Annual report : 2000 / Burroughs Wellcome Fund.

  • Burroughs Wellcome Fund
Date:
2000
Catalogue details

Licence: Attribution 4.0 International (CC BY 4.0)

Credit: Annual report : 2000 / Burroughs Wellcome Fund. Source: Wellcome Collection.

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    a Notes to Financial Statements Years Ended August 31, 2000 and 1999 (All dollar amounts presented in thousands) 1. Organization and Summary of Significant Accounting Policies The Burroughs Wellcome Fund (the “Fund”) is a private foundation established to advance the medical sciences by supporting research and other scientific and educational activities. Cash equivalents Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and have a maturity of three months or less at the time of purchase. Forward currency contracts The Fund enters into financial instruments with off-balance sheet risk in the normal course of its investment activity, primarily forward contracts, to reduce the Fund’s exposure to fluctuations in foreign currency exchange rates. These contracts are for delivery or sale of a specified amount of foreign currency at a fixed future date and a fixed exchange rate. Gains or losses on these contracts occur due to fluctuations in exchange rates between the commencement date and the settlement date. Gains and losses on settled contracts are included within “net realized gains or losses on sales of marketable securities,” and the changes in market value of open contracts is included within “net unrealized appreciation (depreciation) of marketable securities” in the accompanying statements of activities. It is the Fund’s policy to utilize forward contracts to reduce foreign exchange rate risk when foreign-based investment purchases or sales are anticipated. The contract amount of these forward contracts totaled $2,676 and $488 at August 31, 2000 and 1999, respectively. Realized losses on forward currency contracts totaled $608 and $143 in 2000 and 1999, respectively. The market value of open contracts at August 31, 2000 and 1999 was $317 and $18, respectively. The market value is recorded as an asset in the Fund’s financial statements. The average market value of open contracts totaled ($238) and ($97) for the years ending August 31, 2000 and 1999, respectively. Futures contracts The Fund enters into futures contracts in the normal course of its investment activity to reduce the exposure to interest rate risk associated with bonds and mortgage backed securities. The Fund is required to pledge collateral to enter into these contracts. The amounts pledged for futures contracts at August 31, 2000 and 1999 were $235 and $750, respectively. It is the Fund’s intention to terminate these contracts prior to final settlement. Gains and losses on the contracts are settled on a daily basis. Included in transactions payable at August 31, 2000 and 1999 is the net settlement relating to these contracts of $0 and $23, respectively. Options The Fund utilizes options to reduce the exposure to interest rate risk associated with mortgage backed securities. The market value of these options totaled $23 and $1,741 at August 31, 2000 and 1999, respectively, which is recorded as an asset in the Fund’s financial statements. The average fair value of open contracts totaled ($816) and $1,201 for the years ending August 31, 2000 and 1999. Realized losses on options totaled $2,450 and $4,369 for the years ending August 31, 2000 and 1999, respectively. Marketable securities Marketable securities are carried at estimated market values based on quoted prices. Gains and losses from sales of securities are determined on an average cost basis and are recognized when realized. Changes in the estimated market value of securities are reflected as unrealized appreciation or depreciation in the accompanying statements of activities. The Fund has investment advisors which manage its portfolio of marketable securities. The Fund’s management critically evaluates investment advisor performance and compliance with established diversification and investment policies.