INTERIM MANAGEMENT REPORT

Chairman's statement

Dear Shareholder,

As you will see in our fund manager's report, there is much about the last six months for which we should be pleased and there may be good reasons to anticipate that positive momentum will extend through the balance of our financial year.  This is good news and reflects the significant efforts we have undertaken to move our portfolio and its key components into a better, more sustainable position for the future.  The broader world environment, however, is making our work more complicated and I wanted to touch briefly on this before addressing a few key investment trends.

The world was plunged into a chaotic war in the Middle East only at the very end of our first half and hostile activities continue as I write this letter.  While we look for signs of an end to this conflict, changing objectives and definitions of success cloud the ability of any observer to make predictions about how long this will continue or what the end result might be. What is clear, is the impact of the war on energy prices and availability as bombing campaigns close key facilities in the Gulf, and the passage of ships through the Strait of Hormuz remains highly restricted. Growth forecasts for many Western economies have already been cut in half for this year and the period immediately ahead is very opaque as long as fighting continues. 

The Asian markets in which we invest may well be insulated from the Iranian conflict, but they are not immune.  Dramatically higher energy prices will exact a toll of some sort and we have been preparing for surprises.  While I am confident about our investment strategy and approach, it would be foolish to not at least acknowledge we are in unpredictable territory regarding future market developments, and we will remain cautious about the time immediately ahead.

With war in the Middle East as a backdrop, key investment themes have continued to dominate markets.  Foremost among these has been investor infatuation with artificial intelligence ('AI') both globally and in the APAC region.  Market focus on AI investments as well as the broader technology sector contributed significantly to Asian equities outperforming global peers in 2025, with strong demand for sophisticated chips, servers and data centre equipment.    This year began with much the same enthusiasm, but February saw a sharp sell-off in Asian software stocks as investors reassessed business models threatened by AI automation and low-cost AI tools.  We anticipate that there is more to come as investors reassess the impact of cost saving pilot programmes on growth-orientated strategies, particularly with many organisations in the region expecting AI to disrupt their business models within 18 months.  The fund manager's report delves into our exposures in Taiwan and South Korea, which led the way in sophisticated chip technology, and which have been notable beneficiaries of this particular investment theme.

Another interesting development for our region was the 2026 US Supreme Court decision which struck down President Trump's major tariff programmes.  While the judgment opens the door for importers to seek refunds for tariffs already paid (estimated at over £200b for 2025) it has also caused massive confusion over alternative tariffs and the impact on previously negotiated bilateral agreements with the US.  The changing shape of protectionist restrictions remains difficult to predict as they will impact various Asian economies and is a challenge for Asian corporates across a range of industries.   

Performance

NAV total return for the first half of the year was 23.3%, compared to the MSCI AC Asia Pacific ex Japan Index of 26.2%.  You may recall that in my letter to you at the full year, we outlined our intention to report against this single index which the Board believes is more representative of the balanced composition of our portfolio.

The share price total return over the six-month period to 28 February 2026 was 22.9%. The fund manager's report explains some of the key drivers for this performance.

Dividends

The Company has declared two interim dividends of 6.25p each for the financial year ending 31 August 2026.  This represents an increase of 0.8% on the dividends declared in the first half of the last financial year. 

Our dividend yield at 28 February 2026 was 9.3%.

Share issuance

Demand for the Company's shares has remained strong, with just under 16m new shares issued in the first six months of the current financial year, and a further 4.8m new shares issued since the period end up to the date of this report. Not only did this raise £39.1m, and a further £12.0m respectively, for investment, but it has also meant that your Company is now a constituent of the FTSE 250.

We anticipate that demand will continue to be robust and are seeking additional shareholder authority to continue to issue shares at a premium to satisfy market demand.  An extraordinary general meeting is being convened for 14 May 2026 at 10.00 am for this purpose.  The Notice of Extraordinary General Meeting can be found on the Company's website www.hendersonfareastincome.com

I encourage all shareholders to vote their shares, whether by completing their proxy form or instructing their share dealing platform to do so on their behalf.   

Outlook

The International Monetary Fund expects Asia to remain the world's fastest growing region, contributing roughly 60% of global growth in 2026.  This is driven by structural growth themes such as AI and technology supply chains, and is supported by accommodative fiscal policy across the region.  A further tailwind is the corporate reform underway in Japan and South Korea, where local regulators are encouraging companies to re-think their approach to delivering shareholder returns.  Against these positives we note the prospect of a more restrictive interest rate environment to address the surge in oil price related inflation.

Conflict in the Middle East is contributing to increased market volatility across the region. While the duration and broader economic consequences of the conflict remain unclear, energy‑related inflationary pressures may challenge policymakers and temporarily weigh on sentiment.

Despite the ongoing global macroeconomic uncertainty, the region's expanding middle class, improving corporate governance, and strong balance sheets remain supportive of sustainable dividend generation. Monetary policy divergence across key Asian markets may create short‑term volatility; however, it is also likely to present appealing opportunities to invest in robust, cash-generative companies. Our fund manager's focus remains on identifying businesses with resilient fundamentals, prudent capital allocation, and the potential to deliver both consistent income and long‑term capital appreciation. With diversification across sectors and geographies, your Company remains well positioned to navigate the evolving environment and capture the breadth of opportunities that Asia continues to offer.

Ronald Gould

Chairman

14 April 2026

Fund Manager's report

We are encouraged by a strong period of performance for Asian markets with Asian indices reaching all-time highs at the end of the reporting period, significantly outperforming the S&P 500 US Index. We reiterate our view that now is a pivotal period where the recent outperformance of Asian equities versus US equities could be the beginning of a reversal of an unjustifiably wide valuation differential.

Asia was the beneficiary of stellar performance from the technology sector, by far the strongest sector over the period followed by materials and energy. Consumer sectors were weak in the period, which was negative for South Asian markets. South Korea's total return of over 120% was boosted by the performance of Samsung Electronics and SK Hynix as they enjoyed pricing power from a shortage of memory chips, combined with the broader 'value-up' corporate reform program which is leading to higher shareholder returns from other sectors.

India continues to underperform as poor consumption, employment and a failure to attract meaningful foreign investment weigh on the outlook, while Indonesia was one of the weakest performers over the period. Both markets remain attractive given their respective economies' longer-term growth potential, but the immediate challenges have been exacerbated by the ineffectiveness of new policies in the face of US tariffs and weakening consumer sentiment.

Performance

The Company delivered a NAV total return of 23.3% for the six-month period ended 28 February 2026, compared to a return of 26.2% from the MSCI AC Asia Pacific ex Japan Index. The share price total return was 22.9% over the same period. The index is dominated by technology names with well over half of the performance being derived from large weightings in Taiwan Semiconductor Manufacturing Company ('TSMC'), Samsung Electronics and SK Hynix, where we were underweight given our value and income bias.

The Company broadly matched the strong rise in the Asia index justifying our previous tilt to a balanced approach between growth and income.

Our Korean holdings were key contributors over the period with Samsung Electronics, Hyundai Motor, Kia Corp, SK Square and Industrial Bank of Korea amongst the top performers. Principal detractors were our underweight positions in TSMC and SK Hynix and weak relative performance from high yield defensive businesses which underperformed in a strong market, namely Macquarie Korea Infrastructure Fund and First Pacific. Energy names GAIL and Origin Energy also underperformed.

Revenue

Total income rose by 63.4% compared to last year. The income from investments rose 90.8% from the same period last year, while income from option writing increased by 19.0%. The underlying investment income was boosted by a large dividend from our Chinese holding, Brilliance China Automotive, alongside a number of other positive dividend surprises. In addition, the elevated volatility in recent months has contributed to larger than expected option premia.

Portfolio activity

We added Samsung Electronics preference shares which were trading at a significant discount to the ordinary shares, whilst paying a higher dividend. There is renewed optimism in the chipmaker's ability to supply cutting-edge high-bandwidth memory ('HBM') chips that are designed for AI applications. We also added Contemporary Amperex Technology, a global leader in batteries and the energy storage build out, where rising profits and cashflow is leading to more upside for dividends. We increased our weightings in Thailand by purchasing the high yield names Advanced Information Services and PTT Exploration & Production ('PTTEP'). PTTEP is a clear beneficiary of rising oil price expectations amidst the current supply disruption. We also opened a new position in Singapore-based Keppel, as we believe its ongoing asset monetisation programme is likely to lead to higher dividends in the years ahead.

To fund these positions, we continued to reduce our weight in India where the growth outlook is more uncertain and exited GAIL and Power Grid Corporation of India. In China, where our weight was significantly lower at the end of the period, we sold Trip.com ahead of a regulatory investigation which led to a sharp drawdown in the share price, along with Tencent and China Hongqiao, following periods of strong performance. In Australia, we sold Goodman Group and Wesfarmers following strong performance as valuation reached our target prices.

Outlook

Asian investors have faced several exogenous risks in recent years with conflict in the Middle East the most recent potential shock. However, the growth drivers of our markets are broad based and have already demonstrated resilience in uncertain times. They stretch across technology, financials, infrastructure, consumer and wide-ranging corporate reform. Asia has a unique position as a hub for technology supply chains; banks are bringing millions of consumers into the banking system accelerated by a digital rollout and infrastructure is benefitting from significant power demand boosted by AI. In addition, widespread corporate reform in South Korea, China and Singapore is enhancing shareholder returns.

These trends, in combination with faster than expected dividend growth offer a compelling and unique exposure for investors. Whilst there are signs of a confusing and uncertain period ahead, our highlighted investment themes have stood the test of time following a measured and effective response from the region's governments.  This bodes well for investors seeking high income with a structural growth backdrop.

Sat Duhra

Fund Manager

14 April 2026

Principal risks and uncertainties

The principal risks and uncertainties facing the Company are:

Investment and strategy

An inappropriate investment strategy, for example, in terms of asset allocation, level of gearing or use of the options strategy, may result in underperformance against the companies in the peer group, and in the Company's shares trading on a discount. Investments in Asian markets may be impacted by political, market and financial events resulting in changes to the market value of the Company's portfolio.

Accounting, legal and regulatory

The Company is regulated by the Jersey Financial Services Commission, under the Collective Investment Funds (Jersey) Law 1998, and is required to comply with the Companies (Jersey) Law 1991, the UK Listing Rules, and Disclosure Guidance and Transparency Rules issued by the FCA and the Listing Rules of the New Zealand Stock Exchange. To retain investment trust status, the Company must comply with the provisions of section 1158 of the Corporation Tax Act 2010. A breach of company law could result in the Company being subject to criminal proceedings or financial and reputational damage. A breach of the listing rules could result in the suspension of the Company's shares. A breach of section 1158 could result in capital gains realised within the portfolio being subject to corporation tax.

Operational

Disruption to, or the failure of, the investment manager's or the administrator's accounting, dealing, or payment systems or the custodian's records could prevent the accurate reporting or monitoring of the Company's financial position.  The Company may be exposed to cyber risk through vulnerabilities at one or more of its service providers.

Financial

The financial risks faced by the Company include market risk (comprising market price, currency risk and interest rate risk), liquidity risk and credit risk.

Further information on these risks and how they are managed is given in the Annual Report 2025. In the view of the Board these principal risks and uncertainties are as applicable to the remaining six months of the financial year as they were to the six months under review.

Directors' responsibility statement

The directors (listed in note 13) confirm that, to the best of their knowledge:

·      the unaudited condensed set of financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting ('IAS 34') and gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Company as required by Disclosure Guidance and Transparency Rule ('DTR') 4.2.4R;

·      the interim management report includes a fair review of the information required:

-      by DTR 4.2.7R (indication of important events during the first six months of the financial year, and their impact on the unaudited condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year); and

-      by DTR 4.2.8R (disclosure of related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or the performance of the Company during the period; and any changes in the related party transactions described in the latest annual report that could have a material impact in the first six months of the current financial year).

Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The directors remain responsible for establishing and controlling the process for doing so, and for ensuring that the financial statements are complete and unaltered in any way.

On behalf of the Board

Ronald Gould

Chairman

14 April 2026

The Company has no securities in issue that could dilute the return per ordinary share. Therefore, the basic and diluted earnings per ordinary share are the same.

3. Net asset value per ordinary share

The net asset value per ordinary share is based on a net asset value of £518,901,000 (half-year ended 28 February 2025: £363,229,000; year ended 31 August 2025: £407,659,000) and 198,524,679 (half-year ended 28 February 2025: 167,789,679; year ended 31 August 2025: 182,544,679) ordinary shares, being the number of ordinary shares in issue at each period end, excluding shares held in treasury.

4. Transaction costs

Purchase transaction costs for the half year ended 28 February 2026 were £349,000 (half year ended 28 February 2025: £232,000; year ended 31 August 2025: £640,000). Sales transaction costs for the half year ended 28 February 2026 were £450,000 (half year ended 28 February 2025: £268,000; year ended 31 August 2025: £748,000). Transaction costs for both purchases and sales principally consist of commission fees.

5. Stated share capital

At 28 February 2026, there were 198,524,679 shares in issue.

During the half year period ended 28 February 2026, 15,980,000 shares were issued for net proceeds of £39,142,000 (half year ended 28 February 2025: 4,237,500 shares for net proceeds £9,685,000; year ended 31 August 2025: 17,607,500 shares for net proceeds £39,144,000).  No shares were repurchased for treasury (half-year ended 28 February 2025 and year ended 31 August 2025 - no shares repurchased).

Since the period end and up to 13 April 2026, being the latest practicable date before publication of these results, a further 4.8m shares have been issued raising £12.0m for investment.

6. Dividends

The Company pays dividends on a quarterly basis. On 28 November 2025, a final dividend of 6.25p per share was paid in respect of the year ended 31 August 2025. A first interim dividend, in respect of the year ending 31 August 2026, of 6.25p per share was paid on 27 February 2026. The second interim dividend of 6.25p per share will be paid on 29 May 2026 to shareholders on the register on 1 May 2026. The Company's shares will be quoted ex-dividend on 30 April 2026. Based on the number of shares in issue on 13 April 2026, the cost of this dividend will be £12,708,000.

7. Management fee

The management fee calculation is a flat rate of 0.75% of net assets per annum, charged quarterly in arrears.  

8. Financial Instruments

At the period end the carrying value of financial assets and financial liabilities approximates their fair value.

Financial instruments carried at fair value

Fair value hierarchy

The table below analyses recurring fair value measurements for financial assets and financial liabilities. These fair value measurements are categorised into different levels in the fair value hierarchy based on the inputs to valuation techniques used. The different levels are defined as follows:

·      Level 1: inputs are quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date.

·      Level 2: inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

·      Level 3: inputs are unobservable inputs for the asset or liability.

Level 3 investments related to one holding of China Forestry, transferred into level 3 in 2012 and written to zero market value during 2014 following a missed coupon payment, delayed publication of annual report and accounts and resignation of Chief Financial Officer and Company Secretary.  This investment has continued to be held at zero value throughout 2025 and to 28 February 2026.

There have been no transfers into/out of, and no movements, in Level 3 investments during the half-year ended 28 February 2026 and 28 February 2025 and the year ended 31 August 2025.

The Company's holdings in options are included within Level 2. 

The valuation techniques used by the Company are explained in note 1(b).

Premiums from written options during the half-year ended 28 February 2026 were £5,543,000 (half-year ended 28 February 2025: £4,658,000; year ended 31 August 2025: £9,583,000).

10. Going concern

The directors have determined that it is appropriate to prepare the financial statements on a going concern basis and have concluded that the Company has adequate resources to continue in operational existence for at least twelve months from the date of approval of the financial statements. In coming to this conclusion, the directors have considered the nature of the portfolio, being that the securities held are readily realisable, the size and covenants of the Company's bank overdraft and the strength of its distributable reserves. As part of their usual assessment of risks facing the Company, the directors considered the macro-economic and geopolitical environment, as well as the possible impact of climate change risk on the value of the portfolio. The directors have concluded that the Company is able to meet its financial obligations, including the repayment of the loan facility, as they fall due for a period of at least twelve months from the date of this report.

11. Related party transactions

The Company's current related parties are its directors and the investment manager. There have been no material transactions between the Company and the directors during the period, with only amounts paid to them being in respect of remuneration.

In relation to the provision of services by the investment manager (other than fees payable by the Company in the ordinary course of business and the provision of marketing services) there have been no material transactions with investment manager affecting the financial position of the Company during the period under review.

12. Half year report

The Company's half year report for the six months ended 28 February 2026, together with a summary extract  is available on the Company's website at: www.hendersonfareastincome.com.  Copies of the summary will be posted to shareholders in April 2026. Both documents will shortly be available for inspection on the National Storage Mechanism at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

13. General information

a) Company Status

The Company is registered with limited liability in Jersey as a closed end investment company, number 95064, under the Companies (Jersey) Law 1991 and is certified as a collective investment fund under the Collective Investment Funds (Jersey) Law 1998.  The Company has obtained a Fund Certificate under Article 7 of the Collective Investment Funds (Jersey) Law.  The Company is listed on the London and New Zealand stock exchanges and became UK tax resident with effect from 1 September 2018.

SEDOL/ISIN:  B1GXH75/JE00B1GXH751

London Stock Exchange (TIDM) code:  HFEL

New Zealand Stock Exchange code:  HFL

Global Intermediary Identification Number (GIIN):  nttiyp.99999.sl.826

Legal Entity Identifier (LEI):  2138008DIQREOD38O596

b) Directors, Secretary and Registered Office

The directors of the Company are Ronald Gould (Chairman), Timothy Clissold, Carole Ferguson (Senior Independent Director), Nicholas George (Chairman of the Audit Committee), Susan Rippingall and Steven Wilderspin.  The Corporate Secretary is Janus Henderson Secretarial Services UK Limited.  The registered office is IFC1, The Esplanade, St Helier, Jersey, JE1 4BP.  The principal place of business is 201 Bishopsgate, London, EC2M 3AE.

c) Website

Details of the Company's share price and net asset value, together with general information about the Company, monthly factsheets and data, copies of announcements, reports and details of general meetings can be found at www.hendersonfareastincome.com

For further information please contact: