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WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as composition of participants, level of funded status, capacity to absorb risks, and the current economic environment.
The target asset allocation is 35% in equity securities, 62% in debt securities and the remaining 3% in other assets.
Risk management is accomplished through diversification, periodic review of plan asset performance, and appropriate
realignment of asset allocation. Assumptions regarding the expected long-term rate of return on plan assets are
periodically reviewed and are based on the historical trend of returns, the risk and correlation of each asset, and the
latest economic environment.
The expected long-term rate of return is estimated based on many factors, including expected forecast for
inflation, risk premiums for each asset class, expected asset allocation, current and future financial market conditions,
and diversification and rebalancing strategies. Historical return patterns and correlations, consensus return forecasts,
and other relevant financial factors are analyzed periodically by the investment advisor so as to ensure that the
expected long-term rate of return is reasonable and appropriate.
Fair Value Measurements
The following table presents the Japanese defined benefit pension plans’ major asset categories and their asso-
ciated fair values as of July 3, 2015 (in millions):
Level 1 Level 2 Level 3 Total
Equity:
Equity commingled/mutual funds(1)(2) ..................... $— $ 65 $— $ 65
Fixed income:
Fixed income commingled/mutual funds(1)(3) ................ — 112 — 112
Cash and short-term investments ............................ 6 2 — 8
Fair value of plan assets ................................... $ 6 $179 $— $185
The following table presents the Japanese defined benefit pension plans’ major asset categories and their asso-
ciated fair values as of June 27, 2014 (in millions):
Level 1 Level 2 Level 3 Total
Equity:
Equity commingled/mutual funds(1)(2) ..................... $— $ 69 $— $ 69
Fixed income:
Fixed income commingled/mutual funds(1)(3) ................ — 111 — 111
Cash and short-term investments ............................ 8 3 — 11
Fair value of plan assets ................................... $ 8 $183 $— $191
(1) Commingled funds represent pooled institutional investments.
(2) Equity mutual funds invest primarily in equity securities.
(3) Fixed income mutual funds invest primarily in fixed income securities.
Assets held in defined benefit plans in the Philippines, Taiwan and Thailand were less than $1 million and are
not presented in the above tables. There were no significant movements of assets between any level categories in 2015,
2014 or 2013.
Fair Value Valuation Techniques
Equity securities are valued at the closing price reported on the stock exchange on which the individual securities
are traded. Equity commingled/mutual funds are typically valued using the NAV provided by the investment
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