration of the security.
Rule 144A under the Securities Act permits a broader institutional trading
market for securities otherwise subject to restriction on resale to the general
public. Rule 144A establishes a "safe harbor" from the registration requirements
of the Securities Act for resales of certain securities to qualified
institutional buyers. Investing in Rule 144A securities could increase the level
of fund illiquidity to the extent that qualified institutional buyers become,
for a time, uninterested in purchasing these securities.
The Fund may also invest in CP issued in reliance on the "private placement"
exemption from registration under Section 4(2) of the Securities Act of 1933
(Section 4(2) paper). Section 4(2) paper is restricted as to disposition under
the federal securities laws and generally is sold to institutional investors
such as the Fund who agree that they are purchasing the paper for investment and
not with a view to public distribution. Any resale by the purchaser must be in
an exempt transaction. Section 4(2) paper normally is resold to other
institutional investors like the Fund through or with the assistance of the
issuer or investment dealers who make a market in the Section 4(2) paper, thus
providing liquidity. BMC may consider Section 4(2) paper that meets certain
conditions to be liquid, pursuant to procedures approved by the board of
trustees. Section 4(2) paper that is not determined to be liquid pursuant to
these procedures will be included within the 10% limitation on illiquid
securities. BMC monitors the liquidity of the Fund's investments in Section 4(2)
paper on a continuing basis.
INVESTMENT RESTRICTIONS
The Fund's investment restrictions set forth below are fundamental and may only
be changed with approval of a majority of the votes of shareholders of the Fund
as determined in accordance with the 1940 Act.
8
THE FUND MAY NOT:
(1) Purchase, with respect to 75% of its total assets, the securities of any
issuer (other than securities issued or guaranteed by the U.S. government
or any of its agencies or instrumentalities) if, as a result, (i) more
than 5% of the Fund's total assets would be invested in the securities of
that issuer, or (ii) 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 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
senior securities.
(3) Borrow money, except that the Fund may (i) borrow money for temporary or
emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements and forward commitment transactions for any
purpose, provided that (i) and (ii) in combination do not exceed 33-1/3%
of the Fund's 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 in the disposition of restricted
securities within the meaning of the Securities Act of 1933.
(5) Purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the Fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the Fund will
invest more than 25% of its total assets in the financial services
industry.
(6) 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 of companies engaged in the real estate business).
(7) Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments.
(8) 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, but this
limitation 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 trustees without shareholder
approval.
9
THE FUND MAY NOT:
(a) Purchase a security (other than a security issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities) if, as a
result, more than 5% of its total assets would be invested in the
securities of a single issuer, provided that the Fund may invest up to 25%
of its total assets in the first-tier securities of a single issuer for up
to three business days.
(b) Sell securities short unless it owns or has the right to obtain at no
added cost 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.
(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 will not constitute purchasing securities on
margin.
(d) Purchase any security while borrowings representing more than 5% of its
total assets are outstanding.
(e) Purchase any security or enter into a repurchase agreement if, as a
result, more than 10% 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.
(f) 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 (the "Exchange") or the
American Stock Exchange or traded on the NASDAQ National Market System.
(g) 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 except as permitted pursuant to exemptive orders issued by the
SEC. These limitations do not apply to securities received as dividends,
through offers of exchange, or as a result of a reorganization,
consolidation, or merger.
(h) Purchase the 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.
(i) Purchase warrants.
(j) Invest in oil, gas, or other mineral exploration or development programs
or leases.
(k) Purchase the securities of any issuer if those officers and trustees of
the Trust 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.
(l) Purchase the voting securities of any issuer.
10
(m) Purchase or sell futures contracts or put or call options. This limitation
does not apply to options attached to, or acquired or traded together
with, their underlying securities and does not apply to securities that
incorporate features similar to options or futures contracts.
(n) Lend assets other than securities to other parties.
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 the
board of trustees may issue from time to time. Within this framework, BMC is
responsible for making all determinations as to the purchase and sale of
portfolio securities and for taking all steps necessary to implement securities
transactions on behalf of the 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 the board of trustees 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.
Securities in which the Fund invests generally are traded in the
over-the-counter market through broker-dealers. A broker-dealer is a securities
firm or bank that makes a market for securities by offering to buy at one price
and sell at a slightly higher price. The difference between the prices is known
as a spread. BMC transacts in round lots ($1 million to $10 million or more) on
behalf of the Fund whenever possible. Because commissions are not charged for
money market transactions, the Fund's transaction costs consist solely of
custodian charges and dealer mark-ups. The Fund may hold its portfolio
securities to maturity or may sell or swap them for other securities, depending
upon the level and slope of, and anticipated changes in, the yield curve.
The Fund acquired, during the fiscal year ended February 29, 1996, securities
issued by its regular brokers or dealers (as defined in Rule 10b-1 under the
1940 Act) and/or their parent corporations. As of February 29, 1996, the Fund
held securities issued by the following brokers or dealers in the following
aggregate amounts: Merrill Lynch, $25,000,000 and Morgan Stanley Group,
$19,000,000.
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 held by the Fund are valued
at amortized cost. This method involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium paid at the time of purchase. Although this method provides certainty in
valuation, it generally disregards the effect of fluctuating interest rates on
an instrument's market value. Consequently, the instrument's amortized cost
value may be higher or lower than its market value, and this discrepancy may be
reflected in the Fund's yield. During periods of declining
11
interest rates, for example, the daily yield on Fund shares computed as
described above may be higher than that of a fund with identical investments
priced at market value. The converse would apply in a period of rising interest
rates.
The amortized cost valuation method is permitted in accordance with Rule 2a-7
under the 1940 Act. Under the Rule, a fund holding itself out as a money market
fund must adhere to certain quality and maturity criteria, which are described
in the Prospectus.
The trustees have established procedures designed to stabilize the Fund's NAV at
$1.00 per share to the extent reasonably possible. These procedures require the
Trust's chief financial officer to notify the trustees immediately if, at any
time, the Fund's weighted average maturity exceeds 90 days, or its NAV, as
determined by using available market quotations, deviates from its amortized
cost per share by .25% or more. If such deviation exceeds .40%, a meeting of the
board of trustees' audit committee will be called to consider what actions, if
any, should be taken. If such deviation exceeds .50%, the Trust's chief
financial officer is instructed to adjust daily dividend distributions
immediately to the extent necessary to reduce the deviation to .50% or lower and
to call a meeting of the board of trustees to consider further action.
Actions the board may consider under these circumstances include but are not
limited to (i) selling portfolio securities prior to maturity, (ii) withholding
dividends or distributions from capital, (iii) authorizing a one-time dividend
adjustment, (iv) discounting share purchases and initiating redemptions in kind,
or (v) valuing portfolio securities at market value for purposes of calculating
NAV. Actions which BMC may consider in the event that a negative deviation
exceeds .50% include (i) waiving current or past investment advisory or transfer
agent fees and (ii) contributing capital sufficient to raise the Fund's
market-based net asset value per share to $0.995 or higher.
PERFORMANCE
The Fund's yield and total return may be quoted in advertising and sales
literature. Yield and total return will vary. Past performance should not be
considered an indication of future results.
Yield quotations for the Fund are based on the change in the value of a
hypothetical investment (excluding realized gains and losses from the sale of
securities and unrealized appreciation and depreciation of securities) over a
seven-day period (base period) and stated as a percentage of the investment at
the start of the base period (base-period return). The base-period return is
then annualized by multiplying it by 365/7 with the resulting yield figure
carried to at least the nearest hundredth of one percent.
Calculations of effective yield begin with the same base-period return used to
calculate yield, but the return is then annualized to reflect weekly compounding
according to the following formula:
365/7
Effective Yield = [(Base-Period Return + 1) ] - 1
For the seven-day period ended February 29, 1996, the Fund's yield was 4.97%,
and its effective yield was 5.09%.
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.
12
Average annual total returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in the Fund during 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 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 percentages or as dollar amounts and may be calculated for a single
investment, a series of investments, or a series of redemptions over any time
period. 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 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'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
13
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 10 years, whereas the
load fund investment would be worth only $24,511.
BMC may obtain Fund ratings from one or more rating agencies and may publish
these 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, (the "Code" ). To
qualify as a regulated investment company and avoid being subject to federal and
California taxes at the Fund level, the Fund must distribute within each
calendar year as well as each fiscal year substantially all of its net
investment income and net realized capital gains (if any) to shareholders. In
addition to federal income taxes, shareholders may be subject to state and local
taxes on their distributions from the Fund.
The information above is only a summary of some of the tax considerations
generally affecting the Fund and its shareholders. No attempt has been made to
discuss individual tax consequences. An investor considering an investment in
the Fund should consult with his or her tax advisors to determine whether the
Fund is a suitable investment.
ABOUT BENHAM INVESTMENT TRUST
Benham Investment Trust (BIT) was organized as a Massachusetts business trust on
June 16, 1993. Currently Benham Prime Money Market Fund is the only series of
the Trust, although the trustees are authorized to create additional series at
their discretion.
The Declaration of Trust permits the trustees to issue an unlimited number of
full and fractional shares of beneficial interest without par value, which may
be issued in series (or funds). Shares issued are fully paid and nonassessable
and have no preemptive, conversion, or similar rights.
If additional series were created by the board of trustees, each series would
vote separately on matters affecting that series exclusively. Voting rights are
not cumulative, so that investors holding more than 50% of the Trust's (i.e.,
all series') outstanding shares would be able to elect a board of trustees. The
Trust instituted dollar-based voting, meaning that the number of votes you are
entitled to is based upon the dollar amount of your investment. The election of
trustees would be determined by the votes received from all Trust shareholders
without regard to whether a majority of shares of any one series voted in favor
of a particular nominee or all nominees as a group.
Each shareholder of the existing series has rights proportionate to his or her
share ownership interest in the series as to dividends and distributions
declared by the series and to the net assets of such series upon its liquidation
or dissolution.
The shareholders of a Massachusetts business trust could, under certain
circumstances, be held personally liable for its obligations. However, the
Declaration of Trust contains an express disclaimer of shareholder liability for
acts or obligations of the Trust. The Declaration of Trust also provides for
indemnification and reimbursement of expenses of any shareholder held personally
liable for obligations of the Trust. The Declaration of Trust provides that the
Trust will, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Trust
14
and satisfy any judgment thereon. The Declaration of Trust further provides that
the Trust may maintain appropriate insurance (for example, fidelity, bonding,
and errors and omissions insurance) for the protection of the Trust, its
shareholders, trustees, officers, employees, and agents to cover possible tort
and other liabilities. Thus, the risk of a shareholder incurring financial loss
as a result of shareholder liability is limited to circumstances in which both
inadequate insurance exists and the Trust is unable to meet its obligations.
CUSTODIAN BANK: State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02101, is custodian of the Fund's assets. Services
provided by the custodian bank include (i) settling portfolio purchases and
sales, (ii) reporting failed trades, (iii) identifying and collecting portfolio
income, and (iv) providing safekeeping of securities. The custodian takes no
part in determining the Fund's investment policies or in determining which
securities are sold or purchased by the Fund. 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 Trust's independent auditors and provides
services including (i) audit of annual financial statements and (ii) preparation
of annual federal income tax returns filed on behalf of the Fund.
TRUSTEES AND OFFICERS
The Trust's activities are overseen by a board of trustees, including seven
independent trustees. The individuals listed below whose names are marked by an
asterisk (*) are "interested persons" of the Trust (as defined in the 1940 Act)
by virtue of, among other considerations, their affiliation with either the
Trust; the Trust's investment advisor, BMC; the Trust's agent for transfer and
administrative services, Twentieth Century Services, Inc. (TCS); the Trust'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 trustee listed below serves as a trustee or director of
other funds managed by BMC. Unless otherwise noted, dates in parentheses
indicate the dates the trustee or officer began his or her service in a
particular capacity. The trustees' and officers' address with the exception of
Mr. Stowers III and Ms. Roepke is 1665 Charleston Road, Mountain View,
California 94043. The address of Mr. Stowers IIIand Ms. Roepke is 4500 Main
Street, Kansas City, Missouri 64111.
Trustees
*JAMES M. BENHAM, chairman of the board of trustees (1993), president and chief
executive officer (1996). Mr. Benham is also chairman of the boards of Benham
Financial Services (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).
15
RONALD J. GILSON, independent trustee (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 School of Law
(1992). He is counsel to Marron, Ried & Sheehy (a San Francisco law firm, 1984).
MYRON S. SCHOLES, independent trustee (1993). 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 trustee (1993). Mr. Scott is Ralph M. Parsons
Professor of Law and Business at Stanford Law School (1972) and a director of
RCM Capital Management (June 1994).
EZRA SOLOMON, independent trustee (1993). Mr. Solomon is Dean Witter Professor
of Finance Emeritus at the Stanford Graduate School of Business, where he served
as Dean Witter Professor of Finance from 1965 to 1990, and a director of
Encyclopedia Britannica.
ISAAC STEIN, independent trustee (1993). Mr. Stein is former chairman of the
board (1990 to 1992) and chief executive officer (1991 to 1992) of Esprit de
Corp. (clothing manufacturer). He is a member of the board of Raychem
Corporation (electrical equipment, 1993), president of Waverley Associates, Inc.
(private investment firm, 1983), and a director of ALZA Corporation
(pharmaceuticals, 1987). He is also a trustee of Stanford University (1994) and
chairman of Stanford Health Services (hospital, 1994).
*JAMES E. STOWERS III, trustee (1995). Mr. Stowers 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.
JEANNE D. WOHLERS, independent trustee (1993). 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 (1993), vice president (1993), and general counsel
(1993); secretary, vice president and general counsel of BMC, BFS, BDI and all
of the funds in the Benham Group.
*ANN N. McCOID, controller (1993); 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.
16
The following table summarizes the compensation that the trustees of Benham
Investment Trust received from the Fund for the Fund's fiscal year ended
February 29, 1996, as well as the compensation received for serving as a
director or trustee of all other funds managed by BMC.
<TABLE>
<CAPTION>
TRUSTEE COMPENSATION FOR THE FISCAL YEAR ENDED
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
NAME OF AGGREGATE PENSION OR ESTIMATED TOTAL
TRUSTEE* COMPENSATION RETIREMENT BENEFITS ANNUAL BENEFITS COMPENSATION
FROM FUND ACCRUED AS PART OF UPON RETIREMENT FROM FUND AND
FUND EXPENSES FUND COMPLEX**
PAID TO TRUSTEES
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Albert A. Eisenstat $ 428 Not Applicable Not Applicable $20,000
- ---------------------------------------------------------------------------------------------------------------------------
Ronald J. Gilson $6,579 Not Applicable Not Applicable $69,583
- ---------------------------------------------------------------------------------------------------------------------------
Myron S. Scholes $9,122 Not Applicable Not Applicable $68,625
- ---------------------------------------------------------------------------------------------------------------------------
Kenneth E. Scott $9,150 Not Applicable Not Applicable $75,898
- ---------------------------------------------------------------------------------------------------------------------------
Ezra Solomon $8,764 Not Applicable Not Applicable $68,875
- ---------------------------------------------------------------------------------------------------------------------------
Isaac Stein $9,198 Not Applicable Not Applicable $69,625
- ---------------------------------------------------------------------------------------------------------------------------
Jeanne D. Wohlers $9,103 Not Applicable Not Applicable $71,125
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Interested trustees 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 trustees and officers, as a group, owned less
than 1% of the Fund's total shares outstanding.
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 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 registered investment advisor since
1971 and is investment advisor to the rest of Twentieth Century's Benham brand
of mutual funds.
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 votes of
shareholders of the Fund`s or by a vote of a majority of the Fund`s trustees,
including a majority of those trustees who are neither parties to the agreement
nor interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval.
17
The investment advisory agreement is terminable on 60 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. The agreement also
provides that BMC will determine what securities will be purchased and sold by
the Fund and assist the Trust's officers in carrying out decisions made by the
board of trustees.
For these services, the Fund pays BMC a monthly investment advisory fee equal to
its pro rata share of the dollar amount derived from applying the Trust's
average daily net assets to the following investment advisory fee 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 average daily net assets over $6.5 billion
The Fund paid $2,316,045 net of the fee waiver in investment advisory fees for
the fiscal year ended February 29, 1996. The fee paid to BMC for investment
advisory services was reduced by a fee waiver of $1,839,833.
As a result of the expense limitation agreement and a voluntary fee waiver, BMC
waived investment advisory fees of $2,708,338 for the fiscal year ended February
28, 1995, and $55,479 for the period from November 17, 1993 (commencement of
operations), through February 28, 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 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 $6.0 billion .10
up to $9.0 billion .09
over $9.0 billion .08
18
For transfer agent services, the Fund pays TCS a monthly fee of $1.3958 for each
shareholder account maintained and $1.35 for each shareholder transaction
executed during the month.
The Fund paid $1,975,550 in transfer agent fees and $1,319,915 in administrative
fees for the fiscal year ended February 29, 1996.
Due to the expense limitation agreements described below, the Fund paid no
transfer agent or administrative fees for the fiscal year ended February 28,
1995, or for the period from November 17, 1993 (commencement of operations),
through February 28, 1994.
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 trustees; custodian, audit,
tax preparation, and pricing fees; fees of outside counsel and counsel employed
directly by the Trust; costs of printing and mailing prospectuses, statements of
additional information, proxy statements, notices, confirmations, and reports to
shareholders; fees for registering the 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
EXPENSE LIMITATION AGREEMENT. Under an Expense Reimbursement Agreement between
the Fund and BMC, BMC is obligated to limit the Fund's expenses to .50% of
average daily net assets through May 31, 1998. After May 31, 1998, the expense
limit will be subject to annual renewal in June.
The Expense Limitation Agreement provides that BMC may recover amounts
(representing expenses in excess of the contractual limit) reimbursed to 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 lower of the contractual or
voluntary expense limitation in effect at that time.
BMC absorbed $1,839,833 of the Fund's expenses for the fiscal year ended
February 29, 1996.
VOLUNTARY EXPENSE REIMBURSEMENT AGREEMENT. As a supplement to the contractual
Expense Reimbursement Agreement, BMC voluntarily reimbursed the Fund for all
expenses through December 31, 1994. On January 1, 1995, the Fund began paying
expenses equal to an additional .10% of average daily net assets and continued
to do so each subsequent month until the contractual expense limit was reached
on May 1, 1995. Voluntary expense limitations are not eligible for recovery by
BMC.
For the fiscal year ended February 28, 1995, and for the period November 17,
1993 (commencement of operations), through February 28, 1994, BMC reimbursed the
Fund for $5,451,506 and $164,816 of the Fund's expenses, respectively.
19
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.
As of July 31, 1996, to the Fund`s knowledge, no shareholder was the record
holder or beneficial owner of 5% or more of the Fund`s total shares outstanding.
Twentieth Century may reject or limit the amount of an investment to prevent any
one shareholder or affiliated group from controlling the Trust or its series; to
avoid jeopardizing a series' tax status; or whenever, in management's opinion,
such rejection or limitation is in the Trust's or a series' best interest.
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.
When it is in the best interest of the Fund and its shareholders (for example,
to deter abusive market timing transactions), the Fund may honor redemption
requests in kind, normally by delivering portfolio securities in lieu of cash.
Securities delivered as redemptions in kind will be valued by the same method
used to value securities in determining the Fund's NAV. Shareholders who receive
securities may realize a capital gain or loss for tax purposes, incur costs in
handling or disposing of the securities, or encounter other inconveniences.
Share purchases and redemptions are governed by California law.
OTHER INFORMATION
BMC has been continuously registered with the SEC under the Investment Advisers
Act of 1940 since December 14, 1971. The Trust has filed a registration
statement under the Securities Act of 1933 and the 1940 Act with respect to the
shares offered. These registrations do not imply approval or supervision of the
Trust or the advisor by the SEC.
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.
20
<PAGE>
BENHAM INVESTMENT TRUST
1933 Act Post-Effective Amendment No. 3
1940 Act Amendment No. 4
- --------------------------------------------------------------------------------
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS. Audited financial statements for Benham Prime
Money Market Fund for the fiscal year ended February 29, 1996, are
filed herein as included in the Fund's Statement of Additional
Information by reference to the Annual Report dated February 29, 1996,
filed on April 19, 1996 (Accession # 0000908406-96-000003).
(b) EXHIBITS.
(1) Amended and Restated Declaration of Trust, dated June 16, 1993
and amended May 31, 1995, is incorporated herein by reference to
Exhibit 1 of Post-Effective Amendment No. 3 filed on April 24,
1996 (Accession # 0000908406-96-000004).
(2) Amended and Restated Bylaws, dated May 17, 1995, are incorporated
herein by reference to Exhibit 2 of Post-Effective Amendment No.
3 filed on April 24, 1996 (Accession # 0000908406-96-000004).
(3) Not applicable.
(4) Specimen copy of Benham Prime Money Market Fund's share
certificate is incorporated herein by reference to Exhibit 4 of
the Trust's Registration Statement filed on June 28, 1993.
(5) Investment Advisory Agreement between Benham Investment Trust and
Benham Management Corporation, dated June 1, 1995, is
incorporated herein by reference to Exhibit 5 of Post-Effective
Amendment No. 3 filed on April 24, 1996 (Accession #
0000908406-96-000004).
(6) Distribution Agreement between Benham Investment Trust 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) Custodian Agreement between Benham Investment Trust and State
Street Bank and Trust Company, dated August 10, 1993, is
incorporated herein by reference to Exhibit 8 of Pre-Effective
Amendment No. 1 filed on October 6, 1993.
(9) Administrative Services and Transfer Agency Agreement between
Benham Investment Trust 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 April 8, 1996 is incorporated
herein by reference to Rule 24f-2 Notice filed on April 8, 1996
(Accession # 908406-96-000002).
(11) Consent of KPMG Peat Marwick LLP, independent auditors, is
included herein.
(12) Not applicable.
(13) Letter of Understanding relating to initial capital, dated
October 4, 1993 is incorporated herein by reference to Exhibit 13
of Pre-Effective Amendment No. 1 filed on October 6, 1993.
(14) (a)Benham Individual Retirement Account Plan, including all
instructions and other relevant documents, dated February 1992,
is incorporated herein by reference to Exhibit 14(a) of the
Trust's Registration Statement filed on June 28, 1993.
(b)Benham Pension/Profit Sharing Plan, including all instructions
and other relevant documents, dated February 1992, is
incorporated herein by reference to Exhibit 14(b) of the Trust's
Registration Statement filed on June 28, 1993.
(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 March 4, 1996, is incorporated herein by
reference to Exhibit 17 of Post-Effective Amendment No. 3 filed
on April 24, 1996 (Accession # 0000908406-96-000004).
Item 25. Persons Controlled by or Under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
As of July 31, 1996, Benham Prime Money Market Fund (the sole operating series
of Benham Investment Trust) had 52,915 shareholders of record.
Item 27. Indemnification.
As stated in Article VII, Section 3 of the Declaration of Trust, incorporated
herein by reference to Exhibit 1 to the Registration Statement, "The Trustees
shall be entitled and empowered to the fullest extent permitted by law to
purchase insurance for and to provide by resolution or in the Bylaws for
indemnification out of Trust assets for liability and for all expenses
reasonably incurred or paid or expected to be paid by a Trustee or officer in
connection with any claim, action, suit, or proceeding in which he or she
becomes involved by virtue of his or her capacity or former capacity with the
Trust. The provisions, including any exceptions and limitations concerning
indemnification, may be set forth in detail in the Bylaws or in a resolution
adopted by the Board of Trustees."
Registrant hereby incorporates by reference, as though set forth fully herein,
Article VI of the Registrant's Bylaws, amended on May 17, 1995, appearing as
Exhibit 2 of Post-Effective Amendment No. 3 filed on April 24, 1996 (Accession #
908406-96-000004).
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. 3/Amendment No. 4 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 INVESTMENT TRUST
By: /s/ Douglas A. Paul
Douglas A. Paul
Vice President, Secretary, and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 3/Amendment No. 4 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 Trustees, August 30, 1996
- --------------------------------- President, and
James M. Benham Chief Executive Officer
* Trustee August 30, 1996
- ---------------------------------
Albert A. Eisenstat
* Trustee August 30, 1996
- ---------------------------------
Ronald J. Gilson
* Trustee August 30, 1996
- ---------------------------------
Myron S. Scholes
* Trustee August 30, 1996
- ---------------------------------
Kenneth E. Scott
* Trustee August 30, 1996
- ---------------------------------
Ezra Solomon
* Trustee August 30, 1996
- ---------------------------------
Isaac Stein
* Trustee August 30, 1996
- ---------------------------------
James E. Stowers III
* Trustee 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 Declaration of Trust, dated June 16, 1993 and
amended May 31, 1995, is incorporated herein by reference to Exhibit
1 of Post-Effective Amendment No. 3 filed on April 24, 1996
(Accession # 0000908406-96-000004).
EX-99.B2 Amended and Restated Bylaws, dated May 17, 1995, are incorporated
herein by reference to Exhibit 2 of Post-Effective Amendment No. 3
filed on April 24, 1996 (Accession # 0000908406-96-000004).
EX-99.B4 Specimen copy of Benham Prime Money Market Fund's share certificate
is incorporated herein by reference to Exhibit 4 of the Trust's
Registration Statement filed on June 28, 1993.
EX-99.B5 Investment Advisory Agreement between Benham Investment Trust and
Benham Management Corporation, dated June 1, 1995, is incorporated
herein by reference to Exhibit 5 of Post-Effective Amendment No. 3
filed on April 24, 1996 (Accession # 0000908406-96-000004).
EX-99.B6 Distribution Agreement between Benham Investment Trust 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 Custodian Agreement between Benham Investment Trust and State Street
Bank and Trust Company, dated August 10, 1993, is incorporated
herein by reference to Exhibit 8 of Pre-Effective Amendment No. 1
filed on October 6, 1993.
EX-99.B9 Administrative Services and Transfer Agency Agreement between Benham
Investment Trust 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 April 8, 1996 is incorporated herein by
reference to Rule 24f-2 Notice filed on April 8, 1996 (Accession
# 908406-96-000002).
EX-99.B11 Consent of KPMG Peat Marwick LLP, independent auditors, is included
herein.
EX-99.B13 Letter of Understanding relating to initial capital, dated October
4, 1993 is incorporated herein by reference to Exhibit 13 of
Pre-Effective Amendment No. 1 filed on October 6, 1993.
EX-99.B14 a) Benham Individual Retirement Account Plan, including all
instructions and other relevant documents, dated February 1992, is
incorporated herein by reference to Exhibit 14(a) of the Trust's
Registration Statement filed on June 28, 1993.
b) Benham Pension/Profit Sharing Plan, including all instructions
and other relevant documents, dated February 1992, is incorporated
herein by reference to Exhibit 14(b) of the Trust's Registration
Statement filed on June 28, 1993.
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 March 4, 1996, is incorporated herein by
reference to Exhibit 17 of Post-Effective Amendment No. 3 filed on
April 24, 1996 (Accession # 0000908406-96-000004).
EX-27.4 Financial Data Schedule.
Consent of Independent Auditors
The Board of Trustees and Shareholders
Benham Investment Trust:
We consent to the inclusion in Benham Investment Trust's Post-Effective
Amendment No. 4 to the Registration Statement No. 33-65170 on Form N-1A under
the Securities Act of 1933 and Amendment No. 5 to the Registration Statement No.
811-7822 filed on Form N-1A under the Investment Company Act of 1940 of our
report dated April 4, 1996 on the financial statements and financial highlights
of the Benham Prime Money Market Fund (the sole fund comprising the Benham
Investment Trust) for the periods indicated therein, which report has been
incorporated by reference into the Statement of Additional Information of Benham
Investment Trust. We also consent to the reference to our firm under the heading
"Financial Highlights" in the Prospectus and under the heading "About Benham
Investment Trust" in the Statement of Additional Information which is
incorporated by reference in the Prospectus.
/s/KPMG Peat Marwick LLP
Kansas City, Missouri
August 30, 1996
BENHAM PRIME MONEY MARKET FUND
YIELD CALCULATION
FEBRUARY 29, 1996
365/7
Effective Yield: = [(Base Period Return + 1) ] - 1
7 Day Yield = 4.97%
7 Day Effective Yield = 5.09%
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> BENHAM PRIME MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 1276353495
<INVESTMENTS-AT-VALUE> 1276353495
<RECEIVABLES> 17698692
<ASSETS-OTHER> 812517
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1294864704
<PAYABLE-FOR-SECURITIES> 14983841
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9227460
<TOTAL-LIABILITIES> 24211301
<SENIOR-EQUITY> 1270653403
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1270653403
<SHARES-COMMON-PRIOR> 1509862716
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1270653403
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 6433289
<NET-INVESTMENT-INCOME> 74177757
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 74177757
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 74177757
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2375209952
<NUMBER-OF-SHARES-REDEEMED> 2685494938
<SHARES-REINVESTED> 71075673
<NET-CHANGE-IN-ASSETS> (239209313)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4155878
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8426081
<AVERAGE-NET-ASSETS> 1358542055
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> 0.056
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.056
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> 0.48
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
