4.7.3.0070Nikko AM New Asia Fund-180920 · 2018. 10. 8. · Nikko AM New Asia Fund Directors'...

Nikko AM New Asia FundARSN 116 556 113

Financial ReportFor the year ended 30 June 2018

Nikko Asset Management Australia LimitedABN 34 002 542 038

AFS Licence No. 229664

ContentsPage

Directors' Report 1Lead Auditor's Independence Declaration 4Financial statements 5Notes to the financial statements 9Directors' Declaration 22Independent Auditor's Report 23

Nikko AM New Asia FundDirectors' report

30 June 2018

Directors' reportThe directors of Nikko Asset Management Australia Limited (ABN 34 002 542 038), the Responsible Entity of Nikko AM New AsiaFund (the "Scheme"), present their report together with the financial statements of the Scheme for the year ended 30 June 2018and the auditor's report thereon.

Responsible EntityThe Responsible Entity of the Scheme is Nikko Asset Management Australia Limited (ABN 34 002 542 038). The ResponsibleEntity is a subsidiary within the Nikko Asset Management Co., Ltd's group of companies (Nikko AM). Nikko AM is a companyincorporated in Japan. The registered office of the Responsible Entity of the Scheme is Level 26, One International TowersSydney, 100 Barangaroo Avenue, Barangaroo NSW 2000.

The directors of Nikko Asset Management Australia Limited during or since the end of the financial year and up to the date of thisreport are:

NameJohn Gee Appointed 1 March 2011David Semaya Appointed 1 April 2015; resigned 31 March 2018Sam Hallinan Appointed 1 April 2015Junichi Sayato Appointed 28 November 2016

Principal Activities

The Scheme is a registered managed investment scheme, domiciled in Australia.

During the year, the Scheme continued to invest in accordance with the provisions of its Constitution and Product DisclosureStatement. Investments in each class of asset were maintained within the stated asset allocation ranges.

The key asset category is listed equity. There were no significant changes in the nature of the Scheme's activities during theyear.

The Scheme did not have any employees during the year.

Review and Results of Operations

The performance of the Scheme, as represented by the results of its operations, are as follows:

Year ended30 June 2018 30 June 2017

$000 $000

Operating profit 2,731 3,213

The following table sets out the exit unit price (ex-distribution) of the Scheme:

30 June 2018 30 June 2017$ $

Exit unit price (ex-distribution) 1.9087 1.7055

Distributions paid or payable by the Scheme in respect of the year were:Year ended

30 June 2018 30 June 2017

Distributions ($000) 80 221

Distributions (cents per unit) 0.7500 1.5513

Fees paid to and interests held in the Scheme by the Responsible Entity or its Associates

Fees paid to the Responsible Entity and its associates out of the Scheme's property during the year are set out in the statementof comprehensive income and further explained in note 11(c) to the financial statements.

No fees were paid out of the Scheme's property to the directors of the Responsible Entity during the year.

The interests in the Scheme held by the Responsible Entity or its associates as at the end of the financial year are as disclosed innote 11(b)(ii) to the financial statements.

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Nikko AM New Asia FundDirectors' report

30 June 2018

Directors' report (continued)

Significant Changes in State of Affairs

On 19 June 2017, the Responsible Entity elected into the Attribution Managed Investment Trust (AMIT) regime on behalf of theScheme effective from 1 July 2017. This change has not impacted the classification of net assets attributable to unitholders inthe financial statements.

In the opinion of the directors, there were no other significant changes in the state of the affairs of the Scheme that occurredduring the financial year under review.

Interests in the Scheme

The movements in units on issue in the Scheme during the period are disclosed in note 7 to the financial statements.

The value of the Scheme's financial instruments is disclosed in the statement of financial position and are derived using thebasis set out in note 2(c) to the financial statements.

Likely Developments and Expected Results of Operations

The Scheme is expected to continue to operate within the terms of its Constitution and Product Disclosure Statement and willremain invested in accordance with its investment objectives.

The results of the Scheme's operations will be affected by a number of factors, including the performance of investment marketsin which the Scheme invests. Investment performance is not guaranteed and future returns may differ from past returns. Asinvestment conditions change over time, past returns should not be used to predict future returns.

Further information on likely developments in the operations of the Scheme and the expected results of those operations havenot been included in this report because the Responsible Entity believes it would be likely to result in unreasonable prejudice tothe Scheme.

Environmental Regulation

The Scheme's operations are not subject to any significant environmental regulations under Commonwealth, State or Territorylegislation.

Matters Subsequent to the End of the Financial Year

Except as disclosed in the financial statements, no other matter or circumstance has arisen since 30 June 2018, that hassignificantly affected or may significantly affect:

(i) the operations of the Scheme in future financial years, or(ii) the results of those operations in future financial years, or(iii) the state of affairs of the Scheme in future financial years.

Indemnification

So long as the Responsible Entity acts in accordance with the Scheme's Constitution and the Corporations Act 2001, theResponsible Entity remains indemnified out of the assets of the Scheme for any losses, damages, expenses or other liabilityincurred while performing or exercising any of its powers, duties or rights in relation to the Scheme.

The auditors are in no way indemnified out of the assets of the Scheme.

Insurance Premiums

No insurance premiums are paid for out of the Scheme's assets in relation to insurance cover for the Responsible Entity, theResponsible Entity's directors, officers and employees, the Risk and Compliance Committee or the auditors of the Scheme.

Rounding

The Scheme is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191issued by the Australian Securities and Investments Commission relating to the "rounding" of amounts in the directors' reportand financial statements. Amounts in the directors' report and financial statements for the Scheme have been rounded to thenearest thousand dollars in accordance with that ASIC Corporations Instrument, unless otherwise stated.

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4

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Liability limited by a scheme approved under Professional Standards Legislation.

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of Nikko Asset Management Australia Limited I declare that, to the best of my knowledge and belief, in relation to the audit of Scheme for the financial year ended 30 June 2018 there have been: i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii. no contraventions of any applicable code of professional conduct in relation to the audit. KPMG Brendan Twining Partner Sydney 21 September 2018

PAR_SIG_ PAR_NAM_ PAR_POS_ PAR_DAT_ PAR_CIT_

Nikko AM New Asia FundStatement of comprehensive income

For the year ended 30 June 2018

Statement of comprehensive incomeYear ended

30 June 2018 30 June 2017Notes $000 $000

Investment incomeInterest income 6 6Dividend income 374 541Net losses on foreign exchange (1) (3)Net changes in the fair value of investments 4 2,745 3,069Total investment income 3,124 3,613

ExpensesResponsible Entity's fees 11(c) 236 236Withholding tax expense 35 54Transaction costs 108 97Other expenses 14 13Total operating expenses 393 400

Operating income 2,731 3,213

Finance costs attributable to unitholdersDistributions to unitholders 8 (80) (221)(Increase)/decrease in net assets attributable to unitholders 7 (2,651) (2,992)Changes in comprehensive income - -

The above statement of comprehensive income should be read in conjunction with the accompanying notes.

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Nikko AM New Asia FundStatement of financial position

As at 30 June 2018

Statement of financial positionAs at

30 June 2018 30 June 2017Notes $000 $000

AssetsCash and cash equivalents 12(a) 705 627Receivables 5 154 164Financial assets held at fair value through profit or loss 9 19,606 23,327Total assets 20,465 24,118

LiabilitiesDistributions payable 8 80 135Payables 6 51 387Total liabilities (excluding net assets attributable to unitholders) 131 522

Net assets attributable to unitholders - liability 7 20,334 23,596

The above statement of financial position should be read in conjunction with the accompanying notes.

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Nikko AM New Asia FundStatement of changes in equity


Statement of changes in equityYear ended

30 June 2018 30 June 2017$000 $000

Total equity at the beginning of the financial year - -

Total comprehensive income for the year - -

Total recognised income and expense for the year - -

Transactions with owners in their capacity as owners - -

Total equity at the end of the financial year - -

Under Australian Accounting Standards, net assets attributable to unitholders are classified as a liability rather than equity. As aresult, there was no equity at the start or end of the year.

The above statement of changes in equity should be read in conjunction with the accompanying notes.

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Nikko AM New Asia FundStatement of cash flows


Statement of cash flowsYear ended

30 June 2018 30 June 2017Notes $000 $000

Cash flows from operating activitiesProceeds from sale of investments 22,302 16,781Payments for purchase of investments (16,131) (14,681)Dividends received 411 485Interest received 6 6GST received 3 18Responsible Entity's fees paid (239) (235)Withholding tax paid (35) (54)Transaction costs paid (109) (98)Other expenses paid (14) (13)Net cash inflows from operating activities 12(b) 6,194 2,209

Cash flows from financing activitiesProceeds from applications by unitholders 594 584Payments for redemptions by unitholders (6,639) (2,426)Distributions paid (70) (156)Net cash outflows from financing activities (6,115) (1,998)

Net increase in cash and cash equivalents 79 211

Cash and cash equivalents at the beginning of the year 627 419

Effect of foreign currency exchange rate changes on cash andcash equivalents (1) (3)

Cash and cash equivalents at the end of the year 12(a) 705 627

The above statement of cash flows should be read in conjunction with the accompanying notes.

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Nikko AM New Asia FundNotes to the financial statements

30 June 2018

Notes to the financial statementsIndex Page

Note 1 General information 10Note 2 Summary of significant accounting policies 10Note 3 Auditor's remuneration 14Note 4 Net changes in fair value of investments 14Note 5 Receivables 14Note 6 Payables 14Note 7 Net assets attributable to unitholders 15Note 8 Distributions to unitholders 15Note 9 Financial assets held at fair value through profit or loss 16Note 10 Financial risk management 16Note 11 Related party disclosures 20Note 12 Reconciliation of profit/(loss) to net cash inflow/(outflow) from operating activities 21Note 13 Commitments and contingencies 21Note 14 Events occurring after the reporting period 21

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30 June 2018(continued)

Note 1: General informationThe financial statements cover the Nikko AM New Asia Fund (the "Scheme") as an individual entity.

The for-profit Scheme was constituted on 5 October 2005. The Scheme will terminate on 4 October 2085 unless terminated inaccordance with the provisions of the Scheme's Constitution.

The Responsible Entity of the Scheme is Nikko Asset Management Australia Limited. The Responsible Entity's registered officeis Level 26, One International Towers Sydney, 100 Barangaroo Avenue, Barangaroo NSW 2000.

The financial statements were authorised for issue by the directors on 21 September 2018. The directors of the ResponsibleEntity have the power to amend and reissue the financial statements.

On 5 May 2016, a new tax regime applying to Managed Investment Trusts was established under the Tax Law Amendment (NewTax System for Management Investment Trusts) Act 2016. This new Attribution Management Investment Trust (AMIT) regimeallows the schemes that meet certain requirements to make an irrevocable election to be an AMIT. The Responsible Entityelected into the AMIT regime on behalf of the Scheme effective from 1 July 2017. This change has not impacted the classificationof net assets attributable to unitholders in the financial statements.

Note 2: Summary of significant accounting policiesThe principal accounting policies applied in the preparation of the financial statements are set out below. These policies havebeen consistently applied to all years presented, unless otherwise stated.

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with the Scheme's Constitution and withAustralian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board ("AASB")and the Corporations Act 2001 (Cth).

The financial statements have been prepared on the basis of fair value measurement of assets and liabilities, except whereotherwise stated.

The Statement of Financial Position presents assets and liabilities in decreasing order of liquidity and does not distinguishbetween current and non-current items.

(b) Statement of compliance

The financial statements comply with Australian Accounting Standards as issued by the Australian Accounting Standards Boardand International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

Changes in accounting standards

There are no standards, interpretations or amendments to existing standards that are effective for the first time for the financialyear beginning 1 July 2017 that have a material impact on the Scheme.

New accounting standards and interpretations

Certain new accounting standards and interpretations have been published, but are not yet mandatory and have not been earlyadopted by the Scheme for the reporting period ended 30 June 2018. The assessment of the impact of these new standards (tothe extent relevant to the Scheme) and interpretations is set out below:

(i) AASB 9 Financial Instruments (and applicable amendments) (effective for financial reporting periods beginning on or after 1January 2018)

AASB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities. It has alsointroduced revised rules around hedge accounting and impairment. The standard is available for early adoption.

Management has concluded that the adoption of this standard does not have a significant impact on the recognition andmeasurement of the Scheme's financial instruments as they are carried at fair value through profit or loss. The Scheme does nothold debt instruments that could result in a reclassification of financial instruments to amortised cost or fair value through othercomprehensive income. The derecognition rules have not been changed from the previous requirements and the Scheme doesnot apply hedge accounting. AASB 9 introduces a new impairment model. However, as the Scheme's investments are all held atfair value through profit or loss, the change in impairment rules will not impact the Scheme.

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Note 2: Summary of significant accounting policies (continued)

(b) Statement of compliance (continued)

New accounting standards and interpretations (continued)

(ii) AASB 15 Revenue from Contracts with Customers (effective for financial reporting periods beginning on or after 1 January2018)

The AASB has issued a new standard for the recognition of revenue. This will replace AASB 118 Revenue and AASB 111Construction Contracts.

The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer -so the notion of control replaces the existing notion of risks and rewards.

The Schemes main sources of income are interest, dividend and gains on financial instruments held at fair value. All of these areoutside the scope of the new revenue standard. Management has concluded that the new revenue recognition rules do not havea significant impact on the Scheme's accounting policies or the amounts recognised in the financial statements.

There are no other standards that are not yet effective and that are expected to have a material impact on the Scheme in thecurrent or future reporting periods and on foreseeable future transactions.

(c) Financial instruments

(i) Classification

The Scheme has classified its investments as financial instruments at fair value through profit or loss. They comprise:

Financial instruments held for trading

These include futures and forward currency contracts. All derivatives in a net receivable position (positive fair value) are reportedas financial assets held for trading. All derivatives in a net payable position (negative fair value), are reported as financialliabilities held for trading. The Scheme does not designate any derivatives as hedges in a hedging relationship.

Financial instruments designated at fair value through profit or loss upon initial recognition

These include financial assets that are not held for trading purposes and which may be sold. These are investments in listedequities.

Financial assets and financial liabilities designated at fair value through profit or loss at inception are those that are managed andtheir performance evaluated on a fair value basis in accordance with the Scheme's documented investment strategy. TheScheme's policy is for the Responsible Entity to evaluate the information about these financial instruments on a fair value basiswith other related financial information.

(ii) Recognition/derecognition

The Scheme recognises financial assets and financial liabilities on the date it becomes party to the contractual provisions of theinstrument and de-recognised when the right to receive or obligation to pay cash flows have expired, or the Scheme hassubstantially transferred those rights or obligations.

(iii) Measurement

Financial instruments are measured initially at fair value, typically represented by cost, excluding transaction costs which areexpensed as incurred.

Subsequent to initial recognition, all financial instruments (except for receivables, payables and net assets attributable tounitholders which are valued as stated below) are measured at fair value at the end of each reporting period. Gains and lossesarising from changes in fair value of financial instruments are included in the statement of comprehensive income in the period inwhich they arise.

The following represents the basis of valuation of specific financial instruments for financial reporting purposes.

Listed equities and listed trusts

The fair value of shares or unit trusts listed on a stock exchange is determined as the last traded price, for a financial asset, orthe ask price for a financial liability on the relevant exchange the shares or units are traded, at close of business on the day ofvaluation. The fair value does not include an allowance for transaction costs expected to be incurred in realising the investments.

(iv) Use of estimates and judgements

The Scheme's investments are carried at fair value on the statement of financial position. Usually the fair value of the financialinstruments can be reliably determined within a reasonable range of estimates.

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(d) Investment Income

Income is recognised to the extent that it is probable that the economic benefits will flow to the Scheme and the income can bereliably measured. The following specific recognition criteria must also be met before income is recognised:

Dividend Income

Dividends are recognised as income on the date the share is quoted ex-dividend with any related foreign withholding taxrecorded as a tax expense.

Interest Income

Interest income earned on cash and cash equivalents is recognised on an accruals basis.

Net changes in the fair value of investments

Net changes in the fair value of investments are recognised as income and are determined as the difference between the fairvalue at year end or consideration received (if sold during the year) and the fair value as at the prior period end or initial fair value(if the investment was acquired during the year), but excludes interest and dividend income.

(e) Expenses

Expenses are recognised in the statement of comprehensive income on an accruals basis.

(f) Cash and Cash Equivalents

For the purposes of the statement of cash flows, cash and cash equivalents include deposits held at call with a bank or financialinstitution with an original maturity date of three months or less. Cash and cash equivalents also include highly liquid investmentswhich are readily convertible to cash at the Responsible Entity's option and which the Responsible Entity uses in its day to daymanagement of the Scheme's cash requirements.

Payments and receipts relating to the purchase and sale of investments are classified as cash flows from operating activities, asmovements in the fair value of these investments represent the Scheme's main income-generating activity.

(g) Receivables

Receivables include amounts where settlement has not yet occurred, and include amounts due for interest, dividends, trustdistributions due and outstanding settlements on the sale of investments. Receivables are measured initially at fair value plustransaction costs and subsequently at amortised cost using the effective interest rate method, less impairment losses if any.Amounts are generally received within 30 days of being recorded as receivables. Given the short-term nature of mostreceivables, the recoverable amount approximates fair value.

(h) Payables

Payables are recognised for amounts to be paid in the future for goods and services received, whether or not billed to theScheme, and include outstanding settlements on the purchase of investments. Payables are measured at their nominal amounts.Amounts are generally paid within 30 days of being recorded as payables. Given the short-term nature of most payables, thepayable amount approximates fair value.

The distribution amount payable to unitholders as at the end of the reporting period is recognised separately in the statement offinancial position when unitholders are presently entitled to the distributable income under the Scheme's Constitution.

(i) Net Assets Attributable to Unitholders

Net assets attributable to unitholders are classified as financial liabilities. Units in the Scheme can generally be redeemed at anytime for cash equal to a proportionate share of the Scheme's net asset values, subject to restrictions on withdrawals as disclosedin the governing documents. The fair value of redeemable units is measured at the redemption amount that is payable (based onthe redemption unit price) at the balance date if unitholders exercised their right to redeem their units.

(j) Taxation

Under current legislation, the Scheme is not liable to pay income tax since, under the terms of the Scheme's Constitution, theunitholders are presently entitled to the income of the Scheme. The benefits of imputation credits and foreign tax paid are passedon to unitholders.

Realised net capital losses cannot be distributed to unitholders but are carried forward by the Scheme to be offset against anyrealised capital gains in future years.

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(k) Distributions to Unitholders

In accordance with the Scheme's Constitution, the Scheme fully distributes its distributable (taxable) income and any otheramounts determined by the Responsible Entity, to unitholders by cash or reinvestment.

The distributions are recognised as finance costs attributable to unitholders in the statement of comprehensive income.

Distributions paid are included in cash flows from financing activities in the statement of cash flows.

Special distributions may be paid at other dates as determined by the Responsible Entity.

(l) Foreign Currency Translation

(i) Functional and presentation currency

Items included in the Scheme's financial statements are measured using the currency of the primary economic environment inwhich it operates (the "functional currency").

The presentation currency of this financial report, and the functional currency of the Scheme, is Australian dollars.

(ii) Transactions and balances

Income and expense items denominated in a currency other than the functional currency are translated at the spot exchange rateat the date of the transaction. At balance date, all securities denominated in international currencies are translated to Australiandollars using the rates of exchange prevailing at that date. The resulting unrealised exchange differences are recognised aschanges in the fair value of investments in the Statement of Comprehensive Income in the year in which they arise.

(m) Terms and Conditions of Units on Issue

Each unit confers upon the unitholder an equal interest in the Scheme (subject to income entitlements), and is of equal value. Aunit does not confer an interest in any particular asset or investment of the Scheme.

Unitholders have various rights under the Scheme's Constitution and the Corporations Act 2001, including the right to:

- have their units redeemed;

- receive income distributions;

- attend and vote at meetings of unitholders; and

- participate in the termination and winding up of the Scheme.

The rights, obligations and restrictions attached to each unitholder class are identical in all respects.

Applications received for units in the Scheme are recorded net of any entry fees payable prior to the issue of units in the Scheme.Redemptions from the Scheme are recorded gross of any exit fees payable after the cancellation of units redeemed. Unit exitprices are determined in accordance with the Scheme's Constitution and are calculated on a forward pricing basis as the netassets attributable to unitholders of the Scheme for unit pricing purposes less estimated transaction costs divided by the numberof units on issue.

(n) Goods and Services Tax (GST)

All revenues, expenses and assets are recognised net of any GST paid, except where they relate to products and services whichare input taxed for GST purposes or the GST incurred is not recoverable from the relevant tax authorities. In such circumstances,the GST paid is recognised as part of the cost of acquisition of the assets or as part of the particular expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from or payable tothe tax authorities is included as a receivable or payable in the statement of financial position.

Cash flows are reported on a gross basis reflecting any GST paid or collected. The GST component of cash flows arising frominvesting or financing activities which are recoverable from, or payable to, local tax authorities are classified as operating cashflows.

(o) Rounding

The Scheme is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 issuedby the Australian Securities and Investments Commission relating to the "rounding" of amounts in the directors' report andfinancial statements. Amounts in the directors' report and financial statements for the Scheme have been rounded to the nearestthousand dollars in accordance with that ASIC Corporations Instrument, unless otherwise stated.

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Note 3: Auditor's remunerationThe auditor’s remuneration for auditing the financial statements and for other assurance services are as follows. Auditor'sremuneration for the Scheme is paid by the ultimate Australian parent entity of the Responsible Entity, Nikko AM Limited, andhas not been recharged to the Scheme.

30 June 2018 30 June 2017$ $

Auditor of the Scheme - KPMG Auditing the financial statements 9,177 8,910 Other audit services 2,693 2,615 Taxation services 6,185 4,805

18,055 16,330

Note 4: Net changes in the fair value of investments

Year ended30 June 2018 30 June 2017

$000 $000Financial instrumentsNet loss on financial instruments held for trading (49) (51)Net gain on financial instruments designated at fair value through profit or loss 2,794 3,120

Net changes in financial instruments held at fair value through profit or loss 2,745 3,069

Note 5: ReceivablesAs at

30 June 2018 30 June 2017$000 $000

Dividends receivable 84 121Applications receivable - 25GST receivable 4 7Outstanding settlements receivable 66 11

154 164

Note 6: PayablesAs at

30 June 2018 30 June 2017$000 $000

Responsible Entity's fees payable 18 21Outstanding settlements payable - 240Redemptions payable 33 125Transaction costs payable - 1

51 387

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Note 7: Net assets attributable to unitholders

As stipulated within the Scheme's Constitution, each unit represents a right to an individual share in the Scheme and does notextend to a right to the underlying assets of the Scheme. There are no separate classes of units within the individual Scheme andeach unit has the same rights attached to it as all other units of the Scheme.

The Scheme considers its capital to be unitholders' funds. The Scheme manages its net assets attributable to unitholders ascapital, notwithstanding net assets attributable to unitholders being classified as a liability.

The objective of the Scheme is to provide unitholders with returns in accordance with the Product Disclosure Statement. TheScheme aims to meet this objective mainly through holding and managing exposures directly or indirectly, in a highly diversifiedportfolio in accordance with the limitations set by the Product Disclosure Statement. Derivatives can be used to facilitate theinvestment strategy.

The Scheme strives to invest in products that meet the Scheme's investment objectives while maintaining sufficient liquidity to meetunitholders' redemptions. No leveraging of the Scheme is permitted.

Refer to note 10(b) for information on liquidity risk.

Movements in number of units and net assets attributable to unitholders were as follows:

30 June 2018 30 June 2017 30 June 2018 30 June 2017Units (000) Units (000) $000 $000

Unitholders' fundsOpening balance 13,811 14,933 23,596 22,393Applications 295 381 569 609Distributions reinvested 38 87 65 132Redemptions (3,511) (1,590) (6,547) (2,530)Increase/ (decrease) in net assets attributable tounitholders - - 2,651 2,992Closing balance 10,633 13,811 20,334 23,596

Note 8: Distribution to unitholders

The distributions were paid/payable as follows:30 June 2018 30 June 2018 30 June 2017 30 June 2017

$000 CPU $000 CPU

Distributions paid/payableSpecial distributions paid - August 2016 - - 86 0.5749Distributions payable at 30 June 80 0.7500 135 0.9764

80 0.7500 221 1.5513

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Note 9: Financial assets held at fair value through profit or loss

30 June 2018 30 June 2017Fair value Fair value

$000 $000

Designated at fair value through profit or lossListed securities 19,606 23,327Total designated at fair value through profit or loss 19,606 23,327

Total financial assets held at fair value through profit orloss 19,606 23,327

Comprising:

Listed equity securitiesEquities 19,606 23,327Total listed equities 19,606 23,327

Total financial assets held at fair value through profit orloss 19,606 23,327

An overview of the risk exposures relating to financial assets held at fair value through profit or loss is included in note 10.

Note 10: Financial risk management

The Scheme's activities may expose it to a variety of financial risks: market risk (including interest rate risk, foreign currency riskand price risk), liquidity risk and credit risk.

The Scheme’s overall risk management program focuses on ensuring compliance with the Scheme's Product DisclosureStatement and governing documents and seeks to maximise the returns derived for the level of risk to which the Scheme isexposed. The Scheme may include some derivative financial instruments in its portfolio to manage market risk exposure.Financial risk management is carried out by the Investment Manager in accordance with the investment guidelines, as outlined inthe Scheme’s Product Disclosure Statement. Compliance with the Scheme's investment guidelines is monitored daily andreported to the Board of the Responsible Entity on a quarterly basis.

The Scheme uses different methods to measure different types of risk to which it is exposed. The Board of the ResponsibleEntity has overall responsibility for the establishment and oversight of the Scheme's risk management framework including thereview of investment performance, effectiveness of the investment process and adequacy of investment management reporting.

The financial risk management disclosures are prepared on the basis of the direct holdings of the Scheme without lookingthrough to indirect exposure.

(a) Market risk

(i) Interest rate risk exposures

Interest rate risk is the risk that changes in interest rates will affect future cash flows or the fair values of financial instruments.The Scheme has established limits on investments in interest bearing securities, which are monitored on a daily basis.

The exposure to interest rate risk is limited to cash and cash equivalents which earn a floating rate of interest. Interest rate risk istherefore considered not material and consequently interest rate sensitivity has not been presented.

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Note 10 : Financial risk management (continued)

(a) Market risk (continued)

(ii) Foreign currency risk

The Scheme may hold assets, both cash and cash equivalents and other financial assets, denominated in currencies other thanthe Australian dollar. Foreign exchange risk arises as the value of the monetary assets denominated in other currenciesfluctuates due to changes in exchange rates.

The table below shows the Scheme's foreign currency exposure in relation to its financial assets.

30 June 2018

Hong KongDollars

KoreanWons

IndianRupees

TaiwanDollars

OtherCurrencies Total

A$000 A$000 A$000 A$000 A$000 A$000

Financial assets 8,422 2,984 2,489 2,284 3,427 19,606Net exposure 8,422 2,984 2,489 2,284 3,427 19,606

30 June 2017

Hong KongDollars

KoreanWons

IndianRupees

USDollars

OtherCurrencies Total

A$000 A$000 A$000 A$000 A$000 A$000

Financial assets 9,545 4,178 3,175 1,574 4,855 23,327Net exposure 9,545 4,178 3,175 1,574 4,855 23,327

(iii) Price risk

The Scheme is exposed to price risk through its investments in listed equities. This arises from investments held by the Schemefor which prices in the future are uncertain. All investments present a risk of loss of unitholders' funds. The maximum riskresulting from the Scheme's financial instruments is represented by the fair value of those instruments. The Investment Managermanages other price risk through diversification and careful selection of securities within specified limits set out in the Scheme'sProduct Disclosure Statement.

The Scheme's exposure to price risk is measured by sensitivity analysis and is included in the table below.

(iv) Summarised sensitivity analysis

The following table summarises the sensitivity of the Scheme's profit or loss, and net assets attributable to unitholders, to pricerisk and foreign exchange risk.

The 'reasonably possible' movements in the risk variables have been determined based on management's best estimate, havingregard to factors such as past movements in MSCI All Country Asia ex Japan Index (Australian Dollars) unhedged and foreignexchange rates, along with prevailing securities and global market conditions. However, historic variations in risk variables arenot a definitive indicator of future variations so that actual movements may be greater or less than anticipated due to variousfactors impacting on the performance of the economies, markets and securities in which the Scheme invests.

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(a) Market risk (continued)

(iv) Summarised sensitivity analysis (continued)

Price risk

The analysis below is based on the assumption that market indices increased or decreased by 25% (2017: 25%) with all othervariables held constant.

Price risk$000 $000

30 June 2018 (+25%/-25%) 4,902 (4,902)

30 June 2017 (+25%/-25%) 5,832 (5,832)

Foreign exchange risk

The analysis below is based on the assumption that the Australian dollar strengthened or weakened by 20% (2017: 20%)against the various currencies to which the Scheme is exposed.

Foreign exchange risk$000 $000

30 June 2018 (+20%/-20%) (3,320) 4,98030 June 2017 (+20%/-20%) (4,104) 5,538

(b) Liquidity risk

Liquidity risk refers to the risk that financial obligations will not be able to be met as and when they fall due. The Scheme'sapproach to managing liquidity is to ensure, as far as possible, that they will always have sufficient liquidity to meet their liabilitiesas and when they fall due, under both normal and stressed conditions, without incurring unacceptable losses or risking damageto the Scheme's overall value and reputation.

The Scheme's Constitution provides for the daily application and redemption of units and they are therefore exposed to theliquidity risk of meeting unitholder redemptions at any time.

The Scheme's liquidity is managed on a daily basis by the Investment Manager and all sale and purchase trades are settledwithin the stated terms. Cash positions are independently monitored and reported on a daily basis to ensure each portfolio hassufficient capacity to meet the Scheme's obligations.

Financial liabilities of the Scheme comprise payables, distributions payable and net assets attributable to unitholders. Payablesand distributions payable have no contractual maturities but are typically settled within 30 days.

Net assets attributable to unitholders are payable on demand, however the Responsible Entity has the power under theScheme's Constitution to amend the timing of redemption payments.

As the Scheme has no liabilities except for those noted above, a maturity analysis for financial liabilities has not been presentedat reporting date.

(c) Credit risk

The Scheme is subject to credit risk which arises from its holdings of cash and cash equivalents. The Scheme's exposure tocredit risk arises from potential default by the counter-party, with maximum exposure equal to the value of cash and cashequivalents.

Substantially all of the cash held by the Scheme is held with a foreign authorised deposit taking institution or major Australianbanks which have a minimum credit rating of A, as reported by Standard and Poor's.

Credit risk is not considered to be significant to the Scheme as the Scheme has no exposure to interest bearing securities.

(d) Fair value estimation

The Scheme values its investments in accordance with the accounting policies set out in note 2(c).

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(e) Fair value measurement

The Scheme classifies fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used inmaking the measurements. The fair value hierarchy has the following levels:

• Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);

• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is,as prices) or indirectly (that is, derived from prices) (level 2); and

• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

(i) Fair value in an active market (level 1)

The fair value of financial assets and liabilities traded in active markets (such as publicly traded derivatives, listed securities andunit trusts) is based on quoted market prices at the end of the reporting period without any deduction for estimated future sellingcosts. For the majority of the Scheme's financial assets and liabilities, information provided by the quoted market independentpricing services is relied upon for valuation.

A financial instrument is regarded as quoted in an active market if the quoted prices are readily and regularly available from anexchange, dealer, broker, industry group, pricing service, or regulatory agency, and those represent actual and regularlyoccurring market transactions on an arm's length basis. An active market is a market in which transactions for the financial assetor liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

Investments whose values are based on quoted market prices in active markets, and therefore classified within level 1, includelisted equities.

Listed securities are valued at the last traded price.

(ii) Fair value in an inactive or unquoted market (level 2 and level 3)

The fair value of financial assets and liabilities that are not traded in an active market is determined by using valuationtechniques. These include the use of recent arm's length transactions, reference to current fair value of a substantially similarinstrument, discounted cash flow techniques, option pricing models or any other valuation technique that provides a reliableestimate of prices obtained in actual market transactions.

The determination of what constitutes 'observable' requires significant input by the Responsible Entity. The Responsible Entityconsiders observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable,not proprietary and provided by independent sources that are actively involved in the relevant market.

The following table shows an analysis of financial instruments held at the balance date, recorded at fair value by level of the fairvalue hierarchy:

30 June 2018Level 1 Level 2 Level 3 Total

$000 $000 $000 $000Financial assetsFinancial assets at fair value throughprofit or loss:Listed equity securities 19,606 - - 19,606Total 19,606 - - 19,606

30 June 2017Level 1 Level 2 Level 3 Total

$000 $000 $000 $000Financial assetsFinancial assets at fair value throughprofit or lossListed equity securities 23,327 - - 23,327Total 23,327 - - 23,327

The Scheme did not hold any financial instruments with fair value measurements using significant unobservable inputs (level 3)at 30 June 2018 and 30 June 2017.

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Note 11: Related party disclosures

(a) Responsible Entity

The Responsible Entity of the Scheme is Nikko Asset Management Australia Limited (ABN 34 002 542 038). The ResponsibleEntity is a subsidiary within the Nikko Asset Management Co., Ltd's group of companies (Nikko AM). Nikko AM is a companyincorporated in Japan. The Responsible Entity is considered a related party.

(b) Investments

(i) Related party holdings of the Scheme

The Scheme did not hold any investments in the Responsible Entity or its related parties during the year (2017: nil).

(ii) Related party investors in the Scheme

As at 30 June 2018 and 30 June 2017, the Responsible Entity, its affiliates and other trusts managed by the Responsible Entitydid not hold any units in the Scheme.

(c) Transactions with the Responsible Entity

All transactions between the Scheme and related parties have been at market value on normal commercial terms andconditions. This includes purchases and sales of investments as well as applications and redemptions of units.

In accordance with the Scheme's Constitution and Product Disclosure Statement, the Responsible Entity's management cost ischarged as a percentage of the gross asset value of the Scheme calculated on a daily basis and paid from the gross income ofthe Scheme monthly. For the investments by the Scheme in other related unit trusts, the Responsible Entity has ensured that thefees charged are reduced by fees already charged by the Responsible Entity for investments held by the Scheme in otherrelated unit trusts.

The Responsible Entity fee for Nikko AM New Asia Fund is 1.025% (2017: 1.025%).

The table below shows the details of the management costs paid by the Scheme to the Responsible Entity:

30 June 2018 30 June 2017$ $

Responsible Entity's fees 236,389 236,235Aggregate amounts payable 18,294 21,402

(d) Key management personnel

AASB 124 Related Party Disclosures defines key management personnel (KMP) as including all non-executive directors,executive directors and any other persons having authority or responsibility for planning, directing and controlling the activities ofthe entity. The Scheme has no direct employees, however the non-executive directors and the executive directors of theResponsible Entity have been deemed to be directors of the Scheme. These individuals and the Responsible Entity comprise theKMP of the Scheme.

Directors of the Responsible Entity

The names of each person holding the position of Director of the Responsible Entity at any time during the year and until thedate of this report are as follows:

NameJohn Gee Appointed 1 March 2011David Semaya Appointed 1 April 2015; resigned 31 March 2018Sam Hallinan Appointed 1 April 2015Junichi Sayato Appointed 28 November 2016

Remuneration paid to the Responsible Entity is detailed in note 11 (c) above. No director of the Responsible Entity was paid anyremuneration by the Scheme during the year and their compensation is paid by the Responsible Entity or related entities of theResponsible Entity.

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Note 11: Related party disclosures (continued)(d) Key management personnel (continued)

Other Key Management Personnel

There were no other persons with responsibility for planning, directing and controlling the activities of the Scheme, directly orindirectly during the financial year.

Key Management Personnel Unitholdings

From time to time, the directors of the Responsible Entity may invest or withdraw from the Scheme. These investments orwithdrawals are on the same terms and conditions as those entered into by other Scheme investors.

At 30 June 2018, no key management personnel held units in the Scheme (2017: nil).

Key Management Personnel Loan Disclosures

The Scheme has not made, guaranteed, or secured, directly or indirectly, any loans to the Responsible Entity or its relatedentities at any time during the financial year.

Note 12: Reconciliation of profit/(loss) to net cash inflow/(outflow) from operating activities

Year ended

30 June 2018 30 June 2017$000 $000

(a) Cash and cash equivalentsCash at bank 705 627

705 627

(b) Reconciliation of profit/(loss) to net cash inflow/(outflow) fromoperating activitiesIncrease in net assets attributable to unitholders 2,651 2,992Distributions to unitholders 80 221Proceeds from sale of investments 22,302 16,781Payments for purchase of investments (16,131) (14,681)Net changes in the fair value of investments (2,745) (3,069)Net foreign exchange (gain)/loss 1 3Changes in assets and liabilities:(Increase)/decrease in receivables 40 (38)Increase/(decrease) in payables (4) -Net cash inflow from operating activities 6,194 2,209

(c) Non-cash financing activities

Non-cash financing and operating activities carried out during the yearon normal commercial terms and conditions included:Distributions reinvested 65 132

Note 13: Commitments and contingenciesThe Scheme has no contingent liabilities and commitments at the end of the financial year.

Note 14: Events occurring after the reporting periodNo significant events have occurred since the end of the balance date which would impact on the financial position of theScheme disclosed in the statement of financial position as at 30 June 2018 or on the results and cash flows of the Scheme forthe year ended on that date.

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KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Liability limited by a scheme approved under Professional Standards Legislation.

23

Independent Auditor’s Report To the unitholders of Nikko AM New Asia Fund Opinion We have audited the Financial Report of the Nikko AM New Asia Fund (the Scheme). In our opinion, the accompanying Financial Report of the Scheme is in accordance with the Corporations Act 2001, including: giving a true and fair view of the Scheme’s financial position as at 30 June 2018 and of its financial performance for the year ended on that date; and complying with Australian Accounting Standards and the Corporations Regulations 2001. The Financial Report comprises the:

Statement of financial position as at 30 June 2018 Statement of comprehensive income for the year then ended Statement of changes in equity and statement of cash flows for the year then ended Notes including a summary of significant accounting policies Directors’ Declaration made by the Directors’ of Nikko Asset Management Australia Limited (the Responsible Entity).

Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Scheme and the Responsible Entity in accordance with the Corporations Act 2001 and the relevant ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.

24

Other Information Other Information is financial and non-financial information in the issuer of Nikko AM New Asia Fund’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. This includes the Directors’ Report. The Directors of the Responsible Entity are responsible for the Other Information. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Financial Report The Directors of the Responsible Entity are responsible for: preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001; implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error; and assessing the Scheme’s ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Scheme or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objective is: to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists.

25

Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_files/ar4.pdf This description forms part of our Auditor’s Report. KPMG Brendan Twining Partner Sydney 21 September 2018

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