<PAGE>
(ICON)
The
Target Portfolio
Trust
(SYMBOL)
Annual Report
December 31, 1996
(LOGO)
<PAGE>
(ICON)
<PAGE>
The Target Portfolio Trust
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Shareholder Letter 2
Target's Shareholder Services 7
Portfolio of Investments:
Large Capitalization Growth Portfolio 8
Large Capitalization Value Portfolio 10
Small Capitalization Growth Portfolio 14
Small Capitalization Value Portfolio 18
International Equity Portfolio 22
International Bond Portfolio 25
Total Return Bond Portfolio 27
Intermediate-Term Bond Portfolio 30
Mortgage Backed Securities Portfolio 33
U.S. Government Money Market Portfolio 35
Statements of Assets and Liabilities 36
Statements of Operations 38
Statements of Changes in Net Assets 40
Financial Highlights 42
Notes to Financial Statements 46
</TABLE>
1
<PAGE>
Dear Target Shareholder:
It's been quite a year for the U.S. stock market.
In fact, stocks have just
concluded their best two-year performance in 20
years, with back-to-back,
20% plus returns in both 1995 and 1996, as
measured by the S&P 500. (If you
look at the more narrowly focused Dow Jones
Industrial Average, it was the
best performance in 40 years.) Conditions were
ideal for investors - U.S.
economic growth was moderate, inflation was benign
and corporate profits were
good.
<TABLE>
<CAPTION>
Performance Summary as of December 31, 1996
12/31/95
12/31/96 12 Month* # of
Portfolios NAV
NAV Total Return Funds**
<S> <C>
<C> <C> <C>
Large Capitalization Growth $12.13
$12.97 21.09%
Lipper Growth Fund Avg
17.48 805
Large Capitalization Value 12.57
13.97 19.17
Growth & Income Avg
20.69 613
Small Capitalization Growth 14.15
14.93 18.88
Small Company Avg
14.51 461
Small Capitalization Value 13.07
15.22 21.75
Small Company Avg
14.51 461
International Equity 13.64
14.82 15.25
International Avg
14.43 393
International Bond 10.19
10.17 4.45
General World Income Avg
9.25 195
Total Return Bond 10.62
10.28 5.02
Corporate Debt BBB Avg
2.61 121
Intermediate-Term Bond 10.51
10.30 5.22
Intermediate Investment Grade
2.91 194
Mortgage Backed Securities 10.31
10.21 5.56
U.S. Mortgage Avg
3.90 66
U.S. Government Money Market 1.00
1.00 4.53
U.S. Money Fund Avg
4.95 119
</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.
** Represents the number of funds in each
respective Lipper category.
International stock returns, while positive for
the year, lagged the U.S.
U.S. bond markets did not fare as well in 1996,
although they did finish in
positive territory. Long-term interest rates
spiked early in the year, when
economic growth surged after a winter lull. Growth
cooled in the third quarter
but long-term interest rates remained stubbornly
higher than last year,
preventing bonds from repeating their outstanding
performance in 1995.
International bond markets mirrored the U.S.,
although some did produce
superior returns in local currency terms.
Target shareholders enjoyed competitive returns
throughout 1996 - with less
volatility than if invested in one segment of
market. Why? Because the typical
Target account contained between five and eight
portfolios. Sure, some
portfolios performed better than others, but
markets seldom move in lockstep.
And there can be no assurance that any portfolio
will achieve its investment
objective. That's why it's so important to
maintain a proper allocation among
several portfolios.
The fourth quarter wrapped up a good year for
domestic stocks, although
December was not particularly kind to the large
cap growth part of the
market. The Large Capitalization Growth Portfolio,
managed by Oak Associates
and Columbus Circle, was bolstered by
2
<PAGE>
returns in November, largely from Oak Associates'
portion of the Portfolio.
Oak continued to focus on large technology stocks
such as Intel and Cisco.
Columbus Circle also favored technology as well as
finance. While these
sectors were generally good performers, some
individual stocks proved
disappointing. While the Large Capitalization
Value Portfolio, managed by
Invesco Capital Management and Hotchkis & Wiley,
performed relatively well
for the year, it was a challenging time for value
investors as growth stocks
continued to garner most of the spotlight.
Hotchkis & Wiley continued to
invest in high dividend paying stocks that were
undervalued. Overall, the
Portfolio was well diversified in sectors ranging
from utilities and
telecommunications to durable goods and chemicals.
Invesco's portion of the
Portfolio was focused more towards the consumer
staples and financial sectors.
The small cap growth sector of the market stalled
in the fourth quarter but
posted good returns for the year. However, small
cap growth stocks in general
trailed large and small cap value stocks. The
Small Capitalization Growth
Portfolio, managed by Nicholas Applegate Capital
Management and IAI, performed
fairly well due to the performance from IAI's
portion of the Portfolio. Their
dedication to a high quality, growth style paid
off as many of their stock
<TABLE>
<CAPTION>
Average Annual Total Returns as of December 31,
1996
Since
Portfolios One Year
Three Years Inception*
<S> <C>
<C> <C>
Large Capitalization Growth 19.29%
13.07% 9.16%
Large Capitalization Value 17.39
15.41 11.61
Small Capitalization Growth 17.11
11.47 12.86
Small Capitalization Value 20.03
7.30 12.60
International Equity 13.53
8.39 13.58
International Bond 3.41
N/A 6.33
Total Return Bond 3.97
5.55 6.45
Intermediate-Term Bond 4.17
5.27 6.03
Mortgage Backed Securities 4.50
5.79 6.31
</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 5/17/94. Past performance is not
indicative of future results.
selections in the previously unpopular energy
sector were rewarded.
Nicholas-Applegate's style was somewhat out-of-
favor in 1996 and their
performance lagged IAI's (The opposite was true in
1995). In the fourth
quarter, the small cap value sector pulled a page
out of the tortoise and
the hare fable by roaring ahead of the small cap
growth sector of the market.
The rally was fueled mostly by interest rate
sensitive securities. The Small
Capitalization Value Portfolio, managed by Lazard
Freres Asset Management and
Wood, Struthers & Winthrop, was very diversified
in undervalued small
companies with favorable business prospects.
Lazard Freres had an
3
<PAGE>
excellent fourth quarter and year. The performance
of their portion
of the Portfolio was driven by financial and
energy stocks. Wood, Struthers
& Winthrop had a good quarter and managed to post
competitive returns in spite
of a very conservatively positioned portfolio.
International Stocks Were Attractive.
International stocks quietly provided attractive
returns, albeit not as good
as those in the U.S. The International Equity
Portfolio, managed by Lazard
Freres Asset Management, performed well due to
good fundamental stock
selection and geographic allocations. The
Portfolio continued to add
attractively priced stocks that were believed
poised for price appreciation.
The manager's optimism was fueled by their belief
that many foreign companies
and economies continue to undergo the same changes
that have rewarded the U.S.
economy and stock market in recent years.
Specifically, many foreign companies
have been restructuring and realizing tremendous
productivity gains and cost
reductions, while lowering debt. Furthermore,
interest rates have been
declining for years across Europe and in Japan.
Finally, many Europeans and
Japanese were starting to realize that perhaps
they should not be relying
solely upon government to finance their
retirements and that they would need
to personally invest in equities. Sound familiar?
Bonds: 1996 Was No 1995.
After delivering double-digit returns in 1995,
U.S. bonds were a
disappointment in 1996, finishing far behind
stocks. Interest rates rose
early in the year, then fell, but unfortunately
ended slightly higher than
where they began, limiting investors' gains. The
villain was an uncooperative
economy, which threw off conflicting signals -
first slowing, then
accelerating, and finally settling down to close
the year at a moderate
pace. Bonds do best when interest rates are
falling or at least not rising.
Bond prices fell early in 1996 when economic
growth accelerated, because
investors feared rising inflation and rising
interest rates. When economic
growth slowed over the summer, bonds rose, but not
enough to recoup their
earlier losses.
The fourth quarter watched the world's bond
markets behave similarly to the
first nine months of the year. Overall,
international bond markets produced
superior returns (in local currency terms)
relative to the U.S. However,
appreciation of the U.S. dollar negated much of
this advantage. The
International Bond Portfolio, managed by Fiduciary
International, found
the best performing bond markets were once again
in Europe. The move to
create a unified European monetary system
continued to roll, prompting
further convergence of the smaller markets'
currencies (Italy, Spain and
Sweden) toward the core. Of the larger countries,
the Portfolio's manager
believed that UK government
4
<PAGE>
bonds offered outstanding medium-term value and
thus added them to
their holdings.
While the stock market provided large gains again
this year, the U.S. bond
market's performance might be categorized as ho-
hum. This year's tough market
conditions highlighted the importance of the
diversified approach to bond
investments used by the Total Return Bond
Portfolio manager, Pacific
Investment Management Company (PIMCO), PIMCO's use
of multiple strategies,
however, ranging from sector rotation to in-depth
analysis of individual
securities, allowed the Portfolio to post. The
Portfolio was well-diversified
across Treasurys and mortgages, with some exposure
to corporate bonds
Yields on Treasurys with maturities from 1 year to
30 years fell between
0.20% and 0.28% during the fourth quarter, capping
off a year of dramatic
changes across the U.S. fixed income market. The
Intermediate Term Bond
Portfolio, managed by PIMCO, continued to maintain
a duration above its
benchmark during the fourth quarter, reflecting
PIMCO's positive view on
interest rates. The Portfolio's higher duration
benefited investment returns
as bond prices increased in this falling interest
rate environment. Within
the different sectors of the bond market, PIMCO
thought corporates were
generally not very attractive, and were
emphasizing mortgages and Treasurys.
The Mortgage Backed Securities Portfolio, managed
by Wellington Management,
turned in another good year as it continued to
outperform its peers, as
measured by the Lipper Mortgage Average. Within
the bond market, mortgages
have continued to be the sector of choice for
investors searching for
incremental income over Treasurys. Wellington was
modestly positive on
interest rates based on an improved inflation
outlook and targeted the
Portfolio's duration to be modestly longer than
that of its benchmark.
Short-term interest rates were mixed in the fourth
quarter. While most fixed
income yields moved lower, seasonal forces put
upward pressure on the shortest
maturity instruments. As the first quarter of
1997 progressed, the U.S.
Government Money Market Portfolio, managed by
Wellington, remained biased
toward higher rates and consequently maintained a
shorter duration while
keeping vigilant for any tactical opportunities to
lengthen duration once
market prices have fully discounted the Federal
Reserve's moves. (An
investment in the Fund is neither insured nor
guaranteed by the U.S.
government, and there can be no assurance that the
Fund will be able to
maintain a stable net assset value of $1 per
share.)
Your Allocation Mainly Determines Your Returns
Security Selection and Other 7%
Market Timing 2%
Asset Allocation 91%
(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.
5
<PAGE>
Conclusion:
Our Outlook Is Optimistic.
Three months ago we were saying that a 6000 Dow
did not seem far away.
This year a Dow of 8000 may be in our sights. As
the first quarter begins,
market watchers generally remain cautious but
optimistic for the future.
Economic expansion should occur worldwide but with
the usual roller coaster
ride of up and downs in the world markets. Over
time, those investors who
have ridden out the roller coaster have been
rewarded, because a good ride
requires a long-term view and proper
diversification.
As always, we appreciate your commitment to Target
and having the opportunity
to report our activities to you.
Sincerely,
Brian M. Storms
President, Prudential Mutual Funds & Annuities
6
<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) Sixty-six recommended asset allocations or
unlimited number of customized
allocations are available.
4) Access to top investment advisers who manage
Target portfolios.
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)
7
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Growth
Portfolio
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
LONG-TERM INVESTMENTS--97.1%
Common Stocks--97.1%
Aerospace--3.7%
38,500 Boeing Co.................. $
4,095,438
28,800 Honeywell, Inc.............
1,893,600
24,200 Lockheed Martin Corp.......
2,214,300
-----
- -------
8,203,338
-----
- -------
Apparel & Textiles--0.7%
24,700 NIKE, Inc..................
1,475,825
-----
- -------
Auto Parts--0.5%
44,200 AutoZone, Inc.*............
1,215,500
-----
- -------
Banks--4.2%
27,000 Citicorp...................
2,781,000
65,700 NationsBank Corp...........
6,422,175
-----
- -------
9,203,175
-----
- -------
Business Services--0.9%
43,600 CUC International Inc.*....
1,035,500
35,600 Service Corp.
International............
996,800
-----
- -------
2,032,300
-----
- -------
Chemicals--0.8%
43,600 IMC Global, Inc............
1,705,850
-----
- -------
Computers & Business Equipment--
15.3%
100,000 3Com Corp.*................
7,337,500
53,600 Apple Computer, Inc........
1,118,900
143,000 Bay Networks, Inc.*........
2,985,125
29,600 Cabletron Systems, Inc.*...
984,200
149,900 Cisco Systems, Inc.*.......
9,537,387
71,000 Compaq Computer Corp.......
5,271,750
9,300 International Business
Machines Corp............
1,404,300
200,000 Sun Microsystems, Inc.*....
5,137,500
-----
- -------
33,776,662
-----
- -------
Cosmetics & Toiletries--1.0%
18,600 Avon Products, Inc........ $
1,062,525
13,500 Gillette Co...............
1,049,625
------
- -----
2,112,150
------
- -----
Drugs & Healthcare--12.7%
52,800 American Home Products
Corp....................
3,095,400
35,100 Cardinal Health, Inc......
2,044,575
59,800 Columbia/HCA Healthcare
Corp....................
2,436,850
80,300 Johnson & Johnson Co......
3,994,925
19,600 Lilly (Eli) & Co..........
1,430,800
22,000 Medtronic, Inc............
1,496,000
78,000 Merck & Co., Inc..........
6,181,500
88,000 Pfizer Inc................
7,293,000
------
- -----
27,973,050
------
- -----
Electronics--10.5%
42,800 Adaptec Inc...............
1,712,000
82,300 Ascend Communications,
Inc.*...................
5,112,887
10,000 Aspect Telecommunications
Corp.*..................
635,000
106,000 Linear Technology Corp....
4,650,750
100,000 Maxim Integrated Products,
Inc.*...................
4,325,000
45,000 Motorola, Inc.............
2,761,875
110,000 Xilinx Inc.*..............
4,049,375
------
- -----
23,246,887
------
- -----
Financial Services--3.8%
38,200 Associates First Capital
Corp....................
1,685,575
34,100 Chase Manhattan Corp......
3,043,425
57,700 Green Tree Financial
Corp....................
2,228,663
17,500 Merrill Lynch & Co., Inc..
1,426,250
------
- -----
8,383,913
------
- -----
Gas & Pipeline Utilities--0.8%
33,900 Sonat Inc.................
1,745,850
------
- -----
Hotels & Restaurants--1.1%
91,700 Hilton Hotels Corp........
2,395,663
------
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
8
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
Industrial Machinery--2.2%
136,000 Applied Materials, Inc.*... $
4,887,500
-----
- -------
Insurance--3.8%
57,900 Allstate Corporation.......
3,350,962
47,000 American International
Group, Inc...............
5,087,750
-----
- -------
8,438,712
-----
- -------
Leisure--0.6%
18,200 Disney (Walt) Co...........
1,267,175
-----
- -------
Oil & Gas--2.3%
12,700 Atlantic Richfield Co......
1,682,750
28,900 Burlington Resources, Inc..
1,455,838
13,600 Transocean Offshore Inc....
851,700
45,400 USX - Marathon Group.......
1,083,925
-----
- -------
5,074,213
-----
- -------
Paper--0.9%
21,200 Kimberly-Clark Corp........
2,019,300
-----
- -------
Petroleum Services--1.5%
33,200 Schlumberger Ltd...........
3,315,850
-----
- -------
Retail Grocery--1.0%
51,200 Safeway Inc................
2,188,800
-----
- -------
Retail Trade--3.9%
21,000 Home Depot, Inc............
1,052,625
70,800 Price / Costco, Inc.*......
1,778,850
99,100 Staples, Inc.*.............
1,789,994
42,600 TJX Companies Inc..........
2,018,175
66,900 Toys 'R' Us, Inc.*.........
2,007,000
-----
- -------
8,646,644
-----
- -------
Semiconductors & Equipment--9.2%
170,000 Atmel Corp.*...............
5,631,250
105,100 Intel Corp.................
13,761,531
37,400 LSI Logic Corp.*...........
1,000,450
-----
- -------
20,393,231
-----
- -------
Software & Services--9.3%
30,900 Computer Associates $
1,537,275
International, Inc......
74,384 First Data Corp...........
2,715,016
44,000 HBO & Co..................
2,612,500
91,000 Microsoft Corp.*..........
7,518,875
29,000 Netscape Communications
Corp....................
1,649,375
90,000 Parametric Technology
Corp.*..................
4,623,750
------
- -----
20,656,791
------
- -----
Telecommunication--6.4%
53,700 Lucent Technologies Inc...
2,483,625
30,400 Qualcomm, Inc.............
1,212,200
94,300 U.S. Robotics Corp........
6,789,600
136,500 WorldCom Inc.*............
3,557,531
------
- -----
14,042,956
------
- -----
Total common stocks
(cost $167,156,566).......
214,401,335
------
- -----
SHORT-TERM INVESTMENTS--2.7%
Principal
Amount
(000) Repurchase Agreement--2.7%
- ----------
$ 5,971 State Street Bank & Trust
Co.,
4.00%, dated 12/31/96,
due 1/2/97 in the amount
of $5,972,327 (cost
$5,971,000: value of
collateral including
accrued interest
$6,253,899).............
5,971,000
------
- -----
Total short-term
investments
(cost $5,971,000).......
5,971,000
------
- -----
Total Investments--99.8%
(cost $173,127,566).......
220,372,335
Other assets in excess of
liabilities--0.2%.........
410,094
------
- -----
Net Assets--100%..........
$220,782,429
------
- -----
------
- -----
</TABLE>
- ---------------
* Non-income producing.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
9
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Value
Portfolio
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
LONG-TERM INVESTMENTS--97.6%
Common Stocks--97.6%
Aerospace--2.6%
22,000 Boeing Co.................. $
2,340,250
24,450 Lockheed Martin Corp.......
2,237,175
16,000 Northrop Grumman Corp......
1,324,000
-----
- -------
5,901,425
-----
- -------
Agriculture Machinery--1.5%
39,500 Deere & Co.................
1,604,687
82,000 New Holland NV.............
1,711,750
-----
- -------
3,316,437
-----
- -------
Agriculture Products--0.8%
78,750 Archer-Daniels Midland
Co.......................
1,732,500
-----
- -------
Aluminum--1.7%
52,000 Aluminum Company of
America..................
3,315,000
11,000 Reynolds Metals Co.........
620,125
-----
- -------
3,935,125
-----
- -------
Apparel & Textiles--2.4%
35,000 Reebok International,
Ltd......................
1,470,000
45,000 Russell Corp...............
1,338,750
115,000 Shaw Industries, Inc.......
1,351,250
40,000 Unifi, Inc.................
1,285,000
-----
- -------
5,445,000
-----
- -------
Auto Parts--1.3%
50,000 Dana Corp..................
1,631,250
30,000 Genuine Parts Co...........
1,335,000
-----
- -------
2,966,250
-----
- -------
Automobiles--3.7%
142,000 Ford Motor Co..............
4,526,250
70,000 General Motors Corp........
3,902,500
-----
- -------
8,428,750
-----
- -------
Banks--9.8%
105,000 Ahmanson (H.F.) & Co...... $
3,412,500
9,000 BankAmerica Corp..........
897,750
40,000 Boatmen's Bancshares......
2,580,000
9,060 Chase Manhattan Corp......
808,605
11,000 Comerica, Inc.............
576,125
9,600 First America Bank Corp...
577,200
45,000 First Chicago Nbd Corp....
2,418,750
75,000 Great Western Financial
Corp....................
2,175,000
27,000 Keycorp...................
1,363,500
72,000 National City Corp........
3,231,000
22,000 NationsBank Corp..........
2,150,500
8,500 Signet Banking Corp.......
261,375
35,000 Wachovia Corp.............
1,977,500
------
- -----
22,429,805
------
- -----
Brewery--1.7%
98,600 Anheuser Busch Cos.,
Inc.*...................
3,944,000
------
- -----
Chemicals--2.8%
36,000 Dow Chemical Co...........
2,821,500
21,000 Du Pont (E.I.) De Nemours
& Co....................
1,981,875
6,700 Eastman Chemical Co.......
370,175
20,000 Great Lakes Chemical Corp.
935,000
8,785 Millennium Chemicals
Inc.*...................
155,934
------
- -----
6,264,484
------
- -----
Computers & Business Equipment--
3.5%
30,000 Compaq Computer Corp.*....
2,227,500
36,000 Hewlett-Packard Co........
1,809,000
International Business
15,000 Machines Corp...........
2,265,000
30,000 Pitney Bowes, Inc.........
1,635,000
------
- -----
7,936,500
------
- -----
Conglomerate--3.5%
58,000 American Brands Inc.......
2,878,250
25,000 Dover Corp................
1,256,250
223,000 Hanson PLC (ADR)..........
1,505,250
25,000 Textron, Inc..............
2,356,250
------
- -----
7,996,000
------
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
10
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
Domestic Oil--1.5%
16,000 Atlantic Richfield Co...... $
2,120,000
50,000 USX - Marathon Group.......
1,193,750
-----
- -------
3,313,750
-----
- -------
Drugs & Healthcare--8.7%
32,500 Abbott Laboratories........
1,649,375
54,000 American Home Products
Corp.....................
3,165,750
20,000 Baxter International, Inc..
820,000
33,000 Bristol Myers Squibb Co....
3,588,750
52,500 Columbia/HCA Healthcare
Corp.....................
2,139,375
34,000 Lilly (Eli) & Co...........
2,482,000
32,000 Merck & Co., Inc...........
2,536,000
87,000 Mylan Laboratories.........
1,457,250
30,000 Schering Plough Corp.......
1,942,500
-----
- -------
19,781,000
-----
- -------
Electric Utilities--6.8%
20,000 Central & South West Corp..
512,500
73,000 CMS Energy Corp............
2,454,625
6,000 DTE Energy Company.........
194,250
139,000 Edison International.......
2,762,625
21,000 General Public Utilities
Corp.....................
706,125
20,000 Illinova Corp..............
550,000
50,000 New York State Electric &
Gas Corp.................
1,081,250
109,300 Niagara Mohawk Power Corp..
1,079,337
45,000 PECO Energy Co.............
1,136,250
40,000 Public Service Enterprise
Group Inc................
1,090,000
80,000 Southern Co................
1,810,000
80,000 Unicom Corp................
2,170,000
-----
- -------
15,546,962
-----
- -------
Electrical Equipment--1.5%
20,000 Emerson Electric Co.*......
1,935,000
15,000 General Electric Co........
1,483,125
-----
- -------
3,418,125
-----
- -------
Electronics--1.6%
40,000 Raytheon Co................
1,925,000
27,000 Rockwell International
Corporation New..........
1,643,625
-----
- -------
3,568,625
-----
- -------
Financial Services--2.9%
17,000 Beneficial Corp........... $
1,077,375
Federal National Mortgage
104,000 Association.............
3,874,000
18,000 Household International,
Inc.....................
1,660,500
------
- -----
6,611,875
------
- -----
Food & Beverages--2.4%
52,500 Heinz (H.J.) Co...........
1,876,875
50,000 PepsiCo, Inc..............
1,462,500
60,000 Tyson Foods, Inc..........
2,055,000
------
- -----
5,394,375
------
- -----
Forest Products--2.5%
16,000 Georgia-Pacific Corp......
1,152,000
25,000 Kimberly-Clark Corp.......
2,381,250
47,000 Weyerhaeuser Co...........
2,226,625
------
- -----
5,759,875
------
- -----
Gas & Pipeline Utilities--0.4%
27,000 Eastern Enterprises.......
955,125
------
- -----
Household Appliances & Home
Furnishings--1.3%
70,000 Maytag Corp...............
1,382,500
36,000 Whirlpool Corp............
1,678,500
------
- -----
3,061,000
------
- -----
Insurance--6.6%
55,000 American General Corp.....
2,248,125
27,000 Aon Corp..................
1,677,375
10,000 General Reinsurance Corp..
1,577,500
30,000 Jefferson-Pilot Corp......
1,698,750
22,000 Lincoln National Corp.....
1,155,000
19,000 Marsh & Mclennan Cos.,
Inc.....................
1,976,000
55,000 SAFECO Corp...............
2,169,062
11,000 St. Paul Cos, Inc.........
644,875
14,000 Transamerica Corp.........
1,106,000
23,000 USLIFE Corp...............
764,750
------
- -----
15,017,437
------
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
11
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Value
Portfolio (cont'd)
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
International Oil--4.7%
25,000 Amoco Corp................. $
2,012,500
30,000 Chevron Corp...............
1,950,000
31,000 Exxon Corp.................
3,038,000
50,000 Repsol S.A. (ADR)..........
1,906,250
11,000 Royal Dutch Petroleum Co...
1,878,250
-----
- -------
10,785,000
-----
- -------
Mining--0.6%
21,300 Phelps Dodge Corp..........
1,437,750
-----
- -------
Miscellaneous--1.0%
52,000 Tenneco Incorporated New...
2,346,500
-----
- -------
Paper--2.1%
59,999 International Paper Co.....
2,422,460
25,000 Union Camp Corp............
1,193,750
37,500 Westvaco Corp..............
1,078,125
-----
- -------
4,694,335
-----
- -------
Petroleum Services--0.2%
7,900 Ashland, Inc...............
346,613
7,000 Ultramar Diamond Shamrock..
221,375
-----
- -------
567,988
-----
- -------
Pollution Control--1.9%
115,300 Browning Ferris Industries,
Inc......................
3,026,625
40,000 WMX Technologies, Inc......
1,305,000
-----
- -------
4,331,625
-----
- -------
Publishing--0.2%
16,000 Dun & Bradstreet Corp......
380,000
-----
- -------
Railroads & Equipment--1.3%
8,100 Conrail, Inc...............
806,963
35,000 Illinois Central Corp......
1,120,000
12,000 Norfolk Southern Corp......
1,050,000
-----
- -------
2,976,963
-----
- -------
Retail Trade--2.8%
113,800 Kmart Corp.*.............. $
1,180,675
41,000 May Department Stores Co..
1,916,750
37,000 Penney (J.C.) Co., Inc....
1,803,750
34,400 Sears Roebuck & Co........
1,586,700
------
- -----
6,487,875
------
- -----
Retail - Food & Restaurants--0.8%
40,000 McDonald's Corp...........
1,810,000
------
- -----
Steel--0.8%
55,000 USX-U.S. Steel Group, Inc.
1,725,625
------
- -----
Telephone--3.9%
38,000 ALLTEL Corp...............
1,192,250
63,000 AT&T Corp.................
2,740,500
31,000 Pacific Telesis Group.....
1,139,250
Southern New England
Telecommunications,
40,000 Corp....................
1,555,000
40,000 Telefonos de Mexico, S.A.
(ADR)...................
1,320,000
31,000 U.S. West, Inc............
999,750
------
- -----
8,946,750
------
- -----
Tires & Rubber--0.6%
65,000 Cooper Tire & Rubber Co...
1,283,750
------
- -----
Tobacco--4.0%
64,700 Imperial Tobacco Group
Plc., (ADR)*............
824,925
57,000 Philip Morris Cos., Inc...
6,419,625
55,000 UST, Inc..................
1,780,625
------
- -----
9,025,175
------
- -----
Trucking & Freight Forwarding--
1.2%
80,000 Hunt J.B.Transport
Services, Inc...........
1,120,000
58,000 Ryder System, Inc.........
1,631,250
------
- -----
2,751,250
------
- -----
Total common stocks
(cost $168,442,491).......
222,275,011
------
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
12
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--2.0%
Other--2.0%
$ 294 Seven Seas Money
Market Fund.............. $
294,347
4,164 Seven Seas Series
Government Fund..........
4,163,645
-----
- -------
Total other
(cost $4,457,992)..........
4,457,992
-----
- -------
Total short-term
investments
(cost $4,457,992)..........
4,457,992
-----
- -------
Total Investments--99.6%
(cost $172,900,483)........
226,733,003
Other assets in excess of
liabilities--0.4%..........
972,846
-----
- -------
Net Assets--100%...........
$227,705,849
-----
- -------
-----
- -------
</TABLE>
- ---------------
* Non-income producing.
ADR--American Depository Receipts.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
13
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Growth
Portfolio
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
LONG-TERM INVESTMENTS--96.9%
Common Stocks--96.9%
Apparel & Textiles--4.9%
34,600 American Eagle Outfitters.. $
272,475
56,200 Dress Barn, Inc............
843,000
9,000 Fila Holding SpA (ADR).....
523,125
55,200 Finish Line, Inc.*.........
1,166,100
46,200 Goody's Family Clothing,
Inc......................
825,825
42,000 Nautica Enterprises, Inc.*.
1,060,500
33,300 Stein Mart, Inc. *.........
674,325
64,300 Warnaco Group, Inc.........
1,904,887
-----
- -------
7,270,237
-----
- -------
Brewery--0.3%
47,400 Redhook Ale Brewery, Inc...
456,225
-----
- -------
Building Products--0.5%
18,400 Hughes Supply Inc..........
793,500
-----
- -------
Business Services--7.4%
28,300 Analysts International
Corp.....................
799,475
37,600 Children's Comprehensive
Services, Inc.*..........
493,500
44,700 Employee Solutions, Inc....
916,350
33,600 Fiserv, Inc................
1,234,800
63,400 GTECH Holdings Corp........
2,028,800
33,700 International Telecomm.
Systems, Inc.............
817,225
37,100 Metro Networks, Inc........
936,775
33,600 National Education Corp.*..
512,400
34,600 National TechTeam, Inc.....
692,000
7,600 Robert Half International
Inc.*....................
261,250
59,700 Scientific Games Holdings
Corp.*...................
1,596,975
13,200 Technology Solutions Co....
547,800
-----
- -------
10,837,350
-----
- -------
Chemicals--3.2%
35,000 Carbide / Graphite Group
(The), Inc...............
686,875
79,700 Minerals Technologies,
Inc......................
3,267,700
34,300 Mississippi Chemical Corp..
823,200
-----
- -------
4,777,775
-----
- -------
Communication--3.3%
18,200 Cascade Communications
Corp.*.................. $
1,003,275
14,700 DSP Communications, Inc...
284,813
56,000 Pairgain Technologies,
Inc.*...................
1,704,500
43,100 Spectran Corp.*...........
937,425
45,100 Xircom, Inc...............
980,925
------
- -----
4,910,938
------
- -----
Computers & Business Equipment--
5.8%
17,000 Cisco Systems, Inc.*......
1,081,625
11,100 Compaq Computer Corp......
824,175
24,000 Dell Computer Corp.*......
1,275,000
26,900 Encad, Inc................
1,109,625
16,800 Gateway 2000 Inc.*........
899,850
28,500 Identix, Inc..............
233,344
19,600 Medic Computer Systems,
Inc.*...................
790,125
20,600 Sun Microsystems, Inc.*...
529,162
86,100 Wang Laboratories, Inc....
1,743,525
------
- -----
8,486,431
------
- -----
Containers & Glass--0.5%
20,400 Bemis Co., Inc............
752,250
------
- -----
Drugs & Healthcare--7.0%
47,000 Biovail Corp.
International...........
1,204,375
31,000 Health Management Systems,
Inc.....................
434,000
6,000 Incyte Pharmaceuticals,
Inc.....................
309,000
37,000 Inphynet Medical
Management, Inc.........
666,000
48,900 Jones Medical Industries,
Inc.....................
1,790,962
37,300 Medeva PLC (ADR)..........
629,438
56,200 NBTY, Inc.................
1,067,800
16,900 Oxford Health Plans, Inc.*
989,706
30,100 Scherer (R.P.) Corp.......
1,512,525
31,800 Sierra Health Services
Inc.....................
783,075
30,000 Sybron International Corp.
990,000
------
- -----
10,376,881
------
- -----
Electrical Equipment--0.6%
37,100 Park Electrochemical Corp.
844,025
------
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
14
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
Electronics--5.2%
22,300 Ascend Communications, $
1,385,387
Inc.*....................
5,100 Aspect Telecommunications
Corp.*...................
323,850
14,000 Aspen Technology Corp......
1,123,500
13,700 BMC Industries, Inc........
431,550
35,000 DII Group, Inc.............
813,750
57,000 Lexmark International
Group, Inc...............
1,574,625
40,000 Peak Technologies Group,
480,000
Inc......................
14,400 Pittway Corp...............
770,400
62,000 Thermospectra Corp.........
759,500
-----
- -------
7,662,562
-----
- -------
Financial Services--2.9%
22,800 Aames Financial Corp.......
817,950
36,000 Credit Acceptance Corp.....
846,000
19,200 Green Tree Financial Corp..
741,600
55,600 Imperial Credit Industries,
Inc.*....................
1,167,600
8,100 Student Loan Marketing
Association..............
754,313
-----
- -------
4,327,463
-----
- -------
Gas & Pipeline Utilities--0.5%
41,500 Dreyfus (Louis) Natural Gas
Corp.....................
710,688
-----
- -------
Homebuilders--3.1%
68,384 Champion Enterprises, Inc.*
1,333,488
33,700 Coachmen Industries Inc....
956,237
25,500 Lennar Corp................
694,875
57,250 Watsco, Inc................
1,653,094
-----
- -------
4,637,694
-----
- -------
Hotels & Restaurants--2.7%
14,400 HFS Incorporated *.........
860,400
136,600 Homegate Hospitality, Inc..
1,144,025
4,200 Marriott International,
232,050
Inc......................
72,900 Renaissance Hotel Group N V
1,713,150
-----
- -------
3,949,625
-----
- -------
Household Appliances & Home
Furnishings--0.9%
25,600 Ethan Allen Interiors Inc..
985,600
19,500 O'Sullivan Industries
Holdings, Inc............
273,000
-----
- -------
1,258,600
-----
- -------
Industrial Machinery--0.9%
4,300 Graco, Inc................ $
105,350
80,500 JLG Industries, Inc.......
1,288,000
------
- -----
1,393,350
------
- -----
Insurance--3.6%
36,100 Capmac Holdings Inc.......
1,195,812
19,700 Frontier Insurance Group,
753,525
Inc.....................
9,850 HCC Insurance Holdings,
236,400
Inc.....................
61,100 Integon Corp..............
1,084,525
10,000 PMI Group (The), Inc......
553,750
25,500 TIG Holdings, Inc.........
863,812
17,700 Vesta Insurance Group,
Inc.....................
555,338
------
- -----
5,243,162
------
- -----
Leisure--1.3%
12,900 Anchor Gaming.............
519,225
85,000 Silicon Gaming, Inc.......
1,370,625
------
- -----
1,889,850
------
- -----
Manufacturing--0.6%
52,250 Paxar Corp................
901,313
------
- -----
Medical & Dental Supplies--1.3%
10,900 Hologic, Inc.*............
269,775
20,300 Safeskin Corp.............
989,625
34,000 Xomed Surgical Products,
Inc.....................
680,000
------
- -----
1,939,400
------
- -----
Metal--1.8%
13,800 Mueller Industries, Inc.*.
531,300
23,000 Oregon Metallurgical
Corp....................
741,750
41,100 Wolverine Tube, Inc.......
1,448,775
------
- -----
2,721,825
------
- -----
Miscellaneous--1.3%
16,900 Blyth Industries Inc......
771,063
58,600 Metromail Corp............
1,069,450
------
- -----
1,840,513
------
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
15
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Growth
Portfolio (cont'd)
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
Office Equipment & Services--1.9%
79,400 Danka Business Systems PLC $
2,808,775
(ADR)....................
-----
- -------
Oil & Gas Exploration--6.5%
21,450 Chesapeake Energy Corp.*...
1,193,156
101,700 Comstock Resources, Inc.*..
1,322,100
33,800 Cross Timbers Oil Co.......
849,225
131,600 Geoscience Corp............
1,710,800
55,300 Marine Drilling Cos., Inc..
1,088,719
35,300 Nuevo Energy Co............
1,835,600
57,000 Reading & Bates Corp.*.....
1,510,500
-----
- -------
9,510,100
-----
- -------
Oil Field / Equipment & Services--
2.0%
19,100 Camco International, Inc...
880,988
47,500 Roper Industries, Inc......
1,858,437
5,500 Tidewater, Inc.............
248,875
-----
- -------
2,988,300
-----
- -------
Petroleum Services--3.4%
20,300 Parker & Parsley Petroleum
746,025
Co.......................
88,900 Petroleum Geo-Services A/S
3,467,100
(ADR)....................
39,100 Veritas DGC Inc.*..........
723,350
-----
- -------
4,936,475
-----
- -------
Publishing--3.2%
100,500 Big Flower Press Holdings,
1,884,375
Inc......................
8,300 Gardner Denver Machinery
284,275
Inc.*....................
15,400 Gartner Group, Inc.*.......
599,638
32,000 Golden Books Family
Entert., Inc.............
356,000
136,500 Hollinger, Inc.............
1,569,750
-----
- -------
4,694,038
-----
- -------
Retail Trade--4.1%
27,200 Barnes & Noble, Inc.*......
734,400
4,200 Bed Bath & Beyond, Inc.*...
101,850
47,600 CompUSA Inc.*..............
981,750
96,000 Heilig Meyers Co...........
1,560,000
39,500 Ross Stores, Inc...........
1,975,000
34,000 Tuesday Morning Corp.......
726,750
-----
- -------
6,079,750
-----
- -------
Retail/Wholesale--0.7%
39,000 Tech Data Corp.*.......... $
1,067,625
------
- -----
Semiconductors & Equipment--0.6%
18,100 Vitesse Semiconductor
Corp.*..................
823,550
------
- -----
Software--8.6%
50,500 3Do Company...............
243,031
22,950 Cadence Design Systems,
912,263
Inc.*...................
Computer Associates
17,550 International, Inc......
873,113
16,400 Compuware Corp.*..........
822,050
132,100 Decisionone Corp..........
2,179,650
14,800 HBO & Co..................
878,750
35,300 Hyperion Software Corp....
750,125
20,900 Manugistics Group, Inc....
830,775
45,562 McAfee Associates, Inc.*..
2,004,728
50,000 Memco Software Ltd........
881,250
17,400 Microchip Technology, Inc.
885,225
24,200 Peoplesoft, Inc.*.........
1,160,087
12,000 Reynolds & Reynolds Co....
312,000
------
- -----
12,733,047
------
- -----
Steel--1.7%
11,300 Shaw Group Inc............
264,138
65,000 Shiloh Industries, Inc....
1,056,250
58,500 Steel Dynamics, Inc.......
1,118,812
------
- -----
2,439,200
------
- -----
Telephone--0.3%
22,900 LCI International, Inc.*..
492,350
------
- -----
Toys & Amusements--0.5%
38,900 Equity Marketing Inc......
719,650
------
- -----
Transportation--3.8%
53,500 Coach USA, Inc............
1,551,500
69,500 Landstar Systems, Inc.....
1,615,875
41,500 Offshore Logistics, Inc...
804,062
51,300 Teekay Shipping Corp......
1,680,075
------
- -----
5,651,512
------
- -----
Total common stocks
(cost $115,034,187).......
142,926,029
------
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
16
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--1.1%
Other--1.1%
$ 178 Seven Seas Money Market
Fund..................... $
178,307
1,434 Seven Seas Series
Government Fund..........
1,434,495
-----
- -------
Total other
(cost $1,612,802)........
1,612,802
-----
- -------
Total short-term
Investments
(cost $1,612,802)........
1,612,802
-----
- -------
Total Investments--98.0%
(cost $116,646,989)........
144,538,831
Other assets in excess of
liabilities--2.0%........
2,930,444
-----
- -------
Net Assets--100%...........
$147,469,275
-----
- -------
-----
- -------
</TABLE>
- ------------------
* Non-income producing.
ADR--American Depository Receipt.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
17
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Value
Portfolio
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
LONG-TERM INVESTMENTS--96.2%
Common Stocks--96.2%
Aerospace--2.2%
28,200 AAR Corp................... $
853,050
15,300 Alliant Techsystems, Inc...
841,500
44,400 Martin Marietta Materials,
Inc......................
1,032,300
-----
- -------
2,726,850
-----
- -------
Airlines--0.6%
31,800 USAir Group Inc.*..........
743,325
-----
- -------
Apparel & Textiles--1.9%
36,500 Interface, Inc.............
734,563
24,900 Unitog Co. (New)...........
678,525
33,700 Warnaco Group, Inc.........
998,362
-----
- -------
2,411,450
-----
- -------
Auto Parts--1.0%
15,600 Borg-Warner Automotive,
Inc......................
600,600
44,900 Standard Motor Products,
Inc......................
622,988
-----
- -------
1,223,588
-----
- -------
Auto Related--2.7%
32,000 Amcast Industrial Corp.....
792,000
23,800 First Brands Corp..........
675,325
24,800 Modine Manufacturing Co....
663,400
40,680 Myers Industries, Inc......
686,475
20,800 Smith AO Corp..............
621,400
-----
- -------
3,438,600
-----
- -------
Banks--5.9%
38,300 First American Corp........
2,207,037
22,900 First Commerce Corp........
890,237
18,500 Firstmerit Corp............
656,750
28,200 Long Island Bancorp, Inc...
987,000
37,300 ML Bancorp, Inc............
526,863
27,800 North Fork Bancorp, Inc....
990,375
27,900 People's Bank..............
805,613
13,200 Susquehanna Bancshares,
Inc......................
457,050
-----
- -------
7,520,925
-----
- -------
Broadcasting--0.8%
39,200 International Cabletel,
Inc..................... $
989,800
------
- -----
Building & Construction--4.1%
20,100 Carlisle Co., Inc.........
1,216,050
26,650 Clarcor, Inc..............
589,631
27,800 Donaldson Co., Inc........
931,300
52,600 Lydall, Inc.*.............
1,183,500
29,150 Osmonics, Inc.*...........
641,300
32,400 Regal Beloit Corp.........
635,850
------
- -----
5,197,631
------
- -----
Business Services--0.8%
38,200 Bowne & Company, Inc......
940,675
3,450 Nichols Research Corp.*...
87,975
------
- -----
1,028,650
------
- -----
Chemicals--3.1%
27,700 Ferro Corp................
785,987
18,100 Furon Co..................
384,625
46,200 Hanna (M.A.) Co...........
1,010,625
26,700 Learonal, Inc.............
614,100
24,090 Rock-Tenn Co., Cl. A......
481,800
34,950 RPM, Inc..................
594,150
------
- -----
3,871,287
------
- -----
Communication--1.4%
45,600 Allen Group, Inc..........
1,014,600
24,400 Associated Group, Inc.....
750,300
------
- -----
1,764,900
------
- -----
Computers & Business Equipment--
2.7%
73,200 Intelligent Electronics,
Inc.....................
585,600
20,600 MTS Systems Corp..........
412,000
42,600 Planar Systems, Inc.*.....
500,550
46,400 Stratus Computer, Inc.....
1,264,400
32,800 Wang Laboratories, Inc....
664,200
------
- -----
3,426,750
------
- -----
Diversified Industrials--2.1%
27,200 Applied Power, Inc........
1,077,800
23,700 Brady (W.H.) Co...........
583,613
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
18
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
Diversified Industrials--(cont'd)
18,800 Teleflex, Inc.............. $
979,950
-----
- -------
2,641,363
-----
- -------
Drugs & Healthcare--3.1%
22,200 Bergen Brunswig Corp.......
632,700
38,100 Integrated Health Services,
928,687
Inc......................
13,600 Scherer (R.P.) Corp.*......
683,400
49,500 Sunrise Medical, Inc.......
785,813
19,200 Vital Signs, Inc...........
499,200
13,400 West Co., Inc..............
378,550
-----
- -------
3,908,350
-----
- -------
Electrical Equipment--5.4%
37,900 American Power Conversion
1,032,775
Co.......................
54,400 Anixter International,
Inc......................
877,200
21,750 Bearings, Inc..............
606,281
51,200 Belden, Inc................
1,894,400
25,200 Berg Electronics Corp.*....
740,250
38,500 Core Industries, Inc.......
635,250
28,200 Oak Industries, Inc........
648,600
32,900 Woodhead Industries, Inc...
452,375
-----
- -------
6,887,131
-----
- -------
Electronics--4.2%
54,700 Amphenol Corp..............
1,217,075
34,200 Dallas Semiconductor Corp..
786,600
26,400 Esterline Technologies
Corp.*...................
689,700
43,550 Methode Eletronics, Inc....
881,887
46,000 Pioneer Standard
Electronics, Inc.........
603,750
30,200 Wyle Electronics...........
1,192,900
-----
- -------
5,371,912
-----
- -------
Financial Services--1.4%
22,000 CMAC Investment Corp.......
808,500
48,700 Rollins Truck Leasing
Corp.....................
614,837
13,300 United Companies Financial
Corp.....................
354,113
-----
- -------
1,777,450
-----
- -------
Food - Service/Lodging--1.7%
23,700 Luby's Cafeterias, Inc.....
471,038
28,800 Marcus Corp................ $
612,000
39,300 Sbarro, Inc................
1,002,150
----
- -------
2,085,188
----
- -------
Foods--1.5%
27,500 Flowers Industries, Inc....
591,250
14,600 Lancaster Colony Corp......
671,600
17,600 Universal Foods Corp.......
620,400
----
- -------
1,883,250
----
- -------
Gas & Pipeline Utilities--0.5%
16,200 Wicor, Inc.................
581,175
----
- -------
Hospital Supplies & Services--2.7%
17,800 Beckman Instruments, Inc...
683,075
47,100 Magellan Health Services,
1,053,863
Inc......................
63,100 Sierra Health Services
1,553,837
Inc.*....................
9,000 SpaceLabs Medical, Inc.....
184,500
----
- -------
3,475,275
----
- -------
Household Appliances & Home
Furnishings--3.3%
21,000 Chromcraft Revington, Inc.*
582,750
26,500 Department 56, Inc.*.......
655,875
21,700 Ethan Allen Interiors
835,450
Inc......................
16,600 Hon Industries, Inc........
547,800
42,500 Linens N Things, Inc.......
834,062
26,400 Rival Co...................
656,700
4,200 Stanhome, Inc..............
111,300
----
- -------
4,223,937
----
- -------
Industrial Machinery--9.7%
26,400 Alltrista Corp.............
679,800
24,000 Briggs & Stratton Corp.....
1,056,000
45,150 Crane Co...................
1,309,350
50,000 Duriron, Inc...............
1,356,250
27,700 Graco, Inc.................
678,650
25,100 Kennametal, Inc............
975,762
57,723 Mark IV Industries, Inc....
1,305,983
33,100 Measurex Corp..............
794,400
18,200 NN Ball & Roller, Inc......
277,550
28,500 Polaris Industries, Inc.....
676,875
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
19
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Value
Portfolio (cont'd)
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
Industrial Machinery--(cont'd)
19,800 Scotsman Industries, Inc... $
467,775
16,500 Standex International Corp.
509,438
12,000 Stewart & Stevenson
349,500
Services, Inc............
34,900 United Dominion Industries,
820,150
Ltd......................
45,500 Watts Industries, Inc......
1,086,312
-----
- -------
12,343,795
-----
- -------
Insurance--6.9%
18,200 American Bankers Insurance
930,475
Group, Inc...............
35,700 Blanch (E.W.) Holdings,
718,462
Inc......................
12,700 Capmac Holdings, Inc.......
420,688
27,000 Enhance Financial Services
985,500
Group, Inc...............
21,300 Equitable of Iowa Co.......
977,137
14,900 Hartford Steam Boiler
Inspection & Insurance
Co.......................
690,988
44,700 Horace Mann Educators
1,804,762
Corp.....................
500 Liberty Corp...............
19,625
22,900 NAC Re Corp................
775,737
21,300 Poe & Brown, Inc...........
564,450
14,600 Protective Life Corp.......
582,175
9,900 Vesta Insurance Group,
310,613
Inc......................
-----
- -------
8,780,612
-----
- -------
Leisure And Recreation--0.8%
36,500 K2, Inc....................
1,003,750
-----
- -------
Manufacturing--2.3%
38,200 Input/Output, Inc..........
706,700
76,800 International Rectifier
1,171,200
Corp.*...................
26,700 Trinova Corp...............
971,212
-----
- -------
2,849,112
-----
- -------
Miscellaneous--1.4%
18,600 AptarGroup, Inc............
655,650
46,900 Calpine Corp...............
938,000
11,700 Cuno, Inc..................
174,038
-----
- -------
1,767,688
-----
- -------
Office Equipment--2.9%
38,500 Hunt Manufacturing Co..... $
697,812
29,000 Lexmark International
801,125
Group, Inc..............
37,800 Miller (Herman), Inc......
2,140,425
------
- -----
3,639,362
------
- -----
Oil & Gas--2.2%
39,600 Devon Energy Corp.........
1,376,100
12,500 Helmerich & Payne, Inc....
651,562
25,400 Ultramar Diamond Shamrock
Corp....................
803,275
------
- -----
2,830,937
------
- -----
Oil & Gas - Production/pipeline--
0.6%
17,700 Barrett Resources Corp....
754,463
1,200 Production Operators
Corp....................
55,800
------
- -----
810,263
------
- -----
Oil-Supplies & Construction--0.9%
7,400 BJ Services Co............
377,400
16,900 Tidewater, Inc............
764,725
------
- -----
1,142,125
------
- -----
Paper--0.8%
16,100 Caraustar Industries,
535,325
Inc.....................
27,600 Wausau Paper Mills Co.....
510,600
------
- -----
1,045,925
------
- -----
Pollution Control--0.3%
24,500 Safety-Kleen Corp.........
401,188
------
- -----
Printing & Publishing--2.3%
30,350 American Business
Products, Inc...........
762,544
66,150 Banta Corp................
1,513,181
28,400 Lee Enterprises, Inc......
660,300
------
- -----
2,936,025
------
- -----
Professional Services--1.1%
13,100 CDI Corp.*................
371,713
10,000 Interim Services, Inc.*...
355,000
29,800 Jacobs Engineering Group,
Inc.*...................
704,025
------
- -----
1,430,738
------
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
20
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
Railroads & Equipment--0.5%
31,500 ABC Rail Products Corp.*... $
626,063
-----
- -------
Real Estate--2.6%
41,500 Arden Reality, Inc.........
1,151,625
46,300 Liberty Property...........
1,192,225
30,000 RFS Hotel Investors, Inc...
592,500
9,000 Sun Communities, Inc.......
310,500
-----
- -------
3,246,850
-----
- -------
Retail - Food & Drugs--1.0%
35,775 Arbor Drugs, Inc...........
621,591
44,400 Ruddick Corp...............
621,600
-----
- -------
1,243,191
-----
- -------
Retailing--2.7%
31,400 Carson Pirie Scott & Co....
792,850
27,300 Lands End, Inc.............
723,450
21,900 Meyer (Fred), Inc..........
777,450
30,700 Proffitt's, Inc.*..........
1,132,062
-----
- -------
3,425,812
-----
- -------
Steel--0.7%
42,100 Lukens, Inc................
847,263
-----
- -------
Telephone--0.3%
19,400 Cellular Communications
Puerto Rico, Inc.........
383,150
-----
- -------
Tobacco--0.2%
19,200 Swisher International
Group, Inc...............
304,800
-----
- -------
Toys & Amusements--0.4%
26,000 Russ Berrie & Co., Inc.....
468,000
-----
- -------
Transportation--0.7%
38,000 Harper Group, Inc..........
902,500
-----
- -------
Trucking & Freight Forwarding--
1.1%
37,600 Pittston Co............... $
752,000
22,500 The Pittston Co...........
607,500
------
- -----
1,359,500
------
- -----
Trucking & Shipping--0.7%
48,600 Werner Enterprises, Inc...
880,875
------
- -----
Total common stocks
(cost $100,892,040).....
121,848,311
------
- -----
SHORT-TERM INVESTMENTS--2.8%
Principal
Amount
(000) U.S. Government Securities--2.8%
- ----------
Federal Home Loan Mortgage
Discount Notes
$ 2,000 5.42%, 1/22/97..........
1,993,677
United States Treasury
Bills
40 5.045%, 2/6/97..........
39,798
United States Treasury
Bills
53 4.84%, 2/13/97..........
52,694
United States Treasury
Bills
1,050 4.855%, 2/13/97.........
1,043,911
United States Treasury
Bills
430 4.935%, 2/13/97.........
427,465
------
- -----
Total U.S. Government
Securities
(cost $3,557,545).......
3,557,545
------
- -----
Total short-term
investments
(cost $3,557,545).......
3,557,545
------
- -----
Total Investments--99.0%
(cost $104,449,585).......
125,405,856
Other assets in excess of
liabilities--1.0%.......
1,266,047
------
- -----
Net Assets--100%..........
$126,671,903
------
- -----
------
- -----
</TABLE>
- ---------------
* Non-income producing
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
21
<PAGE>
THE TARGET PORTFOLIO TRUST
International Equity Portfolio
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
US$
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
LONG-TERM INVESTMENTS--98.3%
Common Stocks--97.2%
Australia--2.7%
299,547 Coles Myer Ltd. .......... $
1,233,331
(Retail)
911,700 Westpac Banking Corp. ....
5,188,595
(Banking) -----
- -------
6,421,926
-----
- -------
Denmark--1.1%
50,700 Unidanmark A.S. ..........
2,625,025
(Banking) -----
- -------
Finland--1.1%
120,380 UPM Kymmene Oy* ..........
2,525,363
(Forest Products) -----
- -------
France--15.2%
19,625 Accor, S.A. ..............
2,485,039
(Lodging)
72,100 Alcatel Alsthom Compagnie
Generale d' Electricite .
5,791,901
(Energy)
103,960 Banque Nationale de Paris .
4,023,353
(Banking)
34,600 Cie De St Gobain .........
4,894,748
(Manufacturing)
44,800 Eaux Cie Generale ........
5,551,971
(Utilities)
171,977 Rhone Poulenc S.A. .......
5,863,493
(Chemicals)
58,000 Societe Nationale Elf
5,279,638
Aquitaine ..............
(Energy)
31,932 Total Francaise Petroleum
2,597,148
Ltd. ................... -----
- -------
(Oil & Gas-Domestic)
36,487,291
-----
- -------
Germany--13.9%
89,500 Daimler-Benz A.G. ........
6,165,194
(Automobiles)
102,400 Deutsche Bank A.G. ...... $
4,784,611
(Banking)
91,100 Deutsche Telekom A.G.
1,856,162
(ADR)* ................
(Telecommunications)
164,600 Hoechst A.G. ............
7,776,462
(Steel)
9,200 Mannesmann A.G. (ADR) ...
3,981,807
(Industrials)
25,900 Metro A.G. ..............
2,087,081
(Retail)
14,000 Thyssen A.G. ............
2,483,754
(Manufacturing)
73,000 VEBA A.G. ...............
4,222,121
(Utilities) ------
- -----
33,357,192
------
- -----
Hong Kong--3.2%
247,535 HSBC Holdings PLC .......
5,296,664
(Banking)
262,000 Swire-Pacific, Ltd. ``A''
2,498,222
(Diversified Industries) ------
- -----
7,794,886
------
- -----
Italy--2.0%
500,100 Eni Spa .................
2,566,433
(Oil & Gas Services)
436,800 Fiat Spa ................
1,321,629
(Automobiles)
747,600 Istituto Nazionale
973,802
Assicuraz ............. ------
- -----
(Insurance)
4,861,864
------
- -----
Japan--22.3%
157,000 Honda Motor Co., Ltd. ...
4,487,264
(Automobiles)
251,000 Matsushita Electric
4,096,278
Industrial Co., Ltd.
(Electrical Equipment)
589,000 Mitsubishi Heavy Inds.,
4,679,043
Ltd. ..................
(Electrical Equipment)
145,000 Mitsui Marine & Fire
780,028
Insurance Co., Ltd.
(Insurance)
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
22
<PAGE>
<TABLE>
<CAPTION>
US$
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
Japan--(cont'd)
55,700 Nintendo Co., Ltd. ....... $
3,987,160
(Software)
700,000 NKK Corp. ................
1,577,584
(Steel)
100,000 Omron Corp. ..............
1,882,394
(Manufacturing)
77,000 Orix Corp. ...............
3,204,732
(Leasing)
38,400 Promise Co., Ltd. ........
1,889,992
(Financial Services)
414,000 Ricoh Corp., Ltd. ........
4,754,512
(Office Equipment &
Supplies)
81,000 Rohm Co., Ltd. ...........
5,315,603
(Technology)
259,000 Sekisui Chemical Corp.,
2,616,613
Ltd. ...................
(Chemicals)
114,900 Sony Corp. ...............
7,530,360
(Consumer Durable Goods)
359,000 Sumitomo Trust & Banking
3,595,890
Co., Ltd. .
(Banking)
111,000 Toyota Motor Corp. .......
3,191,693
(Automobiles) -----
- -------
53,589,146
-----
- -------
Korea--0.0%
1 Samsung Electronics Co.,
18
Ltd. ................... -----
- -------
(GDR) (Technology)
Netherlands--3.5%
15,700 Heineken N.V. ............
2,780,805
(Food & Beverage)
33,700 Royal Dutch Petroleum Co. .
5,754,275
(Energy) -----
- -------
8,535,080
-----
- -------
New Zealand--0.5%
467,500 Lion Nathan Ltd. .........
1,120,414
(Consumer Goods) -----
- -------
Spain--2.3%
79,100 Empresa Nacional de
5,629,763
Electricidad . -----
- -------
S.A. (Energy)
Sweden--3.2%
50,300 Astra AB ................ $
2,426,531
(Pharmaceuticals)
44,400 Electrolux AB ...........
2,578,102
(Consumer Durable Goods)
97,800 Svenska Handelsbanken ...
2,810,716
(Banking) ------
- -----
7,815,349
------
- -----
Switzerland--6.3%
1,125 Baloise Hldgs. ..........
2,260,927
(Financial Services)
3,200 Elecktrowatt A.G. .......
1,274,262
(Utilities)
4,110 Nestle S.A. .............
4,412,454
(Consumer Goods)
4,010 Novartis A.G.* ..........
4,592,701
(Pharmaceuticals)
Societe Generale
Surveillance
1,100 Holding S.A. ..........
2,703,773
(Business & Public ------
- -----
Services)
15,244,117
------
- -----
United Kingdom--19.9%
416,800 Allied-Domecq PLC .......
3,270,420
(Food & Beverage)
472,400 B.A.T Industries PLC ....
3,917,108
(Tobacco)
303,357 British Aerospace PLC ...
6,641,944
(Aerospace/Defense)
797,100 BTR PLC .................
3,891,956
(Diversified Industries)
550,306 Cadbury Schweppes PLC ...
4,647,950
(Food & Beverage)
342,000 General Electric Co. PLC .
2,244,064
(Electrical Equipment)
630,600 Grand Metropolitan PLC ...
4,948,001
(Food & Beverage)
456,300 Mirror Group Newspapers
1,680,735
PLC ...................
(Printing)
448,800 National Power PLC ......
3,752,174
(Utilities)
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
23
<PAGE>
THE TARGET PORTFOLIO TRUST
International Equity Portfolio
(cont'd)
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
US$
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
United Kingdom--(cont'd)
299,750 Rank Group PLC ........... $
2,249,280
(Recreation)
405,800 Redland PLC ..............
2,565,362
(Miscellaneous)
2,067,700 Sears PLC ................
3,329,858
(Retail)
194,600 Unilever PLC .............
4,717,475
(Conglomerate) -----
- -------
47,856,327
-----
- -------
Total common stocks
(cost $195,801,241)......
233,863,761
-----
- -------
Preferred Stocks--1.1%
Italy--1.1%
1,570,400 Fiat Spa
(Automobiles)
(cost $4,100,237)........
2,593,179
-----
- -------
Total long-term investments
(cost $199,901,478)........
236,456,940
-----
- -------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
US$
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--2.6%
U. S. Government Securities--2.6%
United States Treasury
Bills
$ 4,632 Zero Coupon, 2/6/97........ $
4,609,063
1,580 Zero Coupon, 2/13/97.......
1,570,687
-----
- -------
Total U. S. government
securities
(cost $6,179,750)..........
6,179,750
-----
- -------
Total Investments--100.9%
(cost $206,081,228; Note 4)
242,636,690
Liabilities in excess of
other
assets--(0.9%).............
(2,073,764)
-----
- -------
Net Assets--100%...........
$240,562,926
-----
- -------
-----
- -------
</TABLE>
- ------------------
ADR--American Depository Receipt.
GDR--Global Depository Receipt.
* Non-income producing securities.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
24
<PAGE>
International Bond Portfolio
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
US$
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--88.3%
Australia--1.6%
Australian Gov't. Bonds,
A$ 562 10.00%, 2/15/06............ $
521,082
145 10.00%, 10/15/07...........
137,013
-----
- -----
658,095
-----
- -----
Canada--3.2%
Canadian Gov't. Bonds,
C$ 881 7.50%, 12/1/03.............
695,831
860 6.50%, 6/1/04..............
640,996
-----
- -----
1,336,827
-----
- -----
Denmark--3.8%
Danish Gov't. Bonds,
DKr 8,540# 8.00%, 3/15/06.............
1,592,081
-----
- -----
France--4.9%
Caisse Autonome, Corporate
Bonds,
FF 5,810 7.75%, 12/6/99.............
1,231,203
Credit Foncier de France,
Corporate Bonds,
3,750 8.625%, 2/20/02............
830,081
-----
- -----
2,061,284
-----
- -----
Germany--15.0%
Deutsche Pfandbriefe
Hypobk,
DM 240 5.625%, 2/7/03, Ser. G1....
158,149
Deutsche Pfandbriefe
Hypobk,
875 5.625%, 2/7/03.............
576,586
Deutsche Bundespost,
2,000# 7.50%, 12/2/02.............
1,440,083
German Gov't. Bonds,
360 5.875%, 5/15/00............
245,880
2,010# 7.125%, 12/20/02...........
1,433,568
1,210 6.00%, 1/5/06..............
797,336
440 6.25%, 1/4/24..............
270,782
Treuhandanstalt,
1,900# 7.125%, 1/29/03............
1,353,262
-----
- -----
6,275,646
-----
- -----
Ireland--4.9%
Irish Gov't. Bonds,
IEP 570 6.25%, 4/1/99.............. $
971,251
610 6.50%, 10/18/01............
1,050,262
-----
- -----
2,021,513
-----
- -----
Italy--17.9%
Italian Gov't. Bonds,
L 7,450,000# 10.50%, 7/15/98............
5,193,883
3,060,000# 10.50%, 7/15/00............
2,259,196
-----
- -----
7,453,079
-----
- -----
Japan--8.2%
Int'l. Bank Recon. & Dev.,
Yt 60,000 4.50%, 6/20/00.............
575,857
Japanese Gov't. Bonds,
263,300# 3.20%, 3/20/06.............
2,372,815
52,000 3.80%, 9/20/16.............
474,114
-----
- -----
3,422,786
-----
- -----
Netherlands--1.1%
Dutch Gov't. Bonds,
NLG 780 6.25%, 7/15/98.............
470,756
-----
- -----
Spain--7.1%
Spanish Gov't. Bonds,
Pts 242,590# 10.25%, 11/30/98...........
2,018,080
113,670 8.40%, 4/30/01.............
957,428
-----
- -----
2,975,508
-----
- -----
Sweden--2.4%
Swedish Gov't. Bonds,
Skr 7,100 6.00%, 2/9/05..............
1,008,069
-----
- -----
United Kingdom--18.2%
European Investment Bank,
Bonds,
9 200 8.00%, 6/10/03.............
351,036
Province Of Ontario,
Provincial Bonds,
1,050 6.875%, 9/15/00............
1,768,289
Treasury Corp. Victoria,
915# 8.75%, 7/9/03..............
1,639,225
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
25
<PAGE>
THE TARGET PORTFOLIO TRUST
International Bond Portfolio
(cont'd)
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
US$
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S> <C>
United Kingdom--(cont'd)
United Kingdom Treasury
Bonds,
9 280 10.00%, 2/26/01............ $
525,605
980# 9.75%, 8/27/02.............
1,860,489
752 7.50%, 12/7/06.............
1,287,122
100 8.00%, 12/7/15.............
177,855
-----
- -----
7,609,621
-----
- -----
Total long-term investments
(cost US$36,066,657).....
36,885,265
SHORT-TERM INVESTMENTS--9.3%
U.S. Government Securities--5.9%
United States Treasury
Bills,
US$ 2,500# 5.14%**, 4/24/97
(cost US$2,461,000)......
2,459,945
-----
- -----
Repurchase Agreement--3.4%
US$ 1,434 State Street Bank & Trust
Company, 4.00%, dated
12/31/96, due 1/2/97 in
the amount of $1,434,319
(cost US$1,434,000; the
value of the collateral
including interest is
US$1,496,565)............
$1,434,000
-----
- -----
Total short-term
investments
(cost US$3,895,000)......
3,893,945
-----
- -----
Total Investments--97.6%
(cost US$39,961,657; Note
4).......................
40,779,210
Other assets in excess of
liabilities--2.4%........
1,000,490
-----
- -----
Net Assets--100%...........
$41,779,700
-----
- -----
-----
- -----
</TABLE>
- ------------------
# Principal amount segregated as collateral for
forward currency contracts.
Aggregate value of segregated securities--
$23,622,626.
** Percentage quoted represent yield-to-maturity
as of purchase date.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
26
<PAGE>
Total Return Bond Portfolio
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT
VALUE
(UNAUDITED) (000) DESCRIPTION
(NOTE 1)
<C> <C> <S>
<C>
LONG-TERM
INVESTMENTS--80.6%
Corporate Bonds--14.3%
Airlines--2.5%
United Airlines,
Inc.,
Baa1 $ 1,000@ 10.85%, 2/19/15...... $
1,228,610
--
- ----------
Banking--1.1%
Kansallis Osake
Pankki,
(Finland)
A3 500DD 8.65%, 12/29/49......
522,734
--
- ----------
Financial Services--0.5%
PaineWebber Group,
Inc.,
Baa1 250@ 6.75%, 2/1/06........
236,673
--
- ----------
Industrials--2.0%
TCI Communications,
Inc.,
Baa3 1,000@ 7.25%, 6/15/99.......
1,002,820
--
- ----------
Manufacturing--0.8%
First Brands Corp.,
Ba1 400@ 9.125%, 4/1/99.......
409,625
--
- ----------
Miscellaneous--1.6%
CTC Mansfield Funding
Corp.,
Ba3 300@ 11.125%, 9/30/16.....
316,500
PDV America, Inc.,
Baa3 450@ 7.25%, 8/1/98........
449,203
--
- ----------
765,703
--
- ----------
Publishing--2.8%
Time Warner, Inc.,
Baa3 87DD@ 6.46%, 8/15/00.......
87,486
Baa3 262@ 8.11%, 8/15/06.......
268,595
Baa3 1,000@ 8.18%, 8/15/07.......
1,026,070
--
- ----------
1,382,151
--
- ----------
Tobacco--2.0%
RJR Nabisco, Inc.,
Baa3 $ 1,000@ 8.00%, 7/15/01....... $
1,003,210
--
- ----------
Utilities--1.0%
El Paso Electric Co.,
Ba3 500@ 7.25%, 2/1/99........
498,770
--
- ----------
Total corporate bonds
(cost
$6,988,335)........
7,050,296
--
- ----------
U.S. Government Agency
Mortgage
Backed Securities--
52.6%
Federal Home Loan
Mortgage Corp.,
3,500 6.00%, 1/1/99........
3,253,880
6.50%, 1/1/99 -
7,056@ 2/1/26, I/O........
4,655,209
2,047 7.00%, 8/15/26.......
1,766,238
1,409 7.636%, 1/1/24.......
1,464,675
27@ 9.25%, 1/1/10........
28,680
Federal National Mortgage
Assn.,
1,387 6.679%, 3/1/26.......
1,396,965
2,388 7.135%, 1/1/20.......
2,448,595
17@ 8.50%, 4/1/99........
17,715
Government National
Mortgage Assn.,
2,440@ 5.50%, 2/20/26.......
2,462,658
6.00%, 8/20/25 -
1,934@ 9/20/25............
1,943,320
6.50%, 1/20/24 -
2,240@ 4/15/26............
2,239,137
7.125%, 6/20/21 -
2,979@ 9/20/24............
3,044,357
400 7.50%, 12/15/99......
400,124
Resolution Trust
Corp.,
Aa2 406DD@ 6.7625%, 6/25/23.....
409,558
Aaa## 163@ 8.35%, 6/25/29.......
164,404
Baa2 204@ 9.25%, 6/25/23.......
209,680
--
- ----------
Total U.S. gov't.
agency
mortgage backed
securities
(cost $25,714,204)...
25,905,195
--
- ----------
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
27
<PAGE>
THE TARGET PORTFOLIO TRUST
Total Return Bond Portfolio
(cont'd)
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT
VALUE
(UNAUDITED) (000) DESCRIPTION
(NOTE 1)
<C> <C> <S>
<C>
Foreign Securities--8.0%
Canadian Real Return
Bond,
Aaa## C$ 3,044@ 4.25%, 12/1/26....... $
2,306,165
Petroleas Mexicano
(Mexico),
Ba2 US$1,000DD@ 6.50%, 3/8/99........
977,500
Republic of
Argentina,
Ba3 ARP 735DD@ 6.625%, 3/31/05......
639,450
--
- ----------
Total foreign
securities
(cost
US$3,757,362)......
3,923,115
--
- ----------
Collateralized Mortgage
Obligations--5.5%
American Housing
Trust 1,
Senior Mortgage
Pass Through
Certificate,
Series 1-5 Class A,
Aaa## 23 8.625%, 8/25/18......
23,583
Champion Home Loan
Equity,
Series 1995, Class A2-
3,
Aaa## 1,524DD 8.4297%, 2/25/28.....
1,555,652
Countrywide
Collateralized
Mortgage
Obligation,
Aaa## 500DD@ 8.09204%, 11/25/24...
513,261
Mortgage Obligation
Structured Trust,
Mortgage Pass
Through
Certificate, Series
93-1 Class A-1,
Aaa 277@ 6.35%, 10/25/18......
277,423
PaineWebber Mortgage
Acceptance Corp.,
Aaa 244@ 7.00%, 10/25/23......
244,185
Sears Savings Bank,
Series
1992A Class A
Aaa 89DD@ 8.68%, 5/25/32.......
89,981
--
- ----------
Total collateralized
mortgage
obligations
(cost
$2,702,659)........
2,704,085
--
- ----------
U.S. Government
Securities--0.2%
United States
Treasury Bond,
$ 100@ 6.75%, 8/15/26
(cost $104,276).... $
100,750
--
- ----------
Total long-term
investments
(cost
$39,266,836).......
39,683,441
--
- ----------
SHORT-TERM
INVESTMENTS--30.1%
Corporate Bonds--20.5%
Electronics--2.0%
Motorola, Inc.
A1 1,000@ 5.33%, 1/16/97.......
997,779
--
- ----------
Financial Services--11.2%
Advanta National
Bank,
Baa2 1,000@ 6.31%, 10/15/97......
1,001,910
General Electric
Capital Corp.,
A1 1,800@ 5.42%, 1/28/97.......
1,792,683
KFW International
Finance, Inc.,
A1 2,000@ 5.40%, 2/18/97.......
1,985,600
National Rural
Utilities
Cooperative Finance
Corp.,
A1 700@ 5.35%, 2/19/97.......
694,257
--
- ----------
5,474,450
--
- ----------
Publishing--2.0%
Dow Jones & Co., Inc.
A1 1,000 5.45%, 2/19/97.......
992,582
--
- ----------
Utilities--5.3%
BellSouth
Telecommunica-
tions, Inc.
A1 2,000@ 5.43%, 2/13/97.......
1,987,028
Cleveland Electric
Illuminating Co.,
Ba2 600@ 9.45%, 12/1/97.......
615,318
--
- ----------
2,602,346
--
- ----------
Total corporate bonds
(cost
$10,071,355).......
10,067,157
--
- ----------
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
28
<PAGE>
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT
VALUE
(UNAUDITED) (000) DESCRIPTION
(NOTE 1)
<C> <C> <S>
<C>
U.S. Government Agency
Mortgaged
Backed Securities--0.6%
Federal Home Loan
Mortgage Corp.,
$ 300@ 5.41%, 2/3/97
(cost $298,512).... $
298,512
--
- ----------
Foreign Securities--6.7%
Canadian Wheat Board,
A1 C$ 1,400@ 5.35%, 1/16/97.......
1,396,879
Kingdom Of Sweden,
A1 SEK 1,600@ 5.38%, 1/21/97.......
1,595,218
A1 300@ 5.40%, 2/4/97........
298,470
--
- ----------
Total foreign
securities
(cost
US$3,290,567)......
3,290,567
--
- ----------
U.S. Treasury Obligations-
- -0.5%
United States
Treasury Bills,
50D 4.66%, 1/23/97.......
49,835
170D 4.96%, 3/6/97........
168,477
30D 4.97%, 3/13/97.......
29,702
--
- ----------
Total U.S. Treasury
Obligations
(cost $248,033)....
248,014
--
- ----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S>
<C>
Repurchase Agreement--
1.0%
State Street Bank & Trust
Co.,
$ 510@ Repurchase Agreement,
2.00%, dated
12/31/96, due
1/2/97 in the
amount of $510,057
(cost $510,000;
value of collateral
including
accrued interest
$520,662).......... $
510,000
--
- ----------
Outstanding Call Options
Purchased*--0.8%
<CAPTION>
Contracts
(000) United States Treasury
Notes,
---------
expiring 1/6/97 @
$90.89
5,000 (cost $393,359)....
389,844
--
- ----------
Total short-term
investments
(cost
$14,811,826).......
14,804,094
--
- ----------
Total Investments--110.7%
(cost US$54,078,662;
Note 4)............
54,487,535
Liabilities in excess
of other
assets--(10.7%)....
(5,269,740)
--
- ----------
Net Assets--100%..... $
49,217,795
--
- ----------
--
- ----------
</TABLE>
- ---------------
* Non-income producing securities.
D Pledged as initial margin on financial futures
contracts.
DD Rate shown reflects current rate on variable
rate instrument.
## Standard & Poor's Rating.
@ Principal amount of securities rated A or
better segregated as collateral
for forward currency contracts. Aggregate value
of segregated securities
$40,024,649.
I/O--Interest Only.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
29
<PAGE>
THE TARGET PORTFOLIO TRUST
Intermediate-Term Bond
Portfolio
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT
VALUE
(UNAUDITED) (000) DESCRIPTION
(NOTE 1)
<C> <C> <S>
<C>
LONG-TERM
INVESTMENTS--68.2%
Corporate Bonds--14.7%
Airlines--1.8%
United Airlines, Inc.,
Baa1 $ 1,500@ 10.85%, 2/19/15........ $
1,842,915
---
- ---------
Financial Services--2.0%
Salomon, Inc.,
Baa1 2,000@ 6.47%, 3/19/98.........
2,008,820
---
- ---------
Industrials--2.5%
TCI Communications,
Inc.,
Ba1 2,500@ 6.82%, 9/15/10.........
2,487,300
---
- ---------
Miscellaneous--1.1%
PDV America, Inc.,
Baa3 1,050@ 7.25%, 8/1/98..........
1,048,142
---
- ---------
Publishing--1.2%
Time Warner, Inc.,
Ba1 300DD@ 6.46%, 8/15/00.........
301,677
Ba1 900@ 8.11%, 8/15/06.........
922,653
---
- ---------
1,224,330
---
- ---------
Tobacco--1.9%
RJR Nabisco, Inc.,
Baa3 1,250@ 8.00%, 7/15/01.........
1,254,012
Baa3 600@ 8.625%, 12/1/02........
612,444
---
- ---------
1,866,456
---
- ---------
Utilities--4.2%
CTC Mansfield Funding
Corp.,
Ba3 1,000@ 11.125%, 9/30/16.......
1,055,000
Long Island Lighting
Co.,
Ba3 1,535@ 7.30%, 7/15/99.........
1,548,262
Texas-New Mexico
Power Company,
Ba3 $ 1,500@ 12.50%, 1/15/99........ $
1,629,525
--
- ----------
4,232,787
--
- ----------
Total corporate bonds
(cost
$14,617,583).......
14,710,750
--
- ----------
U.S. Government Agency
Mortgage
Backed Securities--
38.5%
Federal Home Loan
Mortgage Corp.,
Aaa 157@ 6.00%, 4/1/24........
147,055
6.50%, 9/15/18,
Aaa 1,604 I/O................
182,461
6.50%, 12/15/21,
Aaa 2,609 I/O................
383,467
Aaa 974@ 6.50%, 2/1/26........
932,128
Aaa 4,800 6.50%, 1/14/27.......
4,588,464
Aaa 136@ 9.25%, 1/1/10........
144,836
Federal National
Mortgage Assn.,
Aaa 208DD@ 6.084%, 12/1/30......
207,052
Aaa 3,000 6.50%, 1/30/27.......
2,973,750
Aaa 2,775DD@ 6.678%, 3/1/26.......
2,793,929
Aaa 1,430DD@ 6.875%, 8/1/24.......
1,430,428
Aaa 2,172DD@ 7.48%, 8/1/25........
2,246,179
Aaa 49@ 8.50%, 7/1/99........
49,904
Aaa 54@ 8.50%, 4/1/99........
55,587
Government National
Mortgage Assn.,
Aaa 2,440DD@ 5.50%, 2/20/26.......
2,462,658
Aaa 1,549DD@ 6.50%, 1/20/24.......
1,580,291
Aaa 1,516DD@ 7.00%, 10/20/24......
1,551,226
Aaa 879DD@ 7.125%, 6/20/21......
897,773
Aaa 2,079DD@ 7.125%, 5/20/23......
2,117,992
Aaa 1,279DD@ 7.125%, 6/20/23......
1,305,542
Aaa 2,202DD@ 7.125%, 7/20/24......
2,250,899
Aaa 8,300 8.00%, 1/21/27.......
8,466,000
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
30
<PAGE>
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT
VALUE
(UNAUDITED) (000) DESCRIPTION
(NOTE 1)
<C> <C> <S>
<C>
U.S. Government Agency
Mortgage
Backed Securities
(cont'd.)
Resolution Trust Corp.,
Aa2 $ 642DD@ 6.7625%, 6/25/23....... $
647,102
AAA## 816@ 8.35%, 6/25/29.........
822,020
Baa2 408@ 9.25%, 6/25/23.........
419,359
---
- ---------
Total U.S. Government
agency mortgage
backed securities
(cost $38,637,607)...
38,656,102
---
- ---------
Collateralized Mortgage
Obligations--10.8%
Champion Home Loan Equity,
Series 1995, Class A2,
Aaa 2,287DD 8.4297%, 2/25/28.......
2,333,478
Countrywide
Collateralized
Mortgage Obligation,
Aaa 834@ 6.75%, 2/25/24.........
831,504
Aa1 500@ 8.09204%, 11/25/24.....
513,262
Government National
Mortgage Association
Remic Trust 1995 2
Class Kq,
Aaa 3,000@ 8.50%, 3/20/25.........
3,150,000
Mortgage Obligation
Structured Trust,
Mortgage Pass Through
Certificate, Series
B-1, Class A-1
Aaa 416@ 6.35%, 10/25/18........
416,134
PaineWebber Mortgage
Acceptance Corp.,
Aaa 488@ 7.00%, 10/25/23........
488,370
Residential Asset
Securities Corp.,
Ser 1996 Ks4 Class A2
Aaa 2,854DD@ 5.745%, 10/25/27.......
2,854,473
Sears Savings Bank,
Series 1992-A, Class
A
Aaa 257DD@ 8.68%, 5/25/32.........
259,395
---
- ---------
Total collateralized
mortgage obligations
(cost $10,872,088)...
10,846,616
---
- ---------
Foreign Government
Obligations--4.2%
Canadian Real Return
Bond,
AAA## $ 4,057@ 4.25%, 12/1/26..... $
3,073,573
Republic of
Argentina,
B1 1,372DD@ 6.625%, 3/31/05....
1,193,640
--
- ----------
Total Foreign
Government
obligations
(cost
$4,037,200)........
4,267,213
--
- ----------
Total long-term
investments
(cost
$68,164,478).......
68,480,681
--
- ----------
SHORT-TERM
INVESTMENTS--47.0%
Corporate Bonds--23.1%
Advanta National
Bank,
Baa2 3,000@ 6.09%, 11/10/97......
2,998,200
Baa2 2,000@ 6.31%, 10/15/97......
2,003,820
Banco De La Nacional,
B1 275DD@ 6.4375%, 10/15/97....
277,777
Banponce Financial
Corp.,
A3 1,000@ 7.73%, 8/15/97.......
1,010,710
Cleveland Electric
Illuminating
Co.,
Ba2 1,500@ 9.45%, 12/1/97.......
1,538,295
Coca Cola Company,
P1 4,500@ 5.45%, 1/10/97.......
4,493,869
Electricite De France
P1 1,100@ 5.39%, 1/13/97.......
1,098,024
General Electric Capital
Corp.,
P1 3,300@ 5.42%, 2/3/97........
3,283,604
General Motors
Acceptance Corp.,
A3 1,000@ 7.125%, 3/27/97......
1,003,310
A3 250@ 8.125%, 1/13/97......
250,120
KFW International Finance
Inc.,
P1 4,000@ 5.40%, 2/21/97.......
3,966,760
Kimberly Clark Corp.,
P1 1,300@ 5.42%, 2/12/97.......
1,291,780
--
- ----------
Total corporate bonds
(cost
$23,217,462).......
23,216,269
--
- ----------
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
31
<PAGE>
THE TARGET PORTFOLIO TRUST
Intermediate-Term Bond
Portfolio (cont'd)
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT
VALUE
(UNAUDITED) (000) DESCRIPTION
(NOTE 1)
<C> <C> <S>
<C>
U.S. Government Agency
Mortgage
Backed Securities--4.1%
Federal Home Loan Bank
P1 $ 4,000@ 5.40%, 1/16/97......... $
3,991,000
Federal Home Loan
Mortgage Corporation,
P1 100@ 5.41%, 2/3/97..........
99,504
---
- ---------
Total U.S. Government
agency mortgage
backed securities
(cost $4,090,504)....
4,090,504
---
- ---------
Collateralized Mortgage
Obligations--4.0%
New Center Asset Trust,
5.44%, 2/12/97
P1 4,000@ (cost $3,974,613)....
3,974,613
---
- ---------
Commercial Paper--7.9%
BellSouth
Telecommunications,
Inc.,
P1 4,000@ 5.36%, 2/18/97.........
3,970,341
Canadian Wheat Board,
P1 4,000@ 5.35%, 1/16/97.........
3,991,084
---
- ---------
Total commercial paper
(cost $7,962,497)....
7,961,425
---
- ---------
Corporate Notes--4.2%
AT&T Corp.,
P1 4,000@ 5.35%, 2/4/97..........
3,979,789
Ford Motor Credit Co.,
P1 200@ 6.09%, 1/9/97..........
199,729
---
- ---------
Total corporate notes
(cost $4,179,518)....
4,179,518
---
- ---------
U.S. Government Securities-
- -0.3%
United States Treasury
Bills,
Aaa 100D 4.66%, 1/23/97.........
99,670
Aaa 140D 4.97%, 3/13/97.........
138,608
Aaa 110D 4.96%, 3/6/97..........
109,015
---
- ---------
Total U.S. Government
securities
(cost $347,332)......
347,293
---
- ---------
Repurchase Agreement--0.9%
$ 907@ State Street Bank &
Trust Co.,
2.00%, dated
12/31/96, due
1/02/97 in the
amount of $907,101
(cost $907,000;
value of collat-
eral including
accrued interest
$929,727).......... $
907,000
--
- ----------
Foreign Government
Obligations--2.5%
Kingdom Of Sweden,
P1 900@ 5.38%, 1/21/97.......
897,310
P1 400@ 5.40%, 1/29/97.......
398,320
P1 1,200@ 5.40%, 2/4/97........
1,193,880
--
- ----------
Total Foreign
Government
obligations
(cost
$2,489,510)........
2,489,510
--
- ----------
Total short-term
investments
(cost
$47,168,436).......
47,166,132
--
- ----------
Total
Investments--115.2%
(cost US$115,332,914;
Note 4)............
115,646,813
Liabilities in excess
of other
assets--(15.2%)....
(15,254,796)
--
- ----------
Net Assets--100%.....
$100,392,017
--
- ----------
--
- ----------
</TABLE>
- ---------------
I/O--Interest Only Security.
## Standard & Poor's Rating.
D Pledged as initial margin on futures contracts.
DD Rate shown reflects current rate on variable
rate instrument.
@ Principal amount of securities segregated as
collateral for forward
currency contracts. Aggregate value of
segregated securities $96,371,900.
[S] [C] [C]
beginning on page 46
32
<PAGE>
Mortgage Backed Securities
Portfolio
Portfolio of Investments
December 31, 1996
[/TABLE]
<TABLE>
<CAPTION>
PRINCIPAL
<S> <C> <C>
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
LONG-TERM INVESTMENTS--98.9%
Collateralized Mortgage
Obligations--22.0%
Federal Home Loan Mortgage
Corp.,
$ 652 4.25%, 12/15/21, PAC....... $
504,074
2,763 4.50%, 9/15/21, PAC........
2,263,070
225 5.25%, 12/15/22............
192,302
100 5.95%, 6/15/19, PAC........
96,968
1,396 6.00%, 10/15/20 - 8/15/21,
1,325,584
PAC......................
743 6.25%, 10/15/21, PAC.......
711,146
2,300 6.50%, 2/15/23, PAC I/O....
577,875
500 6.50%, 8/15/06 - 2/15/23,
497,655
PAC......................
9,141 7.50%, 6/15/22, PAC I/O....
1,285,411
500 8.00%, 12/15/06, PAC.......
515,935
662 8.00%, 10/15/07 -
671,803
7/15/21..................
242 9.00%, 10/15/20............
252,191
81 10.00%, 6/15/19, PAC.......
82,764
Federal National Mortgage
Assn.,
2,267 5.00%, 8/1/10 - 3/25/21....
2,059,970
302 6.00%, 10/25/21............
291,360
1,969 6.50%, 7/25/20.............
1,906,386
5,591 7.00%, 9/25/19, PAC I/O....
651,754
300 8.00%, 8/25/06, PAC........
310,593
392 8.50%, 6/25/21.............
404,250
First Boston Mortgage
Securities,
1,389 Zero Coupon, 4/25/17,
1,020,145
P/O......................
822 10.965%, 5/25/17, I/O......
265,473
1,389 8.985%, 4/25/17, I/O.......
405,278
-----
- -----
Total collateralized
mortgage obligations
(cost $15,853,078).......
16,291,987
-----
- -----
U.S. Government Securities--0.4%
United States Treasury
Notes,
250 8.875%, 11/15/98
(cost $263,903)..........
263,048
-----
- -----
U.S. Government Agency Mortgage
Pass - Through Obligations--
76.5%
Federal Home Loan Mortgage
Corp.,
12 6.50%, 1/1/98..............
11,907
7,159 7.00%, 2/1/99 - 12/1/25....
7,087,427
Federal Home Loan Mortgage
Corp.,
$ 36 7.25%, 7/1/06.............. $
36,695
274 7.50%, 3/1/08..............
278,586
121 8.00%, 1/1/02 - 2/1/02.....
124,084
155 8.25%, 12/1/05 - 5/1/08....
159,953
514 8.50%, 6/1/03 - 7/1/21.....
539,137
153 8.75%, 12/1/08.............
161,522
1,240 9.00%, 1/1/02 - 3/1/11.....
1,311,896
53 10.00%, 1/1/04.............
56,117
49 10.50%, 11/1/19............
54,346
76 11.50%, 3/1/16.............
86,154
55 12.75%, 11/1/13............
63,376
28 13.25%, 5/1/13.............
32,153
46 14.00%, 9/1/10 - 6/1/11....
54,518
Federal National Mortgage
Assn.,
158 6.077%, 6/1/29.............
157,215
1,852 6.089%, 8/1/26 - 10/1/28...
1,843,358
886 7.00%, 12/1/00 - 7/1/25....
866,546
249 7.75%, 10/1/19.............
254,025
24 8.00%, 3/1/07 - 6/1/07.....
24,694
247 8.50%, 6/1/10..............
257,589
533 9.75%, 8/1/10 - 10/1/17....
574,988
Government National
Mortgage Assn.,
1,277 6.50%, 7/15/08 -
1,240,817
11/15/23.................
14,824 7.00%, 7/15/08 -
14,584,370
11/15/24.................
9,295 7.50%, 3/15/07 -
9,362,416
11/15/26.................
5,418 8.00%, 4/15/02 - 8/15/26...
5,594,883
1,535 8.25%, 6/20/17 - 7/20/17...
1,591,090
2,044 8.50%, 3/15/05 -
2,125,876
12/15/26.................
5,230 9.00%, 10/20/01 -
5,566,416
1/15/20..................
1,815 9.50%, 9/15/02 - 1/15/21...
1,960,066
1 13.00%, 2/15/11............
1,410
35 13.25%, 7/15/14............
41,159
111 13.50%, 6/15/10 -
133,379
11/15/12.................
125 14.00%, 6/15/11 -
152,182
4/15/12..................
87 16.00%, 4/15/12 -
108,870
5/15/12..................
-----
- -----
Total U.S. Government
agency
mortgage pass - through
obligations
(cost $55,960,375).......
56,499,220
-----
- -----
Total long-term investments
(cost $72,077,356).......
73,054,255
-----
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
33
<PAGE>
THE TARGET PORTFOLIO TRUST
Mortgage Backed Securities
Portfolio (cont'd)
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--0.3%
$241 Lehman Brothers Holdings,
Inc., Repurchase
Agreement, 6.85%, dated
12/31/96, due 1/2/97 in
the amount of $241,092
(cost $241,000; the value
of the
collateral including
interest is $247,575).... $
241,000
-----
- -------
OUTSTANDING CALL
Contracts OPTIONS PURCHASED*--0.1%
- ----------
50 United States Treasury
Notes,
5.875%, 2/15/04
expiring 2/22/97 @
$108.00
(cost $98,162)...........
86,719
-----
- -------
Total Investments Before
Outstanding Call Options Written-
- -99.3%
(cost $72,416,518; Note 4).
73,381,974
-----
- -------
OUTSTANDING CALL OPTIONS
WRITTEN*
50 United States Treasury
Notes,
5.875%, 2/15/04
expiring 2/22/97 @
$112.00
(premiums received
$24,494).................
(9,375)
-----
- -------
Total Investments, Net of
Outstanding Call Options
Written--99.3%...........
73,372,599
Other assets in excess of
liabilities--0.7%..........
494,477
-----
- -------
Net Assets--100%........... $
73,867,076
-----
- -------
-----
- -------
</TABLE>
- ---------------
I/O--Interest Only Security.
PAC--Planned Amortization Class.
P/O--Principal Only.
* Non-income producing security.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
34
<PAGE>
U.S. Government Money Market
Portfolio
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S> <C>
Federal Home Loan Bank--10.9%
$ 3,000 5.21%, 1/9/97.............. $
2,996,527
-----
- -------
Federal Home Loan Mortgage
Corporation--27.2%
1,500 5.27%, 2/3/97..............
1,492,754
3,000 5.20%, 2/19/97.............
2,978,766
3,000 5.38%, 2/28/97.............
2,973,997
-----
- -------
7,445,517
-----
- -------
Federal National Mortgage
Association--25.0%
2,420 5.26%, 1/28/97.............
2,410,453
2,000 5.21%, 3/4/97..............
1,982,055
2,500 5.25%, 5/2/97..............
2,455,885
-----
- -------
6,848,393
-----
- -------
Tennessee Valley Authority--9.1%
2,500 5.27%, 2/25/97.............
2,479,871
-----
- -------
United States Treasury Notes--5.5%
1,500 7.50%, 1/31/97.............
1,502,790
-----
- -------
Repurchase Agreement--4.7%
1,295 PaineWebber Inc., 6.70%,
dated 12/31/96, due
1/2/97 in the amount of
$1,295,482, (cost
$1,295,000; value of
collateral including
accrued interest-
$1,321,156)..............
1,295,000
-----
- -------
Total Investments--82.4%
(amortized cost
$22,568,098@@)...........
22,568,098
-----
- -------
Other assets in excess of
liabilities--17.6%.......
4,829,258
-----
- -------
Net Assets--100%........... $
27,397,356
-----
- -------
-----
- -------
</TABLE>
- ---------------
@@ Federal income tax basis of portfolio
securities is the same as for financial
reporting purposes.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
35
<PAGE>
THE TARGET PORTFOLIO TRUST
Statements of Assets and
Liabilities
December 31, 1996
<TABLE>
<CAPTION>
LARGE
CAPITALIZATION LARGE CAPITALIZATION SMALL
CAPITALIZATION
GROWTH PORTFOLIO VALUE PORTFOLIO
GROWTH PORTFOLIO
<S> <C>
<C> <C>
ASSETS
Investments, at value*
$220,372,335 $226,733,003
$144,538,831
Cash
1,493 65,489
1,499,398
Foreign currency, at value
- -- -- --
Receivable for Fund shares sold
333,135 378,286
265,460
Receivable for investments sold
497,598 446,150
1,509,260
Dividends and interest receivable
71,406 493,309
42,899
Deferred expenses and other assets
11,388 11,411
6,045
Due from broker - variation margin
- -- -- --
Forward currency contracts-net amount
receivable
from counterparties
- -- -- --
Total assets
221,287,355 228,127,648
147,861,893
LIABILITIES
Bank overdraft
- -- -- --
Payable for investments purchased
- -- -- --
Payable for Fund shares reacquired
222,800 218,193
186,047
Accrued expenses and other liabilities
217,327 76,742
126,186
Dividends payable
- -- -- --
Outstanding options written (premiums
received
$24,494)
- -- -- --
Withholding taxes payable
- -- 3,427 1,302
Deferred trustees' fees
6,750 6,750
6,750
Due to broker-variation margin payable
- -- --
Due to Manager
58,049 116,687
72,333
Forward currency contracts-net amount
payable
to counterparties
- -- -- --
Total liabilities
504,926 421,799
392,618
NET ASSETS
$220,782,429 $227,705,849
$147,469,275
Net assets were comprised of:
Shares of beneficial interest, at par $
17,023 $ 16,299 $
9,879
Paid-in capital in excess of par
169,682,972 170,277,465
117,195,561
169,699,995 170,293,764
117,205,440
Under (over) distribution of net
investment
income (loss)
58,870 --
(1,302)
Accumulated net realized gains
(losses)
3,778,795 3,579,564
2,373,295
Net unrealized
appreciation/depreciation
47,244,769 53,832,521
27,891,842
Net assets, December 31, 1996
$220,782,429 $227,705,849
$147,469,275
Shares of beneficial interest issued
and outstanding
17,023,217 16,298,861
9,879,416
Net asset value per share
$12.97 $13.97
$14.93
*Identified cost.
$173,127,566 $172,900,483
$116,646,989
<CAPTION>
SMALL
CAPITALIZATION
VALUE
PORTFOLIO
<S> <C>
ASSETS
Investments, at value*
$125,405,856
Cash
238,093
Foreign currency, at value
- --
Receivable for Fund shares sold
239,081
Receivable for investments sold
1,124,405
Dividends and interest receivable
163,889
Deferred expenses and other assets
8,878
Due from broker - variation margin
- --
Forward currency contracts-net amount
receivable
from counterparties
- --
Total assets
127,180,202
LIABILITIES
Bank overdraft
- --
Payable for investments purchased
173,431
Payable for Fund shares reacquired
137,137
Accrued expenses and other liabilities
117,632
Dividends payable
- --
Outstanding options written (premiums
received
$24,494)
- --
Withholding taxes payable
262
Deferred trustees' fees
6,750
Due to broker-variation margin payable
Due to Manager
73,087
Forward currency contracts-net amount
payable
to counterparties
- --
Total liabilities
508,299
NET ASSETS
$126,671,903
Net assets were comprised of:
Shares of beneficial interest, at par $
8,322
Paid-in capital in excess of par
103,371,260
103,379,582
Under (over) distribution of net
investment
income (loss)
8,398
Accumulated net realized gains
(losses)
2,327,652
Net unrealized
appreciation/depreciation
20,956,271
Net assets, December 31, 1996
$126,671,903
Shares of beneficial interest issued
and outstanding
8,322,158
Net asset value per share
$15.22
*Identified cost.
$104,449,585
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
36
<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>
$242,636,690 $ 40,779,210
$ 54,487,535 $ 115,646,813 $
73,381,974
-- 380
666 504 992
-- 208,147
- -- -- --
726,781 182,594
103,741 481,412
138,803
505,082 --
3,820,527 --
- --
703,905 1,096,442
385,290 782,785
566,609
11,780 26,200
- -- 8,011 7,777
-- --
7,133 -- --
-- 147,461
402,833 406,578
- --
244,584,238 42,440,434
59,207,725 117,326,103
74,096,155
185,650 --
- -- -- --
331,620 --
9,449,647 16,122,021
- --
3,193,436 90,203
35,655 212,699
83,839
130,338 12,953
66,194 46,639
88,597
-- 2,666
7,170 15,066 12,293
-- --
- -- -- 9,375
32,096 2,830
- -- -- --
6,750 5,062
6,750 6,750 6,750
-- --
8,330 186,878 --
141,422 17,598
142,969 35,159
28,225
-- 529,422
273,215 308,874
- --
4,021,312 660,734
9,989,930 16,934,086
229,079
$240,562,926 $ 41,779,700
$ 49,217,795 $ 100,392,017 $
73,867,076
16,236
$ $ 4,110
$ 4,786 $ 9,746 $
7,236
200,284,101 41,276,593
49,156,861 100,221,711
74,137,237
200,300,337 41,280,703
49,161,647 100,231,457
74,144,473
102,946 59,414
328,137 81,990
23,140
3,607,116 --
(619,422) (152,462)
(1,281,112)
36,552,527 439,583
347,433 231,032
980,575
$240,562,926 $ 41,779,700
$ 49,217,795 $ 100,392,017 $
73,867,076
16,236,488 4,109,948
4,786,311 9,746,047
7,236,318
$14.82 $10.17
$10.28 $10.30
$10.21
$206,081,228 $ 39,961,657
$ 54,078,662 $ 115,332,914 $
72,416,518
<CAPTION>
INTERNATIONAL U.S. GOVERNMENT MONEY
EQUITY PORTFOLIO MARKET PORTFOLIO
<C> <C>
$242,636,690 $22,568,098
-- --
-- --
726,781 5,576,734
505,082 --
703,905 47,320
11,780 6,350
-- --
-- --
244,584,238 28,198,502
185,650 653
331,620 --
3,193,436 771,406
130,338 19,534
-- 2,803
-- --
32,096 --
6,750 6,750
-- --
141,422 --
-- --
4,021,312 801,146
$240,562,926 $27,397,356
16,236
$ $ 27,397
200,284,101 27,369,959
200,300,337 27,397,356
102,946 --
3,607,116 --
36,552,527 --
$240,562,926 $27,397,356
16,236,488 27,397,356
$14.82 $1.00
$206,081,228 $22,568,098
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
37
<PAGE>
THE TARGET PORTFOLIO TRUST
Statements of Operations
For The Year Ended December
31, 1996
<TABLE>
<CAPTION>
LARGE
CAPITALIZATION LARGE CAPITALIZATION SMALL
CAPITALIZATION
GROWTH PORTFOLIO VALUE PORTFOLIO
GROWTH PORTFOLIO
<S> <C>
<C> <C>
NET INVESTMENT INCOME
- --------------------------------------------------
- --------------------------------------------------
- -----------
Income
Interest $
497,522 $ 391,604 $
368,489
- --------------------------------------------------
- --------------------------------------------------
- -----------
Dividends
1,566,689 6,072,665
448,654
- --------------------------------------------------
- --------------------------------------------------
- -----------
Less: Foreign withholding taxes
(5,259) (52,283)
(4,156)
- --------------------------------------------------
- --------------------------------------------------
- -----------
Total income
2,058,952 6,411,986
812,987
- --------------------------------------------------
- --------------------------------------------------
- -----------
Expenses
Management fee
1,216,415 1,253,390
848,974
- --------------------------------------------------
- --------------------------------------------------
- -----------
Custodian's fees and expenses
129,000 115,000
175,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Transfer agent's fees and expenses
93,300 93,300
92,100
- --------------------------------------------------
- --------------------------------------------------
- -----------
Registration fees
80,000 25,000
33,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Reports to shareholders
107,000 53,000
68,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Audit fees and expenses
15,200 15,200
15,200
- --------------------------------------------------
- --------------------------------------------------
- -----------
Legal fees and expenses
8,000 8,000
8,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Trustees' fees and expenses
4,250 4,250
4,250
- --------------------------------------------------
- --------------------------------------------------
- -----------
Amortization of organization expenses
5,786 5,786
5,786
- --------------------------------------------------
- --------------------------------------------------
- -----------
Insurance
4,400 4,800
3,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Miscellaneous
5,485 4,464
5,433
- --------------------------------------------------
- --------------------------------------------------
- -----------
Total expenses
1,668,836 1,582,190
1,258,743
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net investment income (loss)
390,116 4,829,796
(445,756)
- --------------------------------------------------
- --------------------------------------------------
- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net realized gain (loss) on:
Investment transactions
11,243,006 11,707,935
16,882,644
- --------------------------------------------------
- --------------------------------------------------
- -----------
Financial futures contracts
- -- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Foreign currency transactions
- -- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Options written
- -- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Total net realized gain (loss)
11,243,006 11,707,935
16,882,644
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net change in unrealized
appreciation/depreciation on:
Investments
27,653,840 20,366,798
6,803,397
- --------------------------------------------------
- --------------------------------------------------
- -----------
Financial futures contracts
- -- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Foreign currency transactions
- -- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Options written
- -- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net change in unrealized
appreciation/depreciation
27,653,840 20,366,798
6,803,397
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net gain (loss)
38,896,846 32,074,733
23,686,041
- --------------------------------------------------
- --------------------------------------------------
- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $
39,286,962 $ 36,904,529 $
23,240,285
- --------------------------------------------------
- --------------------------------------------------
- -----------
<CAPTION>
SMALL
CAPITALIZATION
VALUE
PORTFOLIO
<S> <C>
NET INVESTMENT INCOME
- --------------------------------------------------
- ---------------------------------
Income
Interest $
194,619
- --------------------------------------------------
- --------------------------------------------------
- ----
Dividends
1,667,319
- --------------------------------------------------
- --------------------------------------------------
- -----------
Less: Foreign withholding taxes
(1,045)
- --------------------------------------------------
- --------------------------------------------------
- -----------
Total income
1,860,893
- --------------------------------------------------
- --------------------------------------------------
- -----------
Expenses
Management fee
663,383
- --------------------------------------------------
- --------------------------------------------------
- -----------
Custodian's fees and expenses
130,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Transfer agent's fees and expenses
88,300
- --------------------------------------------------
- --------------------------------------------------
- -----------
Registration fees
30,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Reports to shareholders
64,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Audit fees and expenses
15,200
- --------------------------------------------------
- --------------------------------------------------
- -----------
Legal fees and expenses
8,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Trustees' fees and expenses
4,250
- --------------------------------------------------
- --------------------------------------------------
- -----------
Amortization of organization expenses
5,786
- --------------------------------------------------
- --------------------------------------------------
- -----------
Insurance
1,906
- --------------------------------------------------
- --------------------------------------------------
- -----------
Miscellaneous
2,496
- --------------------------------------------------
- --------------------------------------------------
- -----------
Total expenses
1,013,321
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net investment income (loss)
847,572
- --------------------------------------------------
- --------------------------------------------------
- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net realized gain (loss) on:
Investment transactions
10,384,665
- --------------------------------------------------
- --------------------------------------------------
- -----------
Financial futures contracts
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Foreign currency transactions
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Options written
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Total net realized gain (loss)
10,384,665
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net change in unrealized
appreciation/depreciation on:
Investments
11,237,645
- --------------------------------------------------
- --------------------------------------------------
- -----------
Financial futures contracts
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Foreign currency transactions
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Options written
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net change in unrealized
appreciation/depreciation
11,237,645
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net gain (loss)
21,622,310
- --------------------------------------------------
- --------------------------------------------------
- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $
22,469,882
- --------------------------------------------------
- --------------------------------------------------
- -----------
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
38
<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>
$ 656,640 $ 2,465,375
$ 3,125,856 $ 5,247,889 $
5,310,118
6,372,612 --
- -- -- --
(918,206) --
- -- -- --
6,111,046 2,465,375
3,125,856 5,247,889
5,310,118
1,551,382 193,939
212,605 367,755
324,962
403,000 191,000
124,400 119,000
189,000
93,300 32,200
36,400 40,400 49,700
35,000 25,000
18,000 18,000 29,000
67,200 30,000
18,300 18,300 31,000
25,200 15,200
15,200 15,200 15,200
5,000 12,000
5,000 5,000 5,000
4,250 4,250
4,250 4,250 4,250
5,786 10,625
5,786 5,786 5,786
3,887 900
814 1,411 1,800
3,544 3,664
4,837 999 3,251
2,197,549 518,778
445,592 596,101
658,949
3,913,497 1,946,597
2,680,264 4,651,788
4,651,169
12,088,732 1,247,895
(30,724) (715,006)
271,285
-- --
170,742 145,680
18,176
(273,753) (1,376,360)
(206,259) 565,811
- --
-- --
38,957 56,559 37,717
11,814,979 (128,465)
(27,284) 53,044
327,178
16,999,508 31,949
(121,548) (228,099)
(1,124,991)
-- --
(338,375) (338,625)
- --
(24,417) (66,476)
166,706 172,531 -
- -
-- --
- -- -- 19,899
16,975,091 (34,527)
(293,217) (394,193)
(1,105,092)
28,790,070 (162,992)
(320,501) (341,149)
(777,914)
$ 32,703,567 $ 1,783,605
$ 2,359,763 $ 4,310,639 $
3,873,255
<CAPTION>
U.S. GOVERNMENT MONEY
MARKET PORTFOLIO
<C>
$ 1,030,474
--
--
1,030,474
47,830
62,000
7,400
18,300
12,100
6,200
5,000
4,250
5,786
378
1,269
170,513
859,961
2,578
--
--
--
2,578
--
--
--
--
--
2,578
$ 862,539
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
39
<PAGE>
THE TARGET PORTFOLIO TRUST
Statements of Changes in Net
Assets
<TABLE>
<CAPTION>
SMALL
CAPITALIZATION
LARGE
CAPITALIZATION LARGE CAPITALIZATION
GROWTH
GROWTH PORTFOLIO VALUE
PORTFOLIO PORTFOLIO
-----------
- ----------------- -------------------------
- --- ------------
Year Ended
Year
Ended December 31, Year Ended December
31, December 31,
-----------
- ----------------- -------------------------
- --- ------------
1996
1995 1996 1995
1996
<S> <C>
<C> <C> <C>
<C>
INCREASE (DECREASE)
IN NET ASSETS
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Operations
Net investment income (loss) $
390,116 $ 1,438,204 $ 4,829,796 $
4,478,126 $ (445,756)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net realized gain (loss) on
investment and foreign currency
transactions
11,243,006 19,526,858 11,707,935
6,876,322 16,882,644
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net change in unrealized
appreciation/
depreciation of investments
27,653,840 15,296,515 20,366,798
33,534,250 6,803,397
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net increase in net assets
resulting from operations
39,286,962 36,261,577 36,904,529
44,888,698 23,240,285
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net equalization (debits)/credits -
- - 23,852 --
137,234 --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Dividends and Distributions
Dividends from net investment
income
(329,698) (1,438,204) (4,829,796)
(4,180,840) --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Dividends in excess of net
investment
income -
- - (172,473) (435,227)
- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Distributions from net
realized gains
(23,349,943) (146,425) (9,766,690)
(5,166,575) (16,337,409)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Distributions in excess of net
realized gains -
- - -- --
- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Total distributions
(23,679,641) (1,757,102) (15,031,713)
(9,347,415) (16,337,409)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Fund share transactions(a)
Net proceeds from shares sold
63,352,161 56,432,734 67,051,579
54,585,252 52,292,568
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions
23,329,793 1,723,164 14,708,918
9,096,375 16,090,077
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Cost of shares reacquired
(61,584,086) (54,679,344) (63,523,667)
(53,982,606) (49,348,968)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net increase/(decrease) in net
assets from Fund share
transactions
25,097,868 3,476,554 18,236,830
9,699,021 19,033,677
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Total increase/(decrease)
40,705,189 38,004,881 40,109,646
45,377,538 25,936,553
NET ASSETS
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Beginning of year
180,077,240 142,072,359 187,596,203
142,218,665 121,532,722
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
End of year
$220,782,429 $180,077,240 $227,705,849
$187,596,203 $147,469,275
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
<CAPTION>
SMALL CAPITALIZATION
VALUE PORTFOLIO
- ----------------------------
Year Ended December 31,
- ----------------------------
1995
1996 1995
<S> <C>
<C> <C>
INCREASE (DECREASE)
IN NET ASSETS
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Operations
Net investment income (loss) $ 131,644
$ 847,572 $ 1,007,405
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net realized gain (loss) on
investment and foreign currency
transactions 15,587,518
10,384,665 (1,276,385)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net change in unrealized
appreciation/
depreciation of investments 7,737,858
11,237,645 15,684,311
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net increase in net assets
resulting from operations 23,457,020
22,469,882 15,415,331
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net equalization (debits)/credits 5,006
- -- (6,129)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Dividends and Distributions
Dividends from net investment
income
(126,023) (837,683) (1,001,120)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Dividends in excess of net
investment
income --
- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Distributions from net
realized gains
(2,310,413) (4,467,642) --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Distributions in excess of net
realized gains --
- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Total distributions
(2,436,436) (5,305,325) (1,001,120)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Fund share transactions(a)
Net proceeds from shares sold 43,301,027
44,712,582 33,516,882
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions 2,409,004
5,207,885 976,655
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Cost of shares reacquired
(41,665,163) (38,007,600) (35,469,754)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net increase/(decrease) in net
assets from Fund share
transactions 4,044,868
11,912,867 (976,217)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Total increase/(decrease) 25,070,458
29,077,424 13,431,865
NET ASSETS
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Beginning of year 96,462,264
97,594,479 84,162,614
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
End of year $121,532,722
$126,671,903 $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 46
40
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL
INTERNATIONAL
EQUITY
BOND TOTAL RETURN
INTERMEDIATE-TERM
PORTFOLIO
PORTFOLIO BOND PORTFOLIO
BOND PORTFOLIO
--------------------------- -------------
- -------------- ------------------------- -----
- ----------------------
Year Ended December 31, Year Ended
December 31, Year Ended December 31,
Year Ended December 31,
--------------------------- -------------
- -------------- ------------------------- -----
- ----------------------
1996 1995 1996
1995 1996 1995 1996
1995
<C> <C> <C>
<C> <C> <C> <C>
<C>
$ 3,913,497 $ 2,424,043 $ 1,946,597
$ 1,640,903 $ 2,680,264 $ 2,302,300 $
4,651,788 $ 4,178,990
11,814,979 5,756,251 (128,465)
1,246,953 (27,284) 2,690,163
53,044 3,510,267
16,975,091 17,986,578 (34,527)
654,522 (293,217) 1,575,397
(394,193) 2,967,954
32,703,567 26,166,872 1,783,605
3,542,378 2,359,763 6,567,860
4,310,639 10,657,211
-- (305,576) --
- -- -- -- --
- --
(3,405,100) (1,548,526) (812,023)
(1,640,903) (2,614,993) (2,138,946)
(4,651,788) (4,081,709)
-- -- --
(21,207) -- --
(47,210) --
(9,899,724) (493,586) (922,057)
(642,900) (1,230,625) (335,308)
(1,051,696) (188,877)
-- -- --
- -- -- -- --
- --
(13,304,824) (2,042,112) (1,734,080)
(2,305,010) (3,845,618) (2,474,254)
(5,750,694) (4,270,586)
354,553,935 140,908,056 18,342,835
20,469,941 20,202,045 23,640,083
44,780,207 29,966,150
13,089,510 1,993,113 1,705,126
2,145,942 3,603,260 2,334,835
5,507,246 4,022,268
(338,076,828) (163,147,872) (12,977,726)
(10,640,585) (18,219,385) (16,141,734)
(25,580,092) (26,174,351)
29,566,617 (20,246,703) 7,070,235
11,975,298 5,585,920 9,833,184
24,707,361 7,814,067
48,965,360 3,572,481 7,119,760
13,212,666 4,100,065 13,926,790
23,267,306 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
$240,562,926 $191,597,566 $41,779,700
$34,659,940 $49,217,795 $45,117,730
$100,392,017 $77,124,711
<CAPTION>
U.S. GOVERNMENT
MORTGAGE BACKED
MONEY
SECURITIES PORTFOLIO
MARKET PORTFOLIO
-------------------------- -
- --------------------------
Year Ended December 31,
Year Ended December 31,
-------------------------- -
- --------------------------
1996 1995
1996 1995
<C> <C>
<C> <C>
$ 4,651,169 $ 4,423,653
$ 859,961 $ 1,044,138
327,178 2,132,636
2,578 548
(1,105,092) 3,284,752
- -- --
3,873,255 9,841,041
862,539 1,044,686
-- --
- -- --
(4,503,951) (4,423,653)
(862,539) (1,044,686)
-- (196,430)
- -- --
-- --
- -- --
-- --
- -- --
(4,503,951) (4,620,083)
(862,539) (1,044,686)
21,388,848 19,667,652
339,835,083 139,918,716
3,841,153 3,702,170
776,187 945,815
(20,491,299) (20,802,368)
(332,068,470) (143,448,009)
4,738,702 2,567,454
8,542,800 (2,583,478)
4,108,006 7,788,412
8,542,800 (2,583,478)
69,759,070 61,970,658
18,854,556 21,438,034
$73,867,076 $69,759,070
$ 27,397,356 $ 18,854,556
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
41
<PAGE>
THE TARGET PORTFOLIO TRUST
Financial Highlights
<TABLE>
<CAPTION>
LARGE
CAPITALIZATION
LARGE CAPITALIZATION
VALUE
GROWTH PORTFOLIO(e)
PORTFOLIO(e)
---------
- --------------------------------------------------
- ---------- ------------
January 5,
1993(a) Year Ended
Year Ended December 31,
Through December 31,
---------
- -----------------------------------------
December 31, ------------
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) .31
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net realized and unrealized gains
(losses) on
investment transactions
2.33 2.41 (.16)
(.12) 2.07
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Total from investment
operations
2.35 2.51 (.06)
(.05) 2.38
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Less distributions
Dividends from net investment
income
(.02) (.10) (.10)
(.04) (.31)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Distributions in excess of net
investment income -
- - (.01) (.01)
- -- (.03)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Distributions from net realized gains
(1.49) (.01) --
- -- (.64)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Distributions in excess of net realized
gains -
- - -- --
- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Total distributions
(1.51) (.12) (.11)
(.04) (.98)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net asset value, end of period
$12.97 $12.13 $9.74
$9.91 $13.97
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
TOTAL RETURN(d)
21.09% 25.76% (.68)%
(.46)% 19.17%
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
RATIOS/SUPPLEMENTAL DATA:
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net assets, end of period (000)
$220,782 $180,077 $142,072
$98,089 $227,706
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Average net assets (000)
$202,736 $162,982 $129,687
$48,033 $208,898
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Ratios to average net assets
Expenses
.82% .78% .81%
1.05%(b)(c) .77%
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net investment income (loss)
.19% .88% 1.08%
.84%(b)(c) 2.33%
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Portfolio turnover rate
65% 154% 24%
4% 22%
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Average commission rate per share $
.0572 $ .0578 N/A
N/A $ .0509
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
<CAPTION>
LARGE CAPITALIZATION
VALUE PORTFOLIO
----------
- -----------------------------------------
January 5,
1993(a)
Through
Year
Ended 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 46
42
<PAGE>
<TABLE>
<CAPTION>
SMALL CAPITALIZATION
SMALL CAPITALIZATION
GROWTH
VALUE
PORTFOLIO
PORTFOLIO(e)
- --------------------------------------------------
- ------------- --------------------------------
- -------------------------------
January 5,
January 5,
1993(a)
1993(a)
Year Ended December 31,
Through Year Ended December 31,
Through
- ----------------------------------------------
December 31, ---------------------------------
- ------------- December 31,
1996 1995(e) 1994(e)
1993(e) 1996 1995
1994 1993
<C> <C> <C>
<C> <C> <C>
<C> <C>
$14.15 $11.59 $11.86
$10.00 $13.07 $11.07
$12.72 $10.00
(.02) .02 .01
.01(c) .11 .14
.11 (.01)(c)
2.63 2.84 (.27)
1.86 2.71 2.00
(1.49) 3.19
2.61 2.86 (.26)
1.87 2.82 2.14
(1.38) 3.18
-- (.02) (.01)
(.01) (.11) (.14)
- -- --
-- -- --
- -- -- --
- -- --
(1.83) (.28) --
- -- (.56) --
(.27) (.46)
-- -- --
- -- -- --
- -- --
(1.83) (.30) (.01)
(.01) (.67) (.14)
(.27) (.46)
$14.93 $14.15 $11.59
$11.86 $15.22 $13.07
$11.07 $12.72
18.88% 24.62% (2.19)%
18.66% 21.75% 19.21%
(11.03)% 31.86%
$147,469 $121,533 $96,462
$63,917 $126,672 $97,594
$84,163 $64,430
$141,496 $107,649 $87,403
$29,313 $110,564 $88,085
$83,891 $29,039
.89% .85% .93%
1.05(b)(c) .92% 1.00%
.93% 1.05%(b)(c)
(.32)% .12% .10%
.11(b)(c) .77% 1.14%
.88% (.11)%(b)(c)
108% 120% 97%
72% 60% 110%
97% 112%
$ .0590 $ .0586 N/A
N/A $ .0610 $ .0561
N/A N/A
<CAPTION>
INTERNATIONAL
EQUITY
PORTFOLIO
------------------------------------
- ---------------------------
January 5,
1993(a)
Year Ended December 31,
Through
------------------------------------
- ---------- December 31,
1996 1995(e)
1994(e) 1993(e)
<C> <C>
<C> <C>
$13.64 $11.95
$13.09 $10.00
.25 .17
.06 .07
1.79 1.67
(.01) 3.16
2.04 1.84
.05 3.23
(.22) (.11)
(.01) (.01)
--
- -- --
(.64) (.04)
(1.07) (.05)
(.11) (.08)
(.86) (.15)
(1.19) (.14)
$14.82 $13.64
$11.95 $13.09
15.25% 15.38%
.18% 32.38%
$240,563 $191,598
$188,025 $127,121
$221,626 $183,414
$179,614 $49,769
.99% 1.02%
1.07% 1.40%(b)
1.77% 1.32%
.47% .64%(b)
39% 76%
116% 65%
$ .0240 $ .0250
N/A N/A
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
43
<PAGE>
THE TARGET PORTFOLIO TRUST
Financial Highlights
<TABLE>
<CAPTION>
INTERNATIONAL TOTAL
RETURN
BOND BOND
PORTFOLIO PORTFOLIO
--------
- ----------------------------------------------
- ------------
May 17,
1994(a) Year Ended
Year
Ended December 31, Through
December 31,
--------
- ------------------------ December 31,
- ------------
1996
1995 1994 1996
<S> <C>
<C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Net asset value, beginning of
period
$10.19 $9.57 $10.00
$10.62
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Income from investment operations
Net investment income
.51 .57(c) .27(c)
.57
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Net realized and unrealized gains
(losses) on investment
transactions
(.08) .82 (.19)
(.09)
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Total from investment
operations
.43 1.39 .08
.48
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Less distributions
Dividends from net investment
income
(.21) (.57) (.27)
(.56)
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Distributions in excess of net
investment income
- -- -- (.24)
- --
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Distributions from net realized
gains
(.24) (.20) --
(.26)
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Distributions in excess of net
realized gains
- -- -- --
- --
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Total distributions
(.45) (.77) (.51)
(.82)
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Net asset value, end of period
$10.17 $10.19 $9.57
$10.28
- --------------------------------------------------
- --------------------------------------------------
- ----------------
TOTAL RETURN(d)
4.45% 14.66% .71%
5.02%
- --------------------------------------------------
- --------------------------------------------------
- ----------------
RATIOS/SUPPLEMENTAL DATA:
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Net assets, end of period (000)
$41,780 $34,660 $21,447
$49,218
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Average net assets (000)
$38,788 $29,510 $15,366
$47,246
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Ratios to average net assets
Expenses
1.34% 1.00%(c)
1.00%(b)(c) .94%
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Net investment income
5.02% 5.56%(c)
4.84%(b)(c) 5.67%
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Portfolio turnover rate
226% 456% 361%
340%
- --------------------------------------------------
- --------------------------------------------------
- ----------------
<CAPTION>
TOTAL RETURN
BOND
PORTFOLIO
-------------
- --------------------------------
January 5,
1993(a)
Through
Year Ended
December 31, December 31,
1995
1994 1993
<S> <C>
<C> <C>
PER SHARE OPERATING
PERFORMANCE:
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Net asset value, beginning of
period $9.48
$10.28 $10.00
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Income from investment operations
Net investment income .62(c)
.47(c) .44(c)
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Net realized and unrealized gains
(losses) on investment
transactions 1.18
(.82) .56
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Total from investment
operations 1.80
(.35) 1.00
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Less distributions
Dividends from net investment
income (.58)
(.45) (.44)
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Distributions in excess of net
investment income --
- -- (.02)
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Distributions from net realized
gains (.08)
- -- (.19)
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Distributions in excess of net
realized gains --
- -- (.07)
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Total distributions (.66)
(.45) (.72)
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Net asset value, end of period $10.62
$9.48 $10.28
- --------------------------------------------------
- --------------------------------------------------
- ----------------
TOTAL RETURN(d) 19.63%
(3.54)% 10.18%
- --------------------------------------------------
- --------------------------------------------------
- ----------------
RATIOS/SUPPLEMENTAL DATA:
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Net assets, end of period (000) $45,118
$31,191 $25,917
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Average net assets (000) $37,023
$31,141 $12,594
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Ratios to average net assets
Expenses .85%(c)
.85%(c) .85%
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Net investment income 6.21%(c)
4.90%(c) 3.87%
- --------------------------------------------------
- --------------------------------------------------
- ----------------
Portfolio turnover rate 141%
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 46
44
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE-TERM
MORTGAGE BACKED
BOND PORTFOLIO
SECURITIES PORTFOLIO
- --------------------------------------------------
- ------------- --------------------------------
- -------------------------------
January 5,
January 5,
1993(a)
1993(a)
Year Ended December 31,
Through Year Ended December 31,
Through
- ----------------------------------------------
December 31, ---------------------------------
- ------------- 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
.59 .63 .49
.46(c) .65 .68(c)
.61(c) .57(c)
(.07) .94 (.71)
.46 (.12) .83
(.66) .28
.52 1.57 (.22)
.92 .53 1.51
(.05) .85
(.59) (.60) (.48)
(.45) (.63) (.68)
(.61) (.57)
-- -- --
- -- -- (.03)
(.01) (.02)
(.14) (.02) --
(.18) -- --
- -- (.08)
-- -- --
(.03) -- --
- -- --
(.73) (.62) (.48)
(.66) (.63) (.71)
(.62) (.67)
$10.30 $10.51 $9.56
$10.26 $10.21 $10.31
$9.51 $10.18
5.22% 16.87% (2.23)%
9.33% 5.56% 16.18%
(.51)% 8.56%
$100,392 $77,125 $62,924
$60,651 $73,867 $69,759
$61,971 $60,100
$81,723 $68,628 $69,602
$32,441 $72,214 $65,149
$66,276 $29,710
.73% .79% .80%
.85%(b)(c) .91% .85%(c)
.85%(c) .85%(b)(c)
5.69% 6.09% 5.06%
4.27%(b)(c) 6.44% 6.79%(c)
6.19%(c) 5.30%(b)(c)
311% 93% 77%
129% 102% 154%
380% 134%
<CAPTION>
U.S.
GOVERNMENT
MONEY
MARKET
PORTFOLIO
------------------------------------
- -------------------------------
January 5,
1993(a)
Year Ended December 31,
Through
------------------------------------
- ------------ December 31,
1996 1995
1994 1993
<C> <C>
<C> <C>
$1.00 $1.00
$1.00 $1.00
.045 .051(c)
.037(c) .025(c)
-- --
- -- --
.045 .051
.037 .025
(.045) (.051)
(.037) (.025)
-- --
- -- --
-- --
- -- --
-- --
- -- --
(.045) (.051)
(.037) (.025)
$1.00 $1.00
$1.00 $1.00
4.53% 5.25%
3.79% 2.56%
$27,397 $18,855
$21,438 $2,997
$19,132 $20,173
$15,048 $1,407
.89% .75%(c)
.50%(c) .50%(b)(c)
4.49% 5.18%(c)
4.03%(c) 2.51%(b)(c)
-- --
- -- --
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 46
45
<PAGE>
THE TARGET PORTFOLIO TRUST
Notes to Financial Statements
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
CapiTtalization 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 the 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
common stocks that, in the investment adviser's
opinion, are characterized by a
growth of earnings faster than that of the S&P
500; Large Capitalization Value
Portfolio--total return of capital appreciation
and dividend income through
investment primarily in common stocks that, in the
adviser's opinion, have above
average price appreciation potential; Small
Capitalization Growth
Portfolio--maximum capital appreciation through
investment primarily in common
stocks of ``emerging growth'' companies; Small
Capitalization Value
Portfolio--above average capital appreciation
through investment in common
stocks that, in the adviser's opinion, are
undervalued or overlooked in the
marketplace; International Equity Portfolio--
capital appreciation through
investment primarily in common stocks 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 primarily and capital appreciation
secondarily each consistent
with the protection of capital through investment
primarily in mortgage related
securities; U.S. Government Money Market Portfolio-
- -maximum current income
consistent with 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, including accrued interest. If the
seller defaults, and the value
of the collateral declines or, if bankruptcy
proceedings are
- --------------------------------------------------
- ------------------------------
46
<PAGE>
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
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
- --------------------------------------------------
- ------------------------------
47
<PAGE>
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, International Bond Portfolio, Total
Return Bond Portfolio and
Intermediate-Term Bond Portfolio was to reclassify
$(302,524), $(971,362),
$(50,758) and $(141,496), respectively, of net
foreign currency losses to
undistributed net investment income from
accumulated net realized gains
(losses). In addition, the Large Capitalization
Growth Portfolio and Total
Return Bond Portfolio reclassified $227,589 and
$47,955, respectively of
overdistributed income to paid-in capital in
excess of par from overdistributed
net investment income. Lastly, the Small
Capitalization Growth Portfolio
reclassified $439,497 of net operating losses to
paid-in capital in excess of
par from overdistributed net investment income.
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
LLC (``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 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 PMF
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.
- --------------------------------------------------
- ------------------------------
48
<PAGE>
<TABLE>
<CAPTION>
Portfolio Adviser
- ----------------- ------------------------------
- ------------
<S> <C>
Large
Capitalization
Growth......... Oak Associates and
Columbus Circle Investors
Large
Capitalization
Value.......... INVESCO MIM Inc. and
Hotchkis and Willey
Small
Capitalization
Growth......... Nicholas-Applegate Capital
Management and
Investment Advisors, Inc.
Small
Capitalization
Value.......... Wood, Struthers & Winthrop and
Lazard Freres Asset Management
International
Equity......... Lazard Freres Asset Management
International
Bond........... Fiduciary International, Inc.
Total Return Bond
and
Intermediate-Term
Bond........... Pacific Investment Management
Co.
Mortgage Backed
Securities and
U.S. Government
Money Market... 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................. .60%
.30%
Large Capitalization
Value.................. .60%
.30%
Small Capitalization
Growth................. .60%
.30%
Small Capitalization
Value.................. .60%
.30%
International Equity..... .70%
.40%
International Bond....... .50%
.30%
Total Return Bond........ .45%
.25%
Intermediate-Term Bond... .45%
.25%
Mortgage Backed
Securities............. .45%
.25%
U.S. Government Money
Market................. .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 LLC
(``PMFS''), a wholly-owned subsidiary
of PMF, serves as the Fund's transfer agent. The
following amounts represent the
fees PMFS charged for the year ended December 31,
1996 as well as the fees due
PMFS as of December 31, 1996.
<TABLE>
<CAPTION>
Amount incurred
for the
year
Amount Due
ended
as of
December 31,
December 31,
Portfolio 1996
1996
- ------------------------- ---------------- ----
- ---------
<S> <C> <C>
Large Capitalization
Growth................. $ 93,300 $
8,600
Large Capitalization
Value.................. 93,300
8,600
Small Capitalization
Growth................. 93,100
8,600
Small Capitalization
Value.................. 88,300
8,200
International Equity..... 93,300
8,600
International Bond....... 32,200
3,100
Total Return Bond........ 36,400
3,300
Intermediate-Term Bond... 40,400
3,800
Mortgage Backed
Securities............. 49,700
4,500
U.S. Government Money
Market................. 7,400
700
</TABLE>
For the year ended December 31, 1996, PSI
earned approximately $1,200 and
$5,900 in brokerage commissions on behalf of
certain portfolio transactions
executed with the Large Capitalization Growth
Portfolio and Large Capitalization
Value Portfolio, respectively.
- --------------------------------------------------
- --------
Note 4. Portfolio Securities
Purchases and sales of portfolio securities,
excluding short-term
investments and written options, for the year
ended December 31, 1996 were as
follows:
<TABLE>
<CAPTION>
Portfolio Purchases
Sales
- ----------------------------- ------------ ----
- --------
<S> <C> <C>
Large Capitalization
Growth..................... $134,645,456
$127,086,409
Large Capitalization Value... 50,869,036
43,548,514
Small Capitalization
Growth..................... 148,511,086
144,104,461
Small Capitalization Value... 69,546,350
64,779,045
International Equity......... 102,446,314
80,921,596
International Bond........... 83,398,854
74,144,918
Total Return Bond............ 167,864,286
169,996,627
Intermediate-Term Bond....... 247,349,401
236,129,643
Mortgage Backed Securities... 78,650,256
71,993,367
</TABLE>
The federal income tax basis and unrealized
appreciation/
depreciation of each of the Portfolios'
investments, excluding
written options as of December 31, 1996, were as
follows:
<TABLE>
<CAPTION>
Net
Unrealized
Appreciation
Gross Unrealized
Portfolio Basis (Depreciation)
Appreciation Depreciation
- --------------- ------------ ------------- --
- ---------- --------------
<S> <C> <C>
<C> <C>
Large
Capitalization
Growth....... $173,131,254 $47,241,081 $
52,148,606 $4,907,525
Large
Capitalization
Value........ 173,048,592 53,684,411
59,549,452 5,865,041
Small
Capitalization
Growth....... 116,668,107 27,870,724
34,293,241 6,422,517
Small
Capitalization
Value........ 104,449,585 20,956,271
22,976,898 2,020,627
International
Equity....... 206,680,959 35,955,731
42,612,257 6,656,526
International
Bond......... 39,970,371 808,839
1,030,199 221,360
Total Return
Bond......... 54,078,662 408,873
541,350 132,477
Intermediate-Term
Bond......... 115,332,914 313,899
582,209 268,310
Mortgage Backed
Securities... 72,416,518 965,456
1,111,388 145,932
</TABLE>
- --------------------------------------------------
- ------------------------------
49
<PAGE>
For federal income tax purposes, the
Mortgage Backed Securities Portfolio
had a capital loss carryforward as of December 31,
1996. Accordingly, no capital
gain distributions are expected to be paid to
shareholders of the Mortgage
Backed Securities Portfolio until future net gains
have been realized in excess
of such carryforward. In addition, certain
portfolios have either partially or
fully utilized prior year capital losses and/or
are electing to treat net
currency losses incurred in the two month period
ended December 31, 1996 as
having been incurred in the following year.
<TABLE>
<CAPTION>
Utilization Net Losses
of in two
Prior Year months ended
Capital Loss Expiration
Capital Loss December 31,
Portfolio Carryforward Year
Carryforward 1996
- ---------------- ------------- ----------- --
- ---------- ------------
<S> <C> <C>
<C> <C>
Small
Capitalization
Value
Portfolio..... -- -- $
3,493,800 --
International
Equity
Portfolio -- --
- -- $39,900
International
Bond
Portfolio..... -- --
- -- 306,300
Total Return
Bond Portfolio -- --
- -- 349,000
Intermediate-Term
Bond Portfolio -- --
- -- 138,200
Mortgage Backed
Securities
Portfolio..... $ 1,277,400 2002
262,500 --
</TABLE>
At December 31, 1996, the Total Return and
Intermediate-Term Bond
Portfolios bought 166 and 300 financial futures
contracts, respectively, on U.S.
Treasury Bonds expiring in September 1996.
The unrealized appreciation on such
contracts as of December 31, 1996 were
as follows:
<TABLE>
<CAPTION>
Value on
Unrealized
Value at December 31,
Appreciation
Portfolio Disposition 1996
(Depreciation)
- ---------------------- ----------- ------------
- --------------
<S> <C> <C>
<C>
Total Return Bond..... $18,401,750 $18,210,750
$ (191,000)
Intermediate-Term
Bond................ 32,523,750 32,343,250
(180,500)
</TABLE>
At December 31, 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
1/17/97.......... $ 141,764 $
143,038 $ 1,274
British Pounds,
expiring
5/8/97........... 241,632
245,876 4,244
Canadian Dollars,
expiring
1/21/97.......... 1,512,029
1,502,168 (9,861)
Deutschemarks,
expiring
2/21/97.......... 7,669,822
7,493,329 (176,493)
French Francs,
expiring
1/17/97.......... 2,480,921
2,480,554 (367)
Japanese Yen,
expiring
1/9/97........... 3,470,296
3,383,673 (86,623)
Spanish Pesetas,
expiring
1/13/97.......... 926,698
928,748 2,050
Swedish Krona,
expiring
2/12/97.......... 2,354,085
2,328,109 (25,976)
--------------- ---------
- -- --------------
$18,797,247
$18,505,495 $ (291,752)
--------------- ---------
- -- --------------
--------------- ---------
- -- --------------
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Appreciation
Sale Contracts Receivable Value
(Depreciation)
- ------------------- --------------- ---------
- -- --------------
<S> <C> <C>
<C>
British Pounds,
expiring
5/8/97........... $ 4,338,641 $
4,487,230 $ (148,589)
Danish Kroner,
expiring
2/13/97.......... 41,667
41,005 662
Deutschemarks,
expiring
2/21/97.......... 2,371,287
2,353,491 17,796
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Appreciation
Sale Contracts Receivable Value
(Depreciation)
- ------------------- --------------- ---------
- -- --------------
<S> <C> <C>
<C>
French Francs,
expiring
1/17/97.......... $ 4,668,016 $
4,598,240 $ 69,776
Irish Punts,
expiring
1/10/97.......... 1,980,748
2,031,728 (50,980)
Italian Lira,
expiring
1/21/97.......... 3,805,590
3,828,345 (22,755)
Japanese Yen,
expiring
1/9/97........... 2,077,504
2,060,929 16,575
Netherlands
Guilder,
expiring
1/21/97.......... 469,400
471,569 (2,169)
Spanish Pesetas,
expiring
1/13/97.......... 227,481
223,338 4,143
Swedish Krona,
expiring
2/12/97.......... 843,707
818,375 25,332
--------------- ---------
- -- --------------
$20,824,041
$20,914,250 $ (90,209)
--------------- ---------
- -- --------------
--------------- ---------
- -- --------------
</TABLE>
At December 31, 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 1/16/97 -
3/26/97........... $ 6,063,970
$5,791,521 $ (272,449)
--------------- --------
- -- --------------
--------------- --------
- -- --------------
</TABLE>
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Sale Contracts Receivable Value
Appreciation
- -------------------- --------------- --------
- -- --------------
<S> <C> <C>
<C>
Canadian Dollars,
expiring 3/26/97 -
9/5/97............ $ 2,280,226
$2,255,424 $ 24,802
Deutschemarks,
expiring 1/16/97 -
3/26/97........... 6,168,787
5,791,522 377,265
--------------- --------
- -- --------------
$ 8,449,013
$8,046,946 $ 402,067
--------------- --------
- -- --------------
--------------- --------
- -- --------------
</TABLE>
At December 31, 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 3/26/97... $ 6,877,265
$6,568,391 $ (308,874)
--------------- -------
- --- ------------
--------------- -------
- --- ------------
<CAPTION>
Value at
Foreign Currency Settlement Date
Current
Sale Contracts Receivable Value
Appreciation
- --------------------- --------------- -------
- --- ------------
<S> <C> <C>
<C>
Canadian Dollars,
expiring 3/26/97 -
9/5/97............. $ 2,973,578
$2,949,542 $ 24,036
Deutschemarks,
expiring 3/26/97... 6,950,933
6,568,391 382,542
--------------- -------
- --- ------------
$ 9,924,511
$9,517,933 $ 406,578
--------------- -------
- --- ------------
--------------- -------
- --- ------------
</TABLE>
Transactions in options written during the
year ended December 31, 1996,
were as follows:
<TABLE>
<CAPTION>
Number of
Contracts
Premiums
Total Return Bond Portfolio (000)
Received
- -------------------------------------- ---------
- --------
<S> <C>
<C>
Options outstanding at December 31,
1995................................ --
- --
Options written....................... 1,569
$55,062
Options terminated in closing purchase
transactions........................ (11)
(4,582 )
Options exercised..................... (35)
(15,874 )
Options expired....................... (1,523)
(34,606 )
---------
- --------
Options outstanding at December 31,
1996................................ --
$ --
---------
- --------
---------
- --------
</TABLE>
- --------------------------------------------------
- ------------------------------
50
<PAGE>
Transactions in options written during the
year ended December 31, 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)
(7,913 )
Options exercised..................... (37)
(15,989 )
Options expired....................... (40)
(49,045 )
---------
- --------
Options outstanding at December 31,
1996................................ --
$ --
---------
- --------
---------
- --------
<CAPTION>
Number of
Premiums
Mortgage Backed Securities Portfolio Contracts
Received
- -------------------------------------- ---------
- --------
<S> <C>
<C>
Options outstanding at December 31,
1995................................ 40,000
$14,595
Options written....................... 200
93,289
Options terminated in closing purchase
transactions........................ (40,150)
(83,390 )
---------
- --------
Options outstanding at December 31,
1996................................ 50
$24,494
---------
- --------
---------
- --------
</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 December 31,
1996, PMF owned 1,125 shares of each portfolio,
except for the International
Bond Portfolio, of which it owns 237,179 shares.
Transactions in shares of beneficial
interest during the year ended
December 31, 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...........................
5,104,185 1,992,947 (4,916,826)
2,180,306
Large Capitalization Value
Portfolio...........................
4,977,765 1,077,960 (4,680,804)
1,374,921
Small Capitalization Growth
Portfolio...........................
3,362,005 1,099,203 (3,168,065)
1,293,143
Small Capitalization Value
Portfolio...........................
3,200,088 356,460 (2,704,301)
852,247
International Equity Portfolio........
24,759,385 913,832 (23,486,609)
2,186,608
International Bond Portfolio..........
1,851,839 170,401 (1,313,693)
708,547
Total Return Bond Portfolio...........
1,977,896 356,327 (1,796,916)
537,307
Intermediate-Term Bond Portfolio......
4,363,436 539,430 (2,495,825)
2,407,041
Mortgage Backed Securities Portfolio..
2,108,789 378,715 (2,018,658)
468,846
</TABLE>
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 76,421 (3,018,792)
(134,994)
International Equity Portfolio........
11,209,899 150,197 (13,045,509)
(1,685,413)
International Bond Portfolio..........
1,976,236 208,497 (1,025,274)
1,159,459
Total Return Bond Portfolio...........
2,317,689 227,833 (1,588,241)
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>
- --------------------------------------------------
- ------------------------------
51
<PAGE>
THE TARGET PORTFOLIO TRUST
Independent Auditors' Report
The Shareholders and Trustees of
The Target Portfolio Trust:
We have audited the accompanying statements
of assets and liabilities,
including the portfolios of investments, of The
Target Portfolio Trust
(consisting of the 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) as of December
31, 1996, the related statements of operations and
of changes in net assets, and
the financial highlights for each of the periods
presented. These financial
statements and financial highlights are the
responsibility of the Fund's
management. Our responsibility is to express an
opinion on these financial
statements and financial highlights based on our
audits.
We conducted our audits in accordance with
generally accepted auditing
standards. Those standards require that we plan
and perform the audit to obtain
reasonable assurance about whether the financial
statements and financial
highlights are free of material misstatement. An
audit includes examining, on a
test basis, evidence supporting the amounts and
disclosures in the financial
statements. Our procedures included confirmation
of securities owned as of
December 31, 1996 by correspondence with the
custodian and brokers; where
replies were not received from brokers, we
performed other auditing procedures.
An audit also includes assessing the accounting
principles used and significant
estimates made by management, as well as
evaluating the overall financial
statement presentation. We believe that our audits
provide a reasonable basis
for our opinion.
In our opinion, such financial statements
and financial highlights present
fairly, in all material respects, the financial
position of each of the
respective portfolios constituting The Target
Portfolio Trust as of December 31,
1996, the results of their operations, the changes
in their net assets, and
their financial highlights for the periods
presented in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
February 21, 1997
- --------------------------------------------------
- ------------------------------
52
<PAGE>
THE TARGET PORTFOLIO TRUST
Federal Income Tax Information
As required by the Internal Revenue Code, we
wish to advise you as to the
federal tax status of dividends and distributions
paid by the Fund during its
fiscal year ended December 31, 1996. Further, we
wish to advise you of the
percentage of the ordinary income dividends
(excluding long-term capital gains
distributions) paid in 1996 that qualify for the
corporate dividends received
deduction available to corporate taxpayers.
Detailed below, please find the aggregate
dividends and distributions, per
share, paid by each portfolio during the year
ended December 31, 1996 as well as
the corporate dividend received deduction
percentage:
<TABLE>
<CAPTION>
Ordinary Dividends*
Total Corporate
- ------------------------ Long-Term
Dividends Dividend
Short-Term Capital Gains and
Received
Portfolio
Income Capital Gains Distributions
Distributions Deduction
- ------------------------------------------------
- ------ -------------- ------------- -----
- -------- ---------
<S>
<C> <C> <C> <C>
<C>
Large Capitalization Growth Portfolio...........
$0.020 -- $ 1.489 $
1.509 100%
Large Capitalization Value Portfolio............
0.342 $0.121 0.514
0.977 92%
Small Capitalization Growth Portfolio...........
- -- -- 1.831
1.831 0%
Small Capitalization Value Portfolio............
0.105 0.080 0.480
0.665 44%
International Equity Portfolio..................
0.221 0.180 0.463
0.864 0%
International Bond Portfolio....................
0.212 0.240 --
0.452 0%
Total Return Bond Portfolio.....................
0.563 -- 0.262
0.826 0%
Intermediate-Term Bond Portfolio................
0.588 -- 0.137
0.725 0%
Mortgage Backed Securities Portfolio............
0.632 -- --
0.632 0%
U.S. Government Money Market Portfolio..........
0.045 -- --
0.045 0%
</TABLE>
* For federal income tax purposes, ordinary
income dividends and short-term
capital gains distributions are taxable as
ordinary income. Long-term capital
gains distributions are taxable as capital gains
income.
Important Notice For Certain
Shareholders
Many states do not tax the portion of mutual
fund dividends attributed to
interest from U.S. Government obligations. Listed
below is the percentage of
interest earned by the following TARGET portfolios
from U.S. Government
obligations for the calendar year 1996.
To determine the amount of your dividends which
may be exempt from state and
local tax, simply multiply the amount in Box 1b of
your 1099-Div (Ordinary
Dividends) by the percentage listed below. These
percentages do not apply to
taxable capital gain distributions paid by the
portfolios.
<TABLE>
<CAPTION>
Percentage
of Interest from
U.S.
Government
Portfolio*
obligations
- -------------------------------- -----------
- ----------------
<S> <C>
Large Capitalization Growth.....
0.00%
Large Capitalization Value......
1.15%
Small Capitalization Growth.....
0.06%
Small Capitalization Value......
1.98%
International Equity............
5.38%
International Bond..............
5.89%
Total Return Bond...............
5.73%
Intermediate-Term Bond..........
10.58%
Mortgage Backed Securities......
1.30%
U.S. Government Money Market....
30.15%
</TABLE>
* Due to certain minimum portfolio holding
requirements in California,
Connecticut, New York, and New Jersey, residents
of those states will not be
able to exclude 1996 U.S. interest income from
state and local taxes.
Please consult your tax adviser or state/local
authorities to properly report
this information on your tax return. If you have
any questions concerning the
amounts listed above, please call your Prudential
Securities Financial Advisor.
- --------------------------------------------------
- ------------------------------
53
<PAGE>
THE TARGET PORTFOLIO TRUST
Supplemental Proxy Information
A Meeting of Shareholders of the Trust was held
on Wednesday, October 30,
1996 at the offices of Prudential Securities
Incorporated, One Seaport Plaza,
New York, New York. The meeting was held for the
following purposes:
(1) To elect Trustees as follows: Eugene C.
Dorsey, Douglas H. McCorkindale,
Thomas T. Mooney, Richard A. Redeker.
(2) Approval of proposal which would permit the
Manager to enter into or make
material changes to subadvisory agreements
without obtaining shareholder
approval.
(3) Approval of subadvisory agreement between
Prudential Mutual Fund Management
LLC and Hotchkis and Wiley with respect to the
Large Capitalization Value
Portfolio.
(4) To ratify the selection of Deloitte & Touche
LLP as independent public
accountants for the fiscal year ending
December 31, 1996.
(5) The results of the proxy solicitation on the
above matters were as follows:
<TABLE>
<CAPTION>
Director/Matter
Votes for Votes against Abstentions
- --------------------------------------------------
- -------------- ----------- -------------
- -----------
<S>
<C> <C> <C>
(1) Eugene C.
Dorsey............................................
Large Capitalization Growth
Portfolio...........................
8,224,387 -- 263,844
Large Capitalization Value
Portfolio............................
7,600,782 -- 243,164
Small Capitalization Growth
Portfolio...........................
4,473,508 -- 166,728
Small Capitalization Value
Portfolio............................
3,883,589 -- 140,982
International Equity
Portfolio..................................
7,518,180 -- 327,705
International Bond
Portfolio....................................
1,957,025 -- 53,108
Total Return Bond
Portfolio.....................................
2,263,386 -- 73,617
Intermediate-Term Bond
Portfolio................................
3,928,137 -- 153,773
Mortgage Backed Securities
Portfolio............................
3,739,978 -- 105,111
U.S. Government Money Market
Portfolio..........................
10,517,621 -- 427,182
Douglas H. McCorkindale
Large Capitalization Growth
Portfolio...........................
8,223,439 -- 264,792
Large Capitalization Value
Portfolio............................
7,599,948 -- 243,998
Small Capitalization Growth
Portfolio...........................
4,472,205 -- 168,031
Small Capitalization Value
Portfolio............................
3,884,333 -- 140,238
International Equity
Portfolio..................................
7,517,836 -- 328,049
International Bond
Portfolio....................................
1,955,979 -- 54,154
Total Return Bond
Portfolio.....................................
2,264,433 -- 72,570
Intermediate-Term Bond
Portfolio................................
3,924,714 -- 157,196
Mortgage Backed Securities
Portfolio............................
3,739,663 -- 105,426
U.S. Government Money Market
Portfolio..........................
10,527,603 -- 417,200
Thomas T. Mooney
Large Capitalization Growth
Portfolio...........................
8,217,778 -- 270,453
Large Capitalization Value
Portfolio............................
7,594,592 -- 249,354
Small Capitalization Growth
Portfolio...........................
4,470,219 -- 170,017
Small Capitalization Value
Portfolio............................
3,881,525 -- 143,046
International Equity
Portfolio..................................
7,511,618 -- 334,267
International Bond
Portfolio....................................
1,954,422 -- 55,711
Total Return Bond
Portfolio.....................................
2,261,959 -- 75,044
Intermediate-Term Bond
Portfolio................................
3,919,978 -- 161,932
Mortgage Backed Securities
Portfolio............................
3,737,274 -- 107,815
U.S. Government Money Market
Portfolio..........................
10,527,603 -- 417,200
</TABLE>
- --------------------------------------------------
- ------------------------------
54
<PAGE>
<TABLE>
<CAPTION>
Director/Matter
Votes for Votes against Abstentions
- --------------------------------------------------
- -------------- ----------- -------------
- -----------
<S>
<C> <C> <C>
Richard A. Redeker
Large Capitalization Growth
Portfolio...........................
8,226,077 -- 262,154
Large Capitalization Value
Portfolio............................
7,602,097 -- 241,849
Small Capitalization Growth
Portfolio...........................
4,475,481 -- 164,755
Small Capitalization Value
Portfolio............................
3,885,563 -- 139,008
International Equity
Portfolio..................................
7,521,357 -- 324,528
International Bond
Portfolio....................................
1,956,504 -- 53,629
Total Return Bond
Portfolio.....................................
2,262,823 -- 74,180
Intermediate-Term Bond
Portfolio................................
3,922,976 -- 158,934
Mortgage Backed Securities
Portfolio............................
3,738,790 -- 106,299
U.S. Government Money Market
Portfolio..........................
10,522,246 -- 422,557
(2) Approval to permit changes to subadvisory
agreements.
Large Capitalization Growth
Portfolio...........................
6,080,583 557,256 411,520
Large Capitalization Value
Portfolio............................
5,624,885 523,932 372,695
Small Capitalization Growth
Portfolio...........................
3,261,569 315,025 214,395
Small Capitalization Value
Portfolio............................
2,796,401 267,812 186,781
International Equity
Portfolio..................................
5,609,888 535,299 382,599
International Bond
Portfolio....................................
1,562,468 81,537 79,935
Total Return Bond
Portfolio.....................................
1,648,880 119,612 113,546
Intermediate-Term Bond
Portfolio................................
3,166,077 227,016 199,443
Mortgage Backed Securities
Portfolio............................
2,588,811 195,751 1,060.527
U.S. Government Money Market
Portfolio..........................
7,359,356 402,081 335,186
(3) Approval of subadvisory agreement between PMF
and Hotchkis and Wiley.
Large Capitalization Value
Portfolio............................
6,013,240 138,938 369,334
(4) Deloitte & Touche LLP
Large Capitalization Growth
Portfolio...........................
8,091,107 80,960 316,164
Large Capitalization Value
Portfolio............................
7,503,024 67,099 273,823
Small Capitalization Growth
Portfolio...........................
4,420,174 54,933 165,129
Small Capitalization Value
Portfolio............................
3,837,129 50,843 136,599
International Equity
Portfolio..................................
7,439,362 84,424 322,099
International Bond
Portfolio....................................
1,929,051 19,573 61,509
Total Return Bond
Portfolio.....................................
2,233,218 22,157 81,628
Intermediate-Term Bond
Portfolio................................
3,869,512 55,635 156,763
Mortgage Backed Securities
Portfolio............................
3,685,435 34,932 124,722
U.S. Government Money Market
Portfolio..........................
10,472,304 154,121 318,378
</TABLE>
- --------------------------------------------------
- ------------------------------
55
Large Capitalization
Growth Portfolio
<TABLE>
<CAPTION>
Average Annual Total Returns
With Advisory Fee One Year
Since Inception (1/5/93)
<S> <C>
<C>
19.29%
9.16%
</TABLE>
<TABLE>
<CAPTION>
Without Advisory Fee One Year
Since Inception (1/5/93)
<S> <C>
<C>
21.09%
10.81%
</TABLE>
Comparison of Change in Value of a $10,000
Investment
(CHART)
1/5/93
12/31/96
--Large Cap. Growth Portfolio
- --S&P 500
Past performance is not predictive of future
performance and an investor's
shares, when redeemed, may be worth more or less
than their original cost.
This graph is furnished to you in accordance with
SEC regulations. It compares
a $10,000 investment in the Target Large
Capitalization Growth Portfolio with
a similar investment in the Standard & Poor's 500
Index (S&P 500) by portraying
the initial account values on commencement of
operations and subsequent
account values at the end of each fiscal year
(December 31), as measured on
a quarterly basis, beginning in 1993. The graph
and the accompanying table
take into account the maximum quarterly investment
advisory fee associated
with the Prudential Securities Target Program of
1.50% annually. For
individual retirement plans and qualified employee
benefit plans, taking into
account the maximum investment advisory fee of
1.25%, the average annual total
return since inception would have been 6.2% and
the growth of a $10,000
investment would have been $12,015.
The S&P 500 is a capital-weighted index,
representing the aggregate market
value of the common equity of 500 stocks primarily
traded on the New York
Stock Exchange. The S&P 500 is an unmanaged index
and includes the
reinvestment of all dividends, but does not
reflect the payment of
transaction costs. The securities which comprise
the S&P 500 may differ
substantially from the securities in the
Portfolio. The S&P 500 is not the
only index which may be used to characterize
performance of growth equity
funds and other indices may portray different
comparative performance.
56
<PAGE>
Large Capitalization
Value Portfolio
<TABLE>
<CAPTION>
Average Annual Total Returns
With Advisory Fee One Year Since
Inception (1/5/93)
<S> <C> <C>
17.39%
11.61%
</TABLE>
<TABLE>
<CAPTION>
Without Advisory Fee One Year Since
Inception (1/5/93)
<S> <C> <C>
19.17%
13.30%
</TABLE>
Comparison of Change in Value of a
$10,000 Investment
(CHART)
1/5/93
12/31/96
--Large Cap. Value Portfolio
- --S&P 500
Past performance is not predictive of future
performance and an investor's
shares, when redeemed, may be worth more or less
than their original cost.
This graph is furnished to you in accordance with
SEC regulations. It compares
a $10,000 investment in the Target Large
Capitalization Value Portfolio with a
similar investment in the Standard & Poor's 500
Index (S&P 500) by portraying
the initial account values on commencement of
operations and subsequent account
values at the end of each fiscal year (December
31), as measured on a quarterly
basis, beginning in 1993. The graph and the
accompanying table take into
account the maximum quarterly investment advisory
fee associated with the
Prudential Securities Target Program of 1.50%
annually. For individual
retirement plans and qualified employee benefit
plans, taking into account
the maximum investment advisory fee of 1.25%, the
average annual total return
since inception would have been 10.0% and the
growth of a $10,000 investment
would have been $13,340.
The S&P 500 is a capital-weighted index,
representing the aggregate market
value of the common equity of 500 stocks primarily
traded on the New York
Stock Exchange. The S&P 500 is an unmanaged index
and includes the
reinvestment of all dividends, but does not
reflect the payment of
transaction costs. The securities which comprise
the S&P 500 may differ
substantially from the securities in the
Portfolio. The S&P 500 is not the
only index which may be used to characterize
performance of growth equity
funds and other indices may portray different
comparative performance.
57
<PAGE>
Small Capitalization
Growth Portfolio
<TABLE>
<CAPTION>
Average Annual Total Returns
With Advisory Fee One Year Since
Inception (1/5/93)
<S> <C> <C>
17.11% 12.86%
</TABLE>
<TABLE>
<CAPTION>
Without Advisory Fee One Year Since
Inception (1/5/93)
<S> <C> <C>
18.88% 14.57%
</TABLE>
Comparison of Change in Value of a $10,000
Investment
$17,465
$16,258
(CHART)
1/5/93
12/31/96
--Small Cap. Growth Portfolio
- --Russell 2000
Past performance is not predictive of future
performance and an investor's
shares, when redeemed, may be worth more or less
than their original cost.
This graph is furnished to you in accordance with
SEC regulations. It compares
a $10,000 investment in the Target Small
Capitalization Growth Portfolio with
a similar investment in the Russell 2000 Index
(Russell 2000) by portraying
the initial account values on commencement of
operations and subsequent
account values at the end of each fiscal year
(December 31), as measured on
a quarterly basis, beginning in 1993. The graph
and the accompanying table
take into account the maximum quarterly investment
advisory fee associated
with the Prudential Securities Target Program of
1.50% annually. For
individual retirement plans and qualified employee
benefit plans, taking
into account the maximum investment advisory fee
of 1.25%, the average annual
total return since inception would have been 11.8%
and the growth of a $10,000
investment would have been $13,978.
The Russell 2000 is a stock market index comprised
of the 2,000 smallest U.S.
domiciled publicly traded common stocks that are
included in the Russell 3000
Index. These common stocks represent approximately
11% of the U.S. equity
market. The Russell 3000 Index is comprised of the
3,000 largest U.S.
domiciled publicly - traded common stocks by
market capitalization
representing approximately 98% of the U.S.
publicly - traded equity market.
The Russell 2000 is an unmanaged index and
includes the reinvestment of all
dividends, but does not reflect the payment of
transaction costs. The
securities that comprise the Russell 2000 may
differ substantially from the
securities in the Portfolio. The Russell 2000 is
not the only index which may
be used to characterize performance of growth
funds and other indices may
portray different comparative performance.
58
<PAGE>
Small Capitalization
Value Portfolio
<TABLE>
<CAPTION>
Average Annual Total Returns
With Advisory Fee One Year Since
Inception (1/5/93)
<S> <C> <C>
20.03% 12.60%
</TABLE>
<TABLE>
<CAPTION>
Without Advisory Fee One Year Since
Inception (1/5/93)
<S> <C> <C>
21.75% 14.31%
Comparison of Change in Value of a $10,000
Investment
$17,465
$16,111
(CHART)
1/5/93
12/31/96
--Small Cap. Value Portfolio
- --Russell 2000
Past performance is not predictive of future
performance and an investor's
shares, when redeemed, may be worth more or less
than their original cost.
This graph is furnished to you in accordance with
SEC regulations. It compares
a $10,000 investment in the Target Small
Capitalization Value Portfolio with a
similar investment in the Russell 2000 Index
(Russell 2000) by portraying the
initial account values on commencement of
operations and subsequent account
values at the end of each fiscal year (December
31), as measured on a
quarterly basis, beginning in 1993. The graph and
the accompanying table
take into account the maximum quarterly investment
advisory fee associated
with the Prudential Securities Target Program of
1.50% annually. For
individual retirement plans and qualified employee
benefit plans, taking
into account the maximum investment advisory fee
of 1.25%, the average annual
total return since inception would have been 10.5%
and the growth of a
$10,000 investment would have been $13,515.
The Russell 2000 is a stock market index comprised
of the 2,000 smallest U.S.
domiciled publicly traded common stocks that are
included in the Russell 3000
Index. These common stocks represent approximately
11% of the U.S. equity
market. The Russell 3000 Index is comprised of the
3,000 largest U.S.
domiciled publicly - traded common stocks by
market capitalization
representing approximately 98% of the U.S.
publicly - traded equity market.
The Russell 2000 is an unmanaged index and
includes the reinvestment of all
dividends, but does not reflect the payment of
transaction costs. The
securities that comprise the Russell 2000 may
differ substantially from the
securities in the Portfolio. The Russell 2000 is
not the only index which may
be used to characterize performance of growth
funds and other indices may
portray different comparative performance.
59
<PAGE>
International Equity
Portfolio
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns
With Advisory Fee One Year Since
Inception (1/5/93)
<S> <C> <C>
13.53%
13.58%
</TABLE>
<TABLE>
<CAPTION>
Without Advisory Fee One Year Since
Inception (1/5/93)
<S> <C> <C>
15.25%
15.29%
</TABLE>
Comparison of Change in Value of a $10,000
Investment
$17,045
$16,673
(CHART)
1/5/93
12/31/96
--International Equity Portfolio --
Morgan Stanley EAFE Index
Past performance is not predictive of future
performance and an investor's
shares, when redeemed, may be worth more or less
than their original cost.
This graph is furnished to you in accordance with
SEC regulations. It compares
a $10,000 investment in the Target International
Equity Portfolio with a
similar investment in the Morgan Stanley Capital
International Europe,
Australia, Far East Index (EAFE Index) by
portraying the initial account
values on commencement of operations and
subsequent account values at the
end of each fiscal year (December 31), as measured
on a quarterly basis,
beginning in 1993. The graph and the accompanying
table take into account the
maximum quarterly investment advisory fee
associated with the Prudential
Securities Target Program of 1.50% annually. For
individual retirement plans
and qualified employee benefit plans, taking into
account the maximum
investment advisory fee of 1.25%, the average
annual total return since
inception would have been 13.9% and the growth of
a $10,000 investment
would have been $14,786.
The EAFE Index is an arithmetical average weighted
by market value of the
performance of 1023 non-U.S. companies
representing 18 stock markets in
Europe, Australia, New Zealand and the Far East.
The EAFE Index is an
unmanaged index and includes the reinvestment of
all dividends, but does
not reflect the payment of transaction costs. The
securities which comprise
the EAFE Index may differ substantially from the
securities in the Portfolio.
The EAFE Index is not the only index that may be
used to characterize
performance of international equity funds and
other indices may portray
different comparative performance.
60
<PAGE>
International Bond
Portfolio
<TABLE>
<CAPTION>
Average Annual Total Returns
With Advisory Fee One Year Since
Inception (5/17/94)
<S> <C> <C>
3.41%
6.33%
</TABLE>
<TABLE>
<CAPTION>
Without Advisory Fee One Year Since
Inception (5/17/94)
<S> <C> <C>
4.45% 7.39%
</TABLE>
Comparison of Change in Value of a $10,000
Investment
$12,807
$11,228
(CHART)
5/17/94
12/31/96
--International Bond Portfolio --Salomon
WB Bond Index
Past performance is not predictive of future
performance and an investor's
shares, when redeemed, may be worth more or less
than their original cost.
This graph is furnished to you in accordance with
SEC regulations. It compares
a $10,000 investment in the Target International
Bond Portfolio with a similar
investment in the Salomon World Bond Index
(Salomon WB Index) by portraying the
initial account values on commencement of
operations and subsequent account
values at the end of each fiscal year (December
31), as measured on a
quarterly basis, beginning in 1994. The graph and
the accompanying table
take into account the maximum quarterly investment
advisory fee associated
with the Prudential Securities Target Program of
1.00% annually. For
individual retirement plans and qualified employee
benefit plans, taking
into account the maximum investment advisory fee
of 1.35%, the average annual
total return since inception would have been 7.8%
and the growth of a $10,000
investment would have been $11,336.
The Salomon WB Index measures the total return
performance of high-quality
securities in major sectors of the international
bond market. The index covers
approximately 600 bonds from 10 currencies. Only
high-quality, straight issues
are included. The index is calculated on both a
weighted and an unweighted
basis. Generally, index samples for each market
are restricted to bonds with
a least 5 years of remaining life. The Salomon WB
Index is an unmanaged index
and includes the reinvestment of all dividends,
but does not reflect the
payment of transaction costs. The securities which
comprise the Salomon WB
Index may differ substantially from the securities
in the Portfolio. The
Salomon WB Index is not the only index that may be
used to characterize
performance of international bond funds and other
indices may portray
different comparative performance.
61
<PAGE>
Total Return Bond
Portfolio
<TABLE>
<CAPTION>
Average Annual Total Returns
With Advisory Fee One Year Since
Inception (1/5/93)
<S> <C> <C>
3.97%
6.45%
</TABLE>
<TABLE>
<CAPTION>
Without Advisory Fee One Year Since
Inception (1/5/93)
<S> <C> <C>
5.02%
7.52%
</TABLE>
Comparison of Change in Value of a $10,000
Investment
$12,863
$12,663
(CHART)
1/5/93
12/31/96
--Total Return Bond Portfolio --Lehman
Gov't Corp. Index
Past performance is not predictive of future
performance and an investor's
shares, when redeemed, may be worth more or less
than their original cost.
This graph is furnished to you in accordance with
SEC regulations. It compares
a $10,000 investment in the Target Total Return
Bond Portfolio with a similar
investment in the Lehman Government/Corporate
Index (LGCI) by portraying the
initial account values on commencement of
operations and subsequent account
values at the end of each fiscal year (December
31), as measured on a
quarterly basis, beginning in 1993. The graph and
the accompanying table
take into account the maximum quarterly investment
advisory fee associated
with the Prudential Securities Target Program of
1.00% annually. For
individual retirement plans and qualified employee
benefit plans, taking
into account the maximum investment advisory fee
of 1.35%, the average annual
total return since inception would have been 6.9%
and the growth of a $10,000
investment would have been $12,255.
The LGCI is a weighted index comprised of publicly
traded intermediate and
long-term government and corporate debt with an
average maturity of 11 years.
The LGCI is an unmanaged index and includes the
reinvestment of all income,
but does not reflect the payment of transaction
costs. The securities that
comprise the LGCI may differ substantially from
the securities in the
Portfolio. The LGCI is not the only index that may
be used to characterize
performance of bond funds and other indices may
portray different comparative
performance.
62
<PAGE>
Intermediate-Term
Bond Portfolio
<TABLE>
<CAPTION>
Average Annual Total Returns
With Advisory Fee One Year Since
Inception (1/5/93)
<S> <C> <C>
4.17%
6.03%
</TABLE>
<TABLE>
<CAPTION>
Without Advisory Fee One Year Since
Inception (1/5/93)
<S> <C> <C>
5.22%
7.10%
Comparison of Change in Value of a $10,000
Investment
$12,558
$12,663
(CHART)
1/5/93
12/31/96
--Intermediate-Term Bond Portfolio --
Lehman Int. Gov't Corp. Index
Past performance is not predictive of future
performance and an investor's
shares, when redeemed, may be worth more or less
than their original cost.
This graph is furnished to you in accordance with
SEC regulations. It compares
a $10,000 investment in the Target Intermediate-
Term Bond Portfolio with a
similar investment in the Lehman Intermediate
Government/Corporate Index
(LIGC Index) by portraying the initial account
values on commencement of
operations and subsequent account values at the
end of each fiscal year
(December 31), as measured on a quarterly basis,
beginning in 1993. The graph
and the accompanying table take into account the
maximum quarterly investment
advisory fee associated with the Prudential
Securities Target Program of 1.00%
annually. For individual retirement plans and
qualified employee benefit
plans, taking into account the maximum investment
advisory fee of 1.35%, the
average annual total return since inception would
have been 6.3% and the
growth of a $10,000 investment would have been
$12,040.
The LIGC Index is a weighted index comprised of
securities issued or backed by
the U.S. government and its agencies and
securities publicly issued by
corporations with one to 9.99 years remaining to
maturity, rated investment
grade and having $50 million or more outstanding.
The LIGC is an unmanaged
index and includes the reinvestment of all
dividends, but does not reflect the
payment of transaction costs. The securities that
comprise the LIGC may differ
substantially from the securities in the
Portfolio. The LIGC is not the only
index that may be used to characterize performance
of intermediate-term bond
funds and other indices may portray different
comparative performance.
63
<PAGE>
Mortgage Backed
Securities Portfolio
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns
With Advisory Fee One Year Since
Inception (1/5/93)
<S> <C> <C>
4.50%
6.31%
</TABLE>
<TABLE>
<CAPTION>
Without Advisory Fee One Year Since
Inception (1/5/93)
<S> <C> <C>
5.56%
7.38%
Comparison of Change in Value of a $10,000
Investment
$12,807
$12,794
1/5/93
12/31/96
--Mortgage Backed Securities Portfolio --
Salomon MBS Index
Past performance is not predictive of future
performance and an investor's
shares, when redeemed, may be worth more or less
than their original cost.
This graph is furnished to you in accordance with
SEC regulations. It compares
a $10,000 investment in the Target Mortgage-Backed
Securities Portfolio with a
similar investment in the Salomon Bros. Mortgages
Index (Mortgage Index) by
portraying the initial account values on
commencement of operations and
subsequent account values at the end of each
fiscal year (December 31), as
measured on a quarterly basis, beginning in 1993.
The graph and the
accompanying table take into account the maximum
quarterly investment advisory
fee associated with the Prudential Securities
Target Program of 1.00%
annually. For individual retirement plans and
qualified employee benefit
plans, taking into account the maximum investment
advisory fee of 1.35%,
the average annual total return since inception
would have been 6.6% and the
growth of a $10,000 investment would have been
$12,126.
The Mortgage Index is comprised of mortgage-backed
pass-through securities
consisting of 70% pass-through securities issued
by the Government National
Mortgage Association, 23% by the Federal Home Loan
Mortgage Corporation, 5% by
the Federal National Mortgage Association and the
balance a mixture of
conventional and Federal Housing Administration
project mortgage pools. The
Mortgage Index is an unmanaged index and includes
the reinvestment of all
dividends, but does not reflect the payment of
transaction costs. The
securities which comprise the Mortgage Index may
differ substantially from
the securities in the Portfolio. The Mortgage
Index is not the only index that
may be used to characterize performance of
mortgage-backed security funds and
other indices may portray different comparative
performance.
64
<PAGE>
Trustees
Eugene C. Dorsey
Douglas H. McCorkindale
Thomas T. Mooney
Richard A. Redeker
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 LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
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 500Atlanta, GA 30309
Investment Advisors, Inc.
3700 First Bank Place
P.O. Box 357
Minneapolis, Minnesota 55440
Lazard Fr_res 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 LLC
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
This report is not authorized for distribution to
prospective
investors unless preceded or accompanied by a
current prospectus.
875921 87 6 875921 40 5 875921
88 4 875921 60 3
875921 20 7 875921 30 6 875921
80 1
875921 10 8 875921 50 4 875921
70 2 TMF 158 E
</TABLE>
