the virgin bond, gilt and uk share fund · spdr bloomberg barclays 1 - 5 year gilt ucits etf 93,801...

For the six month period ended 31 January 2020 (una udited)

Interim Report and Financial Statements

The Virgin Bond, Gilt and UK Share Fund

3

Management and professional services 3

Manager's investment report 4

Net asset value and operating charges 6

Portfolio statement 7

8

Statement of total return 9

Statement of change in net assets attributable to unitholders 10

Balance sheet 11

Notes to the financial statements 12

Distribution tables 13

Directors' statement 14

Contents

Manager's report

Purchases and sales of investments

2 The Virgin Bond, Gilt and UK Share Fund

Virgin Money Unit Trust Managers LimitedDirectors: S. Fennessy (appointed 13 December 2019)

J. Scott (appointed 13 December 2019)Newcastle upon Tyne H. Chater (appointed 15 August 2019)

M. Phibbs (appointed 17 October 2019)N. L. Tu (appointed 1 August 2019)D. Pope (resigned 24 October 2019)I. Smith M. Thundercliffe (resigned 29 August 2019)

Telephone 03456 10 20 30*

LondonE14 5LB

AberdeenshireAB10 1XL

KPMG LLPSt. Vincent Plaza

Independent auditors

Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Authorised and regulated by the Financial Conduct Authority.

Citigroup CentreCanada SquareCanary Wharf

Investment advisers

Authorised and regulated by the Financial Conduct Authority.

Management and professional services

Manager and registrar (the ‘Manager’)

For the six month period ended 31 January 2020 (unaudited)

* Calls to 03 numbers cost the same as calls to 01 or 02 numbers and they are included in inclusive minutes and discount schemes in the same way. Calls may be monitored and recorded.

Jubilee HouseGosforth

NE3 4PL

319 St. Vincent StreetGlasgowG2 5AS

Aberdeen Asset Managers Limited10 Queen’s TerraceAberdeen

Citibank Europe plc, UK BranchTrustee

3The Virgin Bond, Gilt and UK Share Fund

Risk and Reward Profile

The Fund’s Synthetic Risk and Reward Indicator (‘SRRI’) is 4 on a scale of 1 (lower) to 7 (higher) as it invests in a mixture of gilt-edged securities and corporate bonds - which typically provide moderate rewards but carry a lower level of risk, and company shares which typically provide higher rewards but carry a higher level of risk.

The interim distribution for the period ended 31 January 2020 will be 1.2903p net per unit payable on 31 March 2020.

The Fund receives dividend income from stocks held in its portfolio. Every six months, income received is netted off against expenses incurred. Any net balance is distributed two months after the end of the period.

² The Regulations derive from UK and EU financial services legislation including the Financial Services and Markets Act 2000, the UCITS Directive and Financial Conduct Authority (FCA) rules, principally the COLL Rules.³ Based on net asset value.

¹ Authorised in accordance with the Undertakings in Collective Investments in Transferable Securities (UCITS) Directive.

The investment objective of the Virgin Bond, Gilt and UK Share Fund ("the Fund" or "the Trust") is to provide a total return (income and capital growth) from bonds, gilts and UK shares. The Fund aims to achieve this by tracking the performance of a composite index, comprising 50% FTSE All-Share Index, 18.5% Bloomberg Barclays UK Gilt Index, 13.0% Bloomberg Barclays UK Gilt 1-5 Year Index, 9.25% FTSE 5-15 Year Gilt Index, and 9.25% Bank of America Merrill Lynch 5-15 Year AAA-A Non-Gilt Index, measured annually, less charges.

The Fund is an authorised unit trust scheme under S243 of the Financial Services and Markets Act 2000 and is categorised as a UCITS¹ scheme under the Collective Investment Schemes Sourcebook ('the COLL Rules').

The Fund aims to achieve the objective by investing in other funds rather than in individual bonds or shares. This type of fund is oftenreferred to as a ‘fund-of-funds’.

Trust Status

The Fund rebalances its investments at the end of each calendar quarter to the percentage allocations shown in the investment objective. If at any calendar quarter end, any particular allocation is within +/-0.5% from the specified allocation, that element of the fund may not be traded in order to minimise transaction costs.

The Fund’s investments are split equally between funds which invest in shares and funds which invest in bonds.

In order to achieve the objective, the underlying funds aim to track the performance of the stock market indices specified within the investment objective. No decisions are taken by the managers of these funds on which individual shares or bonds may perform better or worse. In this way, the underlying funds are designed to perform as closely as possible with the respective index, rather than trying to outperform it.


Investment Objective, Policy and Strategy

Manager's investment report

Financial InstrumentsIn pursuing its investment objective set out above, the Fund holds a number of financial instruments. The Fund's financial instruments comprise securities and other investments, cash balances and debtors and creditors that arise directly from its operations.

The Fund invests predominantly in collective investment schemes, as shown in the Portfolio statement on page 7. Management fees for the collective investment schemes in which the Fund invests are met by the Manager out of the operating charges set out on page 6.

Unit Trust schemes are not permitted by the Regulations² to enter into a transaction if its purpose could reasonably be regarded as speculative. The Fund’s use of financial instruments satisfies these requirements and no speculative trading in financial instruments is undertaken.

Fund PerformanceFor the six months to 31 January 2020, the net asset value of each unit decreased by 0.57%³ from 111.41p to 110.77p.

For further information, please refer to the Trust’s Key Investor Information Document ('KIID').

Distribution


Manager’s investment report For the six month period ended 31 January 2020 (unaudited)

Markets overview for the six months to 31 January 2020

The UK stock market finished the period lower than where it started and lagged behind other major stock markets. Bond and gilt prices were positive, as investors continued to favour perceived lower-risk assets.

Economic factors were mixed:

• Brexit uncertainty and political turmoil hampered the UKeconomy. However, after December’s decisive election result,both manufacturing and services activity improved markedly.Europe’s economy continued to struggle with the US-Chinatrade tariff dispute taking a heavy toll on countries reliant onexports like Germany. The US economy remained buoyantalthough cracks appeared here too when trade tariffs startedto bite. Latterly, economic data from across the globe turnedmore favourable. However, this news was thenovershadowed by the escalating coronavirus outbreak andthe threat it poses to global growth.

• Unemployment remained at very low levels across mostregions. In the UK, the unemployment rate fell to its lowestlevel since 1974 and wages rose more than prices, givingworkers more money to spend.

• Having cut interest rates in July, the US Federal Reserve (Fed)made two further cuts in September and October amid worriesabout the global economy. The European Central Bank (ECB)also cut interest rates and brought in fresh support measuresto revive the flagging Eurozone economy. In the UK, the Bankof England left interest rates unchanged at its Januarymeeting. It balanced the risk of post-Brexit pressures againsta strong labour market and rising wages.

UK Stock market performance was negative:

• The UK stock market finished the period in negative territory.Brexit continued to dominate UK headlines, with the stockmarket and value of the pound reacting to each newdevelopment. The pound going up is harmful for companiesthat make the bulk of their earnings overseas (e.g. oil & gasfirms). This is because it makes their profits worth less whenconverted back into pounds.

• In mid-December, the Conservative party won a generalelection by a landslide. The UK market and the pound rose inresponse, as the result brought greater political stability andthe potential to make progress on Brexit (stock-marketstypically dislike uncertainty). Indeed, the UK left the EuropeanUnion on 31 January.

• Having enjoyed a positive end to 2019, the UK market fell inJanuary. The outbreak of the coronavirus in China was a keyfactor. Closer to home, there were concerns around PrimeMinister Boris Johnson’s decision to allow Huawei, theChinese technology giant, to build part of the UK’s 5G network.

Demand for bonds continued:

• Bond market performance was positive. In the UK, the pathtowards Brexit caused uncertainty. This fuelled demand forperceived lower-risk assets, such as corporate bonds andgovernment bonds (gilts).

• Economic growth concerns also led central banks around theworld to cut interest rates. This boosted demand for bonds(lower interest rates mean investors could gain more incomefrom bonds than cash deposits). Prices rose as a result.

Fund performance:

• The positive performance of bonds was outweighed by thenegative performance of shares meaning that the Fund fell by0.57% over the last six months.

3,600

3,700

3,800

3,900

4,000

4,100

4,200

4,300

Dai

ly C

lose

1 August 2019 to 31 January 2020

FTSE All-Share Index

1.10

1.15

1.20

1.25

1.30

1.35

1.40

US

D (

$)

Pound Sterling (GBP) to US Dollar (USD) 1 August 2019 to 31 January 2020

GBP value in USD


Net asset value and operating charges As at 31 January 2020 (unaudited)

31 Jan 20 31 Jul 19 31 Jul 18(p) (p) (p)

Closing net asset value (£) 36,829,600 35,314,458 32,906,681

Closing number of units 33,248,639 31,696,603 29,730,035

Closing net asset value per unit (p) 110.77 111.41 110.68

Operating charges (%)‡ 1.00% 1.00% 1.00%

‡The operating charges are the annualised total expenses paid by the Fund in the period, expressed as a percentage of its average net assets.


Portfolio statement As at 31 January 2020 (unaudited)

Security HoldingsMarket Value

£'000% of Net

Assets

COLLECTIVE INVESTMENT SCHEMES

Bonds and Gilts (50.15%*) 19,187 52.10

Aberdeen Standard Liquidity Fund Lux - Sterling Fund# 202 202 0.55

SPDR Bloomberg Barclays 1 - 5 Year Gilt UCITS ETF 93,801 4,827 13.11

SPDR Bloomberg Barclays UK Gilt UCITS ETF 113,521 7,109 19.30

Virgin Money Bond and Gilt Fund^ 5,171,302 7,049 19.14

UK Shares (50.43%*) 18,041 48.98

SPDR FTSE UK All Share UCITS ETF 102,339 5,386 14.62

SSGA UK Equity Tracker Fund 2,268,810 6,144 16.68

Virgin UK Index Tracking Trust^ 2,382,246 6,511 17.68

Portfolio of investments 37,228 101.08

Net other liabilities (-0.58%*) (398) (1.08)

Net assets 36,830 100.00

*Comparative figures shown in brackets relate to percentage of total net assets at 31 July 2019.

^The Manager of this Fund is Virgin Money Unit Trust Managers Limited, a related party.#The Manager of this Fund is Aberdeen Standard Investments Limited, a related party.



PurchasesCost £'000

Aberdeen Standard Liquidity Fund Lux - Sterling Fund# 1,657

SPDR FTSE UK All Share UCITS ETF 528

SPDR Bloomberg Barclays 1 - 5 Year Gilt UCITS ETF 520

SPDR Bloomberg Barclays UK Gilt UCITS ETF 516

Virgin Money Bond and Gilt Fund^ 441

Virgin UK Index Tracking Trust^ 243

SSGA UK Equity Tracker Fund 1

Total for the period 3,906

SalesProceeds

£'000

Aberdeen Standard Liquidity Fund Lux - Sterling Fund# 1,486

SSGA UK Equity Tracker Fund 300

SPDR Bloomberg Barclays UK Gilt UCITS ETF 199

SPDR Bloomberg Barclays 1 - 5 Year Gilt UCITS ETF 170

Virgin UK Index Tracking Trust^ 100

Virgin Money Bond and Gilt Fund^ 50

Total for the period 2,305

#The Manager of this Fund is Aberdeen Standard Investments Limited, a related party.

^The Manager of this Fund is Virgin Money Unit Trust Managers Limited, a related party.

Purchases and sales of investments


The above constitutes all purchases and sales of investments in the period.

Statement of total return For the six month period ended 31 January 2020 (unaudited)

£'000 £'000 £'000 £'000

Income

Net capital losses (204) (1,939)

Revenue 552 744

Expenses (137) (98)

Net revenue before taxation 415 646

Taxation - -

Net revenue after taxation 415 646

Total return before distributions 211 (1,293)

Distributions (415) (646)

Change in net assets attributable to unitholders from investment activities (204) (1,939)

31 Jan 20 31 Jan 19



£'000 £'000 £'000 £'000

Opening net assets attributable to unitholders 35,314 32,907

Amounts receivable on issue of units 2,460 2,024

Amounts payable on cancellation of units (740) (1,156)

1,720 868

Change in net assets attributable to unitholders from investment activities (204) (1,939)

Closing net assets attributable to unitholders 36,830 31,836

Comparative information is provided for the Statement of change in net assets attributable to unitholders. Since this information is for the prior interim period, the net assets at the end of that period do not correspond to the net assets at the start of the current period.

31 Jan 20 31 Jan 19

Statement of change in net assets attributable to unitholders


Balance sheet As at 31 January 2020 (unaudited)

£'000 £'000 £'000 £'000

Assets

Fixed assets

Investments 37,228 35,518

Current assets

Debtors 40 1

Cash and bank balances 33 7

Total current assets 73 8

Total assets 37,301 35,526

Creditors

Distribution payable (429) (178)

Other creditors (42) (34)

Total liabilities (471) (212)

Net assets attributable to unitholders 36,830 35,314

Notes to the interim financial statements are on page 12.

31 Jan 20 31 Jul 19


Notes to the financial statements For the six month period ended 31 January 2020 (unaudited)

Accounting policies

Basis of accountingThe interim financial statements have been prepared on the same basis as the audited financial statements for the year ended 31 July 2019. They have been prepared under the historical cost convention, as modified by the revaluation of investments, and in accordance with Financial Reporting Standard (FRS) 104 and the Statement of Recommended Practice (SORP) for Financial Statements of Authorised Funds issued by the Investment Management Association (now known as the Investment Association) in May 2014.

Under the SORP guidelines adopted by the Fund, complete notes to the financial statements are not disclosed for the interim accounts. Complete notes to the financial statements will be available in the year end accounts.


Distribution tables

Distribution in pence per unit

Interim distribution payable 31 March 2020

Group 1 Units purchased prior to 1 August 2019Group 2 Units purchased from 1 August 2019 to 31 January 2020 inclusive

Distribution Distributionpayable paid

Revenue Equalisation 31 Mar 20 29 Mar 19(p) (p) (p) (p)

Group 1 1.2903 - 1.2903 2.1345

Group 2 0.5969 0.6934 1.2903 2.1345

Equalisation


Equalisation applies only to units purchased during the distribution period (Group 2 units). It is the average amount of income included in the purchase price of all Group 2 units and is refunded to holders of these units as a return of capital. Being capital, it is not liable to income tax but must be deducted from the cost of units for capital gains tax purposes.


Lan Tu Ian SmithDirector Director30 March 2020 30 March 2020

Directors' statement

We approve the Interim Report and Financial Statements of The Virgin Bond, Gilt and UK Share Fund for the six month period ended 31 January 2020 on behalf of Virgin Money Unit Trust Managers Limited in accordance with the requirements of the Collective Investment Schemes Sourcebook.



Virgin Money Unit Trust Managers Limited

Authorised and regulated by the Financial Conduct Authority

Registered office: Jubilee HouseGosforth, Newcastle upon Tyne NE3 4PL

Registered in England no. 3000482

the virgin bond, gilt and uk share fund · spdr bloomberg barclays 1 - 5 year gilt ucits etf 93,801...

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