SCHRODER ORIENTAL INCOME FUND LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2025
Schroder Oriental Income Fund Limited (“the Company”) hereby submits its annual report and financial statements for the year ended 31 August 2025 as required by the Financial Conduct Authority’s Disclosure Guidance and Transparency Rule 4.1.
The Company’s Annual Report and Financial Statements for the year ended 31 August 2025 is being published in hard copy format and an electronic copy will shortly be available to view and download from the Company’s website: www.schroders.com/orientalincome
Key highlights
- The Company has achieved another year of double-digit share price and NAV returns.
- While performance was behind the Reference Index, this reflects the Company’s disciplined income approach and selective positioning, particularly in China, where market leadership was concentrated in low-yielding growth stocks.
- The Company’s NAV has outperformed its benchmark over three, five, ten years and since inception. Absolute returns were approximately 10% per annum.
- The Company is on track to achieve AIC dividend hero status on the completion of twenty years of consecutive dividend growth next year.
- The Board has negotiated the removal of the performance fee, with effect from 31st August 2026.
Investor presentation
RICHARD SENNITT will be giving a presentation at an investor webinar at 9:00am on Wednesday, 19 November 2025 (which can be signed up to via the following link: https://www.schroders.events/SOI25).
NICK WINSOR, Chair of Schroder Oriental Income Fund Limited, commented:
“Your Company is well positioned to capture opportunities across the region through its focus on high quality businesses offering growing dividend income”.
The Company has submitted a copy of its Annual Report and Financial Statements to the National Storage Mechanism and it will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Chair’s Statement
This is my first Annual Report as Chair, and I would like to begin by thanking Paul Meader again for his significant contribution and leadership during his tenure. This year also marks the Company’s 20th anniversary – a milestone that highlights our resilience, adaptability, and consistent delivery of value for shareholders. I look forward to building on this strong foundation as we enter the next phase of the Company’s development. Having grown its dividend every year since launch, the Company is classed in the Association of Investment Companies (AIC’s) next generation of dividend heroes and it remains the Board’s aim to achieve full dividend hero status on the completion of twenty years of consecutive dividend growth next year.
PERFORMANCE
As I mentioned in the interim report, this year’s financial markets have been heavily influenced by global political events, especially the recent introduction of broad trade tariffs by US President Trump. Given that the Asia Pacific region faced some of the highest tariffs, it was somewhat unexpected to see its stock markets deliver such strong results – a total return of over 20% during the year.
China stood out, with returns above 40%, despite having some of the highest tariff threats and still dealing with the overhang effects of the Covid pandemic. This goes to show that headlines about global economics and politics do not always reflect what actually drives investment markets.
The Company delivered a net asset value (NAV) total return of 14.9% for the year. Although this was a positive result, it was behind the 21.1% return from our Reference Index, the MSCI AC Pacific ex Japan Index, Net of Dividends Reinvested (measured in sterling). Once again, our returns came in the second half of the year, as markets recovered from earlier weakness and benefited from a fall in the US dollar, which tends to help Asian markets. The Company’s share price total return was 17.9%, as the difference between the share price and the underlying value narrowed.
Our underperformance compared to the Reference Index was largely due to not investing in a few very large Chinese internet and e-commerce companies, which performed exceptionally well and make up a large part of the index. However, these companies pay little or no dividends, which does not fit with the Company’s focus on providing rising income to shareholders. The Portfolio Manager’s disciplined approach to prioritising income means the Company does not invest in these stocks, even if it impacts performance relative to the Reference Index. Not owning them has actually helped us in previous years and the long-term performance of the Company speaks for itself. Many of the companies we do own also performed well, both in terms of growth and income. You can find more detail in the Portfolio Manager’s review.
REVENUE AND DIVIDEND
The Company’s objective is to provide a total return for investors primarily through investments in equities and equity-related investments, of companies which are based in, or which derive a significant proportion of their revenues from, the Asia Pacific region and which offer attractive yields. This year the Company’s revenue return increased to 11.59 pence per share (2024: 11.29p).
Having already paid interim dividends amounting to six pence per share, the Board has declared a fourth interim dividend of 6.20 pence per share for the year ended 31 August 2025, which is payable on 5 December 2025 to shareholders on the register on 21 November 2025. The Board recognises that the timing of dividends is important to shareholders that rely on these payments for income. Therefore, we are actively considering ways to smooth payments through the year.
Dividends play an important role in supporting investment returns during uncertain times. To pay reliable dividends, companies need to be financially healthy and able to deliver steady earnings – qualities that also help them weather tough periods. Across global markets, Asia stands out for offering attractive income opportunities, with companies generally paying good dividends while still keeping enough profits to reinvest in their businesses. Ongoing improvements in corporate governance across the region are also encouraging more companies to focus on rewarding shareholders, which bodes well for both current and future dividend growth.
COST SAVINGS – INCREASING SHAREHOLDER VALUE
Following a thorough review of the potential advantages of changing the Company’s depositary and custodian service provider, the Board determined that appointing J.P. Morgan Europe Limited would be in the best interests of the Company. This transition was approved to take place after the end of the financial year, with the migration of depositary and custodian services beginning on 3 October 2025. From the same date, J.P. Morgan Administration Services (Guernsey) also assumed the role of designated administrator.
The transition to J.P. Morgan is expected to play an important role in maintaining the Company’s ongoing charges figure (OCF) at a competitive level, particularly amid an environment of rising cost pressures across the industry. By partnering with a large, well-resourced administrator such as J.P. Morgan, the Company can benefit from greater efficiencies of scale, access to broader infrastructure. These advantages should help to contain or even reduce the ongoing cost base, ensuring that the Company remains attractive to existing and prospective shareholders. In turn, this commitment to cost discipline supports the Company’s focus on delivering value to investors without compromising on the quality of its investment management or governance.
PERFORMANCE FEE
The Board has negotiated a simplified investment management fee structure with Schroders, including removal of the performance fee, which should provide significant cost savings for shareholders, based on historical performance, and greater transparency for investors. Details of the new arrangements, which will come into effect on 31 August 2026, can be found in the Annual Report, together with a breakdown of the fees payable for the period covered by the Annual Report and Accounts. Despite the reduction in fees, shareholders will continue to benefit from Schroder’s proven investment capability, underpinned by extensive resource in key Asian markets.
GEARING
During the year, the Company amended and renewed its one-year multicurrency revolving credit facility with The Bank of Nova Scotia, London Branch, on a secured basis. The facility was reduced from £100 million to £75 million. On 31 August 2025, the Company’s net gearing position was 3.9% taking into account cash balances, compared to 4.4% at 31 August 2024.
DISCOUNT MANAGEMENT
The Company continued to be active in buying back its shares during the year. A total of 12,641,616 shares were bought back into treasury. This represented 5.2% of issued share capital and delivered a modest uplift to NAV. Since the year end, a further 1,768,750 shares have been bought back into treasury.
The discount at the end of August 2025 was 5.0% compared to 7.1% at the previous financial year end. The average discount during the year under review was 5.6%. Your Board remains focused on managing discounts and helping to provide liquidity in the Company’s shares. As such, we believe that adopting a rigid discount control mechanism that seeks to target a defined maximum discount level regardless of market conditions is not in the best interests of shareholders. Our policy on share buy backs takes account of the level of discount at which the Company’s peer group trades, prevailing market conditions and activity within our sector. At the Company’s last AGM, authority was given to purchase up to 14.99% of the issued share capital. We propose that the share buyback authority be renewed at the forthcoming AGM and that any shares so purchased be cancelled or held in treasury for potential reissue.
BOARD SUCCESSION
Board succession has been considered carefully during the year to ensure that we effectively plan for Board changes in the coming years. Paul Meader retired at the conclusion of the Annual General Meeting last year and Alexa Coates will reach the end of her nine-year tenure in February 2027. Consequently, in accordance with the Board’s succession planning the Board, through its Nomination and Remuneration Committee, is undertaking a search process to identify a new non-executive director using a third-party recruitment firm.
BIENNIAL DUE DILIGENCE TRIP TO ASIA
During the year, the Board made its biennial trip to the Asia Pacific region, visiting Singapore, Malaysia and Indonesia to meet the Investment Manager’s team and visit several portfolio holdings. These meetings helped deepen our understanding of regional markets and gave us direct insight into local economic and policy developments. The Board was also able to review ESG practices on site, observing environmental initiatives, workforce conditions and governance frameworks, and discuss key matters directly with senior management.
ANNUAL GENERAL MEETING (“AGM”)
The AGM will be held at 12.30pm on Wednesday, 3 December 2025 at the offices of Schroders at 1 London Wall Place, London EC2Y 5AU. A presentation from Portfolio Manager, Richard Sennitt, will be given at the AGM, and attendees will also be able to ask questions in person and meet the directors. Details of the formal business of the meeting are set out in the Notice of Meeting. All shareholders who are unable to attend in person are recommended to vote by proxy in advance of the AGM and to appoint the Chair of the meeting. If shareholders have any questions for the Board, please write, or email using the details below. The questions and answers will be published on the Company’s web pages before the AGM. To email, please use: amcompanysecretary@schroders.com or write to us at the Company’s registered office address: Company Secretary, Schroder Oriental Income Fund Limited, 1 London Wall Place, London, EC2Y 5AU.
RESULTS WEBINAR
Shareholders are invited to join Richard for a webinar reporting on the year ended 31 August 2025 and to discuss the outlook for the Company’s portfolio. The presentation will be followed by a live Q&A session.
The webinar will take place at 09.00am on Wednesday, 19 November 2025. Registration is available at https://www.schroders.events/SOI25
OUTLOOK
After two years of strong double-digit returns for shareholders, it is understandable to approach the future with some caution. As Richard mentions in his report, markets have remained steady so far, choosing not to panic in response to higher US tariffs. However, we may start to feel the true impact of these new trade barriers later in the year, once the short-term boost from increased exports has faded.
It is worth noting that the US no longer has the same influence on global trade as it once did, and there are real opportunities for trade growth within Asia and with places like Europe and other emerging markets. The region continues to lead in innovation and plays a vital role in global supply chains, especially in technology. While we expect some challenges in the months ahead, we remain confident that Asia Pacific will continue to find ways to adapt and succeed over the long-term. Your Company is well positioned to capture opportunities across the region through its focus on high quality businesses offering growing dividend income.
NICK WINSOR
Chair