Annual Report and Financial Statements 2020 Table of contents Report from Chair 3 Report from Director 5 Trustee’s Report 7 What we do 8 Year at a glance 9 Review of Charitable Activities 11 Review of Investment Activities 24 Financial Review 34 Structure and Governance 39 Social Responsibility 45 Risk Management and Internal Control 47 Remuneration Report 51 Remuneration Committee Report 53 Nominations and Governance Committee Report 54 Investment Committee Report 55 Audit and Risk Committee Report 56 Independent Auditor’s Report 59 Financial Statements 68 Consolidated Statement of Financial Activities 69 Consolidated Balance Sheet 70 Statement of Financial Activities of the Trust 71 Balance Sheet of the Trust 72 Consolidated Cash Flow Statement 73 Alternative Performance Measures and Key Performance Indicators 74 Glossary of Terms 75 Notes to the Financial Statements 76 Reference and Administrative Details 124 Table of Contents Wellcome Trust Annual Report 2020 | 2 Report from Chair Wellcome has played a key role in the global international partnerships and initiatives. As one research response to the pandemic this year, example (there are too many to list), Wellcome while supporting research to improve health in and UNITAID are convening the therapeutics pillar a variety of ways, maintaining a consistent level of the World Health Organization’s Access to of charitable spending, and increasing the value Covid-19 Tools Accelerator. of our investments portfolio. Investments This has been an immensely challenging year. Covid-19 has tested governments to the limits as Wellcome’s capacity to act is dependent on how they have struggled to save lives and maintain well the organisation is run and the skill with livelihoods. The effects on the economy, people’s which our investment team manages the portfolio mental health, other diseases, and world politics that funds everything we do. During my time at have been profound. Wellcome, the value of the investments portfolio has more than doubled, valued at £29 billion on Soon after I joined Wellcome, during a visit by 30 September 2020, allowing a substantial increase the Board of Governors to a Wellcome-funded in charitable spending over the past decade. research centre in Vietnam, the scientist leading the Wellcome is an active and long-term investor: centre arranged a lecture on the 1918 flu pandemic. decisions are based on the continuing ‘licence to I only later appreciated its significance: his concern operate’ of the businesses and funds in which we that we were unprepared for another. That scientist invest. This year, the Board agreed that extra weight was Jeremy Farrar, who became Director of should be placed on sustainability and energy Wellcome in 2013. Among other achievements, he transition when assessing licence to operate. soon ensured that Wellcome co-founded with the The Board has been immensely impressed by how governments of Germany, Japan, India and Norway, the team has navigated with confidence the threat the Bill and Melinda Gates Foundation and the to the world economy caused by Covid-19 this World Economic Forum – the Coalition of Epidemic year. Locking down major economies put huge Preparedness Innovations (CEPI). strains on many businesses in which we invest and “The world needs strong, on financial markets, while accelerating important economic trends such as the shift to e-commerce. compassionate leadership” Equity markets endured one of the steepest declines and fastest recoveries in financial history. So when we first heard of a novel disease in Despite this, the portfolio has not just survived, Wuhan at the end of 2019, Wellcome, with its but prospered in this highly volatile environment, investment in CEPI and with Vaccines one of our returning 12.3% in the year to 30 September 2020 priorities, was better prepared than some for what (11.1% after inflation). lay ahead. And CEPI was able to start funding The macro environment of course remains vaccine work as soon as researchers in China challenging, not least because governments had published the genome of the virus in January. everywhere will need to find ways of reducing the Jeremy, with his experience of SARS, pandemic enormous debt burdens taken on to combat the influenza and other epidemics, and having led Covid-19 crisis. Market valuations are extremely Wellcome’s response to Ebola and Zika, has stretched with interest rates at unprecedently offered outstanding leadership, helping Wellcome low levels. The portfolio is likely to face more and many others understand and address the challenging times ahead, so the team is working pandemic. He has given Wellcome the means and hard to ensure that we are as well placed as the ambition to take an active role in a number of possible to face more difficult times. Report from Chair Wellcome Trust Annual Report 2020 | 3 Strategy Board of Governors Over the course of this year, the Executive has Covid-19 has meant a dramatic end to my time developed and launched a new strategy for at Wellcome. My thanks go to the Board of Wellcome. This was in gestation long before Governors and the Executive Leadership Team for Covid-19 as we sought, in consultation with many, continuing to make bold decisions in a time of to plan how best to use Wellcome’s independence great uncertainty and online meetings. Bill Burns and resources for the greatest effect in improving retired from the Board after four years and his human health. We chose three challenges, mental wisdom and humour will be missed. In January health, global heating, and escalating infectious 2020, Elhadj As Sy joined the Board, and we are diseases. This choice was reinforced by the already extremely grateful for his perspectives on pandemic, which also emphasised their linkages. health, policy and the pandemic response. The pandemic has shown that solving these I am delighted that the Board has chosen Julia challenges, or perhaps more realistically, Gillard to replace me and I wish her and Wellcome significantly reducing their damage, requires further success in the years ahead. It has been unprecedented international cooperation. And we an enormous privilege to be part of what is an shall never undervalue the vital role of discovery extraordinary organisation. There are many science, of backing scientists to explore our challenges ahead, and the world needs strong, understanding of human health and how to compassionate leadership. Wellcome has a role to improve it. Without their sometimes serendipitous play, supporting science and finding solutions to discoveries, across a wide range of disciplines, urgent worldwide health issues. I pay tribute to the often with new tools, progress would be slight. people at Wellcome, the increasing professionalism of its culture, and the renewed sense of purpose But we are not just a funder, as our work on that comes with a new vision and strategy. Covid-19, for example, shows where we have convened partners across the world, helped raise billions of pounds from public, private and philanthropic sectors to fund research, and argued for what we judge is important. I hope we will always continue to make our voice heard, Eliza Manningham-Buller including on the value of strong links between Chair of Wellcome British science and Europe after Brexit. Implementing the strategy will take some time as necessary changes are made to the internal organisational design and culture, as well as to funding mechanisms and other activities, over the coming year or two. As part of this work, we are continuing to develop performance indicators against which to judge future progress. This process is making it easier for us to put diversity at the heart of everything we do, from the staff we employ to the research we fund and the goals we set. The resurgence of the Black Lives Matter movement this summer highlighted existing challenges for people of colour, including within the research community and within Wellcome. It was an opportunity to examine ourselves critically, strengthen Wellcome’s commitment to anti-racism, and take a more proactive approach to changing some of the systemic issues that hinder diversity and equity in health, in research culture, and in our own organisation. Report from Chair Wellcome Trust Annual Report 2020 | 4 Report from Director A difficult year has ended with fresh hopes for Wellcome’s role in the global response to Covid-19 the future thanks to researchers across the and the necessary closures of our buildings world. Wellcome has a renewed commitment meant some of our more usual activities had to to supporting science and bringing people be delayed or cancelled this year. This allowed us together to solve the urgent and truly global to maintain day-to-day operations and a strong challenges to all our health. control environment while working remotely, and demonstrated a robust level of operational On 30 September 2020, the end of Wellcome’s resilience, for which I thank all of my colleagues. financial year, the number of confirmed deaths Everyone had to adapt to a greater or lesser from Covid-19 had just passed 1 million worldwide degree because of reprioritised work, available – each life lost an individual tragedy caught up in space, caring responsibilities, health or other one of the most momentous events of the last reasons. Our position was clear: people’s first 100 years. Many millions more are now living with responsibility was to themselves and their family long-term effects on their health after infection, and friends. Work comes second at times like this. while all of us are grappling with restrictions on our normal ways of life. The environment in which we operate remains uncertain and changeable. Local and national public Since then, however, trial results have indicated a health measures will continue to apply for a good strong likelihood that in 2021 we will have several while yet, in phases of tighter or looser restrictions, safe, effective vaccines to help protect us from and we will respond accordingly.