As filed with the Securities and Exchange Commission on November 25, 1998
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. 14 X
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 15 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 8, 1998 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
Portfolios; Investment
Considerations and Risks;
Performance Information;
General Information
5. Management of the Fund Management of the
Portfolios
5A. Management's Discussion of Not Applicable
Fund Performance
6. Capital Stock and Other Securities How to Buy Portfolio
Shares; Shareholder
Services; How to Redeem
Portfolio Shares; Service
and Distribution Plan;
Dividends, Distributions
and Taxes; General
Information
7. Purchase of Securities How to Buy Portfolio Shares
8. Redemption or Repurchase How to Redeem Portfolio
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 Company
15. Control Persons and Principal Management of the Company;
Holders of Securities Investment Advisory and
Administration Agreements
16. Investment Advisory and Other Investment Advisory and
Services 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
Portfolios
19. Purchase, Redemption and Pricing Purchase of Portfolio
of Purchase, Redemption and Shares; Redemption of
Securities Being Offered Portfolio Shares;
Shareholder Services;
Determination of Net Asset
Value;
20. Tax Status Dividends, Distributions
and Taxes
21. Underwriters Purchases of Portfolio
Shares
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
<PAGE>
WILSHIRE TARGET FUNDS, INC.
The purpose of this Post-Effective Amendment No. 14 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.
<PAGE>
PROSPECTUS W I L S H I R E December 8, 1998
----------------------------------
TARGET FUNDS, INC.
----------------------------------
(Investment Class Shares)
(http://www.wilfunds.com)
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Wilshire Target Funds, Inc. (the "Company") is an open-end investment company,
known as a mutual fund. This prospectus offers Investment Class 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 Company's
investment adviser. See "Description of the Portfolios." No Portfolio is an
index fund.
Wilshire Associates Incorporated ("Wilshire") serves as the Company's
investment adviser. First Data Investor Services Group, Inc. ("Investor Services
Group") serves as the Company's administrator and transfer agent. First Data
Distributors, Inc. ("FDDI") serves as the Company's distributor.
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This prospectus sets forth concisely information about the Company that you
should know before investing. It should be read and retained for future
reference.
The Statement of Additional Information dated December 8, 1998, 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 Company
at P.O. Box 60488, King of Prussia, Pennsylvania 19406-0488, 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 Company 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.
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TABLE OF CONTENTS PAGE
Fee Table...................................................... 2
Condensed Financial Information................................ 4
Description of the Portfolios.................................. 8
Investment Considerations and Risks............................ 9
Management of the Portfolios................................... 11
How to Buy Portfolio Shares.................................... 13
Shareholder Services........................................... 15
How to Redeem Portfolio Shares................................. 16
Service and Distribution Plan.................................. 18
Dividends, Distributions and Taxes............................. 19
Performance Information........................................ 20
General Information............................................ 21
<PAGE>
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.
FEE TABLE
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The purpose of the following table is to assist you in understanding the costs
and expenses that the Company 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, 1998 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. See "Management of the Portfolios --
Investment Adviser."
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Large Large Small Small
Company Company Company Company
Growth Value Growth Value
Portfolio Portfolio Portfolio Portfolio
Shareholder Transaction Expenses:
Maximum sales load imposed on purchases or
reinvestments of dividends............................... None None None None
Contingent deferred sales load upon redemption
of investments........................................... None None None None
Redemption Fees.......................................... None None None None
Exchange Fees............................................ None None None None
Annual Fund Operating Expenses:
(as a percentage of average daily net assets)
Management Fees.......................................... 0.25% 0.25% 0.10%* 0.10%*
12b-1 Fee **............................................. 0.11% 0.10% 0.07% 0.09%
Other Expenses........................................... 0.35% 0.48% 1.07% 0.64%
----- ----- ----- -----
Total Fund Operating Expenses............................ 0.71% 0.83% 1.26% 0.83%
<FN>
* Reflects voluntary waivers which will remain in effect until notice to the
Board of Directors by Wilshire. See "Management of the Portfolios --
Investment Adviser." Absent such fee waivers, the ratio of advisory fees to
average net assets for each Portfolio would be 0.25% and the ratio of total
fund operating expenses to average net assets would be 1.41% for the Small
Company Growth Portfolio and .98% for the Small Company Value Portfolio. **
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.
</FN>
</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:
Large Large Small Small
Company Company Company Company
Growth Value Growth Value
Portfolio Portfolio Portfolio Portfolio
1 Year $ 7 $ 8 $ 13 $ 8
3 Years $ 23 $ 26 $ 40 $ 26
5 Years $ 40 $ 46 $ 69 $ 46
10 Years $ 88 $ 103 $ 152 $103
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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%.
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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 Portfolios"
and "Service and Distribution Plan."
<PAGE>
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by
PricewaterhouseCoopers LLP, the Company'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 Investment Class
share outstanding throughout the period, total investment return, ratios to
average net assets and other supplemental data for each Portfolio for each
period indicated. This information has been derived from each Portfolio's
financial statements.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Period
Large Company Growth Portfolio Ended
Year Ended August 31, August 31,
1998 1997 1996 1995 1994 1993*
---- ---- ---- ---- ---- -----
Net asset value,
beginning of period....... $23.92 $19.35 $16.34 $13.31 12.74 $12.50
------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income...... 0.04 0.04*** 0.07 0.10 0.15 0.21
Net realized and
unrealized gain
on investments....... 2.71 7.29 3.45 3.03 0.65 0.10
---- ---- ---- ---- ---- ----
Total from investment
operations........... 2.75 7.33 3.52 3.13 0.80 0.31
---- ---- ---- ---- ---- ----
Less Distributions:
Dividends from net
investment income.... (0.06) (0.03) (0.12) (0.10) (0.23) (0.07)
Distributions from
capital gains........ (0.52) (2.73) (0.39) -- -- --
------ ------ -- -- --
Total distributions (0.58) (2.76) (0.51) (0.10) (0.23) (0.07)
------ ------ ------ ------ ------ ------
Net asset value, end of
period.................... $26.09 $23.92 $19.35 $16.34 $13.31 $12.74
====== ====== ====== ====== ====== ======
Total return (a)........ 11.61% 40.91% 21.90% 23.67% 6.34% 2.46%**
====== ====== ====== ====== ===== =====
Ratios to average net assets/
supplemental data:
Net assets, end of period
(in 000's)................. $81,569 $73,480 $19,035 $21,348 $8,424 $8,061
Operating expenses
including reimburse-
ment/waiver/custody
earnings credit...... 0.71% 0.81% 0.93% 0.84% 0.68%
Operating expenses
excluding custody
earnings credit...... 0.73% 0.91% -- -- -- --
Operating expenses
excluding reimburse-
ment/waiver/custody
earnings credit...... 0.77% 1.09% 0.96% 1.05% 1.39% 1.14%**
Net investment income
including reimburse-
ment/waiver/custody
earnings credit...... 0.16% 0.20% 0.39% 0.94% 1.18% 1.66%**
Portfolio turnover rate 57% 43% 44% 30% 22% 12%**
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<FN>
* 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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Period
Large Company Value Portfolio Ended
Year Ended August 31, August 31,
1998 1997 1996 1995 1994 1993*
---- ---- ---- ---- ---- -----
Net asset value,
beginning of period....... $20.49 $17.80 $16.02 $13.99 $15.18 $12.50
------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income...... 0.38 0.47*** 0.85 0.34 0.36 0.54
Net realized and
unrealized gain/
(loss) on investments 0.01 5.13 1.91 2.19 (0.90) 2.30
---- ---- ---- ---- ------ ----
Total from investment
operations........... 0.39 5.60 2.76 2.53 (0.54) 2.84
---- ---- ---- ---- ------ ---
Less Distributions:
Dividends from net
investment income.... (0.38) (0.60) (0.47) (0.40) (0.36) (0.16)
Distributions from
capital gains........ (1.21) (2.31) (0.51) (0.10) (0.29) --
------ ------ ------ ------ -----
Total distributions (1.59) (2.91) (0.98) (0.50) (0.65) (0.16)
------ ------ ------ ------ ------
Net asset value, end of
period.................... $19.29 $20.49 $17.80 $16.02 $13.99 $15.18
====== ====== ====== ====== ====== ======
Total return (a)........ 1.34% 34.27% 17.52% 18.97% (3.61)% 22.93%**
===== ====== ====== ====== ======= ======
Ratios to average net assets/
supplemental data:
Net assets, end of period
(in 000's)................. $13,055 $13,989 $17,960 $22,926 $12,158 $8,116
Operating expenses
including reimburse-
ment/waiver/custody
earnings credit...... 0.83% 0.91% 0.89% 0.81% 0.58% --**
Operating expenses
excluding custody
earnings credit...... 0.86% 0.96% -- -- -- --
Operating expenses
excluding reimburse-
ment/waiver/custody
earnings credit...... 0.91% 1.18% 0.92% 1.02% 1.18% 1.32%**
Net investment income
including reimburse-
ment/waiver/custody
earnings credit...... 1.88% 2.51% 3.12% 3.77% 4.02% 4.27%**
Portfolio turnover rate 56% 65% 56% 58% 47% 22%**
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<FN>
* 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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Period
Small Company Growth Portfolio Ended
Year Ended August 31, August 31,
1998 1997 1996 1995 1994 1993*
---- ---- ---- ---- ---- -----
Net asset value, beginning
of period.............. $16.61 $18.56 $18.55 $15.39 $16.03 $12.50
------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income/
(loss)............... (0.18) (0.17)*** (0.19) (0.07) (0.04) 0.08
Net realized and
unrealized gain/(loss)
on investments....... (3.98) 2.38 3.06 3.54 0.90 3.48
------ ---- ---- ---- ---- ----
Total from investment
operations........... (4.16) 2.21 2.87 3.47 0.86 3.56
------ ---- ---- ---- ---- ----
Less Distributions:
Dividends from net
investment income.... -- -- -- -- -- (0.03)
Distributions in excess
of net investment income -- -- -- -- (0.07) --
Distributions from
capital gains........ (0.67) (4.16) (2.86) (0.31) (1.43) --
------ ------ ------ ------ ------ --
Total distributions (0.67) (4.16) (2.86) (0.31) (1.50) (0.03)
------ ------ ------ ------ ------ ------
Net asset value, end of
period................. $11.78 $16.61 $18.56 $18.55 $15.39 $16.03
====== ====== ====== ====== ====== ======
Total return (a)........ (26.02)% 15.16% 17.50% 23.04% 5.20% 28.50%**
======== ====== ====== ====== ===== ======
Ratios to average net assets/
supplemental data:
Net assets, end of period
(in 000's)........... $9,659 $14,471 $18,049 $21,882 $11,188 $7,527
Operating expenses
including
reimbursement/waiver/
custody earnings credit 1.26% 1.22% 1.01% 0.95% 0.74% --
Operating expenses
excluding custody
earnings credit...... 1.28% 1.24% -- -- -- --
Operating expenses
excluding
reimbursement/waiver/
custody earnings credit 1.43% 1.45% 1.05% 1.16% 1.47% 1.40%**
Net investment income/
(loss) including
reimbursement/
waiver/custody
earnings credit...... (1.05)% (1.05)% (0.78)% (0.54)% (0.40)% 0.53%**
Portfolio turnover rate.... 74% 97% 87% 111% 46% 55%**
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<FN>
* 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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Period
Small Company Value Portfolio Ended
Year Ended August 31, August 31,
1998 1997 1996 1995 1994 1993*
---- ---- ---- ---- ---- -----
Net asset value, beginning
of period.............. $17.25 $15.92 $15.41 $14.32 $14.81 $12.50
------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income...... 0.36 0.40*** 0.56 0.55 0.45 0.35
Net realized and
unrealized gain/(loss)
on investments....... (1.50) 4.27 0.95 1.06 (0.45) 2.10
------ ---- ---- ---- ----- ----
Total from investment
operations........... (1.14) 4.67 1.51 1.61 0.00 2.45
------ ---- ---- ---- ---- ----
Less Distributions:
Dividends from net
investment income.... (0.37) (0.75) (0.56) (0.45) (0.33) (0.14)
Distributions from
capital gains........ (1.97) (2.59) (0.44) (0.07) (0.16) --
------ ------ ------ ------ ------ --
Total distributions (2.34) (3.34) (1.00) (0.52) (0.49) (0.14)
------ ------ ------ ------ ------ ------
Net asset value, end of
period................. $13.77 $17.25 $15.92 $15.41 $14.32 $14.81
====== ====== ====== ====== ====== ======
Total return (a)........ (8.79)% 33.73% 10.01% 11.84% (0.01)% (19.72)%**
======= ====== ====== ====== ====== =======
Ratios to average net assets/
supplemental data:
Net assets, end of period
(in 000's)........... $17,602 $20,299 $27,329 $25,978 $23,438 $15,155
Operating expenses
including
reimbursement/waiver/
custody earnings credit 0.83% 0.86% 0.88% 0.69% 0.50% --
Operating expenses
excluding custody
earnings credit...... 0.85% 0.90% -- -- -- --
Operating expenses
excluding
reimbursement/waiver/
custody earnings credit 1.00% 1.15% 0.92% 0.91% 1.06%1.32%**
Net investment income/
(loss) including
reimbursement/
waiver/custody
earnings credit...... 1.61% 2.58% 3.13% 4.12% 3.64% 3.65%**
Portfolio turnover rate.... 74% 105% 81% 86% 49% 27%**
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* 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.
</FN>
</TABLE>
<PAGE>
Further information about each Portfolio's performance is contained in the
Company's annual and semi-annual reports, which may be obtained without charge
by writing to the address or calling the number set forth on the cover page of
this Prospectus.
DESCRIPTION OF THE PORTFOLIOS
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 $296 billion and $190 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 $296 billion
and $1.9 billion on the date of this prospectus), which constitute approximately
84% 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 $1.9 billion and $190 million on the date of
this prospectus), which constitute approximately 12% 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.
<PAGE>
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 Company 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 Company, on behalf of a Portfolio, purchases or sells futures
contracts, the Company 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" in the
Statement of Additional Information for a further discussion of certain risks.
<PAGE>
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. See
"Investment Objective and Management Policies -- Management Policies" in the
Statement of Additional Information for a further discussion of certain risks.
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 series of the Company, other investment
companies and other 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 the 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.
<PAGE>
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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 loan 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 Company 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.
Year 2000 -- The date related computer issues known as the "Year 2000 problem"
could have an adverse impact on the quality of services provided to the Company
and its shareholders. However, the Company understands that its key service
providers, including Wilshire, are taking steps to address the issue. In
addition, the Year 2000 problem may adversely affect the issuers in which a
Portfolio invests. However, because the objectives of the Portfolios are to
provide the investment results of a portfolio of publicly traded common stock in
one of four sub-categories of issuers from the Wilshire 5000 Index, Wilshire
does not perform fundamental analyses of the issuers in which the Portfolios
invests, and does not attempt to monitor the impact of the problem on individual
issuers.
MANAGEMENT OF THE PORTFOLIOS
Investment Adviser -- Wilshire, located at 1299 Ocean Avenue, Santa Monica,
California 90401-1085, was formed in 1972 and serves as the Company's investment
adviser. As of October 1, 1998, Wilshire managed approximately $7.4 billion in
assets. Under the terms of the Investment Advisory Agreement described below,
Wilshire, subject to the overall authority of the Company'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 Company and a Senior
Vice President of Wilshire. He has been employed by Wilshire since 1980. The
Portfolios' other portfolio manager is identified in the Statement of Additional
Information. Wilshire also provides research services for the Company through a
professional staff of portfolio managers and securities analysts. Wilshire is
controlled by its President, Dennis Tito, who owns a majority of its outstanding
voting stock.
<PAGE>
Pursuant to the terms of an Investment Advisory Agreement with Wilshire dated
July 11, 1996 (the "Advisory Agreement"), the Company 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 Company.
For the fiscal year ended August 31, 1998, the Company paid Wilshire an
investment advisory fee at the effective annual rates of .21%, .20%, .10% and
.10% of the value of the average daily net assets of the Large Company Growth
Portfolio, the Large Company Value Portfolio, the Small Company Growth Portfolio
and the Small Company Value Portfolio, respectively, 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, 4400 Computer Drive, Westborough, Massachusetts 01581, serves as
the Company's administrator pursuant to an Administration Agreement with the
Company. Under the terms of the Administration Agreement, Investor Services
Group generally assists in all aspects of the Company's operations, other than
providing investment advice, subject to the overall authority of the Company's
Board of Directors in accordance with Maryland law. Pursuant to the terms of the
Administration Agreement, the Company 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 Company's monthly average net assets up to aggregate assets of $1
billion, .10 of 1% of the Company's monthly average net assets on the next $4
billion, and .08 of 1% the Company's monthly average net assets on the excess
net assets. In addition, the Company 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, is the custodian of the Company's investments. Investor Services Group
is also the Company's Transfer and Dividend Disbursing Agent (the "Transfer
Agent").
Distributor -- FDDI, 4400 Computer Drive, Westborough, Massachusetts 01581,
serves as the distributor of the Company's 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 Portfolios
or the Company, which would have the effect of lowering the overall expense
ratio of the Portfolios and increasing the return to investors at the time such
amounts are waived or assumed, as the case may be. The Company will not pay
Wilshire or Investor Services Group for any amounts which may be waived or
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 Company.
All expenses incurred in the operation of the Company are borne by the Company,
except to the extent specifically assumed by FDDI, Wilshire or Investor Services
Group. The expenses borne by the Company 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 Company'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 series or class of shares are charged against the
assets of that series or class. Other expenses of the Company 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 PORTFOLIO SHARES
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 Company 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 Account Application. The Company 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 Company. The Company 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 Portfolio account
number should appear on the check. Payments which are mailed should be sent to
Wilshire Target Funds, Inc., P.O. Box 60488, King of Prussia, Pennsylvania
19406-0488, together with your investment slip or, when opening a new account,
your Investment Class shares Account Application, indicating the name of the
Portfolio. 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 Portfolio and the Portfolio's DDA number, 065-587, for purchase of shares
in your name. The wire must include your Portfolio 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 Portfolio shares is by wire, please call 1-888-200-6796 after
completing your wire payment to obtain your Portfolio account number. Please
include your Portfolio account number on the Account Application and promptly
mail the Account Application to the Portfolio, 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 Portfolio 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 Portfolios' 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
Account Application for further information concerning this requirement.
Failure to furnish a certified TIN could subject you to a $50 penalty imposed
by the Internal Revenue Service (the "IRS").
SHAREHOLDER SERVICES
Exchanges -- You may purchase, in exchange for shares of a Portfolio, shares of
the same class of one of the other series offered by the Company or shares of
another class of the Portfolio or any other series, 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. If you want 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. 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 shareholders automatically, unless you
check the applicable "No" box on the Account Application, indicating that you
specifically refuse this privilege. You may establish the Telephone Exchange
Privilege 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 Portfolio 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
series into which the exchange is made: Telephone Exchange Privilege, Wire
Redemption Privilege, Telephone Redemption Privilege, and the dividend and
capital gain distribution option you have selected.
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 Company 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 Company 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 series is treated
for Federal income tax purposes as a sale of the Portfolio shares exchanged by
the shareholder and, therefore, you may realize a taxable gain or loss.
Money Market Fund -- You may exchange shares of a Wilshire Target Fund
Portfolio for shares of a money market fund. Please call 1-888-200-6796 to
obtain a prospectus and more information on how to exchange into the money
market fund.
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 you select. Shares are purchased
by transferring funds from the bank account you designate. 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. You may only designate an account maintained at a domestic
financial institution which is an Automated Clearing House member. 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 60488, King of
Prussia, Pennsylvania 19406-0488, and the notification will be effective three
business days following receipt. The Company may modify or terminate this
Privilege at any time or charge a service fee. No such fee currently is
contemplated.
Retirement Plans -- The Company 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 PORTFOLIO 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 Portfolio 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.
Each Portfolio 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 Portfolio 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.
<PAGE>
The Transfer Agent will not redeem your shares until it has received your
Account Application.
Each Portfolio 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 as a result of redemptions 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 Company 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 Company 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 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 Company 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 Company or the Transfer Agent may be liable for any
losses due to unauthorized or fraudulent instructions. Neither the Company 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
60488, King of Prussia, Pennsylvania 19406-0488. 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."
<PAGE>
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 accounts may have redemption proceeds of up
to $250,000 wired within any 30-day period. You may make 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
The Directors of the Company have 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 Company reimburses
FDDI, distributor of the Company, at an annual rate of up to.25 of 1% of the
value of the average daily net assets attributable to the Investment Class
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 Investment Class shares
of a Portfolio and/or for the maintenance of the accounts of the holders of the
Investment Class shares. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Company 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 Investment Class 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 Investment Class 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 Investment Class shares of that
Portfolio.
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 Company 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 Company intends to distribute substantially all of each Portfolio's 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 maximum federal
capital gains rate for individuals is 28% with respect to capital assets held
for more than 12 months, but not more than 18 months, and 20% with respect to
capital assets held for more than 18 months. The maximum capital gains rate for
corporate shareholders is the same as the maximum tax rate for ordinary income.
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 is entitled to claim 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 or her 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.
<PAGE>
Federal regulations generally require the Company 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 you if
you fail to certify either that the TIN furnished in connection with opening an
account is correct or that you have 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 a Portfolio to institute backup withholding if the IRS
determines your TIN is incorrect or if you have 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 Company believes that each Portfolio has qualified for the
fiscal year ended August 31, 1998 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 Portfolios. 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 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 and is also 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.
<PAGE>
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., the Standard & Poor's 500 Composite
Stock Price Index, the Dow Jones Industrial Average, Morningstar, Inc. and other
industry publications.
GENERAL INFORMATION
The Company was incorporated under Maryland law on July 30, 1992, and commenced
operations on September 30, 1992. The Company is authorized to issue 600 million
shares of Common Stock (with 100 million allocated to each Portfolio and 50
million allocated to each of class of each Portfolio), par value $.001 per
Share.
The Company is a "series fund," which is a mutual fund divided into separate
portfolios. Each Portfolio of the Company is treated as a separate entity for
certain matters under the 1940 Act and for other purposes. A shareholder of one
Portfolio is not deemed to be a shareholder of any other Portfolio. As described
below, for certain matters 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 five series of
shares and an "Investment Class" and "Institutional Class" of shares for each
Portfolio. All consideration received by the Company for shares of one of the
Portfolios and all assets in which such consideration is invested will belong to
that Portfolio 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 company expects the investment returns of
Institutional Class shares 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 Company to hold annual meetings of shareholders. As a result, Company
shareholders may not consider each year the election of Directors or the
appointment of auditors. However, pursuant to the Company's By-Laws, the holders
of at least 10% of the shares outstanding and entitled to vote may require the
Company to hold a special meeting of shareholders for the purpose of considering
the removal of a Director from office or for any other purpose. Shareholders may
remove a Director by the affirmative vote of a majority of the Company'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 are entitled
to vote separately to approve investment advisory agreements or changes in
investment restrictions, but shares of all Portfolios 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 a Portfolio on all other matters on which shareholders 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 60488, King
of Prussia, Pennsylvania 19406-0488, 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
Company'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
Company. 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>
PROSPECTUS W I L S H I R E December 8, 1998
----------------------------------------------
TARGET FUNDS, INC.
------------------------------------------------
(Institutional Class Shares)
(http://www.wilfunds.com)
Wilshire Target Funds, Inc. (the "Company") is an open-end investment company,
known as a mutual fund. This prospectus offers Institutional Class 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 Company's investment adviser. See "Description of the Portfolios." No
Portfolio is an index fund.
Wilshire Associates Incorporated ("Wilshire") serves as the Company's
investment adviser. First Data Investor Services Group, Inc. ("Investor Services
Group") serves as the Company's administrator and transfer agent. First Data
Distributors, Inc. ("FDDI") serves as the Company's distributor.
- -------------------------------------------------------------------------------
This prospectus sets forth concisely information about the Company that you
should know before investing. It should be read and retained for future
reference.
The Statement of Additional Information dated December 8, 1998, 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 Company
at P.O. Box 60488, King of Prussia, Pennsylvania 19406-0488, 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 Company 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............................... 4
Description of the Portfolios................................. 6
Investment Considerations and Risks........................... 7
Management of the Portfolios.................................. 9
How to Buy Portfolio Shares................................... 11
Shareholder Services.......................................... 12
How to Redeem Portfolio Shares................................ 13
Dividends, Distributions and Taxes............................ 15
Performance Information....................................... 17
General Information........................................... 17
<PAGE>
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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.
FEE TABLE
- -------------------------------------------------------------------------------
The purpose of the following table is to assist you in understanding the
costs and expenses that the Company 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, 1998
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>
<S> <C> <C> <C>
Large Large Small Small
Company Company Company Company
Growth Value Growth Value
Portfolio Portfolio Portfolio Portfolio
Shareholder Transaction Expenses:
Maximum sales load imposed on purchases
or reinvestments of dividends.................. None None None None
Contingent deferred sales load upon
redemption of investments...................... None None None None
Redemption Fees................................ None None None None
Exchange Fees.................................. None None None None
Annual Portfolio Operating Expenses:
(as a percentage of average daily net assets)
Management Fees................................ 0.25% 0.25% 0.10%* 0.10%*
Other Expenses................................. 0.35% 0.48% 1.07% 0.64%
----- ----- ----- -----
Total Fund Operating Expenses.................. 0.60% 0.73% 1.17% 0.74%
<FN>
* Reflects voluntary waivers which will remain in effect until notice to
the Board of Directors by Wilshire. See "Management of the Portfolios --
Investment Adviser." Absent such fee waivers, the ratio of advisory fees
to average net assets for each Portfolio would be 0.25% and the ratio of
total fund operating expenses to average net assets would be 1.32% for
the Small Company Growth Portfolio and .89% for the Small Company Value
Portfolio.
</FN>
</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:
Large Large Small Small
Company Company Company Company
Growth Value Growth Value
Portfolio Portfolio Portfolio Portfolio
1 Year $ 6 $ 7 $ 12 $ 8
3 Years $ 19 $ 23 $ 37 $ 24
5 Years $ 33 $ 41 $ 64 $ 41
10 Years $ 75 $ 91 $ 142 $ 92
<PAGE>
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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%.
- -------------------------------------------------------------------------------
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 Portfolios."
<PAGE>
CONDENSED FINANCIAL INFORMATION
- -------------------------------------------------------------------------------
The information in the following table has been audited by
PricewaterhouseCoopers LLP, the Company'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>
<S> <C> <C> <C> <C> <C> <C>
Large Company Growth Portfolio Large Company Value Portfolio
Period Period
Ended Ended
Year Ended August 31, August 31, Year Ended August 31, August 31,
1998 1997 1996* 1998 1997 1996*
Net asset value, beginning of period............... $23.91 $19.35 $18.27 $20.47 $17.80 $17.19
------ ------ ------ ------ ------
Income from investment operations:
Net investment income.............................. 0.08 0.05*** 0.01 0.41 0.47*** 0.07
Net realized and unrealized gain on
investments....................................... 2.72 7.29 1.07 0.01 5.13 0.54
---- ---- ---- ---- ---- ----
Total from investment operations................... 2.80 7.34 1.08 0.42 5.60 0.61
---- ---- ---- ---- ---- ----
Less Distributions:
Dividends from net investment income............... (0.07) (0.05) -- (0.39) (0.62) --
Distributions from capital gains................... (0.52) (2.73) -- (1.21) (2.31) --
------ ------ -- ------ ------ --
Total distributions................................ (0.59) (2.78) -- (1.60) (2.93) --
------ ------ -- ------ ------ --
Net asset value, end of period..................... $26.12 $23.91 $19.35 $19.29 $20.47 $17.80
====== ====== ====== ====== ====== ======
Total return+...................................... 11.78% 40.99% 5.91%++ 1.47% 34.26% 3.55%++
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)............... $34,993 $41,881 $7,763 $46,017 $49,334 $17,425
Operating expenses including reimbursement/
waiver/custody earnings credit.................... 0.60% 0.78% 0.91%** 0.73% 0.91% 0.87%**
Operating expenses excluding custody earnings
credit............................................. 0.62% 0.87% -- 0.76% 0.96% --
Operating expenses excluding reimbursement/
waiver/custody earnings credit..................... 0.66% 1.06% 0.94%** 0.81% 1.18% 0.90%**
Net investment income including reimbursement/
waiver/custody earnings credit..................... 0.27% 0.23% 0.41%** 1.98% 2.51% 3.14%**
Portfolio turnover rate............................ 57% 43% 44%++ 56% 65% 56%++
<FN>
* 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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Small Company Growth Portfolio Small Company Value Portfolio
Period Period
Ended Ended
Year Ended August 31, August 31, Year Ended August 31, August 31,
1998 1997 1996* 1998 1997 1996*
Net asset value, beginning of period................. $16.61 $18.56 $16.66 $17.23 $15.92 $15.45
------ ------ ------ ------ ------
Income from investment operations:
Net investment income/(loss)......................... (0.17) (0.17)** (0.02) 0.38 0.40** 0.06
Net realized and unrealized gain/(loss) on
investments.......................................... (3.98) 2.38 1.92 (1.50) 4.27 0.41
------ ---- ---- ------ ---- ----
Total from investment operations..................... (4.15) 2.21 1.90 (1.12) 0.47
------ --- ---- ------ ----
Less Distributions:
Dividends from net investment income................. -- -- -- (0.38) (0.77) --
Distributions from capital gains..................... (0.67) (4.16) -- (1.97) (2.59) --
------ ------ -- ------ ------ --
Total distributions.................................. (0.67) (4.16) -- (2.35) (3.36) --
------ ------ -- ------ ------ --
Net asset value, end of period....................... $11.79 $16.61 $18.56 $13.76 $17.23 $15.92
====== ====== ====== ====== ====== ======
Total return+........................................ (25.95)% 15.14% 11.40%++ (8.72)% 33.74% 3.04%++
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)................. $4,054 $4,599 $3,577 $10,454 $26,412 $7,335
Operating expenses including reimbursement/
waiver/custody earnings credit...................... 1.17% 1.22% 0.98%** 0.74% 0.86% 0.85%**
Operating expenses excluding custody earnings credit 1.19% 1.24% -- 0.76% 0.90%
- --
Operating expenses excluding reimbursement/
waiver/custody earnings credit...................... 1.34% 1.45% 1.02%** 0.91% 1.15% 0.89%**
Net investment income (loss) including
reimbursement/waiver/custody earnings credit...... (0.96)% (1.05)% (0.75)%** 1.70% 2.58% 3.16%**
Portfolio turnover rate.............................. 74% 97% 87%++ 74% 105% 81%++
<FN>
* 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.
</FN>
</TABLE>
Further information about the performance of each Portfolio's shares is
contained in the Company'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>
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DESCRIPTION OF THE PORTFOLIOS
- -------------------------------------------------------------------------------
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 $296 billion and $190 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 $296 billion
and $1.9 billion on the date of this prospectus), which constitute approximately
84% 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 $1.9 billion and $190 million on the date of
this prospectus), which constitute approximately 12% 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 Company 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 Company, on behalf of a Portfolio, purchases or sells futures
contracts, the Company currently intends to use the New York Stock Exchange
Composite Index, Value Line Composite Index or Standard & Poor's 500 Composite
Stock Price Index. The performance of the futures should not be expected to
correlate identically with that of the particular index. In addition, each
Portfolio may lend its portfolio securities. See also "Investment Considerations
and Risks" below and "Investment Objective and Management Policies" in the
Statement of Additional Information.
INVESTMENT CONSIDERATIONS AND RISKS
- --------------------------------------------------------------------------------
General -- Each Portfolio's net asset value is not fixed and should be expected
to fluctuate. You should consider a Portfolio as a supplement to an overall
investment program and should invest only if you are willing to undertake the
risks involved. See "Investment Objective and Management Policies -- Management
Policies" in the Statement of Additional Information for a further discussion of
certain risks.
Equity securities fluctuate in value, often based on factors unrelated to the
value of the issuer of the securities, and such fluctuations can be pronounced.
Changes in the value of a Portfolio's investment securities will result in
changes in the value of such Portfolio's shares and thus the Portfolio's total
return to investors. Moreover, 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. See
"Investment Objective and Management Policies -- Management Policies" in the
Statement of Additional Information for further discussion of certain risks.
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 series of the Company, other investment
companies and other 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 the 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 loan 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 Company 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.
Year 2000 -- The date related computer issues known as the "Year 2000 problem"
could have an adverse impact on the quality of services provided to the Company
and its shareholders. However, the Company understands that its key service
providers, including Wilshire, are taking steps to address the issue. In
addition, the Year 2000 problem may adversely affect the issuers in which a
Portfolio invests. However, because the objectives of the Portfolios are to
provide the investment results of a Portfolio of publicly traded common stock in
one of four sub-categories of issuers from the Wilshire 5000 Index, Wilshire
does not perform fundamental analyses of the issuers in which the Portfolios
invests, and does not attempt to monitor the impact of the problem on individual
issuers.
MANAGEMENT OF THE PORTFOLIOS
- -------------------------------------------------------------------------------
Investment Adviser -- Wilshire, located at 1299 Ocean Avenue, Santa Monica,
California 90401-1085, was formed in 1972 and serves as the Company's investment
adviser. As of October 1, 1998, Wilshire managed approximately $7.4 billion in
assets. Under the terms of the Investment Advisory Agreement described below,
Wilshire, subject to the overall authority of the Company'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 Company and a Senior
Vice President of Wilshire. He has been employed by Wilshire since 1980. The
Portfolios' other portfolio manager is identified in the Statement of Additional
Information. Wilshire also provides research services for the Company through a
professional staff of portfolio managers and securities analysts. Wilshire is
controlled by its President, Dennis Tito, who owns a majority of its outstanding
voting stock.
Pursuant to the terms of an Investment Advisory Agreement with Wilshire dated
July 11, 1996 (the "Advisory Agreement"), the Company 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 Company.
For the fiscal year ended August 31, 1998, the Company paid Wilshire an
investment advisory fee at the effective annual rates of .21%, .20%, .10% and
.10% of the value of the average daily net assets of the Large Company Growth
Portfolio, the Large Company Value Portfolio, the Small Company Growth Portfolio
and the Small Company Value Portfolio, respectively, 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, 4400 Computer Drive, Westborough, Massachusetts 01581, serves as
the Company's administrator pursuant to an Administration Agreement with the
Company. Under the terms of the Administration Agreement, Investor Services
Group generally assists in all aspects of the Company's operations, other than
providing investment advice, subject to the overall authority of the Company's
Board of Directors in accordance with Maryland law. Pursuant to the terms of the
Administration Agreement, the Company 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 Company's monthly average net assets up to aggregate assets of $1
billion, .10 of 1% of the Company's monthly average net assets on the next $4
billion, and .08 of 1% the Company's monthly average net assets on the excess
net assets. In addition, the Company 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 is the custodian of the Company's investments. Investor Services Group
is also the Company'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 Company 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 Portfolios
or the Company, which would have the effect of lowering the overall expense
ratio of the Portfolios and increasing the return to investors at the time such
amounts are waived or assumed, as the case may be. The Company will not pay
Wilshire or Investor Services Group for any amounts which may be waived or
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
Company.
All expenses incurred in the operation of the Company are borne by the Company,
except to the extent specifically assumed by FDDI, Wilshire or Investor Services
Group. The expenses borne by the Company 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 Company'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 series or class of shares are charged against the
assets of that series or class. Other expenses of the Company 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 PORTFOLIO 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 Company 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 Account Application. The Company 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 Portfolio account
number should appear on the check. Payments which are mailed should be sent to
Wilshire Target Funds, Inc., P.O. Box 60488, King of Prussia, Pennsylvania
19406-0488, together with your investment slip or, when opening a new account,
your Institutional Class shares Account Application, indicating the name of the
Portfolio. 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 Portfolio and the Portfolio's DDA number, 065-587, for purchase of shares
in your name. The wire must include your Portfolio 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 Portfolio shares is by wire, please call 1-888-200-6796 after
completing your wire payment to obtain your Portfolio account number. Please
include your Portfolio account number on the Account Application and promptly
mail the Account Application to the Portfolio, 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 Portfolio makes available to certain large
institutions the ability to issue purchase instructions through compatible
computer facilities.
<PAGE>
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 Portfolio 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
Account Application for further information concerning this requirement. Failure
to furnish a certified TIN could subject you to a $50 penalty imposed by the
Internal Revenue Service (the "IRS").
SHAREHOLDER SERVICES
- -------------------------------------------------------------------------------
Exchanges -- You may purchase, in exchange for shares of a Portfolio, shares of
the same class of one of the other series offered by the Company or shares of
another class of the Portfolio or any other series to the extent such shares are
offered for sale in your state of residence. You must meet the eligibility
requirements (including minimum investment amounts) for the purchase of such
shares. If you want 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. The shares being exchanged must have a value of at least the
applicable minimum initial investment, if any, required for the series and class
into which the exchange is being made. The ability to issue exchange
instructions by telephone is given to all shareholders automatically, unless you
check the applicable "No" box on the Account Application, indicating that you
specifically refuse this privilege. You may establish the Telephone Exchange
Privilege 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 Portfolio 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
series into which the exchange is made: Telephone Exchange Privilege, Wire
Redemption Privilege, Telephone Redemption Privilege, and the dividend and
capital gain distribution option you have selected.
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 Company 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 Company 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 series is treated
for Federal income tax purposes as a sale of the Portfolio shares exchanged by
the shareholder and, therefore, may realize a taxable gain or loss.
Money Market Fund -- You may also exchange shares of a Wilshire Target Fund
Portfolio for shares of a money market fund. Please call 1-888-200-6796 to
obtain a prospectus and more information on how to exchange into the money
market fund.
Retirement Plans -- The Company offers a variety of pension and profit-sharing
plans, including Keogh Plans, IRAs, SEP-IRAs, Roth IRAs and IRA "Rollover
Accounts" and 403(b)(7) Plans. Plan support services also are available. To
obtain details on such Plans, please call the following toll-free number:
1-888-200-6796.
HOW TO REDEEM PORTFOLIO 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 Portfolio 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 the Portfolio's shares. Any certificates
representing the 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.
Each Portfolio 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 Portfolio 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.
The Transfer Agent will not redeem your shares until it has received your
Account Application.
Each Portfolio 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 as a result of redemptions
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 Company 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 Company 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 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 Company 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 Company or the Transfer Agent may be liable for any
losses due to unauthorized or fraudulent instructions. Neither the Company 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
60488, King of Prussia, Pennsylvania 19406-0488. 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 accounts may have redemption proceeds of up
to $250,000 wired within any 30-day period. You may make 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
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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 Company 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 Company intends to distribute substantially all of each Portfolio's 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 maximum federal
capital gains rate for individuals is 28% with respect to capital assets held
for more than 12 months, but not more than 18 months, and 20% with respect to
capital assets held for more than 18 months. The maximum capital gains rate for
corporate shareholders is the same as the maximum tax rate for ordinary income.
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 is entitled to claim 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 Company 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 you if
you fail to certify either that the TIN furnished in connection with opening an
account is correct or that you have 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 Portfolio to institute backup withholding if the IRS
determines your TIN is incorrect or if you have 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 Company believes that each Portfolio has qualified for the
fiscal year ended August 31, 1998 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 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 and is also 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., the Standard & Poor's 500 Composite Stock Price
Index, the Dow Jones Industrial Average, Morningstar, Inc. and other industry
publications.
GENERAL INFORMATION
- -------------------------------------------------------------------------------
The Company was incorporated under Maryland law on July 30, 1992, and commenced
operations on September 30, 1992. The Company is authorized to issue 600 million
shares of Common Stock (with 100 million allocated to each Portfolio and 50
million allocated to each class of each Portfolio), par value $.001 per share.
The Company is a "series fund," which is a mutual fund divided into separate
portfolios. Each Portfolio of the Company is treated as a separate entity for
certain matters under the 1940 Act and for other purposes. A shareholder of one
Portfolio is not deemed to be a shareholder of any other Portfolio. As described
below, for certain matters Company 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 five series of
shares and an "Investment Class" and "Institutional Class" of shares for each
Portfolio. All consideration received by the Company for shares of one of the
Portfolios and all assets in which such consideration is invested will belong to
that Portfolio 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.
Investment Class shares, which are generally available to the public, bear a
Rule 12b-1 fee of up to .25% of the average daily net assets of the Portfolio's
Investment Class shares. For information regarding the Investment 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 Company to hold annual meetings of shareholders. As a result, Company
shareholders may not consider each year the election of Directors or the
appointment of auditors. However, pursuant to the Company's By-Laws, the holders
of at least 10% of the shares outstanding and entitled to vote may require the
Company to hold a special meeting of shareholders for the purpose of considering
the removal of a Director from office or for any other purpose. Shareholders may
remove a Director by the affirmative vote of a majority of the Company'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 are entitled
to vote separately to approve investment advisory agreements or changes in
investment restrictions, but shares of all Portfolios 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 shareholders 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 Company at P.O. Box 60488,
King of Prussia, Pennsylvania 19406-0488, 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
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 Company. 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>
WILSHIRE TARGET FUNDS, INC.
STATEMENT OF ADDITIONAL INFORMATION
(http://www.wilfunds.com)
December 8, 1998
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 "Company") (Investment Class and Institutional Class shares),
dated December 8, 1998. To obtain a copy of the Prospectuses, please write to
the Company at P.O. Box 60488, King of Prussia, Pennsylvania 19406-0488.
Capitalized terms not otherwise defined herein have the same meaning as in the
Prospectuses.
Wilshire Associates Incorporated ("Wilshire") serves as the Company's investment
adviser.
First Data Investor Services Group, Inc. ("Investor Services Group") serves
as the Company's administrator and transfer agent.
First Data Distributors, Inc. ("FDDI") serves as the Company's distributor.
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY........................................... 2
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES.............................. 2
MANAGEMENT OF THE COMPANY................................................. 7
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS......................... 11
SERVICE AND DISTRIBUTION PLAN............................................. 15
PURCHASE OF PORTFOLIO SHARES.............................................. 17
REDEMPTION OF PORTFOLIO SHARES............................................ 18
SHAREHOLDER SERVICES...................................................... 19
DETERMINATION OF NET ASSET VALUE.......................................... 20
DIVIDENDS, DISTRIBUTION AND TAXES......................................... 20
PERFORMANCE INFORMATION................................................... 22
PORTFOLIO TRANSACTIONS.................................................... 24
INFORMATION ABOUT THE PORTFOLIOS.......................................... 25
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
COUNSEL AND INDEPENDENT ACCOUNTANTS................................... 26
FINANCIAL STATEMENTS...................................................... 26
<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 Prospectuses entitled "Description of the Portfolios."
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.
<PAGE>
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 Company'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. 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 Company, 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 Company'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 Company'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. A Portfolio may enter into futures contracts on particular
securities for stock indices in U.S. domestic markets, such as the Chicago Board
of Trade and the International Monetary Market of the Chicago Mercantile
Exchange. A futures contract is an agreement in which one party agrees to
deliver to the other an amount of cash equal to a specific dollar amount times
the difference between the value of a specific stock or stock index at the close
of the last trading day of the contract and the price at which the agreement is
made. No physical delivery of securities is made.
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.
<PAGE>
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 Company'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 COMPANY
Directors and officers of the Company, 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 Company,
as defined in the 1940 Act, is indicated by an asterisk.
<PAGE>
DIRECTORS OF THE COMPANY
*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 of Wilshire.
Wilshire Asset Management is a provider of index and structured equity and fixed
income applications. He is 49 years old and his address is c/o Wilshire
Associates Incorporated, 1299 Ocean Avenue, Santa Monica, California 90401.
DEWITT F. BOWMAN, Director. Since January 1994, Pension Investment Consultant
providing advice on large pension fund investment strategy, new product
evaluation and integration, and large plan investment analysis and management.
For more than four years prior thereto, he was Chief Investment Officer of the
California Public Employees Retirement System. He currently serves as a director
of the RREEF America REIT, Dresdner and RCM Capital and Equity Funds, Inc., and
as a trustee of the Pacific Gas & Electric Nuclear Decommissioning Trust,
Brandes Investment Trust and PCG Private Equity Fund. He is 68 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 49 years old and his address is
c/o Wilshire Associates Incorporated, 1299 Ocean Avenue, Santa Monica,
California 90401.
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, the 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 68 years old and her address is c/o The Wexler
Group, 1317 F Street, N.W., Suite 600, Washington, D.C.
20004.
CYNTHIA A. HARGADON, Director. Since July 1998, Director of Investments for the
National Automobile Dealers Association. From November 1996 to July 1998,
President of Stable Value Investment Association, Inc. educating the public
about stable value as a fixed income alternative and how to use it in the asset
allocation process for defined contribution plan participants. She is also a
project consultant of Johnson Custom Strategies, Inc. an independent investment
services firm founded in 1992 to provide specialized asset management strategies
to institutional clients. For more than nine years prior thereto, she was Senior
Vice President and Chief Investment Officer of ICMA Retirement Corporation/ICMA
Retirement Trust. She is 43 years old and her address is c/o National Auto
Dealers Association, Retirement Trust, 8400 Westpark Drive, McLean, VA 22102.
For so long as the Company's plan described in the section captioned "Service
and Distribution Plan" remains in effect, the Directors of the Company who are
not "interested persons" of the Company, as defined in the 1940 Act, will be
selected and nominated by the Directors who are not "interested persons" of the
Company.
The Company 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 Company for the fiscal year ended August 31, 1998,
was as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS ESTIMATED FROM
ACCRUED AS ANNUAL REGISTRANT
NAME OF AGGREGATE PART OF BENEFITS AND
BOARD COMPENSATION COMPANY'S UPON COMPANY
MEMBER FROM COMPANY EXPENSES RETIREMENT COMPLEX
Thomas D. Stevens $0 N/A N/A $0
DeWitt F. Bowman $13,000 N/A N/A $13,000
Robert J. Raab, Jr. $0 N/A N/A $0
Anne L. Wexler $13,000 N/A N/A $13,000
Cynthia A. Hargadon** $ 6,500 N/A N/A $ 6,500
Peter J. Carre*** $ 3,250 N/A N/A $ 3,250
<FN>
* Amount does not include reimbursed expenses for attending Board meetings, which amounted to $18,422 for all Directors as a
group.
** Appointed as a Director on June 8, 1998.
*** Resigned as a Director on February 19, 1998.
</FN>
</TABLE>
OFFICERS OF THE COMPANY
THOMAS D. STEVENS (see "Directors of the Company" 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 49 years old and his address is c/o Wilshire
Associates Incorporated, 1299 Ocean Avenue, Santa Monica, California 90401.
ALAN L. MANNING, Secretary. Since 1990, Vice President, Secretary and
General Counsel of Wilshire. He is 49 years old and his address is c/o Wilshire
Associates Incorporated, 1299 Ocean Avenue, Santa Monica, California 90401.
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 47 years old and his address is c/o Wilshire
Associates Incorporated, 1299 Ocean Avenue, Santa Monica, California 90401.
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 41 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.
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 34 years old and her address is c/o First Data
Investor Services Group, Inc., 53 State Street, Boston, Massachusetts 02109.
KENNETH J. KEMPF, Assistant Treasurer. Since 1998 Senior Vice-President of
Investor Services Group. From November 1993 to February 1998, President and
Chief Executive Officer of FPS Services, Inc., King of Prussia, Pennsylvania. He
is 48 years old and his address is c/o First Data Investor Services Group, Inc.,
3200 Horizon Drive, King of Prussia, Pennsylvania 19406.
GERALD J. HOLLAND, Assistant Treasurer. Since 1994, Vice President of
Investor Services Group's Fund Administration Department. Prior to that time, he
was Senior Vice President of Finance and Administration for Delaware Management
Co. and its affiliates. He is 47 years old and his address is c/o First Data
Investor Services Group, Inc., 3200 Horizon Drive, King of Prussia, Pennsylvania
19406.
BRIAN O'NEILL, Assistant Treasurer. Since 1994, Manager of Investor Services
Group's Financial Reporting Department. From 1992 to 1994, Mr. O'Neill was a
Supervisor in the Accounting Services Unit of Investor Services Group. He is 30
years old and his address is c/o First Data Investor Services Group, Inc., 3200
Horizon Drive, King of Prussia, Pennsylvania 19406.
SUSAN T. NAUGHTON, Assistant Treasurer. Since 1995, Supervisor of Investor
Services Group's Financial Reporting Department. From 1993 to 1995, Ms. Naughton
was a Supervisor of International Funds in the Mutual Funds Accounting
Department at PFPC, Inc. She is 38 years old and her address is c/o First Data
Investor Services Group, Inc., 3200 Horizon Drive, King of Prussia, Pennsylvania
19406.
ROBERT C. HERFORTH, Assistant Treasurer. Since 1997, Senior Financial
Administrator of Investor Services Group's Financial Reporting Department. From
1995 to 1997, Mr. Herforth served as a Financial Administrator. Prior to 1995,
he was a Supervisor in the Transfer Agent Control Department. He is 29 years old
and his address is c/o First Data Investor Services Group, Inc., 3200 Horizon
Drive, King of Prussia, Pennsylvania 19406.
Directors and officers of the Company, as a group, owned less than 1% of
the Company's shares of Common Stock outstanding on October 1, 1998.
The following persons are known by the Company to own of record 5% or more
of a Portfolio's Investment Class shares outstanding on October 1, 1998.
<PAGE>
Large Company Growth Portfolio: Charles Schwab & Company, 101 Montgomery Street,
San Francisco, California 94104 -- 28.78%; Luther & Company A Partnership, c/o
Michigan National Bank, P.O. Box 9088, Farmington Hills, Michigan, 48333 --
5.88%; Comerica Bank Custody, P.O. Box 75000 Detroit, Michigan, 48275-3466 --
6.04%.
Large Company Value Portfolio: Charles Schwab & Company, 101 Montgomery
Street, San Francisco, California 94104 -- 52.54%; and Mac & Co. Mutual Fund
Operations, P.O. Box 3198, Pittsburgh, PA 15230 -- 5.65%.
Small Company Growth Portfolio: Charles Schwab & Company, 101 Montgomery
Street, San Francisco, California 94104 -- 55.51%.
Small Company Value Portfolio: State Street Bank & Trust Company, Praxair
Incorporated, Defined Contribution Plan, 200 Newport Avenue, JQ7, N. Quincy,
Massachusetts 02171 -- 41.23% and Charles Schwab & Company, 101 Montgomery
Street, San Francisco, California 94104 -- 33.98%.
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 Portfolio's Prospectuses entitled "Management of the Portfolios."
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 Company. As to each Portfolio, the
Advisory Agreement has an initial term of two years and thereafter is subject to
annual approval by (i) the Company'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
Company'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 executive officers and directors of Wilshire:
Dennis A. Tito, Chairman of the Board of Directors, President and Chief
Executive Officer; 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; Thomas
J. Ryan, Director and Vice-President; Alan L. Manning, Vice President, General
Counsel and Secretary; and San Slawson, Vice President and Treasurer.
<PAGE>
Wilshire provides day-to-day management of each Portfolio's investments in
accordance with the stated policies of the Portfolio, subject to the oversight
of the Company's Board of Directors. Wilshire provides the Portfolio 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.
All fees and expenses are accrued daily and deducted before declaration of
dividends to investors. For the fiscal years ended August 31, 1996, 1997 and
1998, 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, 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
<PAGE>
FEE PAID FOR FISCAL YEAR
ENDED AUGUST 31, 1998
ADVISORY REDUCTION NET
PORTFOLIO FEE PAYABLE IN FEE FEE PAID
Large Company Growth Portfolio $340,667 $59,495 $281,172
Large Company Value Portfolio $165,814 $34,117 $131,697
Small Company Growth Portfolio $ 50,422 $30,253 $ 20,169
Small Company Value Portfolio $122,710 $73,626 $ 49,084
* 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.
The Advisory Agreement provides that Wilshire shall exercise its best judgment
in rendering the services to be provided to the Portfolios under the Agreement.
Wilshire is not liable under the Advisory Agreement for any error of judgment or
mistake of law or for any loss suffered by the Portfolios. Wilshire is not
protected, however, against any liability to the Portfolios or its shareholders
to which Wilshire would otherwise be subject by reasons of willful misfeasance,
bad faith or gross negligence in the performance of its duties under the
Advisory Agreement or by reason of Wilshire's reckless disregard of its
obligations and duties under the Advisory Agreement.
ADMINISTRATION AGREEMENT. Pursuant to the Administration Agreement (the
"Administration Agreement") dated May 31, 1996 with the Company, Investor
Services Group, a subsidiary of First Data Corporation, 4400 Computer Drive,
Westborough, Massachusetts 01581, furnishes the Company clerical help and
accounting, data processing, internal auditing and legal services and certain
other services required by the Company, 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 Company'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 Company
elects to terminate it on the second anniversary by six months written notice of
termination. Thereafter, the Agreement will continue in effect from year to year
subject to annual approval by (i) the Company'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 Company 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 Company'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 Company 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 Company 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, 1996
For the fiscal year ended August 31, 1996, the administration fees payable to
the former administrator, The Dreyfus Corporation ("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
<PAGE>
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
FEES PAID FOR FISCAL YEAR
ENDED AUGUST 31, 1998
For the fiscal year ended August 31, 1998, 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 $231,401 $0 $231,401
Large Company Value Portfolio $126,488 $0 $126,488
Small Company Growth Portfolio $ 57,253 $0 $ 57,253
Small Company Value Portfolio $100,626 $0 $100,626
SERVICE AND DISTRIBUTION PLAN
The Service and Distribution Plan of the Company adopted pursuant to Section
12(b) of the 1940 Act and Rule 12b-1 thereunder was approved as to the
Investment Class shares of the Portfolio by vote of the majority of both (a) the
Directors of the Company, and (b) those Directors of the Company who are not
interested persons of the Company, and have no direct or indirect financial
interest in the operation of the Services 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 Service and Distribution Plan.
Under the Service and Distribution Plan, FDDI is required to provide to the
Directors of the Company for their review, at least quarterly, a written report
of the amounts by the Portfolios and the purposes for which such expenditures
were made.
<PAGE>
The Service and Distribution Plan will continue in effect with respect to a
Portfolio 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 Company,
and (b) the Independent Directors of the Company, 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 with
respect to a Portfolio 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 Company, and (b) the Independent
Directors of the Company, 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 of the Portfolio. The Plan may be terminated at any time with
respect to a Portfolio by vote of a majority of the Independent Directors or by
vote of a majority of the outstanding shares of the Investment Class of the
Portfolio.
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 Company'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 Company'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
For the fiscal year ended August 31, 1998, the following amounts were charged to
each Portfolio under the Company's shareholder services plan:
Large Company Growth Portfolio $89,828
Large Company Value Portfolio $15,374
Small Company Growth Portfolio $13,866
Small Company Value Portfolio $20,179
<PAGE>
PURCHASE OF PORTFOLIO SHARES
The following information supplements and should be read in conjunction with the
section in the Prospectuses entitled "How to Buy Portfolio Shares."
THE DISTRIBUTOR. FDDI, a subsidiary of Investor Services Group, 4400 Computer
Drive, Westborough, Massachusetts 01581, serves as the Company's distributor
pursuant to an agreement which is renewable annually by the Board of Directors.
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. The
Distribution Agreement between the Distributor and the Company provides that the
Company shall indemnify the Distributor against any liability arising out of any
untrue statement of a material fact or any omission of a material fact in the
Company's registration statement necessary to make the statements therein
misleading, unless such liability results from the Distributor's willful
misfeasance, bad faith or negligence in the performance of its duties under the
Agreement.
TRANSACTIONS THROUGH SECURITIES DEALERS. Portfolio shares may be purchased and
redeemed through securities dealers which may charge a transaction fee for such
services. Some dealers will place the Portfolio's shares in an account with
their firm. Dealers also may require that the customer invest more than the
$2,500 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 Company 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 Company. The Company understands 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; and assistance with inquiries related to their investment. Any such
fees may be deducted from the investor's account monthly and on smaller accounts
could constitute a substantial portion of any distribution by the Portfolios.
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 Company directly from the Portfolio 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 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 Portfolio 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 purpose upon such a payment.
REDEMPTION OF PORTFOLIO SHARES
The following information supplements and should be read in conjunction with the
section in the Prospectuses entitled "How to Redeem Portfolio 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 Company 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 ($2,500
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 Portfolio 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 Company 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 Portfolios'
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
Portfolio 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 Portfolio ordinarily utilizes is restricted, or when an
emergency exists as determined by the SEC so that disposal of the 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 shareholders.
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.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction with the
section in the Prospectuses entitled "Shareholder Services."
EXCHANGES. 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 series being
exchanged must have a value of at least the minimum initial investment required
for the series 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 series of the Company. To exchange shares held in personal retirement
plans, the shares exchanged must have a current value of at least $100.
The exchange service is available to shareholders resident in any state in which
shares of the series being acquired may legally be sold. Shares may be exchanged
only between accounts having identical names and other identifying designations.
The Company reserves the right to reject any exchange request in whole or in
part. The exchange service may be modified or terminated at any time upon notice
to shareholders.
<PAGE>
CORPORATE PENSION/PROFIT-SHARING AND PERSONAL RETIREMENT PLANS. The Company
makes available to corporations a variety of prototype pension and
profit-sharing plans. In addition, the Company 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 Prospectuses entitled "How to Buy Portfolio 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.
DIVIDENDS, DISTRIBUTION AND TAXES
The following information supplements and should be read in conjunction with the
section in the Prospectuses entitled "Dividends, Distributions and Taxes."
Management of the Company believes that each Portfolio qualified for the fiscal
year ended August 31, 1998, 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 if it held the shares of the Portfolio less than 46 days
during the 90-day period that begins 45 days before the stock becomes
ex-dividend with respect to the dividend. 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. 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.
<PAGE>
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 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 Prospectuses entitled "Performance Information."
<PAGE>
From time to time, quotations of the Portfolios' performance may be presented in
advertisements, sales literature or reports to shareholders or prospective
investors. 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, 1998 for each
Portfolio's Investment Class shares was as follows:
Large Company Growth Portfolio 11.61%
Large Company Value Portfolio 1.34%
Small Company Growth Portfolio (26.02)%
Small Company Value Portfolio ( 8.79)%
Average annual total return for the five years ended August 31, 1998 for each
Portfolio's Investment Class shares was as follows:
Large Company Growth Portfolio 20.31%
Large Company Value Portfolio 12.90%
Small Company Growth Portfolio 5.32%
Small Company Value Portfolio 8.46%
Average annual total return for the period from September 30, 1992(1)
(commencement of operations) through August 31, 1998 for each Portfolio's
Investment Class shares was as follows:
Large Company Growth Portfolio 17.39%
Large Company Value Portfolio 14.72%
Small Company Growth Portfolio 9.00%
Small Company Value Portfolio 10.41%
(1) Small Company Growth Portfolio commenced operations on October 1, 1992.
Average annual total return for the fiscal year ended August 31, 1998 for
each Portfolio's Institutional Class shares was as follows:
Large Company Growth Portfolio 11.78%
Large Company Value Portfolio 1.47%
Small Company Growth Portfolio (25.95)%
Small Company Value Portfolio ( 8.72)%
The total return for the period from July 15, 1996 (commencement of operations
for Institutional Class shares) through August 31, 1998 for each Portfolio's
Institutional Class shares was as follows:
Large Company Growth Portfolio 27.23%
Large Company Value Portfolio 17.55%
Small Company Growth Portfolio ( 2.39)%
Small Company Value Portfolio 11.38%
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 Portfolio 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 Portfolios. 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
Portfolios 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 Value Portfolio in 1997 was higher than
anticipated by the Adviser due to the impact of contributions and withdrawals on
the Portfolio. The portfolio turnover of Small Company Value 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. Recognizing this Wilshire attempts to minimize the cost per
share of trading while at the same time implementing only those trades necessary
to maintain the proper style exposure.
For its portfolio securities transactions for the fiscal years ended 1996, 1997,
and 1998 the Fund paid total brokerage commissions as follows:
<PAGE>
YEAR ENDED YEAR ENDED YEAR ENDED
PORTFOLIO AUGUST 31, 1996 AUGUST 31, 1997 AUGUST 31, 1998
Large Company Growth Portfolio $15,709 $54,773 $77,370
Large Company Value Portfolio $28,558 $30,516 $17,486
Small Company Growth Portfolio $28,311 $25,811 $19,555
Small Company Value Portfolio $60,441 $64,560 $58,188
No brokerage commissions were paid to Dreyfus, the Company's former distributor,
or to FDDI. There were no spreads or concessions on principal transactions for
any such period.
INFORMATION ABOUT THE PORTFOLIOS
The following information supplements and should be read in conjunction with the
section in the Prospectuses 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 Company, will not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of series
affected by such matter. Rule 18f-2 further provides that a series shall be
deemed to be affected by a matter unless it is clear that the interests of all
series 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 Company will send annual and semi-annual financial statements to all its
shareholders.
<PAGE>
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 Company's
investments. Investor Services Group, a subsidiary of First Data Corporation,
P.O. Box 5170, Westborough, Massachusetts 01581-5120, is the Company'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
Portfolio or which securities are to be purchased or sold by the Portfolio.
Paul, Hastings, Janofsky & Walker LLP, 555 South Flower Street, Los Angeles,
California 90071-2371, is counsel for the Company.
PricewaterhouseCoopers LLP, One Post Office Square, Boston, Massachusetts 02109,
independent accountants, have been selected as auditors of the Company.
FINANCIAL STATEMENTS
The Company's audited financial statements for the Portfolios contained in its
annual report for the fiscal year ended August 31, 1998 are incorporated into
this Statement of Additional Information by reference in their entirety.
<PAGE>
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, 1998 and the Report of Independent
Accountants dated October 9, 1998 are incorporated by
reference to the Definitive 30b-2 filed (EDGAR Form
N-30D) on October 30, 1998 as Accession
#0000950156-98-000672.
(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) 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) 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 10,
1997 ("Post-Effective Amendment No. 11").
(1)(f) Articles Supplementary dated June 8, 1998 to
the Articles of Incorporation establishing and
classifying shares of the Wilshire 5000 Index
Portfolio is incorporated by reference to
Post-Effective Amendment No. 13 to the Registration
Statement on Form N-1A which was filed on November 2,
1998 ("Post-Effective Amendment No. 13").
(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)(a) 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.
(5)(b) Letter Amendment to the Investment Advisory Agreement
between the Fund and Wilshire Associates Incorporated
dated June 8, 1998 relating to the Wilshire 5000
Index Portfolio is incorporated herein by reference
to Post-Effective Amendment No. 13.
(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) Opinion of Counsel relating to the establishment of
the Wilshire 5000 Index Portfolio 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").
(11)(c) Power of Attorney of Cynthia A. Hargardon is
incorporated herein by reference to Post-Effective
Amendment No. 13.
(11)(d) Consent of PricewaterhouseCoopers LLP is filed
herein.
(12) Not Applicable.
(13) Purchase Agreement between the Company and
Wilshire Associates Incorporated dated November 6,
1998 relating to the Wilshire 5000 Index Portfolio is
filed herein.
(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
Number of Record Holders
Fund as of October 26, 1998
Institutional Class Investment Class
Shares Shares
Large Company Growth Portfolio 2,053 1,950
Large Company Value Portfolio 2,275 250
Small Company Growth Portfolio 1 407
Small Company Value Portfolio 4 361
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 ABN
AMRO Funds, BT Insurance Funds Trust, CT&T Funds, First Choice Funds
Trust, LKCM Funds, The Galaxy Fund, The Galaxy VIP Fund, Galaxy Fund
II, IBJ Funds Trust, the ICM Series Trust, Panorama Trust, Potomac
Funds, Undiscovered Managers Fund, Forward Funds, Inc., Light Index
Funds, Inc. and Worldwide Index 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.
3200 Horizon Drive
King of Prussia, PA 19406-0903
(records relating to its function as fund accounting and
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
distributor)
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 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.
(c) 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.
<PAGE>
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. 14 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. 14 to be signed on its behalf by the undersigned thereunto duly
authorized in the City of Boston, and the Commonwealth of Massachusetts on the
25th day of November, 1998.
WILSHIRE TARGET FUNDS, INC.
BY: *
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Signatures Title Date
* President, November 25, 1998
- --------------------------------
Thomas D. Stevens Chairman of the Board,
and Director
(Principal Executive Officer)
* Treasurer November 25, 1998
- ---------------------------------
David R. Borger (Principal Financial Officer)
* Director November 25, 1998
- --------------------------------
DeWitt F. Bowman
* Director November 25, 1998
- --------------------------------
Cynthia A. Hargardon
* Director November 25, 1998
- --------------------------------
Robert J. Raab, Jr.
* Director November 25, 1998
- --------------------------------
Anne Wexler
</TABLE>
*BY: /s/JULIE A. TEDESCO November 25, 1998
Julie A. Tedesco
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Item Exhibit
10 Opinion of Counsel
11(d) Consent of Pricewaterhouse-
Coopers LLP
13 Purchase Agreement
17 Financial Data Schedules
Exhibit 10
November 25, 1998
Wilshire Target Funds, Inc.
1299 Ocean Avenue,
Suite 700
Santa Monica, CA 90401-1085
Re: Wilshire Target Funds, Inc.
Ladies and Gentlemen:
We have acted as special Maryland counsel for Wilshire Target
Funds, Inc., a Maryland corporation (the "Company"), in connection with the
issuance of Investment Class and Institutional Class (each a "Class") shares of
its Wilshire 5000 Plus Fund (the "Fund") (to be renamed "Wilshire 5000 Index
Portfolio") Common Stock, par value $.001 per share (the "Shares").
As special Maryland counsel for the Company, we are familiar
with its Charter and Bylaws. We have examined the prospectuses with respect to
the Fund that were included in Post-Effective Amendment No. 13 to the Company's
Registration Statement on Form N-1A. We have further examined and relied upon a
certificate of the Maryland State Department of Assessments and Taxation to the
effect that the Company is duly incorporated and existing under the laws of the
State of Maryland and is in good standing and duly authorized to transact
business in the State of Maryland.
We have also examined and relied upon such corporate records
of the Company, as certified to us, and other documents and certificates with
respect to factual matters as we have deemed necessary to render the opinion
expressed herein. We have assumed, without independent verification, the
genuineness of all signatures on documents submitted to us, the authenticity of
all documents submitted to us as originals, and the conformity with originals of
all documents submitted to us as copies.
Based on such examination, we are of the opinion that:
1. The Company is duly organized and validly existing as a
corporation in good standing under the laws of the State of Maryland.
2. The Shares of the Fund to be offered for sale pursuant to
the Prospectuses are, to the extent of the respective number of Shares of each
Class of the Fund authorized in the Company's Charter, duly authorized, and when
sold, issued and paid for as contemplated in the Prospectuses, will be validly
issued, fully paid and nonassessable.
<PAGE>
This letter expresses our opinion with respect to the Maryland
General Corporation Law governing matters such as due organization and the
authorization and issuance of stock. It does not extend to the securities or
"Blue Sky" laws of Maryland, to federal securities laws, or to other laws.
We consent to the filing of this opinion as an exhibit to the
Company's Registration Statement.
Very truly yours,
/s/ Venable, Baetjer and Howard, LLP
Venable, Baetjer and Howard, LLP
Exhibit 11(d)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective Amendment No. 14 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 9, 1998 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, 1998 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/ PricewaterhouseCoopers LLP
November 25, 1998 PricewaterhouseCoopers LLP
Exhibit 13
PURCHASE AGREEMENT
Wilshire Target Funds, Inc. (the "Company"), a Maryland corporation, and
Wilshire Associates Incorporated (the "Purchaser") hereby agree as follows:
1. The Company hereby offers the Purchaser and the Purchaser hereby
purchases one (1) share (the "Share") at $10 per share of the Company's Wilshire
5000 Index Portfolio (the "Portfolio") with par value of $.001 per share. Each
Share is the "initial share" of the Portfolio. The Purchaser hereby acknowledges
receipt of a purchase confirmation reflecting the purchase of each Share, and
the Company hereby acknowledges receipt from the Purchaser of funds in the
amount of $10 in full payment for each Share.
2. The Purchaser represents and warrants to the Company that each
Share purchased by the Purchaser is being acquired for investment purposes and
not for the purpose of distribution.
3. The Company represents that a copy of its Articles of
Incorporation dated July 31, 1992, as amended, is on file in the office of the
State Department of Assessments and Taxation of the State of Maryland.
4. This agreement has been executed on behalf of the Company by the
undersigned officer of the Company in her capacity as an officer of the Company.
The obligations of this agreement shall be binding only upon the assets and
property of the Portfolio and not upon the assets and property of any other
portfolio of the Company.
5. This agreement may be executed in counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have executed this agreement
as of the 6th day of November, 1998.
WILSHIRE TARGET FUNDS, INC.
Attest:
/s/ Julie Tedesco By: /s/ Thomas D. Stevens
Julie Tedesco Thomas D. Stevens
Attest: WILSHIRE ASSOCIATES INCORPORATED
/s/ Julie Tedesco By: /s/ Thomas D. Stevens
Julie Tedesco Thomas D. Stevens
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<NAME> WILSHIRE TARGET FUNDS
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<NAME> WILSHIRE TARGET FUNDS
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<TABLE> <S> <C>
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<NAME> WILSHIRE TARGET FUNDS
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<CIK> 0000890453
<NAME> WILSHIRE TARGET FUNDS
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<TABLE> <S> <C>
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