N-CSR/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-21831

ALTERNATIVE INVESTMENT PARTNERS ABSOLUTE RETURN FUND STS

(Exact name of Registrant as specified in Charter)

100 Front Street, Suite 400

West Conshohocken, Pennsylvania 19428-2881

(Address of principal executive offices)

Registrant’s Telephone Number, including Area Code: (610) 260-7600

Kara Fricke, Esq.

Morgan Stanley Investment Management Inc.

1633 Broadway

New York, New York 10019

(Name and address of agent for service)

COPY TO:

Allison M. Fumai, Esq.

DECHERT LLP

1095 Avenue of the Americas

New York, NY 10036-6797

(212) 698-3500

Date of fiscal year end: December 31

Date of reporting period: December 31, 2021

Explanatory Note:

The Registrant is filing this amendment to its Form N-CSR for the year ended December 31, 2021, originally filed with the Securities and Exchange Commission on March 7, 2022 (Accession Number 0001193125-22-067779) to amend Item 1, “Reports to Stockholders”. The sole purpose of this amendment is to include the Management’s Discussion of Fund Performance disclosure, which was inadvertently omitted in the original filing. Other than the aforementioned, no other information or disclosures contained in the original filing are being amended by this amendment.

Item 1 (as amended hereby) to the amendment is incorporated by reference to the annual report contained in Item 1 of the original filing. Items 2 through Item 12 to the amendment are incorporated by reference to the original filing.

ITEM 1. REPORTS TO STOCKHOLDERS.

SUPPLEMENT DATED MARCH 30, 2022 TO THE ANNUAL REPORT OF

Alternative Investment Partners Absolute Return Fund STS, for the year ended December 31, 2021

(the “Fund”)

This supplement contains information that is added to the annual report for the year ended December 31, 2021 of the Fund (the “Annual Report”). This supplement is part of, and should be read in conjunction with, the Annual Report. The Annual Report has been filed with the U.S. Securities and Exchange Commission and is available free of charge at www.morganstanley.com or by calling (800) 421-7572. The sole purpose of this supplement is to include the Management’s Discussion of Fund Performance disclosure in the Annual Report immediately after the Table of Contents.

Management’s Discussion of Fund Performance

Investment Objective and Strategy Summary

Alternative Investment Partners Absolute Return Fund STS’s (the “Fund”) investment objective is to seek capital appreciation.

The Fund, through the investment of substantially all of its assets in Alternative Investment Partners Absolute Return Fund (the “Master Fund”) invests substantially all its assets in private investment funds (commonly referred to as hedge funds) that are managed by a select group of alternative investment managers that employ different “absolute return” investment strategies in pursuit of attractive risk-adjusted returns consistent with the preservation of capital. “Absolute return” refers to a broad class of investment strategies that are managed without reference to the performance of equity, debt and other markets. “Absolute return” investment strategies allow unaffiliated third-party investment managers the flexibility to use leveraged or short-sale positions to take advantage of perceived inefficiencies across the global capital markets. These strategies are in contrast to the investment programs of “traditional” registered investment companies, such as mutual funds. Absolute return strategies can be contrasted with “relative return strategies” which generally seek to outperform a corresponding benchmark equity or fixed income index. The Master Fund seeks attractive “risk-adjusted” returns, which are returns adjusted to take into account the volatility of those returns. The Master Fund intends to invest in private investment funds that employ the following principal strategies: relative value strategies, security selection strategies, specialist credit strategies and directional strategies.

Performance Discussion

Total Returns1	Average Annual
	One Year			Five Years			Ten Years
Alternative Investment Partners Absolute Return Fund STS		2.25	%		3.87	%		5.13	%

¹  Total returns include the impact of a sales load of 3% of an  investor’s subscription.

The chart below illustrates the growth of a hypothetical $50,000 investment in the Fund over the ten years ending December 31, 2021.

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

In 2021, low interest rates, accommodating central bank policy, and fiscal stimulus supported strong GDP growth and performance by risky assets. During the twelve months ended December 31, 2021, the S&P 500 Total Return Index advanced 28.71% while the Thomson Reuters/CoreCommodity CRB Index gained 38.55%. The yield on the 10-year U.S. Treasury note increased by 0.60% but still closed the year at 1.51%, which is quite low considering high economic growth and the highest inflation readings in the U.S. since the 1970’s. Through its underlying funds, the Master Fund’s portfolio was positioned with low equity and credit exposure throughout the year, reflecting our conviction that risky assets were at high valuation levels and increases in interest rates were forthcoming. Specifically, the portfolio had a minimal allocation to Equity Long/Short Opportunistic funds (which carry relatively high equity beta) and a relatively high weighting to Equity Long/Short High Hedge and Statistical Arbitrage funds (which carry little to no equity beta). Additionally, the portfolio held a significant allocation to Macro funds, including strategies of various time horizons, styles, and risk orientations, in an effort to generate returns in multiple market scenarios.

During the twelve months ended December 31, 2021, the Fund returned 5.32% (excluding sales load), materially outperforming bonds (Bloomberg US Aggregate Bond Index -1.54%) and cash (3 Month LIBOR +0.17%). As would be expected, the Fund underperformed equities due to the Master Fund’s low beta exposure (0.01 in 2021).

Strategy attribution of the Master Fund was as follows:

CTA/Managed Futures	0.13	%
Distressed	3.02	%
Equity L/S High Hedge	1.74	%
Equity L/S Opportunistic	0.02	%
Event Driven Credit	0.00	%
Fixed Income Arbitrage	-0.27	%
Macro	0.24	%
Mortgage Arbitrage	0.50	%
Multi Strategy	0.03	%
Other Directional	0.31	%
Private Placements	-0.13	%
Statistical Arbitrage	2.48	%

Distressed funds were buoyed by two returns from legacy liquidating side pocket holdings in Cerberus funds that collectively returned approximately 70% and contributed 2.46%. The core underlying holding in the Cerberus funds is the U.S. grocer, Albertsons, which leaped more than 70%, due to strong operating performance and appointment of a new Treasurer and CFO. Statistical Arbitrage funds, which carry little to no net equity beta, generated positive results in each quarter. The asset weighted average return of the Master Fund’s five Statistical Arbitrage funds was 10.57%. Two funds each returned more than 20%, profiting from fundamental and technical strategies. The Master Fund’s six Equity Long/Short High Hedge funds (asset weighted return of +7.67% in 2021), with little equity beta, generated positive results in each quarter, profiting from multiple funds (Point 72 +9.4%, Holocene +5.5%, Cinctive +3.2%), which largely profiting from equity trading. Conversely, the asset weighted average return of the Master Fund’s two Fixed Income Arbitrage funds (each of which was terminated prior to year end) was -3.63%.

We thank you for your support for the Fund and believe the Fund is well positioned to enter the uncertainties of 2022.

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.

ITEM 13. EXHIBITS.

(a)
(1)	The Code of Ethics for Principal Executive and Senior Financial Officers is attached hereto.
(2)	Certifications of Principal Executive Officer and Principal Financial Officer are attached to this report as part of EX-99.CERT.

SIGNATURES

Pursuant to the requirements of the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ALTERNATIVE INVESTMENT PARTNERS ABSOLUTE RETURN FUND STS

By:	/s/ John H. Gernon
	Name: John H. Gernon
	Title: President
	Date: March 30, 2022

Pursuant to the requirements of the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By:	/s/ John H. Gernon
	Name: John H. Gernon
	Title: Principal Executive Officer
	Date: March 30, 2022

By:	/s/ Francis J. Smith
	Name: Francis J. Smith
	Title: Principal Financial Officer
	Date: March 30, 2022

EX-99.CODE

Exhibit (a)(1)

Code of Ethics for Principal Executives and Senior Financial Officers MORGAN STANLEY FUNDS Code of Ethics for Principal Executive and Senior Financial Officers Adopted September 28, 2004 and amended September 20, 2005, December 1, 2006, January 1, 2008, September 25, 2008, April 23, 2009 and March 18, 2010 I. This Code of Ethics (the “Code”) for the investment companies within the Morgan Stanley complex identified in Exhibit A (collectively, “Funds” and each, a “Fund”) applies to each Fund’s Principal Executive Officer, President, Principal Financial Officer and Treasurer (or persons performing similar functions) (“Covered Officers” each of whom are set forth in Exhibit B) for the purpose of promoting: honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships. full, fair, accurate, timely and understandable disclosure in reports and documents that a company files with, or submits to, the Securities and Exchange Commission (“SEC”) and in other public communications made by the Fund; compliance with applicable laws and governmental rules and regulations; prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. Any question about the application of the Code should be referred to the General Counsel or his/her designee (who is set forth in Exhibit C). II Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest Overview. A “conflict of interest” occurs when a Covered Officer’s private interest interferes, or appears to interfere, with the interests of, or his service to, the Fund. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Fund. Certain conflicts of interest arise out of the relationships between Covered Officers and the Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940 (“Investment Company Act”) and the Investment Advisers Act of 1940 (“Investment Advisers Act”). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as “affiliated persons” (as defined in the Investment Company Act) of the Fund. The Fund’s and its investment adviser’s compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside the parameters of this Code, unless or until the General Counsel determines that any violation of such programs and procedures is also a violation of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts may arise from, or as a result of, the contractual relationship between the Fund and its investment adviser of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Fund or for the investment adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the Fund and its investment adviser. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the investment adviser and is consistent with the performance by the Covered Officers of their duties as officers

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of the Fund. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds’ Boards of Directors/Trustees (“Boards”) that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Fund. Each Covered Officer must not: use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally (directly or indirectly); cause the Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Fund; or use material non-public knowledge of portfolio transactions made or contemplated for, or actions proposed to be taken by, the Fund to trade personally or cause others to trade personally in contemplation of the market effect of such transactions. Each Covered Officer must, at the time of signing this Code, report to the General Counsel all affiliations or significant business relationships outside the Morgan Stanley complex and must update the report annually. Conflict of interest situations should always be approved by the General Counsel and communicated to the relevant Fund or Fund’s Board. Any activity or relationship that would present such a conflict for a Covered Officer would likely also present a conflict for the Covered Officer if an immediate member of the Covered Officer’s family living in the same household engages in such an activity or has such a relationship. Examples of these include: service or significant business relationships as a director on the board of any public or private company; accepting directly or indirectly, anything of value, including gifts and gratuities in excess of $100 per year from any person or entity with which the Fund has current or prospective business dealings, not including occasional meals or tickets for theatre or sporting events or other similar entertainment; provided it is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; any ownership interest in, or any consulting or employment relationship with, any of the Fund’s service providers, other than its investment adviser, principal underwriter, or any affiliated person thereof; and a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer’s employment, such as compensation or equity ownership. III. Disclosure and Compliance Each Covered Officer should familiarize himself/herself with the disclosure and compliance requirements generally applicable to the Funds; each Covered Officer must not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund, including to the Fund’s Directors/Trustees and auditors, or to governmental regulators and self-regulatory organizations; each Covered Officer should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Funds and their investment advisers with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. Reporting and Accountability Each Covered Officer must:

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upon adoption of the Code (thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Boards that he has received, read and understands the Code; annually thereafter affirm to the Boards that he has complied with the requirements of the Code; not retaliate against any other Covered Officer, other officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; and notify the General Counsel promptly if he/she knows or suspects of any violation of this Code. Failure to do so is itself a violation of this Code. The General Counsel is responsible for applying this Code to specific situations in which questions are presented [1] under it and has the authority to interpret this Code in any particular situation. However, any waivers sought by a Covered Officer must be considered by the Board of the relevant Fund or Funds. The Funds will follow these procedures in investigating and enforcing this Code: the General Counsel will take all appropriate action to investigate any potential violations reported to him; if, after such investigation, the General Counsel believes that no violation has occurred, the General Counsel is not required to take any further action; any matter that the General Counsel believes is a violation will be reported to the relevant Fund’s Audit Committee; if the directors/trustees/managing general partners who are not “interested persons” as defined by the Investment Company Act (the “Independent Directors/Trustees/Managing General Partners”) of the relevant Fund concur that a violation has occurred, they will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer or other appropriate disciplinary actions; the Independent Directors/Trustees/Managing General Partners of the relevant Fund will be responsible for granting waivers of this Code, as appropriate; and any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Funds, the Funds’ investment advisers, principal underwriters, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code unless any provision of this Code conflicts with any applicable federal or state law, in which case the requirements of such law will govern. The Funds’ and their investment advisers’ and principal underwriters’ codes of ethics under Rule 17j-1 under the Investment Company Act and Morgan Stanley’s Code of Ethics are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. Amendments Any amendments to this Code, other than amendments to Exhibits A, B or C, must be approved or ratified by a majority vote of the Board of each Fund, including a majority of Independent Directors/Trustees/Managing General Partners. VII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Independent Directors/Trustees/Managing General Partners of the relevant Fund or Funds and their counsel, the relevant Fund or Funds and their counsel and the relevant investment adviser and its counsel. VIII. Internal Use The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion.

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ACKNOWLEDGEMENT I have read and understand the terms of the above Code. I recognize the responsibilities and obligations incurred by me as a result of my being subject to the Code. I hereby agree to abide by the above Code. Name Date[ 1] Item 2 of Form N-CSR defines “waiver” as “the approval by the registrant of a material departure from a provision of the code of ethics.”

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EXHIBIT A

MORGAN STANLEY FUNDS

at

December 31, 2021

Funds of Hedge Funds

1. Alternative Investment Partners Absolute Return Fund (“Absolute Return Fund”)

2. Alternative Investment Partners Absolute Return Fund STS (“Absolute Return Fund STS”)

3. AIP Multi-Strategy Fund A (“Multi-Strategy A”)

4. AIP Multi-Strategy Fund P (“Multi-Strategy P”)

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EXHIBIT B

Fund of Hedge Funds – Alternative Investment Partners

Covered Officers

John H. Gernon – President and Principal Executive Officer

Francis J. Smith – Treasurer and Principal Financial Officer

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EXHIBIT C

General Counsel’s Designee - Chief Legal Officer

Mary Mullin

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EX-99.CERT

Exhibit (a)(2)

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

CERTIFICATIONS

I, John H. Gernon, certify that:

1. I have reviewed this report on Form N-CSR of Alternative Investment Partners Absolute Return Fund STS;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

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b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: March 30, 2022

By:	/s/ John H. Gernon
	Title: Principal Executive Officer

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Exhibit(a)(2)

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

CERTIFICATIONS

I, Francis J. Smith, certify that:

1. I have reviewed this report on Form N-CSR of Alternative Investment Partners Absolute Return Fund STS;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

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b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: March 30, 2022

By:	/s/ Francis J. Smith
	Title: Principal Financial Officer

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