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i turned on target audience for my list and in "Target Audience" column i have such value: ;;;;Portal Owners, Portal Members, Group1. I thought that this is enouf to prevent user to see list item, but member of Group2 is still able to see it. What I'm missing?

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There are a few steps. Here is a nice checklist:

http://office.microsoft.com/en-us/sharepoint-server-help/target-content-to-specific-audiences-HA010169053.aspx

I'll add that the Target Audience concept in SharePoint is a difficult thing to understand. It is almost easier to describe what it is not, rather than what it is. What it is not: a security mechanism. So what it does not do: prevent unauthorized users from seeing content (you must still rely on security trimming for that). In other words, its goal is to get certain content in front of certain audiences through the use of views if you will, but it does not prevent someone that is not part of that audience from viewing data in master list if they are otherwise part of a security group that allows it.

Many struggle to find the words to explain it. Some older but useful posts on the subject:

http://blog.solanite.com/keith/Lists/Posts/Post.aspx?List=11564265-6153-4557-aee2-72d1f62fa4c1&ID=9

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Thanks for reply. I the first link is useful but there was no Content Query Web Part when i tried to edit page. I need to setup target audience for a list. For now i created column user/group type that contains groups that can view list item and all list-views filter item by that column. Is this acceptable? –  Andriy Shvay Nov 10 '10 at 16:09
    
I think that is acceptable. Just be aware that if someone had a URL for the AllItems.aspx view, they may still be able to see items if item level permission is not set. There are so many caveats with this at every level that at some point you just have to decide what is an acceptable risk. My personal opinion is that there is no good out of the box way manage item level security. Safest bet is to have separate lists for different groups, but that is not always the best way to accomplish one's business objectives. –  Rob Wilson Nov 10 '10 at 16:14
    
Will try to keep this in mind) –  Andriy Shvay Nov 10 '10 at 16:40
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