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1 Phone Fax BDO Ltd Fabrikstrasse 50 CH-8031 Zurich To the Directors of Life Settlements Fund Limited Trust House 112 Bonadie Street Kingstown St. Vincent & the Grenadines Report of the auditors on the Year End Report for the year 2013 (covering the period from to ) 11 September /CPH BDO Ltd, with its statutory seat in Zurich, is the legally independent Swiss member firm of the international BDO network.

2 Phone Fax BDO Ltd Fabrikstrasse 50 CH-8031 Zurich Report of the auditors to the Directors of Life Settlements Fund Limited, St. Vincent & the Grenadines We have examined the accounting records and the Year End Report of Life Settlements Fund Limited for the year ended 31 December This Year End Report is the responsibility of the Directors. Our responsibility is to express an opinion on the Year End Report based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with auditing standards promulgated by the profession, according to which the audit must be planned and performed to obtain reasonable assurance about whether the Year End Report is free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the Year End Report. We have also assessed the accounting principles used, significant estimates made and the overall Year End Report presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the statements of assets, the profit and loss statement, the calculation of the net asset value and the schedules of investments give a true and fair view of the profit and loss for the period covered by the accounts and of the state of affairs of the company at the end of that period, and comply with the prospectus; the information concerning issue, redemption and closing inventory of the units and the compilation of the purchases and sales are complete and correct; the information on the mandatories of the investment company as well as information on matters of particular economic or legal importance are included in the Year End Report. Without qualifying our audit opinion we draw your attention to the description of "Market in Retrospect" and "Market Outlook" disclosed in the Year End Report, in which the policies are valued with a discount rate of 30% due to illiquidity and unfavourable market conditions. Because of the inherent uncertainty associated with the policies, the carrying values of the policies may differ from their realizable values and the difference could be material. Furthermore, we draw your attention to the description of "Market in Retrospect" and "Market Outlook" disclosed in the Year End Report, in which the Directors are disclosing the liquidity matters of the Fund. Zurich, 11 September 2014 BDO Ltd Markus Eugster Auditor in Charge Franco A. Straub Enclosure Year End Report BDO Ltd, with its statutory seat in Zurich, is the legally independent Swiss member firm of the international BDO network.

3 Registered Office: P.O. Box 1674 Regal Building, 2nd Floor Middle Street Kingstown Saint Vincent & the Grenadines {+1 (784} tel {+1 (784} fax

4 Investment Objective The Fund s principal investment objectives are: to invest in Senior Life Settlements with a projected life expectancy of the insured of between four and seven years; by investing in Senior Life Settlements, provide Investors with rates of return that are attractive in today s general investment marketplace; to target Senior Life Settlements providing cumulative, annualised rates of return of 12% (simple yield) or more over four to seven years; to reduce risk and portfolio volatility; to diversify investment risk by pooling life insurance policies; and provide an alternative investment with no correlation to the stock and/or bond markets. 1/17

5 Fund Data Registered Agent: G. Grahame Bollers Custodian Bank: Valartis Bank (Liechtenstein) AG, Bendern Advisor: Life Partners, Inc. Asset Manager: Regent Asset Management Limited Administrator: Regent Fund Management Limited Transfer Agent: Regent Fund Management Limited Auditor: BDO AG Initial Subscription: Initial Offering Price: 100 Net Asset Value: 3.92 Mio. ISIN Number: BSP6341F1044 Price calculation frequency: Quarterly Fund currency: Profit distribution: Reinvested Subscription fee: up to 5.00% Redemption Fee: Custodian Fee: 0.00% Min Management Fee: 1.50% p.a. Performance Fee: 50.00% Hurdle Rate: 12.00% High Watermark: Continuous Administration Fee: 0.25% p.a. (Min ) Financial Year End: 31 December Report Based on: NAV-Calculation per Sales Restrictions: USA Fund Jurisdiction: Saint Vincent & the Grenadines Legal Entity: International Business Company 2/17

6 per Number of shares Net Asset Value in Net Asset Value per Share in % Diff. Evolution of key data '325 89'325 10'995'000 2'844' % '325 2'959' % '325 3'917' % Life Settlements Fund Limited August December 2013 The above shown performance is no guarantee of future perfomance of the fund.the value of a share can fluctuate up or down. The performance data do not include any subscription or redemption fees. 3/17

7 Market in Retrospect POLICY PORTFOLIO 31st DECEMBER 2013 As per the 31st December 2013 the fund s portfolio holds 30 policies, which represent a cumulative Face Value of 10.5 million. The calculated cumulative value of the policies amounts to 3.3 million. Using a discount rate of 30% p.a., 3 out of the 30 policies have a calculated value of zero. Consequently, these 3 policies have an internal rate of return of less than 30% p.a. to their estimated maturities. The average life expectancy (LE) per policy is 3.8 years and the average LE weighted by face value is 3.9 years. The average age for the insured persons on which the fund holds policies is 87. Based on the LE reports, it is estimated that 40.0% of the total face value should be realized through policy maturities through 2016 and a further 34.1% through The remainder, about 25.9% of the total face value, should be realized between 2019 and One policy with a face value of was estimated to mature in May As a matter of policy we decided to extend the estimated life expectancies arbitrarily by 2 years for policies with estimated maturities of less then half a year calculated from a current NAV valuation date. We deem it very unlikely that a policy matures within half a year because the estimations of life expectancies are rather imprecise in relation to one given person. The likelihood that such a policy will mature within 2 years is very much higher though. The arbitrary extension only has an effect on the book value of a given policy and on the estimated cash-flows as an expected maturity revenue will be pushed 2 years farther into the future. This means also more expected premium payments a long the way. NET ASSET VALUE 31st DECEMBER 2013 The calculated Net Asset Value (NAV) as per 31st December 2013 is per fund share. Compared with the NAV published by the end of 2012 ( per fund share) the calculated value per fund share rose by 32.4%. Market Outlook MANAGEMENT S APPROACH The current portfolio of the fund is well diversified with an average face value of about per policy. The age structure of the insured persons is rather high and thus it is only a matter of time till the majority of the policies mature. The calculated yield of about 8.4% p.a. from now to the estimated maturity of the last policy is still attractive. 4/17

8 The best solution would be in obtaining a financing facility of up to in order to meet the funds obligation after December 2014 till about July Maybe the financing will only be needed partially or even not at all when further maturities occur along the way. Yet having such financing facilities in place would give some comfort. We still view the only realistic chance of getting a credit line for the fund is actually from the existing investors. A creditor would get the entire policy portfolio pledged as a security. The sale of the entire policy portfolio is not really an option given the overall adverse market conditions, the expected longer new LE estimates, which would reduce the book/sale value of the policies and the reservation of a lot of market participants against policies originated by LPI. Taking all facts and considerations into account, and primarily the best interest of the fund investors, the manager suggested to the board of directors to extend the fund s life by a further year and reconsider the situation again next year. The manager would continue providing in-depth analysis to the directors on which to base their future decisions. Further, we suggest that in the case of an extension, followed by substantial early policy maturities, the fund would distribute the supplemental cash to the investors by proportional partial redemptions. Subject to a credit line not being obtained, as things currently stand we will have to start putting some policies for sale in October of this year in order to generate enough cash for settling the funds future obligations through at least July Should any early maturity occur or a credit line be in place; no policies may need to be sold. The completion of a policy sale will usually take about 3 to 4 months. DIRECTOR S DECISION In the section Investment Considerations and Risk the prospectus further states that a final distribution will be made to Investors at the end of the seventh year dependent on the number of policies that will have matured by that time and the state of the secondary market for policies at that time. The Directors may determine that it is in the best interests of Investors generally to maintain the Fund in existence and not make a final distribution until a later date. Given the current situation in the fund and the extensive analysis provided by the manager the directors deemed it in the best interest of the investors to extend the fund s life for one further year and will analyze and reconsider the situation again next year. The board s decision was made at its board meeting on the 4th of April /17

9 Fund Structure % of Net Asset Value Ten Largest Investments LP TLNLIC ( ) LP ILIC IL (750000) LP ILIC B (800000) LP WPLIC NYU (500000) LP WCLIC ZUA (500000) LP CILAC FK (500000) LP NYLIAC (500000) LP TOLIC (250000) LP VFLIC ULCP (425000) LP VFLIC VMMT00307 (200000) LP MLIC (250000) 12.90% 12.69% 6.83% 6.18% 5.53% 4.94% 4.76% 4.15% 3.55% 3.38% 2.87% Investments by Sector Financial 84.92% Assets and Liabilities by Currency % Assets and Liabilities by Bank Deposits 15.99% Category Securities and Value Rights 84.92% Miscellaneous Assets 0.13% Liabilities -1.04% 6/17

10 Statement of Assets Current Accounts 626'629 Time Deposits 0 Total Accounts 626'629 Commercial Paper 0 Equities and Bonds 0 Other Securities and Value Rights 0 Miscellaneous Rights on Par with Securities 3'327'013 Commodities (including Precious Metals) 0 Derivative Instruments 0 Miscellaneous Assets 5'000 Total Assets 3'958'642 Current Account Liabilities 0 Liabilities -40'837 Net Assets 3'917'805 Number of Shares Outstanding 89'325 Net Asset Value per Share /17

11 Profit and Loss Statement to Income from current accounts 0 Income from commercial paper 0 Income from bonds, convertible bonds and warrant bonds 0 Income from equities and other participation rights including income from bonus shares 0 Income from other investment funds 0 Income from securities 0 Income from other securities and value rights 0 Income from miscellaneous rights on par with securities 0 Income from derivative instruments 0 Miscellaneous income 0 Adjustment of current income due to issue of shares 0 Total income 0 Interest expenses 0 Auditing fees -5'244 Management fees -163'800 Custodian fees 0 Miscellaneous expenses -45'938 Adjustment of current income due to redemption of shares 0 Net income -214'982 Realised capital gains and losses 289'321 Realised earnings 74'339 Unrealised capital gains and losses 884'381 Total earnings 958'720 8/17

12 Distribution of Earnings Net income of current fiscal year -214'982 Current year capital gains deemed for distribution 0 Previous year s capital gains deemed for distribution 0 Profit and loss carried forward from previous years 0 Earnings available for distribution -214'982 Earnings allocated for distribution to investors 0 Earnings allocated for reinvestment -214'982 Retained earnings 0 Change in Net Asset Value from to Net asset value at beginning of period 2'959'085 Earnings distributions 0 Balance of subscriptions less redemptions 0 Total earnings 958'720 Net asset value at end of period 3'917'805 Number of shares outstanding from to Number of shares at beginning of period 89'325 Number of shares issued 0 Number of shares redeemed 0 Number of shares at end of period 89'325 9/17

13 Securities Lending Income from securities lending 0 Adjustments of income from securities lending due to issue of new shares 0 Adjustments of income from securities lending due to redemption of shares 0 Income from securities lending adjusted for share movements 0 Value of loaned securities 0 Miscellaneous figures Total Expense Ratio (TER) with Performance Fee 5.63% Total Expense Ratio (TER) without Performance Fee 5.63% Portfolio Turnover Ratio (PTR) 0.00 Asset Manager(s) The asset manager(s) of this fund is/are: Regent Asset Management Limited Custodian(s) The fund has its cash deposits and securities with the following custodian(s): Valartis Bank (Liechtenstein) AG, Bendern The Alder Trust 10/17

14 Detailed Statement of Assets Non-Publicly Traded Securities and Value Rights Warrants and Other Rights Opening Balance Buy Sell Closing Balance Price Value in Proportion LP BLIC 17B (400000) ' ' % LP CGLIC (100653) ' ' % LP CILAC FK (500000) ' ' % LP CILAC FK (250000) ' ' % LP ILIC B (350000) ' ' % LP ILIC B (800000) ' ' % LP ILIC IL (750000) ' ' % LP JNLIC (100000) ' ' % LP JPFIC JF (250000) ' ' % LP MLIC (250000) ' ' % LP MLIC (650000) % LP MMLIC (300000) ' ' % LP MMLIC (250000) % LP NACLHI LO (300000) % LP NLAIC N (500000) ' ' % LP NYLIAC (500000) ' ' % LP NYLIAC (100000) ' ' % LP NYLIAC (100000) ' ' % LP SLDI (450000) ' ' % LP SLDI (50000) ' ' % LP TCLAC Y (120000) ' ' % LP TCLAC Y (100000) ' ' % LP TLNLIC ( ) ' ' % 11/17

15 LP TOLIC (250000) ' ' % LP TOLIC (250000) % LP VFLIC ULCP (425000) ' ' % LP VFLIC VMMT00307 (200000) ' ' % LP WCLIC ZUA (500000) ' ' % LP WCLIC ZUA (250000) ' ' % LP WPLIC NYU (500000) ' ' % Total 3'327' % Total Warrants and Other Rights 3'327' % Total Securities and Value Rights 3'327' % Total Non-Publicly Traded 3'327' % Portfolio 3'327' % 12/17

16 Value in Proportion Portfolio 3'327' % Accrued interest rates from securities % Total Portfolio 3'327' % Bank Deposits JPMC Acanthus Valartis Bank (Liechtenstein) AG 472' ' ' ' % 3.92% Miscellaneous Assets 5' % Total Assets 3'958' % Liabilities -40' % Net Asset Value 3'917' % Number of Shares Outstanding 89'325 Net Asset Value per Share /17

17 Registered Agent Custodian Bank Administrator Auditor Asset Manager G. Grahame Bollers P.O. Box 1674 Regal Building, 2nd Floor Middle Street Kingstown Saint Vincent & the Grenadines Valartis Bank (Liechtenstein) AG Schaaner Strasse Gamprin-Bendern Liechtenstein Regent Fund Management Limited Trust House 112 Bonadie St. POB 613 Kingstown Saint Vincent & the Grenadines BDO AG Fabrikstrasse Zürich Switzerland Regent Asset Management Limited Trust House 112 Bonadie St. POB 613 Kingstown Saint Vincent & the Grenadines 14/17

18 Appendix: Detailed Profit and Loss Statement Income Income from interest earnings 0.00 Adjustment of current interest earnings due to issue of shares 0.00 Adjustment of current interest earnings due to redemption of shares 0.00 Interest expenses 0.00 Adjustment of current interest expenses due to issue of shares 0.00 Adjustment of current interest expenses due to redemption of shares 0.00 Interest income adjusted for share movements 0.00 Income from equities and participation rights 0.00 Adjustment of current income from equities and participation rights due to issue of shares 0.00 Adjustment of current income from equities and participation rights due to redemption of shares 0.00 Dividend expenses equities short 0.00 Adjustment of current dividend expenses due to issue of shares 0.00 Adjustment of current dividend expenses due to redemption of shares 0.00 Income from equities and participation rights adjusted for share movements 0.00 Income from derivative instruments 0.00 Adjustment of current income from derivative instruments due to issue of shares 0.00 Adjustment of current income from derivative instruments due to redemption of shares 0.00 Income from derivative instruments adjusted for share movements 0.00 Income from securities lending 0.00 Adjustment of current income from securities lending due to issue of shares 0.00 Adjustment of current income from securities lending due to redemption of shares 0.00 Income from securities lending adjusted for share movements 0.00 Miscellaneous income 0.00 Adjustment of current miscellaneous income due to issue of shares 0.00 Adjustment of current miscellaneous income due to redemption of shares 0.00 Miscellaneous income adjusted for share movements 0.00 Expenses and Fees Auditing fees -5' Adjustment of current auditing fees due to issue of shares 0.00 Adjustment of current auditing fees due to redemption of shares 0.00 Auditing fees adjusted for share movements -5' Fixed management fees -163' Adjustment of current fixed management fees due to issue of shares 0.00 Adjustment of current fixed management fees due to redemption of shares 0.00 Fixed management fees adjusted for share movements -163' Performance fees 0.00 Adjustment of current performance fees due to issue of shares 0.00 Adjustment of current performance fees due to redemption of shares 0.00 Performance fees adjusted for share movements 0.00 Fixed custodian/broker fees 0.00 Adjustment of current fixed custodian/broker fees due to issue of shares 0.00 Adjustment of current fixed custodian/broker fees due to redemption of shares 0.00 Fixed custodian/broker fees adjusted for share movements 0.00 Withholding tax expenses -1' Adjustment of current withholding tax expenses due to issue of shares 0.00 Adjustment of current withholding tax expenses due to redemption of shares 0.00 Withholding tax expenses adjusted for share movements Miscellaneous expenses -44' Adjustment of current miscellaneous expenses due to issue of shares 0.00 Adjustment of current miscellaneous expenses due to redemption of shares 0.00 Miscellaneous expenses adjusted for share movements -1' Securities borrowing expenses 0.00 Adjustment of current securities borrowing expenses due to issue of shares 0.00 Adjustment of current securities borrowing expenses due to redemption of shares 0.00 Securities borrowing expenses adjusted for share movements ' /17

19 Realised Capital Gains and Losses Realized capital gains and losses on securities and value rights 289' Adjustment of current realized capital gains and losses on securities and value rights due to issue of shares 0.00 Adjustment of current realized capital gains and losses on securities and value rights due to redemption of shares 0.00 Realized capital gains and losses on securities and value rights adjusted for share movements 289' Realized capital gains and losses on commodities (including precious metals) 0.00 Adjustment of current realized capital gains and losses on commodities (including precious metals) due to issue of shares 0.00 Adjustment of current realized capital gains and losses on commodities (including precious metals) due to redemption of shares 0.00 Realized capital gains and losses on commodities (including precious metals) adjusted for share movements 0.00 Realized capital gains and losses on derivative instruments 0.00 Adjustment of current realized capital gains and losses on derivative instruments due to issue of shares 0.00 Adjustment of current realized capital gains and losses on derivative instruments due to redemption of shares 0.00 Realized capital gains and losses on derivative instruments adjusted for share movements 0.00 Realized capital gains and losses on currencies 0.00 Adjustment of current realized capital gains and losses on currencies due to issue of shares 0.00 Adjustment of current realized capital gains and losses on currencies due to redemption of shares 0.00 Realized capital gains and losses on currencies adjusted for share movements 0.00 Unrealised Capital Gains and Losses Unrealized capital gains and losses on securities and value rights 884' Adjustment of current unrealized capital gains and losses on securities and value rights due to issue of shares 0.00 Adjustment of current unrealized capital gains and losses on securities and value rights due to redemption of shares 0.00 Unrealized capital gains and losses on securities and value rights adjusted for share movements Unrealized capital gains and losses on derivative instruments adjusted for share movements 884' Unrealized capital gains and losses on commodities (including precious metals) 0.00 Adjustment of current unrealized capital gains and losses on commodities (including precious metals) due to issue of shares 0.00 Adjustment of current unrealized capital gains and losses on commodities (including precious metals) due to redemption of shares 0.00 Unrealized capital gains and losses on commodities (including precious metals) adjusted for share movements 0.00 Unrealized capital gains and losses on derivative instruments 0.00 Adjustment of current unrealized capital gains and losses on derivative instruments due to issue of shares 0.00 Adjustment of current unrealized capital gains and losses on derivative instruments due to redemption of shares 0.00 Unrealized capital gains and losses on currencies Adjustment of current unrealized capital gains and losses on currencies due to issue of shares 0.00 Adjustment of current unrealized capital gains and losses on currencies due to redemption of shares 0.00 Unrealized capital gains and losses on currencies adjusted for share movements /17

20 Totals Total income 0.00 Adjustment of current total income due to issue of shares 0.00 Adjustment of current total income due to redemption of shares 0.00 Total income adjusted for share movements 0.00 Total expenses and fees -214' Adjustment of current total expenses and fees due to issue of shares 0.00 Adjustment of current total expenses and fees due to redemption of shares 0.00 Total expenses and fees adjusted for share movements Total realized capital gains and losses 289' Adjustment of current total realized capital gains and losses due to issue of shares 0.00 Adjustment of current total realized capital gains and losses due to redemption of shares 0.00 Total realized capital gains and losses adjusted for share movements Total unrealized capital gains and losses 884' Adjustment of current total unrealized capital gains and losses due to issue of shares 0.00 Adjustment of current total unrealized capital gains and losses due to redemption of shares 0.00 Total unrealized capital gains and losses adjusted for share movements -214' ' ' Total earnings adjusted for share movements 958' /17