<PAGE>
(ICON)
The
Target Portfolio
Trust
(SYMBOL)
Semiannual Report
JUNE 30, 1999
(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 18
International Equity Portfolio 23
International Bond Portfolio 26
Total Return Bond Portfolio 28
Intermediate-Term Bond Portfolio 31
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:
It started in the first quarter of the year, but investors were too risk-averse
to believe it. By April 1999, however, it could no longer be denied: the world
was becoming a safer place to invest. Japan was showing signs that its economy
had bottomed and was poised to start growing again, Germany was also hinting at
improved economic conditions, and cheaper currencies and lower interest rates
were helping to fuel several emerging market economies.
The Stock Market: No Longer Narrowly Focused
This encouraging economic news prompted many equity investors to look beyond
the domestic large-capitalization growth stocks that have played such a big
part in driving the market's returns over the past several years. What they
found in the United States were stocks of small-cap companies that were ignored
for so long, they had become bargain-priced. Investors also found relatively
inexpensive value stocks among the large-cap companies. These stocks included
many cyclicals--stocks that typically do well when the economy thrives.
Outside the United States, investors found stocks in Asia and emerging markets
that were also inexpensive.
When the second quarter drew to a close, it became obvious that a broader group
of stocks was now benefiting from this accelerated global growth. The Russell
2000 Index of small-company stocks outperformed the other major stock indexes
during the last half of the six-month reporting period. The stock market had
placed exceptionally high capitalizations (the total price of a corporation's
outstanding stock) on a few popular companies. These "mega-caps" had absorbed a
lot of investors' funds, while smaller companies were priced much lower. So
when
Performance Summary as of June 30, 1999
<TABLE>
<CAPTION>
12/31/98 6/30/99 Six-Month* No. of
Portfolios NAV NAV Total Return Funds**
<S> <C> <C> <C> <C>
Large Capitalization Growth $18.29 $21.52 20.58%
Lipper Growth Fund Avg. 11.65 1174
Large Capitalization Value 15.87 17.10 9.73
Lipper Growth & Income Fund Avg. 10.93 922
Small Capitalization Growth 15.35 16.31 6.45
Lipper Small-Cap Fund Avg. 8.56 777
Small Capitalization Value 14.98 15.81 6.30
Lipper Small-Cap Fund Avg. 8.56 777
International Equity 15.54 16.20 4.84
Lipper International Fund Avg. 7.36 624
International Bond 9.52 8.81 -4.17
Lipper International Income Fund Avg. -5.93 63
Total Return Bond 10.49 10.09 -1.38
Lipper Corporate Debt BBB Fund Avg. -1.78 136
Intermediate-Term Bond 10.36 10.04 -0.49
Lipper Intermediate
Investment-Grade Fund Avg. -1.58 275
Mortgage Backed Securities 10.47 10.20 0.27
Lipper U.S. Mortgage Fund Avg. -0.37 69
U.S. Government Money Market 1.00 1.00 2.09
Lipper U.S. Gov't Money Fund Avg. 2.09 122
</TABLE>
* Source: Lipper, Inc. for Lipper averages, and Prudential Investments Fund
Management for Target returns. Target returns are in boldface 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.
2
<PAGE>
investors sold some of their shares of the mega-caps, enough money was released
to have a very large impact on the prices of small-company stocks. They surged.
In many cases, merger and acquisition activity was a catalyst for a
bargain-priced company's gains.
How Did Our Funds Perform?
The Large Capitalization Growth Portfolio, managed by Columbus Circle Investors
and Oak Associates, benefited from strong growth in large-capitalization
companies early in the year and withstood the turbulence those companies
experienced in the second quarter to return 20.58% for the first six months of
1999. The Portfolio benefited from its financial, utility, and consumer
cyclical holdings, while its gains in the technology sector were reduced by
declines in AOL and Compaq.
The Large Capitalization Value Portfolio, managed by INVESCO Capital
Management, Inc. and Hotchkis and Wiley, returned 9.73% for the first six
months of 1999. Investors were finally rewarded for adherence to value-oriented
investment disciplines in the second quarter. The most significant contributors
to performance in the Portfolio were the basic industry and capital goods
sectors. While Hotchkis and Wiley, which employs more of a "deep value" style,
has avoided the high-priced technology stocks, INVESCO has benefited from the
growth-oriented technology and communications services sectors. Healthcare was
the only sector that detracted from performance. Our managers feel the
Portfolio's characteristics are in line with growth prospects, expected
earnings, and the probability of positive rates of return for the overall
market.
The Small Capitalization Growth Portfolio, managed by Sawgrass Asset
Management, L.L.C. and Investment Advisers, Inc., returned 6.45% for the first
six months of 1999. (Sawgrass replaced
Average Annual Total Returns as of June 30, 1999
<TABLE>
<CAPTION>
Since
Portfolios One Year Five Years Inception1
<S> <C> <C> <C>
Large Capitalization Growth 36.45% 25.58% 17.64%
Large Capitalization Value 9.32 19.33 14.03
Small Capitalization Growth -2.90 14.41 11.77 (11.76)2
Small Capitalization Value -4.20 10.93 11.23 (11.22)2
International Equity 0.53 10.25 12.46
International Bond 2.17 2.34 (2.27)2 2.32 (2.22)2
Total Return Bond 1.85 6.96 (6.91)2 6.00 (5.92)2
Intermediate-Term Bond 2.42 6.25 5.62 (5.60)2
Mortgage-Backed Securities 2.34 6.61 (6.59)2 5.84 (5.76)2
</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.
1 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.
2 Without waiver of management fees and/or expense subsidization, the
portfolios' average annual total returns would have been lower, as indicated
in parenthesis ( ).
3
<PAGE>
Nicholas-Applegate Capital Management as co-adviser to the Portfolio on May 27,
1999.) Both Sawgrass and Investment Advisers enjoyed strong gains in the basic
materials and capital goods sectors. Sawgrass benefited from strong performance
in energy stocks, while Investment Advisers had very strong returns in its
transportation and communications holdings. The two managers continue to
believe the outlook for the small-cap growth segment of the market is strong on
a relative basis.
The Small Capitalization Value Portfolio, managed by Lazard Asset Management
and Wood, Struthers & Winthrop, gained 6.30% for the first six months of 1999.
Despite this gain, the Portfolio posted a negative return for the last 12
months due, to a great extent, to investors' strong preference for large-cap
growth stocks throughout the second half of 1998. During the current reporting
period, Lazard Asset Management's outperformance was aided by
technology-related companies, as well as a relatively high weighting in the
producer-manufacturing sector. Technology also helped performance for Wood,
Struthers & Winthrop, as it increased its exposure to this previously
underweight sector. In addition, both managers saw the rewards of holding on
to small-capitalization companies. Due to the extended period of small-cap
underperformance, our managers feel that these stocks are still inexpensive
and earnings expectations remain favorable.
What's Causing the Global Rebound?
Asia, the region that sparked a global financial crisis two years ago, could
actually be credited with helping the world economies get back on course
earlier this year. Corporate restructuring in many parts of Asia, including
Japan and Korea, has accelerated sharply in the last several months. This has
helped companies with inexpensive valuations greatly improve their prospects
for strong earnings growth. The economic climate has also improved by more
flexible currency regimes, improvements in the banking system, and more
disciplined corporate investing policies across the region. The Asian recovery,
in turn, has increased the global demand for commodities, which has helped
commodity exporters in Russia and Latin America. The devaluation of Brazil's
currency--the real--in early January 1999, prompted investors to again be wary
of a global financial crisis. However, the real's slide had little effect on
other world markets, and a resurgence of cyclical stocks and signs of an
economic bottoming-out in Japan drove international equity markets higher
during
4
<PAGE>
the second quarter. Indeed, Brazil benefited from the renewed demand for its
steel, copper, and nickel because its recent currency devaluation placed it
among the lowest-cost commodity exporters in the world.
The corporate environment in many parts of Europe is also showing signs of
improvement after a disappointing first half. Economic growth in some of
Europe's smaller economies, such as Ireland, Spain, and Portugal, remains
strong. And companies in industries sensitive to global economic activity are
reporting improved conditions; exporters that were in the doldrums last year
are now running at full capacity. Company fundamentals remain strong in Europe,
and the weaker euro is helping the export sector. Although, at this stage,
Europe isn't going to generate the kind of earnings explosion that we could
potentially see in Asia, growth there should be solid, and most stocks are
trading at discounts to the U.S. market.
The International Equity Portfolio, managed by Lazard Asset Management,
rebounded from an uneasy start to return 4.84% for the first six months of
1999. Japanese stocks posted impressive gains, but in Europe, the euro softened
amid concerns of a slowing economy, tempering performance. Increased takeover
activity has extended throughout international markets. Such global competition
is also beginning to influence Japanese industries, as was seen with Japan's
first successful hostile takeover--Cable & Wireless' bid prevailed over NTT to
acquire IDC, a Japanese international phone carrier. Lazard's performance in
the second quarter was mostly helped by stock-picking in Japan and in the
telecommunications and energy sectors.
Bond Market: Caught Off-Guard by Strong Global Economic Growth
Many bond investors responded to a safer global economic environment in the
first half of 1999 by pulling out of U.S. Treasury securities and taking
advantage of attractive opportunities in higher-yielding markets. This drove
Treasury yields higher and their prices, which move in the opposite direction,
lower. Treasury prices also fell as investors sold these government securities
to participate in both the wealth of corporate debt offerings and the strong
stock market. While occasional economic reports that hinted at inflation
caused temporary "hiccups" in the debt markets, these pullbacks seemed
short-lived--until mid-May. That's when April's much-higher-than-expected
Consumer Price Index report was
5
<PAGE>
Your Allocation Mainly
Determines Your Returns
(GRAPH)
Based on a study of 82 large pension funds.Source: Financial Analysts Journal,
May/June 1991
Asset allocation is the process of designing an overall portfolio that reflects
your personal risk and return requirements. It helps you invest in specific
amounts of different securities: corporates, 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.
released, to be followed soon by the Federal Reserve's announcement that it was
more inclined to raise interest rates. These events prompted a major sell-off
in the bond market. The yield on the benchmark 30-year Treasury bond--which
moves in the opposite direction of its price--rose from 5.63% on March 31, 1999
to a high of 6.19% on June 24, 1999, a level not seen since November 1997. As
it turned out, this sharp sell-off was unwarranted in light of the fact that
the Federal Reserve increased short-term interest rates by only a quarter of a
percentage point and removed its "bias" toward raising rates in the future.
In anticipation of an increase in short-term interest rates, investors drove
prices lower in almost all sectors of the U.S. fixed-income market in late May
and June 1999. Spreads (the difference in yield between corporate bonds and
Treasuries) also widened in both the high-grade and high-yield (junk) bond
markets. Surprisingly, the spread between yields of Treasuries and some
better-quality corporates (A-rated and AA-rated) widened more than the spread
between Treasuries and lower-rated corporates. This was due in part to the
large supply of new, investment-grade corporate issues that came to market in
the second quarter.
The Total Return Bond Portfolio, managed by Pacific Investment Management
Company (PIMCO), declined 1.38% in the first six months of 1999. The Portfolio
lagged its benchmark during that time as a longer-than-average duration made it
more sensitive to the sell-off in the market. (Duration is a measure of a
portfolio's sensitivity to fluctuations in the level of bond yields.) An
underweight in investment-grade corporates also detracted from performance as
this sector outperformed Treasuries, as did holdings of high-quality, emerging
market bonds. In contrast, below-investment-grade bonds boosted returns due to
higher relative yields. PIMCO believes the U.S. economy will moderate as higher
borrowing costs slow consumer and investment spending.
The Intermediate-Term Bond Portfolio, also managed by PIMCO, declined 0.49% in
the first six months of 1999. The Portfolio outperformed its benchmark during
the first half of 1999 despite a
6
<PAGE>
negative market environment. PIMCO's strategy to shorten the Portfolio's
duration helped protect it in the face of rising interest rates. However, a
concentration in intermediate-term maturities detracted from returns because
intermediate rates climbed the most. PIMCO believes that moderating growth and
low inflation will keep interest rates relatively stable, favoring strategies
and securities that provide higher yields than Treasury bonds.
The Mortgage-Backed Securities Portfolio, managed by Wellington Management
Company, returned 0.27% for the first six months of 1999. The first half of
1999 was difficult for fixed-income markets overall. Mortgage-backed
securities, however, outperformed government agency bonds and high-quality
corporate bonds. Furthermore, the Portfolio outperformed its benchmark.
Wellington Management did not make any large bets about the future direction
of interest rates, and has maintained a duration stance similar to the index.
Anticipating that the Federal Reserve would raise rates in the second quarter,
Wellington Management decreased the U.S. Government Money Market Portfolio's
average maturity and reduced holdings in agency securities during that time.
Wellington also increased the Portfolio's concentration in repurchase agreement
transactions. With inflation levels still contained, Wellington does not expect
the Fed to raise the Federal funds rate dramatically, but if domestic growth
continues at current levels, additional rate hikes in the coming months are
likely. As of June 30, 1999, the Portfolio's seven-day current yield was 4.42%.
Currently, the Portfolio is positioned to allow the managers quick access to
cash to buy any higher-yielding debt that would become available if the
Federal funds rate were increased.
The International Bond Portfolio, managed by Delaware International Advisers
Ltd., declined 4.17% for the first six months of 1999. International bond
investors fared poorly in the first half of 1999 as most markets posted
negative returns. Europe showed the worst figures, with declines of
approximately 6% in dollar terms, mostly reflecting the weakening of the euro
during the period. In contrast, commodity-related markets--Australia and
Canada--continued to do well. Delaware continues to take a cautious approach
as its analysis suggests that most currencies are below fair market value
versus the dollar. Only the sterling stands out as moderately expensive, and if
U.K. interest rates moderate, then its currency should decline. Currently,
Delaware sees the best value in Canada, Australia, and New Zealand, although
their recent rise has eroded some of their relative value.
7
<PAGE>
Remaining on Target
Stock and bond markets seldom perform in lockstep. As we have seen in the first
half of the year, while the stock market was reaching new highs, the bond
market was experiencing some turbulence. Target, as an asset allocation
program, recognizes that disparities will occur in the financial markets and,
therefore, does not favor any one asset category or investment style. Rather
than attempting to time these market cycles, Target recommends an allocation
suited to each client's particular investment preference and risk tolerance.
At a meeting held May 26, 1999, the Board of Trustees of the Target Portfolio
Trust approved our recommendation to replace Nicholas-Applegate Capital
Management, as subadviser to the Small Cap Growth Portfolio, with Sawgrass
Asset Management. As part of Target's ongoing review of its subadvisers, we
saw a number of factors that had been hindering performance. While
Nicholas-Applegate has a tradition of successful small-cap portfolio
management, its assets under management in that discipline had grown to an
amount which, in our opinion, makes it increasingly difficult to add value in
purchasing additional small-cap stocks, thereby offering little prospects for
improvement in performance.
Sawgrass Asset Management, on the other hand, is a newly formed investment firm
with a long history of success. Its investment team worked together for more
than 15 years at Barnett Capital Advisers, Inc. where they managed $2 billion
with an excellent track record. Furthermore, Sawgrass has a clear investment
process that lends well to sustainable success.
One of the most important components of the Target program is the ongoing due
diligence and monitoring of our subadvisers. A key factor we examine in our
subadvisers, in addition to performance, is style consistency. This is
particularly important in an asset allocation program to avoid duplication
among portfolios and, even more importantly, to maintain exposure to the asset
category and investment discipline intended.
We appreciate your commitment to Target and the opportunity to report to you.
John R. Strangfeld
President
The Target Portfolio Trust
<PAGE>
THE TARGET PORTFOLIO TRUST
Large Capitalization Growth
Portfolio
Portfolio of Investments June
30, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--99.6%
Common Stocks--99.6%
Airlines--0.6%
65,000 Northwest Airlines Corp....... $ 2,112,500
------------
Apparel & Textiles--1.0%
58,400 Nike, Inc..................... 3,697,450
------------
Automobiles--0.7%
1 Delphi Automotive Systems
Corp........................ 19
40,000 General Motors Corp........... 2,640,000
------------
2,640,019
------------
Banks--3.8%
96,000 BankAmerica Corp.............. 7,038,000
245,100 MBNA Corp..................... 7,506,188
------------
14,544,188
------------
Business Services--2.2%
83,600 First Data Corp............... 4,091,175
55,600 Omnicom Group Inc............. 4,448,000
------------
8,539,175
------------
Computers & Business Equipment--13.2%
141,000 3Com Corp.*................... 3,762,937
572,150 Cisco Systems, Inc.*.......... 36,903,675
306,000 Compaq Computer Corp.......... 7,248,375
43,600 Pitney Bowes, Inc............. 2,801,300
------------
50,716,287
------------
Drugs & Healthcare--9.3%
34,200 Bausch & Lomb, Inc............ 2,616,300
134,800 Columbia/HCA Healthcare Corp.. 3,075,125
46,400 Guidant Corp.................. 2,386,700
62,000 Medtronic, Inc................ 4,828,250
125,200 Merck & Co., Inc.............. 9,264,800
123,900 Oxford Health Plans, Inc.*.... 1,928,194
17,500 PE CORP-PE Bio Systems
Group....................... 2,008,125
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
49,300 Pfizer, Inc.................. $ 5,410,675
75,600 Schering-Plough Corp......... 4,006,800
------------
35,524,969
------------
Electrical Equipment--1.0%
65,600 AES Corp.*................... 3,813,000
------------
Electronics--16.6%
74,400 Adaptec, Inc.(a)............. 2,627,250
20,000 Aspect Telecommunications
Corp.*..................... 195,000
61,500 Boston Scientific Corp....... 2,702,156
259,900 CIENA Corp.*................. 7,845,732
212,000 Linear Technology Corp....... 14,257,000
200,000 Maxim Integrated Products,
Inc.*...................... 13,300,000
62,900 Motorola, Inc................ 5,959,775
91,700 National Semiconductor
Corp....................... 2,321,156
24,600 Visx, Inc.................... 1,948,012
220,000 Xilinx Inc.*................. 12,595,000
------------
63,751,081
------------
Financial Services--8.1%
80,700 Capital One Financial
Corp....................... 4,493,981
46,000 Chase Manhattan Corp......... 3,984,750
208,725 Citigroup Inc.*.............. 9,914,437
75,000 Morgan Stanley Dean
Witter*.................... 7,687,500
51,400 TD Waterhouse Group, Inc..... 1,288,213
83,700 Wells Fargo & Co............. 3,578,175
------------
30,947,056
------------
Forest Products--0.6%
42,600 Kimberly-Clark Corp.......... 2,428,200
------------
Hotels & Restaurants--1.4%
57,400 Tricon Global Restaurants,
Inc........................ 3,106,775
85,400 Wendys International, Inc.... 2,417,888
------------
5,524,663
------------
Industrial Machinery--4.6%
239,800 Applied Materials, Inc.*..... 17,715,225
------------
Insurance--2.0%
65,250 American International Group,
Inc........................ 7,638,328
------------
</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, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Liquor--1.4%
73,200 Anheuser Busch Companies,
Inc......................... $ 5,192,625
------------
Media--1.3%
90,600 Chancellor Media Corp.*....... 4,994,325
------------
Miscellaneous--3.1%
316,400 Cendant Corp.*................ 6,486,200
56,400 Tyco International Ltd........ 5,343,900
------------
11,830,100
------------
Non-Ferrous Metals--0.8%
51,400 Alcoa Inc..................... 3,180,375
------------
Oil & Gas--1.4%
66,300 Enron Corp.,.................. 5,420,025
------------
Retail Trade--5.8%
50,100 Circuit City Stores, Inc...... 4,659,300
86,800 CVS Corp...................... 4,405,100
52,100 Federated Department Stores,
Inc.*....................... 2,758,044
62,200 Home Depot, Inc............... 4,008,012
51,500 Safeway Inc.*................. 2,549,250
78,300 Wal-Mart Stores, Inc.......... 3,777,975
------------
22,157,681
------------
Semiconductors & Equipment--5.8%
241,600 Atmel Corp.*.................. 6,326,900
268,100 Intel Corp.................... 15,951,950
------------
22,278,850
------------
Software & Services--6.4%
36,300 America Online, Inc........... 4,011,150
162,800 Microsoft Corp.*.............. 14,682,525
180,000 Parametric Technology
Corp.*...................... 2,497,500
57,500 Synopsys, Inc.*............... 3,173,281
------------
24,364,456
------------
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Telecommunication--7.7%
54,288 AT&T Corp.................... $ 3,029,949
41,500 Global Telesystems Group
Incorporated............... 3,361,500
250,635 Lucent Technologies, Inc..... 16,902,198
93,400 Tellabs, Inc.*............... 6,310,337
------------
29,603,984
------------
Trucking & Freight Forwarding--0.8%
55,800 Union Pacific Corp........... 3,253,838
------------
Total common stocks
(cost $202,694,108)........ 381,868,400
------------
SHORT-TERM INVESTMENTS--1.8%
Principal
Amount
(000) Repurchase Agreements
- --------
$ 5,419 State Street Bank & Trust
Co.,
4.25%, dated 6/30/99, due
7/1/99 in the amount of
$5,419,640 (cost
$5,419,000; collateralized
by $4,335,000 U.S. Treasury
Notes, 10.75%, 8/15/05,
value of collateral
including accrued interest
is $5,530,225)............. 5,419,000
1,278 State Street Bank & Trust
Co.,
3.25%, dated 6/30/99, due
7/1/99 in the amount of
$1,278,115 (cost
$1,278,000; collateralized
by $1,280,000 U.S. Treasury
Notes, 5.50%, 2/29/00,
approximate value of
collateral including
accrued
interest is $1,305,139).... 1,278,000
------------
Total short-term investments
(cost $6,697,000).......... 6,697,000
------------
Total Investments--101.4%
(cost $209,391,108; Note
4)......................... 388,565,400
Liabilities in excess of
other assets--(1.4%)....... (5,179,714)
------------
Net Assets--100%............. $383,385,686
------------
------------
</TABLE>
- ---------------
* Non-income producing.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
10
<PAGE>
Large Capitalization Value
Portfolio
Portfolio of Investments June
30, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--98.7%
Common Stocks--98.7%
Aerospace--4.1%
44,000 Boeing Co..................... $ 1,944,250
126,700 Lockheed Martin Corp.......... 4,719,575
50,100 Northrop Grumman Corp......... 3,322,256
40,000 TRW, Inc...................... 2,195,000
------------
12,181,081
------------
Agriculture Machinery--1.1%
10,000 Deere & Co.................... 396,250
161,600 New Holland NV................ 2,767,400
------------
3,163,650
------------
Airlines--0.8%
75,000 Southwest Airlines Co......... 2,334,375
------------
Aluminum--1.9%
51,000 Aluminum Company of America... 3,155,625
48,000 Reynolds Metals Co............ 2,832,000
------------
5,987,625
------------
Apparel & Textiles--2.4%
10,395 Intimate Brands, Inc.......... 492,463
114,700 Russell Corp.................. 2,236,650
115,000 Shaw Industries, Inc.......... 1,897,500
55,000 Unifi, Inc.................... 1,168,750
30,000 V.F. Corp..................... 1,282,500
------------
7,077,863
------------
Auto Parts--1.7%
59,800 Dana Corp..................... 2,754,537
44,462 Delphi Automotive Systems
Corp........................ 825,326
39,000 Genuine Parts Co.............. 1,365,000
6,500 Meritor Automotive, Inc....... 165,750
------------
5,110,613
------------
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Automobiles--3.1%
113,000 Ford Motor Co................ $ 6,377,437
44,300 General Motors Corp.......... 2,923,800
------------
9,301,237
------------
Banks--7.4%
46,200 BankAmerica Corp............. 3,387,037
113,160 Bank One Corp................ 6,740,092
25,000 Chase Manhattan Corp......... 2,165,625
30,300 First Security Corp.......... 825,675
86,700 First Union Corp............. 4,074,900
2,000 Fleet Financial Group,
Inc........................ 88,750
43,200 KeyCorp...................... 1,387,800
45,000 National City Corp........... 2,947,500
16,500 UnionBanCal Corp............. 596,063
------------
22,213,442
------------
Building & Construction--0.2%
24,000 Harsco Corp.................. 768,000
------------
Building Products--0.9%
45,900 Georgia-Pacific Corp......... 1,158,975
35,000 York International Corp...... 1,498,438
------------
2,657,413
------------
Business Services--1.3%
35,000 First Data Corp.............. 1,712,813
35,000 Xerox Corp................... 2,067,187
------------
3,780,000
------------
Chemicals--2.4%
25,000 Air Products & Chemicals,
Inc........................ 1,006,250
17,400 Dow Chemical Co.............. 2,207,625
11,000 Du Pont (E.I.) De Nemours &
Co......................... 751,438
27,000 Eastman Chemical Co.......... 1,397,250
35,000 Nalco Chemical Co............ 1,815,625
------------
7,178,188
------------
</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, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Computers & Business Equipment--4.2%
35,000 Adaptec, Inc.*................ $ 1,235,937
80,000 Compaq Computer Corp.......... 1,895,000
36,000 Hewlett-Packard Co............ 3,618,000
28,000 International Business
Machines Corp............... 3,619,000
30,000 Sun Microsystems, Inc......... 2,066,250
------------
12,434,187
------------
Conglomerate--1.6%
59,200 Dover Corp.................... 2,072,000
38,300 Hanson PLC. (ADR)............. 1,699,562
44,100 Scana Corp.................... 1,030,838
------------
4,802,400
------------
Consumer Products--1.9%
45,000 American Greetings Corp....... 1,355,625
38,000 Eastman Kodak Co.............. 2,574,500
44,100 Fortune Brands Inc............ 1,824,638
------------
5,754,763
------------
Domestic Oil--1.3%
20,000 Atlantic Richfield Co......... 1,671,250
72,100 USX - Marathon Group.......... 2,347,756
------------
4,019,006
------------
Drugs & Healthcare--6.5%
65,000 Abbott Laboratories........... 2,957,500
64,000 American Home Products
Corp........................ 3,680,000
33,632 AstraZeneca PLC (ADR)......... 1,317,954
13,000 Baxter International, Inc..... 788,125
44,000 Bristol Myers Squibb Co....... 3,099,250
80,000 Columbia/HCA Healthcare
Corp........................ 1,825,000
4,210 LifePoint Hospitals, Inc.*.... 56,572
30,000 Merck & Co., Inc.............. 2,220,000
55,000 Mylan Laboratories............ 1,457,500
40,000 Schering Plough Corp.......... 2,120,000
4,210 Triad Hospitals, Inc.*........ 56,835
------------
19,578,736
------------
Electric Utilities--4.8%
50,000 Central & South West Corp..... 1,168,750
34,400 CMS Energy Corp............... 1,440,500
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
40,000 DTE Energy Co................ $ 1,600,000
32,000 Edison International......... 856,000
27,400 Entergy Corp................. 856,250
21,000 General Public Utilities
Corp....................... 885,937
40,100 PacifiCorp................... 736,838
36,000 PECO Energy Co............... 1,507,500
33,835 PP & L Resources, Inc........ 1,040,426
28,800 Public Service Enterprise
Group Inc.................. 1,177,200
80,000 Southern Co.................. 2,120,000
21,832 Texas Utilities Co........... 900,570
------------
14,289,971
------------
Electrical Equipment--1.4%
20,000 Emerson Electric Co.......... 1,257,500
40,000 Raytheon Co., Class B........ 2,815,000
------------
4,072,500
------------
Electronics--2.3%
30,000 Intel Corp................... 1,785,000
25,000 Motorola, Inc................ 2,368,750
45,000 Rockwell International
Corp....................... 2,733,750
------------
6,887,500
------------
Energy--0.7%
81,900 Illinova Corp................ 2,231,775
------------
Financial Services--5.8%
53,050 Associates First Capital
Corp....................... 2,350,778
89,500 Federal National Mortgage
Association................ 6,119,562
48,265 Household International,
Inc........................ 2,286,554
33,000 Morgan Stanley Dean Witter
Discover & Co.............. 3,382,500
15,090 Waddell & Reed Financial,
Inc........................ 408,675
75,100 Washington Mutual, Inc....... 2,656,663
------------
17,204,732
------------
Food & Beverages--1.1%
75,000 Archer-Daniels Midland Co.... 1,157,813
90,000 Tyson Foods, Inc. (Class A).. 2,025,000
------------
3,182,813
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
12
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Forest Products--2.4%
32,000 Georgia-Pacific Corp.......... $ 1,516,000
50,000 Kimberly-Clark Corp........... 2,850,000
39,600 Weyerhaeuser Co............... 2,722,500
------------
7,088,500
------------
Gas & Pipeline Utilities--0.4%
27,000 Eastern Enterprises, Inc...... 1,073,250
------------
Household Appliances & Home
Furnishings--1.9%
77,000 Whirlpool Corp................ 5,698,000
------------
Industrial Machinery--0.6%
32,000 Caterpillar, Inc.............. 1,920,000
------------
Insurance--8.3%
81,258 American General Corp......... 6,124,822
35,200 Lincoln National Corp......... 1,841,400
15,000 Loews Corp.................... 1,186,875
20,000 Marsh & McLennan Companies,
Inc......................... 1,510,000
55,000 MGIC Investment Corp.......... 2,674,375
89,175 Old Republic International
Corp........................ 1,543,842
106,900 SAFECO Corp................... 4,716,962
49,800 St. Paul Companies, Inc....... 1,584,263
50,000 Torchmark Corp................ 1,706,250
25,100 Transamerica Corp............. 1,882,500
------------
24,771,289
------------
International Oil--3.7%
10,050 Exxon Corp.................... 775,106
116,200 Occidental Petroleum Corp..... 2,454,725
75,000 Phillips Petroleum Co......... 3,773,438
150,000 Repsol S.A. (ADR)............. 3,046,875
16,000 Texaco, Inc................... 1,000,000
------------
11,050,144
------------
Liquor--0.5%
21,100 Anheuser Busch Companies, Inc. 1,496,781
------------
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Mining--0.8%
39,500 Phelps Dodge Corp............ $ 2,446,531
------------
Miscellaneous--0.9%
107,500 Tenneco, Inc................. 2,566,563
------------
Paper--1.4%
80,614 International Paper Co....... 4,071,007
------------
Petroleum Services--0.7%
40,000 Norsk Hydro A S.............. 1,530,000
25,600 Ultramar Diamond Shamrock.... 558,400
------------
2,088,400
------------
Pollution Control--1.7%
52,061 Browning Ferris Industries,
Inc........................ 2,238,623
53,562 Waste Management, Inc........ 2,878,958
------------
5,117,581
------------
Railroads & Equipment--1.5%
16,300 CSX Corp..................... 738,594
125,000 Norfolk Southern Corp........ 3,765,625
------------
4,504,219
------------
Retail Trade--3.0%
20,000 Albertson's, Inc............. 1,031,250
40,000 May Department Stores Co..... 1,635,000
40,000 Office Depot, Inc.*.......... 882,500
55,000 Penny (J.C.) Co., Inc........ 2,670,937
60,000 Rite Aid Corp................ 1,477,500
28,800 Sears, Roebuck & Co.......... 1,283,400
------------
8,980,587
------------
Software--1.1%
45,000 Computer Associates
International, Inc......... 2,475,000
25,000 Oracle Corp.*................ 928,125
------------
3,403,125
------------
</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, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Steel--1.5%
35,000 Nucor Corp.................... $ 1,660,313
100,100 USX-U.S. Steel Group.......... 2,702,700
------------
4,363,013
------------
Telephone--5.3%
42,700 ALLTEL Corp................... 3,053,050
30,000 Ameritech Corp................ 2,205,000
92,600 AT&T Corp..................... 5,168,237
40,000 Bell Atlantic Corp............ 2,615,000
13,500 GTE Corp...................... 1,022,625
31,692 SBC Communications, Inc....... 1,838,136
------------
15,902,048
------------
Tires & Rubber--0.5%
65,000 Cooper Tire & Rubber Co....... 1,535,625
------------
Tobacco--2.9%
214,200 Philip Morris Companies, Inc.. 8,608,163
------------
Toys & Amusements--0.5%
60,000 Mattel, Inc................... 1,586,250
------------
Trucking & Freight Forwarding--0.2%
20,000 Ryder System, Inc............. 520,000
------------
Total common stocks
(cost $207,815,273)......... 295,002,946
------------
SHORT-TERM INVESTMENTS--1.5%
4,539 Seven Seas Series Government
Fund
5.04%**, 7/1/99 (cost
$4,538,999)................. 4,538,999
------------
Total Investments--100.2%
(cost $212,354,272; Note 4)... 299,541,945
Liabilities in excess of other
assets--(0.2%).............. (713,895)
------------
Net Assets--100%.............. $298,828,050
------------
------------
</TABLE>
- ---------------
* Non-income producing.
** Rate represents yield at purchase date.
ADR--American Depository Receipts.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
14
<PAGE>
Small Capitalization Growth
Portfolio
Portfolio of Investments June
30, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--95.7%
Common Stocks--95.7%
Apparel & Textiles--1.5%
49,100 Fossil, Inc.*................ $ 2,375,213
------------
Auto/Truck Equipment--2.4%
153,700 Aftermarket Technology
Corp*...................... 1,748,337
46,700 Monaco Coach Corp.*.......... 1,975,994
------------
3,724,331
------------
Broadcasting--3.6%
51,994 Clear Channel Communications,
Inc.*...................... 3,584,336
119,200 Sinclair Broadcast Group,
Inc.*...................... 1,951,900
------------
5,536,236
------------
Building & Construction--3.5%
34,300 Dycom Industries, Inc.*...... 1,920,800
102,000 Insituform Technologies, Inc.* 2,205,750
54,500 Service Experts, Inc.*....... 1,195,594
------------
5,322,144
------------
Business Services--13.6%
105,800 American Management Systems,
Inc.*...................... 3,392,212
61,300 Billing Info Concepts Corp... 685,794
32,900 BISYS Group, Inc.*........... 1,924,650
29,100 Catalina Marketing Corp.*.... 2,677,200
104,400 CCC Information Services
Group, Inc.*............... 1,344,150
70,300 Dollar Thrifty Automotive
Group, Inc.*............... 1,634,475
37,400 INSpire Insurance Solutions,
Inc.*...................... 542,300
17,300 Kronos, Inc.................. 787,150
45,850 Labor Ready, Inc.*........... 1,490,125
41,200 MedQuist, Inc.*.............. 1,802,500
41,700 Plexus Corp.*................ 1,256,213
31,700 Scientific Games Holdings
Corp.*..................... 618,150
39,200 UBICS, Inc.*................. 120,050
66,800 Zebra Technologies Corp.*.... 2,567,625
------------
20,842,594
------------
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Chemicals--0.1%
2,100 Minerals Technologies, Inc... $ 117,206
------------
Computers & Business Equipment--7.6%
35,800 Advanced Digital Information
Corp.*..................... 1,449,900
37,277 Artesyn Technologies, Inc.... 827,083
48,700 Black Box Corp.*............. 2,441,087
98,500 Computer Network
Technology................. 2,130,063
38,500 Cybex Computer Products
Corp.*..................... 1,073,188
12,100 Hutchinson Technology, Inc.*. 335,775
107,700 InterVoice, Inc.............. 1,554,919
100,000 Mastech Corp.*............... 1,862,500
------------
11,674,515
------------
Drugs & Healthcare--4.0%
22,700 Apria Healthcare Group, Inc.* 385,900
16,867 Cardinal Health, Inc......... 1,081,596
24,000 ChiRex, Inc.*................ 771,000
40,500 First Commonwealth, Inc.*.... 994,781
33,200 Hooper Holmes, Inc........... 676,450
4,900 IMPATH, Inc.*................ 132,300
57,300 King Pharmaceuticals, Inc.*.. 1,482,638
42,000 Sunquest Information Systems,
Inc.*...................... 677,250
------------
6,201,915
------------
Educational Services--3.5%
134,900 Apollo Group, Inc.*.......... 3,583,281
57,200 Strayer Education, Inc.*..... 1,755,325
------------
5,338,606
------------
Electronics--6.1%
40,500 Aeroflex, Inc.*.............. 799,875
32,700 American Xtal Technology,
Inc.*...................... 778,669
23,900 Cree Research, Inc.*......... 1,838,806
29,200 DII Group, Inc.*............. 1,089,525
25,100 Electronics for Imaging,
Inc.*...................... 1,289,512
26,500 L-3 Communications Holdings,
Inc.*...................... 1,280,281
20,700 Microchip Technology, Inc.*.. 980,663
11,200 Optical Coating Laboratory,
Inc........................ 936,600
22,900 Tollgrade Communications,
Inc........................ 349,225
------------
9,343,156
------------
</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, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Financial Services--8.1%
47,000 Enhance Financial Services
Group, Inc................. $ 928,250
58,100 Federated Investors, Inc..... 1,042,169
49,400 Hambrecht & Quist Group*..... 1,833,975
14,700 Legg Mason, Inc.............. 565,950
19,588 MBIA, Inc.................... 1,268,323
84,611 Radian Group, Inc............ 4,130,074
92,200 Right Management Consultants,
Inc.*...................... 1,429,100
197,000 Unicapital Corp.*............ 1,243,563
------------
12,441,404
------------
Homebuilders--1.9%
65,200 Ryland Group, Inc.*.......... 1,935,625
62,075 Watsco, Inc.................. 1,016,478
------------
2,952,103
------------
Hotels & Restaurants--1.2%
62,800 Foodmaker, Inc*.............. 1,781,950
------------
Household Products--0.9%
84,200 WMS Industries, Inc.......... 1,431,400
------------
Industrial Machinery--0.7%
99,800 PPT Vision, Inc.*............ 499,000
10,100 Tecumseh Products Co.*....... 611,681
------------
1,110,681
------------
Manufacturing--1.6%
29,900 Aptargroup, Inc.............. 897,000
31,500 Astec Industries, Inc.*...... 1,283,625
93,100 Flanders Corp.*.............. 325,850
------------
2,506,475
------------
Media--2.2%
114,366 Nielsen Media Research, Inc.. 3,345,206
------------
Medical & Dental Supplies--7.8%
29,600 Cytyc Corp.*................. 577,200
14,300 Henry Schein, Inc.*.......... 453,131
113,100 Mentor Corp.................. 2,106,488
36,000 Osteotech, Inc.*............. 1,035,000
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
31,900 Patterson Dental Co.*........ $ 1,108,525
46,850 Priority Healthcare Corp.*... 1,616,325
161,900 Respironics, Inc.*........... 2,448,737
52,550 Xomed Surgical Products,
Inc.*...................... 2,558,528
------------
11,903,934
------------
Mining--0.9%
40,300 Stillwater Mining Co.*....... 1,317,306
------------
Miscellaneous--0.3%
42,000 JLK Direct Distribution,
Inc........................ 391,125
------------
Oil Field/Equipment & Services--1.2%
47,100 Forest Oil Corp.............. 591,694
34,600 Nuevo Energy Co.*............ 458,450
48,200 Petroleum Geo-Services ASA
(ADR)*..................... 716,975
------------
1,767,119
------------
Pollution Control Equipment &
Services--0.4%
24,800 Superior Services, Inc.*..... 661,850
------------
Printing & Publishing--3.0%
20,400 Big Flower Holdings, Inc.*... 650,250
108,550 Valassis Communications,
Inc.*...................... 3,975,644
------------
4,625,894
------------
Retail Trade--4.4%
41,200 American Eagle Outfitters,
Inc.*...................... 1,874,600
39,600 Barnett, Inc.*............... 297,000
103,600 Copart, Inc.*................ 2,201,500
110,900 Handleman Co................. 1,310,006
14,800 Lithia Motors, Inc.*......... 303,400
25,300 Sonic Automotive, Inc.*...... 347,875
11,100 Zale Corp.*.................. 444,000
------------
6,778,381
------------
Software--6.6%
30,000 Clarify, Inc.*............... 1,237,500
7,300 Great Plains Software, Inc.*. 344,469
15,200 HNC Software, Inc.*.......... 468,350
140,100 Hyperion Solutions Corp.*.... 2,495,531
35,500 InfoCure Corp.*.............. 1,879,281
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
16
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Software--(cont'd)
27,500 Mercury Interactive Corp.*... $ 972,812
9,400 National Computer Systems,
Inc........................ 317,250
7,200 Transaction Systems
Architects, Inc.*.......... 280,800
40,500 Verity, Inc.*................ 2,194,594
------------
10,190,587
------------
Telecommunication--5.0%
57,400 ANTEC Corp.*................. 1,840,388
75,500 CommScope, Inc.*............. 2,321,625
107,000 International Telecomm.
Systems, Inc.*............. 1,712,000
51,200 Pinnacle Systems, Inc.*...... 1,721,600
------------
7,595,613
------------
Transportation--3.6%
105,600 American Freightways
Corp.*..................... 2,065,800
81,900 Coach USA, Inc.*............. 3,434,681
------------
5,500,481
------------
Total common stocks
(cost $121,640,346)........ 146,777,425
------------
SHORT-TERM INVESTMENTS--1.9%
Other
954,000 Seven Seas Money Market Fund
4.68%**.................... 954,483
1,890,000 Seven Seas Series Government
Fund
4.57%**.................... 1,890,143
------------
Total short-term investments
(cost $2,844,626).......... 2,844,626
------------
Total Investments--97.6%
(cost $124,484,971; Note 4).. 149,622,051
Other assets in excess of
liabilities--2.4%.......... 3,711,885
------------
Net Assets--100%............. $153,333,936
------------
------------
</TABLE>
- ------------------
* Non-income producing.
** Rate represents yield at purchase date.
ADR--American Depository Receipt.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
17
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Value
Portfolio
Portfolio of Investments June
30, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--98.1%
Common Stocks--98.1%
Aerospace--0.6%
21,900 AAR Corp...................... $ 496,856
9,400 Aviation Sales Co.*........... 371,300
------------
868,156
------------
Apparel & Textiles--1.9%
57,100 Culp, Inc..................... 599,550
44,900 Interface, Inc................ 387,262
21,700 Nautica Enterprises, Inc.*.... 366,188
48,200 Oakley, Inc.*................. 343,425
51,000 Stride Rite Corp.............. 525,937
15,000 Unifi, Inc.................... 318,750
------------
2,541,112
------------
Auto Related--2.5%
19,100 Borg-Warner Automotive, Inc... 1,050,500
35,600 Budget Group, Inc.*........... 438,325
29,800 Modine Manufacturing Co....... 970,362
49,648 Myers Industries, Inc......... 992,960
------------
3,452,147
------------
Automobiles--1.2%
13,100 Dura Automotive Systems,
Inc.*....................... 435,575
49,700 Tower Automotive, Inc.*....... 1,264,244
------------
1,699,819
------------
Banks--5.2%
21,400 Bank United Corp.............. 860,012
17,000 First American Corp........... 706,563
37,000 Firstmerit Corp............... 1,038,312
29,213 HUBCO, Inc.................... 894,648
50,000 Independent Bank Corp. -
Mass........................ 787,500
35,750 People's Bank................. 1,088,141
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
25,700 Southwest Bancorporation of
Texas, Inc.*............... $ 462,600
31,400 Staten Island Bancorp, Inc... 565,200
35,550 Susquehanna Bancshares, Inc.. 628,791
------------
7,031,767
------------
Broadcasting--0.8%
11,900 NTL, Inc.*................... 1,025,633
------------
Building & Construction--2.9%
47,300 Apogee Enterprises, Inc...... 635,594
26,000 Carlisle Co., Inc............ 1,251,250
16,400 Hughes Supply, Inc........... 486,875
18,800 Jacobs Engineering Group,
Inc.*...................... 714,400
16,500 Martin Marietta Materials,
Inc........................ 973,500
------------
4,061,619
------------
Business Services--0.9%
55,900 Bowne & Co., Inc............. 726,700
27,600 HA-LO Industries, Inc.*...... 272,550
9,200 Standard Register............ 282,900
------------
1,282,150
------------
Chemicals--3.7%
36,600 Cambrex Corp................. 960,750
28,250 Ferro Corp................... 776,875
12,800 Fuller (H.B.) Co............. 875,200
61,600 Hanna (M.A.) Co.............. 1,012,550
57,662 RPM, Inc..................... 818,080
37,400 Schulman (A.), Inc........... 642,812
------------
5,086,267
------------
Communication--0.6%
72,200 Allen Telecom, Inc.*......... 776,150
------------
Computers & Business Equipment--1.0%
16,100 Data General Corp.*.......... 234,456
54,600 MTS Systems Corp............. 665,438
61,500 Planar Systems, Inc.*........ 476,625
------------
1,376,519
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
18
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Construction & Mining Equipment--0.8%
50,700 JLG Industries, Inc........... $ 1,033,013
------------
Contruction Materials--0.4%
15,500 Lone Star Industries, Inc..... 582,219
------------
Diversified Industrials--2.8%
46,100 Applied Power, Inc............ 1,259,106
25,200 Brady (W.H.) Co............... 819,000
22,100 Standex International Corp.... 604,988
26,700 Teleflex, Inc................. 1,159,781
------------
3,842,875
------------
Drugs & Healthcare--6.4%
39,400 Apria Healthcare Group,
Inc.*....................... 669,800
25,500 Arrow International, Inc...... 659,812
14,800 Beckman Coulter, Inc.......... 719,650
66,500 Invacare Corp................. 1,778,875
18,000 Jones Pharmaceutical, Inc..... 708,750
100,800 Perrigo Co.*.................. 768,600
49,500 Sunrise Medical, Inc.*........ 352,688
23,600 Varian Medical Systems, Inc... 595,900
21,100 Vital Signs, Inc.............. 420,681
50,500 West Pharmaceutical Services,
Inc......................... 1,982,125
------------
8,656,881
------------
Electric Utilities--1.2%
20,900 Avista Corp................... 339,625
8,000 Calpine Corp.*................ 432,000
23,000 Sierra Pacific Resources...... 836,625
------------
1,608,250
------------
Electrical Equipment--2.9%
40,100 Anixter International, Inc.*.. 731,825
27,900 Belden, Inc................... 667,856
20,800 Oak Industries, Inc.*......... 908,700
29,200 Technitrol, Inc............... 941,700
51,500 Woodhead Industries, Inc...... 630,875
------------
3,880,956
------------
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Electronics--9.7%
29,800 Bell & Howell Co.*........... $ 1,126,812
21,400 C&D Technologies............. 655,375
39,800 Credence Systems Corp.*...... 1,477,575
27,700 Dallas Semiconductor Corp.... 1,398,850
6,300 DII Group, Inc............... 235,069
18,000 Electro Scientific
Industries, Inc.*.......... 752,062
11,200 Electronics for Imaging,
Inc.*...................... 575,400
20,100 Harman International
Industries, Inc............ 884,400
66,400 Kemet Corp.*................. 1,523,050
15,200 Lam Research Corp.*.......... 709,650
64,450 Methode Eletronics, Inc...... 1,474,294
87,800 Pioneer Standard Electronics,
Inc........................ 1,053,600
10,100 Rogers Corp.*................ 304,869
19,400 Tektronix, Inc............... 585,638
37,300 Varian, Inc.................. 503,550
------------
13,260,194
------------
Financial Services--0.2%
6,000 Eaton Vance Corp............. 206,625
------------
Food - Service/Lodging--0.9%
31,700 Luby's Cafeterias, Inc....... 475,500
64,000 Marcus Corp.................. 788,000
------------
1,263,500
------------
Foods--3.4%
28,800 American Italian Pasta Co.*.. 874,800
26,500 Aurora Foods, Inc.*.......... 463,750
26,500 International Multifoods
Corp....................... 597,906
24,150 Lancaster Colony Corp........ 833,175
16,100 Lance, Inc................... 251,563
31,300 Ralcorp Holdings, Inc.*...... 502,756
53,200 Universal Foods Corp......... 1,123,850
------------
4,647,800
------------
Gas & Pipeline Utilities--2.3%
20,600 Equitable Resources, Inc..... 777,650
20,600 National Fuel Gas Co......... 999,100
49,700 Wicor, Inc................... 1,388,494
------------
3,165,244
------------
</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, 1999 (Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Homebuilders--0.9%
10,100 Kaufman & Broad Home Corp..... $ 251,237
43,700 Toll Brothers, Inc.*.......... 936,819
------------
1,188,056
------------
Hospital Supplies & Services--0.5%
49,600 Sierra Health Services, Inc.*.. 716,100
------------
Hotels & Restaurants--1.2%
26,500 CKE Restaurants, Inc.......... 430,625
31,200 Lone Star Steakhouse & Saloon,
Inc.*....................... 303,225
46,300 Prime Hospitality Corp.*...... 555,600
32,800 Ryan's Family Steak Houses,
Inc.*....................... 381,300
------------
1,670,750
------------
Household Appliances & Home
Furnishings--2.1%
24,000 Bassett Furniture Industries,
Inc......................... 549,000
40,900 Chromcraft Revington, Inc.*... 590,494
39,400 Furniture Brands
International, Inc.*........ 1,098,275
22,100 Libbey, Inc................... 640,900
------------
2,878,669
------------
Industrial & Machinery--6.2%
4,300 Briggs & Stratton Corp........ 248,325
39,225 Crane Co...................... 1,233,136
36,000 Flowserve Corp................ 681,750
24,900 Graco, Inc.................... 731,438
35,700 Hussmann International, Inc... 591,281
41,600 MagneTek, Inc.*............... 439,400
63,809 Mark IV Industries, Inc....... 1,347,965
22,500 OmniQuip International, Inc... 177,188
21,400 Polaris Industries, Inc....... 930,900
34,400 Regal-Beloit Corp............. 812,700
22,100 Scotsman Industries, Inc...... 476,531
39,900 Watts Industries, Inc., Cl.A.. 765,581
------------
8,436,195
------------
Insurance--7.1%
12,900 Arthur J. Gallagher & Co...... 638,550
15,800 Blanch (E.W.) Holdings, Inc... 1,077,363
25,000 Brown & Brown, Inc............ 950,000
31,200 Enhance Financial Services
Group, Inc.................. 616,200
7,600 Executive Risk, Inc........... 646,475
31,490 Frontier Insurance Group,
Inc......................... 484,159+
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
41,200 HCC Insurance Holdings, Inc.. $ 934,725
29,000 HSB Group, Inc............... 1,194,437
49,000 Horace Mann Educators Corp... 1,332,187
33,200 Protective Life Corp......... 1,095,600
14,772 Radian Group Holdings, Inc... 721,058
------------
9,690,754
------------
Manufacturing--1.8%
58,000 Lydall, Inc.*................ 667,000
29,000 Roper Industries, Inc........ 928,000
22,300 Silicon Valley Group, Inc.*.. 374,919
11,000 The Dexter Corporation....... 448,937
------------
2,418,856
------------
Miscellaneous--1.7%
36,800 Aptargroup, Inc.............. 1,104,000
23,665 Nielsen Media Research, Inc.. 692,201
45,900 Unisource Worldwide, Inc..... 553,669
------------
2,348,870
------------
Office Equipment--0.5%
23,800 Hon Industries, Inc.......... 694,663
------------
Oil & Gas--2.2%
3,700 CONSOL Energy, Inc........... 44,400
22,700 Devon Energy Corp............ 811,525
79,200 Helmerich & Payne, Inc....... 1,885,950
14,400 Pennzoil Quaker State Co..... 216,000
------------
2,957,875
------------
Oil & Gas - Production/Pipeline--1.4%
31,900 Barrett Resources Corp.*..... 1,224,162
98,400 Santa Fe Snyder Corp......... 750,300
------------
1,974,462
------------
Oil Field/Equipment & Services--1.1%
41,500 Inacom Corp.*................ 523,937
19,500 Progress Software Corp....... 550,875
22,100 Sequent Computer Systems,
Inc.*...................... 392,275
------------
1,467,087
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
20
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Oil-Supplies & Construction--0.6%
50,000 Newpark Resources, Inc.*...... $ 443,750
12,700 Tidewater, Inc................ 387,350
------------
831,100
------------
Paper & Paper Products--1.5%
17,100 Chesapeake Corp............... 640,181
77,700 Wausau Paper Co............... 1,398,600
------------
2,038,781
------------
Petroleum Services--0.5%
56,300 Varco International, Inc...... 615,781
------------
Printing & Publishing--3.4%
36,350 American Business Products,
Inc......................... 554,338
75,450 Banta Corp.................... 1,584,450
36,400 Lee Enterprises, Inc.......... 1,110,200
9,300 Pulitzer, Inc................. 451,631
29,000 Tetra Tech, Inc............... 478,500
17,900 World Color Press, Inc.*...... 492,250
------------
4,671,369
------------
Professional Services--1.2%
19,800 CDI Corp.*.................... 674,438
16,600 Keane, Inc.*.................. 375,575
29,050 Nichols Research Corp.*....... 635,469
------------
1,685,482
------------
Railroads & Equipment--0.1%
9,700 ABC Rail Products Corp.*...... 198,850
------------
Real Estate Investment Trust--3.7%
52,400 Catellus Development Corp.*... 812,200
17,500 Chateau Communities, Inc...... 523,906
30,000 FelCor Lodging Trust, Inc..... 622,500
33,700 Glenborough Realty Trust,
Inc......................... 589,750
27,400 JDN Realty Corp............... 613,075
22,200 Kilroy Realty Corp............ 541,125
28,600 Liberty Property Trust........ 711,425
18,100 Mack California Realty Corp... 559,969
------------
4,973,950
------------
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Retail - Apparel--1.2%
20,800 Lands End, Inc............... $ 1,008,800
9,100 Talbots, Inc................. 346,938
12,000 The Wet Seal, Inc., Cl.A*.... 343,500
------------
1,699,238
------------
Retail Grocery--1.4%
21,800 Great Atlantic & Pacific Tea
Co., Inc................... 737,113
59,100 Ruddick Corp................. 1,182,000
------------
1,919,113
------------
Retail Trade--0.7%
10,200 Cole National Corp.*......... 80,962
35,300 CompUSA, Inc.*............... 262,544
57,200 Pier 1 Imports, Inc.......... 643,500
------------
987,006
------------
Savings And Loan--1.9%
22,425 Astoria Financial Corp....... 985,299
52,411 Sovereign Bancorp, Inc....... 635,483
36,800 Webster Financial Corp....... 998,200
------------
2,618,982
------------
Toys & Amusements--0.6%
31,600 Russ Berrie & Co., Inc....... 782,100
------------
Trucking & Freight Forwarding--2.0%
17,500 CNF Transportation, Inc...... 671,562
37,600 Pittston BAX Group........... 357,200
24,500 Pittston Brink's Group....... 655,375
49,000 Werner Enterprises, Inc...... 1,016,750
------------
2,700,887
------------
Total common stocks
(cost $111,513,420)........ 133,514,872
------------
Warrant*--0.0%
33,900 Wilshire Technologies, Inc.
Expiring 11/2/28 @ $0
(cost $0).................. 0
------------
Total long-term investments
(cost $111,513,420)........ 133,514,872
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
21
<PAGE>
THE TARGET PORTFOLIO TRUST
Small Capitalization Value
Portfolio (cont'd)
Portfolio of Investments June
30, 1999 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL US$
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--2.4%
Other--0.9%
$ 1,196 Seven Seas Money Market Fund
4.83%**
(cost $1,196,164)............. $ 1,196,164
------------
U.S. Government Securities--1.5%
United States Treasury Bills,
610 4.18%, 8/5/99................. 606,991
880 4.30%, 8/5/99................. 876,168
510 4.34%, 8/5/99................. 507,848
------------
Total U.S. government
securities
(cost $1,991,422)........... 1,991,007
------------
Total short-term investments
(cost $3,187,586)........... 3,187,171
------------
Total Investments--100.5%
(cost $114,701,006; Note 4)... 136,702,043
Liabilities in excess of other
assets--(0.5%).............. (651,450)
------------
Net Assets--100%.............. $136,050,593
------------
------------
</TABLE>
- ---------------
* Non-income producing security.
** Rate represents yield at purchase date.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
22
<PAGE>
International Equity Portfolio
Portfolio of Investments June
30, 1999 (Unaudited)
<TABLE>
<CAPTION>
US$
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--92.6%
Common Stocks--92.6%
Australia--2.3%
405,722 Broken Hill Proprietary Co.,
Ltd......................... $ 4,693,544
165,300 Westpac Banking Corp.......... 1,070,861
------------
5,764,405
------------
Denmark--0.5%
20,070 Unidanmark Series A........... 1,335,737
------------
Finland--0.9%
163,200 Merita Ltd., Series A......... 926,973
44,080 UPM Kymmene OYJ............... 1,263,229
------------
2,190,202
------------
France--13.1%
27,930 Alcatel....................... 3,930,060
27,470 Axa SA........................ 3,349,955
52,060 Banque Nationale de Paris..... 4,336,218
21,480 Cie de Saint Gobain........... 3,421,042
36,200 Michelin, Series B............ 1,480,357
27,500 Elf Aquitaine SA.............. 4,033,975
68,877 Rhone-Poulenc SA, Series A.... 3,146,093
16,500 Suez Lyonnaise des Eaux....... 2,974,879
70,101 Vivendi....................... 5,676,308
------------
32,348,887
------------
Germany--8.6%
8,412 Allianz A.G................... 2,332,637
32,483 DaimlerChrysler A.G........... 2,812,749
23,032 Deutsche Telekom A.G.......... 966,321
75,200 Hoechst A.G................... 3,403,125
61,180 Metro A.G..................... 3,796,659
46,600 Siemens A.G................... 3,593,214
85,600 Thyssen Krupp A.G............. 1,882,176
42,400 Veba A.G...................... 2,491,359
------------
21,278,240
------------
<CAPTION>
US$
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Hong Kong--1.2%
80,135 HSBC Holdings PLC........... $ 2,922,976
-----------
Italy--4.0%
537,900 Eni SpA..................... 3,210,522
192,100 Sao Paolo Imi SpA........... 2,613,948
757,800... Telecom Italia SpA.......... 4,108,998
-----------
9,933,468
-----------
Japan--21.3%
194,000 Asahi Breweries, Ltd........ 2,415,177
120,000 Canon, Inc.................. 3,452,096
150,000 Fuji Bank, Ltd.............. 1,046,540
351 Japan Tobacco, Inc.......... 3,888,071
110,000 Kao Corp.................... 3,091,676
17,800 Nintendo Co., Ltd........... 2,502,918
260 Nippon Telegraph & Telephone
Corp...................... 3,030,503
715,000 Nissan Motor Co., Ltd.*..... 3,416,302
400 NTT Mobile Communication
Network, Inc.............. 5,369,926
50,100 Orix Corp................... 4,472,844
47,800 Promise Co., Ltd............ 2,825,246
90,000 Ricoh Corp., Ltd............ 1,239,481
101,000 Sankyo Co., Ltd............. 2,546,499
36,300 Sony Corp................... 3,915,971
840,000 Sumitomo Trust & Banking
Co., Ltd.................. 4,041,333
34,000 TDK Corp.................... 3,111,350
292,000 The Industrial Bank of
Japan, Ltd................ 2,317,269
-----------
52,683,202
-----------
Malaysia--0.5%
408,300 Genting Berhad.............. 1,324,463
-----------
Netherlands--4.2%
67,500 Heineken N.V................ 3,454,766
56,800 ING Groep N.V............... 3,073,995
38,134 Philips Electronics N.V..... 3,760,044
-----------
10,288,805
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
23
<PAGE>
THE TARGET PORTFOLIO TRUST
International Equity Portfolio
(cont'd)
Portfolio of Investments June
30, 1999 (Unaudited)
<TABLE>
<CAPTION>
US$
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
Singapore--1.6%
157,000 Overseas Chinese Banking
Corp., Ltd.................. $ 1,309,871
363,000 United Overseas Bank, Ltd..... 2,538,014
------------
3,847,885
------------
Spain--5.1%
184,400 Argentaria, Caja Postal y
Banco Hipotecario de Espana,
S.A......................... 4,191,458
115,300 Endesa S.A.................... 2,457,963
124,458 Telefonica S.A................ 6,008,175
------------
12,657,596
------------
Sweden--5.1%
33,985 ABB AB, Series A*............. 3,182,716
142,700 Electrolux AB, Series B....... 2,992,178
205,900 Nordbanken Holding AB......... 1,205,469
220,500 Svenska Handelsbanken AB,
Series A.................... 2,649,429
92,800 Volvo AB, Series B............ 2,694,687
------------
12,724,479
------------
Switzerland--3.6%
1,141 Nestle S.A.................... 2,055,136
290 Roche Holdings A.G............ 2,980,001
1,450 The Swatch Group A.G.......... 975,307
4,920 Zurich Allied A.G............. 2,796,785
------------
8,807,229
------------
United Kingdom--20.6%
162,000 Allied Zurich PLC............. 2,036,437
85,983 AstraZeneca Group PLC......... 3,352,618
732,528 British Aerospace PLC......... 4,768,694
317,500 British America Tobacco
Industries PLC.............. 2,995,250
68,800 British Energy PLC............ 591,031
196,100 British Petroleum Co. PLC..... 3,511,406
204,812 Cadbury Schweppes PLC......... 1,307,127
301,599 Diageo PLC.................... 3,168,511
207,300 Granada Group PLC............. 3,839,391
<CAPTION>
US$
VALUE
SHARES DESCRIPTION (NOTE 1)
<C> <S> <C>
232,800 Great Universal Stores PLC.. $ 2,596,179
331,038 Imperial Chemical Industries
PLC....................... 3,269,069
738,100 Invensys PLC................ 3,490,291
237,700 National Westminster Bank
PLC....................... 5,039,375
242,239 Prudential Corp. PLC........ 3,570,104
375,000 Royal & Sun Alliance
Insurance Group PLC....... 3,360,369
155,300 Smithkline Beecham PLC...... 2,019,531
225,892 Unilever PLC................ 2,004,631
-----------
50,920,014
-----------
Total long-term investments
(cost US$179,152,930)..... 229,027,588
-----------
Principal
Amount
(000) SHORT-TERM INVESTMENTS--7.1%
- ----------
United States Treasury
Bills,
$ 50 4.24%, 8/5/99............... 49,793
4,770 4.30%, 8/5/99............... 4,750,252
7,640 4.34%, 8/5/99............... 7,608,370
1,290 4.465%, 8/5/99.............. 1,284,659
3,820 4.48%, 8/5/99............... 3,804,185
-----------
Total short-term investments
(cost US$17,495,378)...... 17,497,259
-----------
Total Investments--99.7%
(cost US$196,648,308; Note
4)........................ 246,524,847
Other assets in excess of
liabilities--0.3%......... 712,702
-----------
Net Assets--100%............ $247,237,549
-----------
-----------
</TABLE>
- ------------------
* Non-income producing securities.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
24
<PAGE>
The industry classification of portfolio holdings and other net assets shown as
a percentage of net assets as of June 30, 1999 was as follows:
<TABLE>
<S> <C>
Banking.......................................... 14.1%
Telecommunications............................... 7.9
U.S Government Securities........................ 7.1
Insurance........................................ 7.1
Pharmaceuticals.................................. 4.4
Manufacturing.................................... 4.2
Energy........................................... 4.2
Food & Beverage.................................. 3.7
Automobiles...................................... 3.6
Diversified Operations........................... 3.3
Retail........................................... 3.0
Chemicals........................................ 2.6
Financial Services............................... 2.4
Office Equipment & Supplies...................... 1.9
Natural Resources................................ 1.9
Aerospace/Defense................................ 1.9
Leasing.......................................... 1.8
Tobacco.......................................... 1.6
Oil & Gas-Domestic............................... 1.6
Diversified Industries........................... 1.6
Electronics...................................... 1.5
Steel-Producers.................................. 1.4
Intergrated Oil.................................. 1.4
Electrical Equipment............................. 1.4
Oil & Gas Services............................... 1.3
Engineering & Equipment.......................... 1.3
Computers........................................ 1.3
Beverages........................................ 1.3
Timber........................................... 1.2
Industrials...................................... 1.2
Cosmetics/Toiletries............................. 1.2
Consumer Durable Goods........................... 1.2
Miscellaneous.................................... 1.1
Software......................................... 1.0
Consumer Goods................................... 0.8
Leisure.......................................... 0.5
Forest Products.................................. 0.5
Electric Utilities............................... 0.2
-----
99.7
Other assets in excess of liabilities............ 0.3
-----
100.0%
-----
-----
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
25
<PAGE>
THE TARGET PORTFOLIO TRUST
International Bond Portfolio
Portfolio of Investments June
30, 1999 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL US$
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--96.4%
Australia--8.2%
New South Wales Treasury
Corp.,
A$ 2,000 8.00%, 12/1/01.............. $ 1,388,205
Queensland Treasury Corp.,
1,400 8.00%, 8/14/01.............. 969,430
-----------
2,357,635
-----------
Canada--6.9%
Canadian Gov't. Bonds,
C$ 100 5.50%, 6/1/09............... 67,593
Deutsche Fin(Neth),
1,500 7.00%, 1/7/04............... 1,056,367
Province of Ontario,
1,150 8.00%, 3/11/03.............. 839,644
-----------
1,963,604
-----------
Euro--37.6%
Dutch Gov't. Bonds,
EUR 400 8.75%, 9/15/01.............. 458,316
600 7.50%, 1/15/23.............. 791,074
Finnish Gov't. Bonds,
1,000 9.50%, 3/15/04.............. 1,267,327
German Gov't. Bonds,
2,050 5.75%, 8/22/00.............. 2,177,697
350 8.00%, 7/22/02.............. 406,078
1,700 5.00%, 2/3/05............... 1,814,657
307 6.00%, 1/5/06............... 347,230
511 6.00%, 7/4/07............... 579,772
900 6.25%, 1/4/24............... 1,038,170
Italian Gov't. Bonds,
800 4.50%, 5/1/09............... 807,197
Spanish Gov't. Bonds,
1,000 5.15%, 7/30/09.............. 1,057,652
-----------
10,745,170
-----------
<CAPTION>
PRINCIPAL US$
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
Germany--9.8%
Austrian Gov't. Bonds,
DM 1,000 7.25%, 5/3/07............... $ 615,349
Halifax PLC,
2,000 5.625%, 7/23/07............. 1,111,581
Nordic Invest. Bank,
2,000 4.875%, 3/1/01.............. 1,078,903
-----------
2,805,833
-----------
Japan--5.9%
Italian Gov't. Bonds,
Yt 90,000 3.75%, 6/8/05............... 844,796
Kingdom of Spain,
90,000 3.10%, 9/20/06.............. 823,593
-----------
1,668,389
-----------
New Zealand--11.6%
Int'l. Bank Recon. & Dev.,
NZ$ 2,500 7.25%, 5/27/03.............. 1,353,407
750 5.375%, 11/6/03............. 378,424
New Zealand Gov't. Bonds,
1,250 8.00%, 11/15/06............. 718,067
1,600 7.00%, 7/15/09.............. 867,875
-----------
3,317,773
-----------
Sweden--7.6%
Eksportfinans A/S,
SEK 7,000 6.875%, 2/9/04.............. 874,897
Kingdom of Sweden,
6,000 9.00%, 4/20/09.............. 917,776
Swedish Gov't. Bonds,
2,000 6.00%, 2/9/05............... 250,583
Toyota Motor Credit,
1,000 7.50%, 8/6/01............... 124,585
-----------
2,167,841
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
26
<PAGE>
International Bond Portfolio
(cont'd)
Portfolio of Investments June
30, 1999 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL US$
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
United States--8.8%
U. S. Treasury Notes,
US$ 935 3.625%, 7/15/02............. $ 925,302
1,049 3.375%, 1/15/07............. 1,005,738
617 3.625%, 1/15/08............. 599,696
-----------
2,530,736
-----------
Total long-term investments
(cost US$28,585,858)...... 27,556,981
-----------
SHORT-TERM INVESTMENTS--2.5%
Japan--1.2%
Yt 40,000 Japanese Gov't. Bonds,
6.70%, 6/20/00............ 351,271
-----------
United States--1.3%
US$ 372 State Street Bank & Trust
Co.,
5.00%, dated 6/30/99, due
7/1/99 in the amount of
$372,021 (cost $372,000;
collateralized by $300,000
U.S. Treasury Bonds,
8.50%, 2/15/20,
approximate value of
collateral including
accrued interest is
$381,697)................. 372,000
-----------
Total short-term investments
(cost US$721,509)......... 723,271
-----------
Total Investments--98.9%
(cost US$29,307,367; Note
4)........................ 28,280,252
Other assets in excess of
liabilities--1.1%......... 325,983
-----------
Net Assets--100%............ $28,606,235
-----------
-----------
</TABLE>
- ------------------
Portfolio securities are classified according to the securities currency
denomination.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
27
<PAGE>
THE TARGET PORTFOLIO TRUST
Total Return Bond Portfolio
Portfolio of Investments June
30, 1999 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<S> <C> <C> <C>
LONG-TERM
INVESTMENTS--73.3%
Corporate Bonds--32.6%
Airlines--2.9%
Continental Airlines,
Inc.,
Ba2 $ 600 9.50%, 12/15/01......... $ 633,000
United Airlines, Inc.,
Baa1 1,000 10.85%, 2/19/15......... 1,235,540
------------
1,868,540
------------
Banking--9.1%
Asian Development Bank,
AAAPoundPound 900 5.82%, 6/16/28.......... 848,917
GS Escrow Corp.,
Ba1 1,300 6.75%, 8/1/01........... 1,284,702
Kansallis Osake Pankki,
(Finland),
A3 500 8.65%, 12/29/49......... 501,590
Korea Development Bank,
Ba2 2,000 9.60%, 12/1/00.......... 2,067,140
MBNA Bank, Inc.,
Baa1 100 DD 5.58%, 8/7/01........... 99,258
Baa1 1,100 DD 6.06%, 12/10/02......... 1,077,553
------------
5,879,160
------------
Cable--1.1%
Tele-Communications,
Inc.,
A2 700 DD 5.82%, 3/12/01.......... 699,142
------------
Financial Services--13.1%
General Motors
Acceptance Corp.,
APoundPound 700 DD 5.25%, 4/5/04........... 698,532
A2 1,300 DD 5.25%, 4/5/04, MTN...... 1,300,251
Goldman Sachs Group,
L.P.,
A1 1,000 DD 5.15%, 1/25/01.......... 998,710
Heller Financial, Inc.,
A3 1,100 DD 5.26%, 4/28/03.......... 1,103,938
Lehman Brothers
Holdings, Inc.,
Baa1 1,000 DD 5.90%, 4/1/02........... 999,929
Baa1 1,100 DD 6.21%, 9/3/02........... 1,100,119
Money Store Trust, Inc.,
Aaa 690 6.21%, 3/15/12.......... 689,072
Orix Credit Alliance,
Inc.,
Baa2 1,300 6.79%, 4/16/01.......... 1,302,444
PaineWebber Group, Inc.,
Baa1 250 6.75%, 2/1/06........... 243,508
------------
8,436,503
------------
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<S> <C> <C> <C>
Health Care--0.7%
Columbia/HCA Healthcare
Corp.,
Ba2 $ 450 6.88%, 7/15/01.......... $ 436,779
------------
Industrials--1.8%
Westpoint Stevens, Inc.,
BB* 1,200 7.88%, 6/15/05.......... 1,173,000
------------
Oil & Gas Exploration Production--0.8%
R&B Falcon Corp.,
Ba3 600 6.50%, 4/15/03.......... 510,000
------------
Recreation--1.5%
Green Tree Recreational
Equipment
AAAPoundPound 964 6.55%, 7/15/28.......... 972,930
------------
Utilities--1.6%
Niagara Mohawk Power
Corp.,
Baa3 1,000 6.88%, 3/1/01........... 1,006,720
------------
Total corporate bonds
(cost $21,102,160).... 20,982,774
------------
U.S. Government Agency Mortgage
Backed Securities--18.4%
Federal Home Loan Mortgage Corp.,
1,000DD 4.71%, 5/18/00.......... 999,820
6.00%, 5/15/28 -
1,000 7/1/28................ 893,750
6.50%, 9/15/18 - 12/15/21,
1,026 (I/O) 118,709
7.50%, 9/1/16 -
2,419 10/1/27............... 2,456,835
621 7.80%, 1/1/24........... 641,046
15 9.25%, 1/1/10........... 16,120
Federal National Mortgage Assn.,
990 6.14%, 5/1/36........... 972,045
1,239DD 7.08%, 1/1/20........... 1,274,190
Government National Mortgage Assn.,
987 6.50%, 7/20/27.......... 997,077
6.88%, 2/20/17 -
1,742 2/20/26............... 1,764,686
7.00%, 7/20/22 -
1,161 9/20/25............... 1,174,780
321 7.38%, 6/20/23.......... 323,895
7.50%, 2/15/27 -
111 1/15/28............... 112,492
Resolution Trust Corp.,
50 9.25%, 6/25/23.......... 49,635
------------
Total U.S. Government
agency
mortgage backed
securities
(cost $11,849,257).... 11,795,080
------------
Foreign Corporate Bonds--2.1%
Hellenic Finance,
Baa1 700 2.00%, 7/15/03.......... 714,171
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
28
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<S> <C> <C> <C>
Foreign Corporate Bonds--(cont'd)
Petroleos Mexicanos,
Ba2 $ 700 DD 9.02%, 7/15/05, MTN..... $ 654,500
------------
Total foreign corporate
bonds
(cost $1,375,505)..... 1,368,671
------------
Collateralized Mortgage
Obligations--11.4%
Allied Capital
Commercial
Mortgage Trust,
AAA* 1,125 6.31%, 9/25/03.......... 1,117,925
American Housing Trust
1,
Senior Mortgage Pass
Through Certificate,
Series 1-5 Class A,
Aaa 15 8.63%, 8/25/18.......... 14,907
Champion Home Loan
Equity,
Series 1995, Class
A2-3,
Aaa 560 8.57%, 2/25/28.......... 571,246
Countrywide
Collateralized
Mortgage Obligation,
Aa1 60 8.14%, 11/25/24......... 60,202
GMAC Commercial Mortgage
Security, Inc.,
Aaa 1,242 6.15%, 5/15/35.......... 1,212,733
Aa2 677 6.81%, 4/15/08.......... 679,366
Baa2 500 7.15%, 3/15/11.......... 478,068
Headlands Mortgage
Security Inc.,
Mortgage Certificate,
Series 1998-2, Class
A1
AAA* 3,274 6.75%, 12/25/28......... 3,186,124
------------
Total collateralized
mortgage obligations
(cost $7,449,395)..... 7,320,571
------------
U.S. Government Securities--6.7%
United States Treasury
Notes,
3,424 DD 3.63%, 7/15/02 (TIPS)... 3,387,702
608 3.88%, 1/15/09.......... 600,680
300 5.50%, 5/31/03.......... 297,702
------------
Total U.S. government
securities
(cost $4,292,361)..... 4,286,084
------------
Foreign Government Bonds--2.1%
Republic of Argentina,
Ba3 90,000 5.50%, 3/27/01.......... 730,153
United Mexican States,
NR 600 DD 8.75%, 4/7/04........... 601,500
------------
Total foreign government securities
(cost $1,327,526)....... 1,331,653
------------
Total long-term
investments
(cost $47,396,204).... 47,084,833
------------
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<S> <C> <C> <C>
SHORT-TERM
INVESTMENTS--50.6%
Corporate Bonds--23.0%
Banking--4.5%
Capital One Bank,
Baa3 $ 1,200 6.83%, 8/16/99.......... $ 1,201,188
Baa3 1,100 7.20%, 7/19/99.......... 1,100,781
Export Import Bank
Korea,
BBB-* 600 6.50%, 10/6/99.......... 600,512
------------
2,902,481
------------
Cable--0.2%
Tele-Communications,
Inc.,
A2 100DD 5.99%, 2/2/00........... 99,885
------------
Electrical Equipment--2.0%
Emerson Electric Co.,
A1 1,300 4.95%, 7/12/99.......... 1,298,034
------------
Entertainment-->1.8%
Six Flags Enertainment
Corp.,
Baa2 1,200 Zero Coupon, 12/15/99... 1,169,208
------------
Financial Services--6.6%
Ford Motor Credit Co.,
A-1* 700 4.79%, 7/27/99.......... 697,306
KFW International
Finance Inc.,
A1 2,300 5.05%, 7/8/99........... 2,297,742
US West Capital Funding,
Inc.,
A2 1,300 5.96%, 3/24/00.......... 1,242,581
------------
4,237,629
------------
Foods--1.7%
Kellogg Co.,
A1 1,100 5.00%, 7/19/99.......... 1,097,250
------------
Industrials--1.7%
Williams Cos., Inc.,
BBB-* 1,100DD 5.50%, 1/30/00.......... 1,100,660
------------
Railroads--1.9%
Union Pacific Railroad
Corp,.
NR 1,200DD 5.95%, 5/22/00.......... 1,198,125
------------
Telecommunication Services--2.1%
AT&T Company Discount,
A1 100 4.95%, 7/7/99........... 99,917
MCI Worldcom, Inc.,
A2 1,300 5.36%, 1/27/00.......... 1,256,289
------------
1,356,206
------------
</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, 1999 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<S> <C> <C> <C>
Utilities--0.5%
Texas Utilities Co.,
A2 $ 300 5.24%, 1/21/00.......... $ 290,235
------------
Total corporate bonds
(cost $14,751,123).... 14,749,713
------------
U.S. Government Agency Mortgage Backed
Securities--26.1%
Federal Home Loan Mortgage Corp.,
900 5.50%, 12/31/99......... 821,250
6,300 6.00%, 12/31/99......... 5,924,961
2,500 7.50%, 12/31/99......... 2,523,450
Federal National Mortgage Assn.,
2,300 5.50%, 12/31/99......... 2,097,312
Government National Mortgage Assn.,
4,950 6.50%, 12/31/99......... 4,752,792
700 7.50%, 12/31/99......... 706,566
------------
Total U.S. government
agency mortgage backed
securities
(cost $16,956,284).... 16,826,331
------------
U.S. Government Securities--0.6%
United States Treasury
Bills,
35 4.40%, 9/16/99.......... 34,657
10 4.43%, 9/16/99.......... 9,902
25 D 4.47%, 9/16/99.......... 24,755
10 D 4.50%, 9/16/99.......... 9,902
150 4.54%, 9/16/99.......... 148,531
125 4.55%, 9/16/99.......... 123,775
20 4.63%, 9/16/99.......... 19,804
------------
Total U.S. government securities
(cost $371,370)......... 371,326
------------
Repurchase Agreement--0.9%
597 State Street Bank &
Trust Co., 2.00%,
dated 6/30/99 due
7/1/99 in the amount
of $597,033 (cost
$597,000,
collateralized by
$470,000 U.S. Treasury
Notes, 8.875%,
2/15/19, value of
collateral including
accrued interest is
$615,099)............. 597,000
------------
Total short-term
investments
(cost $32,675,777).... 32,544,370
------------
Total Investments, Before Outstanding
Options Written--123.9%
(cost $80,071,981; Note
4).................... 79,629,203
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
CONTRACTS DESCRIPTION (NOTE 1)
<S> <C> <C> <C>
OUTSTANDING CALL OPTIONS
WRITTEN*
10 United States
Treasury Bond
Futures, 8.00%,
9/21/99
expiring 8/20/99
@$122.00........... $ (1,094)
11 United States
Treasury Bond
Futures, 8.00%,
9/21/99
expiring 8/20/99
@$124.00........... (344)
5 United States
Treasury Bond
Futures, 8.00%,
9/21/99
expiring 8/20/99
@$120.00........... (1,406)
OUTSTANDING PUT OPTIONS
WRITTEN*
30 United States
Treasury Bond
Futures, 8.00%,
9/21/99
expiring 8/20/99
@$114.00........... (22,500)
9 United States
Treasury Bond
Futures, 8.00%,
9/21/99
expiring 8/20/99
@$110.00........... (1,406)
20 United States
Treasury Bond
Futures, 8.00%,
9/21/99
expiring 8/20/99
@$112.00........... (6,875)
------------
Total outstanding
options
written
(premium received
$42,512)........... (33,625)
------------
Total Investments, Net of
Outstanding
Options Written--123.9%
(cost $80,029,469)... 79,595,578
Liabilities in excess
of
other
assets--(23.9%).... (15,334,254)
------------
Net Assets--100%..... $ 64,261,324
------------
------------
</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.
(I/O)--Interest only.
(TIPS)--Treasury inflation protection securities.
MTN--Medium Term Notes.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
30
<PAGE>
Intermediate-Term Bond
Portfolio
Portfolio of Investments June
30, 1999 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<S> <C> <C> <C>
LONG-TERM
INVESTMENTS--82.2%
Corporate Bonds--32.5%
Airlines--1.7%
United Airlines, Inc.,
Baa1 $ 1,500 10.85%, 2/19/15.......... $ 1,853,310
------------
Banking--7.3%
GS Escrow Corp.,
Ba1 400 6.75%, 8/1/03............ 392,962
Ba1 600 6.75%, 8/1/01............ 592,939
Korea Development Bank,
Ba2 2,000 7.125%, 9/17/01.......... 2,005,278
Kpnqwest NV,
Ba1 1,500 8.125%, 6/1/09........... 1,470,000
MBNA America Bank
Baa1 2,000 DD 6.06%, 12/10/02.......... 1,959,188
Sumitomo Trust & Banking
Co., Ltd.,
Baa2 1,500 9.40%, 12/29/49.......... 1,450,070
------------
7,870,438
------------
Cable--0.4%
TCI Communications, Inc.,
A2 400 DD 5.82%, 3/12/01........... 399,510
------------
Financial Services--12.7%
General Motors Acceptance
Corp.,
APoundPound 2,100 DD 5.25%, 4/5/04............ 2,095,596
Goldman Sachs Group,
L.P.,
A1 1,900 DD 5.15%, 1/25/01........... 1,897,549
Heller Financial Inc.,
A3 1,900 DD 5.255%, 4/28/03.......... 1,906,802
Lehman Brothers Holdings
Inc.,
Baa1 2,000 DD 5.90%, 4/1/02............ 1,999,858
1,500 DD 6.21%, 9/3/02............ 1,500,162
Orix Credit Alliance
Inc.,
Baa2 2,100 6.79%, 4/16/01........... 2,103,948
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<S> <C> <C> <C>
PaineWebber Group, Inc.,
Baa1 $ 2,000 DD 5.82%, 11/27/00.......... $ 2,003,840
Resolution Trust Corp.,
Series 1992-C7, Class
C,
Baa2 100 9.25%, 6/25/23........... 99,269
------------
13,607,024
------------
Health Care Services--0.3%
Columbia/HCA Healthcare
Corp.,
Ba2 300 6.91%, 6/15/05........... 273,594
------------
Industrials--1.6%
Westpoint Stevens Inc.,
BBPoundPound 1,800 7.88%, 6/15/05........... 1,759,500
------------
Oil & Gas Exploration Production--1.5%
Occidental Petroleum
Corp.,
Baa3 1,600 6.40%, 4/1/03............ 1,564,800
------------
Technology--0.2%
International Game
Technology,
Ba1 200 7.88%, 5/15/04........... 196,000
------------
Telecommunications--0.3%
Cox Communications, Inc.,
Baa2 300 6.15%, 8/1/03............ 294,573
------------
Utilities--6.5%
Niagara Mohawk Power Corp.,
Baa3 2,000 6.88%, 3/1/01............ 2,013,440
Texas Utilities Co.,
Baa3 3,000 5.94%, 10/15/01.......... 2,968,830
Baa3 2,000 6.50%, 8/16/02........... 1,999,856
------------
6,982,126
------------
Total corporate bonds
(cost $35,001,760)..... 34,800,875
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
31
<PAGE>
THE TARGET PORTFOLIO TRUST
Intermediate-Term Bond
Portfolio (cont'd)
Portfolio of Investments June
30, 1999 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<S> <C> <C> <C>
U.S. Government Agency
Mortgage Backed Securities--31.4%
Federal Home Loan
Mortgage Corp.,
$ 4,400 5.50%, 12/31/99.......... $ 3,972,375
6.00%, 4/1/24 -
7,440 12/31/99............... 7,006,289
6.50%, 9/15/18 -
1,700 12/15/21............... 197,088
7.50%, 4/1/25 -
4,675 12/31/99............... 4,760,991
78 9.25%, 1/1/10............ 81,407
Federal National Mortgage
Assn.,
389 6.00%, 12/25/08.......... 387,881
146 6.199%, 12/1/30.......... 143,383
2,061 6.50%, 9/1/05............ 2,066,376
566 7.00%, 8/1/24............ 561,421
931 7.758%, 7/1/25........... 958,456
Government National
Mortgage Assn.,
5,300 6.50%, 12/31/99.......... 5,088,848
6.875%, 1/20/24 -
1,669 2/20/26................ 1,690,817
780 7.00%, 10/20/24.......... 792,490
7.375%, 5/20/23 -
1,658 6/20/23................ 1,669,663
2,446 8.50%, 3/20/25........... 2,541,867
Student Loan Marketing
Assn., Student Loan
Trust
1,700 DD 5.54%, 4/25/07........... 1,697,522
------------
Total U.S. Government
agency mortgaged backed
securities
(cost $33,777,505)..... 33,616,874
------------
Foreign Corporate Bonds--2.0%
Hellenic Finance S.C.A.,
Baa1 1,200 2.00%, 7/15/03........... 1,224,293
Petroleos Mexicanos,
Ba2 1,000 DD 9.03%, 7/15/05........... 935,000
------------
Total foreign corporate
bonds
(cost $2,175,757)...... 2,159,293
------------
Collateralized Mortgage
Obligations--8.2%
Champion Home Loan
Equity,
NR 840 8.57%, 2/25/28........... 856,869
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<S> <C> <C> <C>
Countrywide
Collateralized
Mortgage Obligation,
Aa1 $ 60 DD 8.14%, 11/25/24.......... $ 60,202
EQCC Home Equity Loan
Trust,
Series 1999-1, Class
A2F,
Aaa 3,000 5.77%, 3/20/29........... 2,960,156
Residential Accredit Loans Inc.,
Series 1997, Qs5, Class A9,
AAAPoundPound 3,000 7.25%, 6/25/27........... 2,972,415
Residential Asset Securities Corp.,
Series 1996, Ks4, Class A2,
Aaa 550 5.96%, 10/25/27.......... 539,781
Southern Pacific Secured
Assets Corp.,
1,400 DD 5.39%, 6/25/28........... 1,394,290
------------
Total collateralized
mortgage
obligations
(cost $8,916,403)...... 8,783,713
------------
Foreign Government Obligations--2.3%
Republic of Argentina,
Ba3 1,223 5.50%, 3/27/01......... 1,216,922
United Mexican States,
NR 1,200 DD 8.75%, 4/7/04.......... 1,203,000
------------
Total foreign
government obligations
(cost $2,410,377)...... 2,419,922
------------
U.S. Government Securities--5.7%
United States Treasury
Notes,
5,500 3.66%, 7/15/02 (TIPS).... 5,441,040
400 5.50%, 5/31/03........... 396,936
300 5.75%, 11/30/02.......... 300,609
------------
Total U.S. Government
Securities
(cost $6,136,639)...... 6,138,585
------------
Total long-term
investments
(cost $88,418,441)..... 87,919,262
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
32
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<S> <C> <C> <C>
SHORT-TERM
INVESTMENTS--34.2%
Corporate Bonds--26.9%
Banking--0.9%
MBNA America Bank,
Baa1 $ 1,000 DD 5.54%, 4/13/00........... $ 999,390
------------
Electrical Equipment--4.4%
Emerson Electric Co.,
A1 1,000 4.93%, 7/8/99............ 999,041
A1 3,700 4.95%, 7/12/99........... 3,694,404
------------
4,693,445
------------
Financial Services--7.7%
Banco Latinoamericano,
NR 1,800 6.31%, 4/10/00........... 1,798,056
Capital One Bank
Baa3 1,900 7.20%, 7/19/99........... 1,901,349
KFW International Finance
Inc.,
A1 3,900 5.05%, 7/8/99............ 3,896,170
US West Capital Funding
Inc.,
A2 700 5.96%, 3/24/00........... 669,082
------------
8,264,657
------------
Foods--2.0%
Kellogg Co.,
A1 2,100 4.95%, 7/8/99............ 2,097,979
------------
Industrials--5.4%
TCI Communications, Inc.,
A2 1,800 6.46%, 3/6/00............ 1,809,108
Union Pacific Corp.,
NR 2,000 5.9453%, 5/22/00......... 1,996,875
Williams Companies, Inc.,
BBB-PoundPound 2,000 5.50%, 1/30/00..... 2,001,200
------------
5,807,183
------------
<CAPTION>
PRINCIPAL
MOODY'S AMOUNT VALUE
RATING (000) DESCRIPTION (NOTE 1)
<S> <C> <C> <C>
Telecommunication Services--2.0%
MCI Worldcom Inc.,
A2 $ 2,200 5.36%, 1/27/00........... $ 2,126,027
------------
Utilities--4.5%
Florida Power Corp.,
A1 1,900 4.94%, 7/6/99............ 1,898,696
Long Island Lighting Co.,
Baa3 1,535 7.30%, 7/15/99........... 1,535,906
National Rural Utilities
Cooperative Finance
Corp.,
A1 700 4.77%, 7/27/99........... 695,939
A1 200 4.79%, 7/26/99........... 199,297
Texas Utilities Co.,
A2 500 5.24%, 1/21/00........... 483,725
------------
4,813,563
------------
Total corporate bonds
(cost $28,814,324)..... 28,802,244
------------
Corporate Notes--2.6%
American Information
Technologies Corp.,
A1 400 4.98%, 7/20/99........... 398,949
Coca Cola Co.,
A1 600 4.84%, 7/15/99........... 598,871
General Electric Capital
Corp.,
PRIM1 1,800 4.85%, 7/28/99........... 1,789,743
------------
Total corporate notes
(cost $2,791,272)...... 2,787,563
------------
Foreign Government Obligations--1.0%
Republic of Korea,
NR 1,000 8.19%, 4/8/00............ 1,003,750
------------
U.S. Government Agency Mortgage Backed
Securities--1.9%
Federal Home Loan
Mortgage Corp.,
2,000 4.71%, 5/18/00........... 1,999,640
------------
</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, 1999 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<S> <C> <C> <C>
U.S. Government Securities--0.5%
United States Treasury
Bills,
$ 55 DD 4.47%, 9/16/99......... $ 54,461
10 DD 4.50%, 9/16/99......... 9,902
170 4.54%, 9/16/99......... 168,335
260 4.55%, 9/16/99......... 257,453
40 4.63%, 9/16/99......... 39,608
------------
Total U.S. Government Securities
(cost $529,801)........ 529,759
------------
Repurchase Agreement--1.3%
State Street Bank &
Trust Co.,
3.25%, dated 6/30/99
due 7/1/99 in the
amount of $1,414,128
(cost $1,414,000,
collateralized by
$1,105,000 U.S. Trea-
sury Bill, 8.875%,
2/15/19, value of
collateral including
accrued interest is
1,414 $1,446,138).......... 1,414,000
------------
Total short-term
investments
(cost $36,545,674)... 36,536,956
------------
Total Investments, Before Outstanding
Options Written--116.4%
(cost $124,964,115;
Note 4).............. 124,456,218
------------
OUTSTANDING CALL OPTIONS
WRITTEN*
8 United States Treasury
Bond
Futures, 8.00%,
9/21/99
expiring 8/20/99
@$120.00............. (2,250)
16 United States Treasury
Bond
Futures, 8.00%,
9/21/99
expiring 8/20/99
@$122.00............. (1,750)
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<S> <C> <C> <C>
$ 18 United States Treasury
Bond
Futures, 8.00%,
9/21/99
expiring 8/20/99
@$124.00............. $ (563)
OUTSTANDING PUT OPTIONS
WRITTEN*--(0.1)%
17 United States Treasury
Bond
Futures, 8.00%,
9/21/99 expiring
8/20/99 @$110.00..... (2,656)
33 United States Treasury
Bond
Futures, 8.00%,
9/21/99 expiring
8/20/99 @$112.00..... (11,344)
51 United States Treasury
Bond
Futures, 8.00%,
9/21/99 expiring
8/20/99 @$114.00..... (38,250)
------------
Total outstanding
options written
(premium received
$71,795)............. (56,813)
------------
Total Investments, Net of Outstanding
Options Written--116.3%
(cost $124,892,320).... 124,399,405
Liabilities in excess
of other
assets--(16.3%)...... (17,469,462)
------------
Net Assets--100%....... $106,929,943
------------
------------
</TABLE>
- ---------------
D Pledged as initial margin on financial futures contracts.
DD Rate shown reflects current rate on variable rate instrument.
* Non-income producing securities.
PoundPound Standard & Poor's Rating.
(TIPS)--Treasury inflation protection securities.
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
34
<PAGE>
Mortgage Backed Securities
Portfolio
Portfolio of Investments June
30, 1999 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--97.9%
Collateralized Mortgage Obligation--30.3%
Chase Commercial Mortgage
Securities Corp.,
$ 1,000 7.37%, 2/19/07.............. $ 1,022,165
Federal Home Loan Mortgage
Corp.,
221 5.50%, 8/15/21, PAC......... 212,228
240 5.80%, 8/15/19, PAC......... 239,933
100 5.95%, 6/15/19, PAC......... 99,406
3,334 6.00%, 5/15/08 - 5/15/23.... 3,218,036
1,560 6.50%, 8/15/06 - 11/15/22,
PAC....................... 1,526,504
359 7.00%, 3/15/23, PAC......... 356,979
195 7.25%, 1/15/07, PAC......... 196,897
3,703 7.50%, 6/15/22, PAC I/O..... 360,518
1,732 8.00%, 8/15/04 - 7/15/21.... 1,778,424
707 9.00%, 7/01/08 - 10/15/20... 742,184
Federal National Mortgage
Assn.,
1,276 5.00%, 3/25/21, PAC......... 1,204,047
714 5.941%, 1/25/09............. 713,718
1,730 6.00%, 4/25/08 - 10/25/22... 1,664,700
800 6.25%, 1/25/09.............. 785,248
913 6.50%, 2/25/06 - 12/25/23,
PAC....................... 887,463
2,041 7.00%, 9/25/19 - 9/25/20,
PAC I/O................... 403,761
801 7.385%, 3/25/21............. 812,961
747 7.50%, 5/25/07 - 7/25/22.... 757,230
714 8.00%, 8/25/06 - 5/25/24.... 742,199
698 8.50%, 7/25/18 - 6/25/21.... 725,004
First Boston Mortgage
Securities,
1,262 Zero Coupon, 4/25/17, P/O... 639,576
828 6.96%, 6/20/29.............. 835,726
First Union-Lehman Brothers
Commerical Mortgage,
1,000 6.60%, 5/18/07.............. 992,812
Salomon Brothers Mortgage
Securities,
275 6.00%, 12/26/11............. 274,237
-----------
Total collateralized mortgage obligations
(cost $20,777,530).......... 21,191,956
-----------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
U.S. Government Agency Mortgage
Pass-Through Obligations--65.6%
Federal Home Loan Mortgage
Corp.,
$ 306 6.00%, 5/01/11............... $ 296,360
298 6.50%, 2/01/04............... 297,521
12 7.25%, 7/01/06............... 11,895
113 7.50%, 3/01/08............... 114,233
63 8.25%, 12/01/05 - 5/01/08.... 65,108
243 8.50%, 6/01/03 - 7/01/21..... 254,314
119 8.75%, 12/01/08.............. 124,199
321 9.00%, 1/01/02 - 10/01/05.... 336,835
23 10.00%, 1/01/04.............. 23,584
48 10.50%, 11/01/19............. 51,404
43 11.50%, 3/01/16.............. 46,915
19 12.75%, 11/01/13............. 20,551
25 13.25%, 5/01/13.............. 27,393
5 14.00%, 6/01/11.............. 5,501
Federal National Mortgage
Assn.,
918 6.00%, 5/25/10 - 8/01/11..... 889,663
89 6.18%, 7/01/08............... 86,355
49 6.295%, 6/01/08.............. 48,316
79 6.30%, 1/01/08............... 77,104
73 6.34%, 1/01/08............... 71,989
53 6.39%, 1/01/06............... 52,716
79 6.43%, 1/01/08............... 77,707
498 6.447%, 1/01/08.............. 491,050
974 6.50%, 5/01/13 - 7/01/13..... 959,249
649 6.55%, 9/01/07............... 644,814
54 6.812%, 10/01/07............. 54,759
592 6.981%, 6/01/07.............. 600,432
1,996 7.00%, 3/01/29 - 4/01/29..... 1,978,964
315 7.024%, 6/01/07.............. 322,829
613 7.04%, 3/01/07............... 628,163
64 7.28%, 10/01/06.............. 65,932
285 7.50%, 2/01/20............... 289,459
123 7.75%, 10/01/19.............. 126,431
845 8.00%, 3/01/07 - 12/01/22.... 871,030
1,220 8.50%, 1/01/07 - 6/01/10..... 1,265,027
175 9.75%, 8/01/10 - 11/01/16.... 185,701
</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, 1999 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
U.S. Government Agency Mortgage
Pass-Through Obligations (cont'd.)
Government National Mortgage
Assn.,
$ 3,534 6.50%, 5/15/23 - 10/15/28... $ 3,404,498
11,315 7.00%, 7/15/16 - 6/15/29.... 11,172,321
12,845 7.50%, 3/15/07 - 1/15/28.... 12,987,591
1,916 8.00%, 1/15/08 - 5/15/17.... 1,979,607
768 8.25%, 6/20/17 - 7/20/17.... 790,284
210 8.50%, 3/15/05 - 4/20/17.... 220,143
2,534 9.00%, 10/20/01 - 1/15/20... 2,695,739
777 9.50%, 9/15/02 - 1/15/21.... 836,510
1 13.00%, 2/15/11............. 715
75 13.50%, 6/15/10 -
11/15/12.................. 87,765
80 14.00%, 6/15/11 - 4/15/12... 94,783
34 16.00%, 4/15/12 - 5/15/12... 41,474
-----------
Total U.S. government agency
mortgage pass-through
obligations
(cost $46,073,326)........ 45,774,933
-----------
U.S. Government Security--2.0%
United States Treasury Bond
1,000 12.00%, 8/15/13
(cost $1,501,958)......... 1,404,060
-----------
Total long-term investments
(cost $68,352,814)........ 68,370,949
-----------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--5.1%
U.S. Government Agency Mortgage
Pass-Through Obligations--2.8%
Government National Mortgage
Assn.,
$ 1,000 6.50%, 12/15/99.............. $ 961,720
1,000 7.50%, 12/31/99.............. 1,002,969
------------
Total U.S. government agency
mortgage pass-through
obligations
(cost $1,968,828).......... 1,964,689
------------
Repurchase Agreement--2.3%
1,611 Paribas 4.80%, dated 6/30/99,
due 7/1/99 in the amount of
$1,611,215 (cost
$1,611,000; collateralized
by $1,690,000 U.S. Treasury
Notes, 5.875%, 9/30/02,
value of collateral
including accrued interest
- $1,628,052).............. 1,611,000
------------
Total short-term investments
(cost $3,579,828).......... 3,575,689
------------
Total Investments--103.0%
(cost US $71,932,642; Note
4)......................... 71,946,638
Liabilities in excess of other
assets--(3.0%)............. (2,129,372)
------------
Net Assets--100%............. $ 69,817,266
------------
------------
</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, 1999 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
Federal Farm Credit Bank--7.7%
$ 5,000 4.82%, 3/11/00................ $ 4,998,304
------------
Federal Home Loan Bank--86.7%
5,000 4.90%, 1/14/00................ 4,999,828
3,000 4.835%, 1/28/00............... 2,998,890
5,000 4.895%, 2/4/00................ 4,999,104
3,000 4.80%, 4/5/00................. 2,998,880
40,000 4.60%, 7/1/99................. 40,000,000
------------
55,996,702
------------
Student Loan Marketing Association--62.0%
40,000 4.60%, 7/1/99................. 40,000,000
------------
Repurchase Agreements--131.3%
28,783 ABN AMRO, 4.82%, dated
6/30/99, due 7/1/99 in the
amount of $28,786,854 (cost
$28,783,000; collateralized
by $21,000,000 and
$5,765,000 U.S. Treasury
Bonds, 7.50% and 6.125%,
respectively, 11/15/16 and
11/15/27, respectively,
value of collateral
including accrued interest -
$29,323,600)................ 28,783,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) DESCRIPTION (NOTE 1)
<C> <S> <C>
$ 28,000 Lehman Brothers Hldgs., Inc.,
4.85%, dated 6/30/99, due
7/1/99 in
the amount of $28,003,772
(cost $28,000,000;
collateralized
by $50,000,000 and
$26,645,000 U.S. Treasury
Strips, 8/15/14, value of
collateral including
accrued interest -
$29,166,764)............... $ 28,000,000
28,000 Paribas, 4.80%, dated
6/30/99, due 7/1/99 in the
amount of $28,003,733 (cost
$28,000,000; collateralized
by $21,992,000 U.S.
Treasury Bonds, 8.875%,
8/15/17, value of
collateral including
accrued interest -
$28,527,140)............... 28,000,000
------------
84,783,000
------------
Total Investments--287.7%
(amortized cost
$185,778,006*)............. 185,778,006
Liabilities in excess of
other
assets--(187.7%)........... (121,208,010)
------------
Net Assets--100%............. $ 64,569,996
------------
------------
</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, 1999 (Unaudited)
<TABLE>
<CAPTION>
SMALL
LARGE CAPITALIZATION LARGE CAPITALIZATION SMALL CAPITALIZATION CAPITALIZATION
GROWTH PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO VALUE PORTFOLIO
<S> <C> <C> <C> <C>
ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
Investments, at value* $381,868,400 $299,541,945 $149,622,051 $ 136,702,043
- ---------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 6,697,000 -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Cash 1,185 -- -- 2,502
- ---------------------------------------------------------------------------------------------------------------------------------
Foreign currency, at value
(cost $1,628,890; $41,453;
$61,925) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 361,096 366,498 372,473 339,637
- ---------------------------------------------------------------------------------------------------------------------------------
Receivable for investments sold -- 1,175,646 4,421,763 469,397
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and interest receivable 134,451 535,022 34,703 110,149
- ---------------------------------------------------------------------------------------------------------------------------------
Deferred expenses and other assets 2,500 2,500 1,800 1,400
- ---------------------------------------------------------------------------------------------------------------------------------
Due from broker-variation margin -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Forward currency contracts-net
amount receivable
from counterparties -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets 389,064,632 301,621,611 154,452,790 137,625,128
LIABILITIES
- ---------------------------------------------------------------------------------------------------------------------------------
Bank overdraft -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased 2,986,944 1,249,311 235,323 713,950
- ---------------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares reacquired 2,340,728 1,288,174 681,950 634,715
- ---------------------------------------------------------------------------------------------------------------------------------
Accrued expenses and other
liabilities 255,514 170,704 122,316 185,817
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends payable -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Outstanding options written
(premium received $42,512
and $71,795) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Withholding taxes payable -- 5,756 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Deferred trustees' fees 6,983 6,983 6,983 6,983
- ---------------------------------------------------------------------------------------------------------------------------------
Due to Manager 88,777 72,633 72,282 33,070
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities 5,678,946 2,793,561 1,118,854 1,574,535
NET ASSETS $383,385,686 $298,828,050 $153,333,936 $ 136,050,593
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets were comprised of:
Shares of beneficial interest,
at par $ 17,818 $ 17,480 $ 9,403 $ 8,603
- ---------------------------------------------------------------------------------------------------------------------------------
Paid-in capital in excess of par 182,796,620 191,731,857 111,102,730 112,781,034
- ---------------------------------------------------------------------------------------------------------------------------------
182,814,438 191,749,337 111,112,133 112,789,637
Under (over) distribution of net
investment
income (280,185) 2,438,364 (323,354) 430,388
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gains
(losses) 21,677,141 17,452,676 17,408,077 829,531
- ---------------------------------------------------------------------------------------------------------------------------------
Net unrealized
appreciation/depreciation 179,174,292 87,187,673 25,137,080 22,001,037
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, June 30, 1999 $383,385,686 $298,828,050 $153,333,936 $ 136,050,593
- ---------------------------------------------------------------------------------------------------------------------------------
Shares of beneficial interest
issued
and outstanding 17,817,826 17,480,394 9,403,018 8,602,953
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, offering price
and redemption price per share $21.52 $17.10 $16.31 $15.81
- ---------------------------------------------------------------------------------------------------------------------------------
*Identified cost of investments. $209,391,108 $212,354,272 $124,484,971 $ 114,701,006
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
38
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL U.S. GOVERNMENT
EQUITY INTERNATIONAL TOTAL RETURN INTERMEDIATE-TERM MORTGAGE BACKED MONEY
PORTFOLIO BOND PORTFOLIO BOND PORTFOLIO BOND PORTFOLIO SECURITIES PORTFOLIO MARKET PORTFOLIO
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
$246,524,847 $ 28,280,252 $ 79,032,203 $ 123,042,218 $ 71,946,638 $ 100,995,006
- -----------------------------------------------------------------------------------------------------------------------------
-- -- 597,000 1,414,000 -- 84,783,000
- -----------------------------------------------------------------------------------------------------------------------------
2,192 732 -- -- 550 790
- -----------------------------------------------------------------------------------------------------------------------------
1,611,658 -- 40,528 60,541 -- --
- -----------------------------------------------------------------------------------------------------------------------------
1,142,532 22,023 90,558 324,794 72,909 2,106,531
- -----------------------------------------------------------------------------------------------------------------------------
449,219 2,071,656 8,319,696 13,758,896 -- --
- -----------------------------------------------------------------------------------------------------------------------------
534,428 647,953 560,597 935,983 498,263 373,989
- -----------------------------------------------------------------------------------------------------------------------------
2,699 503 600 1,081 980 198
- -----------------------------------------------------------------------------------------------------------------------------
-- -- 190,173 188,394 -- --
- -----------------------------------------------------------------------------------------------------------------------------
-- -- 40,348 29,394 -- --
- -----------------------------------------------------------------------------------------------------------------------------
250,267,575 31,023,119 88,871,703 139,755,301 72,519,340 188,259,514
- -----------------------------------------------------------------------------------------------------------------------------
-- -- 3,013 5,839 -- --
- -----------------------------------------------------------------------------------------------------------------------------
1,668,897 2,059,781 24,125,674 32,200,658 1,968,828 --
- -----------------------------------------------------------------------------------------------------------------------------
1,063,766 180,717 253,021 296,053 501,311 123,395,027
- -----------------------------------------------------------------------------------------------------------------------------
150,176 137,353 78,444 67,951 89,112 25,076
- -----------------------------------------------------------------------------------------------------------------------------
-- 27,032 85,946 151,792 109,945 223,506
- -----------------------------------------------------------------------------------------------------------------------------
-- -- 33,625 56,813 -- --
- -----------------------------------------------------------------------------------------------------------------------------
3,316 66 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
6,983 -- 6,983 6,983 6,983 6,983
- -----------------------------------------------------------------------------------------------------------------------------
136,888 11,935 23,673 39,269 25,895 38,926
- -----------------------------------------------------------------------------------------------------------------------------
3,030,026 2,416,884 24,610,379 32,825,358 2,702,074 123,689,518
$247,237,549 $28,606,235 $64,261,324 $106,929,943 $69,817,266 $64,569,996
- -----------------------------------------------------------------------------------------------------------------------------
15,257
$ $ 3,245 $ 6,367 $ 10,645 $ 6,847 $ 64,570
- -----------------------------------------------------------------------------------------------------------------------------
187,591,502 30,075,526 66,440,201 109,915,428 70,191,568 64,505,426
- -----------------------------------------------------------------------------------------------------------------------------
187,606,759 30,078,771 66,446,568 109,926,073 70,198,415 64,569,996
2,256,590 (452,229) 249,500 21,844 169,055 --
- -----------------------------------------------------------------------------------------------------------------------------
7,530,058 39,730 (2,148,021) (2,670,444) (564,200) --
- -----------------------------------------------------------------------------------------------------------------------------
49,844,142 (1,060,037) (286,723) (347,530) 13,996 --
- -----------------------------------------------------------------------------------------------------------------------------
$247,237,549 $28,606,235 $64,261,324 $106,929,943 $69,817,266 $64,569,996
- -----------------------------------------------------------------------------------------------------------------------------
15,257,625 3,245,443 6,367,034 10,645,481 6,846,949 64,569,996
- -----------------------------------------------------------------------------------------------------------------------------
$16.20 $8.81 $10.09 $10.04 $10.20 $1.00
- -----------------------------------------------------------------------------------------------------------------------------
$196,648,308 $29,307,367 $80,071,981 $124,964,115 $71,932,642 $185,778,006
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
39
<PAGE>
THE TARGET PORTFOLIO TRUST
Statements of Operations
Six Months Ended June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
SMALL
LARGE CAPITALIZATION LARGE CAPITALIZATION SMALL CAPITALIZATION CAPITALIZATION
GROWTH PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO VALUE PORTFOLIO
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME
- ------------------------------------------------------------------------------------------------------------------------------
Income
Interest $ 114,148 $ 68,477 $ 124,904 $ 46,004
- ------------------------------------------------------------------------------------------------------------------------------
Dividends 793,249 3,391,484 126,209 921,533
- ------------------------------------------------------------------------------------------------------------------------------
Less: Foreign withholding
taxes -- (31,280) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total income 907,397 3,428,681 251,113 967,537
- ------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fee 1,061,542 846,317 432,953 384,623
- ------------------------------------------------------------------------------------------------------------------------------
Custodian's fees and expenses 47,000 52,000 55,000 57,000
- ------------------------------------------------------------------------------------------------------------------------------
Transfer agent's fees and
expenses 57,500 58,000 57,000 52,000
- ------------------------------------------------------------------------------------------------------------------------------
Reports to shareholders 5,000 5,000 10,000 15,000
- ------------------------------------------------------------------------------------------------------------------------------
Registration fees 3,200 15,000 9,000 16,000
- ------------------------------------------------------------------------------------------------------------------------------
Audit fee and expenses 6,700 7,000 6,800 7,000
- ------------------------------------------------------------------------------------------------------------------------------
Legal fees and expenses 3,500 3,000 1,200 2,000
- ------------------------------------------------------------------------------------------------------------------------------
Amortization of organization
expenses -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 1,000 1,200 900 1,000
- ------------------------------------------------------------------------------------------------------------------------------
Insurance 1,900 1,873 1,100 1,100
- ------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 240 954 514 1,851
- ------------------------------------------------------------------------------------------------------------------------------
Total expenses 1,187,582 990,344 574,467 537,574
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (280,185) 2,438,337 (323,354) 429,963
- ------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investment transactions 21,893,378 17,443,221 18,268,156 1,178,059
- ------------------------------------------------------------------------------------------------------------------------------
Financial futures contracts -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Foreign currency transactions -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Options written -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total net realized gain (loss) 21,893,378 17,443,221 18,268,156 1,178,059
- ------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation/depreciation on:
Investments 44,315,900 6,915,833 (9,553,908) 5,758,635
- ------------------------------------------------------------------------------------------------------------------------------
Financial futures contracts -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Foreign currencies -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Options written -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized
appreciation/depreciation 44,315,900 6,915,833 (9,553,908) 5,758,635
- ------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) 66,209,278 24,359,054 8,714,248 6,936,694
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ 65,929,093 $ 26,797,391 $ 8,390,894 $ 7,366,657
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements beginning on page 51
40
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL U.S. GOVERNMENT
EQUITY INTERNATIONAL TOTAL RETURN INTERMEDIATE-TERM MORTGAGE BACKED MONEY
PORTFOLIO BOND PORTFOLIO BOND PORTFOLIO BOND PORTFOLIO SECURITIES PORTFOLIO MARKET PORTFOLIO
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
$ 160,589 $ 703,581 $2,066,464 $ 3,288,437 $2,435,923 $4,463,206
- ---------------------------------------------------------------------------------------------------------------------------
4,017,357 -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
(480,794) (2,075) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
3,697,152 701,506 2,066,464 3,288,437 2,435,923 4,463,206
- ---------------------------------------------------------------------------------------------------------------------------
828,245 75,108 145,972 233,923 159,616 226,096
- ---------------------------------------------------------------------------------------------------------------------------
160,000 60,000 57,000 57,000 56,000 35,000
- ---------------------------------------------------------------------------------------------------------------------------
54,000 26,000 23,000 26,000 25,000 14,000
- ---------------------------------------------------------------------------------------------------------------------------
23,000 16,000 7,100 13,000 10,000 10,000
- ---------------------------------------------------------------------------------------------------------------------------
8,000 10,000 12,000 11,000 3,000 91,000
- ---------------------------------------------------------------------------------------------------------------------------
10,000 7,000 6,700 7,000 7,000 2,500
- ---------------------------------------------------------------------------------------------------------------------------
3,500 6,000 2,100 3,500 4,000 2,000
- ---------------------------------------------------------------------------------------------------------------------------
-- 3,949 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
1,200 1,000 1,100 1,200 1,000 1,200
- ---------------------------------------------------------------------------------------------------------------------------
2,000 500 400 600 500 500
- ---------------------------------------------------------------------------------------------------------------------------
901 552 463 1,028 1,266 505
- ---------------------------------------------------------------------------------------------------------------------------
1,090,846 206,109 255,835 354,251 267,382 382,801
- ---------------------------------------------------------------------------------------------------------------------------
2,606,306 495,397 1,810,629 2,934,186 2,168,541 4,080,405
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
9,762,096 (417,763) (1,056,369) (1,248,229) (82,543) 2,539
- ---------------------------------------------------------------------------------------------------------------------------
-- -- (1,084,675) (1,213,153) (1,103) --
- ---------------------------------------------------------------------------------------------------------------------------
(170,256) 100,163 12,411 16,169 -- --
- ---------------------------------------------------------------------------------------------------------------------------
-- -- 42,987 62,153 -- --
- ---------------------------------------------------------------------------------------------------------------------------
9,591,840 (317,600) (2,085,646) (2,383,060) (83,646) 2,539
- ---------------------------------------------------------------------------------------------------------------------------
649,535 (1,353,520) (869,220) (1,165,500) (1,795,745) --
- ---------------------------------------------------------------------------------------------------------------------------
-- 16,951 252,047 225,045 -- --
- ---------------------------------------------------------------------------------------------------------------------------
(62,883) (51,413) 35,281 (997) -- --
- ---------------------------------------------------------------------------------------------------------------------------
-- -- 8,608 14,673 -- --
- ---------------------------------------------------------------------------------------------------------------------------
586,652 (1,387,982) (573,284) (926,779) (1,795,745) --
- ---------------------------------------------------------------------------------------------------------------------------
10,178,492 (1,705,582) (2,658,930) (3,309,839) (1,879,391) 2,539
- ---------------------------------------------------------------------------------------------------------------------------
12,784,798
$ $ (1,210,185) $ (848,301) $ (375,653) $ 289,150 $4,082,944
- ---------------------------------------------------------------------------------------------------------------------------
</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>
LARGE CAPITALIZATION LARGE CAPITALIZATION SMALL CAPITALIZATION
GROWTH PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO
----------------------------- ----------------------------- -----------------------------
Six Months Six Months Six Months
Ended Year Ended Ended Year Ended Ended Year Ended
June 30, December 31, June 30, December 31, June 30, December 31,
1999 1998 1999 1998 1999 1998
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
Operations
Net investment
income (loss) $ (280,185) $ (137,759) $ 2,438,337 $ 4,653,175 $ (323,354) $ (561,626)
- ------------------------------------------------------------------------------------------------------------------------
Net realized gain
(loss) on
investment and
foreign currency
transactions 21,893,378 35,920,680 17,443,221 30,983,706 18,268,156 2,228,053
- ------------------------------------------------------------------------------------------------------------------------
Net change in
unrealized
appreciation/
depreciation of
investments 44,315,900 67,508,676 6,915,833 (9,079,959) (9,553,908) 1,353,560
- ------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in net
assets
resulting from
operations 65,929,093 103,291,597 26,797,391 26,556,922 8,390,894 3,019,987
- ------------------------------------------------------------------------------------------------------------------------
Dividends and
Distributions
Dividends from net
investment income -- -- (331,434) (4,404,065) -- --
- ------------------------------------------------------------------------------------------------------------------------
Dividends in excess
of net investment
income -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Distributions from
net
realized gains (8,039,637) (21,568,633) (4,901,733) (27,679,090) -- (6,691,785)
- ------------------------------------------------------------------------------------------------------------------------
Total distributions (8,039,637) (21,568,633) (5,233,167) (32,083,155) -- (6,691,785)
- ------------------------------------------------------------------------------------------------------------------------
Fund share
transactions(a)
Net proceeds from
shares sold 47,055,366 61,539,874 38,071,269 61,726,845 26,131,242 47,314,663
- ------------------------------------------------------------------------------------------------------------------------
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions 7,853,642 21,112,171 5,121,720 31,419,758 -- 6,560,196
- ------------------------------------------------------------------------------------------------------------------------
Cost of shares
reacquired (59,215,435) (78,466,932) (49,416,798) (79,225,934) (40,170,636) (57,118,761)
- ------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in net
assets from Fund
share
transactions (4,306,427) 4,185,113 (6,223,809) 13,920,669 (14,039,394) (3,243,902)
- ------------------------------------------------------------------------------------------------------------------------
Total increase
(decrease) 53,583,029 85,908,077 15,340,415 8,394,436 (5,648,500) (6,915,700)
NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
Beginning of period 329,802,657 243,894,580 283,487,635 275,093,199 158,982,436 165,898,136
- ------------------------------------------------------------------------------------------------------------------------
End of period(b) $383,385,686 $329,802,657 $298,828,050 $283,487,635 $153,333,936 $158,982,436
- ------------------------------------------------------------------------------------------------------------------------
(a) Fund share transactions are at $1 per share for the U.S. Government Money Market Portfolio.
(b) Includes
undistributed net
investment income
of $ -- $ -- $ 2,438,364 $ 331,461 -- --
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SMALL CAPITALIZATION
VALUE PORTFOLIO
-----------------------------
Six Months
Ended Year Ended
June 30, December 31,
1999 1998
<S> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS
- --------------------------------------------------------
Operations
Net investment
income (loss) $ 429,963 $ 745,060
- ------------------------------------------------------------
Net realized gain
(loss) on
investment and
foreign currency
transactions 1,178,059 11,100,287
- ----------------------------------------------------------------
Net change in
unrealized
appreciation/
depreciation of
investments 5,758,635 (23,613,476)
- --------------------------------------------------------------------
Net increase
(decrease) in net
assets
resulting from
operations 7,366,657 (11,768,129)
- ------------------------------------------------------------------------
Dividends and
Distributions
Dividends from net
investment income (43,620) (616,180)
- ----------------------------------------------------------------------------
Dividends in excess
of net investment
income -- --
- --------------------------------------------------------------------------------
Distributions from
net
realized gains (854,944) (11,204,352)
- ------------------------------------------------------------------------------------
Total distributions (898,564) (11,820,532)
- ----------------------------------------------------------------------------------------
Fund share
transactions(a)
Net proceeds from
shares sold 22,876,463 51,340,282
- --------------------------------------------------------------------------------------------
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions 880,188 11,566,933
- ------------------------------------------------------------------------------------------------
Cost of shares
reacquired (35,731,401) (61,175,473)
- ----------------------------------------------------------------------------------------------------
Net increase
(decrease) in net
assets from Fund
share
transactions (11,974,750) 1,731,742
- --------------------------------------------------------------------------------------------------------
Total increase
(decrease) (5,506,657) (21,856,919)
NET ASSETS
- ------------------------------------------------------------------------------------------------------------
Beginning of period 141,557,250 163,414,169
- ----------------------------------------------------------------------------------------------------------------
End of period(b) $136,050,593 $141,557,250
- --------------------------------------------------------------------------------------------------------------------
(a) Fund share transactions are at $1 per share for the U.S. Government Money Market Portfolio.
(b) Includes
undistributed net
investment income
of $ 430,388 $ 44,045
- ------------------------------------------------------------------------------------------------------------------------
</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,
1999 1998 1999 1998 1999 1998 1999 1998
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
$ 2,606,306 $ 3,498,986 $ 495,397 $ 1,037,980 $ 1,810,629 $ 3,420,783 $ 2,934,186 $ 5,778,552
- ------------------------------------------------------------------------------------------------------------------------------------
9,591,840 19,004,639 (317,600) 733,885 (2,085,646) 2,090,996 (2,383,060) 1,734,284
- ------------------------------------------------------------------------------------------------------------------------------------
586,652 13,769,545 (1,387,982) 768,892 (573,284) (641,674) (926,779) (424,161)
- ------------------------------------------------------------------------------------------------------------------------------------
12,784,798 36,273,170 (1,210,185) 2,540,757 (848,301) 4,870,105 (375,653) 7,088,675
- ------------------------------------------------------------------------------------------------------------------------------------
-- (1,532,425) (495,397) (1,037,980) (1,710,822) 13,336,862) (2,913,040) (5,900,704)
- ------------------------------------------------------------------------------------------------------------------------------------
-- -- (40,031) (211,923) -- (2,089,757) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
(1,186,850) (12,786,060) (532,833) (129,221) -- -- -- (1,685,532)
- ------------------------------------------------------------------------------------------------------------------------------------
(1,186,850) (14,318,485) (1,068,261) (1,379,124) (1,710,822) (5,466,619) (2,913,040) (7,586,236)
- ------------------------------------------------------------------------------------------------------------------------------------
257,029,103 397,245,964 4,636,140 10,468,976 14,176,479 32,010,608 26,160,069 59,709,544
- ------------------------------------------------------------------------------------------------------------------------------------
1,165,296 13,933,450 1,023,696 1,318,338 1,548,433 5,274,697 2,628,396 7,214,518
- ------------------------------------------------------------------------------------------------------------------------------------
(266,845,608) (426,694,187) (5,817,076) (13,095,621) (15,982,627) (20,021,41) (23,852,422) (56,214,686)
- ------------------------------------------------------------------------------------------------------------------------------------
(8,651,209) (15,514,773) (157,240) (1,308,307) (257,715) 17,263,894 4,936,043 10,709,376
- ------------------------------------------------------------------------------------------------------------------------------------
2,946,739 6,439,912 (2,435,686) (146,674) (2,816,838) 16,667,380 1,647,350 10,211,815
- ------------------------------------------------------------------------------------------------------------------------------------
244,290,810 237,850,898 31,041,921 31,188,595 67,078,162 50,410,782 105,282,593 95,070,778
- ------------------------------------------------------------------------------------------------------------------------------------
$247,237,549 $ 244,290,810 $ 28,606,235 $31,041,921 $ 64,261,324 $67,078,162 $106,929,943 $105,282,593
- ------------------------------------------------------------------------------------------------------------------------------------
2,256,590
$ $ -- $ -- $ -- $ 249,500 $ 137,282 $ 21,844 $ --
- ------------------------------------------------------------------------------------------------------------------------------------
<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,
1999 1998 1999 1998
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
$ 2,168,541 $ 4,525,346 $ 4,080,405 $ 5,162,964
- -----------------------------------------------------------------------------------------------------------------------------------
(83,646) 603,101 2,539 (1,050)
- -----------------------------------------------------------------------------------------------------------------------------------
(1,795,745) (603,723 ) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
289,150 4,524,724 4,082,944 5,161,914
- -----------------------------------------------------------------------------------------------------------------------------------
(2,167,305) 4,414,869 (4,082,944) (5,161,914)
- -----------------------------------------------------------------------------------------------------------------------------------
-- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
-- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
(2,167,305) 4,414,869 (4,082,944) (5,161,914)
- -----------------------------------------------------------------------------------------------------------------------------------
9,273,768 17,198,222 3,505,734,945 3,570,979,025
- -----------------------------------------------------------------------------------------------------------------------------------
1,783,922 3,666,643 2,382,827 4,089,479
- -----------------------------------------------------------------------------------------------------------------------------------
(12,232,184) (19,700,312 ) (3,582,396,263) (3,478,545,549)
- -----------------------------------------------------------------------------------------------------------------------------------
(1,174,494) 1,164,553 (74,278,491) (96,522,955)
- -----------------------------------------------------------------------------------------------------------------------------------
(3,052,649) 1,274,408 (74,278,491) (96,522,955)
- -----------------------------------------------------------------------------------------------------------------------------------
72,869,915 71,595,507 138,848,487 42,325,532
- -----------------------------------------------------------------------------------------------------------------------------------
$ 69,817,266 $72,869,915 $ 64,569,996 $ 138,848,487
- -----------------------------------------------------------------------------------------------------------------------------------
$ 169,055 $ 167,819 $ -- $ --
- -----------------------------------------------------------------------------------------------------------------------------------
</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, ------------------------------------------------------------
1999 1998 1997 1996 1995(c) 1994(c)
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $18.29 $13.58 $12.97 $12.13 $9.74 $9.91
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income (loss) (.02) (.01) --(d) .02 .10 .10
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gains
(losses) on
investment transactions 3.70 6.00 2.61 2.33 2.41 (.16)
- ------------------------------------------------------------------------------------------------------------------------
Total from investment
operations 3.68 5.99 2.61 2.35 2.51 (.06)
- ------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends from net investment income -- -- (.01) (.02) (.10) (.10)
- ------------------------------------------------------------------------------------------------------------------------
Distributions in excess of net
investment income -- -- -- -- (.01) (.01)
- ------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (.45) (1.28) (1.99) (1.49) (.01) --
- ------------------------------------------------------------------------------------------------------------------------
Total distributions (.45) (1.28) (2.00) (1.51) (.12) (.11)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $21.52 $18.29 $13.58 $12.97 $12.13 $9.74
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(b) 20.58% 14.22% 20.77% 21.09% 25.76% (.68)%
- ------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $383,386 $329,803 $243,895 $220,782 $180,077 $142,072
- ------------------------------------------------------------------------------------------------------------------------
Average net assets (000) $356,780 $277,794 $242,233 $202,736 $162,982 $129,687
- ------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets
Expenses .67%(a) .68% .73% .82% .78% .81%
- ------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.16)%(a) (.05)% (.01)% .19% .88% 1.08%
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 25% 54% 82% 65% 154% 24%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Annualized.
(b) 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.
(c) Calculated based upon average shares outstanding during the period.
(d) 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
- --------------------------------------------------------------------------- -------------------------------------------------
Six Months Six Months
Ended Year Ended December 31, Ended Year Ended December 31,
June 30, ------------------------------------------------------------ June 30, ----------------------------------
1999 1998 1997 1996(c) 1995(c) 1994(c) 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------------------
$15.87 $16.21 $13.97 $12.57 $10.02 $10.11 $15.35 $15.57 $14.93 $14.15
--------------------------------------------------------------------------------------------------------------------------------
.14 .28 .31 .31 .33 .26 (.03) (.05) (.05) (.02)
--------------------------------------------------------------------------------------------------------------------------------
1.39 1.34 3.77 2.07 2.89 (.04) .99 .48 3.02 2.63
--------------------------------------------------------------------------------------------------------------------------------
1.53 1.62 4.08 2.38 3.22 .22 .96 .43 2.97 2.61
--------------------------------------------------------------------------------------------------------------------------------
(.02) (.27) (.28) (.31) (.30) (.25) -- -- -- --
--------------------------------------------------------------------------------------------------------------------------------
-- -- -- (.03) -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------------
(.28) (1.69) (1.56) (.64) (.37) (.06) -- (.65) (2.33) (1.83)
--------------------------------------------------------------------------------------------------------------------------------
(.30) (1.96) (1.84) (.98) (.67) (.31) -- (.65) (2.33) (1.83)
--------------------------------------------------------------------------------------------------------------------------------
$17.10 $15.87 $16.21 $13.97 $12.57 $10.02 $16.31 $15.35 $15.57 $14.93
--------------------------------------------------------------------------------------------------------------------------------
9.73% 10.25% 29.80% 19.17% 32.08% 2.18% 6.45% 2.55% 20.85% 18.88%
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
$298,828 $283,488 $275,093 $227,706 $187,596 $142,219 $155,334 $158,982 $165,898 $147,469
--------------------------------------------------------------------------------------------------------------------------------
$284,443 $282,078 $253,579 $208,898 $163,124 $128,865 $145,514 $162,654 $156,570 $141,496
--------------------------------------------------------------------------------------------------------------------------------
.70%(a) .71% .72% .77% .76% .81% .80%(a) .77% .79% .89%
--------------------------------------------------------------------------------------------------------------------------------
1.73%(a) 1.65% 1.90% 2.33% 2.83% 2.66% (.45)%(a) (.35)% (.36)% (.32)%
--------------------------------------------------------------------------------------------------------------------------------
12% 24% 21% 22% 59% 6% 71% 69% 106% 108%
--------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------
1995(c) 1994(c)
<S> <C>
- --------------------------------------------------------------------------------------------------------------------------------
$11.59 $11.86
- -------------------------------------------------------------------------------------------------------------------------------
.02 .01
- --------------------------------------------------------------------------------------------------------------------------------
2.84 (.27)
- --------------------------------------------------------------------------------------------------------------------------------
2.86 (.26)
- --------------------------------------------------------------------------------------------------------------------------------
(.02) (.01)
- --------------------------------------------------------------------------------------------------------------------------------
-- --
- --------------------------------------------------------------------------------------------------------------------------------
(.28) --
- --------------------------------------------------------------------------------------------------------------------------------
(.30) (.01)
- --------------------------------------------------------------------------------------------------------------------------------
$14.15 $11.59
- --------------------------------------------------------------------------------------------------------------------------------
24.62% (2.19)%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
$121,533 $96,462
- --------------------------------------------------------------------------------------------------------------------------------
$107,649 $87,403
- --------------------------------------------------------------------------------------------------------------------------------
.85% .93%
- --------------------------------------------------------------------------------------------------------------------------------
.12% .10%
- --------------------------------------------------------------------------------------------------------------------------------
120% 97%
- --------------------------------------------------------------------------------------------------------------------------------
</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
--------------------------------------------------------------------------
Six Months
Ended Year Ended December 31,
June 30, ----------------------------------------------------------
1999 1998(e) 1997(e) 1996(e) 1995(e) 1994(e)
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $14.98 $17.50 $15.22 $13.07 $11.07 $12.72
- -----------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income (loss) .05 .08 .08 .11 .14 .11
- -----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gains
(losses) on
investment transactions .89 (1.27) 4.37 2.71 2.00 (1.49)
- -----------------------------------------------------------------------------------------------------------------------
Total from investment
operations .94 (1.19) 4.45 2.82 2.14 (1.38)
- -----------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends from net investment income (.01) (.07) (.08) (.11) (.14) --
- -----------------------------------------------------------------------------------------------------------------------
Distributions in excess of net
investment income -- -- (.01) -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (.10) (1.26) (2.08) (.56) -- (.27)
- -----------------------------------------------------------------------------------------------------------------------
Distributions in excess of net
realized gains -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Tax return of capital distributions -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions (.11) (1.33) (2.17) (.67) (.14) (.27)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.81 $14.98 $17.50 $15.22 $13.07 $11.07
- -----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(d) 6.30% (6.62)% 29.98% 21.75% 19.21% (11.03)%
- -----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $136,051 $141,557 $163,414 $126,672 $97,594 $84,163
- -----------------------------------------------------------------------------------------------------------------------
Average net assets (000) $129,270 $153,756 $144,160 $110,564 $88,085 $83,891
- -----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets
Expenses .85%(b) .79% .81% .92% 1.00% .93%
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .67%(b) .48% .45% .77% 1.14% .88%
- -----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 24% 39% 36% 60% 110% 97%
- -----------------------------------------------------------------------------------------------------------------------
</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
- --------------------------------------------------------------------------- ----------------------------------------------
Six Months Six Months
Ended Year Ended December 31, Ended Year Ended December 31,
June 30, ------------------------------------------------------------ June 30, -------------------------------
1999 1998 1997 1996 1995(e) 1994(e) 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
$15.54 $14.27 $14.82 $13.64 $11.95 $13.09 $9.52 $9.17 $10.17 $10.19
-----------------------------------------------------------------------------------------------------------------------------
.17 .23 .21 .25 .17 .06 .17 .31 .42 .51
-----------------------------------------------------------------------------------------------------------------------------
.57 1.98 1.32 1.79 1.67 (.01) (.55) .45 (1.00) (.08)
-----------------------------------------------------------------------------------------------------------------------------
.74 2.21 1.53 2.04 1.84 .05 (.38) .76 (.58) .43
-----------------------------------------------------------------------------------------------------------------------------
-- (.10) (.41) (.22) (.11) (.01) (.17) (.31) -- (.21)
-----------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- --(f) (.06) (.06) --
-----------------------------------------------------------------------------------------------------------------------------
(.08) (.84) (1.67) (.64) (.04) (1.07) (.16) (.04) --(f) (.24)
-----------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- (.11) -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- -- (.36) --
-----------------------------------------------------------------------------------------------------------------------------
(.08) (.94) (2.08) (.86) (.15) (1.19) (.33) (.41) (.42) (.45)
-----------------------------------------------------------------------------------------------------------------------------
$16.20 $15.54 $14.27 $14.82 $13.64 $11.95 $8.81 $9.52 $9.17 $10.17
-----------------------------------------------------------------------------------------------------------------------------
4.84% 15.49% 10.60% 15.25% 15.38% .18% (4.17)% 8.55% (5.73)% 4.45%
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
$247,238 $244,291 $237,851 $240,563 $191,598 $188,025 $28,606 $31,042 $31,189 $41,780
-----------------------------------------------------------------------------------------------------------------------------
$238,602 $246,335 $245,536 $221,626 $183,414 $179,614 $30,292 $30,720 $35,163 $38,788
-----------------------------------------------------------------------------------------------------------------------------
.92%(b) .91% .93% .99% 1.02% 1.07% 1.37%(b) 1.54% 1.35% 1.34%
-----------------------------------------------------------------------------------------------------------------------------
2.20%(b) 1.42% 1.15% 1.77% 1.32% .47% 3.30%(b) 3.38% 4.44% 5.02%
-----------------------------------------------------------------------------------------------------------------------------
14% 45% 37% 39% 76% 116% 78% 110% 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, --------------------------------------------------------
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.49 $10.58 $10.28 $10.62 $9.48 $10.28
- ---------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .27 .58 .57 .57 .62(b) .47(b)
- ---------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gains
(losses) on
investment transactions (.40) .27 .35 (.09) 1.18 (.82)
- ---------------------------------------------------------------------------------------------------------------------
Total from investment
operations (.13) .85 .92 .48 1.80 (.35)
- ---------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends from net investment income (.27) (.58) (.54) (.56) (.58) (.45)
- ---------------------------------------------------------------------------------------------------------------------
Distributions in excess of net
investment income -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (.34) (.10) (.26) (.08) --
- ---------------------------------------------------------------------------------------------------------------------
Distributions in excess of net
realized gains -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Total distributions (.27) (.92) (.64) (.82) (.66) (.45)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.09 $10.49 $10.56 $10.28 $10.62 $9.48
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(c) (1.38)% 8.28% 9.23% 5.02% 19.63% (3.54)%
- ---------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $64,261 $67,078 $50,411 $49,218 $45,118 $31,191
- ---------------------------------------------------------------------------------------------------------------------
Average net assets (000) $65,414 $61,786 $48,123 $47,246 $37,023 $31,141
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets
Expenses .79%(a) .81% .91% .94% .85%(b) .85%(b)
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 2.77%(a) 5.54% 5.54% 5.67% 6.21%(b) 4.90%(b)
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 169% 327% 323% 340% 141% 121%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Annualized.
(b) Net of expense subsidies.
(c) 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
- ------------------------------------------------------------------------- ----------------------------------------------
Six Months Six Months
Ended Year Ended December 31, Ended Year Ended December 31,
June 30, ---------------------------------------------------------- June 30, -------------------------------
1999 1998 1997 1996 1995 1994 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------------
$ 10.36 $ 10.42 $ 10.30 $ 10.51 $ 9.56 $ 10.26 $ 10.47 $ 10.45 $ 10.21 $ 10.31
---------------------------------------------------------------------------------------------------------------------------
.29 .63 .58 .59 .63 .49 .31 .64 .64 .65
---------------------------------------------------------------------------------------------------------------------------
(.32) .09 .28 (.07) .94 (.71) (.27) .01 .23 (.12)
---------------------------------------------------------------------------------------------------------------------------
(.03) .72 .86 .52 1.57 (.22) .04 .65 .87 .53
---------------------------------------------------------------------------------------------------------------------------
(.29) (.61) (.57) (.59) (.60) (.48) (.31) (.63) (.63) (.63)
---------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------
-- (.17) (.17) (.14) (.02) -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------
(.29) (.78) (.74) (.73) (.62) (.48) (.31) (.63) (.63) (.63)
---------------------------------------------------------------------------------------------------------------------------
$10.04 $10.36 $10.42 $10.30 $10.51 $9.56 $10.20 $10.47 $10.45 $10.21
---------------------------------------------------------------------------------------------------------------------------
(0.49)% 8.57% 8.57% 5.22% 16.87% (2.23)% .27% 6.37% 8.82% 5.56%
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
$106,930 $95,071 $95,071 $100,392 $77,125 $62,924 $69,817 $72,870 $71,596 $73,867
---------------------------------------------------------------------------------------------------------------------------
$104,827 $95,575 $95,575 $ 81,723 $68,628 $69,602 $71,528 $73,737 $71,757 $72,214
---------------------------------------------------------------------------------------------------------------------------
%(a)
.68 .71% .71% .73% .79% .80% .75%(a) .70% .88% .91%
---------------------------------------------------------------------------------------------------------------------------
5.64%(a) 5.64% 5.64% 5.69% 6.09% 5.06% 6.11%(a) 6.14% 6.21% 6.44%
---------------------------------------------------------------------------------------------------------------------------
101% 249% 249% 311% 93% 77% 7% 24% 128% 102%
---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------
1995 1994
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------
$ 9.51 $ 10.18
- ---------------------------------------------------------------------------------------------------------------------------
.68(c) .61(b)
- ---------------------------------------------------------------------------------------------------------------------------
.83 (.66)
- ---------------------------------------------------------------------------------------------------------------------------
1.51 (.05)
- ---------------------------------------------------------------------------------------------------------------------------
(.68) (.61)
- ---------------------------------------------------------------------------------------------------------------------------
(.03) (.01)
- ---------------------------------------------------------------------------------------------------------------------------
-- --
- ---------------------------------------------------------------------------------------------------------------------------
-- --
- ---------------------------------------------------------------------------------------------------------------------------
(.71) (.62)
- ---------------------------------------------------------------------------------------------------------------------------
$10.31 $9.51
- ---------------------------------------------------------------------------------------------------------------------------
16.18% (.51)%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
$69,759 $61,971
- ---------------------------------------------------------------------------------------------------------------------------
$65,149 $66,276
- ---------------------------------------------------------------------------------------------------------------------------
.85%(b) .85%(b)
- ---------------------------------------------------------------------------------------------------------------------------
6.79%(b) 6.19%(b)
- ---------------------------------------------------------------------------------------------------------------------------
154% 380%
---------------------------------------------------------------------------------------------------------------------------
</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, --------------------------------------------------------
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .021 .048 .049 .045 .051(b) .037(b)
- ---------------------------------------------------------------------------------------------------------------------
Total from investment
operations .021 .048 .049 .045 .051 .037
- ---------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends from net investment income (.021) (.048) (.049) (.045) (.051) (.037)
- ---------------------------------------------------------------------------------------------------------------------
Total distributions (.021) (.048) (.049) (.045) (.051) (.037)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(c) 2.09% 4.88% 4.95% 4.53% 5.25% 3.79%
- ---------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 64,570 $138,848 $42,326 $27,397 $18,855 $21,438
- ---------------------------------------------------------------------------------------------------------------------
Average net assets (000) $ 182,375 $106,500 $37,675 $19,132 $20,173 $15,048
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets
Expenses .42%(a) .55% .65% .89% .75%(b) .50%(b)
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 4.51%(a) 4.85% 4.91% 4.49% 5.18%(b) 4.03%(b)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Annualized.
(b) Net of expense subsidies.
(c) 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, should have earnings
growth 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, are
undervalued; Small Capitalization Growth Portfolio--maximum capital appreciation
through investment primarily in small company common stocks that in the
investment advisor's opinion should have earnings growth faster than that of a
market average companies; Small Capitalization Value Portfolio--above average
capital appreciation through investment in common small company stocks that, in
the adviser's opinion, are undervalued or overlooked in the marketplace;
International Equity Portfolio--capital appreciation through investment
primarily in stocks of companies domiciled outside the United States;
International Bond Portfolio--high total return through investment primarily in
high quality foreign debt securities; 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
capital 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 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.
- --------------------------------------------------------------------------------
51
<PAGE>
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 year.
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.
Foreign Currency Forward Contracts: The International Equity Portfolio,
International Bond Portfolio, Intermediate-Term Bond Portfolio and Total Return
Bond Portfolio may enter into foreign currency forward contracts in order to
hedge their exposure to changes in foreign currency exchange rates on their
foreign portfolio holdings. A foreign currency forward contract is a commitment
to purchase or sell a foreign currency at a future date at a negotiated forward
rate. The Portfolio enters into foreign currency forward 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 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.
- --------------------------------------------------------------------------------
52
<PAGE>
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. Net investment income,
net realized gains and net assets were not affected by this change.
<TABLE>
<CAPTION>
Accumulated Net
Net Gain/ Investment
Portfolio Ref. Loss Income
- ---------------------------------- ------- ----------- ----------
<S> <C> <C> <C>
International Equity.............. a $ 170,256 $(170,256)
International Bond................ a $ 356,705 $(356,705)
Total Return Bond................. a $ (12,411) $ 12,411
Intermediate-Term Bond............ a $ (16,169) $ 16,169
- ---------------
(a) Reclass of net foreign currency gains/losses.
</TABLE>
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's manager is 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.
The advisers noted below each furnished investment advisory services in
connection with the management of the Portfolios. Effective May 28, 1999,
SawGrass Asset Management, L.L.C. became the subadvisor of the Small
Capitalization Growth Portfolio and will serve the portfolio under the same
terms and conditions as under the agreement with Nicholas-Applegate Capital
Management. 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)
are 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, Ltd., and
Columbus Circle Investors
Large Capitalization
Value.................. INVESCO Capital Management, Inc. and
Hotchkis and Willey
Small Capitalization
Growth................. SawGrass Asset Management, L.L.C.
and Investment Advisors, Inc.
Small Capitalization
Value.................. Wood, Struthers & Winthrop Management
Corp. and Lazard Asset Management
International Equity..... Lazard 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>
The Fund has a distribution agreement with Prudential Investment
Management Services LLC ('PIMS'). PIMS serves the Fund without compensation.
PIFM and PIMS are indirect, wholly owned subsidiaries of The Prudential
Insurance Company of America.
- --------------------------------------------------------------------------------
53
<PAGE>
- -------------------------------------------------------------------
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 period ended June 30, 1999 as well as the fees due
PMFS as of June 30, 1999.
<TABLE>
<CAPTION>
Amount incurred
for the Amount Due
period ended as of
June 30, June 30,
Portfolio 1999 1999
- -------------------------------- ---------------- ------------
<S> <C> <C>
Large Capitalization Growth..... $ 56,300 $9,700
Large Capitalization Value...... 55,200 9,700
Small Capitalization Growth..... 55,100 9,200
Small Capitalization Value...... 49,000 9,000
International Equity............ 54,500 9,200
International Bond.............. 17,800 3,000
Total Return Bond............... 23,000 3,900
Intermediate-Term Bond.......... 27,700 4,800
Mortgage Backed Securities...... 25,000 4,400
U.S. Government Money Market.... 13,000 2,200
</TABLE>
For the period ended June 30, 1999, PSI earned approximately $1,100 and
$11,900 in brokerage commissions on behalf of certain portfolio transactions
executed with the Large Capitalization Growth Portfolio and Large Capitalization
Value Portfolio, respectively.
- -------------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of portfolio securities, excluding short-term
investments and written options, for the period ended June 30, 1999 were as
follows:
<TABLE>
<CAPTION>
Portfolio Purchases Sales
- ------------------------------------ ------------ ------------
<S> <C> <C>
Large Capitalization Growth......... $ 87,859,653 $ 94,189,099
Large Capitalization Value.......... 34,881,813 44,641,107
Small Capitalization Growth......... 100,166,923 115,596,959
Small Capitalization Value.......... 19,069,871 31,748,375
International Equity................ 31,906,472 53,616,450
International Bond.................. 22,694,686 22,631,688
Total Return Bond................... 128,382,951 131,983,174
Intermediate-Term Bond.............. 109,479,777 107,208,532
Mortgage Backed Securities.......... 12,763,369 4,881,388
</TABLE>
The federal income tax basis and unrealized appreciation/depreciation of
each of the Portfolios' investments, excluding written options as of June 30,
1999, were as follows:
<TABLE>
<CAPTION>
Net
Unrealized
Appreciation Gross Unrealized
Portfolio Basis (Depreciation) Appreciation Depreciation
- --------------------- ------------ --------------- ------------ ------------
<S> <C> <C> <C> <C>
Large Capitalization
Growth............. $209,537,076 $ 179,028,324 $184,626,011 $5,597,687
Large Capitalization
Value.............. 212,354,272 87,187,673 93,946,867 6,759,194
Small Capitalization
Growth............. 124,514,171 25,107,880 29,837,298 6,759,194
Small Capitalization
Value.............. 114,701,006 22,001,037 29,692,252 7,691,215
International
Equity............. 196,897,610 49,627,237 58,821,433 9,088,169
International Bond... 29,335,939 (1,055,687) 287,615 1,343,302
Total Return Bond.... 80,087,787 (451,584) 160,202 611,786
Intermediate-Term
Bond............... 125,007,892 (551,674) 202,348 754,022
Mortgage Backed
Securities......... 71,932,642 13,995 1,074,407 1,060,412
</TABLE>
For federal income tax purposes, the Mortgage Backed Securities Portfolio
had a capital loss carryforward as of December 31, 1998 of approximately
$458,600 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 International Equity Portfolio
are electing to treat net currency losses of approximately $41,400 and $171,500,
respectively and the Small Capitalization Growth Portfolio, the Total Return
Bond Portfolio, the Intermediate Term Bond Portfolio and the Mortgage Backed
Portfolio are electing to treat net capital losses of approximately $860,100,
$155,500, $374,100 and $22,000, respectively, incurred in the two-month period
ended December 31, 1998 as having been incurred in the current year.
At June 30, 1999, the Total Return and Intermediate-Term Bond Portfolios
bought financial futures contracts. The unrealized appreciation/depreciation on
such contracts as of June 30, 1999 were as follows:
<TABLE>
<CAPTION>
Total Return Bond Portfolio:
Value at Value at Unrealized
Number of Expiration June 30, Trade Appreciation
Contracts Type Date 1999 Date (Depreciation)
- ---------- --------------- ---------- ----------- ---------- --------------
Long Positions:
<C> <S> <C> <C> <C> <C>
7 5 yr. T-Note Sept. 1999 $ 763,000 $ 754,312 $ 8,688
36 30 yr. T-Note Sept. 1999 4,172,625 4,132,125 40,500
149 10 yr. T-Note Sept. 1999 16,566,937 6,506,328 60,609
5 Eurodollar Mar. 2000 1,177,625 1,176,300 1,325
12 90 day LIBOR Mar. 2000 2,351,674 2,356,366 (4,692)
-------
$106,430
-------
-------
</TABLE>
<TABLE>
<CAPTION>
Intermediate-Term Bond Portfolio:
Value at Value at Unrealized
Number of Expiration June 30, Trade Appreciation
Contracts Type Date 1999 Date (Depreciation)
- ---------- -------------------- ---------- ----------- ----------- --------------
Long Positions:
<C> <S> <C> <C> <C> <C>
70 30 yr. T-Note Sept. 1999 $ 8,113,437 $ 8,038,539 $ 74,898
130 10 yr. T-Note Sept. 1999 14,454,375 14,417,812 36,563
9 5 yr. T-Note Sept. 1999 981,000 970,641 10,359
10 Eurodollar Mar. 2000 2,355,250 2,352,600 2,650
18 90 day LIBOR Mar. 2000 2,124,900 2,131,938 (7,038)
--------------
$ 117,432
--------------
--------------
</TABLE>
- --------------------------------------------------------------------------------
54
<PAGE>
At June 30, 1999, 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 Appreciation
Sale Contracts Receivable Value (Depreciation)
- ------------------------- --------------- ---------- --------------
<S> <C> <C> <C>
Eurodollar,
expiring 7/13/99....... $ 726,740 $ 722,086 $ 4,654
Japanese Yen,
expiring 7/14/99....... 1,390,674 1,354,980 35,694
--------------- ---------- --------------
$ 2,117,414 $2,077,066 $ 40,348
--------------- ---------- --------------
--------------- ---------- --------------
</TABLE>
At June 30, 1999, the Intermediate-Term 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>
Eurodollar,
expiring 7/13/99........ $ 1,245,840 $1,237,863 $ 7,977
Japanese Yen,
expiring 7/14/99........ 834,408 812,991 21,417
--------------- ---------- ------------
$ 2,080,248 $2,050,854 $ 29,394
--------------- ---------- ------------
--------------- ---------- ------------
</TABLE>
Transactions in options written during the period ended June 30, 1999,
were as follows:
<TABLE>
<CAPTION>
Number of Premiums
Total Return Bond Portfolio Contracts Received
- ---------------------------------------- --------- --------
<S> <C> <C>
Options outstanding at December 31,
1998.................................. 15 $ 2,872
Options written......................... 179 84,178
Options terminated in closing purchase
transactions.......................... (19) (4,960)
Options expired......................... (90) (39,578)
--- --------
Options outstanding at June 30, 1999.... 85 $42,512
--- --------
--- --------
<CAPTION>
Number of Premiums
Intermediate-Term Bond Portfilio Contracts Received
- ---------------------------------------- --------- --------
<S> <C> <C>
Options outstanding at December 31,
1998.................................. 24 $ 4,340
Options written......................... 276 129,607
Options expired......................... (157) (62,152)
--- --------
Options outstanding at June 30, 1999.... 143 $71,795
--- --------
--- --------
</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,
1999, PIFM and Prudential Bank & Trust owned 268,468 and 44,364 shares of the
International Bond Portfolio, respectively.
Transactions in shares of beneficial interest during the period ended June
30, 1999 were as follows:
<TABLE>
<CAPTION>
Shares
Issued in
Reinvestment Increase/
of Dividends (Decrease)
Shares and Shares in Shares
Portfolio Sold Distributions Reacquired Outstanding
- -------------------------------------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Large Capitalization Growth
Portfolio........................... 2,358,841 404,410 (2,973,561) (210,310)
Large Capitalization Value
Portfolio........................... 2,358,277 314,216 (3,058,110) (385,617)
Small Capitalization Growth
Portfolio........................... 1,767,658 -- (2,724,802) (957,144)
Small Capitalization Value
Portfolio........................... 1,579,551 61,337 (2,488,650) (847,762)
International Equity Portfolio........ 16,484,085 73,940 (17,024,921) 466,896
International Bond Portfolio.......... 498,252 110,710 (624,753) (15,791)
Total Return Bond Portfolio........... 1,373,627 150,425 (1,549,426) (25,374)
Intermediate-Term Bond Portfolio...... 2,560,246 257,252 (2,331,403) 486,095
Mortgage Backed Securities Portfolio.. 894,066 172,202 (1,179,872) (113,604)
</TABLE>
Transactions in shares of beneficial interest during the year ended
December 31, 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........................... 3,830,971 1,197,514 (4,954,992) 73,493
Large Capitalization Value
Portfolio........................... 3,668,396 1,982,225 (4,758,185) 892,436
Small Capitalization Growth
Portfolio........................... 3,052,747 408,882 (3,755,087) (293,458)
Small Capitalization Value
Portfolio........................... 3,013,164 779,594 (3,677,883) 114,875
International Equity Portfolio........ 25,575,077 901,284 (27,414,057) (937,696)
International Bond Portfolio.......... 1,135,046 142,350 (1,417,310) (139,914)
Total Return Bond Portfolio........... 2,988,954 497,282 (1,866,519) 1,619,717
Intermediate-Term Bond Portfolio...... 5,691,190 690,608 (5,350,123) 1,031,625
Mortgage Backed Securities Portfolio.. 1,637,945 349,295 (1,876,495) 110,745
</TABLE>
- --------------------------------------------------------------------------------
55
<PAGE>
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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) Sixty-six 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 advisers 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 advisers' specific market expertise.
4) Detailed performance of market indexes.
56
<PAGE>
Trustees
Eugene C. Dorsey
Douglas H. McCorkindale
Thomas T. Mooney
John R. Strangfeld
Officers
John R. Strangfeld
President
Robert F. Gunia
Vice President
Grace C. Torres
Treasurer
Stephen M. Ungerman
Assistant Treasurer
David F. Connor
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, EC2V6EE
United Kingdom
Hotchkis and Wiley
800 West Sixth Street
Los Angeles, CA 90017
INVESCO Capital Management,
Inc.
1315 Peachtree Street
Suite 500
Atlanta, GA 30309
Investment Advisers, Inc.
3700 First Bank Place
P.O. Box 357
Minneapolis, MN 55440
Lazard Asset Management
30 Rockefeller Plaza
New York, NY 10112
Oak Associates, Ltd.
3875 Embassy Parkway
Suite 250
Akron, OH 44333
Pacific Investment
Management Company
840 Newport Center Drive
Newport Beach, CA 92660
Sawgrass Asset
Management, L.L.C.
4337 Pablo Oaks Court
Jacksonville, FL 32224
Wellington
Management Company
75 State Street
Boston, MA 02109
Wood, Struthers & Winthrop
Management Corp.
277 Park Avenue
New York, NY 10172
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, 1999, 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
875921 10 8 875921 50 4 875921 70 2 TMF 158 E2
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