As Filed with the Securities and Exchange Commission on October 31, 2005

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

TARGET CREDIT CARD OWNER TRUST 2005-1

(Issuer with respect to the Class A notes)
(Exact Name of Registrant as Specified in its Charter)

TARGET RECEIVABLES CORPORATION

(Originator of the Issuer)
(Exact Name of Registrant as Specified in its Charter)

 

Target Receivables Corporation
1000 Nicollet Mall
Suite 3136
Minneapolis, Minnesota  55403
(612) 696-3102
(Address, Including Zip Code, and Telephone Number, Including Area Code, of the Registrant’s Principal Executive Office)

Douglas A. Scovanner
President
Target Receivables Corporation
1000 Nicollet Mall
Minneapolis, Minnesota 55403
(612) 696-3102
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Copies to:
Andrew M. Faulkner
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
(212) 735-2853

Approximate date of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o

CALCULATION OF REGISTRATION FEE

(1)                                  Estimated solely for the purpose of calculating the Registration Fee.

(2)                                  The Registration Fee is $88,275.00, $117.70 of which was previously paid with the initial filing of this Registration Statement and the remainder of which is to be applied against the $242,700.00 previously paid in connection with unissued Asset Backed Certificates registered under Registration Statement No. 333-103371, initially filed on September 22, 2003, and is being offset against the total filing fee due for this Registration Statement pursuant to Rule 457(p) of the General Rules and Regulations under the Securities Act of 1933, as amended.  $154,542.70 of the previously-filed Registration Fee remains unused.

(3)                                  No additional consideration will be paid by purchasers of the Class A notes for the collateral certificate, which is pledged as security for the Class A notes.

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

SUBJECT TO COMPLETION, DATED OCTOBER 31, 2005

Prospectus Supplement to Prospectus, dated October 31, 2005

The information in this prospectus supplement and prospectus is not complete and may be changed.  We cannot sell these securities until the registration statement filed with the Securities and Exchange Commission is effective.  Neither this prospectus supplement nor the prospectus is an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

TARGET CREDIT CARD OWNER TRUST 2005-1

Issuer

TARGET RECEIVABLES CORPORATION

Transferor and Administrator

TARGET NATIONAL BANK

Servicer of Target Credit Card Master Trust

$750,000,000 Floating Rate Class A Asset Backed Notes

 

The Target Credit Card Owner Trust 2005-1 is also issuing Subordinated Interests of the same series in an initial principal amount of $211,538,462. The Subordinated Interests will be subordinated to the Class A notes and initially will be retained by Target Receivables Corporation.

The Class A notes and the Subordinated Interests are obligations of Target Credit Card Owner Trust 2005-1 and are backed only by the assets of Target Credit Card Owner Trust 2005-1. None of the Class A notes, the Subordinated Interests or the collateral certificate, which is the primary asset of Target Credit Card Owner Trust 2005-1, are obligations of Target Corporation, Target National Bank, Target Capital Corporation, Target Receivables Corporation or any of their affiliates or are obligations insured by the FDIC.

These securities are highly structured. Before you purchase these securities, you should understand the structure and you should consider carefully the “Risk Factors” beginning on page S-13 of this prospectus supplement.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of the disclosures in this prospectus supplement and the attached prospectus. Any representation to the contrary is a criminal offense.

The underwriters of the Class A notes have agreed to purchase the Class A notes, subject to the terms and conditions in the underwriting agreement.

 

The date of this Prospectus Supplement is October    , 2005.

Table of Contents

 

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Important Notice About Information Presented in this
Prospectus Supplement and the Attached Prospectus

The attached prospectus provides general information about Target Credit Card Owner Trust 2005-1 and Target Credit Card Master Trust, including terms and conditions that are generally applicable to the Class A notes issued by the owner trust and certificates issued by the master trust. The specific terms of the Class A notes are described in this prospectus supplement.

This prospectus supplement begins with several introductory sections describing the Class A notes, the collateral certificate, Target Credit Card Owner Trust 2005-1 and Target Credit Card Master Trust in abbreviated form:

·        Summary of Terms provides important dates, amounts and other terms of your notes,

·        Structural Summary gives a brief introduction to the key structural features of your notes and the collateral certificate and directions for locating further information,

·        Transaction Flow Chart illustrates the flow of receivables, and

·        Risk Factors describes some of the risks that apply to your notes and the collateral certificate.

As you read through these sections, cross-references will direct you to more detailed descriptions in the attached prospectus and elsewhere in this prospectus supplement. You can also directly reference key topics by looking at the table of contents in this prospectus supplement and the table of contents included in the attached prospectus.

You should rely only on the information contained or incorporated by reference in this prospectus supplement and the attached prospectus. We have not authorized anyone to provide you with different information.

We are not offering these notes in any state where the offer is not permitted.

We do not make any representation as to the accuracy of the information in this prospectus supplement as of any date other than the date set forth on its cover.

You can find a glossary with definitions of important terms that appear in this document under the caption “Glossary of Terms for Prospectus Supplement” beginning on page S-60 in this prospectus supplement or under the caption “Glossary of Terms for Prospectus” beginning on page 70 in the attached prospectus.

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Summary of Terms

Issuer:		Target Credit Card Owner Trust 2005-1
Transferor and Administrator:		Target Receivables Corporation
Servicer:		Target National Bank
Indenture Trustee and Master Trust Trustee:		Wells Fargo Bank, National Association
Owner Trustee:		Wilmington Trust Company
Pricing Date:		November     , 2005
Closing Date:		November     , 2005
Clearance and Settlement:		DTC/Clearstream/Euroclear
Owner Trust Assets:		The collateral certificate issued by Target Credit Card Master Trust, representing an undivided interest in receivables originated in consumer open-end credit card accounts of Target National Bank.

 

Series Structure:		Principal Amount		% of Total Series
Class A notes:		$750,000,000		78%
Subordinated Interests:		$211,538,462		22%
Annual Servicing Fee Rate:		2%
Credit Enhancement for Class A:		subordination of the Subordinated Interests
Class A Interest Rate:		one-month LIBOR +   %  p.a.
Interest Accrual Method:		actual/360
Interest Payment Dates:		monthly on the 25th
First Interest Payment Date:		December 27, 2005
Class A Expected Final Payment Date:		October 2010 distribution date
Legal Maturity Date:		October 2014 distribution date
Class A Anticipated Ratings (Moody’s/Standard & Poor’s):		Aaa/AAA

 

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Structural Summary

This summary briefly describes certain major structural components of the Class A notes. To fully understand the terms of the Class A notes, you will need to read both this prospectus supplement and the attached prospectus in their entirety.

Target Credit Card Owner Trust 2005-1

Target Credit Card Owner Trust 2005-1 is the issuer of the Class A notes and is referred to as the owner trust. The Class A notes will be the only class of notes issued by the owner trust. The owner trust will be maintained by the indenture trustee for the benefit of the holders of the notes. The owner trust is a Delaware statutory trust formed for the purpose of issuing the notes and the Subordinated Interests. TRC is the beneficial owner of the owner trust.

For more information on the owner trust, see “The Owner Trusts” in the attached prospectus.

Target Credit Card Master Trust

Target Credit Card Master Trust, referred to as the master trust, is the issuer of the Series 2005-1 collateral certificate, which is referred to as the collateral certificate. The collateral certificate is one of two series of certificates issued by the master trust that will be outstanding as of the closing date. The master trust is maintained by the master trust trustee for the benefit of the holders of the securities of each outstanding series, including the collateral certificate, as of the closing date.

For more information on other series of the master trust, see “Other Series Issued and Outstanding” in this prospectus supplement.

Target Corporation

Target Corporation, referred to as Target, is one of America’s largest general merchandise retailers operating large-format discount stores. The receivables in the master trust portfolio primarily arise under Target VISA accounts and under Target Card private label revolving credit card accounts relating to the sale of merchandise and services by Target stores and Target.com.

For more information on Target, see “Target Corporation” in the attached prospectus.

Target National Bank

Target National Bank originates the Target VISA accounts and the Target Card accounts. Target National Bank also is the servicer of these accounts.

For more information on Target National Bank, see “Target National Bank” in the attached prospectus.

Target Financial Services

Target Financial Services, a division of Target, performs many of the services which Target National Bank, as servicer, would typically perform, including marketing, implementation of underwriting, implementation of authorizations, guest services, collections and systems support. Target Financial Services will also perform, on behalf of Target Receivables Corporation, most of the duties that Target Receivables Corporation, as administrator of the owner trust, is obligated to perform.

For more information on Target Financial Services, see “Target Financial Services” in the attached prospectus.

Target Capital Corporation

Target Capital Corporation, referred to as TCC, purchases the receivables originated by Target National Bank and subsequently sells the receivables to Target Receivables Corporation.

For more information on TCC, see “Target Capital Corporation” in the attached prospectus.

Target Receivables Corporation

Target Receivables Corporation, referred to as TRC, is the transferor of the receivables to the master trust, the administrator of the owner trust and the depositor of the collateral certificate into the owner trust. TRC holds the transferor certificate issued by the master trust and initially will retain the Subordinated Interests. The mailing address of TRC is 1000 Nicollet Mall, Suite 3136,

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Minneapolis, Minnesota 55403 and the telephone number is (612) 696-3102.

For more information on TRC, see “Target Receivables Corporation” in the attached prospectus.

The Indenture Trustee

Wells Fargo Bank, National Association is the trustee under the indenture pursuant to which the Class A notes are issued. The corporate trust department of the indenture trustee is located at Sixth and Marquette, MAC N9311-161, Minneapolis, Minnesota 55479.

For more information on the indenture trustee, see “Description of the Notes—The Indenture Trustee” in the attached prospectus.

The Owner Trustee

Wilmington Trust Company is the owner trustee under the trust agreement for the owner trust. The corporate trust department of the owner trustee is located at 1100 North Market Street, Wilmington, Delaware 19890.

The Master Trust Trustee

Wells Fargo Bank, National Association is the trustee under the pooling and servicing agreement governing the collateral certificate. The corporate trust department of the master trust trustee is located at Sixth and Marquette, MAC N9311-161, Minneapolis, Minnesota 55479.

For more information on the master trust trustee, see “The Master Trust Trustee” in the attached prospectus.

The Collateral

The primary asset of the owner trust is the collateral certificate. The primary asset of the master trust is a pool of receivables arising under:

·       Target VISA accounts relating to the sale of merchandise and services by Target stores and other merchants and vendors participating in the worldwide VISA network, and

·       Target Card accounts relating to the sale of merchandise and services by Target stores.

For more information on the receivables, see “Target National Bank’s Credit Card Business” and “The Master Trust Portfolio” in this prospectus supplement.

Interests in the Master Trust

The master trust trustee maintains the master trust for several beneficiaries:

·       the owner trust, as holder of the collateral certificate,

·       certificateholders of other series issued by the master trust,

·       Target National Bank, as the holder of a participation in the assets of the master trust, and

·       TRC, as the holder of the transferor certificate issued by the master trust.

Each series, including the collateral certificate, has a claim to a specific dollar amount of the master trust’s assets, regardless of the total amount of principal receivables in the master trust at any time. TRC, as holder of the transferor certificate, and Target National Bank, as holder of the participation, hold the other claims to the master trust’s assets. The sizes of these claims fluctuate with the total amount of principal receivables in the master trust.

For more information on interests in the master trust, see “Description of the Certificates—Allocation of Master Trust Assets” in the attached prospectus.

The Series 2005-1 Collateral Certificate

The collateral certificate represents the right to receive a portion of collections on the underlying master trust assets and will also be allocated a portion of net losses on the principal receivables in the master trust, called the investor defaulted amount. Any collections allocated to the collateral certificate in excess of the amount owed to the owner trust and the servicer of the receivables will be shared with other series of certificates issued by the master trust or returned to TRC.

For more information on the collateral certificate, see “Description of the Collateral Certificate” in this

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prospectus supplement. For more information on the allocation of collections and payments to the collateral certificate, see “Description of the Collateral Certificate—Collateral Certificate Interest Payments,” “—Collateral Certificate Principal Payments” and “—Allocation Percentages” in this prospectus supplement.

The Class A Notes

The Class A notes represent obligations of the owner trust and will be secured by the collateral certificate and amounts received in respect of the collateral certificate, which will be the sole source of payments on the Class A notes. The amounts allocated to the collateral certificate will be used to pay principal of and interest on the Class A notes as those amounts become due, to cover net losses allocated to the collateral certificate and to pay the servicing fee and other expenses allocated to the collateral certificate. In no case will you receive more than the principal and interest owed to you under the terms of your notes described in this prospectus supplement.

For more information on the Class A notes, see “Description of the Notes” in this prospectus supplement.

Interest Payments

Interest on your Class A notes will be paid monthly on each distribution date for the related interest accrual period, from interest paid to the owner trust on the collateral certificate. A distribution date will occur on the 25th day of each month, or if that day is not a business day, the next business day, beginning on December 27, 2005. Your Class A notes will bear interest at one-month LIBOR plus        % per year.

Interest for your Class A notes will be calculated as follows:

 

Each interest accrual period will begin on and include a distribution date and end on but exclude the next distribution date. However, the first interest accrual period will begin on and include the closing date and end on but exclude the first distribution date for your notes.

You may obtain the interest rates for the current interest accrual period and the immediately preceding interest accrual period by telephoning the indenture trustee at (612) 667-8058.

For more information on the payment of interest on the Class A notes, see “Description of the Collateral Certificate—Collateral Certificate Interest Payments” and “—Application of Collections—Payment of Interest, Fees and Other Items” and “Description of the Notes—Interest Payments” in this prospectus supplement.

Principal Payments

Your Class A notes are expected to be paid in full on the October 2010 distribution date, which is the expected final payment date for the Class A notes. If an early amortization period has not commenced, the master trust will accumulate collections of principal receivables in a principal funding account during the accumulation period for the benefit of the owner trust, as holder of the collateral certificate, for the purpose of repaying the Class A notes on the Class A expected final payment date. The length of the accumulation period prior to the Class A expected final payment date will be as many months as is expected to be necessary for the accumulation of the Class A principal amount, but will not be more than twelve months or less than one month. The accumulation period will end on the first to occur of the following:

·       the day before an early amortization period begins,

·       the date on which the invested amount of the collateral certificate is reduced to zero, and

·       the October 2014 distribution date, which is the legal maturity date.

If your Class A notes are not paid in full on the Class A expected final payment date, an early amortization event will occur, the early amortization period will begin and the Class A notes will begin to receive monthly payments of

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interest and principal until the first to occur of the following:

·       the date on which they are paid in full,

·       the date on which the invested amount of the collateral certificate is reduced to zero,

·       the date on which the assets of the owner trust are fully liquidated after an event of default and acceleration of the outstanding principal amount of the notes, and

·       the legal maturity date.

For more information on the payment of principal of the Class A notes and the accumulation period, see “Description of the Collateral Certificate—Collateral Certificate Principal Payments” and “—Application of Collections—Payment of Principal” and “Description of the Notes—Principal Payments” and “—Distributions to Noteholders” in this prospectus supplement.

Credit Enhancement

Your Class A notes are credit enhanced through the subordination of the Subordinated Interests. Each month, the master trust will allocate a portion of net losses on the receivables in the master trust portfolio to the collateral certificate. Finance charge collections allocated to the collateral certificate ordinarily will be used to pay interest on the Class A notes, to fund the servicing fee with respect to the collateral certificate and then to cover the portion of net losses allocated to the collateral certificate.

If finance charge collections allocated to the collateral certificate are insufficient to make all required payments and reimbursements in any month, excess finance charge collections from other series issued by the master trust, if any, may be used to make required payments and reimbursements. If those amounts are not sufficient and TRC does not elect to apply excess transferor finance charge collections to cover those required payments and reimbursements or the amount of excess transferor finance charge collections applied is insufficient to cover those required amounts, principal collections allocated to the collateral certificate in an aggregate amount not to exceed the subordinated amount will be reallocated to make up shortfalls in amounts available to make interest payments on the Class A notes and pay the monthly servicing fee. The subordinated amount is equal to the difference between the invested amount of the collateral certificate and the outstanding principal amount of the Class A notes, but not less than zero. Any reallocation of principal collections allocated to the collateral certificate will result in a reduction in the invested amount of the collateral certificate. In addition, the invested amount of the collateral certificate will be reduced by:

·       any investor defaulted amount allocated to the collateral certificate and not funded by collections of finance charge receivables and other amounts available to the collateral certificate to cover the investor defaulted amount, and

·       any unpaid adjustment payment that TRC is required to but fails to make and that is allocated to the collateral certificate.

The Class A notes may suffer a loss of principal and shortfalls in interest payments if the subordinated amount is reduced to zero and there are shortfalls in collections of finance charge receivables and other amounts available to make interest payments and to cover the investor defaulted amount.

For a more detailed description of the subordination provisions of the Subordinated Interests, see “Description of the Notes—Subordination” in this prospectus supplement.

Allocations of Collections

Each month the servicer will allocate collections among:

·       the collateral certificate,

·       other series of certificates issued and outstanding,

·       the interests of any holders of participations in assets of the master trust, and

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·       the transferor’s interest in the master trust.

Generally, you are entitled to receive payments of interest and principal only from collections and other master trust assets allocated to the collateral certificate.

The amount allocated to the collateral certificate will be based generally upon the invested amount of the collateral certificate compared to the total amount of principal receivables in the master trust. The invested amount of the collateral certificate is the sum of:

·       the initial invested amount of the collateral certificate, plus

·       any increase in the collateral certificate principal amount in connection with the issuance of additional Class A notes and/or Subordinated Interests, plus

·       the aggregate amount of reimbursement of investor charge-offs, minus

·       principal payments made to the holder of the collateral certificate, minus

·       the aggregate amount of investor charge-offs, minus

·       the amount of any reduction in the invested amount of the collateral certificate due to the purchase and subsequent cancellation of notes by TRC or the owner trust.

On the closing date, the invested amount of the collateral certificate will be $961,538,462, the Class A outstanding principal amount will be $750,000,000 and the outstanding principal amount of the Subordinated Interests will be $211,538,462.

During the accumulation period, collections of finance charge receivables allocated to the collateral certificate and the investor defaulted amount will be based upon the adjusted invested amount of the collateral certificate, which is equal to the invested amount of the collateral certificate less amounts accumulated in the principal funding account for the purpose of making payments to the Class A noteholders on the Class A expected final payment date.

If the invested amount of the collateral certificate is reduced due to investor charge-offs, collections of principal receivables and finance charge receivables allocated to the collateral certificate and available for payment on your notes may be reduced.

For a more detailed description of the allocation percentages used for the collateral certificate, see “Description of the Collateral Certificate—Allocation Percentages” in this prospectus supplement. For a description of the events which may lead to reductions in the invested amount of the collateral certificate, see “Description of the Collateral Certificate—Allocation Percentages” and “—Reallocation of Cash Flows; Defaulted Receivables; Investor Charge-Offs” in this prospectus supplement.

Application of Collections

Collections of Finance Charge Receivables

Collections of finance charge receivables allocated to the collateral certificate will be used each month in the following order:

·       to pay interest due and payable on the Class A notes for the related interest accrual period,

·       to pay the monthly servicing fee,

·       to cover the investor defaulted amount,

·       to reimburse write downs of the invested amount of the collateral certificate due to investor charge-offs,

·       to pay interest, if any, on the Subordinated Interests,

·       to fund the reserve account, if TRC, at its option, designates a reserve account funding date,

·       to pay any other amounts required to be paid pursuant to the Indenture or any supplement to the Indenture, and

·       to be applied as excess finance charge collections.

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Collections of Principal Receivables

So long as the subordinated amount is greater than zero, collections of principal receivables allocable to the collateral certificate, up to an amount equal to the subordinated amount, will be applied each month first to fund shortfalls, if any, in:

·       interest payments on the Class A notes, and

·       payments of the monthly servicing fee;

then collections of principal receivables allocable to the collateral certificate will be applied as follows:

·       during the revolving period:

—       first, at the request of TRC, provided that rating agency confirmation is received, used to reduce the outstanding principal amount of the Subordinated Interests in an amount not to exceed the subordinated amount, and

—       second, treated as shared principal collections,

·       during the accumulation period:

—       first, deposited up to the Class A controlled deposit amount in the principal funding account for the benefit of the owner trust for payment to the Class A noteholders on the Class A expected final payment date,

—       second, after the deposit in the principal funding account of an amount equal to the outstanding principal amount of the Class A notes, paid to the owner trust to be applied to pay principal of the Subordinated Interests until the subordinated amount has been paid in full, and

—       third, treated as shared principal collections, and

·       during an early amortization period:

—       first, paid to the owner trust to be applied to pay principal of the Class A notes, until the Class A outstanding principal amount has been paid in full or the invested amount of the collateral certificate is reduced to zero,

—       second, paid to the owner trust to be applied to pay principal of the Subordinated Interests until the subordinated amount has been paid in full, and

—       third, treated as shared principal collections.

For a more detailed description of the application of collections, see “Description of the Collateral Certificate—Application of Collections” in this prospectus supplement.

Group I

The collateral certificate is included in Group I and will share excess finance charge collections with other series in Group I. The series listed under “Other Series Issued and Outstanding” in this prospectus supplement is also included in Group I. Additional series issued by the master trust may be included in Group I or may be included in other groups that may be established.

For more information on sharing of excess finance charge collections among series in Group I, see “Description of the Collateral Certificate—Sharing of Excess Finance Charge Collections” in this prospectus supplement.

Shared Principal Collections

The collateral certificate is a principal sharing series. The series listed under “Other Series Issued and Outstanding” in this prospectus supplement is also a principal sharing series. Each principal sharing series that has a principal shortfall will receive a portion of the total amount of shared

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principal collections based on the amount of the principal shortfall for that series divided by the total principal shortfalls for all principal sharing series.

For more information on shared principal collections and principal sharing series, see “Description of the Collateral Certificate—Shared Principal Collections” in this prospectus supplement.

Early Amortization Events

The collateral certificate is subject to several early amortization events, which could cause principal to be paid on the collateral certificate, and thus on the Class A notes, prior to the Class A expected final payment date. If the collateral certificate or the master trust experiences an early amortization event, the early amortization period may begin. If the early amortization period begins, the Class A notes will receive monthly payments of principal and interest until the first to occur of the following:

·       the date on which they are paid in full,

·       the date the invested amount of the collateral certificate is reduced to zero,

·       the date on which the assets of the owner trust are fully liquidated after an event of default and acceleration of the outstanding principal amount of the notes, and

·       the legal maturity date.

Early amortization events may occur if TRC fails to make required deposits or payments, violates certain covenants and agreements or makes representations and warranties that are materially incorrect.

The following are also early amortization events:

·       the average portfolio yield for any three consecutive months is less than the average base rate for those three consecutive months,

·       the Class A outstanding principal amount is not paid in full on the Class A expected final payment date,

·       bankruptcy, insolvency or similar events relating to TRC, the servicer, TCC or the holder of the transferor certificate, and

·       the occurrence of an event of default and the acceleration of the outstanding principal amount of the notes under the indenture.

For more information on early amortization events, see “Description of the Collateral Certificate—Application of Collections—Payment of Principal” and “—Early Amortization Events” in this prospectus supplement.

Events of Default

The Class A notes are subject to several events of default, which could cause principal to be paid on the Class A notes prior to the Class A expected final payment date. If an event of default occurs, the indenture trustee or the holders of a majority by outstanding principal amount of the notes, including any portion of the Subordinated Interests held by an entity other than TRC or its affiliates, may declare the notes to be immediately due and payable. General references in this prospectus supplement to “notes” or “noteholder” includes any portion of the Subordinated Interests held by an entity other than TRC or its affiliates and any holder thereof, as applicable. Notes or Subordinated Interests held by TRC or its affiliates are not entitled to vote. If the Class A notes are accelerated, the indenture trustee can:

·       begin proceedings to collect amounts due from the owner trust,

·       foreclose on the collateral certificate,

·       sell the collateral certificate and use the proceeds to pay the notes, and

·       allow the owner trustee to continue to hold the collateral certificate and make principal payments of the notes from principal payments of the collateral certificate.

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The following are events of default under the indenture:

·       principal of any class of notes is not paid in full on the legal maturity date,

·       the owner trust fails to pay interest on any class of notes when due and the failure continues for 35 days,

·       the owner trust becomes bankrupt or insolvent,

·       failure to observe or perform any covenants or agreements under the indenture, which failure has a material adverse effect on noteholders, and

·       the owner trust becomes subject to regulation as an “investment company” under the Investment Company Act of 1940.

For more information on events of default, see “Description of the Notes—Events of Default and Rights Upon Event of Default” in this prospectus supplement.

Defeasance

On any date on which certain conditions described herein have been satisfied, the notes will no longer be entitled to the security interest of the indenture trustee in the collateral certificate and the collateral certificate will be released from the lien of the Indenture. Following defeasance of the notes, the owner trust will transfer the collateral certificate to TRC, the owner trust will no longer be entitled to receive payments from the master trust trustee in respect of the collateral certificate and payments of principal of and interest on the notes will be made primarily from amounts deposited into accounts established by the owner trust in connection with the defeasance of the notes.

For more information on defeasance of the notes and the conditions required to be satisfied in connection therewith, see “Description of the Notes—Defeasance” in this prospectus supplement.

Optional Termination

TRC, as the holder of the transferor certificate, has the right to repurchase the collateral certificate, and thus cause an early repayment of the Class A notes, on any distribution date on or after the distribution date on which the outstanding principal amount of the Class A notes is less than or equal to 10% of the highest outstanding principal amount of the Class A notes at any time. The purchase price will be equal to the outstanding principal amount of the collateral certificate plus accrued and unpaid interest.

For more information on optional termination, see “Description of the Collateral Certificate—Optional Termination” in this prospectus supplement.

Federal Income Tax Characterization of the Class A Notes, Target Credit Card Owner Trust 2005-1 and the Target Credit Card Master Trust

Skadden, Arps, Slate, Meagher & Flom LLP, special federal income tax counsel to TRC, will render the opinion, in connection with the issuance of the Class A notes and subject to the assumptions and qualifications stated in its opinion, that:

·       under existing law the Class A notes will be classified as debt for U.S. federal income tax purposes, and

·       neither the owner trust nor the master trust will be an association or publicly traded partnership taxable as a corporation for U.S. federal income tax purposes.

For more information regarding the application of U.S. federal income tax laws, see “Federal Income Tax Consequences” in the attached prospectus.

ERISA Considerations

Subject to important considerations described under “ERISA Considerations” in the attached prospectus, the Class A notes will be eligible for purchase by persons investing assets of employee benefit plans or individual retirement accounts.

For more information regarding the application of ERISA, see “ERISA Considerations” in the attached prospectus.

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Risk Factors

Investment in the Class A notes involves risks. You should consider carefully the risk factors beginning on page S-13 in this prospectus supplement.

Registration, Clearance and Settlement

The Class A notes offered by this prospectus supplement and the attached prospectus will be registered in the name of The Depository Trust Company or its nominee. The purchasers of those Class A notes will not be entitled to receive physical delivery of those Class A notes in definitive paper form except under limited circumstances. Owners of those Class A notes may elect to hold their Class A notes through The Depository Trust Company in the United States or through Clearstream Banking, société anonyme, or the Euroclear system in Europe. Transfers will be made in accordance with the rules and operating procedures of those clearing systems.

For more information regarding registration, clearance and settlement procedures, see “Description of the Notes—General” in this prospectus supplement and “Description of the Notes” in the attached prospectus.

Note Ratings

Upon issuance, the Class A notes are required to be rated in the highest rating category by at least one nationally recognized rating organization. It is anticipated that the Class A notes will be rated “Aaa” by Moody’s and “AAA” by Standard & Poor’s.

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Transaction Flow Chart

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Risk Factors

You should consider carefully the following risk factors in deciding whether to purchase the Class A notes described in this prospectus supplement.

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This prospectus supplement and the attached prospectus use defined terms. Any capitalized term used but not defined in this prospectus supplement is defined in the attached prospectus. Both the attached prospectus and this prospectus supplement contain a glossary of important terms where definitions can be found.

Target National Bank’s Credit Card Business

Effective July 8, 2004, receivables originated on Marshall Field’s and Mervyn’s private label credit cards were removed from the master trust in connection with Target’s sale of these receivables and related accounts and retail operations. All numerical portfolio information in this prospectus supplement reflects the removal of Marshall Field’s and Mervyn’s receivables balances for all periods.

Target National Bank’s credit card business is comprised of Target VISA and Target Card, as described in the table below.

 

Target VISA

The pilot introduction of Target VISA in the fall of 2000 was focused on leveraging Target National Bank’s credit card operations to strengthen the loyalty of Target’s higher credit quality guests. The approaches to account acquisition, credit-granting and the features of Target VISA were tailored to encourage guests to both shop more frequently at Target stores and purchase more on each visit. Accordingly, the primary origination channel was to substitute Target VISA for the Target Cards of qualifying accountholders. Target VISA is accepted by Target stores as well as by other merchants and service providers throughout the VISA network.

In the fall of 2001, Target VISA was rolled out nationally with the conversion of approximately 4 million qualifying and primarily active Target Card accounts to Target VISA accounts. Additional conversions occurred in the fall of 2002, 2004 and 2005 for 1.6 million, 1.4 million and 600 thousand accounts, respectively.

Since the national rollout, expanding existing relationships with Target’s higher credit quality guests continues to remain the focus of Target VISA. New Target VISA accounts have been generated through applications offered at Target stores and online through the Target website. In the future, Target National Bank expects to continue to originate new Target VISA accounts and may convert select existing Target Card accounts to Target VISA accounts as these accounts meet Target VISA underwriting standards. As a result, Target VISA accounts may over time constitute a somewhat greater portion of the accounts designated to have their receivables included in the master trust.

Target VISA cardholders may currently use their Target VISA for purchases and cash advance transactions. Cardholders make purchases when using their Target VISA to buy goods or services. A cash advance is made when Target VISA is used to obtain cash from a financial institution or an automated teller machine to draw against the cardholder’s credit line. The majority of accounts are limited to cash advances up to 15% of their credit line, although certain low risk accounts are allowed cash advances up to 50% of their credit line. Target National Bank may from time to time offer additional credit card features or issue credit cards on other networks.

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Private Label Credit Card Business (Target Card)

Currently, Target’s private label credit card, Target Card, is used to purchase products from Target stores and online through the Target website at www.target.com. New Target Card accounts are generated through applications offered at Target stores and online through the Target website. Target National Bank may test and introduce new private label credit card products from time to time. Credit cards issued by Target National Bank in the future may contain terms different from Target National Bank’s current credit cards.

Marketing Programs and Account Origination

Account Origination.   Over 96% of all new account originations in 2004 were the result of in-store origination channels. The primary vehicle that Target National Bank uses for in-store account origination is “instant credit.”  Applicants provide information, including name, address and social security number, which allows the credit underwriting system to access their credit history and to score their applications. For identification purposes, applicants must also present a valid picture identification and major credit card. Another vehicle that Target National Bank uses for account origination is the use of “Take-One” applications that are available to Target store guests. Target National Bank also originates new accounts through online applications submitted through the Target website.

Guests of Target stores can apply for a Target Card or a Target VISA. A Target VISA applicant is automatically considered for a Target Card if the applicant’s credit history does not meet requirements for the Target VISA. Currently, somewhat more than half of all newly approved accounts are Target Card accounts, with the remainder being Target VISA.

New Accounts.   Application information on all new accounts is entered into a new account processing system. Each application is source-coded to allow future tracking of activation rates, sales trends, delinquencies and charge-offs for various new account sources and promotional programs. Opening a new credit card account may entitle the cardholder to discounts on purchases.

For approved applications, the account is automatically established and a credit card is generated and mailed to the new cardholder. For instant credit accounts, a temporary card is also issued which can be used immediately for purchases.

Stimulation of Account Usage.   Target National Bank and Target stores operate various account loyalty and purchase frequency reward programs. Target encourages Target Card and Target VISA usage by contributing a specified percentage of cardholder purchases to the cardholder’s designated K-12 school. Account usage is also stimulated for Target VISA and Target Card by rewarding cardholders with discounts on future purchases. Additional account loyalty and reward programs may be used in the future.

Optional Balance Protection.   Target Card and Target VISA cardholders are offered an optional balance protection program called “SafetyNet.”  Under this program, the protected portion of an account balance is cancelled in qualifying cases of disability, unemployment, leave of absence, hospitalization, nursing-home care, or loss of life. Balance cancellations are considered credit adjustments for purposes of the master trust. See “Description of the Certificates—Dilution” in the attached prospectus. Fees for this program are treated as Principal Receivables.

Target National Bank’s Underwriting Processes and Authorizations

Account Underwriting and Credit Guidelines.   Target National Bank develops or adopts systems and specifications for underwriting and authorizations. It contracts with Target for services, including the implementation of these systems and of the underwriting and authorization specifications. Target National Bank’s underwriting process involves the purchase of credit bureau information. Target National Bank obtains credit reports from Experian, Inc., Equifax Credit Information Services, Inc., Trans Union Corp.

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and other reporting agencies as appropriate. Individual credit bureau selection is based on the applicant’s mailing address and the perceived strength of each credit bureau service in that geographic region. The information obtained is electronically fed into proprietary scoring models developed for Target National Bank to calculate a credit score. These proprietary models are used along with other bureau information, including generic risk scores offered by the credit bureaus, to make approval, interest rate and credit limit assignment decisions. Target National Bank periodically analyzes performance trends of accounts originated at different score levels as compared to projected performance, and adjusts the minimum score or the opening credit limit to manage risk. Different scoring models may be used depending upon bureau type, account source and type of credit card. All new Target VISA accounts are underwritten by Target National Bank using credit scores from FICO, Inc. and proprietary scoring models. All Target VISA accounts converted from Target Card accounts are re-underwritten by Target National Bank using updated credit bureau information.

Ongoing Credit Monitoring.   To control the quality of its portfolio of credit cards, Target National Bank currently uses an adaptive control system in conjunction with statistical scoring models to evaluate each active account on its monthly cycle date. The models are used with other factors such as delinquency status, time on books and utilization to evaluate whether or not credit limits should be increased or decreased. If a credit limit change is warranted, based on this strategy, the change is made effective immediately.

Up to three types of scoring models are used for credit monitoring and strategy settings:

·       Internal behavior score:   Incorporates payment and usage behavior to predict the likelihood of an account going three or more cycles past due over the next six to twelve months. Internal models are customized at the product level to evaluate specific factors and their respective weighting. Scores are refreshed every month at billing.

·       External credit bureau score:   Reviews utilization, payment patterns and other behavior with external credit grantors to predict the likelihood of an account going two or more cycles past due over the next twelve months. All active accounts within the portfolio receive refreshed scores on a quarterly basis. In addition, active accounts are continuously monitored at the credit bureau and high risk behavior is reported on a daily basis through a trigger process. This daily report includes updated risk scores and specific credit bureau attributes that are integrated into the credit monitoring process.

·       External bankruptcy score:   Includes transactional information from other credit card issuers to predict the likelihood of an accountholder filing for bankruptcy within the next twelve months. All active Target VISA accounts receive refreshed scores on a monthly basis. In addition, Target VISA accounts previously assigned low-risk status that have migrated to high-risk status are refreshed on a daily basis.

Credit monitoring also includes segmentation and trend analysis to identify opportunities that may increase profitability. Standard analysis includes acquisition channel performance, risk score migration, utilization patterns, geographic variances and early stage delinquency trends. Opportunities are evaluated to determine the impact on both credit losses and revenues before they are implemented.

Credit Authorization.   For Target Card, point-of-sale terminals in Target stores have an online connection with Target National Bank’s credit authorization system and allow real-time updating of accounts. Every sales transaction is passed through a proprietary authorization system which looks at a variety of behavioral and risk factors to determine whether each transaction should be declined, approved or referred for further review.

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For Target VISA, the TSYS (TSYS, Inc.) system is used in conjunction with adaptive control software to allow account authorization decisions to be made in real-time. The system looks at a variety of behavioral factors and predictive scoring models to set risk based authorization parameters.

Fraud Prevention.   Target Financial Services provides fraud prevention and detection services to Target National Bank. The TFS Fraud Prevention team monitors several types of transactions and contacts cardholders to confirm whether the account activity is authorized. The team uses industry-standard neural network scoring tools and observed rules to determine transactions that appear suspicious and require confirmation. In addition, the team works closely with Target National Bank in identifying and reviewing suspicious account applications, and leads the research efforts of all national fraud alerts.

Servicing of Accounts

Target National Bank performs the majority of full application new account data entry, review of new account worklists, billing statement preparation and mailing, the production and mailing of credit cards, the mailed communication of adverse credit decisions, and the mailing of collection letters at its offices in Sioux Falls, South Dakota. Credit card production and mailing of Target VISA are also performed at Target Financial Services’ facility in Tempe, Arizona. Credit card production at both sites is performed in a secure environment, including a separately alarmed secure area and audit procedures that are designed to maintain an accurate count of all cards produced, stored, destroyed and mailed.

An internal credit system supports the Target Card accounts by housing all guest account information, providing data interfaces for guest service and collections functions, enabling various credit account management functions (such as automated bill calculation and generation) and interfacing with other key systems. Such systems include Accounts Receivable, Collections, Credit Authorization, Point-of-Sale and Remittance Processing. These interfaces facilitate all key account maintenance and reconciliation functions. TSYS is currently under contract to provide similar account maintenance functions for Target VISA accounts. Target currently plans to move the Target Card from internal system support to the TSYS system in 2006.

Target National Bank sends monthly billing statements to cardholders. Statement mailing is highly automated, utilizing pre-sorting, bar coding and an on-site postal representative to increase efficiency. The billing statements present the total amount due and show the allocation among current fees, current finance charges and the minimum payment due. Under the account agreement and as allowed by law, late fees, returned check fees and other applicable fees may also be added to a cardholder’s outstanding balance. No issuance or annual fees are presently charged to any cardholders. The processing of cardholder remittances is serviced by Target Financial Services in Minneapolis, Minnesota using automated payment processing equipment and systems.

Terms of Accounts

In March 2005 and May 2005, respectively, a majority of Target VISA and Target Card account terms were changed to a variable rate APR. The annual periodic finance charge rate is a prime based variable rate except for Target VISA and Target Card accounts opened after October 2003 and April 2004, respectively,  which remain fixed, but are expected to be changed to a variable rate during 2006 and 2007. The fixed rate for the Target Card is between 21.0% to 21.6% and for the Target VISA is between 9.9% to 18.9% for purchases and 18.9% to 21.9% for cash advances. The variable rate for the Target Card is prime plus 15.99%. For Target VISA, the variable rate is prime plus a margin between 4.99% and 16.99% for purchases and a variable rate of prime plus 16.99% for cash advances. To date, there has been no material change in card usage or account terminations as a result of such changes in account terms. Target National Bank may change its finance charge rates at any time at its discretion, subject to applicable law. Late payment fees of $20 to $25—on Target Card accounts—and a tiered structure of $15, $29 or $35 based on

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balance on Target VISA accounts—are assessed each month on accounts that are delinquent in payment. In addition to late payment fees, the annual periodic finance charge rate may increase if the account is delinquent. Target National Bank from time to time tests different rate structures.

Finance charges for Target National Bank credit card accounts are calculated by multiplying the daily outstanding balance during a billing period by the daily periodic rate and adding these daily calculations together, subject to a minimum finance charge. Periodic finance charges on Target VISA cash advances are assessed from the date of the advance with no grace period. All other periodic finance charges are assessed from the date of purchase, although a grace period of approximately 25 to 30 days applies on purchases if the account is paid in full by the due date.

In January 2003, the FFIEC issued guidelines regarding account management, risk management and loss allowance practices for institutions engaged in credit card lending. The OCC has recently provided new interpretive guidance to Target National Bank and other OCC regulated banks with respect to the FFIEC’s guidelines that will result in an increase in the minimum payments due on a portion of the Target VISA and Target Card accounts when fully implemented by Target National Bank. The OCC guidance is intended to be responsive to concerns raised by the FFIEC that credit card lenders should require minimum payments that amortize outstanding account balances over a reasonable period of time. Currently, Target Card accounts have a minimum payment of either the greater of $10 or 5% of the outstanding balance or the greater of $20 or 10% of the outstanding balance. The Target VISA accounts have a minimum payment of the greater of $10 or 2.5% of the outstanding balance. By December 31, 2005, in response to the OCC guidance, a new minimum payment is expected to be implemented for Target VISA accounts which will equal the greater of (a) $10 or (b) the sum of the following:  1% of the new balance, any periodic finance charges, any returned check fees, and any late payment fees. In 2006, Target National Bank expects to implement a similar minimum payment due for Target Card accounts. These changes in minimum payment are likely to result in a near-term increase in delinquencies and charge-offs in the accounts in the master trust portfolio, although Target National Bank is unable to predict at this time the magnitude of that increase or its long-term impact, if any, on portfolio performance.

Delinquency and Collections Procedures for Target National Bank Credit Cards

Efforts to collect delinquent receivables are made for Target National Bank by the Target Financial Services collection department, collection agencies and outside attorneys. The collection department consists of approximately 600 full-time equivalents. New collectors undergo training which includes courses in professional debt collection, collection laws and regulations and negotiating skills. These courses are also available on a “refresher” basis for experienced collectors. Approximately 1,900 accounts per month are referred to various law firms to assist in collection efforts.

An account is considered delinquent if the minimum payment due is not received by the billing due date. At that time, the account is given a status of one day delinquent. Under current policies, a message requesting payment is printed on a cardholder’s billing statement after a scheduled payment has been missed. Soon after an account becomes delinquent, a proprietary collection model automatically scores the risk of the account and assigns a collection strategy to the account. The strategy dictates the contact schedule and collections priority for the account.

Accounts which become 180 days delinquent are charged off. However, subject to regulatory standards, Target National Bank has the ability, but not the obligation, to re-age accounts during delinquency if the obligor demonstrates a willingness and ability to repay by making at least three consecutive minimum payments and other conditions are satisfied. When Target National Bank receives notice of the bankruptcy of an obligor for an account, that account is charged off at the beginning of that account’s next billing cycle.

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The Master Trust Portfolio

General

The master trust portfolio includes credit card receivables generated through accounts originated by Target National Bank that TRC has designated as master trust accounts.

The master trust accounts consist of:

·       accounts which were designated as master trust accounts when the master trust was initially established,

·       Automatic Additional Accounts designated upon creation as master trust accounts since the establishment of the master trust, and

·       Supplemental Accounts which have been designated as master trust accounts after they were created and since the establishment of the master trust.

All new accounts originated since the establishment of the master trust have been designated as Automatic Additional Accounts. To date, no Supplemental Accounts have been designated as master trust accounts. TRC is permitted to designate accounts, provided that certain conditions are satisfied, and at times is required to designate accounts, the receivables of which will be added to the master trust. TRC can designate accounts, the receivables of which will be removed from the master trust, if the conditions to removal are satisfied. As a result, the composition of the master trust is expected to change over time.

The following information reflects the historical performance and composition of the master trust portfolio of credit card accounts.  For the “Charge-Off Rate Experience”, “Principal Payment Rate Experience” and “Master Trust Portfolio Yield Experience” tables below, references to monthly periods mean calendar months.

The following information excludes historical data for accounts originated at Marshall Field’s and Mervyn’s. Receivables in these accounts were removed from the master trust on July 8, 2004 in connection with the sale of the related retail entities by Target.

Performance trends shown in the following tables reflect the seasoning of the master trust portfolio following the national rollout of the Target VISA in the fall of 2001, the improving credit quality of the portfolio and overall industry trends.

Principal Receivables Outstanding

The following table provides the amount of Principal Receivables Outstanding as of the indicated dates. In the following table:

·       “Principal Receivables Outstanding” means the aggregate amount of principal receivables outstanding at the end of the period shown.

Principal Receivables Outstanding
for Master Trust Portfolio
(Dollars in Thousands)

 

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Delinquency Experience

The following table provides the delinquency experience for the master trust portfolio as of the indicated dates. In the following table:

·       “Number of Days Delinquent” means the number of days following the original billing due date. For example, 30 to 59 days delinquent means that the minimum payment has not been received and that between 30 and 59 days have elapsed since the original billing due date,

·       “Delinquent Amount” represents the outstanding amount of total receivables that are delinquent in each delinquency category at the end of the period shown, and

·       the percentages result from dividing the “Delinquent Amount” by the total receivable balances at the end of the month.

Delinquency Experience
for Master Trust Portfolio
(Dollars in Thousands)

 

 

Charge-Off Rate Experience

The following table provides the highest, lowest and average monthly gross and net charge-off rates for the master trust portfolio during any month in the periods shown. The average monthly gross and net charge-off rate for all months during the periods shown, in each case, is calculated as an arithmetic average of the gross or net charge-off rate for each month during the indicated period. In the following table:

·       “Gross Charge-Off Rates” are calculated as the amount of gross charge-offs for each month expressed as an annualized percentage of the total amount of Principal Receivables in the master trust as of the first day of that month.

·       The amount of gross charge-offs for any month is the amount of charged-off principal receivables recorded in the month.

·       “Net Charge-Off Rates” are calculated as the amount of net charge-offs for each month expressed as an annualized percentage of the total amount of Principal Receivables in the master trust as of the first day of that month.

·       The amount of net charge-offs for any month is the amount of gross charge-offs for that month, net of any recoveries from earlier charge-offs on principal receivables.

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Charge-Off Rate Experience
for Master Trust Portfolio

 

Charge-offs depend on a variety of factors, including:

·       general economic conditions and trends in consumer bankruptcy filings,

·       underwriting policies and standards,

·       the mix of credit card products in the master trust portfolio,

·       terms and conditions of the accounts, and

·       growth and maturity of the portfolio.

Consistent with an industry-wide increase in bankruptcy filings prior to October 17, 2005, the effective date of new U.S. bankruptcy laws, charge-off rates for October and November 2005 master trust monthly periods are expected to increase.

Principal Payment Rate Experience

The following table provides the highest and lowest cardholder monthly principal payment rates for the master trust portfolio during any month in the periods shown and the average cardholder monthly principal payment rate for all months during the periods shown, in each case calculated as an arithmetic average of the principal payment rate for each month during the indicated period. In the following table:

·       “Principal Payment Rates” are calculated as principal payments collected during each month as a percentage of the total amount of Principal Receivables in the master trust as of the first day of that month.

Principal Payment Rate Experience
for Master Trust Portfolio

 

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Master Trust Portfolio Yield Experience

The following table provides the highest and lowest monthly master trust portfolio yields during any month in the periods shown and the average monthly master trust portfolio yield for all months during the periods shown, in each case calculated as an arithmetic average of the master trust portfolio yield for each month during the indicated period. In the following table:

·       “Master Trust Portfolio Yield” means for any month, the annualized percentage equivalent of a fraction:

—       whose numerator equals the total collections of Finance Charge Receivables for that month, and

—       whose denominator is the total amount of Principal Receivables in the master trust as of the first day of that month.

Master Trust Portfolio Yield Experience
Master Trust Portfolio

 

Characteristics of the Master Trust Portfolio

The receivables and the accounts in the master trust portfolio, at the end of the day on September 30, 2005:

·       included $5,313,443,116 of Principal Receivables and $137,481,728 of Finance Charge Receivables,

·       had an average receivables balance of $904, excluding all accounts with a zero balance,

·       had an average credit limit of $3,594, of which the average receivables balance represented approximately 25%, excluding all accounts with a zero balance,

·       had an average account age of 45 months, excluding all accounts with a zero balance,

·       had billing addresses in all 50 states, the District of Columbia and in U.S. territories and possessions and on U.S. military bases, and less than 1% of the obligors had billing addresses outside of the United States,

·       included the following percentages of total receivable balances:  Target VISA 89% and Target Card 11%, and

·       included the following percentages of total number of accounts:  Target VISA 46% and Target Card 54%.

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The following tables summarize characteristics of the master trust portfolio at the end of the day on September 30, 2005. These tables exclude all closed accounts which have a zero balance. Because the composition of the master trust portfolio may change in the future, these tables are not necessarily indicative of the composition of the master trust portfolio at any later time.

Composition by Account Balance
Master Trust Portfolio

 

Composition by Credit Limit
Master Trust Portfolio

 

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Composition by Period of Delinquency
Master Trust Portfolio

 

In the table “Composition by Account Age” below, “Account Age” is determined by the number of months elapsed since the account was originally opened. In the case of converted Target VISA accounts, the “Account Age” is determined by the number of months elapsed since the original Target Card account opening date.

Composition by Account Age
Master Trust Portfolio

 

In the table “Composition of Accounts by State” below, “Other” means not in excess of 5% of the percentage of total receivables outstanding and includes U.S. military, U.S. territories and non-U.S. accounts. The states are ranked by percentage of total receivables outstanding.

Composition of Accounts by State
Master Trust Portfolio

 

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Creation of the Owner Trust

TRC and Wilmington Trust Company, a Delaware banking corporation, as owner trustee will form Target Credit Card Owner Trust 2005-1 as a Delaware statutory trust. The Trust Agreement for the owner trust will provide that the owner trust has been formed for a limited purpose and may not engage in any activities other than:

·        acquiring, owning and managing the assets of the owner trust,

·        issuing and making payments on the Class A notes, the Subordinated Interests and the certificates of beneficial interest in the owner trust, and

·        engaging in other activities incidental to the activities described above.

Because of its limited activities, the owner trust has contracted with TRC to provide administrative services, including providing notices to you and directions to the Indenture Trustee. You should refer to the Trust Agreement and the Deposit and Administration Agreement for a complete description of the owner trust’s activities.

The owner trust’s assets include the collateral certificate, the Note Distribution Account and certain accounts that may be created by the owner trust in connection with a defeasance of the notes as described herein. The owner trust is not expected to have any other assets, and payments of principal of and interest on the notes will only be made to the extent that the master trust allocates finance charge and principal collections to the collateral certificate or the owner trust defeases the notes as described herein and makes the deposits required in connection therewith. See “Description of the Notes—Defeasance” herein for a description of the requirements for defeasance of the notes.

The owner trust’s address is 1100 North Market Street, Wilmington, Delaware 19890-0001, in care of the owner trustee and its telephone number at that address is (302) 636-6119.

Use of Proceeds

The net proceeds from the sale of the Class A notes will be paid to TRC in consideration of the collateral certificate and used by it for general corporate purposes.

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Description of the Notes

The following is a summary of the material provisions of the Class A notes. This summary is not a complete description of the terms of the Class A notes. You should refer to “Description of the Notes” in the attached prospectus as well as the Indenture for a complete description.

General

The Class A notes will be issued under an Indenture between the owner trust and Wells Fargo Bank, National Association, as Indenture Trustee. The Class A notes represent obligations of the owner trust and payments on the Class A notes will only be made if the owner trust receives payment on the collateral certificate. The owner trust will be the holder of the collateral certificate and will pledge the collateral certificate, including its allocations of principal and interest from the master trust, to the Indenture Trustee for your benefit.

Payments of interest on the Class A notes will be made on each Distribution Date, and payments of principal will be made on the Class A Expected Final Payment Date and on any other date on which principal is to be paid, to the persons in whose names Class A notes are registered in the note register on the related Record Date, to the extent of available funds.

The Class A notes will be issued in $1,000 denominations and will be available only in global book-entry form through DTC in the name of its nominee Cede & Co. So long as the Class A notes are in global book-entry form, DTC or its nominee will be the registered holder of the Class A notes and your interest in the Class A notes will be represented, and may be transferred only, through financial institutions acting as direct and indirect participants in DTC. For more information on the form and denomination of your notes, book-entry registration, DTC and the standard settlement procedures of DTC, see “Description of the Notes—General”  and “—Form of Your Notes,” “—DTC,” “—Book-Entry Registration” and “—Initial Settlement” in the attached prospectus.

Interest Payments

You will be entitled to receive from available funds payment of Class A Monthly Interest plus Class A Carryover Interest on the 25th day of each month, or if such day is not a business day, the next business day—each a Distribution Date—that the Class A notes are outstanding.

On each Distribution Date, you will receive an interest payment based on the interest rate for your Class A notes for the related Interest Accrual Period, the outstanding principal amount of your Class A notes as of the end of the prior Monthly Period and the number of days in the related Interest Accrual Period.

The Class A notes are floating rate securities and will bear interest for each Interest Accrual Period at a rate determined by reference to one-month LIBOR. The Indenture Trustee will calculate the interest rate on the Class A notes for each Interest Accrual Period on the applicable LIBOR Determination Date. All determinations of interest by the Indenture Trustee shall, in the absence of manifest error, be conclusive for all purposes and binding on the Class A noteholders. All percentages resulting from any calculation of the rate of interest will be rounded, if necessary, to the nearest 1/100,000 of 1% (.0000001), with five one-millionths of a percentage point rounded upward. If you do not receive your interest in full on any Distribution Date, you will be entitled to receive a payment equal to the shortfall amount on the next succeeding Distribution Date together with interest on such shortfall amount, called Class A Carryover Interest, to the extent that there are funds available to make that payment.

The owner trust will make interest payments on the Class A notes on each Distribution Date from money received from the collateral certificate and deposited in the Note Distribution Account. The Class A notes will receive interest payments prior to the Subordinated Interests.

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Principal Payments

The Class A notes are scheduled to be paid in full on the October 2010 Distribution Date, which is the Class A Expected Final Payment Date. Principal may be paid earlier if an Early Amortization Period begins or if an Event of Default and acceleration of the outstanding principal amount of the notes occur under the Indenture. Final payment of principal may be delayed if the rate of repayment of principal of the receivables in the master trust is slower than expected or in certain other circumstances. See “Risk Factors.”

The Indenture Trustee is required to use the amount on deposit in the Note Distribution Account to pay principal of the Class A notes on the Class A Expected Final Payment Date. If the outstanding principal amount of the Class A notes is greater than zero after the Class A Expected Final Payment Date, principal will be paid on the following Distribution Dates until the first to occur of:

·       the date on which the full balance is paid,

·       the date on which the Invested Amount of the collateral certificate is reduced to zero,

·       the date on which assets of the owner trust are sold following an Event of Default and acceleration of the outstanding principal amount of the notes, and

·       the October 2014 Distribution Date, which is the Legal Maturity Date.

After an Event of Default has been declared, if the Indenture Trustee and the noteholders determine that the outstanding principal amount of the notes is due and payable, available amounts will be paid first to the Class A notes and then to the Subordinated Interests. See “—Subordination.”  For more information about principal payments, see “Description of the Collateral Certificate—Collateral Certificate Principal Payments” and “—Application of Collections—Payment of Principal.”

Distributions to Noteholders

On each Distribution Date, the Master Trust Trustee will allocate collections of Finance Charge Receivables and collections of Principal Receivables and other amounts to pay interest, principal, fees and other amounts on the collateral certificate. Amounts allocated to the collateral certificate in respect of principal on any Distribution Date during the Accumulation Period prior to the Class A Expected Final Payment Date will be deposited into the Principal Funding Account until those amounts become payable to the holder of the collateral certificate. Amounts payable to the owner trust as holder of the collateral certificate on any Distribution Date will be deposited by the Master Trust Trustee into the Note Distribution Account on that Distribution Date and used by the Indenture Trustee to make principal and interest payments on the Class A notes and Subordinated Interests on that Distribution Date in the following manner and order of priority:

·       all available amounts will be used first to pay Class A Monthly Interest and Class A Carryover Interest to the Class A noteholders and then to pay Subordinated Monthly Interest and Subordinated Carryover Interest, if any, to the holders of the Subordinated Interests, provided, however, that the aggregate amounts of interest payable to the noteholders on any Distribution Date shall not exceed the aggregate amounts distributable to the holder of the collateral certificate for that Distribution Date from Available Series 2005-1 Finance Charge Collections and amounts applied with respect to shortfalls in Available Series 2005-1 Finance Charge Collections; and

·       all remaining amounts will be applied to pay principal as follows:

—       during the Revolving Period, upon satisfaction of the conditions for a reduction of the outstanding principal amount of the Subordinated Interests, to the holders of the Subordinated Interests in the amount of such reduction; and

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—       on and after the first to occur of the Class A Expected Final Payment Date and the first Special Payment Date, first to pay principal of the Class A notes, and then to pay principal of the Subordinated Interests, in each case until the first to occur of:

·  the date that the applicable principal amount is paid in full,

·       the date on which the Invested Amount of the collateral certificate is reduced to zero,

·       the date on which assets of the owner trust are sold following an Event of Default and acceleration of the outstanding principal amount of the notes, and

·  the Legal Maturity Date; and

·       all remaining amounts to TRC as holder of the equity in the owner trust;

provided that, instead of depositing into the Collection Account and the Note Distribution Account amounts payable to TRC by the Master Trust Trustee or the Indenture Trustee on any Distribution Date, the Servicer and the Master Trust Trustee, respectively, may pay those amounts directly to TRC and, if so paid, those amounts will be deemed to have been deposited into the applicable account and paid to TRC by the Master Trust Trustee or the Indenture Trustee, as applicable. In addition, so long as Wells Fargo Bank, National Association serves as both Master Trust Trustee and Indenture Trustee, payments to noteholders can be made directly from the Collection Account and the Principal Funding Account without flowing through the Note Distribution Account with the same effect as if made from the Note Distribution Account.

Note Distribution Account

The Administrator will establish and maintain for the benefit of the noteholders a Note Distribution Account, which will be an Eligible Deposit Account. The Master Trust Trustee, on behalf of the owner trust, will deposit into the Note Distribution Account on each Distribution Date payments of principal and interest due on the collateral certificate for that Distribution Date. Amounts deposited in the Note Distribution Account on any Distribution Date will be used to make interest and, if applicable, principal payments to the holders of the Class A notes on that Distribution Date.

Subordination

The Subordinated Interests will be subordinated to the Class A notes. At closing, the Subordinated Interests will not have a stated interest rate and will not be entitled to payments of interest. Any principal payments on the Subordinated Interests will not begin until the Class A notes have been paid in full unless:

·       TRC requests a reduction of the outstanding principal amount of the Subordinated Interests during the Revolving Period, and

·       the Rating Agency Condition is satisfied.

If collections of Principal Receivables allocated to the collateral certificate are reallocated to pay interest on the Class A notes or the Monthly Servicing Fee, the outstanding principal amount of the Subordinated Interests may not be repaid.

If Available Series 2005-1 Finance Charge Collections and Excess Finance Charge Collections for any Monthly Period are not sufficient to cover the Investor Defaulted Amount, or if on any Distribution Date on which the Transferor Amount is zero, TRC is obligated but fails to make an Adjustment Payment,

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an Investor Charge-Off will occur and the Invested Amount of the collateral certificate will be reduced and principal may not be paid in full. The Subordinated Interests will bear this risk prior to the Class A notes.

If receivables of the master trust are sold in connection with the occurrence of the Legal Maturity Date or the assets of the owner trust are sold after an Event of Default and the outstanding principal amount of the notes is accelerated, the net proceeds of that sale which are available to make principal payments on the notes will be paid first to the Class A notes before any payments will be made to the Subordinated Interests. See “Description of the Collateral Certificate—Reallocation of Cash Flows; Defaulted Receivables; Investor Charge-Offs.”

Events of Default and Rights Upon Event of Default

Events of Default.   Each of the following is an Event of Default under the Indenture:

·       principal of any class of notes is not paid in full on the Legal Maturity Date,

·       the owner trust fails to pay interest on any class of notes when due and the failure continues for 35 days,

·       the owner trust becomes bankrupt or insolvent,

·       failure to observe or perform in any material respect any covenants or agreements contained in the Indenture and that failure has a material adverse effect on noteholders and the failure continues unremedied for 60 days after written notice is given by the Indenture Trustee or noteholders representing greater than 50% of the outstanding principal amount of the notes, or

·       the owner trust becomes subject to regulation as an “investment company” under the Investment Company Act of 1940.

General references to “notes” and “noteholders” include any portion of the Subordinated Interests transferred by TRC to an entity other than an affiliate of TRC and that third-party holder of the Subordinated Interests, respectively. As a result, any holder of the Subordinated Interests other than TRC and its affiliates will have a right to vote with Class A noteholders, as a single class, on whether to declare the outstanding principal amounts of the Class A notes and the Subordinated Interests due and payable after the occurrence of an Event of Default.

Remedies upon Event of Default.   During the occurrence of an Event of Default, the Indenture Trustee or holders of a majority in outstanding principal amount of the notes, voting as a single class, may declare the outstanding principal amount of the notes to be immediately due and payable. That declaration may be rescinded only by the holders of a majority of the principal amount of the notes, voting as a single class.

If the notes are declared to be due and payable following an Event of Default, the Indenture Trustee may:

·       begin proceedings to collect amounts due from the owner trust or exercise other remedies available to it as a secured party,

·       foreclose on the collateral certificate and any other owner trust property,

·       sell the collateral certificate and any other owner trust property to a party or parties other than TRC and its affiliates and agents and use the proceeds from the sale to repay you on a date determined by the Indenture Trustee and specified to the owner trust and the noteholders as provided in the Indenture, and

·       allow the owner trustee to continue to hold the collateral certificate and any other owner trust property and pass through any payments on the collateral certificate to you.

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If an Event of Default occurs and principal of the notes is declared to be immediately due and payable, you may receive principal of your Class A notes prior to the Class A Expected Final Payment Date. For a description of other events that may have a similar effect, see “Description of the Collateral Certificate—Application of Collections—Payment of Principal—Early Amortization Period.” For a further description of rights upon the occurrence of an Event of Default, see “Description of the Notes—The Indentures—Events of Default; Rights Upon Event of Default” in the prospectus.

Transfer of the Subordinated Interests

TRC will initially retain the Subordinated Interests. In the future, TRC may sell all or a portion of the Subordinated Interests. If TRC does sell the Subordinated Interests, the owner trust, at the direction of TRC,  will enter into an indenture supplemental to the Indenture with the Indenture Trustee that will specify the interest rate for the Subordinated Interests as well as other relevant provisions. TRC can only sell the Subordinated Interests if:

·       TRC notifies the Indenture Trustee, the servicer and the rating agencies of the proposed transfer of the Subordinated Interests,

·       the transfer satisfies the Rating Agency Condition,

·       no Event of Default has occurred under the Indenture before the transfer,

·       TRC delivers an officer’s certificate to the Indenture Trustee stating that TRC believes that the transfer will not cause an Event of Default to occur, and

·       TRC delivers a tax opinion to the Indenture Trustee regarding the transfer.

Holders of the Subordinated Interests, other than TRC and its affiliates, will have a right to vote together with the Class A noteholders, as a single class where the consent of each noteholder is not required, on any matter on which Class A noteholders are entitled to vote under the Indenture, unless such voting right is expressly limited to Class A noteholders.

Issuance of Additional Notes

During the Revolving Period, TRC may, subject to certain conditions, cause the Indenture Trustee to issue additional notes. When issued, the additional notes will be identical in all respects to the outstanding notes of the same class and will be entitled to the benefits of the Indenture.

Additional notes of any outstanding class will only be issued upon satisfaction of the following conditions:

·       TRC will have given the Indenture Trustee, the servicer and the rating agencies notice of the date and terms of the additional issuance,

·       the conditions precedent for increasing the outstanding principal amount of the collateral certificate have been met and the outstanding principal amount of the collateral certificate has been increased,

·       the required amount of subordination is available or will become available upon the issuance of these additional notes,

·       the additional issuance satisfies the Rating Agency Condition,

·       TRC will have delivered to the Indenture Trustee a certificate which states that TRC believes that the additional issuance will not have a material adverse effect on the outstanding notes; for the purposes of making this determination, a dilution of voting rights will not constitute a

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material adverse effect on any class of notes, see “Risk Factors—You will have limited control of master trust or owner trust actions” in this prospectus supplement, and

·       TRC will have delivered to the Indenture Trustee a tax opinion relating to the additional issuance.

Defeasance

On any date on which the following conditions have been satisfied, the notes will no longer be entitled to the security interest of the Indenture Trustee in the collateral certificate, including amounts distributable by the Master Trust Trustee in respect thereof, and the collateral certificate will be released from the lien of the Indenture:

·       the owner trust has deposited

—       into the Note Principal Funding Account an amount equal to the outstanding principal amount of the Class A notes,

—       into the Note Principal Funding Account an amount equal to the outstanding principal amount of the Subordinated Interests not held by TRC or its affiliates plus any other related amount specified in an indenture supplemental to the Indenture,

—       into the Noteholder Reserve Account an amount equal to the aggregate amount of interest accrued and unpaid in respect of the Class A notes and the Subordinated Interests through, but not including, the first Distribution Date in the Defeasance Period, and

—       if the deposit occurs prior to the commencement of the Early Amortization Period, into the Noteholder Reserve Account an additional amount equal to the Class A Defeasance Covered Amount plus the Subordinated Defeasance Covered Amount, as estimated by the Administrator, for each Interest Accrual Period in the Defeasance Period, other than the Interest Accrual Period related to the first Distribution Date in the Defeasance Period;

·       the owner trust has delivered to the Indenture Trustee an opinion of counsel to the effect that the deposit and termination of obligations as described above will not result in the owner trust being required to register as an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and an opinion of counsel to the effect that following such deposit none of the owner trust, the Noteholder Reserve Account or the Note Principal Funding Account will be deemed to be an association or publicly traded partnership taxable as a corporation;

·       the owner trust has delivered to the Indenture Trustee a certificate, which may be a certificate from an officer of TRC, stating that the owner trust or TRC reasonably believes that the deposit and the release of the lien of the Indenture Trustee on the collateral certificate will not cause an Event of Default or a Default to occur; and

·       the Rating Agency Condition has been satisfied.

Following defeasance of the notes as described above, the owner trust will transfer the collateral certificate to TRC and will no longer be entitled to receive payments from the Master Trust Trustee in respect of the collateral certificate. If the notes are defeased, payments of principal and interest on the notes will be made primarily from amounts deposited into the Note Distribution Account, the Note Principal Funding Account and the Noteholder Reserve Account in connection with the defeasance of the notes.

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Note Principal Funding Account and Noteholder Reserve Account

If the owner trust elects to defease the Class A notes and Subordinated Interests pursuant to the Indenture as described herein under “Defeasance,” then, on or prior to the date of defeasance, the owner trust will cause the Administrator to establish and maintain, in the name of the Indenture Trustee, for the benefit of the holders of the Class A notes and the Subordinated Interests, two separate Eligible Deposit Accounts to be called the Note Principal Funding Account and the Noteholder Reserve Account. Funds on deposit in the Note Principal Funding Account and the Noteholder Reserve Account will be invested in Eligible Investments by the Indenture Trustee at the direction of the Administrator. All gains on investments made with funds on deposit in the Note Principal Funding Account and the Noteholder Reserve Account will be credited to the applicable account and all losses on those investments will be charged to the applicable account. On each Distribution Date following the defeasance of the notes, the Indenture Trustee or paying agent at the direction of the Administrator, will withdraw from the Note Principal Funding Account and the Noteholder Reserve Account and deposit into the Note Distribution Account the aggregate amount of interest and principal due and payable on the Class A notes and Subordinated Interests on that Distribution Date. Upon the payment in full of the notes, all amounts remaining in the Note Principal Funding Account and the Noteholder Reserve Account will be paid to TRC, as holder of the equity of the owner trust.

Optional Termination

The Class A notes will be redeemed by the owner trust on any Distribution Date on which TRC optionally elects to repurchase the collateral certificate. TRC may repurchase the collateral certificate on any Distribution Date on or after the Distribution Date on which the outstanding principal amount of the Class A notes is less than or equal to 10% of the highest outstanding principal amount of the Class A notes at any time. See “Description of the Collateral Certificate—Optional Termination” in this prospectus supplement for a description of the circumstances under which the collateral certificate may be repurchased by TRC.

Purchase of Class A Notes by TRC or the Owner Trust

TRC or the owner trust may purchase Class A notes in the secondary market and request that the Indenture Trustee cancel those Class A notes and/or any Subordinated Interests held by TRC or the owner trust and reduce the outstanding principal amount of the Class A notes and/or Subordinated Interests by the respective amount so cancelled, provided that Subordinated Interests may not be cancelled unless a pro rata amount of Class A notes are being simultaneously cancelled or the Rating Agency Condition is satisfied. On any date on which Class A notes and/or Subordinated Interests are cancelled, the outstanding principal amount and the Invested Amount of the collateral certificate will be reduced by a corresponding amount.

Noteholder Reports

You will receive a monthly report from the Administrator as described in the attached prospectus. If definitive Class A notes are issued, the monthly notice will be mailed to your address as it appears on the Indenture Trustee’s register.

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Description of the Collateral Certificate

The following is a summary of the material provisions of the collateral certificate. This summary is not a complete description of the terms of the collateral certificate. You should refer to “Description of the Certificates” and “The Pooling and Servicing Agreement” in the attached prospectus as well as the Pooling and Servicing Agreement and the Series 2005-1 Supplement for a complete description.

General

The owner trust will be the holder of the collateral certificate and will pledge the collateral certificate, including its allocations of principal and interest from the master trust, to the Indenture Trustee for your benefit.

The collateral certificate will be issued under the Pooling and Servicing Agreement and the Series 2005-1 Supplement. The collateral certificate represents the right to receive payments from collections of Finance Charge Receivables and Principal Receivables allocated to the collateral certificate. The collateral certificate also represents the right to receive payments, if available, from Excess Finance Charge Collections and Shared Principal Collections allocated to the collateral certificate. In addition, the collateral certificate will be allocated a portion of net losses on the Principal Receivables, called the Investor Defaulted Amount.

The owner trust as holder of the collateral certificate will also be entitled to amounts in the Principal Funding Account and, if TRC, at its option, designates a Reserve Account Funding Date, the Reserve Account and the collateral certificate’s share of amounts in the Special Funding Account and the Collection Account, and investment earnings on amounts in these accounts, as applicable.

The master trust has also issued the Transferor Certificate and a Participation. TRC owns the Transferor Certificate. Target National Bank owns the Participation. TRC may transfer the Transferor Certificate in whole or in part under the limitations and conditions described in the Pooling and Servicing Agreement. See “Description of the Certificates—The Transferor Certificate” and “—Participations” in the attached prospectus.

Collateral Certificate Interest Payments

The owner trust as holder of the collateral certificate will be entitled to receive from available funds payment of accrued and unpaid interest on the 25th day of each month, or if such day is not a business day, the next business day—each a Distribution Date—that the collateral certificate is outstanding. The amount of interest required to be paid on the collateral certificate on each Distribution Date is equal to the amount of interest due and payable on the Class A notes and the Subordinated Interests on that Distribution Date.

Interest payments on the collateral certificate on each Distribution Date will be funded from:

·        the Floating Allocation Percentage of collections of Finance Charge Receivables received during the preceding Monthly Period, plus

·        other amounts treated as Available Series 2005-1 Finance Charge Collections for that Monthly Period.

To the extent Available Series 2005-1 Finance Charge Collections are insufficient to make the required interest payment for the collateral certificate, Excess Finance Charge Collections allocated to the collateral certificate will be applied to cover the shortfall. See “—Application of Collections—Payment of Interest, Fees and Other Items—Excess Finance Charge Collections.”

The “Required Amount” means for any Distribution Date, the shortfall, if any, in the amount of Available Series 2005-1 Finance Charge Collections and Excess Finance Charge Collections allocated to

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the collateral certificate and available to make required payments of the Class A Monthly Interest, any Class A Carryover Interest and the Monthly Servicing Fee. If for any Distribution Date there is a Required Amount and TRC does not elect to apply Excess Transferor Finance Charge Collections to the Required Amount or the amount of Excess Transferor Finance Charge Collections applied is insufficient to cover the Required Amount, the Principal Allocation Percentage of collections of Principal Receivables for the Monthly Period preceding that Distribution Date, in an amount not to exceed the Subordinated Amount, will be reallocated to pay the outstanding Required Amount. These collections of Principal Receivables applied to cover the Required Amount are referred to in this prospectus supplement as Reallocated Principal Collections. Reallocated Principal Collections will not be available to make principal payments on the collateral certificate or, therefore, the Class A notes and will result in a reduction in the Invested Amount of the collateral certificate. See “—Reallocation of Cash Flows; Defaulted Receivables; Investor Charge-Offs.”

Collateral Certificate Principal Payments

The owner trust, as holder of the collateral certificate, is scheduled to receive an amount of principal equal to the full outstanding principal amount of the Class A notes on the Class A Expected Final Payment Date. Principal of the collateral certificate may be paid earlier if an Early Amortization Period begins and the final payment of principal may be delayed if the rate of repayment of principal of the receivables in the master trust is slower than expected or in certain other circumstances. See “Risk Factors.”

Principal deposits to the Principal Funding Account or payments on the collateral certificate on each Distribution Date with respect to the Accumulation Period or an Early Amortization Period will be funded from:

·        the Principal Allocation Percentage of collections of Principal Receivables received during the preceding Monthly Period, plus

·        other amounts treated as Available Series 2005-1 Principal Collections for that Monthly Period.

To the extent Available Series 2005-1 Principal Collections are insufficient to make the designated deposits or payments on the collateral certificate, Shared Principal Collections and, at the option of TRC, Shared Transferor Principal Collections allocated to the collateral certificate will be applied to cover the shortfall. See “—Application of Collections—Payment of Principal.”

Collections of Principal Receivables allocable to the collateral certificate but not needed to make payments on the Class A notes or the Subordinated Interests may be applied as Shared Principal Collections for the benefit of other series.

Allocation Percentages

For each Monthly Period, the servicer will allocate collections of Finance Charge Receivables, collections of Principal Receivables and the Defaulted Amount among:

·        the collateral certificate,

·        the interests of certificateholders of all other series issued and outstanding,

·        the Transferor’s Interest, and

·        the interests of the holders of any Participations.

Collections of Finance Charge Receivables and the Defaulted Amount will be allocated to the collateral certificate based on the Floating Allocation Percentage. Collections of Principal Receivables will be allocated to the collateral certificate based on the Principal Allocation Percentage.

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For any Monthly Period, the Floating Allocation Percentage is the percentage equivalent of a fraction:

·        whose numerator equals the Adjusted Invested Amount of the collateral certificate at the end of the last day of:

(1)       the immediately preceding Monthly Period, or in the case of the first Monthly Period, the Closing Date, during the Revolving Period or the Accumulation Period for collections of Finance Charge Receivables and at all times for the Defaulted Amount, and

(2)       the Monthly Period immediately preceding the Monthly Period in which an Early Amortization Event occurs during the Early Amortization Period for collections of Finance Charge Receivables, and

·        whose denominator equals:

(1)       with respect to the Defaulted Amount, the sum of (a) the Principal Receivables and (b) any amount on deposit in the Special Funding Account at the end of the last day of the Monthly Period used to determine the numerator, and

(2)       with respect to collections of Finance Charge Receivables, the greater of (a) the amount described above in (1) and (b) the sum of the numerators used to calculate the applicable allocation percentages for collections of Finance Charge Receivables for all classes of all series and Participations then outstanding.

For any Monthly Period, the Principal Allocation Percentage is the percentage equivalent of a fraction:

·        whose numerator equals:

(1)       during the Revolving Period, the Invested Amount of the collateral certificate at the end of the last day of the immediately preceding Monthly Period, or in the case of the first Monthly Period, the Closing Date, and

(2)       during the Accumulation Period, the Invested Amount of the collateral certificate at the end of the last day of the Revolving Period,

provided that on the date of issuance of any new series during the Accumulation Period, this amount may be reduced by TRC, upon receipt by the Master Trust Trustee of confirmation that the Rating Agency Condition is satisfied, to an amount not less than the greater of:

—       the Adjusted Invested Amount of the collateral certificate on that date, and

—       the amount that would result in a Principal Allocation Percentage that when multiplied by collections of Principal Receivables for the preceding Monthly Period would equal:

·       the Class A Controlled Deposit Amount for that Monthly Period plus 10% of the Class A Controlled Accumulation Amount or, if that date is on or after the Class A Expected Final Payment Date and the Class A notes have been paid in full, the Invested Amount of the collateral certificate, minus

·       the amount of any available Shared Principal Collections for that Monthly Period, and

(3)       during an Early Amortization Period, the Invested Amount of the collateral certificate at the end of the last day of the Revolving Period or, if less, the last numerator used to calculate the Principal Allocation Percentage in the Accumulation Period, if any, and

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·        whose denominator equals the greater of:

(1)       the sum of (x) the Principal Receivables and (y) the principal amount on deposit in the Special Funding Account at the end of the last day of the immediately preceding Monthly Period, or in the case of the first Monthly Period, the Closing Date, and

(2)  the sum of the numerators used to calculate the principal allocation percentages for all series and Participations outstanding as of the date of determination.

The Floating Allocation Percentage and the Principal Allocation Percentage are subject to adjustment upon the direction of TRC, pursuant to the Pooling and Servicing Agreement, to give effect to additions of Additional Accounts.

Application of Collections

Payment of Interest, Fees and Other Items.

On each Distribution Date, Available Series 2005-1 Finance Charge Collections for the related Monthly Period will be applied in the following order:

·        an amount equal to the Class A Monthly Interest and Class A Carryover Interest will be deposited into the Note Distribution Account for payment to the Class A noteholders,

·        an amount equal to the Monthly Servicing Fee will be paid to the servicer,

·        an amount equal to the Investor Defaulted Amount for that Distribution Date will be treated as Available Series 2005-1 Principal Collections,

·        an amount equal to any reduction in the Invested Amount of the collateral certificate due to unreimbursed Investor Charge-Offs will be applied to reinstate the Invested Amount of the collateral certificate and treated as Available Series 2005-1 Principal Collections,

·        an amount equal to the Subordinated Monthly Interest and Subordinated Carryover Interest, if any, will be deposited into the Note Distribution Account for payment to the holders of the Subordinated Interests,

·        on each Distribution Date from and after the Reserve Account Funding Date—if any Reserve Account Funding Date has been established by TRC at its option—but before the date the Reserve Account is terminated, an amount up to the excess, if any, of the Required Reserve Account Amount over the Available Reserve Account Amount, will be deposited in the Reserve Account,

·        to pay any other amounts, if any, required to be paid under the Indenture or any supplement to the Indenture, and

·        the balance, if any, will constitute Excess Finance Charge Collections.

The following diagram provides you with an outline of the allocation of Available Series 2005-1 Finance Charge Collections. This diagram is a simplified demonstration of the allocation and payment provisions contained in this prospectus supplement and the attached prospectus.

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