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 811-09205
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Advantage Advisers Xanthus Fund, LLC
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(Exact name of registrant as specified in charter)
200 Park Avenue, 24th Floor
New York, NY 10166
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(Address of principal executive offices) (Zip code)
Kenneth Gerstein
Schulte, Roth and Zabel LLP
919 3rd Avenue, 24th Floor
New York, NY 10022
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(Name and address of agent for service)
Registrant's telephone number, including area code: 212-667-4225
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Date of fiscal year end: December 31
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Date of reporting period: December 31, 2009
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
[ADVANTAGE ADVISERS LOGO]
Advantage Advisers
Xanthus Fund, L.L.C.
Financial Statements
with Report of Independent
Registered Public Accounting Firm
For the Year Ended December 31, 2009
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2009
CONTENTS
Report of Independent Registered Public Accounting Firm .................. 1
Statement of Assets, Liabilities and Members' Capital .................... 2
Schedule of Portfolio Investments ........................................ 3
Schedule of Securities Sold, Not Yet Purchased ........................... 10
Schedule of Swap Contracts ............................................... 16
Statement of Operations .................................................. 23
Statements of Changes in Members' Capital ................................ 24
Notes to Financial Statements ............................................ 25
Supplemental Information (Unaudited) ..................................... 38
[ERNST & YOUNG LOGO]
ERNST & YOUNG LLP
5 Times Square
New York, New York 10036-6530
Tel: (212) 773 3000
WWW.EY.COM
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Members and Board of Managers of
Advantage Advisers Xanthus Fund, L.L.C.
We have audited the accompanying statement of assets, liabilities and members'
capital of Advantage Advisers Xanthus Fund, L.L.C. (the "Company"), including
the schedules of portfolio investments, securities sold, not yet purchased and
swap contracts, as of December 31, 2009, and the related statement of operations
for the year then ended, the statements of changes in members' capital for each
of the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Company's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2009, by correspondence with the custodian
and brokers or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Advantage Advisers Xanthus Fund, L.L.C. at December 31, 2009, the results of its
operations for the year then ended, the changes in its members' capital for each
of the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with U.S. generally
accepted accounting principles.
/s/ ERNST & YOUNG LLP
New York, New York
February 23, 2010
A member firm of Ernst & Young Global Limited
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ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
STATEMENT OF ASSETS, LIABILITIES AND MEMBERS' CAPITAL
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DECEMBER 31, 2009
ASSETS
Investments in securities, at market value (cost $826,524,956) $ 983,356,391
Cash and cash equivalents (including restricted cash of $93,639,623, Euros of
$314,212 with a cost of $326,072, and Hong Kong Dollars of $2,523,151 with a
cost of $2,522,556) 132,312,307
Due from broker (including Hong Kong Dollars of $8,872 with a cost of $8,876) 230,099,942
Receivable for investment securities sold 29,709,373
Interest receivable 203,501
Dividends receivable 103,018
Other assets 178,131
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TOTAL ASSETS 1,375,962,663
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LIABILITIES
Securities sold, not yet purchased, at market value (proceeds $385,681,104) 400,073,007
Withdrawals payable (see note 3) 57,568,179
Payable for investment securities purchased 19,463,431
Accrued capital gain country tax (see note 2) 3,142,315
Due to broker (including Euros of $2,694,782 with a cost of $2,694,782, Japanese
Yen of $5 with a cost of $5, and British Pound Sterling of $1 with a cost $1) 2,694,788
Dividends payable on securities sold, not yet purchased 465,315
Net unrealized loss on swap contracts 120,954
Accounting and investor services fees payable 117,263
Accrued expenses 901,349
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TOTAL LIABILITIES 484,546,601
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NET ASSETS $ 891,416,062
=================
MEMBERS' CAPITAL - NET ASSETS
Represented by:
Net capital contributions $ 749,070,040
Net unrealized gain on investments, foreign currency, and swap transactions 142,346,022
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MEMBERS' CAPITAL - NET ASSETS $ 891,416,062
=================
The accompanying notes are an integral part of these financial statements.
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ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS
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DECEMBER 31, 2009
SHARES VALUE
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INVESTMENT IN SECURITIES - 110.31%
COMMON STOCK - 109.39%
UNITED STATES - 78.68%
APPAREL MANUFACTURERS - 2.45%
269,390 Polo Ralph Lauren Corp. $ 21,815,202
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APPLICATIONS SOFTWARE - 1.54%
450,915 Microsoft Corp. 13,748,398
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COMMERCIAL SERVICES - FINANCE - 9.70%
121,783 Mastercard, Inc., Class A (a) 31,174,012
801,125 Verisk Analytics, Inc.* 24,258,065
354,930 Visa, Inc., Class A Shares (a) 31,042,178
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86,474,255
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COMPUTERS - 7.93%
209,260 Apple, Inc.* (a) 44,124,564
515,700 Hewlett-Packard Co. 26,563,707
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70,688,271
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COMPUTERS - INTEGRATED SYSTEMS - 0.89%
1,040,061 Brocade Communications Systems, Inc.* (a) 7,935,665
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COMPUTERS - MEMORY DEVICES - 8.45%
917,250 EMC Corp.* (a) 16,024,357
315,210 NetApp, Inc.* (a) 10,840,072
1,671,521 SanDisk Corp.* (a) 48,457,394
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75,321,823
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DATA PROCESSING / MANAGEMENT - 1.25%
471,075 Commvault Systems, Inc.* 11,159,767
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E-COMMERCE / SERVICES - 3.36%
814,377 eBay, Inc.* (a) 19,170,434
420,546 Expedia, Inc.* 10,812,238
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29,982,672
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ELECTRONIC COMPONENTS - MISCELLANEOUS - 1.02%
717,187 AVX Corp. (a) 9,086,759
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The accompanying notes are an integral part of these financial statements.
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ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
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DECEMBER 31, 2009
SHARES VALUE
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COMMON STOCK - (CONTINUED)
UNITED STATES - (CONTINUED)
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 8.26%
1,250,905 Applied Micro Circuits Corp.* (a) $ 9,344,260
468,219 Broadcom Corp., Class A* (a) 14,725,488
408,842 Monolithic Power Systems, Inc.* 9,799,943
522,297 Nvidia Corp.* 9,756,508
1,752,664 PMC - Sierra, Inc.* 15,178,070
591,566 Xilinx, Inc. 14,824,644
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73,628,913
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ENGINEERING / R&D SERVICES - 2.63%
558,158 Mistras Group, Inc.* 8,405,859
523,333 Shaw Group, Inc.* 15,045,824
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23,451,683
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ENTERPRISE SOFTWARE / SERVICES - 4.01%
781,517 CA, Inc. (a) 17,552,872
258,547 Informatica Corp.* 6,686,025
490,265 Taleo Corp., Class A* 11,531,033
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35,769,930
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FINANCE - OTHER SERVICES - 1.56%
123,436 IntercontinentalExchange, Inc.* 13,861,863
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INDUSTRIAL AUDIO & VIDEO PRODUCTION - 1.59%
296,662 Dolby Laboratories, Inc., Class A* (a) 14,159,677
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INTERNET INFRASTRUCTURE SOFTWARE - 0.77%
710,893 TIBCO Software, Inc.* 6,845,900
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INTERNET SECURITY - 1.35%
673,868 Symantec Corp.* 12,055,499
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INVESTMENT MANAGEMENT / ADVISORY SERVICES - 2.75%
232,833 Franklin Resources, Inc. (a) 24,528,957
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MEDICAL - BIOMEDICAL / GENETICS - 0.93%
266,298 OSI Pharmaceuticals, Inc.* 8,263,227
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NETWORKING PRODUCTS - 3.41%
1,268,395 Cisco Systems, Inc.* (a) 30,365,376
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The accompanying notes are an integral part of these financial statements.
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ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
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DECEMBER 31, 2009
SHARES VALUE
- ----------- -----------------
COMMON STOCK - (CONTINUED)
UNITED STATES - (CONTINUED)
POWER CONVERSION / SUPPLY EQUIPMENT - 1.25%
470,720 Sunpower Corp., Class A* $ 11,146,650
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RETAIL - DISCOUNT - 1.60%
295,820 Dollar Tree, Inc.* (a) 14,288,106
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SEMICONDUCTOR COMPONENTS - INTEGRATED CIRCUITS - 5.29%
533,383 Analog Devices, Inc. (a) 16,844,235
991,093 Linear Technology Corp. (a) 30,267,980
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47,112,215
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TRANSPORT - SERVICES - 0.79%
558,158 Echo Global Logistics, Inc.* 7,083,025
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WEB HOSTING / DESIGN - 3.34%
140,071 Equinix, Inc.* 14,868,537
716,096 Rackspace Hosting, Inc.* 14,930,601
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29,799,138
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WIRELESS EQUIPMENT - 2.56%
529,069 American Tower Corp., Class A* (a) 22,861,072
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TOTAL UNITED STATES (COST $589,179,495) $ 701,434,043
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BERMUDA - 3.05%
SEMICONDUCTOR COMPONENTS - INTEGRATED CIRCUITS - 3.05%
1,311,618 Marvell Technology Group, Ltd.* 27,216,073
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TOTAL BERMUDA (COST $21,359,629) $ 27,216,073
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CANADA - 4.26%
COMPUTERS - 2.36%
311,100 Research in Motion, Ltd.* (a) 21,011,694
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ENTERPRISE SOFTWARE / SERVICES - 1.56%
341,337 Open Text Corp.* 13,875,349
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OIL COMPANIES - INTEGRATED - 0.34%
86,360 Suncor Energy, Inc. 3,049,372
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TOTAL CANADA (COST $34,935,281) $ 37,936,415
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The accompanying notes are an integral part of these financial statements.
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ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
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DECEMBER 31, 2009
SHARES VALUE
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COMMON STOCK - (CONTINUED)
CHINA - 8.09%
INDUSTRIAL GASES - 0.91%
7,881,674 Yingde Gases Group Co.* $ 8,121,516
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INSTRUMENTS - CONTROLS - 1.21%
13,209,151 China Automation Group, Ltd. 10,851,411
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INSURANCE BROKERS - 1.70%
754,012 CNinsure, Inc. - Sponsored ADR (a) 15,140,561
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REAL ESTATE MANAGEMENT / SERVICES - 1.34%
659,062 E-House China Holdings, Ltd. - Sponsored ADS 11,942,203
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REAL ESTATE OPERATIONS / DEVELOPMENT - 1.05%
8,274,211 Longfor Properties Co., Ltd.* 9,336,982
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RETAIL - REGIONAL DEPARTMENT STORES - 1.37%
5,968,303 Golden Eagle Retail Group, Ltd. 12,192,083
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RETAIL - RESTAURANTS - 0.51%
5,309,037 Ajisen China Holdings, Ltd. 4,546,275
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TOTAL CHINA (COST $69,163,736) $ 72,131,031
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FRANCE - 1.48%
BATTERIES / BATTERY SYSTEMS - 1.48%
271,700 Saft Groupe SA 13,160,294
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TOTAL FRANCE (COST $13,173,183) $ 13,160,294
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HONG KONG - 9.08%
AGRICULTURAL OPERATIONS - 0.73%
6,811,005 China Green Holdings, Ltd. 6,473,670
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ALTERNATIVE WASTE TECHNOLOGY - 1.89%
32,678,633 China Everbright International, Ltd. 16,857,600
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AUTOMOBILE / TRUCK PARTS & EQUIPMENT - REPLACEMENT - 0.81%
7,983,457 Xinyi Glass Holdings Co., Ltd. 7,237,993
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DIVERSIFIED OPERATIONS - 2.51%
15,490,379 Guangdong Investment, Ltd. 9,049,657
The accompanying notes are an integral part of these financial statements.
-6-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
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DECEMBER 31, 2009
SHARES VALUE
- ----------- -----------------
COMMON STOCK - (CONTINUED)
HONG KONG - (CONTINUED)
DIVERSIFIED OPERATIONS (CONTINUED)
2,609,338 Shanghai Industrial Holdings, Ltd. $ 13,342,751
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22,392,408
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ELECTRONIC MEASURING INSTRUMENTS - 0.41%
3,497,060 Wasion Group Holdings, Ltd. 3,657,597
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GAS - DISTRIBUTION - 0.79%
971,856 Beijing Enterprises Holding, Ltd. 7,050,117
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RETAIL - APPAREL / SHOES - 1.94%
42,054,637 Trinity, Ltd. 17,301,208
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TOTAL HONG KONG (COST $58,449,748) $ 80,970,593
-----------------
ISRAEL - 0.98%
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 0.98%
461,450 Mellanox Technologies, Ltd.* (a) 8,702,947
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TOTAL ISRAEL (COST $7,172,387) $ 8,702,947
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NETHERLANDS - 0.57%
SEMICONDUCTOR EQUIPMENT - 0.57%
149,281 ASML Holding NV 5,088,989
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TOTAL NETHERLANDS (COST $4,558,604) $ 5,088,989
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UNITED KINGDOM - 3.20%
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 3.20%
3,332,711 ARM Holdings, PLC - Sponsored ADR (a) 28,528,006
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TOTAL UNITED KINGDOM (COST $20,332,844) $ 28,528,006
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TOTAL COMMON STOCK (COST $818,324,907) $ 975,168,391
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The accompanying notes are an integral part of these financial statements.
-7-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
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DECEMBER 31, 2009
CONTRACTS VALUE
- ----------- -----------------
PURCHASED OPTIONS - 0.92%
PUT OPTIONS - 0.92%
UNITED STATES - 0.92%
REGISTERED INVESTMENT COMPANY - 0.92%
46,000 Powershares, 06/19/2010, $43.00 $ 8,188,000
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TOTAL PUT OPTIONS (COST $8,200,049) $ 8,188,000
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TOTAL PURCHASED OPTIONS (COST $8,200,049) $ 8,188,000
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TOTAL INVESTMENTS IN SECURITIES (COST $826,524,956) - 110.31% $ 983,356,391
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OTHER LIABILITIES IN EXCESS OF ASSETS - (10.31%)** (91,940,329)
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NET ASSETS - 100.00% $ 891,416,062
=================
(a) Partially or wholly held in a pledged account by the Custodian as
collateral for securities sold, not yet purchased and certain options.
* Non-income producing security.
** Includes $129,474,944 invested in a PNC Bank Money Market Account, which
is 14.52% of net assets and foreign currency with a U.S. Dollar value of
$2,837,363 held in custody at PFPC Trust Company, which is 0.32% of net
assets.
ADR American Depository Receipt
ADS American Depository Share
The accompanying notes are an integral part of these financial statements.
-8-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONCLUDED)
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DECEMBER 31, 2009
PERCENTAGE OF
INVESTMENTS IN SECURITIES - BY INDUSTRY NET ASSETS (%)
- --------------------------------------- ------------------
Agricultural Operations 0.73
Alternative Waste Technology 1.89
Apparel Manufacturers 2.45
Applications Software 1.54
Automobile / Truck Parts & Equipment -
Replacement 0.81
Batteries / Battery Systems 1.48
Commercial Services - Finance 9.70
Computers 10.29
Computers - Integrated Systems 0.89
Computers - Memory Devices 8.45
Data Processing / Management 1.25
Diversified Operations 2.51
E-Commerce / Services 3.36
Electronic Components - Miscellaneous 1.02
Electronic Components - Semiconductors 12.44
Electronic Measuring Instruments 0.41
Engineering / R&D Services 2.63
Enterprise Software / Services 5.57
Finance - Other Services 1.56
Gas - Distribution 0.79
Industrial Audio & Video Production 1.59
DECEMBER 31, 2009
PERCENTAGE OF
INVESTMENTS IN SECURITIES - BY INDUSTRY NET ASSETS (%)
- --------------------------------------- ------------------
Industrial Gases 0.91
Instruments - Controls 1.21
Insurance Brokers 1.70
Internet Infrastructure Software 0.77
Internet Security 1.35
Investment Management / Advisory Services 2.75
Medical - Biomedical / Genetics 0.93
Networking Products 3.41
Oil Companies - Integrated 0.34
Power Conversion / Supply Equipment 1.25
Real Estate Management / Services 1.34
Real Estate Operations / Development 1.05
Registered Investment Company 0.92
Retail - Apparel / Shoes 1.94
Retail - Discount 1.60
Retail - Regional Department Stores 1.37
Retail - Restaurants 0.51
Semiconductor Components -
Integrated Circuits 8.34
Semiconductor Equipment 0.57
Transport - Services 0.79
Web Hosting / Design 3.34
Wireless Equipment 2.56
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TOTAL INVESTMENTS IN SECURITIES 110.31%
======
The accompanying notes are an integral part of these financial statements.
-9-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED
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DECEMBER 31, 2009
SHARES VALUE
- ----------- -----------------
SECURITIES SOLD, NOT YET PURCHASED - 44.88%
COMMON STOCK - 44.88%
UNITED STATES - 16.83%
CABLE / SATELLITE TELEVISION - 0.70%
390,515 Comcast Corp., Class A $ 6,252,145
-----------------
COMMERCIAL BANKS - SOUTHERN U.S. - 0.76%
269,110 BB&T Corp. 6,827,321
-----------------
COMMERCIAL BANKS - WESTERN U.S. - 0.38%
444,960 Cathay General Bancorp 3,359,448
-----------------
COMPUTERS - MEMORY DEVICES - 0.54%
109,027 Western Digital Corp. 4,813,542
-----------------
ELECTRIC - INTEGRATED - 2.42%
322,211 Consolidated Edison, Inc. 14,638,046
210,000 Southern Co. 6,997,200
-----------------
21,635,246
-----------------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 2.31%
585,670 Fairchild Semiconductor International, Inc. 5,850,843
564,736 Intel Corp. 11,520,614
122,976 Texas Instruments, Inc. 3,204,755
-----------------
20,576,212
-----------------
FINANCE - OTHER SERVICES - 0.89%
312,374 NYSE Euronext 7,903,062
-----------------
MEDICAL INSTRUMENTS - 1.11%
310,103 NuVasive, Inc. 9,917,094
-----------------
MULTI-MEDIA - 0.71%
204,810 Meredith Corp. 6,318,388
-----------------
NETWORKING PRODUCTS - 0.08%
20,629 Atheros Communications, Inc. 706,337
-----------------
PRINTING - COMMERCIAL - 0.22%
105,062 Valassis Communications, Inc. 1,918,432
-----------------
RECREATIONAL CENTERS - 0.56%
198,498 Life Time Fitness, Inc. 4,948,555
-----------------
REITS - APARTMENTS - 4.23%
197,636 AvalonBay Communities, Inc. 16,227,892
The accompanying notes are an integral part of these financial statements.
-10-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2009
SHARES VALUE
- ----------- -----------------
COMMON STOCK - (CONTINUED)
UNITED STATES - (CONTINUED)
REITS - APARTMENTS (CONTINUED)
87,027 Camden Property Trust $ 3,687,334
153,100 Essex Property Trust, Inc. 12,806,815
255,440 Post Properties, Inc. 5,006,624
-----------------
37,728,665
-----------------
REITS - WAREHOUSE / INDUSTRIAL - 0.61%
213,864 AMB Property Corp. 5,464,225
-----------------
RENTAL AUTO / EQUIPMENT - 0.56%
281,670 Rent-A-Center, Inc. 4,991,192
-----------------
SEMICONDUCTOR COMPONENTS - INTEGRATED CIRCUITS - 0.56%
464,658 Sigma Designs, Inc. 4,971,841
-----------------
TELECOMMUNICATION EQUIPMENT - 0.19%
145,692 Arris Group, Inc. 1,665,260
-----------------
TOTAL UNITED STATES (PROCEEDS $144,932,755) $ 149,996,965
-----------------
CAYMAN ISLANDS - 1.52%
COMPUTERS - MEMORY DEVICES - 0.80%
394,001 Seagate Technology 7,166,878
-----------------
ELECTRONIC COMPONENTS - MISCELLANEOUS - 0.72%
208,554 Garmin, Ltd. 6,402,608
-----------------
TOTAL CAYMAN ISLANDS (PROCEEDS $10,627,393) $ 13,569,486
-----------------
CHINA - 4.98%
BUILDING & CONSTRUCTION PRODUCTS - MISCELLANEOUS - 0.34%
1,462,415 China National Building Material Co., Ltd., Class H 3,028,922
-----------------
ELECTRIC - GENERATION - 1.10%
8,716,482 Datang International Power Generation Co., Ltd., Class H 3,765,806
10,639,831 Huaneng Power International, Inc., Class H 6,023,808
-----------------
9,789,614
-----------------
INTERNET CONTENT - INFORMATION / NETWORK - 1.87%
40,569 Baidu.com, Inc. - Sponsored ADR 16,683,190
-----------------
The accompanying notes are an integral part of these financial statements.
-11-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED (CONTINUED)
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DECEMBER 31, 2009
SHARES VALUE
- ----------- -----------------
COMMON STOCK - (CONTINUED)
CHINA - (CONTINUED)
MULTI-LINE INSURANCE - 0.75%
768,113 Ping An Insurance Group Co. of China, Ltd., Class H $ 6,736,059
-----------------
PROPERTY / CASUALTY INSURANCE - 0.20%
1,931,244 PICC Property & Casualty Co., Ltd., Class H 1,743,440
-----------------
REAL ESTATE OPERATIONS / DEVELOPMENT - 0.69%
3,466,979 Guangzhou R&F Properties Co., Ltd., Class H 6,125,529
-----------------
SEMICONDUCTOR COMPONENTS - INTEGRATED CIRCUITS - 0.03%
77,100 Semiconductor Manufacturing, Inc. - Sponsored ADR 249,804
-----------------
TOTAL CHINA (PROCEEDS $46,673,972) $ 44,356,558
-----------------
FINLAND - 1.47%
WIRELESS EQUIPMENT - 1.47%
1,018,503 Nokia Corp. - Sponsored ADR 13,087,764
-----------------
TOTAL FINLAND (COST $14,405,174) $ 13,087,764
-----------------
GERMANY - 0.52%
AUTO - CARS / LIGHT TRUCKS - 0.13%
25,843 Bayerische Motoren Werke AG 1,179,081
-----------------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 0.39%
159,228 Solarworld AG 3,502,153
-----------------
TOTAL GERMANY (PROCEEDS $4,564,753) $ 4,681,234
-----------------
HONG KONG - 3.29%
CELLULAR TELECOMMUNICATIONS - 1.34%
829,135 China Mobile, Ltd. 7,789,806
318,310 China Unicom Hong Kong, Ltd. - Sponsored ADR 4,173,044
-----------------
11,962,850
-----------------
REAL ESTATE OPERATIONS / DEVELOPMENT - 1.95%
2,156,741 Hysan Development Co, Ltd. 6,133,078
The accompanying notes are an integral part of these financial statements.
-12-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2009
SHARES VALUE
- ----------- -----------------
COMMON STOCK - (CONTINUED)
HONG KONG - (CONTINUED)
REAL ESTATE OPERATIONS / DEVELOPMENT (CONTINUED)
751,456 Sun Hung Kai Properties, Ltd. $ 11,270,810
-----------------
17,403,888
-----------------
TOTAL HONG KONG (PROCEEDS $29,077,295) $ 29,366,738
-----------------
JAPAN - 9.16%
AIRLINES - 0.43%
939,327 All Nippon Airways Co., Ltd. 2,542,743
1,768,167 Japan Airlines Corp. 1,272,575
-----------------
3,815,318
-----------------
AUDIO / VIDEO PRODUCTS - 1.90%
438,812 Panasonic Corp. 6,245,677
228,674 Sharp Corp. 2,866,638
270,157 Sony Corp. - Sponsored ADR 7,834,553
-----------------
16,946,868
-----------------
AUTO - CARS / LIGHT TRUCKS - 0.46%
2,960,670 Mitsubishi Motors Corp. 4,070,850
-----------------
COMPUTERS - MEMORY DEVICES - 0.73%
107,594 TDK Corp. 6,530,127
-----------------
ELECTRIC PRODUCTS - MISCELLANEOUS - 0.09%
16,200 Funai Electric Co., Ltd. 810,935
-----------------
ELECTRONIC COMPONENTS - MISCELLANEOUS - 2.05%
162,400 Murata Manufacturing Co., Ltd. 8,024,704
2,065,145 NEC Corp. 5,301,925
367,000 Nippon Electric Glass Co., Ltd. 5,010,681
-----------------
18,337,310
-----------------
ELECTRONIC CONNECTORS - 0.46%
39,700 Hirose Electric Co., Ltd. 4,140,901
-----------------
ELECTRONIC MEASURING INSTRUMENTS - 0.43%
146,964 Advantest Corp. 3,796,743
-----------------
OFFICE AUTOMATION & EQUIPMENT - 0.97%
610,060 Ricoh Co., Ltd. 8,610,990
-----------------
The accompanying notes are an integral part of these financial statements.
-13-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2009
SHARES VALUE
- ----------- -----------------
COMMON STOCK - (CONTINUED)
JAPAN - (CONTINUED)
PHOTO EQUIPMENT & SUPPLIES - 0.17%
46,139 Olympus Corp. $ 1,476,963
-----------------
PRINTING - COMMERCIAL - 0.50%
352,835 Dai Nippon Printing Co., Ltd. 4,476,171
-----------------
TOYS - 0.35%
330,668 Namco Bandai Holdings, Inc. 3,154,208
-----------------
WEB PORTALS / ISP - 0.62%
18,452 Yahoo! Japan Corp. 5,518,205
-----------------
TOTAL JAPAN (PROCEEDS $79,061,200) $ 81,685,589
-----------------
SOUTH KOREA - 1.26%
ELECTRONIC COMPONENTS - MISCELLANEOUS - 1.26%
665,714 LG Display Company, Ltd. - Sponsored ADR 11,270,538
-----------------
TOTAL SOUTH KOREA (PROCEEDS $9,661,923) $ 11,270,538
-----------------
SWEDEN - 0.47%
WIRELESS EQUIPMENT - 0.47%
453,521 Telefonaktiebolaget LM Ericsson - Sponsored ADR 4,167,858
-----------------
TOTAL SWEDEN (COST $4,444,207) $ 4,167,858
-----------------
SWITZERLAND - 2.45%
COMPUTERS - PERIPHERAL EQUIPMENT - 1.53%
797,252 Logitech International SA 13,633,009
-----------------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 0.92%
887,774 STMicroelectronics NV 8,229,665
-----------------
TOTAL SWITZERLAND (PROCEEDS $20,154,953) $ 21,862,674
-----------------
TAIWAN - 2.02%
ELECTRONIC COMPONENTS - MISCELLANEOUS - 1.14%
845,875 AU Optronics Corp. - Sponsored ADR 10,142,041
-----------------
SEMICONDUCTOR COMPONENTS - INTEGRATED CIRCUITS - 0.88%
162,210 Taiwan Semiconductor Manufacturing Co., Ltd. - Sponsored ADR 1,855,683
The accompanying notes are an integral part of these financial statements.
-14-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED (CONCLUDED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2009
SHARES VALUE
- ----------- -----------------
COMMON STOCK - (CONTINUED)
TAIWAN - (CONTINUED)
SEMICONDUCTOR COMPONENTS - INTEGRATED CIRCUITS (CONTINUED)
720,937 Siliconware Precision Industries Co. - Sponsored ADR $ 5,053,768
227,182 United Microelectronics Corp. - Sponsored ADR 881,466
-----------------
7,790,917
-----------------
TOTAL TAIWAN (PROCEEDS $15,648,082) $ 17,932,958
-----------------
UNITED KINGDOM - 0.91%
SEMICONDUCTOR COMPONENTS - INTEGRATED CIRCUITS - 0.91%
1,225,277 CSR, PLC 8,094,645
-----------------
TOTAL UNITED KINGDOM (PROCEEDS $6,429,397) $ 8,094,645
-----------------
TOTAL SECURITIES SOLD, NOT YET PURCHASED (PROCEEDS $385,681,104) $ 400,073,007
=================
DECEMBER 31, 2009
SECURITIES SOLD, NOT YET PURCHASED PERCENTAGE OF
BY INDUSTRY NET ASSETS (%)
- ------------------------------------------- -----------------
Airlines 0.43
Audio / Video Products 1.90
Auto - Cars / Light Trucks 0.59
Building & Construction Products -
Miscellaneous 0.34
Cable / Satellite Television 0.70
Cellular Telecommunications 1.34
Commercial Banks - Southern U.S. 0.76
Commercial Banks - Western U.S. 0.38
Computers - Memory Devices 2.07
Computers - Peripheral Equipment 1.53
Electric - Generation 1.10
Electric - Integrated 2.42
Electric Products - Miscellaneous 0.09
Electronic Components - Miscellaneous 5.17
Electronic Components - Semiconductors 3.62
Electronic Connectors 0.46
Electronic Measuring Instruments 0.43
Finance - Other Services 0.89
Internet Content - Information / Network 1.87
DECEMBER 31, 2009
SECURITIES SOLD, NOT YET PURCHASED - PERCENTAGE OF
BY INDUSTRY NET ASSETS (%)
- ------------------------------------------- -----------------
Medical Instruments 1.11
Multi-Line Insurance 0.75
Multi-Media 0.71
Networking Products 0.08
Office Automation & Equipment 0.97
Photo Equipment & Supplies 0.17
Printing - Commercial 0.72
Property / Casualty Insurance 0.20
Real Estate Operations / Development 2.64
Recreational Centers 0.56
REITS - Apartments 4.23
REITS - Warehouse / Industrial 0.61
Rental Auto / Equipment 0.56
Semiconductor Components -
Integrated Circuits 2.38
Telecommunication Equipment 0.19
Toys 0.35
Web Portals / ISP 0.62
Wireless Equipment 1.94
-----
TOTAL SECURITIES SOLD, NOT YET PURCHASED 44.88%
=====
The accompanying notes are an integral part of these financial statements.
-15-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF SWAP CONTRACTS
- --------------------------------------------------------------------------------
DECEMBER 31, 2009
NOTIONAL MATURITY UNREALIZED
AMOUNT DATE GAIN/(LOSS)
- ----------- ---------- -----------------
SWAP CONTRACTS - (0.01%)
TOTAL RETURN SWAP CONTRACTS - LONG - (0.05%)
E-COMMERCE / SERVICES - (0.01%)
$22,178,728 12/21/2010 Rakuten, Inc. $ (97,375)
-----------------
Agreement with Morgan Stanley, dated 04/14/2009 to receive the total return of the
shares of Rakuten, Inc. in exchange for an amount to be paid monthly equal to the one
month LIBOR rate plus 0.50%.
ELETRONIC COMPONENTS - SEMICONDUCTORS - 0.06%
23,453,629 4/26/2011 Samsung Electronics Co., Ltd. 466,766
Agreement with Morgan Stanley, dated 01/12/2007 to receive the total return of the
shares of Samsung Electronics Co., Ltd. in exchange for an amount to be paid monthly
equal to the one month LIBOR rate plus 1.25%.
2,530,183 12/29/2011 Samsung Electronics Co., Ltd. 50,567
Agreement with Morgan Stanley, dated 12/23/2009 to receive the total return of the
shares of Samsung Electronics Co., Ltd. in exchange for an amount to be paid monthly
equal to the one month LIBOR rate plus 0.75%.
-----------------
517,333
-----------------
ENTERPRISE SOFTWARE / SERVICES - (0.05%)
24,736,880 6/2/2011 Oracle Corp. (428,308)
-----------------
Agreement with Morgan Stanley, dated 06/25/2009 to receive the total return of the
shares of Oracle Corp. in exchange for an amount to be paid monthly equal to the one
month LIBOR rate plus 0.45%.
WATER TREATMENT SYSTEMS - (0.05%)
10,979,523 12/21/2010 Kurita Water Industries, Ltd. (423,796)
-----------------
Agreement with Morgan Stanley, dated 05/01/2009 to receive the total return of the
shares of Kurita Water Industries, Ltd. in exchange for an amount to be paid monthly
equal to the one month LIBOR rate plus 0.50%.
The accompanying notes are an integral part of these financial statements.
-16-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF SWAP CONTRACTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2009
NOTIONAL MATURITY UNREALIZED
AMOUNT DATE GAIN/(LOSS)
- ----------- ---------- -----------------
SWAP CONTRACTS - (CONTINUED)
TOTAL RETURN SWAP CONTRACTS - LONG - (CONTINUED)
WEB PORTALS / ISP - (0.00%)
$50,900,314 6/2/2011 Google, Inc. $ (241,625)
Agreement with Morgan Stanley, dated 08/04/2009 to receive the total return of the
shares of Google, Inc. in exchange for an amount to be paid monthly equal to the one
month LIBOR rate plus 0.45%.
26,187,150 4/26/2011 NHN Corp. 257,717
Agreement with Morgan Stanley, dated 06/30/2006 to receive the total return of the
shares of NHN Corp. in exchange for an amount to be paid monthly equal to the one
month LIBOR rate plus 1.25%.
-----------------
16,092
-----------------
WIRELESS EQUIPMENT - 0.00%
40,567,059 6/2/2011 QUALCOMM, Inc. (3,930)
-----------------
Agreement with Morgan Stanley, dated 05/27/2009 to receive the total return of the
shares of QUALCOMM, Inc. in exchange for an amount to be paid monthly equal to the
one month LIBOR rate plus 0.47%.
-----------------
TOTAL LONG SWAP CONTRACTS $ (419,984)
=================
The accompanying notes are an integral part of these financial statements.
-17-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF SWAP CONTRACTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2009
NOTIONAL MATURITY UNREALIZED
AMOUNT DATE GAIN/(LOSS)
- ----------- ---------- -----------------
SWAP CONTRACTS - (CONTINUED)
TOTAL RETURN SWAP CONTRACTS - SHORT - 0.04%
AUDIO / VIDEO PRODUCTS - 0.05%.
$ 6,079,038 12/21/2010 Pioneer Corp. $ 432,844
-----------------
Agreement with Morgan Stanley, dated 05/15/2009 to deliver the total return of the
shares of Pioneer Corp. in exchange for an amount to be received monthly equal to
the one month LIBOR rate less 5.50%.
AUTO - CARS / LIGHT TRUCKS - 0.01%
4,021,969 10/25/2010 Volvo AB, Class B 64,115
-----------------
Agreement with Morgan Stanley, dated 04/24/2009 to deliver the total return of the
shares of Volvo AB, Class B in exchange for an amount to be received monthly equal
to the one month LIBOR rate less 0.50%.
CAPACITORS - 0.03%
5,761,968 12/21/2010 Taiyo Yuden Co., Ltd. 235,670
-----------------
Agreement with Morgan Stanley, dated 05/15/2009 to deliver the total return of the
shares of Taiyo Yuden Co., Ltd. in exchange for an amount to be received monthly
equal to the one month LIBOR rate less 0.95%.
CIRCUIT BOARDS - (0.01%)
4,274,172 1/21/2011 Nan Ya Printed Circuit Board Corp. (64,418)
-----------------
Agreement with Morgan Stanley, dated 11/03/2009 to deliver the total return of the
shares of Nan Ya Printed Circuit Board Corp. in exchange for an amount to be
received monthly equal to the one month LIBOR rate less 9.00%.
The accompanying notes are an integral part of these financial statements.
-18-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF SWAP CONTRACTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2009
NOTIONAL MATURITY UNREALIZED
AMOUNT DATE GAIN/(LOSS)
- ----------- ---------- -----------------
SWAP CONTRACTS - (CONTINUED)
TOTAL RETURN SWAP CONTRACTS - SHORT - (CONTINUED)
COMPUTERS - (0.02%)
$ 5,994,891 1/21/2011 Foxconn Technology Co., Ltd. $ (211,992)
Agreement with Morgan Stanley, dated 05/21/2009 to deliver the total return of the
shares of Foxconn Technology Co., Ltd. in exchange for an amount to be received
monthly equal to the one month LIBOR rate less 5.40%.
1,309,610 1/21/2011 Quanta Computer, Inc. 3,102
Agreement with Morgan Stanley, dated 06/18/2009 to deliver the total return of the
shares of Quanta Computer, Inc. in exchange for an amount to be received monthly
equal to the one month LIBOR rate less 6.50%.
-----------------
(208,890)
-----------------
ELECTRIC - INTEGRATED - (0.00%)
3,695,644 4/26/2011 Korea Electric Power Corp. 12,815
-----------------
Agreement with Morgan Stanley, dated 02/21/2008 to deliver the total return of the
shares of Korea Electric Power Corp. in exchange for an amount to be received
monthly equal to the one month LIBOR rate less 2.00%.
ELECTRIC PRODUCTS - MISCELLANEOUS - 0.03%
7,297,533 12/21/2010 Casio Computer Co., Ltd. 246,187
-----------------
Agreement with Morgan Stanley, dated 05/15/2009 to deliver the total return of the
shares of Casio Computer Co., Ltd. in exchange for an amount to be received monthly
equal to the one month LIBOR rate less 1.61%.
The accompanying notes are an integral part of these financial statements.
-19-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF SWAP CONTRACTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2009
NOTIONAL MATURITY UNREALIZED
AMOUNT DATE GAIN/(LOSS)
- ----------- ---------- -----------------
SWAP CONTRACTS - (CONTINUED)
TOTAL RETURN SWAP CONTRACTS - SHORT - (CONTINUED)
ELECTRONIC COMPONENTS - MISCELLANEOUS - (0.00%)
$ 5,714,430 12/21/2010 Alps Electric Co., Ltd. $ 187,987
Agreement with Morgan Stanley, dated 05/15/2009 to deliver the total return of the
shares of Alps Electric Co., Ltd. in exchange for an amount to be received monthly
equal to the one month LIBOR rate less 0.40%.
4,907,046 1/21/2011 Chi Mei Optoelectronics Corp. (230,955)
Agreement with Morgan Stanley, dated 09/10/2009 to deliver the total return of the
shares of Chi Mei Optoelectronics Corp. in exchange for an amount to be received
monthly equal to the one month LIBO rate less 2.50%.
-----------------
(42,968)
-----------------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - (0.03%)
9,696,745 12/21/2010 Elpida Memory, Inc. (3,608)
Agreement with Morgan Stanley, dated 05/15/2009 to deliver the total return of the
shares of Elpida Memory, Inc. in exchange for an amount to be received monthly equal
to the one month LIBOR rate less 0.40%.
6,161,587 12/21/2010 Shinko Electric Industries Co., Ltd. 246,221
Agreement with Morgan Stanley, dated 10/29/2009 to deliver the total return of the
shares of Shinko Electric Industries Co., Ltd. in exchange for an amount to be
received monthly equal to the one month LIBOR rate less 0.40%.
10,760,156 4/26/2011 Hynix Semiconductor, Inc. (522,271)
Agreement with Morgan Stanley, dated 10/26/2006 to deliver the total return of the
shares of Hynix Semiconductor, Inc. in exchange for an amount to be received monthly
equal to the one month LIBOR rate less 4.50%.
-----------------
(279,658)
-----------------
The accompanying notes are an integral part of these financial statements.
-20-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF SWAP CONTRACTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2009
NOTIONAL MATURITY UNREALIZED
AMOUNT DATE GAIN/(LOSS)
- ----------- ---------- -----------------
SWAP CONTRACTS - (CONTINUED)
TOTAL RETURN SWAP CONTRACTS - SHORT - (CONTINUED)
ENTERTAINMENT SOFTWARE - 0.02%
$ 6,831,291 12/21/2010 Konami Corp. $ 207,427
-----------------
Agreement with Morgan Stanley, dated 05/15/2009 to deliver the total return of the
shares of Konami Corp. in exchange for an amount to be received monthly equal to the
one month LIBOR rate less 0.40%.
METAL PROCESSORS & FABRICATION - (0.02%)
5,073,431 1/21/2011 Catcher Technology Co., Ltd. (152,862)
-----------------
Agreement with Morgan Stanley, dated 09/25/2009 to deliver the total return of the
shares of Catcher Technology Co., Ltd. in exchange for an amount to be received
monthly equal to the one month LIBOR rate less 6.63%.
OFFICE AUTOMATION & EQUIPMENT - 0.01%
8,293,517 12/21/2010 Seiko Epson Co. 96,309
-----------------
Agreement with Morgan Stanley, dated 08/03/2009 to deliver the total return of the
shares of Seiko Epson Co. in exchange for an amount to be received monthly equal to
the one month LIBOR rate less 0.40%.
POWER CONVERSION / SUPPLY EQUIPMENT - (0.02%)
5,101,095 1/3/2012 Vestas Wind Systems AS (146,352)
-----------------
Agreement with Morgan Stanley, dated 12/28/2009 to deliver the total return of the
shares of Vestas Wind Systems AS in exchange for an amount to be received monthly
equal to the one month LIBOR rate less 0.50%.
The accompanying notes are an integral part of these financial statements.
-21-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SCHEDULE OF SWAP CONTRACTS (CONCLUDED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2009
NOTIONAL MATURITY UNREALIZED
AMOUNT DATE GAIN/(LOSS)
- ----------- ---------- -----------------
SWAP CONTRACTS - (CONTINUED)
TOTAL RETURN SWAP CONTRACTS - SHORT - (CONTINUED)
SEMICONDUCTOR COMPONENTS - INTEGRATED CIRCUITS - (0.01%)
$ 7,029,256 1/21/2011 Realtek Semiconductor Co. $ (101,189)
-----------------
Agreement with Morgan Stanley, dated 09/11/2009 to deliver the total return of the
shares of Realtek Semiconductor Co. in exchange for an amount to be received monthly
equal to the one month LIBOR rate less 4.02%.
-----------------
TOTAL SHORT SWAP CONTRACTS $ 299,030
=================
DECEMBER 31, 2009
PERCENTAGE OF
SWAP CONTRACTS - BY INDUSTRY NET ASSETS (%)
- -------------------------------------- -----------------
Audio / Video Products 0.05
Auto - Cars / Light Trucks 0.01
Capacitors 0.03
Circuit Boards (0.01)
Computers (0.02)
E-Commerce / Services (0.01)
Electric Products - Miscellaneous 0.03
Electric - Integrated 0.00
Electronic Components - Miscellaneous 0.00
Electronic Components - Semiconductors 0.03
DECEMBER 31, 2009
PERCENTAGE OF
SWAP CONTRACTS - BY INDUSTRY NET ASSETS (%)
- -------------------------------------- -----------------
Enterprise Software / Services (0.05)
Entertainment Software 0.02
Metal Processors & Fabrication (0.02)
Office Automation & Equipment 0.01
Power Conversion / Supply Equipment (0.02)
Semiconductor Components -
Integrated Circuits (0.01)
Water Treatment Systems (0.05)
Web Portals / ISP 0.00
Wireless Equipment 0.00
-----
TOTAL SWAP CONTRACTS (0.01%)
=====
The accompanying notes are an integral part of these financial statements.
-22-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31, 2009
INVESTMENT INCOME
Dividends (net of withholding taxes of $37,930) $ 5,935,794
Interest 2,061,267
-----------------
TOTAL INVESTMENT INCOME 7,997,061
-----------------
EXPENSES
Dividends on securities sold, not yet purchased 8,133,423
Administration fees 7,386,940
Prime broker fees 5,643,935
Accounting and investor services fees 636,707
Custodian fees 367,873
Country tax 250,832
Audit and tax fees 236,600
Insurance expense 199,207
Interest expense 149,886
Legal fees 79,325
Printing expense 62,998
Board of Managers' fees and expenses 44,750
Registration expense 20,931
Miscellaneous 163,482
-----------------
TOTAL OPERATING EXPENSES 23,376,889
-----------------
NET INVESTMENT LOSS (15,379,828)
-----------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENT ACTIVITIES, FOREIGN CURRENCY
TRANSACTIONS AND SWAP CONTRACTS
Net realized gain on investments in securities 79,512,311
Net realized loss on purchased options (20,646,129)
Net realized loss on securities sold, not yet purchased (41,607,167)
Net realized loss on foreign currency transactions (1,071,824)
Net realized gain on swap contracts 14,378,424
-----------------
NET REALIZED GAIN ON INVESTMENT ACTIVITIES, FOREIGN CURRENCY TRANSACTION AND SWAP
CONTRACTS 30,565,615
NET CHANGE IN UNREALIZED GAIN/(LOSS) ON INVESTMENT ACTIVITIES AND FOREIGN CURRENCY
TRANSACTIONS* 195,824,936
NET CHANGE IN UNREALIZED GAIN/(LOSS) ON SWAP CONTRACTS 884,476
-----------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENT ACTIVITIES, FOREIGN
CURRENCY TRANSACTIONS AND SWAP CONTRACTS 227,275,027
-----------------
NET INCREASE IN MEMBERS' CAPITAL RESULTING FROM OPERATIONS $ 211,895,199
=================
* Net of decrease in deferred capital gain country tax accrual on unrealized
gain/(loss) of $335,470.
The accompanying notes are an integral part of these financial statements.
-23-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
STATEMENT OF CHANGES IN MEMBERS' CAPITAL
- --------------------------------------------------------------------------------
SPECIAL
ADVISORY
MEMBER MEMBERS TOTAL
------------ ------------- -------------
MEMBERS' CAPITAL, DECEMBER 31, 2007 $ -- $ 690,957,426 $ 690,957,426
============ ============= =============
FROM INVESTMENT ACTIVITIES
Net investment loss $ -- $ (10,257,483) $ (10,257,483)
Net realized loss on investment activities, foreign currency
transactions and swap contracts -- (7,854,136) (7,854,136)
Net change in unrealized gain/(loss) on investment activities,
foreign currency transactions and swap contracts -- (108,428,426) (108,428,426)
Incentive allocation 105,712 (105,712) --
------------ ------------- -------------
NET INCREASE/(DECREASE) IN MEMBERS' CAPITAL RESULTING FROM
OPERATIONS 105,712 (126,645,757) (126,540,045)
------------ ------------- -------------
MEMBERS' CAPITAL TRANSACTIONS
Capital contributions -- 104,351,250 104,351,250
Capital withdrawals (105,712) (67,567,415) (67,673,127)
------------ ------------- -------------
NET INCREASE/(DECREASE) IN MEMBERS' CAPITAL RESULTING FROM CAPITAL
TRANSACTIONS (105,712) 36,783,835 36,678,123
------------ ------------- -------------
MEMBERS' CAPITAL, DECEMBER 31, 2008 $ -- $ 601,095,504 $ 601,095,504
============ ============= =============
FROM INVESTMENT ACTIVITIES
Net investment loss $ -- $ (15,379,828) $ (15,379,828)
Net realized gain on investment activities, foreign currency
transactions and swap contracts -- 30,565,615 30,565,615
Net change in unrealized gain/(loss) on investment activities,
foreign currency transactions and swap contracts -- 196,709,412 196,709,412
Incentive allocation 18,992,270 (18,992,270) --
------------ ------------- -------------
NET INCREASE IN MEMBERS' CAPITAL RESULTING FROM OPERATIONS 18,992,270 192,902,929 211,895,199
------------ ------------- -------------
MEMBERS' CAPITAL TRANSACTIONS
Capital contributions -- 170,277,383 170,277,383
Capital withdrawals (18,992,270) (72,859,754) (91,852,024)
------------ ------------- -------------
NET INCREASE/(DECREASE) IN MEMBERS' CAPITAL RESULTING FROM CAPITAL
TRANSACTIONS (18,992,270) 97,417,629 78,425,359
------------ ------------- -------------
MEMBERS' CAPITAL, DECEMBER 31, 2009 $ -- $ 891,416,062 $ 891,416,062
============ ============= =============
The accompanying notes are an integral part of these financial statements.
-24-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2009
- --------------------------------------------------------------------------------
1. ORGANIZATION
Advantage Advisers Xanthus Fund, L.L.C. (the "Company") was organized as a
limited liability company under the laws of Delaware in January 1999. The
Company is registered under the Investment Company Act of 1940, as amended
(the "Act"), as a closed-end, non-diversified management investment
company. The Company's term is perpetual unless the Company is otherwise
terminated under the terms of the Limited Liability Company Agreement
dated as of June 5, 2003. The Company's investment objective is to achieve
maximum capital appreciation. It pursues this objective by actively
investing in a portfolio consisting generally of equity securities of
technology companies and of companies which derive a major portion of
their revenue directly or indirectly from technological events and
advances. The Company's portfolio of securities in the technology area is
expected to include long and short positions primarily in equity
securities of U.S. and non-U.S. companies. Equity securities include
common and preferred stock and other securities having equity
characteristics, including convertible debt securities, stock options,
warrants and rights.
Responsibility for the overall management and supervision of the
operations of the Company is vested in the individuals who serve as the
Board of Managers of the Company (the "Board of Managers"). There are six
members of the Board of Managers, one of whom is considered an "interested
person" under the Act. The Company's investment adviser is Advantage
Advisers Management, L.L.C., a Delaware limited liability company (the
"Adviser"). The Adviser is a subsidiary of Oppenheimer Asset Management
Inc. ("OAM") and an affiliate of Oppenheimer & Co. Inc. ("Oppenheimer").
The Adviser is responsible for managing the Company's investment
activities pursuant to an investment advisory agreement dated June 5,
2003. OAM is the managing member of the Adviser, and Alkeon Capital
Management L.L.C. ("Alkeon") is a non-managing member of the Adviser.
Investment professionals employed by Alkeon, including Mr. Takis
Sparaggis, who serves as the Company's portfolio manager, manage the
Company's portfolio on behalf of the Adviser under the supervision of OAM.
Oppenheimer has a minority profit participation interest in Alkeon.
The acceptance of initial and additional contributions from Members is
subject to approval by the Board of Managers. The Company may from time to
time offer to repurchase interests pursuant to written tenders by Members.
Such repurchases will be made at such times and on such terms as may be
determined by the Board of Managers, in its complete and exclusive
discretion. The Adviser expects that generally it will recommend to the
Board of Managers that the Company offer to repurchase interests from
Members twice each year, effective at the end of the second fiscal quarter
and again at the end of the year.
Generally, except as provided under applicable law, a Member shall not be
liable for the Company's debts, obligations and liabilities in any amount
in excess of the capital account balance of such Member, plus such
Member's share of undistributed profits and assets.
-25-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2009 (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles (hereafter referred to as "authoritative
guidance") requires the Adviser to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying
notes. The Adviser believes that the estimates utilized in preparing the
Company's financial statements are reasonable and prudent; however, actual
results could differ from these estimates.
In June 2009, the Financial Accounting Standards Board ("FASB") issued The
FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Principles. The standard identifies the FASB Accounting Standards
Codification as the single source of authoritative U.S. accounting and
reporting standards applicable for all non-governmental entities, with the
exception of guidance issued by the SEC and its staff. It is effective for
financial statements issued for interim and fiscal years ending on or
after September 15, 2009. The Company adopted the standard effective
December 31, 2009. The adoption did not have a material effect on the
Company's financial statements.
The following is a summary of the Company's accounting policies:
a. REVENUE RECOGNITION
Securities transactions, including related revenue and expenses, are
recorded on a trade-date basis, and dividends are recorded on the
ex-dividend date, net of applicable withholding taxes. Interest income and
expense are recorded on the accrual basis. Premiums and discounts on fixed
income securities are amortized using the effective interest rate method.
b. PORTFOLIO VALUATION
The Company's securities are valued at fair value in accordance with
policies adopted by the Board of Managers, which are summarized below.
(i) Domestic exchange traded securities (other than options and those
securities traded on NASDAQ) shall be valued:
(1) at their last composite sale price as reported on the
exchanges where those securities are traded; or
(2) if no sales of those securities are reported on a particular
day, the securities are valued based upon their composite bid
price for securities held long, or their composite asked price
for securities sold, not yet purchased, as reported by those
exchanges.
-26-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2009 (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
b. PORTFOLIO VALUATION (CONTINUED)
(ii) Securities traded on NASDAQ shall be valued:
(1) at the NASDAQ Official Closing Price ("NOCP") (which is the
last trade price at or before 4:00 p.m. (Eastern Time)
adjusted up to NASDAQ's best offer price if the last traded
price is below such bid and down to NASDAQ's best offer price
if the last trade is above such offer price); or
(2) if no NOCP is available at the last sale price on the NASDAQ
prior to the calculation of the net asset value of the
Company; or
(3) if no sale is shown on NASDAQ at the bid price; or
(4) if no sale is shown and no bid price is available, the price
will be deemed "stale" and the value will be determined in
accordance with the fair valuation procedures set forth
herein.
Securities traded on a foreign securities exchange are valued at their
last sale price on the exchange where such securities are primarily
traded, or in the absence of a reported sale on a particular day, at their
bid price (in the case of securities held long) or asked price (in the
case of securities sold, not yet purchased) as reported by such exchange.
Listed options are valued at their bid price (or asked price in the case
of listed written options) as reported by the exchange with the highest
volume on the last day a trade was reported. Other securities for which
market quotations are readily available are valued at their bid price (or
asked price in the case of securities sold, not yet purchased) as obtained
from one or more dealers making markets for those securities. If market
quotations are not readily available, the fair value of the securities and
other assets are determined in good faith by, or under the supervision of,
the Board of Managers.
Foreign-denominated assets may involve more risks than domestic
transactions, including political, economic, and regulatory risk. Risks
may also arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar.
Securities associated with swaps are valued in accordance with the
procedures described above, net of any contractual terms with the
counterparty.
-27-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2009 (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
b. PORTFOLIO VALUATION (CONTINUED)
Debt securities are valued in accordance with the procedures described
above, which with respect to such securities may include the use of
valuations furnished by a pricing service which employs a matrix to
determine valuation for normal institutional size trading units or
consultation with brokers and dealers in such securities. The Board of
Managers will periodically monitor the reasonableness of valuations
provided by any such pricing service. Debt securities with remaining
maturities of 60 days or less will, absent unusual circumstances, be
valued at amortized cost, so long as such valuation is determined by the
Board of Managers to represent fair value.
All assets and liabilities initially expressed in foreign currencies are
converted into U.S. dollars using foreign exchange rates provided by a
pricing service compiled as of 4:00 p.m. London time. Trading in foreign
securities generally is completed, and the values of such securities are
determined, prior to the close of securities markets in the U.S. Foreign
exchange rates are also determined prior to such close. On occasion, the
values of such securities and exchange rates may be affected by events
occurring between the time such values or exchange rates are determined
and the time that the net asset value of the Company is determined. When
such events materially affect the values of securities held by the Company
or its liabilities, such securities and liabilities are fair valued as
determined in good faith by, or under the supervision of, the Board of
Managers.
The determination of fair value shall take into account the relevant
factors and surrounding circumstances, which may include: (i) the nature
and pricing history (if any) of the security or other investment; (ii)
whether any dealer quotations are available; (iii) possible valuation
methodologies that could be used to determine fair value; (iv) the
recommendation of the Adviser with respect to the valuation; (v) whether
the same or similar securities or other investments are held by other
accounts or other funds managed by the Adviser and the valuation method
used by the Adviser with respect thereto; (vi) the extent to which the
fair value to be determined will result from the use of data or formulae
produced by third parties independent of the Adviser; and (vii) the
liquidity or illiquidity of the market for the security or other
investment.
The fair value of the Company's assets and liabilities which qualify as
financial instruments approximates the carrying amounts presented in the
Statement of Assets, Liabilities and Members' Capital.
During the year ended, December 31, 2009, the Company followed
authoritative guidance for fair value measurement. The guidance
establishes a framework for measuring fair value and a hierarchy for
inputs used in measuring fair value that maximizes the use of observable
inputs and minimizes the use of unobservable inputs by requiring that the
most observable inputs be used when available. The guidance establishes
three levels of inputs that may be used to measure fair value.
-28-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2009 (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
b. PORTFOLIO VALUATION (CONTINUED)
Various inputs are used in determining the value of the Company's
investments. These inputs are summarized in the three broad levels listed
below.
Level 1 - observable market inputs that are unadjusted quoted prices for
identical assets or liabilities in active markets.
Level 2 -- other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayments speeds, credit risk,
etc.).
Level 3 -- significant unobservable inputs (including the Company's own
assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily
an indication of the risk associated with investing in these securities.
Additional information on the investments can be found in the Schedule of
Portfolio Investments, the Schedule of Securities Sold, Not Yet Purchased
and the Schedule of Swap Contracts.
The following is a summary of the inputs used, as of December 31, 2009, in
valuing the Company's investments at fair value.
SECURITIES SOLD, OTHER
INVESTMENTS NOT YET FINANCIAL
VALUATION INPUTS IN SECURITIES PURCHASED INSTRUMENTS
-------------------------- ------------- ---------------- -----------
Level 1--Quoted Prices
Common Stock $ 975,168,391 $ (400,073,007) $ --
Purchased Options 8,188,000 -- --
Level 2--Other Significant
Observable Inputs
Total Return Swaps -- -- (120,954)
Level 3--Other Significant
Unobservable Inputs -- -- --
------------- ---------------- -----------
Total $ 983,356,391 $ (400,073,007) $ (120,954)
============= ================ ===========
-29-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2009 (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
c. CASH AND CASH EQUIVALENTS
The Company treats all highly liquid financial instruments that mature
within three months at the time of purchase as cash equivalents.
Restricted Cash represents funds held by the Custodian for securities held
as collateral. At December 31, 2009, $129,474,944 in cash equivalents was
held at PNC Bank in a money market account, as well as, foreign currency
with a U.S. Dollar value of $2,837,363 was held at PFPC Trust Company.
d. INCOME TAXES
The Company has reclassified $15,379,828 and $30,565,615 from accumulated
net investment loss and accumulated net realized gain on investments,
respectively, to net capital contributions during the year ended December
31, 2009. This reclassification was a result of permanent book to tax
differences to reflect, as an adjustment to net capital contributions, the
amounts of taxable loss and net realized gain on investments that have
been allocated to the Company's Members and had no effect on net assets.
In accordance with authoritative guidance, Management has analyzed the
Company's tax position for all open tax years (tax years ended December
31, 2006-2009), and has concluded that a liability of $3,142,315 capital
gain country tax is required in the Company's financial statements. The
Company recognizes interest and penalties, if any, related to country tax
expense within the Statement of Operations. During the period, the Company
did not record any interest or penalties.
Each Member is individually required to report on its own tax return its
distributive share of the Company's taxable income or loss.
3. ADMINISTRATION FEE, RELATED PARTY TRANSACTIONS AND OTHER
Oppenheimer provides certain administrative services to the Company
including, among other things, providing office space and other support
services. In exchange for such services, the Company pays Oppenheimer a
monthly administration fee of 0.08333% (1% on an annualized basis) of the
Company's net assets determined as of the beginning of the month.
During the year ended December 31, 2009, Oppenheimer earned $88,229 as
brokerage commissions from portfolio transactions executed on behalf of
the Company. Mainsail Group, L.L.C., a broker-dealer affiliate of Alkeon,
earned $1,673,840 as brokerage commissions from portfolio transactions
executed on behalf of the Company.
-30-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2009 (CONTINUED)
- --------------------------------------------------------------------------------
3. ADMINISTRATION FEE, RELATED PARTY TRANSACTIONS AND OTHER (CONTINUED)
Net profits or net losses of the Company for each fiscal period are
allocated among and credited to or debited against the capital accounts of
all Members (but not the Special Advisory Member) as of the last day of
each fiscal period in accordance with Members' respective investment
percentages for the fiscal period. The Adviser, in its capacity as the
Special Advisory Member of the Company, is entitled to receive an
incentive allocation (the "Incentive Allocation"), charged to the capital
account of each Member as of the last day of each allocation period, of
20% of the amount by which net profits, if any, exceed the positive
balance in the Member's "loss recovery account." The Incentive Allocation
is credited to the Special Advisory Account of the Adviser. By the last
business day of the month following the date on which an Incentive
Allocation is made, the Adviser may withdraw up to 100% of the Incentive
Allocation that was credited to the Special Advisory Account with respect
to the allocation period. During the year ended December 31, 2009, an
Incentive Allocation of $18,992,270 was credited to the Special Advisory
Member's capital account and was included in withdrawals payable at
December 31, 2009, in the Statement of Assets, Liabilities and Members'
Capital.
Each member of the Board of Managers (each a "Manager") who is not an
"interested person" of the Company, as defined by the Act, receives an
annual retainer of $5,000 plus a fee for each meeting attended. The lead
independent Manager receives an additional fee of $2,500. Managers who are
"interested persons" do not receive any annual or other fee from the
Company. Managers who are not "interested persons" are reimbursed by the
Company for all reasonable out-of-pocket expenses incurred by them in
performing their duties.
PFPC Trust Company (the "Custodian") serves as custodian of the Company's
assets.
PNC Global Investment Servicing Inc. ("PNC") serves as investor services
and accounting agent to the Company and in that capacity provides certain
accounting, recordkeeping and investor related services. The Company pays
PNC an accounting and investor services fee based primarily on the average
net assets of the Company as of the last day of each month, payable
monthly, subject to a minimum annual fee.
Oppenheimer acts as the non-exclusive placement agent for the Company,
without special compensation from the Company, and bears costs associated
with its activities as placement agent. However, the placement agent is
entitled to charge a sales commission of up to 3% (up to 3.1% of the
amount invested) in connection with a purchase of interests, at its
discretion. For the year ended December 31, 2009, such sales commissions
earned by Oppenheimer amounted to $493,023.
-31-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2009 (CONTINUED)
- --------------------------------------------------------------------------------
4. INDEMNIFICATIONS
The Company has entered into several contracts that contain routine
indemnification clauses. The Company's maximum exposure under these
arrangements is unknown, as this would involve future claims that may be
made against the Company that have not yet occurred. However, based on
experience, the Company expects the risk of loss to be remote.
5. SECURITIES TRANSACTIONS
Aggregate purchases and sales of investment securities, excluding
short-term securities, for the year ended December 31, 2009, amounted to
$2,150,838,257 and $2,159,378,959, respectively. Aggregate purchases and
sales of securities sold, not yet purchased, excluding short-term
securities, for the year ended December 31, 2009, amounted to
$1,330,229,870 and $1,237,601,821, respectively.
At December 31, 2009, the aggregate cost for Federal income tax purposes
of portfolio investments, securities sold, not yet purchased, and
purchased options was $822,081,478, $380,009,544 and $8,200,049,
respectively.
For Federal income tax purposes, at December 31, 2009, accumulated net
unrealized gain on portfolio investments, securities sold, not yet
purchased, and purchased options was $133,011,400, consisting of
$184,011,861 gross unrealized gain and $51,000,461 gross unrealized loss.
Due from broker primarily represents proceeds from securities sold, not
yet purchased, net of excess cash, held at the prime broker as of December
31, 2009, and is used as collateral for securities sold, not yet
purchased.
6. SHORT-TERM BORROWINGS
The Company has the ability to trade on margin and borrow funds from
brokers and banks for investment purposes. Trading in equity securities on
margin involves an initial cash requirement representing at least 50% of
the underlying security's value with respect to transactions in U.S.
markets and varying percentages with respect to transactions in foreign
markets. The Act requires the Company to satisfy an asset coverage
requirement of 300% of its indebtedness, including amounts borrowed,
measured at the time the Company incurs the indebtedness. The Company pays
interest on outstanding margin borrowings at an annualized rate of LIBOR
plus 0.875%. The Company pledges securities as collateral for the margin
borrowings, which are maintained in a segregated account held by the
Custodian. For the year ended December 31, 2009, the average daily amount
of such borrowings was $7,505,392 and the daily weighted average
annualized interest rate was 1.07%. The Company had borrowings outstanding
at December 31, 2009, totaling $2,694,788 recorded as due to broker on the
Statement of Assets, Liabilities and Members' Capital.
-32-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2009 (CONTINUED)
- --------------------------------------------------------------------------------
7. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK OR CONCENTRATIONS OF
CREDIT RISK
In the normal course of business, the Company may trade various financial
instruments and enter into various investment activities with off-balance
sheet risk. These financial instruments include options, swaps and
securities sold, not yet purchased. Generally, these financial instruments
represent future commitments to purchase or sell other financial
instruments at specific terms at specified future dates. Each of these
financial instruments contains varying degrees of off-balance sheet risk
whereby changes in the market value of the securities underlying the
financial instruments may be in excess of the amounts recognized in the
Statement of Assets, Liabilities and Members' Capital.
The Company maintains cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company has not experienced any
losses in such accounts and does not believe it is exposed to any
significant credit risk on such bank deposits.
Securities sold, not yet purchased represent obligations of the Company to
deliver specified securities and thereby creates a liability to purchase
such securities in the market at prevailing prices. Accordingly, these
transactions result in off-balance sheet risk as the Company's ultimate
obligation to satisfy the sale of securities sold, not yet purchased may
exceed the amount indicated in the Statement of Assets, Liabilities and
Members' Capital. Primarily all investments in securities sold, not yet
purchased and due from broker are positions with, and amounts due from,
the prime broker, Morgan Stanley. Accordingly, the Company has a
concentration of individual counterparty credit risk with the prime
broker. The Company pledges securities in an account at PFPC Trust
Company, for the benefit of the prime broker, to meet the margin
requirement as determined by the prime broker.
A swap is a contract under which two parties agree to make periodic
payments to each other based on specified interest rates, an index or the
value of some other instrument, applied to a stated, or "notional" amount.
Swaps generally can be classified as interest rate swaps, currency swaps,
commodity swaps or equity swaps which can also include contracts for
difference, depending on the type of index or instrument used to calculate
the payments. Such swaps would increase or decrease the Company's
investment exposure to the particular interest rate, currency, commodity
or equity involved. Securities associated with swaps are marked-to-market
based on the Company's valuation procedures that are outlined in Section
2b of these notes. The change in value of swaps, including the periodic
amounts of interest to be paid or received on swaps, is reported as
unrealized gains or losses in the Statement of Operations. Net unrealized
gains are reported as an asset and net unrealized losses are reported as a
liability on the Statement of Assets, Liabilities and Members' Capital. A
realized gain or loss is recorded upon payment or receipt of a periodic
payment or termination of swap agreements.
Most swap agreements entered into by the Company require the calculation
of the obligations of the parties to the agreements on a "net basis."
Consequently, current obligations (or rights) under a swap agreement
generally will be equal to only the net amount to be paid or received
under the agreement based on the relative values of the positions held by
each party to the agreement (the "net amount").
-33-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2009 (CONTINUED)
- --------------------------------------------------------------------------------
7. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK OR CONCENTRATIONS OF
CREDIT RISK (CONTINUED)
The Company is subject to the market risk associated with changes in the
value of the underlying investment or instrument, as well as exposure to
credit risk associated with counterparty non-performance on swap
contracts. The risk of loss with respect to swaps is limited to the net
amount of payments that the Company is contractually obligated to make. If
the other party to a swap defaults, the Company's risk of loss consists of
the net amount of payments that the Company contractually is entitled to
receive, which may be different than the amounts recorded on the Statement
of Assets, Liabilities and Members' Capital.
The unrealized appreciation/depreciation, rather than the notional amount,
represents the approximate future cash to be received or paid,
respectively.
The Company may write (sell) put and call options on securities or
derivative instruments in order to gain exposure to or protect against
changes in the markets.
The risk associated with purchasing an option is that the Company pays a
premium whether or not the option is exercised. Additionally, the Company
bears the risk of loss of premium and change in market value should the
counterparty not perform under the contract. Put and call options
purchased are accounted for in the same manner as investment securities.
The volume of activity of purchased options and swap contracts that are
presented in the Schedule of Investments and Schedule of Swap Contracts,
respectively, are consistent with the derivative activity during the year
ended December 31, 2009.
When the Company writes an option, the premium received by the Company is
recorded as a liability and is subsequently adjusted to the current market
value of the option written. If a written call option is exercised, the
premium is added to the proceeds from the sale of the underlying security
in determining whether the Company has realized a gain or loss. If a
written put option is exercised, the premium reduces the cost basis of the
securities purchased by the Company. In writing an option, the Company
bears the market risk of an unfavorable change in the price of the
security or index underlying the written option. Exercise of a written
option by a counterparty could result in the Company selling or buying a
security at a price different from the current market value. During for
the year ended December 31, 2009, the Company had no transactions in
written options.
The Company adopted amendments to authoritative guidance on disclosures
about derivative instruments and hedging activities. The adoption requires
qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair value amounts of gains
and losses on derivative instruments and disclosures about
credit-risk-related contingent features in derivative agreements. All
changes to accounting policies and disclosures have been made in
accordance with the adop-
-34-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2009 (CONTINUED)
- --------------------------------------------------------------------------------
7. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK OR CONCENTRATIONS OF
CREDIT RISK (CONTINUED)
tion and are incorporated for the current period as part of the
disclosures within this Note. The realized gain/(loss) on purchased
options and swap contracts is reflected on the Statement of Operations
within these financial statements. The net change in unrealized
gain/(loss) on purchased options of $(375,589) is included in the net
change in unrealized gain/(loss) from investments activities and foreign
currency transactions on the Statement of Operations within these
financial statements. The net change in unrealized gain/(loss) on swap
contracts is reflected on the Statement of Operations within these
financial statements. The adoption of the additional disclosure
requirements did not materially impact the Company's financial statements.
Option contracts serve as components of the Company's investment
strategies and are utilized to structure investments to enhance the
performance of the Company.
-35-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2009 (CONTINUED)
- --------------------------------------------------------------------------------
8. FINANCIAL HIGHLIGHTS
The following represents the ratios to average net assets and other
supplemental information for each period indicated:
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2009 2008 2007 2006 2005
------------ ------------ ------------ ------------ ------------
Net assets, end of period (000s) $ 891,416 $ 601,096 $ 690,957 $ 394,226 $ 360,816
Ratio of net investment loss to
average net assets** (2.03%) (1.49%) (0.82%) (0.58%) (0.91%)
Ratio of expenses to average
net assets** 3.09% 3.64% 2.46% 2.54% 2.33%
Ratio of incentive allocation
to average net assets 2.51% 0.02% 11.06% 4.00% 0.89%
Portfolio turnover 293% 382% 360% 546% 365%
Total return - gross* 31.80% (17.02%) 73.96% 22.26% 11.47%
Total return - net* 25.44% (17.02%) 59.17% 17.81% 9.18%
Average debt ratio 1.01% 0.93% 0.70% N/A N/A
* Total return assumes a purchase of an interest in the Company on the
first day and a sale of the interest on the last day of the period
noted, gross/net of incentive allocation to the Special Advisory
Member, if any. The figures do not include any applicable sales
charges imposed by the placement agent.
** Ratios do not reflect the effects of incentive allocation to the
Special Advisory Member, if any.
N/A Not applicable
-36-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2009 (CONCLUDED)
- --------------------------------------------------------------------------------
9. SUBSEQUENT EVENTS
Management has evaluated the impact of all subsequent events on the
Company through February 23, 2010, the date the financial statements were
issued. Management has determined that there are no material events that
would require additional disclosure in the Company's financial statements
through this date except as disclosed below.
The Company received initial and additional contributions from Members of
$38,220,779.
-37-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
SUPPLEMENTAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
I. PROXY VOTING
A description of the policies and procedures that the Company uses to determine
how to vote proxies relating to portfolio securities is available without charge
upon request by calling Oppenheimer Asset Management Inc. collect at
212-667-4225 and at the Securities and Exchange Commission's ("SEC"'s) website
at http://www.sec.gov.
Information regarding how the Company voted proxies relating to portfolio
securities during the period from June 30, 2006 through June 30, 2009 is
available, without charge, upon request, by calling Oppenheimer Asset Management
Inc. collect at 212-667-4225 and at the SEC's website at http://www.sec.gov.
II. PORTFOLIO HOLDINGS
The Company files its complete schedule of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. The Company's
Forms N-Q are available on the SEC's website at http://www.sec.gov and may be
reviewed and copied at the SEC's Public Reference Room in Washington D.C.
Information on the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330.
-38-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
COMPANY MANAGEMENT (UNAUDITED)
- --------------------------------------------------------------------------------
Information pertaining to the Managers is set forth below. The Statement of
Additional Information (SAI) includes additional information about the Company
is available without charge, upon request, by calling Oppenheimer Asset
Management Inc. collect at (212) 667-4225.
INDEPENDENT MANAGERS
NUMBER OF
PORTFOLIOS IN
TERM OF OFFICE FUND COMPLEX
NAME, AGE, ADDRESS(1) AND AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS OVERSEEN BY
POSITION(S) WITH THE COMPANY TIME SERVED OTHER DIRECTORSHIPS HELD BY MANAGERS MANAGERS
- ------------------------------- ------------------ ----------------------------------------------------------- ---------------
Luis Rubio, 54 Indefinite; President of Centro de Investigacion Para el Desarrollo, 3
Manager Since A.C. (Center of Research Development) (2000 to present) and
May 2003 Director of same 1984 - 2000); Adjunct Fellow of the Center
for Strategic and International Studies; Director of The
Asia Tigers Fund, Inc. and The India Fund, Inc.; Manager of
Advantage Advisers Augusta Fund, L.L.C. and Advantage
Advisers Whistler Fund, L.L.C., which are affiliates;
Director of Empresa Ica SA de CV, a Mexican construction
company (since 2006).
Janet L. Schinderman, 58 Indefinite; Education consultant specializing in international 3
Manager Since relations, board management and initiating special
May 2003 projects; Associate Dean for Special Projects and Secretary
to the Board of Overseers at Columbia Business School from
1990 until June 2006; Manager of Advantage Advisers Augusta
Fund, L.L.C. and Advantage Advisers Whistler Fund, L.L.C.
which are affiliates; Independent director for two
registered investment companies advised by The Central Park
Group.
-39-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
COMPANY MANAGEMENT (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
INDEPENDENT MANAGERS (CONTINUED)
NUMBER OF
PORTFOLIOS IN
TERM OF OFFICE FUND COMPLEX
NAME, AGE, ADDRESS(1) AND AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS OVERSEEN BY
POSITION(S) WITH THE COMPANY TIME SERVED OTHER DIRECTORSHIPS HELD BY MANAGERS MANAGERS
- ------------------------------- ------------------ ----------------------------------------------------------- ---------------
Lawrence Becker, 54 Indefinite; Private investor in real estate investment management 3
Manager Since concerns. From February 2000 through June 2003, he was
October 2003 V.P.--Controller/Treasurer for National Financial
Partners, which specializes in financial services
distribution. Prior to that, Mr. Becker was a Managing
Director--Controller/Treasurer of Oppenheimer Capital and
its Quest for Value Funds. (Oppenheimer Capital is not
affiliated with Oppenheimer Asset Management Inc.). Mr.
Becker is a licensed CPA. He serves as the Director of the
Asia Tigers Fund, Inc. and The India Fund Inc.; Manager of
Advantage Advisers Augusta Fund, L.L.C. and Advantage
Advisers Whistler Fund, L.L.C., which are affiliates.
Jesse H. Ausubel, 58 Indefinite; Director, Program for the Human Environment and Senior 3
Manager Since Research Associate, The Rockefeller University (1993 to
May 1999 present); Director, Richard Lounshery Foundation (1998 to
present); Program Director, Alfred P. Sloan Foundation
(1994 to present); Adjunct Scientist, Woods Hole
Oceanographic Institution (1990 to present). Mr. Ausubel is
a Manager of Advantage Advisers Augusta Fund, L.L.C. and
Advantage Advisers Whistler Fund, L.L.C., which are
affiliates.
-40-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
COMPANY MANAGEMENT (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
INDEPENDENT MANAGERS (CONTINUED)
NUMBER OF
PORTFOLIOS IN
TERM OF OFFICE FUND COMPLEX
NAME, AGE, ADDRESS(1) AND AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS OVERSEEN BY
POSITION(S) WITH THE COMPANY TIME SERVED OTHER DIRECTORSHIPS HELD BY MANAGERS MANAGERS
- ------------------------------- ------------------ ----------------------------------------------------------- ---------------
James E. Buck, 73 Indefinite; since Retired in 2002 as Senior Vice President and Corporate 3
Manager April 2003 Secretary of the New York Stock Exchange, Inc. (the
"Exchange") and the subsidiaries of the Exchange, including
the NYSE Foundation. Mr. Buck is a Manager of Advantage
Advisers Augusta Fund, L.L.C. and Advantage Advisers
Whistler Fund, L.L.C., which are affiliates.
INTERESTED MANAGER
Bryan McKigney,* 51 Indefinite; Mr. McKigney is a Senior Managing Director and the Chief 3
President, CEO, and Manager Manager since Administrative Officer of Oppenheimer Asset Management Inc.
December 1, 2004; He has been in the financial services industry since 1981
President and and has held various management positions at Canadian
CEO since Imperial Bank of Commerce (1993 - 2003) and Chase Manhattan
September 23, 2004 Bank N.A. (1981 - 1993). He serves as Manager of Advantage
Advisers Augusta Fund, L.L.C. and Advantage Advisers
Whistler Fund, L.L.C., which are affiliates.
-41-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
COMPANY MANAGEMENT (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
COMPANY OFFICERS
In accordance with the Limited Liability Company Agreement, the Board has
selected the following persons to serve as officers of the Company:
TERM OF OFFICE
NAME, AGE, ADDRESS(1) AND AND LENGTH OF PRINCIPAL OCCUPATION(S)
POSITION(S) WITH THE COMPANY(2) TIME SERVED DURING PAST 5 YEARS
- ------------------------------- ----------------- -----------------------------------------------------------
Vineet Bhalla, 49 One year; Mr. Bhalla has been a Senior Vice President at Oppenheimer
Chief Financial Officer Since Asset Management since May 2005. From July 2002 to May
July 27, 2005. 2005, he was an Assistant Vice President at Zurich Capital
Markets Inc., a Director of the Client Service Group at
GlobeOp Financial Services, and a Senior Consultant at
Capital Markets Company. Prior to that, he was a Vice
President at Blackrock Financial Management since June
1999. Mr. Bhalla is a Certified Public Accountant. He
graduated with an MBA from Saint Mary's University,
Halifax, Canada in 1986.
Stephen C. Beach, 56 One year; Since February 2005, Mr. Beach has been the Chief
Chief Compliance Officer Since Compliance Officer for Oppenheimer Asset Management. Prior
March 18, 2005. to that, he had his own law firm with a focus on mutual
funds, investment advisers and general securities law,
beginning in 2001. Mr. Beach obtained an L.L.M. in Taxation
at Temple University School of Law during the period 1999 -
2001.
Deborah Kaback, 58 One year; Ms. Kaback has been a Senior Vice President at Oppenheimer
Chief Legal Officer and Since Asset Management since June 2003. She was Executive
Vice President July 23, 2003 Director of CIBC World Markets Corp. from July 2001 through
June 2003. Prior to that, she was Vice-President and Senior
Counsel of Oppenheimer Funds, Inc. from November 1999
through July 2001. Prior to that, she was Senior Vice
President and Deputy General Counsel at Oppenheimer Capital
from April 1989 through November 1999.
-42-
ADVANTAGE ADVISERS XANTHUS FUND, L.L.C.
COMPANY MANAGEMENT (UNAUDITED) (CONCLUDED)
- --------------------------------------------------------------------------------
COMPANY OFFICERS (CONCLUDED)
TERM OF OFFICE
NAME, AGE, ADDRESS(1) AND AND LENGTH OF PRINCIPAL OCCUPATION(S)
POSITION(S) WITH THE COMPANY(2) TIME SERVED DURING PAST 5 YEARS
- ------------------------------- ------------------- ----------------------------------------------------------
Bryan McKigney, 51 One year term for Mr. McKigney is a Senior Managing Director and the Chief
President, CEO, and Manager President and Administrative Officer of Oppenheimer Asset Management
CEO; since Inc. He has been in the financial services industry since
September 23, 2004. 1981 and has held various management positions at Canadian
Indefinite term for Imperial Bank of Commerce (1993 - 2003) and Chase
Manager; since Manhattan Bank N.A. (1981 - 1993). He serves as Manager of
December 1, 2004; Advantage Advisers Augusta Fund, L.L.C. and Advantage
Advisers Whistler Fund, L.L.C., which are affiliates.
* "Interested Person" of the Company as defined in the Act. Mr. McKigney is
an interested person due to his position as President and Chief Executive
Officer of the Company and as a Senior Managing Director and the Chief
Administrative Officer of Oppenheimer Asset Management Inc., which is a
corporate parent of the managing member of the Investment Adviser.
(1) The address of each independent manager and officer is c/o Oppenheimer
Asset Management, 200 Park Avenue, 24th Floor, New York, New York 10166.
(2) Officers are not compensated by the Company.
-43-
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's board of directors has determined that the registrant has at
least one audit committee financial expert serving on its audit committee, Mr.
Lawrence Becker, and that Mr. Becker is "independent." Mr. Becker was elected as
a non-interested Director of the registrant and as Chairman of the Audit
Committee at a meeting of the board of directors held on October 30, 2003.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$164,100 for 2009 and $160,900 for 2008.
AUDIT-RELATED FEES
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $4,500 for 2009 and $4,500 for 2008.
TAX FEES
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $0 for 2009 and $0 for
2008.
ALL OTHER FEES
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are $0
for 2009 and $0 for 2008.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
The registrant's Audit Committee Charter provides that the Audit
Committee shall pre-approve, to the extent required by applicable law,
all audit and non-audit services that the registrant's independent
auditors provide to the registrant and (ii) all non-audit services that
the registrant's independent auditors provide to the registrant's
investment adviser and any entity controlling, controlled by, or under
common control with the registrant's investment adviser that provides
ongoing services to the registrant, if the engagement relates directly
to the operations and financial reporting of the registrant; provided
that the Committee may implement policies and procedures by which such
services are approved other than by the full Committee prior to their
ratification by the Committee.
(e)(2) The percentage of services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) 100%
(c) Not Applicable
(d) Not Applicable
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was 0%.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another
investment adviser), and any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to
the registrant for each of the last two fiscal years of the registrant
was $160,180 for 2009 and $374,796 for 2008.
(h) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Proxy Voting Policies are attached herewith.
ALKEON CAPITAL MANAGEMENT, LLC
PROXY VOTING POLICIES AND PROCEDURES
As of June 30, 2003
I. POLICY
Proxy voting is an important right of shareholders and reasonable care and
diligence must be undertaken to ensure that such rights are properly and timely
exercised. When Alkeon Capital Management, LLC ("Alkeon") has discretion to vote
the proxies of its clients, it will vote those proxies in the best interest of
its clients and in accordance with these policies and procedures.
II. PROXY VOTING PROCEDURES
Alkeon has entered into an agreement with RiskMetrics Group, Inc, an
independent third party, for RiskMetrics Group, Inc to provide Alkeon with its
research on proxies and to facilitate the electronic voting of proxies. Alkeon
has adopted RiskMetrics Group, Inc's proxy voting policies in order to ensure
that it votes proxies in the best interests of its clients. Alkeon has
instructed RiskMetrics Group, Inc to vote all proxies in accordance with this
policy, unless instructed by Alkeon to vote otherwise.
Alkeon generally votes in favor of routine corporate housekeeping
proposals, such as proposals to ratify auditors and reasonably crafted
shareholder proposals calling for directors to be elected with an affirmative
majority of votes. For all other proposals, Alkeon will vote in accordance with
the proxy voting guidelines adopted by RiskMetrics Group, Inc.
Clients may obtain a copy of the Proxy Procedures and information about how
Alkeon voted a client's proxies by contacting Greg Jakubowsky via e-mail at
gjakubowsky@alkeoncapital.com or by telephone at (212) 389-8710.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(A)(1) IDENTIFICATION OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
Panayotis Sparaggis has served as the Portfolio Manager of the Fund
since its inception. Mr. Sparaggis is the Chief Investment Officer and
a controlling person of Alkeon Capital Management, LLC ("Alkeon"),
which he founded in December 2001. From May 1995 until the founding of
Alkeon , Mr. Sparaggis was employed by CIBC World Markets Corp or its
predecessors.
(A)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
AND POTENTIAL CONFLICTS OF INTEREST
OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
The table below includes details about the type, number, and assets
under management for the various types of accounts, and total assets in
the accounts with respect to which the advisory fee
is based on the performance of the accounts that Mr. Sparaggis managed
as of December 31, 2009:
------------------------------------------------------------------------------------------------------------------
No. of Total Assets
Accounts where in Accounts
Name of Portfolio Total Advisory Fee where Advisory
Manager or No. of Accounts is Based on Fee is Based
Team Member Type of Accounts Managed Total Assets Performance on Performance
----------- --------- ------- ------- ----------- --------------
------------------------------------------------------------------------------------------------------------------
Panayotis Sparaggis Registered ___0___ $___0____ ___0___ $___0____
Investment
Companies:
------------------------------------------------------------------------------------------------------------------
Panayotis Sparaggis Other Pooled ___13__ $779,762,668 ___13__ $779,762,668
Investment
Vehicles:
------------------------------------------------------------------------------------------------------------------
Panayotis Sparaggis Other Accounts: ___0___ $___0____ ___0___ $___0____
------------------------------------------------------------------------------------------------------------------
POTENTIAL CONFLICTS OF INTERESTS
Actual or apparent conflicts of interest may arise when a Portfolio
Manager also has day-to-day responsibilities with respect to one or
more accounts. These potential conflicts include:
o Allocation of Limited Time and Attention. Because the Portfolio Manager
manages other accounts, the Portfolio Manager may not be able to
formulate as complete a strategy or identify equally attractive
investment opportunities for each of those accounts as if the Portfolio
Manager were to devote substantially more attention to the management
of fewer accounts.
o Allocation of Investment Opportunities. If the Portfolio Manager
identifies an investment opportunity that may be suitable for multiple
accounts, the Fund may not be able to take full advantage of that
opportunity because the opportunity may need to be allocated among all
or many of these accounts.
o Pursuit of Differing Strategies. At times, the Portfolio Manager may
determine that an investment opportunity may be appropriate for only
some of the accounts for which he exercises investment responsibility,
or may decide that certain of these accounts should take differing
positions with respect to a particular security. In these cases, the
Portfolio Manager may execute differing or opposite transactions for
one or more accounts which may affect the market price of the security
or the execution of the transactions, or both, to the detriment of one
or more of his accounts.
o Performance Fees. The Portfolio Manager manages other accounts that are
subject to a performance allocation or performance fee which in some
cases may be greater than the fee payable by the Fund. This could
create a conflict because the Portfolio Manager may benefit if a more
attractive investment is allocated to an account that bears a greater
performance allocation or fee.
(A)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM
MEMBERS
Mr. Sparaggis' compensation consists of periodic advances and the
income from the profits of Alkeon Capital Management, LLC derived by
him as its sole principal. The level of Alkeon
Capital Management's profitability in turn is dependent on the advisory
fees and performance fees and allocations received from the Fund and
other advisory clients.
(A)(4) DISCLOSURE OF SECURITIES OWNERSHIP
The table below sets forth beneficial ownership of shares of the
registrant by the Portfolio Manager as of December 31, 2009.
Dollar ($) Range
Name of Portfolio Manager of Fund Shares
or Beneficially
Team Member Owned
----------- -----
Panayotis Sparaggis NONE
(B) Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of 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.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and 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.
(registrant) Advantage Advisers Xanthus Fund, LLC
-------------------------------------------------------------------
By (Signature and Title)* /s/ Bryan Mckigney
-------------------------------------------------------
Bryan McKigney, Principal Executive Officer
(principal executive officer)
Date March 5, 2010
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and 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 (Signature and Title)* /s/ Bryan Mckigney
-------------------------------------------------------
Bryan McKigney, Principal Executive Officer
(principal executive officer)
Date March 5, 2010
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Vineet Bhalla
-------------------------------------------------------
Vineet Bhalla, Chief Financial Officer
(principal financial officer)
Date March 5, 2010
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.