Alpine Select : Annual Report 2023

ANNUAL

REPORT

2023

Investors' Information

Board of Directors
Raymond J. Baer	Chairman
Thomas Amstutz	Member
Dieter Dubs	Member
Michel Vukotic	Member
Management
Claudia Habermacher	Chief Executive Officer
Lukas Hoppe	Chief Operating Officer
Michel Vukotic	Chief Investment Officer
Auditors
BDO AG
Schiffbaustrasse 2
8031 Zurich / Switzerland
Alpine Select Facts
Incorporation date	17 September 1997
Listing	SIX Swiss Exchange
Stock Exchange Symbol	ALPN
Swiss Security Number	1.919.955
ISIN Code	CH0019199550
Reuters	ALPN.S
Bloomberg	ALPN SW EQUITY
Type of Share	Registered share
Total Shares Issued	8,709,900
Custodian	Bank Julius Baer
Management Fees	None
Performance Fees	None
Distributions	Out of retained earnings
Corporate Calendar	https://www.alpine-select.ch/en/investors#calendar

Contact

Alpine Select Ltd.

Gotthardstrasse 31

6300 Zug / Switzerland T [phone] [e-mail]://www.alpine-select.ch/

Contents

Key Figures	4
Chairman's Statement and Review of	7
Operations
Corporate Governance	11
Compensation Report	27
Report of the Statutory Auditor on the	33
Compensation Report
Consolidated Financial Statements	35
Notes to the Consolidated Financial	41
Statements
Report of the Statutory Auditor on the	57
Consolidated Financial Statements
Statutory Financial Statements	61
Notes to the Statutory Financial Statements	65
Proposed Appropriation of Available Earnings	71
Report of the Statutory Auditor on the	73
Financial Statements

Key Figures

	Allocation by Asset Class
Performance Table 1)	in % of Total Assets 2)

	Share Price	NAV	Premium /
	(CHF)	(CHF)	discount to NAV
31 Dec 2023	7.85	7.72	1.68%
31 Dec 2022	7.92	7.71	2.76%
High Year 2023	8.43	7.98
Low Year 2023	6.90	7.23

	Cash 3)	Equity -
	Long/Short
Real Estate	7.9%8.8%
(Legacy)
11.9%
		22.5%	Equity -
			Long Only
Credit	41.0%	7.9%	Blockchain/
Opportunities
		Digital Assets

							Allocation by Region
Selected Balance Sheet Items 4)					in % of Total Assets 2)
	in TCHF	31-Dec-23	31-Dec-22		Japan	Cash 3)
		1.3%
	Current assets	7 263	18 260				7.9%
	Non-current assets	63 747	96 269	USA	18.9%	42.6%	Europe
	Current liabilities	1 246	5 195
	Non-current liabilities	525	392
	Equity attributable to the shareholders	67 212	103 596	Global	29.3%
	of Alpine Select
	Non-controlling interests	2 027	5 346
	Top Positions of the Portfolio as per 31 December 2023				Investment Manager
in % of Total Assets 2)						in % of Total Assets 2)
	Fund name	Asset Class	Allocation
	Cheyne Total Return Credit Fund	Credit Opportunities	16.5%						Alpine
	IP Group PLC	Equity - Long Only	15.7%
				33.8%	Select
	Cheyne New Europe Fund Inc.	Real Estate (Legacy)	11.8%
	Derivatives and Net Cash		7.9%	External		66.2%
	Idorsia Ltd.	Credit Opportunities	4.9%	Manager
	Nishkama Capital Offshore	Equity Long/Short	4.7%
	Aleutian	Credit Opportunities	4.6%
	Three Court Fund Offshore LP	Credit Opportunities	4.5%

1. All figures are adjusted for the payment of an ordinary dividend in May 2023 and an extraordinary dividend in September 2023.
2. Financial assets, derivatives, and net cash.
3. Derivatives and Net Cash includes cash-alike investments.
4. Information herein is presented in addition to the consolidated financial statements.

4

Key Figures

Net Annualized Return (30 September 2003 to 31 December 2023)

Share Price	5.32%
Monthly NAV 1) (net, est.)	4.99%

12 Months Price-History in CHF for the Period January to December 2023 Daily closing share price and weekly NAV

Share Price	Weekly NAV
9.0
8.5
8.0
7.5
7.0
6.5
6.0

	Dec-22Jan-23Feb-23Mar-23Apr-23	May-23Jun-23	Jul-23Aug-23Sep-23	Oct-23	Nov-23	Dec-23
	Monthly NAV Performance in % 1)
		Jan	Feb	Mar	April	May	June		July	Aug	Sept	Oct	Nov	Dec	Annual
	2023	1.55	2.53	-2.83	0.28	-0.34	-0.75		0.91	-0.48	-2.30	-3.81	2.30	3.81	0.58
2022	-1.37	-3.22	0.39	-0.07	-1.55	-5.32		1.49	-3.53	-3.26	-2.04	1.15	-1.95	-18.17
	2021	0.35	3.03	4.25	1.67	1.35	0.02	-0.61	1.25	4.90	-1.95	1.05	2.92	19.56
2020	-0.05	-1.63	-3.37	-4.58	2.40	0.63		2.58	0.88	1.40	-0.18	1.68	3.50	3.07
	2019	0.46	1.05	1.83	0.91	0.53	-0.93		1.69	-1.30	0.40	0.05	2.72	0.46	9.50
2018	2.37	0.25	-0.17	-0.10	0.35	-1.48		0.90	-0.17	-0.05	-1.90	-4.72	-2.99	-9.90
	Monthly Share Price Performance in %
		Jan	Feb	Mar	April	May	June		July	Aug	Sept	Oct	Nov	Dec	Annual
	2023	-1.65	1.68	-0.83	0.00	0.00	0.00	-0.91	-4.59	2.31	-3.95	-1.37	9.03	-0.92
2022	0.65	-6.45	3.45	0.00	-3.08	-3.70	-1.50	-0.78	-5.51	0.00	0.83	0.00	-15.38
	2021	0.73	2.90	3.52	3.40	0.66	-0.70		1.40	1.39	2.05	1.34	2.65	-0.65	20.27
2020	0.00	-1.40	-7.80	2.31	0.06	1.63		0.80	0.79	1.60	0.78	2.31	3.01	3.66
	2019	0.00	0.72	0.71	1.42	-1.43	0.00		1.24	0.72	0.00	0.70	1.43	0.70	6.38
2018	1.84	0.00	-0.60	0.00	0.53	-1.28		0.60	-0.65	0.00	-4.55	-1.36	-3.10	-8.33

1. The monthly NAV performance as disclosed is based on the estimated monthly NAV as published by the Company. Published NAVs are not adjusted except for the effect of dividend distributions and the issuance of tradeable put options of Alpine Select Ltd. Estimated and effective monthly NAVs may differ.

5

Chairman's Statement and Review of Operations

Dear Shareholders

Looking back, 2023 is likely to be remembered as the year when the first applications of artificial intelligence became mainstream. Noteworthy is also the resilience shown by the 'magnificent seven' stocks, which experienced substantial gains throughout the year.

Overall, 2023 surpassed many expectations, with most asset classes ending the year in positive territory. The significant rise in yields, reaching levels not seen since the global financial crisis, initially impacted both stocks and bonds. The bond markets particularly required strong nerves. However, due to a sharper-than- expected decrease in inflation during 2023 and market anticipation of the beginning of an interest rate cutting cycle in 2024, yields declined again, allowing bonds to end the year positively as well. There is an optimistic consensus that 2024 will mark the beginning of interest rate cuts by central banks, heralding a new economic cycle.

The Alpine Select portfolio remained fully invested, yet defensively positioned from a risk-adjusted stand- point. The Net Asset Value (NAV) development for the year was +0.13% (an increase from CHF 7.71 to CHF 7.72 per share). This includes an ordinary dividend of CHF 1.00 per share distributed in May 2023, as well as an extraordinary dividend of CHF 3.00 per share distributed in September 2023.

Throughout the reporting period, the shares traded near the NAV, fulfilling an important commitment of ours.

Portfolio Development and Investment Activities

Exit of regional Far East exposure

In the first half of 2023, engagements with a focus on the regional Chinese market were divested. Heightened tensions and mutual hostility observed between the US and China amplified uncertainties and operational risks, prompting a re-evaluation of regional allocations.

Having maintained exposure to the Chinese market for nearly six years, Alpine Select has opted to exit this regional investment theme. As a result, the portfolio now holds reduced exposure, primarily through one Japanese manager, Bengal Asset Management.

The resurgence of interest rates in Western markets has led to the conclusion that the risk/reward balance in the Western world is now more favorable. Given the economic backdrop in China, in hindsight, this has been the right macro decision.

Special Situations / Discounted Assets

• IP Group holds a central position in our portfolio, albeit facing structural challenges within the broader UK investment landscape. In December 2023, the announcement of another share buyback program led to a rally in the stock, resulting in a +4% performance for the year. The decision to repurchase their own undervalued shares demonstrates the IP Group board's commitment to addressing the current unjustified discount to NAV, which stands above 50%. Regular cash returns to shareholders through realizations will continue, primarily in the form of share buybacks, as long as the discount to NAV remains above 20%.

7

Chairman's Statement and Review of Operations

We support IP Group's proactive undertaking in rectifying their discounted situation until a more 'ac- ceptable' level is attained. Furthermore, we maintain optimism that the IP Group's portfolio is well-positioned to benefit from the maturation of its assets rooted in scientific research. Anticipating various catalysts in 2024 and 2025, we remain confident in the value creation of IP Group.

• We hold the view that the Idorsia convertible bonds have experienced an unwarranted sell-off, primarily driven by negative sentiment surrounding the company, resulting in trading at distressed levels. Despite operational challenges, such as cost reduction measures and the sale of their Asian business, which have been addressed, we maintain our view, foreseeing the convertible bonds being redeemed at par.
  Following the reporting period, on 28 February 2024, Idorsia made a significant announcement: The company entered into a substantial global research and development collaboration with Viatris, a prom- inent U.S.-based global healthcare company. This collaboration entails the joint effort in the global de- velopment and commercialization of two Phase 3 assets, 'selatogrel' and 'cenerimod'. As part of this collaboration, Idorsia will receive an upfront payment of USD 350 million, in addition to potential mile- stone payments and royalties.
  Idorsia Pharmaceuticals reported on 20 March 2024 that the US Food and Drug Administration (FDA) approved the company's once-daily TRYVIO ('aprocitentan') for the treatment of hypertension in com- bination with other antihypertensive drugs, to lower blood pressure in adult patients who are not ade- quately controlled on other drugs. This achievement marks another significant milestone in the compa- ny's trajectory, as it secures its second potential blockbuster drug approved by the FDA.
• Our core position Cheyne Total Return Fund which invests in global investment grade and crossover credit positions via Credit Default Swaps, had a stellar year posting +20%. The strategy has a fixed maturity of December 2024. We intend to keep the position as 'invested cash' - given the yield to maturity is expected to be around 8 to 9%.

Digital Assets

Digital assets witnessed a remarkable year in 2023. Recovering from a bear market, blockchain-based assets experienced a resurgence, especially with the approval and launch of spot Bitcoin exchange-traded funds in the U.S. This move not only opened the asset class to new investors, but also fueled excitement that propelled the market into a new bull phase (which continues at the time of writing).

Despite this optimism, it's important to acknowledge that the industry is still maturing. Volatility is expected to persist, given the various challenges that blockchain-based applications still need to overcome.

Our exposure to digital assets is managed by specialists through venture capital funds. These experts are navigating the landscape of this emerging asset class with expertise.

We reiterate that due to the nature of venture capital investing, target fund valuations considered for our NAV are lagging current market values.

8

Chairman's Statement and Review of Operations

Shareholders' Meetings

During the ordinary shareholders' meeting held on 17 May 2023, all agenda items and proposals presented by the Board of Directors of Alpine Select Ltd. were passed by the shareholders, after which a dividend of CHF 1.00 gross per registered share was distributed to shareholders on 23 May 2023.

At the extraordinary shareholders' meeting convened on 21 September 2023, shareholders endorsed the sole agenda item proposed by the Board of Directors of Alpine Select Ltd. Consequently, an extraordinary dividend of CHF 3.00 gross per registered share was distributed on 27 September 2023.

Outlook

As we look ahead, together with my colleagues on the board of directors, we share a strong belief in the intrinsic value and growth prospects of our current portfolio. Alpine Select remains well-positioned to deliver favorable returns, independent of broader market movements.

We remain vigilant in identifying discounted and mispriced assets offering an attractive risk/reward profile. Aligned with Alpine Select's mandate, we are committed to actively pursue and exploit opportunities for the benefit of our shareholders.

Furthermore, we are closely monitoring geopolitical tensions and their potential economic and financial ramifications. Recognizing the possibility of market volatility stemming from the return of a former American US president, we are adjusting our cash projections accordingly. Our asset allocation strategy is continually reassessed considering evolving macroeconomic factors.

On behalf of the board of directors, I express sincere gratitude for your continued support and trust in our endeavors.

Raymond J. Baer

Chairman of the Board of Directors of Alpine Select Ltd.

9