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                

Advantage Advisers Xanthus Fund, L.L.C.

(Exact name of registrant as specified in charter)

85 Broad Street

New York, NY 10004

(Address of principal executive offices) (Zip code)

Kenneth S. Gerstein, Esq.
Schulte Roth & Zabel LLP
919 3rd Avenue, 24th Floor

New York, NY 10122

(Name and address of agent for service)

Registrant’s telephone number, including area code: 212-667-4225

Date of fiscal year end: December 31

Date of reporting period: December 31, 2016

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, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

Item 1. Reports to Stockholders.

The Report to Shareholders is attached herewith.

Advantage Advisers

Xanthus Fund, L.L.C.

Financial Statements

with Report of Independent

Registered Public Accounting Firm

For the Year Ended December 31, 2016

Advantage Advisers Xanthus Fund, L.L.C.

Financial Statements

For the Year Ended December 31, 2016

Contents

Report of Independent Registered Public Accounting Firm	1
Statement of Assets, Liabilities and Members’ Capital	2
Schedule of Portfolio Investments	3
Schedule of Purchased Options	8
Schedule of Securities Sold, Not Yet Purchased	11
Schedule of Swap Contracts	16
Schedule of Forward Contracts	25
Statement of Operations	26
Statements of Changes in Members’ Capital	27
Statement of Cash Flows	28
Notes to Financial Statements	29
Supplemental Information (Unaudited)	45

 

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, purchased options, securities sold, not yet purchased, swap contracts and forward contracts, as of December 31, 2016, and the related statements of operations and cash flows 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, 2016, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from others 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, 2016, the results of its operations and cash flows 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

 

February 27, 2017

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

	December 31, 2016
Assets
Investments in securities, at fair value (cost $1,207,434,756)		$	1,373,634,123
Purchased options, at fair value (cost of $16,627,340)			16,440,243
Cash and cash equivalents (including restricted cash of $64,314,210, Chinese Renminbi Yuans of $290,222 with a cost of $310,867 and Hong Kong Dollars of $2,011,796 with a cost of $2,010,610)			190,957,162
Due from broker (including Australian Dollars of $1,781 with a cost of $1,855, British Pounds Sterling of $2,475,136 with a cost of $3,029,524, Hong Kong Dollars of $1,875,354 with a cost of $1,874,511 and Japanese Yen of $2,860,042 with a cost of $2,854,675)			106,620,538
Receivable for investment securities sold			84,783,263
Swap contracts at fair value, net			19,724,669
Forward contracts at fair value			2,081,363
Dividends receivable (net of foreign withholding taxes of $33,850)			1,172,896
Interest receivable			238,805
Other assets			133,119
Total assets			1,795,786,181
Liabilities
Securities sold, not yet purchased, at fair value (proceeds $500,456,180)			503,242,397
Withdrawals payable (See note 3)			108,624,300
Due to broker (including Euros of $531,507 with a cost of $536,656, Japanese Yen of $4,764,914 with a cost of $4,848,548, Swedish Kronor of $59,699 with a cost of $63,394 and Swiss Francs of $375,668 with a cost of $400,085)			27,591,788
Payable for investment securities purchased			24,903,540
Dividends payable on securities sold, not yet purchased			624,147
Accounting and investor services fees payable			149,233
Accrued expenses			1,297,864
Total liabilities			666,433,269
Members’ Capital		$	1,129,352,912
Members’ Capital
Represented by:
Net capital contributions		$	944,748,754
Net unrealized gain on investments, foreign currency, forward and swap transactions			184,604,158
Members’ Capital		$	1,129,352,912

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

Shares				December 31, 2016 Fair Value
		Investments in Securities – 121.63%
		Common Stock – 121.23%
		United States – 93.61%
		Aerospace / Defense – 1.58%
	76,720	Northrop Grumman Corp.		$	17,843,538
		Apparel Manufacturers – 0.10%
	13,539	Carter’s, Inc.	(a)		1,169,634
		Applications Software – 5.02%
	912,900	Microsoft Corp.	(a)		56,727,606
		Auction House / Art Dealer – 1.21%
	321,080	KAR Auction Services, Inc.			13,684,430
		Building Products - Cement / Aggregate – 2.24%
	52,160	Martin Marietta Materials, Inc.			11,555,005
	109,660	Vulcan Materials Co.			13,723,949
					25,278,954
		Commercial Services – 2.02%
	197,300	Cintas Corp.			22,799,988
		Commercial Services - Finance – 6.21%
	139,300	FleetCor Technologies, Inc.*	(a)		19,713,736
	269,320	Global Payments, Inc.			18,693,501
	462,500	PayPal Holdings, Inc.*			18,254,875
	225,970	Vantiv, Inc., Class A*			13,472,332
					70,134,444
		Computer Aided Design – 0.73%
	149,978	Aspen Technology, Inc.*	(a)		8,200,797
		Computer Software – 1.67%
	660,120	SS&C Technologies Holdings, Inc.	(a)		18,879,432
		Computers – 1.46%
	142,430	Apple, Inc.	(a)		16,496,243
		Data Processing / Management – 2.17%
	324,020	Fidelity National Information Services, Inc.	(a)		24,508,873
		E-Commerce / Products – 2.91%
	43,800	Amazon.com, Inc.*	(a)		32,844,306
		E-Commerce / Services – 0.38%
	250,000	Match Group, Inc.*			4,275,000
		Electronic Components - Semiconductors – 4.88%
	313,700	Microchip Technology, Inc.			20,123,855
	579,850	Xilinx, Inc.	(a)		35,005,544
					55,129,399
		Electronic Design Automation – 6.00%
	1,388,810	Cadence Design Systems, Inc.*	(a)		35,025,788
	555,922	Synopsys, Inc.*	(a)		32,721,569
					67,747,357

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)

				December 31, 2016
Shares				Fair Value
		Common Stock – (continued)
		United States – (continued)
		Entertainment Software – 5.11%
	485,450	Activision Blizzard, Inc.		$	17,529,599
	509,880	Electronic Arts, Inc.*			40,158,149
					57,687,748
		Finance - Credit Card – 5.72%
	324,260	MasterCard, Inc., Class A	(a)		33,479,845
	398,980	Visa, Inc., Class A	(a)		31,128,420
					64,608,265
		Finance - Other Services – 5.83%
	165,750	CME Group, Inc.			19,119,262
	828,700	Intercontinental Exchange, Inc.	(a)		46,755,254
					65,874,516
		Internet Content - Entertainment – 3.10%
	304,550	Facebook, Inc., Class A*			35,038,477
		Medical - Biomedical / Genetics – 5.74%
	95,420	Alexion Pharmaceuticals, Inc.*			11,674,637
	458,940	Celgene Corp.	(a)		53,122,305
					64,796,942
		Medical – Labs & Testing Services – 1.12%
	165,970	Quintiles IMS Holdings, Inc.*			12,622,019
		Medical - Outpatient / Home Medical – 1.27%
	474,243	Premier, Inc., Class A*			14,398,017
		Oil Companies - Integrated – 1.61%
	200,980	Exxon Mobil Corp.			18,140,455
		REITS - Diversified – 5.83%
	311,570	American Tower Corp			32,926,718
	92,020	Equinix, Inc.			32,888,868
					65,815,586
		Resorts / Theme Parks – 1.13%
	212,920	Six Flags Entertainment Corp.			12,766,683
		Retail - Automobile – 0.67%
	135,820	Copart, Inc.*			7,525,786
		Retail - Discount – 6.01%
	138,850	Costco Wholesale Corp.	(a)		22,231,273
	591,932	Dollar Tree, Inc.*	(a)		45,685,312
					67,916,585
		Retail - Drug Stores – 1.04%
	142,290	Walgreens Boots Alliance, Inc.			11,775,920
		Retail - Perfume & Cosmetics – 2.03%
	89,940	Ulta Salon Cosmetics & Fragrance, Inc.*			22,929,304

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)

				December 31, 2016
Shares				Fair Value
		Common Stock – (continued)
		United States – (continued)
		Semiconductor Components - Integrated Circuits – 2.22%
	344,700	Analog Devices, Inc.	(a)	$	25,032,114
		Semiconductor Equipment – 5.98%
	697,700	Applied Materials, Inc.	(a)		22,514,779
	214,940	Lam Research Corp.	(a)		22,725,606
	877,490	Teradyne, Inc.			22,288,246
					67,528,631
		Telephone - Integrated – 0.62%
	211,770	Zayo Group Holdings, Inc.*			6,958,762
		Total United States (Cost $929,941,603)		$	1,057,135,811
		China – 10.60%
		E-Commerce / Products – 3.40%
	315,500	Alibaba Group Holding Ltd. - Sponsored ADR*			27,704,055
	219,470	JD.com, Inc. - Sponsored ADR*			5,583,317
	466,580	Vipshop Holdings, Ltd. - Sponsored ADR*			5,137,046
					38,424,418
		Entertainment Software – 4.67%
	244,700	NetEase, Inc. - Sponsored ADR			52,693,698
		Internet Application Software – 1.37%
	634,600	Tencent Holdings, Ltd.			15,527,079
		Transport Services – 0.21%
	200,884	ZTO Express Cayman, Inc. - Sponsored ADR*			2,424,670
		Web Portals / ISP – 0.95%
	65,007	Baidu, Inc. - Sponsored ADR*			10,687,801
		Total China (Cost $114,791,105)		$	119,757,666
		France – 0.79%
		Entertainment Software – 0.79%
	249,642	UBISOFT Entertainment*			8,899,891
		Total France (Cost $6,718,397)		$	8,899,891
		Hong Kong – 2.79%
		Alternative Waste Technology – 2.79%
	27,832,633	China Everbright International, Ltd.			31,554,808
		Total Hong Kong (Cost $8,020,077)		$	31,554,808

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)

			December 31, 2016
Shares			Fair Value
		Common Stock – (continued)
		Israel – 0.63%
		Electronic Components - Semiconductors – 0.63%
	373,900	Tower Semiconductor, Ltd.*	$	7,115,317
		Total Israel (Cost $5,920,003)	$	7,115,317
		Japan – 12.81%
		Audio / Video Products – 3.14%
	1,261,000	Sony Corp.		35,408,691
		Chemicals - Specialty – 2.32%
	336,500	Shin-Etsu Chemical Co., Ltd.		26,159,664
		Cosmetics & Toiletries – 1.41%
	627,300	Shiseido Co., Ltd.		15,912,204
		E-Commerce / Products – 0.86%
	992,600	Rakuten, Inc.		9,748,838
		Electric Products - Miscellaneous – 1.55%
	334,200	Mabuchi Motor Co., Ltd.		17,479,128
		Electronic Components - Miscellaneous – 1.16%
	542,800	Alps Electric Co., Ltd.		13,152,111
		Entertainment Software – 0.76%
	334,233	Square Enix Holdings Co., Ltd.		8,611,470
		Finance - Other Services – 1.25%
	984,978	Japan Exchange Group, Inc.		14,103,486
		Metal Products - Distribution – 0.36%
	249,074	MISUMI Group, Inc.		4,108,819
		Total Japan (Cost $137,639,632)	$	144,684,411
		Total Common Stock (Cost $1,203,030,817)	$	1,369,147,904
Par
		Convertible Bonds – 0.40%
		United States – 0.40%
		E-Commerce / Services – 0.40%
	3,510,000	The Priceline Group, Inc., 0.35%, due 06/15/2020	$	4,486,219
		Total United States (Cost $4,403,939)	$	4,486,219
		Total Convertible Bonds (Cost $4,403,939)	$	4,486,219
		Total Investments in Securities (Cost $1,207,434,756) – 121.63%	$	1,373,634,123
		Other Liabilities, in Excess of Assets – (21.63%)**		(244,281,211	)
		Members’ Capital – 100.00%	$	1,129,352,912

(a)	Partially or wholly held in a pledged account by the Custodian as collateral for securities sold, not yet purchased.
*	Non-income producing security.
**	Includes $188,655,144 invested in a Cash Reserve Account at the Bank of New York Mellon, which is 16.70% of Members’ Capital and foreign currency with a U.S. Dollar value $2,302,018 held in BNY Mellon Custody Foreign Cash Account, which is 0.20% of Members’ Capital. $64,314,210 is restricted cash and is in a segregated account.
ADR	American Depository Receipt

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 (concluded)

	December 31, 2016
	Percentage of
	Members’ Capital
Investments in Securities – By Industry	(%)
Aerospace / Defense		1.58
Alternative Waste Technology		2.79
Apparel Manufacturers		0.10
Applications Software		5.02
Auction House / Art Dealer		1.21
Audio / Video Products		3.14
Building Products - Cement / Aggregate		2.24
Chemicals - Specialty		2.32
Commercial Services - Finance		6.21
Commercial Services		2.02
Computer Aided Design		0.73
Computer Software		1.67
Computers		1.46
Cosmetics & Toiletries		1.41
Data Processing / Management		2.17
E-Commerce / Products		7.17
E-Commerce / Services		0.78
Electric Products - Miscellaneous		1.55
Electronic Components - Miscellaneous		1.16
Electronic Components - Semiconductors		5.51
Electronic Design Automation		6.00
Entertainment Software		11.33

	December 31, 2016
	Percentage of
	Members’ Capital
Investments in Securities – By Industry	(%)
Finance - Credit Card		5.72
Finance - Other Services		7.08
Internet Application Software		1.37
Internet Content - Entertainment		3.10
Medical - Biomedical / Genetics		5.74
Medical - Labs & Testing Services		1.12
Medical - Outpatient / Home Medical		1.27
Metal Products - Distribution		0.36
Oil Companies - Integrated		1.61
REITS - Diversified		5.83
Resorts / Theme Parks		1.13
Retail - Automobile		0.67
Retail - Discount		6.01
Retail - Drug Stores		1.04
Retail - Perfume & Cosmetics		2.03
Semiconductor Components - Integrated Circuits		2.22
Semiconductor Equipment		5.98
Telephone - Integrated		0.62
Transport Services		0.21
Web Portals / ISP		0.95
Total Investments in Securities		121.63	%

The accompanying notes are an integral part of these financial statements.

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Advantage Advisers Xanthus Fund, L.L.C.

Schedule of Purchased Options

			December 31, 2016
Contracts			Fair Value
		Purchased Options – 1.46%
		Equity Options – 1.41%
		Equity Call Options – 0.98%
		United States – 0.98%
		Auto - Cars / Light Trucks – 0.04%
	9,640	Ford Motor Co., 01/20/2017, $12.75	$	67,480
	7,113	Ford Motor Co., 03/17/2017, $12		398,328
				465,808
		Beverages - Non-Alcoholic – 0.04%
	4,860	The Coca-Cola Co., 05/19/2017, $43		427,680
		Cosmetics & Toiletries – 0.03%
	2,481	The Procter & Gamble Co., 04/21/2017, $87.50		320,049
		Diversified Manufacturing Operations – 0.05%
	3,200	General Electric Co., 01/20/2017, $30		560,000
		E-Commerce / Services – 0.04%
	146	The Priceline Group, Inc., 01/20/2017, $1,460		438,000
		Electronic Components - Semiconductors – 0.30%
	6,200	Intel Corp., 04/21/2017, $35		1,531,400
	1,660	NVIDIA Corp., 03/17/2017, $110		1,625,140
	1,246	Texas Instruments Inc., 04/21/2017, $77.50		226,772
				3,383,312
		Internet Content - Entertainment – 0.29%
	1,265	NetFlix, Inc., 03/17/2017, $100		3,352,250
		Sector Fund - Real Estate – 0.12%
	4,742	iShares U.S. Real Estate ETF, 06/16/2017, $79		1,384,664
		Sector Fund - Utility – 0.07%
	7,482	Utilities Select Sector SPDR Fund, 01/20/2017, $50		134,676
	5,000	Utilities Select Sector SPDR Fund, 03/17/2017, $49		630,000
				764,676
		Total United States (Cost $10,537,116)	$	11,096,439
		Total Equity Call Options (Cost $10,537,116)	$	11,096,439
		Equity Put Options – 0.43%
		United States – 0.33%
		Oil Companies - Integrated – 0.16%
	4,962	Exxon Mobil Corp., 04/21/2017, $90		1,776,396
		Sector Fund - Technology – 0.17%
	9,925	VanEck Vectors Semiconductor ETF, 02/17/2017, $70		1,885,750
		Total United States (Cost $3,919,952)	$	3,662,146

The accompanying notes are an integral part of these financial statements.

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Advantage Advisers Xanthus Fund, L.L.C.

Schedule of Purchased Options (continued)

			December 31, 2016
Contracts			Fair Value
		Purchased Options – (continued)
		Equity Options – (continued)
		Equity Put Options – (continued)
		China – 0.10%
		E-Commerce / Products – 0.10%
	7,444	JD.com, Inc., 03/17/2017, $25	$	1,131,488
		Total China (Cost $1,022,479)	$	1,131,488
		Total Equity Put Options (Cost $4,942,431)	$	4,793,634
		Total Equity Options (Cost $15,479,547)	$	15,890,073
		Currency Call Options – 0.05%
		United States – 0.05%
	49,025,840	USD-CNH, 06/30/2017, $7.50		550,170
		Total United States (Cost $1,147,793)	$	550,170
		Total Currency Call Options (Cost $1,147,793)	$	550,170
		Total Purchased Options (Cost $16,627,340)	$	16,440,243

CNH	Chinese Renminbi Yuan
ETF	Exchange-Traded Fund
SPDR	Standard & Poor’s Depository Receipt
USD	United States Dollar

The accompanying notes are an integral part of these financial statements.

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Advantage Advisers Xanthus Fund, L.L.C.

Schedule of Purchased Options (concluded)

	December 31, 2016
	Percentage of
	Members’ Capital
Purchased Options – By Industry	(%)
Auto - Cars / Light Trucks	0.04
Beverages - Non-Alcoholic	0.04
Cosmetics & Toiletries	0.03
Currency	0.05
Diversified Manufacturing Operations	0.05
E-Commerce / Products	0.10
E-Commerce / Services	0.04

	December 31, 2016
	Percentage of
	Members’ Capital
Purchased Options – By Industry	(%)
Electronic Components - Semiconductors	0.30
Internet Content - Entertainment	0.29
Oil Companies - Integrated	0.16
Sector Fund - Real Estate	0.12
Sector Fund - Technology	0.17
Sector Fund - Utility	0.07
Total Purchased Options	1.46%

The accompanying notes are an integral part of these financial statements.

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Advantage Advisers Xanthus Fund, L.L.C.

Schedule of Securities Sold, Not Yet Purchased

			December 31, 2016
Shares			Fair Value
		Securities Sold, Not Yet Purchased – 44.56%
		Common Stock – 44.56%
		United States – 31.79%
		Auto - Cars / Light Trucks – 1.00%
	934,140	Ford Motor Co.	$	11,331,118
		Beverages - Non-Alcoholic – 1.77%
	482,160	The Coca-Cola Co.		19,990,354
		Casino Hotels – 0.45%
	94,540	Las Vegas Sands Corp.		5,049,381
		Commercial Services - Finance – 0.19%
	98,390	The Western Union Co.		2,137,031
		Computer Services – 0.69%
	288,730	Teradata Corp.*		7,844,794
		Computers - Memory Devices – 0.97%
	285,710	Seagate Technology PLC		10,905,551
		Cosmetics & Toiletries – 1.91%
	257,000	The Procter & Gamble Co.		21,608,560
		Diversified Manufacturing Operations – 0.83%
	295,900	General Electric Co.		9,350,440
		E-Commerce / Services – 0.98%
	7,525	The Priceline Group, Inc.*		11,032,102
		Electric - Integrated – 3.43%
	175,700	Consolidated Edison, Inc.		12,945,576
	169,250	Duke Energy Corp.		13,137,185
	258,000	The Southern Co.		12,691,020
				38,773,781
		Electronic Components - Semiconductors – 3.87%
	359,600	Intel Corp.		13,042,692
	109,070	NVIDIA Corp.		11,642,132
	260,530	Texas Instruments, Inc.		19,010,874
				43,695,698
		Food - Retail – 0.37%
	218,410	Sprouts Farmers Market, Inc.*		4,132,317
		Internet Content - Entertainment – 1.13%
	102,970	NetFlix, Inc.*		12,747,686
		Motorcycle / Motor Scooter – 0.32%
	62,560	Harley-Davidson, Inc.		3,649,750
		REITS - Apartments – 0.34%
	45,990	Camden Property Trust		3,866,379

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)

			December 31, 2016
Shares			Fair Value
		Common Stock – (continued)
		United States – (continued)
		REITS - Diversified – 1.09%
	118,300	Vornado Realty Trust	$	12,346,971
		REITS - Health Care – 0.65%
	248,940	HCP, Inc.		7,398,497
		REITS - Office Property – 1.46%
	90,600	Boston Properties, Inc.		11,395,668
	47,580	SL Green Realty Corp.		5,117,229
				16,512,897
		REITS - Shopping Centers – 1.00%
	450,480	Kimco Realty Corp.		11,334,077
		REITS - Storage – 0.41%
	20,740	Public Storage		4,635,390
		Rental Auto / Equipment – 0.16%
	48,250	Avis Budget Group, Inc.*		1,769,810
		Retail - Apparel / Shoes – 0.30%
	538,600	Ascena Retail Group, Inc.*		3,333,934
		Retail - Bedding – 0.78%
	217,500	Bed, Bath & Beyond, Inc.*		8,839,200
		Retail - Discount – 0.93%
	145,300	Target Corp.		10,495,019
		Retail - Regional Department Stores – 1.10%
	99,440	Dillard’s, Inc., Class A		6,233,893
	124,260	Kohl’s Corp.		6,135,959
				12,369,852
		Sector Fund - Real Estate – 1.31%
	192,050	iShares U.S. Real Estate ETF		14,776,327
		Sector Fund - Technology – 1.65%
	260,240	VanEck Vectors Semiconductor ETF		18,643,594
		Sector Fund - Utility – 1.73%
	402,150	Utilities Select Sector SPDR Fund		19,532,425
		Semiconductor Components - Integrated Circuits – 0.97%
	175,450	Linear Technology Corp.		10,939,308
		Total United States (Proceeds $359,984,507)	$	359,042,243
		China – 0.51%
		Computers – 0.36%
	6,622,000	Lenovo Group, Ltd.		4,014,296

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, 2016
Shares			Fair Value
		Common Stock – (continued)
		China – (continued)
		Metal Processors & Fabrication – 0.15%
	4,014,000	China Zhongwang Holdings, Ltd.	$	1,708,495
		Total China (Proceeds $6,871,667)	$	5,722,791
		Hong Kong – 2.44%
		Casino Hotels – 0.46%
	326,800	Melco Crown Entertainment, Ltd. - Sponsored ADR		5,196,120
		Distribution / Wholesale – 0.28%
	7,313,000	Li & Fung, Ltd.		3,216,417
		Electric - Integrated – 0.09%
	118,000	Power Assets Holdings, Ltd.		1,040,262
		Finance - Other Services – 0.86%
	408,615	Hong Kong Exchanges and Clearing, Ltd.		9,655,219
		Gas - Distribution – 0.75%
	4,780,600	Hong Kong & China Gas Co., Ltd.		8,472,109
		Total Hong Kong (Proceeds $28,350,045)	$	27,580,127
		India – 0.64%
		Computer Services – 0.64%
	487,600	Infosys, Ltd. - Sponsored ADR		7,231,108
		Total India (Proceeds $7,782,297)	$	7,231,108
		Japan – 5.51%
		Auto - Cars / Light Trucks – 0.73%
	70,390	Toyota Motor Corp. - Sponsored ADR		8,249,708
		Electric - Integrated – 1.18%
	663,900	Chubu Electric Power Co., Inc.		9,295,491
	370,217	The Kansai Electric Power Co., Inc.*		4,056,679
				13,352,170
		Gas - Distribution – 1.77%
	2,370,927	Osaka Gas Co., Ltd.		9,139,617
	2,381,951	Tokyo Gas Co., Ltd.		10,801,644
				19,941,261
		Photo Equipment & Supplies – 0.84%
	249,700	FUJIFILM Holdings Corp.		9,495,015
		Retail - Apparel / Shoes – 0.44%
	13,800	Fast Retailing Co., Ltd.		4,949,376

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, 2016
Shares			Fair Value
		Common Stock – (continued)
		Japan – (continued)
		Retail - Discount – 0.55%
	437,049	Aeon Co., Ltd.	$	6,205,459
		Total Japan (Proceeds $59,263,023)	$	62,192,989
		Macau – 0.47%
		Casino Hotels – 0.47%
	1,213,600	Sands China, Ltd.		5,275,065
		Total Macau (Proceeds $4,310,995)	$	5,275,065
		Netherlands – 2.03%
		Semiconductor Equipment – 2.03%
	204,310	ASML Holding NV		22,923,582
		Total Netherlands (Proceeds $18,814,400)	$	22,923,582
		South Korea – 0.28%
		Electronic Components - Miscellaneous – 0.28%
	249,200	LG Display Co., Ltd. - Sponsored ADR		3,202,220
		Total South Korea (Proceeds $2,886,821)	$	3,202,220
		Taiwan – 0.89%
		Electronic Components - Miscellaneous – 0.46%
	1,459,100	AU Optronics Corp. - Sponsored ADR		5,165,214
		Semiconductor Components - Integrated Circuits – 0.43%
	2,804,033	United Microelectronics Corp. - Sponsored ADR		4,907,058
		Total Taiwan (Proceeds $12,192,425)	$	10,072,272
		Total Securities Sold, Not Yet Purchased (Proceeds $500,456,180)	$	503,242,397

*	Non-income producing security.
ADR	American Depository Receipt
ETF	Exchange-Traded Fund
SPDR	Standard & Poor’s Depository Receipt

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, 2016
	Percentage of
Securities Sold, Not Yet Purchased –	Members’ Capital
By Industry	(%)
Auto - Cars / Light Trucks	1.73
Beverages - Non-alcoholic	1.77
Casino Hotels	1.38
Commercial Services - Finance	0.19
Computer Services	1.33
Computers	0.36
Computers - Memory Devices	0.97
Cosmetics & Toiletries	1.91
Distribution / Wholesale	0.28
Diversified Manufacturing Operations	0.83
E-Commerce / Services	0.98
Electric - Integrated	4.70
Electronic Components - Miscellaneous	0.74
Electronic Components - Semiconductors	3.87
Finance - Other Services	0.86
Food - Retail	0.37
Gas - Distribution	2.52
Internet Content - Entertainment	1.13
Metal Processors & Fabrication	0.15

	December 31, 2016
	Percentage of
Securities Sold, Not Yet Purchased –	Members’ Capital
By Industry	(%)
Motorcycle / Motor Scooter	0.32
Photo Equipment & Supplies	0.84
REITS - Apartments	0.34
REITS - Diversified	1.09
REITS - Health Care	0.65
REITS - Office Property	1.46
REITS - Shopping Centers	1.00
REITS - Storage	0.41
Rental Auto / Equipment	0.16
Retail - Apparel / Shoes	0.74
Retail - Bedding	0.78
Retail - Discount	1.48
Retail - Regional Department Stores	1.10
Sector Fund - Real Estate	1.31
Sector Fund - Technology	1.65
Sector Fund - Utility	1.73
Semiconductor Components - Integrated Circuits	1.40
Semiconductor Equipment	2.03
Total Securities Sold, Not Yet Purchased	44.56%

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, 2016
Notional		Maturity		Unrealized
Amount		Date		Gain/(Loss)
		Swap Contracts – 1.75%
		Total Return Swap Contracts - Long – 1.40%
		United States – 0.61%
		Web Portals / ISP – 0.61%
$	48,169,549	6/1/2018	Alphabet Inc., Class A		$	6,857,322
			Agreement with Morgan Stanley, dated 07/08/2011 to receive the total return of the shares of Alphabet Inc., Class A in exchange for interest based on the Daily Fed Funds Effective Rate plus 0.45%*.
		Total United States			$	6,857,322
		Denmark – (0.08%)
		Commercial Services - Finance – (0.08%)
	4,746,358	1/4/2019	Nets A/S			(936,579	)
			Agreement with Morgan Stanley, dated 09/23/2016 to receive the total return of the shares of Nets A/S in exchange for interest based on the Daily Fed Funds Effective Rate plus 0.65%*.
		Total Denmark			$	(936,579	)
		Luxembourg – (0.06%)
		Retail - Discount – (0.06%)
	4,539,047	12/13/2018	B&M European Value Retail SA			(627,103	)
			Agreement with Morgan Stanley, dated 06/12/2014 to receive the total return of the shares of B&M European Value Retail SA in exchange for interest based on the Daily Fed Funds Effective Rate plus 0.65%*.
		Total Luxembourg			$	(627,103	)

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, 2016
Notional		Maturity		Unrealized
Amount		Date		Gain/(Loss)
		Swap Contracts – (continued)
		Total Return Swap Contracts - Long – (continued)
		South Korea – 1.04%
		Electronic Components - Semiconductors – 1.04%
$	49,094,378	12/28/2018	Samsung Electronics Co., Ltd		$	11,820,017
			Agreement with Morgan Stanley, dated 12/23/2009 to receive the total return of the shares of Samsung Electronics Co., Ltd in exchange for interest based on the Daily Fed Funds Effective Rate plus 0.90%*.
		Total South Korea			$	11,820,017
		Spain – (0.11)%
		Satellite Telecommunications – (0.11)%
	7,729,137	1/4/2019	Cellnex Telecom SAU			(1,268,745	)
			Agreement with Morgan Stanley, dated 05/06/2015 to receive the total return of the shares of Cellnex Telecom SAU in exchange for interest based on the Daily Fed Funds Effective Rate plus 0.65%*.
		Total Spain			$	(1,268,745	)
		Total Return Swap Contracts - Long			$	15,844,912

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, 2016
Notional		Maturity		Unrealized
Amount		Date		Gain/(Loss)
		Swap Contracts – (continued)
		Total Return Swap Contracts - Short – 0.35%
		Australia – (0.08%)
		Commercial Banks - Non-US – (0.13%)
$	7,360,931	12/27/2019	Australia and New Zealand Banking Group, Ltd.		$	(498,192	)
			Agreement with Morgan Stanley, dated 08/26/2015 to deliver the total return of the shares of Australia and New Zealand Banking Group, Ltd. in exchange for interest based on the Daily Fed Funds Effective Rate less 0.40%*.
	7,666,615	12/27/2019	Westpac Banking Corp.			(1,005,983	)
			Agreement with Morgan Stanley, dated 08/14/2015 to deliver the total return of the shares of Westpac Banking Corp. in exchange for interest based on the Daily Fed Funds Effective Rate less 0.40%*.
						(1,504,175	)
		Food - Retail – 0.05%
	11,747,373	12/27/2019	Wesfarmers, Ltd.			(509,026	)
			Agreement with Morgan Stanley, dated 12/23/2014 to deliver the total return of the shares of Wesfarmers, Ltd. in exchange for interest based on the Daily Fed Funds Effective Rate less 0.40%*.
	12,916,877	12/27/2019	Woolworths, Ltd.			1,179,473
			Agreement with Morgan Stanley, dated 12/24/2014 to deliver the total return of the shares of Woolworths, Ltd. in exchange for interest based on the Daily Fed Funds Effective Rate less 0.40%*.
						670,447
		Total Australia			$	(833,728	)

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, 2016
Notional		Maturity		Unrealized
Amount		Date		Gain/(Loss)
		Swap Contracts – (continued)
		Total Return Swap Contracts - Short – (continued)
		Japan – 0.01%
		Building Products - Doors & Windows – (0.15%)
$	8,127,781	12/24/2019	Asahi Glass Co., Ltd.		$	(1,728,656	)
			Agreement with Morgan Stanley, dated 07/26/2012 to deliver the total return of the shares of Asahi Glass Co., Ltd. in exchange for interest based on the Daily Fed Funds Effective Rate less 0.40%*.
		Electric - Integrated – 0.14%
	7,862,574	12/24/2019	Tokyo Electric Power Co. Holdings, Inc.			1,593,215
			Agreement with Morgan Stanley, dated 02/17/2016 to deliver the total return of the shares of Tokyo Electric Power Co. Holdings, Inc. in exchange for interest based on the Daily Fed Funds Effective Rate less 0.40%*.
		Office Automation & Equipment – 0.10%
	14,926,070	12/24/2019	Ricoh Co., Ltd.			1,074,869
			Agreement with Morgan Stanley, dated 05/24/2012 to deliver the total return of the shares of Ricoh Co., Ltd. in exchange for interest based on the Daily Fed Funds Effective Rate less 0.42%*.
		Photo Equipment & Supplies – (0.08%)
	3,561,616	12/24/2019	Konica Minolta, Inc.			(850,266	)
			Agreement with Morgan Stanley, dated 04/13/2011 to deliver the total return of the shares of Konica Minolta, Inc. in exchange for interest based on the Daily Fed Funds Effective Rate less 0.46%*.
		Total Japan			$	89,162

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, 2016
Notional		Maturity		Unrealized
Amount		Date		Gain/(Loss)
		Swap Contracts – (continued)
		Total Return Swap Contracts - Short – (continued)
		South Korea – (0.17%)
		Electronic Components - Semiconductors – (0.17%)
$	4,712,544	4/2/2019	SK Hynix, Inc.		$	(1,879,515	)
			Agreement with Morgan Stanley, dated 03/26/2010 to deliver the total return of the shares of SK Hynix, Inc. in exchange for interest based on the Daily Fed Funds Effective Rate less 0.40%*.
		Total South Korea			$	(1,879,515	)
		Spain – 0.13%
		Food - Retail – 0.13%
	5,819,170	1/4/2019	Distribuidora Internacional de Alimentacion SA			1,412,942
			Agreement with Morgan Stanley, dated 09/29/2014 to deliver the total return of the shares of Distribuidora Internacional de Alimentacion SA in exchange for interest based on the Daily Fed Funds Effective Rate less 0.40%*.
		Total Spain			$	1,412,942
		Switzerland – 0.04%
		Retail - Jewelry – 0.04%
	5,555,752	5/10/2017	Cie Financiere Richemont SA			(523,508	)
			Agreement with Morgan Stanley, dated 08/12/2015 to deliver the total return of the shares of Cie Financiere Richemont SA in exchange for interest based on the Daily Fed Funds Effective Rate less 0.35%*.
	7,252,402	5/10/2017	The Swatch Group AG			922,207
			Agreement with Morgan Stanley, dated 05/08/2015 to deliver the total return of the shares of The Swatch Group AG in exchange for interest based on the Daily Fed Funds Effective Rate less 1.50%*.
		Total Switzerland			$	398,699

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, 2016
Notional		Maturity		Unrealized
Amount		Date		Gain/(Loss)
		Swap Contracts – (continued)
		Total Return Swap Contracts - Short – (continued)
		Taiwan – 0.18%
		Computers – (0.06%)
$	2,515,455	1/25/2018	Foxconn Technology Co., Ltd.		$	(726,139	)
			Agreement with Morgan Stanley, dated 05/21/2009 to deliver the total return of the shares of Foxconn Technology Co., Ltd. in exchange for interest based on the Daily Fed Funds Effective Rate less 1.33%*.
		Computers - Peripheral Equipment – 0.21%
	14,148,360	1/25/2018	Innolux Display Corp.			2,418,715
			Agreement with Morgan Stanley, dated 03/18/2010 to deliver the total return of the shares of Innolux Display Corp. in exchange for interest based on the Daily Fed Funds Effective Rate less 1.00%*.
		Electronic Components - Miscellaneous – 0.02%
	11,490,601	1/25/2018	AU Optronics Corp.			1,708,274
			Agreement with Morgan Stanley, dated 07/26/2012 to deliver the total return of the shares of AU Optronics Corp. in exchange for interest based on the Daily Fed Funds Effective Rate less 0.75%*.
	12,583,565	1/25/2018	Hon Hai Precision Industry Co., Ltd.			(1,511,577	)
			Agreement with Morgan Stanley, dated 01/08/2013 to deliver the total return of the shares of Hon Hai Precision Industry Co., Ltd. in exchange for interest based on the Daily Fed Funds Effective Rate less 0.40%*.
						196,697
		Metal Processors & Fabricators – (0.01%)
	8,336,189	1/25/2018	Catcher Technology Co., Ltd.			(107,508	)
			Agreement with Morgan Stanley, dated 09/25/2009 to deliver the total return of the shares of Catcher Technology Co., Ltd. in exchange for interest based on the Daily Fed Funds Effective Rate less 1.75%*.

The accompanying notes are an integral part of these financial statements.

-21-

Advantage Advisers Xanthus Fund, L.L.C.

Schedule of Swap Contracts (continued)

				December 31, 2016
Notional		Maturity		Unrealized
Amount		Date		Gain/(Loss)
		Swap Contracts – (continued)
		Total Return Swap Contracts - Short – (continued)
		Taiwan – (continued)
		Semiconductor Components - Integrated Circuits – 0.02%
$	2,752,638	1/25/2018	United Microelectronics Corp.		$	217,219
			Agreement with Morgan Stanley, dated 08/08/2013 to deliver the total return of the shares of United Microelectronics Corp. in exchange for interest based on the Daily Fed Funds Effective Rate less 0.40%*.
		Total Taiwan			$	1,998,984
		United Kingdom – 0.24%
		Food - Retail – 0.07%
	6,167,481	12/13/2018	J Sainsbury PLC			449,981
			Agreement with Morgan Stanley, dated 06/03/2014 to deliver the total return of the shares of J Sainsbury PLC in exchange for interest based on the Daily Fed Funds Effective Rate less 0.30%*.
	3,960,685	12/13/2018	Tesco PLC			391,554
			Agreement with Morgan Stanley, dated 04/17/2013 to deliver the total return of the shares of Tesco PLC in exchange for interest based on the Daily Fed Funds Effective Rate less 0.40%*.
						841,535
		Retail - Apparel / Shoes – 0.06%
	9,315,323	12/13/2018	Next PLC			640,448
			Agreement with Morgan Stanley, dated 03/24/2016 to deliver the total return of the shares of Next PLC in exchange for interest based on the Daily Fed Funds Effective Rate less 0.30%*.

The accompanying notes are an integral part of these financial statements.

-22-

Advantage Advisers Xanthus Fund, L.L.C.

Schedule of Swap Contracts (continued)

				December 31, 2016
Notional		Maturity		Unrealized
Amount		Date		Gain/(Loss)
		Swap Contracts – (continued)
		Total Return Swap Contracts - Short – (continued)
		United Kingdom – (continued)
		Retail - Major Dept Store – 0.11%
$	7,615,639	12/13/2018	Marks & Spencer Group PLC – Sponsored ADR		$	1,211,230
			Agreement with Morgan Stanley, dated 02/16/2016 to deliver the total return of the shares of Marks & Spencer Group PLC - Sponsored ADR in exchange for interest based on the Daily Fed Funds Effective Rate less 0.30%*.
		Total United Kingdom			$	2,693,213
		Total Return Swap Contracts - Short			$	3,879,757
		Total Swap Contracts, net			$	19,724,669

*     Financing rate is variable. Rate indicated is as of December 31, 2016.

The accompanying notes are an integral part of these financial statements.

-23-

Advantage Advisers Xanthus Fund, L.L.C.

Schedule of Swap Contracts (concluded)

Swap Contracts – By Industry	December 31, 2016 Percentage of Members’ Capital (%)
Building Products - Doors & Windows		(0.15	)
Commercial Banks - Non-US		(0.13	)
Commercial Services - Finance		(0.08	)
Computers		(0.06	)
Computers - Peripheral Equipment		0.21
Electric - Integrated		0.14
Electronic Components - Miscellaneous		0.02
Electronic Components - Semiconductors		0.87
Food - Retail		0.25
Metal Processors & Fabricators		(0.01	)

Swap Contracts – By Industry	December 31, 2016 Percentage of Members’ Capital (%)
Office Automation & Equipment		0.10
Photo Equipment & Supplies		(0.08	)
Retail - Apparel / Shoes		0.06
Retail - Discount		(0.06	)
Retail - Jewelry		0.04
Retail - Major Department Store		0.11
Satellite Telecommunication		(0.11	)
Semiconductor Components - Integrated Circuits		0.02
Web Portals / ISP		0.61
Total Swap Contracts		1.75	%

The accompanying notes are an integral part of these financial statements.

-24-

Advantage Advisers Xanthus Fund, L.L.C.

Schedule of Forward Contracts

Counterparty	Settlement Date	Currency Sold	Contracts		Currency Bought	Contracts		December 31, 2016 Fair Value
Forward Currency Exchange Contracts – 0.18%
Buy Contracts – 0.18%
United States – 0.18%
Morgan Stanley & Co., LLC	April 2017	CNH		(332,591,299)	USD		48,696,721	$	2,081,363
Total United States								$	2,081,363
Total Buy Contracts								$	2,081,363
Total Forward Currency Exchange Contracts								$	2,081,363

CNH	Chinese Renminbi Yuan
USD	United States Dollar

The accompanying notes are an integral part of these financial statements.

-25-

Advantage Advisers Xanthus Fund, L.L.C.

Statement of Operations

	Year Ended December 31, 2016
Investment income
Dividends (net of withholding taxes of $358,285)	$	15,041,502
Interest		3,855,850
Total investment income		18,897,352
Expenses
Administration fees		17,101,823
Dividends on securities sold, not yet purchased		10,869,836
Prime broker fees		9,127,623
Investment advisory fees		5,067,207
Accounting and investor services fees		917,356
Legal fees		683,992
Interest expense		631,731
Custodian fees		318,414
Audit and tax fees		293,610
Board of Managers’ fees and expenses		280,334
Insurance expense		172,031
Printing expense		112,096
Registration expense		68,226
Miscellaneous		315,573
Total operating expenses		45,959,852
Net investment loss		(27,062,500	)
Net realized and net change in unrealized gain/(loss) from investments in securities, purchased options, foreign currency transactions, forward and swap contracts
Net realized gain/(loss) from investments in securities, purchased options, foreign currency transactions, forward and swap contracts
Net realized gain from investments in securities		62,802,638
Net realized gain from swap contracts		25,796,941
Net realized gain from foreign currency transactions		254,558
Net realized loss from forward contracts		(984,526	)
Net realized loss from purchased options		(1,593,367	)
Net realized loss from securities sold, not yet purchased		(38,201,115	)
Total net realized gain from investments in securities, purchased options, foreign currency transactions, forward and swap contracts		48,075,129
Net change in unrealized gain/(loss) from investments in securities, purchased options, foreign currency transactions, forward and swap contracts
Net change in unrealized gain/(loss) from forward contracts		2,081,363
Net change in unrealized gain/(loss) from investments in securities		(56,428	)
Net change in unrealized gain/(loss) from purchased options		(187,097	)
Net change in unrealized gain/(loss) from foreign currency transactions		(221,916	)
Net change in unrealized gain/(loss) from swap contracts		(13,887,755	)
Net change in unrealized gain/(loss) from securities sold, not yet purchased transactions		(27,071,223	)
Total net change in unrealized loss from investments in securities, purchased options, foreign currency transactions, forward and swap contracts		(39,343,056	)
Net realized gain and net change in unrealized gain/(loss) from investments in securities, purchased options, foreign currency transactions, forward and swap contracts		8,732,073
Net decrease in Members’ Capital resulting from operations	$	(18,330,427	)

The accompanying notes are an integral part of these financial statements.

-26-

Advantage Advisers Xanthus Fund, L.L.C.

Statements of Changes in Members’ Capital

	Special Advisory Member			Members			Total
MEMBERS’ CAPITAL, December 31, 2014	$	—		$	1,360,120,708		$	1,360,120,708
From investment activities
Net investment loss	$	—		$	(33,114,203	)	$	(33,114,203	)
Net realized gain from investment activities, foreign currency transactions and swap contracts		—			92,171,502			92,171,502
Net change in unrealized gain/(loss) from investment activities, foreign currency transactions and swap contracts		—			23,208,749			23,208,749
Incentive allocation		3,287,978			(3,287,978	)		—
Net increase/decrease in Members’ Capital resulting from operations		3,287,978			78,978,070			82,266,048
Members’ Capital transactions
Capital contributions		—			40,518,341			40,518,341
Capital withdrawals		(3,287,978	)		(168,909,312	)		(172,197,290	)
Net decrease in Members’ Capital resulting from capital transactions		(3,287,978	)		(128,390,971	)		(131,678,949	)
MEMBERS’ CAPITAL, December 31, 2015	$	—		$	1,310,707,807		$	1,310,707,807
From investment activities
Net investment loss	$	—		$	(27,062,500	)	$	(27,062,500	)
Net realized gain from investments in securities, purchased options, foreign currency transactions, forward and swap contracts		—			48,075,129			48,075,129
Net change in unrealized gain/(loss) from investments in securities, purchased options, foreign currency transactions, forward and swap contracts		—			(39,343,056	)		(39,343,056	)
Incentive allocation		71,607			(71,607	)		—
Net increase/decrease in Members’ Capital resulting from operations		71,607			(18,402,034	)		(18,330,427	)
Members’ Capital transactions
Capital contributions		—			28,664,516			28,664,516
Capital withdrawals		(71,607	)		(191,617,377	)		(191,688,984	)
Net decrease in Members’ Capital resulting from capital transactions		(71,607	)		(162,952,861	)		(163,024,468	)
MEMBERS’ CAPITAL, December 31, 2016	$	—		$	1,129,352,912		$	1,129,352,912

The accompanying notes are an integral part of these financial statements.

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Advantage Advisers Xanthus Fund, L.L.C.

Statement of Cash Flows

	Year Ended December 31, 2016
Cash flows from operating activities
Net decrease in Members’ Capital resulting from operations	$	(18,330,427	)
Adjustments to reconcile net decrease in Members’ Capital resulting from operations to net cash provided by operating activities:
Proceeds from sales of investments in securities		1,055,006,446
Purchases of investments in securities		(997,699,338	)
Proceeds from sale of purchased options		21,062,407
Purchases of options		(39,283,114	)
Proceeds from securities sold short, not yet purchased		1,541,058,325
Cover of securities sold short, not yet purchased		(1,582,211,691	)
Amortization of premium and accretion of discount, net		68,304
Net realized gain from investment activities		(23,008,156	)
Net change in unrealized gain/(loss) from investment activities		41,202,503
Net change in unrealized gain/(loss) on forward contracts		(2,081,363	)
Changes in assets and liabilities related to operations:
Decrease in due from broker		188,151,210
Decrease in receivable for investment securities sold		18,769,116
Increase in dividends receivable		(766,767	)
Decrease in interest receivable		188,102
Decrease in other assets		12,202
Decrease in payable for investment securities purchased		(36,832,785	)
Decrease in due to broker		(16,504,620	)
Decrease in dividends payable on securities sold, not yet purchased		(503,855	)
Decrease in accounting and investor services fees		(170,767	)
Decrease in accrued expenses		(19,951	)
Net cash provided by operating activities		148,105,781
Cash flows from financing activities
Capital contributions		28,664,516
Capital withdrawals		(149,293,071	)
Net cash used in financing activities		(120,628,555	)
Net change in cash and cash equivalents		27,477,226
Cash and cash equivalents at beginning of year		163,479,936
Cash and cash equivalents as of December 31, 2016	$	190,957,162
Supplemental disclosure of cash flow information
Cash paid during the year for interest	$	598,014

The accompanying notes are an integral part of these financial statements.

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Advantage Advisers Xanthus Fund, L.L.C.

Notes to Financial Statements – December 31, 2016

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 second amended and restated Limited Liability Company Agreement dated July 1, 2011. The Company’s investment objective is to achieve maximum capital appreciation. The Company pursues its investment objective by investing its assets primarily in equity securities of U.S. and foreign companies that the investment adviser believes are well positioned to benefit from demand for their products or services; particularly, companies that can innovate or grow rapidly relative to their peers in their markets. These type of companies are generally considered to be “growth companies.” As part of its investment program, the Company also may utilize short sales of securities that the Company’s investment adviser believes are overvalued. Companies that derive a major portion of their revenues from technology-related business lines or which are expected to benefit from technological events are an important part of the universe of growth companies. The Company may invest without limitation, however, in other market sectors, if those other sectors present attractive opportunities for capital appreciation. The Company’s portfolio of securities includes long and short positions primarily in equity securities, purchased options, forward contracts and total return swaps on 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” of the Company under the Act. The Company’s investment adviser is Advantage Advisers Multi-Manager, L.L.C. (“Multi-Manager”), a subsidiary of Oppenheimer Asset Management Inc. (“OAM”) and an affiliate of Oppenheimer & Co. Inc. (“Oppenheimer”). Multi-Manager also provides administrative services to the Company pursuant to an administrative services agreement. Multi-Manager serves as the Company’s investment adviser pursuant to an investment advisory agreement dated July 1, 2011. OAM is the managing member of Multi-Manager and Alkeon Capital Management L.L.C. (“Alkeon”) is a non-managing member of Multi-Manager; together they make up the Special Advisory Member (“Special Advisory Member”). Alkeon has been retained to manage the Company’s investment portfolio under the supervision of Multi-Manager pursuant to a Sub-Investment Advisory Agreement dated July 1, 2011.
	The acceptance of initial and additional contributions from persons who purchase limited liability company interests in the Company (“Members”) are subject to approval by the Board of Managers. The Company generally accepts initial and additional contributions as of the first day of each month. No Member has the right to require the Company to redeem its interest. The Company may from time to time offer to repurchase interests pursuant to written tenders by

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Advantage Advisers Xanthus Fund, L.L.C.

Notes to Financial Statements – December 31, 2016

1.	Organization (continued)
	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. Multi-Manager expects that generally it will recommend to the Board of Managers that the Company offer to repurchase interests from Members twice each year, based upon the value of interests determined as of the end of the second fiscal quarter and as of at the end of the fiscal 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.
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 management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management believes that the estimates utilized in preparing the Company’s financial statements are reasonable and prudent; however, actual results could differ from these estimates and such differences could be material.
	Basis of Presentation:
	The Company qualifies as an investment company under Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (the “ASC”) 946. Financial Services — Investment Company (Topic 946), Amendments to the scope, measurement and disclosure requirements (“ASC 946”), and follows the accounting and reporting guidance of ASC 946.
	The following is a summary of the Company’s accounting policies:
	a.	Revenue Recognition
	Securities transactions are recorded on trade date basis utilizing first-in-first-out (“FIFO”) for determining realized gains and losses associated with investment transactions. 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 in accordance with policies adopted by the Board of Managers, which are summarized below.
	(i)	Domestic exchange traded securities (other than options and not including those securities traded on NASDAQ) shall be valued as follows:

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Advantage Advisers Xanthus Fund, L.L.C.

Notes to Financial Statements – December 31, 2016

2.	Significant Accounting Policies (continued)
	b.	Portfolio Valuation (continued)
		(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.
	(ii)	Securities traded on NASDAQ shall be valued as follows:
		(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 ask price (in the case of securities sold, not yet purchased) as reported by such exchange.
	Listed options are valued at their bid price (or ask 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 ask 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.
	Total return swaps are valued based on the values of their reference securities determined in accordance with the procedures described above, net of any contractual terms with the counterparty.
	Debt securities are valued using 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.

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Advantage Advisers Xanthus Fund, L.L.C.

Notes to Financial Statements – December 31, 2016

2.	Significant Accounting Policies (continued)
	b.	Portfolio Valuation (continued)

Forward Contracts are traded on the over-the-counter (“OTC”) market. The fair value of forward contracts is determined using observable inputs, such as currency exchange rates or commodity prices, applied to notional amounts stated in the applicable contracts.

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 foreign 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 foreign 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 Company includes the portion of the results of operations resulting from changes in foreign exchange rates on investments in net realized and net change in unrealized gain/(loss) from investments in securities, purchased options, forward and swap contracts on the Statement of Operations.

The determination of fair value takes into account 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 Multi-Manager 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 Multi-Manager and the valuation method used by Multi-Manager 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 Multi-Manager; and (vii) the liquidity or illiquidity of the market for the security or other investment. During the year ended December 31, 2016, no securities were fair valued by the Board of Managers.

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, 2016, the Company followed authoritative guidance for fair value measurement. The authoritative 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 authoritative guidance establishes three levels of inputs in the hierarchy that may be used to measure fair value as follows:

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Advantage Advisers Xanthus Fund, L.L.C.

Notes to Financial Statements – December 31, 2016

2.	Significant Accounting Policies (continued)
	b.	Portfolio Valuation (continued)

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 Company recognizes transfers into and out of levels indicated above at the end of the reporting period. There were no such transfers during the year ended December 31, 2016.

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 Purchased Options, the Schedule of Securities Sold, Not Yet Purchased, the Schedule of Swap Contracts and the Schedule of Forward Contracts.

The following is a summary of the inputs used, as of December 31, 2016, in valuing the Company’s investments at fair value.

Assets:
Valuation Inputs
Level 1—Quoted Prices Investments in Securities
Common Stock	$	1,369,147,904
Equity Options		15,890,073
Level 2—Other Significant Observable Inputs
Convertible Bonds		4,486,219
Total Return Swaps		31,897,466
Forward Contracts		2,081,363
Currency Options		550,170
Level 3—Other Significant Unobservable Inputs		—
Total	$	1,424,053,195

Liabilities:
Valuation Inputs
Level 1—Quoted Prices Securities Sold, Not Yet Purchased
Common Stock	$	503,242,397
Equity Options		—
Level 2—Other Significant Observable Inputs
Convertible Bonds		—
Total Return Swaps		12,172,797
Forward Contracts		—
Currency Options		—
Level 3—Other Significant Unobservable Inputs		—
Total	$	515,415,194

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 of $64,314,210 listed in the Statement of Assets, Liabilities and Members’ Capital represents funds held by the Company’s custodian, The Bank of New York Mellon (the “Custodian”), of which $60,493,107 is held as collateral for

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Advantage Advisers Xanthus Fund, L.L.C.

Notes to Financial Statements – December 31, 2016

2.	Significant Accounting Policies (continued)
	c.	Cash and Cash Equivalents (continued)
	swap contracts, $225,124 is held as collateral for securities sold, not yet purchased and $3,595,979 represents 5% holdback amounts on full repurchase of interests. At December 31, 2016, $188,655,144 in cash equivalents was held at the Custodian in a cash reserve account and foreign currency with a U.S. Dollar value of $2,302,018 was held by the Custodian in a BNY Mellon Custody foreign cash account. At December 31, 2016, $15,044,745 was held at Credit Suisse L.L.C. which is included in the due from broker balance on the Statement of Assets, Liabilities and Members’ Capital and is comprised of the net of $40,540,727 in due from broker and $25,492,982 in due to broker.
	As further discussed in Note 6, the Company has additional cash and cash equivalents on deposit with a broker primarily to satisfy margin and short sale requirements at December 31, 2016.
	d.	Income Taxes
	The Company is treated as a partnership for tax purposes. For federal, state and local income tax purposes, each Member is individually required to report on its own tax return its distributive share of the Company’s taxable income or loss. The Company is not subject to income taxes imposed by the country in which it is domiciled.
	In accordance with authoritative guidance, management has analyzed the Company’s tax position for all open tax years (2013 – 2016) and has concluded that no liability for non-US capital gain tax is required in the Company’s financial statements. The Company recognizes interest and penalties, if any, related to non-US tax expense within the Statement of Operations. However, during the period, the Company did not record any interest or penalties.
3.	Administration Fee, Related Party Transactions and Other
	Multi-Manager provides administrative and investor services to the Company at an annual rate of 1.35% and investment advisory services at an annual rate of 0.40%, of Members’ Capital. Total Multi-Manager administration fees and expenses amounted to $17,101,823 and Multi-Manager advisory services fees and expenses amounted to $5,067,207 during the year.
	During the year ended December 31, 2016, Oppenheimer earned $60,693 in brokerage commissions from portfolio transactions executed on behalf of the Company. The brokerage commissions paid by the Company are reflected in the net realized and net change in unrealized gain/(loss) from investments in securities, purchased options, foreign currency transactions, forward and swap contracts in the Statement of Operations within these financial statements.
	Net profits or net losses of the Company for each fiscal period (monthly) 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. In addition, so long as Multi-Manager

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Advantage Advisers Xanthus Fund, L.L.C.

Notes to Financial Statements – December 31, 2016

3. Administration Fee, Related Party Transactions and Other (continued)

serves as the investment adviser of the Company, Multi-Manager is entitled to be the Special Advisory Member of the Company. In such capacity, Multi-Manager generally 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 (monthly), in an amount equal to 20% of the amount by which net profits, if any, exceed the positive balance in the Member’s “Loss Recovery Account” as defined in the Company’s confidential memorandum. The Incentive Allocation is credited to the capital account of the Special Advisory Member. By the last business day of the month following the date on which an Incentive Allocation is made, the Special Advisory Member may withdraw up to 100% of the Incentive Allocation that was credited to its account with respect to the allocation period. During the year ended December 31, 2016, an Incentive Allocation of $71,607 was credited to the capital account of the Special Advisory Member and was included in withdrawals payable at December 31, 2016, 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 $30,000 plus a fee for each meeting attended. The lead independent Manager and the chair of the audit committee of the Board of Managers each receive a supplemental retainer of $7,500 per annum. Total Board of Managers fees and expenses amounted to $280,334 during the year. 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.

The Bank of New York Mellon serves as custodian of the Company’s assets and is responsible for maintaining custody of the Company’s cash and securities and for retaining sub-custodians to maintain custody of foreign securities held by the Company. Total Bank of New York Mellon custody fees and expenses amounted to $276,944 during the year of which $28,200 is included in the accrued expenses in the Statement of Assets, Liabilities and Members’ Capital.

BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as accounting and investor services agent to the Company and in that capacity provides certain accounting, recordkeeping and investor related services. The Company pays BNY Mellon a fee for these services based primarily on Members’ Capital of the Company as of the last day of each month, payable monthly, subject to a minimum annual fee. Total BNY Mellon fees and expenses amounted to $917,356 during the year of which $149,233 is disclosed as accounting and investor services fees payable in the Statement of Assets, Liabilities and Members’ Capital.

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. The placement agent is entitled to charge a sales commission (placement fee) of up to 3% (up to 3.1% of the amount invested) in connection with a purchase of interests, at its discretion. Placement fees, if any, will reduce the amount of a Member’s investment in the Company and will neither constitute an investment made by the investor in the Company nor form part of the

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Advantage Advisers Xanthus Fund, L.L.C.

Notes to Financial Statements – December 31, 2016

3.	Administration Fee, Related Party Transactions and Other (continued)
	assets of the Company. For the year ended December 31, 2016, placement fees earned by Oppenheimer amounted to $46,134.
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, 2016, amounted to $997,699,338 and $1,055,006,446, respectively. Aggregate purchases and sales of securities sold, not yet purchased, excluding short-term securities, for the year ended December 31, 2016, amounted to $1,582,211,691, which includes $231,545 from return of capital, and $1,541,058,325, respectively.
	At December 31, 2016, the aggregate cost for Federal income tax purposes of portfolio securities and securities sold, not yet purchased was $1,211,454,237 and $483,029,012, respectively.
	For Federal income tax purposes, at December 31, 2016, accumulated net unrealized gain on portfolio securities and securities sold, not yet purchased was $141,966,501, consisting of $206,005,763 gross unrealized gain and $64,039,262 gross unrealized loss.
6.	Due from / to Broker
	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, 2016, which serves as collateral for securities sold, not yet purchased.
	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 and cash as collateral for securities sold, not yet purchased and margin borrowings (except for cash proceeds of securities sold, held at the prime broker), which are maintained in a segregated account held by the Custodian. As of December 31, 2016, the total value of this collateral was $587,068,798, comprised of pledged securities with a value of $586,843,674 which are included in investments in securities in the

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Advantage Advisers Xanthus Fund, L.L.C.

Notes to Financial Statements – December 31, 2016

6.	Due from / to Broker (continued)
	Statement of Assets, Liabilities and Members’ Capital and $225,124 cash which is included in the cash and cash equivalents’ restricted cash in the Statement of Assets, Liabilities and Members’ Capital. Pledged securities with a value of $533,861,369 are held at the Custodian on behalf of Morgan Stanley and securities with a value of $52,982,305 are held at the Custodian on behalf of Credit Suisse LLC. For the year ended December 31, 2016, the average daily amount of the margin borrowings was $57,263,856 and the daily weighted average annualized interest rate was 1.10%. The Company had borrowings outstanding at December 31, 2016, totaling $27,591,788, recorded as due to broker in the Statement of Assets, Liabilities and Members’ Capital.
7.	Financial Instruments with Off-Balance Sheet Risk or Concentrations of Credit Risk
	In the normal course of business, the Company trades various financial instruments and enters into various transactions with off-balance sheet risk. These financial instruments include options, forwards, swaps and short sales. Generally, these financial instruments (other than long options positions) represent future commitments to purchase or sell other financial instruments or to make certain payments 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, investments in securities sold, not yet purchased and due from broker are positions with, and amounts due from, the prime broker, Morgan Stanley. Additional investments in securities sold, not yet purchased are positions with Credit Suisse L.L.C. Accordingly, the Company has a concentration of individual counterparty credit risk with the prime broker. The Company maintains cash with the prime broker and pledges securities in an account at the Custodian, for the benefit of the prime broker, to meet the margin requirement as determined by the prime broker.
	Investing in securities of foreign companies or foreign governments involves special risks which include changes in foreign currency exchange rates and the possibility of future political, regulatory and economic developments which could adversely affect the value of such securities. Moreover, securities of many foreign companies or foreign governments and their

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Advantage Advisers Xanthus Fund, L.L.C.

Notes to Financial Statements – December 31, 2016

7. Financial Instruments with Off-Balance Sheet Risk or Concentrations of Credit Risk (continued)

markets may be less liquid and their prices more volatile than those of comparable U.S. companies and the U.S. government.

The Company has invested approximately 11.21% of its Members’ Capital in equity and option securities (including both long and short) of Chinese companies. Political, social or economic changes in the Chinese market may have a greater impact on the value of the Company’s portfolio due to this concentration than would be the case absent of such concentration.

The Company enters into forward contracts to hedge against foreign currency exchange rate risk for its foreign currency denominated assets and liabilities due to adverse foreign currency fluctuations against the U.S. Dollar.

Forward currency transactions are contracts or agreements for delayed delivery of specific currencies in which the seller agrees to make delivery at a specified future date of specified currencies. Risks associated with currency transactions are the inability of counterparties to meet the terms of their respective contracts and movements in fair value and exchange rates. Forward contracts are traded on OTC, and thus subject to counterparty risk and can be illiquid. The fair value of forward contracts is obtained by applying exchange rates to notional amounts stated in the applicable contract. The net unrealized gain is disclosed as an asset in the Statement of Assets, Liabilities and Members’ Capital and the net unrealized loss is shown as a liability in the Statement of Assets, Liabilities and Members’ Capital. The net unrealized gain on forward contracts is $2,081,363 for the year ended December 31, 2016, and is disclosed in the Statement of Assets, Liabilities and Members’ Capital. The change in fair value is disclosed in the Statement of Operations as unrealized gain/(loss).

In some cases, the Company uses total return swaps to obtain long or short investment exposure in lieu of purchasing or selling an equity security directly. 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. As of December 31, 2016, the counterparty for all of the total return swaps is Morgan Stanley. Any income earned from the swaps’ underlying instruments (i.e. dividend, interest) will be paid proportionately upon the unwinding of the swap or at its maturity. The change in value of swaps, including the periodic amounts of financing interest and income earned from the underlying instrument but not yet paid, is reported as a net change in unrealized gains or losses in the Statement of Operations. Net unrealized gains are reported as an asset and net unrealized losses on swap contracts are reported as a liability in the Statement of Assets, Liabilities and Members’ Capital. A realized

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Advantage Advisers Xanthus Fund, L.L.C.

Notes to Financial Statements – December 31, 2016

7. Financial Instruments with Off-Balance Sheet Risk or Concentrations of Credit Risk (continued)

gain or loss is recorded upon payment or receipt of a periodic payment or termination of swap agreements. The net realized gain/(loss) on swap contracts is reflected in the Statement of Operations within these financial statements.

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 payment obligations of each party to the agreement (the “net amount”).

Certain equity swaps in which the Company engages will have the effect of providing economic leveraging of the Company’s assets. Such leverage can be significant. As such, the impact of an adverse change in the Company’s exposure may result in losses greater than the nominal value of the swap, which can be significant under certain circumstances.

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 Company is exposed to significant concentration of credit risk as the counterparty to the swap contracts is the prime broker, Morgan Stanley. 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 counterparty 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 in the Statement of Assets, Liabilities and Members’ Capital.

The unrealized gain/(loss) amounts presented in the Schedule of Swap Contracts, rather than the notional amount, represents the approximate future cash to be received or paid, (i.e., the fair value) on each swap contract, respectively, as of December 31, 2016. The net change in unrealized gain/(loss) from swap contracts is reflected in the Statement of Operations within these financial statements.

Total return swap agreements contain provisions that require the Company to maintain a predetermined level of Members’ Capital and/or provide limits regarding decline in the Company’s Members’ Capital over one month, three months and twelve month periods. If the Company were to violate such provisions, the counterparty to the total return swap agreements could terminate the agreements and request immediate payment or demand increased collateral for the net obligation owed to the counter-party. Further, the agreements state that, if the authority of Multi-Manager and/or Alkeon are terminated and an acceptable successor(s) is not appointed, the agreement will terminate.

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Advantage Advisers Xanthus Fund, L.L.C.

Notes to Financial Statements – December 31, 2016

7. Financial Instruments with Off-Balance Sheet Risk or Concentrations of Credit Risk (continued)

As of December 31, 2016, $60,493,107 was posted by the Company as collateral, related to its total return swaps. This amount is included in the cash and cash equivalents in the Statement of Assets, Liabilities and Members’ Capital within these financial statements and is restricted.

The Company may purchase put and call options on securities and use 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 Company may also write (sell) put and call options on securities and use derivative instruments in order to gain exposure to or protect against changes in the markets. Option contracts serve as components of the Company’s investment strategies and are utilized to structure investments to enhance the performance of the Company.

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 the year ended December 31, 2016, the Company did not write any options.

The Company follows authoritative guidance on disclosures about derivative instruments and hedging activities. Authoritative guidance 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 accounting policies and disclosures have been made in accordance with authoritative guidance and are incorporated for the current period as part of the disclosures within this note.

The Adviser believes the average quarterly notional amount shown in the table below is the most relevant measure of derivative activity and is indicative of the Company’s volume of derivative activity during the year ended December 31, 2016.

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Advantage Advisers Xanthus Fund, L.L.C.

Notes to Financial Statements – December 31, 2016

7. Financial Instruments with Off-Balance Sheet Risk or Concentrations of Credit Risk (continued)

Forward contracts:
Average notional amount	$	49,392,383
Currency options:
Average notional amount	$	3,676,938
Equity options:
Average notional amount	$	193,289,338
Total Return swaps:
Average notional amount	$	396,672,743

The Company is exposed to certain additional risks relating to derivative contracts. The primary underlying risk of investing in total return swaps and equity options is equity price risk. The primary underlying risk of investing in currency options and forward contracts is currency exchange risk.

The following tables identify the change in unrealized gain/(loss) and the gross and net realized and unrealized gain/(loss) on derivative instruments. The net unrealized gain/(loss) for forward contracts (currency risk) and swap contracts (equity price risk) are disclosed in the Statement of Assets, Liabilities and Members’ Capital as an asset as of December 31, 2016. $15,890,073 and $550,170 of the December 31, 2016 fair value of the purchased options disclosed in the Statement of Assets, Liabilities and Members’ Capital have equity price risk and currency price risk, respectively. The net change in unrealized gain/(loss) on purchased options, forward and swap contracts is reflected in the Statement of Operations within these financial statements.

The Primary	Gross			Gross			Net
Underlying Risk is	Unrealized			Unrealized			Unrealized
Equity Price Risk	Gain			Loss			Gain/(Loss)
Year ended December 31, 2015
Equity Options	$	—		$	—		$	—
Total Return Swaps		49,331,486			15,719,062			33,612,424
Total year ended December 31, 2015	$	49,331,486		$	15,719,062		$	33,612,424
Year ended December 31, 2016
Equity Options	$	2,906,219		$	2,495,693		$	410,526
Total Return Swaps		31,897,466			12,172,797			19,724,669
Total year ended December 31, 2016	$	34,803,685		$	14,668,490		$	20,135,195
Total net change in unrealized gain/(loss)	$	(14,527,801	)	$	(1,050,572	)	$	(13,477,229	)

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Advantage Advisers Xanthus Fund, L.L.C.

Notes to Financial Statements – December 31, 2016

7. Financial Instruments with Off-Balance Sheet Risk or Concentrations of Credit Risk (continued)

The Primary	Gross		Gross		Net
Underlying Risk is	Unrealized		Unrealized		Unrealized
Currency Risk	Gain		Loss		Gain/(Loss)
Year ended December 31, 2015
Currency Options	$	—	$	—	$	—
Forward Contracts		—		—		—
Total year ended December 31, 2015	$	—	$	—	$	—
Year ended December 31, 2016
Currency Options	$	—	$	597,623	$	(597,623	)
Forward Contracts		2,081,363		—		2,081,363
Total year ended December 31, 2016	$	2,081,363	$	597,623	$	1,483,740
Total net change in unrealized gain/(loss)	$	2,081,363	$	597,623	$	1,483,740

The following table identifies the gross and net realized gain/(loss) on derivative instruments. The net realized gain/(loss) on derivatives are reflected in the Statement of Operations within these financial statements.

The Primary	Gross		Gross		Net
Underlying Risk is	Realized		Realized		Realized
Equity Price Risk	Gain		Loss		Gain/(Loss)
Equity Options	$	5,262,706	$	6,856,073	$	(1,593,367	)
Total Return Swaps		52,877,451		27,080,510		25,796,941
Total	$	58,140,157	$	33,936,583	$	24,203,574

The Primary	Gross		Gross		Net
Underlying Risk is	Realized		Realized		Realized
Currency Risk	Gain		Loss		Gain/(Loss)
Currency Options	$	—	$	—	$	—
Forward Contracts		1,387,295		2,371,821		(984,526	)
Total	$	1,387,295	$	2,371,821	$	(984,526	)

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Advantage Advisers Xanthus Fund, L.L.C.

Notes to Financial Statements – December 31, 2016

8. Balance Sheet Offsetting

In the normal course of business, the Company enters into swap contracts governed by an agreement with the prime broker. The agreement allows the Company and the counterparty to make net payments in respect of all transactions in the same currency, settling on the same date. The Company posts cash as collateral with the Custodian to secure the Company’s obligations to the counterparty. Such cash is held by the Custodian in a segregated account and its use is restricted.

In the event that the Company fails to post said collateral, fails to comply with any restrictions or provisions of the agreement, or fails to comply with or perform any agreement or obligation, then the counterparty has the right to set-off any amounts payable by the Company with respect to any obligations against any posted collateral or the cash equivalent of any posted collateral. Further, the counterparty has the right to liquidate, sell, pledge, re-hypothecate, or dispose such posted collateral to satisfy any outstanding obligations.

The table below presents the swap and forward contracts that are set-off, if any, as well as collateral delivered, related to those swap contracts.

Offsetting of Financial Assets and Derivative Assets

				Gross Amounts				Net Amounts of			Gross Amounts Not Offset in the
				Offset in the				Assets Presented			Statement of Assets, Liabilities
				Statement of				in the Statement			and Members’ Capital
	Gross Amounts			Assets, Liabilities				of Assets,						Cash
	of Recognized			and Members’				Liabilities and			Financial			Collateral			Net
	Asset			Capital				Members’ Capital			Instruments			Received			Amount
Forward Contracts		$	2,081,363		$	—			$	2,081,363		$	—		$	—	$	2,081,363
Total Return Swaps			31,897,466			(12,172,797	)			19,724,669			—			—		19,724,669
Total		$	33,978,829		$	(12,172,797	)		$	21,806,032		$	—		$	—	$	21,806,032

Offsetting of Financial Liabilities and Derivative Liabilities

				Gross Amounts				Net Amounts of Liabilities
				Offset in the				Presented in			Gross Amounts Not Offset in the
				Statement of				the Statement			Statement of Assets, Liabilities
				Assets,				of Assets,			and Members’ Capital
	Gross Amounts			Liabilities				Liabilities and						Cash
	of Recognized			and Members’				Members’			Financial			Collateral			Net
	Liabilities			Capital				Capital			Instruments			Pledged(a)			Amount
Total Return Swaps		$	12,172,797		$	(12,172,797	)		$	—		$	—		$	—		$	—
Total		$	12,172,797		$	(12,172,797	)		$	—		$	—		$	—		$	—

(a) Collateral pledged to counterparties is based off notional exposure. There is $60,493,107 of collateral pledged to counterparties related to derivative trading activities which is included in the cash and cash equivalents’ restricted cash in the Statement of Assets, Liabilities and Members’ Capital.

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Advantage Advisers Xanthus Fund, L.L.C.

Notes to Financial Statements – December 31, 2016

9. Financial Highlights

The following represents the ratios to average Members’ Capital 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,
	2016			2015			2014			2013			2012
Members’ Capital, end of period (000s)	$	1,129,353		$	1,310,708		$	1,360,121		$	1,669,557		$	1,349,904
Ratio of net investment loss to average Members’ Capital**		(2.14	%)		(2.37	%)		(2.57	%)		(2.65	%)		(3.22	%)
Ratio of expenses to average Members’ Capital**		3.63	%		3.52	%		3.65	%		3.47	%		4.49	%
Ratio of incentive allocation to average Members’ Capital		0.01	%(a)		0.24	%		0.02	%		5.69	%		1.73	%
Portfolio turnover		73	%		82	%		91	%		158	%		126	%
Total return - gross*		(1.40	%)		5.85	%		(4.91	%)		33.00	%		11.23	%
Total return - net*		(1.40	%)		5.71	%		(4.91	%)		26.40	%		8.98	%
Ratio of average borrowings to average Members’ Capital		4.53	%		3.02	%		2.28	%		1.99	%		0.21	%

*	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.
**	Does not reflect the effect of incentive allocation to the Special Advisory Member, if any.
(a)	Less than 0.01%

An individual Member’s ratios and returns may vary from the above based on the timing of capital transactions.

10. Subsequent Events

Management has evaluated the impact of subsequent events on the Company through 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 except as disclosed below.

The Company received initial and additional contributions from Members of $6,116,920 from January 1, 2017 through February 27, 2017.

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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, 2013 through June 30, 2016 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.

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Advantage Advisers Xanthus Fund, L.L.C.

Company Management (Unaudited)

Information pertaining to the Managers is set forth below. 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, 61 Manager	Indefinite; Since May 2003	President of Centro de Investigacion Para el Desarrollo, A.C. (Center of Research Development) (2000 to present) and 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.; and Director of Empresa Ica SA de CV, a Mexican construction company (since 2006).	1
Janet L. Schinderman, 65 Manager	Indefinite; Since May 2003	Education consultant specializing in international relations, board management and initiating special projects; Associate Dean for Special Projects and Secretary to the Board of Overseers at Columbia Business School from 1990 until June 2006; and Independent director for two registered investment companies advised by The Central Park Group.	1

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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
Jesse H. Ausubel, 65 Manager	Indefinite; Since May 1999	Director, Program for the Human Environment and Senior Research Associate, The Rockefeller University (1993 to 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).	1
Todd T. Milbourn, 47 Manager	Indefinite; Since February 2016	Professor of Finance at Olin Business School, Washington University in St. Louis (since 2010); Senior Associate Dean of Faculty and Research at Olin Business School, Washington University in St. Louis (since 2013).
Michael J. Murphy, 61 Manager	Indefinite; Since August 2016	Private investor (since 2013); Founding Partner and Managing Director, Libertas Partners LLC/Knight Capital Group Inc. (2004 – 2013).
Interested Manager
Bryan McKigney,* 58 President, CEO, and Manager	Indefinite; Manager since December 1, 2004; President and CEO since September 23, 2004	Mr. McKigney is a Managing Director and the President of Oppenheimer Asset Management Inc. since April 2015. He was the Chief Administrative Officer prior thereto. He has been in the financial services industry since 1981 and has held various management positions at Canadian Imperial Bank of Commerce (1993 – 2003) and Chase Manhattan Bank N.A. (1981 – 1993).	1

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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, 56 Chief Financial Officer	One year; Since July 27, 2005	Mr. Bhalla has been an Executive Director at Oppenheimer Asset Management since January 2016 and a Senior Director since May 2005. From July 2002 to May 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.
Salvatore Faia, 54 Chief Compliance Officer	One year; Since December 31, 2014	President, Vigilant Compliance, LLC since 2004; and Director of EIP Growth and Income Fund since 2005.
Deborah Kaback, 65 Chief Legal Officer	One year; Since July 23, 2003	Ms. Kaback has been a Managing Director at Oppenheimer Asset Management since June 2003. She was Executive 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.

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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, 58 President, CEO, and Manager	One year term for President and CEO; since September 23, 2004. Indefinite term for Manager; since December 1, 2004;	Mr. McKigney is a Managing Director and the President of Oppenheimer Asset Management Inc. since April 2015. He was the Chief Administrative Officer prior thereto. He has been in the financial services industry since 1981 and has held various management positions at Canadian Imperial Bank of Commerce (1993 – 2003) and Chase Manhattan Bank N.A. (1981 – 1993).

*	“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 the President of Oppenheimer Asset Management Inc., which is a corporate parent of the managing member of the Adviser.
(1)	The address of each independent manager and officer is c/o Oppenheimer Asset Management, 85 Broad Street, New York, NY 10004.
(2)	Officers are not compensated by the Company.

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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.
(b)	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.

Effective February 1, 2016, Todd Milbourn was elected as an Independent Manager, member of the Audit Committee and the Nominating Committee of the Board, Chairperson of the Audit Committee and namely as the audit committee financial expert.

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 $196,882 for 2016 and $196,882 for 2015.

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 $5,000 for 2016 and $5,000 for 2015. Audit related fees principally include fees associated with reviewing and providing comments on semi-annual statements.

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 $116,700 for 2016 and $113,300 for 2015. Tax fees include fees for tax compliance services and assisting management in the preparation of tax estimates.

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 2016 and $0 for 2015.
(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) 100%

(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 zero percent.

(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 $116,700 for 2016 and $113,300 for 2015.

(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

Alkeon Capital Management, LLC (the “Firm”) has adopted proxy voting policies and procedures to ensure that it votes proxies in a manner that serves the best interests of its clients, including the Company. The following is a summary of the Firm’s proxy voting policies and procedures.

The Firm has entered into an agreement with Institutional Shareholder Services Inc. (“ISS”), an independent third party, for ISS to provide the Firm with its research and recommendations on proxies and to facilitate the electronic voting of proxies. The Firm has adopted ISS’s proxy voting policies and procedures (the “ISS Policies”) in order to ensure that it votes proxies in the best interests of its clients. The Firm has instructed ISS to vote all proxies in accordance with the ISS Policies, unless instructed by the Firm to vote otherwise.

The Firm instructs each custodian for its client accounts (including the Company) to deliver to ISS all proxy solicitation materials that the custodian receives for that client account. The Firm (or its designee, which may include an administrator to a client account) provides to ISS a listing of securities held “long” in each client account as of the 15th and last day of each month to enable ISS to use reasonable efforts to confirm that ISS has received all proxy solicitation materials concerning such securities.

The Firm, through ISS, will vote proxies on behalf of client accounts. ISS evaluates all proxy solicitation material and other facts it deems relevant and may seek additional information from the party soliciting the proxy and independent corroboration of such information when ISS considers it appropriate and when it is reasonably available. The Firm has instructed ISS to make voting decisions on behalf of each client account based on the proxy voting guidelines that ISS provides to the Firm, subject to certain exceptions in the event of conflicts of interests. The Firm may override ISS’s voting decisions if the Firm deems it in the best interests of the client account. The Firm has instructed ISS to use reasonable efforts to respond to each proxy solicitation by the deadline for such response.

Information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve month period ended June 30 will be reported on Form N-PX and be made available no later than August 31 of each year. Such information can be obtained (i) without charge, upon request, by calling the Company at (212) 667-4225 and (ii) at the SECs website at http://www.sec.gov.

Due to the size and nature of the Firm’s operations and the Firm’s limited affiliations in the securities industry, the Firm does not expect that material conflicts of interest will arise between the Firm and a client account over proxy voting. The Firm recognizes, however, that such conflicts may arise from time to time, such as, for example, when the Firm or one of its affiliates has a business arrangement that could be affected by the outcome of a proxy vote or has a personal or business relationship with a person seeking appointment or re-appointment as a director of a company. Notwithstanding the possibility of such a material conflict arising, the Firm believes that it places the interests of client accounts ahead of the Firm’s own interest by following ISS’s recommendations in such circumstances (unless directed otherwise by a client).

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
	Mr. Panayotis (“Takis”) Sparaggis, the controlling person and Chief Investment Officer of Alkeon Capital Management, LLC (“Alkeon”), has served since the Fund’s inception as the Fund’s principal portfolio manager (the “Portfolio Manager”) and is the lead member of Alkeon’s Investment Team.  Other members of the Investment Team assist Mr. Sparaggis in his role as the Fund’s Portfolio Manager.  Mr. Sparaggis founded Alkeon in January 2002. 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 other accounts that Mr. Sparaggis managed as of December 31, 2016:

Name of Portfolio Manager or Team Member	Type of Accounts	Total No. of Accounts Managed	Total Assets		No. of Accounts where Advisory Fee is Based on Performance		Total Assets in Accounts where Advisory Fee is Based on Performance
Panayotis Sparaggis	Registered Investment Companies:	1		$1,678,728,181		1		$1,678,728,181
	Other Pooled Investment Vehicles:	9		$2,092,030,437		8		$2,073,573,991
	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:
·	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.
·	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.
·	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.
·	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 controlling 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 interests of the registrant by the Portfolio Manager as of December 31, 2016

Name of Portfolio Manager or Team Member	Dollar ($) Range of Fund Shares Beneficially Owned
Panayotis Sparaggis		$0

(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.

(12.other) 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, L.L.C.

By (Signature and Title)*	/s/ Bryan McKigney
	Bryan McKigney, Principal Executive Officer
	(Principal Executive Officer)

Date   March 7, 2017

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 7, 2017

By (Signature and Title)*	/s/ Vineet Bhalla
	Vineet Bhalla, Chief Financial Officer
	(Principal Financial Officer)

Date   March 7, 2017

^* Print the name and title of each signing officer under his or her signature.