(ICON)
The
Target Portfolio
Trust
(SYMBOL)
Semi
Annual Report
June 30, 1997
(LOGO)
<PAGE>
(ICON)
<PAGE>
The Target Portfolio Trust
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Shareholder Letter 2
Target's Shareholder Services 9
Portfolio of Investments:
Large Capitalization Growth Portfolio 10
Large Capitalization Value Portfolio 13
Small Capitalization Growth Portfolio 17
Small Capitalization Value Portfolio 21
International Equity Portfolio 26
International Bond Portfolio 29
Total Return Bond Portfolio 31
Intermediate-Term Bond Portfolio 34
Mortgage Backed Securities Portfolio 37
U.S. Government Money Market Portfolio 39
Statements of Assets and Liabilities 40
Statements of Operations 42
Statements of Changes in Net Assets 44
Financial Highlights 46
Notes to Financial Statements 53
</TABLE>
1
<PAGE>
Dear Target Shareholder:
"The Greatest Bull Market in History" is what many
are calling it. And
rightly so. The current U.S. economic expansion
is now in its seventh year.
Unemployment is the lowest it has been in a
generation. Inflation seems like a
distant memory. And all of this has brought
growing profits and stable
corporate borrowing costs - an ideal environment
for investors. Several market
and economic events, including the increase of
short-term interest rates by a
quarter of a percentage point, generated periods
of volatility in the market
over the past six months. However, remarkable
gains prevailed. Overall, stock
returns at home and abroad flourished.
U.S. bond markets fared well, as the yield on the
bellwether 30-year U.S.
Treasury bond rose slightly from where it finished
at the end of 1996.
Long-term interest rates rose, then fell, ending
ever so slightly higher over
the last six months. Domestic bond yields
stabilized in the second quarter as
bond investors turned bullish due to clear signs
that the first quarter's
surging economic growth had subsided to a moderate
pace of expansion. In the
international bond markets, emerging market debt
performed the best.
Target shareholders have enjoyed the overall
market prosperity, with almost
all portfolios outperforming or returning in line
with their respective
benchmarks for the six-month period ended June 30,
1997. No matter what type
of market environment, certain asset classes will
outperform others. That is
why it makes sense to maintain a proper allocation
in order to be exposed to a
broad range of investments. Target shareholders
also benefited from the
increased diversification and lower volatility
they achieved by investing in
several asset classes.
Performance Summary as of June 30, 1997
12/31/96
6/30/97 6 Month*
Portfolios NAV
NAV Total Return
[S] [C]
[C] [C]
Large Capitalization Growth $12.97
$14.53 14.07%
Lipper Growth Fund Avg
14.29
Large Capitalization Value 13.97
16.04 16.74
Growth & Income Avg
15.52
Small Capitalization Growth 14.93
16.33 11.38
Small Company Avg
9.00
Small Capitalization Value 15.22
17.38 16.39
Small Company Avg
9.00
International Equity 14.82
16.31 12.15
International Avg
12.53
International Bond 10.17
9.58 (3.87)
General World Income Avg
0.89
Total Return Bond 10.28
10.28 2.55
Corporate Debt BBB Avg
3.18
Intermediate-Term Bond 10.30
10.30 2.68
Intermediate Investment Grade
2.62
Mortgage Backed Securities 10.21
10.25 3.40
U.S. Mortgage Avg
3.21
U.S. Government Money Market 1.00
1.00 2.26
U.S. Money Fund Avg
2.45
* Source: Lipper Analytical Services for Lipper
averages, and Prudential
Investments Fund Management for Target returns.
Target returns are in bold
face type. Returns assume the reinvestment of all
dividends and distributions
and take into account all charges and expenses
applicable to an investment in
each portfolio except the annual Target advisory
fee. For retail accounts, the
maximum annual advisory fee is 1.5% of equity
portfolio assets and 1.0% of bond
and money market portfolio assets. For retirement
accounts, the maximum
advisory fees are 1.25% and 1.35%, respectively.
Past performance is not
indicative of future results and an investor's
shares, when redeemed, may be
worth more or less than their original cost.
2
Average Annual Total Returns as of June 30, 1997
<TABLE>
<CAPTION>
Since
Portfolios One Year
Three Years Inception*
<S> <C>
<C> <C>
Large Capitalization Growth 26.17%
20.46% 11.14%
Large Capitalization Value 26.75
22.83 13.95
Small Capitalization Growth 12.74
19.47 13.88
Small Capitalization Value 29.31
16.02 14.77
International Equity 17.68
12.02 14.70
International Bond -0.24
3.94 3.81
Total Return Bond 7.68
7.88 6.20
Intermediate-Term Bond 6.78
7.03 5.86
Mortgage Backed Securities 7.52
7.76 6.26
</TABLE>
Note: The average annual return for the Target
Portfolios assumes the
imposition of the maximum Target advisory
fee of 1.5% for stock
portfolios and 1.00% for the bond
portfolios.
* The inception date for all portfolios is 1/5/93,
except for International
Bond, which is 5/16/94. Past performance is not
indicative of future results.
Stocks Soared, then Fell,
Then Soared Again
The U.S. stock market did not rocket straight up
in the first half of the year.
Stocks actually fell nearly 10% in the spring amid
short-lived fears of higher
interest rates. Although the Federal Reserve did,
in fact, raise interest
rates (by a quarter of a percentage point) in
March, U.S. stocks recovered in
April amid evidence that rates would not rise
further any time soon. U.S.
stocks again reached new highs by the end of the
first half, with the Dow Jones
Industrial Average finishing at 7672, up 20.1% at
June 30. Consumer growth
and staple stocks (powered by pharmaceuticals) led
the market, followed by
financials and consumer cyclicals (auto, retail,
and housing stocks that do
well with an expanding economy).
The S&P 500 index, a broader measure of the U.S.
stock market, rose an
impressive 20.6% over the past six months, more
than doubling 1996's first
half returns. The Russell 2000 index, a proxy for
small company stocks,
gained 10.2% for the first half. And "growth"
stocks have outperformed
"value" stocks so far this year, as they have for
the past three years
according to Lipper Analytical Services.
The first quarter hurt the performance of the
Large Capitalization Growth
Portfolio co-managed by Oak Associates and
Columbus Circle Investors. The
second quarter, however, showed a vast improvement
for large cap growth stocks.
Oak Associates was well rewarded with its bullish
position on technology.
Technology and healthcare, which were the two
strongest sectors of the market,
were well represented in the Portfolio. Strong
gains were recorded in
technology holdings such as Microsoft and Cisco
3
Systems, and healthcare holdings such as Pfizer
and Warner Lambert. Columbus
Circle's relative performance was hurt by its
participation in a diverse group
of consumer stocks which did not include any of
the bigger consumer cyclical
companies. Both co-managers are optimistic about
the technology, healthcare
and financial services sectors in which they are
investing.
The Large Capitalization Value Portfolio, managed
by INVESCO Capital
Management and Hotchkis & Wiley, outperformed
their peers as measured by the
Lipper Growth & Income average for the first half
of the year. INVESCO
continues to concentrate on consumer staples
companies including beverage and
tobacco companies like Philip Morris Cos. and
financial companies such as
NationsBank Corp., which have demonstrated strong
performance for the period.
Hotchkis & Wiley continues to favor the basic
material and utility sectors,
which it believes will perform well when investors
once again focus on
rational valuation in the market place.
Although the Small Capitalization Growth Portfolio
lagged in the first
quarter, it recovered by finishing up the first
half of the year solidly
outperforming its benchmark, the Russell 2000
Growth Index, by more than 6%.
IAI drove the portfolio's performance over the six-
month period primarily
because of certain positions it maintained in the
commercial services sector
such as Catalina Marketing and CCC Information
Services. Nicholas-Applegate,
the Portfolio's co-manager, remains committed to
investing in high-growth
companies. It believes that a focus on fundamental
earnings strength
(evidenced in the second quarter) could cause a
dramatic shift in market
leadership, which would in turn benefit its
portion of the Portfolio. The
holdings in the Portfolio continue to be in well-
managed companies with
powerful, sustainable business models.
Both Lazard Freres and Wood, Struthers & Winthrop,
the co-managers of the Small
Capitalization Value Portfolio, attribute their
strong performance as compared
to the Russell 2000 Value Index, as well as that
of their peers, as measured by
the Lipper Small Cap Average for the six-month
period, to their concentration
4
on technology and consumer services. Their
investments in technology and
consumer services companies like Dallas
Semiconductor Corp. and Tower
Automotive Inc., has proved valuable as these
companies have performed notably
well for the first half of the year. The managers
attribute their strong
returns to their strict bottom-up value style that
emphasizes a fundamental
research driven process.
Bonds Bounce Back
The bond markets experienced some turbulence over
the past six months.
Long-term interest rates rose, then fell, ending
slightly higher over the last
six months. The first quarter ignited inflationary
concerns that were met by
the Federal Reserve when it raised short-term
interest rates by a quarter of a
percentage point on March 25th. In the second
quarter, worries dissipated as
data was released showing that inflation remained
remarkably low and economic
growth had slowed considerably from its torrid
first-quarter pace.
Consequently, the Fed left rates unchanged in May
and the markets reacted
favorably.
U.S. bond prices rose as the yield on the 30-year
Treasury Bond ended at 6.78%
in June, slightly ahead of where it left off at
6.74% at the end of December,
1996. Short-term rates, as measured by the 3-
month U.S. Treasury bill,
actually fell slightly to 5.17%, from 5.19%. Over
the six-month period, bonds
returned 3.1% as measured by the Lehman Brothers
Aggregate Bond Index.
Mortgage-backed securities led all investment
grade bonds for the period.
As the second quarter progressed, market
expectations for any future tightening
were worked out of the term structure of interest
rates. As such, intermediate
maturity Treasury yields, which are the most
sensitive to Fed policy
expectations, fell slightly more than very short
and long-term yields. Fixed
income performance received a boost as yields on
Treasuries with maturities of
one year and greater fell 0.35% to 0.40%.
Within the bond sector, investment grade corporate
issues moderately topped
Treasuries. PIMCO, the portfolio manager of both
the Total Return and the
Intermediate-Term Bond Portfolios believes that
the extremely positive
inflation fundamentals will continue to
5
cause both a broad decline in U.S. Treasury yields
and interest rates in the coming quarters. Looking
forward, PIMCO has overweighted such sectors as
fixed and adjustable-rate mortgage backed
securities where they believe that strong
performance
will result.
Your Allocation Mainly
Determines Your Returns
(CHART)
Based on a study of 82 large pension funds.
Source: Financial Analysts
Journal, May/June 1991
Asset allocation is the process of designing an
overall portfolio that reflects
your personal risk and return requirements. It
helps you invest in specific
amounts of different securities: corporates,
Treasurys, small caps, large caps,
foreign, etc. Asset allocation is important
because, over the long-term, it's
usually more important to be in stocks and bonds
as a whole than it is to pick
individual stocks and bonds. In fact, just over
91% of a portfolio's long-term
return is due to the initial allocation.
Target's asset allocations are designed for you
once you complete the Target
Questionnaire. In this way, the Target program
helps ensure that your overall
account reflects your personal investment risk and
return requirements.
Mortgage-backed securities strongly outperformed
comparable duration Treasury
issues for the first six months of the year. The
Mortgage-Backed Securities
Portfolio, managed by Wellington Management
Company narrowly outperformed its
peers, as measured by the Lipper Mortgage Average.
The U.S. Government Money
Market Portfolio, also managed by Wellington
Management performed in line with
its peers, as measured by the Lipper Money Market
average.
International Markets
Rebound
International stocks performed well over the
period with the International
Equity Portfolio outperforming its benchmark, the
Morgan Stanley EAFE Index,
over the past six months. European countries
dominated the EAFE performance
with Switzerland, the Netherlands and Spain
leading the pack, all posting
returns of close to 40% in their local currencies.
However, because of a
strong U.S. dollar, these returns did not
translate as favorably to U.S.
investors. In addition, several Far East markets,
including Taiwan and Hong
Kong bolstered the overall performance of the EAFE
index.
International stocks generally continued to
underperform U.S. stocks for the
period. However, positive conditions abroad have
produced strong international
equity returns that have narrowed the gap with the
U.S. equity markets.
Ongoing structural changes abroad bode well for
improving returns.
Deregulation, for example, is accelerating in a
number of foreign countries.
Whether it is the opening up of Europe's
telecommunication and power
industries, "Big Bang" deregulation of the
financial sector in Japan, or
continuing privatization of state owned
enterprises around the globe, the net
effect should be very positive for discerning
international investors. Lazard
Freres Asset Management, the manager of the
International Equity Portfolio,
believes
6
that over the long term, the consistent
application of identifying
and investing in companies which are both
financially productive and
inexpensive, should continue to result in good
investment returns.
While the international bond markets produced
strong returns, the appreciation
of the U.S. dollar offset much of this advantage.
The International Bond
Portfolio, managed by Fiduciary International,
found the best performing bond
markets in the United Kingdom ("UK"), Australia
and New Zealand. The UK market
soared in response to the incoming Labor
government's decision to defer
responsibility over monetary policy to the Bank of
England. Australia
and New Zealand, which produced the strongest
returns in local currency
terms, benefited from slow growth and falling
inflation which caused their
central banks to cut interest rates. The Manager
has also gradually
increased the Portfolio's exposure to the yen from
very low levels at the
start of the year.
7
<PAGE>
Conclusion:
With the Dow Jones Industrial Average around 8000,
and some analysts now
predicting a Dow of 10,000, it's only natural to
wonder how long all this
good news can continue. While this bull market has
run for seven years now,
it is important to maintain reasonable
expectations in the months and years
to come. Carefully constructed long-term
portfolios are designed to ease
the impact of volatile markets. The ability to
remain with an investment
plan during the inevitable market downturns is
critical to achieving
your long-term investment goals.
As always, we appreciate your commitment to Target
and having the opportunity
to report to you.
Sincerely,
Brian M. Storms
President, Prudential Mutual Funds & Annuities
8
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) 66 recommended asset allocations or unlimited
number of customized
allocations are available.
4) Investment advisers manage or co-manage a
portion of each Target portfolio.
5) Adviser monitoring helps ensure that they
perform as expected over the long
term.
6) Adviser changes are made if long-term
performance is poor.
7) Free, unlimited allocation changes help you
react to changing market
conditions.
8) Research services from Ibbotson Associates are
used for allocation
construction.
9) IRA analysis details your overall IRA
allocation and suggests a new one,
if appropriate.
10) Enhancements and new portfolios keep Target on
the cutting-edge.
11) Personalized 401(k) evaluation helps
illustrate the benefits of such a
plan, if appropriate.
12) A Financial Advisor's professional guidance to
assist you.
Reporting Services
1) Customized quarterly reports contain time-
weighted and dollar-weighted
returns.
2) Detailed tax information including gains,
losses and average cost per share.
3) Quarterly adviser comments focus on their
specific market expertise.
4) Detailed performance of most major market
indices.
(ICON)
9
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Growth
Portfolio
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
LONG-TERM INVESTMENTS--96.9%
Common Stocks--96.9%
Aerospace--2.2%
54,400 Boeing Co.................. $
2,886,600
30,200 Honeywell, Inc.............
2,291,425
-----
- -------
5,178,025
-----
- -------
Agriculture Machinery--0.5%
22,600 Deere & Co.................
1,240,175
-----
- -------
Agriculture Products--0.5%
47,800 Archer-Daniels Midland Co...
1,123,300
-----
- -------
Banks--5.6%
27,000 Citicorp...................
3,255,187
20,000 First Union Corp...........
1,850,000
30,000 MBNA Corp..................
1,098,750
110,500 NationsBank Corp...........
7,127,250
-----
- -------
13,331,187
-----
- -------
Broadcasting--0.5%
83,900 Tele-Communications, Inc.*..
1,248,013
-----
- -------
Business Services--3.3%
123,700 CUC International Inc.*....
3,193,006
23,500 Manpower, Inc..............
1,045,750
66,500 Service Corp.
International............
2,186,188
90,000 Xylan Corp.*...............
1,530,000
-----
- -------
7,954,944
-----
- -------
Computers & Business Equipment--
16.8%
235,950 3Com Corp.*................
10,617,750
143,000 Bay Networks, Inc.*........
3,798,438
146,500 Cisco Systems, Inc.*.......
9,833,812
85,300 Compaq Computer Corp.*.....
8,466,025
200,000 Sun Microsystems, Inc.*....
7,443,750
-----
- -------
40,159,775
-----
- -------
Drugs & Healthcare--13.3%
37,300 Boston Scientific
Corp.*.................. $
2,291,619
13,100 Bristol Myers Squibb
Co.*....................
1,061,100
19,200 Cardinal Health, Inc......
1,099,200
27,000 Lilly (Eli) & Co..........
2,951,437
18,300 Medtronic, Inc............
1,482,300
78,000 Merck & Co., Inc..........
8,073,000
15,200 Oxford Health Plans,
Inc.....................
1,090,600
90,600 Pfizer, Inc...............
10,826,700
23,500 Warner-Lambert Co.........
2,919,875
------
- -----
31,795,831
------
- -----
Electrical Equipment--1.7%
47,800 General Electric Co.......
3,124,925
40,900 Westinghouse Electric
Corp....................
945,812
------
- -----
4,070,737
------
- -----
Electronics--10.5%
96,800 Ascend Communications,
Inc.*...................
3,811,500
20,000 Aspect Telecommunications
Corp.*..................
445,000
106,000 Linear Technology Corp....
5,485,500
100,000 Maxim Integrated Products,
Inc.*...................
5,687,500
37,400 Motorola, Inc.............
2,842,400
138,500 Xilinx Inc.*..............
6,795,156
------
- -----
25,067,056
------
- -----
Financial Services--1.5%
31,100 Associates First Capital
Corp....................
1,726,050
31,400 Merrill Lynch & Co.,
Inc.....................
1,872,225
------
- -----
3,598,275
------
- -----
Forest Products--0.5%
12,300 Georgia-Pacific Corp......
1,050,113
------
- -----
Gas & Pipeline Utilities--0.7%
32,800 Sonat Inc.................
1,681,000
------
- -----
Hotels & Restaurants--0.5%
44,400 Wendys International,
Inc.....................
1,151,625
------
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
10
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
Household Appliances & Home
Furnishings--0.5%
28,100 Newell Co.................. $
1,113,463
-----
- -------
Industrial Machinery--4.0%
136,000 Applied Materials, Inc.*...
9,630,500
-----
- -------
Insurance--4.1%
10,600 Aetna, Inc.................
1,085,175
48,100 Allstate Corporation.......
3,511,300
29,000 American International
Group, Inc...............
4,331,875
24,200 Conseco, Inc...............
895,400
-----
- -------
9,823,750
-----
- -------
Miscellaneous--0.7%
52,000 Waste Management, Inc......
1,670,500
-----
- -------
Oil & Gas--0.9%
73,300 USX - Marathon Group.......
2,116,538
-----
- -------
Petroleum Services--1.5%
13,500 Schlumberger Ltd...........
1,687,500
66,300 Tosco Corp.................
1,984,856
-----
- -------
3,672,356
-----
- -------
Pollution Control--0.9%
62,700 Browning Ferris Industries,
Inc......................
2,084,775
-----
- -------
Retail Grocery--0.5%
27,600 Safeway Inc.*..............
1,273,050
-----
- -------
Retail Trade--3.8%
56,600 Costco Companies, Inc.*....
1,860,725
27,600 CVS Corp...................
1,414,500
25,900 Home Depot, Inc............
1,785,481
86,800 Staples, Inc.*.............
2,018,100
75,600 TJX Companies, Inc.........
1,993,950
-----
- -------
9,072,756
-----
- -------
Savings And Loan--0.9%
35,300 Washington Mutual, Inc.... $
2,109,175
------
- -----
Semiconductors & Equipment--7.5%
170,000 Atmel Corp.*..............
4,760,000
83,400 Intel Corp................
11,827,162
37,000 LSI Logic Corp.*..........
1,184,000
------
- -----
17,771,162
------
- -----
Software & Services--8.4%
45,000 America Online, Inc.......
2,503,125
52,600 HBO & Co..................
3,622,825
63,400 Microsoft Corp.*..........
8,012,175
90,000 Parametric Technology
Corp.*..................
3,830,625
57,500 Synopsys, Inc.*...........
2,113,125
------
- -----
20,081,875
------
- -----
Telecommunication--5.1%
38,000 Cascade Communications
Corp.*..................
1,049,750
32,600 Lucent Technologies
Inc.....................
2,349,238
83,500 NEXTEL Communications,
Inc.*...................
1,581,281
26,400 Nokia Corp. (ADR).........
1,947,000
30,800 Qualcomm, Inc.*...........
1,566,950
111,300 WorldCom Inc.*............
3,561,600
------
- -----
12,055,819
------
- -----
Total common stocks
(cost $170,390,028).....
231,125,775
------
- -----
SHORT-TERM INVESTMENTS--3.5%
Principal
Amount
(000) Commercial Paper--1.7%
- ----------
$ 2,000 General Electric Capital
Corp.
5.58%, 7/17/97..........
1,995,040
2,000 Goldman Sachs Group, L.P.
5.50%, 7/18/97..........
1,997,861
------
- -----
Total commercial paper
(cost $3,992,901).......
3,992,901
------
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
11
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Growth
Portfolio (cont'd)
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S> <C>
Repurchase Agreement--1.8%
$ 4,312 State Street Bank & Trust
Co.,
4.00%, due 7/1/97 in the
amount of $4,312,479
(cost $4,312,000; value
of collateral including
accrued interest is
$4,403,551).............. $
4,312,000
-----
- -------
Total short-term
investments
(cost $8,304,901)........
8,304,901
-----
- -------
Total Investments--100.4%
(cost $178,694,929; Note
4).......................
239,430,676
Liabilities in excess of
other
assets--(0.4%)...........
(949,184)
-----
- -------
Net Assets--100%...........
$238,481,492
-----
- -------
-----
- -------
</TABLE>
- ---------------
* Non-income producing.
ADR--American Depository Receipts.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
12
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Value
Portfolio
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
LONG-TERM INVESTMENTS--96.5%
Common Stocks--96.5%
Aerospace--2.6%
44,000 Boeing Co.................. $
2,334,750
24,450 Lockheed Martin Corp.......
2,532,103
18,800 Northrop Grumman Corp......
1,650,875
-----
- -------
6,517,728
-----
- -------
Agriculture Machinery--1.5%
30,500 Deere & Co.................
1,673,687
82,000 New Holland NV.............
2,244,750
-----
- -------
3,918,437
-----
- -------
Agriculture Products--1.3%
136,250 Archer-Daniels Midland
Co.......................
3,201,875
-----
- -------
Aluminum--1.9%
52,000 Aluminum Company of
America..................
3,919,500
11,000 Reynolds Metals Co.........
783,750
-----
- -------
4,703,250
-----
- -------
Apparel & Textiles--3.1%
37,500 Intimate Brands, Inc.......
787,500
35,000 Reebok International,
Ltd......................
1,636,250
74,000 Russell Corp...............
2,192,250
115,000 Shaw Industries, Inc.......
1,221,875
55,000 Unifi, Inc.................
2,055,625
-----
- -------
7,893,500
-----
- -------
Auto Parts--1.3%
50,000 Dana Corp..................
1,900,000
45,000 Genuine Parts Co...........
1,524,375
-----
- -------
3,424,375
-----
- -------
Automobiles--3.6%
142,000 Ford Motor Co..............
5,360,500
70,000 General Motors Corp........
3,898,125
-----
- -------
9,258,625
-----
- -------
Banks--8.9%
74,000 Ahmanson (H.F.) & Co...... $
3,182,000
11,000 Comerica, Inc.............
748,000
45,000 First Chicago Nbd Corp....
2,722,500
49,000 Great Western Financial
Corp....................
2,633,750
27,000 Keycorp...................
1,508,625
70,000 National City Corp........
3,675,000
66,200 NationsBank Corp..........
4,269,900
47,000 Signet Banking Corp.......
1,692,000
35,000 Wachovia Corp.............
2,040,937
------
- -----
22,472,712
------
- -----
Brewery--0.5%
31,100 Anheuser Busch Cos.,
Inc.....................
1,304,256
------
- -----
Building Products--0.6%
35,000 York International
Corp....................
1,610,000
------
- -----
Business Services--0.2%
16,000 Dun & Bradstreet Corp.....
420,000
------
- -----
Chemicals--3.1%
42,500 Dow Chemical Co...........
3,702,812
26,000 Du Pont (E.I.) De Nemours
& Co....................
1,634,750
24,000 Eastman Chemical Co.......
1,524,000
20,000 Great Lakes Chemical
Corp....................
1,047,500
------
- -----
7,909,062
------
- -----
Computers & Business Equipment--
3.5%
23,000 Compaq Computer Corp.*....
2,282,750
36,000 Hewlett-Packard Co........
2,016,000
28,000 International Business
Machines Corp...........
2,525,250
30,000 Pitney Bowes, Inc.........
2,085,000
------
- -----
8,909,000
------
- -----
Conglomerate--2.2%
29,600 Dover Corp................
1,820,400
27,875 Hanson Plc (ADR)..........
696,875
48,000 Textron, Inc..............
3,186,000
------
- -----
5,703,275
------
- -----
Consumer Products--1.1%
71,500 Fortune Brands Inc........
2,667,844
------
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
13
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Value
Portfolio (cont'd)
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
Domestic Oil--1.4%
32,000 Atlantic Richfield Co...... $
2,256,000
45,000 USX - Marathon Group.......
1,299,375
-----
- -------
3,555,375
-----
- -------
Drugs & Healthcare--8.0%
32,500 Abbott Laboratories........
2,169,375
46,000 American Home Products
Corp.....................
3,519,000
66,666 Astra AB Class A (ADR).....
1,266,654
20,000 Baxter International,
Inc......................
1,045,000
50,000 Bristol Myers Squibb Co....
4,050,000
52,500 Columbia/HCA Healthcare
Corp.....................
2,063,906
20,000 Merck & Co., Inc...........
2,070,000
87,000 Mylan Laboratories.........
1,283,250
60,000 Schering Plough Corp.......
2,872,500
-----
- -------
20,339,685
-----
- -------
Electric Utilities--6.7%
50,000 Central & South West
Corp.....................
1,062,500
32,000 CMS Energy Corp............
1,128,000
40,000 DTE Energy Company.........
1,105,000
127,000 Edison International.......
3,159,125
21,000 General Public Utilities
Corp.....................
753,375
78,000 Illinova Corp..............
1,716,000
50,000 New York State Electric &
Gas Corp.................
1,043,750
48,200 PacifiCorp.................
1,060,400
45,000 PECO Energy Co.............
945,000
40,000 Public Service Enterprise
Group Inc................
1,000,000
80,000 Southern Co................
1,750,000
105,000 Unicom Corp................
2,336,250
-----
- -------
17,059,400
-----
- -------
Electrical Equipment--1.2%
20,000 Emerson Electric Co........
1,101,250
30,000 General Electric Co........
1,961,250
-----
- -------
3,062,500
-----
- -------
Electronics--1.3%
40,000 Raytheon Co................
2,040,000
20,000 Rockwell International
Corporation..............
1,180,000
-----
- -------
3,220,000
-----
- -------
Energy--0.3%
15,375 Energy Group Plc.......... $
651,516
------
- -----
Financial Services--2.9%
19,000 Beneficial Corp...........
1,350,187
104,000 Federal National Mortgage
Association.............
4,537,000
12,000 Household International,
Inc.....................
1,409,250
------
- -----
7,296,437
------
- -----
Food & Beverages--1.4%
50,000 PepsiCo, Inc..............
1,878,125
90,000 Tyson Foods, Inc..........
1,721,250
------
- -----
3,599,375
------
- -----
Forest Products--2.5%
16,000 Georgia-Pacific Corp......
1,366,000
50,000 Kimberly-Clark Corp.......
2,487,500
47,000 Weyerhaeuser Co...........
2,444,000
------
- -----
6,297,500
------
- -----
Gas & Pipeline Utilities--0.4%
27,000 Eastern Enterprises.......
936,563
------
- -----
Household Appliances & Home
Furnishings--1.5%
70,000 Maytag Corp...............
1,828,750
36,000 Whirlpool Corp............
1,964,250
------
- -----
3,793,000
------
- -----
Insurance--8.0%
80,459 American General Corp.....
3,841,903
27,450 Aon Corp..................
1,420,537
10,000 General Reinsurance
Corp....................
1,820,000
30,000 Jefferson-Pilot Corp......
2,096,250
22,000 Lincoln National Corp.....
1,416,250
38,000 Marsh & McLennan Cos.,
Inc.....................
2,712,250
25,000 Old Republic International
Corp....................
757,813
82,000 SAFECO Corp...............
3,828,375
11,000 St. Paul Cos, Inc.........
838,750
5,900 TIG Holdings, Inc.........
184,375
14,000 Transamerica Corp.........
1,309,875
------
- -----
20,226,378
------
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
14
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
International Oil--5.3%
25,000 Amoco Corp................. $
2,173,438
30,000 Chevron Corp...............
2,218,125
51,000 Exxon Corp.................
3,136,500
95,000 Occidental Petroleum
Corp.....................
2,380,937
50,000 Repsol S.A. (ADR)..........
2,121,875
44,000 Royal Dutch Petroleum Co...
2,392,500
-----
- -------
14,423,375
-----
- -------
Mining--0.7%
21,300 Phelps Dodge Corp..........
1,814,494
-----
- -------
Miscellaneous--0.9%
52,000 Tenneco Incorporated.......
2,349,750
-----
- -------
Paper--2.1%
59,999 International Paper Co.....
2,913,702
25,000 Union Camp Corp............
1,250,000
37,500 Westvaco Corp..............
1,178,906
-----
- -------
5,342,608
-----
- -------
Petroleum Services--0.1%
7,000 Ultramar Diamond
Shamrock.................
228,375
-----
- -------
Plastics--0.2%
14,700 Tupperware Corp............
536,550
-----
- -------
Pollution Control--1.6%
86,000 Browning Ferris Industries,
Inc......................
2,859,500
40,000 Waste Management, Inc......
1,285,000
-----
- -------
4,144,500
-----
- -------
Railroads & Equipment--1.0%
35,000 Illinois Central Corp......
1,222,813
12,000 Norfolk Southern Corp......
1,209,000
-----
- -------
2,431,813
-----
- -------
Retail Trade--2.6%
69,000 Kmart Corp.*...............
845,250
41,000 May Department Stores
Co.......................
1,937,250
37,000 Penney (J.C.) Co., Inc.... $
1,930,937
34,400 Sears Roebuck & Co........
1,849,000
------
- -----
6,562,437
------
- -----
Retail - Food & Restaurants--0.8%
40,000 McDonald's Corp...........
1,932,500
------
- -----
Steel--0.9%
65,000 USX-U.S. Steel Group,
Inc.....................
2,279,063
------
- -----
Telephone--3.2%
49,900 ALLTEL Corp...............
1,668,531
79,300 AT&T Corp.................
2,780,457
20,846 SBC Communications Inc....
1,289,846
40,000 Southern New England
Telecommunications,
Corp....................
1,555,000
22,000 U.S. West, Inc............
829,125
------
- -----
8,122,959
------
- -----
Tires & Rubber--0.6%
65,000 Cooper Tire & Rubber
Co......................
1,430,000
------
- -----
Tobacco--3.6%
60,100 Gallaher Group Plc*.......
1,108,093
64,700 Imperial Tobacco Group
Plc., (ADR).............
828,969
128,000 Philip Morris Cos.,
Inc.....................
5,680,000
55,000 UST, Inc..................
1,526,250
------
- -----
9,143,312
------
- -----
Trucking & Freight Forwarding--
1.2%
80,000 Hunt J.B.Transport
Services, Inc...........
1,190,000
58,000 Ryder System, Inc.........
1,914,000
------
- -----
3,104,000
------
- -----
Technology & Services--0.7%
45,000 Electronic Data Systems
Corp....................
1,845,000
------
- -----
Total common stocks
(cost $170,630,058).....
245,642,404
------
- -----
</TABLE>
- --------------------------------------------------
- ----------------------------
See Notes to Financial Statements
beginning on page 53
15
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Value
Portfolio (cont'd)
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--3.4%
$ 882 Seven Seas Money Market Fund
5.31%
(cost $882,105).......... $
882,105
7,779 Seven Seas Series
Government Fund
5.16%
(cost $7,778,519)........
7,778,519
-----
- -------
Total short-term
investments
(cost $8,660,624)..........
8,660,624
-----
- -------
Total Investments--99.9%
(cost $179,290,682; Note
4).......................
254,303,028
Liabilities in excess of
other
assets--0.1%.............
(759,351)
-----
- -------
Net Assets--100%...........
$253,543,677
-----
- -------
-----
- -------
</TABLE>
- ---------------
* Non-income producing.
ADR--American Depository Receipts.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
16
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Growth
Portfolio
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
LONG-TERM INVESTMENTS--97.8%
Common Stocks--97.8%
Airlines--0.4%
7,700 Delta Air Lines, Inc....... $
631,400
-----
- -------
Apparel & Textiles--3.4%
14,700 Fruit of the Loom, Inc.*...
455,700
49,600 G & K Services, Inc........
1,847,600
30,700 Nautica Enterprises,
Inc.*....................
811,631
20,500 Stein Mart, Inc. *.........
615,000
49,500 Stride Rite Corp...........
637,312
30,450 Wolverine World Wide,
Inc......................
924,919
-----
- -------
5,292,162
-----
- -------
Auto/Truck Equipment--3.0%
176,000 Aftermarket Technology
Corp.*...................
3,916,000
21,100 Federal - Mogul Corp.......
738,500
-----
- -------
4,654,500
-----
- -------
Banks--0.8%
14,400 MBNA Corp..................
527,400
35,100 North Fork Bancorporation,
Inc......................
750,263
-----
- -------
1,277,663
-----
- -------
Building Products--3.2%
144,700 Advanced Lighting
Technologies, Inc*.......
3,653,675
21,600 Comfort Systems USA
Inc.*....................
337,500
40,800 Service Experts, Inc.*.....
999,600
-----
- -------
4,990,775
-----
- -------
Business Services--8.1%
78,300 American Management
Systems, Inc.*...........
2,094,525
28,300 Analysts International
Corp.....................
948,050
22,700 Catalina Marketing
Corp.*...................
1,092,437
148,100 CCC Information Services
Group*...................
2,887,950
15,200 GTECH Holdings Corp........
490,200
20,900 International Telecomm.
Systems, Inc.............
512,050
38,900 Lamar Advertising Co.*.....
991,950
11,400 Metro Networks, Inc....... $
276,450
23,700 National TechTeam, Inc....
506,588
7,600 Robert Half International
Inc.*...................
357,675
70,000 Universal Outdoor
Holdings, Inc.*.........
2,441,250
------
- -----
12,599,125
------
- -----
Chemicals--1.3%
32,200 Minerals Technologies,
Inc.....................
1,207,500
25,900 Scotts Company (The)*.....
751,100
------
- -----
1,958,600
------
- -----
Coal--0.4%
28,100 Zeigler Coal Holding
Company.................
656,838
------
- -----
Communication--3.3%
100,000 Allen Telecom, Inc.*......
2,075,000
156,000 Centennial Cellular
Corp.*..................
2,476,500
11,350 MasTec, Inc.*.............
536,997
------
- -----
5,088,497
------
- -----
Computers & Business Equipment--
9.0%
62,100 Black Box Corp.*..........
2,499,525
11,100 Compaq Computer Corp.*....
1,101,675
12,800 Dell Computer Corp.*......
1,503,200
26,900 Encad, Inc................
1,116,350
33,600 Gateway 2000 Inc.*........
1,089,900
120,700 Mastech Corporation*......
2,429,087
29,800 Quantum Corp.*............
605,313
7,500 Seagate Technology,
Inc.*...................
263,906
20,600 Sun Microsystems, Inc.*...
766,706
25,200 Western Digital Corp.*....
796,950
65,300 Zebra Technologies
Corp.*..................
1,820,238
------
- -----
13,992,850
------
- -----
Drugs & Healthcare--4.3%
14,800 Arrow International,
Inc.....................
432,900
28,900 Bio-Technology General
Corp*...................
390,150
74,500 First Commonwealth,
Inc.*...................
1,378,250
20,100 IMPATH, Inc.*.............
547,725
37,300 Medeva PLC (ADR)..........
638,762
56,200 NBTY, Inc.................
1,573,600
16,900 Oxford Health Plans,
Inc.*...................
1,212,575
10,300 Scherer (R.P.) Corp.......
531,738
------
- -----
6,705,700
------
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
17
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Growth
Portfolio (cont'd)
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
Electrical Equipment--3.4%
25,200 American Power Conversion
Corp.*................... $
478,800
134,600 Computer Products, Inc.*...
3,365,000
17,200 Jabil Circuit, Inc*........
1,442,650
-----
- -------
5,286,450
-----
- -------
Electronics--1.8%
5,300 BMC Industries, Inc........
181,525
36,300 Orbotech, Ltd*.............
1,157,062
5,300 Pittway Corp...............
263,675
47,200 Reptron Electronics,
Inc.*....................
1,132,800
-----
- -------
2,735,062
-----
- -------
Financial Services--6.6%
53,000 CMAC Investment Corp.......
2,530,750
117,800 Credit Acceptance Corp.*...
1,516,675
111,200 Emergent Group, Inc.*......
1,223,200
32,600 Enhance Financial Services
Group Inc................
1,430,325
12,900 Green Tree Financial
Corp.....................
459,563
43,800 Imperial Credit Industries,
Inc.*....................
900,637
107,100 Right Mgmt. Consultants,
Inc. *...................
1,218,262
8,100 Student Loan Marketing
Association..............
1,028,700
-----
- -------
10,308,112
-----
- -------
Food & Beverages--1.2%
16,500 Dean Foods Company.........
666,188
11,000 Robert Mondavi Corp.*......
519,750
12,300 Smithfield Foods, Inc*.....
756,450
-----
- -------
1,942,388
-----
- -------
Homebuilders--0.5%
30,250 Watsco, Inc................
756,250
-----
- -------
Hotels & Restaurants--1.0%
46,100 Foodmaker, Inc*............
754,888
90,500 Homegate Hospitality,
Inc......................
882,375
-----
- -------
1,637,263
-----
- -------
Household Appliances & Home
Furnishings--1.6%
25,600 Ethan Allen Interiors
Inc......................
1,459,200
19,500 O'Sullivan Industries
Holdings, Inc........... $
322,969
28,600 Pier 1 Imports, Inc.......
757,900
------
- -----
2,540,069
------
- -----
Industrial Machinery--1.9%
38,500 Coltec Industries,
Inc.*...................
750,750
16,600 Gardner Denver Machinery
Inc.*...................
493,850
16,700 Manitowoc Co., Inc........
780,725
142,000 PPT Vision, Inc*..........
976,250
------
- -----
3,001,575
------
- -----
Insurance--2.6%
8,700 Berkley (W. R.) Corp......
512,212
45,600 Capmac Holdings Inc.......
1,533,300
13,700 Frontier Insurance Group,
Inc.....................
887,075
9,850 HCC Insurance Holdings,
Inc.....................
262,872
10,900 Torchmark Corp............
776,625
------
- -----
3,972,084
------
- -----
Manufacturing--3.1%
38,600 Aptargroup, Inc...........
1,746,650
189,900 Polymer Group, Inc........
3,062,137
------
- -----
4,808,787
------
- -----
Medical & Dental Supplies--5.3%
109,500 InControl, Inc.*..........
971,813
31,600 Patterson Dental
Company*................
1,084,275
78,900 Perclose, Inc*............
1,972,500
40,600 Safeskin Corp.............
1,195,162
150,400 Xomed Surgical Products
Inc.*...................
3,008,000
------
- -----
8,231,750
------
- -----
Metal--0.4%
13,800 Mueller Industries,
Inc.*...................
603,750
------
- -----
Miscellaneous--4.3%
159,000 PalEx, Inc.*..............
1,629,750
132,100 Strayer Education, Inc....
5,019,800
------
- -----
6,649,550
------
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
18
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
Office Equipment & Services--0.6%
25,400 Miller (Herman), Inc....... $
914,400
-----
- -------
Oil & Gas Exploration / Drilling--
3.0%
18,400 Cliffs Drilling Company*...
671,600
73,400 Forcenergy, Inc*...........
2,229,525
55,300 Marine Drilling Companies,
Inc.*....................
1,085,262
6,900 Parker & Parsley Petroleum
Co.......................
244,088
14,500 USX - Marathon Group.......
418,687
-----
- -------
4,649,162
-----
- -------
Oil Field / Equipment & Services--
2.3%
22,400 Cooper Cameron Corp.*......
1,047,200
19,000 EVI, Inc.*.................
798,000
32,100 Petroleum Geo-Services ASA
(ADR)....................
1,568,887
5,500 Tidewater, Inc.............
242,000
-----
- -------
3,656,087
-----
- -------
Pollution Control Equipment &
Services--0.3%
17,700 Superior Services, Inc.*...
420,375
-----
- -------
Printing & Publishing--1.1%
12,900 Central Newspapers, Inc....
923,963
30,800 Valassis Communications,
Inc.*....................
739,200
-----
- -------
1,663,163
-----
- -------
Retail Trade--5.7%
46,000 Barnett, Inc.*.............
1,127,000
4,200 Bed Bath & Beyond, Inc.*...
127,575
56,200 Dress Barn, Inc............
1,095,900
46,200 Goody's Family Clothing,
Inc......................
1,264,725
107,000 Lithia Motors, Inc.*.......
1,177,000
28,700 Mac Frugals Bargains
Close-Outs, Inc.*........
782,075
31,600 Michaels Stores, Inc.*.....
669,525
49,700 Ross Stores, Inc...........
1,624,569
51,000 Tuesday Morning Corp.......
1,026,375
-----
- -------
8,894,744
-----
- -------
Retail/Wholesale--1.0%
29,550 Cellstar Corp.*........... $
904,969
21,700 Tech Data Corp.*..........
682,194
------
- -----
1,587,163
------
- -----
Semiconductors & Equipment--2.6%
13,000 Altera Corp.*.............
656,500
19,300 Dallas Semiconductor
Corp....................
757,525
5,200 Intel Corp.*..............
737,425
19,300 Unitrode Corporation*.....
972,237
27,150 Vitesse Semiconductor
Corp.*..................
887,466
------
- -----
4,011,153
------
- -----
Software--6.5%
8,500 Aspen Technology Corp.....
319,813
33,400 Avid Technology, Inc.*....
880,925
32,800 Compuware Corp.*..........
1,566,200
14,800 HBO & Company.............
1,019,350
19,900 Keane, Inc*...............
1,034,800
41,800 Manugistics Group, Inc....
1,860,100
30,562 McAfee Associates,
Inc.*...................
1,929,226
17,800 Microchip Technology,
Inc.....................
529,550
18,400 Peoplesoft Inc.*..........
970,600
------
- -----
10,110,564
------
- -----
Steel--0.5%
47,900 National Steel Corp.*.....
805,319
------
- -----
Toys & Amusements--0.2%
12,500 Equity Marketing Inc......
293,750
------
- -----
Transportation--2.3%
133,300 Coach USA, Inc............
3,540,781
------
- -----
Trucking & Freight Forwarding--
0.8%
20,900 Swift Transportation Co.,
Inc.*...................
616,550
31,200 Yellow Corp.*.............
698,100
------
- -----
1,314,650
------
- -----
Total common stocks
(cost $117,283,072).......
152,182,511
------
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
19
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Growth
Portfolio (cont'd)
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--2.0%
Commercial Paper--1.9%
$ 2,968 Merrill Lynch & Co., Inc.
6.20%, 7/1/97
(cost $2,968,000)........ $
2,968,000
-----
- -------
Other--0.1%
240 Seven Seas Money Market
Fund
5.31%
(cost $240,132)..........
240,132
-----
- -------
Total short-term
investments
(cost $3,208,132)........
3,208,132
-----
- -------
Total Investments--99.8%
(cost $120,491,204; Note
4).......................
155,390,643
Other assets in excess of
liabilities--0.2%........
255,127
-----
- -------
Net Assets--100%...........
$155,645,770
-----
- -------
-----
- -------
</TABLE>
- ------------------
* Non-income producing.
ADR--American Depository Receipt.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
20
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Value
Portfolio
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
LONG-TERM INVESTMENTS--97.9%
Common Stocks--97.9%
Aerospace--3.0%
20,700 AAR Corp................... $
668,869
25,700 Aeroquip-Vickers, Inc......
1,214,325
19,000 Alliant Techsystems,
Inc......................
1,045,000
44,400 Martin Marietta Materials,
Inc......................
1,437,450
-----
- -------
4,365,644
-----
- -------
Airlines--0.4%
17,500 USAir Group, Inc*..........
612,500
-----
- -------
Apparel & Textiles--1.9%
28,600 Culp, Inc..................
518,375
24,100 Interface, Inc.............
533,212
1,000 Mohawk Industries, Inc.
*........................
22,438
33,100 Unitog Co..................
893,700
21,300 Warnaco Group, Inc.........
678,937
-----
- -------
2,646,662
-----
- -------
Auto Parts--0.8%
21,800 Borg-Warner Automotive,
Inc......................
1,178,562
-----
- -------
Auto Related--1.8%
32,000 Amcast Industrial Corp.....
800,000
25,900 Modine Manufacturing Co....
770,525
40,680 Myers Industries, Inc......
686,475
9,800 Smith AO Corp..............
348,512
-----
- -------
2,605,512
-----
- -------
Automobiles--0.7%
23,300 Tower Automotive, Inc.*....
1,001,900
-----
- -------
Banks--5.4%
34,000 First American Corp........
1,304,750
22,900 First Commerce Corp........
1,007,600
18,500 Firstmerit Corp............
888,000
28,200 Long Island Bancorp,
Inc......................
1,024,012
37,300 ML Bancorp, Inc............
722,688
50,200 North Fork Bancorp, Inc....
1,073,025
39,750 People's Bank............. $
1,028,531
15,800 Susquehanna Bancshares,
620,150
Inc.....................
----
- -------
7,668,756
----
- -------
Broadcasting--0.7%
39,200 NTL, Inc.*................
975,100
----
- -------
Building & Construction--4.0%
38,400 Carlisle Co., Inc.........
1,339,200
26,650 Clarcor, Inc..............
659,587
16,400 Donaldson Co., Inc........
623,200
29,800 Jacobs Engineering Group,
Inc.*...................
800,875
52,600 Lydall, Inc...............
1,111,175
35,350 Osmonics, Inc.............
651,766
18,800 Regal Beloit Corp.........
492,325
----
- -------
5,678,128
----
- -------
Business Services--0.9%
38,200 Bowne & Company, Inc......
1,332,225
----
- -------
Chemicals--3.2%
27,700 Ferro Corp................
1,026,631
46,200 Hanna (M.A.) Co.
1,331,138
26,700 Learonal, Inc.............
760,950
24,090 Rock-Tenn Co., Cl. A......
423,081
34,950 RPM, Inc..................
642,206
13,400 Schulman (A.), Inc........
329,975
----
- -------
4,513,981
----
- -------
Communication--1.8%
57,900 Allen Telecom, Inc.*......
1,201,425
24,400 Associated Group, Inc.....
976,000
29,500 Vanguard Cellular System,
Inc.*...................
401,937
----
- -------
2,579,362
----
- -------
Computers & Business Equipment--
2.2%
27,300 MTS Systems Corp..........
832,650
42,600 Planar Systems, Inc.*.....
441,975
24,100 Stratus Computer, Inc.*...
1,205,000
32,800 Wang Laboratories, Inc....
699,050
----
- -------
3,178,675
----
- -------
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
21
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Value
Portfolio (cont'd)
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
Diversified Industrials--2.2%
23,200 Applied Power, Inc......... $
1,197,700
25,200 Brady (W.H.) Co............
730,800
37,600 Teleflex, Inc..............
1,175,000
-----
- -------
3,103,500
-----
- -------
Drugs & Healthcare--3.9%
27,750 Bergen Brunswig Corp.......
773,531
38,100 Integrated Health Services,
Inc......................
1,466,850
11,200 Scherer (R.P.) Corp.*......
578,200
38,800 Sun Healthcare Group,
Inc.*....................
807,525
49,500 Sunrise Medical, Inc.......
748,688
21,100 Vital Signs, Inc...........
370,569
26,700 West Co., Inc..............
764,287
-----
- -------
5,509,650
-----
- -------
Electrical Equipment--4.5%
19,600 American Power Conversion
Co.......................
372,400
51,500 Anixter International,
Inc......................
885,156
48,900 Belden, Inc................
1,665,656
21,300 Berg Electronics Corp.*....
765,469
32,500 Core Industries, Inc.......
804,375
7,200 Fisher Scientific
International............
342,000
33,800 Oak Industries, Inc........
971,750
36,200 Woodhead Industries,
Inc......................
683,275
-----
- -------
6,490,081
-----
- -------
Electronics--5.3%
27,300 Bell & Howell Co.*.........
841,181
27,700 Dallas Semiconductor
Corp.....................
1,087,225
26,400 Esterline Technologies
Corp.*...................
928,950
18,600 Harman International
Industries, Inc..........
783,525
37,050 Methode Eletronics, Inc....
736,369
16,050 Nichols Research Corp.*....
337,050
56,000 Pioneer Standard
Electronics, Inc.........
756,000
54,000 VLSI Technology, Inc.*.....
1,275,750
20,300 Wyle Electronics...........
801,850
-----
- -------
7,547,900
-----
- -------
Financial Services--1.2%
22,000 CMAC Investment Corp...... $
1,050,500
48,700 Rollins Truck Leasing
Corp....................
724,412
------
- -----
1,774,912
------
- -----
Food - Service/Lodging--1.3%
23,700 Luby's Cafeterias, Inc....
472,519
31,800 Marcus Corp...............
783,075
23,400 Sbarro, Inc...............
649,350
------
- -----
1,904,944
------
- -----
Foods--1.6%
41,250 Flowers Industries,
Inc.....................
693,516
14,600 Lancaster Colony Corp.....
706,275
21,600 Universal Foods Corp......
823,500
------
- -----
2,223,291
------
- -----
Gas & Pipeline Utilities--0.5%
19,600 Wicor, Inc................
763,175
------
- -----
Hospital Supplies & Services--2.8%
17,800 Beckman Instruments,
Inc.....................
858,850
47,100 Magellan Health Services,
Inc.....................
1,389,450
57,700 Sierra Health Services,
Inc.*...................
1,803,125
------
- -----
4,051,425
------
- -----
Hotels & Restaurants--0.6%
93,800 Ryan's Family Steak
Houses, Inc.*...........
803,163
------
- -----
Household Appliances & Home
Furnishings--2.1%
21,000 Chromcraft Revington,
Inc.*...................
601,125
29,200 Department 56, Inc.*......
647,875
45,200 Furniture Brands
International, Inc.*....
875,750
14,700 La-Z-Boy, Inc.............
529,200
26,400 Rival Co..................
389,400
------
- -----
3,043,350
------
- -----
Industrial Machinery--7.0%
17,000 Briggs & Stratton Corp....
850,000
32,750 Crane Co..................
1,369,360
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
22
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Value
Portfolio (cont'd)
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
Industrial Machinery--(cont'd)
20,200 Graco, Inc................. $
608,525
25,100 Kennametal, Inc............
1,079,300
60,609 Mark IV Industries, Inc....
1,454,616
28,500 Polaris Industries, Inc....
928,031
14,800 Scotsman Industries,
Inc......................
421,800
11,500 Standex International
Corp.....................
345,000
46,400 Stewart & Stevenson
Services, Inc............
1,206,400
34,900 United Dominion Industries,
Ltd......................
857,231
39,900 Watts Industries, Inc......
957,600
-----
- -------
10,077,863
-----
- -------
Insurance--8.4%
18,200 American Bankers Insurance
Group, Inc...............
1,151,150
61,200 Amerin Corp.*..............
1,484,100
35,700 Blanch (E.W.) Holdings,
Inc......................
952,744
12,700 Capmac Holdings, Inc.......
427,038
27,000 Enhance Financial Services
Group, Inc...............
1,184,625
17,600 Equitable of Iowa Co.......
985,600
39,300 Horace Mann Educators
Corp.....................
1,925,700
36,100 NAC Re Corp................
1,746,337
21,300 Poe & Brown, Inc...........
788,100
16,600 Protective Life Corp.......
834,150
11,900 Vesta Insurance Group,
Inc......................
514,675
-----
- -------
11,994,219
-----
- -------
Leisure And Recreation--0.8%
36,500 K2, Inc....................
1,156,594
-----
- -------
Manufacturing--1.3%
76,800 International Rectifier
Corp.*...................
1,430,400
7,800 Roper Industries, Inc......
404,625
-----
- -------
1,835,025
-----
- -------
Miscellaneous--2.7%
16,750 Applied Industrial
Technologies, Inc........
603,000
20,500 AptarGroup, Inc............
927,625
46,900 Calpine Corp...............
891,100
65,300 First Brands Corp..........
1,497,819
-----
- -------
3,919,544
-----
- -------
Office Equipment--1.4%
16,600 Hon Industries, Inc....... $
734,550
38,500 Hunt Manufacturing Co.....
721,875
16,000 Miller (Herman), Inc......
576,000
------
- -----
2,032,425
------
- -----
Oil & Gas--1.5%
39,600 Devon Energy Corp.........
1,455,300
11,800 Helmerich & Payne, Inc....
679,975
------
- -----
2,135,275
------
- -----
Oil & Gas - Production/pipeline--
0.3%
15,400 Barrett Resources Corp....
461,038
------
- -----
Oil-Supplies & Construction--0.7%
7,400 BJ Services Co............
396,825
12,700 Tidewater, Inc............
558,800
------
- -----
955,625
------
- -----
Paper--0.5%
36,800 Wausau Paper Mills Co.....
694,600
------
- -----
Petroleum Services--1.7%
48,600 McDermott International,
Inc.....................
1,418,512
31,300 Vintage Petroleum, Inc....
962,475
------
- -----
2,380,987
------
- -----
Pollution Control--0.4%
30,000 Safety-Kleen Corp.........
506,250
------
- -----
Printing & Publishing--2.3%
27,350 American Business
Products, Inc...........
622,212
71,950 Banta Corp................
1,951,644
28,400 Lee Enterprises, Inc......
749,050
------
- -----
3,322,906
------
- -----
Professional Services--1.3%
13,100 CDI Corp.*................
546,106
14,900 HSB Group, Inc............
795,288
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
23
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Value
Portfolio (cont'd)
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
Professional Services--(cont'd)
10,500 Interim Services, Inc.*.... $
467,250
1,200 Metromail Corp.*...........
29,700
-----
- -------
1,838,344
-----
- -------
Railroads & Equipment--0.4%
31,500 ABC Rail Products Corp.*...
539,438
-----
- -------
Real Estate--1.7%
41,500 Arden Reality, Inc.........
1,079,000
52,900 Catellus Development
Corp.*...................
958,812
9,000 Sun Communities, Inc.......
302,063
-----
- -------
2,339,875
-----
- -------
Real Estate Investment Trust--0.4%
25,600 Liberty Property Trust.....
636,800
-----
- -------
Retail Trade--0.5%
28,000 Global Directmail Corp.*...
729,750
-----
- -------
Retail - Apparel--1.2%
41,800 AnnTaylor Stores Corp.*....
815,100
34,200 Footstar, Inc.*............
893,475
-----
- -------
1,708,575
-----
- -------
Retail - Food & Drugs--1.0%
34,275 Arbor Drugs, Inc...........
689,784
47,500 Ruddick Corp...............
783,750
-----
- -------
1,473,534
-----
- -------
Retailing--2.4%
31,400 Carson Pirie Scott & Co....
996,950
27,300 Lands End, Inc.............
808,763
37,100 Proffitt's, Inc.*..........
1,627,762
-----
- -------
3,433,475
-----
- -------
Savings And Loan--0.6%
17,800 Webster Financial Corp.....
809,900
-----
- -------
Steel--0.6%
42,100 Lukens, Inc................
792,006
-----
- -------
Telecommunication--0.6%
19,400 Corecomm, Inc.*........... $
334,650
33,200 Glenayre Technologies,
Inc.*...................
543,650
------
- -----
878,300
------
- -----
Tobacco--0.2%
19,200 Swisher International
Group, Inc..............
331,200
------
- -----
Toys & Amusements--0.4%
28,600 Russ Berrie & Co., Inc....
627,413
------
- -----
Trucking & Freight Forwarding--
4.2%
38,000 Circle International
Group, Inc..............
1,002,250
23,000 CNF Transportation,
Inc.....................
741,750
67,700 Durco International,
Inc.....................
1,980,225
37,600 Pittston Co...............
1,057,500
39,700 The Pittston Co...........
1,191,000
------
- -----
5,972,725
------
- -----
Trucking & Shipping--0.6%
43,600 Werner Enterprises,
Inc.....................
844,750
------
- -----
Total common stocks
(cost $105,638,847).....
139,980,834
------
- -----
SHORT-TERM INVESTMENTS--1.7%
Principal
Amount
(000) U.S. Government Securities--1.7%
- ----------
$ 10 United States Treasury
Bills
5.03%, 11/13/97.........
9,811
207 5.04%, 11/13/97...........
203,088
476 5.05%, 11/13/97...........
466,986
369 5.065%, 11/13/97..........
361,991
58 5.14%, 11/13/97...........
56,882
295 5.17%, 11/13/97...........
289,281
395 5.20%, 11/13/97...........
387,297
97 5.23%, 11/13/97...........
95,098
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
24
<PAGE>
PRINCIPAL
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
[C] [S] [C]
U.S. Government Securities--
(cont'd)
United States Treasury
$ 150 Bills
5.24%, 11/13/97.......... $
147,053
205 5.275%, 11/13/97...........
200,945
155 5.34%, 11/13/97............
151,896
-----
- -------
Total U.S. Government
Securities
(cost $2,370,328)........
2,370,328
-----
- -------
Total short-term
investments
(cost $2,370,328)........
2,370,328
-----
- -------
Total Investments--99.6%
(cost $108,009,175; Note
4).......................
142,351,162
Other assets in excess of
liabilities--0.4%........
573,666
-----
- -------
Net Assets--100%...........
$142,924,828
-----
- -------
-----
- -------
- ---------------
* Non-income producing
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
25
<PAGE>
THE TARGET PORTFOLIO TRUST
International Equity Portfolio
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
US$
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
LONG-TERM INVESTMENTS--97.1%
Common Stocks--96.0%
Australia--1.1%
452,600 Westpac Banking Corp. .... $
2,726,158
(Banking) -----
- -------
Denmark--1.1%
50,700 Unidanmark A.S. ..........
2,848,100
(Banking) -----
- -------
Finland--0.8%
84,180 UPM Kymmene Oy* ..........
1,945,328
(Forest Products) -----
- -------
France--12.8%
34,900 Alcatel Alsthom
Generale d'Electricite ..
4,370,889
(Energy)
103,960 Banque Nationale de Paris..
4,284,567
(Banking)
21,780 Cie De St Gobain .........
3,176,181
(Manufacturing)
43,100 Eaux Cie Generale ........
5,522,538
(Utilities)
15,600 Havas ....................
1,124,202
(Advertising)
171,977 Rhone Poulenc S.A. .......
7,023,411
(Chemicals)
53,700 Societe Nationale Elf
Aquitaine ..............
5,793,353
(Energy)
13,332 Total Francaise Petroleum Ltd..
1,347,560
-----
- -------
(Oil & Gas-Domestic)
32,642,701
-----
- -------
Germany--12.5%
60,000 Daimler-Benz A.G. ........
4,867,840
(Automobiles)
93,100 Deutsche Bank A.G. .......
5,439,419
(Banking)
133,300 Hoechst A.G. .............
5,654,225
(Steel)
5,900 Mannesmann A.G. (ADR) ... $
2,630,823
(Industrials)
110,500 Metallgesellschaft A.G. ..
2,299,839
(Conglomerate)
25,900 Metro A.G. ..............
2,837,848
(Retail)
11,600 Thyssen A.G. ............
2,746,861
(Manufacturing)
11,940 Viag A.G. ...............
5,428,829
(Conglomerate) ----
- -------
31,905,684
----
- -------
Hong Kong--2.8%
131,335 HSBC Holdings PLC .......
3,949,899
(Banking)
368,500 Swire-Pacific, Ltd. 'A'...
3,317,656
----
- -------
(Diversified Industries)
7,267,555
----
- -------
Italy--4.2%
735,300 Eni Spa .................
4,164,148
(Oil & Gas Services)
436,800 Fiat Spa ................
1,572,878
(Automobiles)
747,600 Istituto Nazionale delle
Assicuraz .............
1,139,279
(Insurance)
1,145,900 STET-Societa Finanziaria
3,977,953
Telefonica P.A. ....... ----
- -------
(Telecommunications)
10,854,258
----
- -------
Japan--23.0%
82,000 Honda Motor Co., Ltd. ...
2,468,156
(Automobiles)
52,000 Ito Yokado Co., Ltd. ....
3,016,925
(Food/Retail)
326,000 Matsushita Electric
Industrial Co., Ltd.
6,570,058
(Electrical Equipment)
538,000 Mitsubishi Heavy Inds.,
Ltd. ..................
4,125,825
(Electrical Equipment)
145,000 Mitsui Marine & Fire
Insurance Co., Ltd. ...
1,047,461
(Insurance)
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
26
<PAGE>
<TABLE>
<CAPTION>
US$
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
Japan--(cont'd)
48,100 Nintendo Co., Ltd. ....... $
4,028,616
(Software)
565 Nippon Telegraph &
Telephone Corp. .........
5,422,265
(Telecommunications)
100,000 Omron Corp. ..............
2,120,049
(Manufacturing)
77,000 Orix Corp. ...............
5,703,455
(Leasing)
38,400 Promise Co., Ltd. ........
2,197,732
(Financial Services)
471,000 Ricoh Corp., Ltd. ........
6,163,846
(Office Equipment &
Supplies)
391,000 Sekisui Chemical Corp.,
Ltd. ...................
3,957,076
(Chemicals)
69,900 Sony Corp. ...............
6,092,314
(Consumer Durable Goods)
537,000 Sumitomo Trust & Banking
Co., Ltd. ...............
5,762,607
-----
- -------
(Banking)
58,676,385
-----
- -------
Korea--0.0%
1 Samsung Electronics Co., Ltd.
28
-----
- -------
(GDR) (Technology)
Malaysia--0.4%
188,000 Genting Berhad ...........
901,268
(Leisure & Recreation) -----
- -------
Netherlands--3.8%
15,700 Heineken N.V. ............
2,679,454
(Food & Beverage)
53,200 Philips Electronics N.V....
3,810,647
(Electronics)
60,400 Royal Dutch Petroleum Co (ADR)
3,284,250
-----
- -------
(Energy)
9,774,351
-----
- -------
New Zealand--0.5%
467,500 Lion Nathan Ltd. .........
1,184,459
(Consumer Goods) -----
- -------
Spain--1.1%
101,500 Telefonica de Espana SA .. $
2,934,442
----
- -------
(Telecommunications)
Sweden--3.4%
134,133 Astra AB ................
2,366,900
(Pharmaceuticals)
44,400 Electrolux AB Series B ...
3,202,792
(Consumer Durable Goods)
97,800 Svenska Handelsbanken
Series A ..............
3,110,181
----
- -------
(Banking)
8,679,873
----
- -------
Switzerland--8.3%
2,700 Holderbank Financiere
Glarus AG ............
2,550,205
(Banking)
2,910 Nestle S.A. .............
3,838,808
(Consumer Goods)
4,010 Novartis A.G.* ..........
6,410,507
(Pharmaceuticals)
1,780 SMH AG Swiss Corp. ......
1,016,795
(Retail)
1,100 Societe Generale
Surveillance
Holding S.A. ..........
2,350,685
(Business & Public
Services)
12,530 Zurich
Versicherungesellschaft
4,986,253
---
- --------
(Insurance)
21,153,253
----
- -------
United Kingdom--20.2%
472,400 B.A.T. Industries PLC ...
4,228,449
(Tobacco)
303,357 British Aerospace PLC ...
6,751,741
(Aerospace/Defense)
797,100 BTR PLC .................
2,727,831
(Diversified Industries)
550,306 Cadbury Schweppes PLC ...
4,912,039
(Food & Beverage)
342,000 General Electric Co. PLC..
2,044,623
(Electrical Equipment)
644,711 Grand Metropolitan PLC ...
6,205,627
(Food & Beverage)
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
27
<PAGE>
THE TARGET PORTFOLIO TRUST
International Equity Portfolio
(cont'd)
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
US$
VALUE
SHARES DESCRIPTION (NOTE
1)
<C> <S> <C>
United Kingdom--(cont'd)
1,173,800 Lucas Varity ............. $
4,065,839
(Automotive Parts)
456,300 Mirror Group Newspapers PLC
1,428,569
(Printing)
448,800 National Power PLC .......
3,901,361
(Utilities)
278,200 Prudential Corporation ...
2,719,123
(Insurance)
299,750 Rank Group PLC ...........
1,899,357
(Recreation)
405,800 Redland PLC ..............
2,297,649
(Miscellaneous)
2,067,700 Sears PLC ................
2,341,473
(Retail)
117,800 Thorn EMI PLC ............
2,118,663
(Entertainment)
139,200 Unilever PLC .............
3,984,813
(Conglomerate) -----
- -------
51,627,157
-----
- -------
Total common stocks
(cost $195,147,224)......
245,121,000
-----
- -------
Preferred Stocks--1.1%
Italy--1.1%
1,570,400 Fiat Spa
(Automobiles)
(cost $4,100,237)........
2,901,355
-----
- -------
Units Warrants*
- ----------
France
43 Eaux Cie General
Expiring 5/2/01 ........
25,816
(Utilities)
Total long-term investments
(cost $199,247,461)........
248,048,171
-----
- -------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
US$
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--3.3%
U. S. Government Securities--3.3%
$ 8,493 United States Treasury
Bills
5.33%, 11/13/97
(cost $8,330,631)........ $
8,330,631
-----
- -------
Total Investments--100.4%
(cost $207,578,092; Note
4).......................
256,378,802
Liabilities in excess of
other assets--(0.4%).....
(1,008,630)
-----
- -------
Net Assets--100%...........
$255,370,172
-----
- -------
-----
- -------
</TABLE>
- ------------------
ADR--American Depository Receipt.
GDR--Global Depository Receipt.
* Non-income producing securities.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
28
<PAGE>
International Bond Portfolio
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
US$
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--81.4%
Australia--3.4%
Australian Gov't. Bonds,
A$ 623 10.00%, 10/15/02........... $
543,341
715 10.00%, 2/15/06............
643,570
-----
- -----
1,186,911
-----
- -----
Denmark--3.3%
Danish Gov't. Bonds,
DKr 6,850 8.00%, 3/15/06.............
1,159,153
-----
- -----
Germany--26.3%
Deutsche Bundespost,
DM 2,000 7.50%, 12/2/02.............
1,283,757
Deutsche Pfandbriefe
Hypobk,
1,115 5.625%, 2/7/03.............
658,477
German Gov't. Bonds,
2,890 3.50%, 12/18/98............
1,660,103
330 3.75%, 3/19/99.............
190,153
2,900 5.875%, 5/15/00............
1,747,549
2,010 7.125%, 12/20/02...........
1,273,465
1,660 6.00%, 1/5/06..............
977,478
440 6.25%, 1/4/24..............
243,575
Treuhandanstalt,
1,900 7.125%, 1/29/03............
1,203,228
-----
- -----
9,237,785
-----
- -----
Italy--4.3%
Italian Gov't. Bonds,
L 2,310,000 10.50%, 7/15/00............
1,515,834
-----
- -----
Japan--13.3%
Asian Dev. Bank,
Yt 175,000 3.125%, 6/29/05............
1,591,673
Int'l. Bank Recon. & Dev.,
131,000 4.50%, 6/20/00.............
1,251,483
Japanese Gov't. Bonds,
Yt 50,000 6.40%, 3/20/00............. $
497,077
92,000 3.20%, 3/20/06.............
848,307
52,600 3.50%, 3/20/17.............
482,245
-----
- -----
4,670,785
-----
- -----
New Zealand--6.8%
New Zealand Gov't. Bonds,
NZ$ 3,126 10.00%, 3/15/02............
2,390,876
-----
- -----
Sweden--6.2%
Swedish Gov't. Bonds,
SKr 14,800 10.25%, 5/5/00.............
2,164,850
-----
- -----
United Kingdom--17.8%
European Investment Bank,
Bonds,
9 200 8.00%, 6/10/03.............
343,552
Treasury Corp. Victoria,
915 8.75%, 7/9/03..............
1,616,739
United Kingdom Treasury
Bonds,
1,300 7.00%, 11/6/01.............
2,156,096
1,072 7.50%, 12/7/06.............
1,832,064
160 8.00%, 12/7/15.............
289,846
-----
- -----
6,238,297
-----
- -----
Total long-term investments
(cost US$29,120,364).....
28,564,491
-----
- -----
SHORT-TERM INVESTMENTS--11.2%
U. S. Government Securities--9.8%
United States Treasury
Bills,
US$ 3,500 5.26%, 10/16/97
(cost US$3,447,050)......
3,446,555
-----
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
29
<PAGE>
THE TARGET PORTFOLIO TRUST
International Bond Portfolio
(cont'd)
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
US$
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S> <C>
Repurchase Agreement--1.4%
US$ 491 State Street Bank & Trust
Company, 2.00%, due
7/1/97 in the amount of
$491,027 (cost
US$491,000; the value of
the collateral including
accrued interest is
US$515,782).............. $
491,000
-----
- -----
Total short-term
investments
(cost US$3,938,050)......
3,937,555
-----
- -----
Total Investments--92.6%
(cost US$33,058,414; Note
4).......................
32,502,046
Other assets in excess of
liabilities--7.4%........
2,598,502
-----
- -----
Net Assets--100%...........
$35,100,548
-----
- -----
-----
- -----
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
30
<PAGE>
Total Return Bond Portfolio
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT
VALUE
RATING (000) DESCRIPTION
(NOTE 1)
<S> <C> <C> <C>
LONG-TERM
INVESTMENTS--86.2%
Corporate Bonds--15.2%
Airlines--2.7%
United Airlines, Inc.,
Baa1 $ 1,000 10.85%, 2/19/15........ $
1,264,270
----
- --------
Banking--1.1%
Kansallis Osake Pankki,
(Finland)
A3 500 8.65%, 12/29/49........
511,640
----
- --------
Communications--4.3%
AT&T Corp.,
Baa3 2,000 5.96%, 1/23/98.........
1,998,180
----
- --------
Financial Services--0.5%
PaineWebber Group,
Inc.,
Baa1 250 6.75%, 2/1/06..........
239,695
----
- --------
Industrials--2.1%
TCI Communications,
Inc.,
Ba1 1,000 7.25%, 6/15/99.........
1,007,640
----
- --------
Miscellaneous--1.0%
PDV America, Inc.,
Baa3 450 7.25%, 8/1/98..........
452,291
----
- --------
Publishing--0.2%
Time Warner, Inc.,
BBBPoundPound 87 DD 6.46%, 8/15/00....
87,118
----
- --------
Tobacco--2.2%
RJR Nabisco, Inc.,
Baa3 1,000 8.00%, 7/15/01.........
1,009,740
----
- --------
Utilities--1.1%
El Paso Electric Co.,
Ba3 $ 500 7.25%, 2/1/99.......... $
500,915
----
- --------
Total corporate bonds
(cost $7,042,122)....
7,071,489
----
- --------
U.S. Government Agency
Mortgage
Backed Securities--57.0%
Federal Home Loan
Mortgage Corp.,
1,750 6.00%, 1/1/99..........
1,629,128
6.50%, 9/15/18 -
3,596 2/1/26, I/O..........
1,640,170
2,120 7.00%, 8/15/26.........
1,867,375
2,250 7.50%, 1/1/99..........
2,258,437
1,184DD 7.87%, 1/1/24..........
1,247,363
24 9.25%, 1/1/10..........
25,793
Federal National
Mortgage Assn.,
1,305DD 6.68%, 3/1/26..........
1,314,325
2,225DD 7.18%, 1/1/20..........
2,292,803
15 8.50%, 4/1/99..........
14,967
Government National
Mortgage Assn.,
2,359 5.50%, 2/20/26.........
2,395,444
6.00%, 8/20/25 -
1,858DD 9/20/25..............
1,894,730
6.50%, 2/20/17 -
2,208DD 4/15/26..............
2,219,435
7.13%, 7/20/22 -
1,458DD 6/20/23..............
1,502,997
5,675 7.50%, 12/15/99........
5,690,947
Resolution Trust Corp.,
Aa2 306 6.58%, 6/25/23.........
307,401
AAAPoundPound 143 8.35%, 6/25/29.........
144,228
Baa2 201DD 9.25%, 6/25/23.........
203,267
----
- --------
Total U.S. Gov't.
agency
mortgage backed
securities
(cost $26,309,101)...
26,648,810
----
- --------
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
31
<PAGE>
THE TARGET PORTFOLIO TRUST
Total Return Bond Portfolio
(cont'd)
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT
VALUE
RATING (000) DESCRIPTION
(NOTE 1)
<S> <C> <C> <C>
Foreign Securities--6.9%
Canadian Real Return Bond,
AAAPoundPound C$ 3,083 @ 4.25%, 12/1/26......... $
2,217,164
Petroleas Mexicano (Mexico),
Ba2 US$1,000 DD 6.50%, 3/8/99..........
998,750
----
- --------
Total foreign
securities
(cost $3,212,329)....
3,215,914
----
- --------
Collateralized Mortgage
Obligations--4.6%
American Housing Trust
1,
Senior Mortgage Pass
Through Certificate,
Series 1-5 Class A,
Aaa 22 8.625%, 8/25/18........
22,237
Champion Home Loan Equity,
Series 1995, Class A2-3,
Aaa 1,282 DD 6.624%, 2/25/28........
1,306,697
Countrywide
Collateralized
Mortgage Obligation,
Aa1 402 DD 8.22%, 11/25/24........
412,388
Mortgage Obligation
Structured Trust,
Mortgage Pass Through
Certificate, Series
93-1 Class A-1,
Aaa 139 6.35%, 10/25/18........
138,631
PaineWebber Mortgage
Acceptance Corp.,
Aaa 212 7.00%, 10/25/23........
212,569
Sears Savings Bank, Series
1992A Class A,
Aaa 80 DD 8.65%, 5/25/32.........
81,140
----
- --------
Total collateralized
mortgage
obligations
(cost $2,175,610)....
2,173,662
----
- --------
U.S. Government Securities--
2.5%
United States Treasury
Bond,
6.50%, 11/15/26
$ 1,200D (cost $1,161,580).... $
1,150,872
----
- --------
Total long-term
investments
(cost $39,900,742)...
40,260,747
----
- --------
SHORT-TERM
INVESTMENTS--33.2%
Corporate Bonds--31.3%
Banking--7.0%
Banco Latino Americano
De Expor,
Baa2 300 5.90%, 3/31/98.........
298,710
Baa2 3,000 5.95%, 2/27/98.........
2,990,400
----
- --------
3,289,110
----
- --------
Financial Services--23.0%
Advanta National Bank,
Baa3 1,000 5.98%, 2/10/98.........
993,650
Baa3 1,000 6.31%, 10/15/97........
998,120
Caisse De
Amortissement,
P1 900 5.54%, 9/22/97.........
888,177
P1 1,100 5.55%, 8/11/97.........
1,093,047
Du Pont (E. I.) De
Nemours & Co.,
P1 200 5.51%, 8/4/97..........
198,959
P1 1,500 5.52%, 7/8/97..........
1,498,390
Ford Motor Credit Co.,
P1 600 5.60%, 7/3/97..........
599,813
General Electric Capital
Corp.,
P1 1,300 5.64%, 7/23/97.........
1,295,174
KFW International Finance,
Inc.,
P1 100 5.54%, 8/6/97..........
99,446
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
32
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL
MOODY'S AMOUNT
VALUE
RATING (000) DESCRIPTION
(NOTE 1)
National Rural
Utilities
Cooperative Finance
Corp.,
P1 $ 500 5.30%, 9/5/97.......... $
494,761
P1 1,000 5.54%, 9/19/97.........
987,333
New Center Asset Trust,
P1 600 5.50%, 7/7/97..........
599,450
P1 1,000 5.56%, 8/15/97.........
993,050
----
- --------
10,739,370
----
- --------
Utilities--1.3%
Cleveland Electric
Illuminating Co.,
Ba2 600 9.45%, 12/1/97.........
607,332
----
- --------
Total corporate bonds
(cost $14,658,011)...
14,635,812
----
- --------
U.S. Government Agency
Mortgage
Backed Securities--0.4%
Federal Home Loan
Mortgage Corp.,
200 5.51%, 7/3/97
(cost $199,939)......
199,934
----
- --------
U.S. Government Securities--
0.3%
United States Treasury
Bills,
120 D 5.01%, 10/2/97.........
118,419
30 D 5.08%, 7/3/97..........
29,992
----
- --------
Total U.S. Government
Securities
(cost $148,438)......
148,411
----
- --------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<S> <C>
<C>
Repurchase Agreement--1.2%
$ 580 State Street Bank & Trust
Co.,
2.00%, due 7/1/97 in
the amount of
$580,032 (cost
$580,000; value of
collateral including
accrued interest is
$610,413)............ $
580,000
----
- --------
Total short-term
investments
(cost $15,586,388)...
15,564,157
----
- --------
Total Investments--119.4%
(cost US $55,487,130;
Note 4)..............
55,824,904
Liabilities in excess
of other
assets--(19.4%)......
(9,076,174)
----
- --------
Net Assets--100%....... $
46,748,730
----
- --------
----
- --------
</TABLE>
- ---------------
D Pledged as initial margin on financial
futures
contracts.
DD Rate shown reflects current rate on
variable rate
instrument.
PoundPound Standard & Poor's Rating.
@ Principal amount segregated as
collateral for
forward currency contracts. Value of
segregated
security is $2,217,164.
I/O--Interest Only.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
33
<PAGE>
THE TARGET PORTFOLIO TRUST
Intermediate-Term Bond Portfolio
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT
VALUE
RATING (000) DESCRIPTION
(NOTE 1)
<S> <C> <C> <C>
LONG-TERM
INVESTMENTS--68.3%
Corporate Bonds--15.8%
Airlines--2.0%
United Airlines, Inc.,
Baa1 $ 1,500 10.85%, 2/19/15........ $
1,896,405
-----
- -------
Industrials--2.7%
TCI Communications,
Inc.,
Ba1 2,500 6.82%, 9/15/10.........
2,498,775
-----
- -------
Miscellaneous--1.1%
PDV America, Inc.,
Baa3 1,050 7.25%, 8/1/98..........
1,055,344
-----
- -------
Publishing--0.3%
Time Warner, Inc.,
Ba1 300 DD 6.46%, 8/15/00.........
300,408
-----
- -------
Telephones--4.3%
A T + T Capital Corp.,
Baa3 4,000 6.38%, 8/28/98.........
4,010,520
-----
- -------
Tobacco--2.0%
RJR Nabisco, Inc.,
Baa3 1,250 8.00%, 7/15/01.........
1,262,175
Baa3 600 8.625%, 12/1/02........
616,758
-----
- -------
1,878,933
-----
- -------
Utilities--3.4%
Long Island Lighting
Co.,
Ba3 1,535 7.30%, 7/15/99.........
1,549,997
Texas-New Mexico Power
Company,
Ba3 1,500 12.50%, 1/15/99........
1,608,555
-----
- -------
3,158,552
-----
- -------
Total corporate bonds
(cost $14,724,811)...
14,798,937
-----
- -------
U.S. Government Agency
Mortgage
Backed Securities--26.4%
Federal Home Loan
Mortgage Corp.,
$ 156 6.00%, 4/1/24.......... $
145,931
6.50%, 9/15/18 - 2/1/26
4,549 I/O..................
1,368,385
123 9.25%, 1/1/10..........
130,253
Federal National
Mortgage Assn.,
198DD 6.085%, 12/1/30........
195,709
2,610DD 6.678%, 3/1/26.........
2,628,649
1,259DD 6.875%, 8/1/24.........
1,270,311
1,836DD 7.478%, 8/1/25.........
1,907,440
8.50%, 4/1/99 -
84 7/1/99...............
85,387
Government National
Mortgage Assn.,
2,359DD 5.50%, 2/20/26.........
2,395,444
1,431DD 6.50%, 1/20/24.........
1,468,809
1,403DD 6.875%, 10/20/24.......
1,439,538
7.125%, 5/20/23 -
6/20/23..............
3,183,913
3,095DD
6,875 7.50%, 12/15/99........
6,894,319
Resolution Trust Corp.,
Aa2 484DD 6.57%, 6/25/23.........
485,693
AAAPoundPound 714 8.35%, 6/25/29.........
721,139
Baa2 402DD 9.25%, 6/25/23.........
406,536
----
- --------
Total U.S. Government
agency
mortgage backed
securities
(cost $24,575,479).....
24,727,456
----
- --------
Collateralized Mortgage
Obligations--13.5%
Champion Home Loan
Equity,
Series 1995, Class
A2-3,
Aaa 1,923DD 6.624%, 2/25/28........
1,960,045
Countrywide
Collateralized
Mortgage Obligation,
Aaa 820DD 6.75%, 2/25/24.........
817,316
Aa1 402DD 8.18%, 11/25/24........
412,388
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
34
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT
VALUE
RATING (000) DESCRIPTION
(NOTE 1)
<S> <C> <C> <C>
Collateralized Mortgage
Obligations (cont'd.)
Federal National
Mortgage
Association
Guaranteed
Certificate, Remic
Trust 1997 1 Class A
$ 2,901 6.50%, 2/18/04......... $
2,885,478
Government National
Mortgage Assn.,
Remic Trust 1995 2
Class Kq,
3,000 8.50%, 3/20/25.........
3,168,750
Mortgage Obligation
Structured
Trust,Mortgage Pass
Through Certificate,
Series B-1, Class
A-1,
Aaa 209 6.35%, 10/25/18........
207,946
PaineWebber Mortgage
Acceptance Corp.,
Aaa 424 7.00%, 10/25/23........
425,139
Residential Asset
Securities Corp.,
Ser 1996 Ks4 Class A2
Aaa 2,479 5.925%, 7/25/26........
2,480,706
Sears Savings Bank,
Series 1992-A, Class
A
Aaa 231 DD 8.65%, 5/25/32.........
233,907
-----
- -------
Total collateralized
mortgage obligations
(cost $12,614,975)...
12,591,675
-----
- -------
U.S. Government Securities--
7.9%
United States Treasury
Notes,
7,300 6.625%, 4/30/02
(cost $7,258,458)....
7,367,306
-----
- -------
Foreign Government
Obligations--4.7%
Canadian Real Return
Bond,
4.25%, 12/1/26
AAAPoundPound C$6,167@ (cost $4,561,956).... $
4,434,329
---
- ---------
Total long-term
investments
(cost $63,735,679)...
63,919,703
----
- --------
SHORT-TERM
INVESTMENTS--37.2%
Collateralized Mortgage
Obligations--2.2%
New Center Asset Trust,
B1 US$ 400 5.50%, 7/7/97..........
399,633
B1 1,700 5.56%, 8/15/97.........
1,688,185
----
- --------
Total collateralized
mortgage obligations
(cost $2,087,818)....
2,087,818
----
- --------
Corporate Notes--33.8%
A T & T Capital Corp.,
Baa3 4,000 5.955%, 1/23/98........
3,996,360
Advanta National Bank,
Baa3 4,000 5.98%, 2/10/98.........
3,974,600
Baa3 3,000 6.09%, 11/10/97........
3,000,570
Baa3 2,000 6.31%, 10/15/97........
1,996,240
Banco De La Nacional,
B1 138DD 6.4375%, 10/15/97......
137,363
Banponce Financial
Corp.,
A3 1,000 7.73%, 8/15/97.........
1,001,990
Cleveland Electric
Illuminating Co.,
Ba2 1,500 9.45%, 12/1/97.........
1,518,330
First USA Bank,
Aa2 5,000 6.16%, 3/31/98.........
4,996,450
Ford Motor Credit Co.,
A1 1,300 5.58%, 7/2/97..........
1,299,798
A1 1,900 5.60%, 7/3/97..........
1,899,409
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
35
<PAGE>
THE TARGET PORTFOLIO TRUST
Intermediate-Term Bond Portfolio
(cont'd)
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT
VALUE
RATING (000) DESCRIPTION
(NOTE 1)
<S> <C> <C> <C>
Corporate Notes (cont'd.)
IBM Credit Corp.,
A1 $ 1,100 5.53%, 7/7/97.......... $
1,098,986
National Rural
Utilities
Cooperative Finance
Corp.
A1 2,700 5.55%, 9/17/97.........
2,667,116
PaineWebber Group,
Inc.,
Baa1 2,000 6.07%, 3/6/98..........
1,998,740
Salomon Inc.,
Baa1 2,000 6.47%, 3/19/98.........
2,003,260
-----
- -------
Total corporate notes
(cost $31,624,317)...
31,589,212
-----
- -------
U.S. Government Securities--
0.3%
United States Treasury
Bills,
Aaa 70 D 5.01%, 10/2/97.........
69,078
Aaa 140 D 5.075%, 7/3/97.........
139,961
Aaa 100 D 5.20%, 8/21/97.........
99,278
-----
- -------
308,317
-----
- -------
Total U.S. Government
Securities
(cost $308,318)......
308,317
-----
- -------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<S> <C>
<C>
Repurchase Agreement--0.9%
State Street Bank &
$ 853 Trust Co.,
2.00%, due 7/1/97 in
the amount of
$853,047 (cost
$853,000; value of
collateral including
accrued interest is
$876,215)............ $
853,000
----
- --------
Total short-term
investments
(cost $34,873,453)...
34,838,347
----
- --------
Total Investments--105.5%
(cost US$98,609,132;
Note 4)..............
98,758,050
Liabilities in excess
of other
assets--(5.5%).......
(5,140,678)
----
- --------
Net Assets--100%....... $
93,617,372
----
- --------
----
- --------
</TABLE>
- ---------------
I/O--Interest Only Security.
PoundPound Standard & Poor's Rating.
D Pledged as initial margin on futures
contracts.
DD Rate shown reflects current rate on
variable rate
instrument.
@ Principal amount segregated as
collateral for
forward currency contracts. Value of
segregated
security is $4,434,329.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
36
<PAGE>
Mortgage Backed Securities
Portfolio
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--99.4%
Collateralized Mortgage
Obligation--26.1%
Federal Home Loan Mortgage
Corp.,
$ 652 4.25%, 12/15/21............ $
514,669
3,147 4.50%, 9/15/21.............
2,656,257
374 5.25%, 12/15/22............
334,765
350 5.80%, 8/15/19.............
329,875
100 5.95%, 6/15/19.............
97,218
1,984 6.00%, 5/15/08 - 8/15/21...
1,881,522
500 6.50%, 8/15/06.............
495,935
110 7.00%, 3/15/23.............
108,831
7,842 7.50%, 6/15/22, PAC I/O....
1,081,205
500 8.00%, 12/15/06............
523,590
931 8.00%, 8/15/04 - 7/15/21...
954,647
1,260 9.00%, 7/01/08 -
10/15/20.................
1,321,045
58 10.00%, 6/15/19............
58,488
Federal National Mortgage
Assn.,
1,012 5.00%, 3/25/21.............
870,142
296 6.00%, 10/25/21............
282,874
2,822 6.50%, 2/25/06 -
12/25/23.................
2,720,027
353 6.50%, 12/25/19 -
4/25/22..................
320,071
4,668 7.00%, 9/25/19, PAC I/O....
476,807
366 7.50%, 5/25/07.............
367,079
482 8.00%, 8/25/06 -
12/25/21.................
492,945
1,188 8.50%, 7/25/18 - 6/25/21...
1,230,219
First Boston Mortgage
Securities
1,238 Zero Coupon, 4/25/17,
P/O......................
881,025
1,238 8.985%, 4/25/17, I/O.......
382,499
732 10.965%, 5/25/17, I/O......
242,190
-----
- -----
Total collateralized
mortgage
obligation
(cost $18,053,551).......
18,623,925
-----
- -----
U.S. Government Securities--2.6%
United States Treasury
Bonds
500 10.75%, 2/15/03............
600,470
1,000D 11.875%, 11/15/03..........
1,278,590
-----
- -----
Total U.S. Government
Securities
(cost $1,881,943)........
1,879,060
-----
- -----
U.S. Government Agency Mortgage
Pass-Through Obligations--70.7%
Federal Home Loan Mortgage
Corp.,
$ 507 6.50%, 1/01/98 - 2/01/04... $
500,738
6,863 7.00%, 2/01/99 -
12/01/25.................
6,806,963
29 7.25%, 7/01/06.............
28,931
257 7.50%, 3/01/08.............
261,053
106 8.00%, 1/01/02 - 2/01/02...
107,950
135 8.25%, 12/01/05 -
5/01/08..................
140,236
460 8.50%, 6/01/03 - 7/01/21...
481,402
149 8.75%, 12/01/08............
155,782
235 9.00%, 1/01/02 -
10/01/05.................
245,606
45 10.00%, 1/01/04............
47,572
49 10.50%, 11/01/19...........
53,959
71 11.50%, 3/01/16............
80,084
53 12.75%, 11/01/13...........
60,639
27 13.25%, 5/01/13............
31,377
45 14.00%, 9/01/10 -
6/01/11..................
53,640
Federal National Mortgage
Assn.,
1,425 6.084%, 11/01/28...........
1,408,546
1,104 6.085%, 8/01/26............
1,091,176
147 6.089%, 6/01/29............
145,228
846 7.00%, 12/01/00 -
7/01/25..................
828,572
465 7.50%, 2/01/20.............
470,103
241 7.75%, 10/01/19............
244,600
19 8.00%, 3/01/07 - 6/01/07...
19,584
225 8.50%, 6/01/10.............
234,627
426 9.75%, 8/01/10 -
10/01/17.................
455,217
Government National
Mortgage Assn.,
752 6.50%, 5/15/23 -
11/15/23.................
726,948
13,574 7.00%, 7/15/16 -
11/15/24.................
13,396,816
6,939 7.50%, 3/15/07 - 3/15/24...
7,016,313
5,078 8.00%, 6/15/07 - 8/15/26...
5,243,335
1,440 8.25%, 6/20/17 - 7/20/17...
1,515,175
964 8.50%, 3/15/05 -
12/15/26.................
1,013,804
4,772 9.00%, 10/20/01 -
1/15/20..................
5,084,968
1,603 9.50%, 9/15/02 - 1/15/21...
1,728,246
1 13.00%, 2/15/11............
1,136
35 13.25%, 7/15/14............
40,442
110 13.50%, 6/15/10 -
11/15/12.................
130,778
112 14.00%, 6/15/11 -
4/15/12..................
134,413
63 16.00%, 4/15/12 -
5/15/12..................
77,212
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
37
<PAGE>
THE TARGET PORTFOLIO TRUST
Mortgage Backed Securities
Portfolio (cont'd)
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S> <C>
U.S. Government Agency Mortgage
Pass-Through Obligations--
(cont'd)
Government National
Mortgage
Association
$ 263 7.50%, 3/15/23............. $
265,591
-----
- -------
Total U.S. government
agency mortgage
pass-through obligations
(cost $49,741,465).......
50,328,762
-----
- -------
Total long-term investments
(cost $69,676,959).......
70,831,747
-----
- -------
SHORT-TERM INVESTMENTS--1.2%
Repurchase Agreement--1.2%
806 Morgan (J.P.) Securities,
Inc.,
5.95%, due 7/01/97 in the
amount of $806,133 (cost
$806,000; the value of
the collateral including
accrued interest is
$850,811)................
806,000
-----
- -------
OUTSTANDING OPTIONS
Contracts** PURCHASED*
- ----------
Put Options
United States Treasury
Bond,
40 expiring 8/23/97 @ $107.00
(cost $54,780).............
18,125
-----
- -------
Total Investments--100.6%
(cost $70,537,739; Note
4).......................
71,655,872
Liabilities in excess of
other
assets--(0.6%).............
(416,797)
-----
- -------
Net Assets--100%........... $
71,239,075
-----
- -------
-----
- -------
</TABLE>
- ---------------
I/O--Interest Only Security.
PAC--Planned Amortization Class.
P/O--Principal Only.
* Non-income producing security.
** Each contract represents a notional par amount
of $10,000.
D A portion of principal amount pledged as initial
margin on futures contracts.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
38
<PAGE>
U.S. Government Money Market
Portfolio
Portfolio of Investments June 30,
1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
VALUE
(000) DESCRIPTION
(NOTE 1)
<C> <S> <C>
Federal Home Loan Bank--17.6%
$ 2,755 5.41%, 8/6/97.............. $
2,740,095
4,000 5.43%, 11/17/97............
3,916,137
-----
- -------
6,656,232
-----
- -------
Federal Home Loan Mortgage
Corporation--7.6%
2,900 5.41%, 7/3/97..............
2,899,128
-----
- -------
Federal National Mortgage
Association--41.3%
5,000 5.44%, 7/21/97.............
4,984,889
3,810 5.41%, 8/4/97..............
3,790,533
4,000 5.64%, 10/20/97............
3,930,440
3,000 5.47%, 11/4/97.............
2,942,565
-----
- -------
15,648,427
-----
- -------
Repurchase Agreements--26.3%
4,975 Lehman Brothers Hldgs.,
Inc., 6.00%, due 7/1/97
in the amount of
$4,975,829 (cost
$4,975,000; value of
collateral including
accrued interest is
$5,168,134)..............
4,975,000
4,975 Morgan (J.P.) Securities,
Inc., 5.95%, due 7/1/97
in the amount of
$4,975,822, (cost
$4,975,000; value of
collateral including
accrued interest is
$5,106,463)..............
4,975,000
-----
- -------
9,950,000
-----
- -------
Total Investments--92.8%
(amortized cost
35,153,787
$35,153,787*)............
Other assets in excess of
liabilities--7.2%........
2,744,429
-----
- -------
Net Assets--100%........... $
37,898,216
-----
- -------
-----
- -------
</TABLE>
- ---------------
* Federal income tax basis of portfolio securities
is the same as for financial
reporting purposes.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
39
<PAGE>
THE TARGET PORTFOLIO TRUST
Statements of Assets and
Liabilities
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
LARGE
CAPITALIZATION LARGE CAPITALIZATION SMALL
CAPITALIZATION
GROWTH PORTFOLIO VALUE PORTFOLIO
GROWTH PORTFOLIO
<S> <C>
<C> <C>
ASSETS
Investments, at value*
$239,430,676 $254,303,028
$155,390,643
Cash
200,002 --
- --
Foreign currency, at value*
- -- -- --
Receivable for Fund shares sold
251,302 294,820
188,099
Receivable for investments sold
2,334,150 --
925,808
Dividends and interest receivable
67,985 507,520
34,433
Deferred expenses and other assets
9,855 10,010
7,570
Due from broker - variation margin
- -- -- --
Forward currency contracts-net amount
receivable from counterparties
- -- -- --
Total assets
242,293,970 255,115,378
156,546,553
LIABILITIES
Payable for investments purchased
2,946,287 719,050
280,800
Payable for Fund shares reacquired
578,741 658,667
415,020
Accrued expenses and other liabilities
222,053 52,357
160,827
Dividends payable
- -- -- --
Withholding taxes payable
- -- 9,606 --
Deferred trustees' fees
6,853 6,853
6,853
Due to Manager
58,544 125,168
37,283
Due to broker - variation margin
- -- -- --
Forward currency contracts-net amount
payable to counterparties
- -- -- --
Total liabilities
3,812,478 1,571,701
900,783
NET ASSETS
$238,481,492 $253,543,677
$155,645,770
Net assets were comprised of:
Shares of beneficial interest, at par $
16,417 $ 15,801 $
9,529
Paid-in capital in excess of par
161,275,223 162,505,197
111,820,175
161,291,640 162,520,998
111,829,704
Under (over) distribution of net
investment income (loss)
63,467 2,381,799
(323,207)
Accumulated net realized gains
(losses)
16,390,638 13,628,534
9,239,834
Net unrealized
appreciation/depreciation
60,735,747 75,012,346
34,899,439
Net assets, June 30, 1997
$238,481,492 $253,543,677
$155,645,770
Shares of beneficial interest issued
and outstanding
16,416,721 15,801,370
9,528,665
Net asset value per share
$14.53 $16.05
$16.33
*Identified cost of investments and
foreign currency, if any.
$178,694,929 $179,290,682
$120,491,204
<CAPTION>
SMALL
CAPITALIZATION
VALUE
PORTFOLIO
<S> <C>
ASSETS
Investments, at value*
$142,351,162
Cash
334,982
Foreign currency, at value*
- --
Receivable for Fund shares sold
385,326
Receivable for investments sold
1,167,155
Dividends and interest receivable
78,750
Deferred expenses and other assets
3,195
Due from broker - variation margin
- --
Forward currency contracts-net amount
receivable
from counterparties
- --
Total assets
144,320,570
LIABILITIES
Payable for investments purchased
870,728
Payable for Fund shares reacquired
337,084
Accrued expenses and other liabilities
146,361
Dividends payable
- --
Withholding taxes payable
- --
Deferred trustees' fees
6,853
Due to Manager
34,716
Due to broker - variation margin
- --
Forward currency contracts-net amount
payable to counterparties
- --
Total liabilities
1,395,742
NET ASSETS
$142,924,828
Net assets were comprised of:
Shares of beneficial interest, at par $
8,223
Paid-in capital in excess of par
101,648,520
101,656,743
Under (over) distribution of net
investment income (loss)
312,975
Accumulated net realized gains
(losses)
6,613,123
Net unrealized
appreciation/depreciation
34,341,987
Net assets, June 30, 1997
$142,924,828
Shares of beneficial interest issued
and outstanding
8,222,849
Net asset value per share
$17.38
*Identified cost of investments and
foreign currency, if any.
$108,009,175
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
40
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
TOTAL RETURN INTERMEDIATE-TERM MORTGAGE
BACKED
EQUITY PORTFOLIO BOND PORTFOLIO
BOND PORTFOLIO BOND PORTFOLIO
SECURITIES PORTFOLIO
<C> <C>
<C> <C> <C>
$256,378,802 $ 32,502,046
$ 55,824,904 $ 98,758,050 $
71,655,872
1,218 137
839 634 411
413,492 143,345
216 165 --
345,091 46,362
68,900 192,805
95,274
908,463 1,990,749
5,178,791 6,948,774
- --
1,618,149 619,804
319,882 915,157
534,349
10,172 21,064
4,462 5,707 5,217
-- --
- -- -- 4,250
-- 119,113
24,448 59,179 -
- -
259,675,387 35,442,620
61,422,442 106,880,471
72,295,373
-- --
14,367,434 12,692,016
677,426
3,958,738 80,175
154,929 298,041
157,505
67,081 3,575
25,727 19,892
85,770
-- 36,266
56,898 119,292
102,310
127,027 1,966
- -- -- --
6,853 --
7,624 7,564 6,853
145,516 14,545
17,350 34,918
26,434
-- --
43,750 91,376 -
- -
-- 205,545
- -- -- --
4,305,215 342,072
14,673,712 13,263,099
1,056,298
$255,370,172 $ 35,100,548
$ 46,748,730 $ 93,617,372 $
71,239,075
$ 15,659 $ 3,664
$ 4,547 $ 9,087 $
6,952
190,427,393 37,012,391
46,724,645 93,463,983
71,250,159
190,443,052 37,016,055
46,729,192 93,473,070
71,257,111
(2,270,762) (1,378,247)
549,336 297,503
68,163
18,423,845 116,439
(1,042,770) (523,173)
(1,207,519)
48,774,037 (653,699)
512,972 369,972
1,121,320
$255,370,172 $ 35,100,548
$ 46,748,730 $ 93,617,372 $
71,239,075
15,659,538 3,663,862
4,547,310 9,087,056
6,951,675
$16.31 $9.58
$10.28 $10.30
$10.25
$207,992,941 $ 33,201,679
$ 55,487,363 $ 98,609,330 $
70,537,739
<CAPTION>
U.S. GOVERNMENT MONEY
MARKET PORTFOLIO
<C>
$35,153,787
749
--
3,593,066
--
1,652
3,916
--
--
38,753,170
--
807,125
5,195
35,781
--
--
6,853
--
--
854,954
$37,898,216
15,659
$ 37,898
37,860,318
37,898,216
--
--
--
$37,898,216
37,898,216
$1.00
$35,153,787
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
41
<PAGE>
THE TARGET PORTFOLIO TRUST
Statements of Operations
Six Months Ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
LARGE
CAPITALIZATION LARGE CAPITALIZATION SMALL
CAPITALIZATION
GROWTH PORTFOLIO VALUE PORTFOLIO
GROWTH PORTFOLIO
<S> <C>
<C> <C>
NET INVESTMENT INCOME
- --------------------------------------------------
- --------------------------------------------------
- -----------
Income
Interest $
276,297 $ 67,516 $
137,706
- --------------------------------------------------
- --------------------------------------------------
- -----------
Dividends
666,822 3,225,958
161,865
- --------------------------------------------------
- --------------------------------------------------
- -----------
Less: Foreign withholding taxes
(507) (32,924)
(1,419)
- --------------------------------------------------
- --------------------------------------------------
- -----------
Total income
942,612 3,260,550
298,152
- --------------------------------------------------
- --------------------------------------------------
- -----------
Expenses
Management fee
677,302 713,228
429,719
- --------------------------------------------------
- --------------------------------------------------
- -----------
Custodian's fees and expenses
65,000 61,000
67,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Transfer agent's fees and expenses
57,700 58,100
57,800
- --------------------------------------------------
- --------------------------------------------------
- -----------
Registration fees
17,300 11,000
15,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Reports to shareholders
34,200 16,000
33,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Audit fees and expenses
6,800 6,800
6,800
- --------------------------------------------------
- --------------------------------------------------
- -----------
Legal fees and expenses
4,000 4,000
4,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Trustees' fees and expenses
1,200 1,200
1,200
- --------------------------------------------------
- --------------------------------------------------
- -----------
Amortization of organization expenses
2,862 2,862
2,862
- --------------------------------------------------
- --------------------------------------------------
- -----------
Insurance
2,400 2,000
1,600
- --------------------------------------------------
- --------------------------------------------------
- -----------
Miscellaneous
2,585 2,561
1,076
- --------------------------------------------------
- --------------------------------------------------
- -----------
Total expenses
871,349 878,751
620,057
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net investment income (loss)
71,263 2,381,799
(321,905)
- --------------------------------------------------
- --------------------------------------------------
- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net realized gain (loss) on:
Investment transactions
16,378,464 13,774,899
9,257,962
- --------------------------------------------------
- --------------------------------------------------
- -----------
Financial futures contracts
- -- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Foreign currency transactions
- -- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Options written
- -- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Total net realized gain (loss)
16,378,464 13,774,899
9,257,962
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net change in unrealized
appreciation/depreciation on:
Investments
13,490,978 21,179,825
7,007,597
- --------------------------------------------------
- --------------------------------------------------
- -----------
Financial futures contracts
- -- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Foreign currency transactions
- -- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Options written
- -- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net change in unrealized
appreciation/depreciation
13,490,978 21,179,825
7,007,597
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net gain (loss)
29,869,442 34,954,724
16,265,559
- --------------------------------------------------
- --------------------------------------------------
- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $
29,940,705 $ 37,336,523 $
15,943,654
- --------------------------------------------------
- --------------------------------------------------
- -----------
<CAPTION>
SMALL
CAPITALIZATION
VALUE
PORTFOLIO
<S> <C>
NET INVESTMENT INCOME
- --------------------------------------------------
- --------------------------------------------------
- -----------
Income
Interest $
101,231
- --------------------------------------------------
- --------------------------------------------------
- -----------
Dividends
769,466
- --------------------------------------------------
- --------------------------------------------------
- -----------
Less: Foreign withholding taxes
(728)
- --------------------------------------------------
- --------------------------------------------------
- -----------
Total income
869,969
- --------------------------------------------------
- --------------------------------------------------
- -----------
Expenses
Management fee
389,595
- --------------------------------------------------
- --------------------------------------------------
- -----------
Custodian's fees and expenses
61,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Transfer agent's fees and expenses
55,100
- --------------------------------------------------
- --------------------------------------------------
- -----------
Registration fees
13,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Reports to shareholders
30,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Audit fees and expenses
6,800
- --------------------------------------------------
- --------------------------------------------------
- -----------
Legal fees and expenses
4,000
- --------------------------------------------------
- --------------------------------------------------
- -----------
Trustees' fees and expenses
1,200
- --------------------------------------------------
- --------------------------------------------------
- -----------
Amortization of organization expenses
2,862
- --------------------------------------------------
- --------------------------------------------------
- -----------
Insurance
1,300
- --------------------------------------------------
- --------------------------------------------------
- -----------
Miscellaneous
535
- --------------------------------------------------
- --------------------------------------------------
- -----------
Total expenses
565,392
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net investment income (loss)
304,577
- --------------------------------------------------
- --------------------------------------------------
- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net realized gain (loss) on:
Investment transactions
6,623,830
- --------------------------------------------------
- --------------------------------------------------
- -----------
Financial futures contracts
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Foreign currency transactions
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Options written
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Total net realized gain (loss)
6,623,830
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net change in unrealized
appreciation/depreciation on:
Investments
13,385,716
- --------------------------------------------------
- --------------------------------------------------
- -----------
Financial futures contracts
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Foreign currency transactions
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Options written
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net change in unrealized
appreciation/depreciation
13,385,716
- --------------------------------------------------
- --------------------------------------------------
- -----------
Net gain (loss)
20,009,546
- --------------------------------------------------
- --------------------------------------------------
- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $
20,314,123
- --------------------------------------------------
- --------------------------------------------------
- -----------
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
42
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
TOTAL RETURN INTERMEDIATE-TERM MORTGAGE
BACKED
EQUITY PORTFOLIO BOND PORTFOLIO
BOND PORTFOLIO BOND PORTFOLIO
SECURITIES PORTFOLIO
<C> <C>
<C> <C> <C>
$ 143,951 $ 1,145,504
$ 1,551,407 $ 3,108,984 $
2,600,661
3,910,964 --
- -- -- --
(515,480) (1,012)
- -- -- --
3,539,435 1,144,492
1,551,407 3,108,984
2,600,661
840,208 91,983
106,393 216,892
161,377
190,000 77,000
61,000 62,000 93,000
57,600 20,300
22,000 25,200 29,300
10,000 12,000
11,000 11,000 15,000
5,000 5,000
3,000 10,500 6,000
10,000 6,800
6,800 6,800 6,800
2,000 8,000
2,000 2,000 2,000
1,200 1,200
1,200 1,200 1,200
2,862 5,254
2,862 2,862 2,862
2,400 300
500 1,000 300
2,584 2,599
1,722 1,863 1,876
1,123,854 230,436
218,477 341,317
319,715
2,415,581 914,056
1,332,930 2,767,667
2,280,946
18,604,983 538,655
54,462 44,421 118,594
-- --
(530,232) (415,132)
(17,359)
(4,202,823) (1,987,685)
146,229 141,653 -
- -
-- --
52,422 --
(27,642)
14,402,160 (1,449,030)
(277,119) (229,058)
73,593
12,245,248 (1,374,415)
(71,099) (164,981)
152,677
-- --
341,750 342,375
3,187
(23,738) 281,133
(105,112) (38,454)
- --
-- --
- -- -- (15,119)
12,221,510 (1,093,282)
165,539 138,940
140,745
26,623,670 (2,542,312)
(111,580) (90,118)
214,338
$ 29,039,251 $ (1,628,256)
$ 1,221,350 $ 2,677,549 $
2,495,284
<CAPTION>
U.S. GOVERNMENT MONEY
MARKET PORTFOLIO
<C>
$ 874,932
--
--
874,932
40,479
38,000
5,600
9,200
4,500
2,500
2,000
1,200
2,862
200
1,492
108,033
766,899
(733)
--
--
--
(733)
--
--
--
--
--
(733)
$ 766,166
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
43
<PAGE>
THE TARGET PORTFOLIO TRUST
Statements of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
SMALL
CAPITALIZATION
LARGE
CAPITALIZATION LARGE CAPITALIZATION
GROWTH
GROWTH PORTFOLIO VALUE
PORTFOLIO PORTFOLIO
-----------
- ----------------- -------------------------
- --- ------------
Six Months
Six Months Six Months
Ended
Year Ended Ended Year Ended
Ended
June 30,
December 31, June 30, December 31,
June 30,
1997
1996 1997 1996
1997
<S> <C>
<C> <C> <C>
<C>
INCREASE (DECREASE)
IN NET ASSETS
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Operations
Net investment income (loss) $
71,263 $ 390,116 $ 2,381,799 $
4,829,796 $ (321,905)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net realized gain (loss) on
investment and foreign currency
transactions
16,378,464 11,243,006 13,774,899
11,707,935 9,257,962
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net change in unrealized
appreciation/
depreciation of investments
13,490,978 27,653,840 21,179,825
20,366,798 7,007,597
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net increase (decrease) in net
assets
resulting from operations
29,940,705 39,286,962 37,336,523
36,904,529 15,943,654
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Dividends and Distributions
Dividends from net investment
income
(66,666) (329,698) --
(4,829,796) --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Dividends in excess of net
investment
income -
- - -- --
(435,227) --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Distributions from net
realized gains
(3,766,621) (23,349,943) (3,725,929)
(9,766,690) (2,391,423)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Total distributions
(3,833,287) (23,679,641) (3,725,929)
(15,031,713) (2,391,423)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Fund share transactions(a)
Net proceeds from shares sold
24,657,847 63,352,161 27,721,515
67,051,579 18,328,898
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions
3,759,984 23,329,793 3,656,708
14,708,918 2,349,139
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Cost of shares reacquired
(36,826,186) (61,584,086) (39,150,989)
(63,523,667) (26,053,773)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net increase/(decrease) in net
assets from Fund share
transactions
(8,408,355) 25,097,868 (7,772,766)
18,236,830 (5,375,736)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Total increase (decrease)
17,699,063 40,705,189 25,837,828
40,109,646 8,176,495
NET ASSETS
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Beginning of period
220,782,429 180,077,240 227,705,849
187,596,203 147,469,275
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
End of period
$238,481,492 $220,782,429 $253,543,677
$227,705,849 $155,645,770
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
<CAPTION>
SMALL CAPITALIZATION
VALUE PORTFOLIO
- ----------------------------
Six Months
Year Ended
Ended Year Ended
December 31,
June 30, December 31,
1996
1997 1996
<S> <C>
<C> <C>
INCREASE (DECREASE)
IN NET ASSETS
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Operations
Net investment income (loss) $
(445,756) $ 304,577 $ 847,572
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net realized gain (loss) on
investment and foreign currency
transactions 16,882,644
6,623,830 10,384,665
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net change in unrealized
appreciation/
depreciation of investments 6,803,397
13,385,716 11,237,645
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net increase (decrease) in net
assets
resulting from operations 23,240,285
20,314,123 22,469,882
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Dividends and Distributions
Dividends from net investment
income --
- -- (837,683)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Dividends in excess of net
investment
income --
- -- --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Distributions from net
realized gains
(16,337,409) (2,338,359) (4,467,642)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Total distributions
(16,337,409) (2,338,359) (5,305,325)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Fund share transactions(a)
Net proceeds from shares sold 52,292,568
18,627,589 44,712,582
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions 16,090,077
2,290,121 5,207,885
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Cost of shares reacquired
(49,348,968) (22,640,549) (38,007,600)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Net increase/(decrease) in net
assets from Fund share
transactions 19,033,677
(1,722,839) 11,912,867
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Total increase (decrease) 25,936,553
16,252,925 29,077,424
NET ASSETS
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
Beginning of period 121,532,722
126,671,903 97,594,479
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
End of period $147,469,275
$142,924,828 $126,671,903
- --------------------------------------------------
- --------------------------------------------------
- -----------------------
</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 53
44
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL
INTERNATIONAL
EQUITY
BOND TOTAL RETURN
INTERMEDIATE-TERM
PORTFOLIO
PORTFOLIO BOND PORTFOLIO
BOND PORTFOLIO
--------------------------- -------------
- -------------- -------------------------- ----
- -----------------------
Six Months Six Months
Six Months Six Months
Ended Year Ended Ended
Year Ended Ended Year Ended
Ended Year Ended
June 30, December 31, June 30,
December 31, June 30, December 31,
June 30, December 31,
1997 1996 1997
1996 1997 1996 1997
1996
<C> <C> <C>
<C> <C> <C> <C>
<C>
$ 2,415,581 $ 3,913,497 $ 914,056
$ 1,946,597 $ 1,332,930 $ 2,680,264 $
2,767,667 $ 4,651,788
14,402,160 11,814,979 (1,449,030)
(128,465) (277,119) (27,284)
(229,058) 53,044
12,221,510 16,975,091 (1,093,282)
(34,527) 165,539 (293,217)
138,940 (394,193)
29,039,251 32,703,567 (1,628,256)
1,783,605 1,221,350 2,359,763
2,677,549 4,310,639
(586,466) (3,405,100) (786,248)
(1,734,080) (1,257,960) (2,614,993)
(2,693,807) (4,651,788)
-- -- --
- -- -- -- --
(47,210)
(3,788,254) (9,899,724) --
- -- -- (1,230,625) --
(1,051,696)
(4,374,720) (13,304,824) (786,248)
(1,734,080) (1,257,960) (3,845,618)
(2,693,807) (5,750,694)
194,216,311 354,553,935 6,402,662
18,342,835 6,949,009 20,202,045
13,518,581 44,780,207
4,297,415 13,089,510 714,671
1,705,126 1,136,511 3,603,260
2,446,838 5,507,246
(208,371,011) (338,076,828) (11,381,981)
(12,977,726) (10,517,975) (18,219,385)
(22,723,806) (25,580,092)
(9,857,285) 29,566,617 (4,264,648)
7,070,235 (2,432,455) 5,585,920
(6,758,387) 24,707,361
14,807,246 48,965,360 (6,679,152)
7,119,760 (2,469,065) 4,100,065
(6,774,645) 23,267,306
240,562,926 191,597,566 41,779,700
34,659,940 49,217,795 45,117,730
100,392,017 77,124,711
$255,370,172 $240,562,926 $35,100,548
$41,779,700 $46,748,730 $ 49,217,795 $
93,617,372 $100,392,017
<CAPTION>
U.S. GOVERNMENT
MORTGAGE BACKED
MONEY
SECURITIES PORTFOLIO
MARKET PORTFOLIO
--------------------------
- ----------------------------
Six Months
Six Months
Ended Year Ended
Ended Year Ended
June 30, December 31,
June 30, December 31,
1997 1996
1997 1996
<C> <C>
<C> <C>
$ 2,280,946 $ 4,651,169
$ 766,899 $ 859,961
73,593 327,178
(733) 2,578
140,745 (1,105,092)
- -- --
2,495,284 3,873,255
766,166 862,539
(2,235,923) (4,503,951)
(766,166) (862,539)
-- --
- -- --
-- --
- -- --
(2,235,923) (4,503,951)
(766,166) (862,539)
6,432,434 21,388,848
403,041,557 339,835,083
1,772,166 3,841,153
670,306 776,187
(11,091,962) (20,491,299)
(393,211,003) (332,068,470)
(2,887,362) 4,738,702
10,500,860 8,542,800
(2,628,001) 4,108,006
10,500,860 8,542,800
73,867,076 69,759,070
27,397,356 18,854,556
$71,239,075 $73,867,076
$ 37,898,216 $ 27,397,356
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
45
<PAGE>
THE TARGET PORTFOLIO TRUST
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
LARGE CAPITALIZATION
GROWTH PORTFOLIO(e)
- --------------------------------------------------
- --------------------------
Six Months
Ended Year Ended
December 31,
June 30, -------------------------------
- -------------------------
1997 1996 1995
1994
<S>
<C> <C> <C>
<C>
PER SHARE OPERATING
PERFORMANCE:
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Net asset value, beginning of period
$12.97 $12.13 $9.74
$9.91
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Income from investment operations
Net investment income (loss)
.03 .02 .10
.10
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Net realized and unrealized gains (losses)
on
investment transactions
1.77 2.33 2.41
(.16)
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Total from investment
operations
1.80 2.35 2.51
(.06)
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Less distributions
Dividends from net investment income
(.01) (.02) (.10)
(.10)
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Distributions in excess of net
investment income
- -- -- (.01)
(.01)
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Distributions from net realized gains
(.23) (1.49) (.01)
- --
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Total distributions
(.24) (1.51) (.12)
(.11)
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Net asset value, end of period
$14.53 $12.97 $12.13
$9.74
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
TOTAL RETURN(d)
14.07% 21.09% 25.76%
(.68)%
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
RATIOS/SUPPLEMENTAL DATA:
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Net assets, end of period (000)
$238,481 $220,782
$180,077 $142,072
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Average net assets (000)
$227,638 $202,736
$162,982 $129,687
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Ratios to average net assets
Expenses
.77%(b) .82% .78%
.81%
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Net investment income (loss)
.06%(b) .19% .88%
1.08%
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Portfolio turnover rate
41% 65% 154%
24%
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Average commission rate per share
$ .0552 $ .0572 $
.0578 N/A
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
<CAPTION>
January 5,
1993(a)
Through
December 31,
1993
<S>
<C>
PER SHARE OPERATING
PERFORMANCE:
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Net asset value, beginning of period
$10.00
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Income from investment operations
Net investment income (loss)
.07(c)
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Net realized and unrealized gains (losses)
on
investment transactions
(.12)
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Total from investment
operations
(.05)
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Less distributions
Dividends from net investment income
(.04)
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Distributions in excess of net
investment income
- --
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Distributions from net realized gains
- --
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Total distributions
(.04)
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Net asset value, end of period
$9.91
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
TOTAL RETURN(d)
(.46)%
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
RATIOS/SUPPLEMENTAL DATA:
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Net assets, end of period (000)
$98,089
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Average net assets (000)
$48,033
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Ratios to average net assets
Expenses
1.05%(b)(c)
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Net investment income (loss)
.84%(b)(c)
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Portfolio turnover rate
4%
- --------------------------------------------------
- --------------------------------------------------
- ----------------------------
Average commission rate per share
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 53
46
<PAGE>
<TABLE>
<CAPTION>
SMALL CAPITALIZATION
LARGE CAPITALIZATION
GROWTH
VALUE PORTFOLIO(e)
PORTFOLIO
- --------------------------------------------------
- ---------------------------- -----------------
- ---------------------------
January 5,
Six Months
1993(a) Six Months
Ended Year Ended December 31,
Through Ended Year Ended
December 31,
June 30, -----------------------------------
- ----------- December 31, June 30, --
- ---------------------------
1997 1996 1995
1994 1993 1997
1996 1995(e)
<C> <C> <C>
<C> <C> <C>
<C> <C>
$13.97 $12.57 $10.02
$10.11 $10.00 $14.93
$14.15 $11.59
.15 .31 .33
.26 .21(c) (.03)
(.02) .02
2.16 2.07 2.89
(.04) .02 1.68
2.63 2.84
2.31 2.38 3.22
.22 .23 1.65
2.61 2.86
-- (.31) (.30)
(.25) (.11) --
- -- (.02)
-- (.03) --
- -- -- -- -
- - --
(.23) (.64) (.37)
(.06) (.01) (.25)
(1.83) (.28)
(.23) (.98) (.67)
(.31) (.12) (.25)
(1.83) (.30)
$16.05 $13.97 $12.57
$10.02 $10.11 $16.33
$14.93 $14.15
16.74% 19.17% 32.08%
2.18% 2.29% 11.38%
18.88% 24.62%
$253,544 $227,706 $187,596
$142,219 $96,074 $155,646
$147,469 $121,533
$239,713 $208,898 $163,124
$128,865 $46,623 $144,427
141,496 $107,649
%(b)
.74 .77% .76%
.81% 1.05%(b)(c) .87%(b)
.89% .85%
2.00%(b) 2.33% 2.83%
2.66% 2.12%(b)(c) (.45)%(b)
(.32)% .12%
10% 22% 59%
6% 3% 76%
108% 120%
$ .0480 $ .0509 $ .0514
N/A N/A $ .0632 $
.0590 $ .0586
<CAPTION>
- ----------
January 5,
1993(a)
Through
December 31,
1994(e) 1993(e)
<C> <C>
$11.86 $10.00
.01 .01(c)
(.27) 1.86
(.26) 1.87
(.01) (.01)
-- --
-- --
(.01) (.01)
$11.59 $11.86
(2.19)% 18.66%
$96,462 $63,917
$87,403 $29,313
.93% 1.05%(c)
.10% .11%(c)
97% 72%
N/A N/A
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
47
<PAGE>
THE TARGET PORTFOLIO TRUST
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
SMALL CAPITALIZATION
VALUE
PORTFOLIO(e)
- --------------------------------------------------
- ---------------------------
Six Months
Ended Year Ended
December 31,
June 30, ------------------------------
- --------------------------
1997 1996 1995
1994
<S>
<C> <C> <C>
<C>
PER SHARE OPERATING
PERFORMANCE:
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net asset value, beginning of period
$15.22 $13.07 $11.07
$12.72
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Income from investment operations
Net investment income (loss)
.32 .11 .14
.11
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net realized and unrealized gains (losses)
on
investment transactions
2.13 2.71 2.00
(1.49)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Total from investment
operations
2.45 2.82 2.14
(1.38)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Less distributions
Dividends from net investment income
- -- (.11) (.14)
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Distributions in excess of net
investment income
- -- -- --
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Distributions from net realized gains
(.29) (.56) --
(.27)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Distributions in excess of net realized
gains
- -- -- --
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Total distributions
(.29) (.67) (.14)
(.27)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net asset value, end of period
$17.38 $15.22 $13.07
$11.07
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
TOTAL RETURN(d)
16.39% 21.75% 19.21%
(11.03)%
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
RATIOS/SUPPLEMENTAL DATA:
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net assets, end of period (000)
$142,925 $126,672
$97,594 $84,163
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Average net assets (000)
$130,941 $110,564
$88,085 $83,891
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Ratios to average net assets
Expenses
.87%(b) .92% 1.00%
.93%
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net investment income (loss)
.47%(b) .77% 1.14%
.88%
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Portfolio turnover rate
19% 60% 110%
97%
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Average commission rate per share
$ .0581 $ .0610 $
.0561 N/A
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
<CAPTION>
January 5,
1993(a)
Through
December 31,
1993
<S>
<C>
PER SHARE OPERATING
PERFORMANCE:
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net asset value, beginning of period
$10.00
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Income from investment operations
Net investment income (loss)
(.01)(c)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net realized and unrealized gains (losses)
on
investment transactions
3.19
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Total from investment
operations
3.18
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Less distributions
Dividends from net investment income
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Distributions in excess of net
investment income
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Distributions from net realized gains
(.46)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Distributions in excess of net realized
gains
- --
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Total distributions
(.46)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net asset value, end of period
$12.72
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
TOTAL RETURN(d)
31.86%
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
RATIOS/SUPPLEMENTAL DATA:
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net assets, end of period (000)
$64,430
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Average net assets (000)
$29,039
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Ratios to average net assets
Expenses
1.05%(b)(c)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net investment income (loss)
(.11)%(b)(c)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Portfolio turnover rate
112%
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Average commission rate per share
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 53
48
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL
INTERNATIONAL
BOND
EQUITY
PORTFOLIO
PORTFOLIO
----------------------------------------------
- -------------------------------------------
- -----------------------------
January 5,
Six Months
1993(a) Six Months Year Ended
Ended Year Ended
December 31, Through
Ended December 31,
June 30, -------------------------
- --------------------------- December 31,
June 30, ------------
1997 1996
1995(e) 1994(e) 1993(e)
1997 1996
<C> <C> <C>
<C> <C> <C>
<C>
$14.82 $13.64
$11.95 $13.09 $10.00
$10.17 $10.19
.15 .25
.17 .06 .07
.24 .51
1.62 1.79
1.67 (.01) 3.16
(.63) (.08)
1.77 2.04
1.84 .05 3.23
(.39) .43
(.04) (.22)
(.11) (.01) (.01)
(.20) (.21)
-- --
- -- -- --
- -- --
(.24) (.64)
(.04) (1.07) (.05)
- -- (.24)
-- --
- -- (.11) (.08)
- -- --
(.28) (.86)
(.15) (1.19) (.14)
(.20) (.45)
$16.31 $14.82
$13.64 $11.95 $13.09
$9.58 $10.17
12.15% 15.25%
15.38% .18% 32.38%
(3.87)% 4.45%
$255,370 $240,563
$191,598 $188,025 $127,121
$35,101 $41,780
$242,049 $221,626
$183,414 $179,614 $49,769
$37,098 $38,788
%(b)
.94 .99%
1.02% 1.07% 1.40%(b)
1.25%(b) 1.34%
2.01%(b) 1.77%
1.32% .47% .64%(b)
4.97%(b) 5.02%
22% 39%
76% 116% 65%
86% 226%
$ .0392 $ .0240 $
.0250 N/A N/A
N/A N/A
<CAPTION>
May 17,
1994(a)
Through
December 31,
1995 1994
<C> <C>
$ 9.57 $10.00
.57(c) .27(c)
.82 (.19)
1.39 .08
(.57) (.27)
-- (.24)
(.20) --
-- --
(.77) (.51)
$ 10.19 $9.57
14.66% .71%
$34,660 $21,447
$29,510 $15,366
1.00%(c 1.00%(c)
5.56%(c 4.84%(c)
456% 361%
N/A N/A
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
49
<PAGE>
THE TARGET PORTFOLIO TRUST
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
TOTAL RETURN
BOND PORTFOLIO
- --------------------------------------------------
- ---------------------------
Six Months
Ended Year Ended
December 31,
June 30, ------------------------------
- --------------------------
1997 1996 1995
1994
<S>
<C> <C> <C>
<C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period
$10.28 $10.62 $9.48
$10.28
Income from investment operations
Net investment income
.30 .57 .62(c)
.47(c)
Net realized and unrealized gains (losses)
on investment transactions
(.02) (.09) 1.18
(.82)
Total from investment
operations
.28 .48 1.80
(.35)
Less distributions
Dividends from net investment income
(.28) (.56) (.58)
(.45)
Distributions in excess of net
investment income
- -- -- --
- --
Distributions from net realized gains
- -- (.26) (.08)
- --
Distributions in excess of net realized
gains
- -- -- --
- --
Total distributions
(.28) (.82) (.66)
(.45)
Net asset value, end of period
$10.28 $10.28 $10.62
$9.48
TOTAL RETURN(d)
2.55% 5.02% 19.63%
(3.54)%
RATIOS/SUPPLEMENTAL DATA:
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net assets, end of period (000)
$46,749 $49,218 $45,118
$31,191
Average net assets (000)
$47,678 $47,246 $37,023
$31,141
Ratios to average net assets
Expenses
.92%(b) .94% .85%(c)
.85%(c)
Net investment income
5.64%(b) 5.67%
6.21%(c) 4.90%(c)
Portfolio turnover rate
192% 340% 141%
121%
<CAPTION>
January 5,
1993(a)
Through
December 31,
1993
<S>
<C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period
$10.00
Income from investment operations
Net investment income
.44(c)
Net realized and unrealized gains (losses)
on investment transactions
.56
Total from investment
operations
1.00
Less distributions
Dividends from net investment income
(.44)
Distributions in excess of net
investment income
(.02)
Distributions from net realized gains
(.19)
Distributions in excess of net realized
gains
(.07)
Total distributions
(.72)
Net asset value, end of period
$10.28
TOTAL RETURN(d)
10.18%
RATIOS/SUPPLEMENTAL DATA:
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net assets, end of period (000)
$25,917
Average net assets (000)
$12,594
Ratios to average net assets
Expenses
.85%(b)(c)
Net investment income
3.87%(b)(c)
Portfolio turnover rate
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 returns for periods of
less than one full year are not annualized.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
50
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE-
TERM
MORTGAGE BACKED
BOND
PORTFOLIO
SECURITIES PORTFOLIO
- --------------------------------------------------
- --------------------------------------- ------
- ---------------------
January 5,
1993(a)
Six Months
Through Six Months Year Ended
Ended Year Ended
December 31, December
Ended December 31,
June 30, --------------------------------
- -------------------- 31, June
30, ------------
1997 1996 1995
1994 1993 1997
1996
<S> <C> <C>
<C> <C> <C>
<C>
$ 10.30 $ 10.51 $ 9.56
$ 10.26 $ 10.00 $ 10.21
$ 10.31
.30 .59 .63
.49 .46(c) .32
.65
)
(.01 (.07) .94
(.71) .46 .03
(.12)
.29 .52 1.57
(.22) .92 .35
.53
(.29) (.59) (.60)
(.48) (.45) (.31)
(.63)
-- -- --
- -- -- --
- --
-- (.14) (.02)
- -- (.18) --
- --
-- -- --
- -- (.03) --
- --
(.29) (.73) (.62)
(.48) (.66) (.31)
(.63)
$10.30 $10.30 $10.51
$9.56 $10.26 $10.25
$10.21
2.68% 5.22% 16.87%
(2.23)% 9.33% 3.40%
5.56%
$93,617 $100,392 $77,125
$62,924 $60,651 $71,239
$73,867
$97,196 $81,723 $68,628
$69,602 $32,441 $72,318
$72,214
%(b)
.71 .73% .79%
.80% .85%(b)(c) .89%(b)
.91%
5.74%(b) 5.69% 6.09%
5.06% 4.27%(b)(c) 6.36%(b)
6.44%
103% 311% 93%
77% 129% 14%
102%
<CAPTION>
January 5,
1993(a)
Through
December 31,
1995 1994 1993
<C> <C> <C>
$ 9.51 $ 10.18 $ 10.00
.68(c) .61(c) .57(c)
.83 (.66) .28
1.51 (.05) .85
(.68) (.61) (.57)
(.03) (.01) (.02)
-- -- (.08)
-- -- --
(.71) (.62) (.67)
$ 10.31 $ 9.51 $ 10.18
16.18% (.51)% 8.56%
$69,759 $ 61,971 $60,100
$65,149 $ 66,276 $29,710
.85%(c) .85%(c) .85%(b)(c)
6.79%(c) 6.19%(c) 5.30%(b)(c)
154% 380% 134%
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements
beginning on page 53
51
<PAGE>
THE TARGET PORTFOLIO TRUST
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
U.S. GOVERNMENT
MONEY
MARKET PORTFOLIO
- --------------------------------------------------
- ---------------------------
Six Months
Ended Year Ended
December 31,
June 30, ------------------------------
- --------------------------
1997 1996 1995
1994
<S>
<C> <C> <C>
<C>
PER SHARE OPERATING
PERFORMANCE:
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net asset value, beginning of period
$1.00 $1.00 $1.00
$1.00
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Income from investment operations
Net investment income
.023 .045 .051(c)
.037(c)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Total from investment
operations
.023 .045 .051
.037
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Less distributions
Dividends from net investment income
.023 (.045) (.051)
(.037)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Total distributions
(.023) (.045) (.051)
(.037)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net asset value, end of period
$1.00 $1.00 $1.00
$1.00
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
TOTAL RETURN(d)
2.26% 4.53% 5.25%
3.79%
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
RATIOS/SUPPLEMENTAL DATA:
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net assets, end of period (000)
$37,898 $27,397 $18,855
$21,438
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Average net assets (000)
$32,651 $19,132 $20,173
$15,048
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Ratios to average net assets
Expenses
.66%(b) .89% .75%(c)
.50%(c)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net investment income
4.73%(b) 4.49%
5.18%(c) 4.03%(c)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
<CAPTION>
January 5,
1993(a)
Through
December 31,
1993
<S>
<C>
PER SHARE OPERATING
PERFORMANCE:
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net asset value, beginning of period
$1.00
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Income from investment operations
Net investment income
.025(c)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Total from investment
operations
.025
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Less distributions
Dividends from net investment income
(.025)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Total distributions
(.025)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net asset value, end of period
$1.00
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
TOTAL RETURN(d)
2.56%
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
RATIOS/SUPPLEMENTAL DATA:
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net assets, end of period (000)
$2,997
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Average net assets (000)
$1,407
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Ratios to average net assets
Expenses
.50%(b)(c)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
Net investment income
2.51%(b)(c)
- --------------------------------------------------
- --------------------------------------------------
- -----------------------------
</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 53
52
<PAGE>
THE TARGET PORTFOLIO TRUST
Notes to Financial Statements (Unaudited)
The Target Portfolio Trust (the 'Fund') is an open-
end management
investment company. The Fund was established as a
Delaware business
trust on July 29, 1992 and consists of ten
separate portfolios (the
'Portfolio' or 'Portfolios'): Large Capitalization
Growth Portfolio,
Large Capitalization Value Portfolio, Small
Capitalization Growth Portfolio,
Small Capitalization Value Portfolio,
International Equity Portfolio,
International Bond Portfolio, Total Return Bond
Portfolio, Intermediate-Term
Bond Portfolio, Mortgage Backed Securities
Portfolio and U.S. Government Money
Market Portfolio. All the Portfolios are
diversified as defined under the
Investment Company Act of 1940 except for 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
- --------------------------------------------------
- ------------------------------
53
<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
- --------------------------------------------------
- ------------------------------
54
<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.
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
$(4,202,823), $(1,565,469),
$146,229 and $141,653, respectively, of net
foreign currency gains/losses to
undistributed net investment income from
accumulated net realized gains
(losses). Current year net investment income, net
realized gains (losses) and
net assets were not affected by this statement.
Dividends and Distributions: The
International Bond Portfolio, Total
Return Bond Portfolio, Intermediate-Term Bond
Portfolio and Mortgage Backed
Securities Portfolio declare dividends of their
net investment income daily and
pay such dividends monthly. The U.S. Government
Money Market Portfolio declares
net investment income and any net capital gain
(loss) daily and pays such
dividends monthly. Each other Portfolio declares
and pays a dividend of its net
investment income, if any, at least annually. Each
Portfolio except for the U.S.
Government Money Market Portfolio declares and
pays its net capital gains, if
any, at least annually.
Income distributions and capital gain
distributions are determined in
accordance with income tax regulations which may
differ from generally accepted
accounting principles.
Taxes: For federal income tax purposes, each
portfolio in the Fund is
treated as a separate taxpaying entity. It is the
intent of each portfolio to
continue to meet the requirements of the Internal
Revenue Code applicable to
regulated investment companies and to distribute
all of its taxable net income
to its shareholders. Therefore, no federal income
tax provision is required.
Withholding taxes on foreign interest and
dividends have been provided for
in accordance with the Portfolios' understanding
of the applicable country's tax
rules and rates.
Deferred Organizational Expenses: A total of
$279,000 was incurred in
connection with the organization of the Fund.
These costs have been deferred and
are being amortized ratably over a period of sixty
months from the date the
Portfolio commenced investment operations.
- --------------------------------------------------
- --------
Note 2. Agreements
The Fund has a management agreement with
Prudential Investments Fund
Management LLC ('PIFM') pursuant to which PIFM
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. PIFM
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. PIFM 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.
PIFM 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 PIFM
deems it appropriate. In
addition, there will be a periodic rebalancing of
each Portfolio's assets to
take account of market fluctuations in order to
maintain the approximately equal
allocation. As a consequence, each Portfolio will
allocate assets from the
better performing of the two Advisers to the
other.
<TABLE>
<CAPTION>
Portfolio Adviser
- ----------------- ------------------------------
- ------------
<S> <C>
Large
Capitalization
Growth......... 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>
- --------------------------------------------------
- ------------------------------
55
<PAGE>
The management fee paid PIFM is computed
daily and payable monthly, at an
annual rate of the average daily net assets of the
Portfolios specified below
and PIFM, 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.
PIFM 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
PIFM, serves as the Fund's transfer agent. The
following amounts represent the
fees PMFS charged for the six months ended June
30, 1997 as well as the fees due
PMFS as of June 30, 1997.
<TABLE>
<CAPTION>
Amount incurred
for the
six months
Amount Due
ended
as of
June 30,
June 30,
Portfolio 1997
1997
- ------------------------- ---------------- ----
- ---------
<S> <C> <C>
Large Capitalization
Growth................. $ 57,700 $
7,200
Large Capitalization
Value.................. 58,100
7,300
Small Capitalization
Growth................. 57,800
7,300
Small Capitalization
Value.................. 55,100
7,000
International Equity..... 57,600
7,300
International Bond....... 20,300
2,500
Total Return Bond........ 22,000
2,800
Intermediate-Term Bond... 25,200
3,200
Mortgage Backed
Securities............. 29,300
3,600
U.S. Government Money
Market................. 5,600
700
</TABLE>
For the six months ended June 30, 1997, PSI
earned approximately $2,000 in
brokerage commissions on behalf of certain
portfolio transactions executed with
the Large Capitalization Value Portfolio.
- --------------------------------------------------
- --------
Note 4. Portfolio Securities
Purchases and sales of portfolio securities,
excluding short-term
investments and written options, for the six
months ended June 30, 1997 were as
follows:
<TABLE>
<CAPTION>
Portfolio Purchases
Sales
- ----------------------------- ------------ ----
- --------
<S> <C> <C>
Large Capitalization
Growth..................... $ 87,952,160
$101,097,759
Large Capitalization Value... 22,645,874
34,233,206
Small Capitalization
Growth..................... 106,045,813
113,054,890
Small Capitalization Value... 24,392,482
26,269,675
International Equity......... 50,887,344
66,336,987
International Bond........... 30,445,077
37,241,125
Total Return Bond............ 88,597,798
85,501,730
Intermediate-Term Bond....... 102,555,101
88,362,318
Mortgage Backed Securities... 11,333,362
9,975,206
</TABLE>
The federal income tax basis and unrealized
appreciation/
depreciation of each of the Portfolios'
investments, excluding
written options as of June 30, 1997, were as
follows:
<TABLE>
<CAPTION>
Net
Unrealized
Appreciation
Gross Unrealized
Portfolio Basis (Depreciation)
Appreciation Depreciation
- --------------- ------------ ------------- --
- ---------- --------------
<S> <C> <C>
<C> <C>
Large
Capitalization
Growth....... $178,694,929 $60,735,747 $
67,659,463 $ 6,923,716
Large
Capitalization
Value........ 179,438,791 74,864,237
79,066,885 4,202,648
Small
Capitalization
Growth....... 120,491,204 34,899,439
36,664,376 1,764,937
Small
Capitalization
Value........ 108,009,175 34,341,987
35,824,690 1,482,703
International
Equity....... 207,662,433 48,716,369
54,543,295 5,826,926
International
Bond......... 33,082,725 (580,679)
501,750 1,082,429
Total Return
Bond......... 55,487,130 337,774
479,196 141,422
Intermediate-Term
Bond......... 98,609,132 148,918
413,807 264,889
Mortgage Backed
Securities... 70,537,740 1,118,132
1,252,449 134,317
</TABLE>
- --------------------------------------------------
- ------------------------------
56
<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 are electing to treat net
currency losses incurred in the two month period
ended December 31, 1996 as
having been incurred in the current year.
<TABLE>
<CAPTION>
Net Losses
in two
months ended
Capital Loss
Expiration December 31,
Portfolio Carryforward
Year 1996
- --------------------------- ------------- -----
- ------ ------------
<S> <C> <C>
<C>
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 --
</TABLE>
At June 30, 1997, the Total Return and
Intermediate-Term Bond Portfolios
bought 124 and 300 financial futures contracts,
respectively, on U.S. Treasury
Bonds expiring in September 1997. In addition, the
Mortgage Backed Securities
Portfolio sold 17 financial futures contracts on
U.S. Treasury Notes expiring
in September 1997.
The unrealized appreciation on such
contracts as of June 30, 1997 were as
follows:
<TABLE>
<CAPTION>
Value at Value on
Acquisition/ June 30,
Unrealized
Portfolio Disposition 1997
Appreciation
- ----------------------- ----------- -----------
- - --------------
<S> <C> <C>
<C>
Total Return Bond...... $13,232,250 $13,383,000
$150,750
Intermediate-Term
Bond................. 31,905,750 32,067,625
161,875
Mortgage Backed
Securities........... 1,803,328 1,800,141
3,187
</TABLE>
At June 30, 1997, 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>
British Pounds,
expiring 8/8/97... $ 1,817,659 $
1,818,022 $ 363
Canadian Dollars,
expiring
7/21/97........... 5,924,551
5,947,607 23,056
Danish Kroner,
expiring
7/14/97........... 357,867
351,210 (6,657)
French Francs,
expiring
8/20/97........... 1,862,413
1,819,053 (43,360)
German
Deutschemarks,
expiring
8/21/97........... 657,105
649,273 (7,832)
Irish Punt,
expiring 9/5/97... 844,000
843,696 (304)
Italian Lira,
expiring
7/21/97........... 581,403
580,606 (797)
Japanese Yen,
expiring 7/9/97... 3,419,417
3,428,804 9,387
Norwegian Kroner,
expiring
8/11/97........... 223,092
216,145 (6,947)
Spanish Pesetas,
expiring
8/14/97........... 1,576,742
1,533,199 (43,543)
--------------- --------
- --- -------
$17,264,249
$17,187,615 $(76,634)
--------------- --------
- --- -------
--------------- --------
- --- -------
<CAPTION>
Value at
Foreign Currency Settlement Date
Current Appreciation
Sale Contracts Receivable Value
(Depreciation)
- -------------------- --------------- --------
- --- --------------
<S> <C> <C>
<C>
Australian Dollars,
expiring
7/17/97........... $ 330,968 $
332,580 $ (1,612)
British Pounds,
expiring 8/8/97... 4,195,694
4,295,579 (99,885)
Danish Kroner,
expiring
7/14/97........... 593,360
582,184 11,176
French Francs,
expiring
8/20/97........... 1,868,947
1,819,052 49,895
German
Deutschemarks,
expiring
8/21/97........... 366,085
359,877 6,208
New Zealand Dollars,
expiring
7/23/97........... 2,349,168
2,316,672 32,496
Swedish Krona,
expiring
8/13/97........... 1,290,219
1,298,293 (8,074)
--------------- --------
- --- -------
$10,994,441
$11,004,237 $ (9,796)
--------------- --------
- --- -------
--------------- --------
- --- -------
</TABLE>
At June 30, 1997, the Total Return Bond and
Intermediate-Term Bond
Portfolios had outstanding forward currency
contracts to sell foreign
currencies, as follows:
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date
Current
Sale Contracts Receivable Value
Appreciation
- ----------------------- --------------- -------
- --- --------------
<S> <C> <C>
<C>
Total Return Bond
Portfolio
Canadian Dollars,
expiring 7/9/97 -
9/15/97.............. $ 2,248,634
$2,224,186 $ 24,448
Intermediate-Term Bond
Portfolio
Canadian Dollars,
expiring 7/9/97 -
3/11/98.............. 4,540,764
4,481,585 59,179
</TABLE>
Transactions in options written during the
six months ended June 30, 1997,
were as follows:
<TABLE>
<CAPTION>
Number of
Premiums
Mortgage Backed Securities Portfolio Contracts
Received
- -------------------------------------- ---------
- --------
<S> <C>
<C>
Options outstanding at December 31,
1996................................ 50
$24,494
Options written....................... 80
19,190
Options terminated in closing purchase
transactions........................ (130)
(43,684)
---------
- --------
Options outstanding at June 30,
1997................................ 0
$ 0
---------
- --------
---------
- --------
</TABLE>
- --------------------------------------------------
- -----------------------------
57
<PAGE>
- --------------------------------------------------
- ------------------------------
Note 5. Capital
The Fund has authorized an unlimited number
of shares of beneficial
interest at $.001 par value per share. Of the
shares outstanding at June 30,
1997, PIFM owned 1,125 shares of each portfolio,
except for the International
Bond Portfolio, of which it owned 242,049 shares.
Transactions in shares of beneficial
interest during the six months ended
June 30, 1997 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...........................
1,815,524 297,467 (2,719,487)
(606,496)
Large Capitalization Value
Portfolio...........................
1,869,329 263,262 (2,630,082)
(497,491)
Small Capitalization Growth
Portfolio...........................
1,231,992 174,139 (1,756,882)
(350,751)
Small Capitalization Value
Portfolio...........................
1,176,178 154,947 (1,430,434)
(99,309)
International Equity Portfolio........
13,071,323 297,193 (13,945,466)
(576,950)
International Bond Portfolio..........
667,989 74,725 (1,188,800)
(446,086)
Total Return Bond Portfolio...........
679,788 111,210 (1,029,999)
(239,001)
Intermediate-Term Bond Portfolio......
1,316,356 238,441 (2,213,788)
(658,991)
Mortgage Backed Securities Portfolio..
632,350 174,218 (1,091,211)
(284,643)
</TABLE>
Transactions in shares of beneficial
interest during the year ended
December 31, 1996 were as follows:
<TABLE>
<CAPTION>
Shares
Issued in
Reinvestment
of Dividends Increase
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>
- --------------------------------------------------
- ------------------------------
58
