File Nos. 33-50390
811-7076
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 9 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940[ X]
Amendment No. 9 [ X ]
(Check appropriate box or boxes.)
DREYFUS-WILSHIRE TARGET FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
c/o First Data Investor Services Group, Inc.
One Exchange Place, Boston, MA 02109
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617)
263-3100
Julie A. Tedesco, Esq.
One Exchange Place
Boston, MA 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box)
____ immediately upon filing pursuant to paragraph (b)
X on June 1, 1996 pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)(i)
____ on (date) pursuant to paragraph (a)(i)
____ 75 days after filing pursuant to paragraph (a)(ii)
____ on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
____ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
Registrant has registered an indefinite number of shares of
its common stock under the Securities Act of 1933 pursuant to
Section 24(f) of the Investment Company Act of 1940.
Registrant's Rule 24f-2 Notice for the fiscal year ended
August 31, 1995 was filed on October 25, 1995.
DREYFUS-WILSHIRE TARGET FUNDS, INC.
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information 4
4 General Description of Registrant 5, 16
5 Management of the Fund 7
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 16
7 Purchase of Securities Being Offered 9
8 Redemption or Repurchase 12
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-25
13 Investment Objectives and Policies B-2
14 Management of the Fund B-8
15 Control Persons and Principal B-11
Holders of Securities
16 Investment Advisory and Other B-11
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
WILSHIRE TARGET FUNDS, INC.
Cross-Reference Sheet Pursuant to Rule 495(a)
(continued)
Items in
Part B of
Form N-1A Caption Page
17 Brokerage Allocation B-24
18 Capital Stock and Other Securities B-24
19 Purchase, Redemption and Pricing B-16, B-17
of Securities Being Offered B-19
20 Tax Status *
21 Underwriters B-16
22 Calculations of Performance Data B-23
23 Financial Statements B-27
Items in
Part C of
Form N-1A
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-4
Common Control with Registrant
26 Number of Holders of Securities C-4
27 Indemnification C-4
28 Business and Other Connections of C-4
Investment Adviser
29 Principal Underwriters C-5
30 Location of Accounts and Records C-8
31 Management Services C-8
32 Undertakings C-8
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
PROSPECTUS JUNE 3, 1996
WILSHIRE TARGET FUNDS, INC.
(Investment Class Shares)
Wilshire Target Funds, Inc. (the "Fund") is an open-end
investment company, known as a mutual fund. This prospectus offers
Investment Class Shares ("Shares") in each of four separate
diversified portfolios (each, a "Portfolio"): Large Company Growth
Portfolio, Large Company Value Portfolio, Small Company Growth
Portfolio and Small Company Value Portfolio. The goal of each
Portfolio is to provide the investment results of a portfolio of
publicly-traded common stocks in one of four sub-categories of
companies from the Wilshire 5000 Index which meet certain criteria
established by the Fund's Investment Adviser. See "Description of
the Fund-Investment Approach." No portfolio is an index fund.
Wilshire Associates Incorporated ("Wilshire") serves as the
Fund's investment adviser. First Data Investor Services Group,
Inc. ("First Data") serves as the Fund's administrator and transfer
agent. 440 Financial Distributors, Inc. ("440 Financial") serves as the
Fund's distributor.
This prospectus sets forth concisely information about the
Fund that you should know before investing. It should be read and
retained for future reference.
The Statement of Additional Information dated June 3,
1996, which may be further revised from time to time,
provides a further discussion of certain areas in this prospectus
and other matters which may be of interest to some investors. It
has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. For a free copy, write to the
Fund at P.O. Box 9770, Providence, RI 02940-9770, or call
1-888-200-6796.
Shares of the Fund are not deposits or obligations of, or
guaranteed or endorsed by, any financial institution, are not
insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other agency, and involve risk, including
the possible loss of principal amount invested.
TABLE OF CONTENTS Page
Fee Table 3
Condensed Financial Information 4
Description of the Fund 5
Management of the Fund 7
How to Buy Fund Shares 9
Shareholder Services 10
How to Redeem Fund Shares 11
Shareholder Services Plan 13
Dividends, Distributions and Taxes 14
Performance Information 14
General Information 15
Appendix 16
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
[This Page Intentionally Left Blank]
Fee Table
Large Large Small Small
Company Company Company Company
Growth Value Growth Value
Portfolio Portfolio Portfolio Portfolio
Annual Fund Operating Expenses:
(as a percentage of average daily net assets)
Management Fees 0.25% 0.25% 0.25% 0.25%
12b-1 (Shareholder Services
Plan) Fee 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.67% 0.62% 0.76% 0.51%
Total Fund Operating Expenses 1.17% 1.12% 1.26% 1.01%
Example:
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period:
1 Year $ 12 $ 11 $ 13 $ 10
3 Years $ 37 $ 36 $ 40 $ 32
5 Years $ 64 $ 62 $ 69 $ 56
10 Years $142 $136 $152 $124
The amounts listed in the example should not be considered
as representative of past or future expenses and actual expenses
may be greater or less than those indicated. Moreover, while the
example assumes a 5% annual return, each portfolio's performance
will vary and may result in an actual return greater or less than
5%.
The purpose of the foregoing table is to assist you in
understanding the costs and expenses that the Fund and investors
will bear, the payment of which will reduce investors' annual
return. The information in the foregoing table has been restated
to reflect the current fees payable under the Funds new advisory
and administration contracts, dated May 31, 1996, and the
conversion of its shareholder services plan to a Rule 12b-1
shareholder services plan, effective May 31, 1996; however, the
information does not reflect any fee waivers or expense
limitations that may be in effect. You can purchase Shares
without charge directly from 440 Financial; you may be charged a
nominal fee if you effect transactions in Fund Shares through a
securities dealer, bank or other financial institution. See
"Management of the Fund" and "Shareholder Services Plan." </R
Condensed Financial Information
The information for the fiscal years ended August 31,
1993, 1994 and 1995 in the following table has been audited by
Coopers & Lybrand L.L.P., the Fund's independent accountants,
whose report thereon appears in the Statement of Additional
Information. The financial data in the following table for the
six months ended February 29, 1996 is unaudited. Further
financial data and related notes are included in the Statement of
Additional Information, which is available upon request.
Financial Highlights
Contained below is per share operating performance data for
a Share outstanding throughout the period, total investment
return, ratios to average net assets and other supplemental data
for each Portfolio for each period indicated. This information has
been derived from each Portfolio's financial statements.
<TABLE>
<CAPTION>
Large Company Large Company
Growth Portfolio Value Portfolio
Year Ended (Unaudited) Year Ended (Unaudited)
August 31, Six Months August 31, Six Months
Ended Ended
Feb. 29, Feb. 29,
<S> <C> <C> <C> <C>
<C> <C> <C> <C>
1993(1) 1994 1995 1996
1993(1) 1994 1995 1996
PER SHARE DATA:
Net asset value, beginning
of period $12.50 $12.74 $13.31 $16.34
$12.50 $15.18 $13.99 $16.02
Investment Operations:
Investment income-net .21 .15 .10 .04
.54 .36 .34 .23
Net realized and unrealized
gain (loss) on investments .10 .65 3.03 2.53
2.30 (.90) 2.19
2.40
Total from Investment
Operations .31 .80 3.13 2.57
2.84 (.54) 2.53 2.63
Distributions:
Dividends from investment
income-net (.07) (.23) (.10) (.11)
(.16) (.36) (.40) (.47)
Dividends in excess of
investment income-net -- -- -- (.01)
-- -- -- --
Dividends from net realized
gain on investments -- -- -- (.39)
-- (.29) (.10) (.51)
Total Distributions (.07) (.23) (.10) (.51)
(.16) (.65) (.50) (.98)
Net asset value,
end of period $12.74 $13.31 $16.34 $18.40
$15.18 $13.99 $16.02 $17.67
======= ====== ====== ======
======= ====== ====== ======
TOTAL INVESTMENT
RETURN 2.46%(2) 6.34% 23.67% 15.91%(2)
22.93%(2) (3.61%) 18.97% 16.66%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets -- .68% .84% .40%(2)
-- .58% .81% .39%(2)
Ratio of net investment
income to average net assets 1.66%(2) 1.18% .94% .27%(2)
4.27%(2) 4.02% 3.77% 1.68%(2)
Decrease reflected in above
expense ratios due to undertakings
by Wilshire and Dreyfus 1.14%(2) .71% .21% .01%(2)
1.32%(2) .60% .21% .01%(2)
Portfolio Turnover Rate 11.92%(2) 21.53% 30.09% 12.66%(2)
21.75%(2) 47.16% 58.04% 20.61%(2)
Average commission
rate paid -- -- -- $.0360
-- -- -- $.0288
Net Assets, end of year
(000's omitted) $8,061 $8,424 $21,348 $28,960
$8,116 $12,158 $22,926 $41,626
- -----------------
</TABLE>
(1)From September 30, 1992 (commencement of operations) to August
31, 1993.
(2)Not annualized.
<TABLE>
<CAPTION>
Small Company Small Company
Growth Portfolio Value Portfolio
Year Ended (Unaudited) Year Ended (Unaudited)
August 31, Six Months August 31, Six Months
Ended Ended
Feb. 29, Feb. 29,
<S> <C> <C> <C> <C>
<C> <C> <C> <C>
1993(1) 1994 1995 1996
1993(2) 1994 1995 1996
PER SHARE DATA:
Net asset value, beginning
of period $12.50 $16.03 $15.39 $18.55
$12.50 $14.81 $14.32 $15.41
Investment Operations:
Investment income-net .08 (.04) (.07) (.04)
.35 .45 .55 .19
Net realized and unrealized
gain (loss) on investments 3.48 .90 3.54 1.61
2.10 (.45) 1.06 1.08
Total from Investment
Operations 3.56 .86 3.47 1.57
2.45 -- 1.61 1.27
Distributions:
Dividends from investment
income-net (.03) -- -- --
(.14) (.33) (.45) (.56)
Dividends in excess of
investment income-net -- (.07) -- --
-- -- -- --
Dividends from net realized
gain on investments -- (1.43) (.31) (2.86)
-- (.16) (.07) (.44)
Total Distributions (.03) (1.50) (.31) (2.86)
(.14) (.49) (.52) (1.00)
Net asset value, end of
period $16.03 $15.39 $18.55 $17.26
$14.81 $14.32 $15.41 $15.68
======= ====== ====== ======
======= ====== ====== ======
TOTAL INVESTMENT
RETURN 28.50%(3) 5.20% 23.04% 9.27%(3)
19.72%(3) (0.01%) 11.84% 8.36%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets -- .74% .95% .47%(3)
-- .50% .69% .40%(3)
Ratio of net investment
income (loss)to average
net assets .53%(3) (.40%) (.54%) (.32%)(3)
3.65%(3) 3.64% 4.12% 1.64%(3)
Decrease reflected in above expense ratios due to undertakings
by Wilshire and Dreyfus 1.40%(3) .73% .21% .02%(3)
1.32%(3) .56% .22% .01%(3)
Portfolio Turnover Rate 55.26%(3) 46.41% 110.98% 39.99%(3)
26.87%(3) 48.59% 86.17% 27.56%(3)
Average commission
rate paid -- -- -- $.0251
-- -- -- $.0285
Net Assets, end of year
(000's omitted) $7,527 $11,188 $21,882 $23,391
$15,155 $23,438 $25,978 $38,022
- -----------------
</TABLE>
(1)From October 1, 1992 (commencement of operations) to August 31,
1993.
(2)From September 30, 1992 (commencement of operations) to August
31, 1993.
(3)Not annualized.
Further information about each Portfolio's performance is
contained in the Fund's annual and semi-annual reports, which may
be obtained without charge by writing to the address or calling
the number set forth on the cover page of this Prospectus.
Description of the Fund
Investment Objective - The goal of each Portfolio is to provide
the investment results of a portfolio of publicly-traded common
stocks in one of four sub-categories of companies from the
Wilshire 5000 Index which meet certain criteria established by
Wilshire as described herein. Each Portfolio's investment
objective cannot be changed without approval by the holders of a
majority (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of such Portfolio's outstanding voting
shares. There can be no assurance that a Portfolio's investment
objective will be achieved.
Investment Approach - Wilshire identifies from the Wilshire 5000
Index, an index consisting of all publicly-traded common stocks in
the United States, the stocks of the 2,500 companies with the
largest market capitalizations (ranging between $95 billion and
$155 million). It then divides that universe of stocks, first,
into those of the 750 companies with the largest capitalizations
(ranging between $95 billion and $1.2 billion), which constitute
approximately 90% of the total market value of the stocks included
in the Wilshire 5000 Index, and, second, into those of the 1,750
next largest companies based on capitalization (ranging currently
between $1.2 billion and $155 million), which constitute
approximately 10% of the total market value of the stocks included
in the Wilshire 5000 Index (the stocks of the remaining 2,500
companies constitute less than 2% of the total market value of the
stocks included in the Wilshire 5000 Index). From these large and
small capitalization universes, Wilshire selects the stocks of
those companies it believes to possess the characteristics of
growth stocks and of value stocks, based on criteria discussed
below. In this manner, Wilshire identifies the four potential
universes of companies, the stocks of which it may purchase for
the Portfolios. Wilshire reviews periodically these selections and
updates each potential universe of companies. The number of
securities eligible for investment by a Portfolio at any time will
vary, but is expected to range between 150 to 550 stocks.
To determine whether a company's stock falls within the
growth or value classification, Wilshire analyzes each company
based on fundamental factors such as price to book value ratios,
price to earnings ratios, earnings growth, dividend payout ratios,
return on equity, and the company's beta (a measure of stock price
volatility relative to the market generally). In general, Wilshire
believes that companies with relatively low price to book ratios,
low price to earnings ratios and higher than average dividend
payments in relation to price should be classified as value
companies. Alternatively, companies which have above average
earnings or sales growth and retention of earnings and command
higher price to earnings ratios fit the more classic growth
description.
By dividing companies into these four sub-categories,
Wilshire attempts to offer potential investors market exposure to
these types of companies. As described under "Investment
Considerations and Risks" below, you should purchase a Portfolio's
Shares only as a supplement to an overall investment program. To
provide varying degrees of market exposure to these types of
securities, various combinations of each Portfolio's Shares might
be purchased.
Management Policies - Large Company Growth Portfolio invests
substantially all of its assets in equity securities of issuers
within the universe of companies identified by Wilshire as large
capitalization, growth companies.
Large Company Value Portfolio invests substantially all
of its assets in equity securities of issuers within the universe
of companies identified by Wilshire as large capitalization, value
companies.
Small Company Growth Portfolio invests substantially all
of its assets in equity securities of issuers within the universe
of companies identified by Wilshire as small capitalization,
growth companies.
Small Company Value Portfolio invests substantially all
of its assets in equity securities of issuers within the universe
of companies identified by Wilshire as small capitalization, value
companies.
Each Portfolio attempts to remain fully invested in equity
securities of companies which comprise its relative universe. When
a Portfolio has cash pending investment or needs to meet potential
redemptions, it may invest in money market instruments consisting
of U.S. Government securities, certificates of deposit, time
deposits, bankers' acceptances, short-term investment grade
corporate bonds and other short-term debt instruments, and
repurchase agreements. Under normal circumstances, the Fund
anticipates that not more than 5% of the value of a Portfolio's
total assets will be invested in any one category of such
instruments, and that not more than 20% of the value of a
Portfolio's total assets will be invested in all money market
instruments. No Portfolio intends to invest in money market
instruments or any other securities for defensive purposes. See
the Statement of Additional Information for a description of these
instruments. Each Portfolio may purchase stock index futures in
anticipation of taking a market position when, in Wilshire's
opinion, available cash balances do not permit an economically
efficient trade in the cash market. Each Portfolio may sell stock
index futures to terminate existing positions it may have as a
result of its purchase of stock index futures. To the extent the
Fund, on behalf of a Portfolio, purchases or sells futures
contracts, the Fund currently intends to use the New York Stock
Exchange Composite Index, Value Line Composite Index or Standard &
Poor's 500 Composite Stock Price Index. The performance of the
futures should not be expected to correlate identically with that
of the particular index. In addition, each Portfolio may lend its
portfolio securities. See also "Investment Consideration
and Risks" below and "Investment Objective and Management
Policies" in the Statement of Additional Information.
Investment Considerations and Risks
General - Each Portfolio's net asset value is not fixed and should
be expected to fluctuate. You should consider a Portfolio as a
supplement to an overall investment program and should invest only
if you are willing to undertake the risks involved. See
"Investment Objective and Policies - Management Policies" in the
Statement of Additional Information for a further discussion of
certain risks.
Equity securities fluctuate in value, often based on factors
unrelated to the value of the issuer of the securities, and such
fluctuations can be pronounced. Changes in the value of a
Portfolio's investment securities will result in changes in the
value of such Portfolio's Shares and thus the Portfolio's total
return to investors. Moreover, because no Portfolio will adopt a
temporary defensive position in response to market factors, and
thus will remain almost fully invested at all times, the net asset
value of one or more Portfolios could be adversely affected by
adverse changes, real or anticipated, in companies that are
generally characterized in the same manner as the companies the
securities of which are held by the relevant Portfolio so that,
for example, if large capitalization growth stocks fall out of
favor with investors widely, irrespective of fundamentals, the net
asset value of the Large Company Growth Portfolio should be
expected to be adversely affected. Similar risks exist for the
other Portfolios.
Foreign Securities - Since the stocks of some foreign issuers are
included in the Wilshire 5000 Index, each Portfolio's investments
may include securities of such foreign issuers which may subject
such Portfolio to additional investment risks with respect to
those securities that are different in some respects from those
incurred by a fund which invests only in securities of domestic
issuers. Such risks include future political and economic
developments, the possible imposition of withholding taxes on
income payable on the securities, the possible establishment of
exchange controls or the adoption of other foreign governmental
restrictions which might adversely affect an investment in these
securities, and the possible seizure or nationalization of foreign
deposits.
Use of Derivatives - Each Portfolio may invest, to a limited
extent, in derivatives ("Derivatives"). These are financial
instruments which derive their performance, at least in part, from
the performance of an underlying asset, index or interest rate.
The Derivatives the Portfolios may use include stock index
futures. While Derivatives can be used effectively in furtherance
of a Portfolio's investment objective, under certain market
conditions, they can increase the volatility of the Portfolio's
net asset value, can decrease the liquidity of the Portfolio's
investments and make more difficult the accurate pricing of the
Portfolio's investments. See "Appendix - Investment Techniques -
Use of Derivatives" below and "Investment Objectives and
Management Policies - Management Policies - Derivatives" in the
Statement of Additional Information.
Simultaneous Investments - Investment decisions for each Portfolio
are made independently from those of other investment companies
and accounts advised by Wilshire. However, if such other
investment companies or accounts are prepared to invest in, or
desire to dispose of, securities of the type in which a Portfolio
invests at the same time as such Portfolio, available investments
or opportunities for sales will be allocated equitably to each. In
some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by the Portfolio or the price
paid or received by the Portfolio
Management of the Fund
Investment Adviser - Wilshire, located at 1299 Ocean Avenue,
Santa Monica, California 90401-1085, was formed in 1972 and serves
as the Fund's investment adviser. As of February 29, 1996,
Wilshire managed approximately $7 billion in assets. Under the
terms of an Investment Advisory Agreement with the Fund, Wilshire,
subject to the overall authority of the Fund's Board of Directors
in accordance with Maryland law, manages the investment of the
assets of each Portfolio. The Fund's primary portfolio manager is
Thomas D. Stevens, the President and Chairman of the Board of
Directors of the Fund and a Senior Vice President of Wilshire. He
has held the position of portfolio manager of the Fund since the
Fund's inception and has been employed by Wilshire since October
6, 1980. The Fund's other portfolio manager is identified in the
Statement of Additional Information. Wilshire also provides
research services for the Fund through a professional staff of
portfolio managers and securities analysts. Wilshire is
controlled by its President, Mr. Dennis Tito, who owned 70% of its
outstanding voting stock as of February 29, 1996.
Pursuant to the terms of the Investment Advisory Agreement,
dated May 31, 1996 (the "Advisory Agreement"), the Fund has agreed
to pay Wilshire a monthly fee at the annual rate of .25 of 1% of
the value of each Portfolio's average daily net assets. However,
the Advisory Agreement also includes a fifteen month expense
limitation provision. For the three month period June 1, 1996
through August 31, 1996 and the fiscal year September 1, 1996
through August 31, 1997, Wilshire has agreed that, if the
aggregate operating expenses of any Portfolio (exclusive of
interest, taxes, brokerage, 12b-1 plan fees and extraordinary
expenses) for such period exceed the annual rate specified in the
following table for such Portfolio, the investment advisory fee
otherwise payable for that period by the Portfolio under the
Advisory Agreement will be reduced by the amount of the excess,
but not below an annual fee rate of .10 of 1% of such Portfolio's
average daily net assets.
Fund Annual Rate (%)
Large Company Growth Portfolio .80
Large Company Value Portfolio .77
Small Company Growth Portfolio .91
Small Company Value Portfolio .66
For the fiscal year ended August 31, 1995, the Fund paid Wilshire
an investment advisory fee at the effective annual rate of .09 of
1% of the value of the average daily net assets of the Large
Company Growth, Large Company Value and Small Company Growth
Portfolios, and .08 of 1% for the Small Company Value Portfolio,
in each case after giving effect to a voluntary fee waiver
which was in effect through November 7, 1994.
Administrator - First Data, a subsidiary of First Data
Corporation, 53 State Street, Boston, Massachusetts 02109,
serves as the Fund's administrator pursuant to an Administration
Agreement with the Fund. Under the terms of the Administration
Agreement, First Data generally assists in all aspects of the
Fund's operations, other than providing investment advice, subject
to the overall authority of the Fund's Board of Directors in
accordance with Maryland law. Pursuant to the terms of the
Administration Agreement, dated May 31, 1996, the Fund has agreed
to pay First Data a monthly fee at the annual rate of .15 of 1% of
the value of the Fund's monthly average net assets up to aggregate
net assets of $1 billion, .10 of 1% of such value on the next $4
billion, and .08 of 1% on excess net assets. For the fiscal year
ended August 31, 1995, no administration fee was paid to The
Dreyfus Corporation ("Dreyfus") (the former administrator of the Fund)
pursuant to an undertaking by Dreyfus.
Custodian and Transfer and Dividend Disbursing Agent -
The Northern Trust Company, an Illinois trust company located at 50
South LaSalle Street, Chicago, Illinois 60675, is the custodian of
the Fund's investments. First Data is also the Fund's Transfer
and Dividend Disbursing Agent (the "Transfer Agent").
Distributor - 440 Financial serves as the distributor of the
Shares. 440 Financial is also a subsidiary of First Data
Corporation. 440 Financial is not compensated by the Fund or its
shareholders for its services as distributor, except to the extent
that it receives payments from the Fund under the Funds
shareholder services plan. See "Shareholder Services Plan" below.
Expenses - From time to time, Wilshire or First Data may waive
receipt of its fees and/or voluntarily assume certain expenses of
the Fund, which would have the effect of lowering the overall
expense ratio of the Fund and increasing yield to investors at the
time such amounts are waived or assumed, as the case may be. The
Fund will not pay Wilshire or First Data for any amounts which may
be waived, nor will the Fund reimburse Wilshire or First Data for
any amounts which may be assumed. In addition to shareholder
services fees which may be paid by 440 Financial out of amounts
which it receives under the Funds shareholder services plan, 440
Financial, Wilshire or First Data may bear other expenses of
distribution of the shares of the Fund or of the provision of
shareholder services to the Funds shareholders, including
payments to securities dealers or other financial intermediaries
or service providers, out of its profits and available resources
other than the advisory and administration fees paid by the Fund.
All expenses incurred in the operation of the Fund are borne
by the Fund, except to the extent specifically assumed by 440
Financial, Wilshire or First Data. The expenses borne by the Fund
include: organizational costs, taxes, interest, brokerage fees and
commissions, if any, fees of Directors who are not officers,
directors, employees or holders of 5% or more of the outstanding
voting securities of 440 Financial, Wilshire or First Data or any
of their affiliates, Securities and Exchange Commission fees,
state Blue Sky qualification fees, advisory and administration
fees, shareholder services plan fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance
premiums, industry association fees, outside auditing and legal
expenses, costs of maintaining the Fund's existence, costs of
independent pricing services, costs attributable to investor
services (including, without limitation, telephone and personnel
expenses), costs of shareholders' reports and meetings, costs of
preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to
existing shareholders, and any extraordinary expenses. Expenses
attributable to a particular class of shares or Portfolio are
charged against the assets of that class or Portfolio;
accordingly, shareholder services plan fees payable with respect
to a particular class of shares are charged only to that class of
shares. Other expenses of the Fund are allocated between the
Portfolios on the basis determined by the Board of Directors,
including, but not limited to, proportionately in relation to the
net assets of each Portfolio.
How to Buy Fund Shares
Portfolio Shares are sold without a sales charge. You may be
charged a nominal fee if you effect transactions in Portfolio
Shares through a securities dealer, bank or other financial
institution. Share certificates are issued only upon your written
request. No certificates are issued for fractional Shares. The
Fund reserves the right to reject any purchase order.
The minimum initial investment in a Portfolio is $2,500, or
$1,000 if you are a client of a securities dealer, bank or other
financial institution which has made an aggregate minimum initial
purchase for its customers of $2,500. Subsequent investments must
be at least $100. The initial investment must be accompanied by
the Fund's Account Application. The Fund reserves the
right to offer a Portfolio's Shares without regard to minimum
purchase requirements to employees participating in certain
qualified or non-qualified employee benefit plans or other
programs where contributions or account information can be
transmitted in a manner and form acceptable to the Fund. The Fund
reserves the right to vary further the initial and subsequent
investment minimum requirements at any time.
You may purchase a Portfolio's Shares by check or wire.
Checks should be made payable to "Wilshire Target Funds, Inc."
For subsequent investments, your Fund account number should appear
on the check. Payments which are mailed should be sent to Wilshire
Target Funds, Inc., P.O. Box 9770, Providence, Rhode Island
02940-9770, together with your investment slip or, when opening
a new account, your Account Application, indicating the name of
the Portfolio being purchased. Neither initial nor subsequent
investments may be made by third party check.
Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or
any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to
Boston Safe Deposit and Trust Company (ABA #011001234),
together with the name of
the Fund and the Fund's DDA number, 065-587, for
purchase of Shares in your name. The wire must include your
Fund account number (for new accounts, your Taxpayer
Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial
purchase of Fund Shares is by wire, please call 1-888-200-6796
after completing your wire payment to obtain your Fund account
number. Please include your Fund account number on the Fund's
Account Application and promptly mail the Account Application to
the Fund, as no redemptions will be permitted until the Account
Application is received. You may obtain further information about
remitting funds in this manner from your bank. All payments should
be made in U.S. dollars and, to avoid fees and delays, should be
drawn only on U.S. banks. A charge will be imposed if any check
used for investment in your account does not clear. The Fund makes
available to certain large institutions the ability to issue
purchase instructions through compatible computer facilities.
Portfolio Shares also may be purchased through the
Wilshire Target Funds Accumulation Plan, described under
"Shareholder Services." This service enables you to make regularly
scheduled investments and may provide you with a convenient way to
invest for long-term financial goals. You should be aware,
however, that periodic investment plans do not guarantee a profit
and will not protect an investor against loss in a declining
market.
Subsequent investments also may be made by electronic
transfer of funds from an account maintained in a bank or other
domestic financial institution that is an Automated Clearing House
member. You must direct the institution to transmit immediately
available funds through the Automated Clearing House to Boston
Safe and Trust Deposit Company with instructions to credit your
Fund account. The instructions must specify your Fund account
registration and your Fund account number preceded by the digits
"160, 161, 162 or 163" for Large Company Growth Portfolio,
Large Company Value Portfolio, Small Company Growth Portfolio
or Small Company Value Portfolio, respectively.
Shares of each Portfolio are sold on a continuous basis at
the net asset value per share next determined after an order in
proper form is received by the Transfer Agent. Net asset value per
share of each class of shares is determined as of the close of
trading on the floor of the New York Stock Exchange (currently
4:00 p.m., New York time), on each day the New York Stock Exchange
is open for business. For purposes of determining net asset value,
futures contracts will be valued 15 minutes after the close of
trading on the floor of the New York Stock Exchange. Net asset
value per share of a class of shares of a Portfolio is computed
by dividing the value of the net assets attributable to that class
of shares (i.e., the value of the assets attributable to that
class less liabilities attributable to that class) by the total
number of shares of that class outstanding. Each Portfolio's
investments are valued based on market value or, where market
quotations are not readily available, based on fair value as
determined in good faith by the Board of Directors. For further
information regarding the methods employed in valuing Fund
investments, see "Determination of Net Asset Value" in the
Statement of Additional Information.
Federal regulations require that you provide a certified TIN
upon opening or reopening an account. See "Dividends,
Distributions and Taxes" and the Fund's Account Application for
further information concerning this requirement. Failure to
furnish a certified TIN to the Fund could subject you to a $50
penalty imposed by the Internal Revenue Service (the "IRS").
Shareholder Services
Portfolio Exchanges - You may purchase, in exchange for shares
of a Portfolio, shares of the same class of one of the other
Portfolios offered by the Fund, to the extent such shares are
offered for sale in your state of residence. If you desire to use
this service, please call 1-888-200-6796 to determine if it is
available and whether any conditions are imposed on its use.
To request an exchange, you must give exchange instructions
to the Transfer Agent in writing. Except in the case of personal
retirement plans, the shares being exchanged must have a current
value of at least $500; furthermore, when establishing a new
account by exchange, the shares being exchanged must have a value
of at least the minimum initial investment required for the
Portfolio into which the exchange is being made. The ability to
issue exchange instructions by telephone is given to all Fund
shareholders automatically, unless you check the applicable "No"
box on the Account Application, indicating that you specifically
refuse this privilege. The Telephone Exchange Privilege may be
established for an existing account by written request, signed by
all shareholders on the account, or by a separate signed
Shareholder Services Form, also available by calling
1-888-200-6796. If you have established the Telephone Exchange
Privilege, you may telephone exchange instructions by calling
1-888-200-6796. See "How to Redeem Fund Shares -
Procedures." Upon an exchange into a new account, the following
shareholder services and privileges, as applicable and where
available, will be automatically carried over to the Portfolio
into which the exchange is made: Telephone Exchange
Privilege, Wire Redemption Privilege, Telephone Redemption
Privilege, and the dividend and capital gain distribution option
selected by the investor.
Shares will be exchanged at their next determined net
asset value. No fees currently are charged to
shareholders directly in connection with exchanges, although the
Fund reserves the right, upon not less than 60 days' written
notice, to charge shareholders a nominal fee in accordance with
rules promulgated by the Securities and Exchange Commission. The
Fund reserves the right to reject any exchange request in whole or
in part. The availability of Exchanges may be modified or
terminated at any time upon notice to shareholders.
The exchange of Shares of one Portfolio for Shares of
another is treated for Federal income tax purposes as a sale of
the Shares given in exchange by the shareholder and, therefore, an
exchanging shareholder may realize a taxable gain or loss.
Wilshire Target Funds Accumulation Plan - Wilshire Target
Funds Accumulation Plan permits you to purchase Portfolio Shares
(minimum of $100 and maximum of $150,000 per transaction) at
regular intervals selected by you. Portfolio Shares are purchased
by transferring funds from the bank account designated by you. At
your option, the bank account designated by you will be debited in
the specified amount, and Portfolio Shares will be purchased, once
a month, on either the first or fifteenth day, or twice a month,
on both days. Only an account maintained at a domestic financial
institution which is an Automated Clearing House member may be so
designated. To establish a Wilshire Target Funds Accumulation Plan
account, you must file an authorization form with the Transfer
Agent. You may obtain the necessary authorization form by calling
1-888-200-6796. You may cancel your participation in this
Privilege or change the amount of purchase at any time by mailing
written notification to Wilshire Target Funds, Inc., P.O. Box 9770,
Providence, Rhode Island 02940-9770, and the notification
will be effective three business days following receipt. The Fund
may modify or terminate this Privilege at any time or charge a
service fee. No such fee currently is contemplated.
Retirement Plans - The Fund offers a variety of pension and
profit-sharing plans, including Keogh Plans, IRAs, SEP-IRAs and
IRA "Rollover Accounts" and
403(b)(7) Plans. Plan support services also are available. To
obtain details on Keogh Plans, IRAs and IRA "Rollover Accounts,"
SEP-IRAs and 403(b)(7) Plans,
please call the following toll-free number: 1-888-200-6796.
How to Redeem Fund Shares
General - You may request redemption of your Shares at any time.
Redemption requests should be transmitted in accordance with the
procedures described below. When a request is received in proper
form, the Fund will redeem the Shares at the next determined net
asset value.
Securities dealers, banks and other financial institutions
may charge a nominal fee for effecting redemptions of a
Portfolio's Shares. Any certificates representing a Portfolio's
Shares being redeemed must be submitted with the redemption
request. The value of the Shares redeemed may be more or less than
their original cost, depending upon the Portfolio's then-current
net asset value.
The Fund ordinarily will make payment for all Shares
redeemed within seven days after receipt by the Transfer Agent of
a redemption request in proper form, except as provided by the
rules of the Securities and Exchange Commission. However, if you
have purchased a Portfolio's shares by check or through Wilshire
Target Funds Accumulation Plan and subsequently submit a written
redemption request to the transfer agent, the redemption proceeds
will be transmitted to you promptly upon bank clearance of your
purchase check or Wilshire Target Funds Accumulation Plan order,
which may take up to eight business days or more. In addition, the
Fund will reject requests to redeem shares by wire or telephone
for a period of eight business days after receipt by the transfer
agent of the purchase check or the Wilshire Target Funds
Accumulation Plan order against which such redemption is
requested. These procedures will not apply if your shares were
purchased by wire payment, or if you otherwise have a sufficient
collected balance in your account to cover the redemption request.
Prior to the time any redemption is effective, dividends on such
shares will accrue and be payable, and you will be entitled to
exercise all other rights of beneficial ownership. Fund
Shares will not be redeemed until the Transfer Agent has received
your Account Application.
The Fund reserves the right to redeem your account at its
option upon not less than 45 days' written notice if your
account's net asset value is $500 or less and remains so during
the notice period.
Procedures - You may redeem Shares by using the regular redemption
procedure through the Transfer Agent, or, if you have checked the
appropriate box and supplied the necessary information on the
Account Application or have filed a Shareholder Services Form with
the Transfer Agent, through the Wire Redemption Privilege or the
Telephone Redemption Privilege. The Fund reserves the
right to refuse any request made by wire or telephone, including
requests made shortly after a change of address, and may limit the
amount involved or the number of such requests. The Fund may
modify or terminate any redemption privilege at any time or charge
a service fee upon notice to shareholders. No such fee currently
is contemplated.
You may redeem Shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. If you select a
Telephone Redemption Privilege or Telephone Exchange Privilege
(which is granted automatically unless you refuse it), you
authorize the Transfer Agent to act on telephone instructions from
any person representing himself or herself to be you and
reasonably believed by the Transfer Agent to be genuine. The Fund
will require the Transfer Agent to employ reasonable procedures,
such as requiring a form of personal identification, to confirm
that instructions are genuine and, if it does not follow such
procedures, the Fund or the Transfer Agent may be liable for any
losses due to unauthorized or fraudulent instructions. Neither the
Fund nor the Transfer Agent will be liable for following telephone
instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you
may experience difficulty in contacting the Transfer Agent by
telephone to request a redemption or exchange of a Portfolio's
Shares. In such cases, you should consider using the other
redemption procedures described herein. Use of these other
redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone
redemption had been used. During the delay, such Portfolio's net
asset value may fluctuate.
Regular Redemption - Under the regular redemption procedure, you
may redeem your Shares by written request mailed to Wilshire
Target Funds, Inc., P.O. Box 9770, Providence, Rhode Island
02940-9770. Redemption requests must be signed by each
shareholder, including each owner of a joint account, and each
signature must be guaranteed. The Transfer Agent has adopted
standards and procedures pursuant to which signature-guarantees in
proper form generally will be accepted from domestic banks,
brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings
associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Program ("STAMP"), and the Stock Exchanges
Medallion Program. If you have any questions with respect to
signature-guarantees, please call one of the telephone numbers
listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any
member bank of the Federal Reserve System in accordance with a
written signature-guaranteed request.
Wire Redemption Privilege - You may request by wire or telephone
that redemption proceeds (minimum $1,000) be wired to your account
at a bank which is a member of the Federal Reserve System, or a
correspondent bank if your bank is not a member. You also may
direct that redemption proceeds be paid by check (maximum $150,000
per day) made out to the owners of record and mailed to your
address. Redemption proceeds of less than $1,000 will be paid
automatically by check. Holders of jointly registered Fund or bank
accounts may have redemption proceeds of only up to $250,000 wired
within any 30-day period. You may telephone redemption requests by
calling 1-888-200-6796. The Statement of Additional Information
sets forth instructions for transmitting redemption requests by
wire. Shares held under Keogh Plans, IRAs or other retirement
plans, and Shares for which certificates have been issued, are not
eligible for this privilege.
Telephone Redemption Privilege - You may request by telephone that
redemption proceeds (maximum $150,000 per day) be paid by check
and mailed to your address. You may telephone redemption
instructions by calling 1-888-200-6796. Shares held under
Keogh Plans, IRAs or other retirement plans, and Shares for which
certificates have been issued, are not eligible for this
privilege.
Shareholder Services Plan
The Directors of the Fund have adopted a separate
shareholder services plan (the "Shareholder Services Plan") with
respect to the Shares pursuant to Section 12(b) of the 1940 Act
and Rule 12b-1 thereunder. Under the Shareholder Services Plan,
the Fund reimburses 440 Financial at an annual rate of up to .25
of 1% of the value of the average daily net assets attributable to
the Shares of each Portfolio for certain shareholder services
provided by securities dealers or other financial intermediaries.
The shareholder services provided may include personal services to
holders of the Shares and/or for the maintenance of the accounts
of the holders of the Shares. The amount payable under the
Shareholder Services Plan is charged to, and therefore reduces,
income allocated to the Shares.
Dividends, Distributions and Taxes
Each Portfolio ordinarily declares and pays dividends from
its net investment income and distributes net realized securities
gains, if any, once a year, but it may make distributions on a
more frequent basis to comply with the distribution requirements
of the Internal Revenue Code of 1986, as amended (the "Code"), in
all events in a manner consistent with the provisions of the 1940
Act. The Fund will not make distributions from net realized
securities gains unless capital loss carryovers, if any, have been
utilized or have expired. You may choose whether to
receive dividends and distributions in cash or to reinvest in
additional Shares at net asset value. All expenses are accrued
daily and deducted before declaration of dividends to investors.
The Fund intends to distribute substantially all of its net
investment income and net realized securities gains on a current
basis. Dividends paid by a Portfolio derived from net
investment income and distributions from net realized short-term
securities gains of the Portfolio will be taxable to U.S.
shareholders as ordinary income for federal income tax purposes
whether received in cash or reinvested in additional Shares.
Depending upon the composition of a Portfolio's income, all or a
portion of the dividends derived from net investment income may
qualify for the dividends received deduction allowable to certain
U.S. corporations. Distributions from net realized long-term
securities gains of a Portfolio will be taxable to U.S.
shareholders as long-term capital gains for Federal income tax
purposes, regardless of how long shareholders have held their
Portfolio Shares and whether such distributions are received in
cash or reinvested in Shares. The Code currently provides
that the net capital gain of an individual generally will not be
subject to Federal income tax at a rate in excess of 28%.
Dividends and distributions will generally be subject to state and
local taxes.
Dividends from net investment income and distributions from
net realized short-term securities gains paid by a Portfolio to a
foreign investor generally are subject to U.S. nonresident
withholding taxes at the rate of 30%, unless the foreign investor
claims the benefit of a lower rate specified in a tax treaty.
Distributions from net realized long-term securities gains paid by
a Portfolio to a foreign investor as well as the proceeds of any
redemptions from a foreign investor's account, regardless of the
extent to which gain or loss may be realized, generally will not
be subject to any U.S. withholding tax. However, such
distributions and redemption proceeds may be subject to backup
withholding, as described below, unless the foreign investor
certifies his non-U.S. residency status. The tax consequences
to foreign investors engaged in a trade or business that is
effectively connected with the United States may differ from the
foregoing.
Notice as to the tax status of your dividends and
distributions will be mailed to you annually. You also will
receive periodic summaries of your account which will include
information as to dividends and distributions from securities
gains, if any, paid during the year.
Federal regulations generally require the Fund to withhold
("backup withholding") and remit to the U.S. Treasury 31% of
dividends, distributions from net realized securities gains and
the proceeds of any redemption, regardless of the extent to which
gain or loss may be realized, paid to a shareholder if such
shareholder fails to certify either that the TIN furnished in
connection with opening an account is correct or that such
shareholder has not received notice from the IRS of being subject
to backup withholding as a result of a failure to properly report
taxable dividend or interest income on a Federal income tax
return. Furthermore, the IRS may notify the Fund to institute
backup withholding if the IRS determines a shareholder's TIN is
incorrect or if a shareholder has failed to properly report
taxable dividend and interest income on a Federal income tax
return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax
withheld as a result of backup withholding does not constitute an
additional tax imposed on the record owner of the account, and may
be claimed as a credit on the record owner's Federal income tax
return.
Management of the Fund believes that each Portfolio has
qualified for the fiscal year ended August 31, 1995 as a
"regulated investment company" under the Code. Each Portfolio
intends to continue to so qualify. Such qualification
relieves a Portfolio of any liability for Federal income tax to
the extent its earnings are distributed in accordance with
applicable provisions of the Code. In addition, each Portfolio is
subject to a non-deductible 4% excise tax, measured with respect
to certain undistributed amounts, if any, of taxable investment
income and capital gains.
The foregoing is a general summary of the U.S. federal
income tax consequences of investing in the Fund. You should
consult your tax adviser regarding specific questions as to
Federal, state or local taxes.
Performance Information
For purposes of advertising, performance is calculated on
the bases of average annual total return and/or total return.
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment in the
Portfolio was purchased with an initial payment of $1,000 and that
the investment was redeemed at the end of a stated period of time,
after giving effect to the reinvestment of dividends and
distributions during the period. The return is expressed as a
percentage rate which, if applied on a compounded annual basis,
would result in the redeemable value of the investment at the end
of the period. Advertisements of each Portfolio's performance will
include such Portfolio's average annual total return for one-, five-
and ten-year periods, or for shorter periods depending upon the
length of time during which the Portfolio has operated.
Total return is computed on a per share basis and assumes
the reinvestment of dividends and distributions. Total return
generally is expressed as a percentage rate which is calculated by
combining the income and principal changes for a specified period
and dividing by the net asset value per share at the beginning of
the period. Advertisements may include the percentage rate of
total return or may include the value of a hypothetical investment
at the end of the period which assumes the application of the
percentage rate of total return.
Performance will vary from time to time and past results are
not necessarily representative of future results. You should
remember that performance is a function of portfolio management in
selecting the type and quality of portfolio securities and is
affected by operating expenses. Performance information, such as
that described above, may not provide a basis for comparison with
other investments or other investment companies using a different
method of calculating performance.
Comparative performance information may be used from time to
time in advertising or marketing the Fund's Shares, including data
from the Wilshire 5000 Index, Lipper Analytical Services, Inc.,
Standard & Poor's 500 Composite Stock Price Index, the Dow Jones
Industrial Average, Morningstar, Inc. and other industry
publications.
General Information
The Fund was incorporated under Maryland law on July 30,
1992, and commenced operations on September 30, 1992. The Fund is
authorized to issue 400 million shares of Common Stock (with 100
million allocated to each Portfolio and 50 million
allocated to each of two classes of each Portfolio), par value
$.001 per share.
The Fund is a "series fund," which is a mutual fund divided
into separate portfolios. Each Portfolio of the Fund is treated as
a separate entity for certain matters under the 1940 Act and for
other purposes, and a shareholder of one Portfolio is not deemed
to be a shareholder of any other Portfolio. As described below,
for certain matters Fund shareholders vote together as a group; as
to others they vote separately by Portfolio or by class.
To date, the Board of Directors has authorized
the creation of four series of shares and an "Investment
Class" and "Institutional Class" of shares for each Portfolio.
All consideration received by the Fund for shares of one of
the Portfolios and all assets in which such consideration is
invested will belong to that Portfolio (subject only to the rights
of creditors of the Fund) and will be subject to the liabilities
related thereto. Each share of a class of a Portfolio
represents an equal proportionate interest in the Portfolio with
each other class share, subject to the liabilities of the
particular class. Each class of shares of a Portfolio
participates equally in the earnings, dividends and assets
attributable to that class. The income attributable to, and the
expenses of, one class are treated separately from those of the
other classes. Shares are fully paid and non-assessable. Should a
Portfolio be liquidated, the holders of each class are entitled to
share pro rata in the net assets attributable to that class
available for distribution to shareholders. The Board of Directors
has the ability to create, from time to time, new portfolios and
additional classes without shareholder approval. Shares have no
pre-emptive or conversion rights.
Unless otherwise required by the 1940 Act, ordinarily it
will not be necessary for the Fund to hold annual meetings of
shareholders. As a result, Fund shareholders may not consider each
year the election of Directors or the appointment of auditors.
However, pursuant to the Fund's By-Laws, the holders of at least
10% of the shares outstanding and entitled to vote may require the
Fund to hold a special meeting of shareholders for the purpose of
considering the removal of a Director from office or for any other
purpose. Fund shareholders may remove a Director by the
affirmative vote of a majority of the Fund's outstanding voting
shares. In addition, the Board of Directors will call a meeting of
shareholders for the purpose of electing Directors if, at any
time, less than a majority of the Directors then holding office
have been elected by shareholders. Each share has one vote and
shares of each Portfolio would be entitled to vote separately to
approve investment advisory agreements or changes in investment
restrictions, but shares of all Portfolios would vote together in
the election of Directors or selection of accountants. Each class
of a Portfolio is also entitled to vote separately on any material
increases in the fees under its Shareholder Services Plan or on
any other matter that affects solely that class of shares, but
will otherwise vote together with all other classes of shares of
the Portfolio on all other matters on which stockholders are
entitled to vote.
The Transfer Agent maintains a record of your ownership and
sends confirmations and statements of account. Certificates
for shares will not be issued unless specifically requested.
Shareholder inquiries may be made by writing to the Fund at
P.O. Box 9770, Providence, RI 02940-9770, or by calling toll free
1-888-200-6796. </R
Appendix
Investment Techniques
Borrowing Money - Each Portfolio is permitted to borrow money only
for temporary or emergency (not leveraging) purposes, in an amount
up to 15% of the value of its total assets (including the amount
borrowed) valued at the lesser of cost or market, less liabilities
(not including the amount borrowed) at the time the borrowing is
made. While borrowings exceed 5% of a Portfolio's total assets,
the Portfolio will not make any additional investments.
Use of Derivatives - Although no Portfolio will be a commodity
pool, Derivatives subject a Portfolio to the rules of the
Commodity Futures Trading Commission which limit the extent to
which a Portfolio can invest in certain Derivatives. Each
Portfolio may invest in stock index futures contracts for hedging
purposes without limit. However, no Portfolio may invest in such
contracts for other purposes if the sum of the amount of initial
margin deposits and premiums paid for unexpired commodity options,
other than for bona fide hedging purposes, exceed 5% of the
liquidation value of the Portfolio's assets, after taking into
account unrealized profits and unrealized losses on such contracts
it has entered into; provided, however, that in the case of an
option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in calculating the 5%
limitation.
Lending Portfolio Securities - Each Portfolio may lend securities
from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain
transactions. In connection with such loans, the Portfolio
continues to be entitled to payments in amounts equal to the
interest, dividends or other distributions payable on the loaned
securities. Loans of portfolio securities afford the Portfolio an
opportunity to earn interest on the amount of the loan and at the
same time to earn income on the loaned securities' collateral.
Loans of portfolio securities may not exceed 33 % of the value of
the Portfolio's total assets. In connection with such loans, the
Portfolio will receive collateral consisting of cash, U.S.
Government securities or irrevocable letters of credit which will
be maintained at all times in an amount equal to at least 100% of
the current market value of the loaned securities. Such loans are
terminable by the Fund at any time upon specified notice. A
Portfolio might experience risk of loss if the institution with
which it has engaged in a portfolio loan transaction breaches its
agreement with the Portfolio.
No person has been authorized to give any information or to
make any representations other than those contained in this
prospectus and in the Fund's official sales literature in
connection with the offer of the Portfolios' shares, and, if given
or made, such other information or representations must not be
relied upon as having been authorized by the Fund. This prospectus
does not constitute an offer in any state in which, or to any
person to whom, such offering may not lawfully be made
[This Page Intentionally Left Blank]
"ART"
"LOGO"
Wilshire Target Funds, Inc.
"Prospectus"
[ 1996, Wilshire Associates Incorporated]
[WILSp511595]
WILSHIRE TARGET FUNDS, INC.
(INVESTMENT CLASS SHARES)
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
June 3, 1996
This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with the
current Prospectus of Wilshire Target Funds, Inc. (Investment
Class Shares), dated June 3, 1996, as it may be revised from time
to time. To obtain a copy of the Prospectus, please write to
Wilshire Target Funds, Inc. (the "Fund") at P.O. Box 9770, Providence,
Rhode Island 02940-9770, or call 1-888-200-6796. Capitalized terms
not otherwise defined herein have the same meaning as in the Prospectus.
Wilshire Associates Incorporated ("Wilshire") serves as the
Fund's investment adviser.
First Data Investor Services Group, Inc. ("First Data")
serves as the Fund's administrator.
440 Financial Distributors, Inc. ("440 Financial") serves as
the Fund's distributor.
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY 1
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES 2
MANAGEMENT OF THE FUND 8
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS 11
SHAREHOLDER SERVICES PLAN 16
PURCHASE OF FUND SHARES 17
REDEMPTION OF FUND SHARES 18
SHAREHOLDER SERVICES 19
DETERMINATION OF NET ASSET VALUE 21
DIVIDENDS, DISTRIBUTION AND TAXES 21
PERFORMANCE INFORMATION 23
PORTFOLIO TRANSACTIONS 24
INFORMATION ABOUT THE FUND 25
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING
AGENT,COUNSEL AND INDEPENDENT ACCOUNTANTS 25
FINANCIAL STATEMENTS 26
APPENDIX 26
GENERAL INFORMATION AND HISTORY
On August 28, 1992, Dreyfus-Wilshire Series Fund, Inc.
changed its name to Dreyfus-Wilshire Target Funds, Inc.
On May 31, 1996, Dreyfus-Wilshire Target Funds, Inc. changed
its name to Wilshire Target Funds, Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Description of the Fund."
Other Portfolio Securities
U.S. Government Securities. Each Portfolio may purchase
securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, which include U.S. Treasury
securities that differ in their interest rates, maturities and
times of issuance. Some obligations issued or guaranteed by U.S.
Government agencies and instrumentalities, for example, Government
National Mortgage Association pass-through certificates, are
supported by the full faith and credit of the U.S. Treasury;
others, such as those of the Federal Home Loan Banks, by the right
of the issuer to borrow from the Treasury; others, such as those
issued by the Federal National Mortgage Association, by
discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others, such as
those issued by the Student Loan Marketing Association, only by
the credit of the agency or instrumentality. These securities
bear fixed, floating or variable rates of interest. While the
U.S. Government provides financial support to such U.S.
Government-sponsored agencies or instrumentalities, no assurance
can be given that it will always do so, since it is not so
obligated by law.
Zero Coupon Securities. Each Portfolio may invest in zero
coupon U.S. Treasury securities, which are Treasury Notes and
Bonds that have been stripped of their unmatured interest coupons,
the coupons themselves and receipts or certificates representing
interests in such stripped debt obligations and coupons. Each
Portfolio also may invest in zero coupon securities issued by
corporations and financial institutions which constitute a
proportionate ownership of the issuer's pool of underlying U.S.
Treasury securities. A zero coupon security pays no interest to
its holder during its life and is sold at a discount to its face
value at maturity. The amount of the discount fluctuates with the
market price of the security. The market prices of zero coupon
securities generally are more volatile than the market prices of
securities that pay interest periodically and are likely to
respond to a greater degree to changes in interest rates than
non-zero coupon securities having similar maturities and credit
qualities.
Bank Obligations. Each Portfolio may purchase certificates
of deposit, time deposits, bankers' acceptances and other
short-term obligations issued by domestic banks, foreign
subsidiaries of domestic banks, foreign branches of domestic
banks, and domestic and foreign branches of foreign banks,
domestic savings and loan associations and other banking
institutions. With respect to such securities issued by foreign
branches of domestic banks, foreign subsidiaries of domestic
banks, and domestic and foreign branches of foreign banks, the
Portfolio may be subject to additional investment risks that are
different in some respects from those incurred by a fund which
invests only in debt obligations of U.S. domestic issuers. Such
risks include possible future political and economic developments,
the possible imposition of foreign withholding taxes on interest
income payable on the securities, the possible establishment of
exchange controls or the adoption of other foreign governmental
restrictions which might adversely affect the payment of principal
and interest on these securities and the possible seizure or
nationalization of foreign deposits.
Certificates of deposit are negotiable certificates
evidencing the obligation of a bank to repay funds deposited with
it for a specified period of time.
Time deposits are non-negotiable deposits maintained in a
banking institution for a specified period of time at a stated
interest rate. Each Portfolio will invest in time deposits of
domestic banks that have total assets in excess of one billion
dollars. Time deposits which may be held by the Portfolios will
not benefit from insurance from the Bank Insurance Fund or the
Savings Association Insurance Fund administered by the Federal
Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the
obligation of a bank to pay a draft drawn on it by a customer.
These
instruments reflect the obligation both of the bank and of the
drawer to pay
the face amount of the instrument upon maturity. The other
short-term
obligations may include uninsured, direct obligations bearing
fixed, floating
or variable interest rates.
Repurchase Agreements. In a repurchase agreement, the
Portfolio buys, and the seller agrees to repurchase a security at
a mutually agreed upon time and price (usually within seven days).
The repurchase agreement thereby determines the yield during the
purchaser's holding period, while the seller's obligation to
repurchase is secured by the value of the underlying security.
Repurchase agreements could involve risks in the event of a
default or insolvency of the other party to the agreement,
including possible delays or restrictions upon the Portfolio's
ability to dispose of the underlying securities. The Fund's
custodian or sub-custodian will have custody of, and will hold in
a segregated account, securities acquired by a Portfolio under a
repurchase agreement. Repurchase agreements are considered by the
staff of the Securities and Exchange Commission to be loans by the
Portfolio entering into them. In an attempt to reduce the risk of
incurring a loss on a repurchase agreement, the Portfolios will
enter into repurchase agreements only with domestic banks with
total assets in excess of one billion dollars, or primary
government securities dealers reporting to the Federal Reserve
Bank of New York, with respect to securities of the type in which
such Portfolio may invest, and will require that additional
securities be deposited with it if the value of the securities
purchased should decrease below resale price.
Commercial Paper and Other Short-Term Corporate
Obligations. Commercial paper consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The
commercial paper purchased by the Portfolios will consist only of
direct obligations which, at the time of their purchase, are (a)
rated not lower than Prime-1 by Moody's Investors Service, Inc.,
A-1 by Standard & Poor's Ratings Group, F-1 by Fitch Investors
Service, L.P. or D-1 by Duff & Phelps Credit Rating Co., (b)
issued by companies having an outstanding unsecured debt issue
currently rated not lower than Aa3 by Moody's Investors Service,
Inc. or AA- by Standard & Poor's Ratings Group, Fitch Investors
Service, L.P. or Duff & Phelps Credit Rating Co., or (c)
if unrated, determined by Wilshire to be of comparable quality to
those rated obligations which may be purchased by such Portfolio.
These instruments include variable amount master demand notes,
which are obligations that permit the Portfolio to invest
fluctuating amounts at varying rates of interest pursuant to
direct arrangements between the Portfolio, as lender, and the
borrower. These notes permit daily changes in the amounts
borrowed. Because these obligations are direct lending
arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and
there generally is no established secondary market for these
obligations, although they are redeemable at face value, plus
accrued interest, at any time. Accordingly, where these
obligations are not secured by letters of credit or other credit
support arrangements, the Portfolio's right to redeem is dependent
on the ability of the borrower to pay principal and interest on
demand. In connection with floating and variable rate demand
obligations, Wilshire will consider, on an ongoing basis, earning
power, cash flow and other liquidity ratios of the borrower, and
the borrower's ability to pay principal and interest on demand.
Such obligations frequently are not rated by credit rating
agencies, and a Portfolio may invest in them only if at the time
of an investment the borrower meets the criteria set forth above
for other commercial paper issuers.
Management Policies
Derivatives. A Portfolio may invest in Derivatives (as
defined in the Fund's Prospectus) for a variety of reasons,
including to hedge against certain market risks, to provide a substitute
for purchasing or selling particular securities or to increase
potential income gain. Derivatives may provide a cheaper, quicker
or more specifically focused way for the Portfolio to invest than
"traditional" securities would.
Derivatives can be volatile and involve various types and
degrees of risk, depending upon the characteristics of the
particular Derivative and the portfolio as a whole. Derivatives
permit a Fund to increase, decrease or change the level of risk to
which its portfolio is exposed in much the same way as the
Portfolio can increase, decrease or change the risk of its
portfolio by making investments in specific securities.
In addition, Derivatives may entail investment exposures
that are greater than their cost would suggest, meaning that a
small investment in Derivatives could have a large potential
impact on a Portfolio's performance.
If a Portfolio invests in Derivatives at inappropriate times
or judges market conditions incorrectly, such investments may
lower the Portfolio's return or result in a loss. A Portfolio
also could experience losses if its Derivatives were poorly
correlated with its other investments, or if the Portfolio was
unable to liquidate its position because of an illiquid secondary
market. The market for many Derivatives is, or suddenly can
become, illiquid. Changes in liquidity may result in significant,
rapid and unpredictable changes in the prices for Derivatives.
When required by the Securities and Exchange Commission, the
Portfolio will set aside permissible liquid assets in a segregated
account to cover its obligations relating to its purchase of
Derivatives. To maintain this required cover, a Portfolio may
have to sell portfolio securities at disadvantageous prices or
times since it may not be possible to liquidate a Derivative
position at a reasonable price. Derivatives may be purchased on
established exchanges or through privately negotiated transactions
referred to as over-the-counter Derivatives. Exchange-traded
Derivatives generally are guaranteed by the clearing agency which
is the issuer or counterparty to such Derivatives. This guarantee
usually is supported by a daily payment system (i.e., margin
requirements) operated by the clearing agency in order to reduce
overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk
associated with Derivatives purchased on an exchange. By
contrast, no clearing agency guarantees over-the-counter
Derivatives. Therefore, each party to an over-the-counter
Derivative bears the risk that the counterparty will default.
Accordingly, Wilshire will consider the creditworthiness of
counterparties to over-the-counter Derivatives in the same manner
as it would review the credit quality of a security to be
purchased by a Portfolio. Over-the-counter Derivatives are
less liquid than exchange-traded Derivatives since the other party
to the transaction may be the only investor with sufficient
understanding of the Derivative to be interested in bidding for
it.
Futures Transactions--In General. A Portfolio may enter
into futures contracts in U.S. domestic markets, such as the
Chicago Board of Trade and the International Monetary Market of
the Chicago Mercantile Exchange.
Engaging in these transactions involves risk of loss to a
Portfolio which could adversely affect the value of such
Portfolio's net assets. Although each Portfolio intends to
purchase or sell futures contracts only if there is an active
market for such contracts, no assurance can be given that a liquid
market will exist for any particular contract at any particular
time. Many futures exchanges and boards of trade limit the amount
of fluctuation permitted in futures contract prices during a
single trading day. Once the daily limit has been reached in a
particular contract, no trades may be made that day at a price
beyond that limit or trading may be suspended for specified
periods during the trading day. Futures contract prices could move
to the limit for several consecutive trading days with little or
no trading, thereby preventing prompt liquidation of futures
positions and potentially subjecting the Portfolio to substantial
losses.
Successful use of futures by a Portfolio also is subject to
the ability of Wilshire to predict correctly movements in the
direction of the relevant market and, to the extent the
transaction is entered into for hedging purposes, to ascertain the
appropriate correlation between the transaction being hedged and
the price movements of the futures contract. For example, if a
Portfolio uses futures to hedge against the possibility of a
decline in the market value of securities held in its portfolio
and the prices of such securities instead increase, the Portfolio
will lose part or all of the benefit of the increased value of
securities which it has hedged because it will have offsetting
losses in its futures positions. Furthermore, if in such
circumstances the Portfolio has insufficient cash, it may have to
sell securities to meet daily variation margin requirements. A
Portfolio may have to sell such securities at a time when it may
be disadvantageous to do so.
Pursuant to regulations and/or published positions of the
Securities and Exchange Commission, a Portfolio may be required to
segregate cash or high quality money market instruments in
connection with its commodities transactions in an amount
generally equal to the value of the underlying commodity. The
segregation of such assets will have the effect of limiting a
Portfolio's ability otherwise to invest those assets.
Specific Futures Transactions. A Portfolio may purchase and
sell stock index futures contracts. A stock index future
obligates a Portfolio to pay or receive an amount of cash equal to
a fixed dollar amount specified in the futures contract multiplied
by the difference between the settlement price of the contract on
the contract's last trading day and the value of the index based
on the stock prices of the securities that comprise it at the
opening of trading in such securities on the next business day.
Future Developments. A Portfolio may take advantage of
opportunities in the area of futures contracts and any other
Derivatives which are not presently contemplated for use by the
Portfolio or which are not currently available but which may be
developed, to the extent such opportunities are both consistent
with the Portfolio's investment objective and legally permissible
for the Portfolio. Before entering into such transactions or
making any such investment, the Portfolio will provide appropriate
disclosure in its Prospectus or Statement of Additional
Information.
Lending Portfolio Securities. In connection with its
securities lending transactions, a Portfolio may return to the
borrower or a third party which is unaffiliated with the Fund, and
which is acting as a "placing broker," a part of the interest
earned from the investment of collateral received for securities
loaned.
The Securities and Exchange Commission currently requires
that the following conditions must be met whenever portfolio
securities are loaned: (1) the Portfolio must receive at least
100% cash collateral from the borrower; (2) the borrower must
increase such collateral whenever the market value of the
securities rises above the level of such collateral; (3) the
Portfolio must be able to terminate the loan at any time; (4) the
Portfolio must receive reasonable interest on the loan, as well as
any dividends, interest or other distributions payable on the
loaned securities, and any increase in market value; (5) the
Portfolio may pay only reasonable custodian fees in connection
with the loan; and (6) while voting rights on the loaned
securities may pass to the borrower, the Fund's Board of Directors
must terminate the loan and regain the right to vote the
securities if a material event adversely affecting the investment
occurs. These conditions may be subject to future modification.
Investment Restrictions. Each Portfolio has adopted
investment restrictions numbered 1 through 9 as fundamental
policies, which cannot be changed, as to a Portfolio, without
approval by the holders of a majority (as defined in the
Investment Company Act of 1940, as amended (the "1940 Act")) of
such Portfolio's outstanding voting shares. Investment
restrictions numbered 10 through 15 are not fundamental policies
and may be changed by vote of a majority of the Directors at any
time. No Portfolio may:
1. Invest in commodities, except that the Portfolio may
purchase and sell options, forward contracts, futures contracts,
including those relating to indices, and options on futures
contracts or indices.
2. Purchase, hold or deal in real estate, or oil, gas or
other mineral leases or exploration or development programs, but
the Portfolio may purchase and sell securities that are secured by
real estate or issued by companies that invest or deal in real
estate.
3. Borrow money, except for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the
Portfolio's total assets (including the amount borrowed) based on
the lesser of cost or market, less liabilities (not including the
amount borrowed) at the time the borrowing is made. While
borrowings exceed 5% of the value of the Portfolio's total assets,
the Portfolio will not make any additional investments. For
purposes of this investment restriction, the entry into options,
forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices shall not
constitute borrowing.
4. Make loans to others, except through the purchase of
debt obligations and the entry into repurchase agreements.
However, the Portfolio may lend its portfolio securities in an
amount not to exceed 33 1/3% of the value of its total assets.
Any loans of portfolio securities will be made according to
guidelines established by the Securities and Exchange Commission
and the Fund's Board of Directors.
5. Act as an underwriter of securities of other issuers,
except to the extent the Portfolio may be deemed an underwriter
under the Securities Act of 1933, as amended, by virtue of
disposing of portfolio securities.
6. Invest more than 25% of its assets in the securities
of issuers in any single industry, provided there shall be no
limitation on the purchase of obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities.
7. Invest more than 5% of its assets in the obligations
of any single issuer, except that up to 25% of the value of the
Portfolio's total assets may be invested, and securities issued or
guaranteed by the U.S. Government, or its agencies or
instrumentalities may be purchased, without regard to any such
limitation.
8. Hold more than 10% of the outstanding voting
securities of any single issuer. This Investment Restriction
applies only with respect to 75% of the Portfolio's total assets.
9. Issue any senior security (as such term is defined in
Section 18(f) of the 1940 Act), except to the extent the
activities permitted in Investment Restriction Nos. 1, 3, 11 and
12 may be deemed to give rise to a senior security.
10. Invest in the securities of a company for the purpose
of exercising management or control, but the Portfolio will vote
the securities it owns in its portfolio as a shareholder in
accordance with its views.
11. Pledge, mortgage or hypothecate its assets, except to
the extent necessary to secure permitted borrowings and to the
extent related to the deposit of assets in escrow in connection
with writing covered put and call options and the purchase of
securities on a when-issued or forward commitment basis and
collateral and initial or variation margin arrangements with
respect to options, forward contracts, futures contracts,
including those relating to indices, and options on futures
contracts or indices.
12. Purchase, sell or write puts, calls or combinations
thereof, except as may be described in the Fund's Prospectus and
this Statement of Additional Information.
13. Purchase securities of any company having less than
three years' continuous operations (including operations of any
predecessors) if such purchase would cause the value of the
Portfolio's investments in all such companies to exceed 5% of the
value of its total assets.
14. Enter into repurchase agreements providing for
settlement in more than seven days after notice or purchase
securities which are illiquid, if, in the aggregate, more than 15%
of the value of the Portfolio's net assets would be so invested.
15. Purchase securities of other investment companies,
except to the extent permitted under the 1940 Act or those
received as part of a merger or consolidation.
If a percentage restriction is adhered to at the time of
investment, a later change in percentage resulting from a change
in values or assets will not constitute a violation of such
restriction.
The Fund may make commitments more restrictive than the
restrictions listed above so as to permit the sale of a
Portfolio's shares in certain states. In this regard, and while
not a fundamental policy, the Fund has undertaken that no
Portfolio may invest in real estate limited partnerships. Should
the Fund determine that a commitment is no longer in the best
interest of the Portfolio and its shareholders, the Fund reserves
the right to revoke the commitment by terminating the sale of such
Portfolio's shares in the state involved.
MANAGEMENT OF THE FUND
Directors and officers of the Fund, together with
information as to their principal business occupations during at
least the last five years, are shown below. Each Director who is
deemed to be an "interested person" of the Fund, as defined in the
1940 Act, is indicated by an asterisk.
Directors of the Fund
*THOMAS D. STEVENS, Chairman of the Board, President and Director.
Senior Vice President and Principal of Wilshire Associates
Incorporated for more than the past five years. He is the Chief
Investment Officer of the Wilshire Asset Management division.
Wilshire Asset Management is a provider of index and structured
equity and fixed income applications. He is 46 years old and his
address is c/o Wilshire Associates Incorporated, 1299 Ocean
Avenue, Santa Monica, California 90401-1085.
DEWITT F. BOWMAN, Director. Since January 1994, Pension
Investment Consultant providing advice on large pension fund
investment strategy, new product evaluation and integration, and
large plan investment analysis and management. For more than four
years prior thereto, he was Chief Investment Officer of the
California Public Employees Retirement System. He currently
serves as a director of the RREEF America REIT, RCM Equity Funds,
Inc., Brandes Investment Trust, and as a trustee of the Pacific
Gas and Electric Nuclear Decommissioning Trust. He is 65 years
old and his address is 79 Eucalyptus Knoll, Mill Valley,
California 94941.
*ROBERT J. RAAB, JR., Director. Senior Vice President and
Principal of Wilshire Associates Incorporated for more than the
past five years. He is head of Wilshire's Institutional Services
Division and is responsible for Wilshire Equity, Fixed Income,
Index Fund and Portfolio Accounting products. He is 46 years old
and his address is c/o Wilshire Associates Incorporated, 1299
Ocean Avenue, Santa Monica, California 90401-1085.
PETER J. CARRE, Director. Attorney, Peter Carre and
Associates, Law Offices, since 1982. He practices law in the
areas of ERISA and investments. He is 48 years old and his
address is c/o Peter Carre and Associates, Law Offices, 815
Connecticut Avenue, N.W., Washington, D.C. 20006.
ANNE WEXLER, Director. Chairman of the Wexler Group, consultants
specializing in government relations and public affairs for
more than fifteen years. She is also a director of Alumax,
Comcast Corporation, The New England Electric System,
Nova Corporation, and sixteen (16) mutual funds in the Dreyfus
mutual fund family as well as a member of the
Board of the Carter Center of Emory University, the Council of
Foreign Relations, the National Park Foundation, Visiting
Committee of the John F. Kennedy School of Government at Harvard
University and the Board of Visitors of the University of Maryland
School of Public Affairs. She is 65 years old and her address is
c/o The Wexler Group, 1317 F Street, N.W., Suite 600, Washington,
D.C. 20004.
For so long as the Fund's plan described in the section
captioned "Shareholder Services Plan" remains in effect, the
Directors of the Fund who are not "interested persons" of the
Fund, as defined in the 1940 Act, will be selected and nominated
by the Directors who are not "interested persons" of the Fund.
The Fund typically pays its Directors an annual retainer and
a per meeting fee and reimburses them for their expenses. The
aggregate amount of compensation paid to each current Director by
the Fund for the fiscal year ended August 31, 1995, was as
follows:
(1) (2) (3) (4) (5)
Name of Aggregate Pension or Estimated Total
Board Member Compensation Retirement Annual Compensation
From the Fund* Benefits Benefits Upon From
Accrued as Retirement Registrant
Part of Fund's and Fund
Expenses Complex
Thomas D. Stevens none none none none
DeWitt F. Bowman none none none none
Robert J. Raab, Jr. none none none none
Peter J. Carre none none none none
Anne Wexler $4,500* none none $4,500*
* Amount does not include reimbursed expenses for attending
Board meetings, which amounted to $598 for all Directors as a
group.
Officers of the Fund
THOMAS D. STEVENS, (see "Directors of the Fund" above).
DAVID R. BORGER, Vice President and Treasurer. Vice President and
Principal of Wilshire Associates Incorporated and Director of
Research for its Wilshire Asset Management division for more than
five years. He is 47 years old and his address is c/o Wilshire
Associates Incorporated, 1299 Ocean Avenue, Santa Monica,
California 90401-1085.
ALAN L. MANNING, Secretary. Since 1990, Vice President, Secretary
and General Counsel of Wilshire Associates Incorporated. He is 46
years old and his address is c/o Wilshire Associates Incorporated,
1299 Ocean Avenue, Santa Monica, California 90401-1085.
MICHAEL J. NAPOLI, JR., Vice President. Vice President and
Principal of Wilshire Associates Incorporated for more than five
years. He is Director of Marketing for its Wilshire Asset
Management division. He is 44 years old and his address is c/o
Wilshire Associates Incorporated, 1299 Ocean Avenue, Santa Monica,
California 90401-1085.
JULIE A. TEDESCO, Vice President and Assistant Secretary. Since
May 1994, Counsel to First Data Investor Services Group, Inc.
From July 1992 to May 1994, Assistant Vice President and Counsel
of The Boston Company Advisors, Inc.. From 1988 to 1992,
Ms. Tedesco was an associate in the Boston law firm of Hutchins,
Wheeler & Dittmar. She is 38 years old and her address is c/o
First Data Investor Services Group, Inc., 53 State Street, Boston,
Massachusetts 02109.
THERESE M. HOGAN, Vice President and Assistant Secretary. Since
June 1994, Manager (State Regulation) of First Data Investor
Services Group, Inc. From October 1993 to June 1994, Senior Legal
Assistant at Palmer & Dodge, Boston, Massachusetts. For more than
eight years prior thereto, a paralegal at Robinson & Cole in
Hartford, Connecticut. She is 34 years old and her address is c/o
First Data Investor Services Group, Inc., 53 State Street, Boston,
Massachusetts 02109.
KEVIN MORRISSEY, Assistant Treasurer. Since 1996, Vice
President, First Data Investor Services Group, Inc. For more than
five years prior thereto, he was Treasurer of the Keystone families
of funds. He is 51 years old and his address is c/o
First Data Investor Services Group, Inc., 4400 Computer Drive,
Westborough, Massachusetts 01581.
Directors and officers of the Fund, as a group, owned less
than 1% of the Fund's shares of Common Stock outstanding on
May 24, 1996.
The following persons are known by the Fund to own of record
5% or more of a Portfolio's voting securities outstanding on
May 24, 1996:
Large Company Growth Portfolio: Charles Schwab & Company,
101 Montgomery Street, San Francisco, California 94104--45%; and
Cincinnati Bell Collectively Bargained Retirees Health Care
Trust, 201 East 4th Street, Cincinnati, Ohio 45202--27%.
Large Company Value Portfolio: Cincinnati Bell Collectively
Bargained Retirees Health Care Trust, 201 East 4th Street,
Cincinnati, Ohio 45202--45%; and Charles Schwab & Company, 101
Montgomery Street, San Francisco, California 94104--36%.
Small Company Growth Portfolio: Charles Schwab & Company,
101 Montgomery Street, San Francisco, California 94104--38%; and
Cincinnati Bell Collectively Bargained Retirees Health Care Trust,
201 East 4th Street, Cincinnati, Ohio 45202--15%.
Small Company Value Portfolio: Charles Schwab & Company,
101 Montgomery Street, San Francisco, California 94104--34%;
Dreyfus Trust Company, as trustee for FDC Incentive Savings Plan,
144 Glenn Curtiss Boulevard, Uniondale, New York 11556--23%;
Cincinnati Bell Collectively Bargained Retirees Health Care Trust,
201 East 4th Street, Cincinnati, Ohio 45202--19%; and Dreyfus
Trust Company, as trustee for Medline Industries, Inc. 401(k)
Profit Sharing Plan, 144 Glenn Curtiss Boulevard, Uniondale, New
York 11556--8%.
A shareholder that owns, directly or indirectly, 25% or more
of a Portfolio's voting securities may be deemed to be a "control
person" (as defined in the 1940 Act) of such Portfolio.
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Management of the Fund."
Investment Advisory Agreement. Wilshire provides investment
advisory services to each Portfolio pursuant to the Investment
Advisory Agreement (the "Advisory Agreement") dated May 31,
1996, with the Fund. As to each Portfolio, the Advisory Agreement
has an initial term of two years and thereafter is subject to
annual approval by (i) the Fund's Board of Directors or (ii)
vote of a majority (as defined in the 1940 Act) of the outstanding
voting securities of such Portfolio, provided that in either event
the continuance also is approved by a majority of the Directors
who are not "interested persons" (as defined in the 1940 Act) of
the Fund or Wilshire, by vote cast in person at a meeting called
for the purpose of voting on such approval. As to each Portfolio,
the Advisory Agreement is terminable without penalty, on 60 days'
notice, by the Fund's Board of Directors or by vote of the holders
of a majority of such Portfolio's shares, or, on not less than 90
days' notice, by Wilshire. The Advisory Agreement will terminate
automatically, as to the relevant Portfolio, in the event of its
assignment (as defined in the 1940 Act).
The following persons are officers and directors of
Wilshire: Dennis A. Tito, Chairman of the Board of Directors,
President and Chief Executive Officer; Gilbert Hammer, Director
and Senior Vice President; Robert J. Raab, Jr., Director and
Senior Vice President; Thomas D. Stevens, Director and Senior Vice
President; Stephen L. Nesbitt, Director and Senior Vice President;
Rosalind M. Hewsenian, Director and Vice President; Robert C.
Kuberek, Director and Vice President; Howard M. Yata, Director and
Vice President; Cecilia I. Loo, Director and Vice President; Alan
L. Manning, Vice President, General Counsel and Secretary; and San
Slawson, Vice President and Treasurer.
Wilshire is controlled by Mr. Dennis Tito, who owned 70%
of its outstanding stock as of February 29, 1996.
Wilshire provides day-to-day management of each Portfolio's
investments in accordance with the stated policies of the
Portfolio, subject to the approval of the Fund's Board of
Directors. Wilshire provides the Fund with portfolio managers
who are authorized by the Board of Directors to execute purchases
and sales of securities. The Fund's primary Portfolio Manager is
Thomas D. Stevens and he is assisted by David R. Borger. Wilshire
maintains a research department with a professional staff of
portfolio managers and securities analysts who provide research
services for the Fund. All purchases and sales are reported for
the Board's review at the meeting subsequent to such transactions.
As compensation for Wilshire's services, the Fund has agreed
to pay Wilshire a monthly advisory fee at the annual rate of
.25 of 1% of the value of each Portfolio's average daily net
assets. The aggregate of the fees payable to Wilshire is not
subject to reduction as the value of a Portfolios net assets
increases. However, the advisory agreement also includes a
fifteen-month expense limitation provision. For the three-month
period June 1, 1996 through August 31, 1996 and the fiscal year
September 1, 1996 through August 31, 1997, Wilshire has agreed
that, if the aggregate operating expenses of any Portfolio
(exclusive of interest, taxes, brokerage, 12b-1 plan fees and
extraordinary expenses) for such period exceed the annual rate
specified in the following table for such Portfolio, the
investment advisory fee otherwise payable for that period by the
Portfolio under the agreement will be reduced by the amount of the
excess, but not below an annual fee rate of .10 of 1% of such
Portfolio's average daily net assets.
Fund Annual Rate (%)
Large Company Growth Portfolio .80
Large Company Value Portfolio .77
Small Company Growth Portfolio .91
Small Company Value Portfolio .66
All fees and expenses are accrued daily and deducted before
declaration of dividends to investors. For the period September
30, 1992 (commencement of operations for all Portfolios except
Small Company Growth Portfolio which commenced operations on
October 1, 1992) through August 31, 1993, and for the fiscal years
ended August 31, 1994 and 1995, the advisory fees for each
Portfolio payable to Wilshire, the reductions attributable to a
voluntary fee waiver which was in effect until November 7, 1994,
and the net fees paid were as follows:
* Fee Paid For Period Ended August 31, 1993
Advisory Reduction Net
Portfolio Fee Payable in Fee Fee Paid
Large Company Growth Portfolio $7,486 $7,486 -0-
Large Company Value Portfolio $5,979 $5,979 -0-
Small Company Growth Portfolio $6,308 $6,308 -0-
Small Company Value Portfolio $6,886 $6,886 -0-
* Fee Paid For Fiscal Year Ended August 31, 1994
Advisory Reduction Net
Portfolio Fee Payable in Fee Fee Paid
Large Company Growth Portfolio $ 8,137 $ 8,137 -0-
Large Company Value Portfolio $11,133 $11,133 -0-
Small Company Growth Portfolio $ 8,397 $ 8,397 -0-
Small Company Value Portfolio $20,919 $20,919 -0-
* Fee Paid For Fiscal Year Ended August 31, 1995
Advisory Reduction Net
Portfolio Fee Payable in Fee Fee Paid
Large Company Growth Portfolio $14,834 $ 1,672 $13,162
Large Company Value Portfolio $15,835 $ 2,071 $13,764
Small Company Growth Portfolio $15,630 $ 2,195 $13,435
Small Company Value Portfolio $25,210 $ 4,145 $21,065
*The monthly fee payable to Wilshire during the above time periods
was calculated at the annual rate of .10 of 1% of the value of
each Portfolio's average daily net assets under the contract in
effect prior to May 31, 1996.
Administration Agreement. Pursuant to the Administration
Agreement (the "Administration Agreement") dated May 31, 1996
with the Fund, First Data, a subsidiary of First Data Corporation,
53 State Street, Boston, Massachusetts 02109, furnishes the Fund
clerical help and accounting, data processing, internal auditing
and legal services and certain other services required by the
Fund, prepares reports to each Portfolio's shareholders, tax
returns, reports to and filings with the Securities and Exchange
Commission and state Blue Sky authorities, and generally assists
in all aspects of the Fund's operations, other than providing
investment advice.
As to each Portfolio, the Administration Agreement has an
initial term of two years and will be extended for a third year
automatically unless the Fund elects to terminate it on the second
anniversary by six months written notice of termination.
Thereafter, the Agreement would continue in effect from year to
year subject to annual approval by (i) the Fund's Board of
Directors or (ii) vote of a majority (as defined in the 1940 Act)
of such Portfolio's outstanding voting securities, provided that
in either event the continuance also is approved by a majority of
the Directors who are not "interested persons" (as defined in the
1940 Act) of the Fund or First Data, by vote cast in person
at a meeting called for the purpose of voting on such approval.
As to each Portfolio, the Administration Agreement is terminable
without penalty, on six months notice prior to its second
anniversary, and 60 days' notice at any time after its third
anniversary, by the Fund's Board of Directors or by vote of
the holders of a majority of such Portfolio's shares, or, on not
less than 90 days' notice at any time after its third
anniversary by First Data. The Administration Agreement will
terminate automatically, as to the relevant Portfolio, in the
event of its assignment (as defined in the 1940 Act).
As compensation for First Data's services under the
Administration Agreement, the Fund has agreed to pay First Data a
monthly administration fee at the annual rate of .15 of 1% of the
Fund's monthly average net assets up to aggregate net assets of $1
billion, .10 of 1% of such value on the next $4 billion, and .08
of 1% on excess net assets. For the period September 30, 1992
(commencement of operations for all Portfolios except Small
Company Growth Portfolio which commenced operations on October 1,
1992) through August 31, 1993, and for the fiscal years ended
August 31, 1994 and 1995, the administration fees payable to the
former administrator, The Dreyfus Corporation, for each Portfolio,
the reductions attributable to a voluntary fee waiver which was in
effect until August 31, 1995, and the net fees paid were as
follows:
Fee Paid For Period Ended August 31, 1993
Administration Reduction Net
Portfolio Fee Payable in Fee Fee Paid
Large Company Growth Portfolio $14,972 $14,972 -0-
Large Company Value Portfolio $11,958 $11,958 -0-
Small Company Growth Portfolio $12,617 $12,617 -0-
Small Company Value Portfolio $13,772 $13,772 -0-
Fee Paid For Fiscal Year Ended August 31, 1994
Administration Reduction Net
Portfolio Fee Payable in Fee Fee Paid
Large Company Growth Portfolio $16,275 $16,275 -0-
Large Company Value Portfolio $22,267 $22,267 -0-
Small Company Growth Portfolio $16,793 $16,793 -0-
Small Company Value Portfolio $41,838 $41,838 -0-
Fee Paid For Fiscal Year Ended August 31, 1995
Administration Reduction Net
Portfolio Fee Payable in Fee Fee Paid
Large Company Growth Portfolio $29,667 $29,667 -0-
Large Company Value Portfolio $31,669 $31,669 -0-
Small Company Growth Portfolio $31,260 $31,260 -0-
Small Company Value Portfolio $50,421 $50,421 -0-
Expenses and Expense Information. From time to time,
Wilshire or First Data may waive receipt of its fees and/or
voluntarily assume certain expenses of the Fund, which would have
the effect of lowering the overall expense ratio of the Fund and
increasing yield to investors at the time such amounts are waived
or assumed, as the case may be. The Fund will not pay Wilshire or
First Data for any amounts which may be waived, nor will the Fund
reimburse Wilshire or First Data for any amounts which may be
assumed. In addition to shareholder services fees which may be
paid by 440 Financial out of amounts which it receives under the
Fund's shareholder services plan, 440 Financial, Wilshire or First
Data may bear other expenses of distribution of the shares of the
Fund or of the provision of shareholder services to the Fund's
shareholders, including payments to securities dealers or other
financial intermediaries or service providers, out of its profits
and available resources other than the advisory and administration
fees paid by the Fund.
All expenses incurred in the operation of the Fund are borne
by the Fund, except to the extent specifically assumed by 440
Financial, Wilshire or First Data. The expenses borne by the
Fund include: organizational costs, taxes, interest, brokerage
fees and commissions, if any, fees of Directors who are not
officers, directors, employees or holders of 5% or more of the
outstanding voting securities of 440 Financial, Wilshire or
First Data or any of their affiliates, Securities and
Exchange Commission fees, state Blue Sky qualification fees,
advisory and administration fees, shareholder services plan
fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association
fees, outside auditing and legal expenses, costs of maintaining
the Fund's existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation,
telephone and personnel expenses), costs of shareholders' reports
and meetings, costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and
for distribution to existing shareholders, and any extraordinary
expenses. Expenses attributable to a particular class of
shares or Portfolio are charged against the assets of that class
or Portfolio; accordingly, shareholder services plan fees payable
with respect to a particular class of shares are charged only to
that class of shares. Other expenses of the Fund are allocated
between the Portfolios on the basis determined by the Board
of Directors, including, but not limited to, proportionately in
relation to the net assets of each Portfolio.
As to each Portfolio, Wilshire and First Data have
agreed that if in any fiscal year the aggregate annual
expenses of the Portfolio, exclusive of taxes, brokerage,
interest on borrowings, Rule 12b-1 plan expenses and
extraordinary expenses, but including the advisory and
administration fees, exceed the expense limitation of any state in
which shares of the Portfolio are qualified for offer and sale,
the Fund may deduct from the payments to be made to each of
Wilshire and First Data, or Wilshire and First Data will bear such
excess expense in proportion to their investment advisory fee and
administration fee otherwise payable, to the extent required by
state law. Such deduction or payment, if any, will be estimated
daily, and reconciled and effected or paid, as the case may be, on
a monthly basis.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholder Services Plan."
The Fund has adopted a Shareholder Services Plan (the
"Plan") with respect to the Investment Class Shares of each
Portfolio pursuant to Section 12b of the 1940 Act and Rule 12b-1
thereunder. The Fund reimburses 440 Financial, which acts as the
distributor of the Investment Class Shares of each Portfolio, at
an annual rate of up to 0.25 of 1% of the value of the average
daily net assets attributable to the Shares of each Portfolio for
certain shareholder services provided by securities dealers or
other financial intermediaries. The shareholder services provided
may include personal services to holders of Investment Class
Shares and/or the maintenance of shareholder accounts. The amount
payable under the Shareholder Services Plan is charged to, and
therefore reduces, income allocated to the Investment Class
Shares.
The Plan has been, and any material amendments to the Plan
must be, approved (i) by votes of the majority of both (a) the
Directors of the Fund, and (b) those Directors of the Fund who are
not interested persons of the Fund, and have no direct or indirect
financial interest in the operation of the Plan or any agreements
related to it (the "Independent Directors"), in each case cast in
person at a meeting called for the purpose of voting on the Plan,
and (ii) and by vote of a majority of the outstanding Investment
Class shares. The Plan shall continue in effect for a period of
more than one year after May 31, 1996 only so long as such
continuance is specifically approved at least annually by votes of
the majority (or whatever other percentage may, from time to time,
be required by Section 12(b) of the Investment Company Act of 1940
or the rules and regulations thereunder) of both (a) the Directors
of the Fund, and (b) the Independent Directors of the Fund, cast
in person at a meeting called for the purpose of voting on the
Plan or such agreement.
Under the Plan, 440 Financial is required to provide to the
Directors of the Fund for their review, at least quarterly, a
written report of the amounts so expended and the purposes for
which such expenditures were made. The Plan may be terminated at
any time by vote of a majority of the Independent Directors, or by
vote of a majority of the outstanding Investment Class shares.
The Plan may not be amended to increase materially the amount of
expenses permitted without approval by a vote of at least a
majority of the outstanding Investment Class shares.
The services provided may include personal services relating
to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information,
and services related to the maintenance of shareholder accounts.
For the fiscal year ended August 31, 1995, the following
amounts
were charged to each Portfolio under the Fund's former
Shareholder Services Plan:
Large Company Growth Portfolio $34,200
Large Company Value Portfolio $39,503
Small Company Growth Portfolio $38,741
Small Company Value Portfolio $62,831
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"How to Buy Fund Shares."
The Distributor. 440 Financial, a subsidiary of First
Data, c/o First Data, 53 State Street,
Boston, Massachusetts 02109, serves as the Fund's distributor
pursuant to an agreement which is renewable annually.
Transactions Through Securities Dealers. Fund shares may be
purchased and redeemed through securities dealers which may charge
a nominal transaction fee for such services. Some dealers will
place the Fund's shares in an account with their firm. Dealers
also may require that the customer invest more than the $1,000
minimum investment; the customer not take physical delivery of
share certificates; the customer not request redemption checks to
be issued in the customer's name; fractional shares not be
purchased; or other conditions.
There is no sales or service charge to individual investors
by the Fund or by 440 Financial, although investment dealers,
banks and other institutions may make reasonable charges to
investors for their services. The services provided and the
applicable fees are established by each dealer or other
institution acting independently of the Fund. The Fund has been
given to understand that these fees may be charged for customer
services including, but not limited to, same-day investment of
client funds; same-day access to client funds; advice to customers
about the status of their accounts, yield currently being paid or
income earned to date; provision of periodic account statements
showing security and money market positions; other services
available from the dealer, bank or other institution; and
assistance with inquiries related to their investment. Any such
fees will be deducted from the investor's account monthly and on
smaller accounts could constitute a substantial portion of the
distribution. Small, inactive, long-term accounts involving
monthly service charges may not be in the best interest of
investors. Investors should be aware that they may purchase
shares of the Fund directly from the Fund through 440
Financial without imposition of any maintenance or service
charges, other than those already described herein. In some
states, banks or other financial institutions effecting
transactions in Fund shares may be required to register as dealers
pursuant to state law.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"How to Redeem Fund Shares."
Wire Redemption Privilege. By using this Privilege, the
investor authorizes First Data (the "Transfer Agent") to
act on wire or telephone redemption instructions from any person
representing himself or herself to be the investor, and reasonably
believed by the Transfer Agent to be genuine. Ordinarily, the
Fund will initiate payment for shares redeemed pursuant to this
Privilege on the next business day after receipt if the Transfer
Agent receives the redemption request in proper form. Redemption
proceeds ($1,000 minimum) will be transferred by Federal Reserve
wire only to the commercial bank account specified by the investor
on the Account Application or Shareholder Services Form, or to a
correspondent bank if the investor's bank is not a member of the
Federal Reserve System. Fees ordinarily are imposed by such bank
and usually are borne by the investor. Immediate notification by
the correspondent bank to the investor's bank is necessary to
avoid a delay in crediting the funds to the investor's bank
account.
To change the commercial bank or account designated to
receive wire redemption proceeds, a written request must be sent
to the Transfer Agent. This request must be signed by each
shareholder, with each signature guaranteed as described below
under "Stock Certificates; Signatures."
Stock Certificates; Signatures. Any certificates
representing Fund shares to be redeemed must be submitted with the
redemption request. Written redemption requests must be signed by
each shareholder, including each holder of a joint account, and
each signature must be guaranteed. Signatures on endorsed
certificates submitted for redemption also must be guaranteed.
The Transfer Agent has adopted standards and procedures pursuant
to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions,
national securities exchanges, registered securities associations,
clearing agencies and savings associations, as well as from
participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program
("STAMP") and the Stock Exchanges Medallion Program. Guarantees
must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The
Transfer Agent may request additional documentation from
corporations, executors, administrators, trustees or guardians,
and may accept other suitable verification arrangements from
foreign investors, such as consular verification. For more
information with respect to signature-guarantees, please call
the telephone number listed on the cover.
Redemption Commitment. The Fund has committed itself to pay
in cash all redemption requests by any shareholder of record,
limited in amount during any 90-day period to the lesser of
$250,000 or 1% of the value of the Portfolio's net assets at the
beginning of such period. Such commitment is irrevocable without
the prior approval of the Securities and Exchange Commission. In
the case of requests for redemption in excess of such amount, the
Board of Directors reserves the right to make payments in whole or
in part in securities or other assets in case of an emergency or
any time a cash distribution would impair the liquidity of the
Fund to the detriment of the existing shareholders. In such
event, the securities would be readily marketable, to the extent
available, and would be valued in the same manner as the
Portfolio's investment securities are valued. If the recipient
sold such securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be
suspended or the date of payment postponed (a) during any period
when the New York Stock Exchange is closed (other than customary
weekend and holiday closings), (b) when trading in the markets the
Fund ordinarily utilizes is restricted, or when an emergency
exists as determined by the Securities and Exchange Commission so
that disposal of the Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such
other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholder Services."
Portfolio Exchanges. You may purchase, in exchange for
shares of a Portfolio, shares of the same class of one of the
other Portfolios offered by the Fund, to the extent such shares
are offered for sale in your state of residence. Shares of
other Portfolios purchased by exchange will be purchased on the
basis of relative net asset value per share.
To request an exchange, the investor must give exchange
instructions to the Transfer Agent in writing or by telephone.
The ability to issue exchange instructions by telephone is given
to all Fund shareholders automatically, unless the investor checks
the applicable "No" box on the Account Application, indicating
that the investor specifically refuses this privilege. By using
the Telephone Exchange Privilege, the investor authorizes the
Transfer Agent to act on telephonic instructions from any person
representing himself or herself to be the investor and reasonably
believed by the Transfer Agent to be genuine. Telephone exchanges
may be subject to limitations as to the amount involved or the
number of telephone exchanges permitted. Shares issued in
certificate form are not eligible for telephone exchange.
To establish a personal retirement plan by exchange, shares
of the Portfolio being exchanged must have a value of at least
the minimum initial investment required for the Portfolio into
which the exchange is being made. For Keogh Plans, IRAs and IRAs
set up under a Simplified Employee Pension Plan ("SEP-IRAs") with
only one participant, the minimum initial investment is $750. To
exchange shares held in corporate plans, 403(b)(7) Plans and
SEP-IRAs with more than one participant, the minimum initial
investment is $100 if the plan has at least $2,500 invested among
the portfolios in Wilshire Target Funds, Inc. To exchange
shares held in personal retirement plans, the shares exchanged
must have a current value of at least $100.
The Portfolio Exchanges service is available to shareholders
resident in any state in which shares of the Portfolio being
acquired may legally be sold. Shares may be exchanged only
between accounts having identical names and other identifying
designations.
The Fund reserves the right to reject any exchange request
in whole or in part. The Portfolio Exchanges service may
be modified or terminated at any time upon notice to shareholders.
Corporate Pension/Profit-Sharing and Personal Retirement
Plans. The Fund makes available to corporations a variety of
prototype pension and profit-sharing plans including a 401(k)
Salary Reduction Plan. In addition, the Fund makes available
Keogh Plans, IRAs, including SEP-IRAs and IRA "Rollover Accounts,"
and 403(b)(7) Plans. Plan support services also are available.
Investors can obtain details on the various plans by calling the
following toll-free number: 1-888-200-6796.
Investors who wish to purchase a Portfolio's shares in
conjunction with a Keogh Plan, a 403(b)(7) Plan or an IRA,
including an SEP-IRA, may request from the Transfer Agent
forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7)
Plans or IRAs may charge a fee, payment of which could require the
liquidation of shares. All fees charged are described in the
appropriate form.
Shares may be purchased in connection with these plans only
by direct remittance to the entity acting as custodian. Purchases
for these plans may not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary
Reduction Plans, 403(b)(7) Plans and SEP-IRAs with more than one
participant, is $2,500 with no minimum or subsequent purchases.
The minimum initial investment for Keogh Plans, IRAs,
SEP-IRAs and 403(b)(7) Plans with only one participant, is
normally $750, with no minimum on subsequent purchases.
Individuals who open an IRA may also open a non-working spousal
IRA with a minimum investment of $250.
The investor should read the prototype retirement plan and
the appropriate form of custodial agreement for further details on
eligibility, service fees and tax implications, and should consult
a tax adviser.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"How to Buy Fund Shares."
Valuation of Portfolio Securities. Each Portfolio's
investment securities are valued at the last sale price on the
securities exchange or national securities market on which such
securities primarily are traded. Securities not listed on an
exchange or national securities market, or securities in which
there were no transactions, are valued at the average of the most
recent bid and asked prices. Bid price is used when no asked
price is available. Short-term investments are carried at
amortized cost, which approximates value. Any securities or other
assets for which recent market quotations are not readily
available are valued at fair value as determined in good faith by
the Board of Directors. Expenses and fees, including the advisory
and administration fees, are accrued daily and taken into account
for the purpose of determining the net asset value of each
Portfolio's shares.
New York Stock Exchange Closings. The holidays (as
observed) on which the New York Stock Exchange is closed currently
are: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTION AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Dividends, Distributions and Taxes."
Management of the Fund believes that each Portfolio
qualified for the fiscal year ended August 31, 1995, as a
"regulated investment company" under the Internal Revenue Code of
1986, as amended (the "Code"). Each Portfolio intends to continue
to so qualify. Qualification as a regulated investment
company relieves the Portfolio from any liability for Federal
income taxes to the extent its earnings are distributed in
accordance with the applicable provisions of the Code. The term
"regulated investment company" does not imply the supervision of
management or investment practices or policies by any government
agency.
Depending on the composition of a Portfolio's income, all or
a portion of the dividends paid by such Portfolio from net
investment income may qualify for the dividends received deduction
allowable to certain U.S. corporate shareholders ("dividends
received deduction"). In general, dividend income of a Portfolio
distributed to qualifying corporate shareholders will be eligible
for the dividends received deduction only to the extent that (i)
such Portfolio's income consists of dividends paid by U.S.
corporations and (ii) the Portfolio would have been entitled to
the dividends received deduction with respect to such dividend
income if the Portfolio were not a regulated investment company.
The dividends received deduction for qualifying corporate
shareholders may be reduced if the shares of the
Portfolio held by them with respect to which dividends are
received are treated as debt-financed or deemed to have been held
for less than 46 days. In addition, the Code provides other
limitations with respect to the ability of a qualifying corporate
shareholder to claim the dividends received deduction in
connection with holding a Portfolio's shares.
Any dividend or distribution paid shortly after an
investor's purchase may have the effect of reducing the aggregate
net asset value of his shares below the cost of his investment.
Such a dividend or distribution would be a return on investment in
an economic sense, although taxable as stated in the Fund's
Prospectus. In addition, the Code provides that if a shareholder
holds shares of the Fund for six months or less and has received a
capital gain distribution with respect to such shares, any loss
incurred on the sale of such shares will be treated as a long-term
capital loss to the extent of the capital gain distribution
received.
If a shareholder holds shares of a Portfolio while holding a
short position in a regulated futures contract or an option in
such regulated futures contract that substantially diminishes
the shareholders risk of loss in its Portfolio shares (an
"offsetting position"), recently proposed Internal Revenue Service
regulations clarify that (i) any losses on the disposition of
Portfolio shares will be required to be deferred to the extent of
any unrealized appreciation in the short position and (ii) such
holding will limit the shareholder's ability to claim the
corporate dividends received deduction in respect of Portfolio
dividends.
Ordinarily, gains and losses realized from portfolio
transactions will be treated as capital gain or loss. All or a
portion of the gain realized from engaging in "conversion
transactions" may be treated as ordinary income under Section
1258. "Conversion transactions" are defined to include certain
forward, futures, option and "straddle" transactions, transactions
marketed or sold to produce capital gains, or transactions
described in Treasury regulations to be issued in the future.
Under Section 1256 of the Code, gain or loss realized by a
Portfolio from certain financial futures transactions will be
treated as 60% long-term capital gain or loss and 40% short-term
capital gain or loss. Gain or loss will arise upon the exercise
or lapse of such futures as well as from closing transactions. In
addition, any such futures remaining unexercised at the end of the
Portfolio's taxable year will be treated as sold for their then
fair market value, resulting in additional gain or loss to such
Portfolio characterized in the manner described above.
Offsetting positions held by a Portfolio involving financial
futures may constitute "straddles." Straddles are defined to
include "offsetting positions" in actively traded personal
property. The tax treatment of straddles is governed by Sections
1092 and 1258 of the Code, which, in certain circumstances,
overrides or modifies the provisions of Section 1256. As such,
all or a portion of any short- or long-term capital gain from
certain "straddle" and/or conversion transactions may be
recharacterized to ordinary income.
If a Portfolio were treated as entering into straddles by
reason of its futures transactions, such straddles could be
characterized as "mixed straddles" if the futures transactions
comprising such straddles were governed by Section 1256 of the
Code. The Portfolio may make one or more elections with respect
to "mixed straddles." Depending upon which election is made, if
any, the results to the Portfolio may differ. If no election is
made, to the extent the straddle rules apply to positions
established by the Portfolio, losses realized by such Portfolio
will be deferred to the extent of unrealized gain in any
offsetting positions. Moreover, as a result of the straddle
rules, short-term capital loss on straddle positions may be
recharacterized as long-term capital loss, and long-term capital
gain on straddle positions may be recharacterized as
short-term capital gain, and as a result of the conversion
transaction rules, long-term capital gain may be recharacterized
as ordinary income.
Investment by a Portfolio in securities issued or acquired
at a discount, or providing for deferred interest or for payment
of interest in the form of additional obligations could under
special tax rules affect the amount, timing and character of
distributions to shareholders by causing such Portfolio to
recognize income prior to the receipt of cash payments. For
example, the Portfolio could be required to accrue a portion of
the discount (or deemed discount) at which the securities were
issued each year and to distribute such income in order to
maintain its qualification as a regulated investment company. In
such case, such Portfolio may have to dispose of securities which
it might otherwise have continued to hold in order to generate
cash to satisfy these distribution requirements.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Performance Information."
The Large Company Growth Portfolio's average annual total
return for the 1 and 2.921 year periods ended August 31, 1995 was
23.67% and 10.75%, respectively. The Large Company Value
Portfolio's average annual total return for the 1 and 2.921 year
periods ended August 31, 1995 was 18.97% and 12.48%, respectively.
The Small Company Growth Portfolio's average annual total return
for the 1 and 2.918 year periods ended August 31, 1995 was 23.04%
and 19.03%, respectively. The Small Company Value Portfolio's
average annual total return for the 1 and 2.921 year periods ended
August 31, 1995 was 11.84% and 10.51%, respectively. Average
annual total return is calculated by determining the ending
redeemable value of an investment purchased at net asset value per
share with a hypothetical $1,000 payment made at the beginning of
the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment,
taking the "nth" root of the quotient (where "n" is the
number of years in the period) and subtracting 1 from the result.
The total return for the period September 30, 1992(1)
(commencement of operations), to August 31, 1995, for each Portfolio
was as follows:
Large Company Growth Portfolio 34.74%
Large Company Value Portfolio 40.98%
Small Company Growth Portfolio 66.33%
Small Company Value Portfolio 33.88%
_____________________
(1) Small Company Growth Portfolio commenced operations on October
1, 1992.
Total return is calculated by subtracting the amount of the
Portfolio's net asset value per share at the beginning of a
stated period from the net asset value per share at the end
of the period (after giving effect to the
reinvestment of dividends and distributions during the period),
and dividing the result by the net asset value per share at the
beginning of the period.
From time to time advertising materials for the Fund may
refer to Morningstar ratings and related analysis supporting such
ratings.
PORTFOLIO TRANSACTIONS
Wilshire supervises the placement of orders on behalf of
each Portfolio for the purchase or sale of portfolio securities.
Allocation of brokerage transactions, including their frequency,
is made in the best judgment of Wilshire and in a manner deemed
fair and reasonable to shareholders. The primary consideration is
prompt execution of orders at the most favorable net price.
Subject to this consideration, the brokers selected may include
those that supplement Wilshire's research facilities with
statistical data, investment information, economic facts and
opinions. Information so received is in addition to and not in
lieu of services required to be performed by Wilshire and its
fees are not reduced as a consequence of the receipt of such
supplemental information. Such information may be useful to
Wilshire in serving both the Fund and other clients which it
advises and, conversely, supplemental information obtained by the
placement of business of other clients may be useful to Wilshire
in carrying out its obligations to the Fund. Brokers also are
selected because of their ability to handle special executions
such as are involved in large block trades or broad distributions,
provided the primary consideration is met. Large block trades, in
certain cases, may result from two or more clients Wilshire might
advise being engaged simultaneously in the purchase or sale of the
same security. When transactions are executed in the
over-the-counter market, the Fund will deal with the primary
market makers unless a more favorable price or execution otherwise
is obtainable.
Portfolio turnover may vary from year to year, as well as
within a year. Under normal market conditions, each Portfolio's
turnover rate generally will not exceed 60%. High turnover rates
are likely to result in comparatively greater brokerage expenses.
The overall reasonableness of brokerage commissions paid is
evaluated by the Adviser based upon its knowledge of available
information as to the general level of commissions paid by other
institutional investors for comparable services.
For its portfolio securities transactions for the period
September 30, 1992 (commencement of operations for all Portfolios
except Small Company Growth Portfolio which commenced operations
on October 1, 1992), through August 31, 1993, and for the fiscal
years ended August 31, 1994 and 1995, the Fund paid total
brokerage commissions as follows:
Period Ended Year Ended Year Ended
Portfolio August 31, 1993 August 31, 1994 August 31, 1995
Large Company Growth Portfolio $ 8,191 $ 2,199 $13,487
Large Company Value Portfolio $ 9,779 $10,349 $23,243
Small Company Growth Portfolio $21,107 $12,919 $42,766
Small Company Value Portfolio $17,687 $37,422 $61,819
No brokerage commissions were paid to the former distributor,
The Dreyfus Corporation. There were no spreads or concessions
on principal transactions for any such period.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"General Information."
Each share of a Portfolio has one vote and, when issued and
paid for in accordance with the terms of the offering, is fully
paid and non-assessable. Shares of each class of a Portfolio
have equal rights as to dividends and in liquidation. Shares
have no preemptive, subscription or conversion rights and are
freely transferable.
Rule 18f-2 under the 1940 Act provides that any matter
required to be submitted under the provisions of the 1940 Act or
applicable state law or otherwise to the holders of the
outstanding voting securities of an investment company, such as
the Fund, will not be deemed to have been effectively acted upon
unless approved by the holders of a majority of the outstanding
shares of each Portfolio affected by such matter. Rule
18f-2 further provides that a Portfolio shall be deemed to be
affected by a matter unless it is clear that the interests of each
Portfolio in the matter are identical or that the matter does not
affect any interest of such Portfolio. However, the Rule exempts
the selection of independent accountants and the election of
Directors from the separate voting requirements of the Rule.
Rule 18f-3 under the 1940 Act makes further provision for the
voting rights of each class of Shares, such as the Investment
Class shares, of an investment company which issues more than one
class of voting shares. In particular, Rule 18f-3 provides that
each class shall have exclusive voting rights on any matter
submitted to shareholders that relates solely to the class'
arrangement for services and expenses, and shall have separate
voting rights on any matter submitted to shareholders in which the
interests of one class differ from the interests of any other
class.
The Fund will send annual and semi-annual financial
statements to all its shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT ACCOUNTANTS
The Northern Trust Company, an Illinois trust company
located at 50 South LaSalle Street, Chicago, Illinois 60675, acts as
custodian of the Fund's investments. First Data Investor Services
Group, Inc., a subsidiary of First Data Corporation, P.O. Box
9671, Providence, Rhode Island 02940-9671, is the Fund's transfer
and dividend disbursing agent. Neither The Northern Trust Company
nor First Data has any part in determining the investment policies of
the Fund or which securities are to be purchased or sold by the
Fund.
Ropes & Gray, One International Place, Boston, Massachusetts
02110-2624, is counsel for the Fund.
Coopers & Lybrand L.L.P., 1301 Avenue of the Americas, New
York, New York 10019, independent accountants, have been selected
as auditors of the Fund.
FINANCIAL STATEMENTS
The Fund's audited financial statements for
the Portfolios contained in its annual report for the
fiscal year ended August 31, 1995, and the Fund's
financial statements for the Portfolios contained in its
semi-annual report for the fiscal period ended
February 29, 1996, are incorporated into this Statement of
Additional Information by reference in their entirety.
APPENDIX
Description of the highest commercial paper rating assigned
by Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc. ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Fitch Investors Service, L.P. ("Fitch") and Duff &
Phelps Credit Rating Co. ("Duff").
The rating A is the highest rating and is assigned by S&P to
issues that are regarded as having the greatest capacity for
timely payment. Issues in this category are delineated with the
number 1, 2 or 3 to indicate the relative degree of safety. Paper
rated A-1 indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess
overwhelming safety characteristics are denoted with a plus (+)
sign designation.
The rating Prime-1 (P-1) is the highest commercial paper
rating assigned by Moody's. Issuers of P-1 paper must have a
superior capacity for repayment of short-term promissory
obligations, and ordinarily will be evidenced by leading market
positions in well established industries, high rates of return on
funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad
margins in earnings coverage of fixed financial charges and high
internal cash generation, and well established access to a range
of financial markets and assured sources of alternate liquidity.
The rating F-1 is among the highest commercial paper ratings
assigned by Fitch, denoting very strong credit quality. Issues assigned
this rating reflect an assurance for timely payment only slightly
less than those issues rated F-1+.
The rating D-1 is the highest commercial paper rating
assigned by Duff. Paper rated D-1 is regarded as having very
high certainty of timely payment with excellent liquidity factors
which are supported by ample asset protection. Risk factors are
minor.
PROSPECTUS JUNE 3, 1996
WILSHIRE TARGET FUNDS, INC.
(Institutional Class Shares)
Wilshire Target Funds, Inc. (the "Fund") is an open-end
investment company, known as a mutual fund. This prospectus offers
Institutional Class Shares ("Shares") in each of four separate
diversified portfolios (each, a "Portfolio"): Large Company Growth
Portfolio, Large Company Value Portfolio, Small Company Growth
Portfolio and Small Company Value Portfolio. The goal of each
Portfolio is to provide the investment results of a portfolio of
publicly-traded common stocks in one of four sub-categories of
companies from the Wilshire 5000 Index which meet certain criteria
established by the Fund's Investment Adviser. See "Description of
the Fund-Investment Approach." No portfolio is an index fund.
Wilshire Associates Incorporated ("Wilshire") serves as the
Fund's investment adviser. First Data Investor Services Group,
Inc. ("First Data") serves as the Fund's administrator and transfer
agent. 440 Financial Distributors, Inc. ("440 Financial") serves as the
Fund's distributor.
This prospectus sets forth concisely information about the
Fund that you should know before investing. It should be read and
retained for future reference.
The Statement of Additional Information dated June 3, 1996,
which may be further revised from time to time, provides a further
discussion of certain areas in this prospectus and other matters
which may be of interest to some investors. It has been filed with
the Securities and Exchange Commission and is incorporated herein
by reference. For a free copy, write to the Fund at P.O. Box 9770,
Providence, RI 02940-9770, or call 1-888-200-6796.
Shares of the Fund are not deposits or obligations of, or
guaranteed or endorsed by, any financial institution, are not
insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other agency, and involve risk, including
the possible loss of principal amount invested.
TABLE OF CONTENTS Page
Fee Table 3
Condensed Financial Information 4
Description of the Fund 5
Management of the Fund 7
How to Buy Fund Shares 9
Shareholder Services 10
How to Redeem Fund Shares 11
Dividends, Distributions and Taxes 13
Performance Information 14
General Information 14
Appendix 16
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
[This Page Intentionally Left Blank]
Fee Table
Large Large Small Small
Company Company Company Company
Growth Value Growth Value
Portfolio Portfolio Portfolio Portfolio
Annual Fund Operating Expenses:
(as a percentage of average daily net assets)
Management Fees 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.67% 0.62% 0.76% 0.51%
Total Fund Operating
Expenses 0.92% 0.87% 1.01% 0.76%
Example:
You would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual
return and (2) redemption at the end of each
time period:
1 Year $ 9 $ 9 $ 10 $ 8
3 Years $ 29 $ 28 $ 32 $ 24
5 Years $ 51 $ 48 $ 56 $ 42
10 Years $113 $107 $124 $ 94
The amounts listed in the example should not be considered
as representative of past or future expenses and actual expenses
may be greater or less than those indicated. Moreover, while the
example assumes a 5% annual return, each portfolio's performance
will vary and may result in an actual return greater or less than
5%.
The purpose of the foregoing table is to assist you in
understanding the costs and expenses that the Fund and investors
will bear, the payment of which will reduce investors' annual
return. The information in the foregoing table reflects the
current fees payable under the Funds new advisory and
administration contracts, dated May 31, 1996; however,
the information does not reflect any fee waivers or expense
limitations that may be in effect. You
can purchase Shares without charge directly from 440 Financial;
you may be charged a nominal fee if you effect transactions in
Fund Shares through a securities dealer, bank or other financial
institution. See "Management of the Fund."
Condensed Financial Information
The information for the fiscal years ended August 31, 1993,
1994 and 1995 in the following table has been audited by Coopers &
Lybrand L.L.P., the Fund's independent accountants, whose report
thereon appears in the Statement of Additional Information. The
financial data in the following table for the six months ended
February 29, 1996 is unaudited. Further financial data and
related notes are included in the Statement of Additional
Information, which is available upon request.
Financial Highlights
Contained below is per share operating performance data for
an Investment Class share outstanding throughout the period, total
investment return, ratios to average net assets and other
supplemental data for each Portfolio for each period indicated.
(No Institutional Class shares were outstanding prior to May 31,
1996.) This information has been derived from each Portfolio's
financial statements.
<TABLE>
<CAPTION>
Large Company Large Company
Growth Portfolio Value Portfolio
Year Ended (Unaudited) Year Ended (Unaudited)
August 31, Six Months August 31, Six Months
Ended Ended
Feb. 29, Feb. 29,
<S> <C> <C> <C> <C>
<C> <C> <C> <C>
1993(1) 1994 1995 1996
1993(1) 1994 1995 1996
PER SHARE DATA:
Net asset value, beginning
of period $12.50 $12.74 $13.31 $16.34
$12.50 $15.18 $13.99 $16.02
Investment Operations:
Investment income-net .21 .15 .10 .04
.54 .36 .34 .23
Net realized and unrealized
gain (loss) on investments .10 .65 3.03 2.53
2.30 (.90) 2.19
2.40
Total from Investment
Operations .31 .80 3.13 2.57
2.84 (.54) 2.53 2.63
Distributions:
Dividends from investment
income-net (.07) (.23) (.10) (.11)
(.16) (.36) (.40) (.47)
Dividends in excess of
investment income-net -- -- -- (.01)
-- -- -- --
Dividends from net realized
gain on investments -- -- -- (.39)
-- (.29) (.10) (.51)
Total Distributions (.07) (.23) (.10) (.51)
(.16) (.65) (.50) (.98)
Net asset value,
end of period $12.74 $13.31 $16.34 $18.40
$15.18 $13.99 $16.02 $17.67
======= ====== ====== ======
======= ====== ====== ======
TOTAL INVESTMENT
RETURN 2.46%(2) 6.34% 23.67% 15.91%(2)
22.93%(2) (3.61%) 18.97% 16.66%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets -- .68% .84% .40%(2)
-- .58% .81% .39%(2)
Ratio of net investment
income to average net assets 1.66%(2) 1.18% .94% .27%(2)
4.27%(2) 4.02% 3.77% 1.68%(2)
Decrease reflected in above
expense ratios due to undertakings
by Wilshire and Dreyfus 1.14%(2) .71% .21% .01%(2)
1.32%(2) .60% .21% .01%(2)
Portfolio Turnover Rate 11.92%(2) 21.53% 30.09% 12.66%(2)
21.75%(2) 47.16% 58.04% 20.61%(2)
Average commission
rate paid -- -- -- $.0360
-- -- -- $.0288
Net Assets, end of year
(000's omitted) $8,061 $8,424 $21,348 $28,960
$8,116 $12,158 $22,926 $41,626
- -----------------
</TABLE>
(1)From September 30, 1992 (commencement of operations) to August
31, 1993.
(2)Not annualized.
<TABLE>
<CAPTION>
Small Company Small Company
Growth Portfolio Value Portfolio
Year Ended (Unaudited) Year Ended (Unaudited)
August 31, Six Months August 31, Six Months
Ended Ended
Feb. 29, Feb. 29,
<S> <C> <C> <C> <C>
<C> <C> <C> <C>
1993(1) 1994 1995 1996
1993(2) 1994 1995 1996
PER SHARE DATA:
Net asset value, beginning
of period $12.50 $16.03 $15.39 $18.55
$12.50 $14.81 $14.32 $15.41
Investment Operations:
Investment income-net .08 (.04) (.07) (.04)
.35 .45 .55 .19
Net realized and unrealized
gain (loss) on investments 3.48 .90 3.54 1.61
2.10 (.45) 1.06 1.08
Total from Investment
Operations 3.56 .86 3.47 1.57
2.45 -- 1.61 1.27
Distributions:
Dividends from investment
income-net (.03) -- -- --
(.14) (.33) (.45) (.56)
Dividends in excess of
investment income-net -- (.07) -- --
-- -- -- --
Dividends from net realized
gain on investments -- (1.43) (.31) (2.86)
-- (.16) (.07) (.44)
Total Distributions (.03) (1.50) (.31) (2.86)
(.14) (.49) (.52) (1.00)
Net asset value, end of
period $16.03 $15.39 $18.55 $17.26
$14.81 $14.32 $15.41 $15.68
======= ====== ====== ======
======= ====== ====== ======
TOTAL INVESTMENT
RETURN 28.50%(3) 5.20% 23.04% 9.27%(3)
19.72%(3) (0.01%) 11.84% 8.36%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets -- .74% .95% .47%(3)
-- .50% .69% .40%(3)
Ratio of net investment
income (loss)to average
net assets .53%(3) (.40%) (.54%) (.32%)(3)
3.65%(3) 3.64% 4.12% 1.64%(3)
Decrease reflected in above expense ratios due to undertakings
by Wilshire and Dreyfus 1.40%(3) .73% .21% .02%(3)
1.32%(3) .56% .22% .01%(3)
Portfolio Turnover Rate 55.26%(3) 46.41% 110.98% 39.99%(3)
26.87%(3) 48.59% 86.17% 27.56%(3)
Average commission
rate paid -- -- -- $.0251
-- -- -- $.0285
Net Assets, end of year
(000's omitted) $7,527 $11,188 $21,882 $23,391
$15,155 $23,438 $25,978 $38,022
- -----------------
</TABLE>
(1)From October 1, 1992 (commencement of operations) to August 31,
1993.
(2)From September 30, 1992 (commencement of operations) to August
31, 1993.
(3)Not annualized.
Further information about the prior performance of each
Portfolio's Investment Class shares is contained in the Fund's
annual and semi-annual reports, which may be obtained without
charge by writing to the address or calling the number set forth
on the cover page of this Prospectus.
Description of the Fund
Investment Objective - The goal of each Portfolio is to provide
the investment results of a portfolio of publicly-traded common
stocks in one of four sub-categories of companies from the
Wilshire 5000 Index which meet certain criteria established by
Wilshire as described herein. Each Portfolio's investment
objective cannot be changed without approval by the holders of a
majority (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of such Portfolio's outstanding voting
shares. There can be no assurance that a Portfolio's investment
objective will be achieved.
Investment Approach - Wilshire identifies from the Wilshire 5000
Index, an index consisting of all publicly-traded common stocks in
the United States, the stocks of the 2,500 companies with the
largest market capitalizations (ranging between $95 billion and
$155 million). It then divides that universe of stocks, first,
into those of the 750 companies with the largest capitalizations
(ranging between $95 billion and $1.2 billion), which constitute
approximately 90% of the total market value of the stocks included
in the Wilshire 5000 Index, and, second, into those of the 1,750
next largest companies based on capitalization (ranging currently
between $1.2 billion and $155 million), which constitute
approximately 10% of the total market value of the stocks included
in the Wilshire 5000 Index (the stocks of the remaining 2,500
companies constitute less than 2% of the total market value of the
stocks included in the Wilshire 5000 Index). From these large and
small capitalization universes, Wilshire selects the stocks of
those companies it believes to possess the characteristics of
growth stocks and of value stocks, based on criteria discussed
below. In this manner, Wilshire identifies the four potential
universes of companies, the stocks of which it may purchase for
the Portfolios. Wilshire reviews periodically these selections and
updates each potential universe of companies. The number of
securities eligible for investment by a Portfolio at any time will
vary, but is expected to range between 150 to 550 stocks.
To determine whether a company's stock falls within the
growth or value classification, Wilshire analyzes each company
based on fundamental factors such as price to book value ratios,
price to earnings ratios, earnings growth, dividend payout ratios,
return on equity, and the company's beta (a measure of stock price
volatility relative to the market generally). In general, Wilshire
believes that companies with relatively low price to book ratios,
low price to earnings ratios and higher than average dividend
payments in relation to price should be classified as value
companies. Alternatively, companies which have above average
earnings or sales growth and retention of earnings and command
higher price to earnings ratios fit the more classic growth
description.
By dividing companies into these four sub-categories,
Wilshire attempts to offer potential investors market exposure to
these types of companies. As described under "Investment
Considerations and Risks" below, you should purchase a Portfolio's
Shares only as a supplement to an overall investment program. To
provide varying degrees of market exposure to these types of
securities, various combinations of each Portfolio's Shares might
be purchased.
Management Policies - Large Company Growth Portfolio invests
substantially all of its assets in equity securities of issuers
within the universe of companies identified by Wilshire as large
capitalization, growth companies.
Large Company Value Portfolio invests substantially all
of its assets in equity securities of issuers within the universe
of companies identified by Wilshire as large capitalization, value
companies.
Small Company Growth Portfolio invests substantially all
of its assets in equity securities of issuers within the universe
of companies identified by Wilshire as small capitalization,
growth companies.
Small Company Value Portfolio invests substantially all
of its assets in equity securities of issuers within the universe
of companies identified by Wilshire as small capitalization, value
companies.
Each Portfolio attempts to remain fully invested in equity
securities of companies which comprise its relative universe. When
a Portfolio has cash pending investment or needs to meet potential
redemptions, it may invest in money market instruments consisting
of U.S. Government securities, certificates of deposit, time
deposits, bankers' acceptances, short-term investment grade
corporate bonds and other short-term debt instruments, and
repurchase agreements. Under normal circumstances, the Fund
anticipates that not more than 5% of the value of a Portfolio's
total assets will be invested in any one category of such
instruments, and that not more than 20% of the value of a
Portfolio's total assets will be invested in all money market
instruments. No Portfolio intends to invest in money market
instruments or any other securities for defensive purposes. See
the Statement of Additional Information for a description of these
instruments. Each Portfolio may purchase stock index futures in
anticipation of taking a market position when, in Wilshire's
opinion, available cash balances do not permit an economically
efficient trade in the cash market. Each Portfolio may sell stock
index futures to terminate existing positions it may have as a
result of its purchase of stock index futures. To the extent the
Fund, on behalf of a Portfolio, purchases or sells futures
contracts, the Fund currently intends to use the New York Stock
Exchange Composite Index, Value Line Composite Index or Standard &
Poor's 500 Composite Stock Price Index. The performance of the
futures should not be expected to correlate identically with that
of the particular index. In addition, each Portfolio may lend its
portfolio securities. See also "Investment Considerations and
Risks" below and "Investment Objective and Management Policies" in
the Statement of Additional Information.
Investment Considerations and Risks
General - Each Portfolio's net asset value is not fixed and should
be expected to fluctuate. You should consider a Portfolio as a
supplement to an overall investment program and should invest only
if you are willing to undertake the risks involved. See
"Investment Objective and Policies - Management Policies" in the
Statement of Additional Information for a further discussion of
certain risks.
Equity securities fluctuate in value, often based on factors
unrelated to the value of the issuer of the securities, and such
fluctuations can be pronounced. Changes in the value of a
Portfolio's investment securities will result in changes in the
value of such Portfolio's Shares and thus the Portfolio's total
return to investors. Moreover, because no Portfolio will adopt a
temporary defensive position in response to market factors, and
thus will remain almost fully invested at all times, the net asset
value of one or more Portfolios could be adversely affected by
adverse changes, real or anticipated, in companies that are
generally characterized in the same manner as the companies the
securities of which are held by the relevant Portfolio so that,
for example, if large capitalization growth stocks fall out of
favor with investors widely, irrespective of fundamentals, the net
asset value of the Large Company Growth Portfolio should be
expected to be adversely affected. Similar risks exist for the
other Portfolios.
Foreign Securities - Since the stocks of some foreign issuers are
included in the Wilshire 5000 Index, each Portfolio's investments
may include securities of such foreign issuers which may subject
such Portfolio to additional investment risks with respect to
those securities that are different in some respects from those
incurred by a fund which invests only in securities of domestic
issuers. Such risks include future political and economic
developments, the possible imposition of withholding taxes on
income payable on the securities, the possible establishment of
exchange controls or the adoption of other foreign governmental
restrictions which might adversely affect an investment in these
securities, and the possible seizure or nationalization of foreign
deposits.
Use of Derivatives - Each Portfolio may invest, to a limited
extent, in derivatives ("Derivatives"). These are financial
instruments which derive their performance, at least in part, from
the performance of an underlying asset, index or interest rate.
The Derivatives the Portfolios may use include stock index
futures. While Derivatives can be used effectively in furtherance
of a Portfolio's investment objective, under certain market
conditions, they can increase the volatility of the Portfolio's
net asset value, can decrease the liquidity of the Portfolio's
investments and make more difficult the accurate pricing of the
Portfolio's investments. See "Appendix - Investment Techniques -
Use of Derivatives" below and "Investment Objectives and
Management Policies - Management Policies - Derivatives" in the
Statement of Additional Information.
Simultaneous Investments - Investment decisions for each Portfolio
are made independently from those of other investment companies
and accounts advised by Wilshire. However, if such other
investment companies or accounts are prepared to invest in, or
desire to dispose of, securities of the type in which a Portfolio
invests at the same time as such Portfolio, available investments
or opportunities for sales will be allocated equitably to each. In
some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by the Portfolio or the price
paid or received by the Portfolio.
Management of the Fund
Investment Adviser - Wilshire, located at 1299 Ocean Avenue, Santa
Monica, California 90401-1085, was formed in 1972 and serves as
the Fund's investment adviser. As of February 29, 1996, Wilshire
managed approximately $7 billion in assets. Under the terms of an
Investment Advisory Agreement with the Fund, Wilshire, subject to
the overall authority of the Fund's Board of Directors in
accordance with Maryland law, manages the investment of the assets
of each Portfolio. The Fund's primary portfolio manager is Thomas
D. Stevens, the President and Chairman of the Board of Directors
of the Fund and a Senior Vice President of Wilshire. He has held
the position of portfolio manager of the Fund since the Fund's
inception and has been employed by Wilshire since October 6, 1980.
The Fund's other portfolio manager is identified in the Statement
of Additional Information. Wilshire also provides research
services for the Fund through a professional staff of portfolio
managers and securities analysts. Wilshire is controlled by its
President, Mr. Dennis Tito, who owned 70% of its outstanding
voting stock as of February 29, 1996.
Pursuant to the terms of the Investment Advisory Agreement,
dated May 31, 1996 (the "Advisory Agreement"), the Fund has agreed
to pay Wilshire a monthly fee at the annual rate of .25 of 1% of
the value of each Portfolio's average daily net assets. However,
the Advisory Agreement also includes a fifteen month expense
limitation provision. For the three month period June 1, 1996
through August 31, 1996 and the fiscal year September 1, 1996
through August 31, 1997, Wilshire has agreed that, if the
aggregate operating expenses of any Portfolio (exclusive of
interest, taxes, brokerage, 12b-1 plan fees (if applicable) and extraordinary
expenses) for such period exceed the annual rate specified in the
following table for such Portfolio, the investment advisory fee
otherwise payable for that period by the Portfolio under the
Advisory Agreement will be reduced by the amount of the excess,
but not below an annual fee rate of .10 of 1% of such Portfolio's
average daily net assets.
Fund Annual Rate (%)
Large Company Growth Portfolio .80
Large Company Value Portfolio .77
Small Company Growth Portfolio .91
Small Company Value Portfolio .66
For the fiscal year ended August 31, 1995, the Fund paid Wilshire
an investment advisory fee at the effective annual rate of .09 of
1% of the value of the average daily net assets of the Large
Company Growth, Large Company Value and Small Company Growth
Portfolios, and .08 of 1% for the Small Company Value Portfolio,
in each case after giving effect to a voluntary fee waiver which
was in effect through November 7, 1994.
Administrator - First Data, a subsidiary of First Data
Corporation, 53 State Street, Boston, Massachusetts 02109,
serves as the Fund's administrator pursuant to an Administration
Agreement with the Fund. Under the terms of the Administration
Agreement, First Data generally assists in all aspects of the
Fund's operations, other than providing investment advice, subject
to the overall authority of the Fund's Board of Directors in
accordance with Maryland law. Pursuant to the terms of the
Administration Agreement, dated May 31, 1996, the Fund has agreed
to pay First Data a monthly fee at the annual rate of .15 of 1% of
the value of the Fund's monthly average net assets up to aggregate
net assets of $1 billion, .10 of 1% of such value on the next $4
billion, and .08 of 1% on excess net assets. For the fiscal year
ended August 31, 1995, no administration fee was paid to The
Dreyfus Corporation ("Dreyfus") (the former administrator of
the Fund) pursuant to an undertaking by Dreyfus.
Custodian and Transfer and Dividend Disbursing Agent - The Northern
Trust Company, an Illinois trust company located at 50 South
LaSalle Street, Chicago, Illinois 60675, is the custodian of the
Fund's investments. First Data is also the Fund's Transfer and
Dividend Disbursing Agent (the "Transfer Agent").
Distributor - 440 Financial serves as the distributor of the
Shares. 440 Financial is also a subsidiary of First Data
Corporation. 440 Financial is not compensated by the Fund or its
shareholders for its services as distributor with respect to the Shares.
Expenses - From time to time, Wilshire or First Data may waive
receipt of its fees and/or voluntarily assume certain expenses of
the Fund, which would have the effect of lowering the overall
expense ratio of the Fund and increasing yield to investors at the
time such amounts are waived or assumed, as the case may be. The
Fund will not pay Wilshire or First Data for any amounts which may
be waived, nor will the Fund reimburse Wilshire or First Data for
any amounts which may be assumed. In addition to shareholder
services fees which may be paid by 440 Financial out of amounts
which it receives under the Funds shareholder services plan, 440
Financial, Wilshire or First Data may bear other expenses of
distribution of the shares of the Fund or of the provision of
shareholder services to the Funds shareholders, including
payments to securities dealers or other financial intermediaries
or service providers, out of its profits and available resources
other than the advisory and administration fees paid by the Fund.
All expenses incurred in the operation of the Fund are borne
by the Fund, except to the extent specifically assumed by 440
Financial, Wilshire or First Data. The expenses borne by the Fund
include: organizational costs, taxes, interest, brokerage fees and
commissions, if any, fees of Directors who are not officers,
directors, employees or holders of 5% or more of the outstanding
voting securities of 440 Financial, Wilshire or First Data or any
of their affiliates, Securities and Exchange Commission fees,
state Blue Sky qualification fees, advisory and administration
fees, shareholder services plan fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance
premiums, industry association fees, outside auditing and legal
expenses, costs of maintaining the Fund's existence, costs of
independent pricing services, costs attributable to investor
services (including, without limitation, telephone and personnel
expenses), costs of shareholders' reports and meetings, costs of
preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to
existing shareholders, and any extraordinary expenses. Expenses
attributable to a particular class of shares or Portfolio are
charged against the assets of that class or Portfolio;
accordingly, shareholder services plan fees payable with respect
to a particular class of shares are charged only to that class of
shares. Other expenses of the Fund are allocated between the
Portfolios on the basis determined by the Board of Directors,
including, but not limited to, proportionately in relation to the
net assets of each Portfolio.
How to Buy Fund Shares
Shares are offered exclusively to institutional investors,
such as employee benefit plans, other tax-exempt institutions,
corporations and other institutional buyers. Shares are sold
without a sales charge. You may be charged a nominal fee if you
effect transactions in Portfolio Shares through a securities
dealer, bank or other financial institution. Share certificates
are issued only upon your written request. No certificates are
issued for fractional Shares. The Fund reserves the right to
reject any purchase order.
The minimum initial investment in the Shares of a Portfolio
is $5,000,000. Subsequent investments must be at least $100,000.
The initial investment must be accompanied or preceded by the
Fund's Account Application. The Fund reserves the right to vary
the initial and subsequent investment minimum requirements at any
time.
You may purchase a Portfolio's Shares by check or wire.
Checks should be made payable to "Wilshire Target Funds, Inc."
For subsequent investments, your Fund account number should appear
on the check. Payments which are mailed should be sent to Wilshire
Target Funds, Inc., P.O. Box 9770, Providence, Rhode Island
02940-9770, together with your investment slip or, when opening
a new account, your Institutional Class Shares Account
Application, indicating the name of the Portfolio being purchased.
Neither initial nor subsequent investments may be made by third
party check.
Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or
any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to Boston
Safe Deposit and Trust Company (ABA #011001234),
together with the name of the Fund
and the Fund's DDA number, 065-587, for purchase of Shares in
your name. The wire must include your Fund account number
(for new accounts, your Taxpayer Identification Number ("TIN")
should be included instead), account registration and dealer
number, if applicable. If your initial purchase of Fund Shares is
by wire, please call 1-888-200-6796 after completing your wire
payment to obtain your Fund account number. Please include your
Fund account number on the Fund's Account Application and promptly
mail the Account Application to the Fund, as no redemptions will
be permitted until the Account Application is received. You may
obtain further information about remitting funds in this manner
from your bank. All payments should be made in U.S. dollars and,
to avoid fees and delays, should be drawn only on U.S. banks. A
charge will be imposed if any check used for investment in your
account does not clear. The Fund makes available to certain large
institutions the ability to issue purchase instructions through
compatible computer facilities.
Subsequent investments also may be made by electronic
transfer of funds from an account maintained in a bank or other
domestic financial institution that is an Automated Clearing House
member. You must direct the institution to transmit immediately
available funds through the Automated Clearing House to Boston
Safe and Trust Deposit Company with instructions to credit your
Fund account. The instructions must specify your Fund account
registration and your Fund account number preceded by the digits
"260, 261, 262 or 263" for Large Company Growth Portfolio,
Large Company Value Portfolio, Small Company Growth Portfolio
or Small Company Value Portfolio, respectively.
Shares of each Portfolio are sold on a continuous basis at
the net asset value per share next determined after an order in
proper form is received by the Transfer Agent. Net asset value per
share of each class of shares is determined as of the close of
trading on the floor of the New York Stock Exchange (currently
4:00 p.m., New York time), on each day the New York Stock Exchange
is open for business. For purposes of determining net asset value,
futures contracts will be valued 15 minutes after the close of
trading on the floor of the New York Stock Exchange. Net asset
value per share of a class of shares of a Portfolio is computed by
dividing the value of the net assets attributable to that class of
shares (i.e., the value of the assets attributable to that class
less liabilities attributable to that class) by the total number
of shares of that class outstanding. Each Portfolio's investments
are valued based on market value or, where market quotations are
not readily available, based on fair value as determined in good
faith by the Board of Directors. For further information regarding
the methods employed in valuing Fund investments, see
"Determination of Net Asset Value" in the Statement of Additional
Information.
Federal regulations require that you provide a certified TIN
upon opening or reopening an account. See "Dividends,
Distributions and Taxes" and the Fund's Account Application for
further information concerning this requirement. Failure to
furnish a certified TIN to the Fund could subject you to a $50
penalty imposed by the Internal Revenue Service (the "IRS").
Shareholder Services
Portfolio Exchanges - You may purchase, in exchange for shares of
a Portfolio, shares of the same class of one of the other
Portfolios offered by the Fund, to the extent such shares are
offered for sale in your state of residence. If you desire to use
this service, please call 1-888-200-6796 to determine if it is
available and whether any conditions are imposed on its use.
To request an exchange, you must give exchange instructions
to the Transfer Agent in writing. Except in the case of personal
retirement plans, the shares being exchanged must have a current
value of at least $100,000; furthermore, when establishing a new
account by exchange, the shares being exchanged must have a value
of at least the minimum initial investment required for the
Portfolio into which the exchange is being made (currently,
$5,000,000). The ability to issue exchange instructions by
telephone is given to all Fund shareholders automatically, unless
you check the applicable "No" box on the Account Application,
indicating that you specifically refuse this privilege. The
Telephone Exchange Privilege may be established for an existing
account by written request, signed by all shareholders on the
account, or by a separate signed Shareholder Services Form, also
available by calling 1-888-200-6796. If you have established the
Telephone Exchange Privilege, you may telephone exchange
instructions by calling 1-888-200-6796. See "How to Redeem Fund
Shares - Procedures." Upon an exchange into a new account, the
following shareholder services and privileges, as applicable and
where available, will be automatically carried over to the
Portfolio into which the exchange is made: Telephone
Exchange Privilege, Wire Redemption Privilege, Telephone
Redemption Privilege, and the dividend and capital gain
distribution option selected by the investor.
Shares will be exchanged at their next determined net asset
value. No fees currently are charged to shareholders directly in
connection with exchanges, although the Fund reserves the right,
upon not less than 60 days' written notice, to charge shareholders
a nominal fee in accordance with rules promulgated by the
Securities and Exchange Commission. The Fund reserves the right to
reject any exchange request in whole or in part. The availability
of exchanges may be modified or terminated at any time upon notice
to shareholders.
The exchange of Shares of one Portfolio for Shares of
another is treated for Federal income tax purposes as a sale of
the Shares given in exchange by the shareholder and, therefore, an
exchanging shareholder may realize a taxable gain or loss.
Retirement Plans - The Fund offers a variety of pension and
profit-sharing plans. Plan support services also are available.
To obtain details on available plans, please call the following
toll-free number: 1-888-200-6796.
How to Redeem Fund Shares
General - You may request redemption of your Shares at any time.
Redemption requests should be transmitted in accordance with the
procedures described below. When a request is received in proper
form, the Fund will redeem the Shares at the next determined net
asset value.
Securities dealers, banks and other financial institutions
may charge a nominal fee for effecting redemptions of a
Portfolio's Shares. Any certificates representing a Portfolio's
Shares being redeemed must be submitted with the redemption
request. The value of the Shares redeemed may be more or less than
their original cost, depending upon the Portfolio's then-current
net asset value.
The Fund ordinarily will make payment for all Shares
redeemed within seven days after receipt by the Transfer Agent of
a redemption request in proper form, except as provided by the
rules of the Securities and Exchange Commission. However, if you
have purchased a Portfolio's shares by check and subsequently
submit a written redemption request to the transfer agent, the
redemption proceeds will be transmitted to you promptly upon bank
clearance of your purchase check, which may take up to eight
business days or more. In addition, the Fund will reject requests
to redeem shares by wire or telephone for a period of eight
business days after receipt by the transfer agent of the purchase
check against which such redemption is requested. These procedures
will not apply if your shares were purchased by wire payment, or
if you otherwise have a sufficient collected balance in your
account to cover the redemption request. Prior to the time any
redemption is effective, dividends on such shares will accrue and
be payable, and you will be entitled to exercise all other rights
of beneficial ownership. Fund Shares will not be redeemed until
the Transfer Agent has received your Account Application.
The Fund reserves the right to redeem your account(s) at its
option upon not less than 45 days' written notice if the aggregate
net asset value of all of your accounts in the Portfolios is
$2,000,000 or less and remains so during the notice period.
Procedures - You may redeem Shares by using the regular redemption
procedure through the Transfer Agent, or, if you have checked the
appropriate box and supplied the necessary information on the
Account Application or have filed a Shareholder Services Form with
the Transfer Agent, through the Wire Redemption Privilege or the
Telephone Redemption Privilege. The Fund reserves the right to
refuse any request made by wire or telephone, including requests
made shortly after a change of address, and may limit the amount
involved or the number of such requests. The Fund may modify or
terminate any redemption privilege at any time or charge a service
fee upon notice to shareholders. No such fee currently is
contemplated.
You may redeem Shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. If you select a
Telephone Redemption Privilege or Telephone Exchange Privilege
(which is granted automatically unless you refuse it), you
authorize the Transfer Agent to act on telephone instructions from
any person representing himself or herself to be you and
reasonably believed by the Transfer Agent to be genuine. The Fund
will require the Transfer Agent to employ reasonable procedures,
such as requiring a form of personal identification, to confirm
that instructions are genuine and, if it does not follow such
procedures, the Fund or the Transfer Agent may be liable for any
losses due to unauthorized or fraudulent instructions. Neither the
Fund nor the Transfer Agent will be liable for following telephone
instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you
may experience difficulty in contacting the Transfer Agent by
telephone to request a redemption or exchange of a Portfolio's
Shares. In such cases, you should consider using the other
redemption procedures described herein. Use of these other
redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone
redemption had been used. During the delay, such Portfolio's net
asset value may fluctuate.
Regular Redemption - Under the regular redemption procedure, you
may redeem your Shares by written request mailed to Wilshire
Target Funds, Inc., P.O. Box 9770, Providence, Rhode Island
02940-9770. Redemption requests must be signed by each
shareholder, including each owner of a joint account, and each
signature must be guaranteed. The Transfer Agent has adopted
standards and procedures pursuant to which signature-guarantees in
proper form generally will be accepted from domestic banks,
brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings
associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Program ("STAMP"), and the Stock Exchanges
Medallion Program. If you have any questions with respect to
signature-guarantees, please call one of the telephone numbers
listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any
member bank of the Federal Reserve System in accordance with a
written signature-guaranteed request.
Wire Redemption Privilege - You may request by wire or telephone
that redemption proceeds (minimum $1,000) be wired to your account
at a bank which is a member of the Federal Reserve System, or a
correspondent bank if your bank is not a member. You also may
direct that redemption proceeds be paid by check (maximum $150,000
per day) made out to the owners of record and mailed to your
address. Redemption proceeds of less than $1,000 will be paid
automatically by check. Holders of jointly registered Fund or bank
accounts may have redemption proceeds of only up to $250,000 wired
within any 30-day period. You may telephone redemption requests by
calling 1-888-200-6796. The Statement of Additional Information sets
forth instructions for transmitting redemption requests by wire.
Shares held under Keogh Plans, IRAs or other retirement plans, and
Shares for which certificates have been issued, are not eligible
for this privilege.
Telephone Redemption Privilege - You may request by telephone that
redemption proceeds (maximum $150,000 per day) be paid by check
and mailed to your address. You may telephone redemption
instructions by calling 1-888-200-6796. Shares held under Keogh Plans,
IRAs or other retirement plans, and Shares for which certificates
have been issued, are not eligible for this privilege.
Dividends, Distributions and Taxes
Each Portfolio ordinarily declares and pays dividends from
its net investment income and distributes net realized securities
gains, if any, once a year, but it may make distributions on a
more frequent basis to comply with the distribution requirements
of the Internal Revenue Code of 1986, as amended (the "Code"), in
all events in a manner consistent with the provisions of the 1940
Act. The Fund will not make distributions from net realized
securities gains unless capital loss carryovers, if any, have been
utilized or have expired. You may choose whether to receive
dividends and distributions in cash or to reinvest in additional
Shares at net asset value. All expenses are accrued daily and
deducted before declaration of dividends to investors.
The Fund intends to distribute substantially all of its net
investment income and net realized securities gains on a current
basis. Dividends paid by a Portfolio derived from net investment
income and distributions from net realized short-term securities
gains of the Portfolio will be taxable to U.S. shareholders as
ordinary income for federal income tax purposes whether received
in cash or reinvested in additional Shares. Depending upon the
composition of a Portfolio's income, all or a portion of the
dividends derived from net investment income may qualify for the
dividends received deduction allowable to certain U.S.
corporations. Distributions from net realized long-term securities
gains of a Portfolio will be taxable to U.S. shareholders as
long-term capital gains for Federal income tax purposes,
regardless of how long shareholders have held their Portfolio
Shares and whether such distributions are received in cash or
reinvested in Shares. The Code currently provides that the net
capital gain of an individual generally will not be subject to
Federal income tax at a rate in excess of 28%. Dividends and
distributions will generally be subject to state and local taxes.
Dividends from net investment income and distributions from
net realized short-term securities gains paid by a Portfolio to a
foreign investor generally are subject to U.S. nonresident
withholding taxes at the rate of 30%, unless the foreign investor
claims the benefit of a lower rate specified in a tax treaty.
Distributions from net realized long-term securities gains paid by
a Portfolio to a foreign investor as well as the proceeds of any
redemptions from a foreign investor's account, regardless of the
extent to which gain or loss may be realized, generally will not
be subject to any U.S. withholding tax. However, such
distributions and redemption proceeds may be subject to backup
withholding, as described below, unless the foreign investor
certifies his non-U.S. residency status. The tax consequences to
foreign investors engaged in a trade or business that is
effectively connected with the United States may differ from the
foregoing.
Notice as to the tax status of your dividends and
distributions will be mailed to you annually. You also will
receive periodic summaries of your account which will include
information as to dividends and distributions from securities
gains, if any, paid during the year.
Federal regulations generally require the Fund to withhold
("backup withholding") and remit to the U.S. Treasury 31% of
dividends, distributions from net realized securities gains and
the proceeds of any redemption, regardless of the extent to which
gain or loss may be realized, paid to a shareholder if such
shareholder fails to certify either that the TIN furnished in
connection with opening an account is correct or that such
shareholder has not received notice from the IRS of being subject
to backup withholding as a result of a failure to properly report
taxable dividend or interest income on a Federal income tax
return. Furthermore, the IRS may notify the Fund to institute
backup withholding if the IRS determines a shareholder's TIN is
incorrect or if a shareholder has failed to properly report
taxable dividend and interest income on a Federal income tax
return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax
withheld as a result of backup withholding does not constitute an
additional tax imposed on the record owner of the account, and may
be claimed as a credit on the record owner's Federal income tax
return.
Management of the Fund believes that each Portfolio has
qualified for the fiscal year ended August 31, 1995 as a
"regulated investment company" under the Code. Each Portfolio
intends to continue to so qualify. Such qualification relieves a
Portfolio of any liability for Federal income tax to the extent
its earnings are distributed in accordance with applicable
provisions of the Code. In addition, each Portfolio is subject to
a non-deductible 4% excise tax, measured with respect to certain
undistributed amounts, if any, of taxable investment income and
capital gains.
The foregoing is a general summary of the U.S. federal
income tax consequences of investing in the Fund. You should
consult your tax adviser regarding specific questions as to
Federal, state or local taxes.
Performance Information
For purposes of advertising, performance is calculated on
the bases of average annual total return and/or total return.
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment in the
Portfolio was purchased with an initial payment of $1,000 and that
the investment was redeemed at the end of a stated period of time,
after giving effect to the reinvestment of dividends and
distributions during the period. The return is expressed as a
percentage rate which, if applied on a compounded annual basis,
would result in the redeemable value of the investment at the end
of the period. Advertisements of each Portfolio's performance will
include such Portfolio's average annual total return for one-, five-
and ten-year periods, or for shorter periods depending upon the
length of time during which the Portfolio has operated.
Total return is computed on a per share basis and assumes
the reinvestment of dividends and distributions. Total return
generally is expressed as a percentage rate which is calculated by
combining the income and principal changes for a specified period
and dividing by the net asset value per share at the beginning of
the period. Advertisements may include the percentage rate of
total return or may include the value of a hypothetical investment
at the end of the period which assumes the application of the
percentage rate of total return.
Performance will vary from time to time and past results are
not necessarily representative of future results. You should
remember that performance is a function of portfolio management in
selecting the type and quality of portfolio securities and is
affected by operating expenses. Performance information, such as
that described above, may not provide a basis for comparison with
other investments or other investment companies using a different
method of calculating performance.
Comparative performance information may be used from time to
time in advertising or marketing the Fund's Shares, including data
from the Wilshire 5000 Index, Lipper Analytical Services, Inc.,
Standard & Poor's 500 Composite Stock Price Index, the Dow Jones
Industrial Average, Morningstar, Inc. and other industry
publications.
General Information
The Fund was incorporated under Maryland law on July 30,
1992, and commenced operations on September 30, 1992. The Fund is
authorized to issue 400 million shares of Common Stock (with 100
million allocated to each Portfolio and 50 million allocated to
each of two classes of each Portfolio), par value $.001 per share.
The Fund is a "series fund," which is a mutual fund divided
into separate portfolios. Each Portfolio of the Fund is treated as
a separate entity for certain matters under the 1940 Act and for
other purposes, and a shareholder of one Portfolio is not deemed
to be a shareholder of any other Portfolio. As described below,
for certain matters Fund shareholders vote together as a group; as
to others they vote separately by Portfolio or by class.
To date, the Board of Directors has authorized the creation
of four series of shares and an "Investment Class"
and "Institutional Class" of shares for each Portfolio. All
consideration received by the Fund for shares of one of the
Portfolios and all assets in which such consideration is invested
will belong to that Portfolio (subject only to the rights of
creditors of the Fund) and will be subject to the liabilities
related thereto. Each share of a class of a Portfolio represents
an equal proportionate interest in the Portfolio with each other
class share, subject to the liabilities of the particular class.
Each class of shares of a Portfolio participates equally in the
earnings, dividends and assets attributable to that class. The
income attributable to, and the expenses of, one class are treated
separately from those of the other classes. Shares are fully paid
and non-assessable. Should a Portfolio be liquidated, the holders
of each class are entitled to share pro rata in the net assets
attributable to that class available for distribution to
shareholders. The Board of Directors has the ability to create,
from time to time, new portfolios and additional classes without
shareholder approval. Shares have no pre-emptive or conversion
rights.
Unless otherwise required by the 1940 Act, ordinarily it
will not be necessary for the Fund to hold annual meetings of
shareholders. As a result, Fund shareholders may not consider each
year the election of Directors or the appointment of auditors.
However, pursuant to the Fund's By-Laws, the holders of at least
10% of the shares outstanding and entitled to vote may require the
Fund to hold a special meeting of shareholders for the purpose of
considering the removal of a Director from office or for any other
purpose. Fund shareholders may remove a Director by the
affirmative vote of a majority of the Fund's outstanding voting
shares. In addition, the Board of Directors will call a meeting of
shareholders for the purpose of electing Directors if, at any
time, less than a majority of the Directors then holding office
have been elected by shareholders. Each share has one vote and
shares of each Portfolio would be entitled to vote separately to
approve investment advisory agreements or changes in investment
restrictions, but shares of all Portfolios would vote together in
the election of Directors or selection of accountants. Each class
of a Portfolio is also entitled to vote separately on
any matter that affects solely that class of shares, but
will otherwise vote together with all other classes of shares of
the Portfolio on all other matters on which stockholders are
entitled to vote.
The Transfer Agent maintains a record of your ownership and
sends confirmations and statements of account. Certificates for
shares will not be issued unless specifically requested.
Shareholder inquiries may be made by writing to the Fund at
P.O. Box 9770, Providence, Rhode Island 02940-9770, or by calling
toll free 1-888-200-6796.
Appendix
Investment Techniques
Borrowing Money - Each Portfolio is permitted to borrow money only
for temporary or emergency (not leveraging) purposes, in an amount
up to 15% of the value of its total assets (including the amount
borrowed) valued at the lesser of cost or market, less liabilities
(not including the amount borrowed) at the time the borrowing is
made. While borrowings exceed 5% of a Portfolio's total assets,
the Portfolio will not make any additional investments.
Use of Derivatives - Although no Portfolio will be a commodity
pool, Derivatives subject a Portfolio to the rules of the
Commodity Futures Trading Commission which limit the extent to
which a Portfolio can invest in certain Derivatives. Each
Portfolio may invest in stock index futures contracts for hedging
purposes without limit. However, no Portfolio may invest in such
contracts for other purposes if the sum of the amount of initial
margin deposits and premiums paid for unexpired commodity options,
other than for bona fide hedging purposes, exceed 5% of the
liquidation value of the Portfolio's assets, after taking into
account unrealized profits and unrealized losses on such contracts
it has entered into; provided, however, that in the case of an
option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in calculating the 5%
limitation.
Lending Portfolio Securities - Each Portfolio may lend securities
from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain
transactions. In connection with such loans, the Portfolio
continues to be entitled to payments in amounts equal to the
interest, dividends or other distributions payable on the loaned
securities. Loans of portfolio securities afford the Portfolio an
opportunity to earn interest on the amount of the loan and at the
same time to earn income on the loaned securities' collateral.
Loans of portfolio securities may not exceed 33 % of the value of
the Portfolio's total assets. In connection with such loans, the
Portfolio will receive collateral consisting of cash, U.S.
Government securities or irrevocable letters of credit which will
be maintained at all times in an amount equal to at least 100% of
the current market value of the loaned securities. Such loans are
terminable by the Fund at any time upon specified notice. A
Portfolio might experience risk of loss if the institution with
which it has engaged in a portfolio loan transaction breaches its
agreement with the Portfolio.
No person has been authorized to give any information or to
make any representations other than those contained in this
prospectus and in the Fund's official sales literature in
connection with the offer of the Portfolios' shares, and, if given
or made, such other information or representations must not be
relied upon as having been authorized by the Fund. This prospectus
does not constitute an offer in any state in which, or to any
person to whom, such offering may not lawfully be made
[This Page Intentionally Left Blank]
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"ART"
"LOGO"
Wilshire Target Funds, Inc.
"Prospectus"
[ 1996, Wilshire Associates Incorporated]
[WILSp511595]
WILSHIRE TARGET FUNDS, INC.
(INSTITUTIONAL CLASS SHARES)
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
June 3, 1996
This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with the
current Prospectus of Wilshire Target Funds, Inc. (Institutional
Class Shares), dated June 3, 1996, as it may be revised from time
to time. To obtain a copy of the Prospectus, please write to
Wilshire Target Funds, Inc. (the "Fund") at P.O. Box 9770, Providence, RI
02940-9770 or call 1-888-200-6796. Capitalized terms not otherwise
defined herein have the same meaning as in the Prospectus.
Wilshire Associates Incorporated ("Wilshire") serves as the
Fund's investment adviser.
First Data Investor Services Group, Inc. ("First Data")
serves as the Fund's administrator.
440 Financial Distributors, Inc. ("440 Financial") serves as
the Fund's distributor.
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY 1
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES 2
MANAGEMENT OF THE FUND 8
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS 11
SHAREHOLDER SERVICES PLAN 16
PURCHASE OF FUND SHARES 17
REDEMPTION OF FUND SHARES 18
SHAREHOLDER SERVICES 19
DETERMINATION OF NET ASSET VALUE 21
DIVIDENDS, DISTRIBUTION AND TAXES 21
PERFORMANCE INFORMATION 23
PORTFOLIO TRANSACTIONS 24
INFORMATION ABOUT THE FUND 25
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING
AGENT, COUNSEL AND INDEPENDENT ACCOUNTANTS 25
FINANCIAL STATEMENTS 26
APPENDIX 26
GENERAL INFORMATION AND HISTORY
On August 28, 1992, Dreyfus-Wilshire Series Fund, Inc.
changed its name to Dreyfus-Wilshire Target Funds, Inc.
On May 31, 1996, Dreyfus-Wilshire Target Funds, Inc. changed
its name to Wilshire Target Funds, Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Description of the Fund."
Other Portfolio Securities
U.S. Government Securities. Each Portfolio may purchase
securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, which include U.S. Treasury
securities that differ in their interest rates, maturities and
times of issuance. Some obligations issued or guaranteed by U.S.
Government agencies and instrumentalities, for example, Government
National Mortgage Association pass-through certificates, are
supported by the full faith and credit of the U.S. Treasury;
others, such as those of the Federal Home Loan Banks, by the right
of the issuer to borrow from the Treasury; others, such as those
issued by the Federal National Mortgage Association, by
discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others, such as
those issued by the Student Loan Marketing Association, only by
the credit of the agency or instrumentality. These securities
bear fixed, floating or variable rates of interest. While the
U.S. Government provides financial support to such U.S.
Government-sponsored agencies or instrumentalities, no assurance
can be given that it will always do so, since it is not so
obligated by law.
Zero Coupon Securities. Each Portfolio may invest in zero
coupon U.S. Treasury securities, which are Treasury Notes and
Bonds that have been stripped of their unmatured interest coupons,
the coupons themselves and receipts or certificates representing
interests in such stripped debt obligations and coupons. Each
Portfolio also may invest in zero coupon securities issued by
corporations and financial institutions which constitute a
proportionate ownership of the issuer's pool of underlying U.S.
Treasury securities. A zero coupon security pays no interest to
its holder during its life and is sold at a discount to its face
value at maturity. The amount of the discount fluctuates with the
market price of the security. The market prices of zero coupon
securities generally are more volatile than the market prices of
securities that pay interest periodically and are likely to
respond to a greater degree to changes in interest rates than
non-zero coupon securities having similar maturities and credit
qualities.
Bank Obligations. Each Portfolio may purchase certificates of
deposit, time deposits, bankers' acceptances and other short-term
obligations issued by domestic banks, foreign subsidiaries of
domestic banks, foreign branches of domestic banks, and domestic
and foreign branches of foreign banks, domestic savings and loan
associations and other banking institutions. With respect to such
securities issued by foreign branches of domestic banks, foreign
subsidiaries of domestic banks, and domestic and foreign branches
of foreign banks, the Portfolio may be subject to additional
investment risks that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S.
domestic issuers. Such risks include possible future political and
economic developments, the possible imposition of foreign
withholding taxes on interest income payable on the securities,
the possible establishment of exchange controls or the adoption of
other foreign governmental restrictions which might adversely
affect the payment of principal and interest on these securities
and the possible seizure or nationalization of foreign deposits.
Certificates of deposit are negotiable certificates
evidencing the obligation of a bank to repay funds deposited with
it for a specified period of time.
Time deposits are non-negotiable deposits maintained in a
banking institution for a specified period of time at a stated
interest rate. Each Portfolio will invest in time deposits of
domestic banks that have total assets in excess of one billion
dollars. Time deposits which may be held by the Portfolios will
not benefit from insurance from the Bank Insurance Fund or the
Savings Association Insurance Fund administered by the Federal
Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the
obligation of a bank to pay a draft drawn on it by a customer.
These
instruments reflect the obligation both of the bank and of the
drawer to pay
the face amount of the instrument upon maturity. The other
short-term
obligations may include uninsured, direct obligations bearing
fixed, floating
or variable interest rates.
Repurchase Agreements. In a repurchase agreement, the
Portfolio buys, and the seller agrees to repurchase a security at
a mutually agreed upon time and price (usually within seven days).
The repurchase agreement thereby determines the yield during the
purchaser's holding period, while the seller's obligation to
repurchase is secured by the value of the underlying security.
Repurchase agreements could involve risks in the event of a
default or insolvency of the other party to the agreement,
including possible delays or restrictions upon the Portfolio's
ability to dispose of the underlying securities. The Fund's
custodian or sub-custodian will have custody of, and will hold in
a segregated account, securities acquired by a Portfolio under a
repurchase agreement. Repurchase agreements are considered by the
staff of the Securities and Exchange Commission to be loans by the
Portfolio entering into them. In an attempt to reduce the risk of
incurring a loss on a repurchase agreement, the Portfolios will
enter into repurchase agreements only with domestic banks with
total assets in excess of one billion dollars, or primary
government securities dealers reporting to the Federal Reserve
Bank of New York, with respect to securities of the type in which
such Portfolio may invest, and will require that additional
securities be deposited with it if the value of the securities
purchased should decrease below resale price.
Commercial Paper and Other Short-Term Corporate Obligations.
Commercial paper consists of short-term, unsecured promissory
notes issued to finance short-term credit needs. The commercial
paper purchased by the Portfolios will consist only of direct
obligations which, at the time of their purchase, are (a) rated
not lower than Prime-1 by Moody's Investors Service, Inc., A-1 by
Standard & Poor's Ratings Group, F-1 by Fitch Investors Service,
L.P. or D-1 by Duff & Phelps Credit Rating Co., (b) issued by
companies having an outstanding unsecured debt issue currently
rated not lower than Aa3 by Moody's Investors Service, Inc. or AA-
by Standard & Poor's Ratings Group, Fitch Investors Service, L.P.
or Duff & Phelps Credit Rating Co., or (c) if unrated, determined
by Wilshire to be of comparable quality to those rated obligations
which may be purchased by such Portfolio. These instruments
include variable amount master demand notes, which are obligations
that permit the Portfolio to invest fluctuating amounts at varying
rates of interest pursuant to direct arrangements between the
Portfolio, as lender, and the borrower. These notes permit daily
changes in the amounts borrowed. Because these obligations are
direct lending arrangements between the lender and borrower, it is
not contemplated that such instruments generally will be traded,
and there generally is no established secondary market for these
obligations, although they are redeemable at face value, plus
accrued interest, at any time. Accordingly, where these
obligations are not secured by letters of credit or other credit
support arrangements, the Portfolio's right to redeem is dependent
on the ability of the borrower to pay principal and interest on
demand. In connection with floating and variable rate demand
obligations, Wilshire will consider, on an ongoing basis, earning
power, cash flow and other liquidity ratios of the borrower, and
the borrower's ability to pay principal and interest on demand.
Such obligations frequently are not rated by credit rating
agencies, and a Portfolio may invest in them only if at the time
of an investment the borrower meets the criteria set forth above
for other commercial paper issuers.
Management Policies
Derivatives. A Portfolio may invest in Derivatives (as
defined in the Fund's Prospectus) for a variety of reasons,
including to hedge against certain market risks, to provide a substitute
for purchasing or selling particular securities or to increase
potential income gain. Derivatives may provide a cheaper, quicker
or more specifically focused way for the Portfolio to invest than
"traditional" securities would.
Derivatives can be volatile and involve various types and
degrees of risk, depending upon the characteristics of the
particular Derivative and the portfolio as a whole. Derivatives
permit a Fund to increase, decrease or change the level of risk to
which its portfolio is exposed in much the same way as the
Portfolio can increase, decrease or change the risk of its
portfolio by making investments in specific securities.
In addition, Derivatives may entail investment exposures
that are greater than their cost would suggest, meaning that a
small investment in Derivatives could have a large potential
impact on a Portfolio's performance.
If a Portfolio invests in Derivatives at inappropriate times
or judges market conditions incorrectly, such investments may
lower the Portfolio's return or result in a loss. A Portfolio
also could experience losses if its Derivatives were poorly
correlated with its other investments, or if the Portfolio was
unable to liquidate its position because of an illiquid secondary
market. The market for many Derivatives is, or suddenly can
become, illiquid. Changes in liquidity may result in significant,
rapid and unpredictable changes in the prices for Derivatives.
When required by the Securities and Exchange Commission, the
Portfolio will set aside permissible liquid assets in a segregated
account to cover its obligations relating to its purchase of
Derivatives. To maintain this required cover, a Portfolio may
have to sell portfolio securities at disadvantageous prices or
times since it may not be possible to liquidate a Derivative
position at a reasonable price. Derivatives may be purchased on
established exchanges or through privately negotiated transactions
referred to as over-the-counter Derivatives. Exchange-traded
Derivatives generally are guaranteed by the clearing agency which
is the issuer or counterparty to such Derivatives. This guarantee
usually is supported by a daily payment system (i.e., margin
requirements) operated by the clearing agency in order to reduce
overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk
associated with Derivatives purchased on an exchange. By
contrast, no clearing agency guarantees over-the-counter
Derivatives. Therefore, each party to an over-the-counter
Derivative bears the risk that the counterparty will default.
Accordingly, Wilshire will consider the creditworthiness of
counterparties to over-the-counter Derivatives in the same manner
as it would review the credit quality of a security to be
purchased by a Portfolio. Over-the-counter Derivatives are less
liquid than exchange-traded Derivatives since the other party to
the transaction may be the only investor with sufficient
understanding of the Derivative to be interested in bidding for
it.
Futures Transactions-In General. A Portfolio may enter into
futures contracts in U.S. domestic markets, such as the Chicago
Board of Trade and the International Monetary Market of the
Chicago Mercantile Exchange.
Engaging in these transactions involves risk of loss to a
Portfolio which could adversely affect the value of such
Portfolio's net assets. Although each Portfolio intends to
purchase or sell futures contracts only if there is an active
market for such contracts, no assurance can be given that a liquid
market will exist for any particular contract at any particular
time. Many futures exchanges and boards of trade limit the amount
of fluctuation permitted in futures contract prices during a
single trading day. Once the daily limit has been reached in a
particular contract, no trades may be made that day at a price
beyond that limit or trading may be suspended for specified
periods during the trading day. Futures contract prices could move
to the limit for several consecutive trading days with little or
no trading, thereby preventing prompt liquidation of futures
positions and potentially subjecting the Portfolio to substantial
losses.
Successful use of futures by a Portfolio also is subject to
the ability of Wilshire to predict correctly movements in the
direction of the relevant market and, to the extent the
transaction is entered into for hedging purposes, to ascertain the
appropriate correlation between the transaction being hedged and
the price movements of the futures contract. For example, if a
Portfolio uses futures to hedge against the possibility of a
decline in the market value of securities held in its portfolio
and the prices of such securities instead increase, the Portfolio
will lose part or all of the benefit of the increased value of
securities which it has hedged because it will have offsetting
losses in its futures positions. Furthermore, if in such
circumstances the Portfolio has insufficient cash, it may have to
sell securities to meet daily variation margin requirements. A
Portfolio may have to sell such securities at a time when it may
be disadvantageous to do so.
Pursuant to regulations and/or published positions of the
Securities and Exchange Commission, a Portfolio may be required to
segregate cash or high quality money market instruments in
connection with its commodities transactions in an amount
generally equal to the value of the underlying commodity. The
segregation of such assets will have the effect of limiting a
Portfolio's ability otherwise to invest those assets.
Specific Futures Transactions. A Portfolio may purchase and
sell stock index futures contracts. A stock index future
obligates a Portfolio to pay or receive an amount of cash equal to
a fixed dollar amount specified in the futures contract multiplied
by the difference between the settlement price of the contract on
the contract's last trading day and the value of the index based
on the stock prices of the securities that comprise it at the
opening of trading in such securities on the next business day.
Future Developments. A Portfolio may take advantage of
opportunities in the area of futures contracts and any other
Derivatives which are not presently contemplated for use by the
Portfolio or which are not currently available but which may be
developed, to the extent such opportunities are both consistent
with the Portfolio's investment objective and legally permissible
for the Portfolio. Before entering into such transactions or
making any such investment, the Portfolio will provide appropriate
disclosure in its Prospectus or Statement of Additional
Information.
Lending Portfolio Securities. In connection with its
securities lending transactions, a Portfolio may return to the
borrower or a third party which is unaffiliated with the Fund, and
which is acting as a "placing broker," a part of the interest
earned from the investment of collateral received for securities
loaned.
The Securities and Exchange Commission currently requires
that the following conditions must be met whenever portfolio
securities are loaned: (1) the Portfolio must receive at least
100% cash collateral from the borrower; (2) the borrower must
increase such collateral whenever the market value of the
securities rises above the level of such collateral; (3) the
Portfolio must be able to terminate the loan at any time; (4) the
Portfolio must receive reasonable interest on the loan, as well as
any dividends, interest or other distributions payable on the
loaned securities, and any increase in market value; (5) the
Portfolio may pay only reasonable custodian fees in connection
with the loan; and (6) while voting rights on the loaned
securities may pass to the borrower, the Fund's Board of Directors
must terminate the loan and regain the right to vote the
securities if a material event adversely affecting the investment
occurs. These conditions may be subject to future modification.
Investment Restrictions. Each Portfolio has adopted
investment restrictions numbered 1 through 9 as fundamental
policies, which cannot be changed, as to a Portfolio, without
approval by the holders of a majority (as defined in the
Investment Company Act of 1940, as amended (the "1940 Act")) of
such Portfolio's outstanding voting shares. Investment
restrictions numbered 10 through 15 are not fundamental policies
and may be changed by vote of a majority of the Directors at any
time. No Portfolio may:
1. Invest in commodities, except that the Portfolio may
purchase and sell options, forward contracts, futures contracts,
including those relating to indices, and options on futures
contracts or indices.
2. Purchase, hold or deal in real estate, or oil, gas or
other mineral leases or exploration or development programs, but
the Portfolio may purchase and sell securities that are secured by
real estate or issued by companies that invest or deal in real
estate.
3. Borrow money, except for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the
Portfolio's total assets (including the amount borrowed) based on
the lesser of cost or market, less liabilities (not including the
amount borrowed) at the time the borrowing is made. While
borrowings exceed 5% of the value of the Portfolio's total assets,
the Portfolio will not make any additional investments. For
purposes of this investment restriction, the entry into options,
forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices shall not
constitute borrowing.
4. Make loans to others, except through the purchase of
debt obligations and the entry into repurchase agreements.
However, the Portfolio may lend its portfolio securities in an
amount not to exceed 33 1/3% of the value of its total assets.
Any loans of portfolio securities will be made according to
guidelines established by the Securities and Exchange Commission
and the Fund's Board of Directors.
5. Act as an underwriter of securities of other issuers,
except to the extent the Portfolio may be deemed an underwriter
under the Securities Act of 1933, as amended, by virtue of
disposing of portfolio securities.
6. Invest more than 25% of its assets in the securities
of issuers in any single industry, provided there shall be no
limitation on the purchase of obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities.
7. Invest more than 5% of its assets in the obligations
of any single issuer, except that up to 25% of the value of the
Portfolio's total assets may be invested, and securities issued or
guaranteed by the U.S. Government, or its agencies or
instrumentalities may be purchased, without regard to any such
limitation.
8. Hold more than 10% of the outstanding voting
securities of any single issuer. This Investment Restriction
applies only with respect to 75% of the Portfolio's total assets.
9. Issue any senior security (as such term is defined in
Section 18(f) of the 1940 Act), except to the extent the
activities permitted in Investment Restriction Nos. 1, 3, 11 and
12 may be deemed to give rise to a senior security.
10. Invest in the securities of a company for the purpose
of exercising management or control, but the Portfolio will vote
the securities it owns in its portfolio as a shareholder in
accordance with its views.
11. Pledge, mortgage or hypothecate its assets, except to
the extent necessary to secure permitted borrowings and to the
extent related to the deposit of assets in escrow in connection
with writing covered put and call options and the purchase of
securities on a when-issued or forward commitment basis and
collateral and initial or variation margin arrangements with
respect to options, forward contracts, futures contracts,
including those relating to indices, and options on futures
contracts or indices.
12. Purchase, sell or write puts, calls or combinations
thereof, except as may be described in the Fund's Prospectus and
this Statement of Additional Information.
13. Purchase securities of any company having less than
three years' continuous operations (including operations of any
predecessors) if such purchase would cause the value of the
Portfolio's investments in all such companies to exceed 5% of the
value of its total assets.
14. Enter into repurchase agreements providing for
settlement in more than seven days after notice or purchase
securities which are illiquid, if, in the aggregate, more than 15%
of the value of the Portfolio's net assets would be so invested.
15. Purchase securities of other investment companies,
except to the extent permitted under the 1940 Act or those
received as part of a merger or consolidation.
If a percentage restriction is adhered to at the time of
investment, a later change in percentage resulting from a change
in values or assets will not constitute a violation of such
restriction.
The Fund may make commitments more restrictive than the
restrictions listed above so as to permit the sale of a
Portfolio's shares in certain states. In this regard, and while
not a fundamental policy, the Fund has undertaken that no
Portfolio may invest in real estate limited partnerships. Should
the Fund determine that a commitment is no longer in the best
interest of the Portfolio and its shareholders, the Fund reserves
the right to revoke the commitment by terminating the sale of such
Portfolio's shares in the state involved.
MANAGEMENT OF THE FUND
Directors and officers of the Fund, together with
information as to their principal business occupations during at
least the last five years, are shown below. Each Director who is
deemed to be an "interested person" of the Fund, as defined in the
1940 Act, is indicated by an asterisk.
Directors of the Fund
*THOMAS D. STEVENS, Chairman of the Board, President and Director.
Senior Vice President and Principal of Wilshire Associates
Incorporated for more than the past five years. He is the Chief
Investment Officer of the Wilshire Asset Management division.
Wilshire Asset Management is a provider of index and structured
equity and fixed income applications. He is 46 years old and his
address is c/o Wilshire Associates Incorporated, 1299 Ocean
Avenue, Santa Monica, California 90401-1085.
DEWITT F. BOWMAN, Director. Since January 1994, Pension
Investment Consultant providing advice on large pension fund
investment strategy, new product evaluation and integration, and
large plan investment analysis and management. For more than four
years prior thereto, he was Chief Investment Officer of the
California Public Employees Retirement System. He currently
serves as a director of the RREEF America REIT, RCM Equity Funds,
Inc., Brandes Investment Trust, and as a trustee of the Pacific
Gas and Electric Nuclear Decommissioning Trust. He is 65 years
old and his address is 79 Eucalyptus Knoll, Mill Valley,
California 94941.
*ROBERT J. RAAB, JR., Director. Senior Vice President and
Principal of Wilshire Associates Incorporated for more than the
past five years. He is head of Wilshire's Institutional Services
Division and is responsible for Wilshire Equity, Fixed Income,
Index Fund and Portfolio Accounting products. He is 46 years old
and his address is c/o Wilshire Associates Incorporated, 1299
Ocean Avenue, Santa Monica, California 90401-1085.
PETER J. CARRE, Director. Attorney, Peter Carre and Associates,
Law Offices, since 1982. He practices law in the areas of ERISA
and investments. He is 48 years old and his address is c/o
Peter Carre and Associates, Law Offices, 815 Connecticut Avenue,
N.W., Washington, D.C. 20006.
ANNE WEXLER, Director. Chairman of the Wexler Group, consultants
specializing in government relations and public affairs for more
than fifteen years. She is also a director of Alumax,
Comcast Corporation, The New England Electric
System, Nova Corporation, and sixteen (16) mutual funds in the
Dreyfus mutual fund family as well as a member of the Board of the Carter
Center of Emory University, the Council of Foreign Relations, the
National Park Foundation, Visiting Committee of the John F.
Kennedy School of Government at Harvard University and the Board
of Visitors of the University of Maryland School of Public
Affairs. She is 65 years old and her address is c/o The Wexler
Group, 1317 F Street, N.W., Suite 600, Washington, D.C. 20004.
The Fund typically pays its Directors an annual retainer and
a per meeting fee and reimburses them for their expenses. The
aggregate amount of compensation paid to each current Director by
the Fund for the fiscal year ended August 31, 1995, was as
follows:
(1) (2) (3) (4) (5)
Name of Aggregate Pension or Estimated Total
Board Member Compensation Retirement Annual Compensation
From the Fund* Benefits Benefits Upon From
Accrued as Retirement Registrant
Part of Fund's and Fund
Expenses Complex
Thomas D. Stevens none none none none
DeWitt F. Bowman none none none none
Robert J. Raab, Jr. none none none none
Peter J. Carre none none none none
Anne Wexler $4,500* none none $4,500*
* Amount does not include reimbursed expenses for attending
Board meetings, which amounted to $598 for all Directors as a
group.
Officers of the Fund
THOMAS D. STEVENS, (see "Directors of the Fund" above).
DAVID R. BORGER, Vice President and Treasurer. Vice President and
Principal of Wilshire Associates Incorporated and Director of
Research for its Wilshire Asset Management division for more than
five years. He is 47 years old and his address is c/o Wilshire
Associates Incorporated, 1299 Ocean Avenue, Santa Monica,
California 90401-1085.
ALAN L. MANNING, Secretary. Since 1990, Vice President, Secretary
and General Counsel of Wilshire Associates Incorporated. He is 46
years old and his address is c/o Wilshire Associates Incorporated,
1299 Ocean Avenue, Santa Monica, California 90401-1085.
MICHAEL J. NAPOLI, JR., Vice President. Vice President and
Principal of Wilshire Associates Incorporated for more than five
years. He is Director of Marketing for its Wilshire Asset
Management division. He is 44 years old and his address is c/o
Wilshire Associates Incorporated, 1299 Ocean Avenue, Santa Monica,
California 90401-1085.
JULIE A. TEDESCO, Vice President and Assistant Secretary. Since
May 1994, Counsel to First Data Investor Services Group, Inc.
From July 1992 to May 1994, Assistant Vice President and Counsel
of The Boston Company Adcvisors, Inc. From 1988 to 1992,
Ms. Tedesco was an associate in the Boston law firm of Hutchins,
Wheeler & Dittmar. She is 38 years old and her address is
c/o First Data Investor Services Group, Inc., 53 State Street,
Boston, Massachusetts 02109.
THERESE M. HOGAN, Vice President and Assistant Secretary. Since
June 1994, Manager (State Regulation) of First Data Investor
Services Group, Inc. From October 1993 to June 1994, Senior Legal
Assistant at Palmer & Dodge, Boston, Massachusetts. For more than
eight years prior thereto, a paralegal at Robinson & Cole in
Hartford, Connecticut. She is 34 years old and her address is c/o
First Data Investor Services Group, Inc., 53 State Street, Boston,
Massachusetts 02109.
KEVIN MORRISSEY, Assistant Treasurer. Since 1996, Vice
President, First Data Investor Services Group, Inc. For more than
five years prior thereto, he was Treasurer of the Keystone families
of funds. He is 51 years old and his address is c/o
First Data Investor Services Group, Inc., 4400 Computer Drive,
Westborough, Massachusetts 01581.
Directors and officers of the Fund, as a group, owned less
than 1% of the Fund's shares of Common Stock outstanding on May
24, 1996.
The following persons are known by the Fund to own of record
5% or more of a Portfolio's voting securities outstanding on May
24, 1996:
Large Company Growth Portfolio: Charles Schwab & Company,
101 Montgomery Street, San Francisco, California 94104--45%; and
Cincinnati Bell Collectively Bargained Retirees Health Care Trust,
201 East 4th Street, Cincinnati, Ohio 45202--27%.
Large Company Value Portfolio: Cincinnati Bell Collectively
Bargained Retirees Health Care Trust, 201 East 4th Street,
Cincinnati, Ohio 45202--45%; and Charles Schwab & Company, 101
Montgomery Street, San Francisco, California 94104--36%.
Small Company Growth Portfolio: Charles Schwab & Company,
101 Montgomery Street, San Francisco, California 94104--38%; and
Cincinnati Bell Collectively Bargained Retirees Health Care Trust,
201 East 4th Street, Cincinnati, Ohio 45202--15%.
Small Company Value Portfolio: Charles Schwab & Company,
101 Montgomery Street, San Francisco, California 94104--34%;
Dreyfus Trust Company, as trustee for FDC Incentive Savings Plan,
144 Glenn Curtiss Boulevard, Uniondale, New York 11556--23%;
Cincinnati Bell Collectively Bargained Retirees Health Care Trust,
201 East 4th Street, Cincinnati, Ohio 45202--19%; and Dreyfus
Trust Company, as trustee for Medline Industries, Inc. 401(k)
Profit Sharing Plan, 144 Glenn Curtiss Boulevard, Uniondale, New
York 11556--8%.
A shareholder that owns, directly or indirectly, 25% or more
of a Portfolio's voting securities may be deemed to be a "control
person" (as defined in the 1940 Act) of such Portfolio.
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Management of the Fund."
Investment Advisory Agreement. Wilshire provides investment
advisory services to each Portfolio pursuant to the Investment
Advisory Agreement (the "Advisory Agreement") dated May 31, 1996,
with the Fund. As to each Portfolio, the Advisory Agreement has
an initial term of two years and thereafter is subject to annual
approval by (i) the Fund's Board of Directors or (ii) vote of a
majority (as defined in the 1940 Act) of the outstanding voting
securities of such Portfolio, provided that in either event the
continuance also is approved by a majority of the Directors who
are not "interested persons" (as defined in the 1940 Act) of the
Fund or Wilshire, by vote cast in person at a meeting called for
the purpose of voting on such approval. As to each Portfolio, the
Advisory Agreement is terminable without penalty, on 60 days'
notice, by the Fund's Board of Directors or by vote of the holders
of a majority of such Portfolio's shares, or, on not less than 90
days' notice, by Wilshire. The Advisory Agreement will terminate
automatically, as to the relevant Portfolio, in the event of its
assignment (as defined in the 1940 Act).
The following persons are officers and directors of
Wilshire: Dennis A. Tito, Chairman of the Board of Directors,
President and Chief Executive Officer; Gilbert Hammer, Director
and Senior Vice President; Robert J. Raab, Jr., Director and
Senior Vice President; Thomas D. Stevens, Director and Senior Vice
President; Stephen L. Nesbitt, Director and Senior Vice President;
Rosalind M. Hewsenian, Director and Vice President; Robert C.
Kuberek, Director and Vice President; Howard M. Yata, Director and
Vice President; Cecilia I. Loo, Director and Vice President; Alan
L. Manning, Vice President, General Counsel and Secretary; and San
Slawson, Vice President and Treasurer.
Wilshire is controlled by Mr. Dennis Tito, who owned 70% of
its outstanding stock as of February 29, 1996.
Wilshire provides day-to-day management of each Portfolio's
investments in accordance with the stated policies of the
Portfolio, subject to the approval of the Fund's Board of
Directors. Wilshire provides the Fund with portfolio managers who
are authorized by the Board of Directors to execute purchases and
sales of securities. The Fund's primary Portfolio Manager is
Thomas D. Stevens and he is assisted by David R. Borger. Wilshire
maintains a research department with a professional staff of
portfolio managers and securities analysts who provide research
services for the Fund. All purchases and sales are reported for
the Board's review at the meeting subsequent to such transactions.
As compensation for Wilshire's services, the Fund has agreed
to pay Wilshire a monthly advisory fee at the annual rate of .25
of 1% of the value of each Portfolio's average daily net assets.
The aggregate of the fees payable to Wilshire is not subject to
reduction as the value of a Portfolios net assets increases.
However, the advisory agreement also includes a fifteen-month
expense limitation provision. For the three-month period June 1,
1996 through August 31, 1996 and the fiscal year September 1, 1996
through August 31, 1997, Wilshire has agreed that, if the
aggregate operating expenses of any Portfolio (exclusive of
interest, taxes, brokerage, 12b-1 plan fees and extraordinary
expenses) for such period exceed the annual rate specified in the
following table for such Portfolio, the investment advisory fee
otherwise payable for that period by the Portfolio under the
agreement will be reduced by the amount of the excess, but not
below an annual fee rate of .10 of 1% of such Portfolio's average
daily net assets.
Fund Annual Rate (%)
Large Company Growth Portfolio .80
Large Company Value Portfolio .77
Small Company Growth Portfolio .91
Small Company Value Portfolio .66
All fees and expenses are accrued daily and deducted before
declaration of dividends to investors. For the period September
30, 1992 (commencement of operations for all Portfolios except
Small Company Growth Portfolio which commenced operations on
October 1, 1992) through August 31, 1993, and for the fiscal years
ended August 31, 1994 and 1995, the advisory fees for each
Portfolio payable to Wilshire, the reductions attributable to a
voluntary fee waiver which was in effect until November 7, 1994,
and the net fees paid were as follows:
*Fee Paid For Period Ended August 31, 1993
Advisory Reduction Net
Portfolio Fee Payable in Fee Fee Paid
Large Company Growth Portfolio $7,486 $7,486 -0-
Large Company Value Portfolio $5,979 $5,979 -0-
Small Company Growth Portfolio $6,308 $6,308 -0-
Small Company Value Portfolio $6,886 $6,886 -0-
*Fee Paid For Fiscal Year Ended August 31, 1994
Advisory Reduction Net
Portfolio Fee Payable in Fee Fee Paid
Large Company Growth Portfolio $ 8,137 $ 8,137 -0-
Large Company Value Portfolio $11,133 $11,133 -0-
Small Company Growth Portfolio $ 8,397 $ 8,397 -0-
Small Company Value Portfolio $20,919 $20,919 -0-
*Fee Paid For Fiscal Year Ended August 31, 1995
Advisory Reduction Net
Portfolio Fee Payable in Fee Fee Paid
Large Company Growth Portfolio $14,834 $ 1,672 $13,162
Large Company Value Portfolio $15,835 $ 2,071 $13,764
Small Company Growth Portfolio $15,630 $ 2,195 $13,435
Small Company Value Portfolio $25,210 $ 4,145 $21,065
*The monthly fee payable to Wilshire during the above time periods
was calculated at the annual rate of .10 of 1% of the value of
each Portfolio's average daily net assets under the contract in
effect prior to May 31, 1996.
Administration Agreement. Pursuant to the Administration
Agreement (the "Administration Agreement") dated May 31, 1996 with
the Fund, First Data, a subsidiary of First Data Corporation, 53
State Street, Boston, Massachusetts 02109, furnishes the Fund
clerical help and accounting, data processing, internal auditing
and legal services and certain other services required by the
Fund, prepares reports to each Portfolio's shareholders, tax
returns, reports to and filings with the Securities and Exchange
Commission and state Blue Sky authorities, and generally assists
in all aspects of the Fund's operations, other than providing
investment advice.
As to each Portfolio, the Administration Agreement has an
initial term of two years and will be extended for a third year
automatically unless the Fund elects to terminate it on the second
anniversary by six months written notice of termination.
Thereafter, the Agreement would continue in effect from year to
year subject to annual approval by (i) the Fund's Board of
Directors or (ii) vote of a majority (as defined in the 1940 Act)
of such Portfolio's outstanding voting securities, provided that
in either event the continuance also is approved by a majority of
the Directors who are not "interested persons" (as defined in the
1940 Act) of the Fund or First Data, by vote cast in person at a
meeting called for the purpose of voting on such approval. As to
each Portfolio, the Administration Agreement is terminable without
penalty, on six months notice prior to its second anniversary, and
60 days' notice at any time after its third anniversary, by the
Fund's Board of Directors or by vote of the holders of a majority
of such Portfolio's shares, or, on not less than 90 days' notice
at any time after its third anniversary by First Data. The
Administration Agreement will terminate automatically, as to the
relevant Portfolio, in the event of its assignment (as defined in
the 1940 Act).
As compensation for First Data's services under the
Administration Agreement, the Fund has agreed to pay First Data a
monthly administration fee at the annual rate of .15 of 1% of the
Fund's monthly average net assets up to aggregate net assets of $1
billion, .10 of 1% of such value on the next $4 billion, and .08
of 1% on excess net assets. For the period September 30, 1992
(commencement of operations for all Portfolios except Small
Company Growth Portfolio which commenced operations on October 1,
1992) through August 31, 1993, and for the fiscal years ended
August 31, 1994 and 1995, the administration fees payable to the
former administrator, The Dreyfus Corporation, for each Portfolio,
the reductions attributable to a voluntary fee waiver which was in
effect until August 31, 1995, and the net fees paid were as
follows:
Fee Paid For Period Ended August 31, 1993
Administration Reduction Net
Portfolio Fee Payable in Fee Fee Paid
Large Company Growth Portfolio $14,972 $14,972 -0-
Large Company Value Portfolio $11,958 $11,958 -0-
Small Company Growth Portfolio $12,617 $12,617 -0-
Small Company Value Portfolio $13,772 $13,772 -0-
Fee Paid For Fiscal Year Ended August 31, 1994
Administration Reduction Net
Portfolio Fee Payable in Fee Fee Paid
Large Company Growth Portfolio $16,275 $16,275 -0-
Large Company Value Portfolio $22,267 $22,267 -0-
Small Company Growth Portfolio $16,793 $16,793 -0-
Small Company Value Portfolio $41,838 $41,838 -0-
Fee Paid For Fiscal Year Ended August 31, 1995
Administration Reduction Net
Portfolio Fee Payable in Fee Fee Paid
Large Company Growth Portfolio $29,667 $29,667 -0-
Large Company Value Portfolio $31,669 $31,669 -0-
Small Company Growth Portfolio $31,260 $31,260 -0-
Small Company Value Portfolio $50,421 $50,421 -0-
Expenses and Expense Information. From time to time,
Wilshire or First Data may waive receipt of its fees and/or
voluntarily assume certain expenses of the Fund, which would have
the effect of lowering the overall expense ratio of the Fund and
increasing yield to investors at the time such amounts are waived
or assumed, as the case may be. The Fund will not pay Wilshire or
First Data for any amounts which may be waived, nor will the Fund
reimburse Wilshire or First Data for any amounts which may be
assumed. 440 Financial, Wilshire or First
Data may bear expenses of distribution of the shares of the
Fund or of the provision of shareholder services to the Fund's
shareholders, including payments to securities dealers or other
financial intermediaries or service providers, out of its profits
and available resources other than the advisory and administration
fees paid by the Fund.
All expenses incurred in the operation of the Fund are borne
by the Fund, except to the extent specifically assumed by 440
Financial, Wilshire or First Data. The expenses borne by the Fund
include: organizational costs, taxes, interest, brokerage fees
and commissions, if any, fees of Directors who are not officers,
directors, employees or holders of 5% or more of the outstanding
voting securities of 440 Financial, Wilshire or First Data or any
of their affiliates, Securities and Exchange Commission fees,
state Blue Sky qualification fees, advisory and administration
fees, shareholder services plan fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance
premiums, industry association fees, outside auditing and legal
expenses, costs of maintaining the Fund's existence, costs of
independent pricing services, costs attributable to investor
services (including, without limitation, telephone and personnel
expenses), costs of shareholders' reports and meetings, costs of
preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to
existing shareholders, and any extraordinary expenses. Expenses
attributable to a particular class of shares or Portfolio are
charged against the assets of that class or Portfolio.
Other expenses of the Fund are allocated between the
Portfolios on the basis determined by the Board of Directors,
including, but not limited to, proportionately in relation to the
net assets of each Portfolio.
As to each Portfolio, Wilshire and First Data have agreed
that if in any fiscal year the aggregate annual expenses of the
Portfolio, exclusive of taxes, brokerage, interest on borrowings,
Rule 12b-1 plan expenses (if applicable) and extraordinary
expenses, but including the advisory and administration fees,
exceed the expense limitation of any state in which shares of the
Portfolio are qualified for offer and sale, the Fund may deduct from the
payments to be made to each of Wilshire and First Data, or
Wilshire and First Data will bear such excess expense in
proportion to their investment advisory fee and administration fee
otherwise payable, to the extent required by state law. Such
deduction or payment, if any, will be estimated daily, and
reconciled and effected or paid, as the case may be, on a monthly
basis.
SHAREHOLDER SERVICES PLAN
For the fiscal year ended August 31, 1995, the following
amounts were charged to each Portfolio under the Fund's
former Shareholder Services Plan:
Large Company Growth Portfolio $34,200
Large Company Value Portfolio $39,503
Small Company Growth Portfolio $38,741
Small Company Value Portfolio $62,831
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"How to Buy Fund Shares."
The Distributor. 440 Financial, a subsidiary of First Data,
c/o First Data, 53 State Street, Boston,
Massachusetts 02109, serves as the Fund's distributor pursuant to
an agreement which is renewable annually.
Transactions Through Securities Dealers. Fund shares may be
purchased and redeemed through securities dealers which may charge
a nominal transaction fee for such services. Some dealers will
place the Fund's shares in an account with their firm. Dealers
also may require that the customer not take physical delivery of
share certificates; the customer not request redemption checks to
be issued in the customer's name; fractional shares not be
purchased; or other conditions.
There is no sales or service charge to individual investors
by the Fund or by 440 Financial, although investment dealers,
banks and other institutions may make reasonable charges to
investors for their services. The services provided and the
applicable fees are established by each dealer or other
institution acting independently of the Fund. The Fund has been
given to understand that these fees may be charged for customer
services including, but not limited to, same-day investment of
client funds; same-day access to client funds; advice to customers
about the status of their accounts, yield currently being paid or
income earned to date; provision of periodic account statements
showing security and money market positions; other services
available from the dealer, bank or other institution; and
assistance with inquiries related to their investment. Any such
fees will be deducted from the investor's account monthly and on
smaller accounts could constitute a substantial portion of the
distribution. Investors should be aware that they may purchase
shares of the Fund directly from the Fund through 440 Financial
without imposition of any maintenance or service charges, other
than those already described herein. In some states, banks or
other financial institutions effecting transactions in Fund shares
may be required to register as dealers pursuant to state law.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"How to Redeem Fund Shares."
Wire Redemption Privilege. By using this Privilege, the
investor authorizes First Data (the "Transfer Agent") to act on
wire or telephone redemption instructions from any person
representing himself or herself to be the investor, and reasonably
believed by the Transfer Agent to be genuine. Ordinarily, the
Fund will initiate payment for shares redeemed pursuant to this
Privilege on the next business day after receipt if the Transfer
Agent receives the redemption request in proper form. Redemption
proceeds ($1,000 minimum) will be transferred by Federal Reserve
wire only to the commercial bank account specified by the investor
on the Account Application or Shareholder Services Form, or to a
correspondent bank if the investor's bank is not a member of the
Federal Reserve System. Fees ordinarily are imposed by such bank
and usually are borne by the investor. Immediate notification by
the correspondent bank to the investor's bank is necessary to
avoid a delay in crediting the funds to the investor's bank
account.
To change the commercial bank or account designated to
receive wire redemption proceeds, a written request must be sent
to the Transfer Agent. This request must be signed by each
shareholder, with each signature guaranteed as described below
under "Stock Certificates; Signatures."
Stock Certificates; Signatures. Any certificates
representing Fund shares to be redeemed must be submitted with the
redemption request. Written redemption requests must be signed by
each shareholder, including each holder of a joint account, and
each signature must be guaranteed. Signatures on endorsed
certificates submitted for redemption also must be guaranteed.
The Transfer Agent has adopted standards and procedures pursuant
to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions,
national securities exchanges, registered securities associations,
clearing agencies and savings associations, as well as from
participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program
("STAMP") and the Stock Exchanges Medallion Program. Guarantees
must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The
Transfer Agent may request additional documentation from
corporations, executors, administrators, trustees or guardians,
and may accept other suitable verification arrangements from
foreign investors, such as consular verification. For more
information with respect to signature-guarantees, please call
the telephone number listed on the cover.
Redemption Commitment. The Fund has committed itself to pay
in cash all redemption requests by any shareholder of record,
limited in amount during any 90-day period to the lesser of
$250,000 or 1% of the value of the Portfolio's net assets at the
beginning of such period. Such commitment is irrevocable without
the prior approval of the Securities and Exchange Commission. In
the case of requests for redemption in excess of such amount, the
Board of Directors reserves the right to make payments in whole or
in part in securities or other assets in case of an emergency or
any time a cash distribution would impair the liquidity of the
Fund to the detriment of the existing shareholders. In such
event, the securities would be readily marketable, to the extent
available, and would be valued in the same manner as the
Portfolio's investment securities are valued. If the recipient
sold such securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be
suspended or the date of payment postponed (a) during any period
when the New York Stock Exchange is closed (other than customary
weekend and holiday closings), (b) when trading in the markets the
Fund ordinarily utilizes is restricted, or when an emergency
exists as determined by the Securities and Exchange Commission so
that disposal of the Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such
other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholder Services."
Portfolio Exchanges. You may purchase, in exchange for
shares of a Portfolio, shares of the same class of one of the
other Portfolios offered by the Fund, to the extent such shares
are offered for sale in your state of residence. Shares of other
Portfolios purchased by exchange will be purchased on the basis of
relative net asset value per share.
To request an exchange, the investor must give exchange
instructions to the Transfer Agent in writing or by telephone.
The ability to issue exchange instructions by telephone is given
to all Fund shareholders automatically, unless the investor checks
the applicable "No" box on the Account Application, indicating
that the investor specifically refuses this privilege. By using
the Telephone Exchange Privilege, the investor authorizes the
Transfer Agent to act on telephonic instructions from any person
representing himself or herself to be the investor and reasonably
believed by the Transfer Agent to be genuine. Telephone exchanges
may be subject to limitations as to the amount involved or the
number of telephone exchanges permitted. Shares issued in
certificate form are not eligible for telephone exchange.
The Portfolio Exchanges service is available to shareholders
resident in any state in which shares of the Portfolio being
acquired may legally be sold. Shares may be exchanged only
between accounts having identical names and other identifying
designations.
The Fund reserves the right to reject any exchange request
in whole or in part. The Portfolio Exchanges service may be
modified or terminated at any time upon notice to shareholders.
Corporate Pension/Profit-Sharing and Personal Retirement
Plans. The Fund makes available to corporations a variety of
prototype pension and profit-sharing plans. To obtain details on
available plans, please call the following toll-free number:
1-888-200-6796.
The investor should read the prototype retirement plan and
the appropriate form of custodial agreement for further details on
eligibility, service fees and tax implications, and should consult
a tax adviser.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"How to Buy Fund Shares."
Valuation of Portfolio Securities. Each Portfolio's
investment securities are valued at the last sale price on the
securities exchange or national securities market on which such
securities primarily are traded. Securities not listed on an
exchange or national securities market, or securities in which
there were no transactions, are valued at the average of the most
recent bid and asked prices. Bid price is used when no asked
price is available. Short-term investments are carried at
amortized cost, which approximates value. Any securities or other
assets for which recent market quotations are not readily
available are valued at fair value as determined in good faith by
the Board of Directors. Expenses and fees, including the advisory
and administration fees, are accrued daily and taken into account
for the purpose of determining the net asset value of each
Portfolio's shares.
New York Stock Exchange Closings. The holidays (as
observed) on which the New York Stock Exchange is closed currently
are: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTION AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Dividends, Distributions and Taxes."
Management of the Fund believes that each Portfolio
qualified for the fiscal year ended August 31, 1995, as a
"regulated investment company" under the Internal Revenue Code of
1986, as amended (the "Code"). Each Portfolio intends to continue
to so qualify. Qualification as a regulated investment company
relieves the Portfolio from any liability for Federal income taxes
to the extent its earnings are distributed in accordance with the
applicable provisions of the Code. The term "regulated investment
company" does not imply the supervision of management or
investment practices or policies by any government agency.
Depending on the composition of a Portfolio's income, all or
a portion of the dividends paid by such Portfolio from net
investment income may qualify for the dividends received deduction
allowable to certain U.S. corporate shareholders ("dividends
received deduction"). In general, dividend income of a Portfolio
distributed to qualifying corporate shareholders will be eligible
for the dividends received deduction only to the extent that (i)
such Portfolio's income consists of dividends paid by U.S.
corporations and (ii) the Portfolio would have been entitled to
the dividends received deduction with respect to such dividend
income if the Portfolio were not a regulated investment company.
The dividends received deduction for qualifying corporate
shareholders may be reduced if the shares of the Portfolio held by
them with respect to which dividends are received are treated as
debt-financed or deemed to have been held for less than 46 days.
In addition, the Code provides other limitations with respect to
the ability of a qualifying corporate shareholder to claim the
dividends received deduction in connection with holding a
Portfolio's shares.
Any dividend or distribution paid shortly after an
investor's purchase may have the effect of reducing the aggregate
net asset value of his shares below the cost of his investment.
Such a dividend or distribution would be a return on investment in
an economic sense, although taxable as stated in the Fund's
Prospectus. In addition, the Code provides that if a shareholder
holds shares of the Fund for six months or less and has received a
capital gain distribution with respect to such shares, any loss
incurred on the sale of such shares will be treated as a long-term
capital loss to the extent of the capital gain distribution
received.
If a shareholder holds shares of a Portfolio while holding a
short position in a regulated futures contract or an option in
such regulated futures contract that substantially diminishes the
shareholders risk of loss in its Portfolio shares (an "offsetting
position"), recently proposed Internal Revenue Service regulations
clarify that (i) any losses on the disposition of Portfolio shares
will be required to be deferred to the extent of any unrealized
appreciation in the short position and (ii) such holding will
limit the shareholder's ability to claim the corporate dividends
received deduction in respect of Portfolio dividends.
Ordinarily, gains and losses realized from portfolio
transactions will be treated as capital gain or loss. All or a
portion of the gain realized from engaging in "conversion
transactions" may be treated as ordinary income under Section
1258. "Conversion transactions" are defined to include certain
forward, futures, option and "straddle" transactions, transactions
marketed or sold to produce capital gains, or transactions
described in Treasury regulations to be issued in the future.
Under Section 1256 of the Code, gain or loss realized by a
Portfolio from certain financial futures transactions will be
treated as 60% long-term capital gain or loss and 40% short-term
capital gain or loss. Gain or loss will arise upon the exercise
or lapse of such futures as well as from closing transactions. In
addition, any such futures remaining unexercised at the end of the
Portfolio's taxable year will be treated as sold for their then
fair market value, resulting in additional gain or loss to such
Portfolio characterized in the manner described above.
Offsetting positions held by a Portfolio involving financial
futures may constitute "straddles." Straddles are defined to
include "offsetting positions" in actively traded personal
property. The tax treatment of straddles is governed by Sections
1092 and 1258 of the Code, which, in certain circumstances,
overrides or modifies the provisions of Section 1256. As such,
all or a portion of any short- or long-term capital gain from
certain "straddle" and/or conversion transactions may be
recharacterized to ordinary income.
If a Portfolio were treated as entering into straddles by
reason of its futures transactions, such straddles could be
characterized as "mixed straddles" if the futures transactions
comprising such straddles were governed by Section 1256 of the
Code. The Portfolio may make one or more elections with respect
to "mixed straddles." Depending upon which election is made, if
any, the results to the Portfolio may differ. If no election is
made, to the extent the straddle rules apply to positions
established by the Portfolio, losses realized by such Portfolio
will be deferred to the extent of unrealized gain in any
offsetting positions. Moreover, as a result of the straddle
rules, short-term capital loss on straddle positions may be
recharacterized as long-term capital loss, and long-term capital
gain on straddle positions may be recharacterized as short-term
capital gain, and as a result of the conversion transaction rules,
long-term capital gain may be recharacterized as ordinary income.
Investment by a Portfolio in securities issued or acquired
at a discount, or providing for deferred interest or for payment
of interest in the form of additional obligations could under
special tax rules affect the amount, timing and character of
distributions to shareholders by causing such Portfolio to
recognize income prior to the receipt of cash payments. For
example, the Portfolio could be required to accrue a portion of
the discount (or deemed discount) at which the securities were
issued each year and to distribute such income in order to
maintain its qualification as a regulated investment company. In
such case, such Portfolio may have to dispose of securities which
it might otherwise have continued to hold in order to generate
cash to satisfy these distribution requirements.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Performance Information."
The Large Company Growth Portfolio's average annual total
return for the 1 and 2.921 year periods ended August 31, 1995 was
23.67% and 10.75%, respectively. The Large Company Value
Portfolio's average annual total return for the 1 and 2.921 year
periods ended August 31, 1995 was 18.97% and 12.48%, respectively.
The Small Company Growth Portfolio's average annual total return
for the 1 and 2.918 year periods ended August 31, 1995 was 23.04%
and 19.03%, respectively. The Small Company Value Portfolio's
average annual total return for the 1 and 2.921 year periods ended
August 31, 1995 was 11.84% and 10.51%, respectively. Average
annual total return is calculated by determining the ending
redeemable value of an investment purchased at net asset value per
share with a hypothetical $1,000 payment made at the beginning of
the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment,
taking the "nth" root of the quotient (where "n" is the number of
years in the period) and subtracting 1 from the result.
The total return for the period September 30, 1992(1)
(commencement of operations), to August 31, 1995, for each Portfolio
was as follows:
Large Company Growth Portfolio 34.74%
Large Company Value Portfolio 40.98%
Small Company Growth Portfolio 66.33%
Small Company Value Portfolio 33.88%
___________________
(1) Small Company Growth Portfolio commenced operations on October
1, 1992.
Total return is calculated by subtracting the amount of the
Portfolio's net
asset value per share at the beginning of a stated period from the
net
asset value per share at the end of the period (after giving
effect to the
reinvestment of dividends and distributions during the period),
and
dividing the result by the net asset value per share at the
beginning of the period.
From time to time advertising materials for the Fund may
refer to Morningstar ratings and related analysis supporting such
ratings.
PORTFOLIO TRANSACTIONS
Wilshire supervises the placement of orders on behalf of
each Portfolio for the purchase or sale of portfolio securities.
Allocation of brokerage transactions, including their frequency,
is made in the best judgment of Wilshire and in a manner deemed
fair and reasonable to shareholders. The primary consideration is
prompt execution of orders at the most favorable net price.
Subject to this consideration, the brokers selected may include
those that supplement Wilshire's research facilities with
statistical data, investment information, economic facts and
opinions. Information so received is in addition to and not in
lieu of services required to be performed by Wilshire and its fees
are not reduced as a consequence of the receipt of such
supplemental information. Such information may be useful to
Wilshire in serving both the Fund and other clients which it
advises and, conversely, supplemental information obtained by the
placement of business of other clients may be useful to Wilshire
in carrying out its obligations to the Fund. Brokers also are
selected because of their ability to handle special executions
such as are involved in large block trades or broad distributions,
provided the primary consideration is met. Large block trades, in
certain cases, may result from two or more clients Wilshire might
advise being engaged simultaneously in the purchase or sale of the
same security. When transactions are executed in the
over-the-counter market, the Fund will deal with the primary
market makers unless a more favorable price or execution otherwise
is obtainable.
Portfolio turnover may vary from year to year, as well as
within a year. Under normal market conditions, each Portfolio's
turnover rate generally will not exceed 60%. High turnover rates
are likely to result in comparatively greater brokerage expenses.
The overall reasonableness of brokerage commissions paid is
evaluated by the Adviser based upon its knowledge of available
information as to the general level of commissions paid by other
institutional investors for comparable services.
For its portfolio securities transactions for the period
September 30, 1992 (commencement of operations for all Portfolios
except Small Company Growth Portfolio which commenced operations
on October 1, 1992), through August 31, 1993, and for the fiscal
years ended August 31, 1994 and 1995, the Fund paid total
brokerage commissions as follows:
Period Ended Year Ended Year Ended
Portfolio August 31, 1993 August 31, 1994 August 31, 1995
Large Company Growth Portfolio $ 8,191 $ 2,199 $13,487
Large Company Value Portfolio $ 9,779 $10,349 $23,243
Small Company Growth Portfolio $21,107 $12,919 $42,766
Small Company Value Portfolio $17,687 $37,422 $61,819
No brokerage commissions were paid to the former distributor, The
Dreyfus Corporation. There were no spreads or concessions on
principal transactions for any such period.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"General Information."
Each share of a Portfolio has one vote and, when issued and
paid for in accordance with the terms of the offering, is fully
paid and non-assessable. Shares of each class of a Portfolio have
equal rights as to dividends and in liquidation. Shares have no
preemptive, subscription or conversion rights and are freely
transferable.
Rule 18f-2 under the 1940 Act provides that any matter
required to be submitted under the provisions of the 1940 Act or
applicable state law or otherwise to the holders of the
outstanding voting securities of an investment company, such as
the Fund, will not be deemed to have been effectively acted upon
unless approved by the holders of a majority of the outstanding
shares of each Portfolio affected by such matter. Rule 18f-2
further provides that a Portfolio shall be deemed to be affected
by a matter unless it is clear that the interests of each
Portfolio in the matter are identical or that the matter does not
affect any interest of such Portfolio. However, the Rule exempts
the selection of independent accountants and the election of
Directors from the separate voting requirements of the Rule. Rule
18f-3 under the 1940 Act makes further provision for the voting
rights of each class of Shares, such as the Institutional Class
shares, of an investment company which issues more than one class
of voting shares. In particular, Rule 18f-3 provides that each
class shall have exclusive voting rights on any matter submitted
to shareholders that relates solely to the class' arrangement for
services and expenses, and shall have separate voting rights on
any matter submitted to shareholders in which the interests of one
class differ from the interests of any other class.
The Fund will send annual and semi-annual financial
statements to all its shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT ACCOUNTANTS
The Northern Trust Company, an Illinois trust company located at
50 South LaSalle Street, Chicago, Illinois 60675, acts as
custodian of the Fund's investments. First Data Investor Services
Group, Inc., a subsidiary of First Data Corporation, P.O. Box
9671, Providence, Rhode Island 02940-9671, is the Fund's transfer
and dividend disbursing agent. Neither The Northern Trust Company nor
First Data has any part in determining the investment policies of
the Fund or which securities are to be purchased or sold by the
Fund.
Ropes & Gray, One International Place, Boston, Massachusetts
02110-2624, is counsel for the Fund.
Coopers & Lybrand L.L.P., 1301 Avenue of the Americas, New
York, New York 10019, independent accountants, have been selected
as auditors of the Fund.
FINANCIAL STATEMENTS
The Fund's audited financial statements for
the Portfolios contained in its annual report for the
fiscal year ended August 31, 1995, and the Fund's
financial statements for the Portfolios contained in its
semi-annual report for the fiscal period ended
February 29, 1996, are incorporated into this Statement of
Additional Information by reference in their entirety.
APPENDIX
Description of the highest commercial paper rating assigned
by Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc. ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Fitch Investors Service, L.P. ("Fitch") and Duff &
Phelps Credit Rating Co. ("Duff").
The rating A is the highest rating and is assigned by S&P to
issues that are regarded as having the greatest capacity for
timely payment. Issues in this category are delineated with the
number 1, 2 or 3 to indicate the relative degree of safety. Paper
rated A-1 indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess
overwhelming safety characteristics are denoted with a plus (+)
sign designation.
The rating Prime-1 (P-1) is the highest commercial paper
rating assigned by Moody's. Issuers of P-1 paper must have a
superior capacity for repayment of short-term promissory
obligations, and ordinarily will be evidenced by leading market
positions in well established industries, high rates of return on
funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad
margins in earnings coverage of fixed financial charges and high
internal cash generation, and well established access to a range
of financial markets and assured sources of alternate liquidity.
The rating F-1 is among the highest commercial paper ratings
assigned by Fitch, denoting very strong credit quality. Issues assigned
this rating reflect an assurance for timely payment only slightly
less than those issues rated F-1+.
The rating D-1 is the highest commercial paper rating
assigned by Duff. Paper rated D-1 is regarded as having very high
certainty of timely payment with excellent liquidity factors which
are supported by ample asset protection. Risk factors are minor.
WILSHIRE TARGET FUNDS, INC.
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
(a) Financial Statements:
Included in Part A of the Registration Statement:
Condensed Financial Information for the period from September 30,
1992 (commencement of operations for all Portfolios except Small
Company Growth Portfolio which commenced operations October 1,
1992) to August 31, 1993, for the fiscal years ended August
31, 1994 and 1995 and for the semi-annual period ended
February 29, 1996.
Included in Part B of the Registration Statement:
The Registrant's financial statements contained in
its Annual Report for the fiscal year ended
August 31, 1995 and the Report of Independent Accountants dated
October 6, 1995 are incorporated by reference to the Definitive
N-30D filed on November 3, 1995 as Accession #0000890453-
95-000010. Furthermore, the Registrant's financial statements
contained in its Semi-Annual Report for
the fiscal period ended February 29, 1996 and the Report of
Independent Accountants dated April 1, 1996 are incorporated
by reference to the Definitive N-30D filed on May 3, 1996 as
Accession #0000890453-96-000004.
Item 24. Financial Statements and Exhibits. - List (continued)
(b) Exhibits:
(1)(a) Articles of Incorporation is incorporated by reference
to Exhibit (1)(a) of Post-Effective Amendment No. 3 to the
Registration Statement on Form N-1A, filed on November 12, 1993.
(1)(b) Articles of Amendment to the Articles of Incorporation
is incorporated by reference to Exhibit (1)(b) of Post-Effective
Amendment No. 3 to the Registration Statement on Form N-1A, filed
on November 12, 1993.
(1)(c) Form of Articles of Amendment to the Articles of
Incorporation amending the name of the Fund and the name of a
class of shares of each Series of the Fund
is incorporated by reference to Exhibit (1)(c) of Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1A, filed
on April 2, 1996.
(1)(d) Form of Articles Supplementary to the Articles of
Incorporation classifying shares of each Series of the Fund
is incorporated by reference to Exhibit (1)(d) of Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1A, filed
on April 2, 1996.
(2) By-Laws are incorporated by reference to Exhibit (2) of
Post-Effective Amendment No. 3 to the Registration Statement on
Form N-1A, filed on November 12, 1993.
(5)(a) Form of Investment Advisory Agreement, to be dated May
31, 1996 is incorporated by reference to Exhibit (5)(a) of Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1A, filed
on April 2, 1996.
(5)(b) Form of Administration Agreement, to be dated May 31,
1996 is incorporated by reference to Exhibit (5)(b) of Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1A, filed
on April 2, 1996.
(6)(a) Form of Distribution Agreement, to be dated May 31,
1996 is incorporated by reference to Exhibit (6)(a) of Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1A, filed
on April 2, 1996.
(8)(a) Form of Custody Agreement, to be dated May 31, 1996
is incorporated by reference to Exhibit (8)(a) of Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1A, filed
on April 2, 1996.
(9)(a) Form of Transfer Agency Agreement
is incorporated by reference to Exhibit (9)(a) of Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1A, filed
on April 2, 1996.
(9)(b) Form of Transfer Agency and Services Agreement, to be
dated May 31, 1996 is incorporated by reference to Exhibit (9)(b)
of Post-Effective Amendment No. 8 to the Registration Statement
on Form N-1A, filed on April 2, 1996.
(11)(a) Consent of Coopers & Lybrand, Independent Accountants
is incorporated by reference to Exhibit (11)(a) of Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1A, filed
on April 2, 1996.
(11)(b) Powers of Attorney of the Directors and officers
is incorporated by reference to Exhibit (11)(b) of Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1A, filed
on April 2, 1996.
(11)(c) Powers of Attorney of Directors and officers.
(15) Form of 12b-1 Plan for Investment Class Shares, effective
May 31, 1996, is incorporated by reference to Exhibit (15) of
Post-Effective Amendment No. 8 to the Registration Statement
on Form N-1A, filed on April 2, 1996.
(17) Financial Data Schedules.
(18) Form of Rule 18f-3 Plan, amended as of May 23, 1996,
to be effective May 31, 1996.
Item 25. Persons Controlled by or under Common Control with
Registrant.
Not Applicable.
Item 26. Number of Holders of Securities.
(1) (2)
Title of Class Number of Record
Investment Class Holders as of March 14, 1996
Common Stock
Par value $.01 per share
Large Company Growth Portfolio 415
Large Company Value Portfolio 315
Small Company Growth Portfolio 899
Small Company Value Portfolio 470
(1) (2)
Title of Class Number of Record
Institutional Class Holders as of March 14, 1996
Common Stock
Par value $.01 per share
Large Company Growth Portfolio 0
Large Company Value Portfolio 0
Small Company Growth Portfolio 0
Small Company Value Portfolio 0
Item 27. Indemnification.
The Statement as to the general effect of any contract,
arrangements or statute under which a director, officer,
underwriter or affiliated person of the Registrant is insured or
indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any
director, officer, affiliated person or underwriter for their own
protection, is incorporated by reference to Item 27 of Part C of
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A, filed on September 23, 1992.
Reference is also made to the Form of Distribution Agreement to be
dated May 31, 1996 attached as Exhibit 6(a) to the Registrant's
Post-Effective Amendment No. 8 to the Registration Statement
on Form N-1A, filed on April 2, 1996.
Item 28. Business and Other Connections of Investment Adviser.
1. Since 1992, Dennis A. Tito has been the president, a
director, and 100% shareholder of Summit Advisors, Inc., located
at 100 Wilshire Boulevard, Suite 1960, Santa Monica, CA 90401.
2. Since 1993, Dennis A. Tito has been chairman of the
Water and Power Commission of the City of Los Angeles, located at
200 North Spring Street, Los Angeles, CA 90012.
3. Since 1993, Robert J. Raab, Jr. has been chairman of
the board of directors of Optical Laser Data Equipment and
Supplies Co., located at 5862 Bolsa Avenue, Suite 103, Huntington
Beach, CA 92549.
Item 29. Principal Underwriters.
(a) Other investment companies for which Registrant's
principal underwriter (exclusive distributor) acts as principal
underwriter or exclusive distributor:
440 Financial Distributors, Inc. (the "Distributor") currently
acts as distributor for BT Insurance Funds Trust, The Galaxy Fund,
The Galaxy VIP Fund, Galaxy Fund II, The Kent Funds and Armada
Funds (formerly known as NCC Funds). The Distributor is
registered with the Securities and Exchange Commission as a
broker-dealer and is a member of the National Association of
Securities Dealers. The Distributor is a wholly-owned subsidiary
of First Data Investor Services Group, Inc., 53 State Street,
Mail Zone BOS425, Boston, MA 02109.
(b)
The information required by this Item 29(b) with respect to each
director, officer or partner of 440 Financial Distributors, Inc.
is incorporated by reference to Schedule A of Form BD filed by 440
Financial Distributors, Inc. with the Securities and Exchange
Commission pursuant to the Securities Act of 1934 (File No. 8-
45467). No director, officer or partner of 440 Financial
Distributors, Inc. holds a Position or Office with the Registrant.
Item 30. Location of Accounts and Records.
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
53 State Street
Boston, Massachusetts 02109
3. The Northern Trust Company
50 LaSalle Street
Chicago, Illinois 60675
4. Wilshire Associates Incorporated
1299 Ocean Avenue
Suite 700
Santa Monica, CA 90401
Item 31. Management Services.
Not Applicable
Item 32. Undertakings.
(1) To call a meeting of shareholders for the purpose of voting
upon the question of removal of a director or directors when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares of common stock and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
(2) To furnish each person to whom a prospectus is delivered
with a copy of the Fund's latest Annual Report to Shareholders,
upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant certifies
that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston, and Commonwealth
of Massachusetts on the 30th day of May, 1996.
DREYFUS-WILSHIRE TARGET FUNDS, INC.
BY: THOMAS D. STEVENS*
Thomas D. Stevens, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, this Amendment to the
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signatures Title Date
THOMAS D. STEVENS* President, Chairman 5/30/96
Thomas D. Stevens of the Board and Director
(Principal Executive Officer)
DAVID R. BORGER* Treasurer 5/30/96
David R. Borger (Principal Financial Officer)
DEWITT F. BOWMAN* Director 5/30/96
DeWitt F. Bowman
PETER J. CARRE* Director 5/30/96
Peter J. Carre
ROBERT J. RAAB, JR.* Director 5/30/96
Robert J. Raab, Jr.
ANNE WEXLER* Director 5/30/96
Anne Wexler
*BY: JULIE A. TEDESCO
Julie A. Tedesco
Attorney-in-Fact
EXHIBIT INDEX
Item Exhibit
(11)(c) Powers of Attorney of Directors and officers
(17) Financial Data Schedules.
(18) Form of Rule 18f-3 Plan, amended as of May 23, 1996,
to be effective May 31, 1996.
EXHIBIT NO. 11c
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints
Edward A. Benjamin, Robert D. Guiod, Thomas D. Stevens
and Julie A. Tedesco and each of them, with full power
to act without the other, his true and lawful
attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in
his name, place and stead, in any and all
capacities (until revoked in writing) to sign any and
all amendments to the Registration Statement for
Dreyfus-Wilshire Target Funds, Inc. (including post-
effective amendments and amendments thereto), and to
file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-
in-fact and agents, and each of them, full power and
authority to do and perform each and every act and
thing ratifying and confirming all that said attorneys-
in-fact and agents or any of them, or their or his or her
substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
THOMAS D. STEVENS
Thomas D. Stevens, President
DAVID R. BORGER
David R. Borger, Treasurer
ROBERT J. RAAB, JR.
Robert J. Raab, Jr., Board Member
PETER J. CARRE
Peter J. Carre, Board Member
Dated: May 30, 1996
EXHIBIT NO. 18
FORM OF
WILSHIRE TARGET FUNDS, INC.
Plan pursuant to Rule 18f-3(d) under the Investment
Company Act of 1940
Effective May 31, 1996
WHEREAS, the Board of Directors of the Wilshire
Target Funds, Inc. (the "Fund") have considered the
following multi-class plan (the "Plan") under which the
Fund may offer multiple classes of shares of its now
existing and hereafter created series pursuant to Rule
18f-3 under the Investment Company Act of 1940 (the
"1940 Act"); and
WHEREAS, a majority of the Directors of the Fund
and a majority of the Directors who are not interested
persons of the Fund have found the Plan, as proposed,
to be in the best interests of each class of the Fund
individually and the Fund as a whole;
NOW, THEREFORE, the Fund hereby approves and
adopts the following Plan pursuant to Rule 18f-3(d) of
the 1940 Act.
The Plan
Each now existing and hereafter created series
("Portfolio") of the Fund may from time to time issue
one or more of the following classes of shares:
Investment Class shares and Institutional Class
shares. Each class is subject to such investment
minimums and other conditions of eligibility as are set
forth in the Fund's prospectus as from time to time in
effect with respect to such class (the "Prospectus").
The differences in expenses among these classes of
shares, and the exchange features of each class of
shares, are set forth below in this Plan, which is
subject to change, to the extent permitted by law and
by the Articles of Incorporation and By-laws of the
Fund, by action of the Board of Directors of the Fund.
Initial Sales Charge
Investment Class and Institutional Class shares of
the Portfolios are offered at their per share net asset
value, without an initial sales charge.
Redemption Fee
No redemption fee will be imposed upon redemptions
of shares of either Class.
Separate Arrangements and Expense Allocations of Each
Class
Investment Class and Institutional Class shares
will pay the expenses associated with their different
distribution and shareholder servicing arrangements.
The Investment Class will reimburse its distributor for payments
to securities dealers or other organizations as service
fees pursuant to agreements with such organizations for
the provision of personal services rendered to
shareholders of that class and the maintenance of
shareholder accounts ("Shareholder Services Fees").
Shareholder Services Fees are paid pursuant to a
plan adopted for the Investment Class pursuant to Rule 12b-1
under the 1940 Act (the "12b-1 Plan"). Shares of the
Investment Class of a Portfolio pay, pursuant to the
12b-1 Plan, a Shareholder Services Fee of up
to 0.25% per annum of the average daily net assets of
such Portfolio attributable to such class, as described
in the Prospectus for that class. The
Institutional Class has not adopted a
12b-1 Plan.
Each class may, at the Directors' discretion, also
pay a different share of other expenses, not including
advisory or custodial fees or other expenses related to
the management of the Portfolios assets, if these
expenses are actually incurred in a different amount by
that class, or if the class receives services of a
different kind or to a different degree than other
classes. All other expenses will be allocated to each
class on the basis of the net asset value of that class
in relation to the net asset value of the particular
Portfolio. However, any Portfolio which may hereafter
be established to operate as a money market fund in
reliance on Rule 2a-7 under the 1940 Act and which will
make daily distributions of its net investment income,
may allocate such other expenses to each share
regardless of class, or based on relative net assets
(i.e., settled shares), as permitted by Rule 18f-
3(c)(2) under the 1940 Act.
Exchange and Conversion Features
Exchange Features
A shareholder may exchange shares of any class of
a Portfolio for shares of the same class of any other
Portfolio in an account with identical registration on
the basis of their respective net asset values.
Conversion Features
Shares of one class do not convert into shares of
another class.
Dividends/Distributions
Each Portfolio pays out as dividends substantially
all of its net investment income (which comes from
dividends and interest it receives from its
investments) and net realized short-term capital gains.
All dividends and/or distributions will be paid,
at the election of the shareholder, either in the form
of additional shares of the class of shares of the
Portfolio to which the dividends and/or distributions
relate or in cash. Dividends paid with respect to each
class of a Portfolio are calculated in the same manner
and at the same time as dividends paid with respect to
each other class of that Portfolio.
Voting Rights
Each share entitles the shareholder of record to
one vote. Each Portfolio will vote separately on
matters which require a shareholder vote and which
relate solely to that Portfolio. In addition, each
class of shares of a Portfolio shall have exclusive
voting rights on any matter submitted to shareholders
that relates solely to that class, and shall have
separate voting rights on any matter submitted to
shareholders in which the interests of one class differ
from the interests of any other class. However, all
Portfolio shareholders will have equal voting rights on
matters that affect all Portfolio shareholders equally.
Under the current terms of this Plan and of the
12b-1 Plan, the Portfolios' Investment Class will vote
separately only with respect to their 12b-1 Plan.
WILSHIRE TARGET FUNDS, INC.
By:
Title: President
Date:
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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