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FINANCIAL STATEMENTSYear ended 31st December 2013

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APS FUNDS - APS ALPHA FUND(Constituted under a Trust Deed in the Republic of Singapore)

Manager : APS Asset Management Pte Ltd 3 Anson Road #23-01 Springleaf Tower Singapore 079909

Directors of the Manager : Raymond Lim Siang Keat Wong Kok Hoi James Liu Ji Sim Poh Heng Prof. Tan Kong Yam

Trustee/ Custodian : RBC Investor Services Trust Singapore Limited 20 Cecil Street #28-01 Equity Plaza Singapore 049705

Auditors : Deloitte & Touche LLP 6 Shenton Way #32-00 DBS Building Tower Two Singapore 068809

Registrar : RBC Investor Services Trust Singapore Limited 20 Cecil Street #28-01 Equity Plaza Singapore 049705

Solicitors to the Managers : Rodyk & Davidson LLP 80RafflesPlace #33-00 UOB Plaza 1 Singapore 048624

Solicitors to the Trustee : Stamford Law Corporation 10 Collyer Quay #27-00 Ocean Financial Centre Singapore 049315

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) ANNUAL REPORT AND FINANCIAL STATEMENTS For the financial year ended December 31, 2013 C O N T E N T S PAGE Manager’s investment report 1 - 4

Notes to unitholders 5 - 6

Report of the trustee 7

Statement by the manager 8

Independent auditors’ report to the unitholders of APS Funds - APS Alpha Fund 9 - 10

Financial statements

Statement of total return 11

Statement of financial position 12

Portfolio statement 13

Notes to financial statements 14 - 28 GFSI-SM/3025458-4xxxxxx-FS/GEL/NWS/VTSM/BL

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) MANAGER’S INVESTMENT REPORT PERFORMANCE SUMMARY

3-month 6-month 1-year 3-year* 5-year* Since inception*

APS Alpha Fund 14.5% 21.6% 14.5% 3.8% 20.1% 4.0% * Average annual compounded return Source: APS, returns up to 31st December 2013 calculated on bid-to-bid basis, in Singapore Dollars with dividends reinvested net of all charges payable upon reinvestment Since inception: 23 July 2003 Economic and Market Background The MSCI Asia Pacific ex Japan index increased by 3.86% in 2013, underperforming the MSCI All Country World index by a whopping 23 percentage points. The developed markets in general had outperformed emerging markets as economic recovery took hold in the US and the Eurozone. Among the better performing Asian markets were Hong Kong (+8%) and Taiwan (+7%). The worst underperformers were several emerging ASEAN markets, such as Indonesia (-25%), Thailand (-17%) and the Philippines (-4%). The Indonesian market’s underperformance was mainly due to a collapse in the Indonesian rupiah, which depreciated 26% against USD, mainly during the second half of the year as the current account deficit worsened. Thai equities started to decline in the second quarter from a historically high valuation as growth slowed down. Subsequently, the decline continued as Thailand’s political turmoil worsened. Throughout 2013, the market was abuzz with news that heightened volatility in the various Asian markets, which generally corrected in the middle of the year when investors increasingly expected the US Federal Reserve to taper its asset purchases. But when the Fed unexpectedly left its quantitative easing program intact in September, the markets recovered significantly to levels achieved before the correction. Subsequently, investors took profit as the US government temporarily shut down during the budget ceiling debate. Other developments that impacted market sentiments included the nomination of Janet Yellen as the next head of the US Federal Reserve, China’s Third Plenary session and last but not least, the long-awaited announcement by the Federal Reserve on QE tapering at the end of 2013.

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) MANAGER’S INVESTMENT REPORT ( cont’d) Fund Performance Analysis and Portfolio Activities Largest Contributors to Performance GOME Electrical Appliances is one of China's largest consumer electronics retailer both online and offline. The share price went up by 55% in 2013 and 123% from its lowest point on June 25, 2013 due to a recovery in earnings and fundamentals. In FY12, GOME’s business performance was impacted by an e-commerce price war which resulted in losses of as much as RMB 597million in FY12. However, new business strategies such as cost cutting, store restructuring and change of product mix that were initiated in FY12 -13 produced positive results in FY13, and GOME surprised the market with its strong earnings turnaround in 3Q13. Significant improvements in gross profit margins, cost savings (such as rental and staff) and share of e-commerce losses by its parent since 4Q12 have helped GOME to deliver positive earnings (RMB 582 million in the first 9 months of 2013). The resumption of dividend distribution and recent positive earnings alert announced by the company again beat consensus based on their guidance on FY13 performance. We believe GOME will continue to benefit from strong electrical appliance demand in 2014, helped by robust residential property sales in China in FY13, which tend to have a trickle-down effect on sales of electrical appliances 6-9 months later. Also, we expect to see an improvement in GOME’s operating margin as management continues to implement cost cutting measures in areas such as rental and logistics. Naver Corporation’s share price performed strongly as its mobile messaging app, ”Line”, is growing significantly across Asia, Europe and South America. The number of Line users reached 260 million in September 2013 (2.6 times higher than at the beginning of 2013). Revenues from Naver’s mobile service have doubled every quarter as it monetizes the opportunity successfully. We believe Naver is one of the biggest beneficiaries of the rising mobile internet trend. Naver is already South Korea’s largest internet search portal. Shenzhen International Holdings is a Shenzhen investment business that is 48% owned by Shenzhen State-Owned Assets Supervision and Administration Commission (SASAC). The company has three main businesses: 1) toll roads; 2) Shenzhen Airlines; and 3) logistics. The company derives the majority of its earnings from the toll-road business, which is held through a 51% holding in Shenzhen Expressway. Shenzhen International’s share price increased by 25% in 2013 as investors held a positive view of the company’s exposure to the Qianhai economic zone, a 15 sq km of land that the government plans to turn into a new business district focusing on finance, logistics, IT and professional services. The company’s key asset here is 380,000 sqm of land, which investors expect would enjoy significant value appreciation. Based on our estimates, the company’s land and property assets where their warehouses are located remain significantly undervalued by investors. The current valuation is a 25% discount to our fair value estimate, hence we anticipate that Shenzhen International will be re-rated in due course. Largest Detractors from Performance PT Bank Danamon Indonesia is the country’s sixth largest lender. Singapore’s DBS Group had initiated an attempt to acquire Danamon in April 2012 but the deal fell through in August 2013 mainly because Indonesia’s regulations cap foreign ownership of banks at 40%; DBS had been aiming for a 99% share of Danamon. The failed acquisition, coupled with the general malaise in the Indonesian stock market, placed pressure on Danamon’s stock.

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) MANAGER’S INVESTMENT REPORT ( cont’d) Hi-P International, a vertically integrated contract manufacturer, performed poorly in 2013 as the company missed its revenue and profit guidance due to order cuts from the major customers. Despite the challenging business environment, the management continued to diversify Hi-P’ revenue base and has recently secured a home appliances order which they expect to contribute positively in 2014. Tianneng Power International's share price weakened in 2013 as a result of margin erosion from price competition in the motive battery industry. However, competition could ease up in the future as new forces reshape the industry. Amidst the rising discontent over environmental pollution in China, the Chinese government has tightened up its environmental regulation, so over the next 1-2 years, we expect to see more small players quitting the industry due to (1) failure to meet environmental standards, (2) cost inefficiency and (3) inferior manufacturing technology. As one of the largest e-bike battery manufacturers in China, we believe Tianneng Power is set to benefit from this industry consolidation over the next 1-2 years. Recent Buys Pakuwon Jati is an Indonesian property developer and landlord with mainly shopping mall assets. Pakuwon’s share price underperformed the market towards the second half of 2013 as investors became concerned about Indonesia’s economic health and the weakening rupiah. More specifically, investors foresee reduced against any slowdown in demand for real estate because about half of its revenues are demand for properties as well as an escalation in construction costs. However, we think that Pakuwon will be resilient from recurring income, among the highest in the industry. Its portfolio of popular malls in Jakarta and Surabaya, two of Indonesia’s largest cities, should ensure a steady income stream. It is currently trading at a 42% discount to NAV, and has substantially deleveraged since 2009. We expect net income to grow at about 69% in FY12-13 as the company continues to expand its business. Korea Gas (KOGAS) is Korea’s sole importer of natural gas. Our investment rationales are: 1) the shift from nuclear to eco-friendly power generation (gas, renewable energy, etc.) should boost KOGAS’ guaranteed profit as its guaranteed return from gas distribution is directly related to its capital expenditure growth; 2) in February, the Korean government announced a gas tariff increase and a reintroduction of the tariff cost pass-through system, which should help to reduce KOGAS’ 5 trillion won account receivables and ease investors’ concerns about the high gearing ratio; 3) profit from the exploration and production business should jump 130 billion won in 2013 to over 500 billion won in 2014 as more projects start to bear fruit from 2014; and 4) we think the share price is significantly undervalued at 6x PER (FY14E) and 0.6x PBR (FY14E) based on our earnings projection. Tune Ins Holdings Berhad (TIH) is a Malaysia-based insurance company offering life and general insurance online and via traditional channels. The company partners with budget airline AirAsia, AirAsia Expedia and Tune Hotels to offer insurance to travellers within and outside Malaysia. Therefore, Tune provides exposure to rapidly growing AirAsia passenger volumes, underpinned by an aggressive capacity build-out, without fuel and capex risks inherent in the airline industry. Since the IPO, Tune’s management has delivered on its stated strategy to reduce the leakage of travel insurance premium to its external partners. The company also announced its acquisition of a general insurance company in Indonesia which going forward will underwrite all the travel insurance originating from Indonesia. The company also announced a decent set of quarterly results over the past few quarters. At our initiation price (during the IPO), Tune is valued at 15x forward P/E while it is expected to deliver earnings CAGR in the high teens over the next 2 years.

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) MANAGER’S INVESTMENT REPORT ( cont’d) Recent Sells Minor International is a Thailand-based hospitality and leisure company. The Fund sold its remaining holdings in Minor in the middle of 2013 as the share price had appreciated 155% since our initial purchase during the Great Bangkok Flood back in October 2011. Valuation is no longer attractive and the latest quarterly results disappointed with cost escalation, which offset the strong revenue growth. Aeon Co (M) Berhad is a retailer in Malaysia with stores located mainly in suburban residential areas. The Fund took profit on this name in the middle of 2013 as valuation had re-rated to 22x forward P/E. On top of this, we also foresaw that, with the Malaysia general elections over, there was going to be heightened risk of further reduction in fuel subsidies and of hikes in various utilities’ tariffs. This could weaken the domestic consumption trend going forward. True to our expectation, the Malaysian government has since introduced various measures to reduce the government’s budget deficit, such as an electricity tariff hike and the implementation of GST starting in 2014, which will curb domestic consumption going forward. Travelsky Technology provides IT services to China’s aviation and travel industries. The share price’s strength in the middle of 2013 provided us with an opportunity to exit our position with a decent return. We were not optimistic about Travelsky as the management had continued to under-deliver in terms of cost control. We expect the company’s expenses to continue to escalate in the foreseeable future, which will negate the stable revenue growth rate in the low teens.

Investment Strategy

In 2014, we will continue to stick to our mantra and proven investment approach—we seek only asymmetric risk-return opportunities and continue to uncover gems through diligent primary research. The low valuation in North Asian markets (such as China, Hong Kong and Korea) as well as recent corrections in emerging ASEAN markets (such as Indonesia and Thailand) should provide us with fertile grounds for alpha hunting. New structural trends are surfacing in emerging Asia, such as m-commerce, an increase in birth rates in China, new lighting sources and growing investment into network security. We are keeping a close watch for the key beneficiaries of these trends and we expect to inform our investors along the way. At the outset, 2014 looks to be a year full of investment ideas and opportunities.

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) NOTES TO UNITHOLDERS For the financial year ended December 31, 2013 1 TOP 10 HOLDINGS Percentage of total net assets Fair attributable to Value* unitholders $ % 10 largest holdings as at December 31, 2013 held by APS Far East Alpha Fund (the “Master Fund”): Security name GOME Electrical Appliances Holding Limited 2,340,040 2.46 IGB Group 1,594,298 1.68 Samsung Electronics Company Limited 1,485,630 1.56 Pakuwon Jati 1,465,502 1.54 Chaowei Power 1,426,044 1.50 Korea Gas 1,330,537 1.40 Intime Retail 1,312,286 1.38 Ying Li International Real Estate 1,189,995 1.25 Hotel Shilla 1,100,301 1.16 Tune Ins 1,091,623 1.15 10 largest holdings as at December 31, 2012 held by the Master Fund: Security name Shenzhen International Holdings Limited 2,732,239 2.72 Samsung Electronics Company Limited 1,738,775 1.73 Ying Li International Real Estate 1,515,019 1.51 Minor International Receipt 1,339,871 1.34 Religare Health Trust 1,339,242 1.33 WT Microelectronics 1,338,887 1.33 Hi-P International Limited 1,284,294 1.28 Guoco 1,280,545 1.28 Jardine Strategic 1,279,405 1.28 GOME Electrical Appliances Holding Limited 1,222,565 1.22 *This represents the Fund’s proportionate holding of the 10 largest holdings held by the Master Fund.

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) NOTES TO UNITHOLDERS For the financial year ended December 31, 2013 2 PORTFOLIO TURNOVER RATIO Please refer to the Note 11 of the financial statements. 3 EXPENSE RATIO Please refer to the Note 11 of the financial statements. 4 SCHEDULE OF INVESTMENT BY COUNTRY (EXCLUDING CASH AND CASH EQUIVALENT) Percentage of Percentage total net assets total net assets Fair value attributable to Fair value attributable to as at unitholders as at as at unitholders as at December 31, December 31, December 31, December 31, Country 2013 2013 2012 2012 $ % $ % Ireland 48,818,082 96.50 43,964,974 96.73 5 SCHEDULE OF INVESTMENT BY INDUSTRY Percentage of Percentage total net assets total net assets Fair value attributable to Fair value attributable to as at unitholders as at as at unitholders as at December 31, December 31, December 31, December 31, Industry 2013 2013 2012 2012 $ % $ % Investment funds 48,818,082 96.50 43,964,974 96.73 Other net assets 1,769,454 3.50 1,483,979 3.27 Net assets attributable to unitholders 50,587,536 100.00 45,448,953 100.00

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) REPORT OF THE TRUSTEE The Trustee is under a duty to take into custody and hold the assets of APS Funds - APS Alpha Fund in trust for the unitholders. In accordance with the Securities and Futures Act (Cap. 289), its subsidiary legislation and the Code on Collective Investment Schemes (collectively referred to as the “laws and regulations”), the Trustee shall monitor the activities of the Manager for compliance with the limitations imposed on the investment and borrowing powers as set out in the Trust Deed in each annual accounting period and report thereon to unitholders in an annual report. To the best knowledge of the Trustee, the Manager has, in all material respects, managed APS Funds - APS Alpha Fund during the period covered by these financial statements, set out on pages 11 to 28, comprising the statement of total return, statement of financial position, portfolio statement and notes to the financial statements, in accordance with the limitations imposed on the investment and borrowing powers set out in the Trust Deed, laws and regulations and otherwise in accordance with the provisions of the Trust Deed. For and on behalf of the Trustee RBC Investor Services Trust Singapore Limited .............................................................................. Authorised Signatory Singapore March 17, 2014

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) STATEMENT BY THE MANAGER In the opinion of the directors of APS Asset Management Pte Ltd, the accompanying financial statements set

out on pages 11 to 28, comprising the statement of total return, statement of financial position, portfolio

statement and notes to the financial statements are drawn up so as to present fairly, in all material respects, the

financial position of APS Funds - APS Alpha Fund as at December 31, 2013 and the total return for the year

then ended in accordance with the Recommendations of Statement of Recommended Accounting Practice 7

“Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered Accountants. At the

date of this statement, there are reasonable grounds to believe that APS Funds - APS Alpha Fund will be able

to meet its financial obligation as and when they materialise.

FOR AND ON BEHALF OF THE DIRECTORS OF THE MANAGER, APS ASSET MANAGEMENT PTE LTD .............................................................................. Mr Wong Kok Hoi Director Singapore March 17, 2014

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INDEPENDENT AUDITORS’ REPORT TO THE UNITHOLDERS OF APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) We have audited the financial statements of APS Funds - APS Alpha Fund (the “Fund”), which comprise the statement of financial position and portfolio statement as at December 31, 2013, and the statement of total return for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 11 to 28. Manager’s Responsibility for the Financial Statements The Fund’s Manager (the “Manager”) is responsible for the preparation and fair presentation of these financial statements in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered Accountants, and for such internal control as the Manager determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Fund’s preparation and fair presentation of financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Manager, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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INDEPENDENT AUDITORS’ REPORT TO THE UNITHOLDERS OF APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as at December 31,2013 and the total return for the year then ended in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered Accountants. Public Accountants and Chartered Accountants Singapore March 17, 2014

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) STATEMENT OF TOTAL RETURN For the financial year ended December 31, 2013 Note 2013 2012 $ $ Income Other income 8 19,087 230,035 19,087 230,035 Less: Expenses Performance Fee 9 (1,838,168) - Other expenses 10 (128,673) (7,558) Net (loss) income (1,947,754) 222,477 Net gains on value of investments Net gains on investments 8,588,448 6,139,570 Net foreign exchange gains (losses) 11,802 (12,611) Net gains on value of investments 8,600,250 6,126,959 Total return for the year before income tax 6,652,496 6,349,436 Less: Income tax - - Total return for the year 6,652,496 6,349,436 See accompanying notes to financial statements.

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) STATEMENT OF FINANCIAL POSITION As at December 31, 2013 Note 2013 2012 $ $ ASSETS Portfolio of investments 48,818,082 43,964,974 Receivables 7,222 - Cash and bank balances 3,772,574 1,548,730 Total assets 52,597,878 45,513,704 LIABILITIES Payables 5 2,010,342 64,751 Net assets attributable to unitholders 6 50,587,536 45,448,953 Total liabilities 52,597,878 45,513,704 See accompanying notes to financial statements.

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) PORTFOLIO STATEMENT As at December 31, 2013 Percentage Percentage of total of total net assets net assets attributable attributable Holdings Holdings Fair value Fair value to unitholders to unitholders As at As at as at as at as at as at December 31, December 31, December 31, December 31, December 31, December 31, 2013 2012 2013 2012 2013 2012 $ $ $ $ % % By Geography (Primary) APS Far East Alpha Fund - Class E 159,923 172,500 48,818,082 43,964,974 96.50 96.73 Total Ireland 48,818,082 43,964,974 96.50 96.73 Other net assets 1,769,454 1,483,979 3.50 3.27 Net assets attributable to unitholders 50,587,536 45,448,953 100.00 100.00 Percentage Percentage of total of total net assets net assets attributable attributable Fair value Fair value to unitholders to unitholders as at as at as at as at December 31, December 31, December 31, December 31, 2013 2012 2013 2012 $ $ % % By Industry (Secondary) Quoted Investment Funds Ireland Investment Funds 48,818,082 43,964,974 96.50 96.73 Portfolio of investments 48,818,082 43,964,974 96.50 96.73 Other net assets 1,769,454 1,483,979 3.50 3.27 Net assets attributable to unitholders 50,587,536 45,448,953 100.00 100.00 See accompanying notes to financial statements.

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) NOTES TO FINANCIAL STATEMENTS As at December 31, 2013 1 GENERAL APS Funds - APS Alpha Fund (the “Fund”) is an open-umbrella fund established by way of a Trust

Deed dated May 14, 2003, as amended by Amending and Restating Deeds dated July 18, 2003, June 29, 2004, August 2, 2004, June 29, 2010, June 29, 2011 and September 30, 2011 between APS Asset Management Pte Ltd (the “Manager”) and RBC Investor Services Trust Singapore Limited (the “Trustee”). The Trust Deed is governed by the laws of the Republic of Singapore.

Only units in APS Alpha Fund (a sub-fund of APS) are currently being offered. The Fund is a feeder fund and all or substantially all of the assets of the Fund, to the extent not retained

in cash, are invested in the units of APS Far East Alpha Fund (the “Master Fund”). The Master Fund is a sub-fund of APS Fund which was established as an open-ended umbrella Unit Trust authorised by the Central Bank of Ireland pursuant to the provisions of the European Communities Undertakings for Collecting Investment in Transferable Securities regulations. The Master Fund is listed on the Irish Stock Exchange. The Manager also acts as the investment manager for the Master Fund.

The principal objective of the Fund is to achieve capital appreciation in the medium to long term

through its investment in the Master Fund. The Master Fund invest in listed equities, quoted convertible bonds and financial derivative instruments specifically those traded on a recognised exchange in the Far East (excluding Japan).

The Fund is included under the Central Provident Fund Investment Scheme. 2 SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING - The financial statements have been prepared under the historical cost

basis as modified by the revaluation of investments and in accordance with the Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” (“RAP 7”) issued by the Institute of Singapore Chartered Accountants.

For the purposes of preparation of these financial statements, the basis used for calculating the ratio of

expenses and portfolio turnover rate are in accordance with the guidelines issued by the Investment Management Association of Singapore and the Code on Collective Investment Schemes under the Securities and Futures Act (Cap. 289), respectively.

The financial statements are expressed in Singapore dollars, which is the functional currency of the

Fund.

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) NOTES TO FINANCIAL STATEMENTS As at December 31, 2013 2 SIGNIFICANT ACCOUNTING POLICIES (cont’d)

RECOGNITION OF INCOME - Dividend income is recognised when declared and is stated gross of tax credits. Interest income on deposits is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

INVESTMENTS - Investments are classified as fair value through profit and loss. (i) Initial recognition Purchases of investments are recognised on the trade date. Investments are recorded at fair value

on initial recognition. (ii) Subsequent measurement Investments are subsequently carried at fair value based on the bid prices at the reporting date.

Net changes in fair value of investments are included in the Statement of Total Return in the year in which they arise.

(iii) Derecognition Investments are derecognised on the trade date of disposal. The realised gains and losses

including gain and losses on foreign exchange on the sale of investment are taken up in the Statement of Total Return.

BASIS OF VALUATION OF INVESTMENTS - Investment in the Master Fund is stated at the last

published net asset value per unit as at the end of the reporting period. FOREIGN CURRENCIES TRANSACTION - Foreign currency monetary assets and liabilities are

converted to Singapore dollars at the rates of exchange prevailing as at the end of the reporting period. Transactions in foreign currencies during the year are translated into Singapore dollars at exchange rates prevailing at the transaction dates. Exchange differences arising on the settlement of monetary items, and on retranslation of monetary assets and liabilities are included in the Statement of Total Return.

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) NOTES TO FINANCIAL STATEMENTS As at December 31, 2013 2 SIGNIFICANT ACCOUNTING POLICIES (cont’d) DERIVATIVE FINANCIAL INSTRUMENTS - Derivatives are recognised at fair value on the date on

which a derivative contract is entered into and are subsequently re-measured at their fair values. Fair values are obtained from quoted market prices in active markets, including recent market transactions and valuation techniques. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative. Subsequent changes in the fair value of any derivative instrument are recognised in the Statement of Total Return.

PRELIMINARY EXPENSES - Preliminary expenses consist of legal fees and other fees, incurred in the

establishment of the Master Fund. All preliminary expenses are taken up in the Statement of Total Return of the Master Fund in the period in which they are incurred.

RECEIVABLES - Receivables are non-derivative financial assets with fixed or determinable payments

that are not quoted in an active market. Receivables are carried at anticipated realisable value. CASH AND BANK BALANCES - Cash and bank balances comprise cash in banks are subject to an

insignificant risk of changes in value. PAYABLES - Payables and accruals are initially measured at fair value, net of transaction cost, and are

subsequently measured at amortised cost, using the effective interest rate method, with interest expense recognised on an effective yield basis.

TAXATION - The taxation charge relates to tax deducted at source and withholding tax suffered on

dividend income and interest income. The Fund was granted the status of a Designated Unit Trust and, therefore, the following income is

exempted from tax in accordance with Section 35(12) of the Income Tax Act (Cap. 134): • gains or profits derived from Singapore or elsewhere from the disposal of securities; • interest (other than interest for which Singapore tax has been withheld); and • dividend derived from outside Singapore and received in Singapore.

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) NOTES TO FINANCIAL STATEMENTS As at December 31, 2013 3 FINANCIAL RISK MANAGEMENT As the Fund invests solely in the Master Fund, the Fund is exposed to the same risks faced by the

Master Fund. The Master Fund’s activities expose it to a variety of market risk (including price risk, currency risk and interest rate risk), credit risk and liquidity risk. The Master Funds’ overall risk management programme seeks to minimise potential adverse effects on its financial performance.

The Master Fund’s assets principally consist of investments in listed equities, warrants, bonds, cash and

short-term receivables arising from its operations. They are held in accordance with the investment policies stated in the prospectus of the Master Fund. The allocation of assets between the various types of investments is determined by the investment manager of the Master Fund to achieve the Master Fund’s investment objectives.

The following is a summary of the main risks and risk management policies: (a) Market risk Market risk is the risk of potential adverse changes to the value of financial instruments to

changes in market conditions like interest and currency rate movements and volatility in security prices.

External factors such as changes in economic environment, consumption patterns and investor’s

expectation contribute to market risk which may have a significant impact on the assets’ value. The Master Fund’s market risk is affected by changes in three main components: changes in

actual market prices, foreign exchange movements and interest rate volatility. (i) Price risk The Fund’s investment in the Master Fund is subject to the fluctuation in the quoted net

asset value of the Master Fund. Such risk is primarily managed by the investment manager of the Master Fund through constant monitoring to ensure effective portfolio diversification via countries, industries and stocks to limit its exposure. The investment manager also performs regular portfolio reviews to revalidate the weightings of each stock, sector and country to prevent unintended large underweight or overweight positions.

Manager’s estimate of the reasonable possible increase (decrease) of 5% in the Master Fund

has a potential impact of approximately $2,440,904 (2012 : $2,198,249) on the increase (decrease) in the Fund’s net asset attributable to unitholders.

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APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) NOTES TO FINANCIAL STATEMENTS As at December 31, 2013 3 FINANCIAL RISK MANAGEMENT (ii) Currency risk The Master Funds’ accounting books and records are kept in United States dollars. The

Master Fund invests in underlying securities which are denominated in foreign currencies where the fluctuations in the relevant exchange rates may have an impact on the income and value of the Master Fund.

The tables below summarise the Master Fund’s currency risk based on Singapore dollar

equivalents, denominated in the following currencies:

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t Dec

embe

r 31

, 201

3

Ass

ets

Po

rtfol

io o

f inv

estm

ents

31

,711

,299

21

,649

,518

8,

739,

669

10,0

10,0

43

2,52

0,18

6 5,

706,

699

2,16

8,66

3 3,

814,

830

3,53

3,06

8 89

,853

,975

Rec

eiva

bles

1,

053,

530

231,

388

3,45

7 39

2,30

9 -

403,

262

126,

363

-

3,

553

2,21

3,86

2

Cas

h an

d ba

nk b

alan

ces

1

12,8

88

-

179,

628

1,6

51,7

73

-

1

,560

,903

1,

666,

824

-

-

5,

172,

016

To

tal a

sset

s 32

,877

,717

21

,880

,906

8,

922,

754

12,0

54,1

25

2,52

0,18

6 7

,670

,864

3,

961,

850

3,81

4,83

0 3,

536,

621

97,2

39,8

53

L

iabi

litie

s

Paya

bles

1

,154

,354

-

-

84

0,33

7

-

-

16

0,13

7

-

9

0,08

0

2,24

4,90

8

Net

exp

osur

e 31

,723

,363

21

,880

,906

8,

922,

754

11,2

13,7

88

2,52

0,18

6 7,

670,

864

3,80

1,71

3 3,

814,

830

3,44

6,54

1 94

,994

,945

As a

t Dec

embe

r 31

, 201

2

Ass

ets

Po

rtfol

io o

f inv

estm

ents

33

,897

,863

21

,024

,709

5,

173,

287

15,8

11,2

62

1,53

4,34

1 6,

195,

578

3,16

9,73

6 3,

668,

336

4,86

8,75

1 95

,343

,863

Rec

eiva

bles

16

3,77

2 19

1,04

8 -

-

-

-

9,

274

456,

885

-

82

0,97

9

Cas

h an

d ba

nk b

alan

ces

1,1

89,8

68

4

99,6

96

55

4,62

5

775

,630

-

5

72,0

14

80

4,12

3

315,

666

-

4,71

1,62

2

Tota

l ass

ets

35,2

51,5

03

21,7

15,4

53

5,72

7,91

2 16

,586

,892

1,

534,

341

6,7

67,5

92

3,98

3,13

3 4,

440,

887

4,86

8,75

1 10

0,87

6,46

4

Lia

bilit

ies

Pa

yabl

es

1

74,2

52

-

3

9,60

9

-

-

1

45,7

18

16

6,06

1

-

-

52

5,64

0

Net

exp

osur

e 35

,077

,251

21

,715

,453

5,

688,

303

16,5

86,8

92

1,53

4,34

1 6

,621

,874

3,

817,

072

4,44

0,88

7 4,

868,

751

100,

350,

824

19

23

DRAFT

20

APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) NOTES TO FINANCIAL STATEMENTS As at December 31, 2013 3 FINANCIAL RISK MANAGEMENT (cont’d)

At December 31, 2013, had the exchange rate of HKD and KRW increased or decreased by 5% against SGD with all other variables held constant, the increase or decrease respectively in net assets attributable to unitholders would amount to approximately $1,586,168 and $1,094,045 respectively (2012 : $1,753,863 and $1,085,773) respectively.

(iii) Interest rate risk Interest rate risk is the risk that the value of the Master Fund will decline because of varying

interest rates. The following table provides a breakdown of the re-pricing period and the interest sensitivity gap of the assets and liabilities of the Master Fund as at the balance sheet date:

Non- Up to 1 to 5 interest 1 year years bearing Total $ $ $ $ As at December 31, 2013 Assets Portfolio of investments - 1,431,520 88,422,457 89,853,977 Receivables - - 274,412 274,412 Due from brokers - - 1,102,446 1,102,446 Cash and bank balances 5,172,016 - - 5,172,016 Total assets 5,172,016 1,431,520 89,799,315 96,402,851 Liabilities Payables - - 1,407,905 1,407,905 Net assets attributable to unitholders - - 94,994,946 94,994,946 Total liabilities - - 96,402,851 96,402,851 Total interest sensitivity gap 5,172,016 1,431,520 (6,603,536) -

20

24

DRAFT

21

APS FUNDS - APS ALPHA FUND

(Constituted under a Trust Deed in the Republic of Singapore) NOTES TO FINANCIAL STATEMENTS As at December 31, 2013 3 FINANCIAL RISK MANAGEMENT (cont’d) Non- Up to 1 to 5 interest 1 year years bearing Total $ $ $ $ As at December 31, 2012 Assets Portfolio of investments - 3,207,845 92,136,018 95,343,863 Receivables 210,049 - 610,930 820,979 Cash and bank balances 4,711,622 - - 4,711,622 Total assets 4,921,671 3,207,845 92,746,948 100,876,464 Liabilities Due to brokers - - 359,579 359,579 Payables - - 166,060 166,060 Net assets attributable to unitholders - - 100,350,825 100,350,825 Total liabilities - - 100,876,464 100,876,464 Total interest sensitivity gap 4,921,671 3,207,845 (8,129,516) - (b) Credit risk The Master Fund is exposed to the credit risk of the counterparty, where the counterparty may be

unable to pay amounts in part or in full when due, including transactions with counterparties such as issuers, custodians and banks.

The carrying amounts of financial assets best represent the maximum credit risk exposure at the

balance sheet date. This relates also to financial assets carried at amortised costs, as they have a short-term maturity.

The Master Fund’s credit risk is managed regularly by the investment manager through active

monitoring of changes in counterparty’s credit rating. The investment manager has in place an internal credit evaluation process to review the credit rating of each counterparty. To mitigate counterparty default, the investment manager will generally deal with well-established and reputable counterparties on a delivery versus payment basis whenever market practice permits.

21

25

DRAFT

22

APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) NOTES TO FINANCIAL STATEMENTS As at December 31, 2013 3 FINANCIAL RISK MANAGEMENT (cont’d) (c) Liquidity risk The Master Fund’s assets comprise mainly readily realisable securities. The main liability of the

Master Fund is the redemption of any units that investors wish to sell. The Master Fund constitution provides for the daily creation and cancellation of units and is therefore exposed to the liquidity risk of meeting unitholder redemption at any time.

(d) Fair value of financial and financial liabilities The financial assets and financial liabilities of the Fund comprise of investments, receivables,

cash and bank balances and payables. The fair values of these financial assets and financial liabilities as at the balance sheet date approximate their carrying amounts as shown in the balance sheet.

The Fund classifies fair value measurements using a fair value hierarchy that reflects the

significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

(i) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); (ii) quoted prices for similar investments in active markets; quoted prices for identical or

similar investments in markets that are not active and model-derived valuations whose significant value drives are observable (Level 2); and

(iii) inputs for the asset or liability that are not based on observable market data (unobservable

inputs) (Level 3).

22

26

DRAFT

23

APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) NOTES TO FINANCIAL STATEMENTS As at December 31, 2013 3 FINANCIAL RISK MANAGEMENT (cont’d)

Financial instruments measured at fair value: Total Level 1 Level 2 Level 3 $ $ $ $ Financial assets 2013 Financial assets at fair value through profit or loss: - Investment in the Master Fund 48,818,082 48,818,082 - - 2012 Financial assets at fair value through profit or loss: - Investment in the Master Fund 43,964,974 43,964,974 - - (e) Capital management The objective of the Fund is to provide medium and long-term capital appreciation through

investment in the Master Fund. The Master Fund invests in listed equities, bonds and warrants traded on recognised exchange in the Far East (excluding Japan).

The Fund strives to invest the subscriptions of units in investments that meet the Fund’s

investment objectives while maintaining sufficient liquidity to meet unitholder redemption during the year.

The Fund is not subjected to externally imposed capital requirements, and there were no changes

in the Fund’s approach to capital management during the year.

23

27

DRAFT

24

APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) NOTES TO FINANCIAL STATEMENTS As at December 31, 2013 4 RELATED PARTY TRANSACTIONS (a) The Investment Manager of the Master Fund is APS Asset Management Pte Ltd. The Trustee,

Custodian and Registrar of the Fund is RBC Investor Services Trust Singapore Limited. The trustee, custodian and registrar fees are payable to the Trustee, the Custodian and the

Registrar respectively. (b) As at the end of the financial year, the Master Fund maintained the following balances with a

related party as follows: 2013 2012 $ $ Bank balances held with related party of the Trustee of the Master Fund 2,657,902 2,073,106 (c) The Manager, as well as its directors and staff, are allowed to subscribe in the units of the Fund.

This is in line with the Manager’s policy to align its long term interest with its clients. The investment is for long term purposes and not for the purpose of trading or resale to generate short term profits. The units held by the directors of APS Asset Management Pte Ltd as at December 31, 2013 and 2012 are as follows:

Fund 2013 2012 currency Units Units Wong Kok Hoi SGD 383,817 383,817 James Liu Ji SGD - 497,780 Tan Kong Yam SGD 112,764 112,764 Tan Kong Yam USD 90,909 90,909 587,490 1,085,270

(d) During the year, APS Asset Management Pte Ltd, as Manager of the Fund earned a performance fee of $1,838,168 (2012 : nil) of which $1,838,168 (2012 : nil) was due at the year end.

24

28

DRAFT

25

APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) NOTES TO FINANCIAL STATEMENTS As at December 31, 2013 5 PAYABLES 2013 2012 $ $ Amount due to unitholders for cancellation of units 40,622 - Performance fee 1,838,168 - Other accrued expenses 131,552 64,751 2,010,342 64,751 6 NET ASSETS ATTRIBUTABLE TO UNITHOLDERS 2013 2012 $ $ At beginning of the year 45,448,953 41,024,968 Operations Change in net assets attributable to unitholders resulting from operations 6,652,496 6,349,436 Unitholders’ contributions (withdrawals) Units created 312,332 245,553 Units cancelled (1,826,245) (2,171,004) Change in net assets attributable to unitholders resulting from net creation and cancellation of units (1,513,913) (1,925,451) Total increase in net assets attributable to unitholders 5,138,583 4,423,985 At end of the year 50,587,536 45,448,953 Units in issue (see Note 7) 33,358,456 34,401,886 Net assets attributable to unitholders per unit 1,516 1,321

25

29

DRAFT

26

APS FUNDS - APS ALPHA FUND (Constituted under a Trust Deed in the Republic of Singapore) NOTES TO FINANCIAL STATEMENTS As at December 31, 2013 7 UNITS IN ISSUE 2013 2012 $ $ Units at beginning of the year 34,401,886 35,963,428 Units created 214,999 191,346 Units cancelled (1,258,429) (1,752,888) Units at end of the year 33,358,456 34,401,886 8 OTHER INCOME 2013 2012 $ $ Input tax recovered - 230,035 Other income 19,087 - 19,087 230,035 9 PERFORMANCE FEE

The Manager is entitled to receive a performance fee payable annually out of the assets of Class A. In order for the Manager to qualify for the payment of the performance fee in any Performance Fee Period (the “PF Period”), the appreciation in the gross value per Class A Unit during that PF Period must exceed the non-cumulative annual hurdle rate of 6% (the “Hurdle”) in annualised terms and the gross value per Class A Unit at the end of that PF Period must be higher than the High Water Mark (the “HWM”) in order for a performance fee to be payable.

The “PF Period” for each Class A Unit (other than the first PF Period) shall be a period commencing from 1st January and ending at the close of business on the 31st day of every December and thereafter, each PF Period commences on the day following the last day of the preceding PF Period for the Class A Units and ending at the close of business on the 31st day of every December. In respect of a financial year where 1st day of January or 31st day of December is a non Business Day, the gross value per Unit shall be determined with reference to the immediately preceding Business Day.

The Performance Fee in respect of each Class A Unit will be equal to 25% of the appreciation in the gross value per Class A Unit above its HWM during that PF Period. The HWM is the higher of (1) the highest gross value per Class A Unit in respect of which a performance fee has been paid at the end of any previous PF Period (if any) during which such Class A Unit was in issue; or (2) the gross value per Class A Unit at the beginning of that PF Period.

There is no performance payable for Class B units.

26

30

DRAFT

27

APS FUNDS - APS ALPHA FUND

(Constituted under a Trust Deed in the Republic of Singapore) NOTES TO FINANCIAL STATEMENTS As at December 31, 2013 10 OTHER EXPENSES 2013 2012 $ $ Others - 7,558 Output tax 128,673 - 128,673 7,558 11 FINANCIAL RATIOS 2013 2012 % % Expense ratio - (excluding performance fee) for the 12 months ended (Note 1) 0.26 0.02 Expense ratio - (including performance fee) for the 12 months ended (Note 1) 3.96 0.02 Turnover ratio for the 12 months ended (Note 2) 7.53 5.22 The financial ratios of Master Fund (Note 3): Expense ratio of Class E - (excluding performance fee) for the 12 months ended 0.00 0.00 Expense ratio of Class E - (including performance fee) for the 12 months ended 0.00 0.00 Turnover ratio for the 12 months ended (Note 2) 80.08 70.83 Note 1 - The expense ratio is calculated in accordance with the Investment Management Association of

Singapore’s guidelines on the disclosures of expense ratio. It does not include brokerage and other transaction costs, foreign exchange gains or losses, front or back-end loads arising from the purchase or sale of the Master Fund and tax deducted at source or arising out of income received.

Note 2 - The turnover ratio is calculated based on the lesser of purchases and sales expressed as a

percentage of the daily average net asset value. Note 3 - The Fund currently has Class A units only which invest into Class E of the Master Fund. Class

E of the Master Fund is available only for investment by the Fund and not available for other investors. The Manager bears all expenses attributable to Class E of the Master Fund such as the administration fees, accounting and valuation fees, custodian, sub-custodian and depository fees, registrar fees, legal and professional fees and audit fees. No management and performance fees are repayable by Class E units of the Master Fund.

27

31

DRAFT

28

APS FUNDS - APS ALPHA FUND

(Constituted under a Trust Deed in the Republic of Singapore) NOTES TO FINANCIAL STATEMENTS As at December 31, 2013 12 SOFT DOLLAR ARRANGEMENT In its management of the Fund, the Manager receives soft dollar commissions from, or enters into soft

dollar arrangements with a number of brokers in respect of the Fund. The brokers also execute trades for other schemes managed by the Manager. The goods and services under the soft dollar arrangement may include the following:

(a) Research and advisory services; (b) Economic and political analyses; (c) Portfolio analyses; (d) Market analyses; (e) Data and quotation services; (f) Computer hardware and software used for or in support of the investment process The goods and services received under the soft dollar arrangement were for the benefit of the Fund. The

transactions were executed on best execution basis and the Manager did not enter into unnecessary trades in order to achieve a sufficient volume of transactions to qualify for soft dollars.

28

32

3 Anson Road, #23-01 Springleaf Tower, Singapore 079909. Tel: (65) 6333 8600 Fax: (65) 6333 8900 E-mail: cs@aps.com.sg

Website: www.aps.com.sg Company Regn No.: 1980-00835-G