As filed with the Securities and Exchange Commission on December 29,
1997
Securities Act File No. 33-50390
Investment Company Act File No. 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. 12 X
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 12 X
WILSHIRE TARGET FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
c/o First Data Investor Services Group, Inc.
53 State Street
One Exchange Place
Boston, MA 02109
Registrant's Telephone Number, including Area Code: (617) 573-1556
Name and Address of Agent for Service:
Julie A. Tedesco, Esq.
Wilshire Target Funds, Inc.
c/o First Data Investor Services Group, Inc.
53 State Street
One Exchange Place
Boston, MA. 02109
It is proposed that the filing will become effective:
immediately upon filing pursuant to paragraph (b)
X on December 29, 1997 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1)
on pursuant to paragraph (a)(1)
75 days after filing pursuant to paragraph (a)(2)
on pursuant to paragraph (a)(2) of Rule 485
WILSHIRE TARGET FUNDS, INC.
Cross-Reference Sheet Pursuant to Rule 485(a)
Part A
Item No. Prospectus Caption
1. Cover Page Cover Page
2. Synopsis Fee Table
3. Condensed Financial Information Financial
Highlights
4. General Description of Registrant Description of the
Fund; Investment
Considerations and
Risks; Performance
Information; 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;
Service and Distribution
Plan;
Dividends, Distributions
and
Taxes; General
Information
7. Purchase of Securities How to Buy Fund
Shares Being Offered
8. Redemption or Repurchase How to Redeem Fund
Shares
9. Pending Legal Proceedings Not Applicable
Part B.
Item No. Statement of Additional
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 Management of the
Holders of Securities Fund;
Investment
Advisory and
Administration
Agreements
16. Investment Advisory and Other Investment
Services Advisory and
Administration
Agreements;
Service and Distribution
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 Purchase of Fund
of Purchase, Redemption and Shares;
Redemption of Fund
Shares;
Securities Being Offered
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
WILSHIRE TARGET FUNDS, INC.
The purpose of this Post-Effective Amendment No. 12 is to
bring the financial statements and other information up to date
under Section 10(a)(3) of the Securities Act of 1933, as
amended.
PROSPECTUS DECEMBER 29, 1997
W I L S H I R E
----------------------
TARGET FUNDS, INC.
----------------------
(INVESTMENT CLASS SHARES)
(HTTP://WWW.WILFUNDS.COM)
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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"
and collectively the "Portfolios"): 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." No Portfolio is
an index fund.
Wilshire Associates Incorporated ("Wilshire") serves as the Fund's
investment adviser. First Data Investor Services Group, Inc. ("Investor
Services Group") serves as the Fund's administrator and transfer agent. First
Data Distributors, Inc. ("FDDI") serves as the Fund's distributor.
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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 December 29, 1997, which may
be further revised from time to time, provides a further discussion of certain
topics in this prospectus and other matters which may be of interest to some
investors. It has been filed with the Securities and Exchange Commission
("SEC") and is incorporated herein by reference. For a free copy, write to the
Fund at P.O. Box 5170, Westborough, Massachusetts 01581-5120, or call
1-888-200-6796. In addition, the SEC maintains a web site (http://www.sec.gov)
that contains the Statement of Additional Information, information
incorporated by reference to this Prospectus and the Statement of Additional
Information and other information regarding registrants that file electronically
with the SEC.
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Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any financial institution, are not insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency, and
involve risk, including the possible loss of principal amount invested.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS PAGE
Fee Table ................................ 2
Condensed Financial Information .......... 3
Description of the Fund .................. 5
Investment Considerations and Risks ...... 6
Management of the Fund ................... 7
How to Buy Fund Shares ................... 9
Shareholder Services ..................... 10
How to Redeem Fund Shares ................ 11
Service and Distribution Plan ............ 13
Dividends, Distributions and Taxes ....... 13
Performance Information .................. 15
General Information ...................... 15
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
FEE TABLE
The purpose of the following 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, 1997 for the
Portfolios, except that the Management Fees for the Large Company Growth and
Large Company Value Portfolios were restated to reflect the elimination of a
waiver of management fees and the 12b-1 fees for each Portfolio were restated to
reflect anticipated changes in 12b-1 fees due to a change from a shareholder
servicing plan to a service and distribution plan. See "Management of the Fund
- -- Investment Adviser."
- --------------------------------------------------------------------------------
<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)
<S> <C> <C> <C> <C>
Management Fees ...................................... 0.25% 0.25% 0.10%* 0.10%*
12b-1 Fee **.......................................... 0.15% 0.15% 0.15% 0.15%
Other Expenses ....................................... 0.81% 0.93% 1.20% 0.90%
---------- ---------- --------- ---------
Total Fund Operating Expenses ........................ 1.21% 1.33% 1.45% 1.15%
* Reflects voluntary waivers which will remain in effect until notice to the Board of Directors by Wilshire. See
"Management of the Fund -- Investment Adviser." Absent such fee waivers, the ratio of advisory fees to average net
assets for each Portfolio would be 0.25%.
** Each Portfolio may pay annually up to 0.25% of its average daily net assets as reimbursement for expenses incurred
under its Rule 12b-1 Plan.
</TABLE>
EXAMPLE:
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 Year $ 12 $ 13 $ 15 $ 12
3 Years $ 38 $ 41 $ 45 $ 36
5 Years $ 65 $ 72 $ 78 $ 62
10 Years $144 $157 $170 $137
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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 Fund anticipates the Portfolios' total fund operating expenses to be as
follows for the fiscal year ended August 31, 1998:
ANTICIPATED TOTAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
LARGE COMPANY LARGE COMPANY SMALL COMPANY SMALL COMPANY
GROWTH PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO VALUE PORTFOLIO
- ------------------------ --------------- ------------------ ---------------
0.85% 0.97% 1.32% 0.85%
You can purchase Shares without charge directly from FDDI; 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 "Service and Distribution Plan."
<PAGE>
CONDENSED FINANCIAL INFORMATION
- -------------------------------------------------------------------------------
The information for the Shares for the fiscal years ended August 31, 1993,
1994, 1995, 1996 and 1997 in the following table has been audited by Coopers &
Lybrand L.L.P., the Fund's independent accountants, whose report is incorporated
by reference 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,
----------------------------------------------------- --------------------------------------------------
1997 1996 1995 1994 1993* 1997 1996 1995 1994 1993*
--------- --------- --------- -------- -------- -------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year ..... $19.35 $16.34 $13.31 $12.74 $12.50 $17.80 $16.02 $13.99 $15.18 $12.50
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .. 0.04*** 0.07 0.10 0.15 0.21 0.47*** 0.85 0.34 0.36 0.54
Net realized and
unrealized gain/
(loss) on investments . 7.29 3.45 3.03 0.65 0.10 5.13 1.91 2.19 (0.90) 2.30
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS ........... 7.33 3.52 3.13 0.80 0.31 5.60 2.76 2.53 (0.54) 2.84
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income .... (0.03) (0.12) (0.10) (0.23) (0.07) (0.60) (0.47) (0.40) (0.36) (0.16)
Distributions from
capital gains ........ (2.73) (0.39) -- -- -- (2.31) (0.51) (0.10) (0.29) --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS .... (2.76) (0.51) (0.10) (0.23) (0.07) (2.91) (0.98) (0.50) (0.65) (0.16)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
year ................. $23.92 $19.35 $16.34 $13.31 $12.74 $20.49 $17.80 $16.02 $13.99 $15.18
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return (a) ....... 40.91% 21.90% 23.67% 6.34% 2.46%** 34.27% 17.52% 18.97% (3.61)% 22.93%**
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of year
(in 000's) ........... $73,480 $19,035 $21,348 $8,424 $8,061 $13,989 $17,960 $22,926 $12,158 $8,116
Operating expenses
including
reimbursement/waiver/
custody earnings credit 0.81% 0.93% 0.84% 0.68% -- 0.91% 0.89% 0.81% 0.58% --
Operating expenses
excluding cusotody
earnings credit ...... 0.91% -- -- -- -- 0.96% -- -- -- --
Operating expenses
excluding
reimbursement/waiver/
custody earnings credit 1.09% 0.96% 1.05% 1.39% 1.14%** 1.18% 0.92% 1.02% 1.18% 1.32%**
Net investment income
including
reimbursement/waiver/
custody earnings credit 0.20% 0.39% 0.94% 1.18% 1.66%** 2.51% 3.12% 3.77% 4.02% 4.27%**
Portfolio turnover rate 43% 44% 30% 22% 12%** 65% 56% 58% 47% 22%**
Average commission rate
paid (b) ............. $0.0247 $0.0312 -- -- -- $0.0222 $0.0269 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
* Large Company Growth Portfolio and Large Company Value Portfolio Investment Class shares commenced operations on
September 30, 1992.
** Non-annualized
*** The selected per share data was calculated using the weighted average shares outstanding method for the year.
(a) Total return represents aggregate total return for the period indicated.
(b) Average commission rate paid per share of portfolio securities purchased and sold by the Portfolio.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH PORTFOLIO SMALL COMPANY VALUE PORTFOLIO
----------------------------------------------------- --------------------------------------------------
YEAR ENDED AUGUST 31, YEAR ENDED AUGUST 31,
----------------------------------------------------- --------------------------------------------------
1997 1996 1995 1994 1993* 1997 1996 1995 1994 1993*
--------- --------- --------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of year ............... $18.56 $18.55 $15.39 $16.03 $12.50 $15.92 $15.41 $14.32 $14.81 $12.50
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/
(loss) ............... (0.17)*** (0.19) (0.07) (0.04) 0.08 0.40*** 0.56 0.55 0.45 0.35
Net realized and
unrealized gain/(loss)
on investments ........ 2.38 3.06 3.54 0.90 3.48 4.27 0.95 1.06 (0.45) 2.10
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS ........... 2.21 2.87 3.47 0.86 3.56 4.67 1.51 1.61 0.00 2.45
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income .... -- -- -- -- (0.03) (0.75) (0.56) (0.45) (0.33) (0.14)
Distributions in excess
of net investment income -- -- -- (0.07) -- -- -- -- -- --
Distributions from
capital gains .......... (4.16) (2.86) (0.31) (1.43) -- (2.59) (0.44) (0.07) (0.16) --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS .... (4.16) (2.86) (0.31) (1.50) (0.03) (3.34) (1.00) (0.52) (0.49) (0.14)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
year ................. $16.61 $18.56 $18.55 $15.39 $16.03 $17.25 $15.92 $15.41 $14.32 $14.81
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return (a) ....... 15.16% 17.50% 23.04% 5.20% 28.50%** 33.73% 10.01% 11.84% (0.01)% 19.72%**
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of year
(in 000's) ........... $14,471 $18,049 $21,882 $11,188 $7,527 $20,299 $27,329 $25,978 $23,438 $15,155
Operating expenses
including
reimbursement/waiver/
custody
earnings credit ...... 1.22% 1.01% 0.95% 0.74% -- 0.86% 0.88% 0.69% 0.50% --
Operating expenses
excluding
cusotody earnings
credit ............... 1.24% -- -- -- -- 0.90% -- -- -- --
Operating expenses
excluding
reimbursement/waiver/
custody
earnings credit ...... 1.45% 1.05% 1.16% 1.47% 1.40%** 1.15% 0.92% 0.91% 1.06% 1.32%**
Net investment income/
(loss) including
reimbursement/
waiver/custody
earnings credit ........ (1.05)% (0.78)% (0.54)% (0.40)% 0.53%** 2.58% 3.13% 4.12% 3.64% 3.65%**
Portfolio turnover rate 105% 87% 111% 46% 55%** 105% 81% 86% 49% 27%**
Average commission rate
paid (b) ............. $0.0175 $0.0200 -- -- -- $0.0223 $0.0238 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
* Small Company Growth Portfolio and Small Company Value Portfolio Investment Class shares commenced operations on
October 1, 1992 and September 30, 1992, respectively.
** Non-annualized.
*** The selected per share data was calculated using the weighted average shares outstanding method for the year.
(a) Total return represents aggregate total return for the period indicated.
(b) Average commission rate paid per share of portfolio securities purchased and sold by the Portfolio.
</TABLE>
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.
<PAGE>
DESCRIPTION OF THE FUND
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INVESTMENT OBJECTIVE -- The goal of each Portfol1io 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 $213 billion and $244 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 $213 billion
and $1.8 billion on the date of this prospectus), which constitute approximately
82% 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 between $1.8 billion and $244 million on the date of
this prospectus), which constitute approximately 13% of the total market value
of the stocks included in the Wilshire 5000 Index (the stocks of the remaining
companies constituted less than 5% 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 periodically reviews 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 500 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 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 hold 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 -- 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, 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. 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.
Except as otherwise indicated, each Portfolio's investment objectives and
policies are not fundamental and may be changed without a vote of shareholders.
There can be no assurance that a Portfolios' objectives will be met.
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 purchase any additional securities.
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 are currently
comprised of 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 shares. 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 the premiums paid for unexpired commodity options, other
than for bona fide hedging purposes, exceeds 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. See "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 approximately 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.
LENDING PORTFOLIO SECURITIES -- Each Portfolio may lend securities from its
portfolio to brokers, dealers and other financial institutions. 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 a 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 a 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 and such Portfolio is delayed or prevented from recovering
the collateral or completing the transaction.
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 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 assets.
MANAGEMENT OF THE FUND
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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 November 30, 1997, Wilshire managed approximately $7.7 billion in
assets. Under the terms of the 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 Portfolios' 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 since the
Portfolio's inception and has been employed by Wilshire since October 6, 1980.
The Portfolios' 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, Dennis Tito, who owned a majority of
its outstanding voting stock as of September 30, 1997.
Pursuant to the terms of an Investment Advisory Agreement dated July 11, 1996
(the "Advisory Agreement"), the Fund has agreed to pay Wilshire a fee computed
daily and paid monthly at the annual rate of .25 of 1% of the value of each
Portfolio's average daily net assets.
Wilshire has voluntarily undertaken to waive a portion of its fee otherwise
payable under the Advisory Agreement to .10 of 1% of the Small Company Growth
Portfolio's and Small Company Value Portfolio's average daily net assets. The
voluntary waiver may be terminated at any time by Wilshire by notice to the
Directors of the Fund.
For the fiscal year ended August 31, 1997, 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 an expense limitation set forth in the Advisory Agreement, which was
in effect from July 11, 1996 through October 11, 1997, and voluntary waivers by
Wilshire.
ADMINISTRATOR -- Investor Services Group, 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, Investor Services Group 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 Investor Services Group 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 Investor Services Group an annual fee of $25,000 per
each Portfolio and $2,000 for each additional class.
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. Investor Services
Group is also the Fund's Transfer and Dividend Disbursing Agent (the "Transfer
Agent").
DISTRIBUTOR -- FDDI, 4400 Computer Drive, Westborough, Massachusetts 01581,
serves as the distributor of the Shares. FDDI is an indirect wholly-owned
subsidiary of First Data Corporation. FDDI is not compensated for its services
as distributor.
EXPENSES -- From time to time, Wilshire or Investor Services Group 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 the return to investors at the time such amounts are waived or
assumed, as the case may be. The Fund will not pay Wilshire or Investor Services
Group for any amounts which may be waived, nor will the Fund reimburse Wilshire
or Investor Services Group for any amounts which may be assumed. Each of FDDI,
Wilshire or Investor Services Group may bear other expenses of distribution of
the shares of a Portfolio or of the provision of shareholder services to a
Portfolio'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 FDDI, Wilshire or Investor Services
Group. 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 FDDI, Wilshire or Investor Services Group or any of their
affiliates, SEC fees, state Blue Sky qualification fees, advisory and
administration 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.
HOW TO BUY FUND SHARES
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Shares are sold without a sales charge. You may be charged a 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. For investors who purchase through a financial intermediary and
hold their shares through an omnibus account with that financial intermediary,
the minimum initial investment applies to the omnibus account, and not to the
investors individually.
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 5170, Westborough, Massachusetts
01581-5620, together with your investment slip or, when opening a new account,
your Account Application, indicating the name of the Portfolio being purchased.
Neither initial nor subsequent investments may be made by third party check.
Wire payments may be made if your bank account is in a commercial bank that is
a member of the Federal Reserve System or any other bank having a correspondent
bank in New York City. Immediately available funds may be transmitted by wire to
Boston Safe Deposit and Trust Company (ABA #011001234), together with the name
of the Fund and the Fund's DDA number, 065-587, for purchase of Shares in your
name. The wire must include your Fund account number (for new accounts, your
Taxpayer Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial purchase of Fund
Shares is by wire, please call 1-888-200-6796 after completing your wire payment
to obtain your Fund account number. Please include your Fund account number on
the Fund's Account Application and promptly mail the Account Application to the
Fund, as no redemptions will be permitted until the Account Application is
received. You may obtain further information about remitting funds in this
manner from your bank. All payments should be made in U.S. dollars and, to avoid
fees and delays, should be drawn only on U.S. banks. A charge will be imposed if
any check used for investment in your account does not clear. The Fund makes
available to certain large institutions the ability to issue purchase
instructions through compatible computer facilities.
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 Deposit and Trust Company
Fund Number ("160, 161, 162 or 163" for Large Company Growth Portfolio,
Large Company Value Portfolio, Small Company Growth Portfolio, Small Company
Value Portfolio, respectively)
Shareholder Account Number
Account of (Registered Shareholder)
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 (normally
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 of the Portfolios, 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 or
Shares of another class of the same Portfolio, to the extent such Shares are
offered for sale in your state of residence and you meet the eligibility
requirements (including minimum investment amounts) for the purchase of such
Shares.
To request an exchange, you must give exchange instructions to the Transfer
Agent in writing. The Shares being exchanged must have a value of at least the
applicable minimum initial investment, if any, required for the Portfolio and
class 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 SEC. 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. Shares are
purchased by transferring funds from the bank account designated by you. At your
option, the bank account will be debited in the specified amount, and 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 5170, Westborough,
Massachusetts 01581-5120, 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
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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 SEC.
HOWEVER, IF YOU HAVE PURCHASED A PORTFOLIO'S SHARES BY CHECK OR THROUGH THE
WILSHIRE TARGET FUNDS ACCUMULATION PLAN AND SUBSEQUENTLY SUBMIT A WRITTEN
REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE
TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK OR
WILSHIRE TARGET FUNDS ACCUMULATION PLAN ORDER, WHICH MAY TAKE 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
5170, Westborough, Massachusetts 01581-5120. Redemption requests must be signed
by each shareholder, including each owner of a joint account, and each signature
must be guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be accepted
from domestic banks, brokers, dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations, as well as from participants in the New York Stock Exchange
Medallion Signature Program, the Securities Transfer Agents Medallion Program
("STAMP"), and the Stock Exchanges Medallion Program. If you have any questions
with respect to signature-guarantees, please call one of the telephone numbers
listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any member bank of the
Federal Reserve System in accordance with a written signature-guaranteed
request.
WIRE REDEMPTION PRIVILEGE -- You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which is
a member of the Federal Reserve System, or a correspondent bank if your bank is
not a member. You also may direct that redemption proceeds be paid by check
(maximum $150,000 per day) made out to the owners of record and mailed to your
address. Redemption proceeds of less than $1,000 will be paid automatically by
check. Holders of jointly registered Fund or bank accounts may have redemption
proceeds of only up to $250,000 wired within any 30-day period. You may
telephone redemption requests by calling 1-888-200-6796. The Statement of
Additional Information sets forth instructions for transmitting redemption
requests by wire. Shares held under Keogh Plans, IRAs or other retirement plans,
and Shares for which certificates have been issued, are not eligible for this
privilege.
TELEPHONE REDEMPTION PRIVILEGE -- You may request by telephone that redemption
proceeds (maximum $150,000 per day) be paid by check and mailed to your address.
You may telephone redemption instructions by calling 1-888-200-6796. Shares held
under Keogh Plans, IRAs or other retirement plans, and Shares for which
certificates have been issued, are not eligible for this privilege.
SERVICE AND DISTRIBUTION PLAN
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The Directors of the Fund have adopted a separate service and distribution
plan (the "Service and Distribution Plan") with respect to the Shares of each
Portfolio pursuant to Section 12(b) of the 1940 Act and Rule 12b-1 thereunder.
Under the Service and Distribution Plan, the Fund reimburses FDDI, distributor
of the Fund, 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
service and distribution expenses borne, or paid to others, by FDDI. Generally,
the service fees covered under the Service and Distribution Plan are fees paid
to securities dealers and other financial intermediaries for personal services
to holders of the Shares of a Portfolio and/or for the maintenance of the
accounts of the holders of the 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. To
the extent that such service fees do not aggregate.25 of 1% of the value of the
average daily net assets attributable to the Shares of a Portfolio, the Service
and Distribution Plan also permits reimbursement for distribution expenses
borne, or paid to others, by FDDI for the purpose of financing or assisting in
the financing of any activity which is primarily intended to result in the sale
of the Shares of the Portfolio. The types of distribution expenses covered
include, but are not limited to, the costs and expenses of direct marketing
activities (including related travel, meals and lodging); the design,
preparation, printing and distribution of promotional materials, advertising and
offering materials, and shareholder materials; the compensation of securities
dealers and other financial intermediaries for sales activities; and related
capital, overhead and interest expenses. Amounts payable under the Service and
Distribution Plan relating to a Portfolio are charged to, and therefore reduce,
income allocated to the Shares of that Portfolio.
DIVIDENDS, DISTRIBUTIONS AND TAXES
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Each Portfolio ordinarily declares and distributes net realized gains, if any,
once a year, but 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 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.
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 share-holder 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, 1997 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
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For purposes of advertising, performance may be calculated on the basis of
average annual total returns and/or total returns of the Portfolios. "Total
return" is the change in value of an investment in a Portfolio for a specified
period. The "average annual total return" of a Portfolio is the average annual
compound rate of return in an investment in the Portfolio assuming the
investment has been held for one-, five- and ten year periods (or the life of
the Portfolio if shorter).
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, market conditions and the
risks associated with a Portfolio's objective and investment policies.
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 Shares of the Portfolios, 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 600 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.
Institutional Class Shares, which are generally available only to institutions
investing at least $5 million in a Portfolio, bear no 12b-1 (Shareholder Service
Plan) fee and, consequently, the investment returns of Institutional Class
Shares are expected to exceed those of Investment Class Shares. For more
information regarding eligibility to purchase Institutional Class Shares, call
1-888-200-6796 or contact your investment representative.
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 Services and Distribution 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 5170,
Westborough, Massachusetts 01581-5120, or by calling toll free 1-888-200-6796.
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.
<PAGE>
[GRAPHIC OMITTED]
W I L S H I R E
------------------
TARGET FUNDS, INC.
------------------
------------------
PROSPECTUS
------------------
<PAGE>
WILSHIRE TARGET FUNDS, INC.
(INVESTMENT CLASS SHARES)
STATEMENT OF ADDITIONAL INFORMATION
December 29, 1997
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. (the "Fund") (Investment Class shares), dated
December 29, 1997. To obtain a copy of the Prospectus, please write to the Fund
at P.O. Box 5170, Westborough, Massachusetts 01581-5120. 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. ("Investor Services Group") serves
as the Fund's administrator and transfer agent.
First Data Distributors, Inc. ("FDDI") 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
SERVICE AND DISTRIBUTION PLAN..............................................17
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
<PAGE>
GENERAL INFORMATION AND HISTORY
On September 17, 1992, Dreyfus-Wilshire Series Fund, Inc. changed its name
to Dreyfus-Wilshire Target Funds, Inc.
On May 29, 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 (Investment Class shares) 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.
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 only will only 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 bank obligations in which the
Portfolios may invest may include uninsured, direct obligations bearing fixed,
floating or variable interest rates.
REPURCHASE AGREEMENTS. In a repurchase agreement, a 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 SEC 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.
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 SEC 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.
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.
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 a Portfolio 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.
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 SEC, 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 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 affect the value of such Portfolio's net assets adversely. 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 SEC, a Portfolio
may be required to segregate cash or liquid assets 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 presently are not
contemplated for use by the Portfolio or which currently are not 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 SAI.
MANAGEMENT POLICIES
- -------------------
PORTFOLIOS 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 1940 Act) of such Portfolio's outstanding voting shares.
Investment restrictions numbered 10 through 12 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 33 1/3% 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, or 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, each 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 SEC 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 a 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 a
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 that the activities permitted in investment
restrictions No. 1 and 3 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 a Portfolio will vote the securities it owns in its
portfolio as a shareholder in accordance with its views.
11. 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.
12. 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.
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 48 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 the
Pacific Gas & Electric Nuclear Decommissioning Trust and Brandes Investment
Trust. He is 67 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 48 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 50
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 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 67 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
"Service and Distribution 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,
1997, was as follows:
<TABLE>
<CAPTION>
PENSION OR RETIREMENT
AGGREGATE BENEFITS ACCRUED AS ESTIMATED ANNUAL TOTAL COMPENSATION
NAME OF COMPENSATION PART OF BENEFITS UPON FROM REGISTRANT AND
BOARD MEMBER FROM FUND* FUND'S EXPENSES RETIREMENT FUND COMPLEX
-------------- -------------- ----------------------- ------------------ --------------------
<S> <C> <C>
Thomas D. Stevens $0 N/A N/A $0
DeWitt F. Bowman $16,250 N/A N/A $16,250
Robert J. Raab, Jr. $0 N/A N/A $0
Peter J. Carre $16,250 N/A N/A $16,250
Anne L. Wexler $16,250 N/A N/A $16,250
* Amount does not include reimbursed expenses for attending Board meetings, which amounted to $14,824.44 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 48 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 48 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 46 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 Investor Services Group. From July 1992 to May 1994, Assistant Vice
President and Counsel of The Boston Company Advisors, Inc. She is 40 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 Investor Services Group. 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 35 years old and her address is c/o First Data Investor
Services Group, Inc., 53 State Street, Boston, Massachusetts 02109.
NEIL FORREST, Assistant Treasurer. Since 1995, Vice President and Division
Manager of Client Services of Investor Services Group. From 1992 through March
1995, Mr. Forrest was Vice President of 440 Financial, Inc. He is 37 years old
and his address is c/o First Data Investor Services Group, Inc. 4400 Computer
Drive, Westborough, Massachusetts 01581.
TERESA M.R. HAMLIN, Assistant Secretary. Since 1995, Counsel to Investor
Services Group. Prior to that time, she was a paralegal manager with The Boston
Company Advisors, Inc. She is 33 years old and her address is c/o First Data
Investor Services Group, Inc., 53 State Street, Boston, Massachusetts 02109.
DIANA TARNOW, Assistant Treasurer. Since 1997, Vice President for Investor
Services Group's Treasury Department. Prior to that time, she was Vice President
of Financial Reporting and Tax. From 1989 to 1994, Ms. Tarnow served as Vice
President of Financial Reporting and Tax with The Boston Company Advisors, Inc.
She is 34 years old and her address is c/o First Data Investor Services Group,
Inc. 4400 Computer Drive, Westborough, Massachusetts 01581.
JOHN J. BURKE, III, Assistant Treasurer. Since 1991, Vice President of Fund
Accounting and Portfolio Valuation Group. Prior to 1991, Mr. Burke was a
management associate with Fidelity Investments. He is 33 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 September 30, 1997.
The following persons are known by the Fund to own of record 5% or more of a
Portfolio's Investment Class shares outstanding on December 15, 1997:
Large Company Growth Portfolio: Charles Schwab & Company, 101 Montgomery
Street, San Francisco, California 94104 -- 27.28%; Luther & Company A
Partnership, c/o Michigan National Bank, P.O. Box 9088, Farmington Hills,
Michigan, 48333 -- 15.04%; Comerica Bank Custody, P.O. Box 75000 Detroit,
Michigan, 48275-3466 -- 6.52%; and Northern Trust Company Custodian, Thiokal
Corp, A/C 22-30595, P.O. Box 92956, Chicago, Illinois 60675 -- 6.54%.
Large Company Value Portfolio: Charles Schwab & Company, 101 Montgomery
Street, San Francisco, California 94104 -- 51.04%; and Norwest Bank Minnesota,
Jennie Edmundson Memorial Hospital, 733 Marquette Ave, Minneapolis, Minnesota
55402-2309 -- 12.66%.
Small Company Growth Portfolio: Charles Schwab & Company, 101 Montgomery
Street, San Francisco, California 94104 -- 57.29%.
Small Company Value Portfolio: State Street Bank & Trust Company, Praxair
Incorporated, Defined Contribution Plan, 200 Newport Avenue, JQ7, N. Quincy,
Massachusetts 02171 -- 39.19% and Charles Schwab & Company, 101 Montgomery
Street, San Francisco, California 94104 -- 36.05%.
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 (Investment Class shares) entitled
"Management of the Fund."
INVESTMENT ADVISORY AGREEMENT. Wilshire provides investment advisory
services to the Portfolios pursuant to 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 September 30, 1997.
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 Portfolios' 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.
Wilshire voluntarily has undertaken to waive a portion of its fee otherwise
payable under the Portfolios' Advisory Agreement. Wilshire is currently waiving
.15% of 1% of each of the Small Company Growth Portfolio's and Small Company
Value Portfolio's average daily net assets. The voluntary waiver may be
terminated at any time 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, 1995, 1996 and
1997, the advisory fees for each Portfolio payable to Wilshire, the reductions
attributable to both a voluntary fee waiver and contractual expense limitations
in effect through July 11, 1996, and the net fees paid with respect to the
Portfolios were as follows:
FEE PAID FOR FISCAL YEAR
ENDED AUGUST 31, 1995*
ADVISORY REDUCTION NET
PORTFOLIO FEE PAYABLE IN FEE FEE PAID
Large Company Growth Portfolio $14,834 $ 1,672 $13,162
Large Company Value Portfolio $15,835 $ 2,071 $13,764
Small Company Growth Portfolio $15,630 $ 2,195 $13,435
Small Company Value Portfolio $25,210 $ 4,145 $21,065
FEE PAID FOR FISCAL YEAR
ENDED AUGUST 31, 1996*
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
FEE PAID FOR FISCAL YEAR
ENDED AUGUST 31, 1997*
ADVISORY REDUCTION NET
PORTFOLIO FEE PAYABLE IN FEE FEE PAID
Large Company Growth Portfolio $156,239 $93,760 $62,479
Large Company Value Portfolio $102,886 $61,731 $41,155
Small Company Growth Portfolio $ 46,788 $28,073 $18,715
Small Company Value Portfolio $ 93,963 $56,378 $37,585
* The monthly fee payable to Wilshire during the fiscal year ended August
31, 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, Investor Services
Group, 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 SEC 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 Investor Services Group, 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 Investor Services Group.
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 Investor Services Group's services under the
Administration Agreement, Investor Services Group is entitled to receive from
the Fund a monthly administration fee at the annual rate of .15 of 1% of each
Portfolio's monthly average net assets up to aggregate assets of $1 billion, .10
of 1% such value on the next $4 billion, and .08 of 1% on the excess net assets.
In addition, the Fund has agreed to pay Investor Services Group an annual fee of
$25,000 for each Portfolio and $2,000 for each additional class.
FEE PAID FOR FISCAL YEAR
ENDED AUGUST 31, 1995
For the fiscal year ended August 31, 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:
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-
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:
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
For the fiscal year ended August 31, 1996, the administration fees paid to
Investor Services Group for each Portfolio were as follows:
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
FEE PAID FOR FISCAL YEAR
ENDED AUGUST 31, 1997
For the fiscal year ended August 31, 1997, the administration fees paid to
Investor Services Group for each Portfolio were as follows:
ADMINISTRATION REDUCTION NET
PORTFOLIO FEE PAYABLE IN FEE FEE PAID
Large Company Growth Portfolio $120,719 $24,498 $96,221
Large Company Value Portfolio $ 88,732 $27,823 $60,909
Small Company Growth Portfolio $ 55,070 $12,169 $42,901
Small Company Value Portfolio $ 83,379 $37,363 $46,016
EXPENSES AND EXPENSE INFORMATION. From time to time, Wilshire or Investor
Services Group may waive receipt of its fees and/or voluntarily assume certain
expenses of the Fund or a Portfolio, which would have the effect of lowering the
overall expense ratio of a Portfolio 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 Investor Services Group for any amounts which may be waived, nor
will the Fund reimburse Wilshire or Investor Services Group for any amounts
which may be assumed. In addition to fees which may be paid by FDDI out of
amounts which it receives under the Fund's Service and Distribution Plan, FDDI,
Wilshire or Investor Services Group may bear other expenses of distribution of
the shares of a Portfolio or of the provision of shareholder services to a
Portfolio'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 FDDI, Wilshire or Investor Services
Group. 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 FDDI, Wilshire or Investor Services Group or any of their
affiliates, SEC fees, state Blue Sky qualification fees, advisory and
administration fees, Rule 12b-1 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, Rule 12b-1
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 among 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.
SERVICE AND DISTRIBUTION PLAN
The Fund has adopted a Service and Distribution Plan (the "Service and
Distribution 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.
Under the Service and Distribution Plan, the Fund reimburses FDDI, distributor
of the Fund, 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
service and distribution expenses borne, or paid to others, by FDDI. Generally,
the service fees covered under the Service and Distribution Plan are fees paid
to securities dealers and other financial intermediaries for personal services
to holders of the Shares of a Portfolio and/or for the maintenance of the
accounts of the holders of the 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. To
the extent that such service fees do not aggregate .25 of 1% of the value of the
average daily net assets attributable to the Shares of a Portfolio, the Service
and Distribution Plan also permits reimbursement for distribution expenses
borne, or paid to others, by FDDI for the purpose of financing or assisting in
the financing of any activity which is primarily intended to result in the sale
of the Shares of the Portfolio. The types of distribution expenses covered by
the Service and Distribution Plan include, but are not limited to, the costs and
expenses of direct marketing activities (including related travel, meals and
lodging); the design, preparation, printing and distribution of promotional
materials, advertising and offering materials, and shareholder materials; the
compensation of securities dealers and other financial intermediaries for sales
activities; and related capital, overhead and interest expenses. Amounts payable
under the Service and Distribution Plan relating to a Portfolio are charged to,
and therefore reduce, income allocated to the Shares of that Portfolio.
The original Shareholder Services Plan (the "Services Plan") of the Fund
adopted pursuant to Section 12(b) of the 1940 Act and Rule 12b-1 thereunder was
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 Service
and Distribution 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 Services Plan, and (ii) by vote of a majority of the outstanding
Investment Class shares. Subsequently, an amendment to the Services Plan to
include distribution expenses, as well as service fees, as covered expenses
under the plan, and to rename the plan as the Service and Distribution Plan, was
approved on June 3, 1997 by vote of the majority 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. The amendment did not
increase the maximum amount of payments permissible under the Plan.
Under the Service and Distribution Plan, FDDI 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 Service and Distribution Plan will continue in effect 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 Service and Distribution Plan. The Service and Distribution Plan
may not be amended in any material respect unless such amendment is approved 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 Service and Distribution Plan, and may not be amended
to increase materially the amount to be spent thereunder without such approvals
and approval by vote of at least a majority of the outstanding Shares of the
affected Investment Class. 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 Shares.
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:
Large Company Growth Portfolio $6,277
Large Company Value Portfolio $5,984
Small Company Growth Portfolio $5,857
Small Company Value Portfolio $9,763
Pursuant to the 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:
Large Company Growth Portfolio $42,313
Large Company Value Portfolio $48,619
Small Company Growth Portfolio $35,742
Small Company Value Portfolio $51,521
For the fiscal year ended August 31, 1997, the following amounts were
charged to each Portfolio under the Fund's former shareholder services plan:
Large Company Growth Portfolio $13,509
Large Company Value Portfolio $0
Small Company Growth Portfolio $0
Small Company Value Portfolio $0
PURCHASE OF FUND SHARES
The following information supplements and should be read in conjunction with
the section in the Fund's Prospectus (Investment Class shares) entitled "How to
Buy Fund Shares."
THE DISTRIBUTOR. FDDI, a subsidiary of Investor Services Group, 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 FDDI as agent, although
FDDI 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 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 FDDI, 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 FDDI 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.
IN-KIND PURCHASES. Payments for each Portfolio's shares may, at the
discretion of Wilshire, be made in the form of securities which are permissible
investments for the Portfolio. For further information about this form of
payment, please contact the Transfer Agent. Generally, securities which are
accepted by a Portfolio as payment for the Portfolio's shares will be valued
using the Portfolio's procedures for valuing its own shares at the time the
Portfolio's net asset value is next determined after receipt of a properly
completed order. All dividends, interest, subscription or other rights
pertaining to such securities will become the property of the Portfolio and must
be delivered to the Portfolio upon receipt from the issuer. The Portfolio will
require that (1) it will have good and marketable title to the securities
received by it; (2) the securities are in proper form for transfer to the
Portfolio and are not subject to any restriction on sale by the Portfolio under
the Securities Act of 1933, as amended, or otherwise; and (3) the Fund receives
such other documentation as Wilshire may, in its discretion, deem necessary or
appropriate. Investors who are subject to Federal taxation may realize a gain or
loss for Federal income tax purposes.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in conjunction with
the section in the Fund's Prospectus (Investment Class shares) entitled "How to
Redeem Fund Shares."
WIRE REDEMPTION PRIVILEGE. By using this Privilege, the investor authorizes
Investor Services Group (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 SEC. 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 SEC 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 SEC 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 (Investment Class shares) 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 and you meet the eligibility requirements (including minimum
investment amounts) for the purchase of such shares. 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 (Investment Class shares) 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, Rev. Martin Luther King, Jr. 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 (Investment Class shares) entitled
"Dividends, Distributions and Taxes."
Management of the Fund believes that each Portfolio qualified for the
fiscal year ended August 31, 1997, as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"). 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. Pursuant to the Taxpayer
Relief Act of 1997, the dividends received deduction is also not available to a
corporate shareholder unless it held the shares of the Portfolio on which a
dividend is paid on the ex-dividend date and for at least 45 more days during
the 90-day period surrounding the ex-dividend date. This holding period
requirement is applicable to each dividend paid by a Portfolio. In addition to
these requirements, 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 Portfolios'
Prospectuses. In addition, the Code provides that if a shareholder holds shares
of the Portfolios for six months or less and has received a long-term 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
long-term 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 a 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, a 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.
Under Section 1259 of the Code, enacted as part of the Taxpayer Relief Act
of 1997, a Portfolio will recognize gain if it enters into a short sale, a swap
contract, or a future or forward contract relating to an appreciated direct
position in any stock or debt instrument, or if it acquires stock or a debt
instrument at a time when the Portfolio has an offsetting appreciated position
in the stock or debt instrument. Such transactions are considered to be
constructive sales for income tax purposes.
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 (Investment Class shares) entitled
"Performance Information."
From time to time, quotations of the Portfolios' performance may be
presented in advertisements, sales literature or reports to shareholders or
prospective investors. In the case of Portfolios with more than one class of
shares, all performance information is calculated separately for each class. The
data is calculated as follows:
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.
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.
Average annual total return for the fiscal year ended August 31, 1997
for each Portfolio's Investment Class shares was as follows:
Large Company Growth Portfolio 40.91%
Large Company Value Portfolio 34.27%
Small Company Growth Portfolio 15.16%
Small Company Value Portfolio 33.73%
Average annual total return for the period from September 30, 1992(1)
(commencement of operations) through August 31, 1997 for each Portfolio's
Investment Class shares was as follows:
Large Company Growth Portfolio 18.61%
Large Company Value Portfolio 17.66%
Small Company Growth Portfolio 17.95%
Small Company Value Portfolio 14.78%
(1) Small Company Growth Portfolio commenced operations on October 1, 1992.
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 1995,
1996, and 1997 the Fund paid total brokerage commissions as follows:
YEAR ENDED YEAR ENDED YEAR ENDED
PORTFOLIO AUGUST 31, 1995 AUGUST 31, 1996 AUGUST 31, 1997
Large Company Growth Portfolio $13,487 $15,709 $54,773
Large Company Value Portfolio $23,243 $28,558 $30,516
Small Company Growth Portfolio $42,766 $28,311 $25,811
Small Company Value Portfolio $61,819 $60,441 $64,560
No brokerage commissions were paid to Dreyfus, the Fund's 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 (Investment Class shares) 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. Investor Services Group, a subsidiary of First Data Corporation,
P.O. Box 5170, Westborough, Massachusetts 01581-5120, is the Fund's transfer and
dividend disbursing agent. Neither The Northern Trust Company nor Investor
Services Group has any part in determining the investment policies of the Fund
or which securities are to be purchased or sold by the Fund.
Paul, Hastings, Janofsky & Walker LLP, 555 South Flower Street, Los Angeles,
California 90071-2371, 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, 1997 are incorporated into
this Statement of Additional Information by reference in their entirety.
<PAGE>
APPENDIX
Description of the highest commercial paper rating assigned by Standard &
Poor's Ratings Group, a division of The McGraw-Hill Companies, Inc. ("S&P"),
Moody's Investors Service, Inc. ("Moody's"), Fitch Investors Service, L.P.
("Fitch") and Duff & Phelps Credit Rating Co. ("Duff").
The rating A is the highest rating and is assigned by S&P to issues that are
regarded as having the greatest capacity for timely payment. Issues in this
category are delineated with the number 1, 2 or 3 to indicate the relative
degree of safety. Paper rated A-1 indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign designation.
The rating Prime-1 (P-1) is the highest commercial paper rating assigned by
Moody's. Issuers of P-1 paper must have a superior capacity for repayment of
short-term promissory obligations, and ordinarily will be evidenced by leading
market positions in well established industries, high rates of return on funds
employed, conservative capitalization structures with moderate reliance on debt
and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation, and well established access
to a range of financial markets and assured sources of alternate liquidity.
The rating F-1 is among the highest commercial paper ratings assigned by
Fitch, denoting very strong credit quality. Issues assigned this rating reflect
an assurance for timely payment only slightly less than those issues rated F-1+.
The rating D-1 is the highest commercial paper rating assigned by Duff.
Paper rated D-1 is regarded as having very high certainty of timely payment with
excellent liquidity factors which are supported by ample asset protection. Risk
factors are minor.
PROSPECTUS DECEMBER 29, 1997
W I L S H I R E
----------------------
TARGET FUNDS, INC.
----------------------
(INSTITUTIONAL CLASS SHARES)
(http://www.wilfunds.com)
- --------------------------------------------------------------------------------
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"
and collectively, the "Portfolios"): 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." No Portfolio is
an index fund.
Wilshire Associates Incorporated ("Wilshire") serves as the Fund's
investment adviser. First Data Investor Services Group, Inc. ("Investor
Services Group") serves as the Fund's administrator and transfer agent. First
Data Distributors, Inc. ("FDDI") 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 December 29, 1997, which may
be further revised from time to time, provides a further discussion of certain
topics in this prospectus and other matters which may be of interest to some
investors. It has been filed with the Securities and Exchange Commission ("SEC")
and is incorporated herein by reference. For a free copy, write to the Fund at
P.O. Box 5170, Westborough, Massachusetts 01581-5120, or call 1-888-200-6796. In
addition, the SEC maintains a web site (http://www.sec.gov) that contains the
Statement of Additional Information, information incorporated by reference to
this Prospectus and the Statement of Additional Information and other
information regarding registrants that file electronically with the SEC.
- --------------------------------------------------------------------------------
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any financial institution, are not insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency, and
involve risk, including the possible loss of principal amount invested.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS PAGE
Fee Table ................................ 2
Condensed Financial Information .......... 3
Description of the Fund .................. 5
Investment Considerations and Risks ...... 6
Management of the Fund ................... 7
How to Buy Fund Shares ................... 9
Shareholder Services ..................... 10
How to Redeem Fund Shares ................ 11
Dividends, Distributions and Taxes ....... 13
Performance Information .................. 14
General Information ...................... 14
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
FEE TABLE
The purpose of the following 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, 1997 for the
Portfolios, except that the Management Fees for the Large Company Growth and
Large Company Value Portfolios were restated to reflect the elimination of a
waiver of management fees.
- --------------------------------------------------------------------------------
<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 ...................................... 0.25% 0.25% 0.10%* 0.10%*
Other Expenses ....................................... 0.81% 0.93% 1.20% 0.90%
---------- ---------- --------- ---------
Total Fund Operating Expenses ........................ 1.06% 1.18% 1.30% 1.00%
*Reflects voluntary waivers which will remain in effect until notice to the Board of Directors by Wilshire.
See "Management of the Fund -- Investment Adviser." Absent such fee waivers, the ratio of advisory fees to
average net assets for each Portfolio would be 0.25%.
</TABLE>
EXAMPLE:
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 Year $ 11 $ 12 $ 13 $ 10
3 Years $ 33 $ 37 $ 40 $ 31
5 Years $ 57 $ 64 $ 70 $ 54
10 Years $127 $140 $154 $120
- ------------------------------------------------------------------------------
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 Fund anticipates the Portfolios' total fund operating expenses to be as
follows for the fiscal year ended August 31, 1998:
ANTICIPATED TOTAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
LARGE COMPANY LARGE COMPANY SMALL COMPANY SMALL COMPANY
GROWTH PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO VALUE PORTFOLIO
- ------------------------ --------------- ------------------ ---------------
0.70% 0.82% 1.17% 0.70%
You can purchase Shares without charge directly from FDDI; 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."
<PAGE>
CONDENSED FINANCIAL INFORMATION
- -------------------------------------------------------------------------------
The information for the shares for the fiscal periods ended August 31, 1996
and 1997 in the following table has been audited by Coopers & Lybrand L.L.P.,
the Fund's independent accountants, whose report is incorporated by reference 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 Institutional
Class share outstanding throughout the period, total investment return, ratios
to average net assets and other supplemental data for each Portfolio for each
period indicated. This information has been derived from each Portfolio's
financial statements.
<TABLE>
<CAPTION>
LARGE COMPANY LARGE COMPANY
GROWTH PORTFOLIO VALUE PORTFOLIO
---------------------------- ----------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
1997 1996* 1997 1996*
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of year ........... $19.35 $18.27 $17.80 $17.19
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.05*** 0.01 0.47*** 0.07
Net realized and unrealized gain/(loss) on
investments ................................. 7.29 1.07 5.13 0.54
------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS ............. 7.34 1.08 5.60 0.61
------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ......... (0.05) -- (0.62) --
Distributions from capital gains ............. (2.73) -- (2.31) --
------ ------ ------ ------
TOTAL DISTRIBUTIONS .......................... (2.78) -- (2.93) --
------ ------ ------ ------
Net asset value, end of year ................. $23.91 $19.35 $20.47 $17.80
====== ====== ====== ======
Total return+ ................................ 40.99% 5.91%++ 34.26% 3.55%++
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) ........... $41,881 $7,763 $49,334 $17,425
Operating expenses including reimbursement/
waiver/custody earnings credit ............. 0.78% 0.91%** 0.91% 0.87%**
Operating expenses excluding custody earnings
credit ..................................... 0.87% -- 0.96% --
Operating expenses excluding reimbursement/
waiver/custody earnings credit ............. 1.06% 0.94%** 1.18% 0.90%**
Net investment income including reimbursement/
waiver/custody earnings credit ............. 0.23% 0.41%** 2.51% 3.14%**
Portfolio turnover rate ...................... 43% 44%++ 65% 56%++
Average commission rate paid (a) ............. $0.0247 $0.0312 $0.0222 $0.0269
- --------------------------------------------------------------------------------------------------------------
* Large Company Growth Portfolio and Large Company Value Portfolio Institutional Class shares commenced
operations on July 15, 1996.
** Annualized
*** The selected per share data was calculated using the weighted average shares outstanding method for the year.
+ 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>
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY SMALL COMPANY
GROWTH PORTFOLIO VALUE PORTFOLIO
---------------------------- ----------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
1997 1996* 1997 1996*
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of year ........... $18.56 $16.66 $15.92 $15.45
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) ................. (0.17)** (0.02) 0.40** 0.06
Net realized and unrealized gain on
investments ................................. 2.38 1.92 4.27 0.41
------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS ............. 2.21 1.90 4.67 0.47
------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ......... -- -- (0.77) --
Distributions from capital gains ............. (4.16) -- (2.59) --
------ ------ ------ ------
TOTAL DISTRIBUTIONS .......................... (4.16) -- (3.36) --
----- ----- ----- -----
Net asset value, end of year ................. $16.61 $18.56 $17.23 $15.92
====== ====== ====== ======
Total return+ ................................ 15.14% 11.40%++ 33.74% 3.04%++
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) ........... $4,599 $3,577 $26,412 $7,335
Operating expenses including reimbursement/
waiver/custody earnings credit ............. 1.22% 0.98%** 0.86% 0.85%**
Operating expenses excluding custody earnings
credit ..................................... 1.24% -- 0.90% --
Operating expenses excluding reimbursement/
waiver/custody earnings credit ............. 1.45% 1.02%** 1.15% 0.89%**
Net investment income (loss) including
reimbursement/waiver/custody earnings credit. (1.05)% (0.75)%** 2.58% 3.16%**
Portfolio turnover rate ...................... 105% 87%++ 105% 81%++
Average commission rate paid (a) ............. $0.0175 $0.0200 $0.0223 $0.0238
- --------------------------------------------------------------------------------------------------------------
* Small Company Growth Portfolio and Small Company Value Portfolio Institutional Class shares commenced
operations on July 15, 1996.
** Annualized
*** The selected per share data was calculated using the average shares outstanding method for the year.
+ 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>
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.
<PAGE>
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 $213 billion and $244 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 $213 billion
and $1.8 billion on the date of this prospectus), which constitute approximately
82% 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 between $1.8 billion and $244 million on the date of
this prospectus), which constitute approximately 13% of the total market value
of the stocks included in the Wilshire 5000 Index (the stocks of the remaining
companies constituted less than 5% 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 periodically reviews 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 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 hold as a result of its purchase of stock index futures. To the
extent the Fund, on behalf of a Portfolio, purchases or sells futures contracts,
the Fund currently intends to use the New York Stock Exchange Composite Index,
Value Line Composite Index or Standard & Poor's 500 Composite Stock Price Index.
The performance of the futures should not be expected to correlate identically
with that of the particular index. In addition, each Portfolio may lend its
portfolio securities. See also "Investment Considerations and Risks" below and
"Investment Objective and Management Policies" in the Statement of Additional
Information.
INVESTMENT CONSIDERATIONS AND RISKS
- --------------------------------------------------------------------------------
GENERAL -- Each Portfolio's net asset value is not fixed and should be expected
to fluctuate. You should consider a Portfolio as a supplement to an overall
investment program and should invest only if you are willing to undertake the
risks involved. See "Investment Objective and Policies -- Management Policies"
in the Statement of Additional Information for a further discussion of certain
risks.
Equity securities fluctuate in value, often based on factors unrelated to
the value of the issuer of the securities, and such fluctuations can be
pronounced. Changes in the value of a Portfolio's investment securities will
result in changes in the value of such Portfolio's Shares and thus the
Portfolio's total return to investors. Moreover, 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. 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.
Except as otherwise indicated, each Portfolio's investment objectives and
policies are not fundamental and may be changed without a vote of shareholders.
There can be no assurance that a Portfolios' objectives will be met.
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 purchase any additional securities.
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 are currently
comprised of stock index futures. While Derivatives can be used effectively in
furtherance of an 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 shares. 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 the 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. "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 approximately 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.
LENDING PORTFOLIO SECURITIES -- Each Portfolio may lend securities from its
portfolio to brokers, dealers and other financial institutions. 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 a 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 a 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 and such Portfolio is delayed or prevented from recovering
the collateral or completing the transaction.
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 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.
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 November 30, 1997, Wilshire managed approximately $7.7 billion in
assets. Under the terms of the 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 Portfolios' 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 since the
Portfolios' inception and has been employed by Wilshire since October 6, 1980.
The Portfolios' 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, Dennis Tito, who owned a majority of
its outstanding voting stock as of September 30, 1997.
Pursuant to the terms of an Investment Advisory Agreement dated July 11, 1996
(the "Advisory Agreement"), the Fund with respect to the Portfolios, has agreed
to pay Wilshire a fee computed daily and paid monthly at the annual rate of .25
of 1% of the value of each Portfolio's average daily net assets.
Wilshire has voluntarily undertaken to waive a portion of its fee otherwise
payable under the Advisory Agreement to .10 of 1% of each of the Small Company
Value Portfolio's and Small Company Growth Portfolio's average daily net assets.
The voluntary waiver may be terminated at any time by Wilshire by notice to the
Directors of the Fund.
For the fiscal year ended August 31, 1997, 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 an expense limitation set forth in the Advisory Agreement, which was
in effect from July 11, 1996 through October 11, 1997, and voluntary waivers by
Wilshire.
ADMINISTRATOR -- Investor Services Group, 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, Investor Services Group 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 Investor Services Group 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 Investor Services Group an annual fee of $25,000 per
each Portfolio and $2,000 for each additional class.
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. Investor Services
Group is also the Fund's Transfer and Dividend Disbursing Agent (the "Transfer
Agent").
DISTRIBUTOR -- FDDI, 4400 Computer Drive, Westborough, Massachusetts 01581,
serves as the distributor of the Shares. FDDI is an indirect wholly-owned
subsidiary of First Data Corporation. FDDI is not compensated by the Fund or its
shareholders for its services as distributor.
EXPENSES -- From time to time, Wilshire or Investor Services Group 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 the return to investors at the time such amounts are waived or
assumed, as the case may be. The Fund will not pay Wilshire or Investor Services
Group for any amounts which may be waived, nor will the Fund reimburse Wilshire
or Investor Services Group for any amounts which may be assumed. Each of FDDI,
Wilshire or Investor Services Group may bear expenses of distribution of the
shares of a Portfolio or of the provision of shareholder services to a
Portfolio'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 FDDI, Wilshire or Investor Services
Group. 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 FDDI, Wilshire or Investor Services Group or any of their
affiliates, SEC fees, state Blue Sky qualification fees, advisory and
administration 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
among the Portfolios on the basis determined by the Board of Directors,
including, but not limited to, proportionately in relation to the net assets of
each Portfolio.
HOW TO BUY FUND SHARES
- --------------------------------------------------------------------------------
Shares are offered exclusively to institutional investors, such as employee
benefit plans, other tax-exempt institutions, corporations and other
institutional buyers. Shares are sold without a sales charge. You may be charged
a 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. For investors who purchase through a financial intermediary and hold their
shares through an omnibus account with that financial intermediary, the minimum
initial investment applies to the omnibus account, and not to the investors
individually.
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 5170, Westborough, Massachusetts
01581-5120, 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 Deposit and Trust Company
Fund Number ("260, 261, 262 or 263" for Large Company Growth Portfolio,
Large Company Value Portfolio, Small Company Growth Portfolio, Small Company
Value Portfolio, respectively)
Shareholder Account Number
Account of (Registered Shareholder)
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 (normally
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 of the Portfolios, futures
contracts will be valued 15 minutes after the close of trading on the floor of
the New York Stock Exchange. Net asset value per Share of a class of Shares of a
Portfolio is computed by dividing the value of the net assets attributable to
that class of Shares (i.e., the value of the assets attributable to that class
less liabilities attributable to that class) by the total number of Shares of
that class outstanding. Each Portfolio's investments are valued based on market
value or, where market quotations are not readily available, based on fair value
as determined in good faith by the Board of Directors. For further information
regarding the methods employed in valuing Fund investments, see "Determination
of Net Asset Value" in the Statement of Additional Information.
Federal regulations require that you provide a certified TIN upon opening or
reopening an account. See "Dividends, Distributions and Taxes" and the Fund's
Account Application for further information concerning this requirement. Failure
to furnish a certified TIN to the Fund could subject you to a $50 penalty
imposed by the Internal Revenue Service (the "IRS").
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
PORTFOLIO EXCHANGES -- You may purchase, in exchange for Shares of a Portfolio,
Shares of the same class of one of the other Portfolios offered by the Fund, to
the extent such Shares are offered for sale in your state of residence. If you
desire to use this service, please call 1-888-200-6796 to determine if it is
available and whether any conditions are imposed on its use.
To request an exchange, you must give exchange instructions to the Transfer
Agent in writing. Except in the case of personal retirement plans, the shares
being exchanged must have a current value of at least $100,000; furthermore,
when establishing a new account by exchange, the shares being exchanged must
have a value of at least the minimum initial investment required for the
Portfolio into which the exchange is being made (currently, $5,000,000). The
ability to issue exchange instructions by telephone is given to all Fund
shareholders automatically, unless you check the applicable "No" box on the
Account Application, indicating that you specifically refuse this privilege. The
Telephone Exchange Privilege may be established for an existing account by
written request, signed by all shareholders on the account, or by a separate
signed Shareholder Services Form, also available by calling 1-888-200-6796. If
you have established the Telephone Exchange Privilege, you may telephone
exchange instructions by calling 1-888-200-6796. See "How to Redeem Fund Shares
- -- Procedures." Upon an exchange into a new account, the following shareholder
services and privileges, as applicable and where available, will be
automatically carried over to the Portfolio into which the exchange is made:
Telephone Exchange Privilege, Wire Redemption Privilege, Telephone Redemption
Privilege, and the dividend and capital gain distribution option selected by the
investor.
Shares will be exchanged at their next determined net asset value. No fees
currently are charged to shareholders directly in connection with exchange s,
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 SEC. The Fund reserves the right to reject any exchange
request in whole or in part. The availability of exchanges may be modified or
terminated at any time upon notice to shareholders.
The exchange of Shares of one Portfolio for Shares of another is treated for
Federal income tax purposes as a sale of the Shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize a taxable gain
or loss.
RETIREMENT PLANS -- The Fund offers a variety of pension and profit-sharing
plans. Plan support services also are available. To obtain details on available
plans, please call the following toll-free number:
1-888-200-6796.
HOW TO REDEEM FUND SHARES
- --------------------------------------------------------------------------------
GENERAL -- You may request redemption of your Shares at any time. Redemption
requests should be transmitted in accordance with the procedures described
below. When a request is received in proper form, the Fund will redeem the
Shares at the next determined net asset value.
Securities dealers, banks and other financial institutions may charge a
nominal fee for effecting redemptions of a Portfolio's Shares. Any certificates
representing a Portfolio's Shares being redeemed must be submitted with the
redemption request. The value of the Shares redeemed may be more or less than
their original cost, depending upon the Portfolio's then-current net asset
value.
The Fund ordinarily will make payment for all Shares redeemed within seven
days after receipt by the Transfer Agent of a redemption request in proper form,
except as provided by the rules of the SEC.
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 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
5170, Westborough, Massachusetts 01581-5120. Re-demption requests must be signed
by each shareholder, including each owner of a joint account, and each signature
must be guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be accepted
from domestic banks, brokers, dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations, as well as from participants in the New York Stock Exchange
Medallion Signature Program, the Securities Transfer Agents Medallion Program
("STAMP"), and the Stock Exchanges Medallion Program. If you have any questions
with respect to signature-guarantees, please call one of the telephone numbers
listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any member bank of the
Federal Reserve System in accordance with a written signature-guaranteed
request.
WIRE REDEMPTION PRIVILEGE -- You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which is
a member of the Federal Reserve System, or a correspondent bank if your bank is
not a member. You also may direct that redemption proceeds be paid by check
(maximum $150,000 per day) made out to the owners of record and mailed to your
address. Redemption proceeds of less than $1,000 will be paid automatically by
check. Holders of jointly registered Fund or bank accounts may have redemption
proceeds of only up to $250,000 wired within any 30-day period. You may
telephone redemption requests by calling 1-888-200-6796. The Statement of
Additional Information sets forth instructions for transmitting redemption
requests by wire. Shares held under Keogh Plans, IRAs or other retirement plans,
and Shares for which certificates have been issued, are not eligible for this
privilege.
TELEPHONE REDEMPTION PRIVILEGE -- You may request by telephone that redemption
proceeds (maximum $150,000 per day) be paid by check and mailed to your address.
You may telephone redemption instructions by calling 1-888-200-6796. Shares held
under Keogh Plans, IRAs or other retirement plans, and Shares for which
certificates have been issued, are not eligible for this privilege.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
Each Portfolio ordinarily declares and distributes net realized gains, if any,
once a year, but 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 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.
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, 1997 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 may be calculated on the basis of
average annual total return and/or total returns of the Portfolios.
"Total return" is the change in value of an investment in a Portfolio for a
specified period. The "average annual total return" of a Portfolio is the
average annual compound rate of return in an investment in the Portfolio
assuming the investment has been held for one-, five- and ten-year periods (or
the life of the Portfolio if shorter).
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, market conditions and the
risks associated with a Portfolio's objective and investment policies.
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 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 600 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 5170,
Westborough, Massachusetts 01581-5120, or by calling toll free 1-888-200-6796.
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.
<PAGE>
[GRAPHIC OMITTED]
WILSHIRE
------------------
TARGET FUNDS, INC.
INSTITUTIONAL CLASS SHARES
- --------------------------
PROSPECTUS
<PAGE>
WILSHIRE TARGET FUNDS, INC.
(INSTITUTIONAL CLASS SHARES)
STATEMENT OF ADDITIONAL INFORMATION
December 29, 1997
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. (the "Fund") (Institutional Class shares), dated
December 29, 1997. To obtain a copy of the Prospectus, please write to the Fund
at P.O. Box 5170, Westborough, Massachusetts 01581-5120, 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. ("Investor Services Group") serves
as the Fund's administrator and transfer agent.
First Data Distributors, Inc. ("FDDI") 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......................................................16
REDEMPTION OF FUND SHARES....................................................17
SHAREHOLDER SERVICES.........................................................18
DETERMINATION OF NET ASSET VALUE.............................................19
DIVIDENDS, DISTRIBUTION AND TAXES............................................19
PERFORMANCE INFORMATION......................................................21
PORTFOLIO TRANSACTIONS.......................................................22
INFORMATION ABOUT THE FUND...................................................23
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT ACCOUNTANTS.....................................24
FINANCIAL STATEMENTS.........................................................24
APPENDIX.....................................................................25
<PAGE>
GENERAL INFORMATION AND HISTORY
On September 17, 1992, Dreyfus-Wilshire Series Fund, Inc. changed its name
to Dreyfus-Wilshire Target Funds, Inc.
On May 29, 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 (Institutional Class shares) 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.
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 only 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 bank obligations in which the Portfolios may invest may
include uninsured, direct obligations bearing fixed, floating or variable
interest rates.
REPURCHASE AGREEMENTS. In a repurchase agreement, a 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 SEC 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.
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 is has engaged in a
portfolio loan transaction breaches its agreement with the Portfolio.
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 SEC 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.
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.
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 a Portfolio 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.
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 SEC, 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 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 affect the value of such Portfolio's net assets adversely. 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 SEC, a Portfolio
may be required to segregate cash or liquid assets 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 presently are not
contemplated for use by the Portfolio or which currently are not 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 SAI.
MANAGEMENT POLICIES
- -------------------
PORTFOLIOS 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 1940 Act) of such Portfolio's outstanding voting shares.
Investment restrictions numbered 10 through 12 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 33 1/3% 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, or 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, each 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 SEC 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 a 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 a
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 that the activities permitted in investment
restrictions No. 1 and 3 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 a Portfolio will vote the securities it owns in its
portfolio as a shareholder in accordance with its views.
11. 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.
12. 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.
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 48 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 the
Pacific Gas & Electric Nuclear Decommissioning Trust and Brandes Investment
Trust. He is 67 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 48 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 50
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 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 67 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,
1997, was as follows:
<TABLE>
<CAPTION>
PENSION OR RETIREMENT
AGGREGATE BENEFITS ACCRUED AS ESTIMATED ANNUAL TOTAL COMPENSATION
NAME OF COMPENSATION PART OF BENEFITS UPON FROM REGISTRANT AND
BOARD MEMBER FROM FUND* FUND'S EXPENSES RETIREMENT FUND COMPLEX
------------ ------------ --------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Thomas D. Stevens $0 N/A N/A $0
DeWitt F. Bowman $16,250 N/A N/A $16,250
Robert J. Raab, Jr. $0 N/A N/A $0
Peter J. Carre $16,250 N/A N/A $16,250
Anne L. Wexler $16,250 N/A N/A $16,250
* Amount does not include reimbursed expenses for attending Board meetings, which amounted to $14,824.44 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 48 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 48 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 46 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 Investor Services Group. From July 1992 to May 1994, Assistant Vice
President and Counsel of The Boston Company Advisors, Inc. She is 40 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 Investor Services Group. 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 35 years old and her address is c/o First Data Investor
Services Group, Inc., 53 State Street, Boston, Massachusetts 02109.
NEIL FORREST, Assistant Treasurer. Since 1995, Vice President and Division
Manager of Client Services of Investor Services Group. From 1992 through March,
1995, Mr. Forrest was Vice President of 440 Financial, Inc. He is 37 years old
and his address is c/o First Data Investor Services Group, Inc. 4400 Computer
Drive, Westborough, Massachusetts 01581.
TERESA M.R. HAMLIN, Assistant Secretary. Since 1995, Counsel to Investor
Services Group. Prior to that time, she was a paralegal manager with The Boston
Company Advisors, Inc. She is 33 years old and her address is c/o First Data
Investor Services Group, Inc., 53 State Street, Boston, Massachusetts 02109.
DIANA TARNOW, Assistant Treasurer. Since 1997, Vice President for Investor
Services Group's Treasury Department. Prior to that time, she was Vice President
of Financial Reporting and Tax. From 1989 to 1994, Ms. Tarnow served as Vice
President of Financial Reporting and Tax with The Boston Company Advisors, Inc.
She is 35 years old and her address is c/o First Data Investor Services Group,
Inc. 4400 Computer Drive, Westborough, Massachusetts 01581.
JOHN J. BURKE, III, Assistant Treasurer. Since 1991, Vice President of Fund
Accounting and Portfolio Valuation Group. Prior to 1991, Mr. Burke was a
management associate with Fidelity Investments. He is 33 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 September 30, 1997.
The following persons are known by the Fund to own of record 5% or more
of a Portfolio's Institutional Class shares outstanding on December 15, 1997.
Large Company Growth Portfolio: Nationsbank TX NA TTEE, P.O. Box 831575,
Dallas, Texas 75283 -- 47.35%; and Cincinnati Bell Collectively Bargained
Retirees Health Care Trust, 201 East 4th Street, Cincinnati, Ohio 45202 --
26.15%.
Large Company Value Portfolio: Cincinnati Bell Collectively, Bargained
Retirees Health Care, 201 E 4th Street, Cincinnati, Ohio 45202. -- 49.20%.
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: Nationsbank, TX NA TTEE, Combined
Master/General Inv., P.O. Box 831575, Dallas, Texas 75283 -- 56.66%; and
Cincinnati Bell Collectively Bargained Retirees Health Care Trust, 201 East 4th
Street, Cincinnati, Ohio 45202 -- 43.34%.
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 (Institutional Class shares) entitled
"Management of the Fund."
INVESTMENT ADVISORY AGREEMENT. Wilshire provides investment advisory
services to the Portfolios pursuant to 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 September 30, 1997.
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 Portfolios' 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.
Wilshire voluntarily has undertaken to waive a portion of its fee otherwise
payable under the Portfolios' Advisory Agreement. Wilshire is currently waiving
.15% of 1% of each of the Small Company Growth Portfolio's and Small Company
Value Portfolio's average daily net assets. The voluntary waiver 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, 1995, 1996 and
1997, the advisory fees for each Portfolio payable to Wilshire, the reductions
attributable to both a voluntary fee waiver and contractual expense limitations
in effect through July 11, 1996, and the net fees paid with respect to the
Portfolios were as follows:
FEE PAID FOR FISCAL YEAR
ENDED AUGUST 31, 1995*
ADVISORY REDUCTION NET
PORTFOLIO FEE PAYABLE IN FEE FEE PAID
Large Company Growth Portfolio $14,834 $1,672 $13,162
Large Company Value Portfolio $15,835 $2,071 $13,764
Small Company Growth Portfolio $15,630 $2,195 $13,435
Small Company Value Portfolio $25,210 $4,145 $21,065
FEE PAID FOR FISCAL YEAR
ENDED AUGUST 31, 1996*
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
<PAGE>
FEE PAID FOR FISCAL YEAR
ENDED AUGUST 31, 1997*
ADVISORY REDUCTION NET
PORTFOLIO FEE PAYABLE IN FEE FEE PAID
Large Company Growth Portfolio $156,239 $93,760 $62,479
Large Company Value Portfolio $102,886 $61,731 $41,155
Small Company Growth Portfolio $ 46,788 $28,073 $18,715
Small Company Value Portfolio $ 93,963 $56,378 $37,585
* The monthly fee payable to Wilshire during the fiscal year ended August
31, 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, Investor Services
Group, 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 SEC 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 Investor Services Group, 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 Investor Services Group.
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 Investor Services Group's services under the
Administration Agreement, Investor Services Group is entitled to receive from
the Fund a monthly administration fee at the annual rate of .15 of 1% each
Portfolio's monthly average net assets up to aggregate assets of $1 billion, .10
of 1% of such value on the next $4 billion, and .08 of 1% on the excess net
assets. In addition, the Fund has agreed to pay Investor Services Group an
annual fee of $25,000 for each Portfolio and $2,000 for each additional class.
FEE PAID FOR FISCAL YEAR
ENDED AUGUST 31, 1995
For the fiscal year ended 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:
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-
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:
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
For the fiscal year ended August 31, 1996, the administration fees paid to
Investor Services Group for each Portfolio were as follows:
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
FEE PAID FOR FISCAL YEAR
ENDED AUGUST 31, 1997
For the fiscal year ended August 31, 1997, the administration fees payable
to Investor Services Group for each Portfolio were as follows:
ADMINISTRATION REDUCTION NET
PORTFOLIO FEE PAYABLE IN FEE FEE PAID
Large Company Growth Portfolio $120,719 $24,498 $96,221
Large Company Value Portfolio $ 88,732 $27,823 $60,909
Small Company Growth Portfolio $ 55,070 $12,169 $42,901
Small Company Value Portfolio $ 83,379 $37,363 $46,016
EXPENSES AND EXPENSE INFORMATION. From time to time, Wilshire or Investor
Services Group may waive receipt of its fees and/or voluntarily assume certain
expenses of the Fund or a Portfolio, which would have the effect of lowering the
overall expense ratio of a Portfolio 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 Investor Services Group for any amounts which may be waived, nor
will the Fund reimburse Wilshire or Investor Services Group for any amounts
which may be assumed. FDDI, Wilshire or Investor Services Group may bear
expenses of distribution of the shares of a Portfolio or of the provision of
shareholder services to a Portfolio'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 FDDI, Wilshire or Investor Services
Group. 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 FDDI, Wilshire or Investor Services Group or any of their
affiliates, SEC fees, state Blue Sky qualification fees, advisory and
administration fees, Rule 12b-1 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.
PURCHASE OF FUND SHARES
The following information supplements and should be read in conjunction with
the section in the Fund's Prospectus (Institutional Class shares) entitled "How
to Buy Fund Shares."
THE DISTRIBUTOR. FDDI, a subsidiary of Investor Services Group, 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 FDDI as agent, although
FDDI 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 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 FDDI, 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 FDDI 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.
IN-KIND PURCHASES. Payments for each Portfolio's shares may, at the
discretion of Wilshire, be made in the form of securities which are permissible
investments for the Portfolio. For further information about this form of
payment, please contact the Transfer Agent. Generally, securities which are
accepted by a Portfolio as payment for the Portfolio's shares will be valued
using the Portfolio's procedures for valuing its own shares at the time the
Portfolio's net asset value is next determined after receipt of a properly
completed order. All dividends, interest, subscription or other rights
pertaining to such securities will become the property of the Portfolio and must
be delivered to the Portfolio upon receipt from the issuer. The Portfolio will
require that (1) it will have good and marketable title to the securities
received by it; (2) the securities are in proper form for transfer to the
Portfolio and are not subject to any restriction on sale by the Portfolio under
the Securities Act of 1933, as amended, or otherwise; and (3) the Fund receives
such other documentation as Wilshire may, in its discretion, deem necessary or
appropriate. Investors who are subject to Federal taxation may realize a gain or
loss for Federal income tax purposes.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in conjunction with
the section in the Fund's Prospectus (Institutional Class shares) entitled "How
to Redeem Fund Shares."
WIRE REDEMPTION PRIVILEGE. By using this Privilege, the investor authorizes
Investor Services Group (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 SEC. 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 SEC 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 SEC 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 (Institutional Class shares) 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 and you meet the eligibility requirements (including, minimum
investment amounts for the purchase of such shares. 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 (Institutional Class shares) 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, Rev. Martin Luther King, Jr. 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 (Institutional Class shares) entitled
"Dividends, Distributions and Taxes."
Management of the Fund believes that each Portfolio qualified for the fiscal
year ended August 31, 1997, as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"). 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. Pursuant to the Taxpayer
Relief Act of 1997, the dividends received deduction is also not available to a
corporate shareholder unless it held the shares of the Portfolio on which a
dividend is paid on the ex-dividend date and for at least 45 more days during
the 90-day period surrounding the ex-dividend date. This holding period
requirement is applicable to each dividend paid by a Portfolio. In addition to
these requirements, 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 Portfolios'
Prospectuses. In addition, the Code provides that if a shareholder holds shares
of the Portfolios for six months or less and has received a long-term 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
long-term 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 a 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, a 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.
Under Section 1259 of the Code, enacted as part of the Taxpayer Relief Act
of 1997, a Portfolio will recognize gain if it enters into a short sale, a swap
contract, or a future or forward contract relating to an appreciated direct
position in any stock or debt instrument, or if it acquires stock or a debt
instrument at a time when the Portfolio has an offsetting appreciated position
in the stock or debt instrument. Such transactions are considered to be
constructive sales for income tax purposes.
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 (Institutional Class shares) entitled
"Performance Information."
From time to time, quotations of the Portfolios' performance may be
presented in advertisements, sales literature or reports to shareholders or
prospective investors. In the case of Portfolios with more than one class of
shares, all performance information is calculated separately for each class. The
data is calculated as follows.
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.
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.
Average annual total return for the fiscal year ended August 31, 1997 for
each Portfolio's Institutional Class shares was as follows:
Large Company Growth Portfolio 40.99%
Large Company Value Portfolio 34.26%
Small Company Growth Portfolio 15.14%
Small Company Value Portfolio 33.74%
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 July 15, 1996 (commencement of
operations for Institutional Class shares) through August 31, 1997 for each
Portfolio's Institutional Class shares was as follows:
Large Company Growth Portfolio 42.65%
Large Company Value Portfolio 33.98%
Small Company Growth Portfolio 24.74%
Small Company Value Portfolio 32.94%
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, 1995, 1996, and 1997, the Fund paid total brokerage commissions as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
PORTFOLIO AUGUST 31, 1995 AUGUST 31, 1996 AUGUST 31, 1997
<S> <C> <C> <C>
Large Company Growth Portfolio $13,487 $15,709 $54,773
Large Company Value Portfolio $23,243 $28,558 $30,516
Small Company Growth Portfolio $42,766 $28,311 $25,811
Small Company Value Portfolio $61,819 $60,441 $64,560
</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 (Institutional Class shares) 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. Investor Services Group, a subsidiary of First Data Corporation,
P.O. Box 5170, Westborough, Massachusetts 01581-5120, 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.
Paul, Hastings, Janofsky & Walker LLP, 555 South Flower Street, Los Angeles,
California 90071-2371, 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, 1997 are incorporated into
this Statement of Additional Information by reference in their entirety.
<PAGE>
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.
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
Financial Highlights
Included in Part B:
The Registrant's Annual Report for the fiscal year ended August
31, 1997 and the Report of Independent Accountants dated October
3, 1997 are incorporated by reference to the Definitive 30b-2
filed (EDGAR Form N-30D) on November 4, 1997 as Accession
#0000903893-97-001303.
(b) Exhibits:
(1)(a) Articles of Incorporation dated July 30, 1992 is
incorporated by reference to Exhibit (1)(a) of Post-Effective
Amendment No. 3 to the Registration Statement on Form N-1A which
was filed on November 12, 1993 ("Post-Effective Amendment No. 3").
(1)(b) Articles of Amendment dated August 20, 1992 to the
Articles of Incorporation is incorporated by reference to Exhibit
(1)(b) of Post-Effective Amendment No. 3.
(1)(c) 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 which
was filed on April 2, 1996 ("Post-Effective Amendment No. 8").
(1)(d) 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 Post-Effective Amendment No. 8.
(1)(e) Articles Supplementary dated June 24, 1997 to
the Articles of Incorporation establishing and classifying shares
of the Intermediate Portfolio Corporate Bond and Long-Term
Corporate Bond Portfolio of the Fund is incorporated by reference
to Post-Effective Amendment No. 11 to the Registration Statement
on Form N-1A which was filed on July 22, 1997 ("Post-Effective
Amendment No. 11").
(2)(a) By-Laws dated July 30, 1992, as revised September 17,
1992, are incorporated by reference to Exhibit (2) of Post-
Effective Amendment No. 3.
(2)(b) Amended By-Laws dated September 9, 1996, as
subsequently amended October 1, 1996, are incorporated by
reference to Exhibit (2)(b) of Post-Effective Amendment No. 10 to
the Registration Statement on Form N-1A which was filed on October
30, 1996 ("Post-Effective Amendment No. 10").
(3) Not Applicable.
(4) Not Applicable.
(5) Investment Advisory Agreement between the Fund and Wilshire
Associates Incorporated relating to the Large Company Growth,
Large Company Value, Small Company Growth and Small Company Value
Portfolios dated July 11, 1996 is incorporated by reference to
Exhibit (5)(a) of Post-Effective Amendment No. 10.
(6) Distribution Agreement between the Fund and First Data
Distributors, Inc. relating to the Large Company Growth, Large
Company Value, Small Company Growth and Small Company Value
Portfolios dated March 3, 1997 is incorporated herein by reference
to Post-Effective Amendment No. 11.
(7) Not Applicable.
(8)(a) Custody Agreement between the Fund and The
Northern Trust Company dated June 3, 1996 is incorporated herein
by reference to Post-Effective Amendment No. 11.
(8)(b) Letter Agreement between the Fund and The Northern
Trust Company dated November 5, 1996 is incorporated herein by
reference to Post-Effective Amendment No. 11.
(9)(a) Transfer Agency and Services Agreement between the
Fund and First Data Investor Services Group, Inc. dated May 31,
1996 is incorporated herein by reference to Post-Effective
Amendment No. 11.
(9)(b) Administration Agreement between the Fund and First
Data Investor Services Group, Inc. dated May 31, 1996 is
incorporated by reference to Post-Effective Amendment No. 11.
(10) Consent of Coopers & Lybrand L.L.P. is filed herein
(11)(a) Powers of Attorney of the Directors and officers are
incorporated by reference to Exhibit (11)(b) of Post-Effective
Amendment No. 8.
(11)(b) 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 which
was filed on May 31, 1996 ("Post-Effective Amendment No. 9").
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
(15)(a) Shareholder Services Plan under Rule 12b-1 for
Investment Class shares is incorporated herein by reference to
Post-Effective Amendment No. 11.
(15)(b) Amended and Restated Service and Distribution Plan
under Rule 12b-1, adopted as of June 3, 1997 is incorporated
herein by reference to Post-Effective Amendment No. 11.
(16) Not Applicable.
(17) Financial Data Schedules are filed herein.
(18)(a) Rule 18f-3 Plan, effective May 31, 1996 is
incorporated herein by reference to Post-Effective Amendment No.
11.
(18)(b)Amended Rule 18f-3d Plan, adopted as of June 3, 1997 is
incorporated herein by reference to Post Effective Amendment No.
11.
Item 25. Persons Controlled by or under Common Control with
Registrant
Not Applicable.
Item 26. Number of Holders of Securities
Fund
Number of Record Holders
as of November 30, 1997
Instituti
onal
Class
Shares
Investm
ent
Class
Shares
Large Company Growth Portfolio
1,632
484
Large Company Value Portfolio
1,810
219
Small Company Growth Portfolio
1
428
Small Company Value Portfolio
2
342
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 his/her
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 which was filed on September 23, 1992.
Reference is also made to the Distribution Agreements filed as
Exhibit (6)(a)(b).
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) First Data Distributors, Inc. ("FDDI"), formerly known as
440 Financial Distributors, Inc., currently acts as distributor
for BT Insurance Funds Trust, CT&T Funds, First Choice Funds
Trust, LKCM Funds, The Galaxy Fund, The Galaxy VIP Fund, Galaxy
Fund II, Panorama Trust and Potomac Funds. FDDI is registered
with the Securities and Exchange Commission (the "SEC") as a
broker-dealer and is a member of the National Association of
Securities Dealers. FDDI, 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 FDDI is incorporated by
reference to Schedule A of Form BD filed by FDDI with the SEC
pursuant to the Securities Act of 1934 (File No. 8-45467). No
director, officer, or partner of FDDI 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 function as transfer agent)
2. First Data Investor Services Group, Inc.
53 State Street
Boston, Massachusetts 02109
(records relating to it functions as administrator)
3. First Data Investor Services Group, Inc. and
First Data Distributors, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
(records relating to its functions as administrator and
4. The Northern Trust Company
50 LaSalle Street
Chicago, Illinois 60675
(records relating to its function as custodian)
5. Wilshire Associates Incorporated
1299 Ocean Avenue
Suite 700
Santa Monica, CA 90401
(records relating to its function as investment adviser)
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Not Applicable.
(b) The Registrant hereby undertakes to file a post-effective
amendment, using financial statements which need not be certified,
regarding the Wilshire Target Intermediate Corporate Bond Fund and
the Wilshire Target Long-Term Corporate Bond Fund within four to
six months after the effective date of the Registration Statement
under the Securities Act of 1933.
(c) The Registrant hereby undertakes 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.
(d) The Registrant hereby undertakes 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, as amended, the Registrant
certifies that this Post-Effective Amendment No. 12 to the
Registration Statement meets the requirements for effectiveness
pursuant to Rule 485(b) of the Securities Act of 1933, as amended
and the Registrant has duly caused this Post-Effective Amendment
No. 12 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston, and Commonwealth of
Massachusetts on the 29th day of December, 1997.
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, as amended, 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, December 29, 1997
Thomas D. Stevens Chairman of the Board,
and Director
(Principal Executive Officer)
DAVID R. BORGER* Treasurer December 29, 1997
David R. Borger (Principal Financial Officer)
DEWITT F. BOWMAN* Director December 29, 1997
DeWitt F. Bowman
PETER J. CARRE* Director December 29, 1997
Peter J. Carre
ROBERT J. RAAB, JR.* Director December 29, 1997
Robert J. Raab, Jr.
ANNE WEXLER* Director December 29, 1997
Anne Wexler
*BY: JULIE A. TEDESCO December 29, 1997
Julie A. Tedesco
Attorney-in-Fact
EXHIBIT INDEX
Item Exhibit
10 Consent of Coopers & Lybrand L.L.P.
17 Financial Data Schedules
g:\shared\clients\wilshire\peas\peano.-\partc\121997.doc
Exhibit 10
CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion in Post-Effective Amendment No. 12 to
the Registration Statement on Form N-1A (1933 Act File No. 33-
50390) of Wilshire Target Funds, Inc. (the "Funds"), of our report
dated October 3, 1997 on our audit of the financial statements and
financial highlights of the Funds, which report is included in the
Annual Report to Shareholders for the year ended August 31, 1997
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.
Boston, Massachusetts /s/ Coopers
& Lybrand L.L.P.
December 29, 1997 Coopers & Lybrand L.L.P.
g:\shared\clients\wilshire\peas\peano._\partc\consent.doc
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.91
<EXPENSE-RATIO> .78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> WILSHIRE LARGE COMPANY VALUE INVESTMENT
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 51,738,577
<INVESTMENTS-AT-VALUE> 62,108,131
<RECEIVABLES> 1,052,959
<ASSETS-OTHER> 1,503,244
<OTHER-ITEMS-ASSETS> 7,040
<TOTAL-ASSETS> 64,671,374
<PAYABLE-FOR-SECURITIES> 1,246,762
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101,416
<TOTAL-LIABILITIES> 1,348,178
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 49,920,336
<SHARES-COMMON-STOCK> 682,707
<SHARES-COMMON-PRIOR> 1,009,161
<ACCUMULATED-NII-CURRENT> 762,826
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,270,480
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,369,554
<NET-ASSETS> 63,323,196
<DIVIDEND-INCOME> 1,407,526
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 373,257
<NET-INVESTMENT-INCOME> 1,034,269
<REALIZED-GAINS-CURRENT> 3,378,742
<APPREC-INCREASE-CURRENT> 7,579,626
<NET-CHANGE-FROM-OPS> 11,992,637
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 450,971
<DISTRIBUTIONS-OF-GAINS> 1,745,588
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,591,762
<NUMBER-OF-SHARES-REDEEMED> 15,615,868
<SHARES-REINVESTED> 2,047,357
<NET-CHANGE-IN-ASSETS> 27,938,506
<ACCUMULATED-NII-PRIOR> 779,655
<ACCUMULATED-GAINS-PRIOR> 2,901,041
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 102,886
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 486,007
<AVERAGE-NET-ASSETS> 16,271,976
<PER-SHARE-NAV-BEGIN> 17.80
<PER-SHARE-NII> .87
<PER-SHARE-GAIN-APPREC> 4.73
<PER-SHARE-DIVIDEND> (.60)
<PER-SHARE-DISTRIBUTIONS> (2.31)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.49
<EXPENSE-RATIO> .91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> WILSHIRE LARGE COMPANY VALUE INSTITUTIONAL
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 51,738,577
<INVESTMENTS-AT-VALUE> 62,108,131
<RECEIVABLES> 1,052,959
<ASSETS-OTHER> 1,503,244
<OTHER-ITEMS-ASSETS> 7,040
<TOTAL-ASSETS> 64,671,374
<PAYABLE-FOR-SECURITIES> 1,246,762
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101,416
<TOTAL-LIABILITIES> 1,348,178
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 49,920,336
<SHARES-COMMON-STOCK> 2,410,117
<SHARES-COMMON-PRIOR> 979,106
<ACCUMULATED-NII-CURRENT> 762,826
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,270,480
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,369,554
<NET-ASSETS> 63,323,196
<DIVIDEND-INCOME> 1,407,526
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 373,257
<NET-INVESTMENT-INCOME> 1,034,269
<REALIZED-GAINS-CURRENT> 3,378,742
<APPREC-INCREASE-CURRENT> 7,579,626
<NET-CHANGE-FROM-OPS> 11,992,637
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 603,729
<DISTRIBUTIONS-OF-GAINS> 2,263,715
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25,463,128
<NUMBER-OF-SHARES-REDEEMED> 343,952
<SHARES-REINVESTED> 2,867,445
<NET-CHANGE-IN-ASSETS> 27,938,506
<ACCUMULATED-NII-PRIOR> 779,655
<ACCUMULATED-GAINS-PRIOR> 2,901,041
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 102,886
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 486,007
<AVERAGE-NET-ASSETS> 24,882,148
<PER-SHARE-NAV-BEGIN> 17.80
<PER-SHARE-NII> .59
<PER-SHARE-GAIN-APPREC> 5.01
<PER-SHARE-DIVIDEND> (.62)
<PER-SHARE-DISTRIBUTIONS> (2.31)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.47
<EXPENSE-RATIO> .91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> WILSHIRE SMALL COMPANY GROWTH INVESTMENT
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 15,467,741
<INVESTMENTS-AT-VALUE> 19,020,683
<RECEIVABLES> 3,775
<ASSETS-OTHER> 76,730
<OTHER-ITEMS-ASSETS> 2,681
<TOTAL-ASSETS> 19,103,869
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 33,989
<TOTAL-LIABILITIES> 33,989
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15,407,513
<SHARES-COMMON-STOCK> 871,275
<SHARES-COMMON-PRIOR> 972,333
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 109,425
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,552,942
<NET-ASSETS> 19,069,880
<DIVIDEND-INCOME> 30,362
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 227,675
<NET-INVESTMENT-INCOME> (197,313)
<REALIZED-GAINS-CURRENT> 933,077
<APPREC-INCREASE-CURRENT> 1,789,172
<NET-CHANGE-FROM-OPS> 2,524,936
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 3,506,355
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,370,546
<NUMBER-OF-SHARES-REDEEMED> 8,655,680
<SHARES-REINVESTED> 3,289,679
<NET-CHANGE-IN-ASSETS> (2,556,839)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3,485,066
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 46,788
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 271,646
<AVERAGE-NET-ASSETS> 14,797,632
<PER-SHARE-NAV-BEGIN> 18.56
<PER-SHARE-NII> (.18)
<PER-SHARE-GAIN-APPREC> 2.39
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (4.16)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.61
<EXPENSE-RATIO> 1.22
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> WILSHIRE SMALL COMPANY GROWTH INSTITUTIONAL
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 15,467,741
<INVESTMENTS-AT-VALUE> 19,020,683
<RECEIVABLES> 3,775
<ASSETS-OTHER> 76,730
<OTHER-ITEMS-ASSETS> 2,681
<TOTAL-ASSETS> 19,103,869
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 33,989
<TOTAL-LIABILITIES> 33,989
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15,407,513
<SHARES-COMMON-STOCK> 276,982
<SHARES-COMMON-PRIOR> 192,695
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 109,425
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,552,942
<NET-ASSETS> 19,069,880
<DIVIDEND-INCOME> 30,362
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 227,675
<NET-INVESTMENT-INCOME> (197,313)
<REALIZED-GAINS-CURRENT> 933,077
<APPREC-INCREASE-CURRENT> 1,789,172
<NET-CHANGE-FROM-OPS> 2,524,936
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 802,363
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 421,000
<NUMBER-OF-SHARES-REDEEMED> 964
<SHARES-REINVESTED> 802,362
<NET-CHANGE-IN-ASSETS> (2,556,839)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3,485,066
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 46,788
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 271,646
<AVERAGE-NET-ASSETS> 3,917,525
<PER-SHARE-NAV-BEGIN> 18.56
<PER-SHARE-NII> (.15)
<PER-SHARE-GAIN-APPREC> 2.36
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (4.16)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.61
<EXPENSE-RATIO> 1.22
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> WILSHIRE SMALL COMPANY VALUE INVESTMENT
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 38,687,725
<INVESTMENTS-AT-VALUE> 46,554,379
<RECEIVABLES> 136,187
<ASSETS-OTHER> 114,420
<OTHER-ITEMS-ASSETS> 6,567
<TOTAL-ASSETS> 46,811,553
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101,077
<TOTAL-LIABILITIES> 101,077
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 35,405,028
<SHARES-COMMON-STOCK> 1,176,841
<SHARES-COMMON-PRIOR> 1,716,735
<ACCUMULATED-NII-CURRENT> 705,999
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,732,795
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,866,654
<NET-ASSETS> 46,710,476
<DIVIDEND-INCOME> 1,292,264
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 322,363
<NET-INVESTMENT-INCOME> 969,901
<REALIZED-GAINS-CURRENT> 4,279,058
<APPREC-INCREASE-CURRENT> 6,540,323
<NET-CHANGE-FROM-OPS> 11,789,282
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 662,863
<DISTRIBUTIONS-OF-GAINS> 2,277,643
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,355,863
<NUMBER-OF-SHARES-REDEEMED> 20,524,026
<SHARES-REINVESTED> 2,785,299
<NET-CHANGE-IN-ASSETS> 12,046,822
<ACCUMULATED-NII-PRIOR> 751,862
<ACCUMULATED-GAINS-PRIOR> 1,922,414
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 93,963
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 432,241
<AVERAGE-NET-ASSETS> 17,772,321
<PER-SHARE-NAV-BEGIN> 15.92
<PER-SHARE-NII> .77
<PER-SHARE-GAIN-APPREC> 3.90
<PER-SHARE-DIVIDEND> (.75)
<PER-SHARE-DISTRIBUTIONS> (2.59)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.25
<EXPENSE-RATIO> .86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> WILSHIRE SMALL COMPANY VALUE INSTITUTIONAL
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 38,687,725
<INVESTMENTS-AT-VALUE> 46,554,379
<RECEIVABLES> 136,187
<ASSETS-OTHER> 114,420
<OTHER-ITEMS-ASSETS> 6,567
<TOTAL-ASSETS> 46,811,553
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101,077
<TOTAL-LIABILITIES> 101,077
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 35,405,028
<SHARES-COMMON-STOCK> 1,533,155
<SHARES-COMMON-PRIOR> 460,695
<ACCUMULATED-NII-CURRENT> 705,999
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,732,795
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,866,654
<NET-ASSETS> 46,710,476
<DIVIDEND-INCOME> 1,292,264
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 322,363
<NET-INVESTMENT-INCOME> 969,901
<REALIZED-GAINS-CURRENT> 4,279,058
<APPREC-INCREASE-CURRENT> 6,540,323
<NET-CHANGE-FROM-OPS> 11,789,282
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 355,380
<DISTRIBUTIONS-OF-GAINS> 1,191,034
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,495,849
<NUMBER-OF-SHARES-REDEEMED> 7,914,939
<SHARES-REINVESTED> 1,546,414
<NET-CHANGE-IN-ASSETS> 12,046,822
<ACCUMULATED-NII-PRIOR> 751,862
<ACCUMULATED-GAINS-PRIOR> 1,922,414
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 93,963
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 432,241
<AVERAGE-NET-ASSETS> 19,813,112
<PER-SHARE-NAV-BEGIN> 15.92
<PER-SHARE-NII> .83
<PER-SHARE-GAIN-APPREC> 3.84
<PER-SHARE-DIVIDEND> (.77)
<PER-SHARE-DISTRIBUTIONS> (2.59)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.23
<EXPENSE-RATIO> .86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
