XYZ Fund Limited

Date of test: 19/01/2021

Name of candidate: Aaron Ferreira

1. Have you previously worked with SS&C GlobeOp (Y/N):– N

If yes, give the following details

Fro T Name of the Manager/team with whom you have worked

m o

2. Previous experience with any other organization :- No

Fro T Name of the Organization Brief description of role

m o

3. Knowledge of MS Word – Yes/ No

Yes/No

Worked in any organization in drafting letters, N

documents etc o
XYZ Fund Limited

XYZ FUND, LTD.

Audited Financial Statements
For the year ended December 31, 2009
withWith Report of Independent Auditors
XYZ Fund Limited

XYZ FUND, LTD.

Audited Financial Statements

For the year ended December 31, 2009

Contents

Report of Independent Auditors ........................................................................................................... 1

Audited Financial Statements

Statement of Assets and Liabilities ....................................................................................................... 2

Condensed Schedule of Investments .................................................................................................... 3
Statement of Operations ....................................................................................................................... 9
Statement of Changes in Net Assets ................................................................................................... 10
Statement of Cash Flows .................................................................................................................... 11
Notes to Financial Statements ............................................................................................................ 12
XYZ Fund Limited

Report of Independent Auditors

The Board of Directors

XYZ Fund, Ltd.

We have audited the accompanying statement of assets and liabilities of XYZ Fund, Ltd.
(The ‘’Fund’’)including the condensed schedule of investments, as of December 31, 2009,
and the related statements of operations, changes in net assets and cash flows for the
year ended December 31, 2009. These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. We were not engaged to perform an audit of the Fund’s internal control
over financial reporting. Our audit 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 Fund’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, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of XYZ Fund, Ltd. at December 31, 2009, and the results
of its operations, the changes in its net assets and its cash flows for the year ended
December 31, 2009 in conformity with U.S. generally accepted accounting principles.

Ernst & Young Ltd

March 26,2010, 2010

1
XYZ Fund Limited

XYZ Fund, Ltd.

Statement of Assets and Liabilities
(Stated in United States Dollars)
December 31, 2009

2009
Assets $
Cash and cash equivalents 50,55,99
9
Due from brokers 52,00,15
9
Securities owned, at fair value (cost $259,171,003) 27,51,84,63
2
Options purchased 23,28,96
2
Unrealised gains on derivative contracts 90,00,75
1
Interest and dividends receivable 9,85,36
1
Other assets 52,01
2
Total assets 29,78,07,87
6

Liabilities
Securities sold, not yet purchased, at fair value (proceeds $281,415) 3,25,6
75

Unrealized losses on derivative contracts 15,31,956

Due to brokers 26,49,781

Performance fees payable 14,58,483

Interest and Dividends payable 1,56,324
Deferred incentive fees payable 99,496

Accounts payable and accrued expenses 9,45,632

Redemptions payable 10,00,000
Total liabilities 81,67,347

Net Assets 28,96,40,529

2
 XYZ Fund Limited

Net asset value per share    

  $
Class A, Series 1 Ordinary shares (based on 0.00 shares outstanding)
1,700.64
  $
Class A, Series 3 Ordinary shares (based on 0.00 shares outstanding)
1,565.92
  $
Class A, Series 4 Ordinary shares (based on 0.00 shares outstanding)
1,419.87
  $
Class A, Series 5 Ordinary shares (based on 0.00 shares outstanding)
1,618.49
  $
Class A, Series 6 Ordinary shares (based on 0.00 shares outstanding)
1,584.47
  $
Class B, Series 1 Ordinary shares (based on 0.00 shares outstanding)
1,699.28
  $
Class B, Series 3 Ordinary shares (based on 0.00 shares outstanding)
1,419.44
  $
Class A-1, Series 1 Ordinary shares (based on 0.00 shares outstanding)
1,865.51
  $
Class A-1, Series 2 Ordinary shares (based on 0.00 shares outstanding)
1,725.51

3
 XYZ Fund Limited

(See accompanying notes)

4
XYZ Fund Limited

XYZ Fund, Ltd.

Condensed Schedule of Investments
(Stated in United States Dollars)
December 31, 2009

(See accompanying notes)

5
XYZ Fund Limited

XYZ Fund, Ltd.

Condensed Schedule of Investments (Continued)
(Stated in United States Dollars)
December 31, 2009

(See accompanying notes)

6
XYZ Fund Limited

XYZ Fund, Ltd.

Condensed Schedule of Investments (Continued)
(Stated in United States Dollars)
December 31, 2009

(See accompanying notes)

7
XYZ Fund Limited

XYZ Fund, Ltd.

Statement of Operations
(Stated in United States Dollars)
For the year ended December 31, 2009

Investment income    
Interest   6,64,55,
567
Dividends (net of withholding tax of $667,392)   10,37,
893
Total investment income   6,74,93,
460
     
Expenses    
Interest   1,29,18,
405
Dividend   73,4
93
Fund administration fees   6,68,1
81
Performance fee   3,46,46,
397
Management fees   61,73,
424
Deferred incentive fees   1,53,67,
169
Directors fees   25,4
90
Professional fees   20,58,
586
Other expenses   15,60,
589
Total expenses   7,34,91,
734
     
Net investment loss   (59,98,2
74)
     
Gain from securities and derivatives transactions    
Net realized gain from securities transactions   1,30,33,
014
Net realized loss from derivative transactions   (76,03,7
87)
Net realized loss from cash   (19,98,5
8
XYZ Fund Limited

09)
Net change in unrealized appreciation from securities   21,59,85,
transactions 716
Net change in unrealized appreciation from derivative   37,27,
transactions 056
Net change in unrealized appreciation in cash   14,83,
244
Net loss on investment   22,46,26,
734
     
Net increase in net assets resulting from operations   21,86,28,
460

(See accompanying notes)

9
XYZ Fund Limited

XYZ Fund, Ltd.

Statement of Changes in Net Assets
(Stated in United States Dollars)
For the year ended December 31, 2009

   

Increase in net assets resulting from operations $

Net realized gain from securities transactions 1,30,33,01
4
Net realized loss from derivative transactions (76,03,78
7)
Net realized loss from cash (19,98,50
9)
Net change in unrealized appreciation from securities transactions 21,59,85,71
6
Net change in unrealized appreciation from derivative transactions 37,27,05
6
Net change in unrealized appreciation in cash 14,83,24
4
Net investment loss (59,98,27
4)
Net increase in net assets resulting from operations 21,86,28,46
0
   
Increase in net assets resulting from capital transactions  
   
Shares redeemed:  
Class A (21,47,49,68
4)
Class B (6,72,59,92
4)
Class A-1 (40,00,00
0)
Deferral Class  
Net decrease in net assets resulting from capital transactions (28,60,09,60
8)
   
   
Net decrease in net assets (6,73,81,14
8)
Net assets at beginning of year 35,70,21,67
7
Net assets at end of year 28,96,40,52
9

10
XYZ Fund Limited

   

(See accompanying notes)

11
XYZ Fund Limited

XYZ Fund, Ltd.

Statement of Cash Flows
For the year ended December 31, 2009

  $

Cash flows from operating activities $

 
Net change in net assets resulting from operations 21,86,2
8,460 
Adjustment for items not affecting cash:
Amortization adjustment 46,6
2,911
Change in operating assets and liabilities: (1,56
,210)
Payments to purchase securities (18,25
,882)
Payments to covered securities sold short (11,82
,904)
Proceeds from sale of securities 3,47,5
5,268
Proceeds from securities sold short but not yet purchased (18,25
,882)
Net realized loss from securities transactions (11,82
,904)
Net change in unrealized depreciation from securities transactions 3,47,5
5,268
Due from brokers 29,18,0
9,507
Unrealized gains on derivative contracts (89,85
,385)
Interest and dividends receivable 67,4
4,203
Other assets (52,
12
XYZ Fund Limited

012)
Unrealized losses on derivative contracts (3,28
,324)
Due to brokers (33,24
,572)
Performance fees payable 14,5
8,483
Deferred incentive fees payable (1,43,6
7,528)
Accounts payable and accrued expenses 28
,615
Net cash provided by operating activities 55,96,11,112
Cash flows from financing activities
Proceeds from issuance of shares
Payments for redemptions of shares (59,00,7
8,475)
Net cash used in financing activities (59,00,78,475
)
 
Net change in cash & cash equivalents 50,23,481
Cash and cash equivalents at beginning of year 32,518
Cash and cash equivalents at end of year 50,55,999
 
Supplemental disclosure of cash flow information
Cash paid during the year for interest 1,29,1
8,405

13
XYZ Fund Limited

(See accompanying notes)

14
XYZ Fund Limited

XYZ Fund, Ltd.

Notes to Financial Statements
December 31, 2009

1. Organization

XYZ Fund, Ltd. (the “Fund”) is an open-ended investment company incorporated as an exempted
company under the provisions of the Companies Law (as amended) of the Cayman Islands on May 22,
2006 and registered with the Cayman Islands Monetary Authority. The Fund commenced its operation on
October 2, 2006.

The Fund’s investment objective is to achieve superior risk-adjusted returns over a multi-year period, by
applying a multi-disciplinary approach to investing and maintaining a focus on capital preservation. The
Fund seeks to achieve its investment objective by purchasing and selling high-yield bonds, investing in
bank loans made to highly leveraged companies and investing in sovereign debt and other debt and equity
securities, including securities of financially distressed companies. In addition, the Fund may also make
(1) event-driven investments, such as investments made as a result of corporate reorganizations,
bankruptcies, and mergers and acquisitions, as well as (2) investments in private companies and special
situations investments. The Fund will not be limited with respect to the types of investments strategies it
may employ or the markets or instruments in which it may invest.

XYZ Fund Capital Management, L.P., a Delaware limited partnership (the "Investment Manager"), is the
investment manager of the Fund and is responsible for the Fund's investment activities. The Investment
Manager is not currently registered as an investment adviser under the U.S. Investment Advisers Act of
1940, as amended, but may do so in the future. Additionally, the Investment Manager has claimed an
exemption under Commodity Futures Trading Commission ("CFTC") Rule 4.13(a)(4) from registration
with the CFTC as a commodity Pool operator and, accordingly, is not subject to certain regulatory
requirements with respect to the Fund (which are intended to provide certain regulatory safeguards to
investors) that would otherwise be applicable absent such an exemption. The Investment Manager is also
exempt from registration with the CFTC as a commodity-trading advisor.

The Fund has retained GlobeOp Financial Services (Cayman) Limited (the “Administrator”) as
administrator to the Fund.

Goldman Sachs & Co. serves as the custodian and prime broker for the Fund. The Fund is not committed
to continue its prime brokerage relationship with any prime broker for any minimum period, and the
Investment Manager may select other or additional brokers to act as a prime broker for the Fund.

15
XYZ Fund Limited

XYZ Fund, Ltd.

Notes to Financial Statements (continued)

2. Significant Accounting Policies

The Fund’s financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (GAAP) and are stated in United States Dollars. The following
is a summary of the significant accounting and reporting policies used in preparing the financial
statements.

 Adoption of New Accounting Standard

In June 2009, the Financial Accounting Standards Board (“FASB”) established the FASB
Accounting Standards Codification (“Codification”) as the single source of authoritative
accounting principles recognized by the FASB in the preparation of the financial statements in
conformity with U.S. generally accepted accounting principles (“US GAAP”). The Codification
supersedes existing non-grandfathered, non-SEC accounting and reporting standards. The
Codification did not change US GAAP but rather organized it into a hierarchy where all guidance
within the Codification carries an equal level of authority. The Codification became effective in
September 2009. The Codification did not have a material effect on the Fund’s financial
statements.

 Cash and Cash Equivalents

Cash and cash equivalents include amounts due from banks on demand, foreign cash and interest
bearing deposits with original maturities of three months or less. The Fund held cash in USD with
a value of $2,203,637 at December 31, 2009. Included in the cash and cash equivalent balance is
cash held as collateral in the amount of $2,200,668. (See Note 8)

 Valuation of Investments

Listed securities are valued at their last sales price on the valuation date, or, if no sales occurred
on such date, at the closing “bid” price if owned and the closing “asked” price if sold short. When
available and determined by the Investment Manager to be representative of fair value,
investments are valued based on dealer quoted prices. Unrealized gains and losses are reflected in
the statement of operations.

The Partnership records its derivative activities on a mark-to-market or fair value basis. Market
values are determined by using quoted market values when available. Otherwise, fair values are
based on industry-accepted models or confirmation with counterparties. The fair value of
investments in derivatives does not include the effects of collateral held which is recorded on the
statement of financial condition as a component of cash and cash equivalent.

 Investment Transactions and Related Investment Income

Investment transactions are accounted for on a trade date basis. Interest is recorded on the accrual
basis and dividends are recorded on the ex-dividend date. Premiums/discounts on bonds are
amortized/accreted using the effective interest rate method.

16
XYZ Fund Limited

 Realized gains and losses on securities transactions are recorded on a specific identified cost
basis.

XYZ Fund, Ltd.

Notes to Financial Statements (continued)

2. Significant Accounting Policies (continued)

 Investment Portfolio

The Industry classification reflected in the accompanying condensed scheduled of

investments represent the Investment Manager’s belief as to the most meaningful
presentation of the classification of the principal business of the securities.

 Foreign Currency Translation

 Assets and liabilities denominated in foreign currencies are translated at the rates of exchange
prevailing at the date of the financial statements. Transactions in foreign currencies are translated
at the rates of exchange prevailing at the time of the transaction. Exchange gains or losses are
included in the statement of operations.

The Fund does not isolate that portion of gains and losses on investments which is due to changes
in foreign exchange rates from that which is due to changes in market prices of the investments.
Such fluctuations are included with the net realized and unrealized gains and losses from
investments.

 Taxation

There is currently no taxation imposed on income or capital gains by the Government of the
Cayman Islands. The only taxes payable by the Fund are withholding taxes of other countries
applicable to certain investment income. As a result, no tax liability or expense has been recorded
in the financial statements.

Beginning with the 2010 financial statements, the Fund recognizes a tax benefit from an uncertain
position only if it is more likely than not that the position is sustainable, based solely on its
technical merits and consideration of the relevant taxing authority’sauthorities widely understood
administrative practices and precedents. If this threshold is met, the Fund measures the tax benefit
as the largest amount of benefit that is greater than fifty percent likely being realized upon
ultimate settlement. In most jurisdictions, the statue of limitations last from 3 to 5 years, however,
in some jurisdictions there is no limit. The Fund recognizes interest and penalties, if any, related
to unrecognized tax benefits as income tax expenses in the statement of operations. As of
December 31, 2010, there was no impact to the financial statements relating to accounting for
uncertainty in income taxes.

 Fair Value of Financial Instruments

The fair value of the Fund’s assets and liabilities, which qualify as financial instruments under
Statement of Financial Accounting Standards No. 107, “Disclosures about Fair Value of
Financial Instruments,” approximates the carrying amounts presented in the financial statements.
17
XYZ Fund Limited

 Indemnifications

 The Fund enters into contracts that contain a variety of indemnifications. The Fund’s
maximum exposure under these arrangements is unknown. However, the Fund has not had
prior claims or losses pursuant to these contracts.

XYZ Fund, Ltd.

Notes to Financial Statements (continued)

3. Significant Accounting Policies (continued)

 Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results could differ from those
estimates.

3. Fair Value Measurements

In accordance with GAAP, fair value is defined as the price that would be received to sell an asset or paid to
transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the
measurement date.

In determining fair value, the Fund uses various valuation approaches. In accordance with GAAP, a fair
value 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. Observable inputs are those that market participants would use in pricing the asset or liability
based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the
Master Fund’s assumptions about the inputs market participants would use in pricing the asset or liability
developed based on the best information available in the circumstances. Unobservable inputs reflect the
Partnership’s assumptions about the inputs market participants would use in pricing the asset or liability
developed based on the best information available in the circumstances. The fair value hierarchy is
categorized into three levels based on the inputs as follows:

Level I - Quoted prices are available in active markets for identical investments from market data sources
as of the reporting date. As required by GAAP, the Investment Manager does not adjust the quoted price
for these investments, even in situations where the Partnership holds a large position and a sale could
reasonably impact the quoted price. These positions include listed equity, listed derivatives and bonds that
trade in an active market.

18
XYZ Fund Limited

XYZ Fund, Ltd.

Notes to Financial Statements (continued)

3. Fair Value Measurements (continued)

Level II - Pricing inputs are a combination of broker quoted prices, broker indications, broker internal
valuation services and Trade Reporting and Compliance Engine (“TRACE”) prices for identical
investments observable as of the reporting date. Additionally, if an identical investment is not observable
in the market, the Investment Manager may base a price on similar instruments (i.e.: the same issuer with
similar maturities and stated coupons). The Investment Manager considers all of the above factors to
determine fair value. Investments which are generally included in this category include bonds and loans,
less liquid and over-the-counter derivatives.

Level III - Pricing inputs are unobservable for the investment and includes situations where there is little,
if any, market activity for the investment. The inputs into the determination of fair value require
significant judgment or estimation. Investments that are included in this category generally include
investments in corporate private equity and distressed debt for which there is not an active market. In
certain cases, the inputs used to measure fair value may fall into different levels of the fair value
hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level
of input that is significant to the fair value measurement.

The assessment of the significance of a particular input to the fair value measurement in its entirety
requires judgment, and considers factors specific to the investment. Changes in the observability of
valuation inputs may result in a reclassification for certain financial assets or liabilities.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk
associated with investing in these securities.

19
 XYZ Fund Limited

XYZ Fund, Ltd.

Notes to Financial Statements (continued)

3. Fair Value Measurements (continued)

The following table summarizes the valuation of the Fund’s investments by the above FAS 157 fair value
hierarchy levels as of December 31, 2009:

Quoted Prices Significant

in Active Other Significant
Total Fair Markets for Observable Unobservable
Description Value Identical Assets Inputs Inputs
USD (Level 1) (Level 2) (Level 3)
Assets
Investments in securities at fair value
Bonds
Corporate Bonds $ 268,953,406 $ - $ 220,185,849 $ 48,767,557
Bank debt 44,418,612 - 44,418,612
Total bonds $313,372,018 $ - $ 220,185,849 $ 93,186,169
Equities
Basic Materials 785,648 785,648 -
Consumer Cyclical 33,225,674 33,225,674 -
Energy 6,026,181 6,026,181 -
Financial 53,170,476 45,046,151 5,803,500 2,320,825
Industrial 902,517 902,517
Total Equities $ 94,110,496 $ 85,986,171 $ 5,803,500 $ 2,320,825
Derivative contracts at fair value
Forwards 1,039,154 - 1,039,154 -
Swaps 871,714 - 871,714 -
Futures 5,672 5,672 - -
Total $ 409,399,054 $ 85,991,843 $ 227,900,217 $ 95,506,994

Liabilities
Securities sold ,not yet purchased
Equity
Industrial $ (375,759) $ (375,759) $ - $ -
Derivative contracts at fair value
Future (34,398) (34,398) - -
Total $ (410,157) $ (410,157) $ - $ -

20
XYZ Fund Limited

The Investment Manager has reviewed the reasonableness of these prices and is satisfied that they fairly
represent the fair value of the assets held by the Fund.

XYZ Fund, Ltd.

Notes to Financial Statements (continued)

3. Fair Value Measurements (continued)

The changes in investments measured at fair value for which Level III inputs have been used to determine
fair value are as follows:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

Corporate Bank Debt
Assets Bonds Equity Total (USD)
Balance as of
December 31,2008 $ - $ 15,386,743 $ 18,543,929 $ 33,930,672
Purchases 37,487,458 61,766,998 21,727,232 120,981,690
Sales (12,524,378) (58,975,419) (20,480,116) (91,979,913)
Total realized gains
and losses 610,704 5,548,897 (8,359,135) (2,199,534)
Total unrealized gains
and losses 21,910,673 20,691,393 - 42,602,066
Transfer from Level 3 1,283,100 - (9,11,087) (7,827,987)
Balance as of
December 31, 2009 $ 48,767,557 $ 44,418,612 $ 2,320,825 $ 95,506,994

The amount of total gains or losses for the year included In earnings attributable to the change in unrealized
gains or losses relating to assets still held at the reporting date

Corporate Bank Debt

Bonds Equity Total
Net level 3 gains and losses $ 22,238,274 $ 23,731,943 $ - $ 45,970,217

4. Due from/to Broker

Due from/to brokers includes cash balances with the Fund’s brokers, foreign cash balances, margin debt
balances, and amounts receivable or payable for securities transactions that have not settled at the date of
the financial statements. In relation to margin debt balances, the Fund is charged interest at fluctuating
rates based on the broker call rate. Cash and securities at the brokers that are related to securities sold, but
not yet purchased are partially restricted until the securities are purchased.

21
XYZ Fund Limited

XYZ Fund, Ltd.

Notes to Financial Statements (continued)

4. Due from/to Broker (continued)

The Fund has restricted balances relating to securities sold short and over the counter derivative positions

Due to brokers includes $712,202 owed to Lehman Brothers International (Europe) (“LBIE”) arising out
of swap transactions terminated as a result of the filing by LBIE of administrative proceedings. This
amount represents the netting of all amounts owed to the Fund by LBIE and all amounts owed to LBIE by
the Fund under the agreements governing the transactions.

5. Share Capital

The Fund’s authorized capital consists of 5,000,000 Shares, each having par values of $0.01 per share and
is initially offering Class A shares (the “Class A shares”) and Class B shares (the “Class B shares” and
together with the Class A shares, The “Shares”). Class A and Class B shares have equal rights and
privileges, except that Class B Shares will be limited in their participation in the profits and losses
attributable to "new issue" securities as such term is defined under the Financial Industry Regulatory
Authority. ("FINRA") Rule 2790 (as amended, supplemented and interpreted from time to time, the
"FINRA Rule"). In addition, the Investment Manager may designate as a Special Investment an asset that
it believes either lacks a readily assessable market value or should be held until the resolution of a special
event or circumstance.

As part of its investment program, the Fund may acquire assets or securities through direct investments or
private placements that the Investment Manager believes either lack a readily assessable market value or
should be held until the resolution of a special event or circumstance (each, along with corresponding
hedge positions and financing obligations, if any, a "Special Investment"). Additionally, the Investment
Manager may determine that, for various reasons, an asset that initially was not designated a Special
Investment should be deemed to be a Special Investment. Each Special Investment will be represented by
a series of Class S Shares. Unless otherwise determined by the Investment Manager, Class S Shares are
allocated, on a pro rata basis, to those investors that are shareholders at the time a Special Investment is
made or at the time an investment is designated as a Special Investment. Shareholders will not have the
right to elect whether to participate in Special Investments.

The Class S shares will be issued at the initial aggregate net asset value equal to the cost of the special
Investment at the time of the investment if the investment is designated as Special Investment at the time
of the acquisition or the fair value of such investment if designated subsequent to the time of acquisition,
in each case, net if any portion of such amount attributable to deferred fees. Class S Shares must be held
by a Shareholder until the Special Investment in respect of which they have been issued is realized or
upon determination of the Investment Manager in its discretion, that such investment need not be treated
22
XYZ Fund Limited

as a Special Investment any longer (such determination, a deemed realization of such Special
Investment). Class S Shares are not redeemable by a shareholder except as allowed by the Board of
Directors.

Net profit or loss is allocated based upon ownership percentages other than new issue income which is
allocated to its respective class.  See the private placement memorandum for further detail.

23
XYZ Fund Limited

XYZ Fund, Ltd.

Notes to Financial Statements (continued)

5. Share Capital (continued)

Shares will be offered in series at a purchase price of $1,000 per share, subject to a minimum subscription. A new series of shares generally will be issued
on each date the shares are purchased. Generally, a shareholder may redeem all or a portion of a series of shares (other than shares purchased on January 1,
2007), upon 45 days’ prior written notice to the administrator, as of the last day of the calendar year ending on or after the last day of the 25 th month
following the date as of which such series was established and thereafter on each second anniversary of such date. Shareholders may redeem all or any
portion of shares purchased on January 1, 2007, upon 45 days’ prior written notice to the administrator, on March 31, 2007 and thereafter on each second
anniversary of such date.

The Fund held back approximately 8.6 % of its total redemptions for December 31, 2009 subject to and pending the completion of the audit of the
financial statements for the year ended December 31, 2009

Common Share transactions for the year ended December 31, 2009 were as follows:

USD A USD A USD A USD A USD A USD A USD B USD B USD B USD B USD A-1 USD A-1
Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares
Series 1 Series 2 Series 3 Series 4 Series 5 Series 6 Series 1 Series 2 Series 3 Series 4 Series1 Series2

Shares outstanding at
beginning of period 105,545. 123,644. 14,930. 89,731.6 7,531.3 31,395. 27,310.0 3,538. 19,906.
54 54 32 5 5,250.00 4,400.00 2 81 0 00 75 9,953.38
Shares issued
- - - - - - -
Shares redeemed (22,803.2 (123,644.5 (45,100.00 (4,180.40 (31,395.8 (23,309.88 (3,538.0 (2,200.2
3) 4) - ) (5,250.00) (4,400.00) ) 1) ) 0) 9)
Shares outstanding at
end of period 82,742. 14,930. 44,631.6 3,350.9 4,000.1 17,706.
31 - 32 5 - - 2 - 2 - 46 9,953.38

24
XYZ Fund Limited

XYZ Fund, Ltd.

Notes to Financial Statements (continued)

6. Investment Management Fees

Pursuant to an investment management agreement, the Fund pays to the Investment Manager a fixed fee
at the beginning of each quarter equal to 0.5% (2% annualized) of the net assets value of each series of
shares and Class S shares as of the beginning of each quarter. Any portion of the Management Fee
attributable to a shareholder’s Class S Shares will be debited against the net asset value of the series of
Shares from which such Class S Shares had been issued. For purposes of determining the Management
Fee, Special Investments are valued at fair value. The Management Fee will be calculated and paid in
advance, but will be amortized over the quarter during which such Management Fee is earned.

Generally, at the end of each fiscal year of the Fund, an incentive fee will be determined, with respect of
each series of shares. The incentive fee is equal to 20% of the increase in the net asset value of a series
above the prior high net asset value of such series.

The Investment Manager may, in its sole discretion, reduce, waive or calculate differently the
Management Fee and the Incentive Fee, as applicable, with respect to any Shareholder, including, without
limitation, Shareholders that are members, partners, affiliates or employees of the Investment Manager,
members of the immediate families of such persons and trusts or other entities for their benefit. The
Investment Manager has exercised such discretion with respect to one of the Shareholder in USD A-1,
such Shareholder’s related persons and members, partners, affiliates or employees of the Investment
Manager and trusts for their benefit.

For the year ended December 31, 2009, there was $29,725,323 of deferred incentive fees. Cumulative
deferred incentive fees as of December 31, 2009 totaled $17,621,074, and cumulative net appreciation on
such amounts totaled $12,104,249. The net change in appreciation of deferred incentive fees is recorded
on a separate line item under “Expense” within the statement of operations. During the year ended
December 31, 2009, there were no distributions of previously deferred incentive fees.

7. Financial Instruments with Off-Balance Sheet Risk and Concentration of Credit Risk

At December 31, 2009, the Fund had its individual counterparty credit risk mainly with one broker
Goldman Sachs. In addition, all cash and cash equivalents are held with a single financial institution in
the Cayman Islands. The Fund continuously monitors the credit standing of its broker and other
counterparties and does not expect any material losses as a result of this concentration.

The Fund also invests in corporate bonds. Until the bonds are sold or mature, the Fund is exposed to
credit risk relating to whether the bond issuer will meet its obligation when they come due.

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XYZ Fund Limited

XYZ Fund, Ltd.

Notes to Financial Statements (continued)

7. Financial Instruments with Off-Balance Sheet Risk and Concentration of Credit Risk
(continued)

Derivative contracts including forwards, futures, swaps, contract for differences and options written may
result in off-balance sheet risk as the Fund’s obligations under these contracts may exceed the amounts
recognized in the statement of assets and liabilities.

Securities sold, but not yet purchased represent obligations of the Fund to purchase the security in the
market at prevailing prices to the extent that the Fund does not already have the securities in possession.
Accordingly, these transactions result in off-balance sheet risk as the Fund’s satisfaction of the obligations
may exceed the amount recognized in the statement of assets and liabilities.

Credit risk is the possibility of loss from the failure of counterparty to perform according to the terms of a
contract. At any moment, the credit risk for over-the-counter (“OTC”) derivative contracts is limited to
the net unrealized gain as reported in the statement of assets and liabilities for each counterparty for
which a netting agreement exists. In a similar fashion, liabilities represent net amounts owed to
counterparties. This netting basis is executed across products and cash collateral when these provisions
are specified in the netting agreement.

The Fund seeks to reduce its credit risk for OTC contracts by only transacting with high credit standing
counterparties and through master agreements that include netting provisions and/or rights of “set off” (assets
less liabilities) across OTC contracts with such counterparties. The Fund records its trading related derivative
activities at fair value (as described in Note 2). Since the Fund has entered into certain master agreements that
include netting provisions with some of its counterparties, the assets included in the statement of assets and
liabilities include the Fund’s unrealized gains, net of unrealized losses, where such agreements are in effect.
Similarly, liabilities represent net amounts owed to such counterparties.

8. Derivative Financial Instruments

Derivative contracts (including forwards, futures, swaps and options) written may result in off-balance
sheet risk as the Fund’s obligations under these contracts may exceed the amounts recognized in the
statement of assets and liabilities.

Credit risk is the possibility of loss from the failure of counterparty to perform according to the terms of a
contract. At any moment, the credit risk for over-the-counter (“OTC”) derivative contracts is limited to
the net unrealized gain as reported in the statement of assets and liabilities for each counterparty for
which a netting agreement exists. In a similar fashion, liabilities represent net amounts owed to
counterparties. This netting basis is executed across products and cash collateral when these provisions
are specified in the netting agreement. However the amounts have been shown in the financial statements
as gross amounts.

XYZ Fund, Ltd.

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XYZ Fund Limited

Notes to Financial Statements (continued)

8. Derivative Financial Instruments (continued)

The Fund seek to reduce its credit risk for OTC contracts by only transacting with high credit standing
counterparties and by seeking to negotiate master agreements with inputs that include netting provisions
that incorporate the right of “set off” (assets less liabilities) across OTC counteracts with such
counterparties. The Fund records its trading related derivative activities at fair value (as described in Note
2). Since the Fund has entered into certain master agreements that include netting provisions with some of
its counterparties, the assets included in the statement of assets and liabilities include the Fund’s
unrealized gains, net of unrealized losses, where such agreements are in effect.

In the normal course of business, the Fund enters into transactions involving derivative financial
instruments in connection with its investing activities. These instruments are subject to various risks
similar to non-derivative instruments, including market, credit, liquidity, and operational risks. The Fund
manages these risks on an aggregate basis along with the risks associated with its investing activities as
part of its overall risk management policies, and distinguishes derivative profit or loss from any other
category of investments for income presentation purposes.

The premium received by the Fund upon writing an option contract is recorded as a liability in the
statement of assets and liabilities and is valued at market value. In writing an option contract, the Fund
bears the market risk of an unfavorable change in financial instrument underlying the written option. The
exercise of an option written by the Fund could result in the Fund selling or buying a financial instrument
at a price different from the current market vale. The Fund had no written options outstanding at
December 31, 2009.

Swap agreements (“swaps”) represent agreements that obligate two parties to exchange a series of cash
flows at specified intervals based upon or calculated by reference to changes in specified prices or rates
for a specified amount of an underlying asset or otherwise determined notional amount. The payment
flows are usually netted against each other, with the difference being paid by one party to the other.
Therefore amounts required for the future satisfaction of the swap may be greater or lees than the amount
recorded. The fair value of open swaps reported in the statement of assets and liabilities may differ from
that which would be realized in the event the Fund terminated its position in contract. Risks may arise as
a result of the failure of the counterparty to the swap contract to comply with the terms of the swap
contract. The loss incurred by the failure of a counterparty is generally limited to the aggregate of the
unrealized gain on the swap contracts in an unrealized gain position as well as any collateral posted with
the counterparty.

The realized gain or loss depends upon the prices at which the underlying financial instruments of the
swap is valued at the swap’s settlement date and is included in the income statement. Unrealized gains or
losses are fair valued in accordance with the accounting policy stated in Note 2 and the resulting
movement in the unrealized gain or loss is recorded in the statement of operations.

XYZ Fund, Ltd.

Notes to Financial Statements (continued)

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XYZ Fund Limited

8. Derivative Financial Instruments (continued)

The Fund considers the creditworthiness of each counterparty to a swap contract in evaluating potential
credit risk. Additionally, risk may arise from unanticipated movements in the fair value of the underlying
investments

Contracts for difference (“CFD”) represent agreements that obligate two parties to exchange a series of
cash flows at specified intervals based upon or calculated by reference to changes in specified prices or
rates for a specified amount of an underlying asset or otherwise determined notional amount.

The payment flows are usually netted against each other, with the difference being paid by one party to
the other. Therefore amounts required for the future satisfaction of the CFD may be greater or less than
the amount recorded. The ultimate gain or loss depends upon the prices at which the underlying financial
instruments of the CFD is valued at the CFD settlement date. In the ordinary course of business the Fund
accrues and records interest expense on the notional value of its CFD’s. The Fund held no CFD’s as at
December 31, 2009.

Forward contracts entered into by the Fund represent a firm commitment to buy or sell an underlying
asset or currency at a specified value and point in time base upon an agreed or contracted quantity. The
realized / unrealized gain or loss is equal to the difference between the value of the contract at the onset
and the value of the contract at settlement date / period-end date and are included in the statement of
operations.

The fair value of the Fund’s derivative financial instrument contracts approximates the carrying amounts
included in derivative contracts on the accompanying statement of financial condition.

In March 2008, Accounting Standards Code No. 815, “ Derivatives and Hedging ” (“ASC 815”) was
issued and is effective for fiscal years and interim periods beginning after November 15, 2008. ASC 815
requires enhanced disclosures about a fund’s derivative and hedging activities.

The following table presents the effect of derivatives on the statement of financial condition (not
designated as hedging instruments under ASC 815) for the period January 1, 2009 to December 31, 2009:
:

Location in Statement of Assets and Fair Value Notional No. of

Liabilities-Assets Amount contracts
Credit Default Swaps Unrealised gains on derivative contracts $ 871,714 $ 23,250,000 3
Forward contracts Unrealized gains on derivative contracts 1,039,154 17,604,925 9
Future Contracts Unrealized gains on derivative contracts 5,672 13,838,911 270

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XYZ Fund Limited

XYZ Fund, Ltd.

Notes to Financial Statements (continued)

9. Derivative Financial Instruments (continued)

Location in Statement of Assets and Fair Value Notional No. of

Liabilities-Liabilities Amount contracts
Future Contracts Unrealized losses on derivative contracts 34,398 16,237,534 292

The following table presents the effect of derivatives on the Statement of Operations (not designated as
hedging instruments under ASC 815) for the period January 1, 2009 to December 31, 2009.

Amount of realised
Location in Statement of Operations loss
Credit Default Swaps Net realized loss from derivative transactions $ (1,632,846)
Forward contracts Net realized loss from derivative transactions (1,718,386)
Future Contracts Net realized loss from derivative transactions (4,252,555)

Amount of
Location in Statement of Operations unrealized gain
Net change in unrealized appreciation on investments
Credit Default Swaps in derivatives $ 871,714
Net change in unrealized appreciation on investments 2
Forward contracts in derivatives ,700,341
Net change in unrealized appreciation on investments
Future Contracts in derivatives 155,002

The fair value of investments in derivatives does not include the effects of collateral held which is
recorded op the statement of financial condition as a component of cash and cash equivalent. The Fund
has pledged cash in the amount of $2,200,668 related to a credit default swap that has a fair value of $
871,714 as December 31, 2009.

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XYZ Fund Limited

XYZ Fund, Ltd.

Notes to Financial Statements (continued)

9. Financial Highlights

Financial highlights for the year ended December 31, 2009 are as follows:

USD A USD B USD A-1

Shares Shares Shares
Series 1 Series 1 Series1
Per share operating performance
Beginning net asset value $868.12 $867.42 $905.53
Change in net assets resulting from operations:
Net investment income/(expense) (8.34) (6.43) 76.43
Net gain on investments, derivatives and
foreign currency transactions 840.86 838.29 883.55
Net increase in net assets resulting from
operations 832.52 831.86 959.98
Ending net asset value $1,700.64   $1,699.28   $1,865.51

Total return prior to incentive fee 112.24% 112.24% 114.59%

Incentive fee (16.34)% (16.34)% (8.58)%
Total return after incentive fee 95.90% 95.90% 106.01%
USD Shares USD Shares USD Shares
Series 1A Series 1B Series A-1
Ratio to average net assets:
Expenses other than incentive fees (6.76)% (6.92)% (5.45)%
Deferred incentive fee (4.66)% (4.71)% (4.55)%
Incentive fee (11.78)% (11.88)% (6.03)%
Total Expenses (23.20)% (23.51)% (16.03)%
Net investment income 11.09% 11.35% 11.95%

The above per share operating performance and ratios are calculated for each class taken as a whole. An
individual investor’s per share amounts, total return and ratios to average net assets may vary from these
amounts and ratios based on participation in new issues, different management fee and incentive fee
arrangements (as applicable) and the timing and amount of capital transactions.

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XYZ Fund Limited

XYZ Fund, Ltd.

Notes to Financial Statements (continued)

10. Recent Accounting Pronouncements

On January 21, 2010, the FASB issued the ASU 2010-06, “Improving Disclosures about Fair Value
Measurement”, an amendment to Subtopic 820-10 which requires the following disclosures about fair
value investments: 1) A reporting entity should disclose the amounts of significant transfers in and/or out
of Level 1 and Level 2 fair value measurements and the reasons for the transfers; 2) The reasons for any
transfers in and out of Level 3; and 3) Information in the reconciliation of recurring Level 3
measurements about purchases, sales, issuances and settlements on a gross basis. In addition to these new
disclosure requirements, the ASU also amends ASC 820 to clarify that reporting entities are required to
provide fair value measurement disclosures for each class of assets and liabilities. Prior to the issuance of
ASU 2010-06, the guidance in ASC 820 required separate fair value disclosures for each major category
of assets and liabilities. ASU 2010-06 also clarifies the requirement for entities to disclose information
about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value
measurements. Except for the requirement to disclosure information about purchases, sales, issuances and
settlements in the reconciliation of recurring Level 3 measurements on a gross basis, which are effective
December 15, 2010, all the amendments to ASC 820 made by ASU 2010-06 are effective for annual
reporting periods beginning after December 15, 2009. Management does not expect this pronouncement
to have a significant impact on the financial statements of the Fund.

11. Subsequent Events

Subsequent to year-end through March 26, 2010, there were no transactions that have occurred that
require disclosure to the financial statements or accompanying notes.

The Fund’s authorized capital consists of 5,000,000 Shares , each having par value of
$0.01 per share and is initially offering Class A shares (the “Class A shares”) and Class b
shares ( the “Class B shares” and together with the Class A shares, The “Shares”).
(“FINRA”)Rule 2790(as amended, supplemented and interpreted from time to time, the
“FINRA Rule”).
The Fund’s authorized capital consists of 5,000,000 Shares, each having par values of $0.01 per
share and is initially offering Class A shares (the “Class A shares”) and Class B shares (the “Class
B shares” and together with the Class A shares, The “Shares”). ("FINRA") Rule 2790 (as amended,
supplemented and interpreted from time to time, the "FINRA Rule").

31