(ICON)
The
Target Portfolio
Trust
Semi-Annual Report
JUNE 30, 1996
(LOGO)
<PAGE>
The Target Portfolio Trust
Table of Contents
Page
Shareholder Letter 2
Target's Shareholder Services 9
Portfolio of Investments:
Large Capitalization Growth Portfolio 10
Large Capitalization Value Portfolio 13
Small Capitalization Growth Portfolio 17
Small Capitalization Value Portfolio 21
International Equity Portfolio 26
International Bond Portfolio 29
Total Return Bond Portfolio 31
Intermediate-Term Bond Portfolio 34
Mortgage Backed Securities Portfolio 37
U.S. Government Money Market Portfolio 39
Statements of Assets and Liabilities 40
Statements of Operations 42
Statements of Changes in Net Assets 44
Financial Highlights 46
Notes to Financial Statements 50
1
<PAGE>
Dear Target Shareholder:
It wasn't what anyone expected. That thought sums up the performance of the
financial markets so far this year. Most economists had predicted a slower
economy and lower long-term interest rates. As the year progressed, however,
initial predictions proved to be inaccurate and, for investors, that meant a
bumpy ride. Payroll employment, consumer spending, and factory orders came in
stronger than expected while the unemployment rate fell and inflation remained
low. Importantly, when predictions are markedly off, prices fluctuate a lot.
Overall, stock returns were in positive territory. Bonds were another story as
prices sunk on normally-positive inflation news. Investors in international
securities and mutual funds also were surprised as a strong U.S. dollar partly
tempered international returns.
So far in 1996, Target shareholders have fared well, but with less volatility,
since the typical account contains between five and eight portfolios. Certainly,
some portfolios did do better than others but, as usual, no one can predict
which specific investment or portfolio will do best, and there is no assurance
that any portfolio will achieve its financial objective. A proper overall
allocation, importantly, offers you a good opportunity at long-term success.
<TABLE>
<CAPTION>
Performance Summary as of June 30, 1996
12/31/95 6/30/96 6 Month*
Portfolios NAV NAV Total Return
<S> <C> <C> <C>
Large Capitalization Growth $12.13 $11.97 7.85%
Lipper Growth Fund Avg 10.08
Large Capitalization Value 12.57 13.45 8.12
Growth & Income Avg 9.24
Small Capitalization Growth 14.15 16.12 15.70
Small Company Avg 15.12
Small Capitalization Value 13.07 14.11 8.04
Small Company Avg 15.12
International Equity 13.64 14.63 8.20
International Avg 8.02
International Bond 10.19 9.91 -0.35
General World Income Avg 1.69
Total Return Bond 10.62 9.98 -0.98
Corporate Debt BBB Avg -2.30
Intermediate-Term Bond 10.51 10.10 0.17
Intermediate Investment Grade -1.40
Mortgage Backed Securities 10.31 10.04 0.50
U.S. Mortgage Avg -0.80
U.S. Government Money Market 1.00 1.00 2.20
U.S. Money Fund Avg 2.33
</TABLE>
* Source: Lipper Analytical Services for Lipper averages, and Prudential
Mutual Fund Management for Target returns. Target returns are in bold face
type. Returns assume the reinvestment of all dividends and distributions and
take into account all charges and expenses applicable to an investment in each
portfolio except the annual Target advisory fee. For retail accounts, the
maximum annual advisory fee is 1.5% of equity portfolio assets and 1.0% of bond
and money market portfolio assets. For retirement accounts, the maximum advisory
fees are 1.25% and 1.35%, respectively. Past performance is not indicative of
future results and an investor's shares, when redeemed, may be worth more or
less than their original cost.
2
<PAGE>
Stocks Posted Modest Gains
U.S. stocks advanced, and set record highs along the way, as the Dow Jones
Industrial Average finished at 5654, up from 5117 on December 31, 1995. Stocks
and bonds both rallied through much of the first quarter of 1996 as interest
rates fell. Despite a rise in rates starting in February, stocks held their
own and advanced, in contrast to the past few years when stocks and bonds moved
in tandem.
Average Annual Total Returns as of June 30, 1996
<TABLE>
<CAPTION>
Since
Portfolios One Year Three Years Inception*
<S> <C> <C> <C>
Large Capitalization Growth 14.35% 10.63% 7.18%
Large Capitalization Value 20.32 12.79 10.53
Small Capitalization Growth 26.83 13.63 14.23
Small Capitalization Value 15.69 5.51 10.92
International Equity 16.54 13.78 13.88
International Bond -1.43 N/A 5.79
Total Return Bond 5.23 4.73 5.79
Intermediate-Term Bond 5.64 4.74 5.60
Mortgage Backed Securities 5.63 5.91 5.91
</TABLE>
Note: The average annual return for the Target Portfolios assumes the
imposition of the maximum Target advisory fee of 1.5% for stock
portfolios and 1.00% for the bond portfolios.
* The inception date for all portfolios is 1/5/93, except for International
Bond, which is 5/16/94. Past performance is not indicative of future results.
The S&P 500 returned 10.2% year-to-date and 26.1% for the past 12 months. While
those are clearly strong numbers, the trend is off 1995's pace. The Russell
2000, a proxy for small company stocks, rose 10.3% year-to-date and 23.9% for
12 months, again off 1995's mark. In terms of sectors, one of 1995's hottest,
biotechnology, is down for the year and lost 7% in the first quarter alone,
according to Dow Jones.
"Growth" stocks, for large and small caps, markedly beat their "value" brethren
for the same periods, though at the cost of more volatility, according to the
Frank Russell Company. In contrast, in 1992 and 1993, the value style was the
winner. Many recent high-flying funds use a growth style, though both styles
are well regarded. Having exposure to both styles often is a prudent course of
action and can help you limit volatility. Target offers both growth and value
philosophies through the large cap and small cap portfolios. For the most part,
Target's portfolios have done well this year. Our portfolios are well
diversified within a broad category and are designed to work within an asset
allocation framework.
3
<PAGE>
The Target Large Cap Value Portfolio rose 8.1%, beating its benchmark, the
Russell 1000 Value Index. One co-manager, INVESCO, benefitted from an emphasis
on financial and consumer staple issues, such as beverage and tobacco companies.
The portfolio's other co-manager, Hotchkis & Wiley, also favored financials,
though as a yield-oriented firm, they especially emphasized the utility and
basic industry sectors. Importantly, "pricey" issues like technology shares
currently, are rarely found in value portfolios. These issues often are found,
however, in growth portfolios like Target's Large Cap Growth and Small Cap
Growth Portfolios. For example, the Large Cap Growth Portfolio currently holds
a 36% stake in technology shares (computers, software, and semiconductors) in
addition to a 6% stake in financial services. The Small Cap Growth Portfolio has
a more modest exposure to technology (20%), but more substantial exposure to the
business and consumer service sectors. Nicholas-Applegate and IAI manage
that portfolio.
Bond Prices Were Volatile and Generally Down
Yields started the year where they left off 1995: falling. The yield on the
benchmark 30-year Treasury bond broke through 6% and almost into record
territory. In late February, however, yields started to rise sharply as the
economy never seemed to slow down as expected. The big surprise were the
employment numbers, which came in substantially ahead of projections. As
usual, this type of news caused inflation fears to increase. Consequently, the
30-year bond's yield rose to about 6.9% by June 30, 1996 and down only slightly
from a spring high of more than 7%.
The Lehman Brothers Aggregate Bond Index fell just over 1.2% for the first six
months (coupon income plus price change), with prices of long maturity issues
suffering the most. Intermediate-term issues (three-to ten-year maturities) did
better. Overall, government issues were bettered by corporates and mortgages.
Corporates tend to react to the economic fortunes of the issuing
4
<PAGE>
company which, recently, have improved. High yield issues, in particular,
posted more pronounced gains, as they moved partly in concert with stocks.
The advisory line-up for Target's bond portfolios includes Wellington, PIMCO,
and Fiduciary International. These are active, institutional managers who seek
to provide added value by analyzing the yield curve, credit, and sector
opportunities in the bond markets. Currency and country considerations also
apply to the International Bond Portfolio.
The Total Return and Intermediate Term Portfolios, managed by PIMCO, beat their
Lehman Brothers benchmarks and their Lipper averages. The Mortgage-Backed
Securities Portfolio also is having another strong year. According to Lipper,
that portfolio, run by Wellington, returned six percentage points more than the
typical mortgage fund for the past three years. That is no small feat, as bond
fund returns normally are in a narrow range. Wellington also manages our U.S.
Government Money Market Portfolio, which also has done well since inception.
International Returns Were Modest
International Stocks: Predictions for international stocks to lead the way
also were off-base due, mainly, to a stronger dollar. In dollar terms, U.S.
stocks led most major markets by wide margins, including Japan, Canada, Germany,
and Great Britain. In local currency terms, however, the U.S. was only 19th best
of the 29 markets in the Dow Jones World Stock Index. Year-to-date, some bright
spots, in dollar terms, have been the Taiwanese (31.6%) and Philippine (29.0%)
markets.
The Morgan Stanley EAFE Index rose 4.7% for the year to date and 13.6% for the
past 12 months. This year is continuing 1995's trend of modest returns when
compared to U.S. results. The EAFE is dominated by Japanese issues, and Japan
has lagged most other major markets. Factoring in a stronger U.S. dollar versus
the Yen, U.S. investors barely posted a gain in Japanese issues, according to
Dow Jones. Of the other major markets, only Great Britain posted low returns
(1.9% in dollar terms) similar to Japan's. On the
5
<PAGE>
bright side, valuations seem more modest and greater numbers of European
managements are taking the U.S.'s lead and are restructuring their businesses
to improve profits. Historically, this has been an infrequent approach
overseas.
Target's International Equity Portfolio is having a strong year (8.2%) and is
beating both the EAFE (4.7%) and the Lipper International Fund average (8.0%).
At mid-year, the Portfolio's largest country allocations were Japan (26.9%) and
Great Britain (15.6%). Specific securities in these markets are attractively
priced according to the adviser, Lazard Frares, despite those markets having
underperformed. Lazard is known as a bottom-up manager and seeks to add value,
in part, through superior security selection. Scandinavian and European
countries comprise much of the rest of the Portfolio.
International Bonds: It has been a rough year for international bonds as rates
generally have risen around the world. The benchmark is the Salomon Brothers
Non-U.S. World Government Bond Index, which fell -1.30% this year. The dollar's
strength hurt returns for U.S. investors even more. The strongest markets were
found in the "peripheral" European markets, such as Italy, Sweden, and Spain,
and not in the German, French, or U.K. markets. Farther east, the Japanese
market has done modestly well and comprises the largest country allocation in
the index.
The Target International Bond Portfolio now is underweighted in the Japanese
and core European markets (Germany, France, Denmark, Holland, Belgium, and
Austria). The adviser is emphasizing the Dollar Bloc countries such as Canada,
Australia, and New Zealand compared to the Salomon Brothers index. The
portfolio is managed by Fiduciary International.
Your Allocation Mainly
Determines Your Returns
(CHART)
Based on a study of 82 large pension funds.
Source: Financial Analysts Journal, May/June 1991
Asset allocation is the process of designing an overall portfolio that reflects
your personal risk and return requirements. It helps you invest in specific
amounts of different securities: corporates, Treasurys, small caps, large caps,
foreign, etc. Asset allocation is important because, over the long-term, it's
usually more important to be in stocks and bonds as a whole than it is to pick
individual stocks and bonds. In fact, just over 91% of a portfolio's long-term
return is due to the initial allocation.
Target's asset allocations are designed for you once you complete the Target
Questionnaire. In this way, the Target program helps ensure that your overall
account reflects your personal investment risk and return requirements.
6
<PAGE>
Conclusion:
The Outlook Remains Positive
"Few people expect stocks to advance in 1996 like they did in 1995, but
generally, people are optimistic." That quote is from your 1995 annual report
and, as it turned out, was right on the mark. "For bonds, the consensus call
is for slightly lower rates along the entire yield curve by year-end." That
quote, however, is also from the annual report and, so far, is off the mark.
These statements serve as a reminder that predicting the short-term movements
of the financial markets can be extremely difficult. More importantly for most
investors is the ability to structure an appropriate allocation that reflects
their return requirements and risk tolerance. That's one of the major services
that Target provides to you.
Despite recent volatility in absolute terms (such as a 100 point one-day drop
in the Dow), the market has not fallen more than 10% from a mid-year high in
nearly six years, judging by the S&P 500. In contrast, it fell by 20%, or more,
29 times this century! As a result, as we concluded your last report, the
question to ask is this: "Given my personal goals and resources, do I have the
right exposure to low risk and high risk investments, to stocks and bonds, to
foreign and domestic?" The prudent, long-term investor will use the techniques
of diversification and asset allocation to his advantage. While there are no
assurances that you'll be successful in the long term, surely it's the best way
to increase your chances.
As always, we appreciate your commitment to Target and having the opportunity
to report our activities to you.
Sincerely,
Richard Redeker, President
7
<PAGE>
(PICTURE)
Co-Investment Adviser:
Oak Associates
It's Not Only the Return
The goal of the Target program is to help you construct an overall portfolio
that reflects your personal situation: the return you seek and the risk you're
willing to take. That means service is as important as competitive returns.
One important service that Target provides is to review your investment
advisers. Advisers are replaced when they underperform for an extended period
or change investment philosophies. Target replaced an adviser to the Small Cap
Value Portfolio last April. In November, we made another change as Oak
Associates joined the Large Cap Growth Portfolio, replacing Roger Engemann
Management Company, Inc. The following is an overview of Oak's investment
approach.
Oak Associates is based in Akron, Ohio and specializes in large company growth
stocks. Oak was founded in 1985, though the main investment professionals have
worked together for 20 years. As of December 1995, Oak managed more than $3
billion for institutional clients such as pension plans, endowments, and
municipalities. The firm's minimum account size is $400,000.
They follow a strict growth discipline that is distinguished by a willingness
to make large sector allocations. Subject to Target's investment restrictions,
Oak may take large positions in certain securities and sectors and this ability
may subject the Portfolio to high volatility at times. Importantly, however,
this approach has yielded superior long-term results that more than offset any
short-term losses.* Past performance, though, is no guarantee of future results.
Oak's investment style is fairly unique. They start with a "top-down" global
macro-economic analysis. They define trends and themes and then, in "bottom-up"
fashion, seek a few strong stocks to focus on. Interest rate and inflation
expectations are key considerations. Since they use a long-term outlook,
turnover is relatively low and they tend to let their winners run. This can
lead to some positions becoming large portions of a portfolio. Oak does not
strategically under- or over-weight sectors versus a specific index. Instead,
they invest heavily in attractive sectors and completely avoid those that they
believe are less attractive.
8
<PAGE>
Target's Shareholder Services
Target strives to demonstrate that top managers can make a difference, asset
allocation can limit volatility, and quality services are worth paying for. So
here's a sampling of the services you receive as a Target shareholder. This
short list should confirm that your choice to use Target was the right one for
you and your family.
Consulting Services
1) Questionnaire process addresses your investment needs.
2) Personalized investment policy statement (the Evaluation) details your risk
profile.
3) 36 recommended asset allocations or unlimited number of customized
allocations are available.
4) Access to top investment advisers who each manage a Target portfolio.
5) Adviser monitoring helps ensure that they perform as expected over the
long term.
6) Adviser changes are made if long-term performance is poor.
7) Free, unlimited allocation changes help you react to changing market
conditions.
8) Research services from Ibbotson Associates are used for allocation
construction.
9) IRA analysis details your overall IRA allocation and suggests a new one,
if appropriate.
10) Enhancements and new portfolios keep Target on the cutting-edge.
11) Personalized 401(k) evaluation helps illustrate the benefits of such a
plan, if appropriate.
12) A Financial Advisor's professional guidance to assist you.
Reporting Services
1) Customized quarterly reports contain time-weighted and dollar-weighted
returns.
2) Detailed tax information including gains, losses and average cost per share.
3) Quarterly market commentaries address stock, bond and international markets.
4) Quarterly adviser comments focus on their specific market expertise.
5) Detailed performance of most major market indices.
(ICON)
9
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Growth Portfolio
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--95.6%
Common Stocks--95.6%
Aerospace--2.1%
37,300 Boeing Co.................. $ 3,249,763
11,500 Lockheed Martin Corp....... 966,000
------------
4,215,763
------------
Airlines--2.1%
28,100 Delta Air Lines, Inc....... 2,332,300
64,300 Southwest Airlines Co...... 1,872,738
------------
4,205,038
------------
Apparel & Textiles--0.8%
16,500 NIKE, Inc.................. 1,695,375
------------
Auto Parts--0.5%
29,500 AutoZone, Inc.............. 1,025,125
------------
Banks--2.5%
27,000 Citicorp................... 2,230,875
35,000 NationsBank Corp........... 2,891,875
------------
5,122,750
------------
Broadcasting--0.5%
27,100 Viacom Inc................. 1,053,513
------------
Business Services--0.5%
17,800 Service Corp. 1,023,500
International............
------------
Communication--0.7%
25,800 Qualcomm, Inc.............. 1,370,625
------------
Computers & Business Equipment--14.3%
100,000 3 Com Corp.*............... 4,575,000
140,000 Bay Networks, Inc.*........ 3,605,000
166,000 Cisco Systems, Inc.*....... 9,399,750
71,000 Compaq Computer Corp.*..... 3,496,750
21,000 Hewlett-Packard Co......... 2,092,125
100,000 Sun Microsystems, Inc.*.... 5,887,500
------------
29,056,125
------------
Domestic Oil--0.7%
26,800 Amerada Hess Corp......... $ 1,437,150
-----------
Drugs & Healthcare--16.1%
133,500 American Home Products 8,026,687
Corp....................
23,400 Cardinal Health, Inc...... 1,687,725
89,800 Columbia/HCA Healthcare 4,793,075
Corp....................
145,800 Johnson & Johnson Co...... 7,217,100
78,000 Merck & Co., Inc.......... 5,040,750
22,300 Oxford Health Plans, 917,088
Inc.....................
69,000 Pfizer Inc................ 4,924,875
-----------
32,607,300
-----------
Electrical Equipment--0.8%
28,800 Honeywell, Inc............ 1,569,600
-----------
Electronics--14.2%
28,900 Adaptec Inc............... 1,369,138
Ericsson (L.M.) Telephone
Co., Inc. B-free
102,700 (ADR)................... 2,208,050
26,300 General Motors Corp., 1,581,287
Class H.................
114,400 Intel Corp................ 8,401,250
106,000 Linear Technology Corp.... 3,180,000
85,000 Maxim Integrated Products, 2,321,562
Inc.*...................
97,600 Motorola, Inc............. 6,136,600
110,000 Xilinx Inc.*.............. 3,492,500
-----------
28,690,387
-----------
Financial Services--6.0%
39,800 Associates First Capital 1,497,475
Corp....................
38,200 Chase Manhattan Corp...... 2,697,875
44,192 First Data Corp........... 3,518,788
25,700 Fleet Financial Group, 1,117,950
Inc.....................
71,000 Green Tree Financial 2,218,750
Corp....................
16,500 Merrill Lynch & Co., 1,074,562
Inc.....................
-----------
12,125,400
-----------
Food & Beverages--2.1%
13,400 Campbell Soup Co.......... 944,700
92,200 PepsiCo Inc............... 3,261,575
-----------
4,206,275
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
10
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Forest Products--0.7%
20,800 Georgia-Pacific Corp....... $ 1,476,800
------------
Hotels & Restaurants--1.4%
8,700 Hilton Hotels Corp......... 978,750
34,500 Mirage Resorts, Inc........ 1,863,000
------------
2,841,750
------------
Industrial Machinery--1.5%
100,000 Applied Materials, Inc.*... 3,050,000
------------
Insurance--6.0%
24,500 Aetna Life & Casualty 1,751,750
Co.......................
47,000 American International 4,635,375
Group, Inc...............
24,000 General Reinsurance 3,654,000
Corp.....................
47,500 The Allstate Corp.......... 2,167,187
------------
12,208,312
------------
Leisure Time--0.1%
6,000 Circus Circus Enterprises, 246,000
Inc......................
------------
Miscellaneous--3.1%
205,900 Atmel Corp.*............... 6,202,737
------------
Paper--0.8%
21,200 Kimberly-Clark Corp........ 1,637,700
------------
Petroleum Services--1.5%
36,200 Schlumberger Ltd........... 3,049,850
------------
Retail Grocery--0.8%
51,200 Safeway Inc............... $ 1,689,600
-----------
Retail Trade--2.3%
15,900 Dayton-Hudson Corp........ 1,639,687
46,600 Federated Department 1,590,225
Stores, Inc.............
26,300 Home Depot, Inc........... 1,420,200
-----------
4,650,112
-----------
Software--7.7%
55,000 Adobe Systems, Inc........ 1,973,125
Computer Associates
35,000 International, Inc...... 2,493,750
59,400 Microsoft Corp.*.......... 7,135,425
90,000 Parametric Technology 3,903,750
Corp.*..................
-----------
15,506,050
-----------
Telecommunication--4.0%
85,000 DSC Communications 2,560,625
Corp.*..................
49,300 Lucent Technologies 1,867,238
Inc.....................
19,300 United States Robotics 1,650,150
Corp....................
35,800 WorldCom Inc.............. 1,982,425
-----------
8,060,438
-----------
Telephone--1.8%
98,500 MCI Communications 2,524,063
Corp....................
41,000 Telecommunications, 1,086,500
Inc.....................
-----------
3,610,563
-----------
Total common stocks
(cost $167,782,176)....... 193,633,838
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
11
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Growth Portfolio (cont'd)
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--4.5%
Commercial Paper--2.7%
$ 1,500 Goldman Sachs & Co.
5.33%, 7/8/96............ $ 1,498,445
2,000 Lucent Technologies Inc.
5.30%, 7/1/96............ 2,000,000
2,000 Sheffield Receivables Corp.
5.32%, 7/9/96............ 1,997,636
------------
Total commercial paper
(cost $5,496,081)........ 5,496,081
------------
Repurchase Agreement--1.8%
State Street Bank and Trust
Co.,
4.00%, dated 6/28/96, due
7/1/96 in the amount of
$3,712,237 (cost
$3,711,000; value of
collateral including ac-
crued
$ 3,711 interest-$3,817,764)..... $3,711,000
----------
Total short-term 9,207,081
investments
(cost $9,207,081)........
----------
Total Investments--100.1%
(cost $176,989,257)........ 202,840,919
Liabilities in excess of (226,491)
other
assets--(0.1%)...........
----------
Net Assets--100%........... $202,614,428
----------
----------
</TABLE>
- ---------------
* Non-income producing.
ADR--American Depository Receipts.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
12
<PAGE>
Large Capitalization Value Portfolio
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG TERM INVESTMENTS--92.9%
Common Stocks--92.9%
Aerospace--3.6%
22,000 Boeing Co.................. $ 1,916,750
24,450 Lockheed Martin Corp....... 2,053,800
15,000 Northrop Grumman Corp...... 1,021,875
25,100 Rockwell International 1,436,975
Corp.....................
10,000 United Technologies 1,150,000
Corp.....................
------------
7,579,400
------------
Agriculture Machinery--1.1%
56,500 Deere & Co................. 2,260,000
------------
Agriculture Products--0.4%
50,000 Archer-Daniels Midland 956,250
Co.......................
------------
Aluminum--1.6%
49,700 Aluminum Company of 2,851,538
America..................
11,000 Reynolds Metals Co......... 573,375
------------
3,424,913
------------
Apparel & Textiles--3.2%
50,000 Liz Claiborne, Inc......... 1,731,250
35,000 Reebok International, 1,176,875
Ltd......................
45,000 Russell Corp............... 1,243,125
115,000 Shaw Industries, Inc....... 1,509,375
40,000 Unifi, Inc................. 1,125,000
------------
6,785,625
------------
Auto Parts--0.7%
46,200 Dana Corp.................. 1,432,200
------------
Automobiles--3.2%
138,000 Ford Motor Co.............. 4,467,750
42,000 General Motors Corp........ 2,199,750
------------
6,667,500
Banks--8.2%
100,600 Ahmanson (H.F.) & Co...... $ 2,716,200
10,600 BankAmerica Corp.......... 802,950
40,000 Boatmen's Bancshares...... 1,605,000
11,960 Chase Manhattan Corp...... 844,675
10,000 Comerica, Inc............. 446,250
22,500 First America Bank 1,006,875
Corp....................
35,000 First Chicago Nbd 1,369,375
Corporation.............
71,600 Great Western Financial 1,709,450
Corp....................
25,000 Keycorp................... 968,750
70,000 National City Corp........ 2,458,750
20,300 NationsBank Corp.......... 1,677,287
35,000 Wachovia Corp............. 1,531,250
-----------
17,136,812
-----------
Chemicals--2.0%
35,000 Dow Chemical Co........... 2,660,000
20,000 Du Pont (E.I.) de Nemours 1,582,500
& Co....................
-----------
4,242,500
-----------
Computers & Business Equipment--2.9%
30,000 Compaq Computer Corp.*.... 1,477,500
18,000 Hewlett-Packard Co........ 1,793,250
International Business
15,000 Machines Corp........... 1,485,000
30,000 Pitney Bowes, Inc......... 1,432,500
-----------
6,188,250
-----------
Conglomerates--3.5%
55,000 American Brands Inc....... 2,495,625
198,000 Hanson PLC (ADR).......... 2,821,500
25,000 Textron, Inc.............. 1,996,875
-----------
7,314,000
-----------
Domestic Oil--2.3%
16,000 Atlantic Richfield Co..... 1,896,000
40,000 Tenneco, Inc.............. 2,045,000
46,200 USX Marathon Corp......... 929,775
-----------
4,870,775
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
13
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Value Portfolio (cont'd)
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Drugs & Healthcare--7.9%
32,500 Abbott Laboratories........ $ 1,413,750
54,000 American Home Products 3,246,750
Corp.....................
20,000 Baxter International, 945,000
Inc......................
33,000 Bristol Myers Squibb Co.... 2,970,000
35,000 Columbia Healthcare 1,868,125
Corp.....................
34,000 Lilly (Eli) & Co........... 2,210,000
32,000 Merck & Co., Inc........... 2,068,000
30,000 Schering Plough Corp....... 1,882,500
------------
16,604,125
------------
Electric Utilities--5.8%
30,000 Cinergy Corp............... 960,000
58,200 CMS Energy Corp............ 1,796,925
137,000 Edison International....... 2,414,625
20,000 General Public Utilities 705,000
Corp.....................
3,000 Illinova Corp.............. 86,250
47,500 New York State Electric & 1,157,812
Gas Corp.................
109,300 Niagara Mohawk Power 847,075
Corp.*...................
35,000 PECO Energy Co............. 910,000
37,000 Public Service Enterprise 1,012,875
Inc......................
80,000 Unicom Corp................ 2,230,000
------------
12,120,562
------------
Electrical Equipment--1.5%
20,000 Emerson Electric Co........ 1,807,500
15,000 General Electric Co........ 1,297,500
------------
3,105,000
------------
Electronics--1.0%
40,000 Raytheon Co................ 2,065,000
------------
Financial Services--3.0%
15,900 Beneficial Corp............ 892,387
101,600 Federal National Mortgage 3,403,600
Association..............
25,200 Household International, 1,915,200
Inc......................
------------
6,211,187
Food & Beverages--2.4%
52,500 Heinz (H.J.) Co........... $ 1,594,688
50,000 PepsiCo Inc............... 1,768,750
60,000 Tyson Foods, Inc.......... 1,642,500
-----------
5,005,938
-----------
Forest Products--2.3%
15,000 Georgia-Pacific Corp...... 1,065,000
25,000 Kimberly-Clark Corp....... 1,931,250
44,400 Weyerhaeuser Co........... 1,887,000
-----------
4,883,250
-----------
Gas & Pipeline Utilities--0.4%
25,000 Eastern Enterprises....... 831,250
-----------
Household Appliances & Home
Furnishings--1.3%
70,000 Maytag Corp............... 1,461,250
24,000 Whirlpool Corp............ 1,191,000
-----------
2,652,250
-----------
Insurance--6.5%
12,700 Aetna Life & Casualty 908,050
Co......................
55,000 American General Corp..... 2,000,625
25,700 Aon Corp.................. 1,304,275
10,000 General Reinsurance 1,522,500
Corp....................
30,000 Jefferson-Pilot Corp...... 1,548,750
20,200 Lincoln National Corp..... 934,250
19,000 Marsh & Mclennan Cos...... 1,833,500
55,000 SAFECO Corp............... 1,945,625
12,500 Transamerica Corp......... 1,012,500
22,000 USLIFE Corp............... 723,250
-----------
13,733,325
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
14
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
International Oil--5.0%
25,000 Amoco Corp................. $ 1,809,375
30,000 Chevron Corp............... 1,770,000
31,000 Exxon Corp................. 2,693,125
50,000 Repsol S.A. (ADR).......... 1,737,500
15,000 Royal Dutch Petroleum 2,306,250
Co.......................
5,000 Ultramar Corp.............. 145,000
------------
10,461,250
------------
Liquor--1.8%
49,300 Anheuser Busch Cos., 3,697,500
Inc......................
------------
Mining--1.5%
27,000 Minnesota Mining &
Manufacturing Co......... 1,863,000
21,300 Phelps Dodge Corp.......... 1,328,588
------------
3,191,588
------------
Paper--2.1%
57,091 International Paper Co..... 2,105,225
22,600 Union Camp Corp............ 1,101,750
37,500 Westvaco Corp.............. 1,120,313
------------
4,327,288
------------
Petroleum Services--0.7%
36,700 Ashland, Inc............... 1,454,238
------------
Pollution Control--1.7%
76,000 Browning Ferris Industries, 2,204,000
Inc......................
40,000 WMX Technologies, Inc...... 1,310,000
------------
3,514,000
------------
Publishing--0.5%
16,000 Dun & Bradstreet Corp...... 1,000,000
------------
Railroads & Equipment--1.3%
28,000 Conrail, Inc............... 1,858,500
11,000 Norfolk Southern Corp...... 932,250
------------
2,790,750
------------
Retail Trade--3.7%
113,800 Kmart Corp.*.............. $ 1,408,275
38,400 May Department Stores 1,680,000
Co......................
30,000 Melville Corp............. 1,215,000
35,000 Penney (J.C.) Co., Inc.... 1,837,500
34,400 Sears Roebuck & Co........ 1,672,700
-----------
7,813,475
-----------
Retail - Food & Restaurants--0.9%
40,000 McDonald's Corp........... 1,870,000
-----------
Steel--0.7%
52,000 USX-U.S. Steel Group, 1,475,500
Inc.....................
-----------
Telephone--2.4%
31,000 Pacific Telesis Group..... 1,046,250
Southern New England
Telecommunications,
40,000 Corp.................... 1,680,000
Telefonos de Mexico, S.A.
40,000 (ADR)................... 1,340,000
29,000 U.S. West, Inc............ 924,375
-----------
4,990,625
-----------
Tires & Rubber--0.7%
65,000 Cooper Tire & Rubber 1,446,250
Co......................
-----------
Tobacco--3.6%
55,000 Philip Morris Cos., 5,720,000
Inc.....................
55,000 UST, Inc.................. 1,883,750
-----------
7,603,750
-----------
Trucking & Freight Forwarding--1.5%
80,000 Hunt J.B.Transport 1,670,000
Services, Inc...........
55,000 Ryder System, Inc......... 1,546,875
-----------
3,216,875
-----------
Total common stocks
(cost $154,508,253)....... 194,923,201
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
15
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Value Portfolio (cont'd)
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--7.5%
Commercial Paper--0.5%
$ 1,000 American Greetings Corp.
5.34%, 7/10/96
(cost $998,665).......... $ 998,665
------------
U.S. Government Securities--2.1%
United States Treasury
Bills
2,000 5.035%, 8/8/96............. 1,989,371
1,500 5.11%, 9/12/96............. 1,484,457
1,000 5.37374%, 2/6/97........... 968,711
------------
Total U.S. Government
Securities
(cost $4,442,539).......... 4,442,539
------------
Other--4.9%
2,000 Seven Seas Money Market 2,000,000
Fund.....................
8,267 Seven Seas Series
Government Fund.......... 8,266,882
------------
Total other
(cost $10,266,882)......... 10,266,882
------------
Total short-term
investments
(cost $15,708,086)......... 15,708,086
------------
Total Investments--100.4%
(cost $170,216,339; Note 210,631,287
4).......................
Liabilities in excess of
other
assets--(0.4%)............. (772,982)
------------
Net Assets--100%........... $209,858,305
------------
------------
</TABLE>
- ---------------
* Non-income producing.
ADR--American Depository Receipts.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
16
<PAGE>
Small Capitalization Growth Portfolio
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--92.6%
Common Stocks--92.6%
Airlines--1.2%
37,500 America West Airlines, $ 825,000
Inc.*....................
15,100 Continental Airlines, 932,425
Inc.*....................
------------
1,757,425
------------
Apparel & Textiles--1.9%
23,800 Finish Line, Inc.*......... 681,275
62,700 Nautica Enterprises, 1,802,625
Inc.*....................
15,200 Warnaco Group, Inc......... 391,400
------------
2,875,300
------------
Broadcasting--0.9%
34,800 Heritage Media Corp........ 1,387,650
------------
Building & Construction--0.5%
10,400 Texas Industries Inc....... 713,700
------------
Business Services--4.0%
5,000 Children's Comprehensive
Services, Inc.*.......... 106,250
33,600 Fiserv, Inc................ 1,008,000
48,400 GTECH Holdings Corp........ 1,433,850
50,200 National Education 715,350
Corp.*...................
55,200 National Media Corp.*...... 972,900
17,300 Robert Half International 482,237
Inc.*....................
39,300 Stewart Enterprises, 1,228,125
Inc......................
------------
5,946,712
------------
Chemicals--1.8%
79,700 Minerals Technologies, 2,729,725
Inc......................
------------
Communication--2.7%
18,200 Cascade Communications $ 1,237,600
Corp.*..................
28,000 Pairgain Technologies, 1,736,000
Inc.*...................
56,900 Valassis Communications, 1,052,650
Inc.....................
-----------
4,026,250
-----------
Computers & Business Equipment--4.8%
40,100 Chips and Technologies, 390,975
Inc.*...................
17,000 Cisco Systems, Inc.*...... 962,625
1,600 Computer Horizons 63,200
Corp.*..................
28,500 Identix, Inc.............. 416,812
17,000 In Focus Systems, Inc.*... 412,250
35,400 Iomega Corp*.............. 1,026,600
22,200 Komag, Inc.*.............. 585,525
9,800 Medic Computer Systems, 795,025
Inc.*...................
23,200 Sun Microsystems, Inc.*... 1,365,900
8,500 Trident Microsystems, 107,313
Inc.*...................
55,300 Wang Laboratories, Inc.... 1,043,787
-----------
7,170,012
-----------
Containers & Glass--1.2%
13,000 Aptargroup Inc............ 393,250
11,700 Avery Dennison Corp....... 642,038
20,400 Bemis Co., Inc............ 714,000
-----------
1,749,288
-----------
Drugs & Healthcare--7.9%
1,900 ABR Information Services, 95,475
Inc.*...................
47,000 Biovail Corp. 1,468,750
International...........
24,800 Community Health Systems 1,283,400
Inc.....................
14,800 HBO & Co.................. 1,002,700
10,700 Impath Inc................ 192,600
27,400 Integrated Health 650,750
Services, Inc...........
48,900 Jones Medical Industries, 1,625,925
Inc.....................
26,900 Liposome Co., Inc.*....... 504,375
37,300 Medeva PLC. (ADR)......... 578,150
22,700 Neurogen Corp.*........... 584,525
30,100 Scherer (R.P.) Corp....... 1,365,787
31,800 Sierra Health Services 1,001,700
Inc.....................
30,000 Sybron International 750,000
Corp....................
15,000 Watson Pharmaceuticals, 568,125
Inc.....................
-----------
11,672,262
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
17
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Growth Portfolio (cont'd)
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Electrical Equipment--1.0%
10,000 C-Cube Microsystems $ 330,000
Inc.*....................
6,300 Kent Electronics Corp.*.... 196,875
37,100 Park Electrochemical 742,000
Corp.....................
9,900 Zytec Corp.*............... 179,438
------------
1,448,313
------------
Electronics--7.0%
40,000 Allen Group Inc............ 870,000
22,300 Ascend Communications, 1,254,375
Inc.*....................
14,300 Aspect Telecommunications 707,850
Corp.*...................
27,800 BMC Industries, Inc........ 799,250
7,700 Dionex Corp.*.............. 248,325
16,700 Electro Scientific 350,700
Industries, Inc.*........
18,400 Electroglas, Inc.*......... 262,200
14,100 Esterline Technologies 352,500
Corp.*...................
17,600 Hadco Corp.*............... 378,400
16,600 Maxim Integrated Products, 453,387
Inc.*....................
27,900 Photronics, Inc.*.......... 732,375
32,100 Spectrian Corp.*........... 625,950
62,000 Thermospectra Corp......... 976,500
17,200 U.S. Robotics Corp......... 1,470,600
7,700 Wyle Electronics........... 255,063
13,800 Zygo Corp.*................ 603,750
------------
10,341,225
------------
Financial Services--3.6%
22,800 Aames Financial Corp....... 817,950
16,940 Bear Stearns Cos., Inc..... 400,207
36,000 Credit Acceptance Corp..... 756,000
12,200 First USA, Inc............. 671,000
19,200 Green Tree Financial 600,000
Corp.....................
27,800 Imperial Credit Industries, 840,950
Inc.*....................
25,000 Lehman Brothers Holdings 618,750
Inc......................
8,100 Student Loan Marketing 599,400
Association..............
------------
5,304,257
------------
Homebuilders--2.6%
87,600 Champion Enterprises, 1,828,650
Inc.*....................
25,500 Lennar Corp................ 637,500
29,000 Redman Industries, $ 601,750
Inc.*...................
35,550 Watsco Inc.*.............. 746,550
-----------
3,814,450
-----------
Hotels & Restaurants--4.1%
14,400 Hfs Incorporated*......... 1,008,000
13,200 Marriott International, 709,500
Inc.....................
92,000 Red Roof Inns Inc......... 1,299,500
72,900 Renaissance Hotel Group N 1,567,350
V.......................
54,000 Trump Hotels & Casino 1,539,000
Resorts.................
-----------
6,123,350
-----------
Industrial Machinery--1.2%
24,200 JLG Industries, Inc....... 1,796,850
-----------
Insurance--4.6%
9,600 Allied Group, Inc......... 417,600
26,100 Capmac Holdings Inc....... 743,850
25,150 HCC Insurance Holdings, 565,875
Inc.....................
18,400 Penncorp Financial Group, 584,200
Inc.....................
24,000 Progressive Corp.......... 1,110,000
10,000 The PMI Group, Inc........ 425,000
25,500 TIG Holdings, Inc......... 739,500
45,800 Vesta Insurance Group, 1,528,575
Inc.....................
42,000 Western National Corp..... 771,750
-----------
6,886,350
-----------
Leisure Time--1.2%
16,100 Grand Casinos, Inc........ 414,575
122,800 Hammons (John Q.) Hotels, 1,335,450
Inc.....................
1,700 King World Productions, 61,838
Inc.*...................
-----------
1,811,863
-----------
Medical - Dental Supplies--2.8%
20,900 Hologic, Inc.*............ 924,825
22,000 Omnicare Inc.............. 583,000
99,400 OrthoLogic Corp.*......... 1,267,350
36,200 Protocol Systems, Inc.*... 832,600
11,900 Target Therapeutics, 487,900
Inc.*...................
-----------
4,095,675
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
18
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Metal--0.7%
8,100 Castle (A.M.) & Co......... $ 191,363
20,100 Mueller Industries, 834,150
Inc.*....................
------------
1,025,513
------------
Miscellaneous--1.0%
20,200 Aetrium Inc.*.............. 363,600
53,500 Coach USA Inc.............. 1,190,375
------------
1,553,975
------------
Non-Ferrous Metals--1.0%
41,100 Wolverine Tube, Inc........ 1,438,500
------------
Office Equipment & Services--2.0%
99,500 Danka Business Systems PLC 2,910,375
(ADR)....................
------------
Office Furnishings--0.4%
34,100 Staples, Inc.*............. 664,950
------------
Oil & Gas Exploration--7.0%
18,200 Anadarko Petroleum Corp.... 1,055,600
14,300 Chesapeake Energy Corp.*... 1,285,212
101,700 Comstock Resources, 1,036,069
Inc.*....................
70,000 Forcenergy Gas Expl Inc.... 1,321,250
81,300 Geoscience Corp............ 1,138,200
70,300 Noram Energy Corp.......... 764,513
51,100 Nuevo Energy Co............ 1,647,975
57,000 Reading & Bates Corp.*..... 1,261,125
17,100 Sonat Offshore Drilling 863,550
Inc......................
------------
10,373,494
------------
Oil Field/Machinery & Equipment--1.4%
20,600 Camco Inc.................. 697,825
30,000 Roper Industries, Inc...... 1,462,500
------------
2,160,325
------------
Petroleum Services--2.9%
30,300 Parker & Parsley Petroleum $ 840,825
Co......................
109,900 Petroleum Geo-Services A/S 3,118,412
(ADR)...................
14,900 Valero Energy Corp........ 372,500
-----------
4,331,737
-----------
Publishing--2.9%
100,500 Big Flower Press Holdings 1,419,562
Inc.....................
28,700 Consolidated Graphics, 624,225
Inc.....................
18,500 Gardner Denver Machinery 487,938
Inc.*...................
15,400 Gartner Group, Inc.*...... 564,025
6,900 Meredith Corp............. 288,075
13,900 Scholastic Corp.*......... 861,800
-----------
4,245,625
-----------
Retail Trade--5.9%
27,200 Barnes & Noble, Inc.*..... 975,800
28,000 Bed Bath & Beyond, 749,000
Inc.*...................
23,800 CompUSA Inc.*............. 812,175
9,700 Damark International, 135,800
Inc.*...................
47,800 Harcourt General, Inc..... 2,390,000
55,000 Heilig Meyers Co.......... 1,320,000
31,500 Regis Corp.*.............. 984,375
39,500 Ross Stores, Inc.......... 1,372,625
-----------
8,739,775
-----------
Retail/Wholesale--0.6%
39,000 Tech Data Corp.*.......... 848,250
-----------
Semiconductors & Equipment--0.6%
31,800 Atmel Corp.*.............. 957,975
-----------
Software--7.5%
90,000 Acclaim Entertainment, 866,250
Inc.*...................
79,500 Artisoft, Inc.*........... 695,625
13,900 BARRA Inc.*............... 357,925
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
19
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Growth Portfolio (cont'd)
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Software--(cont'd)
22,950 Cadence Design Systems, $ 774,562
Inc.*....................
32,200 CFI ProServices, Inc.*..... 821,100
11,700 Computer Associates
International, Inc....... 833,625
26,000 Decisionone Corp........... 617,500
46,600 Global Village 384,450
Communications Inc.*.....
14,400 Henry Jack & Associates 489,600
Inc......................
30,375 McAffee Associates, 1,488,375
Inc.*....................
45,000 Microchip Technology, 1,113,750
Inc......................
45,100 Micrografx, Inc.*.......... 659,588
6,700 Microsoft Corp.*........... 804,837
12,100 Peoplesoft, Inc.*.......... 862,125
6,000 Reynolds & Reynolds Co..... 319,500
------------
11,088,812
------------
Steel--0.7%
65,000 Shiloh Industries, Inc..... 1,048,125
------------
Telephone--1.0%
49,600 LCI International, Inc..... 1,556,200
------------
Trucking & Freight Forwarding--2.0%
21,500 Heartland Express, Inc..... 575,125
51,300 Teekay Shipping Corp....... 1,353,038
25,000 Tidewater Inc.............. 1,096,875
------------
3,025,038
------------
Total common stocks
(cost $108,829,275)........ 137,619,326
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--6.1%
Commercial Paper--3.8%
$ 1,747 UBS Finance Delaware, Inc.
5.58%, 7/1/96............ $ 1,747,000
3,829 USAA Capital Corp.
5.50%, 7/1/96............ 3,829,000
------------
Total commercial paper
(cost $5,576,000)........ 5,576,000
------------
Other--2.3%
121 Seven Seas Money Market 120,969
Fund.....................
3,345 Seven Seas Series
Government Fund.......... 3,345,404
------------
Total investment company
(cost $3,466,373)........ 3,466,373
------------
Total short-term
Investments
(cost $9,042,373)........ 9,042,373
------------
Total Investments--98.7%
(cost $117,871,648)........ 146,661,699
Other assets in excess of
liabilities--1.3%........ 1,900,765
------------
Net Assets--100%........... $148,562,464
------------
------------
</TABLE>
- ------------------
* Non-income producing.
ADR--American Depository Receipt.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
20
<PAGE>
Small Capitalization Value Portfolio
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--95.2%
Common Stocks--95.2%
Aerospace--1.3%
6,000 Alliant Techsystems, $ 282,750
Inc.*....................
26,000 Ball Corp.................. 747,500
26,300 Whittaker Corp.*........... 486,550
------------
1,516,800
------------
Airlines--0.6%
39,300 USAir Group Inc.*.......... 707,400
------------
Apparel & Textiles--1.8%
36,500 Interface, Inc............. 565,750
24,900 Unitog Co. (New)........... 703,425
28,700 Warnaco Group, Inc......... 739,025
------------
2,008,200
------------
Auto Parts--0.7%
44,900 Standard Motor Products, 802,588
Inc......................
------------
Auto Related--3.2%
32,000 Amcast Industrial Corp..... 648,000
27,000 Armor All Products, 401,625
Corp.....................
23,800 First Brands Corp.......... 642,600
21,400 Modine Manufacturing Co.... 567,100
31,680 Myers Industries, Inc...... 590,040
22,300 Smith AO Corp.............. 557,500
13,900 Thomson PBE, Inc.*......... 166,800
------------
3,573,665
------------
Banks--5.4%
20,000 Bay View Capital Corp...... 680,000
19,300 Center Financial Corp...... 466,216
37,500 First American Corp........ 1,579,687
22,900 First Commerce Corp. 810,088
(L.A.)...................
18,500 Firstmerit Corp............ 587,375
28,200 Long Island Bancorp, 861,862
Inc......................
11,000 MLF Bancorp, Inc........... 266,750
26,800 People's Bank............. $ 596,300
8,700 Susquehanna Bancshares, 232,725
Inc.....................
-----------
6,081,003
-----------
Broadcasting--0.7%
28,600 International Cabletel, 843,700
Inc.....................
-----------
Building & Construction--5.2%
21,200 Carlisle Co., Inc......... 1,126,250
26,650 Clarcor, Inc.............. 659,587
38,000 Commercial Intertech 978,500
Corp....................
27,800 Donaldson Co., Inc........ 715,850
46,800 Lydall, Inc............... 1,029,600
26,450 Osmonics, Inc.*........... 595,125
36,000 Regal Beloit Corp......... 711,000
-----------
5,815,912
-----------
Business Services--0.7%
38,200 Bowne & Company, Inc...... 787,875
-----------
Chemicals--3.0%
39,800 Arcadian Corp............. 786,050
46,200 Hanna (M.A.) Co........... 964,425
24,300 Learonal, Inc............. 607,500
4,300 O Sullivan Corp........... 51,062
21,900 Rock-Tenn Co., Class A.... 432,525
31,750 RPM, Inc.................. 496,094
-----------
3,337,656
-----------
Communication--0.6%
24,400 Associated Group, Inc.*... 738,100
-----------
Computers & Business Equipment--2.3%
73,200 Intelligent Electronics, 622,200
Inc.....................
24,600 Planar Systems, Inc.*..... 350,550
35,600 Stratus Computer, Inc.*... 1,032,400
32,800 Wang Laboratories, 619,100
Inc.*...................
-----------
2,624,250
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
21
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Value Portfolio (cont'd)
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Diversified Industrials--2.3%
20,600 Applied Power, Inc......... $ 576,800
23,700 Brady (W.H.) Co............ 527,325
25,100 Furon Co................... 621,225
18,800 Teleflex, Inc.............. 897,700
------------
2,623,050
------------
Domestic Oil--0.6%
25,400 Ultramar Corp.............. 736,600
------------
Drugs & Healthcare--3.4%
2,500 Applied Bioscience 26,250
International, Inc.*.....
18,400 Bergen Brunswig Corp....... 510,600
22,700 FHP International Corp.*... 621,412
27,500 Integrated Health Services, 653,125
Inc......................
10,800 Scherer (R.P.) Corp.*...... 490,050
49,500 Sunrise Medical, Inc.*..... 952,875
18,500 West Co., Inc.............. 555,000
------------
3,809,312
------------
Electrical Equipment--5.9%
82,300 American Power Conversion 843,575
Co.*.....................
45,600 Anixter International, 678,300
Inc.*....................
19,750 Bearings, Inc.............. 533,250
46,200 Belden, Inc................ 1,386,000
45,700 Berg Electronics Corp.*.... 1,085,375
27,500 Core Industries, Inc....... 395,312
26,200 EG&G, Inc.................. 560,025
29,600 Oak Industries, Inc.*...... 876,900
27,200 Woodhead Industries, 319,600
Inc......................
------------
6,678,337
------------
Electronics--4.6%
45,100 Amphenol Corp.*............ 1,037,300
22,500 Augat, Inc................. 430,313
28,300 Dallas Semiconductor 512,937
Corp.....................
21,800 Esterline Technologies 545,000
Corp.*...................
32,000 Lattice Semiconductor 772,000
Corp.*...................
39,750 Methode Eletronics, Inc.... 675,750
41,800 Pioneer Standard 553,850
Electronics, Inc.........
21,000 Wyle Electronics........... 695,625
------------
5,222,775
------------
Entertainment--0.5%
19,400 GTECH Holdings Corp.*..... $ 574,725
-----------
Financial Services--1.9%
11,000 CMAC Investment Corp...... 632,500
48,700 Rollins Truck Leasing 505,263
Corp....................
28,800 Sei Corp.................. 608,400
11,800 United Companies Financial 401,200
Corp....................
-----------
2,147,363
-----------
Food - Service/Lodging--2.1%
21,500 Luby's Cafeterias, Inc.... 505,250
28,800 Marcus Corp............... 723,600
44,200 Sbarro, Inc............... 1,110,525
-----------
2,339,375
-----------
Foods--1.3%
33,900 Flowers Industries, 546,638
Inc.....................
7,200 Lancaster Colony Corp..... 269,100
17,600 Universal Foods Corp...... 649,000
-----------
1,464,738
-----------
Gas & Pipeline Utilities--0.5%
14,700 Wicor, Inc................ 554,925
-----------
Hospital Supplies & Services--3.1%
22,800 Beckman Instruments, 866,400
Inc.....................
40,100 Magellan Health Services, 862,150
Inc.*...................
42,100 Sierra Health Services 1,326,150
Inc.....................
19,000 SpaceLabs Medical, 441,750
Inc.*...................
-----------
3,496,450
-----------
Household Appliances & Home
Furnishings--2.9%
20,300 Chromcraft Revington, 474,513
Inc.*...................
6,900 Crown Crafts, Inc......... 70,725
21,900 Department 56, Inc.*...... 495,487
65,000 Ekco Group, Inc........... 341,250
32,600 Ethan Allen Interiors, 806,850
Inc.*...................
14,500 Premark International, 268,250
Inc.....................
18,000 Rival Co.................. 414,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
22
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Household Appliances & Home
Furnishings--(cont'd)
16,700 Stanhome, Inc.............. $ 442,550
------------
3,313,625
------------
Industrial Machinery--8.5%
26,400 Alltrista Corp.*........... 627,000
24,000 Briggs & Stratton Corp..... 987,000
30,100 Crane Co................... 1,234,100
18,600 Duriron, Inc............... 446,400
22,900 Graco, Inc................. 463,725
19,300 Kennametal, Inc............ 656,200
25,900 Keystone International, 537,425
Inc......................
45,423 Mark IV Industries, Inc.... 1,027,695
33,100 Measurex Corp.............. 968,175
21,000 Polaris Industries, Inc.... 716,625
4,000 Scotsman Industries Inc.... 80,500
12,500 Standex International 356,250
Corp.....................
34,900 United Dominion Industries 802,700
Ltd......................
39,300 Watts Industries, Inc...... 731,963
------------
9,635,758
------------
Insurance--5.9%
9,300 American Bankers Insurance
Group, Inc............... 405,713
16,500 American Travellers 379,500
Corp.....................
27,000 Enhance Financial Services
Group, Inc............... 756,000
21,300 Equitable of Iowa Cos...... 756,150
14,900 Hartford Steam Boiler
Inspection & Insurance
Co....................... 731,962
40,500 Horace Mann Educators 1,285,875
Corp.....................
22,900 NAC Re Corp................ 767,150
21,300 Poe & Brown, Inc........... 527,175
14,300 Protective Life 502,287
Corporation..............
4,600 Vesta Insurance Group, 153,525
Inc......................
22,000 Western National Corp...... 404,250
------------
6,669,587
------------
Investment Companies--0.1%
18,600 Noel Group, Inc.*......... $ 160,425
-----------
Manufacturing--0.7%
22,600 Trinova Corp.............. 754,275
-----------
Miscellaneous--2.2%
16,900 AptarGroup Inc............ 511,225
50,000 Genesee & Wyoming Inc., 1,025,000
Class A*................
36,500 K2, Inc.*................. 990,062
-----------
2,526,287
-----------
Office Equipment--2.5%
18,500 Hon Industries, Inc....... 527,250
38,500 Hunt Manufacturing Co..... 572,688
29,000 Lexmark International 583,625
Group, Inc.*............
37,800 Miller (Herman), Inc...... 1,157,625
-----------
2,841,188
-----------
Oil & Gas--1.4%
34,200 Devon Energy Corp......... 837,900
20,000 Helmerich & Payne, Inc.... 732,500
-----------
1,570,400
-----------
Oil & Gas - Production/Pipeline--0.5%
17,700 Barrett Resources 526,575
Corp.*..................
-----------
Oil-Supplies & Construction--1.0%
7,400 BJ Services Co.*.......... 259,925
20,600 Tidewater Inc............. 903,825
-----------
1,163,750
-----------
Paper--0.6%
23,900 Caraustar Industries, 633,350
Inc.....................
-----------
Printing & Publishing--2.8%
30,350 American Business 663,906
Products, Inc...........
57,950 Banta Corp................ 1,463,238
16,100 Jostens, Inc.............. 317,975
28,400 Lee Enterprises, Inc...... 670,950
-----------
3,116,069
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
23
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Value Portfolio (cont'd)
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Professional Services--1.3%
14,700 CDI Corp.*................. $ 496,125
9,900 Interim Services, Inc.*.... 425,700
20,400 Jacobs Engineering Group, 538,050
Inc.*....................
------------
1,459,875
------------
Railroads & Equipment--0.4%
20,200 ABC Rail Products Corp..... 436,825
------------
Real Estate--2.4%
16,600 Crescent Real Estate 610,050
Equities.................
20,000 Hospitality Properties 535,000
Trust....................
24,000 Irvine Apartment 483,000
Communities, Inc.........
20,700 Liberty Property (ADR)..... 411,412
30,000 RFS Hotel Investors, 465,000
Inc......................
9,000 Sun Communities, Inc....... 241,875
------------
2,746,337
------------
Retail - Food & Drugs--1.1%
25,650 Arbor Drugs, Inc........... 535,444
21,200 Big B, Inc................. 201,400
36,700 Ruddick Corp............... 449,575
------------
1,186,419
------------
Retailing--3.4%
31,400 Carson Pirie Scott & Co.... 839,950
24,800 Lands End, Inc.*........... 613,800
21,900 Meyer (Fred), Inc.*........ 643,312
29,400 Proffitts, Inc.*........... 1,043,700
27,800 Revco DS, Inc.*............ 663,725
------------
3,804,487
------------
Steel--1.1%
40,300 J & L Specialty Steel, $ 599,463
Inc.....................
26,400 Lukens, Inc............... 630,300
-----------
1,229,763
-----------
Telecommunication--0.2%
14,800 Metromedia Corp.*......... 181,300
-----------
Telephone--0.6%
Cellular Communications
19,400 Puerto Rico, Inc.*...... 630,500
-----------
Toys & Amusements--0.2%
11,000 Russ Berrie & Co., Inc.... 202,125
-----------
Transportation--0.7%
38,000 Harper Group, Inc......... 741,000
-----------
Trucking & Freight Forwarding--1.4%
37,600 Pittston Co............... 813,100
41,100 US Freightways Corp....... 801,450
-----------
1,614,550
-----------
Trucking & Shipping--1.0%
27,500 American Freightways 305,938
Corp....................
32,400 Werner Enterprises, 842,400
Inc.....................
-----------
1,148,338
-----------
Wine--0.6%
21,900 Canandaigua Wine Co., 657,000
Inc.*...................
-----------
Total common stocks 107,434,607
(cost $96,832,146)......
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
24
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--5.0%
U.S. Government Securities--3.2%
$ 605 Federal Home Loan Mortgage
5.26%, 7/8/96............ $ 604,381
635 Federal National Mortgage
Association,
5.24%, 7/2/96............ 634,908
125 United States Treasury
Notes
4.69%, 7/5/96............ 124,935
2,210 United States Treasury
Notes
6.25%, 8/31/96........... 2,212,409
------------
Total U.S. Government
Securities
(cost $3,577,063)........ 3,576,633
------------
Other--1.8%
2,065 Seven Seas Money Market
Fund
(cost $2,064,913)........ 2,064,913
------------
Total short-term
investments
(cost $5,641,976)........ 5,641,546
------------
Total Investments--100.2%
(cost $102,474,122; Note 113,076,153
4).......................
Liabilities in excess of
other
assets--(0.2%)........... (183,816)
------------
Net Assets--100%........... $112,892,337
------------
------------
</TABLE>
- ---------------
* Non-income producing.
ADR--American Depository Receipts.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
25
<PAGE>
THE TARGET PORTFOLIO TRUST
International Equity Portfolio
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
US$
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--93.4%
Common Stocks--92.2%
Australia--3.8%
299,200 Coles Myer Ltd. .......... $ 1,086,290
(Retail)
205,300 News Corp. Ltd. (ADR) .... 4,131,663
(Printing)
795,900 Westpac Bank Corp. ....... 3,521,349
(Banking) ------------
8,739,302
------------
Denmark--1.0%
50,700 Unidanmark A.S. .......... 2,353,913
(Banking) ------------
Finland--1.5%
172,880 UPM Kymmene Oy* .......... 3,587,047
(Forest Products) ------------
France--12.9%
15,925 Accor, S.A. .............. 2,229,178
(Lodging)
72,100 Alcatel Alsthom (Compagnie
Generale d' Electricite) 6,293,821
........................
(Energy)
69,560 Banque Nationale de Paris 2,443,715
........................
(Banking)
32,700 Cie De St Gobain ......... 4,380,259
(Manufacturing)
35,500 Eaux Cie Generale ........ 3,968,524
(Utilities)
137,377 Rhone Poulenc S.A. ....... 3,613,638
(Chemicals)
18,250 Roussel Uclaf (ADR) ...... 2,190,951
(Consumer Goods)
34,800 Societe Nationale Elf 2,561,490
Aquitaine ..............
(Energy)
31,932 Total Francaise Petroleum 2,370,254
Ltd. ................... ------------
(Oil & Gas-Domestic)
30,051,830
------------
Germany--11.2%
8,430 Daimler-Benz A.G.* ...... $ 4,515,774
(Automobiles)
73,600 Deutsche Bank A.G.* ..... 3,485,169
(Banking)
168,000 Hoechst A.G. ............ 5,701,282
(Steel)
12,300 Mannesmann A.G. (ADR) ... 4,250,467
(Industrials)
81,000 Siemens A.G. ............ 4,331,010
(Industrials)
68,000 Veba A.G. ............... 3,616,679
(Utilities) -----------
25,900,381
-----------
Hong Kong--2.0%
306,329 HSBC Holdings PLC ....... 4,630,076
(Banking) -----------
Japan--26.9%
540 DDI Corp. ............... 4,720,340
(Consumer Goods)
157,000 Honda Motor Co., Ltd. ... 4,076,990
(Automobiles)
251,000 Matsushita Electric 4,681,937
Industrial Co., Ltd.
(Electrical Equipment)
596,000 Mitsubishi Heavy Inds., 5,193,508
Ltd. ..................
(Electrical Equipment)
145,000 Mitsui Marine & Fire 1,154,803
Insurance Co., Ltd.
(Insurance)
34,000 Nintendo Co., Ltd. ...... 2,536,826
(Software)
773,000 NKK Corp.* .............. 2,346,601
(Steel)
99,000 Omron Corp. ............. 2,109,176
(Manufacturing)
77,000 Orix Corp. .............. 2,858,501
(Leasing)
38,400 Promise Co., Ltd. ....... 1,896,036
(Financial Services)
419,000 Ricoh Corp., Ltd. ....... 4,444,201
(Office Equipment &
Supplies)
81,000 Rohm Co., Ltd. .......... 5,362,227
(Technology)
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
26
<PAGE>
<TABLE>
<CAPTION>
US$
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Japan--(cont'd)
259,000 Sekisui Chemical Corp., $ 3,173,410
Ltd. ...................
(Chemicals)
114,900 Sony Corp. ............... 7,574,900
(Consumer Durable Goods)
339,000 Sumitomo Trust & Banking 4,649,568
Co., Ltd. .
(Banking)
221,000 Toyota Motor Corp. ....... 5,536,872
(Automobiles) ------------
62,315,896
------------
Korea
1 Samsung Electronics Co., 25
Ltd. ................... ------------
(GDR) (Technology)
Netherlands--5.7%
25,000 Heineken N.V. ............ 5,590,736
(Food & Beverage)
81,262 ING Group N.V.* .......... 2,425,233
(Financial Services)
33,700 Royal Dutch Petroleum Co. 5,181,375
........................ ------------
(Energy)
13,197,344
------------
New Zealand--0.5%
408,500 Lion Nathan Ltd. ......... 1,070,784
(Consumer Goods) ------------
Spain--2.1%
79,100 Empresa Nacional de 4,937,378
Electricidad . ------------
S.A. (Energy)
Sweden--3.0%
47,200 Astra B Free ............. 2,060,513
(Health & Personal Care)
41,400 Electrolux AB ............ 2,085,603
(Consumer Durable Goods)
129,800DD Nackebro Fastighets AB
Common Stock Unit ...... 156,856
(Real Estate)
129,800 Svenska Handelsbanken .... 2,715,563
(Banking) ------------
7,018,535
------------
Switzerland--6.0%
1,040 Baloise Hldgs. .......... $ 2,262,678
(Financial Services)
3,645 Ciba-Geigy A.G., Ltd. ... 4,446,189
(Pharmaceuticals)
4,110 Nestle S.A. ............. 4,697,800
(Consumer Goods)
Societe Generale
Surveillance
1,015 Holding S.A. .......... 2,431,551
(Business & Public -----------
Services)
13,838,218
-----------
United Kingdom--15.6%
416,800 Allied-Domecq PLC ....... 2,932,294
(Food & Beverage)
335,057 British Aerospace PLC ... 5,081,273
(Aerospace/Defense)
544,714 Cadbury Schweppes PLC ... 4,305,939
(Food & Beverage)
429,800 General Electric Co. PLC 2,312,870
.......................
(Electrical Equipment)
272,600 Lloyds Abbey Life PLC* 2,150,657
.......................
(Insurance)
597,800 Mirror Group Newspapers 1,889,304
PLC ...................
(Printing)
236,000 National Power PLCD* .... 1,407,423
(Utilities)
175,500 National Power PLC (Ord.) 1,417,301
.......................
(Utilities)
364,250 Rank Organisation PLC ... 2,814,325
(Technology)
405,800 Redland PLC ............. 2,508,284
(Miscellaneous)
1,905,500 Sears PLC ............... 2,929,717
(Retail)
104,600 Thorn EMI PLC ........... 2,914,310
(Entertainment)
180,100 Unilever PLC ............ 3,580,183
(Conglommerate) -----------
36,243,880
-----------
Total common stocks 213,884,609
(cost $182,305,437).....
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
27
<PAGE>
THE TARGET PORTFOLIO TRUST
International Equity Portfolio (cont'd)
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
US$
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Preferred Stocks--1.2%
Italy--1.2%
1,570,400 Fiat Spa
(Automobiles)
(cost $4,100,237)........ $ 2,758,776
------------
Total long-term investments
(cost $186,405,674)........ 216,643,385
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL US$
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--5.5%
U. S. Government Securities--5.5%
Federal Home Loan Mortgage
Corp.,
Discount Notes,
$ 3,940 5.26%, 7/8/96.............. $ 3,935,971
Federal National Mortgage
Assn.,
Discount Notes,
3,240 5.24%, 7/2/96.............. 3,239,528
1,275 5.26%, 7/16/96............. 1,272,206
United States Treasury
Notes,
4,235 6.25%, 8/31/96............. 4,240,876
------------
Total U.S. government
securities
(cost $12,688,581)......... 12,688,581
------------
Total Investments--98.9%
(cost $199,094,255; Note 229,331,966
4).......................
Other assets in excess of
liabilities--1.1%.......... 2,573,431
------------
Net Assets--100%........... $231,905,397
------------
------------
</TABLE>
- ------------------
ADR--American Depository Receipt.
GDR--Global Depository Receipt.
* Non-income producing securities.
D Partially Paid Security
DD Common Stock Unit (each 10 units is comprised of
one share of stock).
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
28
<PAGE>
International Bond Portfolio
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL US$
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--72.4%
Australia--2.3%
Australian Gov't. Bonds,
A$ 490 6.25%, 3/15/99............. $ 366,585
650 9.00%, 9/15/04............. 516,169
----------
882,754
----------
Canada--1.7%
Canadian Gov't. Bonds,
C$ 881 7.50%, 12/1/03............. 647,861
----------
Denmark--3.9%
Danish Gov't. Bonds,
DKr 8,540 8.00%, 3/15/06............. 1,516,019
----------
France--6.9%
Caisse Autonome, Corporate
Bonds,
FF 5,810# 7.75%, 12/6/99............. 1,212,582
Credit Foncier de France,
Corporate Bonds,
3,750 8.625%, 2/20/02............ 790,667
French Gov't. Bonds,
3,500 5.75%, 3/12/98............. 694,066
----------
2,697,315
----------
Germany--11.8%
Depfa Bank, Bonds,
DM 1,115 5.625%, 2/7/03............. 710,579
Deutsche Bundespost,
2,000 7.50%, 12/2/02............. 1,403,485
German Gov't. Bonds,
496 7.125%, 12/20/02........... 344,476
1,380 6.25%, 1/4/24.............. 803,223
Treuhandanstalt,
1,900 7.125%, 1/29/03............ 1,318,941
----------
4,580,704
----------
Italy--8.0%
Italian Gov't. Bonds,
L 2,990,000# 10.50%, 4/15/98............ $2,019,239
1,560,000 10.50%, 4/1/05............. 1,097,934
----------
3,117,173
----------
Japan--12.2%
Federal National Mortgage Association,
Global Bonds,
Yt 200,000# 2.00%, 12/20/99............ 1,827,824
Japanese Gov't. Bonds,
138,300# 3.00%, 9/20/05............. 1,249,145
136,400# 2.90%, 12/20/05............ 1,206,417
53,600 3.70%, 9/21/15............. 486,230
----------
4,769,616
----------
Spain--5.1%
Spanish Gov't. Bonds,
Pts 242,590# 10.25%, 11/30/98........... 2,003,943
----------
Sweden--7.5%
Swedish Gov't. Bonds,
Skr 17,400# 10.25%, 5/5/00............. 2,903,548
----------
United Kingdom--13.0%
European Investment Bank
Bonds,
9 200 8.00%, 6/10/03............. 314,335
Province of Ontario,
Provincial Bond,
1,050# 6.875%, 9/15/00............ 1,594,813
United Kingdom Treasury
Bonds,
540 7.00%, 11/6/01............. 824,752
610 9.75%, 8/27/02............. 1,049,192
154 7.75%, 9/8/06.............. 236,104
552 8.50%, 7/16/07............. 890,230
100 8.00%, 9/27/13............. 152,391
----------
5,061,817
----------
Total long-term investments
(cost US$28,009,188)....... 28,180,750
----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
29
<PAGE>
THE TARGET PORTFOLIO TRUST
International Bond Portfolio (cont'd)
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL US$
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--24.8%
U.S. Government Securities--16.9%
United States Treasury
Bills,*
US$ 1,600# 3.54%, 7/5/96.............. $1,598,718
2,500# 4.91%, 8/15/96............. 2,482,778
2,500# 5.17%, 10/3/96............. 2,466,713
----------
Total U.S. Government
Securities
(cost US$6,550,158)...... 6,548,209
----------
Repurchase Agreement--7.9%
3,084 State Street Bank & Trust
Company, 4.00%, dated
6/28/96, due 7/1/96 in
the amount of $3,085,028
(cost US$3,084,000; the
value of the collateral
including accrued
interest is
US$3,221,793)............ 3,084,000
----------
Total short-term
investments
(cost US$9,634,158)...... 9,632,209
----------
</TABLE>
<TABLE>
<CAPTION>
US$
Contracts VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
OUTSTANDING OPTIONS
PURCHASEDD--0.2%
Put Options
Japanese Gov't. Bond,
2.90%, 12/20/05
Yt 136,400 expiring 9/20/96 $ 7,093
@ Yt96.01................
------------
Foreign Currency Put Options
Eurostyle Option,
DM 2,682 expiring 7/2/[email protected]..... 38,843
Eurostyle Option,
Yt 207,765 expiring 9/12/96 24,309
@ Yt109.35...............
------------
Total outstanding put
options
purchased (cost
US$61,666)............... 70,245
------------
Total Investments--97.4%
(cost US$37,705,012; Note 37,883,204
4).......................
Other assets in excess of
liabilities--2.6%........ 1,009,483
------------
Net Assets--100%........... $ 38,892,687
------------
------------
</TABLE>
- ------------------
# Principal amount segregated as collateral for forward currency contracts.
Aggregate value of segregated securities--$20,565,720.
* Percentages quoted represent yield-to-maturity as of purchase date.
D Non-income producing security.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
30
<PAGE>
Total Return Bond Portfolio
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<C> <C> <S> <C>
LONG-TERM
[email protected]%
Corporate Bonds--23.3%
Agricultural Equipment--0.7%
Varity Corp.,
Baa3 $ 300 11.375%, 11/15/98..... $ 305,193
-----------
Airlines--5.9%
American Airlines,
Inc.,
A3 1,000 9.78%, 11/26/11....... 1,144,330
AMR Corp.,
Baa3 100 10.00%, 2/1/01........ 110,096
Delta Air Lines, Inc.,
Baa1 281 9.32%, 1/2/09......... 308,996
United Airlines, Inc.,
Baa1 1,000 10.85%, 2/19/15....... 1,196,950
-----------
2,760,372
-----------
Automobiles & Trucks--0.2%
Ford Motor Credit Co.,
A1 100 6.25%, 2/26/98........ 99,805
-----------
Banking--1.1%
Kansallis Osake
Pankki,
(Finland)
A3 500 DD 8.65%, 12/29/49....... 516,875
-----------
Financial Services--2.0%
G.I. Holdings, Inc.,
Zero Coupon,
Ba3 885 10/1/98............. 710,212
PaineWebber Group Inc.
Baa1 250 6.75%, 2/1/06......... 232,370
-----------
942,582
-----------
Industrials--2.2%
TCI Communications,
Inc.,
Ba1 $ 1,000 7.25%, 6/15/99........ $ 1,002,330
-----------
Manufacturing--0.9%
First Brands Corp.,
Ba2 400 9.125%, 4/1/99........ 408,375
-----------
Miscellaneous--1.6%
CTC Mansfield Funding
Corp.,
Ba3 300 11.125%, 9/30/16...... 307,536
PDV America, Inc.,
Baa3 450 7.25%, 8/1/98......... 445,901
-----------
753,437
-----------
Publishing--4.2%
Time Warner, Inc.,
Ba1 87DD 6.46%, 8/15/00........ 87,884
Ba1 1,600 7.45%, 2/1/98......... 1,617,328
Ba1 262 8.11%, 8/15/06........ 260,360
-----------
1,965,572
-----------
Tobacco--2.1%
RJR Nabisco, Inc.,
Baa3 1,000 8.00%, 7/15/01........ 989,500
-----------
Utilities--2.4%
Cleveland Electric Illuminating
Co.,
Ba2 600 9.45%, 12/1/97........ 610,638
El Paso Electric Co.,
Ba3 500 7.25%, 2/1/99......... 492,300
-----------
1,102,938
-----------
Total corporate bonds
(cost
$10,906,714)........ 10,846,979
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
31
<PAGE>
THE TARGET PORTFOLIO TRUST
Total Return Bond Portfolio (cont'd)
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<C> <C> <S> <C>
U.S. Gov't. Agency Mortgage Backed
Securities--57.7%
Federal Home Loan
Mortgage Corp.,
$ 1,186 6.50%, 9/15/18, I/O... $ 141,622
6.50%, 12/15/21,
1,840 I/O................. 262,220
9,800 6.50%, 8/12/26........ 9,178,288
1,561 DD 7.637%, 1/1/24........ 1,605,677
31 9.25%, 1/1/10......... 32,782
Federal National
Mortgage Assn.,
289 6.12%, 9/1/15......... 286,690
515 6.12%, 12/1/17........ 510,808
203 6.12%, 10/1/18........ 201,490
2,155 6.124%, 11/1/27....... 2,136,161
2,078 6.124%, 12/1/30....... 2,059,890
2,572 6.978%, 1/1/20........ 2,638,374
22 8.50%, 4/1/99......... 22,960
Government National
Mortgage Assn.,
554 5.00%, 8/20/25........ 546,122
1,425 5,00%, 9/20/25........ 1,404,618
1,690 6.50%, 1/20/24........ 1,701,275
1,587 7.25%, 7/20/24........ 1,612,216
396 7.25%, 9/20/24........ 402,125
550 7.375%, 6/20/21....... 558,610
696 7.375%, 6/20/23....... 705,954
Resolution Trust
Corp.,
Aa 497 6.6375%, 6/25/23...... 499,728
Aaa 186 8.35%, 6/25/29........ 187,176
Baa 208 9.25%, 6/25/23........ 210,838
-----------
Total U.S. gov't.
agency
mortgage backed
securities
(cost $26,802,322).... 26,905,624
-----------
Foreign Securities--4.1%
Argentina Government Bonds,
B1 $ 990 6.3125%, 3/31/05...... $ 773,437
United Mexican States,
Ba2 250 6.25%, 12/31/19....... 162,188
Petroleas Mexicano,
Ba2 1,000DD 6.539%, 3/8/99........ 960,000
-----------
Total foreign
securities
(cost $1,800,066)..... 1,895,625
-----------
Collateralized Mortgage
Obligations--7.2%
American Housing Trust
1,
Senior Mortgage Pass
Through Certificate,
Series 1-5 Class A,
Aaa 26 8.625%, 8/25/18....... 25,935
Champion Home Loan
Equity,
Series 1995, Class
A2-3,
Aaa 1,846 6.624%, 2/25/28....... 1,885,348
Countrywide
Collateralized
Mortgage Obligation,
Aaa 611 7.792%, 11/25/24...... 625,449
Mortgage Obligation
Structured Trust
Mortgage Pass
Through Certificate,
Series 93-1 Class
A-1,
Aaa 458 6.35%, 10/25/18....... 455,648
PaineWebber Mortgage
Acceptance Corp.,
Aaa 280 7.00%, 10/25/23....... 279,571
Sears Mortgage Securities Corp.,
Aaa 99 8.70%, 5/25/32........ 99,972
-----------
Total collateralized
mortgage
obligations
(cost $3,373,161)... 3,371,923
-----------
Total long-term
investments
(cost $42,882,263).... 43,020,151
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
32
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<C> <C> <S> <C>
SHORT-TERM
INVESTMENTS--24.4%
Commercial Paper--4.3%
Emerson Electric Co.,
A1+ $ 600 5.30%, 7/9/96......... $ 599,294
Ford Motor Credit
Corp.,
A1 200 5.38%, 7/18/96........ 199,492
Pitney-Bowes Credit
Corp.,
A1+ 1,200 5.26%, 7/24/96........ 1,195,599
-----------
Total commercial paper
(cost $1,994,752)... 1,994,385
-----------
U. S. Treasury Obligations--17.8%
United States Treasury
Bills#,
45 4.95%, 8/29/96........ 44,620
45 D 4.96%, 8/29/96........ 44,620
15 4.97%, 8/29/96........ 14,874
45 5.09%, 11/14/96....... 44,126
130 5.18%, 11/14/96....... 127,476
3,000 5.625%, 6/30/97....... 2,995,320
United States Treasury
Notes,
5,000 6.125%, 5/31/97....... 5,015,600
-----------
Total U.S. treasury
obligations
(cost $8,285,511)... 8,286,636
-----------
Repurchase Agreement--1.6%
State Street Bank &
Trust Co.,
$ 763 Repurchase Agreement,
4.00%, dated
6/28/96, due 7/1/96
in the amount of
$763,254 (cost
$763,000; value of
collateral including
accrued
interest
$779,165)........... $ 763,000
-----------
Outstanding Call Options
Purchased--0.7%
Contracts
(000) United States Treasury Notes,
---------
expiring 8/19/96 @
$90.50
5,000 (cost $296,094)..... 342,969
-----------
Total short-term
investments
(cost
$11,339,357)........ 11,386,990
-----------
Total Investments--116.7%
(cost $54,221,620;
Note 4)............. 54,407,141
Liabilities in excess
of other
assets--(16.7%)..... (7,806,197)
-----------
Net Assets--100%...... $46,600,944
-----------
-----------
</TABLE>
- ---------------
# Percentages quoted represent yield-to-maturity as
of purchase date.
D Pledged as initial margin on financial futures
contracts.
DD Rate shown reflects current rate on variable rate
instrument.
@ Principal amount of securities rated A or better
segregated as collateral for forward currency
contracts.
I/O--Interest Only Security.
The Fund's current Statement of Additional Information contains a description
of
Moody's ratings.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
33
<PAGE>
THE TARGET PORTFOLIO TRUST
Intermediate-Term Bond Portfolio
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<C> <C> <S> <C>
LONG-TERM
[email protected]%
Corporate Bonds--21.4%
Agricultural Equipment--0.6%
Varity Corp.,
Baa3 $ 500 11.375%, 11/15/98..... $ 508,655
-----------
Airlines--3.3%
AMR Corp.,
Baa3 100 10.375%, 3/15/21...... 122,353
Delta Air Lines, Inc.,
Baa1 467 9.32%, 1/2/09......... 514,993
Baa3 250 9.875%, 1/1/98........ 261,295
United Airlines, Inc.,
Baa1 1,500 10.85%, 2/19/15....... 1,795,425
-----------
2,694,066
-----------
Financial Services--2.4%
Banco De La Nacional
Argentina,
B1 413 6.4375%, 10/15/97..... 416,666
Banponce Financial
Corp.,
Baa1 1,000 7.73%, 8/15/97........ 1,016,110
Ford Motor Credit Co.,
A1 500 6.25%, 2/26/98........ 499,025
-----------
1,931,801
-----------
Miscellaneous--1.3%
PDV America, Inc.,
Baa3 1,050 7.25%, 8/1/98......... 1,040,435
-----------
Publishing--5.2%
Time Warner, Inc.,
BBB-* 300 6.46%, 8/15/00........ 303,048
Ba3 3,000 7.45%, 2/1/98......... 3,032,490
Ba3 900 8.11%, 8/15/06........ 894,366
-----------
4,229,904
-----------
Radio & T.V.-Broadcasting--3.1%
TCI Communications,
Inc.,
Baa3 $ 2,500 6.82%, 9/15/10........ $ 2,486,725
-----------
Tobacco--2.3%
RJR Nabisco, Inc.,
Baa3 1,250 8.00%, 7/15/01........ 1,236,875
Baa3 600 8.625%, 12/1/02....... 608,394
-----------
1,845,269
-----------
Utilities--3.2%
Cleveland Electric
Illuminating Co.,
Ba2 1,500 9.45%, 12/1/97........ 1,526,595
CTC Mansfield Funding
Corp.,
Ba3 1,000 11.125%, 9/30/16...... 1,025,120
-----------
2,551,715
-----------
Total corporate bonds
(cost
$17,346,271)........ 17,288,570
-----------
Collateralized Mortgage
Obligations--7.5%
Champion Home Loan
Equity,
Series 1995, Class A2,
Aaa 2,769 6.624%, 2/25/28....... 2,828,021
Chase Mortgage Finance
Corp.,
Aaa 108 7.50%, 11/25/23....... 107,417
CMO Countrywide,
Aaa 980 6.75%, 2/25/24........ 972,981
Aa1 611DD 7.79215%, 11/25/24.... 625,449
Mortgage Obligation
Structred
Trust,
Aaa 687 6.35%, 10/25/18....... 683,473
PaineWebber Mortgage
Acceptance Corp.,
Aaa 560 7.00%, 10/25/23....... 559,142
Sears Mortgage
Securities Corp.,
Aaa 285 8.6966%, 5/25/32...... 288,195
-----------
Total collateralized
mortgage obligations
(cost $6,098,357)... 6,064,678
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
34
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<C> <C> <S> <C>
U.S. Gov't. Agency Mortgage Backed
Securities--44.3%
Federal Home Loan
Mortgage Corp.,
$ 159 6.00%, 4/1/24......... $ 144,824
1,944 6.50%, 9/15/18, I/O... 232,065
6.50%, 12/15/21,
3,067 I/O................. 437,034
5,800 6.50%, 8/12/26........ 5,432,048
8,300 7.50%, 7/15/26........ 8,196,250
158 9.25%, 1/1/10......... 165,549
Federal National
Mortgage Assn.,
3,233 6.124%, 11/1/27....... 3,204,242
2,771 DD 6.124%, 12/1/30....... 2,746,520
1,558 DD 7.125%, 8/1/24........ 1,549,487
2,594 7.319%, 8/1/25........ 2,668,716
70 8.50%, 4/1/99......... 72,047
54 8.50%, 7/1/99......... 55,538
Government National
Mortgage Assn.,
198 DD 6.50%, 1/20/24........ 199,467
1,492 DD 6.50%, 1/20/24........ 1,501,808
2,233 DD 7.00%, 5/20/23........ 2,261,588
2,381 DD 7.25%, 7/20/24........ 2,418,323
962 DD 7.375%, 6/20/21....... 977,567
1,392 DD 7.375%, 6/20/23....... 1,411,912
Resolution Trust
Corp.,
Aa2 785 DD 6.6375%, 6/25/23...... 789,570
Aaa 930 8.35%, 6/25/29........ 935,881
Baa2 415 9.25%, 6/25/23........ 421,676
-----------
Total U.S. gov't.
agency
mortgage backed
securities
(cost
$35,863,553)........ 35,822,112
-----------
U.S. Gov't. Securities--12.3%
United States Treasury
Notes,
5.625%, 6/30/97
Aaa 10,000 (cost $9,972,832)... 9,984,400
-----------
Foreign Government
Obligations--2.6%
Argentina Government
Bonds,
6.3125%, 3/31/05
B1 2,673,000 (cost $2,044,432)... 2,088,281
-----------
Total long-term
investments
(cost
$71,325,445)........ $71,248,041
-----------
SHORT-TERM
INVESTMENTS--26.1%
Commercial Paper--1.6%
Emerson Electric Co.,
P1 $ 200 5.30%, 7/9/96......... 199,764
Pitney-Bowes Credit
Corp.,
P1 200 5.26%, 7/24/96........ 199,267
P1 400 5.32%, 7/10/96........ 399,468
Southwestern
Publishing
Service Co.,
P1 500 5.42%, 7/19/96........ 498,645
-----------
Total commercial paper
(cost $1,297,205)... 1,297,144
-----------
Corporate Bonds--1.6%
General Motors
Acceptance Corp.,
A3 1,000 7.125%, 3/27/97....... 1,007,310
A3 250 8.125%, 1/13/97....... 252,680
-----------
Total corporate bonds
(cost $1,259,771)... 1,259,990
-----------
U.S. Gov't. Securities--21.5%
United States Treasury
Bills#,
65 4.95%, 8/29/96........ 64,452
70D 4.955%, 8/29/96....... 69,409
40D 5.01%, 10/17/96....... 40,879
55D 5.12%, 10/17/96....... 54,155
75D 5.14%, 11/14/96....... 73,544
60 5.175%, 11/14/96...... 58,835
United States Treasury
Notes,
8,000 6.50%, 4/30/97........ 8,048,720
9,000 6.125%, 5/31/97....... 9,028,080
-----------
Total U.S. gov't.
securities
(cost
$17,445,734)........ 17,438,074
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
35
<PAGE>
THE TARGET PORTFOLIO TRUST
Intermediate-Term Bond Portfolio (cont'd)
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<C> <C> <S> <C>
Repurchase Agreement--1.4%
State Street Bank &
$ 1,118 Trust Co.,
4.00%, dated 6/28/96,
due 7/1/96 in the
amount of $1,118,373
(cost $1,118,000;
value of collateral
including accrued
interest
$1,144,090)......... $ 1,118,000
-----------
Total short-term
investments
(cost $21,120,710).... 21,113,208
-----------
Total
Investments--114.2%
(cost $92,446,155;
Note 4)............. 92,361,249
Liabilities in excess
of other
assets--(14.2%)..... (11,501,684)
-----------
Net Assets--100%...... $80,859,565
-----------
-----------
</TABLE>
- ---------------
I/O--Interest Only Security.
NR--Not rated by either Standard & Poor's or Moody's.
* Standard & Poor's Rating.
# Percentages quoted represent yield-to-maturity as
of purchase date.
D Pledged as initial margin on financial futures
contracts.
DD Rate shown reflects current rate on variable rate
instrument.
@ Principal amount of securities rated A or better
segregated as collateral for forward currency
contracts.
The Fund's current Statement of Additional Information contains a description
of
Moody's ratings.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
36
<PAGE>
Mortgage Backed Securities Portfolio
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--99.0%
Collateralized Mortgage
Obligations--20.9%
Federal Home Loan Mortgage
Corp.,
$ 714 4.50%, 9/15/21 PAC......... $ 557,141
100 5.95%, 6/15/19 PAC......... 95,562
1,108 6.00%, 10/15/20-8/15/21 1,016,028
PAC......................
743 6.25%, 10/15/21 PAC........ 686,761
500 6.50%, 8/15/06 PAC......... 490,625
2,300 6.50%, 2/15/23 PAC I/O..... 621,719
8,690 7.50%, 6/15/22 PAC I/O..... 1,298,036
500 8.00%, 12/15/06 PAC........ 506,715
444 8.00%, 7/15/21............. 440,801
103 10.00%, 6/15/19 PAC........ 105,669
Federal National Mortgage
Assn.,
1,565 5.00%, 8/1/10.............. 1,428,220
230 6.00%, 10/25/21............ 216,702
1,969 6.50%, 7/25/20 PAC......... 1,864,541
1,992 7.00%, 3/25/18............. 1,871,395
6,458 7.00%, 9/25/19 PAC I/O..... 791,093
300 8.00%, 8/25/06 PAC......... 310,875
290 8.50%, 6/25/21............. 299,242
531 9.00%, 1/25/21............. 555,548
First Boston Mortgage
Securities,
1,503 Zero Coupon, 4/25/17 P/O... 1,061,511
1,503 8.99%, 4/25/17 I/O......... 462,646
934 10.97%, 5/25/17 I/O........ 321,344
----------
Total collateralized
mortgage obligations
(cost $14,824,022)....... 15,002,174
----------
U.S. Government Securities--2.0%
United States Treasury
Bonds,
1,000 12.00%, 8/15/13
(cost $1,417,731)........ 1,409,690
----------
U.S. Government Agency Mortgage
Pass-Through Obligations--76.1%
Federal Home Loan Mortgage
Corp.,
14 6.50%, 1/1/98.............. 13,540
7,403 7.00%, 2/1/99 - 10/1/25.... 7,381,928
39 7.25%, 7/1/06.............. 39,191
Federal Home Loan Mortgage
Corp.,
$ 2,168 7.50%, 3/1/08 - 11/1/10.... $2,180,876
142 8.00%, 1/1/02.............. 143,468
169 8.25%, 12/1/05 - 5/1/08.... 171,582
585 8.50%, 6/1/03 - 7/1/21..... 606,293
203 8.75%, 12/1/08............. 211,618
1,398 9.00%, 1/1/02 - 3/1/11..... 1,464,333
59 10.00%, 1/1/04............. 61,739
94 10.50%, 11/1/19............ 103,157
81 11.50%, 3/1/16............. 90,907
58 12.75%, 11/1/13............ 65,551
28 13.25%, 5/1/13............. 32,599
46 14.00%, 9/1/10 - 6/1/11.... 54,978
Federal National Mortgage
Assn.,
971 7.00%, 12/1/00 - 6/1/25.... 935,484
27 8.00%, 6/1/07.............. 27,122
273 8.50%, 6/1/10.............. 283,085
579 9.75%, 8/1/10 - 10/1/17.... 615,215
Government National
Mortgage Assn.,
540 6.50%, 7/15/08 - 525,042
11/15/10.................
18,457 7.00%, 7/15/08 - 17,765,023
12/15/99.................
6,036 7.50%, 3/15/17 - 3/15/24... 5,999,938
3,353 8.00%, 3/15/17 - 3,411,925
10/15/24.................
1,562 8.25%, 6/20/17 - 7/20/17... 1,581,973
594 8.50%, 3/15/05 - 8/15/21... 615,950
5,687 9.00%, 4/20/01 - 1/15/20... 6,005,710
2,021 9.50%, 9/15/02 - 1/15/21... 2,161,996
68 10.50%, 1/15/98 - 71,834
1/15/04..................
874 11.00%, 4/15/98 - 921,127
1/15/01..................
222 11.50%, 6/15/98 - 234,194
4/15/00..................
324 12.00%, 9/15/98 - 341,687
3/15/99..................
1 13.00%, 2/15/11............ 1,412
35 13.25%, 7/15/14............ 40,870
125 13.50%, 6/15/10 - 149,021
11/15/12.................
188 14.00%, 6/15/11 - 226,883
4/15/12..................
88 16.00%, 4/15/12 - 103,562
5/15/12..................
----------
Total U.S. Government 54,640,813
agency
mortgage pass-through
obligations
(cost $54,610,971).......
----------
Total long-term investments
(cost $70,852,724)......... 71,052,677
----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
37
<PAGE>
THE TARGET PORTFOLIO TRUST
Mortgage Backed Securities Portfolio (cont'd)
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
CONTRACTS VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
OUTSTANDING OPTIONS
PURCHASEDD--0.2%
Call Options--0.1%
United States Treasury Bond
Future,
$ 50 expiring 8/24/96 @ $107.00
(cost $70,819)........... $ 74,219
------------
Put Options--0.1%
United States Treasury Note
Future,
50 expiring 8/24/96 @ $109.00
(cost $100,506).......... 104,688
------------
Total outstanding options purchased
(cost $171,325)............ 178,907
------------
Total Investments Before
Outstanding
Options Written--99.2%
(cost $71,024,049; Note 71,231,584
4).......................
------------
OUTSTANDING OPTIONS
WRITTEND
Call Options
United States Treasury
Bond Future,
expiring 8/24/96 @ $111.00
(premiums received
$ 50 $13,557)................ $ (9,375)
-----------
Put Options
United States Treasury
Bond Future,
expiring 8/24/96 @ $104.00
(premiums received
50 $40,900)................ (11,719)
-----------
Total outstanding options
written
(premiums received (21,094)
$54,457)................
-----------
Total Investments, Net of 71,210,490
Outstanding Options
Written--99.2%..........
Other assets in excess of
liabilities--0.8%......... 548,557
-----------
Net Assets--100%.......... $71,759,047
-----------
-----------
</TABLE>
- ---------------
I/O--Interest Only Security.
PAC--Planned Amortization Class.
P/O--Principal Only.
D Non-income producing security.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
38
<PAGE>
U.S. Government Money Market Portfolio
Portfolio of Investments June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
Federal Farm Credit Bank--6.2%
$ 1,000 5.27%, 8/2/96.............. $ 995,316
------------
Federal Home Loan Bank--26.4%
1,050 5.27%, 7/8/96.............. 1,048,924
1,065 5.18%, 7/15/96............. 1,062,854
2,145 5.28%, 8/12/96............. 2,131,787
------------
4,243,565
------------
Federal Home Loan Mortgage
Corporation--15.5%
2,500 5.25%, 8/5/96.............. 2,487,240
------------
Federal National Mortgage
Association--43.2%
2,000 5.18%, 7/18/96............. 1,995,108
2,000 5.25%, 8/8/96.............. 1,988,927
2,000 5.33%, 9/16/96............. 1,977,199
1,000 5.16%, 9/24/96............. 987,817
------------
6,949,051
------------
United States Treasury Notes--9.4%
$ 1,500 7.50%, 1/31/97............. $1,519,902
----------
Total Investments--100.7%
(amortized cost 16,195,074
$16,195,074*)............
----------
Liabilities in excess of (108,778)
other
assets--(0.7%)...........
----------
Net Assets--100%........... $16,086,296
----------
----------
</TABLE>
- ---------------
* Federal income tax basis of portfolio securities is the same as for financial
reporting purposes.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
39
<PAGE>
THE TARGET PORTFOLIO TRUST
Statements of Assets and Liabilities
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
LARGE CAPITALIZATION LARGE
CAPITALIZATION SMALL CAPITALIZATION
GROWTH PORTFOLIO VALUE
PORTFOLIO GROWTH PORTFOLIO
<S> <C> <C>
<C>
ASSETS
Investments, at value* $202,840,919
$210,631,287 $146,661,699
Cash --
-- 2,567
Foreign currency, at value --
-- --
Receivable for Fund shares sold 896,392
905,416 766,422
Receivable for investments sold 954,153
430,147 4,866,577
Dividends and interest receivable 91,442
401,618 36,881
Deferred expenses and other assets 15,654
15,729 13,692
Due from broker - variation margin --
-- --
Forward contracts-net amount receivable
from counterparties --
-- --
Total assets 204,798,560
212,384,197 152,347,838
LIABILITIES
Bank overdraft 33,383
-- --
Payable for investments purchased 1,331,239
1,638,588 3,113,876
Payable for Fund shares reacquired 655,126
708,385 515,485
Accrued expenses and other liabilities 108,325
61,321 111,931
Dividends payable --
-- --
Outstanding options written (premiums
received $54,457) --
-- --
Withholding taxes payable --
8,428 893
Deferred trustees' fees 6,099
6,099 6,099
Due to broker-variation margin payable --
-- --
Due to Manager 49,960
103,071 37,090
Forward contracts-net amount payable
to counterparties --
-- --
Total liabilities 2,184,132
2,526,892 3,785,374
NET ASSETS $202,614,428
$209,858,305 $148,562,464
Net assets were comprised of:
Shares of beneficial interest, at par $ 16,925 $
15,602 $ 9,216
Paid-in capital in excess of par 169,049,461
161,062,230 108,489,559
169,066,386
161,077,832 108,498,775
Under (over) distribution of net
investment
income (loss) 61,343
2,313,246 (147,909)
Accumulated net realized gains
(losses) 7,635,037
6,052,279 11,421,547
Net unrealized
appreciation/depreciation 25,851,662
40,414,948 28,790,051
Net assets, June 30, 1996 $202,614,428
$209,858,305 $148,562,464
Shares of beneficial interest issued
and outstanding 16,925,205
15,602,340 9,215,626
Net asset value per share $11.97
$13.45 $16.12
*Identified cost. $176,989,257
$170,216,339 $117,871,648
<CAPTION>
SMALL CAPITALIZATION
VALUE PORTFOLIO
<S> <C>
ASSETS
Investments, at value* $113,076,153
Cash 14,433
Foreign currency, at value --
Receivable for Fund shares sold 774,827
Receivable for investments sold 69,376
Dividends and interest receivable 140,710
Deferred expenses and other assets 12,542
Due from broker - variation margin --
Forward contracts-net amount receivable
from counterparties --
Total assets 114,088,041
LIABILITIES
Bank overdraft --
Payable for investments purchased 748,539
Payable for Fund shares reacquired 264,523
Accrued expenses and other liabilities 148,450
Dividends payable --
Outstanding options written (premiums
received $54,457) --
Withholding taxes payable 262
Deferred trustees' fees 6,099
Due to broker-variation margin payable --
Due to Manager 27,830
Forward contracts-net amount payable
to counterparties --
Total liabilities 1,195,703
NET ASSETS $112,892,338
Net assets were comprised of:
Shares of beneficial interest, at par $ 8,002
Paid-in capital in excess of par 98,860,835
98,868,837
Under (over) distribution of net
investment
income (loss) 386,259
Accumulated net realized gains
(losses) 3,035,212
Net unrealized
appreciation/depreciation 10,602,030
Net assets, June 30, 1996 $112,892,338
Shares of beneficial interest issued
and outstanding 8,002,320
Net asset value per share $14.11
*Identified cost. $102,474,122
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
40
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL TOTAL RETURN
INTERMEDIATE-TERM MORTGAGE BACKED
EQUITY PORTFOLIO BOND PORTFOLIO BOND PORTFOLIO BOND
PORTFOLIO SECURITIES PORTFOLIO
<C> <C> <C> <C>
<C>
$229,331,966 $ 37,883,204 $ 54,407,141 $
92,361,249 $ 71,231,584
5,834 863 541
959 --
1,737,471 33,412 --
-- --
1,363,052 371,937 437,472
536,636 501,905
852,003 2,158,556 4,916
7,494,536 4,353,297
1,572,767 669,358 554,690
1,103,873 599,605
16,224 37,778 10,411
11,522 11,247
-- -- 144,496
192,465 --
-- 297,728 625,599
900,156 --
234,879,317 41,452,836 56,185,266
102,601,396 76,697,638
-- -- --
-- 31,168
1,847,313 2,105,403 9,040,875
21,013,844 4,314,375
683,755 183,875 234,768
302,441 318,388
146,661 -- 68,980
73,246 100,380
-- 52,083 78,819
128,192 120,923
-- -- --
-- 21,094
161,177 1,681 --
-- --
6,099 4,411 6,099
6,099 6,099
-- -- --
-- --
128,915 10,483 16,802
29,453 26,164
-- 202,213 137,979
188,556 --
2,973,920 2,560,149 9,584,322
21,741,831 4,938,591
$231,905,397 $ 38,892,687 $ 46,600,944 $
80,859,565 $ 71,759,047
$ 15,852 $ 3,924 $ 4,667 $
8,005 $ 7,145
195,962,170 39,410,955 48,027,706
82,346,502 73,243,384
195,978,022 39,414,879 48,032,373
82,354,507 73,250,529
2,268,662 (1,050,888) (206,359)
(610,665) (72,288)
3,413,495 258,422 (2,184,805)
(1,974,880) (1,660,092)
30,245,218 270,274 959,735
1,090,603 240,898
$231,905,397 $ 38,892,687 $ 46,600,944
$80,859,565 $ 71,759,047
15,852,223 3,924,016 4,667,451
8,005,030 7,144,669
$14.63 $9.91 $9.98
$10.10 $10.04
$199,094,254 $ 37,705,012 $ 54,221,620
$92,446,155 $ 71,024,049
<CAPTION>
U.S. GOVERNMENT MONEY
MARKET PORTFOLIO
<C>
$16,195,074
2,896
--
119,551
--
46,978
9,413
--
--
16,373,912
--
--
227,668
33,331
18,584
--
--
6,099
--
1,934
--
287,616
$16,086,296
$ 16,086
16,070,210
16,086,296
--
--
--
$16,086,296
16,086,296
$1.00
$16,195,074
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
41
<PAGE>
THE TARGET PORTFOLIO TRUST
Statements of Operations
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
LARGE CAPITALIZATION LARGE
CAPITALIZATION SMALL CAPITALIZATION
GROWTH PORTFOLIO VALUE
PORTFOLIO GROWTH PORTFOLIO
<S> <C> <C>
<C>
NET INVESTMENT INCOME
- -----------------------------------------------------------------------------
- ----------------------------------
Income
Interest $ 274,918 $
207,117 $ 172,259
- -----------------------------------------------------------------------------
- ----------------------------------
Dividends 778,370
2,884,065 237,391
- -----------------------------------------------------------------------------
- ----------------------------------
Less: Foreign withholding taxes (5,259)
(28,234) (2,115)
- -----------------------------------------------------------------------------
- ----------------------------------
Total income 1,048,029
3,062,948 407,535
- -----------------------------------------------------------------------------
- ----------------------------------
Expenses
Management fee 573,994
596,791 399,841
- -----------------------------------------------------------------------------
- ----------------------------------
Custodian's fees and expenses 58,000
57,500 68,000
- -----------------------------------------------------------------------------
- ----------------------------------
Transfer agent's fees and expenses 44,900
44,900 44,700
- -----------------------------------------------------------------------------
- ----------------------------------
Registration fees 30,000
15,700 20,000
- -----------------------------------------------------------------------------
- ----------------------------------
Reports to shareholders 27,000
12,300 12,000
- -----------------------------------------------------------------------------
- ----------------------------------
Audit fees and expenses 7,600
7,600 7,600
- -----------------------------------------------------------------------------
- ----------------------------------
Legal fees and expenses 3,000
3,000 3,000
- -----------------------------------------------------------------------------
- ----------------------------------
Trustees' fees and expenses 2,100
2,100 2,100
- -----------------------------------------------------------------------------
- ----------------------------------
Amortization of organization expenses 2,879
2,879 2,879
- -----------------------------------------------------------------------------
- ----------------------------------
Insurance 1,400
700 500
- -----------------------------------------------------------------------------
- ----------------------------------
Miscellaneous 6,676
2,638 6,607
- -----------------------------------------------------------------------------
- ----------------------------------
Total expenses 757,549
746,108 567,227
- -----------------------------------------------------------------------------
- ----------------------------------
Net investment income (loss) 290,480
2,316,840 (159,692)
- -----------------------------------------------------------------------------
- ----------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
- -----------------------------------------------------------------------------
- ----------------------------------
Net realized gain (loss) on:
Investment transactions 7,763,471
6,068,653 11,582,885
- -----------------------------------------------------------------------------
- ----------------------------------
Financial futures contracts -- --
--
- -----------------------------------------------------------------------------
- ----------------------------------
Foreign currency transactions -- --
--
- -----------------------------------------------------------------------------
- ----------------------------------
Options written -- --
--
- -----------------------------------------------------------------------------
- ----------------------------------
Total net realized gain (loss) 7,763,471
6,068,653 11,582,885
- -----------------------------------------------------------------------------
- ----------------------------------
Net change in unrealized
appreciation/depreciation on:
Investments 6,260,733
6,949,225 7,701,606
- -----------------------------------------------------------------------------
- ----------------------------------
Financial futures contracts -- --
--
- -----------------------------------------------------------------------------
- ----------------------------------
Foreign currencies -- --
--
- -----------------------------------------------------------------------------
- ----------------------------------
Options written -- --
--
- -----------------------------------------------------------------------------
- ----------------------------------
Net change in unrealized
appreciation/depreciation 6,260,733
6,949,225 7,701,606
- -----------------------------------------------------------------------------
- ----------------------------------
Net gain (loss) 14,024,204
13,017,878 19,284,491
- -----------------------------------------------------------------------------
- ----------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ 14,314,684 $
15,334,718 $ 19,124,799
- -----------------------------------------------------------------------------
- ----------------------------------
<CAPTION>
SMALL CAPITALIZATION
VALUE PORTFOLIO
<S> <C>
NET INVESTMENT INCOME
- -----------------------------------------------------------------------------
- ------
Income
Interest $ 95,061
- -----------------------------------------------------------------------------
- ---------------------------
Dividends 785,523
- -----------------------------------------------------------------------------
- ----------------------------------
Less: Foreign withholding taxes (520)
- -----------------------------------------------------------------------------
- ----------------------------------
Total income 880,064
- -----------------------------------------------------------------------------
- ----------------------------------
Expenses
Management fee 312,775
- -----------------------------------------------------------------------------
- ----------------------------------
Custodian's fees and expenses 66,000
- -----------------------------------------------------------------------------
- ----------------------------------
Transfer agent's fees and expenses 42,400
- -----------------------------------------------------------------------------
- ----------------------------------
Registration fees 18,000
- -----------------------------------------------------------------------------
- ----------------------------------
Reports to shareholders 36,000
- -----------------------------------------------------------------------------
- ----------------------------------
Audit fees and expenses 7,600
- -----------------------------------------------------------------------------
- ----------------------------------
Legal fees and expenses 3,000
- -----------------------------------------------------------------------------
- ----------------------------------
Trustees' fees and expenses 2,100
- -----------------------------------------------------------------------------
- ----------------------------------
Amortization of organization expenses 2,879
- -----------------------------------------------------------------------------
- ----------------------------------
Insurance 1,000
- -----------------------------------------------------------------------------
- ----------------------------------
Miscellaneous 560
- -----------------------------------------------------------------------------
- ----------------------------------
Total expenses 492,314
- -----------------------------------------------------------------------------
- ----------------------------------
Net investment income (loss) 387,750
- -----------------------------------------------------------------------------
- ----------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
- -----------------------------------------------------------------------------
- ----------------------------------
Net realized gain (loss) on:
Investment transactions 6,624,583
- -----------------------------------------------------------------------------
- ----------------------------------
Financial futures contracts --
- -----------------------------------------------------------------------------
- ----------------------------------
Foreign currency transactions --
- -----------------------------------------------------------------------------
- ----------------------------------
Options written --
- -----------------------------------------------------------------------------
- ----------------------------------
Total net realized gain (loss) 6,624,583
- -----------------------------------------------------------------------------
- ----------------------------------
Net change in unrealized
appreciation/depreciation on:
Investments 883,404
- -----------------------------------------------------------------------------
- ----------------------------------
Financial futures contracts --
- -----------------------------------------------------------------------------
- ----------------------------------
Foreign currencies --
- -----------------------------------------------------------------------------
- ----------------------------------
Options written --
- -----------------------------------------------------------------------------
- ----------------------------------
Net change in unrealized
appreciation/depreciation 883,404
- -----------------------------------------------------------------------------
- ----------------------------------
Net gain (loss) 7,507,987
- -----------------------------------------------------------------------------
- ----------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ 7,895,737
- -----------------------------------------------------------------------------
- ----------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
42
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL TOTAL RETURN
INTERMEDIATE-TERM MORTGAGE BACKED
EQUITY PORTFOLIO BOND PORTFOLIO BOND PORTFOLIO BOND
PORTFOLIO SECURITIES PORTFOLIO
<C> <C> <C> <C>
<C>
$ 294,901 $ 1,191,827 $ 1,567,988 $
2,566,071 $ 2,593,582
4,023,933 -- --
-- --
(574,687) (13,200) --
-- --
3,744,147 1,178,627 1,567,988
2,566,071 2,593,582
732,554 91,247 104,151
176,069 158,631
192,000 55,000 55,000
55,000 91,000
44,900 15,100 17,700
19,500 24,400
13,000 11,000 13,000
9,000 11,000
14,000 7,500 9,000
9,000 12,000
12,000 7,600 7,600
7,600 7,600
2,500 2,500 2,500
2,500 2,500
2,100 2,100 2,100
2,100 2,100
2,879 5,283 2,879
2,879 2,879
2,100 100 300
500 300
2,477 3,425 7,758
1,104 1,661
1,020,510 200,855 221,988
285,252 314,071
2,723,637 977,772 1,346,000
2,280,819 2,279,511
3,594,641 479,493 (1,336,324)
(1,569,245) (59,742)
-- -- (805,842)
(909,483) --
(31,853) (1,300,170) 36,484
(63,022) --
-- -- 28,134
56,560 7,940
3,562,788 (820,677) (2,077,548)
(2,485,190) (51,802)
10,681,758 (607,412) (349,431)
(630,654) (1,882,912)
-- -- 139,219
305,781 --
(13,976) 403,576 529,297
790,251 --
-- -- --
-- 38,143
10,667,782 (203,836) 319,085
465,378 (1,844,769)
14,230,570 (1,024,513) (1,758,463)
(2,019,812) (1,896,571)
$ 16,954,207 $ (46,741) $ (412,463) $
261,007 $ 382,940
<CAPTION>
U.S. GOVERNMENT MONEY
MARKET PORTFOLIO
<C>
$ 485,799
--
--
485,799
22,610
26,000
3,500
9,600
4,200
3,000
2,500
2,100
2,879
--
1,082
77,471
408,328
2,635
--
--
--
2,635
--
--
--
--
--
2,635
$ 410,963
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
43
<PAGE>
THE TARGET PORTFOLIO TRUST
Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
SMALL
CAPITALIZATION
LARGE CAPITALIZATION
LARGE CAPITALIZATION GROWTH
GROWTH PORTFOLIO
VALUE PORTFOLIO PORTFOLIO
----------------------------
- ---------------------------- ------------
Six Months Six
Months Six Months
Ended Year Ended
Ended Year Ended Ended
June 30, December 31,
June 30, December 31, June 30,
1996 1995
1996 1995 1996
<S> <C> <C> <C>
<C> <C>
INCREASE (DECREASE)
IN NET ASSETS
- -----------------------------------------------------------------------------
- ----------------------------------------------
Operations
Net investment income (loss) $ 290,480 $ 1,438,204 $
2,316,840 $ 4,478,126 $ (159,692)
- -----------------------------------------------------------------------------
- ----------------------------------------------
Net realized gain (loss) on
investment and foreign currency
transactions 7,763,471 19,526,858
6,068,653 6,876,322 11,582,885
- -----------------------------------------------------------------------------
- ----------------------------------------------
Net change in unrealized
appreciation/
depreciation of investments 6,260,733 15,296,515
6,949,225 33,534,250 7,701,606
- -----------------------------------------------------------------------------
- ----------------------------------------------
Net increase (decrease) in net
assets
resulting from operations 14,314,684 36,261,577
15,334,718 44,888,698 19,124,799
- -----------------------------------------------------------------------------
- ----------------------------------------------
Net equalization (debits)/credits -- 23,852
-- 137,234 --
- -----------------------------------------------------------------------------
- ----------------------------------------------
Dividends and Distributions
Dividends from net investment
income -- (1,438,204)
(336,185) (4,180,840) --
- -----------------------------------------------------------------------------
- ----------------------------------------------
Distributions in excess of net
investment
income -- (172,473)
-- -- --
- -----------------------------------------------------------------------------
- ----------------------------------------------
Distributions from net
realized gains (15,887,236) (146,425)
(1,757,329) (5,166,575) (1,956,347)
- -----------------------------------------------------------------------------
- ----------------------------------------------
Distributions in excess of net
realized gains (126,930) --
-- -- (26,225)
- -----------------------------------------------------------------------------
- ----------------------------------------------
Total distributions (16,014,166) (1,757,102)
(2,093,514) (9,347,415) (1,982,572)
- -----------------------------------------------------------------------------
- ----------------------------------------------
Fund share transactions(a)
Net proceeds from shares sold 36,177,329 56,432,734
38,089,003 54,585,252 29,876,337
- -----------------------------------------------------------------------------
- ----------------------------------------------
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions 15,791,391 1,723,164
2,059,219 9,096,375 1,958,817
- -----------------------------------------------------------------------------
- ----------------------------------------------
Cost of shares reacquired (27,732,050) (54,679,344)
(31,127,324) (53,982,606) (21,947,639)
- -----------------------------------------------------------------------------
- ----------------------------------------------
Net increase/(decrease) in net
assets from Fund share
transactions 24,236,670 3,476,554
9,020,898 9,699,021 9,887,515
- -----------------------------------------------------------------------------
- ----------------------------------------------
Total increase/(decrease) 22,537,188 38,004,881
22,262,102 45,377,538 27,029,742
NET ASSETS
- -----------------------------------------------------------------------------
- ----------------------------------------------
Beginning of period 180,077,240 142,072,359
187,596,203 142,218,665 121,532,722
- -----------------------------------------------------------------------------
- ----------------------------------------------
End of period $202,614,428 $180,077,240
$209,858,305 $187,596,203 $148,562,464
- -----------------------------------------------------------------------------
- ----------------------------------------------
<CAPTION>
SMALL
CAPITALIZATION
GROWTH SMALL
CAPITALIZATION
PORTFOLIO VALUE
PORTFOLIO
----------------
- ----------------------------
Six Months
Year Ended Ended Year
Ended
December 31, June 30,
December 31,
1995 1996
1995
<S> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS
- -----------------------------------------------------------------------------
- ----------------------------------------------
Operations
Net investment income (loss) $ 131,644 $ 387,750 $
1,007,405
- -----------------------------------------------------------------------------
- ----------------------------------------------
Net realized gain (loss) on
investment and foreign currency
transactions 15,587,518 6,624,583
(1,276,385 )
- -----------------------------------------------------------------------------
- ----------------------------------------------
Net change in unrealized
appreciation/
depreciation of investments 7,737,858 883,404
15,684,311
- -----------------------------------------------------------------------------
- ----------------------------------------------
Net increase (decrease) in net
assets
resulting from operations 23,457,020 7,895,737
15,415,331
- -----------------------------------------------------------------------------
- ----------------------------------------------
Net equalization (debits)/credits 5,006 --
(6,129 )
- -----------------------------------------------------------------------------
- ----------------------------------------------
Dividends and Distributions
Dividends from net investment
income (126,023) --
(1,001,120 )
- -----------------------------------------------------------------------------
- ----------------------------------------------
Distributions in excess of net
investment
income -- --
--
- -----------------------------------------------------------------------------
- ----------------------------------------------
Distributions from net
realized gains (2,310,413) --
--
- -----------------------------------------------------------------------------
- ----------------------------------------------
Distributions in excess of net
realized gains -- --
--
- -----------------------------------------------------------------------------
- ----------------------------------------------
Total distributions (2,436,436) --
(1,001,120 )
- -----------------------------------------------------------------------------
- ----------------------------------------------
Fund share transactions(a)
Net proceeds from shares sold 43,301,027 26,176,107
33,516,882
- -----------------------------------------------------------------------------
- ----------------------------------------------
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions 2,409,004 --
976,655
- -----------------------------------------------------------------------------
- ----------------------------------------------
Cost of shares reacquired (41,665,163) (18,773,985)
(35,469,754 )
- -----------------------------------------------------------------------------
- ----------------------------------------------
Net increase/(decrease) in net
assets from Fund share
transactions 4,044,868 7,402,122
(976,217 )
- -----------------------------------------------------------------------------
- ----------------------------------------------
Total increase/(decrease) 25,070,458 15,297,859
13,431,865
NET ASSETS
- -----------------------------------------------------------------------------
- ----------------------------------------------
Beginning of period 96,462,264 97,594,479
84,162,614
- -----------------------------------------------------------------------------
- ----------------------------------------------
End of period $121,532,722 $112,892,338
$97,594,479
- -----------------------------------------------------------------------------
- ----------------------------------------------
</TABLE>
(a) Fund share transactions are at $1 per share for the U.S. Government Money
Market Portfolio.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
44
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
EQUITY BOND TOTAL
RETURN INTERMEDIATE-TERM
PORTFOLIO PORTFOLIO BOND
PORTFOLIO BOND PORTFOLIO
--------------------------- ---------------------------
- ------------------------- ---------------------------
Six Months Six Months Six Months
Six Months
Ended Year Ended Ended Year Ended Ended
Year Ended Ended Year Ended
June 30, December 31, June 30, December 31, June 30,
December June 30, December 31,
1996 1995 1996 1995 1996
31, 1995 1996 1995
<C> <C> <C> <C> <C>
<C> <C> <C>
$ 2,723,637 $ 2,424,043 $ 977,772 $ 1,640,903 $ 1,346,000
$ 2,302,300 $ 2,280,819 $ 4,178,990
3,562,788 5,756,251 (820,677) 1,246,953 (2,077,548)
2,690,163 (2,485,190) 3,510,267
10,667,782 17,986,578 (203,836) 654,522 319,085
1,575,397 465,378 2,967,954
16,954,207 26,166,872 (46,741) 3,542,378 (412,463)
6,567,860 261,007 10,657,211
-- (305,576) -- -- --
-- -- --
(320,195) (1,548,526) (924,923) (1,640,903) (1,346,000)
(2,138,946) (2,280,819) (4,081,709)
-- -- -- (21,207) (87,306)
-- (15,327) --
(1,570,483) (493,586) -- (642,900) (1,079,708)
(335,308) -- (188,877)
-- -- -- -- --
-- (1,060,418) --
(1,890,678) (2,042,112) (924,923) (2,305,010) (2,513,014)
(2,474,254) (3,356,564) (4,270,586)
161,251,439 140,908,056 10,729,827 20,469,941 10,941,532
23,640,083 16,153,475 29,966,150
1,869,042 1,993,113 852,678 2,145,942 2,277,652
2,334,835 3,125,151 4,022,268
(137,876,179) (163,147,872) (6,378,094) (10,640,585) (8,810,493)
(16,141,734) (12,448,215) (26,174,351)
25,244,302 (20,246,703) 5,204,411 11,975,298 4,408,691
9,833,184 6,830,411 7,814,067
40,307,831 3,572,481 4,232,747 13,212,666 1,483,214
13,926,790 3,734,854 14,200,692
191,597,566 188,025,085 34,659,940 21,447,274 45,117,730
31,190,940 77,124,711 62,924,019
$231,905,397 $191,597,566 $38,892,687 $34,659,940 $46,600,944
$45,117,730 $ 80,859,565 $ 77,124,711
<CAPTION>
U.S. GOVERNMENT
MORTGAGE BACKED MONEY
SECURITIES PORTFOLIO MARKET PORTFOLIO
-------------------------- ---------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, December 31, June 30, December 31,
1996 1995 1996 1995
<C> <C> <C> <C>
$ 2,279,511 $ 4,423,653 $ 408,328 $ 1,044,138
(51,802) 2,132,636 2,635 548
(1,844,769) 3,284,752 -- --
382,940 9,841,041 410,963 1,044,686
-- -- -- --
(2,227,721) (4,423,653 ) (410,963) (1,044,686)
-- (196,430 ) -- --
-- -- -- --
-- -- -- --
(2,227,721) (4,620,083 ) (410,963) (1,044,686)
11,344,065 19,667,652 134,369,012 139,918,716
1,848,702 3,702,170 354,400 945,815
(9,348,009) (20,802,368 ) (137,491,672) (143,448,009)
3,844,758 2,567,454 (2,768,260) (2,583,478)
1,999,977 7,788,412 (2,768,260) (2,583,478)
69,759,070 61,970,658 18,854,556 21,438,034
$71,759,047 $69,759,070 $ 16,086,296 $ 18,854,556
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
45
<PAGE>
THE TARGET PORTFOLIO TRUST
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
LARGE
CAPITALIZATION
LARGE
CAPITALIZATION VALUE
GROWTH
PORTFOLIO(e) PORTFOLIO(e)
- ------------------------------------------------------------- ----------
January 5,
Six Months Year Ended
1993(a) Six Months
Ended December 31,
Through Ended
June 30,
- ------------------------- December 31, June 30,
1996 1995
1994 1993 1996
<S> <C> <C> <C>
<C> <C>
PER SHARE OPERATING
PERFORMANCE:
- -----------------------------------------------------------------------------
- ------------------------------------------
Net asset value, beginning of period $12.13 $9.74
$9.91 $10.00 $12.57
- -----------------------------------------------------------------------------
- ------------------------------------------
Income from investment operations
Net investment income (loss) .02 .10
.10 .07(c) .15
- -----------------------------------------------------------------------------
- ------------------------------------------
Net realized and unrealized gains
(losses) on
investment transactions .86 2.41
(.16) (.12) .87
- -----------------------------------------------------------------------------
- ------------------------------------------
Total from investment
operations .88 2.51
(.06) (.05) 1.02
- -----------------------------------------------------------------------------
- ------------------------------------------
Less distributions
Dividends from net investment
income -- (.10)
(.10) (.04) (.02)
- -----------------------------------------------------------------------------
- ------------------------------------------
Distributions in excess of net
investment income -- (.01)
(.01) -- --
- -----------------------------------------------------------------------------
- ------------------------------------------
Distributions from net realized gains (1.04) (.01)
-- -- (.12)
- -----------------------------------------------------------------------------
- ------------------------------------------
Distributions in excess of net realized
gains -- --
-- -- --
- -----------------------------------------------------------------------------
- ------------------------------------------
Total distributions (1.04) (.12)
(.11) (.04) (.14)
- -----------------------------------------------------------------------------
- ------------------------------------------
Net asset value, end of period $11.97 $12.13
$9.74 $9.91 $13.45
- -----------------------------------------------------------------------------
- ------------------------------------------
TOTAL RETURN(d) 7.85% 25.76%
(.68)% (.46)% 8.12%
- -----------------------------------------------------------------------------
- ------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------
- ------------------------------------------
Net assets, end of period (000) $202,614 $180,077
$142,072 $98,089 $209,858
- -----------------------------------------------------------------------------
- ------------------------------------------
Average net assets (000) $192,383 $162,982
$129,687 $48,033 $200,023
- -----------------------------------------------------------------------------
- ------------------------------------------
Ratios to average net assets
Expenses .79%(b) .78%
.81% 1.05%(b)(c) .75%(b)
- -----------------------------------------------------------------------------
- ------------------------------------------
Net investment income (loss) .30%(b) .88%
1.08% .84%(b)(c) 2.34%(b)
- -----------------------------------------------------------------------------
- ------------------------------------------
Portfolio turnover rate 29% 154%
24% 4% 13%
- -----------------------------------------------------------------------------
- ------------------------------------------
Average commission rate per share $ .0595 $ .0578
N/A N/A $ .0533
- -----------------------------------------------------------------------------
- ------------------------------------------
<CAPTION>
LARGE CAPITALIZATION
VALUE PORTFOLIO(e) January
5,
-------------------------------
1993(a)
Year Ended
Through
December 31,
December
------------------------------ 31,
1995 1994 1993
<S> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
- -----------------------------------------------------------------------------
- ------------------------------------------
Net asset value, beginning of period $10.02 $10.11
$10.00
- -----------------------------------------------------------------------------
- ------------------------------------------
Income from investment operations
Net investment income (loss) .33 .26
.21(c)
- -----------------------------------------------------------------------------
- ------------------------------------------
Net realized and unrealized gains
(losses) on
investment transactions 2.89 (.04)
.02
- -----------------------------------------------------------------------------
- ------------------------------------------
Total from investment
operations 3.22 .22
.23
- -----------------------------------------------------------------------------
- ------------------------------------------
Less distributions
Dividends from net investment
income (.30) (.25)
(.11)
- -----------------------------------------------------------------------------
- ------------------------------------------
Distributions in excess of net
investment income -- --
--
- -----------------------------------------------------------------------------
- ------------------------------------------
Distributions from net realized gains (.37) (.06)
(.01)
- -----------------------------------------------------------------------------
- ------------------------------------------
Distributions in excess of net realized
gains -- --
--
- -----------------------------------------------------------------------------
- ------------------------------------------
Total distributions (.67) (.31)
(.12)
- -----------------------------------------------------------------------------
- ------------------------------------------
Net asset value, end of period $12.57 $10.02
$10.11
- -----------------------------------------------------------------------------
- ------------------------------------------
TOTAL RETURN(d) 32.08% 2.18%
2.29%
- -----------------------------------------------------------------------------
- ------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------
- ------------------------------------------
Net assets, end of period (000) $187,596 $142,219
$96,074
- -----------------------------------------------------------------------------
- ------------------------------------------
Average net assets (000) $163,124 $128,865
$46,623
- -----------------------------------------------------------------------------
- ------------------------------------------
Ratios to average net assets
Expenses .76% .81%
1.05%(b)(c)
- -----------------------------------------------------------------------------
- ------------------------------------------
Net investment income (loss) 2.83% 2.66%
2.12%(b)(c)
- -----------------------------------------------------------------------------
- ------------------------------------------
Portfolio turnover rate 59% 6%
3%
- -----------------------------------------------------------------------------
- ------------------------------------------
Average commission rate per share $ .0514 N/A
N/A
- -----------------------------------------------------------------------------
- ------------------------------------------
</TABLE>
(a) Commencement of investment operations.
(b) Annualized.
(c) Net of expense subsidies.
(d) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported and includes
reinvestment of dividends and distributions. Total return for periods of
less than a full year are not annualized.
(e) Calculated based upon average shares outstanding during the period.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
46
<PAGE>
<TABLE>
<CAPTION>
SMALL CAPITALIZATION
SMALL CAPITALIZATION INTERNATIONAL
GROWTH
VALUE EQUITY
PORTFOLIO(e)
PORTFOLIO(e) PORTFOLIO(e)
- -------------------------------------------------------
- ------------------------------------------------------- ----------
January 5,
January 5,
Six Months Year Ended 1993(a) Six Months
Year Ended 1993(a) Six Months
Ended December 31, Through Ended
December 31, Through Ended
June 30, ----------------------- December 31, June 30,
- ----------------------- December 31, June 30,
1996 1995 1994 1993 1996
1995 1994 1993 1996
<C> <C> <C> <C> <C> <C>
<C> <C> <C>
$14.15 $11.59 $11.86 $10.00 $13.07
$11.07 $12.72 $10.00 $13.64
(.02) .02 .01 .01(c ) .05
.14 .11 (.01)(c) .18
2.22 2.84 (.27) 1.86 .99
2.00 (1.49) 3.19 .93
2.20 2.86 (.26) 1.87 1.04
2.14 (1.38) 3.18 1.11
-- (.02) (.01) (.01 ) --
(.14) -- -- (.02)
-- -- -- -- --
-- -- -- --
(.23) (.28) -- -- --
-- (.27) (.46) (.10)
-- -- -- -- --
-- -- -- --
(.23) (.30) (.01) (.01 ) --
(.14) (.27) (.46) (.12)
$16.12 $14.15 $11.59 $11.86 $14.11
$13.07 $11.07 $12.72 $14.63
15.70% 24.62% (2.19)% 18.66 % 8.04%
19.21% (11.03)% 31.86% 8.20%
$148,562 $121,533 $96,462 $63,917 $112,892
$97,594 $84,163 $64,430 $231,905
$134,013 $107,649 $87,403 $29,313 $104,831
$88,085 $83,891 $29,039 $210,451%(b)
.85 .85% .93% 1.05 (b)(c) .94%(b)
1.00% .93% 1.05%(b)(c) .98%(b)
(.24)%(b) .12% .10% .11 (b)(c) .74%(b)
1.14% .88% (.11)%(b)(c) 2.60%(b)
61% 120% 97% 72 % 34%
110% 97% 112% 20%
$ .0592 $ .0586 N/A N/A $ .0587 $
.0561 N/A N/A $ .0236
<CAPTION>
January 5,
Year Ended 1993(a)
December 31, Through
----------------------- December 31,
1995 1994 1993
<C> <C> <C>
$11.95 $13.09 $10.00
.17 .06 .07
1.67 (.01) 3.16
1.84 .05 3.23
(.11) (.01) (.01)
-- -- --
(.04) (1.07) (.05)
(.11) (.08)
(.15) (1.19) (.14)
$13.64 $11.95 $13.09
15.38% .18% 32.38%
$191,598 $188,025 $127,121
$183,414 $179,614 $49,769
1.02% 1.07% 1.40%(b)
1.32% .47% .64%(b)
76% 116% 65%
$ .0250 N/A N/A
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
47
<PAGE>
THE TARGET PORTFOLIO TRUST
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
INTERNATIONAL
BOND
TOTAL RETURN
PORTFOLIO
BOND PORTFOLIO
- ----------------------------------------------------
- ----------------------------
May 17, Year Ended
Six Months
1994(a) Six Months December
Ended Year Ended
Through Ended 31,
June 30, December 31,
December 31, June 30, ----------
1996 1995
1994 1996 1995
<S> <C> <C>
<C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Net asset value, beginning of
period $10.19 $9.57
$10.00 $10.62 $9.48
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Income from investment operations
Net investment income .26 .57(c)
.27(c) .29 .62(c)
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Net realized and unrealized gains
(losses) on investment
transactions (.29) .82
(.19) (.39) 1.18
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Total from investment
operations (.03) 1.39
.08 (.10) 1.80
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Less distributions
Dividends from net investment
income (.25) (.57)
(.27) (.29) (.58)
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Distributions in excess of net
investment income -- --
(.24) (.02) --
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Distributions from net realized
gains -- (.20)
-- (.23) (.08)
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Distributions in excess of net
realized gains -- --
-- -- --
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Total distributions (.25) (.77)
(.51) (.54) (.66)
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Net asset value, end of period $9.91 $10.19
$9.57 $9.98 $10.62
- -----------------------------------------------------------------------------
- -----------------------------------------------------
TOTAL RETURN(d) (.35)% 14.66%
.71% (.98)% 19.63%
- -----------------------------------------------------------------------------
- -----------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Net assets, end of period (000) $38,893 $34,660
$21,447 $46,601 $45,118
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Average net assets (000) $36,699 $29,510
$15,366 $46,544 $37,023
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Ratios to average net assets
Expenses 1.10%(b) 1.00%(c)
1.00%(b)(c) .95%(b) .85%(c)
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Net investment income 5.36%(b) 5.56%(c)
4.84%(b)(c) 5.82%(b) 6.21%(c)
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Portfolio turnover rate 158% 456%
361% 148% 141%
- -----------------------------------------------------------------------------
- -----------------------------------------------------
<CAPTION>
Year January 5,
Ended 1993(a)
December 31, Through
------------- December 31,
1994 1993
<S> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Net asset value, beginning of
period $10.28 $10.00
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Income from investment operations
Net investment income .47(c) .44(c)
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Net realized and unrealized gains
(losses) on investment
transactions (.82) .56
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Total from investment
operations (.35) 1.00
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Less distributions
Dividends from net investment
income (.45) (.44)
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Distributions in excess of net
investment income -- (.02)
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Distributions from net realized
gains -- (.19)
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Distributions in excess of net
realized gains -- (.07)
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Total distributions (.45) (.72)
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Net asset value, end of period $9.48 $10.28
- -----------------------------------------------------------------------------
- -----------------------------------------------------
TOTAL RETURN(d) (3.54)% 10.18%
- -----------------------------------------------------------------------------
- -----------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Net assets, end of period (000) $31,191 $25,917
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Average net assets (000) $31,141 $12,594
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Ratios to average net assets
Expenses .85%(c) .85%(b)(c)
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Net investment income 4.90%(c) 3.87%(b)(c)
- -----------------------------------------------------------------------------
- -----------------------------------------------------
Portfolio turnover rate 121% 171%
- -----------------------------------------------------------------------------
- -----------------------------------------------------
</TABLE>
(a) Commencement of investment operations.
(b) Annualized.
(c) Net of expense subsidies.
(d) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported and includes
reinvestment of dividends and distributions. Total return for periods of
less than a full year are not annualized.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
48
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE-TERM
MORTGAGE BACKED
BOND PORTFOLIO
SECURITIES PORTFOLIO
- ------------------------------------------------------
- -------------------------------------------------------------
January 5,
January 5,
Six Months Year Ended 1993(a) Six Months
Year Ended 1993(a)
Ended December 31, Through Ended
December 31, Through
June 30, ---------------------- December 31, June 30,
- --------------------------- December 31,
1996 1995 1994 1993 1996
1995 1994 1993
<C> <C> <C> <C> <C> <C>
<C> <C>
$10.51 $9.56 $10.26 $10.00 $10.31
$9.51 $10.18 $10.00
.31 .63 .49 .46(c) .33
.68(c) .61(c) .57(c)
(.17) .94 (.71) .46 (.28)
.83 (.66) .28
.14 1.57 (.22) .92 .05
1.51 (.05) .85
(.31) (.60) (.48) (.45) (.32)
(.68) (.61) (.57)
(.01) -- -- -- --
(.03) (.01) (.02)
-- (.02) -- (.18) --
-- -- (.08)
(.23) -- -- (.03) --
-- -- --
(.55) (.62) (.48) (.66) (.32)
(.71) (.62) (.67)
$10.10 $10.51 $9.56 $10.26 $10.04
$10.31 $9.51 $10.18
.17% 16.87% (2.23)% 9.33% .50%
16.18% (.51)% 8.56%
$80,860 $77,125 $62,924 $60,651 $71,759
$69,759 $61,971 $60,100
$78,683 $68,628 $69,602 $32,441 $70,890
$65,149 $66,276 $29,710
.73%(b) .79% .80% .85%(b)(c) .89%(b)
.85%(c) .85%(c) .85%(b)(c)
5.83%(b) 6.09% 5.06% 4.27%(b)(c) 6.47%(b)
6.79%(c) 6.19%(c) 5.30%(b)(c)
68% 93% 77% 129% 66%
154% 380% 134%
<CAPTION>
U.S. GOVERNMENT
MONEY
MARKET PORTFOLIO
-----------------------------------------------------------------
January 5,
Six Months Year Ended 1993(a)
Ended December 31, Through
June 30, ------------------------------- December 31,
1996 1995 1994 1993
<C> <C> <C> <C>
$1.00 $1.00 $1.00 $1.00
.022 .051(c) .037(c) .025(c)
-- -- -- --
.022 .051 .037 .025
(.022) (.051) (.037) (.025)
-- -- -- --
-- -- -- --
-- -- -- --
(.022) (.051) (.037) (.025)
$1.00 $1.00 $1.00 $1.00
2.20% 5.25% 3.79% 2.56%
$16,086 $18,855 $21,438 $2,997
$18,187 $20,173 $15,048 $1,407
.85%(b) .75%(c) .50%(c) .50%(b)(c)
4.50%(b) 5.18%(c) 4.03%(c) 2.51%(b)(c)
-- -- -- --
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 50
49
<PAGE>
THE TARGET PORTFOLIO TRUST
Notes to Financial Statements (Unaudited)
The Target Portfolio Trust (the ``Fund'') is an open-end management
investment company. The Fund was established as a Delaware business
trust on July 29, 1992 and consists of ten separate portfolios (the
``Portfolio'' or ``Portfolios''): Large Capitalization Growth Portfolio, Large
Capitalization Value Portfolio, Small Capitalization Growth Portfolio, Small
Capitalization Value Portfolio, International Equity Portfolio, International
Bond Portfolio, Total Return Bond Portfolio, Intermediate-Term Bond Portfolio,
Mortgage Backed Securities Portfolio and U.S. Government Money Market Portfolio.
All the Portfolios are diversified as defined under the Investment Company Act
of 1940 except for International Bond Portfolio. Investment operations commenced
on January 5, 1993 with the exception of the International Bond Portfolio which
commenced on May 17, 1994.
The Portfolios' investment objectives are as follows: Large Capitalization
Growth Portfolio--long-term capital appreciation through investment primarily
in
equities that, in the investment adviser's opinion, have a growth of earnings
potential greater than that of the S&P 500; Large Capitalization Value
Portfolio--total return of capital appreciation and dividend income through
investment primarily in equities that, in the adviser's opinion, have above
average price appreciation potential; Small Capitalization Growth
Portfolio--maximum capital appreciation through investment primarily in equities
of ``emerging growth'' companies; Small Capitalization Value Portfolio--above
average capital appreciation through investment in equities that, in the
adviser's opinion, are undervalued or overlooked in the marketplace;
International Equity Portfolio--capital appreciation through investment
primarily in equity securities of companies domiciled outside the United States;
International Bond Portfolio--high total return through investment primarily in
high quality foreign debt securities denominated primarily in foreign
currencies; Total Return Bond Portfolio--total return of current income and
capital appreciation through investment primarily in fixed-income securities of
varying maturities with a dollar-weighted average portfolio maturity of more
than four years but not more than fifteen years; Intermediate-Term Bond
Portfolio--current income and reasonable stability of principal through
investment primarily in high quality fixed-income securities of varying
maturities with a dollar-weighted average portfolio maturity of more than three
years but not more than ten years; Mortgage Backed Securities Portfolio--high
current income and capital appreciation each consistent with the protection of
capital through investment primarily in mortgage related securities; U.S.
Government Money Market Portfolio--high current income, maintenance of liquidity
and preservation of principal through investment exclusively in short-term
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
The ability of issuers of debt securities (other than those issued or
guaranteed by the U.S. Government) held by the Portfolios to meet their
obligations may be affected by economic or political developments in a specific
industry, region or country.
- ----------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements.
Securities Valuations: Securities, including options, futures contracts
and options thereon, for which the primary market is on a national securities
exchange, commodities exchange or board of trade are valued at the last sale
price on such exchange or board of trade on the date of valuation or, if there
was no sale on such day, at the average of readily available closing bid and
asked prices on such day.
Securities, including options, that are actively traded in the
over-the-counter market, including listed securities for which the primary
market is believed to be over-the-counter, are valued at the average of the most
recently quoted bid and asked prices provided by a principal market maker or
dealer.
U.S. Government securities for which market quotations are available are
valued at a price provided by an independent broker/dealer or pricing service.
Quotations of foreign securities in a foreign currency are converted to
U.S. dollar equivalents at the current rate obtained from a recognized bank or
dealer.
Securities for which market quotations are not available, are valued in
good faith under procedures adopted by the Trustees.
Securities held by the U.S. Government Money Market Portfolio are valued
at amortized cost, which approximates market value. Short-term securities held
by the other portfolios which mature in 60 days or less are valued at amortized
cost which approximates market value. The amortized cost method involves valuing
a security at its cost on the date of purchase and thereafter assuming a
constant amortization to maturity of the difference between the principal amount
due at maturity and cost. Short-term securities held by the other portfolios
which mature in more than 60 days are valued at current market quotations.
In connection with transactions in repurchase agreements, it is the Fund's
policy that its custodian take possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction,
- --------------------------------------------------------------------------------
50
<PAGE>
including accrued interest. If the seller defaults, and the value of the
collateral declines or, if bankruptcy proceedings are commenced with respect to
the seller of the security, realization of the collateral by the Fund may be
delayed or limited.
All securities (except those of the U.S. Government Money Market
Portfolio) are valued as of 4:15 P.M., New York time. The U.S. Government Money
Market Portfolio calculates net asset value as of 4:30 P.M., New York time.
Securities Transactions and Net Investment Income: Securities transactions
are recorded on the trade date. Realized gains and losses on sales of securities
are calculated on the identified cost basis. Dividend income is recorded on the
ex-dividend date and interest income is recorded on the accrual basis. The Fund
amortizes premiums and discounts paid on purchases of portfolio securities as
adjustments to interest income. Expenses are recorded on the accrual basis which
may require the use of certain estimates by management. The cost of portfolio
securities for federal income tax purposes is substantially the same as for
financial reporting purposes.
Financial Futures Contracts: A financial futures contract is an agreement
to purchase (long) or sell (short) an agreed amount of securities at a set price
for delivery on a future date. Upon entering into a financial futures contract,
the Portfolio is required to pledge to the broker an amount of cash and/or other
assets equal to a certain percentage of the contract amount. This amount is
known as the ``initial margin.'' Subsequent payments, known as ``variation
margin,'' are made or received by the Portfolio each day, depending on the daily
fluctuations in the value of the underlying security. Such variation margin is
recorded for financial statement purposes on a daily basis as unrealized gain
or
loss. When the contract expires or is closed, the gain or loss is realized and
is presented in the statement of operations as net realized gain (loss) on
financial futures contracts.
The Portfolio invests in financial futures contracts in order to hedge its
existing portfolio securities, or securities the Portfolio intends to purchase,
against fluctuations in value caused by changes in prevailing interest rates.
Should interest rates move unexpectedly, the Portfolio may not achieve the
anticipated benefits of the financial futures contracts and may realize a loss.
The use of futures transactions involves the risk of imperfect correlation in
movements in the price of futures contracts, interest rates and the underlying
hedged assets. The International Equity Portfolio, International Bond Portfolio,
Intermediate-Term Bond Portfolio, Mortgage-Backed Securities Portfolio and Total
Return Bond Portfolio are the only portfolios that may invest in financial
futures contracts.
Foreign Currency Translation: The books and records of the Portfolios are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis:
(i) market value of investment securities, other assets and
liabilities--at the closing rates of exchange.
(ii) purchases and sales of investment securities, income and expenses--at
the rate of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Portfolios are presented at the foreign
exchange rates and market values at the close of the fiscal period, the
Portfolios do not isolate that portion of the results of operations arising as
a
result of changes in the foreign exchange rates from the fluctuations arising
froms changes in the market prices of securities held at the end of the fiscal
period. Similarly, the Portfolios do not isolate the effect of changes in
foreign exchange rates from the fluctuations arising from changes in the market
prices of long-term portfolio securities sold during the fiscal period.
Accordingly, these realized foreign currency gains (losses) are included in the
reported net realized gains (losses) on investment transactions.
Net realized gains (losses) on foreign currency transactions represent net
foreign exchange gains (losses) from sales and maturities of short-term
securities, holding of foreign currencies, currency gains or losses realized
between the trade and settlement dates of securities transactions, and the
difference between the amounts of dividends, interest and foreign taxes recorded
on the Fund's books and the U.S. dollar equivalent amounts actually received or
paid. Net currency gains and losses from valuing foreign currency denominated
assets and liabilities at period end exchange rates are reflected as a component
of net unrealized appreciation/depreciation on investments and foreign
currencies.
Foreign security and currency transactions may involve certain
considerations and risks not typically associated with those of domestic origin
as a result of, among other factors, the level of governmental supervision and
regulation of foreign securities markets and the possibility of political or
economic instability.
Forward Currency Contracts: The International Equity Portfolio,
International Bond Portfolio, Intermediate-Term Bond Portfolio and Total Return
Bond Portfolio may enter into forward currency contracts in order to hedge their
exposure to changes in foreign currency exchange rates on their foreign
portfolio holdings. A forward currency contract is a commitment to purchase or
sell a foreign currency at a future date at a negotiated forward rate. The
Portfolio enters into forward currency contracts in order to hedge its exposure
to changes in foreign currency exchange rates on its foreign portfolio holdings
or on specific receivables and payables denominated in a foreign currency. The
contracts are valued daily at current exchange rates and any unrealized gain or
loss is included in net unrealized appreciation or depreciation on investments.
Gain or loss is realized on the settlement date of the contract equal to the
difference between the settlement value of the original and renegotiated forward
contracts. This gain or loss, if any, is included in net realized gain (loss)
on
foreign currency transactions. Risks may arise upon entering into these
contracts from the potential inability of the counter parties to meet the terms
of their contracts.
Options: The International Equity Portfolio, the International Bond
Portfolio, the Intermediate-Term Bond Portfolio, the Total Return Bond Portfolio
and the Mortgage-Backed Securities Portfolio may either purchase or write
options in order to hedge against adverse market movements or fluctuations in
- --------------------------------------------------------------------------------
51
<PAGE>
value caused by changes in prevailing interest rates or foreign currency
exchange rates with respect to securities or currencies which the Portfolio
currently owns or intends to purchase. When the Portfolio purchases an option,
it pays a premium and an amount equal to that premium is recorded as an
investment. When the Portfolio writes an option, it receives a premium and an
amount equal to that premium is recorded as a liability. The investment or
liability is adjusted daily to reflect the current market value of the option.
If an option expires unexercised, the Fund realizes a gain or loss to the extent
of the premium received or paid. If an option is exercised, the premium received
or paid is an adjustment to the proceeds from the sale or the cost basis of the
purchase in determining whether the Portfolio has realized a gain or loss. The
difference between the premium and the amount received or paid on effecting a
closing purchase or sale transaction is also treated as a realized gain or loss.
Gain or loss on purchased options is included in net realized gain (loss) on
investment transactions. Gain or loss on written options is presented separately
as net realized gain (loss) on written option transactions.
The Portfolio, as writer of an option, has no control over whether the
underlying securities or currencies may be sold (called) or purchased (put). As
a result, the Portfolio bears the market risk of an unfavorable change in the
price of the security or currency underlying the written option. The Portfolio,
as purchaser of an option, bears the risk of the potential inability of the
counterparties to meet the terms of their contracts.
Equalization: Effective January 1, 1996, the Portfolios discontinued the
accounting practice known as equalization by which a portion of the proceeds
from sales and costs of reacquisitions of Portfolio shares, equivalent on a per
share basis to the amount of distributable net investment income on the date of
the transaction, is credited or charged to undistributed net investment income.
The following balances of undistributed net investment income at December 31,
1995, resulting from equalization, were transferred to paid-in capital in excess
of par.
<TABLE>
<CAPTION>
Portfolio Amount
- ----------------------------------------- ----------
<S> <C>
Large Capitalization Growth Portfolio $ 682,397
Large Capitalization Value Portfolio 1,690,441
Small Capitalization Growth Portfolio 91,762
Small Capitalization Value Portfolio 25,342
International Equity Portfolio 1,094,130
</TABLE>
Such reclassifications have no effect on net assets, results of
operations, or net asset value per share.
Reclassification of Capital Accounts: The Fund accounts for and reports
distributions to shareholders in accordance with AICPA Statement of Position
93-2: Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. The
effect of applying this Statement of Position, on the International Equity
Portfolio, Total Return Bond Portfolio, Intermediate-Term Bond Portfolio and
International Bond Portfolio, was to reclassify ($31,853), ($384,722),
($866,034) and ($999,939), respectively, of foreign currency gains (losses) to
undistributed net investment income from accumulated net realized gains
(losses). Current year net investment income, net realized gains (losses) and
net assets were not affected by this statement.
Dividends and Distributions: The International Bond Portfolio, Total
Return Bond Portfolio, Intermediate-Term Bond Portfolio and Mortgage Backed
Securities Portfolio declare dividends of their net investment income daily and
pay such dividends monthly. The U.S. Government Money Market Portfolio declares
net investment income and any net capital gain (loss) daily and pays such
dividends monthly. Each other Portfolio declares and pays a dividend of its net
investment income, if any, at least annually. Each Portfolio except for the U.S.
Government Money Market Portfolio declares and pays its net capital gains, if
any, at least annually.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.
Taxes: For federal income tax purposes, each portfolio in the Fund is
treated as a separate taxpaying entity. It is the intent of each portfolio to
continue to meet the requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of its taxable net income
to its shareholders. Therefore, no federal income tax provision is required.
Withholding taxes on foreign interest and dividends have been provided for
in accordance with the Portfolios' understanding of the applicable country's tax
rules and rates.
Deferred Organizational Expenses: A total of $279,000 was incurred in
connection with the organization of the Fund. These costs have been deferred and
are being amortized ratably over a period of sixty months from the date the
Portfolio commenced investment operations.
- ----------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential Mutual Fund
Management, Inc. (``PMF'') pursuant to which PMF manages the investment
operations of the Fund, administers the Fund's affairs and is responsible for
the selection, subject to review and approval of the Trustees, of the advisers.
PMF supervises the advisers' performance of advisory services and makes
recommendations to the Trustees as to whether the advisers' contracts should be
renewed, modified or terminated. PMF pays for the costs pursuant to the advisory
agreements, the cost of compensation of officers of the Fund, occupancy and
certain clerical and accounting costs of the Fund. The Fund bears all other
costs and expenses.
PMF has subadvisory agreements with the advisers noted below pursuant to
which each adviser furnishes investment advisory services in connection with the
management of the Portfolios. Each of the two Advisers of the domestic equity
Portfolios--the Large Capitalization Growth Portfolio, Large Capitalization
Value Portfolio, Small Capitalization Growth Portfolio and Small Capitalization
Value Portfolio--manages approximately 50% of the assets of the respective
Portfolio. In general, in order to maintain an approximately equal division of
assets
- --------------------------------------------------------------------------------
52
<PAGE>
between the two Advisers, all daily cash inflows (i.e., subscriptions and
reinvested distributions) and outflows (i.e., redemptions and expenses items)
will be divided between the two Advisers as the Manager deems it appropriate.
In
addition, there will be a periodic rebalancing of each Portfolio's assets to
take account of market fluctuations in order to maintain the approximately equal
allocation. As a consequence, each Portfolio will allocate assets from the
better performing of the two Advisers to the other.
<TABLE>
<CAPTION>
Portfolio Adviser
- ----------------- ------------------------------------------
<S> <C>
Large Capitalization
Growth Portfolio...... Oak Associates and
Columbus Circle Investors
Large Capitalization
Value Portfolio...... INVESCO MIM Inc. and
Hotchkis and Willey
Small Capitalization
Growth Portfolio...... Nicholas-Applegate Capital Management and
Investment Advisors, Inc.
Small Capitalization
Value Portfolio...... Wood, Struthers & Winthrop and
Lazard Freres Asset Management
International Equity
Portfolio.......... Lazard Freres Asset Management
International Bond
Portfolio.......... Fiduciary International, Inc.
Total Return Bond and
Intermediate-Term
Bond Portfolios..... Pacific Investment Management Co.
Mortgage Backed
Securities and
U.S. Government
Money Market
Portfolios.......... Wellington Management Co.
</TABLE>
The management fee paid PMF is computed daily and payable monthly, at an
annual rate of the average daily net assets of the Portfolios specified below
and PMF, in turn, pays each adviser a fee for its services.
<TABLE>
<CAPTION>
Total
Portfolio Management Fee Adviser Fee
- ------------------------- -------------- -----------
<S> <C> <C>
Large Capitalization
Growth Portfolio....... .60% .30%
Large Capitalization
Value Portfolio........ .60% .30%
Small Capitalization
Growth Portfolio....... .60% .30%
Small Capitalization
Value Portfolio........ .60% .30%
International Equity
Portfolio.............. .70% .40%
International Bond
Portfolio.............. .50% .30%
Total Return Bond
Portfolio.............. .45% .25%
Intermediate-Term Bond
Portfolio.............. .45% .25%
Mortgage Backed
Securities Portfolio... .45% .25%
U.S. Government Money
Market Portfolio....... .25% .125%
</TABLE>
The Fund has entered into a distribution agreement with Prudential
Securities Incorporated (``PSI'') for distribution of the Fund's shares. PSI
serves the Fund without compensation.
PMF and PSI are indirect, wholly-owned subsidiaries of The Prudential
Insurance Company of America.
- ----------------------------------------------------------
Note 3. Other Transactions
with Affiliates
Prudential Mutual Fund Services, Inc. (``PMFS''), a wholly-owned
subsidiary of PMF, serves as the Fund's transfer agent. The following amounts
represent the fees PMFS charged for the six months ended June 30, 1995 as well
as the fees due PMFS as of June 30, 1995.
<TABLE>
<CAPTION>
Amount incurred
for the
six months Amount Due
ended as of
Portfolio June 30, 1996 June 30, 1996
- ------------------------- ---------------- -------------
<S> <C> <C>
Large Capitalization
Growth Portfolio....... $ 44,900 $ 7,700
Large Capitalization
Value Portfolio........ 44,900 7,700
Small Capitalization
Growth Portfolio....... 44,700 7,700
Small Capitalization
Value Portfolio........ 42,400 7,300
International Equity
Portfolio.............. 44,900 7,700
International Bond
Portfolio.............. 15,100 2,600
Total Return Bond
Portfolio.............. 17,700 3,000
Intermediate-Term Bond
Portfolio.............. 19,500 3,300
Mortgage Backed
Securities Portfolio... 24,400 4,100
U.S. Government Money
Market Portfolio....... 3,500 600
</TABLE>
For the six months ended June 30, 1996, PSI earned approximately $1,590
and $1,400 in brokerage commissions on behalf of certain portfolio transactions
executed with the Large Capitalization Value Portfolio and Large Capitalization
Growth Portfolio, respectively.
- ----------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of portfolio securities, excluding short-term
investments and written options, for the six months ended June 30, 1996 were as
follows:
<TABLE>
<CAPTION>
Portfolio Purchases Sales
- ----------------------------- ------------ ------------
<S> <C> <C>
Large Capitalization Growth
Portfolio.................. $ 65,562,979 $ 53,898,641
Large Capitalization Value
Portfolio.................. 25,499,286 26,474,061
Small Capitalization Growth
Portfolio.................. 80,464,107 34,740,373
Small Capitalization Value
Portfolio.................. 41,420,519 76,962,634
International Equity
Portfolio.................. 56,995,899 40,634,830
International Bond
Portfolio.................. 49,910,542 47,692,554
Total Return Bond
Portfolio.................. 100,190,986 89,669,445
Intermediate-Term Bond
Portfolio.................. 124,534,206 111,658,672
Mortgage Backed Securities
Portfolio.................. 51,202,831 46,051,231
</TABLE>
- --------------------------------------------------------------------------------
53
<PAGE>
The federal income tax basis and unrealized appreciation/depreciation of
each of the Portfolios' investments, excluding written options as of June 30,
1996, were as follows:
<TABLE>
<CAPTION>
Net
Unrealized
Appreciation Gross Unrealized
Portfolio Basis (Depreciation) Appreciation Depreciation
- --------------- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Large
Capitalization
Growth
Portfolio.... $176,990,281 $25,850,638 $ 34,510,150 $ 8,659,512
Large
Capitalization
Value
Portfolio.... 170,216,339 40,414,948 44,894,173 4,479,225
Small
Capitalization
Growth
Portfolio.... 117,871,648 28,790,051 33,476,625 4,686,574
Small
Capitalization
Value
Portfolio.... 102,482,286 10,593,867 13,112,862 2,518,995
International
Equity
Portfolio.... 199,178,596 30,153,370 34,076,044 3,922,674
International
Bond
Portfolio.... 37,708,357 174,847 594,161 419,314
Total Return
Bond
Portfolio.... 54,221,620 185,521 452,074 266,553
Intermediate-Term
Bond
Portfolio.... 92,446,155 (84,906) 390,172 475,078
Mortgage Backed
Securities
Portfolio.... 71,024,049 207,535 592,465 384,930
</TABLE>
For federal income tax purposes, the Small Capitalization Value and
Mortgage Backed Securities portfolios had capital loss carryforwards as of
December 31, 1995. Accordingly, no capital gain distributions are expected to
be
paid to shareholders of these portfolios until future net gains have been
realized in excess of such carryforwards. In addition, certain portfolios are
electing to treat net currency losses incurred in the two month period ended
December 31, 1995 as having been incurred in the current year.
<TABLE>
<CAPTION>
Net Losses
in two
months ended
Capital Loss Expiration December 31,
Portfolio Carryforward Year 1995
- --------------------------- -------------- ---------- ------------
<S> <C> <C> <C>
Small Capitalization Value
Portfolio................ $1,755,000 2003 $ 87,500
1,738,800 2002 --
International Equity
Portfolio................ -- -- 68,600
International Bond
Portfolio................ -- -- 268,300
Mortgage Backed Securities
Portfolio................ 1,539,900 2002 --
</TABLE>
At June 30, 1996, the Total Return and Intermediate-Term Bond Portfolios
bought 178 and 305 financial futures contracts, respectively, on U.S. Treasury
Bonds expiring in September 1996.
The unrealized appreciation on such contracts as of June 30, 1996 were as
follows:
<TABLE>
<CAPTION>
Value on
Value at June 30, Unrealized
Portfolio Disposition 1996 Appreciation
- ------------------------ ----------- ------------ ------------
<S> <C> <C> <C>
Total Return Bond
Portfolio............. $19,210,594 $18,924,000 $286,594
Intermediate-Term Bond
Portfolio............. 32,512,656 32,048,750 463,906
</TABLE>
At June 30, 1996, the International Bond Portfolio had outstanding forward
currency contracts, both to purchase and sell foreign currencies, as follows:
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Purchase Contracts Payable Value (Depreciation)
- -------------------- --------------- ----------- --------------
<S> <C> <C> <C>
Australian Dollars,
expiring
8/16/96........... $ 349,800 $ 344,776 $ (5,024)
British Pounds,
expiring 7/9/96... 195,067 200,322 5,255
Canadian Dollars,
expiring
7/18/96........... 521,363 523,183 1,820
Deutschemarks,
expiring
8/20/96........... 6,891,186 6,939,977 48,791
Italian Lira,
expiring
7/19/96........... 248,287 254,637 6,350
Japanese Yen,
expiring 7/9/96... 6,582,307 6,543,284 (39,023)
Spanish Pesetas,
expiring
7/11/96........... 6,300,990 6,284,752 (16,238)
-------
--------------- -----------
$21,089,000 $21,090,931 $ 1,931
--------------- ----------- -------
--------------- ----------- -------
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Sale Contracts Receivable Value (Depreciation)
- -------------------- --------------- ----------- --------------
<S> <C> <C> <C>
Australian Dollars,
expiring
8/16/96........... $ 533,133 $ 522,649 $ 10,484
British Pounds,
expiring 7/9/96... 2,319,186 2,380,560 (61,374)
Danish Kroner,
expiring
8/13/96........... 41,302 41,220 82
Deutschemarks,
expiring
8/20/96........... 2,471,000 2,490,703 (19,703)
French Francs,
expiring
7/17/96........... 1,152,500 1,166,171 (13,671)
Japanese Yen,
expiring 7/9/96... 2,309,962 2,201,274 108,688
Spanish Pesetas,
expiring
7/11/96........... 4,065,400 3,949,137 116,263
Swedish Krona,
expiring
7/11/96........... 2,819,222 2,866,407 (47,185)
-------
--------------- -----------
$15,711,705 $15,618,121 $ 93,584
--------------- ----------- -------
--------------- ----------- -------
</TABLE>
At June 30, 1996, the Total Return Bond Portfolio had outstanding forward
currency contracts, both to purchase and sell foreign currencies, as follows:
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Purchase Contracts Payable Value Depreciation
- -------------------- --------------- ----------- --------------
<S> <C> <C> <C>
Deutschemarks,
expiring
12/16/96.......... $11,659,911 $11,521,932 $ (137,979)
--------------- ----------- --------------
--------------- ----------- --------------
</TABLE>
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Sale Contracts Receivable Value Appreciation
- -------------------- --------------- ----------- --------------
<S> <C> <C> <C>
Deutschemarks,
expiring
12/16/96-1/16/97... $12,712,204 $12,086,605 $ 625,599
--------------- ----------- --------------
--------------- ----------- --------------
</TABLE>
- --------------------------------------------------------------------------------
54
<PAGE>
At June 30, 1996, the Intermediate Term Bond Portfolio had outstanding
forward currency contracts, both to purchase and sell foreign currencies, as
follows:
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Purchase Contracts Payable Value Depreciation
- --------------------- --------------- ----------- ------------
<S> <C> <C> <C>
Deutschemarks,
expiring
12/16/96........... $16,846,215 $16,657,659 $ (188,556)
--------------- ----------- ------------
--------------- ----------- ------------
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Sale Contracts Receivable Value Appreciation
- --------------------- --------------- ----------- ------------
<S> <C> <C> <C>
Deutschemarks,
expiring
12/16/96........... $18,438,843 $17,538,686 $ 900,158
--------------- ----------- ------------
--------------- ----------- ------------
</TABLE>
Transactions in options written during the six months ended June 30, 1996,
were as follows:
<TABLE>
<CAPTION>
Number of
Contracts Premiums
Intermediate-Term Bond Portfolio (000) Received
- --------------------------------------- --------- --------
<S> <C> <C>
Options outstanding at December 31,
1995................................. -- --
Options written........................ 96 $72,947
Options terminated in closing purchase
transactions......................... (19) (7,914 )
Options exercised...................... (37) (15,989 )
Options expired........................ (40) (49,044 )
--------- --------
Options outstanding at June 30, 1996... -- $ --
--------- --------
--------- --------
</TABLE>
<TABLE>
<CAPTION>
Number of
Contracts Premiums
Total Return Bond Portfolio (000) Received
- --------------------------------------- --------- --------
<S> <C> <C>
Options outstanding at December 31,
1995................................. -- --
Options written........................ 1,557 $49,127
Options terminated in closing purchase
transactions......................... (11) (4,582 )
Options exercised...................... (23) (9,939 )
Options expired........................ (1,523) (34,606 )
--------- --------
Options outstanding at June 30, 1996... -- $ --
--------- --------
--------- --------
<CAPTION>
Mortgage Backed Securities Portfolio
- ---------------------------------------
<S> <C> <C>
Options outstanding at December 31,
1995................................. 40 $14,595
Options written........................ 100 54,457
Options terminated in closing purchase
transactions......................... (40) (14,595 )
--------- --------
Options outstanding at June 30, 1996... 100 $54,457
--------- --------
--------- --------
</TABLE>
- --------------------------------------------------------------------------------
Note 5. Capital
The Fund has authorized an unlimited number of shares of beneficial
interest at $.001 par value per share. Of the shares outstanding at June 30,
1996, PMF owned 1,125 shares of each portfolio, except for the International
Bond Portfolio, of which it owns 232,221 shares.
Transactions in shares of beneficial interest during the six months ended
June 30, 1996 were as follows:
<TABLE>
<CAPTION>
Shares
Issued in
Reinvestment
Increase/
of Dividends
(Decrease)
Shares and
Shares in Shares
Portfolio Sold Distributions
Reacquired Outstanding
- -------------------------------------- ------------- ------------
---------- -----------
<S> <C> <C>
<C> <C>
Large Capitalization Growth
Portfolio........................... 2,951,668 1,404,928
(2,274,302) 2,082,294
Large Capitalization Value
Portfolio........................... 2,895,465 157,312
(2,374,377) 678,400
Small Capitalization Growth
Portfolio........................... 1,963,629 129,981
(1,464,257) 629,353
Small Capitalization Value
Portfolio........................... 1,913,437 --
(1,381,028) 532,409
International Equity Portfolio........ 11,450,792 132,462
(9,780,911) 1,802,343
International Bond Portfolio.......... 1,078,128 85,877
(641,390 ) 522,615
Total Return Bond Portfolio........... 1,063,389 225,655
(870,597 ) 418,447
Intermediate-Term Bond Portfolio...... 1,572,808 306,223
(1,213,007) 666,024
Mortgage Backed Securities Portfolio.. 1,118,796 182,427
(924,026 ) 377,197
</TABLE>
- --------------------------------------------------------------------------------
55
<PAGE>
Transactions in shares of beneficial interest during the year ended
December 31, 1995 were as follows:
<TABLE>
<CAPTION>
Shares
Issued in
Reinvestment
Increase/
of Dividends
(Decrease)
Shares and
Shares in Shares
Portfolio Sold Distributions
Reacquired Outstanding
- -------------------------------------- ------------- ------------
----------- -----------
<S> <C> <C>
<C> <C>
Large Capitalization Growth
Portfolio........................... 5,088,274 140,781
(4,979,073) 249,982
Large Capitalization Value
Portfolio........................... 4,775,800 734,989
(4,779,753) 731,036
Small Capitalization Growth
Portfolio........................... 3,325,532 172,318
(3,236,827) 261,023
Small Capitalization Value
Portfolio........................... 2,807,377 76,427
(3,018,792) (134,994 )
International Equity Portfolio........ 11,209,899 150,197
(13,045,509) (1,685,418 )
International Bond Portfolio.......... 1,976,236 208,497
(1,025,274) 1,159,459
Total Return Bond Portfolio........... 2,317,689 227,833
(1,586,241) 957,281
Intermediate-Term Bond Portfolio...... 2,958,764 396,173
(2,600,802) 754,135
Mortgage Backed Securities Portfolio.. 1,971,802 371,098
(2,094,123) 248,777
</TABLE>
- --------------------------------------------------------------------------------
56
<PAGE>
Trustees
Eugene C. Dorsey
Donald D. Lennox
Richard A. Redeker
Stanley E. Shirk
Robin B. Smith
Officers
Richard A Redeker President
Robert F. Gunia Vice President
Grace Torres Treasurer
Stephen M. Ungerman Assistant Treasurer
S. Jane Rose Secretary
Marguerite E.H. Morrison Assistant Secretary
Manager
Prudential Mutual Fund
Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Advisers
Columbus Circle Investors
Metro Center One Station Plaza
Stamford, Connecticut 06902
Fiduciary International
Two World Trade Center
New York, NY 10048
Hotchkis and Wiley
800 West Sixth Street
Los Angeles, California 90017
INVESCO Capital Management
1315 Peachtree Street
Suite 500
Atlanta, GA 30309
Investment Advisors, Inc.
3700 First Bank Place
P.O. Box 357
Minneapolis, Minnesota 55440
Lazard Frares Asset Management
30 Rockefeller Plaza
New York, NY 10020
Oak Associates
3875 Embassy Parkway
Suite 250
Akron, OH 44333
Nicholas-Applegate Capital Management
600 West Broadway
San Diego, CA 92101
Pacific Investment Management Company
840 Newport Center Drive
Newport Beach, CA 92658
Wellington Management Company
75 State Street
Boston, MA 02109
Wood, Struthers & Winthrop
277 Park Avenue
New York, NY 10005
Distributor
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund
Services, Inc.
Raritan Plaza One
Edison, NJ 08837
Independent Auditors
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281
Legal Counsel
Shereff, Friedman, Hoffman & Goodman LLP
919 Third Avenue
New York, NY 10022
(ICON)
