the virgin bond, gilt, uk and overseas share fund...gilt index, 9.25% ftse 5-15 year gilt index, and...

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

Interim Report and Financial Statements

The Virgin Bond, Gilt, UKand Overseas Share Fund

3

Management and professional services 3

Manager's investment report 4

Net asset value and operating charges 7

Portfolio statement 8

9

Statement of total return 10

Statement of change in net assets attributable to unitholders 11

Balance sheet 12

Notes to the financial statements 13

Distribution tables 14

Directors' statement 15

Contents

Manager's report

Purchases and sales of investments

2 The Virgin Bond, Gilt, UK and Overseas 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, UK and Overseas Share Fund

Distribution

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 1.4781p 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, UK and Overseas Share Fund ("the Fund" or "the Trust") is to provide a total return (income and capital growth) from bonds, gilts, UK and overseas shares. The Fund aims to achieve this by tracking the performance of a composite index, comprising 50% FTSE All-Share Index, 6.5% FTSE World North America Index, 6.5% FTSE All-World Developed Europe ex UK Index, 6% FTSE Japan Index, 6% FTSE All-World Developed Asia Pacific ex Japan Index, 6.5% Bloomberg Barclays UK Gilt 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

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

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


Investment Objective, Policy and Strategy

Manager's investment report

Financial Instruments

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

In 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 8. 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 7.

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 Performance

For the six months to 31 January 2020, the net asset value of each unit decreased³ by 1.33% from 121.75p to 120.13p.

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


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

Markets overview for the six months to 31 January 2020

While stock markets around the world were generally positive over the last six months, the rising value of the pound meant that the UK stock market fell. Central banks cut interest rates because of economic weakness, and this boosted stock markets. There was also a breakthrough in the trade dispute between the US and China towards the end of 2019. However, global share prices fell in January, in reaction to the spread of the coronavirus. Bond and gilt prices finished ahead, 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.

Performance among stock markets varied:

• 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.

• Stock markets in the US hit a record high during the reviewperiod. However, the pound rose against the US dollar,limiting gains for UK investors. A potential breakthrough in thecountry’s ongoing trade war with China boosted sentiment.Interest rate cuts also boosted companies and the economy.

• Despite poor economic news and political upheaval,European stock markets performed relatively well in localcurrency terms, however, they produced negative returnswhen converted into pounds. Investors took some cheer fromthe ECB’s decision to cut interest rates from -0.4% to -0.5%.This means that banks have to pay the ECB to hold their fundson deposit, rather than getting interest. The hope is that bankswill lend the money instead, boosting the economy byincreasing spending.

• Returns from stock markets in Asia were also negative whenconverted into pounds. Dictating investor sentiment (bothpositively and negatively) were the US-China trade war andconcerns about China’s economy and central bank policy. USinterest rate cuts helped markets around the world, includingin Asia. Protests in Hong Kong were another key feature, aswas the coronavirus outbreak.

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


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

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 by1.33% over the last six months.


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 (£) 85,829,581 82,613,497 70,959,669

Closing number of units 71,444,729 67,854,460 58,983,071

Closing net asset value per unit (p) 120.13 121.75 120.31

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 (25.05%*) 22,766 26.52

Aberdeen Standard Liquidity Fund Lux - Sterling Fund# 402 402 0.47

SPDR Bloomberg Barclays UK Gilt UCITS ETF 93,602 5,861 6.83

Virgin Money Bond and Gilt Fund^ 12,107,836 16,503 19.22

UK Shares (49.73%*) 42,420 49.43

SPDR FTSE UK All Share UCITS ETF 249,143 13,112 15.28

SSGA UK Equity Tracker Fund 5,260,021 14,244 16.60

Virgin UK Index Tracking Trust^ 5,511,762 15,064 17.55

Overseas Shares (25.90%*) 21,621 25.19

SSGA Asia Pacific Ex-Japan Equity Tracker Fund 1,759,520 5,001 5.83

SSGA Europe ex UK Equity Tracker Fund 2,717,632 5,688 6.63

SSGA Japan Equity Tracker Fund 2,655,742 5,133 5.98

SSGA North America Equity Tracker Fund 1,478,682 5,799 6.75

Portfolio of investments 86,807 101.14

Net other liabilities (-0.69%*) (977) (1.14)

Net assets 85,830 100.00

*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# 3,880

SPDR FTSE UK All Share UCITS ETF 1,606

Virgin Money Bond and Gilt Fund^ 1,244

Virgin UK Index Tracking Trust^ 648

SSGA Japan Equity Tracker Fund 330

SPDR Bloomberg Barclays UK Gilt UCITS ETF 300

SSGA UK Equity Tracker Fund 254

SSGA Asia Pacific Ex-Japan Equity Tracker Fund 205

SSGA Europe ex UK Equity Tracker Fund 129

SSGA North America Equity Tracker Fund 3

Total for the period 8,599

SalesProceeds

£'000

Aberdeen Standard Liquidity Fund Lux - Sterling Fund# 3,652

SSGA UK Equity Tracker Fund 600

SPDR FTSE UK All Share UCITS ETF 247

SSGA Japan Equity Tracker Fund 225

Total for the period 4,724

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

Purchases and sales of investments

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


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 (1,116) (5,548)

Revenue 1,323 1,603

Expenses (292) (189)

Net revenue before taxation 1,031 1,414

Taxation - -

Net revenue after taxation 1,031 1,414

Total return before distributions (85) (4,134)

Distributions (1,031) (1,414)

Change in net assets attributable to unitholders from investment activities (1,116) (5,548)

31 Jan 20 31 Jan 19



£'000 £'000 £'000 £'000

Opening net assets attributable to unitholders 82,613 70,960

Amounts receivable on issue of units 5,611 5,968

Amounts payable on cancellation of units (1,278) (1,521)

4,333 4,447

Change in net assets attributable to unitholders from investment activities (1,116) (5,548)

Closing net assets attributable to unitholders 85,830 69,859

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 86,807 83,177

Current assets

Debtors 61 56

Cash and bank balances 106 67

Total current assets 167 123

Total assets 86,974 83,300

Creditors

Distribution payable (1,056) (619)

Other creditors (88) (68)

Total liabilities (1,144) (687)

Net assets attributable to unitholders 85,830 82,613

Notes to the interim financial statements are on page 13.

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 1.4781 - 1.4781 2.3271

Group 2 0.8353 0.6428 1.4781 2.3271

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, UK and Overseas 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, uk and overseas share fund...gilt index, 9.25% ftse 5-15 year gilt index, and...

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