Stay on Track with TARGET

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1 Stay on Track with TARGET Whether you re spending time with your family or focusing on your career, your time is valuable. The time you spend searching for that hot dot or keeping abreast of market events may not be productive. The TARGET program allows you to focus on what you do every day, and lets experienced research professionals and money managers focus on your investments. After you speak with a financial professional and develop an asset allocation strategy that fits your individual needs and goals, you won t have to worry about continually monitoring your funds, analyzing performance results, or conducting your own research on portfolio managers. The TARGET program does this all for you through intensive research and strategic asset allocation. Leave the research to TARGET analysts As part of their ongoing due diligence, research analysts are in constant communication with portfolio managers to monitor their investment results. The research process includes: 1. Analysis of performance and risk 2. Verification of investment style to ensure your portfolio is managed according to the fund s stated objective 3. Evaluation of the organization and portfolio management team If a manager does not satisfy the rigorous criteria that our experienced research group has developed, the firm may be replaced. Asset allocation addresses your concerns Asset allocation is the key component of TARGET S structured, professionally managed approach. With the help of a financial professional, you can construct a portfolio built for your unique needs, time horizon, and circumstances. In time, your circumstances can change, or market conditions may warrant re-evaluation. Your financial professional will explain how these changes impact your portfolio and how asset allocation helps you achieve more consistent results over time. The hypothetical portfolios on the following page illustrate some of the ways a portfolio could be constructed to satisfy your risk and return requirements.

2 TARGET ASSET ALLOCATION STRATEGY COMPOSITIONS TARGET Conservative TARGET Moderate TARGET Aggressive Int FI 45% MM 30% LCV 5% Intl Eq 5% Int FI LCV 20% MBS Intl Eq LCG LCV SCG 20% SCV LCG Intl Eq MBS 5% LT FI 5% Intl FI 5% SCG 5% SCV 5% TARGET Conservative Portfolio The TARGET Conservative Portfolio is designed for a risk averse client, or a client with a short time horizon. The portfolio aims to minimize risk by investing a large portion of the portfolio in short-to intermediate-term fixed income securities, while providing some exposure to the growth potential of equity, international, and longerterm fixed income markets. TARGET Moderate Portfolio The TARGET Moderate Portfolio is designed for a client with a moderate risk profile, who seeks greater participation in the growth potential of the domestic and international equity/fixed income markets, with less emphasis placed on the risk reduction characteristics of shortto intermediate-term fixed income securities. TARGET Aggressive Portfolio The TARGET Aggressive Portfolio is designed for a client who is more comfortable with market volatility and seeks to fully participate in the growth potential of the domestic and international equity markets. Risk is managed through the allocation of assets across a broad range of equity asset classes. Intl Eq = TARGET International Intl FI = TARGET International MBS = TARGET Mortgage LCG = TARGET Large-Cap LCV = TARGET Large-Cap Equity Fixed Income/Bond Backed Securities Growth Value LT FI = TARGET Long-Term Int FI = TARGET Intermediate MM = TARGET Money Market SCG = TARGET Small-Cap SCV = TARGET Small-Cap Fixed Income/Bond Fixed Income/Bond Growth Value SCG, SCV Small-cap funds invest in stocks of smaller companies whose prices are generally more volatile than those of larger, more established companies. LCG, LCV Since large-cap equity portfolios invest primarily in common stocks, there is the risk that the price of a particular stock owned by a portfolio could go down. In addition, the value of a market sector or of the equity markets as a whole could go down. Intl Eq, Intl FI Investing in foreign/international securities presents certain unique risks not associated with domestic investments, such as currency fluctuation and political and economic changes. This may result in greater share price volatility. MM An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the fund. MBS Mortgage backed securities invest in certain securities that are subject to prepayment risk. Principal on this type of security may be repaid before its scheduled maturity. This may reduce the security s value and require a fund to reinvest the prepayment at a lower yield. LT FI Long-term fixed income securities could lose value because of the interest rate changes. Longer maturities typically offer higher yields, but are subject to greater price shifts as a result of interest rate changes than those with shorter maturities. The TARGET Asset Allocation Strategies are hypothetical model strategies.

3 Portfolio rebalancing Portfolio rebalancing attempts to keep the portfolio close to the original asset allocation plan. For instance, suppose the original plan called for 30% short-term bonds, and 70% equities. If equities outgrow bonds over time and you do nothing, the percentage of stocks in your portfolio will rise, increasing the risk characteristics of your portfolio. Rebalancing helps keep your portfolio in line with your original investment selections. An additional benefit of automatic rebalancing is that it takes the emotion out of the decision-making process, systematically reducing exposure to funds that have had the greatest relative appreciation and increasing exposure to funds that have had the smallest relative appreciation. This is one of the basic premises of a successful investment strategy. TARGET HYPOTHETICAL ASSET ALLOCATION PORTFOLIOS (PERFORMANCE DIFFERENCES WITH AND WITHOUT ANNUAL REBALANCING AS OF 03/31/03) TARGET Conservative Total Return Performance Qtr 1 Year 3 Years 5 Years Over/Underperformance TARGET Moderate Over/Underperformance TARGET Aggressive Over/Underperformance Total return performance for hypothetical conservative, moderate, and aggressive TARGET portfolios use basis point differentials to compare annual rebalancing versus no rebalancing. Positive numbers indicate outperformance by annually rebalanced portfolios and negative numbers indicate non-rebalanced portfolio outperformance. As the chart below illustrates, rebalancing a well-diversified asset allocation may lower the overall volatility of returns. Rebalancing your portfolio does have tax implications, which you should discuss with your tax adviser and financial professional. TARGET HYPOTHETICAL ASSET ALLOCATION PORTFOLIOS (RISK DIFFERENCES WITH AND WITHOUT ANNUAL REBALANCING AS OF 03/31/03) 5-Year Standard Deviation With Rebalancing Without Rebalancing Difference TARGET Conservative TARGET Moderate TARGET Aggressive Standard deviations for hypothetical conservative, moderate, and aggressive TARGET portfolios show the effect of rebalancing versus no rebalancing. A decrease in standard deviation indicates a reduction in risk. The standard deviation measures how tightly the returns are clustered around the average for the period. The performance of the hypothetical model strategies reflects a retroactive application of models and does not represent the results of actual trading using client funds. The performance includes the reinvestment of dividends and is net of mutual fund expenses. If a client decides not to follow the hypothetical model strategies, their performance would be different. Using the hypothetical model strategies has the potential for loss as well as gain.

4 The benefit of low fund expenses You can t control the performance of your funds, but you can improve the probability of competitive performance by keeping fund expenses low. All funds have expenses, which are deducted directly from the returns you receive. By limiting expenses you lower the hurdle your portfolio manager needs to overcome in order to deliver competitive performance results. The expense ratios for the TARGET funds are competitive and generally lower than the average expense ratios for comparable peers. In fact, 9 of the 10 TARGET funds have expense ratios lower than their respective peer averages. On average, the TARGET equity funds have an expense ratio that is approximately 70 basis points lower than the average equity fund. MUTUAL FUND EXPENSES AS OF 03/31/03 Equity Portfolios TARGET Expense Ratio Lipper Average Variance Large-Cap Growth Large-Cap Value Small-Cap Growth Small-Cap Value International Equity Equity Portfolio Average Fixed Income Portfolios TARGET Expense Ratio Lipper Average Variance Intermediate Bond Total Return Bond International Bond Mortgage Backed Securities Money Market Fixed Income Portfolio Average Overall Portfolio Average The Lipper Expense Ratio Average ( Lipper Average ) is calculated by using the average expense ratio of funds by asset class, which are culled directly from the most recent audited annual reports. The expense ratio is money deducted from a fund s earnings and assets to pay for annual operating expenses, including investment advisory fees, distribution and service (12b-1) fees, legal and accounting services, printing, phone services, postage, and other administrative costs. The lower the expense ratio, the more returns a fund can pass on to shareholders. For more information about other TARGET charges, fees, and expenses, see the prospectus. Focus on success Your financial professional will help you develop a personalized investment strategy that meets your needs and investment goals. You can work with your financial professional to fine-tune your strategy as your goals evolve or markets change. TARGET and your financial professional will provide you with the information and tools you need to succeed. For more information, please speak to your financial professional before investing or sending money.

5 The following chart illustrates how TARGET S hypothetical model strategies have performed historically. TARGET ASSET ALLOCATION STRATEGIES VS. BENCHMARKS 1 AS OF 03/31/03 Qtr 1 Year 3 Years 5 Years Since Inception 06/30/94 TARGET Conservative (without fee) 0.64% 4.98% 5.34% 4.89% 6.36% (with fee) 0.38% 3.89% 4.24% 3.80% 5. Blended Index % 5.74% 5.37% 5.36% 6.54% TARGET Moderate (without fee) 1.99% 11.64% 4.22% 1.46% 7.74% (with fee) 2.30% 12.78% 5.45% % Blended Index % 11.07% 5.34% 0.88% 7.52% TARGET Aggressive (without fee) 4.06% 26.31% 13.58% 3.20% 7.17% (with fee) 4.42% 27.41% 14.87% 4.65% 5.57% Blended Index % 25.46% 15.21% 4.40% 6.81% 1 Past performance is not indicative of future results. Both net (with fee) and gross (without fee) of fee returns are net of mutual fund expenses. The net of fee returns are net of maximum advisory fees. Individuals cannot invest directly in an index. The investment return and principal value will fluctuate, and shares, when sold, may be worth more or less than their original cost. The fees used to calculate the net of fee returns are fees applicable to retail accounts. Retirement accounts charge different fees. Russell 1000 Value, 5% MSCI EAFE, 5% SSB WGBI Ex-U.S. Hedged, 5% LB G/C, 45% LB G/C Int, 5% LB Mortgages, 30% SSB 3-Month Treasury Bill. 3 Russell 1000 Growth, 20% Russell 1000 Value, 5% Russell 2000 Growth, 5% Russell 2000 Value, MSCI EAFE, LB G/C Int, LB Mortgages. 4 Russell 1000 Growth, Russell 1000 Value, 20% Russell 2000 Growth, Russell 2000 Value, MSCI EAFE. The Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Index consists of the 1,000 largest securities in the Russell 3000 Index. The Russell 3000 Index is composed of the 3,000 largest U.S. securities, as determined by total market capitalization. (LCG); The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-tobook ratios and lower forecasted growth values. (LCV); The Russell 2000 Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index consists of the smallest 2,000 securities in the Russell 3000 Index. The Russell 3000 Index is composed of the 3,000 largest U.S. securities, as determined by total market capitalization. (SCG); The Russell 2000 Value Index measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. (SCV); The Lehman Brothers Government/Credit Intermediate Bond Index is composed of all bonds that are investment grade (rated Baa or higher by Moody's or BBB or higher by S&P, if unrated by Moody's) with maturities between 1 and 9.99 years. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. The index is rebalanced monthly by market capitalization. (Int FI); The Lehman Brothers Government/Credit-Long Term Bond Index is composed of all bonds that are investment grade (rated Baa or higher by Moody's or BBB or higher by S&P, if unrated by Moody's) and have at least 10 years to maturity. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. The index is rebalanced monthly by market capitalization. (LT FI); The Lehman Brothers Mortgage Index is composed of fixed-rate, securitized mortgage pools by GNMA, FNMA, and the FLHMC, including GNMA Graduated Payment Mortgages. The minimum principal amount required for inclusion is $50 million. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. (MBS); The Salomon Smith Barney 90 Day Index is constructed by purchasing equal dollar amounts of three-month Treasury bills at the beginning of three consecutive months. As each bill matures, all proceeds are rolled over or reinvested in a new three-month bill. The income used to calculate the monthly return is derived by subtracting the original amount invested from the maturity value. (MM); Salomon Brothers World Government Bond ex-u.s. Hedged Index is a market capitalization weighted index consisting of the government bond markets of the following countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, Portugal, Spain, Sweden, Switzerland, and the U.K. Country eligibility is determined based on market capitalization and investability criteria. All issues have a remaining maturity of at least one-year. Rebalanced monthly. (Intl FI); The Morgan Stanley Capital International EAFE Index is a market capitalization weighted index composed of companies representative of the market structure of 20 developed market countries in Europe, Australasia, and the Far East. The index is calculated without dividends, with net or with gross dividends reinvested, in both U.S. Dollars and Local. (Intl Eq). The strategies presented in this document are hypothetical portfolios for clients with a risk tolerance that is conservative, moderate, or aggressive. They were developed based on modern portfolio theory. These portfolios are representative of the median rates of return that can be achieved by a client in the program for the given level of risk. The client's risk level is based on his or her responses to the investment questionnaire. TARGET is an investment advisory program offered through Pruco Securities Corporation (member SIPC), 751 Broad Street, Newark, NJ and Prudential Securities Incorporated (member SIPC), 199 Water Street, New York, NY The funds in the TARGET Portfolio Trust are distributed by Prudential Investment Management Services LLC (member SIPC), Gateway Center Three, 14th Floor, Newark, NJ For more information about the TARGET investment program, including risks, charges, and expenses, contact your financial professional for a free prospectus. Read the prospectus carefully before investing or sending money. TARGET is a wrap-fee program. This type of program is one in which an investor pays one advisory fee based on assets in the program instead of typical transaction fees based on buying or selling the investment in the program. The wrap-fee covers the transaction fees and the investment advisory services provided by the sponsor. Prudential Financial is a service mark of The Prudential Insurance Company of America, Newark, NJ, and its affiliates.