Investments


(a)	Summary of Available-for-Sale Investments

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



October 29, 2016	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed income securities:
U.S. government securities	$	25,905	$	24	$	(33	)	$	25,896
U.S. government agency securities	2,619		4		(1		)	2,622
Non-U.S. government and agency securities	1,104		1		(1		)	1,104
Corporate debt securities	29,046		177		(60		)	29,163
U.S. agency mortgage-backed securities	2,069		16		(2		)	2,083
Total fixed income securities	60,743		222		(97		)	60,868
Publicly traded equity securities	1,225		346		(54		)	1,517
Total ⁽¹⁾	$	61,968	$	568	$	(151	)	$	62,385



July 30, 2016	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed income securities:
U.S. government securities	$	26,473	$	73	$	(2	)	$	26,544
U.S. government agency securities	2,809		8		—			2,817
Non-U.S. government and agency securities	1,096		4		—			1,100
Corporate debt securities	24,044		263		(15		)	24,292
U.S. agency mortgage-backed securities	1,846		22		—			1,868
Total fixed income securities	56,268		370		(17		)	56,621
Publicly traded equity securities	1,211		333		(40		)	1,504
Total ⁽¹⁾	$	57,479	$	703	$	(57	)	$	58,125

⁽¹⁾ Includes investments that were pending settlement as of the respective fiscal years. The net unsettled investment purchases were $328 million and $654 million as of October 29, 2016 and July 30, 2016, 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 the Company’s available-for-sale investments (in millions):



	Three Months Ended
	October 29, 2016			October 24, 2015
Gross realized gains	$	30		$	35
Gross realized losses	(15		)	(36		)
Total	$	15		$	(1	)

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



	Three Months Ended
	October 29, 2016		October 24, 2015
Net gains/(losses) on investments in publicly traded equity securities	$	5	$	(9	)
Net gains/(losses) on investments in fixed income securities	10		8
Total	$	15	$	(1	)

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 29, 2016 and July 30, 2016 (in millions):



	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
October 29, 2016	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed income securities:
U.S. government securities	$	11,766	$	(33	)	$	100	$	—		$	11,866	$	(33	)
U.S. government agency securities	596		(1		)	—		—			596		(1		)
Non-U.S. government and agency securities	498		(1		)	—		—			498		(1		)
Corporate debt securities	9,013		(57		)	572		(3		)	9,585		(60		)
U.S. agency mortgage-backed securities	594		(2		)	—		—			594		(2		)
Total fixed income securities	22,467		(94		)	672		(3		)	23,139		(97		)
Publicly traded equity securities	291		(53		)	3		(1		)	294		(54		)
Total	$	22,758	$	(147	)	$	675	$	(4	)	$	23,433	$	(151	)



	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
July 30, 2016	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed income securities:
U.S. government securities	$	2,414	$	(2	)	$	—	$	—		$	2,414	$	(2	)
U.S. government agency securities	144		—			—		—			144		—
Non-U.S. government and agency securities	61		—			—		—			61		—
Corporate debt securities	2,499		(7		)	1,208		(8		)	3,707		(15		)
U.S. agency mortgage-backed securities	174		—			—		—			174		—
Total fixed income securities	5,292		(9		)	1,208		(8		)	6,500		(17		)
Publicly traded equity securities	188		(40		)	—		—			188		(40		)
Total	$	5,480	$	(49	)	$	1,208	$	(8	)	$	6,688	$	(57	)

As of October 29, 2016, 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 29, 2016, 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 29, 2016.

The Company has evaluated its publicly traded equity securities as of October 29, 2016 and has determined that there was no indication of 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 29, 2016 (in millions):



	Amortized Cost		Fair Value
Less than 1 year	$	12,967	$	12,977
Due in 1 to 2 years	17,042		17,071
Due in 2 to 5 years	25,125		25,230
Due after 5 years	3,540		3,507
Mortgage-backed securities with no single maturity	2,069		2,083
Total	$	60,743	$	60,868

Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations. The remaining contractual principal maturities for mortgage-backed securities were allocated assuming no prepayments.


(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 29, 2016 and October 24, 2015 was $1.5 billion and $0.5 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 29, 2016 and July 30, 2016, the Company had no outstanding securities lending transactions.


(e)	Investments in Privately Held Companies

The carrying value of the Company’s 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 29, 2016 and July 30, 2016, the amounts are summarized in the following table (in millions):



	October 29, 2016		July 30, 2016
Equity method investments	$	162	$	174
Cost method investments	829		829
Total	$	991	$	1,003

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 29, 2016, 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 discussed in Note 2, during the first quarter of fiscal 2017, the Company adopted a new accounting standard update related to the consolidation of certain types of legal entities. As of October 29, 2016, the carrying value of the Company's investments in privately held companies was $991 million, of which $609 million of such investments are considered to be in variable interest entities which are unconsolidated. In addition, the Company has additional funding commitments of $189 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.