Investments


(a)	Summary of Available-for-Sale Investments

The following tables summarize the Company’s available-for-sale investments (in millions):



October 28, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed income securities:
U.S. government securities	$	20,564	$	—	$	(93	)	$	20,471
U.S. government agency securities	1,923		—		(6		)	1,917
Non-U.S. government and agency securities	358		—		(1		)	357
Corporate debt securities	31,999		162		(131		)	32,030
U.S. agency mortgage-backed securities	2,095		2		(23		)	2,074
Commercial paper	1,775		—		—			1,775
Certificates of deposit	140		—		—			140
Total fixed income securities	58,854		164		(254		)	58,764
Publicly traded equity securities	1,134		653		(6		)	1,781
Total ⁽¹⁾	$	59,988	$	817	$	(260	)	$	60,545



July 29, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed income securities:
U.S. government securities	$	19,880	$	3	$	(60	)	$	19,823
U.S. government agency securities	2,057		—		(5		)	2,052
Non-U.S. government and agency securities	389		—		(1		)	388
Corporate debt securities	31,626		202		(93		)	31,735
U.S. agency mortgage-backed securities	2,037		3		(17		)	2,023
Commercial paper	996		—		—			996
Certificates of deposit	60		—		—			60
Total fixed income securities	57,045		208		(176		)	57,077
Publicly traded equity securities	1,180		554		(27		)	1,707
Total ⁽¹⁾	$	58,225	$	762	$	(203	)	$	58,784

⁽¹⁾ Includes investments that were pending settlement as of the respective fiscal years. The net unsettled investment purchases (sales) were $95 million and $(30) million as of October 28, 2017 and July 29, 2017, respectively.

Non-U.S. government and agency securities include agency and corporate debt securities that are guaranteed by non-U.S. governments.


(b)	Gains and Losses on Available-for-Sale Investments

The following table presents the gross realized gains and gross realized losses related to available-for-sale investments (in millions):



	Three Months Ended
	October 28, 2017			October 29, 2016
Gross realized gains	$	67		$	30
Gross realized losses	(34		)	(15		)
Total	$	33		$	15

The following table presents the realized net gains (losses) related to available-for-sale investments by security type (in millions):



	Three Months Ended
	October 28, 2017		October 29, 2016
Net gains (losses) on investments in publicly traded equity securities	$	29	$	5
Net gains (losses) on investments in fixed income securities	4		10
Total	$	33	$	15

The following tables present the breakdown of the available-for-sale investments with gross unrealized losses and the duration that those losses had been unrealized at October 28, 2017 and July 29, 2017 (in millions):



	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
October 28, 2017	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed income securities:
U.S. government securities	$	16,719	$	(66	)	$	3,602	$	(27	)	$	20,321	$	(93	)
U.S. government agency securities	1,696		(4		)	222		(2		)	1,918		(6		)
Non-U.S. government and agency securities	316		(1		)	41		—			357		(1		)
Corporate debt securities	8,129		(45		)	4,209		(86		)	12,338		(131		)
U.S. agency mortgage-backed securities	1,562		(16		)	266		(7		)	1,828		(23		)
Total fixed income securities	28,422		(132		)	8,340		(122		)	36,762		(254		)
Publicly traded equity securities	54		(6		)	—		—			54		(6		)
Total	$	28,476	$	(138	)	$	8,340	$	(122	)	$	36,816	$	(260	)



	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
July 29, 2017	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed income securities:
U.S. government securities	$	14,962	$	(55	)	$	771	$	(5	)	$	15,733	$	(60	)
U.S. government agency securities	1,791		(4		)	130		(1		)	1,921		(5		)
Non-U.S. government and agency securities	368		(1		)	—		—			368		(1		)
Corporate debt securities	9,487		(92		)	101		(1		)	9,588		(93		)
U.S. agency mortgage-backed securities	1,485		(16		)	38		(1		)	1,523		(17		)
Total fixed income securities	28,093		(168		)	1,040		(8		)	29,133		(176		)
Publicly traded equity securities	122		(27		)	—		—			122		(27		)
Total	$	28,215	$	(195	)	$	1,040	$	(8	)	$	29,255	$	(203	)

For the three months ended October 28, 2017, the net realized losses related to available-for-sale investments included impairment charges of $26 million. These impairment charges related primarily to publicly traded equity securities and were due to a decline in the fair value of those securities below their cost basis that were determined to be other than temporary. There were no impairment charges on available-for-sale investments for the three months ended October 29, 2016.

As of October 28, 2017, for fixed income securities that were in unrealized loss positions, the Company has determined that (i) it does not have the intent to sell any of these investments and (ii) it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. In addition, as of October 28, 2017, the Company anticipates that it will recover the entire amortized cost basis of such fixed income securities and has determined that no other-than-temporary impairments associated with credit losses were required to be recognized during the three months ended October 28, 2017.

The Company has evaluated its publicly traded equity securities as of October 28, 2017 and has determined that there were no additional other-than-temporary impairments in the respective categories of unrealized losses. This determination was based on several factors, which include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the issuer, and the Company’s intent and ability to hold the publicly traded equity securities for a period of time sufficient to allow for any anticipated recovery in market value.


(c)	Maturities of Fixed Income Securities

The following table summarizes the maturities of the Company’s fixed income securities as of October 28, 2017 (in millions):



	Amortized Cost		Fair Value
Less than 1 year	$	16,376	$	16,360
Due in 1 to 2 years	14,866		14,820
Due in 2 to 5 years	21,852		21,883
Due after 5 years	3,665		3,627
Mortgage-backed securities with no single maturity	2,095		2,074
Total	$	58,854	$	58,764

Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations.


(d)	Securities Lending

The Company periodically engages in securities lending activities with certain of its available for sale investments. These transactions are accounted for as a secured lending of the securities, and the securities are typically loaned only on an overnight basis. The average daily balance of securities lending for the three months ended October 28, 2017 and October 29, 2016 was $0.5 billion and $1.2 billion, respectively. The Company requires collateral equal to at least 102% of the fair market value of the loaned security and that the collateral be in the form of cash or liquid, high-quality assets. The Company engages in these secured lending transactions only with highly creditworthy counterparties, and the associated portfolio custodian has agreed to indemnify the Company against collateral losses. The Company did not experience any losses in connection with the secured lending of securities during the periods presented. As of October 28, 2017 and July 29, 2017, the Company had no outstanding securities lending transactions.


(e)	Investments in Privately Held Companies

The carrying value of the investments in privately held companies was included in other assets. For such investments that were accounted for under the equity and cost method as of October 28, 2017 and July 29, 2017, the amounts are summarized in the following table (in millions):



	October 28, 2017		July 29, 2017
Equity method investments	$	108	$	124
Cost method investments	839		859
Total	$	947	$	983

For additional information on impairment charges related to investments in privately held companies, see Note 9.

Variable Interest Entities In the ordinary course of business, the Company has investments in privately held companies and provides financing to certain customers. These privately held companies and customers may be considered to be variable interest entities. The Company evaluates on an ongoing basis its investments in these privately held companies and its customer financings, and has determined that as of October 28, 2017, except as disclosed in Note 1, there were no significant variable interest entities required to be consolidated in the Company’s Consolidated Financial Statements.

As of October 28, 2017, the carrying value of investments in privately held companies was $947 million, of which $519 million of such investments are considered to be in variable interest entities which are unconsolidated. In addition, the Company has additional funding commitments of $213 million related to these investments, some of which are based on the achievement of certain agreed-upon milestones, and some of which are required to be funded on demand. The carrying value of these investments and the additional funding commitments collectively represent the Company's maximum exposure related to these variable interest entities.