Solaris High Alpha Australian Equity Fund · The Responsible Entity of the Solaris High Alpha Australian Equity Fund is Channel Investment ... Review and results ... Dividend income

ARSN 128 860 159

Annual financial statements for the year ended 30 June 2017

Solaris High Alpha Australian Equity Fund

ARSN 128 860 159

Annual financial statements for the year ended 30 J une 2017

ContentsPage

Directors' report 2 Auditor's independence declaration 4 Statement of comprehensive income 5 Statement of financial position 6 Statement of changes in equity 7 Statement of cash flows 8 Notes to the financial statements 9 Directors' declaration 27 Independent auditor's report to the unitholders of the Solaris High Alpha Australian Equity Fund 28


1

These financial statements cover the Solaris High Alpha Australian Equity Fund as an individual entity.

The Responsible Entity of the Solaris High Alpha Australian Equity Fund is Channel Investment Management Limited (ABN 22 163 234240). The Responsible Entity's registered office is Level 25, Waterfront Place, 1 Eagle Street, Brisbane, QLD 4000.

1

Directors' report

Principal activities

Directors

Mr G Holding Ms K YouhannaMr S Jordan

Review and results of operations

In addition, the Fund will seek to remain fully invested with the Fund's allowable maximum cash exposure of 5% of total assets at any onetime.

The directors of Channel Investment Management Limited, the Responsible Entity of the Solaris High Alpha Australian Equity Fund,present their report together with the financial statements of the Solaris High Alpha Australian Equity Fund (the "Fund''), for the year ended30 June 2017.


For the year ended 30 June 2017

The following persons held office as directors of Channel Investment Management Limited during the year or since the end of the year andup to the date of this report.

Directors' report

The Responsible Entity has a Compliance Committee consisting of two independent persons and one non-independent person. Thiscommittee’s role is to oversee the compliance requirements of the Fund operated by the Responsible Entity. During the year thisCommittee met four times.

The Fund is a registered managed investment fund domiciled in Australia.

The Fund did not have any employees during the year.

The Fund may hold between 20 and 40 listed Australian securities and security derivatives in accordance with the provisions of the Fund'sProduct Disclosure Statement and Fund Constitution.

There have been no significant changes to the operations of the Fund since the previous financial period. The Fund continued to investfunds in accordance with target asset allocations as set out in the governing documents of the Fund and in accordance with the provisions

2

Review and results of operations (continued)

30 June 30 June2017 2016$'000 $'000

Net operating profit before financing costs attributable to unitholders 33,783 6,936

Distribution paid and payable Class A 13,551 7,354 Class B 4 3

13,555 7,357

Distribution (cents per unit)Class A 6.4805 3.7982 Class B 5.8179 3.1339

Significant changes in state of affairs

Matters subsequent to the end of the financial year

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

Year ended

The performance of the Fund, as represented by the results of its operations, was as follows:

In the opinion of the directors, there were no significant changes in the state of affairs of the Fund that occurred during the financial year.

No matter or circumstance other than disclosed in Note 17 has arisen since 30 June 2017 that has significantly affected, or maysignificantly affect:

funds in accordance with target asset allocations as set out in the governing documents of the Fund and in accordance with the provisionsof the Fund's Constitution.

2

Directors' report (continued)

Likely developments and expected results of operati ons

Indemnification and insurance of officers and audit ors

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

Fees paid to and interests held in the Fund by the Responsible Entity or its associates

No fees were paid out of Fund property to the directors of the Responsible Entity during the year.

lnterests in the Fund

The results of the Fund's operations will be affected by a number of factors, including the performance of investment markets in which theFund invests. Investment performance is not guaranteed and future returns may differ from past returns. As investment conditions changeover time, past returns should not be used to predict future returns.

Further information on likely developments in the operations of the Fund and the expected results of those operations have not beenincluded in this report because the Responsible Entity believes it would be likely to result in unreasonable prejudice to the Fund.

Fees paid to the Responsible Entity and its associates out of Fund property during the year are disclosed in Note 15 on page 24 of thefinancial statements.

Insurance cover provided to either the officers of Channel Investment Management Limited or the auditors of the Fund is paid by ChannelInvestment Management Limited and not out of the assets of the Fund. So long as the officers of Channel Investment Management Limitedact in accordance with the Fund's Constitution and the Law, the officers remain indemnified out of the assets of the Fund against lossesincurred while acting on behalf of the Fund.

The number of interests in the Fund held by the Responsible Entity or its associates as at the end of the financial year are disclosed inNote 15 of the financial statements.

Directors' report (continued)Solaris High Alpha Australian Equity Fund

The Fund will continue to be managed in accordance with the investment objectives and guidelines as set out in the governing documentsof the Fund.


3

The movement in units on issue in the Fund during the year is disclosed in Note 13 of the financial statements.

Environmental regulation

Rounding of amounts to the nearest thousand dollars

Auditor's independence declaration

This report is made in accordance with a resolution of the directors.

Mr G HoldingDirectorChannel Investment Management Limited

Brisbane19 September 2017

A copy of the Auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 4.

The value of the Fund's assets and liabilities are disclosed in the statement of financial position and derived using the basis set out in Note2 of the financial statements.

The operations of the Fund are not subject to any particular or significant environmental regulations under a Commonwealth, State orTerritory law.

The Funds are entities of the kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 and inaccordance with that instrument, amounts in the consolidated financial report and directors' report have been rounded off to the nearestthousand dollars or nearest dollar, unless otherwise stated.

3

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pwc

Auditor's Independence Declaration

As lead auditor for the audit of Solaris High Alpha Australian Equity Fund for the year ended 3o Junezot7,l declare that to the best of my knowledge and belief, there have been:

(a) no contraventions of the auditor independence requirements of the Corporations Act 2oo1 inrelation to the audit; and

(b) no contraventions ofany applicable code ofprofessional conduct in relation to the audit.

Woodbridge Brisbane19 September 2ot7Partner

PricewaterhouseCoopers

PricewaterhouseCoopers, ABN 5z 7ao 4gS 78748o Queen Street, BRISBANE QLD 4ooo, GPO Box t5o, BRISBANE QLD 4ootT: +6t 7 3zg7 5ooo, F: +6t 7 3257 59gg,www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation

Statement of comprehensive income

30 June 30 JuneNotes 2017 2016

$'000 $'000

Investment income

44 55 Dividend income 5 8,642 8,189

6 25,546 (890) Total net investment income 34,232 7,354

ExpensesManagement fees 15 - - Transaction costs 449 418 Total operating expenses 449 418

Operating profit 33,783 6,936

Finance costs attributable to unitholdersDistributions to unitholders 8 (13,555) (7,357) Increase/(decrease) in net assets attributable to unitholders 13 (20,228) 421 Profit/(loss) for the year - -

Other comprehensive income - -

Total comprehensive income for the year - -

Year ended

Statement of comprehensive incomeSolaris High Alpha Australian Equity Fund

Net (losses)/gains on financial instruments held at fair value through profit or loss


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

Investment income from financial assets not held at fair value through profit or loss

5

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

5

Statement of financial position

30 June 30 June Notes 2017 2016

$'000 $'000

AssetsCash and cash equivalents 9 4,737 2,173 Receivables 11 3,625 2,328 Financial assets held at fair value through profit or loss 10 228,751 192,817 Total assets 237,113 197,318

LiabilitiesDistributions declared 8 7,405 2,678 Payables 12 4,125 1,167 Financial liabilities held at fair value through profit or loss 10 - -

11,530 3,845

Net assets attributable to unitholders 13 225,583 193,473

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

As at 30 June 2017

As at

Total liabilities (excluding net assets attributabl e to unitholders)

Statement of financial positionSolaris High Alpha Australian Equity Fund

66

Statement of changes in equity

30 June 30 June2017 2016$'000 $'000

Total equity at the beginning of the financial year - - Profit/(loss) for the year - - Other comprehensive income - - Total comprehensive income - - Transactions with owners in their capacity as owners - - Total equity at the end of the financial year - -

Changes in net assets attributable to unitholders are disclosed in Note 13.

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

Statement of changes in equity

Year ended



ln accordance with AASB 132 'Financial lnstruments, net assets attributable to unitholders are classified as a liability rather than equity. Asa result there was no equity at the start or end of the year.

77

Statement of cash flows

30 June 30 JuneNotes 2017 2016

$'000 $'000

Cash flows from operating activities

100,531 99,750Purchase of financial instruments held at fair value through profit or loss (109,394) (118,738)

(449) (418)Dividend/Trust distribution received 8,788 7,885Interest received 41 54RITC (paid)/received (7) 1 Net cash outflow from operating activities 16 (a) (490) (11,466)

Cash flows from financing activitiesProceeds from applications by unitholders 3,400 20,001Payments for redemptions by unitholders (342) (8,000) Distributions paid (4) (1) Net cash inflow from financing activities 3,054 12,000

Net increase in cash and cash equivalents 2,564 534 Cash and cash equivalents at the beginning of the year 2,173 1,639

Cash and cash equivalents at the end of the year 9, 16 (b) 4,737 2,173

Non-cash financing activities 16 (c) 8,824 9,479

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

Transaction costs on financial instruments held at fair value through profit or loss

Statement of cash flowsSolaris High Alpha Australian Equity Fund

Year ended


Proceeds from sales of financial instruments held at fair value through profit or loss

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Contents

Page 1 General information 10 2 Summary of significant accounting policies 10 3 Financial risk management 14 4 Fair value measurements 17 5 Dividend income 19 6 Net gains/(losses) on financial instruments held at fair value through profit or loss 20 7 Auditor's remuneration 20 8 Distributions to unitholders 20 9 Cash and cash equivalents 21 10 Net financial assets held at fair value through profit or loss 21 11 Receivables 21 12 Payables 21 13 Net assets attributable to unitholders 22 14 Derivative financial instruments 23 15 Related party transactions 24 16 Reconciliation of net profit to net cash outflow from operating activities 26 17 Events occurring after the reporting date 26 18 Contingent assets and liabilities and commitments 26

Notes to the financial statementsSolaris High Alpha Australian Equity Fund


99

1

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(a)

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have beenconsistently applied to all years presented, unless otherwise stated in the following text.

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, interpretationsissued by the Accounting Standard Board and the Corporations Act 2001 in Australia. The Solaris High Alpha Australian Equity Fund is afor-profit unit trust for the purpose of preparing the financial statements.

The financial statements are prepared on the basis of fair value measurement of assets and liabilities except where otherwise stated.

General information



Basis of preparation

Summary of significant accounting policies

The Responsible Entity of the Fund is Channel Investment Management Limited (the “Responsible Entity''). The Responsible Entity'sregistered office is Level 25, Waterfront Place, 1 Eagle Street, Brisbane, QLD 4000. The financial statements are presented in theAustralian currency.

The Fund may hold between 20 and 40 listed Australian securities and security derivatives in accordance with the provisions of the Fund'sProduct Disclosure Statement and Fund Constitution.

The financial statements were authorised for issue by the directors on 19 September 2017. The directors of the Responsible Entity havethe power to amend the financial statements after they have been issued.

The Custodian of the Fund is RBC Investor Services Trust.

Notes to the financial statements (continued)

These financial statements cover the Solaris High Alpha Australian Equity Fund (the “Fund") as an individual entity. The Fund wasconstituted on 7 December 2007. The Fund will terminate on 7 December 2087 unless terminated earlier in accordance with the provisionsof the Fund Constitution.

The Responsible Entity is incorporated and domiciled in Australia. Solaris Investment Management Limited acts as investment manager ofthe Fund.

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(i) Compliance with International Financial Reporting Standards (IFRS)

(ii) New and amended standards adopted by the Fund

(iii) New standards and interpretations not yet adopted

-

Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2017 reporting periodand have not been early adopted by the Fund. The directors’ assessment of the impact of these new standards (to the extent relevant tothe Fund) and interpretations is set out below:

AASB 9 Financial Instruments (and applicable amendments) (effective from 1 January 2018)

AASB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities. It has now also introducedrevised rules around hedge accounting and impairment. The standard is not applicable until 1 January 2018 but is available for earlyadoption. The directors do not expect this to have a significant impact on the recognition and measurement of the Fund’s financialinstruments as they are carried at fair value through profit or loss. The derecognition rules have not changed from the previousrequirements, and the Fund does not apply hedge accounting. AASB 9 introduces a new impairment model. However, as the Fund'sinvestments are held at fair value through profit or loss, the change in impairment rules will not impact the Fund. The Fund has not yetdecided when to adopt AASB 9.

The financial statements of the Fund also comply with International Financial Reporting Standards as issued by the InternationalAccounting Standards Board.

The statement of financial position is presented on a liquidity basis. Assets and liabilities are presented in decreasing order of liquidity andare not distinguished between current and non‑current. All balances are generally expected to be recovered or settled within twelvemonths, except for investments in financial assets and net assets attributable to unitholders. The amount expected to be recovered orsettled in relation to these balances cannot be reliably determined.

There are no new standards, interpretations or amendments to existing standards that are effective for the first time for the financial year beginning 1 July 2016 that have a material impact on the Fund.

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2

(a)

-

(b)

(i) Classification

The Fund’s investments are categorised as at fair value through profit or loss. They comprise:

- Financial instruments held for trading

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

Basis of preparation (continued)


AASB 15 Revenue from Contracts with Customers (effective from 1 January 2018)

AASB 15 will replace AASB 118 Revenue which covers contracts for goods and services and AASB 111 Construction Contracts whichcovers construction contracts. AASB 15 is based on the principle that revenue is recognised when control of a good or service transfers toa customer – so the notion of control replaces the existing notion of risks and rewards.

The Fund’s main sources of income are interest, dividends and distributions, and gains on financial instruments held at fair value. All ofthese are outside the scope of the new revenue standard. As a consequence, the directors do not expect the adoption of AASB 15 to havea significant impact on the Fund’s accounting policies or the amounts recognised in the financial statements. The Fund has not yet decidedwhen to adopt AASB 15.

Summary of significant accounting policies (continu ed)

Derivative financial instruments such as futures, forward contracts, options and interest rate swaps are included under thisclassification. The Fund does not designate any derivatives as hedges in a hedging relationship.

Financial instruments

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

These include financial assets and financial liabilities that are not held for trading purposes and which may be sold. These areinvestments in exchange traded equity instruments and unlisted trusts.

Solaris High Alpha Australian Equity FundNotes to the financial statements (continued)

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(ii) Recognition/derecognition

(iii) Measurement

(a) Financial assets and liabilities held at fair value through profit or loss

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 Fund’s documented investment strategy. The Fund’s policyis for the Responsible Entity to evaluate the information about these financial instruments on a fair value basis together with otherrelated financial information. The information on the fair value basis is provided internally to the Fund’s key management personnel.

Subsequent to initial recognition, all financial assets and financial liabilities at fair value through profit or loss are measured at fair value.Gains and losses arising from changes in the fair value of the ‘financial assets or financial liabilities at fair value through profit or loss’category are presented in the statement of comprehensive income within net gains/(losses) on financial instruments held at fair valuethrough profit or loss in the period in which they arise. This also includes dividend expense on short sales of securities, which have beenclassified at fair value through profit or loss.

The fair value of financial assets and liabilities traded in active markets is subsequently based on their quoted market prices at the end ofthe reporting period without any deduction for estimated future selling costs. The quoted market price used for financial assets held by theFund is the current bid price and the quoted market price for financial liabilities is the current asking price.

The Fund recognises financial assets and financial liabilities on the date they become party to the contractual agreement (trade date) andrecognises changes in fair value of the financial assets or financial liabilities from this date.

A financial asset is derecognised when the rights to receive cash flows from the financial assets have expired or the Fund has transferredsubstantially all the risks and rewards of ownership. Financial liabilities are derecognised when the obligation under the liabilities aredischarged.

At initial recognition, the Fund measures a financial asset at its fair value. Transaction costs of financial assets carried at fair value throughprofit or loss are expensed in the statement of comprehensive income.

11

2

(b)

(iii) Measurement (continued)

(a) Financial assets and liabilities held at fair value through profit or loss (continued)

(b) Loans and receivables

(iv) Offsetting financial instruments

(c) Net assets attributable to unitholders

Loan assets are measured initially at fair value plus transaction costs and subsequently amortised using the effective interest rate method,less impairment losses if any. Such assets are reviewed at the end of each reporting period to determine whether there is objectiveevidence of impairment.

The fair value of financial assets and liabilities that are not traded in an active market are determined using valuation techniques. The Funduses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Valuationtechniques used include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially thesame, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants makingthe maximum use of market inputs and relying as little as possible on entity-specific inputs.

Further details on how the fair values of financial instruments are determined are disclosed in Note 4.



If evidence of impairment exists, an impairment loss is recognised in profit or loss as the difference between the asset’s carrying amountand the present value of estimated future cash flows discounted at the original effective interest rate.


Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legallyenforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle theliability simultaneously.

If in a subsequent period the amount of an impairment loss recognised on a financial asset carried at amortised cost decreases and thedecrease can be linked objectively to an event occurring after the write-down, the write-down is reversed through profit or loss.

Financial instruments (continued)


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(c) Net assets attributable to unitholders

(d) Cash and cash equivalents

(e) Investment income

(i) Interest income

Units are redeemable at the unitholders' option, however, applications and redemptions may be suspended by the responsible entity if it isin the best interests of the unitholders. The units are classified as financial liabilities as the Fund is required to distribute its distributableincome. The units can be put back to the Fund at any time for cash based on the redemption price. The fair value of redeemable units ismeasured at the redemption amount that is payable (based on the redemption unit price) at the end of the reporting period if unitholdersexercised their right to redeem units in the Fund.

The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating theinterest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated futurecash payments or receipts throughout the expected life of the financial instrument, or a shorter period where appropriate, to the netcarrying amount of the financial asset or liability. When calculating the effective interest rate, the Fund estimates cash flows considering allcontractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The calculationincludes all fees paid or received between the parties to the contract that are an integral part of the effective interest rate, includingtransaction costs and all other premiums or discounts.

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call withfinancial institutions, cash held by broker for margin calls, other short term, highly liquid investments with original maturities of three monthsor less from the date of acquisition that are readily convertible to known amounts of cash and which are subject to an insignificant risk ofchanges in value, and bank overdrafts. Bank overdrafts are shown within borrowings in the statement of financial position.

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

Interest income is recognised in profit or loss for all financial instruments that are not held at fair value through profit or loss using theeffective interest method. Interest income on assets held at fair value through profit or loss is included in the net gains/(losses) on financialinstruments. Other changes in fair value for such instruments are recorded in accordance with the policies described in Note 2(b).

12

2

(e) Investment income (continued)

(ii) Dividend and Distributions

(f) Expenses

(g) Income tax

(h) Distributions

(i) Increase/(decrease) in net assets attributable to u nitholders

(j) Due from/to brokers

Trust distributions are recognised on an entitlements basis.

Dividend income is recognised on the ex-dividend date with any related foreign withholding tax recorded as an expense. The Fundcurrently incurs withholding tax imposed by certain countries on investment income. Such income is recorded gross of withholding tax inthe statement of comprehensive income.

Income not distributed is included in net assets attributable to unitholders. Movements in net assets attributable to unitholders arerecognised in profit or loss as finance costs.

Any expenses which are paid by the unitholder from Fund assets are included in the Fund's financial statements and recognised in theprofit or loss on an accruals basis. Any expenses that are paid directly to the Responsible Entity and/or investment manager by theunitholder as per the terms of individual agreements are not recognized in the Fund's financial statements.


In accordance with the Fund’s Constitution, the Fund distributes its distributable (taxable) income, and any other amounts determined bythe Responsible Entity, to unitholders by cash or reinvestment. The distributions are recognised in the statement of comprehensive incomeas finance costs attributable to unitholders.



Under current legislation, the Fund is not subject to income tax as unitholders are presently entitled to the income of the Fund.

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(j) Due from/to brokers

(k) Receivables

(l) Payables

(m) Applications and redemptions

Payables include liabilities and accrued expenses owing by the Fund which are unpaid as at the end of the reporting period.

As the Fund has a contractual obligation to distribute its distributable income, a separate distribution payable is recognised in the balancesheet as at the end of each reporting period where this amount remains unpaid as at the end of the reporting period.

Applications received for units in the Fund are recorded net of any entry fees payable prior to the issue of units in the Fund. Redemptionsfrom the Fund are recorded gross of any exit fees payable after the cancellation of units redeemed.

Amounts due from/to brokers represent receivables for securities sold and payables for securities purchased that have been contracted forbut not yet delivered by the end of the year. Trades are recorded on trade date, and for equities normally settled within three businessdays. A provision for impairment of amounts due from brokers is established when there is objective evidence that the Fund will not be ableto collect all amounts due from the relevant broker. Indicators that the amount due from brokers is impaired include significant financialdifficulties of the broker, probability that the broker will enter bankruptcy or financial reorganisation and default in payments.

Receivables may include amounts for dividends, interest and trust distributions. Dividends and trust distributions are accrued when theright to receive payment is established. Interest is accrued at the end of each reporting period from the time of last payment in accordancewith the policy set out in note 2(f) above. Amounts are generally received within 30 days of being recorded as receivables.

Receivables include such items as Reduced Input Tax Credits (RITC) and application monies receivable from unitholders.

13

2

(n) Goods and Services Tax (GST)

(o) Use of estimates

(p) Rounding of amounts

The GST incurred on the costs of various services provided to the Fund by third parties such as audit fees, custodial services andinvestment management fees have been passed onto the Fund. The Fund qualifies for Reduced Input Tax Credits (RITC) at a rate of 75%hence management fees, transaction costs and other expenses have been recognised in the statement of comprehensive income net ofthe amount of GST recoverable from the Australian Taxation Office (ATO). Accounts payable are inclusive of GST. The net amount of GSTrecoverable from the ATO is included in receivables in the statement of financial position. Cash flows relating to GST are included in thestatement of cash flows on a gross basis.



For certain other financial instruments, including amounts due from/to brokers and payables, the carrying amounts approximate fair valuedue to the short-term nature of these financial instruments.

The Fund is as entity of the kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 and inaccordance with that instrument, amounts in the consolidated financial report and directors' report have been rounded off to the nearestthousand dollars or nearest dollar, unless otherwise stated.

The Fund makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year.Estimates are continually evaluated and based on historical experience and other factors, including expectations of future events that arebelieved to be reasonable under the circumstances.

For the majority of the Fund’s financial instruments, quoted market prices are readily available. However, certain financial instruments, forexample over-the-counter derivatives or unquoted securities, are fair valued using valuation techniques. Where valuation techniques (forexample, pricing models) are used to determine fair values, they are validated and periodically reviewed by experienced personnel of theResponsible Entity, independent of the area that created them.

Models use observable data, to the extent practicable. However, areas such as credit risk (both own and counterparty), volatilities andcorrelations require management to make estimates. Changes in assumptions about these factors could affect the reported fair value offinancial instruments.

Notes to the financial statements (continued)For the year ended 30 June 2017

14

3

(a) Objectives, strategies, policies and processes

(b) Market risk

(i) Price risk

The Investment Manager mitigates this price risk through diversification and a careful selection of securities and other financial instrumentswithin specified limits set by the Board. The Fund’s overall market positions are monitored on a daily basis by the Fund’s InvestmentManager. Compliance with the Fund’s Product Disclosure Statement is reported to the Board at least quarterly.

The Fund’s overall risk management program focuses on ensuring compliance with the Fund’s Product Disclosure Statement and seeks tomaximise the returns derived for the level of risk to which the Fund is exposed. Financial risk management is carried out by the InvestmentManager under policies approved by the Board of Directors of the Responsible Entity (the Board).

The Fund uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in thecase of interest rate, foreign exchange and other price risks and ratings analysis for credit risk.

As part of its risk management strategy, the Fund uses derivatives and other investments, including share price futures, to manageexposures resulting from changes in equity price risks, and exposures arising from forecast transactions.

Equity price risk is the risk that the fair value of equities will fluctuate because of changes in market prices, whether those changes arecaused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in themarket. Equity price risk exposure arises from the Fund's investment portfolio. The investments are classified on the statement of financialposition as at fair value through profit or loss. All securities investments present a risk of loss of capital. The maximum risk resulting fromfinancial instruments is determined by the fair value of the financial instruments.

The Fund’s policy also limits individual equity securities to no more than +/- 9% (relative to the benchmark) of net assets attributable tounitholders. The Fund had no concentrations in individual equity positions exceeding +/- 9% (relative to the benchmark) (2016: 9%) of thenet assets attributable to unitholders at 30 June 2017.

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

Financial risk management

14

3

As at30 June 30 June

2017 2016$'000 $'000

Securities designated at fair value through profit or loss 228,766 192,794 Derivative assets/(liabilities) held for trading (15) 23 Total 228,751 192,817

Summarised sensitivity analysis

(ii) Foreign exchange risk

(iii) Cash flow and interest rate risk


The Fund is not exposed to significant risks from movements in foreign exchange rates as there are no financial assets and liabilitiesdenominated in foreign currencies.

Financial risk management (continued)


The following summarises the sensitivity of the Fund’s operating profit and net assets attributable to unitholders to price risk. Thereasonably possible movements in the risk variables have been determined based on management’s best estimate, having regards to anumber of factors, including historical correlation of the Fund’s Investments with the relevant benchmark and market volatility. However,actual movements in the risk variables may be greater or less than anticipated due to a number of factors, including unusually large marketshocks resulting from changings in the performance of the economies, markets and securities in which the Fund invests. As a result,historic variation in risk variables should not be used to predict future variation in the risk variables.

At 30 June 2017, if the equity prices had increased by 13% (2016: 13%) with all other variables held constant, this would have increasednet assets attributable to unitholders (and net operating profit/(loss)) by approximately $29,739,471 (2016: $25,063,229). Conversely, if theequity prices had decreased by 13% (2016: 13%), this would have decreased net assets attributable to unitholders (and net operatingprofit/(loss)) by approximately $29,739,471 (2016: 25,063,229).

Net assets attributable to unitholders include investments in equity securities and related derivatives. At 30 June 2017 and 30 June 2016,the overall market exposures were as follows:


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(c) Credit risk

Credit risk is not considered to be significant to the Fund.

(d) Liquidity risk

The Fund holds no collateral as security or any other credit enhancement. The maximum exposure to credit risk at the end of eachreporting period is the carrying amount of the financial assets. None of these assets are impaired nor past due but not impaired.

Liquidity risk is the risk that the Fund may not be able to generate sufficient cash resources to settle its obligations in full as they fall due orcan only do so on terms that are materially disadvantageous.

The majority of the Fund’s financial assets are non-interest-bearing. Interest-bearing financial assets and interest-bearing financialliabilities mature or reprice in the short-term, no longer than twelve months. As a result, the Fund is subject to limited exposure to fair valueinterest rate risk due to fluctuations in the prevailing levels of market interest rates.

The Fund may, from time to time, invest in exchange traded derivative contracts.

The Fund is exposed to daily cash redemptions of redeemable units and daily margin calls on derivatives. It therefore primarily holdsinvestments that are traded in an active market and can be readily disposed.

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge anobligation.

15

3

(d) Liquidity risk (continued)

Maturity analysis for financial liabilities

At 30 June 2017 1‑‑‑‑3 months 3‑‑‑‑12 months 12‑‑‑‑60 months$’000 $’000 $’000 $’000

Distributions payable 7,405 - - -

4,125 - - - Net assets attributable to unitholders 225,583 - - -

237,113 - - -

At 30 June 2016 1‑3 months 3‑12 months 12‑60 months$’000 $’000 $’000 $’000

Distributions payable 2,678 - - -

1,167 - - - Net assets attributable to unitholders 193,473 - - - Contractual cashflow (excluding derivatives) 197,318 - - -

At 30 June 2017 1‑‑‑‑3 months 3‑‑‑‑12 months 12‑‑‑‑60 months

Financial risk management (continued)


Contractual cashflow (excluding derivatives)

The table below analyses the Fund's net settled derivative financial instruments in a loss position for which the contractual maturities areconsidered to be essential to an understanding of the timing of cash flows based on the Fund's investment strategy.

Less than 1 month

In accordance with the Fund’s policy, the Investment Manager monitors the Fund’s liquidity position on a daily basis.

Due to brokers - payable for securities purchased


Less than 1 month


Due to brokers - payable for securities purchased

Less than 1 month

The table below analyses the Fund's non-derivative financial liabilities into relevant maturity groupings based on the remaining period atthe end of the reporting period to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows.

16

At 30 June 2017 1‑‑‑‑3 months 3‑‑‑‑12 months 12‑‑‑‑60 months$’000 $’000 $’000 $’000

SPI Futures - (15) - - - (15) - -

At 30 June 2016 1‑3 months 3‑12 months 12‑60 months$’000 $’000 $’000 $’000

SPI Futures - 23 - - - 23 - -

Less than 1 month

Less than 1 month

16

4

---

-

-

-

(a)

The quoted market price used for financial assets held by the Fund is the current bid price; the quoted market price for financial liabilities isthe current asking price. When the Fund holds derivatives with offsetting market risks, it uses mid-market prices as a basis for establishing


Fair value hierarchy

Classification of financial assets and financial liabilities

The Fund classifies fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used in making themeasurements. The fair value hierarchy has the following levels:

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 or indirectly (Level2); and

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

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 and listed equity securities) arebased on quoted market prices at the close of trading at the end of the reporting period without any deduction for estimated future sellingcosts.

The Fund values its investments in accordance with the accounting policies set out in Note 2 of the financial statements. For the majority ofits investments, the Fund relies on information provided by independent pricing services for the valuation of its investments.

Derivative financial instruments

The Fund has no assets or liabilities measured at fair value on a non-recurring basis in the current reporting period.



Financial assets/liabilities held for trading

Fair value measurements

The Fund measures and recognises financial assets and liabilities held at fair value through profit or loss on a recurring basis.

Financial assets/liabilities designated at fair value through profit or loss (FVTPL)

17

(b) 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 using valuation techniques. Theseinclude the use of recent arm’s length market transactions, reference to the current fair value of a substantially similar other instrument,discounted cash flow techniques, option pricing models or any other valuation technique that provides a reliable estimate of pricesobtained in actual market transactions.

Where discounted cash flow techniques are used, estimated future cash flows are based on best estimates and the discount rate used is amarket rate at the end of the reporting period applicable for an instrument with similar terms and conditions.

the current asking price. When the Fund holds derivatives with offsetting market risks, it uses mid-market prices as a basis for establishingfair values for the offsetting risk positions and applies this bid or asking price to the net open position, as appropriate.

An active market is a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricinginformation on an ongoing basis.

A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange,dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring markettransactions on an arm’s length basis.

17

4

(b) Fair value in an inactive or unquoted market (Level 2 and Level 3)

At 30 June 2017 Level 1 Level 2 Level 3 Total$’000 $’000 $’000 $’000

Financial assetsDesignated at fair value through profit or lossListed equities 187,975 - - 187,975 Listed property trusts 40,791 - - 40,791



Fair value measurements (continued)

For other pricing models, inputs are based on market data at the end of the reporting period. Fair values for unquoted equity investmentsare estimated, if possible, using applicable price/earnings ratios for similar listed companies adjusted to reflect the specific circumstancesof the issuer.

The fair value of derivatives that are not exchange traded is estimated at the amount that the Fund would receive or pay to terminate thecontract at the end of reporting period taking into account current market conditions (volatility and appropriate yield curve) and the currentcreditworthiness of the counterparties. The foreign currency contracts are valued at the forward rate.

Investments in other unlisted unit funds are recorded at the redemption value per unit as reported by the investment managers of suchfunds.

Some of the inputs to these models may not be market observable and are therefore estimated based on assumptions.

The output of a model is always an estimate or approximation of a value that cannot be determined with certainty, and valuation techniquesemployed may not fully reflect all factors relevant to the positions the Fund holds. Valuations are therefore adjusted, where appropriate, toallow for additional factors including liquidity risk and counterparty risk.

The carrying value less impairment provision of other receivables and payables are assumed to approximate their fair values. The fairvalue of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current marketinterest rate that is available to the Fund for similar financial instruments.

The following table presents the Fund's financial assets and liabilities measured and recognised at fair value according to the fair valuehierarchy at 30 June 2017 and 30 June 2016:

18

Held for tradingFinancial assets held for trading (15) - - (15) Total financial assets 228,751 - - 228,751

At 30 June 2016 Level 1 Level 2 Level 3 Total$’000 $’000 $’000 $’000

Financial assetsDesignated at fair value through profit or lossListed equities 163,188 - - 163,188 Listed property trusts 29,606 - - 29,606 Financial assets held for trading 23 - - 23 Total financial assets 192,817 - - 192,817

The fair value of financial instruments traded in active markets (listed equities, unit trusts and property trusts) is based on quoted marketprices at the end of the reporting period. The quoted market price used for financial assets held by the Fund is the current bid price. Theseinstruments are included in level 1. Derivative financial instruments (futures) are included in level 1, as they are traded in an active market.

18

4

At 30 June 2016Unlisted equity

$'000

1,700 - -

(1,700) - -

At 30 June 2016Range of inputs

Fair value$'000

- Market price 16%-20% (18%)

5

The carrying amounts of trade receivables and payables are assumed to approximate their fair values due to their short-term nature.

Higher (lower) market price (+/-18%)would increase (decrease) fair value by$306,000

Dividend income


(probability - weighted average)

Relationship of unobservable inputs tofair valueUnobservable inputs

The following table summarises the quantitative information about the significant unobservable inputs used in level 3 fair valuemeasurements. Refer to the note below for the valuation techniques adopted.

Unlisted equities

Opening balancePurchasesSalesTransfers into(out) from level 3

Description

Valuation inputs and relationships to fair value

Closing balanceGains and losses recognised in profit or loss

The following table presents the movement in level 3 instruments for the year ended 30 June 2016 by class of financial instrument. Nolevel 3 instruments were held for the year ended 30 June 2017.


Fair value measurements (continued)

19

5

30 June 30 June2017 2016$'000 $'000

Dividend/Trust distribution income 8,642 8,189 8,642 8,189

6 Net gains/(losses) on financial instruments held a t fair value through profit or loss

30 June 30 June2017 2016$'000 $'000

Financial assets

Net unrealised (losses)/gains on financial assets held for trading (36) 116 Net realised gains/(losses) on financial assets held for trading 418 (631) Net gains/(losses) on financial assets held for trading 382 (515)

14,092 155

11,072 (530)

25,164 (375)

25,546 (890)

Dividend income

Net gains/(losses) on financial assets designated as at fair value through profit or loss

Year ended

Year ended

Net unrealised gains/(losses) on financial assets designated as at fair value through profit or lossNet realised gains/(losses) on financial assets designated as at fair value through profit or loss

Net gains/(losses) on financial assets held at fair value throughprofit or loss

19

7

During the year the following fees were paid or payable for services provided by the auditor of the Fund:

30 June 30 June 2017 2016

$ $

(i) Audit and other assurance servicesAudit and review of financial statements 10,959 10,853 Other assurance services

Audit of compliance plan 8,117 9,435 Total remuneration for audit and other assurance se rvices 19,076 20,288

(ii) Taxation servicesTax Compliance Services 3,125 3,250

Total remuneration for audit and non-audit services 22,201 23,538

8 Distributions to unitholders

Timing of distributions

The distributions were paid/payable as follows:

30 June 30 June 30 June 30 June2017 2017 2016 2016$'000 CPU $'000 CPU

Class A31 December 6,146 2.9846 4,676 2.4613 30 June (payable) 7,405 3.4959 2,678 1.3369

Auditor’s remuneration

Year ended

For the year ended 30 June 2017Notes to the financial statements (continued)

The fees for audit and non‑audit services are paid by the investment manager out of the management fee that they charge to the clients.

Year ended


20

30 June (payable) 7,405 3.4959 2,678 1.3369 13,551 6.4805 7,354 3.7982

Class B31 December 2 2.6697 2 2.1841 30 June (payable) 2 3.1482 1 0.9498

4 5.8179 3 3.1340

Total distribution 13,555 7,357

20

9 Cash and cash equivalents

30 June 30 June2017 2016$'000 $'000

Cash at bank 4,617 1,963 Deposits held with brokers for margin calls 120 210

4,737 2,173

10

30 June 30 June 2017 2016$'000 $'000

Designated at fair value through profit or lossListed equities 187,975 163,188 Listed property trusts 40,791 29,606 Unlisted equity - - Total financial assets designated at fair value thr ough profit or loss 228,766 192,794

Held for tradingDerivatives (futures) (15) 23 Total financial (liabilities)/assets held for tradi ng (15) 23

Total net financial assets held at fair value throu gh profit or loss 228,751 192,817

An overview of the risk exposures relating to financial assets at fair value through profit or loss is included in Note 3.

11

Net financial assets held at fair value through pro fit or loss

As at

As at



Receivables

21

11

30 June 30 June 2017 2016$'000 $'000

Due from brokers - receivable for securities sold 1,621 187 Accrued income 1,990 2,133 GST receivable 14 8

3,625 2,328

12

30 June 30 June 2017 2016$'000 $'000

Due to brokers - payable for securities purchased 4,125 1,167 4,125 1,167

As at

Payables

As at

Receivables

21

13

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

30 June 30 June 30 June 30 June2017 2016 2017 2016

Units '000 Units '000 $'000 $'000

Net assets attributable to unitholdersOpening balance 200,230 177,063 193,432 172,373 Applications 3,316 21,583 3,400 20,001 Redemptions (329) (8,194) (344) (8,000) Units issued upon reinvestment of distributions 8,610 9,778 8,824 9,478

- - 20,221 (420) Closing balance 211,827 200,230 225,533 193,432

Net assets attributable to unitholdersOpening balance 75 73 43 43 Applications - - - - Redemptions - - - - Units issued upon reinvestment of distributions - 2 - 1

- - 7 (1) Closing balance 75 75 50 43

Year ended


Net assets attributable to unitholders

As stipulated in the Fund Constitution, each unit represents a right to an individual share in the Fund and does not extend to a right to theunderlying assets of the Fund. The Constitution of the Fund allows the Responsible Entity to issue different classes of units with specialrights or restrictions. In these instances, the Corporations Act requires the Responsible Entity to treat all investors within a class of unitsequally and investors in different classes fairly.


Class A

Class B

Increase/(decrease) in net assets attributable to unitholders


Total


22

Net assets attributable to unitholdersOpening balance 200,305 177,136 193,473 172,416 Applications 3,316 21,583 3,400 19,999 Redemptions (329) (8,194) (342) (8,000) Units issued upon reinvestment of distributions 8,610 9,780 8,824 9,479

- - 20,228 (421) Closing balance 211,901 200,305 225,583 193,473

Capital risk management

The Fund monitors the level of daily applications and redemptions relative to the liquid assets in the Fund. The Fund’s strategy is to hold acertain portion of the net assets attributable to unitholders in liquid investments. Liquid assets include cash and cash equivalents and listedequities. Under the terms of the Fund’s Constitution, the Responsible Entity has the discretion to reject an application for units and to deferor adjust a redemption of units, if the exercise of such discretion is in the best interests of unitholders.


Total

The Fund manages its net assets attributable to unitholders as capital, notwithstanding net assets attributable to unitholders are classifiedas a liability. The amount of net assets attributable to unitholders can change significantly on a daily basis as the Fund is subject to dailyapplications and redemptions at the discretion of unitholders.

22

14

- hedging to protect an asset or liability of the Fund against a fluctuation in market values or to reduce volatility,

- a substitution for trading of physical securities, and

-

The Fund holds the following derivative instruments:

(a) Futures

The Fund’s derivative financial instruments at year end are detailed below:


While derivatives are used for trading purposes, they are not used to gear (leverage) a portfolio. Gearing a portfolio would occur if the levelof exposure to the markets exceeds the underlying value of the Fund.


Futures are contractual obligations to buy or sell financial instruments on a future date at a specified price established in an organisedmarket. The futures contracts are collateralised by cash or marketable securities. Changes in futures contracts’ values are usually settlednet daily with the exchange. Futures are contractual obligations to receive or pay a net amount based on changes in Share Price Index(SPI) futures at a future date at a specified price, established in an organised financial market.

adjusting asset exposures within the parameters set in the investment strategy, and adjusting the duration of fixed interest portfoliosor the weighted average maturity of cash portfolios.

Derivative transactions include a wide assortment of instruments, such as forwards, futures and options. Derivatives are considered to bepart of the investment process. The use of derivatives is an essential part of the Fund’s portfolio management. Derivatives are notmanaged in isolation. Consequently, the use of derivatives is multifaceted and includes:

Derivative financial instruments require no initial net investment or an initial net investment that is smaller than would be required for othertypes of contracts that would be expected to have a similar response to changes in market factors.

Derivative financial instruments

In the normal course of business the Fund enters into transactions in various derivative financial instruments with certain risks. A derivativeis a financial instrument or other contract which is settled at a future date and whose value changes in response to the change in aspecified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or creditindex or other variable.


23

Contract/notional Assets Liabilities

30 June 2017 $'000 $'000 $'000

SPI Futures 3,672 (15) -

Contract/notional Assets Liabilities

30 June 2016 $'000 $'000 $'000

SPI Futures 2,847 23 -

An overview of the risk exposure relating to derivatives is included in Note 3.

Fair Values

Fair Values

23

15

Mr W EarnshawMr S MartinMr I MacounMr A Ihlenfeldt Mr B Machen

Mr G HoldingMs K YouhannaMr S Jordan

Manager's fees and other transactions

Class A - fees are charged in accordance with each unitholder's Investment Management AgreementClass B - 0.90% (2016: 0.90%) per annum charged on any unitholders’ funds

The transactions during the year and amounts payable at year end between the Fund and the Responsible Entity were as follows:

Related party transactions

Key management personnel also includes persons who were directors of Channel Investment Management Limited at any time during theyear or since the end of the year and up to the date of this report.

Under the terms of the Fund's Constitution, the Responsible Entity is entitled to receive management fees. From this, the ResponsibleEntity pays Solaris Investment Management Limited a fee for acting as the Investment Manager. The fee is calculated by reference to theaverage daily net assets (excluding net assets attributable to unitholders) of the Fund as follows:

Under the terms of the Fund's Constitution, the Responsible Entity is also entitled to receive a performance fee if the performance of theClass B of the Fund exceeds its benchmark, being the S&P/ASX200 Accumulation Index, by 2%. No performance fee was paid in thecurrent or previous year.

Key management personnel includes persons who were directors of Solaris Investment Management Limited (investment manager) duringthe year or since the end of the year and up to the date of this report.

The Responsible Entity of the Solaris High Alpha Australian Equity Fund is Channel Investment Management Limited. Solaris InvestmentManagement Limited continues to act as investment manager of the Fund.



24

30 June 30 June2017 2016

$ $

Management fees for the year paid by the Fund to the Responsible Entity 437 407

37 34

The transactions during the year and amounts payable at year end between the Fund and the Responsible Entity were as follows:

Aggregate amount payable from the Fund to the Responsible Entity at the reporting date

Year ended

24

15

Related party unitholdings

Number of units held

Director

W. Earnshaw* 0.06% 217,840 6,532 96,712 127,660 B. Machen^ 0.06% 217,904 9,278 95,639 131,543 435,744 15,810 192,351 259,203

Fair value of investments held and distributions paid/payable by the Fund

Director $ $

W. Earnshaw* 135,588 8,167 B. Machen^ 139,712 11,191 275,300 19,358

* Units were held indirectly by Earnshaw Capital Pty Ltd.^ Units were held indirectly by the Machen Superannuation Fund.

Number of units held

Interest held (%)


Distributions paid/payable by the

FundFair value of investments

Number of units held closing (Units)

Parties related to the Fund (including Solaris Investment Management Limited and Channel Investment Management Limited, their relatedparties and other Funds managed by Solaris Investment Management Limited and Channel Investment Management Limited) held units inthe Fund as follows:

Number of units acquired (Units)

Number of units held opening

(Units)

Related party transactions (continued)

Number of units disposed (Units)

Notes to the financial statements (continued)Solaris High Alpha Australian Equity Fund

Year ended 30 June 2016

Year ended 30 June 2017

0.12%

25

Director

W. Earnshaw* 0.11% 206,667 11,173 - 217,840 B. Machen^ 0.11% 206,728 11,176 - 217,904 413,395 22,349 - 435,744

Fair value of investments held and distributions paid/payable by the Fund

Director $ $

W. Earnshaw* 213,570 8,140 B. Machen^ 213,633 8,142 Total 427,203 16,282

* Units were held indirectly by Earnshaw Capital Pty Ltd.^ Units were held indirectly by the Machen Superannuation Fund.

Key management personnel compensation

Key management personnel loan disclosures

Number of units disposed (Units)

Distributions paid/payable by the

Fund

Key management personnel are paid by Channel Capital Pty Ltd, the parent entity of Channel Investment Management Limited. Paymentsmade from the Fund to Channel Investment Management Limited do not include any amounts directly attributable to key managementpersonnel remuneration.

Number of units held closing (Units)

Fair value of investments

0.22%

The Fund has not made, guaranteed or secured, directly or indirectly, any loans to the key management personnel or their personallyrelated entities at any time during the reporting year.

Number of units acquired (Units)Interest held (%)

Number of units held opening (Units)

25

15

Other transactions within the Fund

16 Reconciliation of net profit to net cash outflow from operating activities

30 June 30 June2017 2016$'000 $'000

(a) Reconciliation of net profit to net cash outflow fr om operating activitiesNet profit/(loss) for the year - - Decrease/(increase) in net assets attributable to unitholders 20,228 (421)

100,531 99,750 Purchase of financial instruments held at fair value through profit or loss (109,394) (118,738) Net losses/(gains) on financial instruments held at fair value through profit or loss (25,546) 890 Distributions to unitholders 13,555 7,357 Increase/(decrease) in receivables and accrued income 136 (304) Net cash outflow from operating activities (490) (11,466)

(b) Components of cash and cash equivalents

Cash and cash equivalents 4,737 2,173 Closing balance 4,737 2,173

Related party transactions (continued)


Cash as at the end of the financial year as shown in the statement of cash flows is reconciled to the statement of financial position as follows:

Proceeds from sales of financial instruments held at fair value through profit or loss

From time to time directors of Channel Investment Management Limited or their director related entities, may invest in or withdraw from theFund. These investments or withdrawals are on the same terms and conditions as those entered into by other Fund investors and are trivialin nature.


Apart from those details disclosed in this note, no key management personnel of the Responsible Entity have entered into a materialcontract with the Fund during the year and there were no material contracts involving directors’ interests existing at year end.

Year ended


26

Closing balance 4,737 2,173

(c) Non-cash financing and investing activities

8,824 9,479 Closing balance 8,824 9,479

17

18

No significant events have occurred since the end of the reporting period which would impact on the financial position of the Fund asdisclosed in the statement of financial position as at 30 June 2017 or on the results and cash flows of the Fund for the year ended on thatdate.

Contingent assets and liabilities and commitments

There are no outstanding contingent assets and liabilities or commitments as at 30 June 2017 and 30 June 2016.

Events occurring after the reporting period

During the year, the following distribution payments were satisfied by the issue of units underthe distribution reinvestment plan

26

Directors' declaration

In the opinion of the directors of the Responsible Entity:

(a)

(i)

(ii)

(b)

This declaration is made in accordance with a resolution of the directors.

Mr G HoldingDirectorChannel Investment Management Limited

Brisbane19 September 2017

Note 2(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the InternationalAccounting Standards Board.

Directors' declaration

there are reasonable grounds to believe that the Fund will be able to pay its debts as and when they become due and payable.

giving a true and fair view of the Fund's financial position as at 30 June 2017 and of its performance for the financial year endedon that date.



complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professionalreporting requirements; and

the financial statements and notes set out on pages 5 to 26 are in accordance with the Corporations Act 2001 , including:

19 September 2017

27

Independent auditor’s report To the unitholders of Solaris High Alpha Australian Equity Fund

Our opinion In our opinion:

The accompanying financial report of Solaris High Alpha Australian Equity Fund (the Registered Scheme) is in accordance with the Corporations Act 2001, including:

(a) giving a true and fair view of the Registered Scheme's financial position as at 30 June 2017 and of its financial performance for the year then ended

(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.

What we have audited The financial report comprises:

• the statement of financial position as at 30 June 2017

• the statement of comprehensive income for the year then ended

• the statement of changes in equity for the year then ended

• the statement of cash flows for the year then ended

• the notes to the financial statements, which include a summary of significant accounting policies

• the directors of the Responsible Entity’s declaration.

Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence We are independent of the Registered Scheme in accordance with the auditor independence requirements of the Corporations Act 2001 and the 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 also fulfilled our other ethical responsibilities in accordance with the Code.

Responsibilities of the directors of the Responsible Entity for the financial report The directors of the Responsible Entity of the Registered Scheme are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and Corporations Act 2001 and for such internal control as the directors of the Responsible Entity

PricewaterhouseCoopers, ABN 52 780 433 757 480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001 T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors of the Responsible Entity are responsible for assessing the ability of the Registered Scheme to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors of the Responsible Entity either intend to liquidate the Registered 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 objectives are 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 the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and 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_responsibilities/ar4.pdf. This description forms part of our auditor's report.

PricewaterhouseCoopers

Ben Woodbridge Brisbane Partner 19 September 2017

http://www.auasb.gov.au/auditors_responsibilities/ar4.pdf

Documents

Solaris High Alpha Australian Equity Fund · The Responsible Entity of the Solaris High Alpha Australian Equity Fund is Channel Investment ... Review and results ... Dividend income