N-Q 1 d183037dnq.htm PRUDENTIAL INVESTMENT PORTFOLIOS 5 Prudential Investment Portfolios 5

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number:    811-09439
Exact name of registrant as specified in charter:    Prudential Investment Portfolios 5
Address of principal executive offices:    655 Broad Street, 17th Floor,
   Newark, New Jersey 07102
Name and address of agent for service:    Deborah A. Docs
   655 Broad Street, 17th Floor,
   Newark, New Jersey 07102
Registrant’s telephone number, including area code:    800-225-1852
Date of fiscal year end:    7/31/2016
Date of reporting period:    4/30/2016

Item 1. Schedule of Investments

Prudential Jennison Conservative Growth Fund

Schedule of Investments

as of April 30, 2016 (Unaudited)

 

     Shares      Value  

LONG-TERM INVESTMENTS — 99.7%

      

COMMON STOCKS

      

Aerospace & Defense — 1.6%

      

Boeing Co. (The)

      261       $ 35,183   

General Dynamics Corp.

      24,334         3,419,413   
     

 

 

  
        3,454,596   
     

 

 

  

Banks — 3.5%

      

Bank of America Corp.

      125,087         1,821,267   

JPMorgan Chase & Co.

      45,183         2,855,565   

Wells Fargo & Co.

      58,047         2,901,189   
     

 

 

  
        7,578,021   
     

 

 

  

Beverages — 1.4%

      

Coca-Cola Co. (The)

      68,767         3,080,762   
     

 

 

  

Biotechnology — 1.5%

      

Celgene Corp.*

      10,858         1,122,826   

Gilead Sciences, Inc.

      24,598         2,169,789   
     

 

 

  
        3,292,615   
     

 

 

  

Capital Markets — 4.7%

      

Bank of New York Mellon Corp. (The)

      87,202         3,509,008   

BlackRock, Inc.

      5,441         1,938,792   

Morgan Stanley

      173,310         4,689,769   
     

 

 

  
          10,137,569   
     

 

 

  

Chemicals — 1.6%

      

Dow Chemical Co. (The)

      62,972         3,312,957   
     

 

 

  

Consumer Finance — 1.6%

      

American Express Co.

      52,493         3,434,617   
     

 

 

  

Diversified Financial Services — 2.1%

      

Berkshire Hathaway, Inc. (Class B Stock)*

      22,396         3,258,170   

Intercontinental Exchange, Inc.

      5,584         1,340,328   
     

 

 

  
        4,598,498   
     

 

 

  

Diversified Telecommunication Services — 2.3%

      

AT&T, Inc.

      82,468         3,201,408   

Level 3 Communications, Inc.*

      12,849         671,489   

Verizon Communications, Inc.

      21,760         1,108,454   
     

 

 

  
        4,981,351   
     

 

 

  

Energy Equipment & Services — 0.3%

      

Schlumberger Ltd.

      6,779         544,625   
     

 

 

  

Food & Staples Retailing — 2.1%

      

Costco Wholesale Corp.

      4,750         703,618   

Kroger Co. (The)

      101,393         3,588,298   

Walgreens Boots Alliance, Inc.

      2,969         235,382   
     

 

 

  
        4,527,298   
     

 

 

  

Food Products — 2.3%

      

General Mills, Inc.

      2,621         160,772   

Kraft Heinz Co. (The)

      40,723         3,179,245   

Tyson Foods, Inc. (Class A Stock)

      24,626         1,620,883   
     

 

 

  
        4,960,900   
     

 

 

  

Health Care Equipment & Supplies — 4.0%

      

Abbott Laboratories

      45,023         1,751,394   

Baxter International, Inc.(a)

      77,246         3,415,818   

C.R. Bard, Inc.

      11,788         2,501,060   

Stryker Corp.(a)

      7,974         869,246   
     

 

 

  
        8,537,518   
     

 

 

  

Health Care Providers & Services — 3.6%

      

Aetna, Inc.

      18,279         2,052,183   

Anthem, Inc.

      22,703         3,195,901   

Cardinal Health, Inc.

      20,090         1,576,261   

Cigna Corp.

      3,038         420,885   

UnitedHealth Group, Inc.

      3,639         479,184   
     

 

 

  
        7,724,414   
     

 

 

  

Hotels, Restaurants & Leisure — 2.6%

      

Marriott International, Inc. (Class A Stock)(a)

      4,149         290,804   

McDonald’s Corp.

      33,333         4,216,291   

Starbucks Corp.

      17,996         1,011,915   
     

 

 

  
        5,519,010   
     

 

 

  

Independent Power & Renewable Electricity Producers — 2.0%

      

Calpine Corp.*

      208,980         3,297,705   

TerraForm Power, Inc. (Class A Stock)(a)

      84,280         900,110   
     

 

 

  
        4,197,815   
     

 

 

  

Industrial Conglomerates — 1.9%

      

General Electric Co.

      134,381         4,132,216   
     

 

 

  

Insurance — 2.4%

      

Aon PLC

      13,784         1,448,974   

Markel Corp.*

      2,523         2,268,454   

Marsh & McLennan Cos., Inc.

      23,071         1,456,934   
     

 

 

  
        5,174,362   
     

 

 

  

Internet & Catalog Retail — 6.5%

      

Amazon.com, Inc.*

      13,163         8,682,183   

Expedia, Inc.

      5,707         660,700   

JD.com, Inc. (China), ADR*(a)

      26,105         667,244   

Netflix, Inc.*

      19,769         1,779,803   

Priceline Group, Inc. (The)*

      1,664         2,235,850   
     

 

 

  
          14,025,780   
     

 

 

  

Internet Software & Services — 11.9%

      

Alibaba Group Holding Ltd. (China), ADR*(a)

      25,005         1,923,884   

Alphabet, Inc. (Class A Stock)*

      14,450         10,228,866   

eBay, Inc.*

      96,230         2,350,899   

Facebook, Inc. (Class A Stock)*

      67,653         7,954,640   

Tencent Holdings Ltd. (China), ADR

      157,566         3,198,590   
     

 

 

  
        25,656,879   
     

 

 

  

IT Services — 5.1%

      

International Business Machines Corp.

      1,396         203,732   

MasterCard, Inc. (Class A Stock)

      39,020         3,784,550   

Visa, Inc. (Class A Stock)(a)

      90,657         7,002,347   
     

 

 

  
        10,990,629   
     

 

 

  

Machinery — 2.7%

      

Cummins, Inc.

      29,244         3,422,425   

Deere & Co.

      20,320         1,709,115   

Stanley Black & Decker, Inc.

      6,050         677,116   
     

 

 

  
        5,808,656   
     

 

 

  

Media — 1.7%

      

Comcast Corp. (Class A Stock)

      8,638         524,845   

Walt Disney Co. (The)

      30,808         3,181,234   
     

 

 

  
        3,706,079   
     

 

 

  

Multiline Retail — 1.4%

      

Target Corp.

      38,912         3,093,504   
     

 

 

  

Multi-Utilities — 1.4%

      

Dominion Resources, Inc.

      42,716         3,052,913   
     

 

 

  

Oil, Gas & Consumable Fuels — 6.7%

      

Chevron Corp.

      21,410         2,187,674   

Concho Resources, Inc.*

      9,455         1,098,388   

Exxon Mobil Corp.

      50,463         4,460,929   

HollyFrontier Corp.

      73,947         2,632,513   

Marathon Petroleum Corp.

      31,164         1,217,889   

Tesoro Corp.

      35,171         2,802,777   
     

 

 

  
        14,400,170   
     

 

 

  

Pharmaceuticals — 5.5%

      

Bristol-Myers Squibb Co.

      42,024         3,033,292   

Johnson & Johnson

      29,493         3,305,575   

Novo Nordisk A/S (Denmark), ADR(a)

      34,769         1,939,763   

Shire PLC (Ireland), ADR(a)

      19,144         3,587,969   
     

 

 

  
          11,866,599   
     

 

 

  

Real Estate Investment Trusts (REITs) — 0.6%

      

Crown Castle International Corp.

      10,419         905,202   

Public Storage

      1,196         292,793   
     

 

 

  
        1,197,995   
     

 

 

  

Road & Rail — 0.4%

      

CSX Corp.

      30,355         827,781   
     

 

 

  

Semiconductors & Semiconductor Equipment — 1.4%

      

Intel Corp.

      99,241         3,005,017   
     

 

 

  

Software — 3.6%

      

Adobe Systems, Inc.*

      16,929         1,595,050   

Microsoft Corp.

      88,365         4,406,763   

Red Hat, Inc.*

      3,146         230,822   

salesforce.com, inc.*

      19,430         1,472,794   
     

 

 

  
        7,705,429   
     

 

 

  

Specialty Retail — 2.4%

      

Home Depot, Inc. (The)

      3,616         484,146   

Industria de Diseno Textil SA (Spain), ADR

      175,038         2,809,360   

O’Reilly Automotive, Inc.*

      4,459         1,171,290   

TJX Cos., Inc. (The)

      9,055         686,550   
     

 

 

  
        5,151,346   
     

 

 

  

Technology Hardware, Storage & Peripherals — 2.6%

      

Apple, Inc.

      60,446         5,666,208   
     

 

 

  

Textiles, Apparel & Luxury Goods — 3.2%

      

Luxottica Group SpA (Italy), ADR

      19,985         1,093,779   

NIKE, Inc. (Class B Stock)

      95,158         5,608,612   

Under Armour, Inc. (Class A Stock)*(a)

      2,555         112,267   

Under Armour, Inc. (Class C Stock)*

      2,555         104,244   
     

 

 

  
        6,918,902   
     

 

 

  

Tobacco — 1.1%

      

Altria Group, Inc.

      36,773         2,306,035   
     

 

 

  

TOTAL LONG-TERM INVESTMENTS
(cost $179,341,712)

   

      214,569,066   
     

 

 

  

SHORT-TERM INVESTMENT — 9.3%

      

AFFILIATED MUTUAL FUND

      

Prudential Investment Portfolios 2 — Prudential Core Ultra Short Bond Fund
(cost $19,978,451; includes $19,106,369 of cash collateral for securities on
loan)(b)(c)

      19,978,451         19,978,451   
     

 

 

  

TOTAL INVESTMENTS — 109.0%
(cost $199,320,163)(d)

   

      234,547,517   

Liabilities in excess of other assets — (9.0)%

  

      (19,411,283 ) 
     

 

 

  

NET ASSETS — 100.0%

  

    $ 215,136,234   
     

 

 

  

 

The following abbreviations are used in the quarterly schedule of portfolios report.

 

ADR    American Depositary Receipt
OTC    Over-the-counter

 

* Non-income producing security.
(a) All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $18,671,589; cash collateral of $19,106,369 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. Securities on loan are subject to contractual netting arrangements.
(b) Prudential Investments LLC, the manager of the Fund, also serves as manager of the Prudential Investment Portfolios 2 — Prudential Core Ultra Short Bond Fund.
(c) Represents security, or a portion thereof, purchased with cash collateral received for securities on loan.
(d) The United States federal income tax basis of investments and net unrealized appreciation were as follows:

 

Tax Basis

    $ 199,724,959   
  

 

 

  

Appreciation

      38,967,675   

Depreciation

      (4,145,117 ) 
  

 

 

  

Net Unrealized Appreciation

    $ 34,822,558   
  

 

 

  

The book basis may differ from tax basis due to certain tax-related adjustments.

Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.

Level 1 - quoted prices generally in active markets for identical securities.

Level 2 - quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.

Level 3 - unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.

The following is a summary of the inputs used as of April 30, 2016 in valuing such portfolio securities:

 

     Level 1      Level 2      Level 3  

Investments in Securities

         

Common Stocks

         

Aerospace & Defense

    $ 3,454,596       $ —         $ —     

Banks

      7,578,021         —           —     

Beverages

      3,080,762         —           —     

Biotechnology

      3,292,615         —           —     

Capital Markets

      10,137,569         —           —     

Chemicals

      3,312,957         —           —     

Consumer Finance

      3,434,617         —           —     

Diversified Financial Services

      4,598,498         —           —     

Diversified Telecommunication Services

      4,981,351         —           —     

Energy Equipment & Services

      544,625         —           —     

Food & Staples Retailing

      4,527,298         —           —     

Food Products

      4,960,900         —           —     

Health Care Equipment & Supplies

      8,537,518         —           —     

Health Care Providers & Services

      7,724,414         —           —     

Hotels, Restaurants & Leisure

      5,519,010         —           —     

Independent Power & Renewable Electricity Producers

      4,197,815         —           —     

Industrial Conglomerates

      4,132,216         —           —     

Insurance

      5,174,362         —           —     

Internet & Catalog Retail

      14,025,780         —           —     

Internet Software & Services

      25,656,879         —           —     

IT Services

      10,990,629         —           —     

Machinery

      5,808,656         —           —     

Media

      3,706,079         —           —     

Multiline Retail

      3,093,504         —           —     

Multi-Utilities

      3,052,913         —           —     

Oil, Gas & Consumable Fuels

      14,400,170         —           —     

Pharmaceuticals

      11,866,599         —           —     

Real Estate Investment Trusts (REITs)

      1,197,995         —           —     

Road & Rail

      827,781         —           —     

Semiconductors & Semiconductor Equipment

      3,005,017         —           —     

Software

      7,705,429         —           —     

Specialty Retail

      5,151,346         —           —     

Technology Hardware, Storage & Peripherals

      5,666,208         —           —     

Textiles, Apparel & Luxury Goods

      6,918,902         —           —     

Tobacco

      2,306,035         —           —     

Affiliated Mutual Fund

      19,978,451         —           —     
  

 

 

     

 

 

     

 

 

  

Total

    $ 234,547,517       $ —         $ —     
  

 

 

     

 

 

     

 

 

  

Prudential Jennison Rising Dividend Fund

Schedule of Investments

as of April 30, 2016 (Unaudited)

 

     Shares      Value  

LONG-TERM INVESTMENTS — 97.3%

      

COMMON STOCKS

      

Aerospace & Defense — 5.3%

      

Boeing Co. (The)

      537       $ 72,387   

Honeywell International, Inc.

      1,707         195,059   

Lockheed Martin Corp.

      1,050         243,999   
     

 

 

  
        511,445   
     

 

 

  

Banks — 6.8%

      

Bank of America Corp.

      6,567         95,616   

Citigroup, Inc.

      2,715         125,650   

JPMorgan Chase & Co.

      3,087         195,098   

PNC Financial Services Group, Inc. (The)

      1,055         92,608   

Wells Fargo & Co.

      3,068         153,339   
     

 

 

  
        662,311   
     

 

 

  

Beverages — 4.7%

      

Coca-Cola Co. (The)

      2,196         98,381   

Constellation Brands, Inc. (Class A Stock)

      1,353         211,149   

PepsiCo, Inc.

      1,408         144,968   
     

 

 

  
        454,498   
     

 

 

  

Capital Markets — 2.3%

      

Goldman Sachs Group, Inc. (The)

      796         130,632   

TD Ameritrade Holding Corp.

      3,047         90,892   
     

 

 

  
        221,524   
     

 

 

  

Communications Equipment — 3.5%

      

Cisco Systems, Inc.

      12,216         335,818   
     

 

 

  

Diversified Telecommunication Services — 2.0%

      

AT&T, Inc.

      4,893         189,946   
     

 

 

  

Electric Utilities — 1.8%

      

PG&E Corp.

      3,069         178,616   
     

 

 

  

Food & Staples Retailing — 1.0%

      

Costco Wholesale Corp.

      641         94,951   
     

 

 

  

Food Products — 1.9%

      

J.M. Smucker Co. (The)

      1,469         186,534   
     

 

 

  

Health Care Equipment & Supplies — 1.0%

      

Abbott Laboratories

      2,539         98,767   
     

 

 

  

Hotels, Restaurants & Leisure — 4.6%

      

Carnival Corp.

      1,573         77,156   

McDonald’s Corp.

      2,906         367,580   
     

 

 

  
        444,736   
     

 

 

  

Household Products — 1.8%

      

Procter & Gamble Co. (The)

      2,156         172,739   
     

 

 

  

Industrial Conglomerates — 1.9%

      

General Electric Co.

      6,120         188,190   
     

 

 

  

Insurance — 1.5%

      

American International Group, Inc.

      1,398         78,037   

MetLife, Inc.

      1,422         64,132   
     

 

 

  
          142,169   
     

 

 

  

IT Services — 4.3%

      

MasterCard, Inc. (Class A Stock)

      1,872         181,565   

Visa, Inc. (Class A Stock)

      2,224         171,782   

Xerox Corp.

      6,915         66,384   
     

 

 

  
        419,731   
     

 

 

  

Life Sciences Tools & Services — 2.1%

      

Thermo Fisher Scientific, Inc.

      1,408         203,104   
     

 

 

  

Media — 2.5%

      

Comcast Corp. (Class A Stock)

      2,530         153,723   

Time Warner, Inc.

      1,222         91,821   
     

 

 

  
        245,544   
     

 

 

  

Multi-Utilities — 2.5%

      

NiSource, Inc.

      2,108         47,872   

Sempra Energy

      1,891         195,435   
     

 

 

  
        243,307   
     

 

 

  

Multiline Retail — 1.1%

      

Dollar General Corp.

      1,276         104,517   
     

 

 

  

Oil, Gas & Consumable Fuels — 12.0%

      

Chevron Corp.

      1,480         151,226   

Exxon Mobil Corp.

      2,467         218,083   

Hess Corp.

      1,701         101,414   

Occidental Petroleum Corp.

      2,813         215,616   

Royal Dutch Shell PLC (Netherlands) (Class A Stock), ADR

      4,315         228,220   

Suncor Energy, Inc. (Canada)

      5,153         151,344   

TransCanada Corp. (Canada) (TSX)

      1,935         80,349   

TransCanada Corp. (Canada) Sub Receipt

      518         20,840   
     

 

 

  
        1,167,092   
     

 

 

  

Pharmaceuticals — 6.5%

      

Bristol-Myers Squibb Co.

      4,494         324,377   

Eli Lilly & Co.

      1,094         82,630   

Pfizer, Inc.

      6,785         221,937   
     

 

 

  
        628,944   
     

 

 

  

Real Estate Investment Trusts (REITs) — 5.3%

      

AvalonBay Communities, Inc.

      902         159,465   

Crown Castle International Corp.

      1,058         91,919   

CyrusOne, Inc.

      5,895         260,146   
     

 

 

  
        511,530   
     

 

 

  

Road & Rail — 2.0%

      

Ryder System, Inc.

      1,381         95,179   

Union Pacific Corp.

      1,179         102,844   
     

 

 

  
        198,023   
     

 

 

  

Semiconductors & Semiconductor Equipment — 2.9%

      

Analog Devices, Inc.

      2,447         137,815   

Texas Instruments, Inc.

      2,456         140,090   
     

 

 

  
        277,905   
     

 

 

  

Software — 3.4%

      

Intuit, Inc.

      669         67,495   

Microsoft Corp.

      5,246         261,618   
     

 

 

  
        329,113   
     

 

 

  

Specialty Retail — 4.1%

      

Home Depot, Inc. (The)

      1,190         159,329   

Lowe’s Cos., Inc.

      1,932         146,871   

Ross Stores, Inc.

      1,708         96,980   
     

 

 

  
        403,180   
     

 

 

  

Technology Hardware, Storage & Peripherals — 0.8%

      

Apple, Inc.

      845         79,210   
     

 

 

  

Textiles, Apparel & Luxury Goods — 2.4%

      

Coach, Inc.

      5,844         235,338   
     

 

 

  

Tobacco — 4.5%

      

Altria Group, Inc.

      1,567         98,266   

Philip Morris International, Inc.

      3,433         336,846   
     

 

 

  
        435,112   
     

 

 

  

Wireless Telecommunication Services — 0.8%

      

Vodafone Group PLC (United Kingdom), ADR

      2,435         79,722   
     

 

 

  

TOTAL LONG-TERM INVESTMENTS
(cost $8,741,664)

   

      9,443,616   
     

 

 

  

SHORT-TERM INVESTMENT — 3.6%

      

AFFILIATED MUTUAL FUND

      

Prudential Investment Portfolios 2 — Prudential Core Ultra Short Bond Fund
(cost $350,504)(a)

      350,504         350,504   
     

 

 

  

TOTAL INVESTMENTS — 100.9%
(cost $9,092,168)(b)

   

      9,794,120   

Liabilities in excess of other assets — (0.9)%

  

      (87,133 ) 
     

 

 

  

NET ASSETS — 100.0%

  

    $ 9,706,987   
     

 

 

  

 

The following abbreviations are used in the quarterly schedule of portfolio holdings:

 

ADR    American Depositary Receipt
OTC    Over-the-counter
TSX    Toronto Stock Exchange

 

(a) Prudential Investments LLC, the manager of the Fund, also serves as manager of the Prudential Investment Portfolios 2 — Prudential Core Ultra Short Bond Fund.
(b) The United States federal income tax basis of investments and net unrealized appreciation were as follows:

 

Tax Basis

    $ 9,093,064   
  

 

 

  

Appreciation

      850,366   

Depreciation

      (149,310 ) 
  

 

 

  

Net Unrealized Appreciation

    $ 701,056   
  

 

 

  

The book basis may differ from tax basis due to certain tax-related adjustments.

Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.

Level 1 - quoted prices generally in active markets for identical securities.

Level 2 - quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.

Level 3 - unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.

The following is a summary of the inputs used as of April 30, 2016 in valuing such portfolio securities:

 

     Level 1      Level 2      Level 3  

Investments in Securities

         

Common Stocks

         

Aerospace & Defense

    $ 511,445       $ —         $ —     

Banks

      662,311         —           —     

Beverages

      454,498         —           —     

Capital Markets

      221,524         —           —     

Communications Equipment

      335,818         —           —     

Diversified Telecommunication Services

      189,946         —           —     

Electric Utilities

      178,616         —           —     

Food & Staples Retailing

      94,951         —           —     

Food Products

      186,534         —           —     

Health Care Equipment & Supplies

      98,767         —           —     

Hotels, Restaurants & Leisure

      444,736         —           —     

Household Products

      172,739         —           —     

Industrial Conglomerates

      188,190         —           —     

Insurance

      142,169         —           —     

IT Services

      419,731         —           —     

Life Sciences Tools & Services

      203,104         —           —     

Media

      245,544         —           —     

Multi-Utilities

      243,307         —           —     

Multiline Retail

      104,517         —           —     

Oil, Gas & Consumable Fuels

      1,167,092         —           —     

Pharmaceuticals

      628,944         —           —     

Real Estate Investment Trusts (REITs)

      511,530         —           —     

Road & Rail

      198,023         —           —     

Semiconductors & Semiconductor Equipment

      277,905         —           —     

Software

      329,113         —           —     

Specialty Retail

      403,180         —           —     

Technology Hardware, Storage & Peripherals

      79,210         —           —     

Textiles, Apparel & Luxury Goods

      235,338         —           —     

Tobacco

      435,112         —           —     

Wireless Telecommunication Services

      79,722         —           —     

Affiliated Mutual Fund

      350,504         —           —     
  

 

 

     

 

 

     

 

 

  

Total

    $ 9,794,120       $ —         $ —     
  

 

 

     

 

 

     

 

 

  

Notes to Schedules of Investments (Unaudited)

Securities Valuation: The Funds hold securities and other assets that are fair valued at the close of each day (generally, 4:00PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Trustees (the “Board”) has adopted Valuation Procedures for security valuation under which fair value responsibilities have been delegated to Prudential Investments LLC (“PI” or “Manager”). Under the current Valuation Procedures, the established Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets. The Valuation Procedures permit the Funds to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly-scheduled quarterly meeting.

Various inputs determine how the Funds’ investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, 3) detailed in the table following each Schedule of Investments.

Common and preferred stocks, exchange-traded funds, and derivative instruments such as futures and options, that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security principally trades. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy.

In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and ask prices, or at the last bid price in the absence of an ask price. These securities are classified as Level 2 in the fair value hierarchy.

Common and preferred stocks traded on foreign securities exchanges are valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy. The models generate an evaluated adjustment factor for each security, which can be applied to the local closing price to adjust it for post closing market movements. Utilizing that evaluated adjustment factor, the vendor provides an evaluated price to the extent that the valuation meets the established confidence level for each security. Such confidence level is a measure of the probability of a relationship between a given equity security and the factors used in the models. If the confidence level is not met or the vendor does not provide an evaluated price, securities are valued in accordance with exchange-traded common and preferred stocks discussed above.

Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.

Fixed income securities traded in the OTC market are generally valued at prices provided by approved independent pricing vendors. The pricing vendors provide these prices after evaluating observable inputs including, but not limited to yield curves, yield spreads, credit ratings, deal terms, tranche level attributes, default rates, cash flows, prepayment spreads, broker/dealer quotations, and reported trades. Securities valued using such vendor prices are classified as Level 2 in the fair value hierarchy.

Bank loans traded in the OTC market are generally valued at prices provided by approved independent pricing vendors. The pricing vendors utilize broker/dealer quotations and provide prices based on the average of such quotations. Bank loans valued using such vendor prices are generally classified as Level 2 in the fair value hierarchy.

OTC derivative instruments are generally valued using pricing vendor services, which derive the valuation based on inputs such as underlying asset prices, indices, spreads, interest rates, and exchange rates. These instruments are categorized as Level 2 in the fair value hierarchy.

Centrally cleared swaps listed or traded on a multilateral or trade facility platform, such as a registered exchange, are generally valued at the daily settlement price determined by the respective exchange. These securities are classified as Level 2 in the fair value hierarchy, as the daily settlement price is not public.

Participatory notes (P-notes) are generally valued based upon the value of a related underlying security that trades actively in the market and are classified as Level 2 in the fair value hierarchy.

Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.

When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values.

Each Fund may invest up to 15% of its net assets in illiquid securities, including those which are restricted as to disposition under securities law (“restricted securities”). Restricted securities are valued pursuant to the valuation procedures noted above.

The Funds invest in the Prudential Core Ultra Short Bond Fund, a portfolio of the Prudential Investment Portfolios 2, registered under the Investment Company Act of 1940, as amended, and managed by PI.

Other information regarding the Funds is available in the Funds’ most recent Report to Shareholders. This information is available on the Securities and Exchange Commission’s website (www.sec.gov).

Item 2. Controls and Procedures

 

  (a) It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.

 

  (b) There have been no significant changes in the registrant’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Item 3. Exhibits

Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 – Attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant) Prudential Investment Portfolios 5   
By (Signature and Title)*    /s/ Deborah A. Docs   
   Deborah A. Docs   
   Secretary of the Fund   
Date    June 16, 2016      

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)*    /s/ Stuart S. Parker   
   Stuart S. Parker   
   President and Principal Executive Officer
Date    June 16, 2016      
By (Signature and Title)*    /s/ M. Sadiq Peshimam   
   M. Sadiq Peshimam   
   Treasurer and Principal Financial Officer
Date    June 16, 2016      

* Print the name and title of each signing officer under his or her signature.