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. 10 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940[ X]
Amendment No. 10 [ X ]
(Check appropriate box or boxes.)
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)
X immediately upon filing pursuant to paragraph (b)
____ on (date) 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, 1996 was filed on October 30, 1996.
WILSHIRE TARGET FUNDS, INC.
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in Part A of Form N-1A - Prospectus
Item No. Information Caption
1. Cover Page Cover Page
2. Synopsis Fee Table
3. Condensed Financial Information Condensed Financial Information
4. General Description of Registrant Description of the Fund; Investment
Considerations and Risks; General
Information
5. Management of the Fund Management of the Fund
5A. Management's Discussion of Not Applicable
Fund Performance
6. Capital Stock and Other Securities How to Buy Fund Shares;
Shareholder Services; How
to Redeem Fund Shares;
Shareholder Services Plan;
Dividends, Distributions and
Taxes; General Information
7. Purchase of Securities
Being Offered How to Buy Fund Shares
8. Redemption or Repurchase How to Redeem Fund Shares
9. Pending Legal Proceedings Not Applicable
Part B. - Statement of Additional Information
Item No. Information Caption
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History General Information and History
13. Investment Objectives and Policies Investment Objective and
Management Policies
14. Management of the Registrant Management of the Fund
15. Control Persons and Principal
Holders of Securities Management of the Fund;
Investment Advisory and
Administration Agreements
16. Investment Advisory and Other
Services Investment Advisory and
Administration Agreements;
Shareholder Services Plan;
Custodian, Transfer and Dividend
Disbursing Agent, Counsel and
Independent Accountants
17. Brokerage Allocation Portfolio Transactions
18. Capital Stock and Other Securities Information about the Fund
19. Purchase, Redemption and Pricing
of Purchase, Redemption and
Securities Being Offered Purchase of Fund Shares;
Redemption of Fund Shares;
Shareholder Services;
Determination of Net Asset Value;
20. Tax Status Dividends, Distributions and Taxes
21. Underwriters Management of the Fund
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
PART A - INFORMATION REQUIRED IN A PROSPECTUS
PROSPECTUS OCTOBER 30, 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 October 30, 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, Rhode Island 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>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
Fee Table 2
Condensed Financial Information 3
Description of the Fund 4
Investment Considerations and Risks 6
Management of the Fund 6
How to Buy Fund Shares 8
Shareholder Services 9
How to Redeem Fund Shares 10
Shareholder Services Plan 12
Dividends, Distributions and Taxes 12
Performance Information 13
General Information 14
Appendix 15
</TABLE>
- --------------------------------------------------------------------------------
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.
1
FEE TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE LARGE SMALL SMALL
COMPANY COMPANY COMPANY COMPANY
GROWTH VALUE GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average daily net assets)
Management Fees (after expense limitation and waivers)* 0.10% 0.10% 0.10% 0.10%
12b-1 (Shareholder Services Plan) Fee 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.58% 0.55% 0.67% 0.52%
Total Fund Operating Expenses 0.93% 0.90% 1.02% 0.87%
</TABLE>
- --------------------------------------------------------------------------------
* Reflects a contractual expense limitation in effect for the fifteen-month
period beginning July 11, 1996 and voluntary waivers which will remain in
effect until at least February 28, 1997. See "Management of the Fund --
Investment Adviser." Absent such expense limitation and fee waivers, the ratio
of advisory fees to average net assets for each Portfolio would be 0.25%.
EXAMPLE:
<TABLE>
<CAPTION>
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:
<S> <C> <C> <C> <C>
1 Year $ 9 $ 9 $ 10 $ 9
3 Years $ 30 $ 29 $ 32 $ 28
5 Years $ 51 $ 50 $ 56 $ 48
10 Years $ 114 $ 111 $ 125 $ 107
</TABLE>
- --------------------------------------------------------------------------------
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 is
based on expenses incurred during the fiscal year ended August 31, 1996 adjusted
to reflect fees payable under the Fund's new advisory and administration
contracts dated July 11, 1996 and May 31, 1996, respectively, and currently
effective expense limitations and waivers. See "Management of the Fund --
Investment Adviser."
You can purchase Shares without charge directly from 440 Financial; you may
be charged a nominal fee if you effect transactions in Shares through a
securities dealer, bank or other financial institution. See "Management of the
Fund" and "Shareholder Services Plan."
2
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
The information for the fiscal years ended August 31, 1993, 1994, 1995 and
1996 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. 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 GROWTH PORTFOLIO LARGE COMPANY VALUE PORTFOLIO
------------------------------ -----------------------------
YEAR ENDED AUGUST 31, YEAR ENDED AUGUST 31,
--------------------- ---------------------
1996 1995 1994 1993* 1996 1995 1994 1993*
---- ---- ---- ----- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 16.34 $ 13.31 $12.74 $12.50 $ 16.02 $ 13.99 $ 15.18 $12.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.07 0.10 0.15 0.21 0.85 0.34 0.36 0.54
Net realized and unrealized gain/(loss)
on
investments 3.45 3.03 0.65 0.10 1.91 2.19 (0.90) 2.30
TOTAL FROM INVESTMENT OPERATIONS 3.52 3.13 0.80 0.31 2.76 2.53 (0.54) 2.84
LESS DISTRIBUTIONS:
Dividends from net investment income (0.12) (0.10) (0.23) (0.07) (0.47) (0.40) (0.36) (0.16)
Distributions from capital gains (0.39) -- -- -- (0.51) (0.10) (0.29) --
TOTAL DISTRIBUTIONS (0.51) (0.10) (0.23) (0.07) (0.98) (0.50) (0.65) (0.16)
Net asset value, end of year $ 19.35 $ 16.34 $13.31 $12.74 $ 17.80 $ 16.02 $ 13.99 $15.18
Total return+ 21.90% 23.67% 6.34% 2.46%++ 17.52% 18.97% (3.61)% 22.93%++
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) $19,035 $21,348 $8,424 $8,061 $17,960 $22,926 $12,158 $8,116
Ratio of net operating expenses to
average net assets 0.93% 0.84% 0.68% -- 0.89% 0.81% 0.58% --
Decrease reflected in above expense
ratio due to expense waivers 0.03% 0.21% 0.71% 1.14%++ 0.03% 0.21% 0.60% 1.32%++
Ratio of net investment income to
average net assets 0.39% 0.94% 1.18% 1.66%++ 3.12% 3.77% 4.02% 4.27%++
Portfolio turnover rate 44% 30% 22% 12% 56% 58% 47% 22%
Average commission rate paid(a) $0.0312 -- -- -- $0.0269 -- -- --
</TABLE>
- --------------------------------------------------------------------------------
* Large Company Growth Portfolio Investment Class shares and Large
Company Value Portfolio Investment Class shares commenced operations
on September 30, 1992.
+ Total return represents aggregate total return for the period
indicated.
++ Non-annualized.
(a) Average commission rate paid per share of portfolio securities purchased and
sold by the Portfolio.
<TABLE>
<CAPTION>
3
SMALL COMPANY GROWTH PORTFOLIO SMALL COMPANY VALUE PORTFOLIO
------------------------------ -----------------------------
YEAR ENDED AUGUST 31, YEAR ENDED AUGUST 31,
--------------------- ---------------------
1996 1995 1994 1993* 1996 1995 1994 1993*
---- ---- ---- ----- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 18.55 $ 15.39 $ 16.03 $12.50 $ 15.41 $ 14.32 $ 14.81 $ 12.50
Income from investment operations:
Net investment income/(loss) (0.19) (0.07) (0.04) 0.08 0.56 0.55 0.45 0.35
Net realized and unrealized gain/(loss)
on
investments 3.06 3.54 0.90 3.48 0.95 1.06 (0.45) 2.10
Total from investment operations 2.87 3.47 0.86 3.56 1.51 1.61 0.00 2.45
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- -- (0.03) (0.56) (0.45) (0.33) (0.14)
Distributions in excess of net
investment
income -- -- (0.07) -- -- -- -- --
Distributions from capital gains (2.86) (0.31) (1.43) -- (0.44) (0.07) (0.16) --
Total distributions (2.86) (0.31) (1.50) (0.03) (1.00) (0.52) (0.49) (0.14)
Net asset value, end of year $ 18.56 $ 18.55 $ 15.39 $16.03 $ 15.92 $ 15.41 $ 14.32 $ 14.81
Total return+ 17.50% 23.04% 5.20% 28.50%++ 10.01% 11.84% (0.01)% 19.72%++
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) $18,049 $21,882 $11,188 $7,527 $27,329 $25,978 $23,438 $15,155
Ratio of net operating expenses to
average net assets 1.01% 0.95% 0.74% -- 0.88% 0.69% 0.50% --
Decrease reflected in above expense
ratio due to expense waivers 0.04% 0.21% 0.73% 1.40%++ 0.04% 0.22% 0.56% 1.32%++
Ratio of net investment income/(loss)
to
average net assets (0.78)% (0.54)% (0.40)% 0.53%++ 3.13% 4.12% 3.64% 3.65%++
Portfolio turnover rate 87% 111% 46% 55% 81% 86% 49% 27%
Average commission rate paid(a) $0.0200 -- -- -- $0.0238 -- -- --
</TABLE>
- --------------------------------------------------------------------------------
* Small Company Growth Portfolio Investment Class shares and Small Company
Value Portfolio Investment Class shares commenced operations on October 1,
1992 and September 30, 1992, respectively.
+ Total return represents aggregate total return for the period
indicated.
++ Non-annualized.
(a) Average commission rate paid per share of portfolio securities purchased and
sold by the Portfolio.
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 -- In June of each year, 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 $144 billion and $210 million on the date of
this prospectus ). It then divides that universe of stocks, first, into those of
the 750 companies with the largest capitalizations (ranging between $144 billion
and $1.5 billion on the date of this prospectus ), which constitute
approximately 90% of the total market value of the stocks included in the
Wilshire 5000 Index, and, se
4
cond, into those of the 1,750 next largest companies based on capitalization
(ranging currently between $1.5 billion and $210 million on the date of this
prospectus ), 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 constituted less than 2% of the total market value of the stocks
included in the Wilshire 5000 Index on the date of this prospectus ). 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 from the four potential universes of companies, the stocks 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.
5
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 Management 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 August 31, 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
6
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 a majority of its outstanding voting
stock as of October 10, 1996.
Pursuant to the terms of the Investment Advisory Agreement dated July 11,
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 an expense
limitation provision. For the first fifteen months under the Advisory Agreement,
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 each 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.
<TABLE>
<CAPTION>
FUND ANNUAL RATE(%)
---- --------------
<S> <C>
LARGE COMPANY GROWTH PORTFOLIO .80
Large Company Value Portfolio .77
Small Company Growth Portfolio .91
Small Company Value Portfolio .66
</TABLE>
In addition, Wilshire has voluntarily undertaken to waive such additional
portion of its fee otherwise payable under the Advisory Agreement as is in
excess of the rate payable under its prior agreement with the Fund (.10 of 1% of
each Portfolio's average daily net assets). The voluntary waiver will remain in
effect until at least February 28, 1997, but may be terminated at any time
thereafter by Wilshire by notice to the Directors of the Fund.
For the fiscal year ended August 31, 1996, the Fund paid Wilshire an
investment advisory fee at the effective annual rate of .10 of 1% of the value
of the average daily net assets of each Portfolio, in each case after giving
effect to the expense limitation set forth in the Advisory Agreement and the
voluntary waivers, both as described above.
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 fee, computed daily and paid monthly, at
the annual rate of .15 of 1% of the value of the Fund's monthly average net
assets up to aggregate assets of $1 billion, .10 of 1% of the Fund's monthly
average net assets on the next $4 billion, and .08 of 1% the Fund's monthly
average net assets on the excess net assets. In addition, the Fund has agreed to
pay First Data an annual fee of $25,000 per each Portfolio and $2,000 for each
additional class. 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. For the period from September
1, 1995 through May 31, 1996, Dreyfus received a monthly administration fee at
the annual rate of .20 of 1% of the Fund's average daily net assets which was
reduced pursuant to an undertaking by Dreyfus in effect from September 1, 1995
through September 30, 1995.
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, 4400 Computer Drive, Westborough,
Massachusetts 01581, serves as the distributor of the Shares. 440 Financial is
an indirect wholly-owned 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
7
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 sold without a sales charge. You may be charged a nominal fee if
you effect transactions in 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 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
8
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.
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
9
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
10
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.
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 correspon-
11
dent 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 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, regard-
12
less 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, 1996 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, a 4% non-deductible excise tax is imposed on regulated investment
companies that fail to currently distribute specified percentages of their
ordinary income and capital gain net income (excess of capital gains over
capital losses). Each Portfolio intends to make sufficient distributions or
deemed distributions of its ordinary income and any capital gain net income with
respect to each year to avoid liability for this excise tax.
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 basis 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.
13
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 share- holder 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.
14
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 1/3% 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.
15
[LOGO]
PROSPECTUS
PROSPECTUS OCTOBER 30, 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 October 30, 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, Rhode Island 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>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
Fee Table 2
Condensed Financial Information 3
Description of the Fund 7
Investment Considerations and Risks 8
Management of the Fund 9
How to Buy Fund Shares 11
Shareholder Services 12
How to Redeem Fund Shares 12
Dividends, Distributions and Taxes 14
Performance Information 15
General Information 16
Appendix 17
</TABLE>
- --------------------------------------------------------------------------------
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.
1
FEE TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE LARGE SMALL SMALL
COMPANY COMPANY COMPANY COMPANY
GROWTH VALUE GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average daily net assets)
Management Fees (after expense limitation and waivers)* 0.10% 0.10% 0.10% 0.10%
Other Expenses 0.58% 0.55% 0.67% 0.52%
Total Fund Operating Expenses 0.68% 0.65% 0.77% 0.62%
</TABLE>
- --------------------------------------------------------------------------------
* Reflects a contractual expense limitation in effect for the fifteen-month
period beginning July 11, 1996 and voluntary waivers which will remain in
effect until at least February 28, 1997. See "Management of the Fund --
Investment Adviser." Absent such expense limitation and fee waivers, the ratio
of advisory fees to average net assets for each Portfolio would be 0.25%.
EXAMPLE:
<TABLE>
<CAPTION>
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:
<S> <C> <C> <C> <C>
1 Year $ 7 $ 7 $ 8 $ 6
3 Years $ 22 $ 21 $ 25 $ 20
5 Years $ 38 $ 36 $ 43 $ 35
10 Years $ 85 $ 81 $ 95 $ 77
</TABLE>
- --------------------------------------------------------------------------------
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 is
based on expenses incurred during the fiscal year ended August 31, 1996 adjusted
to reflect fees payable under the Fund's new advisory and administration
contracts dated July 11, 1996 and May 31, 1996, respectively, and currently
effective expense limitations and waivers. See "Management of the Fund --
Investment Adviser."
You can purchase Shares without charge directly from 440 Financial; you may
be charged a nominal fee if you effect transactions in Shares through a
securities dealer, bank or other financial institution. See "Management of the
Fund."
2
CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
The information for the fiscal years ended August 31, 1993, 1994, 1995 and
1996 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. 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 and an Institutional Class share outstanding throughout the period,
total investment return, ratios to average net assets and other supplemental
data for each Portfolio for the period indicated. This information has been
derived from each Portfolio's financial statements.
LARGE COMPANY GROWTH PORTFOLIO
<TABLE>
<CAPTION>
INSTITUTIONAL
INVESTMENT CLASS SHARES CLASS SHARES
----------------------- ------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
8/31/96 8/31/95 8/31/94 8/31/93* 8/31/96*
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 16.34 $ 13.31 $ 12.74 $ 12.50 $ 18.27
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.07 0.10 0.15 0.21 0.01
Net realized and unrealized gain on investments 3.45 3.03 0.65 0.10 1.07
Total from investment operations 3.52 3.13 0.80 0.31 1.08
LESS DISTRIBUTIONS:
Dividends from net investment income (0.12) (0.10) (0.23) (0.07) --
Distributions from capital gains (0.39) -- -- -- --
Total distributions (0.51) (0.10) (0.23) (0.07) --
Net asset value, end of year $ 19.35 $ 16.34 $ 13.31 $ 12.74 $ 19.35
Total return+ 21.90% 23.67% 6.34% 2.46%++ 5.91%++
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) $19,035 $21,348 $8,424 $8,061 $ 7,763
Ratio of net operating expenses to average net
assets 0.93% 0.84% 0.68% -- 0.91%**
Decrease reflected in above expense ratio due to
expense waivers 0.03% 0.21% 0.71% 1.14%++ 0.03%**
Ratio of net investment income to average net
assets 0.39% 0.94% 1.18% 1.66%++ 0.41%**
Portfolio turnover rate 44% 30% 22% 12% 44%
Average commission rate paid (a) $0.0312 -- -- -- $0.0312
</TABLE>
* Large Company Growth Portfolio Investment Class shares and Institutional
Class shares commenced operations on September 30, 1992 and July 15, 1996,
respectively.
** Annualized.
+ Total return represents aggregate total return for the period indicated.
++ Non-annualized.
(a)Average commission rate paid per share of portfolio securities purchased and
sold by the Portfolio.
3
LARGE COMPANY VALUE PORTFOLIO
<TABLE>
<CAPTION>
INSTITUTIONAL
INVESTMENT CLASS SHARES CLASS SHARES
----------------------- ------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
8/31/96 8/31/95 8/31/94 8/31/93* 8/31/96*
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 16.02 $ 13.99 $ 15.18 $ 12.50 $ 17.19
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.85 0.34 0.36 0.54 0.07
Net realized and unrealized gain/(loss) on
investments 1.91 2.19 (0.90) 2.30 0.54
Total from investment operations 2.76 2.53 (0.54) 2.84 0.61
LESS DISTRIBUTIONS:
Dividends from net investment income (0.47) (0.40) (0.36) (0.16) --
Distributions from capital gains (0.51) (0.10) (0.29) -- --
Total distributions (0.98) (0.50) (0.65) (0.16) --
Net asset value, end of year $ 17.80 $ 16.02 $ 13.99 $ 15.18 $ 17.80
Total return+ 17.52% 18.97% (3.61)% 22.93%++ 3.55%++
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) $17,960 $22,926 $12,158 $8,116 $ 17,425
Ratio of net operating expenses to average net
assets 0.89% 0.81% 0.58% -- 0.87%**
Decrease reflected in above expense ratio due to
expense waivers 0.03% 0.21% 0.60% 1.32%++ 0.03%**
Ratio of net investment income to average net
assets 3.12% 3.77% 4.02% 4.27%++ 3.14%**
Portfolio turnover rate 56% 58% 47% 22% 56%
Average commission rate paid (a) $0.0269 -- -- -- $0.0269
</TABLE>
* Large Company Value Portfolio Investment Class shares and Institutional Class
shares commenced operations on September 30, 1992 and July 15, 1996,
respectively.
** Annualized.
+ Total return represents aggregate total return for the period indicated.
++ Non-annualized.
(a)Average commission rate paid per share of portfolio securities purchased and
sold by the Portfolio.
4
SMALL COMPANY GROWTH PORTFOLIO
<TABLE>
<CAPTION>
INSTITUTIONAL
INVESTMENT CLASS SHARES CLASS SHARES
----------------------- ------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
8/31/96 8/31/95 8/31/94 8/31/93* 8/31/96*
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 18.55 $ 15.39 $ 16.03 $ 12.50 $ 16.66
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) (0.19) (0.07) (0.04) 0.08 (0.02)
Net realized and unrealized gain on investments 3.06 3.54 0.90 3.48 1.92
Total from investment operations 2.87 3.47 0.86 3.56 1.90
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- -- (0.03) --
Distributions in excess of net investment income -- -- (0.07) -- --
Distributions from capital gains (2.86) (0.31) (1.43) -- --
Total distributions (2.86) (0.31) (1.50) (0.03) --
Net asset value, end of year $ 18.56 $ 18.55 $ 15.39 $ 16.03 $ 18.56
Total return+ 17.50% 23.04% 5.20% 28.50%++ 11.40%++
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) $18,049 $21,882 $11,188 $7,527 $ 3,577
Ratio of net operating expenses to average net
assets 1.01% 0.95% 0.74% -- 0.98%**
Decrease reflected in above expense ratio due to
expense waivers 0.04% 0.21% 0.73% 1.40%++ 0.04%**
Ratio of net investment income/(loss) to average
net assets (0.78)% (0.54)% (0.40)% 0.53%++ (0.75)%**
Portfolio turnover rate 87% 111% 46% 55% 87%
Average commission rate paid (a) $0.0200 -- -- -- $0.0200
</TABLE>
* Small Company Growth Portfolio Investment Class shares and Institutional
Class shares commenced operations on October 1, 1992 and July 15, 1996,
respectively.
** Annualized.
+ Total return represents aggregate total return for the period indicated.
++ Non-annualized.
(a)Average commission rate paid per share of portfolio securities purchased and
sold by the Portfolio.
5
SMALL COMPANY VALUE PORTFOLIO
<TABLE>
<CAPTION>
INSTITUTIONAL
INVESTMENT CLASS SHARES CLASS SHARES
----------------------- ------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
8/31/96 8/31/95 8/31/94 8/31/93* 8/31/96*
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 15.41 $ 14.32 $ 14.81 $ 12.50 $ 15.45
Income from investment operations:
Net investment income 0.56 0.55 0.45 0.35 0.06
Net realized and unrealized gain/(loss) on
investments 0.95 1.06 (0.45) 2.10 0.41
Total from investment operations 1.51 1.61 0.00 2.45 0.47
LESS DISTRIBUTIONS:
Dividends from net investment income (0.56) (0.45) (0.33) (0.14) --
Distributions from capital gains (0.44) (0.07) (0.16) -- --
Total distributions (1.00) (0.52) (0.49) (0.14) --
Net asset value, end of year $ 15.92 $ 15.41 $ 14.32 $ 14.81 $ 15.92
Total return+ 10.01% 11.84% (0.01)% 19.72%++ 3.04%++
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) $27,329 $25,978 $23,438 $15,155 $ 7,335
Ratio of net operating expenses to average net
assets 0.88% 0.69% 0.50% -- 0.85%**
Decrease reflected in above expense ratio due to
expense waivers 0.04% 0.22% 0.56% 1.32%++ 0.04%**
Ratio of net investment income to average net
assets 3.13% 4.12% 3.64% 3.65%++ 3.16%**
Portfolio turnover rate 81% 86% 49% 27% 81%
Average commission rate paid (a) $0.0238 -- -- -- $0.0238
</TABLE>
* Small Company Value Portfolio Investment Class shares and Institutional Class
shares commenced operations on September 30, 1992 and July 15, 1996,
respectively.
** Annualized.
+ Total return represents aggregate total return for the period indicated.
++ Non-annualized.
(a)Average commission rate paid per share of portfolio securities purchased and
sold by the Portfolio.
Further information about the performance of each Portfolio's 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.
6
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 -- In June of each year, 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 $144 billion and $210 million on the date of
this prospectus ). It then divides that universe of stocks, first, into those of
the 750 companies with the largest capitalizations (ranging between $144 billion
and $1.5 billion on the date of this prospectus ), 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 $1.5 billion and $210 million
on the date of this prospectus ), 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 constituted less than 2% of the total market
value of the stocks included in the Wilshire 5000 Index on the date of this
prospectus ). 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 from the four potential universes of companies, the
stocks 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 invest-
7
ment 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 Management 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
8
"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 August 31, 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 a majority
of its outstanding voting stock as of October 10, 1996.
Pursuant to the terms of the Investment Advisory Agreement dated July 11,
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 an expense
limitation provision. For the first fifteen months under the Advisory Agreement,
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 each 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.
<TABLE>
<CAPTION>
FUND ANNUAL RATE (%)
- ---- ---------------
<S> <C>
LARGE COMPANY GROWTH
PORTFOLIO .80
Large Company Value Portfolio .77
Small Company Growth
Portfolio .91
Small Company Value Portfolio .66
</TABLE>
In addition, Wilshire has voluntarily undertaken to waive such additional
portion of its fee otherwise payable under the Advisory Agreement as is in
excess of the rate payable under its prior agreement with the Fund (.10 of 1% of
each Portfolio's average daily net assets). The voluntary waiver will remain in
effect until at least February 28, 1997, but may be terminated at any time
thereafter by Wilshire by notice to the Directors of the Fund.
For the fiscal year ended August 31, 1996, the Fund paid Wilshire an
investment advisory fee at the effective annual rate of .10 of 1% of the value
of the average daily net assets of each Portfolio, in each case after giving
effect to the expense limitation set forth in the Advisory Agreement and the
voluntary waivers, both as described above.
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 gen-
9
erally 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 fee, computed daily and paid monthly, at the annual rate of .15 of 1% of
the value of the Fund's monthly average net assets up to aggregate assets of $1
billion, .10 of 1% of the Fund's monthly average net assets on the next $4
billion, and .08 of 1% the Fund's monthly average net assets on the excess net
assets. In addition, the Fund has agreed to pay First Data an annual fee of
$25,000 per each Portfolio and $2,000 for each additional class. 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. For the period from September 1, 1995 through May 31,
1996, Dreyfus received a monthly administration fee at the annual rate of .20 of
1% of the Fund's average daily net assets which was reduced pursuant to an
undertaking by Dreyfus in effect from September 1, 1995 through September 30,
1995.
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, 4400 Computer Drive, Westborough,
Massachusetts 01581, serves as the distributor of the Shares. 440 Financial is
an indirect wholly-owned subsidiary of First Data Corporation. 440 Financial is
not compensated by the Fund or its shareholders for its services as distributor.
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.
10
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 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 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
11
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
12
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. 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
13
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 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.
14
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, 1996 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, a 4% non-deductible excise tax is imposed on regulated investment
companies that fail to currently distribute specified percentages of their
ordinary income and capital gain net income (excess of capital gains over
capital losses). Each Portfolio intends to make sufficient distributions or
deemed distributions of its ordinary income and any capital gain net income with
respect to each year to avoid liability for this excise tax.
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 basis of
average annual total return, aggregate 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.
15
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.
16
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 1/3% 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.
17
[LOGO]
INSTITUTIONAL CLASS SHARES
PROSPECTUS
PART B - INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
WILSHIRE TARGET FUNDS, INC.
(INVESTMENT CLASS SHARES)
STATEMENT OF ADDITIONAL INFORMATION
October 30, 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 October 30, 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 and transfer
agent.
440 Financial Distributors, Inc. ("440 Financial")
serves as the Fund's distributor.
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY 2
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES 2
MANAGEMENT OF THE FUND 8
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS 12
SHAREHOLDER SERVICES PLAN 18
PURCHASE OF FUND SHARES 19
REDEMPTION OF FUND SHARES 20
SHAREHOLDER SERVICES 21
DETERMINATION OF NET ASSET VALUE 23
DIVIDENDS, DISTRIBUTION AND TAXES 23
PERFORMANCE INFORMATION 25
PORTFOLIO TRANSACTIONS 26
INFORMATION ABOUT THE FUND 27
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT ACCOUNTANTS 28
FINANCIAL STATEMENTS 28
APPENDIX 29
GENERAL INFORMATION AND HISTORY
On September 17, 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 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 Prospectuses) 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
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
47 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 RREE
America REIT and RCM Equity Funds, Inc., and as a trustee of
Brandes Investment Trust and the Pacific Gas & 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 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 47 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 investment law. He is 49 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, The Dreyfus Corporation, 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 66 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, 1996, was as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(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 $0 N/A N/A $0
DeWitt F. Bowman $3,250.00 N/A N/A $3,250.00
Robert J. Raab, Jr. $0 N/A N/A $0
Peter J. Carre $3,250.00 N/A N/A $3,250.00
Anne Wexler $6,837.91 N/A N/A $6,837.91
<FN>
* Amount does not include reimbursed expenses for
attending Board meetings, which amounted to $1,611 for all
Directors as a group.
</TABLE>
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 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. He is 47 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 for more than five years. He is
Director of Marketing for its Wilshire Asset Management
division. He is 45 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. 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 39 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.
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 of First Data. For more than five years prior
thereto, he was Treasurer of the Keystone families of funds.
He is 53 years old and his address is c/o First Data
Investor Services Group, Inc., 4400 Computer Drive,
Westborough, Massachusetts 01581.
SCOTT C. BLAIR, Assistant Treasurer. Since 1994, Director
in First Data's Treasury department. Prior to that time,
Mr. Blair was affiliated with the accounting firm of Coopers
& Lybrand L.L.P. He is 32 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 October 10, 1996.
The following persons are known by the Fund to own of
record 5% or more of a Portfolio's Investment Class shares
outstanding on October 10, 1996:
Large Company Growth Portfolio: Charles Schwab &
Company, 101 Montgomery Street, San Francisco, California
94104 -- 64.10%; and Donaldson, Lufkin & Jenrette Securities
Corporation, Mutual Funds Department, P.O. Box 2052, Jersey
City, New Jersey 07303 -- 20.15%.
Large Company Value Portfolio: Charles Schwab &
Company, 101 Montgomery Street, San Francisco, California
94104 -- 56.75%; Donaldson, Lufkin & Jenrette Securities
Corporation, Mutual Funds Department, P.O. Box 2052, Jersey
City, New Jersey 07303 -- 12.38%; and Jennie Edmundson
Memorial Hospital, 933 East Pierce Street, Council Bluffs,
Iowa 51503 -- 8.99%.
Small Company Growth Portfolio: Charles Schwab &
Company, 101 Montgomery Street, San Francisco, California
94104 -- 48.95%; and Donaldson, Lufkin & Jenrette Securities
Corporation, Mutual Funds Department, P.O. Box 2052, Jersey
City, New Jersey 07303 -- 6.06%.
Small Company Value Portfolio: Charles Schwab &
Company, 101 Montgomery Street, San Francisco, California
94104 -- 67.21%; and Donaldson, Lufkin & Jenrette Securities
Corporation, Mutual Funds Department, P.O. Box 2052, Jersey
City, New Jersey 07303 -- 6.29%.
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 July 11, 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 a
majority of its outstanding stock as of October 10, 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
Portfolio's net assets increases. However, the advisory
agreement also includes a fifteen-month expense limitation
provision. For the period from July 11, 1996 to October 11,
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.
<TABLE>
<CAPTION>
<S> <C>
Fund Annual Rate (%)
Large Company Growth Portfolio .80
Large Company Value Portfolio .77
Small Company Growth Portfolio .91
Small Company Value Portfolio .66
</TABLE>
In addition, Wilshire has voluntarily undertaken to
waive such additional portion of its fee otherwise payable
under the Advisory Agreement as is in excess of the rate
payable under its prior agreement with the Fund (.10% of 1%
of each Portfolio's average daily net assets). The
voluntary waiver will remain in effect until at least
February 28, 1997, but may be terminated at any time
thereafter by Wilshire by notice to the Directors of the
Fund.
All fees and expenses are accrued daily and deducted
before declaration of dividends to investors. For the
fiscal years ended August 31, 1994, 1995 and 1996, the
advisory fees for each Portfolio payable to Wilshire, the
reductions attributable to both a voluntary fee waiver which
was in effect until November 7, 1994 and a voluntary fee
waiver and contractual expense limitations in effect
beginning July 11, 1996, and the net fees paid were as
follows:
<TABLE>
<CAPTION>
* Fee Paid For Fiscal Year
Ended August 31, 1994
<S> <C> <C> <C>
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-
</TABLE>
<TABLE>
<CAPTION>
* Fee Paid For Fiscal Year
Ended August 31, 1995
<S> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
* Fee Paid For Fiscal Year
Ended August 31, 1996
<S> <C> <C> <C>
Advisory Reduction Net
Portfolio Fee Payable in Fee Fee Paid
Large Company Growth Portfolio $32,643 $5,851 $26,792
Large Company Value Portfolio $42,436 $7,744 $34,692
Small Company Growth Portfolio $27,057 $4,637 $22,420
Small Company Value Portfolio $43,314 $8,004 $35,310
</TABLE>
* The monthly fee payable to Wilshire during the fiscal
years ended August 31, 1994 and 1995 and the time period
from September 1, 1995 up to and including July 11, 1996 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 up to July 11, 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 fee, computed daily and paid monthly, at the annual
rate of .15 of 1% of the value of the Fund's monthly average
net assets up to aggregate assets of $1 billion, .10 of 1%
of the Fund's monthly average net assets on the next $4
billion, and .08 of 1% the Fund's monthly average net assets
on the excess net assets. In addition, the Fund has agreed
to pay First Data an annual fee of $25,000 per each
Portfolio and $2,000 for each additional class. For the
fiscal years ended August 31, 1994 and 1995, the
administration fees payable to the former administrator, The
Dreyfus Corporation ("Dreyfus"), 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:
<TABLE>
<CAPTION>
Fee Paid For Fiscal Year
Ended August 31, 1994
<S> <C> <C> <C>
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-
</TABLE>
<TABLE>
<CAPTION>
Fee Paid For Fiscal Year
Ended August 31, 1995
<S> <C> <C> <C>
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-
</TABLE>
Fee Paid For Fiscal Year
Ended August 31, 1996
For the fiscal year ended August 31, 1996, the
administration fees payable to Dreyfus for each Portfolio,
the reductions attributable to a voluntary fee waiver
undertaken by Dreyfus which was in effect from September 1,
1995 through September 30, 1995, and the net fees paid were
as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Administration Reduction Net
Portfolio Fee Payable in Fee Fee Paid
Large Company Growth Portfolio $39,599 $3,682 $35,917
Large Company Value Portfolio $50,833 $3,917 $46,916
Small Company Growth Portfolio $33,491 $3,747 $29,744
Small Company Value Portfolio $51,590 $4,383 $47,207
</TABLE>
For the fiscal year ended August 31, 1996, the
administration fees paid to First Data for each Portfolio
were as follows:
<TABLE>
<CAPTION>
<S> <C>
Administration
Portfolio Fee Paid
Large Company Growth Portfolio $16,988
Large Company Value Portfolio $20,411
Small Company Growth Portfolio $15,010
Small Company Value Portfolio $20,770
</TABLE>
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 12(b) 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 July 3, 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 period from July 15, 1996 through August 31,
1996, each Portfolio incurred the following amount, utilized
for payments to securities broker-dealers and other
financial intermediaries for shareholder servicing and other
recordkeeping services, pursuant to the Plan:
<TABLE>
<CAPTION>
<S> <C>
Large Company Growth Portfolio $6,277
Large Company Value Portfolio $5,984
Small Company Growth Portfolio $5,857
Small Company Value Portfolio $9,763
</TABLE>
Pursuant to a shareholder services plan in effect
through May 31, 1996, each Portfolio reimbursed Dreyfus
Service Corporation, a wholly owned subsidiary of Dreyfus,
an amount not to exceed an annual rate of .25 of 1% of the
value of each Portfolio's average daily net assets for
certain allocated expenses of providing personal services
relating to shareholder accounts, such as answering
shareholder inquiries regarding the Portfolios and providing
reports and other information, and services related to the
maintenance of shareholder accounts.
For the fiscal year ended August 31, 1996, the
following amounts were charged to each Portfolio under the
Fund's former shareholder services plan:
<TABLE>
<CAPTION>
<S> <C>
Large Company Growth Portfolio $42,313
Large Company Value Portfolio $48,619
Small Company Growth Portfolio $35,742
Small Company Value Portfolio $51,521
</TABLE>
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, 4400 Computer Drive, Westborough, Massachusetts 01581,
serves as the Fund's distributor pursuant to an agreement
which is renewable annually. Each Portfolio's shares are
sold on a continuous basis by 440 Financial as agent,
although 440 Financial is not obligated to sell any
particular amount of shares.
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. 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,
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, 1996, 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 shareholder's 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."
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.
Average annual total return for Large Company Growth
Portfolio's Investment Class shares for the fiscal year
ended August 31, 1996 was 21.90%. Average annual total
return for Large Company Value Portfolio's Investment Class
shares for the fiscal year ended August 31, 1996 was 17.52%.
Average annual total return for Small Company Growth
Portfolio's Investment Class shares for the fiscal year
ended August 31, 1996 was 17.50%. Average annual total
return for Small Company Value Portfolio's Investment Class
shares for the fiscal year ended August 31, 1996 was 10.01%.
Average annual total return for the period from
September 30, 1992(1) (commencement of operations) through
August 31, 1996 for each Portfolio's Investment Class shares
was as follows:
<TABLE>
<CAPTION>
<S> <C>
Large Company Growth Portfolio 13.51%
Large Company Value Portfolio 13.76%
Small Company Growth Portfolio 18.67%
Small Company Value Portfolio 10.39%
<FN>
(1) Small Company Growth Portfolio commenced operations on
October 1, 1992.
</TABLE>
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.
The total return for the period from September 30,
1992(1) (commencement of operations) through August 31, 1996
for each Portfolio's Investment Class shares was as follows:
<TABLE>
<CAPTION>
<S> <C>
Large Company Growth Portfolio 64.24%
Large Company Value Portfolio 65.68%
Small Company Growth Portfolio 95.44%
Small Company Value Portfolio 47.29%
<FN>
(1) Small Company Growth Portfolio commenced operations on
October 1, 1992.
</TABLE>
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 80%.
Turnover for Small Company Growth Portfolio in 1995 was
higher than anticipated by the Adviser due to the impact of
net withdrawals on the Portfolio. The portfolio turnover of
Small Company Growth Portfolio was also affected by
fluctuating market conditions which at times required
increased dispositions and acquisitions of securities to
maintain the Portfolio's focused style. 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
fiscal years ended August 31, 1994, 1995 and 1996, the Fund
paid total brokerage commissions as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Year Ended Year Ended Year Ended
Portfolio August 31, 1994 August 31, 1995 August 31, 1996
Large Company Growth Portfolio $ 2,199 $13,487 $15,709
Large Company Value Portfolio $10,349 $23,243 $28,558
Small Company Growth Portfolio $12,919 $42,766 $28,311
Small Company Value Portfolio $37,422 $61,819 $60,441
</TABLE>
No brokerage commissions were paid to Dreyfus, the
former distributor. 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, 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., One Post Office Square,
Boston, Massachusetts 02109, 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, 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.
29
WILSHIRE TARGET FUNDS, INC.
(INSTITUTIONAL CLASS SHARES)
STATEMENT OF ADDITIONAL INFORMATION
October 30, 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 October 30, 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 and transfer
agent.
440 Financial Distributors, Inc. ("440 Financial")
serves as the Fund's distributor.
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY 2
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES 2
MANAGEMENT OF THE FUND 8
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS 11
PURCHASE OF FUND SHARES 17
REDEMPTION OF FUND SHARES 18
SHAREHOLDER SERVICES 19
DETERMINATION OF NET ASSET VALUE 20
DIVIDENDS, DISTRIBUTION AND TAXES 20
PERFORMANCE INFORMATION 22
PORTFOLIO TRANSACTIONS 24
INFORMATION ABOUT THE FUND 25
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT ACCOUNTANTS 26
FINANCIAL STATEMENTS 26
APPENDIX 27
GENERAL INFORMATION AND HISTORY
On September 17, 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 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 Prospectuses) 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
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
47 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 RREE
America REIT and RCM Equity Funds, Inc., and as a trustee of
Brandes Investment Trust and the Pacific Gas & 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 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 47 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 investment law. He is 49 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 66
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, 1996, was as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(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 $0 N/A N/A $0
DeWitt F. Bowman $3,250.00 N/A N/A $3,250.00
Robert J. Raab, Jr. $0 N/A N/A $0
Peter J. Carre $3,250.00 N/A N/A $3,250.00
Anne Wexler $6,837.91 N/A N/A $6,837.91
<FN>
* Amount does not include reimbursed expenses for
attending Board meetings, which amounted to $1,611 for all
Directors as a group.
</TABLE>
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 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. He is 47 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 for more than five years. He is
Director of Marketing for its Wilshire Asset Management
division. He is 45 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. 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 39 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.
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 of First Data. For more than five years prior
thereto, he was Treasurer of the Keystone families of funds.
He is 53 years old and his address is c/o First Data
Investor Services Group, Inc., 4400 Computer Drive,
Westborough, Massachusetts 01581.
SCOTT C. BLAIR, Assistant Treasurer. Since 1994, Director
in First Data's Treasury department. Prior to that time,
Mr. Blair was affiliated with the accounting firm of Coopers
& Lybrand L.L.P. He is 32 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 October 10, 1996.
The following persons are known by the Fund to own of
record 5% or more of a Portfolio's Institutional Class
shares outstanding on October 10, 1996.
Large Company Growth Portfolio: Cincinnati Bell
Collectively Bargained Retirees Health Care Trust, 201 East
4th Street, Cincinnati, Ohio 45202 -- 100.00%.
Large Company Value Portfolio: Cincinnati Bell
Collectively Bargained Retirees Health Care Trust, 201 East
4th Street, Cincinnati, Ohio 45202 -- 99.98%.
Small Company Growth Portfolio: Cincinnati Bell
Collectively Bargained Retirees Health Care Trust, 201 East
4th Street, Cincinnati, Ohio 45202 -- 100.00%.
Small Company Value Portfolio: Cincinnati Bell
Collectively Bargained Retirees Health Care Trust, 201 East
4th Street, Cincinnati, Ohio 45202 -- 100.00%.
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 July 11, 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 a
majority of its outstanding stock as of October 10, 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
Portfolio's net assets increases. However, the advisory
agreement also includes a fifteen-month expense limitation
provision. For the period from July 11, 1996 to October 11,
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.
</R
<TABLE>
<CAPTION>
<S> <C>
Fund Annual Rate (%)
Large Company Growth Portfolio .80
Large Company Value Portfolio .77
Small Company Growth Portfolio .91
Small Company Value Portfolio .66
</TABLE>
In addition, Wilshire has voluntarily undertaken to
waive such additional portion of its fee otherwise payable
under the Advisory Agreement as is in excess of the rate
payable under its prior agreement with the Fund (.10% of 1%
of each Portfolio's average daily net assets). The
voluntary waiver will remain in effect until at least
February 28, 1997, but may be terminated at any time
thereafter by Wilshire by notice to the Directors of the
Fund.
All fees and expenses are accrued daily and deducted
before declaration of dividends to investors. For the
fiscal years ended August 31, 1994, 1995 and 1996, the
advisory fees for each Portfolio payable to Wilshire, the
reductions attributable to both a voluntary fee waiver which
was in effect until November 7, 1994 and a voluntary fee
waiver and contractual expense limitations in effect
beginning July 11, 1996, and the net fees paid were as
follows:
<TABLE>
<CAPTION>
* Fee Paid For Fiscal Year
Ended August 31, 1994
<S> <C> <C> <C>
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-
</TABLE>
<TABLE>
<CAPTION>
* Fee Paid For Fiscal Year
Ended August 31, 1995
<S> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
* Fee Paid For Fiscal Year
Ended August 31, 1996
<S> <C> <C> <C>
Advisory Reduction Net
Portfolio Fee Payable in Fee Fee Paid
Large Company Growth Portfolio $32,643 $5,851 $26,792
Large Company Value Portfolio $42,436 $7,744 $34,692
Small Company Growth Portfolio $27,057 $4,637 $22,420
Small Company Value Portfolio $43,314 $8,004 $35,310
</TABLE>
* The monthly fee payable to Wilshire during the fiscal
years ended August 31, 1994 and 1995 and the time period
from September 1, 1995 up to and including July 11, 1996 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 up to July 11, 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 fee, computed daily and paid monthly, at the annual
rate of .15 of 1% of the value of the Fund's monthly average
net assets up to aggregate assets of $1 billion, .10 of 1%
of the Fund's monthly average net assets on the next $4
billion, and .08 of 1% the Fund's monthly average net assets
on the excess net assets. In addition, the Fund has agreed
to pay First Data an annual fee of $25,000 per each
Portfolio and $2,000 for each additional class. For the
fiscal years ended August 31, 1994 and 1995, the
administration fees payable to the former administrator, The
Dreyfus Corporation ("Dreyfus"), 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:
<TABLE>
<CAPTION>
Fee Paid For Fiscal Year
Ended August 31, 1994
<S> <C> <C> <C>
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-
</TABLE>
<TABLE>
<CAPTION>
Fee Paid For Fiscal Year
Ended August 31, 1995
<S> <C> <C> <C>
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-
</TABLE>
Fee Paid For Fiscal Year
Ended August 31, 1996
For the fiscal year ended August 31, 1996, the
administration fees payable to Dreyfus for each Portfolio,
the reductions attributable to a voluntary fee waiver
undertaken by Dreyfus which was in effect from September 1,
1995 through September 30, 1995, and the net fees paid were
as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Administration Reduction Net
Portfolio Fee Payable in Fee Fee Paid
Large Company Growth Portfolio $39,599 $3,682 $35,917
Large Company Value Portfolio $50,833 $3,917 $46,916
Small Company Growth Portfolio $33,491 $3,747 $29,744
Small Company Value Portfolio $51,590 $4,383 $47,207
</TABLE>
For the fiscal year ended August 31, 1996, the
administration fees paid to First Data for each Portfolio
were as follows:
<TABLE>
<CAPTION>
<S> <C>
Administration
Portfolio Fee Paid
Large Company Growth Portfolio $16,988
Large Company Value Portfolio $20,411
Small Company Growth Portfolio $15,010
Small Company Value Portfolio $20,770
</TABLE>
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.
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, 4400 Computer Drive, Westborough, Massachusetts 01581,
serves as the Fund's distributor pursuant to an agreement
which is renewable annually. Each Portfolio's shares are
sold on a continuous basis by 440 Financial as agent,
although 440 Financial is not obligated to sell any
particular amount of shares.
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, 1996, 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 shareholder's 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."
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.
Average annual total return for Large Company Growth
Portfolio's Investment Class shares for the fiscal year
ended August 31, 1996 was 21.90%. Average annual total
return for Large Company Value Portfolio's Investment Class
shares for the fiscal year ended August 31, 1996 was 17.52%.
Average annual total return for Small Company Growth
Portfolio's Investment Class shares for the fiscal year
ended August 31, 1996 was 17.50%. Average annual total
return for Small Company Value Portfolio's Investment Class
shares for the fiscal year ended August 31, 1996 was 10.01%.
Average annual total return for the period from
September 30, 1992(1) (commencement of operations) through
August 31, 1996 for each Portfolio's Investment Class shares
was as follows:
<TABLE>
<CAPTION>
<S> <C>
Large Company Growth Portfolio 13.51%
Large Company Value Portfolio 13.76%
Small Company Growth Portfolio 18.67%
Small Company Value Portfolio 10.39%
<FN>
(1) Small Company Growth Portfolio commenced operations on
October 1, 1992.
</TABLE>
Total return is calculated by subtracting the amount
of the 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.
The total return for the period from September 30,
1992(1) (commencement of operations) through August 31, 1996
for each Portfolio's Investment Class shares was as follows:
<TABLE>
<CAPTION>
<S> <C>
Large Company Growth Portfolio 64.24%
Large Company Value Portfolio 65.68%
Small Company Growth Portfolio 95.44%
Small Company Value Portfolio 47.29%
<FN>
(1) Small Company Growth Portfolio commenced operations on
October 1, 1992.
</TABLE>
The total return for the period from July 15, 1996
(commencement of operations for Institutional Class shares)
through August 31, 1996 for each Portfolio's Institutional
Class shares was as follows:
<TABLE>
<CAPTION>
<S> <C>
Large Company Growth Portfolio 5.91%
Large Company Value Portfolio 3.55%
Small Company Growth Portfolio 11.40%
Small Company Value Portfolio 3.04%
</TABLE>
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 80%.
Turnover for Small Company Growth Portfolio in 1995 was
higher than anticipated by the Adviser due to the impact of
net withdrawals on the Portfolio. The portfolio turnover of
Small Company Growth Portfolio was also affected by
fluctuating market conditions which at times required
increased dispositions and acquisitions of securities to
maintain the Portfolio's focused style. 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
fiscal years ended August 31, 1994, 1995 and 1996, the Fund
paid total brokerage commissions as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Year Ended Year Ended Year Ended
Portfolio August 31, 1994 August 31, 1995 August 31, 1996
Large Company Growth Portfolio $ 2,199 $13,487 $15,709
Large Company Value Portfolio $10,349 $23,243 $28,558
Small Company Growth Portfolio $12,919 $42,766 $28,311
Small Company Value Portfolio $37,422 $61,819 $60,441
</TABLE>
No brokerage commissions were paid to Dreyfus, the former
distributor. 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., One Post Office Square,
Boston, Massachusetts 02109, 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, 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.
27
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, and for the fiscal years ended August
31, 1994, 1995 and 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, 1996 and the Report of Independent Accountants dated
October 14, 1996 are incorporated by reference to the Definitive
N-30D filed on October 28, 1996 as Accession #0000927405-
96-000419.
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)(a) 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.
(2)(b) Amended By-Laws are filed herein.
(5)(a) Investment Advisory Agreement between the Fund
and Wilshire Associates Incorporated dated July 11, 1996
is filed herein.
(5)(b) Form of Administration Agreement
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
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
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) Form of Transfer Agency and Services Agreement
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.
(10) Opinion and Consent of Counsel for the Fund
is incorporated by reference to the Exhibit to the Fund's Annual Notice
of Securities Sold Pursuant to Rule 24f-2 on Form 24f-2, filed
on October 30, 1996.
(11)(a) Consent of Independent Accountants is filed herein.
(11)(b) Powers of Attorney of the Directors and officers
are 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
are incorporated by reference to Exhibit (11)(c) of Post-Effective
Amendment No. 9 to the Registration Statement on Form N-1A, filed
on May 31, 1996.
(11)(d) Consent of Counsel for the Fund is filed herein.
(15) Form of 12b-1 Plan for Investment Class shares
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 are filed herein.
(18) Form of Rule 18f-3 Plan, amended as of May 23, 1996,
is incorporated by reference to Exhibit (18) of Post-Effective
Amendment No. 9 to the Registration Statement on Form N-1A,
filed on 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 October 24, 1996
Common Stock
Par value $.001 per share
Large Company Growth Portfolio 228
Large Company Value Portfolio 203
Small Company Growth Portfolio 840
Small Company Value Portfolio 292
(1) (2)
Title of Class Number of Record
Institutional Class Holders as of October 24, 1996
Common Stock
Par value $.001 per share
Large Company Growth Portfolio 1
Large Company Value Portfolio 2
Small Company Growth Portfolio 1
Small Company Value Portfolio 1
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
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.
The list required by this Item 28 of officers and
directors of Wilshire Associates Incorporated, together with
the information as to any other business, profession,
vocation or employment of substantial nature engaged
in by such officers and directors during the past two
years, is incorporated by reference to Schedules A and
D of Form ADV filed by Wilshire Associates Incorporated
pursuant to the Investment Advisers Act of 1940
(SEC File No. 801-36233).
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, AMBAC Treasurers Trust,
Panorama Trust 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, a wholly-owned
subsidiary of First Data Investor Services Group, Inc., is located at
4400 Computer Drive, Westborough, Massachusetts 01581.
(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.
One American Express Plaza
Providence, Rhode Island 02903
(records relating to its functions as transfer agent)
2. First Data Investor Services Group, Inc.
53 State Street
Boston, Massachusetts 02109
(records relating to its functions as administrator)
3. First Data Investor Services Group, Inc. and
440 Financial Distributors, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
(records relating to its functions as administrator and
distributor, respectively)
4. The Northern Trust Company
50 LaSalle Street
Chicago, Illinois 60675
(records relating to its functions as custodian)
5. Wilshire Associates Incorporated
1299 Ocean Avenue
Suite 700
Santa Monica, CA 90401
(records relating to its functions as investment adviser)
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 October, 1996.
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 10/30/96
Thomas D. Stevens of the Board and Director
(Principal Executive Officer)
DAVID R. BORGER* Treasurer 10/30/96
David R. Borger (Principal Financial Officer)
DEWITT F. BOWMAN* Director 10/30/96
DeWitt F. Bowman
PETER J. CARRE* Director 10/30/96
Peter J. Carre
ROBERT J. RAAB, JR.* Director 10/30/96
Robert J. Raab, Jr.
ANNE WEXLER* Director 10/30/96
Anne Wexler
*BY: JULIE A. TEDESCO
Julie A. Tedesco
Attorney-in-Fact
EXHIBIT INDEX
Item Exhibit
(2)(b) Amended By-Laws.
(5)(a) Investment Advisory Agreement between the Fund
and Wilshire Associates Incorporated
dated July 11, 1996.
(11)(a) Consent of Independent Accountants.
(11)(d) Consent of Counsel for the Fund.
(17) Financial Data Schedules.
Exhibit (2)(b)
AMENDED BY-LAWS
OF
WILSHIRE TARGET FUNDS, INC.
(A Maryland Corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates
representing shares of stock shall set forth thereon the
statements prescribed by Section 2-211 of the Maryland
General Corporation Law ("General Corporation Law") and by
any other applicable provision of law and shall be signed by
the Chairman of the Board or the President or a Vice
President and countersigned by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer and may
be sealed with the corporate seal. The signatures of any
such officers may be either manual or facsimile signatures
and the corporate seal may be either facsimile or any other
form of seal. In case any such officer who has signed
manually or by facsimile any such certificate ceases to be
such officer before the certificate is issued, it
nevertheless may be issued by the corporation with the same
effect as if the officer had not ceased to be such officer
as of the date of its issue.
No certificate representing shares of stock shall be
issued for any share of stock until such share is fully
paid, except as otherwise authorized in Section 2-207 of the
General Corporation Law.
The corporation may issue a new certificate of stock
in place of any certificate theretofore issued by it,
alleged to have been lost, stolen or destroyed, and the
Board of Directors may require, in its discretion, the owner
of any such certificate or his legal representative to give
bond, with sufficient surety, to the corporation to
indemnify it against any loss or claim that may arise by
reason of the issuance of a new certificate.
2. SHARE TRANSFERS. Upon compliance with
provisions restricting the transferability of shares of
stock, if any, transfers of shares of stock of the
corporation shall be made only on the stock transfer books
of the corporation by the record holder thereof or by his
attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary of the corporation or
with a transfer agent or a registrar, if any, and on
surrender of the certificate or certificates for such shares
of stock properly endorsed and the payment of all taxes due
thereon.
3. RECORD DATE FOR STOCKHOLDERS. The Board of
Directors may fix, in advance, a date as the record date for
the purpose of determining stockholders entitled to notice
of, or to vote at, any meeting of stockholders, or
stockholders entitled to receive payment of any dividend or
the allotment of any rights or in order to make a
determination of stockholders for any other proper purpose.
Such date, in any case, shall be not more than 90 days, and
in case of a meeting of stockholders not less than 10 days,
prior to the date on which the meeting or particular action
requiring such determination of stockholders is to be held
or taken. In lieu of fixing a record date, the Board of
Directors may provide that the stock transfer books shall be
closed for a stated period but not to exceed 20 days. If
the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of, or to vote
at, a meeting of stockholders, such books shall be closed
for at least 10 days immediately preceding such meeting. If
no record date is fixed and the stock transfer books are not
closed for the determination of stockholders: (1) The
record date for the determination of stockholders entitled
to notice of, or to vote at, a meeting of stockholders shall
be at the close of business on the day on which the notice
of meeting is mailed or the day 30 days before the meeting,
whichever is the closer date to the meeting; and (2) The
record date for the determination of stockholders entitled
to receive payment of a dividend or an allotment of any
rights shall be at the close of business on the day on which
the resolution of the Board of Directors declaring the
dividend or allotment of rights is adopted, provided that
the payment or allotment date shall not be more than 60 days
after the date on which the resolution is adopted.
4. MEANING OF CERTAIN TERMS. As used herein in
respect of the right to notice of a meeting of stockholders
or a waiver thereof or to participate or vote thereat or to
consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share of stock" or "shares of stock"
or "stockholder" or "stockholders" refers to an outstanding
share or shares of stock and to a holder or holders of
record of outstanding shares of stock when the corporation
is authorized to issue only one class of shares of stock and
said reference also is intended to include any outstanding
share or shares of stock and any holder or holders of record
of outstanding shares of stock of any class or series upon
which or upon whom the Charter confers such rights where
there are two or more classes or series of shares or upon
which or upon whom the General Corporation Law confers such
rights notwithstanding that the Charter may provide for more
than one class or series of shares of stock, one or more of
which are limited or denied such rights thereunder.
5. STOCKHOLDER MEETINGS.
-- ANNUAL MEETINGS. If a meeting of the
stockholders of the corporation is required by the
Investment Company Act of 1940, as amended, to elect the
directors, then there shall be submitted to the stockholders
at such meeting the question of the election of directors,
and a meeting called for that purpose shall be designated
the annual meeting of stockholders for that year. In other
years in which no action by stockholders is required for the
aforesaid election of directors, no annual meeting need be
held.
-- SPECIAL MEETINGS. Special stockholder meetings
for any purpose may be called by the Board of Directors or
the President and shall be called by the Secretary for the
purpose of removing a Director and for all other purposes
whenever the holders of shares entitled to at least ten
percent of all the votes entitled to be cast at such meeting
shall make a duly authorized request that such meeting be
called. Such request shall state the purpose of such
meeting and the matters proposed to be acted on thereat, and
no other business shall be transacted at any such special
meeting. Notwithstanding the foregoing, unless requested by
stockholders entitled to cast a majority of the votes
entitled to be cast at the meeting, a special meeting of the
stockholders need not be called at the request of
stockholders to consider any matter that is substantially
the same as a matter voted on at any special meeting of the
stockholders held during the preceding twelve (12) months.
-- PLACE AND TIME. Stockholder meetings shall be
held at such place, either within the State of Maryland or
at such other place within the United States, and at such
date or dates as the directors from time to time may fix.
-- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF
NOTICE. Written or printed notice of all meetings shall be
given by the Secretary and shall state the time and place of
the meeting. The notice of a special meeting shall state in
all instances the purpose or purposes for which the meeting
is called. Written or printed notice of any meeting shall
be given to each stockholder either by mail or by presenting
it to him personally or by leaving it at his residence or
usual place of business not less than ten days and not more
than ninety days before the date of the meeting, unless any
provisions of the General Corporation Law shall prescribe a
different elapsed period of time, to each stockholder at his
address appearing on the books of the corporation or the
address supplied by him for the purpose of notice. If
mailed, notice shall be deemed to be given when deposited in
the United States mail addressed to the stockholder at his
post office address as it appears on the records of the
corporation with postage thereon prepaid. Whenever any
notice of the time, place or purpose of any meeting of
stockholders is required to be given under the provisions of
these by-laws or of the General Corporation Law, a waiver
thereof in writing, signed by the stockholder and filed with
the records of the meeting, whether before or after the
holding thereof, or actual attendance or representation at
the meeting shall be deemed equivalent to the giving of such
notice to such stockholder. The foregoing requirements of
notice also shall apply, whenever the corporation shall have
any class of stock which is not entitled to vote, to holders
of stock who are not entitled to vote at the meeting, but
who are entitled to notice thereof and to dissent from any
action taken thereat.
-- STATEMENT OF AFFAIRS. The President of the
corporation or, if the Board of Directors shall determine
otherwise, some other executive officer thereof, shall
prepare or cause to be prepared annually a full and correct
statement of the affairs of the corporation, including a
balance sheet and a financial statement of operations for
the preceding fiscal year, which shall be filed at the
principal office of the corporation in the State of
Maryland.
-- CONDUCT OF MEETING. Meetings of the
stockholders shall be presided over by one of the following
officers in the order of seniority and if present and
acting: the President, the Chairman of the Board, a Vice
President or, if none of the foregoing is in office and
present and acting, by a chairman to be chosen by the
stockholders. The Secretary of the corporation or, in his
absence, an Assistant Secretary, shall act as secretary of
every meeting, but if neither the Secretary nor an Assistant
Secretary is present the chairman of the meeting shall
appoint a secretary of the meeting.
-- PROXY REPRESENTATION. Every stockholder may
authorize another person or persons to act for him by proxy
in all matters in which a stockholder is entitled to
participate, whether for the purposes of determining his
presence at a meeting, or whether by waiving notice of any
meeting, voting or participating at a meeting, expressing
consent or dissent without a meeting or otherwise. Every
proxy shall be executed in writing by the stockholder or by
his duly authorized attorney-in-fact and filed with the
Secretary of the corporation. No unrevoked proxy shall be
valid after 11 months from the date of its execution, unless
a longer time is expressly provided therein.
-- INSPECTORS OF ELECTION. The directors, in
advance of any meeting, may, but need not, appoint one or
more inspectors to act at the meeting or any adjournment
thereof. If an inspector or inspectors are not appointed,
the person presiding at the meeting may, but need not,
appoint one or more inspectors. In case any person who may
be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors
in advance of the meeting or at the meeting by the person
presiding thereat. Each inspector, if any, before entering
upon the discharge of his duties, shall take and sign an
oath to execute faithfully the duties of inspector at such
meeting with strict impartiality and according to the best
of his ability. The inspectors, if any, shall determine the
number of shares outstanding and the voting power of each,
the shares represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or
consents, determine the result and do such acts as are
proper to conduct the election or vote with fairness to all
stockholders. On request of the person presiding at the
meeting or any stockholder, the inspector or inspectors, if
any, shall make a report in writing of any challenge,
question or matter determined by him or them and execute a
certificate of any fact found by him or them.
-- VOTING. Each share of stock shall entitle the
holder thereof to one vote, except in the election of
directors, at which each said vote may be cast for as many
persons as there are directors to be elected. Except for
election of directors, a majority of the votes cast at a
meeting of stockholders, duly called and at which a quorum
is present, shall be sufficient to take or authorize action
upon any matter which may come before a meeting, unless more
than a majority of votes cast is required by the
corporation's Articles of Incorporation. A plurality of all
the votes cast at a meeting at which a quorum is present
shall be sufficient to elect a director. Stockholders may
participate in a meeting of stockholders by means of a
conference telephone or similar communications equipment if
all persons participating in the meeting can hear each other
at the same time. Participation by such means shall
constitute presence in person at a meeting.
-- QUORUM. The presence in person or by proxy of
the holders of one-third of the shares of stock of the
corporation entitled to vote (without regard to class) shall
constitute a quorum at any meeting of the stockholders,
except with respect to any matter which, under applicable
statutes or regulatory requirements, requires approval by a
separate vote of one or more classes of stock, in which case
the presence in person or by proxy of the holders of one-
third of the shares of stock of each class required to vote
as a class on the matter shall constitute a quorum.
-- ADJOURNMENT. Any meeting of the stockholders
convened on the date for which it was called may be
adjourned from time to time, without notice other than by
announcement at the meeting at which the adjournment was
taken. In the absence of a quorum, the stockholders present
in person or by proxy, by majority vote of those present and
without notice other than by announcement at the meeting,
may adjourn the meeting from time to time. At any adjourned
meeting at which a quorum shall be present, any action may
be taken that could have been taken at the meeting
originally called. A meeting of the stockholders may not be
adjourned without further notice to a date more than 120
days after the original record date determined pursuant to
Section 3 of this Article I.
6. INFORMAL ACTION. Any action required or
permitted to be taken at a meeting of stockholders may be
taken without a meeting if a consent in writing, setting
forth such action, is signed by all the stockholders
entitled to vote on the subject matter thereof and any other
stockholders entitled to notice of a meeting of stockholders
(but not to vote thereat) have waived in writing any rights
which they may have to dissent from such action and such
consent and waiver are filed with the records of the
corporation.
ARTICLE II
BOARD OF DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and
affairs of the corporation shall be managed under the
direction of a Board of Directors. The use of the phrase
"entire board" herein refers to the total number of
directors which the corporation would have if there were no
vacancies.
2. QUALIFICATIONS AND NUMBER. Each director shall
be a natural person of full age. A director need not be a
stockholder, a citizen of the United States or a resident of
the State of Maryland. The initial Board of Directors shall
consist of one person. Thereafter, the number of directors
constituting the entire board shall never be less than three
or the number of stockholders, whichever is less. At any
regular meeting or at any special meeting called for that
purpose, a majority of the entire Board of Directors may
increase or decrease the number of directors, provided that
the number thereof shall never be less than three or the
number of stockholders, whichever is less, nor more than 12
and further provided that the tenure of office of a director
shall not be affected by any decrease in the number of
directors.
3. ELECTION AND TERM. The first Board of Directors
shall consist of the director named in the Articles of
Incorporation and shall hold office until the first meeting
of stockholders or until his successor has been elected and
qualified. Thereafter, directors who are elected at a
meeting of stockholders, and directors who are elected in
the interim to fill vacancies and newly created
directorships, shall hold office until their successors have
been elected and qualified. Newly created directorships and
any vacancies in the Board of Directors, other than
vacancies resulting from the removal of directors by the
stockholders, may be filled by the Board of Directors,
subject to the provisions of the Investment Company Act of
1940. Newly created directorships filled by the Board of
Directors shall be by action of a majority of the entire
Board of Directors. All other vacancies to be filled by the
Board of Directors may be filled by a majority of the
remaining members of the Board of Directors, although such
majority is less than a quorum thereof.
4. MEETINGS.
-- TIME. Meetings shall be held at such time as
the Board shall fix, except that the first meeting of a
newly elected Board shall be held as soon after its election
as the directors conveniently may assemble.
-- PLACE. Meetings shall be held at such place
within or without the State of Maryland as shall be fixed by
the Board.
-- CALL. No call shall be required for regular
meetings for which the time and place have been fixed.
Special meetings may be called by or at the direction of the
President or of a majority of the directors in office.
-- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER.
Whenever any notice of the time, place or purpose of any
meeting of directors or any committee thereof is required to
be given under the provisions of the General Corporation Law
or of these by-laws, a waiver thereof in writing, signed by
the director or committee member entitled to such notice and
filed with the records of the meeting, whether before or
after the holding thereof, or actual attendance at the
meeting shall be deemed equivalent to the giving of such
notice to such director or such committee member.
-- QUORUM AND ACTION. A majority of the entire
Board of Directors shall constitute a quorum except when a
vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a
quorum, provided such majority shall constitute at least
one-third of the entire Board and, in no event, less than
two directors. A majority of the directors present, whether
or not a quorum is present, may adjourn a meeting to another
time and place. Except as otherwise specifically provided
by the Articles of Incorporation, the General Corporation
Law or these by-laws, the action of a majority of the
directors present at a meeting at which a quorum is present
shall be the action of the Board of Directors.
-- CHAIRMAN OF THE MEETING. The Chairman of the
Board, if any and if present and acting, or the President or
any other director chosen by the Board, shall preside at all
meetings.
5. REMOVAL OF DIRECTORS. Any or all of the
directors may be removed for cause or without cause by the
stockholders, who may elect a successor or successors to
fill any resulting vacancy or vacancies for the unexpired
term of the removed director or directors.
6. COMMITTEES. The Board of Directors may appoint
from among its members an Executive Committee and other
committees composed of two or more directors and may
delegate to such committee or committees, in the intervals
between meetings of the Board of Directors, any or all of
the powers of the Board of Directors in the management of
the business and affairs of the corporation, except the
power to amend the by-laws, to approve any consolidation,
merger, share exchange or transfer of assets, to declare
dividends, to issue stock or to recommend to stockholders
any action requiring the stockholders' approval. In the
absence of any member of any such committee, the members
thereof present at any meeting, whether or not they
constitute a quorum, may appoint a member of the Board of
Directors to act in the place of such absent member.
7. INFORMAL ACTION. Any action required or
permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a
meeting, if a written consent to such action is signed by
all members of the Board of Directors or any such committee,
as the case may be, and such written consent is filed with
the minutes of the proceedings of the Board or any such
committee.
Members of the Board of Directors or any committee
designated thereby may participate in a meeting of such
Board or committee by means of a conference telephone or
similar communications equipment by means of which all
persons participating in the meeting can hear each other at
the same time. Participation by such means shall constitute
presence in person at a meeting.
ARTICLE III
OFFICERS
The corporation may have a Chairman of the Board and
shall have a President, a Secretary and a Treasurer, who
shall be elected by the Board of Directors, and may have
such other officers, assistant officers and agents as the
Board of Directors shall authorize from time to time. Any
two or more offices, except those of President and Vice
President, may be held by the same person, but no person
shall execute, acknowledge or verify any instrument in more
than one capacity, if such instrument is required by law to
be executed, acknowledged or verified by two or more
officers.
Any officer or agent may be removed by the Board of
Directors whenever, in its judgment, the best interests of
the corporation will be served thereby.
ARTICLE IV
PRINCIPAL OFFICE - RESIDENT AGENT - STOCK LEDGER
The address of the principal office of the corporation
in the State of Maryland prescribed by the General
Corporation Law is 32 South Street, c/o The Corporation
Trust Incorporated, Baltimore, Maryland 21202. The name and
address of the resident agent in the State of Maryland
prescribed by the General Corporation Law are: The
Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202.
The corporation shall maintain, at its principal
office in the State of Maryland prescribed by the General
Corporation Law or at the business office or an agency of
the corporation, an original or duplicate stock ledger
containing the names and addresses of all stockholders and
the number of shares of each class held by each stockholder.
Such stock ledger may be in written form or any other form
capable of being converted into written form within a
reasonable time for visual inspection.
The corporation shall keep at said principal office in
the State of Maryland the original or a certified copy of
the by-laws, including all amendment thereto, and shall duly
file thereat the annual statement of affairs of the
corporation prescribed by Section 2-314 of the General
Corporation Law.
ARTICLE V
CORPORATE SEAL
The corporate seal shall have inscribed thereon the
name of the corporation and shall be in such form and
contain such other words and/or figures as the Board of
Directors shall determine or the law require.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall be
fixed, and shall be subject to change, by the Board of
Directors.
ARTICLE VII
CONTROL OVER BY-LAWS
The power to make, alter, amend and repeal the
by-laws is vested in the Board of Directors of the
corporation.
ARTICLE VIII
INDEMNIFICATION
1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The
corporation shall indemnify its directors to the fullest
extent that indemnification of directors is permitted by the
law. The corporation shall indemnify its officers to the
same extent as its directors and to such further extent as
is consistent with law. The corporation shall indemnify its
directors and officers who while serving as directors or
officers also serve at the request of the corporation as a
director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint
venture, trust, other enterprise or employee benefit plan to
the same extent as its directors and, in the case of
officers, to such further extent as is consistent with law.
The indemnification and other rights provided by this
Article shall continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of the
heirs, executors and administrators of such a person. This
Article shall not protect any such person against any
liability to the corporation or any stockholder thereof to
which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office ("disabling conduct").
2. ADVANCES. Any current or former director or
officer of the corporation seeking indemnification within
the scope of this Article shall be entitled to advances from
the corporation for payment of the reasonable expenses
incurred by him in connection with the matter as to which he
is seeking indemnification in the manner and to the fullest
extent permissible under the General Corporation Law. The
person seeking indemnification shall provide to the
corporation a written affirmation of his good faith belief
that the standard of conduct necessary for indemnification
by the corporation has been met and a written undertaking to
repay any such advance if it should ultimately be determined
that the standard of conduct has not been met. In addition,
at least one of the following additional conditions shall be
met: (a) the person seeking indemnification shall provide a
security in form and amount acceptable to the corporation
for his undertaking; (b) the corporation is insured against
losses arising by reason of the advance; or (c) a majority
of a quorum of directors of the corporation who are neither
"interested persons" as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended, nor parties to
the proceeding ("disinterested non-party directors"), or
independent legal counsel, in a written opinion, shall have
determined, based on a review of facts readily available to
the corporation at the time the advance is proposed to be
made, that there is reason to believe that the person
seeking indemnification will ultimately be found to be
entitled to indemnification.
3. PROCEDURE. At the request of any person
claiming indemnification under this Article, the Board of
Directors shall determine, or cause to be determined, in a
manner consistent with the General Corporation Law, whether
the standards required by this Article have been met.
Indemnification shall be made only following: (a) a final
decision on the merits by a court or other body before whom
the proceeding was brought that the person to be indemnified
was not liable by reason of disabling conduct or (b) in the
absence of such a decision, a reasonable determination,
based upon a review of the facts, that the person to be
indemnified was not liable by reason of disabling conduct by
(i) the vote of a majority of a quorum of disinterested non-
party directors or (ii) an independent legal counsel in a
written opinion.
4. INDEMNIFICATION OF EMPLOYEES AND AGENTS.
Employees and agents who are not officers or directors of
the corporation may be indemnified, and reasonable expenses
may be advanced to such employees or agents, as may be
provided by action of the Board of Directors or by contract,
subject to any limitations imposed by the Investment Company
Act of 1940, as amended.
5. OTHER RIGHTS. The Board of Directors may make
further provision consistent with law for indemnification
and advance of expenses to directors, officers, employees
and agents by resolution, agreement or otherwise. The
indemnification provided by this Article shall not be deemed
exclusive of any other right, with respect to
indemnification or otherwise, to which those seeking
indemnification may be entitled under any insurance or other
agreement or resolution of stockholders or disinterested
non-party directors or otherwise
6. AMENDMENTS. References in this Article are to
the General Corporation Law and to the Investment Company
Act of 1940 as from time to time amended. No amendment of
the by-laws shall affect any right of any person under this
Article based on any event, omission or proceeding prior to
the amendment.
Dated: September 9, 1996
Subsequently amended October 1, 1996
- -11-
Exhibit 5(a)
INVESTMENT ADVISORY AGREEMENT
WILSHIRE TARGET FUNDS, INC.
Providence, Rhode Island
July 11, 1996
Wilshire Associates Incorporated
1299 Ocean Avenue
Santa Monica, California 90401-1085
Ladies and Gentlemen:
Wilshire Target Funds, Inc., a Maryland corporation
(the "Fund") consisting of the series set forth on Exhibit A
hereto, as such Exhibit may be revised from time to time
(each, a "Series"), herewith confirms its agreement with
Wilshire Associates Incorporated ("Wilshire") as follows:
The Fund desires to employ its capital by investing
and reinvesting the same in investments of the type and in
accordance with the limitations specified in its Articles of
Incorporation and in its Prospectus and Statement of
Additional Information as from time to time in effect,
copies of which have been or will be submitted to the
Wilshire, and in such manner and to such extent as from time
to time may be approved by the Fund's Board of Directors.
The Fund currently employs Wilshire (the "Adviser") to act
as its investment adviser pursuant to an investment advisory
agreement, dated August 12, 1992, as revised September 17,
1992, and desires to continue the employment of the Adviser
as its investment adviser pursuant to this Agreement. The
Fund also employs First Data Investor Services Group, Inc.
(the "Administrator") as its administrator pursuant to a
separate agreement of even date herewith.
In this connection it is understood that from time to
time the Adviser may employ or associate with itself such
other person or persons as the Adviser may believe to be
particularly fitted to perform, or to assist it in the
performance of, some or all of its responsibilities under
this Agreement. Such person or persons may be persons who
are employed by the Adviser, the Administrator and/or the
Fund as officers or employees or to furnish other services
to or for the Fund. The compensation of such person or
persons shall
be paid by the Adviser and no obligation may be incurred on
the Fund's behalf in any such respect.
Subject to the supervision and approval of the Fund's
Board of Directors, the Adviser will provide investment
management of each Series' portfolio in accordance with such
Series' investment objective and policies as stated in the
Fund's Prospectus and Statement of Additional Information as
from time to time in effect. In connection therewith, the
Adviser will supervise such Series' investments and, if
appropriate, the sale and reinvestment of the Series'
assets. The Adviser will furnish to the Fund such
statistical information, with respect to the investments
which the Fund may hold or contemplate purchasing, as the
Fund may reasonably request. The Fund wishes to be informed
of important developments materially affecting any Series'
portfolio and shall expect the Adviser, on its own
initiative, to furnish to the Fund from time to time such
information as the Adviser may believe appropriate for this
purpose.
In addition, the Adviser will supply office facilities
(which may be in the Adviser's own offices), data processing
services, clerical, internal executive services, and
stationery and office supplies; make available information
necessary to prepare reports to each Series' stockholders,
tax returns, reports to and filings with the Securities and
Exchange Commission and state Blue Sky authorities; and
generally assist in all aspects of the Fund's operations.
The Adviser shall exercise its best judgment in
rendering the services to be provided to the Fund hereunder
and the Fund agrees as an inducement to the Adviser's
undertaking the same that the Adviser shall not be liable
hereunder for any error of judgment or mistake of law or for
any loss suffered by any Series, provided that nothing
herein shall be deemed to protect or purport to protect the
Adviser against any liability to a Series or to its
securityholders to which the Adviser would otherwise be
subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder, or by
reason of the Adviser's reckless disregard of its
obligations and duties hereunder.
In consideration of the services rendered pursuant to
this Agreement, the Fund will pay the Adviser a fee
calculated daily and paid monthly at the annual rate set
forth opposite each Series' name on Exhibit A hereto based
on the value of such Series' average daily net assets. Net
asset value shall be computed on such days and at such time
or times as described in the Fund's then-current Prospectus
and Statement of Additional Information. Upon any
termination of this Agreement before the end of any month,
the fee for such part of a month shall be pro-rated
according to the proportion which such period bears to the
full monthly period and shall be payable upon the date of
termination of this Agreement.
For the purpose of determining fees payable to the
Adviser, the value of each Series' net assets shall be
computed in the manner specified in the Fund's Articles of
Incorporation for the computation of the value of each
Series' net assets.
However, for the three month period June 1, 1996
through August 31, 1996 and the fiscal year September 1,
1996 through August 31, 1997, if the aggregate operating
expenses of any Series (exclusive of interest, taxes,
brokerage, 12b-1fees and extraordinary expenses) for such
period exceed the annual rate specified in the following
table for such class, the investment advisory fee otherwise
payable for that period by the Series under this Agreement
will be reduced by the amount of the excess, but not below
an annual fee rate of .10 of 1% of such Series' average
daily net assets.
Series Annual Rate (%)
Large company Growth Portfolio .80
Large company Value Portfolio .77
Small company Growth Portfolio .91
Small company Value Portfolio .66
The Adviser will bear all expenses in connection with
the performance of its services under this Agreement. All
other expenses to be incurred in the operation of the Fund
will be borne by the Fund, except to the extent specifically
assumed by the Adviser. The expenses to be borne by the
Fund include, without limitation, the following:
distribution expense, transfer agency expense, dividend
disbursing and shareholder services agency expense,
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 Wilshire or any of its
affiliates, Securities and Exchange Commission fees and
state Blue Sky qualification fees, investment advisory and
administration fees, charges of custodians, certain
insurance premiums, industry association fees, outside
auditing and legal expenses, costs of independent pricing
services, costs of maintaining corporate existence, costs
attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of
preparing and printing prospectuses and statements of
additional information for regulatory purposes and for
distribution to existing stockholders, costs of
stockholders' reports and corporate meetings, and any
extraordinary expenses.
As to each Series, if in any fiscal year the aggregate
annual expenses of the Series (including fees pursuant to
this Agreement, but excluding interest, taxes, brokerage,
12b-1 plan fees and extraordinary expenses) exceed the
expense limitation of any state in which shares of the
Series are qualified for offer and sale, the Fund may deduct
the amount of the excess from the fees to be paid hereunder,
to the extent required by state law and to the extent that
such excess has not been born by the Administrator or any
other person furnishing services to the Fund. The Adviser's
obligation pursuant hereto is limited to the amount of its
fees hereunder. Such deduction, if any, will be estimated
daily, and reconciled and deducted on a monthly basis.
The Fund understands that the Adviser now acts, or may
in the future act, as investment adviser to various
investment companies and fiduciary or other managed
accounts, and the Fund has no objection to the Adviser's so
acting, provided that when the purchase or sale of
securities of the same issuer is suitable for the investment
objectives of two or more companies or accounts managed by
the Adviser which have available funds for investment, the
available securities will be allocated in a manner believed
by the Adviser to be in keeping with its fiduciary or
contractual duties to each company or account. It is
recognized that in some cases this procedure may adversely
affect the price paid or received by one or more Series or
the size of the position obtainable for or disposed of by
one or more Series.
In addition, it is understood that the persons
employed by the Adviser to assist in the performance of its
duties hereunder will not devote their full time to such
service and nothing contained herein shall be deemed to
limit or restrict the right of the Adviser or the right of
any of its affiliates to engage in and devote time and
attention to other businesses or to render services of
whatever kind or nature.
Any person, even though also an officer, director,
partner, employee or agent of the Adviser, who may be or
become an officer, director, employee or agent of the Fund,
shall be deemed, when rendering services to the Fund or
acting on any business of the Fund, to be rendering such
services to or acting solely for the Fund and not as an
officer, director, partner, employee or agent or one under
control or direction of the Adviser even though paid by the
Adviser.
The Fund recognizes that from time to time directors,
officers and employees of the Adviser may serve as
directors, trustees, partners, officers and employees of
other corporations, business trusts, partnerships or other
entities (including other investment companies) and that
such other entities may include the name "Wilshire" as part
of their name, and that the Adviser or its affiliates may
enter into investment advisory or other agreements with such
other entities. If the Adviser ceases to act as the Fund's
investment adviser, the Fund agrees to take all necessary
action to change the name of the Fund as soon as
practicable, and in no event longer than nine months, after
receipt of a request from the Adviser to do so, to a name
not including "Wilshire" in any form or combination of
words.
As to each Series, this Agreement shall continue in
effect until the date set forth opposite such Series' name
on Exhibit A hereto (the "Reapproval Date"), and thereafter
shall continue automatically for successive annual periods
ending on the day of each year set forth opposite such
Series' name on Exhibit A hereto (the "Reapproval Day"),
provided such continuance is specifically approved at least
annually by (i) the Fund's Board of Directors or (ii) vote
of a majority (as defined in the Investment Company Act of
1940) of such Series' outstanding voting securities,
provided that in either event its continuance also is
approved by a majority of the Fund's Directors who are not
"interested persons" (as defined in said Act) of any party
to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. As to
each Series, this Agreement is terminable without penalty,
on 60 days' notice, by the Fund's Board of Directors or by
vote of holders of a majority of such Series' shares or,
upon not less than 90 days' notice, by the Adviser. This
Agreement also will terminate automatically, as to the
relevant Series, in the event of its assignment (as defined
in said Act).
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
WILSHIRE TARGET FUNDS, INC.
THOMAS D. STEVENS
Thomas D. Stevens President
Accepted:
WILSHIRE ASSOCIATES INCORPORATED
By:THOMAS D. STEVENS
EXHIBIT A
Name of Series
Annual Fees as Reapproval Date Reapproval Day
a Percentage
of Average Daily
Net Assets
Large Company Growth Portfolio
.25 of 1% May 31, 1998 May 31
Large Company Value Portfolio
.25 of 1% May 31, 1998 May 31
Small Company Growth Portfolio
.25 of 1% May 31, 1998 May 31
Small Company Value Portfolio
.25 of 1% May 31, 1998 May 31
- -1-
Exhibit 11(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective Amendment No.
10 to the Registration Statement on Form N-1A (1933 Act
File No. 33-50390) of Wilshire Target Funds, Inc. (the
"Fund"), of our report dated October 14, 1996 on our audit
of the financial statements and financial highlights of the
Fund, which report is included in the Annual Report to
Shareholders for the year ended August 31, 1996 which is
incorporated by reference in the Registration Statement.
We also consent to the reference to our firm under the
captions "Condensed Financial Information" in the
Prospectuses and "Custodian, Transfer and Dividend
Disbursing Agent, Counsel and Independent Accountants" in
the Statements of Additional Information of the Registration
Statement.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts Coopers & Lybrand L.L.P.
October 25, 1996
Exhibit 11(d)
CONSENT OF COUNSEL
We hereby consent to the use of our name and
to the reference to our Firm under the caption
"Counsel" in the Statements of Additional
Information that are included in Post-Effective
Amendment No. 10 to the Registration Statement on
Form N-1A under the Securities Act of 1933, as
amended, of Wilshire Target Funds, Inc.
ROPES & GRAY
Ropes & Gray
Boston, MA
October 28, 1996
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000890453
<NAME> WILSHIRE TARGET FUNDS, INC.
<SERIES>
<NUMBER>011
<NAME>LARGE COMPANY GROWTH FUND INV.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 21,316,749
<INVESTMENTS-AT-VALUE> 26,897,050
<RECEIVABLES> 25,256
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 15,124
<TOTAL-ASSETS> 26,937,430
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 140,099
<TOTAL-LIABILITIES> 140,099
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,144,651
<SHARES-COMMON-STOCK> 983,778
<SHARES-COMMON-PRIOR> 1,306,134
<ACCUMULATED-NII-CURRENT> 31,210
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,714,606
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,580,301
<NET-ASSETS> 19,034,785
<DIVIDEND-INCOME> 346,690
<INTEREST-INCOME> 8,290
<OTHER-INCOME> 0
<EXPENSES-NET> 250,007
<NET-INVESTMENT-INCOME> 104,973
<REALIZED-GAINS-CURRENT> 3,041,621
<APPREC-INCREASE-CURRENT> 1,835,722
<NET-CHANGE-FROM-OPS> 4,982,316
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (171,127)
<DISTRIBUTIONS-OF-GAINS> (586,295)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 811,376
<NUMBER-OF-SHARES-REDEEMED> (1,173,450)
<SHARES-REINVESTED> 39,718
<NET-CHANGE-IN-ASSETS> 5,448,884
<ACCUMULATED-NII-PRIOR> 89,061
<ACCUMULATED-GAINS-PRIOR> 230,334
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 32,643
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 259,540
<AVERAGE-NET-ASSETS> 25,817,546
<PER-SHARE-NAV-BEGIN> 16.34
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 3.45
<PER-SHARE-DIVIDEND> (0.12)
<PER-SHARE-DISTRIBUTIONS> (0.39)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.35
<EXPENSE-RATIO> 0.93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.0000
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000890453
<NAME> WILSHIRE TARGET FUNDS, INC.
<SERIES>
<NUMBER>021
<NAME>Wilshire Large Company Value Fund Inv.
<S> <C>
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Aug-31-1996
<PERIOD-END> Aug-31-1996
<INVESTMENTS-AT-COST> 32,611,321
<INVESTMENTS-AT-VALUE> 35,401,249
<RECEIVABLES> 468,973
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 18,134
<TOTAL-ASSETS> 35,888,356
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 503,666
<TOTAL-LIABILITIES> 503,666
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,083,821
<SHARES-COMMON-STOCK> 1,009,161
<SHARES-COMMON-PRIOR> 1,430,928
<ACCUMULATED-NII-CURRENT> 779,655
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,901,041
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,789,928
<NET-ASSETS> 17,959,835
<DIVIDEND-INCOME> 1,373,115
<INTEREST-INCOME> 16,319
<OTHER-INCOME> 0
<EXPENSES-NET> 307,601
<NET-INVESTMENT-INCOME> 1,081,833
<REALIZED-GAINS-CURRENT> 3,153,054
<APPREC-INCREASE-CURRENT> 583,669
<NET-CHANGE-FROM-OPS> 4,867,175
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (772,273)
<DISTRIBUTIONS-OF-GAINS> (831,426)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,253,565
<NUMBER-OF-SHARES-REDEEMED> (1,767,796)
<SHARES-REINVESTED> 92,464
<NET-CHANGE-IN-ASSETS> 12,507,054
<ACCUMULATED-NII-PRIOR> 470,916
<ACCUMULATED-GAINS-PRIOR> 569,152
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 42,436
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 319,262
<AVERAGE-NET-ASSETS> 32,510,667
<PER-SHARE-NAV-BEGIN> 16.02
<PER-SHARE-NII> 0.85
<PER-SHARE-GAIN-APPREC> 1.91
<PER-SHARE-DIVIDEND> (0.47)
<PER-SHARE-DISTRIBUTIONS> (0.51)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.80
<EXPENSE-RATIO> 0.89
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.0000
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000890453
<NAME> WILSHIRE TARGET FUNDS, INC.
<SERIES>
<NUMBER>031
<NAME>SMALL COMPANY GROWTH FUND INV.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 19,748,411
<INVESTMENTS-AT-VALUE> 21,512,181
<RECEIVABLES> 86,411
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 116,175
<TOTAL-ASSETS> 21,714,767
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 88,048
<TOTAL-LIABILITIES> 88,048
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13,168,094
<SHARES-COMMON-STOCK> 972,333
<SHARES-COMMON-PRIOR> 1,179,532
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,485,066
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,763,770
<NET-ASSETS> 18,049,348
<DIVIDEND-INCOME> 44,193
<INTEREST-INCOME> 6,908
<OTHER-INCOME> 0
<EXPENSES-NET> 225,832
<NET-INVESTMENT-INCOME> (174,731)
<REALIZED-GAINS-CURRENT> 3,995,373
<DEPPR-DECREASE-CURRENT> (279,274)
<NET-CHANGE-FROM-OPS> 3,541,368
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (3,245,229)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 562,163
<NUMBER-OF-SHARES-REDEEMED> (955,596)
<SHARES-REINVESTED> 186,234
<NET-CHANGE-IN-ASSETS> (255,459)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,970,329
<OVERDISTRIB-NII-PRIOR> (87,165)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 27,057
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 234,216
<AVERAGE-NET-ASSETS> 21,987,377
<PER-SHARE-NAV-BEGIN> 18.55
<PER-SHARE-NII> (0.19)
<PER-SHARE-GAIN-APPREC> 3.06
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (2.86)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.56
<EXPENSE-RATIO> 1.01
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.0000
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000890453
<NAME> WILSHIRE TARGET FUNDS, INC.
<SERIES>
<NUMBER>041
<NAME>Small Company Value Fund Inv.
<S> <C>
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Aug-31-1996
<PERIOD-END> Aug-31-1996
<INVESTMENTS-AT-COST> 32,912,036
<INVESTMENTS-AT-VALUE> 34,238,367
<RECEIVABLES> 3,905,965
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 11,891
<TOTAL-ASSETS> 38,156,223
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,492,569
<TOTAL-LIABILITIES> 3,492,569
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 23,545,516
<SHARES-COMMON-STOCK> 1,716,735
<SHARES-COMMON-PRIOR> 1,685,300
<ACCUMULATED-NII-CURRENT> 751,862
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,922,414
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,326,331
<NET-ASSETS> 27,328,889
<DIVIDEND-INCOME> 1,400,514
<INTEREST-INCOME> 17,033
<OTHER-INCOME> 0
<EXPENSES-NET> 310,652
<NET-INVESTMENT-INCOME> 1,106,895
<REALIZED-GAINS-CURRENT> 2,101,923
<APPREC-INCREASE-CURRENT> (194,305)
<NET-CHANGE-FROM-OPS> 3,066,034
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,093,961)
<DISTRIBUTIONS-OF-GAINS> (860,790)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,527,858
<NUMBER-OF-SHARES-REDEEMED> (1,619,393)
<SHARES-REINVESTED> 122,970
<NET-CHANGE-IN-ASSETS> 8,736,963
<ACCUMULATED-NII-PRIOR> 733,991
<ACCUMULATED-GAINS-PRIOR> 678,335
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 43,314
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 323,039
<AVERAGE-NET-ASSETS> 34,401,295
<PER-SHARE-NAV-BEGIN> 15.41
<PER-SHARE-NII> 0.56
<PER-SHARE-GAIN-APPREC> 0.95
<PER-SHARE-DIVIDEND> (0.56)
<PER-SHARE-DISTRIBUTIONS> (0.44)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.92
<EXPENSE-RATIO> 0.88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.0000
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000890453
<NAME> WILSHIRE TARGET FUNDS, INC.
<SERIES>
<NUMBER>012
<NAME>LARGE COMPANY GROWTH FUND INST.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 21,316,749
<INVESTMENTS-AT-VALUE> 26,897,050
<RECEIVABLES> 25,256
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 15,124
<TOTAL-ASSETS> 26,937,430
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 140,099
<TOTAL-LIABILITIES> 140,099
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,326,563
<SHARES-COMMON-STOCK> 401,090
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 31,210
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,714,606
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,580,301
<NET-ASSETS> 7,762,546
<DIVIDEND-INCOME> 346,690
<INTEREST-INCOME> 8,290
<OTHER-INCOME> 0
<EXPENSES-NET> 250,007
<NET-INVESTMENT-INCOME> 104,973
<REALIZED-GAINS-CURRENT> 3,041,621
<APPREC-INCREASE-CURRENT> 1,835,722
<NET-CHANGE-FROM-OPS> 4,982,316
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 401,090
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,448,884
<ACCUMULATED-NII-PRIOR> 89,061
<ACCUMULATED-GAINS-PRIOR> 230,334
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 32,643
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 259,540
<AVERAGE-NET-ASSETS> 974,656
<PER-SHARE-NAV-BEGIN> 18.27
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 1.07
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.35
<EXPENSE-RATIO> 0.91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.0000
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000890453
<NAME> WILSHIRE TARGET FUNDS, INC.
<SERIES>
<NUMBER>022
<NAME>Large Company Value Fund Inst.
<S> <C>
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Aug-31-1996
<PERIOD-END> Aug-31-1996
<INVESTMENTS-AT-COST> 32,611,321
<INVESTMENTS-AT-VALUE> 35,401,249
<RECEIVABLES> 468,973
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 18,134
<TOTAL-ASSETS> 35,888,356
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 503,666
<TOTAL-LIABILITIES> 503,666
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16,830,245
<SHARES-COMMON-STOCK> 979,106
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 779,655
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,901,041
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,789,928
<NET-ASSETS> 17,424,855
<DIVIDEND-INCOME> 1,373,115
<INTEREST-INCOME> 16,319
<OTHER-INCOME> 0
<EXPENSES-NET> 307,601
<NET-INVESTMENT-INCOME> 1,081,833
<REALIZED-GAINS-CURRENT> 3,153,054
<APPREC-INCREASE-CURRENT> 583,669
<NET-CHANGE-FROM-OPS> 4,867,175
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 979,106
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 12,507,054
<ACCUMULATED-NII-PRIOR> 470,916
<ACCUMULATED-GAINS-PRIOR> 569,152
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 42,436
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 319,262
<AVERAGE-NET-ASSETS> 2,183,735
<PER-SHARE-NAV-BEGIN> 17.19
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 0.54
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.80
<EXPENSE-RATIO> 0.87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.0000
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000890453
<NAME> WILSHIRE TARGET FUNDS, INC.
<SERIES>
<NUMBER>032
<NAME>SMALL COMPANY GROWTH FUND INST.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 19,748,411
<INVESTMENTS-AT-VALUE> 21,512,181
<RECEIVABLES> 86,411
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 116,175
<TOTAL-ASSETS> 21,714,767
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 88,048
<TOTAL-LIABILITIES> 88,048
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,209,789
<SHARES-COMMON-STOCK> 192,695
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,485,066
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,763,770
<NET-ASSETS> 3,577,371
<DIVIDEND-INCOME> 44,193
<INTEREST-INCOME> 6,908
<OTHER-INCOME> 0
<EXPENSES-NET> 225,832
<NET-INVESTMENT-INCOME> (174,731)
<REALIZED-GAINS-CURRENT> 3,995,373
<DEPPR-DECREASE-CURRENT> (279,274)
<NET-CHANGE-FROM-OPS> 3,541,368
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 192,695
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (255,459)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,970,329
<OVERDISTRIB-NII-PRIOR> (87,165)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 27,057
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 234,216
<AVERAGE-NET-ASSETS> 432,690
<PER-SHARE-NAV-BEGIN> 16.66
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 1.91
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.56
<EXPENSE-RATIO> 0.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.0000
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000890453
<NAME> WILSHIRE TARGET FUNDS, INC.
<SERIES>
<NUMBER>042
<NAME>Small Company Value Fund Inst.
<S> <C>
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Aug-31-1996
<PERIOD-END> Aug-31-1996
<INVESTMENTS-AT-COST> 32,912,036
<INVESTMENTS-AT-VALUE> 34,238,367
<RECEIVABLES> 3,905,965
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 11,891
<TOTAL-ASSETS> 38,156,223
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,492,569
<TOTAL-LIABILITIES> 3,492,569
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,117,531
<SHARES-COMMON-STOCK> 460,695
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 751,862
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,922,414
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,326,331
<NET-ASSETS> 7,334,765
<DIVIDEND-INCOME> 1,400,514
<INTEREST-INCOME> 17,033
<OTHER-INCOME> 0
<EXPENSES-NET> 310,652
<NET-INVESTMENT-INCOME> 1,106,895
<REALIZED-GAINS-CURRENT> 2,101,923
<APPREC-INCREASE-CURRENT> (194,305)
<NET-CHANGE-FROM-OPS> 3,066,034
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 460,695
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 8,736,963
<ACCUMULATED-NII-PRIOR> 733,991
<ACCUMULATED-GAINS-PRIOR> 678,335
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 43,314
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 323,039
<AVERAGE-NET-ASSETS> 908,021
<PER-SHARE-NAV-BEGIN> 15.45
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 0.41
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.92
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.0000
</TABLE>
