NOTE 3    INVESTMENTS

(In millions)	Cost basis		Unrealized gains		Unrealized losses		Recorded basis		Cash and equivalents		Short-term investments		Equity and other investments
June 30, 2006
Cash and securities
Cash	$03,248		$0,00–		$(00–)		$03,248		$3,248		$00,00–		$00,00–
Mutual funds	723		11		(1)		733		288		445		–
Commercial paper	3,242		–		–)		3,242		3,150		92		–
Certificates of deposit	364		–		–)		364		–		364		–
U.S. Government and     Agency securities	4,904		4		(30)		4,878		14		4,790		74
Foreign government     bonds	6,034		21		(73)		5,982		–		5,982		–
Mortgage backed     securities	4,285		–		(42)		4,243		–		4,243		–
Corporate notes and     bonds	7,605		15		(18)		7,602		–		7,475		127
Municipal securities	4,008		5		(45)		3,968		14		3,954		–
Common stock and     equivalents	6,933		1,846		(34)		8,745		–		–		8,745
Preferred stock	41		5		–)		46		–		–		46
Other investments	342		–		–)		342		–		102		240
Total	$41,729		$1,907		$(243)		$43,393		$6,714		$27,447		$09,232
(In millions)	Cost basis		Unrealized gains		Unrealized losses		Recorded basis		Cash and equivalents		Short-term investments		Equity and other investments
June 30, 2005
Cash and securities
Cash	$01,911		$0,00–		$(00–)		$01,911		$1,911		$00,00–		$00,00–
Mutual funds	1,636		38		–)		1,674		817		857		–
Commercial paper	1,566		4		–)		1,570		1,570		–		–
Certificates of deposit	614		–		–)		614		453		161		–
U.S. Government     and Agency securities	9,943		29		(59)		9,913		–		9,913		–
Foreign government     bonds	5,486		194		(2)		5,678		–		5,678		–
Mortgage backed     securities	123		–		–)		123		–		123		–
Corporate notes and     bonds	8,053		50		(31)		8,072		80		7,473		519
Municipal securities	8,579		70		(33)		8,616		20		8,596		–
Common stock and     equivalents	7,273		1,970		(133)		9,110		–		–		9,110
Preferred stock	1,067		4		–)		1,071		–		–		1,071
Other investments	403		–		–)		403		–		99		304
Total	$46,654		$2,359		$(258)		$48,755		$4,851		$32,900		$11,004

Investments with continuous unrealized losses for less than and greater than 12 months and their related fair values were as follows:

	Less than 12 months				12 months or greater				Total
(In millions)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
June 30, 2006
Mutual funds	$00,014		$00(1)		$0,004		$(0)–		$00,018		$00(1)
U.S. Government and     Agency securities	2,303		(24)		172		(6)		2,475		(30)
Foreign government bonds	2,523		(56)		1,749		(17)		4,272		(73)
Mortgage backed securities	2,692		(40)		102		(2)		2,794		(42)
Corporate notes and bonds	4,721		(13)		359		(5)		5,080		(18)
Municipal securities	1,323		(13)		1,192		(32)		2,515		(45)
Common stock and     equivalents	266		(33)		29		(1)		295		(34)
Total	$13,842		$(180)		$3,607		$(63)		$17,449		$(243)
	Less than 12 months				12 months or greater				Total
(In millions)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
June 30, 2005
U.S. Government and Agency     securities	$07,490		$0(59)		$0,00–		$(0)–		$07,490		$0(59)
Foreign government bonds	32		(2)		–		–		32		(2)
Corporate notes and bonds	4,536		(31)		–		–		4,536		(31)
Municipal securities	4,339		(30)		239		(3)		4,578		(33)
Common stock and     equivalents	1,168		(111)		89		(22)		1,257		(133)
Total	$17,565		$(233)		$0,328		$(25)		$17,893		$(258)

At June 30, 2006 unrealized losses of $243 million consisted of: $196 million related to investment grade fixed-income securities, $12 million related to investments in high yield and emerging market fixed-income securities, $2 million related to domestic equity securities and $33 million related to international equity securities. Unrealized losses from fixed-income securities are primarily attributable to changes in interest rates. Unrealized losses from domestic and international equities are due to market price movements. At June 30, 2005 unrealized losses of $258 million consisted of: $112 million related to investment grade fixed-income securities, $13 million related to investments in high yield and emerging market fixed income securities, $90 million related to domestic equity securities and $43 million related to international equity securities. Unrealized losses from fixed-income securities are primarily attributable to changes in interest rates. Unrealized losses from domestic and international equities are due to market price movements. Management does not believe any unrealized losses represent an other-than-temporary impairment based on our evaluation of available evidence as of June 30, 2006.

Common and preferred stock and other investments that are restricted for more than one year or are not publicly traded are recorded at cost. At June 30, 2006 the recorded basis of these investments was $41 million, and their estimated fair value was $41 million. At June 30, 2005 the recorded basis of these investments was $1.05 billion, and their estimated fair value was $1.27 billion. The estimate of fair value is based on publicly available market information or other estimates determined by management.

(In millions)	Cost basis		Estimated fair value
Due in one year or less	$05,680		$05,686
Due after one year through five years	12,011		11,971
Due after five years through ten years	6,111		6,041
Due after ten years	6,741		6,683
Total	$30,543		$30,381