Available-for-Sale Debt Investments and Equity Investments

The following table summarizes our available-for-sale debt investments and equity investments (in millions):



	January 26, 2019		July 28, 2018
Available-for-sale debt investments	$	30,486	$	37,009
Marketable equity securities	62		605
Total investments	30,548		37,614
Non-marketable equity securities included in other assets ⁽¹⁾	1,133		978
Equity method investments included in other assets	115		118
Total	$	31,796	$	38,710

⁽¹⁾ We held equity interests in certain private equity funds of $0.6 billion as of January 26, 2019 which are accounted for under the NAV practical expedient following the adoption of ASU 2016-01, Financial Instruments, in the first quarter of fiscal 2019.


(a)	Summary of Available-for-Sale Debt Investments

The following tables summarize our available-for-sale debt investments (in millions):



January 26, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government securities	$	3,486	$	—	$	(14	)	$	3,472
U.S. government agency securities	356		—		(2		)	354
Non-U.S. government and agency securities	115		—		—			115
Corporate debt securities	25,103		16		(366		)	24,753
U.S. agency mortgage-backed securities	1,475		1		(42		)	1,434
Commercial paper	243		—		—			243
Certificates of deposit	115		—		—			115
Total ⁽¹⁾	$	30,893	$	17	$	(424	)	$	30,486



July 28, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government securities	$	7,318	$	—	$	(43	)	$	7,275
U.S. government agency securities	732		—		(5		)	727
Non-U.S. government and agency securities	209		—		(1		)	208
Corporate debt securities	27,765		44		(445		)	27,364
U.S. agency mortgage-backed securities	1,488		—		(53		)	1,435
Total ⁽¹⁾	$	37,512	$	44	$	(547	)	$	37,009

⁽¹⁾ Net unsettled investment purchases were $4 million and net unsettled investment sales were $1.5 billion as of January 26, 2019 and July 28, 2018, respectively and were included in other current assets and other current liabilities.

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

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



	Three Months Ended						Six Months Ended
	January 26, 2019			January 27, 2018			January 26, 2019			January 27, 2018
Gross realized gains	$	1		$	6		$	3		$	14
Gross realized losses	(6		)	(102		)	(14		)	(106		)
Total	$	(5	)	$	(96	)	$	(11	)	$	(92	)

The following tables present the breakdown of the available-for-sale debt investments with gross unrealized losses and the duration that those losses had been unrealized at January 26, 2019 and July 28, 2018 (in millions):



	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
January 26, 2019	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government securities	$	6	$	—		$	3,437	$	(14	)	$	3,443	$	(14	)
U.S. government agency securities	—		—			344		(2		)	344		(2		)
Non-U.S. government and agency securities	—		—			115		—			115		—
Corporate debt securities	5,849		(61		)	15,108		(305		)	20,957		(366		)
U.S. agency mortgage-backed securities	47		—			1,216		(42		)	1,263		(42		)
Total	$	5,902	$	(61	)	$	20,220	$	(363	)	$	26,122	$	(424	)



	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
July 28, 2018	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government securities	$	2,966	$	(20	)	$	4,303	$	(23	)	$	7,269	$	(43	)
U.S. government agency securities	206		(2		)	521		(3		)	727		(5		)
Non-U.S. government and agency securities	105		(1		)	103		—			208		(1		)
Corporate debt securities	16,990		(344		)	3,511		(101		)	20,501		(445		)
U.S. agency mortgage-backed securities	826		(24		)	581		(29		)	1,407		(53		)
Total	$	21,093	$	(391	)	$	9,019	$	(156	)	$	30,112	$	(547	)

There were no impairment charges related to our available-for-sale debt investments for the second quarter and first six months of fiscal 2019, and for the corresponding periods of fiscal 2018, respectively. For available-for-sale debt investments that were in an unrealized loss position as of January 26, 2019, we have determined that no other-than-temporary impairments were required to be recognized.

The following table summarizes the maturities of our available-for-sale debt investments as of January 26, 2019 (in millions):



	Amortized Cost		Fair Value
Within 1 year	$	10,131	$	10,104
After 1 year through 5 years	17,704		17,426
After 5 years through 10 years	1,568		1,507
After 10 years	15		15
Mortgage-backed securities with no single maturity	1,475		1,434
Total	$	30,893	$	30,486

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


(b)	Summary of Equity Investments

We recorded adjustments to the carrying value of our non-marketable equity securities measured using the measurement alternative during the second quarter and first six months of fiscal 2019 as follows (in millions):



	Three Months Ended			Six Months Ended
	January 26, 2019			January 26, 2019
Adjustments to non-marketable equity securities measured using the measurement alternative:
Upward adjustments	$	14		$	24
Downward adjustments, including impairments	(2		)	(18		)
Net upward adjustments	$	12		$	6

Gains and losses recognized on our marketable and non-marketable equity securities for the second quarter and first six months of fiscal 2019 are summarized below (in millions):



	Three Months Ended		Six Months Ended
	January 26, 2019		January 26, 2019
Net gains and losses recognized during the period on equity investments	$	67	$	75
Less: Net gains and losses recognized on equity investments sold	5		(7		)
Unrealized gains and losses recognized during reporting period on equity securities still held at the reporting date	$	72	$	68


(c)	Securities Lending

We periodically engage in securities lending activities with certain of our available-for-sale debt 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 was $1.2 billion and $0.4 billion for the first six months of fiscal 2019 and fiscal 2018, respectively. We require 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. We engage in these secured lending transactions only with highly creditworthy counterparties, and the associated portfolio custodian has agreed to indemnify us against collateral losses. We did not experience any losses in connection with the secured lending of securities during the periods presented. As of January 26, 2019 and July 28, 2018, we had no outstanding securities lending transactions.


(d)	Variable Interest Entities

In the ordinary course of business, we have investments in privately held companies and provide financing to certain customers. These privately held companies and customers may be considered to be variable interest entities. We evaluate on an ongoing basis our investments in these privately held companies and our customer financings, and have determined that as of January 26, 2019, except as disclosed in Note 1, there were no significant variable interest entities required to be consolidated in our Consolidated Financial Statements.

As of January 26, 2019, the carrying value of investments in privately held companies was $1.25 billion, of which $670 million of such investments are considered to be in variable interest entities which are unconsolidated. In addition, we have additional funding commitments of $192 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 our maximum exposure related to these variable interest entities.