<PAGE>
(ICON)
The
Target Portfolio
Trust
(SYMBOL)
Semi
Annual
Report
JUNE 30, 1998
(LOGO)
<PAGE>
(ICON)
<PAGE>
The Target Portfolio Trust
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Shareholder Letter 2
Portfolio of Investments:
Large Capitalization Growth Portfolio 9
Large Capitalization Value Portfolio 11
Small Capitalization Growth Portfolio 15
Small Capitalization Value Portfolio 19
International Equity Portfolio 24
International Bond Portfolio 27
Total Return Bond Portfolio 29
Intermediate-Term Bond Portfolio 32
Mortgage Backed Securities Portfolio 35
U.S. Government Money Market Portfolio 37
Statements of Assets and Liabilities 38
Statements of Operations 40
Statements of Changes in Net Assets 42
Financial Highlights 44
Notes to Financial Statements 51
Target's Shareholder Services 56
</TABLE>
1
<PAGE>
Dear Target Shareholder:
The pace of economic growth slowed in the second quarter of
1998 after its
sharp acceleration early in the year led to a buildup of
inventories. We
expect slower growth to continue over the second half of the
year as those
inventories are drawn down; net imports increase "because of
the deepening
economic troubles in Asia" and greater unused industrial
capacity slows
business investment.
However, inflation has been subdued so far this year and we
expect it to
remain so. Although profits have been declining in many
industries, we believe
they will be squeezed further rather than lead to price
increases. Our
economists think the Federal Reserve will strike a "wait-and-
see" stance on
interest rates. Although the Fed has shown a bias toward
raising rates, the
strong dollar and widening trade gap have prevented any
action in that
direction thus far. Gross Domestic Product (GDP) grew during
the first half of
the year, slowing from 5.6% to 1.4% from the first to second
quarter. Such
slowing growth takes pressure off the Fed to raise rates,
which would have
been difficult in any case because of its effect on Asian
economies and the
U.S. balance of trade.
The U.S. stock market paused for breath during the second
quarter of 1998. The
3.3% increase in the Standard & Poor's (S&P) 500 was
slightly above average,
historically speaking, for the quarter, though well below
many quarters of the
past three years. Overseas stock markets also slowed.
Performance Summary as of June 30, 1998
<TABLE>
<CAPTION>
12/31/97 6/30/98
Six Month* # of
Portfolios NAV NAV
Total Return Funds**
<S> <C> <C>
<C> <C>
Large Capitalization Growth $13.58 $17.05
25.55%
Lipper Growth Fund Avg
15.12 1005
Large Capitalization Value 16.21 17.30
9.01
Growth & Income Avg
12.16 761
Small Capitalization Growth 15.57 16.88
10.76
Small Company Avg
6.45 627
Small Capitalization Value 17.50 17.64
2.06
Small Company Avg
6.45 627
International Equity 14.27 16.71
18.65
International Avg
15.53 534
International Bond 9.17 9.04
0.80
International Income Avg
2.75 54
Total Return Bond 10.56 10.70
3.79
Corporate Debt BBB Avg
3.79 102
Intermediate-Term Bond 10.42 10.45
3.02
Intermediate Investment Grade
3.62 232
Mortgage Backed Securities 10.45 10.48
3.19
U.S. Mortgage Avg
3.01 71
U.S. Government Money Market*** 1.00 1.00
2.45
U.S. Government Money Fund Avg
2.45 114
</TABLE>
* 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.
** Represents the number of funds in each respective Lipper
category.
*** Note: An investment in the Fund is neither insured nor
guaranteed by the
U.S. government and there can be no assurance the Fund will
be able to maintain
a stable net asset value of $1 per share.
2
<PAGE>
Although Continental European markets gained, U.K. stocks
and the markets in
Asia and Latin America declined. That prompted many
investors to shift their
assets into more secure harbors, such as Wall Street, which
exacerbated the
declines overseas.
The U.S. government securities market likewise benefited
from a flight to
quality. In June, when the yen tumbled to an eight-year low
against the U.S.
dollar, demand for U.S. Treasuries soared, driving the 30-
year Treasury bond
yield to its lowest level since regular sales of the
securities began in 1977.
Among other fixed-income instruments, corporate bonds
performed well; global
bonds provided a solid return as the Euromarket benefited
from a similar
flight to quality, but emerging markets posted a negative
return.
Target shareholders continue to benefit from the advantages
of maintaining a
diversified portfolio through a customized and comprehensive
investment
program. Most of the Target portfolios produced returns that
were either ahead
of or competitive with their benchmarks during the reporting
period. It is
important to remember that given the current volatile
investment environment,
maintaining a portfolio diversified across a variety of
asset classes is key
to achieving your long-term investment goals.
Average Annual Total Returns as of June 30, 1998
<TABLE>
<CAPTION>
Since
Portfolios One Year Five Years
Inception*
<S> <C> <C>
<C>
Large Capitalization Growth 30.95% 17.46%
14.52%
Large Capitalization Value 19.40 16.76
14.93
Small Capitalization Growth 18.38 14.37
14.69
Small Capitalization Value 12.28 11.26
14.31
International Equity 15.26 14.83
14.80
International Bond -2.14 N/A
2.35
Total Return Bond 9.45 6.24
6.78
Intermediate-Term Bond 7.84 5.75
6.22
Mortgage Backed Securities 7.51 5.88
6.49
</TABLE>
Note: The average annual return for the Target Portfolios
assumes the
imposition of the maximum Target advisory fee of 1.5%
for stock
portfolios and 1.00% for the bond portfolios.
* The inception date for all portfolios is 1/5/93, except
for International
Bond, which is 5/17/94.
Past performance is not indicative of future results.
3
<PAGE>
U.S. Stocks Surge
The flow of cash into the U.S. stock market remained strong
during the first
half of 1998 with larger stocks benefiting more than smaller
issues and growth
investments outperforming value. In an apparent nod to high
quality, stable
growth companies, investors favored larger-cap growth
stocks. Sectors
benefiting from this pattern included technology, health
care, and
consumer-related stocks including consumer cyclicals (stocks
which perform
well as an economy grows), and consumer staples. Among the
strongest industries
were computer networking, computer software, medical
products, pharmaceuticals
and specialty apparel. A central theme in the companies that
performed well was
a lack of exposure to Asian economies plus strong domestic
growth and demand
for their products.
The Large Capitalization Growth Portfolio, co-managed by Oak
Associates and
Columbus Circle Investors, returned 25.55% for the reporting
period. The
Portfolio was overweighted in technology, consumer staples
and consumer
cyclicals. Excellent returns were recorded by America Online
(+53.9%), Cisco
Systems (+34.6%), Lucent Technologies (+30.1%), Warner
Lambert (+22.5%),
Schering Plough (+12.4%), TCI Group (+23.6%), McDonald's
(+15.2%) and Capital
One Financial (+57.6%).
Going forward, Columbus Circle will continue its search for
improving companies
that are likely to exceed investor expectations. They will
also continue their
focus on companies with limited Asian exposure that continue
to see solid
growth in their domestic business.
The Large Capitalization Value Portfolio, co-managed by
INVESCO and Hotchkis &
Wiley, returned 9.01% for the reporting period. The second
quarter was a
difficult one for diversified value investors to outperform
the S&P 500 Index.
Three market sectors performed particularly well -- health
care, technology,
and consumer durables -- but Hotchkis & Wiley only had their
portion of the
portfolio significantly weighted in the latter sector. In
their part of the
portfolio, INVESCO had significant weightings in health care
and technology,
but realized mixed results. They continued to take profits
in their
pharmaceutical holdings. Their weighting in technology
issues suffered because
they didn't own the biggest-
4
<PAGE>
capitalization stocks. The Portfolio's financial issues --
its heaviest
weighting -- turned in positive results for Hotchkis &
Wiley, but were neutral
for INVESCO. Both managers believe valuations for the
broader market are
reasonable given the level of interest rates, though the
threat of weak
profits makes selectivity that much more important.
The Small Capitalization Growth Portfolio, co-managed by
Investment Advisers,
Inc. (IAI) and Nicholas Applegate, returned 10.76% for the
reporting period.
Following a strong performance in the first quarter, small-
cap growth stocks
cooled in the second. Virtually all sectors were down with
energy stocks
posting the worst results (-17.5%) for the second quarter.
Communications
services enhanced portfolio returns largely due to the
performance of
Centennial Cellular, a Connecticut-based wireless carrier.
IAI increased their exposure to consumer cyclicals, consumer
staples, and
health care. Energy stocks were also attractively valued,
and they added
positions there. Going forward, IAI believes their part of
the portfolio is
well positioned with fast growing companies in
extraordinarily strong
competitive positions.
The Small Capitalization Value Portfolio, co-managed by
Lazard Asset Management
and Wood, Struthers & Winthrop returned 2.06% for the
reporting period. Lazard
Asset Management and Wood, Struthers & Winthrop noted that
stocks in the
consumer discretionary sector were among their best
performers as consumer
confidence reached a 29-year high. Technology stocks were
among their worst
performers due to slackening Asian demand and plunging
prices.
Retailers performed especially well, benefiting from
domestic sales and cheap
Asian-made goods. Footstar, a leading retailer of athletic
footwear, generated
strong returns, and Ann Taylor, which focuses on women's
apparel, also
performed well due to increased sales and better-than-
expected first quarter
earnings. Lazard recently bought two new holdings in the
services sector. They
believe that Hughes Supply Inc., a wholesale distributor of
construction
equipment and supplies, should benefit from its sound
management team and the
strong commercial construction market, and recent
acquisitions will drive
top-line revenue. Their second new services
5
<PAGE>
position was Budget Group Inc., a worldwide car and truck
rental company.
Budget's new ownership structure is focused on maximizing
shareholder value
and improving asset usage.
International Equities
The International Equity Portfolio, managed by Lazard Asset
Management,
returned 18.65% for the reporting period. Our return
outpaced the MSCI EAFE
index during the second quarter. EAFE rose 1.1% as Europe's
5.1% gain was
tempered by continued weakness in Asia. Year-to-date, the
Portfolio returned
nearly 19% against EAFE's 15.9% gain.
European stock prices rose as companies shed their non-core
businesses and
bolstered their main operations through mergers and
acquisitions. Such change
hit every industry, but none was bigger than Daimler-Benz's
surprise
acquisition of Chrysler in the largest industrial takeover
in history. Then,
DaimlerChrysler began talks to extend its reach with a stake
in Nissan Diesel,
Japan's fourth-largest truck maker. Alcatel of France
acquired DSC
Communications in the U.S.
In consumer electronics, Philips Electronics of the
Netherlands continued its
own restructuring by selling its unrelated PolyGram music
and film business to
Seagrams of Canada, which owns Universal Studios. And the
Dutch group KPN
split its disparate telecommunication and postal services,
leaving it as a
focused telecom company in a deregulating industry.
Bonds Show Their Strength
As conditions in Asia deteriorated during the second
quarter, and Japan slipped
into recession, investors resumed their flight to U.S.
Treasury securities,
which are considered to be among the world's safest
investments. When the yen
tumbled to an eight-year low against the U.S. dollar, demand
for Treasuries
soared and drove down the yield of the 30-year Treasury to
its lowest level
since the regular sale of the securities began in 1977.
Separately, the Treasury Department announced plans to meet
the government's
reduced borrowing needs by eliminating sales of three-year
notes and cutting
the frequency of its five-year note auctions to quarterly
from monthly.
Prospects of lower supply fueled the buying of Treasuries.
Consequently, U.S.
government securities were the best performing bonds, as
measured by the
Lehman Brothers Aggregate Index.
Your Allocation Mainly Determines Your Returns
Based on a study of 82 large pension funds.
(CHART)
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,
Treasuries, 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,
studies have shown
that just over 91% of a portfolio's long-term return is due
to the initial
allocation.
Target's asset allocations are designed for you once you
complete the Target
Questionnaire. In this way, the Target program helps ensure
that your overall
account reflects your personal investment risk and return
requirements.
6
<PAGE>
The rally in Treasury securities may not have run its
course. Should the yield
of the 30-year Treasury slip below the psychologically
important level of
5.50%, it could tumble further.
Corporate bonds performed well even though a flood of new
debt securities drew
weak investor demand late in the second quarter. The sharp
drop in yields
prompted many corporations to come to market, attracted by
the lower borrowing
costs.
The Total Return Bond and the Intermediate-Term Bond
portfolios, both managed
by PIMCO, returned 3.79% and 3.02% respectively for the
reporting period.
Treasuries outperformed mortgages and corporate issues. At
the same time, the
yield curve flattened, with long rates dropping sharply and
short-to-
intermediate rates declining modestly. Although most
mortgage-backed
securities lagged Treasuries, the portfolios' lower-coupon
issues matched or
exceeded returns on Treasuries. Exposure to below-investment-
grade bonds
detracted from returns as lower-rated credits suffered from
an uncertain
corporate earnings outlook and increased supply.
PIMCO believes consumer spending will propel the domestic
economy forward, but
the impact of Asia will prevent overheating and a resurgence
of inflation.
The International Bond portfolio, managed by Delaware
International Advisers,
returned 0.80% for the reporting period. It has been yet
another solid quarter
for international bonds, with remarkably uniform
performance: no major market
returned less than 1.5% in local currency terms, and only
the U.S. and Sweden
were over 2%. The dollar was flat on average, but currencies
exposed to Asian
and commodity market concerns were weak, and as a result
Japan, Australia,
Canada, and New Zealand delivered negative returns in U.S.
dollar terms.
In contrast, European currency strength boosted the region's
returns above 4%.
While the past quarter has been better than expected,
Delaware International
Advisers remains cautious. Having said that, they believe
there are now big
differences in value in different markets. Australia and New
Zealand have been
badly hit by Asian currency problems, but these markets
still offer exceptional
relative value. The Portfolio's performance was hindered by
its position in the
region, but benefited from its
7
<PAGE>
limited exposure to the Japanese yen.
Delaware's strategy is to continue to underweight the
fundamentally overvalued
Japanese market while maintaining an index weighting in
Europe.
There is also a selective overweight in attractively valued
dollar-based
markets. The Portfolio duration is defensive and moderately
short of the
index.
The Mortgage-Backed Securities Portfolio, managed by
Wellington Management,
returned 3.19% for the reporting period. Wellington is
maintaining a moderately
longer than neutral duration and is focusing on purchasing
high quality
mortgage securities. Due to both quarter-end pressures and
the long bond
breaking through 6.00%, most investors indiscriminately sold
seasoned
pass-through mortgages. This enabled Wellington to buy high
quality securities
at attractive prices as the quarter ended.
And the U.S. Government Money Market Portfolio is likewise
aiming to keep its
average maturity in a neutral position. To maintain its high
liquidity,
Wellington Management buys shorter term securities, and as
rates back up,
looks to purchase longer dated securities at attractive
prices.
Looking Ahead
Financial markets have been unsettled, amid concern about
the slowing pace of
U.S. economic growth, mixed reports on corporate earnings
growth, and the
gradual spread of the impact of Asia's recession. On the
other hand, our
economy continues to grow at a moderate rate that will not
likely reignite our
dormant inflation. It is important to remember that
investors' asset allocation
should be determined by their short- and long-term needs and
by their risk
tolerance, not by changing market conditions. A good
investment plan takes
into account the normal fluctuations in financial markets,
and deviations from
the plan's discipline are usually counter-productive.
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
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Growth Portfolio
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--97.6%
Common Stocks--97.6%
Airlines--0.6%
14,100 Delta Air Lines, Inc........ $ 1,822,425
------------
Banks--3.8%
27,000 Citicorp.................... 4,029,750
45,000 MBNA Corp................... 1,485,000
76,000 NationsBank Corp............ 5,814,000
------------
11,328,750
------------
Beverages--0.6%
42,900 Seagram Co., Ltd............ 1,756,219
------------
Broadcasting--1.5%
114,293 Tele-Communications, 4,393,137
Inc.*.....................
------------
Computers & Business Equipment--12.2%
141,000 3Com Corp.*................. 4,326,938
202,850 Cisco Systems, Inc.*........ 18,674,878
369,200 Compaq Computer Corp........ 10,476,050
90,000 Xylan Corp.*................ 2,683,125
------------
36,160,991
------------
Consumer Products--0.6%
15,400 Ralston-Ralston Purina 1,798,913
Group.....................
------------
Cosmetics & Toiletries--0.9%
32,300 Avon Products, Inc.......... 2,503,250
------------
Drugs & Healthcare--15.0%
35,300 Cardinal Health, Inc........ 3,309,375
33,700 Guidant Corp................ 2,403,231
62,000 Medtronic, Inc.............. 3,952,500
74,000 Merck & Co., Inc............ 9,897,500
146,800 Pfizer, Inc................. 15,955,325
40,800 Schering-Plough Corp...... $ 3,738,300
72,600 Warner-Lambert Co......... 5,036,625
------------
44,292,856
------------
Electronics--4.0%
227,700 Ascend Communications, 11,285,381
Inc.*...................
20,000 Aspect Telecommunications 547,500
Corp.*..................
------------
11,832,881
------------
Financial Services--5.2%
29,200 Capital One Financial 3,626,275
Corp....................
32,500 Countrywide Mortgage 1,649,375
Investments, Inc.*......
42,700 Morgan Stanley Dean 3,901,712
Witter*.................
60,200 Newcourt Credit Group*.... 2,961,088
51,350 Travelers Group, Inc...... 3,113,094
------------
15,251,544
------------
Food & Beverages--1.2%
54,200 PepsiCo, Inc.............. 2,232,363
24,700 Sara Lee Corp............. 1,381,656
------------
3,614,019
------------
Forest Products--0.8%
54,300 Fort James Corp........... 2,416,350
------------
Hotels & Restaurants--1.0%
42,800 McDonald's Corp........... 2,953,200
------------
Industrial Machinery--2.5%
252,000 Applied Materials, 7,434,000
Inc.*...................
------------
Insurance--2.1%
43,500 American International 6,351,000
Group, Inc..............
------------
Media--0.6%
33,600 Chancellor Media Corp.*... 1,668,450
------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
9
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Growth Portfolio
(cont'd)
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Miscellaneous--1.9%
59,100 Tyco International Ltd...... $ 3,723,300
58,100 Waste Management, Inc....... 2,033,500
------------
5,756,800
------------
Newspapers--1.1%
42,100 New York Times Co........... 3,336,425
------------
Oil & Gas--3.0%
22,100 Atlantic Richfield Co....... 1,726,562
66,300 Enron Corp.................. 3,584,344
47,300 Mobil Corp.................. 3,624,362
------------
8,935,268
------------
Retail Grocery--1.6%
116,700 Safeway Inc.*............... 4,748,231
------------
Retail Trade--8.4%
30,400 Bed Bath & Beyond, Inc.*.... 1,575,100
57,600 Costco Companies, Inc.*..... 3,632,400
94,900 CVS Corp.................... 3,695,169
51,600 Dayton-Hudson Corp.......... 2,502,600
46,950 Home Depot, Inc............. 3,899,784
99,200 Sears, Roebuck & Co......... 6,057,400
145,400 TJX Companies, Inc.......... 3,507,775
------------
24,870,228
------------
Savings And Loan--1.2%
84,300 Washington Mutual, Inc...... 3,661,781
------------
Semiconductors & Equipment--10.0%
170,000 Atmel Corp.*................ 2,316,250
146,800 Intel Corp.................. 10,881,550
106,000 Linear Technology Corp...... 6,393,125
200,000 Maxim Integrated Products, 6,337,500
Inc.*.....................
110,000 Xilinx Inc.*................ 3,740,000
------------
29,668,425
------------
Software & Services--10.6%
50,400 America Online, Inc....... $ 5,342,400
33,800 Computer Associates 1,878,013
International, Inc......
198,200 HBO & Co.................. 6,986,550
90,800 Microsoft Corp.*.......... 9,840,450
180,000 Parametric Technology 4,882,500
Corp.*..................
57,500 Synopsys, Inc.*........... 2,630,625
------------
31,560,538
------------
Telecommunication--7.2%
144,000 CIENA Corp.*.............. 10,026,000
34,200 Lucent Technologies, 2,845,012
Inc.....................
112,600 NEXTEL Communications, 2,800,925
Inc.....................
79,400 Tellabs, Inc.*............ 5,687,025
------------
21,358,962
------------
Total common stocks 289,474,643
(cost $181,893,854).....
------------
SHORT-TERM INVESTMENTS--3.0%
Principal
Amount
(000) Repurchase Agreement
- ----------
$ 830 State Street Bank & Trust 830,000
Co.,
2.00%, 7/1/98 in the
amount of $830,046 (cost
$830,000; value of
collateral including
accrued interest is
$848,692)...............
7,987 State Street Bank & Trust 7,987,000
Co.,
5.00%, 7/1/98 in the
amount of $7,988,109
(cost $7,987,000; value
of collateral including
accrued interest is
$8,150,776).............
------------
Total short-term 8,817,000
investments
(cost $8,817,000).......
------------
Total Investments--100.6%
(cost $190,710,854; Note 298,291,643
4)......................
Liabilities in excess of (1,893,342)
other
assets--(0.6%)..........
------------
Net Assets--100%.......... $296,398,301
------------
------------
</TABLE>
- ---------------
* Non-income producing.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
10
<PAGE>
Large Capitalization Value Portfolio
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--99.5%
Common Stocks--99.5%
Aerospace--3.1%
44,000 Boeing Co................... $ 1,960,750
34,250 Lockheed Martin Corp........ 3,626,219
33,000 Northrop Grumman Corp....... 3,403,125
------------
8,990,094
------------
Agriculture Machinery--1.0%
15,300 Deere & Co.................. 808,988
115,700 New Holland NV.............. 2,270,612
------------
3,079,600
------------
Airlines--0.5%
50,000 Southwest Airlines Co....... 1,481,250
------------
Aluminum--1.5%
41,000 Aluminum Company of 2,703,438
America...................
30,000 Reynolds Metals Co.......... 1,678,125
------------
4,381,563
------------
Apparel & Textiles--3.1%
37,500 Intimate Brands, Inc........ 1,033,594
35,000 Reebok International, 969,062
Ltd.......................
108,400 Russell Corp................ 3,272,325
115,000 Shaw Industries, Inc........ 2,026,875
55,000 Unifi, Inc.................. 1,883,750
------------
9,185,606
------------
Auto Parts--1.4%
50,000 Dana Corp................... 2,675,000
39,000 Genuine Parts Co............ 1,347,938
6,666 Meritor Automotive, Inc..... 159,984
------------
4,182,922
------------
Automobiles--4.3%
142,000 Ford Motor Co............... 8,378,000
63,000 General Motors Corp......... 4,209,187
------------
12,587,187
------------
Banks--8.8%
46,300 Ahmanson (H.F.) & Co...... $ 3,287,300
17,000 Banc One Corp............. 948,812
2,000 Comerica, Inc............. 132,500
63,000 First Chicago Nbd Corp.... 5,583,375
51,700 First Union Corp.......... 3,011,525
54,000 Keycorp................... 1,923,750
62,000 National City Corp........ 4,402,000
46,200 NationsBank Corp.......... 3,534,300
35,000 Wachovia Corp............. 2,957,500
------------
25,781,062
------------
Brewery--0.5%
31,100 Anheuser Busch Companies, 1,467,531
Inc.....................
------------
Building Products--0.8%
41,900 Georgia-Pacific Corp...... 966,319
35,000 York International 1,524,687
Corp....................
------------
2,491,006
------------
Business Services--1.1%
16,000 Dun & Bradstreet Corp..... 578,000
35,000 First Data Corp........... 1,165,938
95,000 Ikon Office Solutions, 1,383,437
Inc.....................
------------
3,127,375
------------
Chemicals--2.6%
42,500 Dow Chemical Co........... 4,109,219
26,000 Du Pont (E.I.) De Nemours 1,940,250
& Co....................
27,000 Eastman Chemical Co....... 1,680,750
------------
7,730,219
------------
Computers & Business Equipment--3.2%
80,000 Compaq Computer Corp...... 2,270,000
36,000 Hewlett-Packard Co........ 2,155,500
20,000 International Business 2,296,250
Machines Corp...........
30,000 Pitney Bowes, Inc......... 1,443,750
25,000 Sun Microsystems, Inc..... 1,085,937
------------
9,251,437
------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
11
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Value Portfolio (cont'd)
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Conglomerate--2.2%
59,200 Dover Corp.................. $ 2,027,600
38,300 Hanson PLC. (ADR)........... 1,160,969
44,100 Scana Corp.................. 1,314,731
28,000 Textron, Inc................ 2,007,250
------------
6,510,550
------------
Consumer Products--1.4%
32,500 Eastman Kodak Co............ 2,374,531
45,000 Fortune Brands Inc.......... 1,729,688
------------
4,104,219
------------
Domestic Oil--1.6%
34,000 Atlantic Richfield Co....... 2,656,250
61,000 USX - Marathon Group........ 2,093,063
------------
4,749,313
------------
Drugs & Healthcare--7.5%
65,000 Abbott Laboratories......... 2,656,875
66,800 American Home Products 3,456,900
Corp......................
66,666 Astra AB Class A (ADR)...... 1,366,653
13,000 Baxter International, 699,563
Inc.......................
20,000 Biomet, Inc................. 661,250
28,000 Bristol Myers Squibb Co..... 3,218,250
80,000 Columbia/HCA Healthcare 2,330,000
Corp......................
20,000 Merck & Co., Inc............ 2,675,000
55,000 Mylan Laboratories.......... 1,653,437
36,000 Schering Plough Corp........ 3,298,500
------------
22,016,428
------------
Electric Utilities--5.9%
50,000 Central & South West 1,343,750
Corp......................
24,000 CMS Energy Corp............. 1,056,000
40,000 DTE Energy Company.......... 1,615,000
32,000 Edison International........ 946,000
115,600 Entergy Corporation......... 3,323,500
21,000 General Public Utilities 794,063
Corp......................
56,500 PacifiCorp.................. 1,278,312
48,000 PECO Energy Co.............. 1,401,000
68,000 PP & L Resources, Inc....... 1,542,750
28,800 Public Service Enterprise 991,800
Group Inc.................
80,000 Southern Co............... $ 2,215,000
21,832 Texas Utilities Co........ 908,757
------------
17,415,932
------------
Electrical Equipment--1.2%
20,000 Emerson Electric Co....... 1,207,500
40,000 Raytheon Company Class 2,365,000
B.......................
------------
3,572,500
------------
Electronics--1.2%
25,000 Motorola, Inc............. 1,314,063
45,000 Rockwell International 2,162,812
Corp....................
------------
3,476,875
------------
Energy--0.8%
74,000 Illinova Corp............. 2,220,000
------------
Financial Services--3.9%
37,215 Associates First Capital 2,860,903
Corp....................
16,000 Beneficial Corp........... 2,451,000
89,500 Federal National Mortgage 5,437,125
Association.............
12,000 Household International, 597,000
Inc.....................
------------
11,346,028
------------
Food & Beverages--2.3%
143,062 Archer-Daniels Midland 2,771,826
Co......................
50,000 PepsiCo, Inc.............. 2,059,375
90,000 Tyson Foods, Inc. (Class 1,951,875
A)......................
------------
6,783,076
------------
Forest Products--2.0%
20,700 Georgia-Pacific Corp...... 1,220,006
50,000 Kimberly-Clark Corp....... 2,293,750
50,000 Weyerhaeuser Co........... 2,309,375
------------
5,823,131
------------
Gas & Pipeline Utilities--0.4%
27,000 Eastern Enterprises....... 1,157,625
------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
12
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Household Appliances & Home
Furnishings--2.2%
91,800 Whirlpool Corp.............. $ 6,311,250
------------
Industrial Machinery--0.6%
32,000 Caterpillar, Inc............ 1,692,000
------------
Insurance--10.0%
80,458 American General Corp....... 5,727,604
10,000 General Reinsurance Corp.... 2,535,000
45,000 Jefferson-Pilot Corp........ 2,607,188
20,000 Lincoln National Corp....... 1,827,500
6,500 Loews Corp.................. 566,313
57,000 Marsh & McLennan Companies, 3,444,937
Inc.......................
89,175 Old Republic International 2,613,942
Corp......................
103,000 SAFECO Corp................. 4,680,062
22,000 St. Paul Companies, Inc..... 925,375
47,900 TIG Holdings, Inc........... 1,101,700
35,000 Torchmark Corp.............. 1,601,250
14,000 Transamerica Corp........... 1,611,750
------------
29,242,621
------------
International Oil--5.1%
50,000 Amoco Corp.................. 2,081,250
22,000 Exxon Corp.................. 1,568,875
111,000 Occidental Petroleum 2,997,000
Corp......................
74,000 Phillips Petroleum Co....... 3,565,875
50,000 Repsol S.A. (ADR)........... 2,750,000
65,000 YPF Sociedad Anonima 1,954,062
(ADR).....................
------------
14,917,062
------------
Mining--1.1%
55,500 Phelps Dodge Corp........... 3,173,906
------------
Miscellaneous--0.9%
70,000 Tenneco, Inc................ 2,664,375
------------
Paper--1.5%
49,999 International Paper Co...... 2,149,957
25,000 Union Camp Corp............. 1,240,625
37,500 Westvaco Corp............... 1,059,375
------------
4,449,957
------------
Petroleum Services--0.9%
40,000 Norsk Hydro A S........... $ 1,765,000
25,000 Ultramar Diamond 789,063
Shamrock................
------------
2,554,063
------------
Plastics--0.5%
51,000 Tupperware Corp........... 1,434,375
------------
Pollution Control--2.1%
39,961 Browning Ferris 1,388,645
Industries, Inc.........
134,500 Waste Management, Inc..... 4,707,500
------------
6,096,145
------------
Railroads & Equipment--1.3%
14,000 CSX Corp.................. 637,000
105,000 Norfolk Southern Corp..... 3,130,313
------------
3,767,313
------------
Retail Trade--2.1%
33,000 May Department Stores 2,161,500
Co......................
30,000 Penny (J.C.) Co., Inc..... 2,169,375
28,800 Sears, Roebuck & Co....... 1,758,600
------------
6,089,475
------------
Software--0.4%
20,000 Computer Associates 1,111,250
International, Inc......
------------
Steel--1.1%
25,000 Nucor Corp................ 1,150,000
65,000 USX-U.S. Steel Group, 2,145,000
Inc.....................
------------
3,295,000
------------
Telephone--2.7%
49,900 ALLTEL Corp............... 2,320,350
56,800 AT&T Corp................. 3,244,700
41,692 SBC Communications, 1,667,680
Inc.....................
15,000 United States West 705,000
Incorporated New........
------------
7,937,730
------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
13
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Value Portfolio (cont'd)
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Tires & Rubber--0.5%
65,000 Cooper Tire & Rubber Co..... $ 1,340,625
------------
Tobacco--2.6%
195,200 Philip Morris Companies, 7,686,000
Inc.......................
------------
Trucking & Freight Forwarding--0.2%
20,000 Ryder System, Inc........... 631,250
------------
Technology & Services--1.4%
60,000 Adaptec, Inc................ 858,750
80,000 Electronic Data Systems 3,200,000
Corp......................
------------
4,058,750
------------
Total common stocks
(cost $199,600,373)....... 291,365,676
------------
SHORT-TERM INVESTMENTS--0.8%
Principal
Amount
(000)
- ---------
$ 2,305 Seven Seas Series Government 2,305,051
Fund
5.34%, 7/1/98.............
------------
Total short-term investments
(cost $2,305,051)......... 2,305,051
------------
Total Investments--100.3%
(cost $201,905,424; Note 293,670,727
4)........................
Liabilities in excess of
other
assets--(0.3%)............ (871,838)
------------
Net Assets--100%............ $292,798,889
------------
------------
</TABLE>
- ---------------
* Non-income producing.
ADR--American Depository Receipts.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
14
<PAGE>
Small Capitalization Growth Portfolio
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--95.4%
Common Stocks--95.4%
Aerospace--0.1%
11,400 DeCrane Aircraft Holdings, $ 198,075
Inc.*.....................
------------
Airlines--1.4%
44,100 America West Holdings 1,259,606
Corp.*....................
43,200 SkyWest, Inc................ 1,209,600
------------
2,469,206
------------
Apparel & Textiles--4.0%
51,000 Burlington Industies, 717,188
Inc.*.....................
37,300 G & K Services, Inc......... 1,627,212
34,600 Jones Apparel Group, 1,265,062
Inc.*.....................
31,650 Mohawk Industries, Inc. *... 1,002,909
30,700 Nautica Enterprises, 823,144
Inc.*.....................
55,400 Tarrant Apparel Group*...... 1,045,675
10,500 Timberland Co.*............. 755,344
------------
7,236,534
------------
Auto/Truck Equipment--2.0%
137,400 Aftermarket Technology 2,576,250
Corp.*....................
16,500 Federal Mogul Corp.......... 1,113,750
------------
3,690,000
------------
Banks--1.8%
15,700 Dime Community Bancshares... 435,675
16,800 FirstFed Financial Corp.*... 873,600
17,300 GreenPoint Financial 650,913
Corp......................
18,250 North Fork Bancorp, Inc..... 445,984
26,600 Webster Financial Corp...... 884,450
------------
3,290,622
------------
Building Products--2.4%
71,000 Advanced Lighting 1,650,750
Technologies, Inc.*.......
50,800 Service Experts, Inc.*...... 1,752,600
17,700 Texas Industries, Inc....... 938,100
------------
4,341,450
------------
Business Services--9.8%
103,500 American Management $ 3,098,531
Systems, Inc.*..........
36,900 BISYS Group, Inc. 1,512,900
(The)*..................
34,500 Catalina Marketing 1,791,844
Corp.*..................
99,800 CCC Information Services 1,646,700
Group, Inc.*............
53,850 Labor Ready, Inc.*........ 1,625,597
13,650 Lamar Advertising Co.*.... 489,694
29,700 On Assignment, Inc.*...... 1,037,644
13,000 PRT Group Inc.*........... 137,313
79,500 Quanta Services, Inc.*.... 1,167,656
11,400 Robert Half International 636,975
Inc.*...................
40,300 UBICS, Inc.*.............. 554,125
88,100 Zebra Technologies 3,766,275
Corp.*..................
------------
17,465,254
------------
Chemicals--1.3%
23,100 Lyondell Petrochemical 703,106
Co......................
31,400 Minerals Technologies, 1,597,475
Inc.....................
------------
2,300,581
------------
Communication Equipment & Services--4.3%
63,200 Centennial Cellular 2,358,150
Corp.*..................
30,100 Coherent Communications 1,409,056
Systems Corp.*..........
52,600 DSP Communications, 723,250
Inc.*...................
66,700 Mitel Corp.*.............. 912,956
30,500 Premisys Communications, 758,688
Inc.*...................
33,400 Tekelec*.................. 1,494,650
------------
7,656,750
------------
Computers & Business Equipment--4.3%
252,677 Artesyn Technologies, 4,042,832
Inc.*...................
87,300 Black Box Corp.*.......... 2,897,269
13,200 InterVoice, Inc.*......... 234,300
17,000 Mastech Corp.*............ 478,125
------------
7,652,526
------------
Drugs & Healthcare--2.7%
35,000 Dura Pharmaceuticals, 783,125
Inc.*...................
61,500 First Commonwealth, 922,500
Inc.*...................
21,900 Integrated Health 821,250
Services, Inc...........
25,100 Scherer (R.P.) Corp.*..... 2,224,488
------------
4,751,363
------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
15
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Growth Portfolio
(cont'd)
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Educational Services--2.0%
35,000 Apollo Group, Inc.*......... $ 1,159,287
68,300 Strayer Education, Inc...... 2,475,875
------------
3,635,162
------------
Electronics--0.4%
33,900 DSP Group, Inc.*............ 669,525
------------
Financial Services--5.5%
27,000 AmeriCredit Corp.*.......... 963,562
40,000 CMAC Investment Corp........ 2,460,000
180,900 Credit Acceptance Corp.*.... 1,537,650
20,300 Eaton Vance Corp............ 940,144
95,000 Emergent Group, Inc.*....... 368,125
65,200 Enhance Financial Services 2,200,500
Group, Inc................
102,300 Right Management 1,381,050
Consultants, Inc.*........
------------
9,851,031
------------
Food & Beverages--0.9%
13,800 Canandaigua Brands, Inc.*... 678,788
11,000 Robert Mondavi Corp.*....... 312,125
22,200 Smithfield Foods, Inc.*..... 677,100
------------
1,668,013
------------
Homebuilders--3.9%
36,000 Fairfield Communities, 690,750
Inc.*.....................
32,800 Lennar Corp................. 967,600
63,000 Oakwood Homes Corp.......... 1,890,000
31,100 Ryland Group, Inc.*......... 816,375
48,500 Standard Pacific Corp....... 1,000,312
43,950 Watsco, Inc................. 1,546,491
------------
6,911,528
------------
Hotels & Restaurants--0.9%
24,970 CKE Restaurants, Inc........ 1,030,013
37,000 Foodmaker, Inc*............. 624,375
------------
1,654,388
------------
Household Appliances & Home
Furnishings--2.5%
31,800 Ethan Allen Interiors, $ 1,588,012
Inc.....................
144,000 Heilig-Meyers Co.......... 1,773,000
42,900 Pier 1 Imports, Inc....... 1,024,238
------------
4,385,250
------------
Industrial Machinery--3.2%
24,900 Gardner Denver Machinery 687,862
Inc.*...................
25,050 Graco, Inc................ 873,619
30,000 Kennametal, Inc........... 1,252,500
21,900 Manitowoc Co., Inc........ 882,844
7,600 NACCO Industries, Inc..... 982,300
127,300 PPT Vision, Inc*.......... 970,662
------------
5,649,787
------------
Insurance--2.0%
15,300 Amerin Corp.*............. 446,569
24,500 Fidelity National 975,406
Financial, Inc..........
19,588 MBIA, Inc................. 1,466,651
18,600 Mutual Risk Management, 677,738
Ltd.....................
------------
3,566,364
------------
Leisure--1.1%
10,200 Anchor Gaming*............ 791,775
41,300 Coastcast Corp.*.......... 743,400
15,100 Scientific Games Holdings 347,300
Corp.*..................
------------
1,882,475
------------
Manufacturing--2.8%
28,100 Aptargroup, Inc........... 1,747,469
93,100 Flanders Corp.*........... 453,862
28,300 Kaydon Corp............... 999,344
158,600 Polymer Group, Inc.*...... 1,804,075
------------
5,004,750
------------
Media--2.5%
36,247 Clear Channel 3,955,454
Communications, Inc.*...
121,700 Nielsen Media Research, 554,550
Inc.....................
------------
4,510,004
------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
16
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Medical & Dental Supplies--7.8%
35,300 Mentor Corp................. $ 856,025
47,400 Patterson Dental Co.*....... 1,736,025
102,400 Perclose, Inc.*............. 2,892,800
89,800 Respironics, Inc.*.......... 1,397,512
53,600 Safeskin Corp.*............. 2,204,300
13,200 VISX, Inc.*................. 785,400
128,400 Xomed Surgical Products, 3,996,450
Inc.*.....................
------------
13,868,512
------------
Miscellaneous--0.9%
30,000 JLK Direct Distribution, 656,250
Inc.*.....................
29,600 Rent-Way, Inc.* 902,800
------------
1,559,050
------------
Office Equipment & Services--2.0%
127,700 Danka Business Systems PLC 1,508,456
(ADR).....................
50,800 Miller (Herman), Inc........ 1,235,075
13,700 United Stationers, Inc.*.... 887,075
------------
3,630,606
------------
Oil & Gas Exploration/Drilling--1.1%
115,400 Forcenergy, Inc.*........... 2,055,563
------------
Oil Field/Equipment & Services--1.8%
75,600 Petroleum Geo-Services ASA 2,305,800
(ADR)*....................
46,000 Varco International, 911,375
Inc.*.....................
------------
3,217,175
------------
Paper Products--0.1%
7,500 Schweitzer-Mauduit 217,500
International, Inc........
------------
Printing & Publishing--1.5%
26,000 Banta Corp.................. 802,750
48,300 Valassis Communications, 1,862,569
Inc.*.....................
------------
2,665,319
------------
Retail Trade--7.4%
35,000 Ames Department Stores, 920,938
Inc.*.....................
39,600 Barnett, Inc.*.............. 801,900
64,600 Best Buy Co., Inc.*......... 2,333,675
56,200 Dress Barn, Inc. *.......... 1,397,975
35,600 Goody's Family Clothing, 1,953,550
Inc.*.....................
98,000 Lithia Motors, Inc.*...... $ 1,445,500
28,200 Michaels Stores, Inc.*.... 994,931
49,700 Ross Stores, Inc.......... 2,137,100
28,200 Trans World Entertainment 1,216,125
Corp.*..................
------------
13,201,694
------------
Semiconductors & Equipment--1.2%
29,000 Semtech Corp.*............ 512,938
54,300 Vitesse Semiconductor 1,676,512
Corp.*..................
------------
2,189,450
------------
Software--6.3%
20,900 Autodesk, Inc............. 807,262
27,500 Avid Technology, Inc.*.... 921,250
16,350 Citrix Systems, Inc.*..... 1,117,931
43,800 Digi International, 886,950
Inc.*...................
32,600 FileNET Corp.*............ 941,325
18,200 Information Management 615,388
Resources, Inc.*........
39,800 Keane, Inc*............... 2,228,800
11,100 Microchip Technology, 289,988
Inc.....................
28,743 Networks Associates, 1,376,071
Inc.*...................
46,600 Systems & Computer 1,258,200
Technology Corp.*.......
20,300 Transaction Systems 781,550
Architects, Inc.*.......
------------
11,224,715
------------
Steel--0.4%
65,200 Bethlehem Steel Corp.*.... 810,925
------------
Transportation--3.1%
25,200 Airborne Freight Corp..... 880,425
53,100 Coach USA, Inc.*.......... 2,422,687
19,800 Expeditors International 871,200
of
Washington, Inc.........
32,600 Navistar International 941,325
Corp.*..................
8,400 XTRA Corp................. 508,200
------------
5,623,837
------------
Total common stocks 170,704,984
(cost $131,330,062).....
------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
17
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Growth Portfolio
(cont'd)
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--5.3%
Commercial Paper--2.8%
$ 794 Cargill, Inc. $ 794,000
6.10%, 7/1/98..............
4,233 Merrill Lynch & Co., Inc. 4,233,000
6.10%, 7/1/98..............
------------
Total commercial paper
(cost $5,027,000).......... 5,027,000
------------
Other--2.5%
381 Seven Seas Money Market Fund 380,782
5.30%......................
4,051 Seven Seas Series Government 4,050,943
Fund
5.34%......................
------------
Total other
(cost $4,431,725).......... 4,431,725
------------
Total short-term investments
(cost $9,458,725).......... 9,458,725
------------
Total Investments--100.7%
(cost $140,788,787; Note 180,163,709
4).........................
Liabilities in excess of
other
assets--(0.7%)............. (1,335,460)
------------
Net Assets--100%............. $178,828,249
------------
------------
</TABLE>
- ------------------
* Non-income producing.
ADR--American Depository Receipt.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
18
<PAGE>
Small Capitalization Value Portfolio
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--98.2%
Apparel & Textiles--2.1%
33,869 Albany International Corp., $ 810,727
Cl.A......................
42,100 Culp, Inc................... 544,669
47,800 Interface, Inc.............. 964,963
4,850 Mohawk Industries, Inc.*.... 153,684
17,500 Stride Rite Corp............ 263,594
29,800 Unitog Co................... 655,600
------------
3,393,237
------------
Auto Related--2.4%
31,400 Amcast Industrial Corp.*.... 584,825
21,800 Borg-Warner Automotive, 1,047,762
Inc.......................
29,800 Modine Manufacturing Co..... 1,031,825
52,448 Myers Industries, Inc....... 1,258,752
------------
3,923,164
------------
Automobiles--0.9%
7,900 Dura Automotive Systems, 253,787
Inc.*.....................
30,200 Tower Automotive, Inc.*..... 1,294,825
------------
1,548,612
------------
Banks--4.2%
17,000 First American Corp......... 818,125
37,000 Firstmerit Corp............. 1,077,625
17,100 HUBCO, Inc.................. 612,394
19,500 Long Island Bancorp, Inc.... 1,184,625
35,750 People's Bank............... 1,237,844
23,700 Susquehanna Bancshares, 885,787
Inc.......................
31,700 The Colonial BancGroup, 1,022,325
Inc.......................
------------
6,838,725
------------
Building & Construction--2.7%
30,400 Apogee Enterprises, Inc..... 465,500
36,700 Carlisle Co., Inc........... 1,580,394
15,600 Hughes Supply, Inc.......... 571,350
29,800 Jacobs Engineering Group, 957,325
Inc.*.....................
20,300 Martin Marietta Materials, 913,500
Inc.......................
------------
4,488,069
------------
Business Services--1.0%
35,900 Bowne & Company, Inc...... $ 1,615,500
------------
Chemicals--2.8%
33,850 Ferro Corp................ 856,828
63,600 Hanna (M.A.) Co........... 1,164,675
40,050 Learonal, Inc............. 956,194
48,062 RPM, Inc.................. 817,054
37,400 Schulman (A.), Inc........ 731,637
------------
4,526,388
------------
Computers & Business Equipment--2.4%
42,700 Data General Corp.*....... 637,831
72,300 Komag, Inc.*.............. 386,353
54,600 MTS Systems Corp.......... 877,012
52,600 Planar Systems, Inc.*..... 552,300
23,400 Stratus Computer, Inc.*... 592,313
32,800 Wang Laboratories, 834,350
Inc.*...................
------------
3,880,159
------------
Commercial Services--0.6%
12,950 Dynatech Corp.*........... 40,469
24,500 Pittston Brink's Group.... 903,437
------------
943,906
------------
Computer Services--0.6%
38,400 Bell & Howell Co.*........ 991,200
------------
Construction & Mining Equipment--0.6%
46,300 JLG Industries, Inc....... 937,575
------------
Consumer Products--0.4%
28,800 Gibson Greetings, Inc.*... 720,000
------------
Diversified Industrials--2.3%
41,800 Applied Power, Inc........ 1,436,875
28,200 Brady (W.H.) Co........... 784,312
41,400 Teleflex, Inc............. 1,573,200
------------
3,794,387
------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
19
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Value Portfolio (cont'd)
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Drugs & Healthcare--7.0%
53,300 Apria Healthcare Group, $ 356,444
Inc.*.....................
15,000 Arrow International, Inc.... 411,563
17,600 Beckman Coulter Inc......... 1,025,200
38,100 Integrated Health Services, 1,428,750
Inc.......................
47,100 Magellan Health Services, 1,195,163
Inc.*.....................
103,100 Perrigo Co.................. 1,037,444
9,000 Scherer (R.P.) Corp.*....... 797,625
86,550 Sierra Health Services, 2,179,978
Inc.*.....................
45,100 Sun Healthcare Group, 659,587
Inc.*.....................
49,500 Sunrise Medical, Inc.*...... 742,500
44,500 The West Co., Inc........... 1,259,906
21,100 Vital Signs, Inc............ 385,074
------------
11,479,234
------------
Electric Utilities--0.5%
23,000 Sierra Pacific Resources.... 835,188
------------
Electrical Equipment--2.8%
64,100 Anixter International, 1,221,906
Inc.*.....................
56,400 Belden, Inc................. 1,727,250
25,900 Oak Industries, Inc.*....... 916,212
43,900 Woodhead Industries, Inc.... 674,963
------------
4,540,331
------------
Electronics--5.4%
50,800 BMC Industries, Inc......... 444,500
39,500 Credence Systems Corp.*..... 750,500
27,700 Dallas Semiconductor 858,700
Corp......................
47,400 Esterline Technologies 989,475
Corp.*....................
20,500 Hadco Corp.*................ 477,906
30,200 Harman International 1,162,700
Industries, Inc...........
36,300 Kemet Corp.*................ 477,572
33,500 Lam Research Corp.*......... 640,687
61,050 Methode Eletronics, Inc..... 946,275
16,950 Nichols Research Corp.*..... 462,947
84,600 Pioneer Standard 814,275
Electronics, Inc..........
46,300 VLSI Technology, Inc.*...... 776,972
------------
8,802,509
------------
Financial Services--1.1%
27,500 AMRESCO, Inc.*............ $ 800,937
16,300 CMAC Investment Corp...... 1,002,450
------------
1,803,387
------------
Food - Service/Lodging--0.6%
58,000 Marcus Corp............... 1,036,750
------------
Foods--1.8%
26,650 Flowers Industries, 544,660
Inc.....................
24,150 Lancaster Colony Corp..... 914,681
53,200 Universal Foods Corp...... 1,180,375
14,000 Vlasic Foods 281,750
International, Inc.*....
------------
2,921,466
------------
Gas & Pipeline Utilities--1.3%
8,200 KN Energy, Inc............ 444,337
19,600 National Fuel Gas Co...... 853,825
39,200 Wicor, Inc................ 906,500
------------
2,204,662
------------
Homebuilders--1.8%
40,700 Kaufman & Broad Home 1,292,225
Corp....................
35,400 Toll Brothers, Inc.*...... 1,015,538
30,300 Walter Industries, 573,806
Inc.*...................
------------
2,881,569
------------
Hotels & Restaurants--2.0%
34,900 Lone Star Steakhouse & 482,056
Saloon, Inc.*...........
31,700 Luby's Cafeterias, Inc.... 556,731
34,300 Prime Hospitality 598,106
Corp.*..................
93,800 Ryan's Family Steak 961,450
Houses, Inc.*...........
23,400 Sbarro, Inc............... 634,725
------------
3,233,068
------------
Household Appliances & Home
Furnishings--3.4%
24,000 Bassett Furniture 676,500
Industries, Inc.........
42,000 Chromcraft Revington, 761,250
Inc.*...................
23,500 Department 56, Inc.*...... 834,250
44,700 Furniture Brands 1,254,394
International, Inc.*....
17,700 La-Z-Boy, Inc............. 1,000,050
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
20
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Household Appliances & Home
Furnishings--(cont'd.)
22,100 Libbey, Inc................. $ 846,706
19,400 Rival Co.................... 261,900
------------
5,635,050
------------
Industrial & Machinery--7.7%
17,000 Briggs & Stratton Corp...... 636,438
26,150 Crane Co.................... 1,269,909
41,500 First Brands Corp........... 1,063,437
30,300 Graco, Inc.................. 1,056,712
27,700 MagneTek, Inc.*............. 436,275
60,609 Mark IV Industries, Inc..... 1,310,670
22,500 OmniQuip International, 416,250
Inc.......................
35,500 Polaris Industries, Inc..... 1,335,687
40,800 Regal-Beloit Corp........... 1,162,800
36,900 Scotsman Industries, Inc.... 1,023,975
14,500 Standex International 429,563
Corp......................
32,700 United Dominion Industries 1,091,362
Ltd.......................
39,900 Watts Industries, Inc., 832,913
Cl.A......................
27,800 Wyman-Gordon Co.*........... 554,263
------------
12,620,254
------------
Insurance--9.2%
61,200 Amerin Corp.*............... 1,786,275
15,000 Berkley (W. R.) Corp........ 600,938
27,300 Blanch (E.W.) Holdings, 1,003,275
Inc.......................
6,204 Delphi Financial Group, 349,363
Inc., Cl.A*...............
46,400 Enhance Financial Services 1,566,000
Group, Inc................
11,200 Executive Risk, Inc......... 826,000
19,690 Frontier Insurance Group, 444,256
Inc.......................
34,700 HCC Insurance Holdings, 763,400
Inc.......................
78,600 Horace Mann Educators 2,711,700
Corp......................
37,700 NAC Re Corp................. 2,012,237
27,900 Poe & Brown, Inc............ 1,037,531
33,200 Protective Life Corp........ 1,218,025
27,000 Reliance Group Holdings, 472,500
Inc.......................
14,800 Vesta Insurance Group, 315,425
Inc.......................
------------
15,106,925
------------
Leisure And Recreation--0.4%
40,500 K2, Inc................... $ 713,813
------------
Machinery--0.5%
24,300 McDermott International, 836,831
Inc.....................
------------
Manufacturing--4.2%
31,800 ACX Technologies, Inc.*... 691,650
10,300 Aeroquip-Vickers, Inc..... 601,263
44,025 CLARCOR, Inc.............. 924,525
26,600 Donaldson Co., Inc........ 628,425
36,300 Flowserve Corp............ 893,887
41,300 International Rectifier 351,050
Corp.*..................
52,600 Lydall, Inc.*............. 765,988
35,350 Osmonics, Inc.*........... 421,991
30,800 Roper Industries, Inc..... 804,650
47,300 Silicon Valley Group, 759,756
Inc.*...................
------------
6,843,185
------------
Miscellaneous--1.1%
25,125 Applied Industrial 516,633
Technologies, Inc.......
20,500 Aptargroup, Inc........... 1,274,844
------------
1,791,477
------------
Office Equipment--1.1%
23,800 Hon Industries, Inc....... 809,200
38,500 Hunt Corp................. 911,969
------------
1,721,169
------------
Oil & Gas--1.6%
33,500 Devon Energy Corp......... 1,170,406
67,700 Helmerich & Payne, Inc.... 1,506,325
------------
2,676,731
------------
Oil & Gas - Production/Pipeline--1.4%
29,000 Barrett Resources 1,085,687
Corp.*..................
48,000 Snyder Oil Corp........... 957,000
14,400 Tuboscope, Inc.*.......... 284,400
------------
2,327,087
------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
21
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Value Portfolio (cont'd)
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Oil-Supplies & Construction--0.5%
14,800 BJ Services Co.............. $ 430,125
12,700 Tidewater, Inc.............. 419,100
------------
849,225
------------
Paper & Related Products--0.9%
24,090 Rock-Tenn Co., Cl. A........ 302,631
53,500 Wausau Paper Co............. 1,223,813
------------
1,526,444
------------
Petroleum Services--0.5%
43,000 Vintage Petroleum, Inc...... 811,625
------------
Printing & Publishing--3.3%
27,350 American Business Products, 560,675
Inc.......................
92,550 Banta Corp.................. 2,857,481
22,700 Electronics for Imaging, 479,538
Inc.*.....................
31,400 Lee Enterprises, Inc........ 961,625
17,900 World Color Press, Inc.*.... 626,500
------------
5,485,819
------------
Professional Services--1.7%
40,700 CDI Corp.*.................. 1,088,725
32,300 HSB Group, Inc.............. 1,728,050
------------
2,816,775
------------
Railroads & Equipment--0.3%
31,500 ABC Rail Products Corp.*.... 543,375
------------
Real Estate--0.4%
39,700 Catellus Development 702,194
Corp.*....................
------------
Real Estate Investment Trust--1.0%
33,300 Glenborough Realty Trust, 878,287
Inc.......................
28,600 Liberty Property Trust...... 731,088
------------
1,609,375
------------
Retail Trade--1.6%
9,400 Cole National Corp.*........ 376,000
43,400 Eagle Hardware & Garden, 1,003,625
Inc.*.....................
48,200 Oakley, Inc.*............... 644,675
16,500 Proffitt's, Inc.*........... 666,187
------------
2,690,487
------------
Retail - Apparel--2.2%
37,700 AnnTaylor Stores Corp.*... $ 798,769
26,000 Footstar, Inc.*........... 1,248,000
27,300 Lands End, Inc............ 863,362
18,700 The Wet Seal, Inc., 598,400
Cl.A*...................
------------
3,508,531
------------
Retail - Food & Drugs--0.7%
59,100 Ruddick Corp.............. 1,071,189
------------
Savings And Loan--1.4%
65,211 Sovereign Bancorp, Inc.... 1,065,792
37,000 Webster Financial Corp.... 1,230,250
------------
2,296,042
------------
Steel--0.4%
16,200 Reliance Steel & Aluminum 625,725
Co......................
------------
Telecommunications--1.6%
72,200 Allen Telecom, Inc.*...... 839,325
15,200 NTL, Inc.*................ 813,200
48,600 Vanguard Cellular Systems, 917,325
Inc., Cl.A*.............
------------
2,569,850
------------
Tobacco--0.1%
14,500 Swisher International 116,000
Group, Inc.*............
------------
Toys & Amusements--0.5%
31,600 Russ Berrie & Co., Inc.... 790,000
------------
Transportation--0.3%
14,900 Budget Group, Inc., 475,869
Cl.A*...................
------------
Trucking & Freight Forwarding--1.4%
34,800 Circle International 974,400
Group, Inc..............
17,500 CNF Transportation, 743,750
Inc.....................
37,600 Pittston BAX Group........ 585,150
------------
2,303,300
------------
Trucking & Shipping--0.7%
60,000 Werner Enterprises, 1,143,750
Inc.....................
------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
22
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Utilities--0.6%
46,900 Calpine Corp.*.............. $ 946,794
------------
Wholesale/Distribution--0.2%
36,200 Unisource Worldwide, Inc.... 391,412
------------
Total long-term investments
(cost $129,240,824)....... 160,885,389
------------
SHORT-TERM INVESTMENTS--2.3%
Principal
Amount
(000) U.S. Government Securities--1.8%
- ---------
United States Treasury Bills
$ 700 4.98%, 10/15/98............. 689,736
430 5.00%, 10/15/98............. 423,669
460 5.01%, 10/15/98............. 453,214
345 5.02%, 10/15/98............. 339,901
155 5.05%, 10/15/98............. 152,695
175 5.055%, 10/15/98............ 172,395
105 5.06%, 10/15/98............. 103,436
255 5.08%, 10/15/98............. 251,186
135 5.105%, 10/15/98............ 132,971
195 5.11%, 10/15/98............. 192,063
------------
Total U.S. government
securities
(cost $2,911,266)......... 2,911,266
------------
Other--0.5%
843 Seven Seas Money Market Fund
5.30%, 7/1/98
(cost $842,660)............. 842,660
------------
Total short-term investments
(cost $3,753,926)......... 3,753,926
------------
Total Investments--100.5%
(cost $132,994,750; Note 164,639,315
4)........................
Liabilities in excess of
other
assets--(0.5%)............ (766,671)
------------
Net Assets--100%............ $163,872,644
------------
------------
</TABLE>
- ---------------
* Non-income producing security.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
23
<PAGE>
THE TARGET PORTFOLIO TRUST
International Equity Portfolio
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
US$
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--95.3%
Common Stocks--95.3%
Australia--1.8%
308,322 Broken Hill Proprietary Co., $ 2,612,485
Ltd.......................
360,500 Westpac Banking Corp........ 2,204,236
------------
4,816,721
------------
Denmark--1.3%
37,800 Unidanmark A.S.............. 3,400,597
------------
Finland--1.1%
222,600 Merita Bank, Ltd............ 1,470,178
50,280 UPM Kymmene Oy*............. 1,385,187
------------
2,855,365
------------
France--17.6%
27,830 Alcatel Alsthom Generale 5,666,628
d'Electricite.............
53,970 Axa-UAP..................... 6,070,364
54,860 Banque Nationale de Paris... 4,482,664
26,380 Cie De Saint Gobain......... 4,891,407
40,600 Compagnie Generale des 2,343,715
Etablissements Michelin,
Ser. B....................
28,520 Eaux Cie Generale........... 6,090,167
50,100 Elf Aquitaine SA............ 7,043,849
115,277 Rhone Poulenc S.A........... 6,502,052
19,800 Suez Lyonnaise des Eaux..... 3,258,680
------------
46,349,526
------------
Germany--11.1%
7,650 Allianz A.G................. 2,551,485
36,600 Daimler-Benz A.G............ 3,602,262
61,750 Dresdner Bank A.G........... 3,338,393
108,800 Hoechst A.G................. 5,474,840
32,900 Mannesmann A.G. (ADR)....... 3,381,070
57,150 Metro A.G................... 3,454,130
9,360 Thyssen A.G................. 2,382,234
7,320 Viag A.G.................... 5,041,138
------------
29,225,552
------------
Hong Kong--2.0%
147,335 HSBC Holdings PLC......... $ 3,603,508
233,500 Swire-Pacific, Ltd. 'A'... 881,502
680,000 Wharf Holdings, Ltd....... 671,399
-----------
5,156,409
-----------
Italy--5.5%
357,000 Credito Italiano.......... 1,869,641
591,400 Eni Spa................... 3,877,760
376,480 Fiat Spa.................. 1,648,524
243,700 Istituto Bancario San 3,518,168
Paolo di Torino.........
710,900 Telecom Italia Spa........ 3,442,968
-----------
14,357,061
-----------
Japan--13.4%
126,000 Asahi Breweries, Ltd...... 1,594,706
69,000 Honda Motor Co., Ltd...... 2,465,177
5,000 Ito Yokado Co., Ltd....... 236,132
421 Japan Tobacco, Inc........ 2,859,037
294,000 Matsushita Electric 4,741,592
Industrial Co., Ltd.....
35,900 Nintendo Co., Ltd......... 3,336,335
491 Nippon Telegraph & 4,083,677
Telephone Corp..........
98,000 Omron Corp................ 1,502,567
58,600 Orix Corp................. 3,971,085
47,840 Promise Co., Ltd.......... 1,975,601
212,000 Ricoh Corp., Ltd.......... 2,240,052
59,000 Sekisui Chemical Corp., 302,958
Ltd.....................
41,900 Sony Corp................. 3,621,212
537,000 Sumitomo Trust & Banking 2,407,898
Co., Ltd................
-----------
35,338,029
-----------
Korea--0.0%
1 Samsung Electronics Co., 8
Ltd. (GDR)..............
-----------
Malaysia--0.3%
408,300 Genting Berhad............ 737,847
-----------
Netherlands--3.9%
77,500 Heineken N.V.............. 3,046,243
53,500 Kon Kpn N.V............... 2,060,780
45,450 Royal Philips Electronics 3,823,367
N.V.....................
53,500 TNT Post Group N.V........ 1,368,589
-----------
10,298,979
-----------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
24
<PAGE>
<TABLE>
<CAPTION>
US$
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Singapore--0.4%
342,000 United Overseas Bank, $ 1,065,579
Ltd.......................
------------
Spain--4.0%
200,000 Argentaria Corp Bc.......... 4,486,469
132,345 Telefonica de Espana S.A.... 6,118,852
------------
10,605,321
------------
Sweden--7.1%
240,300 ABB AB, Ser. A.............. 3,404,451
209,933 Astra AB, Series B.......... 4,184,973
156,000 Electrolux AB, Series B..... 2,679,539
205,900 Nordbanken Holding AB....... 1,510,174
95,700 Svenska Handelsbanken, 4,439,444
Series A..................
87,000 Volvo AB, Ser. B............ 2,590,584
------------
18,809,165
------------
Switzerland--7.9%
22,310 Credit Suisse Group......... 4,972,347
1,286 Nestle S.A.................. 2,756,624
1,826 Novartis A.G.*.............. 3,043,534
1,730 SMH AG Swiss Corp........... 1,338,942
1,536 Societe Generale 2,607,843
Surveillance S.A..........
9,520 Zurich 6,085,558
Versicherungesellschaft...
------------
20,804,848
------------
United Kingdom--17.9%
406,000 B.A.T. Industries PLC....... 4,067,389
849,428 British Aerospace PLC....... 6,509,951
348,600 British Petroleum Co. PLC... 5,087,182
173,706 Cadbury Schweppes PLC....... 2,690,092
376,799 Diageo PLC.................. 4,466,903
206,740 EMI Group PLC............... 1,808,815
185,500 Granada Group PLC........... 3,413,217
150,300 Imperial Chemical Industries 2,414,196
PLC.......................
777,100 Lucas Varity PLC............ 3,088,107
US$
VALUE
SHARES DESCRIPTION (NOTE 1)
448,000 Mirror Group Newspapers $ 1,690,538
PLC.....................
250,000 National Power PLC........ 2,354,277
244,000 National Westminster Bank 4,363,327
PLC.....................
204,500 Prudential Corp. PLC...... 2,695,776
218,700 Unilever PLC.............. 2,329,742
-----------
46,979,512
-----------
Total common stocks 250,800,519
(cost $183,990,330).....
-----------
Units Warrants*
- ----------
34 Wharf Holdings 0
expiring 12/1/99
(cost $0)...............
-----------
Total long-term 250,800,519
investments
(cost $183,990,330).....
-----------
SHORT-TERM INVESTMENTS--6.9%
Rights*
80 Metro AG 3,103
expiring 7/6/98
(cost $0)...............
-----------
Principal
Amount
(000) U.S. Government Securities--6.9%
- ----------
United States Treasury
Bills
$ 18,405 4.95%, 10/15/98 18,136,838
(cost $18,132,931)......
-----------
Total short-term 18,139,941
investments
(cost $18,132,931)......
-----------
Total Investments--102.2%
(cost $202,123,261; Note 268,940,460
4)......................
Liabilities in excess of (5,865,326)
other
assets--(2.2%)..........
-----------
Net Assets--100%.......... $263,075,134
-----------
-----------
</TABLE>
- ------------------
ADR--American Depository Receipt.
GDR--Global Depository Receipt.
* Non-income producing securities.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
25
<PAGE>
THE TARGET PORTFOLIO TRUST
International Equity Portfolio (cont'd)
Portfolio of Investments June 30, 1998
(Unaudited)
The industry classification of portfolio holdings and other
net assets shown as a percentage of net assets as of June
30, 1998 was as follows:
Banking........................................ 18.9%
U.S Government Securities...................... 6.9
Insurance...................................... 6.6
Telecommunications............................. 5.2
Energy......................................... 4.8
Food & Beverage................................ 4.5
Manufacturing.................................. 4.2
Automobiles.................................... 3.9
Chemicals...................................... 3.5
Utilities...................................... 3.2
Conglomerates.................................. 2.8
Pharmaceuticals................................ 2.7
Tobacco........................................ 2.6
Retail......................................... 2.6
Aerospace/Defense.............................. 2.5
Industrials.................................... 2.5
Consumer Durable Goods......................... 2.4
Steel.......................................... 2.1
Intergrated Oil................................ 1.9
Electrical Equipment........................... 1.8
Diversified Industries......................... 1.6
Leasing........................................ 1.5
Oil & Gas Services............................. 1.5
Electronics.................................... 1.5
Software....................................... 1.3
Engineering & Equipment........................ 1.3
Automotive Parts............................... 1.2
Consumer Goods................................. 1.0
Natural Resources Sector....................... 1.0
Office Equipment & Supplies.................... 0.9
Business & Public Services..................... 0.9
Financial Services............................. 0.8
Printing....................................... 0.6
Forest Products................................ 0.5
Transportation................................. 0.5
Leisure........................................ 0.3
Real Estate.................................... 0.2
-----
102.2
Liabilities in excess of other assets.......... (2.2)
-----
100.0%
-----
-----
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
26
<PAGE>
International Bond Portfolio
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL US$
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--96.0%
Australia--19.1%
Commonwealth of Australia,
A$ 2,000 7.00%, 4/15/00............ $ 1,279,365
3,200 6.75%, 11/15/06........... 2,143,325
KFW Int'l. Finance,
1,400 7.25%, 7/16/07............ 939,443
Queensland Treasury Corp.,
800 8.00%, 7/14/99............ 510,504
1,250 8.00%, 8/14/01............ 832,581
-----------
5,705,218
-----------
Canada--9.6%
Canadian Gov't. Bonds,
C$ 1,300 7.50%, 12/1/03............ 971,853
1,000 8.75%, 12/1/05............ 819,204
Deutsche Fin(Neth),
1,500 7.00%, 1/7/04............. 1,076,416
-----------
2,867,473
-----------
Denmark--3.3%
Danish Gov't. Bonds,
DKr 2,500 8.00%, 11/15/01........... 402,941
3,500 7.00%, 12/15/04........... 570,893
-----------
973,834
-----------
Germany--25.7%
Abbey National Treasury,
DM 2,500 5.625%, 9/30/02........... 1,443,761
Austrian Gov't. Bonds,
1,000 7.25%, 5/3/07............. 646,538
DSL Finance NV,
2,000 5.75%, 3/19/09............ 1,166,653
Finland Gov't. Bonds,
2,000 5.50%, 2/9/01............. 1,146,691
German Gov't. Bonds,
1,500 5.75%, 8/22/00............ 860,018
4,000 6.00%, 1/5/06............. 2,397,627
-----------
7,661,288
-----------
Japan--10.1%
Federal National Mortgage
Assn.,
Yt 140,000 2.00%, 12/20/99........... $ 1,032,762
Japan Dev. Bank,
130,000 5.00%, 10/1/99............ 990,960
Kingdom of Belgium,
130,000 5.00%, 12/17/99........... 1,000,361
-----------
3,024,083
-----------
Netherlands--8.9%
Dutch Gov't. Bonds,
NLG 2,000 9.00%, 5/15/00............ 1,069,684
2,500 7.50%, 1/15/23............ 1,593,777
-----------
2,663,461
-----------
New Zealand--10.8%
Int'l Bank Recon. & Dev.,
NZ$ 2,500 7.25%, 5/27/03............ 1,289,818
New Zealand Gov't. Bonds,
700 6.50%, 2/15/00............ 360,421
1,250 8.00%, 11/15/06........... 714,831
1,600 7.00%, 7/15/09............ 872,939
-----------
3,238,009
-----------
Sweden--3.2%
Toyota Motor Credit,
SEK 7,000 7.50%, 8/6/01............. 939,857
-----------
United States--5.3%
U. S. Treasury Notes,
US$ 609 3.625%, 7/15/02........... 602,088
718 3.375%, 1/15/07........... 695,256
302 3.625%, 1/15/08........... 298,249
-----------
1,595,593
-----------
Total long-term 28,668,816
investments
(cost $29,086,445)......
-----------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
27
<PAGE>
THE TARGET PORTFOLIO TRUST
International Bond Portfolio (cont'd)
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL US$
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--1.8%
Repurchase Agreements--1.8%
US$ 557 State Street Bank & Trust $ 557,000
Co.,
2.00%, dated 6/30/98 due
7/1/98 in the amount of
$557,031 (cost $557,000;
collaterized by $570,000
U.S. Treasury Notes,
8.125%, 8/15/21,
approximate value of
collateral including
accrued
interest is $570,215)...
-----------
Total Investments--97.8%
(cost $29,643,445; Note 29,225,816
4)......................
Other assets in excess of
liabilities--2.2%....... 646,419
-----------
Net Assets--100%.......... $29,872,235
-----------
-----------
</TABLE>
- ------------------
Portfolio securities are classified according to the
securities currency
denomination.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
28
<PAGE>
Total Return Bond Portfolio
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
<C> <C> <S> <C>
LONG-TERM
INVESTMENTS--101.2%
Corporate Bonds--33.7%
Airlines--3.2%
Continental Airlines,
Inc.,
Ba2 $ 600 9.50%, 12/15/01....... $ 640,500
United Airlines, Inc.,
Baa1 1,000 10.85%, 2/19/15....... 1,337,780
------------
1,978,280
------------
Banking--6.5%
Capital One Bank,
Baa3 1,200 6.83%, 8/16/99........ 1,211,112
Baa3 1,100 7.20%, 7/19/99........ 1,110,912
Kansallis Osake
Pankki,
(Finland),
A3 500 8.65%, 12/29/49....... 508,895
MBNA Bank, Inc.,
Baa1 100 DD 5.89%, 8/7/01......... 99,108
Baa1 1,100 DD 6.06%, 12/10/02....... 1,100,220
------------
4,030,247
------------
Cable--1.3%
Tele-Communications,
Inc.,
Baa3 100 5.96%, 2/2/00......... 100,026
Baa3 700 DD 6.28%, 3/12/01........ 693,255
------------
793,281
------------
Consumer Goods--1.9%
Westpoint Stevens,
Inc.,
Ba3 1,200 7.88%, 6/15/05........ 1,209,000
------------
Energy--1.8%
Williams Cos., Inc.,
Baa2 1,100 DD 6.00%, 1/30/00........ 1,105,104
------------
Entertainment--1.8%
Six Flags Enertainment
Corp.,
Zero Coupon,
Baa2 1,200 12/15/99............ 1,097,964
------------
Financial Services--7.4%
Goldman Sachs Group,
L.P.
A1 1,000 DD 5.87%, 1/25/01........ 1,002,730
Lehman Brothers Holdings, Inc.,
Baa1 $ 1,000DD 6.06%, 1/14/00........ $ 1,005,430
Baa1 1,100DD 6.21%, 9/3/02......... 1,101,080
Money Store Trust,
Inc.,
Aaa 1,200 6.21%, 3/15/12........ 1,200,450
PaineWebber Group,
Inc.,
Baa1 250 6.75%, 2/1/06......... 254,508
------------
4,564,198
------------
Health Care--0.7%
Columbia/HCA Healthcare Corp.,
Ba2 450 6.88%, 7/15/01........ 441,243
------------
Railroads--1.9%
Union Pacific Railroad
Co.,
Baa1 1,200DD 5.95%, 5/22/00........ 1,199,250
------------
Tobacco--1.6%
RJR Nabisco, Inc.,
Baa3 1,000 8.00%, 7/15/01........ 1,014,600
------------
Utilities--5.6%
California Energy Co.,
Inc.,
Ba2 1,100 9.88%, 6/30/03........ 1,177,011
Long Island Lighting
Co.,
Ba1 1,200 8.90%, 7/15/19........ 1,271,712
Niagara Mohawk Power
Corp.,
Ba1 1,000 6.88%, 3/1/01......... 1,010,570
------------
3,459,293
------------
Total corporate bonds
(cost
$20,775,231)........ 20,892,460
------------
U.S. Government Agency Mortgage
Backed Securities--43.8%
Federal Home Loan
Mortgage
Corp.,
6.00%, 4/1/28 -
8,892 12/1/28............. 8,669,547
6.50%, 9/15/18 -
4,414 12/1/28............. 3,170,857
877 7.80%, 1/1/24......... 915,270
20 9.25%, 1/1/10......... 21,640
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
29
<PAGE>
THE TARGET PORTFOLIO TRUST
Total Return Bond Portfolio (cont'd)
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
<C> <C> <S> <C>
U.S. Government Agency Mortgage
Backed Securities--(cont'd.)
Federal National Mortgage Assn.,
$ 1,200 5.95%, 12/1/28........ $ 1,207,500
936 6.64%, 3/1/26......... 955,050
1,697 7.08%, 1/1/20......... 1,741,190
Government National
Mortgage Assn.,
6.50%, 7/20/27 -
3,552 12/15/28............ 3,588,469
6.88%, 2/20/17 -
2,868 2/20/26............. 2,933,702
7.00%, 7/20/22 -
1,894 9/20/25............. 1,938,804
441 7.38%, 6/20/23........ 450,820
1,150 7.50%, 12/15/99....... 1,181,981
Resolution Trust
Corp.,
77 DD 6.95%, 6/25/23........ 76,711
86 8.35%, 6/25/29........ 85,663
195 9.25%, 6/25/23........ 194,014
------------
Total U.S. Government
agency
mortgage backed
securities
(cost
$26,891,558)........ 27,131,218
------------
Foreign Securities--5.5%
Asian Development
Bank,
Aaa 900 5.82%, 6/16/28........ 908,914
Federal Republic of
Germany,
Aaa DM 1,700 5.63%, 1/4/28......... 979,825
Republic of Argentina,
Baa1 $ 1,140 6.63%, 3/31/05........ 1,006,050
Republic of Korea,
Ba1 600 8.88%, 4/15/08........ 542,670
------------
3,437,459
------------
Total foreign
securities
(cost $3,517,063)... 3,437,459
------------
Collateralized Mortgage
Obligations--3.7%
American Housing Trust
1,
Senior Mortgage Pass
Through Certificate,
Series 1-5 Class A,
Aaa 18 8.63%, 8/25/18........ 18,442
Champion Home Loan
Equity,
Series 1995, Class
A2-3,
Aaa $ 808DD 8.57%, 2/25/28........ $ 823,558
Countrywide
Collateralized
Mortgage Obligation,
Aa1 171DD 8.14%, 11/25/24....... 176,234
GMAC Commercial
Mortgage Security,
Inc.,
Aa2 677DD 6.81%, 4/15/08........ 703,973
Baa2 500DD 7.15%, 3/15/11........ 510,234
PaineWebber Mortgage
Acceptance Corp.,
Aaa 50 7.00%, 10/25/23....... 50,049
Total collateralized
mortgage obligations
(cost $2,251,939)... 2,282,490
------------
U.S. Government Securities--14.5%
United States Treasury
Notes,
3.625%, 7/15/02
710 (TIPS).............. 702,436
500 5.50%, 5/31/03........ 500,080
United States Treasury
Bonds,
1,700 6.00%, 2/15/26........ 1,768,527
5,600 6.125%, 11/15/27...... 6,000,736
------------
Total U.S. government
securities
(cost $8,942,309)... 8,971,779
------------
Total long-term
investments
(cost
$62,378,100)........ 62,715,406
------------
SHORT-TERM
INVESTMENTS--21.1%
Corporate Bonds--18.2%
Cable--1.7%
Tele-Communications,
Inc.,
Baa3 1,000 7.25%, 6/15/99........ 1,011,420
------------
Financial Services--13.1%
A T & T Capital Corp.,
Baa3 2,400DD 5.956%, 2/16/99....... 2,400,912
General Electric
Capital Corp.,
A1+PoundPound 2,500 5.51%, 7/28/98........ 2,489,235
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
30
<PAGE>
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL
RATING AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
SHORT-TERM
INVESTMENTS--(cont'd.)
<S> <C> <C> <C>
Heller Financial,
Inc.,
A3 $ 800 6.25%, 1/15/99........ $ 801,200
A3 1,100 6.41%, 5/3/99......... 1,104,521
IBM Credit Corp.,
A2 1,300 5.51%, 7/1/98......... 1,300,000
------------
8,095,868
------------
Miscellaneous--0.7%
PDV America, Inc.,
Baa3 450 7.25%, 8/1/98......... 448,362
------------
Utilities--2.7%
El Paso Electric Co.,
Ba2 500 7.25%, 2/1/99......... 501,745
National Rural
Utilities, Inc.,
A1+PoundPound 1,200 5.49%, 9/10/98........ 1,186,551
------------
1,688,296
------------
Total corporate bonds
(cost
$11,226,048)........ 11,243,946
------------
U.S. Government Agency Mortgage
Backed Securities--0.0%
Federal National Mortgage Assn.,
4 8.50%, 4/1/99
(cost $4,178)......... 3,993
------------
Foreign Securities--1.7%
Petroleas Mexicano,
1,100 DD 6.6875%, 3/8/99
(cost $1,068,901)..... 1,078,000
------------
U.S. Government Securities--0.5%
United States Treasury
Bills,
175 D 4.955%, 7/23/98....... 174,461
30 D 4.975%, 7/23/98....... 29,908
50 D 4.99%, 10/15/98....... 49,265
35 D 5.00%, 7/23/98........ 34,892
10 D 5.04%, 7/23/98........ 9,969
------------
298,495
------------
Total U.S. Government Securities
(cost $298,507)....... 298,495
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <C> <S> <C>
Repurchase Agreement--0.7%
$ 461 State Street Bank & Trust Co.,
2.00%, dated 6/30/98
due 7/1/98 in the
amount of $461,026
(cost $461,000;
collateralized by
$465,000
U.S. Treasury Notes,
6.125%, 12/31/01,
value of collateral
including accrued
interest is
$471,859)............ $ 461,000
------------
<CAPTION>
OUTSTANDING PUT OPTIONS
Contracts PURCHASED*
---------
<C> <C> <S> <C>
United States Treasury
Bond
Futures, 8.00%,
9/18/98
expiring 8/21/98 @
14 $118.00
(cost $8,027).......... 1,531
------------
Total short-term
investments
(cost $13,067,763;
Note 4).............. 13,086,965
------------
Total Investments Before Outstanding
Call Options Written--122.4%
(cost $75,445,863; Note
4)................... 75,802,371
OUTSTANDING CALL OPTIONS
WRITTEN*--(0.1%)
United States Treasury
Bond
Futures, 8.00%,
9/18/98
expiring 8/21/98 @
14 $126.00
(premiums received
$6,925).............. (7,875)
------------
Total Investments, Net of Outstanding
Call Options Written--122.3%
(cost $75,438,938)..... 75,794,496
Liabilities in excess
of other
assets--(22.3%)...... (13,846,061)
------------
Net Assets--100%....... $ 61,948,435
------------
------------
</TABLE>
- ---------------
D Pledged as initial margin on financial futures
contracts.
DD Rate shown reflects current rate on variable
rate
instrument.
* Non-income producing security.
PoundPound Standard & Poor's Rating.
(TIPS)--Treasury inflation protection securities.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
31
<PAGE>
THE TARGET PORTFOLIO TRUST
Intermediate-Term Bond Portfolio
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<C> <C> <S> <C>
LONG-TERM
INVESTMENTS--94.6%
Corporate Bonds--34.1%
Airlines--2.0%
United Airlines, Inc.,
Baa1 $ 1,500 10.85%, 2/19/15........ $ 2,006,670
------------
Banking--7.8%
Capital One Bank,
Baa3 1,900 7.20%, 7/19/99......... 1,918,848
MBNA America Bank,
Baa1 1,000 DD 5.864%, 4/13/00........ 998,542
Baa1 2,000 DD 6.06%, 12/10/02........ 2,000,400
Sumitomo Trust &
Banking Co., Ltd.,
Baa 3,000 9.40%, 12/29/49........ 2,956,881
------------
7,874,671
------------
Financial Services--8.2%
Goldman Sachs Group,
A1 1,900 DD 5.8675%, 1/25/01....... 1,905,187
Lehman Brothers
Holdings, Inc.,
Baa1 2,000 DD 6.0762%, 1/14/00....... 2,010,860
1,900 DD 5.9875%, 9/3/02........ 1,901,866
PaineWebber Group,
Inc.,
Baa1 2,000 6.2875%, 11/27/00...... 2,022,660
Tokai Preferred Capital
Co., L.L.C.,
A3 500 9.98%, 12/29/49........ 463,785
------------
8,304,358
------------
Industrials--8.6%
TCI Communications,
Inc.,
Baa3 400 6.2875%, 3/12/01....... 396,146
Baa3 2,500 6.82%, 9/15/10......... 2,503,475
Union Pacific Corp.,
Baa 2,000 5.945%, 5/22/00........ 1,998,750
Westpoint Stevens,
Inc.,
Ba3 1,800 7.875%, 6/15/05........ 1,813,500
Williams Companies,
Inc.,
Baa2 $ 2,000 5.9089%, 1/30/00....... $ 2,009,280
------------
8,721,151
------------
Tobacco--1.8%
RJR Nabisco, Inc.,
Baa3 1,250 8.00%, 7/15/01......... 1,268,250
Baa3 600 8.625%, 12/1/02........ 619,314
------------
1,887,564
------------
Utilities--5.7%
California Energy Co.,
Inc.,
Ba2 2,000 9.875%, 6/30/03........ 2,140,020
Long Island Lighting
Co.,
Baa3 1,535 7.30%, 7/15/99......... 1,551,102
Niagara Mohawk Power
Corp.,
Ba1 2,000 6.875%, 3/1/01......... 2,021,140
------------
5,712,262
------------
Total corporate bonds
(cost $34,292,661)... 34,506,676
------------
U.S. Government Agency Mortgage
Backed Securities--40.3%
Federal Home Loan Mortgage Corp.,
6.00%, 4/1/24 -
14,821 6/1/28............... 14,451,154
6.50%, 9/15/18 -
5,992 12/1/99 I/O.......... 3,937,172
6,500 7.50%, 12/1/99......... 6,660,420
103 9.25%, 1/1/10.......... 109,283
Federal National Mortgage Assn.,
1,800 6.167%,8/25/28......... 1,810,687
175 6.167%, 12/1/30........ 176,378
1,872 6.610%, 3/1/26......... 1,910,100
987DD 7.00%, 8/1/24.......... 1,007,295
1,354DD 7.758%, 7/1/25......... 1,400,058
6 8.50%, 7/1/99.......... 6,173
Government National
Mortgage Assn.,
6.875%, 1/20/24 -
2,777DD 2/20/26.............. 2,840,755
1,091DD 7.00%, 10/20/24........ 1,119,340
7.375%, 5/20/23 -
2,313DD 6/20/23.............. 2,365,803
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
32
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<C> <C> <S> <C>
U.S. Government Agency Mortgage
Backed Securities--(cont'd.)
Resolution Trust Corp.,
$ 121 DD 6.95%, 6/25/23......... $ 121,201
430 8.35%, 6/25/29......... 428,315
389 9.25%, 6/25/23......... 388,032
Student Loan Marketing
Assn., Student Loan
Trust, Series 1998 2
Class A1,
2,000 5.87%, 4/25/07......... 2,000,000
------------
Total U.S. Government
agency mortgage
backed securities
(cost $40,507,969)... 40,732,166
------------
Collateralized Mortgage
Obligations--10.7%
Champion Home Loan
Equity, Series 1995,
Class A2-3,
Aaa 1,220 DD 8.53%, 2/25/28......... 1,243,141
Countrywide
Collateralized
Mortgage Obligation,
Aaa 375 6.75%, 3/25/24......... 374,374
Aa1 171 DD 8.20%, 11/25/24........ 176,234
Federal National
Mortgage Association
Guaranteed
Certificate, Remic
Trust 1997-1 Class A
1,568 6.50%, 2/18/04......... 1,571,004
Remic Trust 1997 1
Class A
970 6.00%, 12/25/08........ 966,325
Government National
Mortgage Assn., Remic
Trust 1995- 2, Class
Kq,
3,000 8.50%, 3/20/25......... 3,142,969
PaineWebber Mortgage
Acceptance Corp.,
Aaa 100 7.00%, 10/25/23........ 100,099
Residential Asset
Securities Corp.,
Series 1996 Ks4,
Class A2,
Aaa 1,233 DD 5.96%, 10/25/27........ 1,226,961
Southern Pacific
Secured
Assets Corp.,
Aaa $ 2,000 5.83%, 7/25/29......... $ 2,000,000
------------
Total collateralized
mortgage
obligations
(cost $10,822,576)... 10,801,107
------------
U.S. Government Securities--7.0%
United States Treasury Bonds,
700 6.00%, 2/15/26......... 728,217
United States Treasury Notes,
5,000 5.50%, 5/31/03......... 5,000,800
1,420 3.63%, 7/15/02......... 1,404,873
------------
Total U.S. Government
Securities
(cost $7,103,750).... 7,133,890
------------
Foreign Government Obligations--2.5%
Republic of Argentina,
Ba3 1,805 6.62%, 3/31/05......... 1,592,913
Republic of Korea,
Ba1 1,000 8.88%, 4/15/08......... 904,450
------------
Total foreign
government
obligations
(cost $2,636,963).... 2,497,363
------------
Total long-term
investments
(cost $95,363,919)... 95,671,202
------------
SHORT-TERM
INVESTMENTS--17.0%
Corporate Bonds--12.8%
Financial Services--7.4%
A T & T Capital Corp.,
Baa3 100DD 5.96%, 2/16/99......... 100,038
Baa3 4,000 6.38%, 8/28/98......... 4,001,320
Heller Financial, Inc.,
A3 1,500 6.25%, 1/15/99......... 1,502,250
A3 1,900 6.41%, 5/3/99.......... 1,907,809
------------
7,511,417
------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
33
<PAGE>
THE TARGET PORTFOLIO TRUST
Intermediate-Term Bond Portfolio (cont'd)
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<C> <C> <S> <C>
SHORT-TERM
INVESTMENTS--(cont'd.)
Industrial--1.9%
NWCG Holdings Corp.,
Ba2 $ 2,000 Zero Coupon, 6/15/99... $ 1,888,940
------------
Miscellaneous--1.9%
PDV America, Inc.,
Baa3 1,950 7.25%, 8/1/98.......... 1,942,902
------------
Utilities--1.6%
Texas-New Mexico Power
Co.,
Ba3 1,500 12.50%, 1/15/99........ 1,545,195
------------
Total corporate bonds
(cost $12,944,963)... 12,888,454
------------
Corporate Notes--2.9%
Du Pont (E. I.) De Nemours & Co.,
P-1 300 5.59%, 7/22/98......... 298,965
General Electric
Capital Corp.,
P-1 300 5.59%, 7/22/98......... 298,633
P-1 2,300 5.51%, 7/28/98......... 2,290,096
------------
Total corporate notes
(cost $2,888,574).... 2,887,694
------------
U.S. Government Agency Mortgage
Backed Securities
Federal National Mortgage Assn.,
12 8.50%, 4/1/99
(cost $13,082)......... 12,530
------------
U.S. Government Securities--0.3%
United States Treasury
Bills,
140 D 4.98%, 7/23/98......... 139,569
35 D 4.98%, 7/23/98......... 34,892
140 4.98%, 10/15/98........ 137,943
------------
Total U.S. Government
Securities
(cost $312,410)...... 312,404
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <C> <S> <C>
Repurchase Agreement--1.0%
State Street Bank &
Trust Co.,
$ 1,061 4.00%, dated 6/30/98
due 7/1/98 in the
amount of
$1,061,118 (cost
$1,061,000:
collateralized by
$690,000 U.S.
Treasury Notes,
10.625% 8/15/15,
value of collateral
including accrued
interest -
$1,091,665).......... $ 1,061,000
------------
<CAPTION>
OUTSTANDING PUT OPTIONS
Contracts PURCHASED*
---------
<C> <C> <S> <C>
United States Treasury Bond Futures,
8.00%, 9/21/98
expiring 8/21/98
@$118.00
23 (cost $13,188)....... 2,516
------------
Total short-term
investments
(cost $17,233,217)... 17,164,598
------------
Total Investments Before
Outstanding Call Options
Written--111.6%
(cost $112,597,136;
Note 4).............. 112,835,800
------------
OUTSTANDING CALL OPTIONS
WRITTEN*
United States Treasury Bond Futures,
8.00%, 9/18/98
expiring 8/21/98
@$126.00
(premium received
23 $11,377)............. (12,938)
------------
Total Investments, Net of
Outstanding Call Options
Written--111.6%
(cost $112,585,759).... 112,822,862
Liabilities in excess
of other
assets--(11.6%)...... (11,746,633)
------------
Net Assets--100%....... $101,076,229
------------
------------
</TABLE>
- ---------------
* Non-income producing securities.
I/O--Interest Only Security.
L.L.C.--Limited Liability Company.
D Pledged as initial margin on futures contracts.
DD Rate shown reflects current rate on variable rate
instrument.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
34
<PAGE>
Mortgage Backed Securities
Portfolio
Portfolio of Investments June
30, 1998 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--98.0%
Collateralized Mortgage
Obligations--33.4%
Federal Home Loan Mortgage
Corp.,
$ 374 5.25%, 12/15/22, PAC...... $ 352,774
221 5.50%, 8/15/21, PAC....... 213,886
350 5.80%, 8/15/19, PAC....... 346,062
100 5.95%, 6/15/19, PAC....... 99,906
146 6.00%, 5/15/22............ 145,873
3,603 6.00%, 5/15/08 - 5/15/23, 3,573,491
PAC.....................
1,560 6.50%, 8/15/06 - 11/15/22, 1,572,654
PAC.....................
110 7.00%, 3/15/23, PAC....... 114,915
403 7.25%, 1/15/07, PAC....... 407,952
5,430 7.50%, 6/15/22, PAC I/O... 623,261
500 8.00%, 12/15/06, PAC...... 539,530
1,345 8.00%, 8/15/04 - 1,415,850
7/15/21.................
166 9.00%, 10/15/20........... 175,947
10 10.00%, 6/15/19, PAC...... 9,749
Federal National Mortgage
Assn.,
1,246 5.00%, 3/25/21............ 1,175,802
477 5.00%, 10/25/20, PAC...... 472,646
1,058 5.941%, 1/25/09........... 1,051,474
346 6.00%, 4/25/08, PAC....... 345,363
1,243 6.00%, 9/25/22 - 1,213,790
10/25/22................
800 6.25%, 1/25/09, PAC....... 804,000
370 6.50%, 12/25/19 - 366,256
4/25/22.................
2,286 6.50%, 2/25/06 - 12/25/23, 2,293,114
PAC.....................
2,955 7.00%, 9/25/19, PAC I/O... 239,558
926 7.385%, 3/25/21........... 962,724
693 7.50%, 5/25/07 - 722,383
7/25/22.................
197 8.00%, 12/25/21........... 211,709
617 8.00%, 8/25/06 - 5/25/24, 662,308
PAC.....................
483 8.50%, 6/25/21............ 508,074
510 8.50%, 7/25/18 - 2/25/20, 537,348
PAC.....................
First Boston Mortgage
Securities,
938 Zero Coupon, 4/25/17, 755,389
P/O.....................
941 6.96%, 6/20/29............ 966,463
938 8.985%, 4/25/17, I/O...... 228,526
First Union-Lehman
Brothers
Commerical Mortgage,
1,000 6.60%, 11/18/29........... 1,022,500
Salomon Brothers Mortgage Securities,
366 6.00%, 12/26/11........... 363,573
-----------
Total collateralized mortgage
obligations
(cost $23,453,435)........ 24,494,850
-----------
U.S. Government Agency Mortgage
Pass-Through Obligations--63.5%
Federal Home Loan Mortgage
Corp.,
$ 424 6.50%, 2/01/04............. $ 426,823
5,926 7.00%, 2/01/99 - 3/01/24... 6,081,530
20 7.25%, 7/01/06............. 20,359
179 7.50%, 3/01/08............. 182,613
90 8.25%, 12/01/05 - 93,838
5/01/08..................
348 8.50%, 6/01/03 - 7/01/21... 366,942
128 8.75%, 12/01/08............ 134,418
1,252 9.00%, 1/01/02 - 3/01/11... 1,313,726
32 10.00%, 1/01/04............ 33,136
48 10.50%, 11/01/19........... 53,966
53 11.50%, 3/01/16............ 60,591
42 12.75%, 11/01/13........... 48,785
26 13.25%, 5/01/13............ 30,301
30 14.00%, 9/01/10 - 36,402
6/01/11..................
Federal National Mortgage
Assn.,
186 6.199%, 12/01/27........... 187,377
805 6.217%, 8/01/28............ 809,825
539 6.981%, 6/01/07............ 561,847
732 7.00%, 12/01/00 - 742,010
7/01/25..................
371 7.50%, 2/01/20............. 384,350
165 7.75%, 10/01/19............ 171,118
13 8.00%, 3/01/07 - 6/01/07... 13,801
181 8.50%, 6/01/10............. 189,251
246 9.75%, 8/01/10 - 262,666
11/01/16.................
Government National
Mortgage Assn.,
694 6.50%, 5/15/23 - 695,035
11/15/23.................
8,456 7.00%, 7/15/16 - 8,599,953
11/15/24.................
14,417 7.50%, 3/15/07 - 6/15/24... 14,829,845
2,726 8.00%, 1/15/08 - 8/15/22... 2,836,960
1,145 8.25%, 6/20/17 - 7/20/17... 1,186,441
774 8.50%, 3/15/05 - 820,578
11/15/21.................
3,683 9.00%, 10/20/01 - 3,942,014
1/15/20..................
1,217 9.50%, 9/15/02 - 1/15/21... 1,315,810
1 13.00%, 2/15/11............ 1,030
77 13.50%, 6/15/10 - 92,122
11/15/12.................
99 14.00%, 6/15/11 - 117,691
4/15/12..................
40 16.00%, 4/15/12 - 48,735
5/15/12..................
-----------
Total U.S. Government
agency
mortgage pass-through
obligations
(cost $45,541,191)....... 46,691,889
-----------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
35
<PAGE>
THE TARGET PORTFOLIO TRUST
Mortgage Backed Securities Portfolio (cont'd)
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
U.S. Government Securities--1.1%
United States Treasury
Bonds,
$ 500 12.00%, 8/15/13........... $ 741,330
United States Treasury
Notes,
100 6.875%, 7/31/99........... 101,391
-----------
Total U.S. government
securities
(cost $837,356)......... 842,721
-----------
Total long-term
investments
(cost $69,831,982)...... 72,029,460
-----------
SHORT-TERM INVESTMENTS--1.6%
Repurchase Agreement--1.6%
1,164 Morgan (J.P.) Securities,
Inc.,
5.75%, dated 6/30/98 due
7/01/98 in the amount of
$1,164,186 (cost
$1,164,000;
collateralized by
$1,161,000 U.S. Treasury
Notes, 8.50%, 2/15/20,
value of the collateral
including accrued
interest is
$1,188,689)............. 1,164,000
-----------
Principal U.S. Government Agency Mortgage
Amount Pass-Through Obligations
- ----------
381 Federal Home Loan Mortgage
Corp,
7.00%, 2/01/99.......... 388
-----------
Total short-term
investments
(cost $1,164,378)....... 1,164,388
-----------
Total Investments--99.6%
(cost US $70,996,360; Note 73,193,848
4)......................
Other assets in excess of
liabilities--0.4%....... 324,001
-----------
Net Assets--100%.......... $73,517,849
-----------
-----------
</TABLE>
- ---------------
I/O--Interest Only Security.
PAC--Planned Amortization Class.
P/O--Principal Only.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
36
<PAGE>
U.S. Government Money Market Portfolio
Portfolio of Investments June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
Federal Farm Credit Bank--1.9%
$ 2,000 5.70%, 11/3/98.............. $ 1,999,539
------------
Federal Home Loan Bank--5.6%
2,000 5.81%, 11/4/98.............. 1,999,619
2,000 5.80%, 12/18/98............. 1,999,906
2,000 5.50%, 3/19/99.............. 1,998,827
------------
5,998,352
------------
Federal National Mortgage
Association--1.8%
2,000 5.625%, 5/6/99.............. 1,997,968
------------
Student Loan Marketing Association--1.9%
2,000 5.82%, 9/16/98.............. 1,999,815
------------
Repurchase Agreements--108.8%
29,209 Lehman Brothers Hldgs., 29,209,000
Inc., 5.75%, dated 6/30/98
due 7/1/98 in the amount
of $29,213,665 (cost
$29,209,000;
collateralized by
$50,000,000 U.S. Treasury
Strips, 5.91%, 5/15/18,
value of collateral in-
cluding accrued interest -
$30,213,524)..............
29,209 PaineWebber Inc., 5.75%, 29,209,000
dated 6/30/98 due 7/1/98
in the amount of
$29,213,665 (cost
$29,209,000;
collateralized by
$29,505,000 U.S. Treasury
Notes,
5.63%, 5/15/01, value of
collateral
including accrued interest
- $29,836,931)............
$ 29,210 Paribas, 5.75%, dated $29,210,000
6/30/98 due 7/1/98 in the
amount of $29,214,665
(cost $29,210,000;
collateralized by
$29,050,000 U.S. Treasury
Notes, 5.52%, 9/30/02,
value of collateral
including accrued
interest -
$29,851,083).............
29,209 Swiss Bank Corp., 5.85%, 29,209,000
dated 6/30/98 due 7/1/98
in the amount of
$29,213,746 (cost
$29,209,000;
collateralized by
$23,029,000 U.S. Treasury
Bonds, 8.00%, 11/15/21;
value of collateral
including
accrued interest -
$29,772,179).............
-----------
116,837,000
-----------
Total Investments--120.0%
(amortized cost 128,832,674
$128,832,674*)...........
Liabilities in excess of (21,479,140)
other
assets--(20.0%)..........
-----------
Net Assets--100%........... $107,353,534
-----------
-----------
</TABLE>
- ---------------
* Federal income tax basis of portfolio securities is the
same as for financial
reporting purposes.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
37
<PAGE>
THE TARGET PORTFOLIO TRUST
Statements of Assets and Liabilities
June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
LARGE
CAPITALIZATION LARGE CAPITALIZATION SMALL
CAPITALIZATION
GROWTH
PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO
<S> <C>
<C> <C>
ASSETS
- ------------------------------------------------------------
- ---------------------------------------------------
Investments, at value* $289,474,643
$293,670,727 $180,163,709
- ------------------------------------------------------------
- ---------------------------------------------------
Repurchase Agreements 8,817,000
- -- --
- ------------------------------------------------------------
- ---------------------------------------------------
Cash 1,668
- -- 852
- ------------------------------------------------------------
- ---------------------------------------------------
Foreign currency, at value
(cost $816,322; $100,093) --
- -- --
- ------------------------------------------------------------
- ---------------------------------------------------
Receivable for Fund shares sold 194,610
354,908 126,870
- ------------------------------------------------------------
- ---------------------------------------------------
Receivable for investments sold 1,265,205
736,481 2,056,613
- ------------------------------------------------------------
- ---------------------------------------------------
Dividends and interest receivable 92,266
488,436 46,351
- ------------------------------------------------------------
- ---------------------------------------------------
Deferred expenses and other assets 3,140
3,207 2,231
- ------------------------------------------------------------
- ---------------------------------------------------
Due from broker-variation margin --
- -- --
- ------------------------------------------------------------
- ---------------------------------------------------
Forward currency contracts-net amount
receivable
from counterparties --
- -- --
- ------------------------------------------------------------
- ---------------------------------------------------
Total assets 299,848,532
295,253,759 182,396,626
LIABILITIES
- ------------------------------------------------------------
- ---------------------------------------------------
Payable for investments purchased 1,964,903
703,674 2,757,202
- ------------------------------------------------------------
- ---------------------------------------------------
Payable for Fund shares reacquired 1,193,522
1,573,896 610,540
- ------------------------------------------------------------
- ---------------------------------------------------
Accrued expenses and other liabilities 215,544
26,908 106,335
- ------------------------------------------------------------
- ---------------------------------------------------
Dividends payable --
- -- --
- ------------------------------------------------------------
- ---------------------------------------------------
Outstanding options written (premium
received $6,925
and $11,377) --
- -- --
- ------------------------------------------------------------
- ---------------------------------------------------
Withholding taxes payable --
- -- 2,465
- ------------------------------------------------------------
- ---------------------------------------------------
Deferred trustees' fees 6,054
6,054 6,054
- ------------------------------------------------------------
- ---------------------------------------------------
Due to Manager 70,208
144,338 85,781
- ------------------------------------------------------------
- ---------------------------------------------------
Forward currency contracts-net amount
payable
to counterparties --
- -- --
- ------------------------------------------------------------
- ---------------------------------------------------
Total liabilities 3,450,231
2,454,870 3,568,377
NET ASSETS $296,398,301
$292,798,889 $178,828,249
- ------------------------------------------------------------
- ---------------------------------------------------
Net assets were comprised of:
Shares of beneficial interest, at par $ 17,382
$ 16,927 $ 10,591
- ------------------------------------------------------------
- ---------------------------------------------------
Paid-in capital in excess of par 171,741,138
180,639,915 127,899,711
- ------------------------------------------------------------
- ---------------------------------------------------
171,758,520
180,656,842 127,910,302
Under (over) distribution of net
investment
income (43,957)
2,377,788 (301,622)
- ------------------------------------------------------------
- ---------------------------------------------------
Accumulated net realized gains
(losses) 17,102,949
17,998,956 11,844,647
- ------------------------------------------------------------
- ---------------------------------------------------
Net unrealized
appreciation/depreciation 107,580,789
91,765,303 39,374,922
- ------------------------------------------------------------
- ---------------------------------------------------
Net assets, June 30, 1998 $296,398,301
$292,798,889 $178,828,249
- ------------------------------------------------------------
- ---------------------------------------------------
Shares of beneficial interest issued
and outstanding 17,381,797
16,927,179 10,591,212
- ------------------------------------------------------------
- ---------------------------------------------------
Net asset value, offering price and
redemption price per share $17.05
$17.30 $16.88
- ------------------------------------------------------------
- ---------------------------------------------------
*Identified cost of investments. $190,710,854
$201,905,424 $140,788,787
<CAPTION>
SMALL
CAPITALIZATION
VALUE PORTFOLIO
<S> <C>
ASSETS
- ------------------------------------------------------------
- -----------------------
Investments, at value* $164,639,315
- ------------------------------------------------------------
- --------------------------------------------
Repurchase Agreements --
- ------------------------------------------------------------
- ---------------------------------------------------
Cash 4,776
- ------------------------------------------------------------
- ---------------------------------------------------
Foreign currency, at value
(cost $816,322; $100,093) --
- ------------------------------------------------------------
- ---------------------------------------------------
Receivable for Fund shares sold 147,658
- ------------------------------------------------------------
- ---------------------------------------------------
Receivable for investments sold 677,931
- ------------------------------------------------------------
- ---------------------------------------------------
Dividends and interest receivable 100,233
- ------------------------------------------------------------
- ---------------------------------------------------
Deferred expenses and other assets 1,823
- ------------------------------------------------------------
- ---------------------------------------------------
Due from broker-variation margin --
- ------------------------------------------------------------
- ---------------------------------------------------
Forward currency contracts-net amount
receivable
from counterparties --
- ------------------------------------------------------------
- ---------------------------------------------------
Total assets 165,571,736
LIABILITIES
- ------------------------------------------------------------
- ---------------------------------------------------
Payable for investments purchased 728,530
- ------------------------------------------------------------
- ---------------------------------------------------
Payable for Fund shares reacquired 768,818
- ------------------------------------------------------------
- ---------------------------------------------------
Accrued expenses and other liabilities 154,860
- ------------------------------------------------------------
- ---------------------------------------------------
Dividends payable --
- ------------------------------------------------------------
- ---------------------------------------------------
Outstanding options written (premium
received $6,925
and $11,377) --
- ------------------------------------------------------------
- ---------------------------------------------------
Withholding taxes payable 456
- ------------------------------------------------------------
- ---------------------------------------------------
Deferred trustees' fees 6,054
- ------------------------------------------------------------
- ---------------------------------------------------
Due to Manager 40,374
- ------------------------------------------------------------
- ---------------------------------------------------
Forward currency contracts-net amount
payable
to counterparties --
- ------------------------------------------------------------
- ---------------------------------------------------
Total liabilities 1,699,092
NET ASSETS $163,872,644
- ------------------------------------------------------------
- ---------------------------------------------------
Net assets were comprised of:
Shares of beneficial interest, at par $ 9,291
- ------------------------------------------------------------
- ---------------------------------------------------
Paid-in capital in excess of par 120,770,841
- ------------------------------------------------------------
- ---------------------------------------------------
120,780,132
Under (over) distribution of net
investment
income 365,372
- ------------------------------------------------------------
- ---------------------------------------------------
Accumulated net realized gains
(losses) 11,082,575
- ------------------------------------------------------------
- ---------------------------------------------------
Net unrealized
appreciation/depreciation 31,644,565
- ------------------------------------------------------------
- ---------------------------------------------------
Net assets, June 30, 1998 $163,872,644
- ------------------------------------------------------------
- ---------------------------------------------------
Shares of beneficial interest issued
and outstanding 9,290,940
- ------------------------------------------------------------
- ---------------------------------------------------
Net asset value, offering price and
redemption price per share $17.64
- ------------------------------------------------------------
- ---------------------------------------------------
*Identified cost of investments. $132,994,750
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
38
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY INTERNATIONAL TOTAL RETURN
INTERMEDIATE-TERM MORTGAGE BACKED
PORTFOLIO BOND PORTFOLIO BOND
PORTFOLIO BOND PORTFOLIO SECURITIES PORTFOLIO
<S> <C> <C>
<C> <C>
--------------------------------------------------
- ------------------------------------------------
$268,940,460 $ 29,225,816 $ 75,802,371
$ 112,835,800 $ 73,193,848
--------------------------------------------------
- ------------------------------------------------
-- -- --
- -- --
--------------------------------------------------
- ------------------------------------------------
2,040 40 78
641 575
--------------------------------------------------
- ------------------------------------------------
810,060 98,888 --
- -- --
--------------------------------------------------
- ------------------------------------------------
256,007 54,039 252,065
586,268 98,754
--------------------------------------------------
- ------------------------------------------------
284,433 -- 2,429,922
- -- --
--------------------------------------------------
- ------------------------------------------------
1,259,111 688,948 715,897
1,057,825 534,624
--------------------------------------------------
- ------------------------------------------------
3,307 9,877 727
1,328 1,165
--------------------------------------------------
- ------------------------------------------------
-- -- 15,379
44,304 --
--------------------------------------------------
- ------------------------------------------------
-- -- 5,455
- -- --
--------------------------------------------------
- ------------------------------------------------
271,555,418 30,077,608 79,221,894
114,526,166 73,828,966
--------------------------------------------------
- ------------------------------------------------
2,625,620 -- 17,038,626
13,067,338 --
--------------------------------------------------
- ------------------------------------------------
5,545,726 88,825 71,064
108,492 75,993
--------------------------------------------------
- ------------------------------------------------
107,768 67,571 49,650
80,581 106,923
--------------------------------------------------
- ------------------------------------------------
-- 35,665 77,641
137,441 110,071
--------------------------------------------------
- ------------------------------------------------
-- -- 7,875
12,938 --
--------------------------------------------------
- ------------------------------------------------
42,179 3,847 --
- -- --
--------------------------------------------------
- ------------------------------------------------
6,054 4,644 6,054
6,054 6,054
--------------------------------------------------
- ------------------------------------------------
152,937 4,821 22,549
37,093 12,076
--------------------------------------------------
- ------------------------------------------------
-- -- --
- -- --
-------------------------------------------------
- ------------------------------------------------
8,480,284 205,373 17,273,459
13,449,937 311,117
$263,075,134 $29,872,235 $61,948,435
$101,076,229 $73,517,849
--------------------------------------------------
- ------------------------------------------------
$ 15,745 $ 3,305 $ 5,792
$ 9,672 $ 7,017
--------------------------------------------------
- ------------------------------------------------
187,441,403 31,053,187 59,958,180
99,589,052 71,958,125
--------------------------------------------------
- ------------------------------------------------
187,457,148 31,056,492 59,963,972
99,598,724 71,965,142
(2,061,126 ) (977,844) 337,772
498,408 145,231
--------------------------------------------------
- ------------------------------------------------
10,885,080 222,299 1,291,810
627,400 (790,012)
--------------------------------------------------
- ------------------------------------------------
66,794,032 (428,712) 354,881
351,697 2,197,488
--------------------------------------------------
- ------------------------------------------------
$263,075,134 $29,872,235 $61,948,435
$101,076,229 $73,517,849
--------------------------------------------------
- ------------------------------------------------
15,744,586 3,305,031 5,792,140
9,672,246 7,016,929
--------------------------------------------------
- ------------------------------------------------
$16.71 $9.04 $10.70
$10.45 $10.48
--------------------------------------------------
- ------------------------------------------------
$202,123,261 $29,643,445 $75,445,863
$112,597,136 $70,996,360
<CAPTION>
U.S. GOVERNMENT MONEY
MARKET PORTFOLIO
<C>
--------------------------------------------------
- ------------------------------------------------
$ 11,995,674
--------------------------------------------------
- ------------------------------------------------
116,837,000
--------------------------------------------------
- ------------------------------------------------
846
--------------------------------------------------
- ------------------------------------------------
--
--------------------------------------------------
- ------------------------------------------------
13,690,968
--------------------------------------------------
- ------------------------------------------------
--
--------------------------------------------------
- ------------------------------------------------
92,916
--------------------------------------------------
- ------------------------------------------------
76,196
--------------------------------------------------
- ------------------------------------------------
--
--------------------------------------------------
- ------------------------------------------------
--
--------------------------------------------------
- ------------------------------------------------
142,693,600
--------------------------------------------------
- ------------------------------------------------
--
--------------------------------------------------
- ------------------------------------------------
35,211,412
--------------------------------------------------
- ------------------------------------------------
5,951
--------------------------------------------------
- ------------------------------------------------
98,717
--------------------------------------------------
- ------------------------------------------------
--
--------------------------------------------------
- ------------------------------------------------
--
--------------------------------------------------
- ------------------------------------------------
6,054
--------------------------------------------------
- ------------------------------------------------
17,932
--------------------------------------------------
- ------------------------------------------------
--
-------------------------------------------------
- ------------------------------------------------
35,340,066
$107,353,534
--------------------------------------------------
- ------------------------------------------------
$ 107,354
--------------------------------------------------
- ------------------------------------------------
107,246,180
--------------------------------------------------
- ------------------------------------------------
107,353,534
--
--------------------------------------------------
- ------------------------------------------------
--
--------------------------------------------------
- ------------------------------------------------
--
--------------------------------------------------
- ------------------------------------------------
$107,353,534
--------------------------------------------------
- ------------------------------------------------
107,353,534
--------------------------------------------------
- ------------------------------------------------
$1.00
--------------------------------------------------
- ------------------------------------------------
$128,832,674
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
39
<PAGE>
THE TARGET PORTFOLIO TRUST
Statements of Operations
Six Months Ended June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
LARGE
CAPITALIZATION LARGE CAPITALIZATION SMALL
CAPITALIZATION
GROWTH
PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO
<S> <C>
<C> <C>
NET INVESTMENT INCOME
- ------------------------------------------------------------
- ---------------------------------------------------
Income
Interest $ 189,958
$ 98,875 $ 178,766
- ------------------------------------------------------------
- ---------------------------------------------------
Dividends 694,095
3,329,252 193,613
- ------------------------------------------------------------
- ---------------------------------------------------
Less: Foreign withholding taxes (816)
(28,617) (2,465)
- ------------------------------------------------------------
- ---------------------------------------------------
Total income 883,237
3,399,510 369,914
- ------------------------------------------------------------
- ---------------------------------------------------
Expenses
Management fee 812,058
855,622 526,066
- ------------------------------------------------------------
- ---------------------------------------------------
Custodian's fees and expenses 46,000
49,000 49,600
- ------------------------------------------------------------
- ---------------------------------------------------
Transfer agent's fees and expenses 48,000
50,000 50,500
- ------------------------------------------------------------
- ---------------------------------------------------
Reports to shareholders 5,000
12,500 20,000
- ------------------------------------------------------------
- ---------------------------------------------------
Registration fees 1,000
10,500 11,500
- ------------------------------------------------------------
- ---------------------------------------------------
Audit fee 7,000
7,000 7,000
- ------------------------------------------------------------
- ---------------------------------------------------
Legal fees and expenses 3,500
3,500 3,500
- ------------------------------------------------------------
- ---------------------------------------------------
Amortization of organization expenses --
- -- --
- ------------------------------------------------------------
- ---------------------------------------------------
Trustees' fees and expenses 1,200
1,200 1,200
- ------------------------------------------------------------
- ---------------------------------------------------
Insurance 2,000
2,000 1,300
- ------------------------------------------------------------
- ---------------------------------------------------
Miscellaneous 1,436
745 870
- ------------------------------------------------------------
- ---------------------------------------------------
Total expenses 927,194
992,067 671,536
- ------------------------------------------------------------
- ---------------------------------------------------
Net investment income (loss) (43,957)
2,407,443 (301,622)
- ------------------------------------------------------------
- ---------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
- ------------------------------------------------------------
- ---------------------------------------------------
Net realized gain (loss) on:
Investment transactions 20,859,222
19,658,557 11,875,562
- ------------------------------------------------------------
- ---------------------------------------------------
Financial futures contracts --
- -- --
- ------------------------------------------------------------
- ---------------------------------------------------
Foreign currency transactions --
- -- --
- ------------------------------------------------------------
- ---------------------------------------------------
Total net realized gain (loss) 20,859,222
19,658,557 11,875,562
- ------------------------------------------------------------
- ---------------------------------------------------
Net change in unrealized
appreciation/depreciation on:
Investments 40,231,073
2,413,504 6,037,494
- ------------------------------------------------------------
- ---------------------------------------------------
Financial futures contracts --
- -- --
- ------------------------------------------------------------
- ---------------------------------------------------
Foreign currencies --
- -- --
- ------------------------------------------------------------
- ---------------------------------------------------
Options written --
- -- --
- ------------------------------------------------------------
- ---------------------------------------------------
Net change in unrealized
appreciation/depreciation 40,231,073
2,413,504 6,037,494
- ------------------------------------------------------------
- ---------------------------------------------------
Net gain (loss) 61,090,295
22,072,061 17,913,056
- ------------------------------------------------------------
- ---------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ 61,046,338
$ 24,479,504 $ 17,611,434
- ------------------------------------------------------------
- ---------------------------------------------------
<CAPTION>
SMALL
CAPITALIZATION
VALUE PORTFOLIO
<S> <C>
NET INVESTMENT INCOME
- ------------------------------------------------------------
- ---------------------------------------------------
Income
Interest $ 189,849
- ------------------------------------------------------------
- ---------------------------------------------------
Dividends 823,482
- ------------------------------------------------------------
- ---------------------------------------------------
Less: Foreign withholding taxes (923)
- ------------------------------------------------------------
- ---------------------------------------------------
Total income 1,012,408
- ------------------------------------------------------------
- ---------------------------------------------------
Expenses
Management fee 505,260
- ------------------------------------------------------------
- ---------------------------------------------------
Custodian's fees and expenses 49,000
- ------------------------------------------------------------
- ---------------------------------------------------
Transfer agent's fees and expenses 49,000
- ------------------------------------------------------------
- ---------------------------------------------------
Reports to shareholders 16,000
- ------------------------------------------------------------
- ---------------------------------------------------
Registration fees 14,000
- ------------------------------------------------------------
- ---------------------------------------------------
Audit fee 7,000
- ------------------------------------------------------------
- ---------------------------------------------------
Legal fees and expenses 3,500
- ------------------------------------------------------------
- ---------------------------------------------------
Amortization of organization expenses --
- ------------------------------------------------------------
- ---------------------------------------------------
Trustees' fees and expenses 1,200
- ------------------------------------------------------------
- ---------------------------------------------------
Insurance 1,000
- ------------------------------------------------------------
- ---------------------------------------------------
Miscellaneous 1,076
- ------------------------------------------------------------
- ---------------------------------------------------
Total expenses 647,036
- ------------------------------------------------------------
- ---------------------------------------------------
Net investment income (loss) 365,372
- ------------------------------------------------------------
- ---------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
- ------------------------------------------------------------
- ---------------------------------------------------
Net realized gain (loss) on:
Investment transactions 11,111,681
- ------------------------------------------------------------
- ---------------------------------------------------
Financial futures contracts --
- ------------------------------------------------------------
- ---------------------------------------------------
Foreign currency transactions --
- ------------------------------------------------------------
- ---------------------------------------------------
Total net realized gain (loss) 11,111,681
- ------------------------------------------------------------
- ---------------------------------------------------
Net change in unrealized
appreciation/depreciation on:
Investments (8,211,313)
- ------------------------------------------------------------
- ---------------------------------------------------
Financial futures contracts --
- ------------------------------------------------------------
- ---------------------------------------------------
Foreign currencies --
- ------------------------------------------------------------
- ---------------------------------------------------
Options written --
- ------------------------------------------------------------
- ---------------------------------------------------
Net change in unrealized
appreciation/depreciation (8,211,313)
- ------------------------------------------------------------
- ---------------------------------------------------
Net gain (loss) 2,900,368
- ------------------------------------------------------------
- ---------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ 3,265,740
- ------------------------------------------------------------
- ---------------------------------------------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
40
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY INTERNATIONAL TOTAL RETURN
INTERMEDIATE-TERM MORTGAGE BACKED
PORTFOLIO BOND PORTFOLIO BOND PORTFOLIO
BOND PORTFOLIO SECURITIES PORTFOLIO
<S> <C> <C>
<C> <C>
--------------------------------------------------
- -----------------------------------------------
$ 223,561 $ 761,786 $1,835,576
$ 3,110,442 $2,513,357
--------------------------------------------------
- -----------------------------------------------
4,345,139 -- --
- -- --
--------------------------------------------------
- -----------------------------------------------
(519,031) (3,464) --
- -- --
--------------------------------------------------
- -----------------------------------------------
4,049,669 758,322 1,835,576
3,110,442 2,513,357
--------------------------------------------------
- -----------------------------------------------
883,512 76,396 129,892
218,849 162,715
--------------------------------------------------
- -----------------------------------------------
147,000 56,000 50,000
49,000 35,000
--------------------------------------------------
- -----------------------------------------------
49,000 18,000 20,300
22,000 24,000
--------------------------------------------------
- -----------------------------------------------
5,000 16,000 7,600
14,000 10,000
--------------------------------------------------
- -----------------------------------------------
20,000 15,000 12,700
14,000 8,800
--------------------------------------------------
- -----------------------------------------------
10,000 7,000 7,000
7,000 7,000
--------------------------------------------------
- -----------------------------------------------
3,500 12,000 3,500
3,500 3,500
--------------------------------------------------
- -----------------------------------------------
-- 5,313 --
- -- --
--------------------------------------------------
- -----------------------------------------------
1,200 1,200 1,200
1,200 1,200
--------------------------------------------------
- -----------------------------------------------
1,500 500 300
600 400
--------------------------------------------------
- -----------------------------------------------
3,528 1,101 3,187
1,315 1,181
--------------------------------------------------
- -----------------------------------------------
1,124,240 208,510 235,679
331,464 253,796
--------------------------------------------------
- -----------------------------------------------
2,925,429 549,812 1,599,897
2,778,978 2,259,561
--------------------------------------------------
- -----------------------------------------------
--------------------------------------------------
- -----------------------------------------------
14,048,920 (383,939) 756,085
335,673 314,985
--------------------------------------------------
- -----------------------------------------------
-- -- 426,658
432,486 (21,342)
--------------------------------------------------
- -----------------------------------------------
(4,906,872) 110,642 (18,421)
165,618 --
--------------------------------------------------
- -----------------------------------------------
9,142,048 (273,297) 1,164,322
933,777 293,643
--------------------------------------------------
- -----------------------------------------------
31,301,779 148,534 (528,841)
(533,121) (215,976)
--------------------------------------------------
- -----------------------------------------------
-- -- (17,547)
(21,781) --
--------------------------------------------------
- -----------------------------------------------
4,308 (136,299) (26,016)
(95,250) --
--------------------------------------------------
- -----------------------------------------------
-- -- (950)
(1,561) --
--------------------------------------------------
- -----------------------------------------------
31,306,087 12,235 (573,354)
(651,713) (215,976)
--------------------------------------------------
- -----------------------------------------------
40,448,135 (261,062) 590,968
282,064 77,667
--------------------------------------------------
- -----------------------------------------------
$43,373,564 $ 288,750 $2,190,865
$ 3,061,042 $2,337,228
--------------------------------------------------
- -----------------------------------------------
<CAPTION>
U.S. GOVERNMENT MONEY
MARKET PORTFOLIO
<C>
--------------------------------------------------
- -----------------------------------------------
$ 1,888,449
--------------------------------------------------
- -----------------------------------------------
--
--------------------------------------------------
- -----------------------------------------------
--
--------------------------------------------------
- -----------------------------------------------
1,888,449
--------------------------------------------------
- -----------------------------------------------
85,712
--------------------------------------------------
- -----------------------------------------------
31,100
--------------------------------------------------
- -----------------------------------------------
6,900
--------------------------------------------------
- -----------------------------------------------
5,000
--------------------------------------------------
- -----------------------------------------------
49,000
--------------------------------------------------
- -----------------------------------------------
2,500
--------------------------------------------------
- -----------------------------------------------
3,500
--------------------------------------------------
- -----------------------------------------------
--
--------------------------------------------------
- -----------------------------------------------
1,200
--------------------------------------------------
- -----------------------------------------------
400
--------------------------------------------------
- -----------------------------------------------
1,666
--------------------------------------------------
- -----------------------------------------------
186,978
--------------------------------------------------
- -----------------------------------------------
1,701,471
--------------------------------------------------
- -----------------------------------------------
--------------------------------------------------
- -----------------------------------------------
--
--------------------------------------------------
- -----------------------------------------------
--
--------------------------------------------------
- -----------------------------------------------
--
--------------------------------------------------
- -----------------------------------------------
--
--------------------------------------------------
- -----------------------------------------------
--
--------------------------------------------------
- -----------------------------------------------
--
--------------------------------------------------
- -----------------------------------------------
--
--------------------------------------------------
- -----------------------------------------------
--
--------------------------------------------------
- -----------------------------------------------
--
--------------------------------------------------
- -----------------------------------------------
--
--------------------------------------------------
- -----------------------------------------------
$ 1,701,471
--------------------------------------------------
- -----------------------------------------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
41
<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,
1998 1997
1998 1997 1998
<S> <C> <C>
<C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS
- ------------------------------------------------------------
- -----------------------------------------------------------
Operations
Net investment income (loss) $ (43,957) $
(12,653) $ 2,407,443 $ 4,815,417 $
(301,622)
- ------------------------------------------------------------
- -----------------------------------------------------------
Net realized gain (loss) on
investment and foreign
currency transactions 20,859,222
24,436,720 19,658,557 25,006,548
11,875,562
- ------------------------------------------------------------
- -----------------------------------------------------------
Net change in unrealized
appreciation/
depreciation of investments 40,231,073
20,104,947 2,413,504 35,519,278
6,037,494
- ------------------------------------------------------------
- -----------------------------------------------------------
Net increase (decrease) in net
assets
resulting from operations 61,046,338
44,529,014 24,479,504 65,341,243
17,611,434
- ------------------------------------------------------------
- -----------------------------------------------------------
Dividends and Distributions
Dividends from net investment
income --
(46,217) (499,686) (4,345,386)
- --
- ------------------------------------------------------------
- -----------------------------------------------------------
Dividends in excess of net
investment
income --
(60,960) -- --
- --
- ------------------------------------------------------------
- -----------------------------------------------------------
Distributions from net
realized gains --
(31,971,788) (5,879,644) (24,366,069)
(3,988,224)
- ------------------------------------------------------------
- -----------------------------------------------------------
Tax return of capital
distributions --
- -- -- -- --
- ------------------------------------------------------------
- -----------------------------------------------------------
Total distributions --
(32,078,965) (6,379,330) (28,711,455)
(3,988,224)
- ------------------------------------------------------------
- -----------------------------------------------------------
Fund share transactions(a)
Net proceeds from shares sold 29,494,741
47,455,937 32,871,090 54,334,008
24,032,668
- ------------------------------------------------------------
- -----------------------------------------------------------
Net asset value of shares
issued to shareholders in
reinvestment of dividends and
distributions --
31,377,043 6,249,888 28,089,014
3,911,743
- ------------------------------------------------------------
- -----------------------------------------------------------
Cost of shares reacquired (38,037,358)
(68,170,878) (39,515,462) (71,665,460)
(28,637,508)
- ------------------------------------------------------------
- -----------------------------------------------------------
Net increase/(decrease) in net
assets from Fund share
transactions (8,542,617)
10,662,102 (394,484) 10,757,562
(693,097)
- ------------------------------------------------------------
- -----------------------------------------------------------
Total increase (decrease) 52,503,721
23,112,151 17,705,690 47,387,350
12,930,113
NET ASSETS
- ------------------------------------------------------------
- -----------------------------------------------------------
Beginning of period 243,894,580
220,782,429 275,093,199 227,705,849
165,898,136
- ------------------------------------------------------------
- -----------------------------------------------------------
End of period(b) $296,398,301
$243,894,580 $292,798,889 $275,093,199
$178,828,249
- ------------------------------------------------------------
- -----------------------------------------------------------
(a) Fund share transactions are at $1 per share for the U.S.
Government Money
Market Portfolio.
(b) Includes undistributed net
investment income (loss) of $ (43,957)
- -- $ 2,377,788 $ 470,031 $ (301,622)
- ------------------------------------------------------------
- -----------------------------------------------------------
<CAPTION>
SMALL CAPITALIZATION
VALUE PORTFOLIO
------
- ----------------------
Six
Months
Year Ended
Ended Year Ended
December 31, June
30, December 31,
1997
1998 1997
<S> <C> <C>
<C>
INCREASE (DECREASE)
IN NET ASSETS
- ------------------------------------------------------------
- -----------------------------------------------------------
Operations
Net investment income (loss) $ (556,708) $
365,372 $ 655,639
- ------------------------------------------------------------
- -----------------------------------------------------------
Net realized gain (loss) on
investment and foreign
currency transactions 24,119,898
11,111,681 17,387,992
- ------------------------------------------------------------
- -----------------------------------------------------------
Net change in unrealized
appreciation/
depreciation of investments 5,445,586
(8,211,313) 18,899,607
- ------------------------------------------------------------
- -----------------------------------------------------------
Net increase (decrease) in net
assets
resulting from operations 29,008,776
3,265,740 36,943,238
- ------------------------------------------------------------
- -----------------------------------------------------------
Dividends and Distributions
Dividends from net investment
income --
- -- (664,037)
- ------------------------------------------------------------
- -----------------------------------------------------------
Dividends in excess of net
investment
income --
- -- (94,907)
- ------------------------------------------------------------
- -----------------------------------------------------------
Distributions from net
realized gains (21,977,874)
(2,216,932) (17,432,911)
- ------------------------------------------------------------
- -----------------------------------------------------------
Tax return of capital
distributions --
- -- --
- ------------------------------------------------------------
- -----------------------------------------------------------
Total distributions (21,977,874)
(2,216,932) (18,191,855)
- ------------------------------------------------------------
- -----------------------------------------------------------
Fund share transactions(a)
Net proceeds from shares sold 38,578,759
31,133,842 44,917,116
- ------------------------------------------------------------
- -----------------------------------------------------------
Net asset value of shares
issued to shareholders in
reinvestment of dividends and
distributions 21,564,493
2,157,018 17,747,752
- ------------------------------------------------------------
- -----------------------------------------------------------
Cost of shares reacquired (48,745,293)
(33,881,193) (44,673,985)
- ------------------------------------------------------------
- -----------------------------------------------------------
Net increase/(decrease) in net
assets from Fund share
transactions 11,397,959
(590,333) 17,990,883
- ------------------------------------------------------------
- -----------------------------------------------------------
Total increase (decrease) 18,428,861
458,475 36,742,266
NET ASSETS
- ------------------------------------------------------------
- -----------------------------------------------------------
Beginning of period 147,469,275
163,414,169 126,671,903
- ------------------------------------------------------------
- -----------------------------------------------------------
End of period(b) $165,898,136
$163,872,644 $163,414,169
- ------------------------------------------------------------
- -----------------------------------------------------------
(a) Fund share transactions are
Market Portfolio.
(b) Includes undistributed net
investment income (loss) of $ (556,708) $
365,372 --
- ------------------------------------------------------------
- -----------------------------------------------------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
42
<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,
1998 1997 1998
1997 1998 1997 1998
1997
<S> <C> <C> <C>
<C> <C> <C> <C>
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
$ 2,925,429 $ 2,820,604 $ 549,812 $
1,560,613 $ 1,599,897 $ 2,668,018 $ 2,778,978
$ 5,389,243
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
9,142,048 25,216,162 (273,297)
(2,969,114 ) 1,164,322 995,324 933,777
1,604,324
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
31,306,087 (1,064,582) 12,235
(880,530 ) (573,354) 580,802 (651,713)
772,378
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
43,373,564 26,972,184 288,750
(2,289,031 ) 2,190,865 4,244,144 3,061,042
7,765,945
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
(396,509) (2,820,604) (549,812)
- -- (1,467,270) (2,523,654 ) (2,664,834)
(5,281,003)
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
-- (3,343,171) (166,648)
(227,344 ) -- -- --
- --
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
(3,092,912) (25,343,801) --
(14,562 ) (50,039) (465,731 ) (92,870)
(1,471,335)
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
-- -- --
(1,320,129 ) -- -- --
- --
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
(3,489,421) (31,507,576) (716,460)
(1,562,035 ) (1,517,309) (2,989,385 )
(2,757,704) (6,752,338)
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
188,912,125 355,674,205 5,129,857
10,444,049 17,935,209 14,859,623 28,405,578
29,443,555
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
3,426,436 30,918,137 665,281
1,488,888 1,398,819 2,845,116 2,510,074
6,439,182
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
(206,998,468) (384,768,978) (6,683,788)
(18,672,976 ) (8,469,931) (17,766,511 )
(25,213,539) (42,217,583)
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
(14,659,907) 1,823,364 (888,650)
(6,740,039 ) 10,864,097 (61,772 ) 5,702,113
(6,334,846)
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
25,224,236 (2,712,028) (1,316,360)
(10,591,105 ) 11,537,653 1,192,987
6,005,451 (5,321,239)
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
237,850,898 240,562,926 31,188,595
41,779,700 50,410,782 49,217,795 95,070,778
100,392,017
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
$263,075,134 $ 237,850,898 $ 29,872,235
$31,188,595 $ 61,948,435 $50,410,782
$101,076,229 $ 95,070,778
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
$ (2,061,126) $ 316,826 $ (977,844) $
(314,807 ) $ 337,772 $ 223,566 $ 498,408
$ 218,646
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
<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,
1998 1997 1998
1997
<S> <C> <C> <C>
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
$ 2,259,561 $ 4,459,335 $ 1,701,471 $
1,850,349
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
293,643 197,457 --
(469)
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
(215,976) 1,432,889 --
- --
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
2,337,228 6,089,681 1,701,471
1,849,880
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
(2,171,672) (4,425,133 ) (1,701,471)
(1,849,880)
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
-- -- --
- --
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
-- -- --
- --
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
-- -- --
- --
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
(2,171,672) (4,425,133 ) (1,701,471)
(1,849,880)
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
8,993,286 13,448,142 1,218,460,166
1,070,854,061
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
1,720,563 3,643,014 1,270,662
1,601,795
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
(8,957,063) (21,027,273 ) (1,154,702,826)
(1,057,527,680)
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
1,756,786 (3,936,117 ) 65,028,002
14,928,176
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
1,922,342 (2,271,569 ) 65,028,002
14,928,176
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
71,595,507 73,867,076 42,325,532
27,397,356
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
$ 73,517,849 $71,595,507 $ 107,353,534 $
42,325,532
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
$ 145,231 $ 57,342 --
- --
-------------------------------------------------------
- ------------------------------------------------------------
- ---------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
43
<PAGE>
THE TARGET PORTFOLIO TRUST
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
LARGE CAPITALIZATION
GROWTH PORTFOLIO
--------
- --------------------------------------------------------
Six
Months
Ended
Year Ended December 31,
June
30, --------------------------------------------
1998
1997 1996 1995(e)
<S> <C>
<C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
- ------------------------------------------------------------
- --------------------------------------------------------
Net asset value, beginning of period
$13.58 $12.97 $12.13
$9.74
- ------------------------------------------------------------
- --------------------------------------------------------
Income from investment operations
Net investment income (loss) -
- - --(f) .02 .10
- ------------------------------------------------------------
- --------------------------------------------------------
Net realized and unrealized gains (losses)
on
investment transactions
3.47 2.61 2.33 2.41
- ------------------------------------------------------------
- --------------------------------------------------------
Total from investment
operations
3.47 2.61 2.35 2.51
- ------------------------------------------------------------
- --------------------------------------------------------
Less distributions
Dividends from net investment income -
- - (.01) (.02) (.10)
- ------------------------------------------------------------
- --------------------------------------------------------
Distributions in excess of net
investment income -
- - -- -- (.01)
- ------------------------------------------------------------
- --------------------------------------------------------
Distributions from net realized gains -
- - (1.99) (1.49) (.01)
- ------------------------------------------------------------
- --------------------------------------------------------
Total distributions -
- - (2.00) (1.51) (.12)
- ------------------------------------------------------------
- --------------------------------------------------------
Net asset value, end of period
$17.05 $13.58 $12.97
$12.13
- ------------------------------------------------------------
- --------------------------------------------------------
TOTAL RETURN(d)
25.55% 20.77% 21.09%
25.76%
- ------------------------------------------------------------
- --------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ------------------------------------------------------------
- --------------------------------------------------------
Net assets, end of period (000)
$296,398 $243,895 $220,782
$180,077
- ------------------------------------------------------------
- --------------------------------------------------------
Average net assets (000)
$272,929 $242,233 $202,736
$162,982
- ------------------------------------------------------------
- --------------------------------------------------------
Ratios to average net assets
Expenses
.69%(b) .73% .82% .78%
- ------------------------------------------------------------
- --------------------------------------------------------
Net investment income (loss)
(.03)%(b) (.01)% .19% .88%
- ------------------------------------------------------------
- --------------------------------------------------------
Portfolio turnover rate
26% 82% 65% 154%
- ------------------------------------------------------------
- --------------------------------------------------------
<CAPTION>
January 5,
1993(a)
Through
December 31,
1994(e)
1993(e)
<S>
<C>
PER SHARE OPERATING
PERFORMANCE:
- ------------------------------------------------------------
- --------------------------------------------------------
Net asset value, beginning of period $9.91
$10.00
- ------------------------------------------------------------
- --------------------------------------------------------
Income from investment operations
Net investment income (loss) .10
.07(c)
- ------------------------------------------------------------
- --------------------------------------------------------
Net realized and unrealized gains (losses)
on
investment transactions (.16)
(.12)
- ------------------------------------------------------------
- --------------------------------------------------------
Total from investment
operations (.06)
(.05)
- ------------------------------------------------------------
- --------------------------------------------------------
Less distributions
Dividends from net investment income (.10)
(.04)
- ------------------------------------------------------------
- --------------------------------------------------------
Distributions in excess of net
investment income (.01)
- --
- ------------------------------------------------------------
- --------------------------------------------------------
Distributions from net realized gains --
- --
- ------------------------------------------------------------
- --------------------------------------------------------
Total distributions (.11)
(.04)
- ------------------------------------------------------------
- --------------------------------------------------------
Net asset value, end of period $9.74
$9.91
- ------------------------------------------------------------
- --------------------------------------------------------
TOTAL RETURN(d) (.68)%
(.46)%
- ------------------------------------------------------------
- --------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ------------------------------------------------------------
- --------------------------------------------------------
Net assets, end of period (000) $142,072
$98,089
- ------------------------------------------------------------
- --------------------------------------------------------
Average net assets (000) $129,687
$48,033
- ------------------------------------------------------------
- --------------------------------------------------------
Ratios to average net assets
Expenses .81%
1.05%(b)(c)
- ------------------------------------------------------------
- --------------------------------------------------------
Net investment income (loss) 1.08%
.84%(b)(c)
- ------------------------------------------------------------
- --------------------------------------------------------
Portfolio turnover rate 24%
4%
- ------------------------------------------------------------
- --------------------------------------------------------
</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.
(f) Less than $.005 per share.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
44
<PAGE>
<TABLE>
<CAPTION>
SMALL CAPITALIZATION
LARGE CAPITALIZATION
GROWTH
VALUE PORTFOLIO
PORTFOLIO
---------------------------------------------------
- ---------------------------- ---------------------------
- ---------
January 5,
Six Months
1993(a) Six Months Year Ended December
Ended Year Ended December 31,
Through Ended 31,
June 30, ------------------------------------
- ----------- December 31, June 30, ------------
- ---------
1998 1997 1996(e) 1995(e)
1994(e) 1993(e) 1998 1997
1996
<C> <C> <C> <C>
<C> <C> <C> <C>
<C>
--------------------------------------------------
- ------------------------------------------------------------
- ---------
$16.21 $13.97 $12.57 $10.02
$10.11 $10.00 $15.57 $14.93
$14.15
--------------------------------------------------
- ------------------------------------------------------------
- ---------
.14 .31 .31 .33
.26 .21(c) (.03) (.05)
(.02)
--------------------------------------------------
- ------------------------------------------------------------
- ---------
1.33 3.77 2.07 2.89
(.04) .02 1.72 3.02
2.63
--------------------------------------------------
- ------------------------------------------------------------
- ---------
1.47 4.08 2.38 3.22
.22 .23 1.69 2.97
2.61
--------------------------------------------------
- ------------------------------------------------------------
- ---------
(.03) (.28) (.31) (.30)
(.25) (.11) -- --
- --
--------------------------------------------------
- ------------------------------------------------------------
- ---------
-- -- (.03) --
- -- -- -- -- --
--------------------------------------------------
- ------------------------------------------------------------
- ---------
(.35) (1.56) (.64) (.37)
(.06) (.01) (.38) (2.33)
(1.83)
--------------------------------------------------
- ------------------------------------------------------------
- ---------
(.38) (1.84) (.98) (.67)
(.31) (.12) (.38) (2.33)
(1.83)
--------------------------------------------------
- ------------------------------------------------------------
- ---------
$17.30 $16.21 $13.97 $12.57
$10.02 $10.11 $16.88 $15.57
$14.93
--------------------------------------------------
- ------------------------------------------------------------
- ---------
9.01% 29.80% 19.17% 32.08%
2.18% 2.29% 20.18% 20.85%
18.88%
--------------------------------------------------
- ------------------------------------------------------------
- ---------
--------------------------------------------------
- ------------------------------------------------------------
- ---------
$292,799 $275,093 $227,706 $187,596
$142,219 $96,074 $178,828 $165,898
$147,469
--------------------------------------------------
- ------------------------------------------------------------
- ---------
$289,093 $253,579 $208,898 $163,124
$128,865 $46,623 $176,809 $156,570
$141,496
--------------------------------------------------
- ------------------------------------------------------------
- ---------
.69%(b) .72% .77% .76%
.81% 1.05%(b)(c) .77% .79%
.89%
--------------------------------------------------
- ------------------------------------------------------------
- ---------
1.68%(b) 1.90% 2.33% 2.83%
2.66% 2.12%(b)(c) (.34)% (.36)%
(.32)%
--------------------------------------------------
- ------------------------------------------------------------
- ---------
15% 21% 22% 59%
6% 3% 30% 106% 108%
--------------------------------------------------
- ------------------------------------------------------------
- ---------
<CAPTION>
January 5,
1993(a)
Through
December 31,
1995(e) 1994(e) 1993(e)
<S> <C> <C> <C>
--------------------------------------------------
- ------------------------------------------------------------
- ---------
$11.59 $11.86 $10.00
--------------------------------------------------
- ------------------------------------------------------------
- ---------
.02 .01 .01(c)
--------------------------------------------------
- ------------------------------------------------------------
- ---------
2.84 (.27) 1.86
--------------------------------------------------
- ------------------------------------------------------------
- ---------
2.86 (.26) 1.87
--------------------------------------------------
- ------------------------------------------------------------
- ---------
(.02) (.01) (.01)
--------------------------------------------------
- ------------------------------------------------------------
- ---------
-- -- --
--------------------------------------------------
- ------------------------------------------------------------
- ---------
(.28) -- --
--------------------------------------------------
- ------------------------------------------------------------
- ---------
(.30) (.01) (.01)
--------------------------------------------------
- ------------------------------------------------------------
- ---------
$14.15 $11.59 $11.86
--------------------------------------------------
- ------------------------------------------------------------
- ---------
24.62% (2.19)% 18.66%
--------------------------------------------------
- ------------------------------------------------------------
- ---------
--------------------------------------------------
- ------------------------------------------------------------
- ---------
$121,533 $96,462 $63,917
--------------------------------------------------
- ------------------------------------------------------------
- ---------
$107,649 $87,403 $29,313
--------------------------------------------------
- ------------------------------------------------------------
- ---------
.85% .93% 1.05%(b)(c)
--------------------------------------------------
- ------------------------------------------------------------
- ---------
.12% .10% .11%(b)(c)
--------------------------------------------------
- ------------------------------------------------------------
- ---------
120% 97% 72%
--------------------------------------------------
- ------------------------------------------------------------
- ---------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
45
<PAGE>
THE TARGET PORTFOLIO TRUST
Financial Highlights
(Unaudited)
<TABLE>
<CAPTION>
SMALL CAPITALIZATION
VALUE
PORTFOLIO(e)
--------
- --------------------------------------------------------
Six
Months
Ended
Year Ended December 31,
June
30, -------------------------------------------
1998
1997 1996 1995
<S> <C>
<C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
- ------------------------------------------------------------
- --------------------------------------------------------
Net asset value, beginning of period
$17.50 $15.22 $13.07 $11.07
- ------------------------------------------------------------
- --------------------------------------------------------
Income from investment operations
Net investment income (loss)
.04 .08 .11 .14
- ------------------------------------------------------------
- --------------------------------------------------------
Net realized and unrealized gains (losses)
on
investment transactions
.34 4.37 2.71 2.00
- ------------------------------------------------------------
- --------------------------------------------------------
Total from investment
operations
.38 4.45 2.82 2.14
- ------------------------------------------------------------
- --------------------------------------------------------
Less distributions
Dividends from net investment income
- -- (.08) (.11) (.14)
- ------------------------------------------------------------
- --------------------------------------------------------
Distributions in excess of net
investment income
- -- (.01) -- --
- ------------------------------------------------------------
- --------------------------------------------------------
Distributions from net realized gains
(.24) (2.08) (.56) --
- ------------------------------------------------------------
- --------------------------------------------------------
Distributions in excess of net realized
gains
- -- -- -- --
- ------------------------------------------------------------
- --------------------------------------------------------
Tax return of capital distributions
- -- -- -- --
- ------------------------------------------------------------
- --------------------------------------------------------
Total distributions
(.24) (2.17) (.67) (.14)
- ------------------------------------------------------------
- --------------------------------------------------------
Net asset value, end of period
$17.64 $17.50 $15.22 $13.07
- ------------------------------------------------------------
- --------------------------------------------------------
TOTAL RETURN(d)
2.06% 29.98% 21.75% 19.21%
- ------------------------------------------------------------
- --------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ------------------------------------------------------------
- --------------------------------------------------------
Net assets, end of period (000)
$163,873 $163,414 $126,672
$97,594
- ------------------------------------------------------------
- --------------------------------------------------------
Average net assets (000)
$169,816 $144,160 $110,564
$88,085
- ------------------------------------------------------------
- --------------------------------------------------------
Ratios to average net assets
Expenses
.77%(b) .81% .92% 1.00%
- ------------------------------------------------------------
- --------------------------------------------------------
Net investment income (loss)
.43%(b) .45% .77% 1.14%
- ------------------------------------------------------------
- --------------------------------------------------------
Portfolio turnover rate
18% 36% 60% 110%
- ------------------------------------------------------------
- --------------------------------------------------------
<CAPTION>
January 5,
1993(a)
Through
December 31,
1994
1993
<S>
<C>
PER SHARE OPERATING
PERFORMANCE:
- ------------------------------------------------------------
- --------------------------------------------------------
Net asset value, beginning of period $12.72
$10.00
- ------------------------------------------------------------
- --------------------------------------------------------
Income from investment operations
Net investment income (loss) .11
(.01)(c)
- ------------------------------------------------------------
- --------------------------------------------------------
Net realized and unrealized gains (losses)
on
investment transactions (1.49)
3.19
- ------------------------------------------------------------
- --------------------------------------------------------
Total from investment
operations (1.38)
3.18
- ------------------------------------------------------------
- --------------------------------------------------------
Less distributions
Dividends from net investment income --
- --
- ------------------------------------------------------------
- --------------------------------------------------------
Distributions in excess of net
investment income --
- --
- ------------------------------------------------------------
- --------------------------------------------------------
Distributions from net realized gains (.27)
(.46)
- ------------------------------------------------------------
- --------------------------------------------------------
Distributions in excess of net realized
gains --
- --
- ------------------------------------------------------------
- --------------------------------------------------------
Tax return of capital distributions --
- --
- ------------------------------------------------------------
- --------------------------------------------------------
Total distributions (.27)
(.46)
- ------------------------------------------------------------
- --------------------------------------------------------
Net asset value, end of period $11.07
$12.72
- ------------------------------------------------------------
- --------------------------------------------------------
TOTAL RETURN(d) (11.03)%
31.86%
- ------------------------------------------------------------
- --------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ------------------------------------------------------------
- --------------------------------------------------------
Net assets, end of period (000) $84,163
$64,430
- ------------------------------------------------------------
- --------------------------------------------------------
Average net assets (000) $83,891
$29,039
- ------------------------------------------------------------
- --------------------------------------------------------
Ratios to average net assets
Expenses .93%
1.05%(b)(c)
- ------------------------------------------------------------
- --------------------------------------------------------
Net investment income (loss) .88%
(.11)%(b)(c)
- ------------------------------------------------------------
- --------------------------------------------------------
Portfolio turnover rate 97%
112%
- ------------------------------------------------------------
- --------------------------------------------------------
</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.
(f) Less than $.005 per share.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
46
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL
INTERNATIONAL
BOND
EQUITY PORTFOLIO
PORTFOLIO
--------------------------------------------------
- ----------------------------- --------------------------
- --------
January 5,
Six Months
1993(a) Six Months Year Ended December
Ended Year Ended December 31,
Through Ended 31,
June 30, -----------------------------------
- ------------ December 31, June 30, -----------
- --------
1998 1997 1996 1995(e)
1994(e) 1993(e) 1998 1997
1996
<C> <C> <C> <C>
<C> <C> <C> <C> <C>
-------------------------------------------------
- ------------------------------------------------------------
- --------
$14.27 $14.82 $13.64 $11.95
$13.09 $10.00 $9.17 $10.17
$10.19
-------------------------------------------------
- ------------------------------------------------------------
- --------
.19 .21 .25 .17
.06 .07 .16 .42 .51
-------------------------------------------------
- ------------------------------------------------------------
- --------
2.48 1.32 1.79 1.67
(.01) 3.16 (.07) (1.00)
(.08)
-------------------------------------------------
- ------------------------------------------------------------
- --------
2.67 1.53 2.04 1.84
.05 3.23 .09 (.58) .43
-------------------------------------------------
- ------------------------------------------------------------
- --------
(.03) (.41) (.22) (.11)
(.01) (.01) (.16) --
(.21)
-------------------------------------------------
- ------------------------------------------------------------
- --------
-- -- -- --
- -- -- (.06) (.06) --
-------------------------------------------------
- ------------------------------------------------------------
- --------
(.20) (1.67) (.64) (.04)
(1.07) (.05) -- --(f)
(.24)
-------------------------------------------------
- ------------------------------------------------------------
- --------
-- -- -- --
(.11) (.08) -- -- --
-------------------------------------------------
- ------------------------------------------------------------
- --------
-- -- -- --
- -- -- -- (.36) --
-------------------------------------------------
- ------------------------------------------------------------
- --------
(.23) (2.08) (.86) (.15)
(1.19) (.14) (.22) (.42)
(.45)
-------------------------------------------------
- ------------------------------------------------------------
- --------
$16.71 $14.27 $14.82 $13.64
$11.95 $13.09 $9.04 $9.17
$10.17
-------------------------------------------------
- ------------------------------------------------------------
- --------
18.65% 10.60% 15.25% 15.38%
.18% 32.38% .80% (5.73)% 4.45%
-------------------------------------------------
- ------------------------------------------------------------
- --------
-------------------------------------------------
- ------------------------------------------------------------
- --------
$263,075 $237,851 $240,563 $191,598
$188,025 $127,121 $29,872 $31,189
$41,780
-------------------------------------------------
- ------------------------------------------------------------
- --------
$254,524 $245,536 $221,626 $183,414
$179,614 $49,769 $30.812 $35,163
$38,788
-------------------------------------------------
- ------------------------------------------------------------
- --------
.89%(b) .93% .99% 1.02%
1.07% 1.40%(b) 1.36%(b) 1.35%
1.34%
-------------------------------------------------
- ------------------------------------------------------------
- --------
2.32%(b) 1.15% 1.77% 1.32%
.47% .64%(b) 3.60%(b) 4.44% 5.02%
-------------------------------------------------
- ------------------------------------------------------------
- --------
19% 37% 39% 76%
116% 65% 44% 202% 226%
-------------------------------------------------
- ------------------------------------------------------------
- --------
<CAPTION>
May 17,
1994(a)
Through
December 31,
1995 1994
<S> <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%(b)(c)
-------------------------------------------------
- ------------------------------------------------------------
- --------
5.56%(c) 4.84%(b)(c)
-------------------------------------------------
- ------------------------------------------------------------
- --------
456% 361%
-------------------------------------------------
- ------------------------------------------------------------
- --------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements beginning
on page 51
47
<PAGE>
THE TARGET PORTFOLIO TRUST
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
TOTAL RETURN
BOND PORTFOLIO
--------
- ------------------------------------------------------------
- ------------
Six
Months
Ended
Year Ended December 31,
June
30, ---------------------------------------------
- --------------
1998
1997 1996 1995 1994
<S> <C>
<C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Net asset value, beginning of period $10.56
$10.28 $10.62 $9.48 $10.28
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Income from investment operations
Net investment income .28
.57 .57 .62(c) .47(c)
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Net realized and unrealized gains (losses)
on
investment transactions .14
.35 (.09) 1.18 (.82)
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Total from investment
operations .42
.92 .48 1.80 (.35)
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Less distributions
Dividends from net investment income (.27)
(.54) (.56) (.58) (.45)
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Distributions in excess of net
investment income --
- -- -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Distributions from net realized gains (.01)
(.10) (.26) (.08) --
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Distributions in excess of net realized
gains --
- -- -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Total distributions (.28)
(.64) (.82) (.66) (.45)
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Net asset value, end of period $10.70
$10.56 $10.28 $10.62 $9.48
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
TOTAL RETURN(d) 3.79%
9.23% 5.02% 19.63% (3.54)%
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
RATIOS/SUPPLEMENTAL DATA:
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Net assets, end of period (000) $61,948
$50,411 $49,218 $45,118 $31,191
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Average net assets (000) $58,208
$48,123 $47,246 $37,023 $31,141
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Ratios to average net assets
Expenses
.82%(b) .91% .94% .85%(c)
.85%(c)
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Net investment income
5.54%(b) 5.54% 5.67%
6.21%(c) 4.90%(c)
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Portfolio turnover rate 177%
323% 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 51
48
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE-TERM
MORTGAGE BACKED
BOND PORTFOLIO
SECURITIES PORTFOLIO
-------------------------------------------------
- --------------------------- ----------------------------
- ------
January 5,
1993(a)
Six Months
Through Six Months Year Ended December
Ended Year Ended December 31,
December Ended 31,
June 30, ----------------------------------
- ----------- 31, June 30, -------------
- ------
1998 1997 1996 1995
1994 1993 1998 1997 1996
<C> <C> <C> <C>
<C> <C> <C> <C> <C>
------------------------------------------------
- ------------------------------------------------------------
- ------
$ 10.42 $ 10.30 $ 10.51 $ 9.56
$ 10.26 $ 10.00 $ 10.45 $ 10.21 $
10.31
------------------------------------------------
- ------------------------------------------------------------
- ------
.30 .58 .59 .63
.49 .46(c) .33 .64 .65
------------------------------------------------
- ------------------------------------------------------------
- ------
.03 .28 (.07) .94
(.71) .46 .01 .23 (.12)
------------------------------------------------
- ------------------------------------------------------------
- ------
.33 .86 .52 1.57
(.22) .92 .34 .87 .53
------------------------------------------------
- ------------------------------------------------------------
- ------
(.29) (.57) (.59) (.60)
(.48) (.45) (.31) (.63) (.63)
------------------------------------------------
- ------------------------------------------------------------
- ------
-- -- -- --
- -- -- -- -- --
------------------------------------------------
- ------------------------------------------------------------
- ------
(.01) (.17) (.14) (.02)
- -- (.18) -- -- --
------------------------------------------------
- ------------------------------------------------------------
- ------
-- -- -- --
- -- (.03) -- -- --
------------------------------------------------
- ------------------------------------------------------------
- ------
(.30) (.74) (.73) (.62)
(.48) (.66) (.31) (.63) (.63)
------------------------------------------------
- ------------------------------------------------------------
- ------
$10.45 $10.42 $10.30 $10.51
$9.56 $10.26 $10.48 $10.45 $10.21
------------------------------------------------
- ------------------------------------------------------------
- ------
3.02% 8.57% 5.22% 16.87%
(2.23)% 9.33% 3.19% 8.82%
5.56%
------------------------------------------------
- ------------------------------------------------------------
- ------
------------------------------------------------
- ------------------------------------------------------------
- ------
$101,076 $95,071 $100,392 $77,125
$62,924 $60,651 $73,518 $71,596
$73,867
------------------------------------------------
- ------------------------------------------------------------
- ------
$98,072 $95,575 $81,723 $68,628
$69,602 $32,441 $72,917 $71,757
$72,214
------------------------------------------------
- ------------------------------------------------------------
- ------
.68%(b) .71% .73% .79%
.80% .85%(b)(c) .70%(b) .88% .91%
------------------------------------------------
- ------------------------------------------------------------
- ------
5.71%(b) 5.64% 5.69% 6.09%
5.06% 4.27%(b)(c) 6.25%(b) 6.21% 6.44%
------------------------------------------------
- ------------------------------------------------------------
- ------
211% 249% 311% 93%
77% 129% 9% 128% 102%
------------------------------------------------
- ------------------------------------------------------------
- ------
<CAPTION>
January 5,
1993(a)
Through
December 31,
1995 1994 1993
<S> <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 51
49
<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, -------------------------------------------
1998
1997 1996 1995
<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
.024 .049 .045
.051(c)
- ------------------------------------------------------------
- --------------------------------------------------------
Total from investment
operations
.024 .049 .045 .051
- ------------------------------------------------------------
- --------------------------------------------------------
Less distributions
Dividends from net investment income
(.024) (.049) (.045) (.051)
- ------------------------------------------------------------
- --------------------------------------------------------
Total distributions
(.024) (.049) (.045) (.051)
- ------------------------------------------------------------
- --------------------------------------------------------
Net asset value, end of period
$1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------
- --------------------------------------------------------
TOTAL RETURN(d)
2.45% 4.95% 4.53% 5.25%
- ------------------------------------------------------------
- --------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ------------------------------------------------------------
- --------------------------------------------------------
Net assets, end of period (000)
$107,354 $42,326 $27,397
$18,855
- ------------------------------------------------------------
- --------------------------------------------------------
Average net assets (000)
$69,138 $37,675 $19,132
$20,173
- ------------------------------------------------------------
- --------------------------------------------------------
Ratios to average net assets
Expenses
.55%(b) .65% .89%
.75%(c)
- ------------------------------------------------------------
- --------------------------------------------------------
Net investment income
4.96%(b) 4.91% 4.49%
5.18%(c)
- ------------------------------------------------------------
- --------------------------------------------------------
<CAPTION>
January 5,
1993(a)
Through
December 31,
1994
1993
<S>
<C>
PER SHARE OPERATING
PERFORMANCE:
- ------------------------------------------------------------
- --------------------------------------------------------
Net asset value, beginning of period $1.00
$1.00
- ------------------------------------------------------------
- --------------------------------------------------------
Income from investment operations
Net investment income .037(c)
.025(c)
- ------------------------------------------------------------
- --------------------------------------------------------
Total from investment
operations .037
.025
- ------------------------------------------------------------
- --------------------------------------------------------
Less distributions
Dividends from net investment income (.037)
(.025)
- ------------------------------------------------------------
- --------------------------------------------------------
Total distributions (.037)
(.025)
- ------------------------------------------------------------
- --------------------------------------------------------
Net asset value, end of period $1.00
$1.00
- ------------------------------------------------------------
- --------------------------------------------------------
TOTAL RETURN(d) 3.79%
2.56%
- ------------------------------------------------------------
- --------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ------------------------------------------------------------
- --------------------------------------------------------
Net assets, end of period (000) $21,438
$2,997
- ------------------------------------------------------------
- --------------------------------------------------------
Average net assets (000) $15,048
$1,407
- ------------------------------------------------------------
- --------------------------------------------------------
Ratios to average net assets
Expenses .50%(c)
.50%(b)(c)
- ------------------------------------------------------------
- --------------------------------------------------------
Net investment income 4.03%(c)
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 51
50
<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 sixty 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 sixty 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
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
- ------------------------------------------------------------
- --------------------
51
<PAGE>
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.
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
from 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 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
- ------------------------------------------------------------
- --------------------
52
<PAGE>
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 American
Institute of Certified
Public Accountants (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 $(4,906,872), $(496,389), $(18,421) and
$165,618,
respectively, of net foreign currency gains/losses to
undistributed
(overdistribution) net investment income from accumulated
net realized gains
(losses).
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 tax-paying 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........... Delaware International Advisers Ltd.
Total Return Bond
and
Intermediate-Term
Bond........... Pacific Investment Management Co.
Mortgage Backed
Securities and
U.S. Government
Money Market... Wellington Management Company, LLP
</TABLE>
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>
- ------------------------------------------------------------
- --------------------
53
<PAGE>
The Fund had a distribution agreement with Prudential
Securities
Incorporated ('PSI') for distribution of the Fund's shares.
PSI served the Fund
without compensation. Effective July 1, 1998, Prudential
Investment Management
Services LLC ('PIMS') became the distributor of the Fund and
serves the Fund
under the same terms and conditions as under the agreement
with PSI.
PIFM, PSI and PIMS 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, 1998 as
well as the fees due
PMFS as of June 30, 1998.
<TABLE>
<CAPTION>
Amount incurred
for the Amount Due
six months ended as of
June 30, June 30,
Portfolio 1998 1998
- ------------------------ ---------------- ------------
<S> <C> <C>
Large Capitalization
Growth................ $ 49,700 $8,800
Large Capitalization
Value................. 50,300 8,900
Small Capitalization
Growth................ 49,700 8,800
Small Capitalization
Value................. 48,700 8,600
International Equity.... 48,900 8,700
International Bond...... 16,200 2,800
Total Return Bond....... 19,600 3,500
Intermediate-Term
Bond.................. 21,600 3,900
Mortgage Backed
Securities............ 23,500 4,100
U.S. Government Money
Market................ 6,700 1,300
</TABLE>
For the six months ended June 30, 1998, PSI earned
approximately $2,700
and $3,375 in brokerage commissions on behalf of certain
portfolio transactions
executed with the Large Capitalization Growth Portfolio and
Large Capitalization
Value Portfolio, respectively.
- ----------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of portfolio securities, excluding
short-term
investments and written options, for the six months ended
June 30, 1998 were as
follows:
<TABLE>
<CAPTION>
Portfolio Purchases Sales
- ---------------------------- ------------ ------------
<S> <C> <C>
Large Capitalization
Growth.................... $ 67,940,145 $ 77,262,760
Large Capitalization
Value..................... 44,887,914 41,227,841
Small Capitalization
Growth.................... 51,160,572 61,446,470
Small Capitalization
Value..................... 33,174,811 29,918,706
International Equity........ 46,186,602 63,344,933
International Bond.......... 13,090,298 13,948,478
<CAPTION>
Portfolio Purchases Sales
- ---------------------------- ------------ ------------
<S> <C> <C>
Total Return Bond........... 125,594,272 105,568,718
Intermediate-Term Bond...... 208,803,358 183,017,199
Mortgage Backed
Securities................ 14,689,271 6,435,325
</TABLE>
The federal income tax basis and unrealized
appreciation/depreciation of
each of the Portfolios' investments, excluding written
options as of June 30,
1998, were as follows:
<TABLE>
<CAPTION>
Net
Unrealized
Appreciation Gross
Unrealized
Portfolio Basis (Depreciation) Appreciation
Depreciation
- ------------ ------------ ------------- ------------
- --------------
<S> <C> <C> <C>
<C>
Large
Capitalization
Growth.... $190,710,854 $ 107,580,789 $111,203,349
$ 3,622,560
Large
Capitalization
Value..... 201,905,424 91,765,303 96,144,365
4,379,062
Small
Capitalization
Growth.... 140,788,787 39,374,922 46,663,560
7,288,638
Small
Capitalization
Value..... 152,994,750 31,644,565 39,693,798
8,049,233
International
Equity.... 204,856,678 64,083,782 76,196,306
12,112,524
International
Bond...... 29,086,445 (417,629) 490,545
908,174
Total Return
Bond...... 75,445,863 356,508 515,465
158,957
Intermediate-
Term
Bond...... 112,597,136 238,664 601,960
363,296
Mortgage
Backed
Securities... 70,996,360 2,197,488 2,361,525
164,037
</TABLE>
For federal income tax purposes, the Mortgage Backed
Securities Portfolio
had a capital loss carryforward as of December 31, 1997 of
approximately
$1,083,600 which expires in 2002. 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, the International Bond Portfolio and the
International Equity
Portfolio are electing to treat net currency losses of
approximately $165,700
and $60,668, respectively and the Large Capitalization
Growth Portfolio is
electing to treat net capital losses of approximately
$3,715,800, incurred in
the two-month period ended December 31, 1997 as having been
incurred in the
current year.
At June 30, 1998, the Total Return and Intermediate-
Term Bond Portfolios
bought 67 and 261 financial futures contracts, respectively,
on U.S. Treasury
Bonds, both expiring on September 18, 1998. The unrealized
appreciation on such
contracts as of June 30, 1998 were as follows:
<TABLE>
<CAPTION>
Value on
Unrealized
Value at June 30,
Appreciation
Portfolio Acquisition 1998
(Depreciation)
- ---------------------- ----------- ------------ -------
- -------
<S> <C> <C> <C>
Total Return Bond..... $ 8,065,578 $ 8,058,281 $
(7,297)
Intermediate-Term
Bond................ 29,362,125 29,476,719
114,594
</TABLE>
- ------------------------------------------------------------
- --------------------
54
<PAGE>
At June 30, 1998, the Total Return Bond Portfolio 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>
German Deutsche marks,
expiring 9/24/98.... $ 1,020,134 $1,014,679 $
5,455
--------------- ----------
- ------
--------------- ----------
- ------
</TABLE>
Transactions in options written during the six months
ended June 30, 1998,
were as follows:
<TABLE>
<CAPTION>
Number of
Premiums
Target Total Return Contracts
Received
- -------------------------------------- --------- ------
- --
<S> <C> <C>
Options outstanding at December 31,
1997................................ -- $ -
- -
Options written....................... 14
6,925
--------- ------
- --
Options outstanding at June 30,
1998................................ 14 $
6,925
--------- ------
- --
--------- ------
- --
<CAPTION>
Number of
Premiums
Intermediate-Term Bond Portfilio Contracts
Received
- -------------------------------------- --------- ------
- --
<S> <C> <C>
Options outstanding at December 31,
1997................................ -- $ -
- -
Options written....................... 23
11,377
--------- ------
- --
Options outstanding at June 30,
1998................................ 23
$11,377
--------- ------
- --
--------- ------
- --
</TABLE>
- ------------------------------------------------------------
- --------------------
Note 5. Capital
The Fund has authorized an unlimited number of shares
of beneficial
interest at $.001 par value per share. Of the shares
outstanding at June 30,
1998, PIFM owned 1,125 shares of each portfolio, except for
the International
Bond Portfolio, of which it owned 252,543 shares.
Transactions in shares of beneficial interest during
the six months ended
June 30, 1998 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........................... 1,899,022
- -- (2,471,868) (572,846)
Large Capitalization Value
Portfolio........................... 1,915,490
349,938 (2,311,824) (46,396)
Small Capitalization Growth
Portfolio........................... 1,427,348
220,380 (1,710,136) (62,408)
Small Capitalization Value
Portfolio........................... 1,688,146
112,697 (1,845,743) (44,900)
International Equity Portfolio........ 11,973,055
205,916 (13,096,601) (917,630)
International Bond Portfolio.......... 556,593
72,149 (724,859) (96,117)
Total Return Bond Portfolio........... 1,685,150
131,582 (797,283) 1,019,449
Intermediate-Term Bond Portfolio...... 2,715,118
240,073 (2,410,706) 544,485
Mortgage Backed Securities Portfolio.. 857,258
164,025 (854,162) 167,121
</TABLE>
Transactions in shares of beneficial interest during
the year ended
December 31, 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........................... 3,273,409
2,367,133 (4,709,116) 931,426
Large Capitalization Value
Portfolio........................... 3,430,654
1,783,097 (4,539,037) 674,714
Small Capitalization Growth
Portfolio........................... 2,375,813
1,448,105 (3,049,714) 774,204
Small Capitalization Value
Portfolio........................... 2,564,741
1,051,562 (2,602,621) 1,013,682
International Equity Portfolio........ 23,121,459
2,177,188 (24,872,919) 425,728
International Bond Portfolio.......... 1,097,817
157,365 (1,963,982) (708,800)
Total Return Bond Portfolio........... 1,432,562
273,531 (1,719,713) (13,620)
Intermediate-Term Bond Portfolio...... 2,836,650
620,854 (4,075,790) (618,286)
Mortgage Backed Securities Portfolio.. 1,308,386
354,474 (2,049,370) (386,510)
</TABLE>
- ------------------------------------------------------------
- --------------------
55
<PAGE>
Target's Shareholder Services
Target strives to demonstrate that top managers can make a
difference, asset
allocation can limit volatility and quality services are
worth paying for. So
here's a sampling of the services you receive as a Target
shareholder. This
impressive list should confirm that your choice to use
Target was the right
one for you and your family.
Consulting Services
1) A Financial Advisor's professional guidance to assist
you.
2) Questionnaire process addresses your investment needs.
3) Personalized investment policy statement (the
Evaluation) details your risk
profile.
4) 66 recommended asset allocations or unlimited number of
customized
allocations are available.
5) Investment advisers manage or co-manage a portion of
each Target portfolio.
6) Adviser monitoring helps ensure that they perform as
expected over the long
term.
7) Adviser changes are made if long-term performance is
poor.
8) Free, unlimited allocation changes help you react to
changing market
conditions.
9) Research services from Ibbotson Associates are used for
allocation
construction.
10) IRA analysis details your overall IRA allocation and
suggests a new one,
if appropriate.
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 market indices.
(ICON)
56
<PAGE>
Trustees
Eugene C. Dorsey
Douglas H. McCorkindale
Thomas T. Mooney
Richard A. Redeker
Officers
Richard A Redeker
President
Robert F. Gunia
Vice President
Grace C. Torres
Treasurer
Stephen M. Ungerman
Assistant Treasurer
S. Jane Rose
Secretary
David F. Connor
Assistant Secretary
Manager
Prudential Investments Fund
Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Advisers
Columbus Circle Investors
Metro Center
One Station Plaza
Stamford, CT 06902
Delaware International
Advisers Ltd.
80 Cheapside
London, ECZV6EE
United Kingdom
Hotchkis and Wiley
800 West Sixth Street
Los Angeles, CA 90017
INVESCO Capital Management
1315 Peachtree Street
Suite 500
Atlanta, GA 30309
Investment Advisers, Inc.
3700 First Bank Place
P.O. Box 357
Minneapolis, MN 55440
Lazard Freres Asset Management
30 Rockefeller Plaza
New York, NY 10020
Oak Associates
3875 Embassy Parkway
Suite 250
Akron, OH 44333
Nicholas-Applegate
Capital Management
600 West Broadway
San Diego, CA 92101
Pacific Investment
Management Company
840 Newport Center Drive
Newport Beach, CA 92658
Wellington Management Company
75 State Street
Boston, MA 02109
Wood, Struthers & Winthrop
277 Park Avenue
New York, NY 10005
Distributor
Prudential Investment
Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund
Services LLC
Raritan Plaza One
Edison, NJ 08837
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The accompanying financial statements as of June 30, 1998
were not audited
and, accordingly, no opinion is expressed on them.
This report is not authorized for distribution to
prospective investors unless
preceded or accompanied by a current prospectus.
875921 87 6 875921 40 5 875921 88 4 875921 60 3
875921 20 7 875921 30 6 875921 80 1 TMF 158 E2
875921 10 8 875921 50 4 875921 70 2
(ICON)
