To Our Shareholders For decades, Target Corporation has been guided by principles, and devoted to strategies, that are intended to enhance our long-term financial performance and success. We have maintained a steadfast commitment to initiatives that fuel consistent growth over time because we believe that managing our business  this way continues to generate substantial value  for our shareholders. At Target Stores, which now represents more than 90 percent of our total pretax segment profit, our vision is clear and unwavering, reinforced by the strength and consistency of our financial results and the power of our brand. Target continues to enjoy strong market share gains and significant increases in profitability. At MervynGLYPH<213>s and Marshall FieldGLYPH<213>s, our path is less clear. In March, we announced plans to review strategic alternatives for both of these divisions, including, but not limited to, the possible sale of one or both divisions to existing retailers or other qualified buyers. Arriving at this decision was not easy or hasty. We have dedi- cated significant effort to increasing sales and profits at MervynGLYPH<213>s and Marshall FieldGLYPH<213>s over many years and we continue to believe that both of these businesses are valuable as ongoing operations. MervynGLYPH<213>s and Marshall FieldGLYPH<213>s have been important contributors to Target CorporationGLYPH<213>s overall strategy and financial performance for decades GLYPH<209> providing fashion leadership, manage- ment talent, and financial services expertise as well as significant cash flow that has allowed us the luxury of simultaneously pursuing terrific growth opportunities for our Target Stores division, while maintaining both a balanced capital structure and strong investment grade debt ratings. Additionally, these businesses have provided critical scale benefits to the Corporation, allowing us to leverage our fixed costs across a much larger retail organization. In recent years, however, both of these divisions have experienced considerable challenges to their top-line growth, resulting in unfavor- able trends in their financial performance. While each of these businesses continues to generate meaningful profits and substantial positive cash flow, the absolute amounts are much lower than their historical levels. As stewards of the CorporationGLYPH<213>s assets, our senior management team and our Board of Directors remain intently focused on our responsibilities to our share- holders, our team members, our guests and the communities we serve. While we believe that it is appropriate to identify and evaluate possible strategic alternatives for MervynGLYPH<213>s and Marshall FieldGLYPH<213>s, it is not clear that our review will result in either division being sold. Despite this uncertainty, we remain confident that Target Corporation is well-positioned to build on our record of outstanding performance and to generate profitable growth and superior shareholder value in 2004 and well into the future. 1