Ceres Tactical Commodity 10-K 2018 FY Annual report

Exhibit 99.1

To the Limited Partners of

MB Master Fund L.P.

To the best of the knowledge and belief of the undersigned, the information contained herein is accurate and complete.

By: Patrick T. Egan

President and Director

Ceres Managed Futures LLC

General Partner,

MB Master Fund L.P.

Ceres Managed Futures LLC

522 Fifth Avenue

New York, NY 10036

855-672-4468

Report of Independent Registered Public Accounting Firm

To the General Partner of MB Master Fund L.P. (in liquidation),

Opinion on the Financial Statements

We have audited the accompanying statement of financial condition of MB Master Fund L.P. (in liquidation) (the “Partnership”) as of December 31, 2018, and the related statements of income and expenses and changes in partners’ capital for the year then ended, and the related notes. We have also audited the statement of financial condition, including the condensed schedule of investments, as of December 31, 2017, and the related statements of income and expenses and changes in partners’ capital for the year then ended (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership at December 31, 2018 and 2017, and the results of its operations and changes in its partners’ capital for each of the two years in the period then ended, in conformity with U.S. generally accepted accounting principles.

The statements of income and expenses and changes in partners’ capital for the year ended December 31, 2016 were audited by another independent registered public accounting firm whose report, dated March 24, 2017, expressed an unqualified opinion on those statements.

Basis for Opinion

These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnership’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and 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, whether due to error or fraud. The Partnership is not required to have, nor were we engaged to perform, an audit of the Partnership’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Liquidation Basis of Accounting

As described in Note 1 to the financial statements, the General Partner of the Partnership has decided to liquidate the Partnership and the Partnership determined liquidation is imminent. As a result, the Partnership changed its basis of accounting from the going concern basis to a liquidation basis. Our opinion is not modified with respect to this matter.

/s/ Ernst & Young LLP

We have served as the auditor of the Partnership since 2017.

Boston, MA

March 19, 2019

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of MB Master Fund L.P.:

We have audited the accompanying statements of income and expenses and changes in partners’ capital of MB Master Fund L.P. (the “Partnership”) for the year ended December 31, 2016. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit 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 are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its 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 Partnership’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, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the results of operations and changes in partners’ capital of MB Master Fund L.P. for the year ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

New York, New York

March 24, 2017

MB Master Fund L.P.

Statements of Financial Condition

December 31, 2018 (termination of operations) (liquidation basis) and 2017

	December 31,		December 31,
	2018*		2017
Assets:
Equity in trading account:
Unrestricted cash (Note 3c)	$	7,329,004	$	85,624,998
Restricted cash (Note 3c)		-		757,076
Net unrealized appreciation on open futures contracts		-		112,276
Options purchased, at fair value (premiums paid $0 and $871,324 at December 31, 2018 and 2017, respectively)		-		849,052
Total equity in trading account		7,329,004		87,343,402
Cash at bank (Note 1)		-		436
Expense reimbursement (Note 3c)		14,361		4,370
Total assets	$	7,343,365	$	87,348,208
Liabilities and Partners’ Capital:
Liabilities:
Options written, at fair value (premiums received $0 and $585,448 at December 31, 2018 and 2017, respectively)	$	-	$	533,767
Accrued expenses:
Professional fees		48,238		39,239
Redemptions payable (Note 6)		-		9,405,675
Liquidation redemptions payable (Note 10)		7,295,127		-
Total liabilities		7,343,365		9,978,681
Partners’ Capital:
General Partner		-		-
Limited Partners		-		77,369,527
Total partners’ capital (net asset value)		-		77,369,527
Total liabilities and partners’ capital	$	7,343,365	$	87,348,208

*      Presented on a liquidation basis of accounting.

See accompanying notes to financial statements.

MB Master Fund L.P.

Condensed Schedule of Investments

December 31, 2017

	Number				% of Partners’
	of Contracts		Fair Value		Capital
Futures Contracts Purchased
Energy		95	$	178,768		0.23	%
Grains		971		(708,234)		(0.92)
Softs		307		(57,953)		(0.07)
Total futures contracts purchased				(587,419)		(0.76)
Futures Contracts Sold
Energy		80		(165,605)		(0.21)
Grains		821		860,106		1.11
Livestock		78		39,284		0.05
Softs		210		(34,090)		(0.04)
Total futures contracts sold				699,695		0.91
Net unrealized appreciation on open futures contracts			$	112,276		0.15	%
Options Purchased
Calls
Grains		51	$	19,125		0.02	%
Livestock		212		237,070		0.31
Softs		180		138,307		0.18
Puts
Livestock		434		436,490		0.57
Softs		110		18,060		0.02
Total options purchased (premiums paid $871,324)			$	849,052		1.10	%
Options Written
Calls
Livestock		139	$	(311,340)		(0.41)	%
Softs		132		(33,917)		(0.04)
Puts
Livestock		176		(188,510)		(0.24)
Total options written (premiums received $585,448)			$	(533,767)		(0.69)	%

See accompanying notes to financial statements.

MB Master Fund L.P.

Statements of Income and Expenses

For the Years Ended December 31, 2018 (termination of operations) (liquidation basis), 2017 and 2016

	2018*			2017			2016
Investment Income:
Interest income	$	255,817		$	813,095		$	277,605
Expenses:
Clearing fees (Note 3c)		365,179			1,382,290			2,721,005
Professional fees		68,276			63,879			73,742
Total expenses		433,455			1,446,169			2,794,747
Expense reimbursements (Note 3c)		(230,053	)		(109,988	)		(203,079	)
Net expenses		203,402			1,336,181			2,591,668
Net investment income (loss)		52,415			(523,086	)		(2,314,063	)
Trading Results:
Net gains (losses) on trading of commodity interests:
Net realized gains (losses) on closed contracts		(802,771	)		846,478			16,573,503
Net change in unrealized gains (losses) on open contracts		(148,346	)		(952,781	)		(240,661	)
Total trading results		(951,117	)		(106,303	)		16,332,842
Net income (loss)	$	(898,702	)	$	(629,389	)	$	14,018,779

*    Presented on a liquidation basis of accounting.

See accompanying notes to financial statements.

MB Master Fund L.P.

Statements of Changes in Partners’ Capital

For the Years Ended December 31, 2018 (termination of operations) (liquidation basis), 2017 and 2016

	Partners’         Capital
Partners’ Capital, December 31, 2015	$	159,372,646
Subscriptions		9,852,158
Redemptions		(63,341,883	)
Distribution of interest income to feeder funds		(56,160	)
Net income (loss)		14,018,779
Partners’ Capital, December 31, 2016		119,845,540
Subscriptions		9,753,900
Redemptions		(50,797,523	)
Distribution of interest income to feeder funds		(803,001	)
Net income (loss)		(629,389	)
Partners’ Capital, December 31, 2017		77,369,527
Subscriptions		3,317,072
Redemptions		(79,532,080	)
Distribution of interest income to feeder funds		(255,817	)
Net income (loss)		(898,702	)
Partners’ Capital, December 31, 2018	$	-

See accompanying notes to financial statements.

MB Master Fund L.P.

Notes to Financial Statements (Liquidation Basis)

1. Organization:

MB Master Fund L.P. (the “Master”) was a limited partnership organized under the partnership laws of the State of Delaware on April 21, 2011, to engage in the speculative trading of a diversified portfolio of commodity interests, including futures, option, swap and forward contracts. The sectors traded included currencies, energy, grains, livestock, metals and softs. The commodity interests that were traded by the Master were volatile and involved a high degree of market risk. The General Partner (as defined below) was permitted to invest up to all of the Master’s assets in United States (“U.S.”) Treasury bills and/or money market mutual funds, including money market mutual funds managed by Morgan Stanley or its affiliates. The Master terminated operations on December 31, 2018. As a result, the Master changed its basis of accounting from the going concern basis to a liquidation basis. Liquidation basis accounting requires the Master to record assets and liabilities at values to be received or paid in liquidation. The Master was liquidated in accordance with the terms of its limited partnership agreement (the “Limited Partnership Agreement”).

Ceres Managed Futures LLC, a Delaware limited liability company, acted as the general partner (the “General Partner”) and commodity pool operator of the Master. As of January 1, 2017, the General Partner became awholly-owned subsidiary of Morgan Stanley Domestic Holdings, Inc. (“MSD Holdings”). MSD Holdings is ultimately owned by Morgan Stanley. Morgan Stanley is a publicly held company whose shares are listed on the New York Stock Exchange. Morgan Stanley is engaged in various financial services and other businesses. Prior to January 1, 2017, the General Partner was awholly-owned subsidiary of Morgan Stanley Smith Barney Holdings LLC. Prior to its termination on December 31, 2018, all trading decisions for the Master were made by the Advisor (as defined below).

On May 1, 2011 (commencement of trading operations), Commodity Advisors Fund L.P. (“Commodity Advisors”) allocated a portion of its capital to the Master. On December 1, 2011, Institutional Futures Portfolio L.P. (“Institutional”) and Morgan Stanley Spectrum Strategic L.P. (“Spectrum Strategic”) each allocated a portion of their capital to the Master. On February 1, 2013, Ceres Tactical Commodity L.P. (formerly, Managed Futures Premier Aventis II L.P.) (“Tactical Commodity”) allocated substantially all of its capital to the Master. On June 1, 2013, Managed Futures Custom Solutions Fund LP — Series A (formerly, Morgan Stanley Managed Futures Custom Solutions Fund LP – Series A) (“Custom Solutions”) allocated a portion of its capital to the Master. On December 31, 2016, Commodity Advisors redeemed its entire investment in the Master. Effective July 31, 2017, Custom Solutions terminated operations and fully redeemed its investment in the Master. Effective December 31, 2017, Institutional terminated operations and fully redeemed its investment in the Master. Effective November 30, 2018, Tactical Commodity fully redeemed its investment in the Master. Effective December 31, 2018, Spectrum Strategic fully redeemed its investment in the Master. The Master permitted commodity pools managed by Aventis Asset Management, LLC (the “Advisor”) using the Aventis Diversified Commodity Strategy, a proprietary, discretionary trading system, to invest together in one trading vehicle.

During the periods covered by this report, the Master’s commodity broker was Morgan Stanley & Co. LLC (“MS&Co.”), a registered futures commission merchant. The Master deposited a portion of its cash in anon-trading bank account at JPMorgan Chase Bank, N.A.

Prior to its termination on December 31, 2018, the Master operated under a structure where its sole investor was Spectrum Strategic (the “Feeder”, or the “Fund”). References herein to a “Feeder” or the “Funds” may also include as relevant, reference to Tactical Commodity, Commodity Advisors, Custom Solutions and Institutional. Institutional, Spectrum Strategic and Tactical Commodity each owned approximately 1.7%, 9.0% and 89.3% of the Master prior to the close of business on December 31, 2017, respectively.

On December 10, 2018, the General Partner terminated the management agreement (the “Management Agreement”) by and among the Advisor, the Master and the General Partner effective the close of business on December 31, 2018. As a result, the Master changed its basis of accounting from the going concern basis to the liquidation basis.

MB Master Fund L.P.

Notes to Financial Statements (Liquidation Basis)

In July 2015, the General Partner delegated certain administrative functions to SS&C Technologies, Inc., a Delaware corporation, currently doing business as SS&C GlobeOp (the “Administrator”). Pursuant to a master services agreement, the Administrator furnished certain administrative, accounting, regulatory reporting, tax and other services as agreed from time to time. In addition, the Administrator maintained certain books and records of the Master.

2. Basis of Presentation and Summary of Significant Accounting Policies:

a. Use of Estimates.The preparation of financial statements and accompanying notes in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires the General Partner to make estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses, and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. As a result, actual results could differ from these estimates, and those differences could be material.

The financial statements of the Master as of and for the year ended December 31, 2018 are prepared using the liquidation basis of accounting. The liquidation basis of accounting requires the Master to record assets and liabilities at values expected to be received or paid in liquidation. The change in basis of accounting from the going concern basis to the liquidation basis did not have a material effect on the Master’s carrying value of assets and liabilities or its results of operations. All carrying values are expected to be realized by the Master during liquidation. The liquidation basis of accounting also requires the financial statements to include a statement of net assets available to limited partners or changes in net assets available. The Statements of Changes in Partners’ Capital (included herein) present the same information and thus the financial statements include a statement of changes in net assets available to limited partners for the year ended December 31, 2018.

b. Statement of Cash Flows.The Master did not provide a Statement of Cash Flows, as permitted by Accounting Standards Codification (“ASC”) 230, “Statement of Cash Flows.” The Statements of Changes in Partners’ Capital is included herein, and as of and for the years ended December 31, 2018, 2017 and 2016 the Master carried no debt and all of the Master’s investments were carried at fair value and classified as Level 1 or Level 2 measurements.

c. Master’s Investments.All commodity interests held by the Master, including derivative financial instruments and derivative commodity instruments, were held for trading purposes. The commodity interests were recorded on trade date and open contracts were recorded at fair value (as described in Note 5,“Fair Value Measurements”) at the measurement date. Investments in commodity interests denominated in foreign currencies were translated into U.S. dollars at the exchange rates prevailing at the measurement date. Gains or losses were realized when contracts were liquidated and were determined using thefirst-in,first-out method. Net unrealized gains or losses on open contracts were included as a component of equity in trading account in the Statements of Financial Condition. Net realized gains or losses and net change in unrealized gains or losses were included in the Statements of Income and Expenses. The Master did not isolate the portion of the results of operations arising from the effect of changes in foreign exchange rates on investments from fluctuations from changes in market prices of investments held. Such fluctuations are included in total trading results in the Statements of Income and Expenses.

Master’s Cash. The Master’s cash included cash denominated in foreign currencies of $55,998 (cost of $59,096) and $183,012 (cost of $179,449) at December 31, 2018 and 2017, respectively.

d. Income and Expenses Recognition. All of the income and expenses and realized and unrealized gains and losses on trading of commodity interests were determined on each valuation day and allocatedpro-rata among the Funds at the time of such determination.

MB Master Fund L.P.

Notes to Financial Statements (Liquidation Basis)

e. Income Taxes. Income taxes have not been recorded as each partner is individually liable for the taxes, if any, on its share of the Master’s income and expenses. The Master followed the guidance of ASC 740, “Income Taxes,” which prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of tax positions taken or expected to be taken in the course of preparing the Master’s tax returns to determine whether the tax positions were“more-likely-than-not” of being sustained “when challenged” or “when examined” by the applicable tax authority. Tax positions determined not to meet themore-likely-than-not threshold would have been recorded as a tax benefit or liability in the Master’s Statements of Financial Condition for the current year. If a tax position did not meet the minimum statutory threshold to avoid the incurring of penalties, an expense for the amount of the statutory penalty and interest, if applicable, was recognized in the Statements of Income and Expenses in the years in which the position was claimed or expected to be claimed. The General Partner has concluded that there were no significant uncertain tax positions that would have required recognition in the financial statements. The Master files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The 2015 through 2018 tax years remain subject to examination by U.S. federal and most state tax authorities.

f. Investment Company Status.Effective January 1, 2014, the Master adopted Accounting Standards Update2013-08,“Financial Services—Investment Companies (Topic 946): Amendments to the Scope, Measurement and Disclosure Requirements” and based on the General Partner’s assessment, the Master had been deemed to be an investment company since inception. Accordingly, the Master followed the investment company accounting and reporting guidance of Topic 946 and reflected its investments at fair value with unrealized gains and losses resulting from changes in fair value reflected in the Statements of Income and Expenses.

3. Agreements:

a. Limited Partnership Agreement:

The General Partner administered the business and affairs of the Master, including selecting one or more advisors to make trading decisions for the Master. The Limited Partnership Agreement was in effect until December 31, 2018, when the Master terminated operations.

b. Management Agreement:

The General Partner, on behalf of the Master, entered into a Management Agreement with the Advisor, a registered commodity trading advisor. The Advisor was not affiliated with the General Partner or MS&Co. and was not responsible for the organization or operation of the Master. The Management Agreement provided that the Advisor had sole discretion in determining the investment of the assets of the Master. All management fees in connection with the Management Agreement were borne by the Funds. The Management Agreement was in effect until December 31, 2018, when the Master terminated operations.

c. Customer Agreement:

The Master entered into a customer agreement with MS&Co. (the “Customer Agreement”). Under the Customer Agreement, the Master paid MS&Co. trading fees for the clearing and, where applicable, the execution of transactions. Further, all trading, exchange, clearing, user,give-up, floor brokerage and National Futures Association fees (collectively, the “clearing fees”) were borne by the Master and allocated to the Funds. All other fees were borne by the Funds. All of the Master’s assets available for trading in commodity interests were deposited in the Master’s brokerage account at MS&Co. The Master’s cash deposited with MS&Co. was held in segregated bank accounts to the extent required by Commodity Futures Trading Commission regulations. The Master’s restricted cash was equal to the cash portion of assets on deposit to meet margin requirements, as determined by the exchange or counterparty, and required by MS&Co. At December 31, 2018 and 2017, the amount of cash held by the Master for margin requirements was $0 and $757,076, respectively. Cash that was not classified as restricted cash was therefore classified as unrestricted cash. The Customer Agreement was in effect until December 31, 2018, when the Master terminated operations.

MB Master Fund L.P.

Notes to Financial Statements (Liquidation Basis)

Spectrum Strategic paid a General Partner administrative fee payable to the General Partner equal to an annual rate of 2.0% of Spectrum Strageic’s net assets. Spectrum Strategic’s General Partner administrative fees included clearing fees that were charged to the Master, and therefore, the Master received monthly expense reimbursements that the General Partner was contractually obligated to pay on clearing fees incurred during such months, as shown in the Statements of Income and Expenses as expense reimbursements, based on the beginning of the month Partners’ capital allocation percentage for Spectrum Strategic’s investment in the Master.

4. Trading Activities:

The Master was formed for the purpose of trading contracts in a variety of commodity interests, including derivative financial instruments and derivative commodity interests. The results of the Master’s trading activities are shown in the Statements of Income and Expenses.

The Customer Agreement gave the Master the legal right to net unrealized gains and losses on open futures and forward contracts. The Master netted, for financial reporting purposes, the unrealized gains and losses on open futures and forward contracts in the Statements of Financial Condition, as the criteria under ASC210-20, “Balance Sheet,” were met.

All of the commodity interests owned by the Master were held for trading purposes. The monthly average number of futures contracts traded during the years ended December 31, 2018 (termination of operations) and 2017 were 972 and 6,469, respectively. The monthly average number of option contracts traded during the years ended December 31, 2018 (termination of operations) and 2017 were 1,444 and 5,058, respectively. The monthly average number of metals forward contracts traded during the years ended December 31, 2018 (termination of operations) and 2017 were 0 and 52, respectively.

The following table summarizes the gross and net amounts recognized relating to assets and liabilities of the Master’s derivatives and their offsetting subject to master netting agreements or similar arrangements as of December 31, 2017. There were no open positions as of December 31, 2018 (termination of operations).

				Gross Amounts			Amounts		Gross Amounts Not Offset in the
				Offset in the			Presented in the		Statements of Financial Condition
	Gross			Statements of			Statements of
	Amounts			Financial			Financial		Financial		Cash Collateral
December 31, 2017	Recognized			Condition			Condition		Instruments		Received/Pledged*		Net Amount
Assets
Futures	$	1,308,111		$	(1,195,835	)	$	112,276	$	-	$	-	$	112,276
Total assets	$	1,308,111		$	(1,195,835	)	$	112,276	$	-	$	-	$	112,276
Liabilities
Futures	$	(1,195,835	)	$	1,195,835		$	-	$	-	$	-	$	-
Total liabilities	$	(1,195,835	)	$	1,195,835		$	-	$	-	$	-	$	-
Net fair value													$	112,276	*

* In the event of default by the Master, MS&Co., the Master’s commodity futures broker and the sole counterparty to the Master’snon-exchange-traded contracts, as applicable, had the right to offset the Master’s obligation with the Master’s cash and/or U.S. Treasury bills held by MS&Co., thereby minimizing MS&Co.’s risk of loss. In certain instances MS&Co. may not have posted collateral and as such, in the event of default by MS&Co., the Master was exposed to the amount shown in the Master’s Statements of Financial Condition. In the case of exchange-traded contracts, the Master’s exposure to counterparty risk may have been reduced since the exchange’s clearinghouse interposes its credit between buyer and seller and the clearinghouse’s guarantee funds may have been available in the event of a default.

MB Master Fund L.P.

Notes to Financial Statements (Liquidation Basis)

The following table indicates the gross fair values of derivative instruments of futures and option contracts as separate assets and liabilities as of December 31, 2017. There were no open positions as of December 31, 2018 (termination of operations).

	December 31, 2017
Assets
Futures Contracts
Energy	$	180,618
Grains		986,005
Livestock		57,201
Softs		84,287
Total unrealized appreciation on open futures contracts		1,308,111
Liabilities
Futures Contracts
Energy		(167,455	)
Grains		(834,133	)
Livestock		(17,917	)
Softs		(176,330	)
Total unrealized depreciation on open futures contracts		(1,195,835	)
Net unrealized appreciation on open futures contracts	$	112,276		*
Assets
Options Purchased
Grains	$	19,125
Livestock		673,560
Softs		156,367
Total options purchased	$	849,052		**
Liabilities
Options Written
Livestock	$	(499,850	)
Softs		(33,917	)
Total options written	$	(533,767	)	***

* This amount is in “Net unrealized appreciation on open futures contracts” in the Statements of Financial Condition.

** This amount is in “Options purchased, at fair value” in the Statements of Financial Condition.

*** This amount is in “Options written, at fair value” in the Statements of Financial Condition.

MB Master Fund L.P.

Notes to Financial Statements (Liquidation Basis)

The following table indicates the trading gains and losses, by market sector, on derivative instruments for the years ended December 31, 2018 (termination of operations), 2017 and 2016.

Sector	2018			2017			2016
Currencies	$	(3,890)		$	(8,804)		$	7,546
Energy		164,716			(6,256,780)			13,788,446
Grains		(871,529)			1,619,966			66,845
Livestock		154,261			2,048,168			(580,885)
Metals		(147,882)			488,773			24,529
Softs		(246,793)			2,002,374			3,026,361
Total	$	(951,117)	****	$	(106,303)	****	$	16,332,842	****

****This amount is in “Total trading results” in the Statements of Income and Expenses.

5. Fair Value Measurements:

Master’s Fair Value Measurements.Fair value is defined as the value that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to fair values derived from unobservable inputs (Level 3). The level in the fair value hierarchy within which the fair value measurement in its entirety falls shall be determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The fair value of exchange-traded futures, option and forward contracts is determined by the various exchanges, and reflects the settlement price for each contract as of the close of business on the last business day of the reporting period. The fair value of foreign currency forward contracts is extrapolated on a forward basis from the spot prices quoted as of approximately 3:00 P.M. (E.T.) on the last business day of the reporting period from various exchanges. The fair value ofnon-exchange-traded foreign currency option contracts is calculated by applying an industry standard model application for options valuation of foreign currency options, using as input the spot prices, interest rates, and option implied volatilities quoted as of approximately 3:00 P.M. (E.T.) on the last business day of the reporting period. U.S. Treasury bills are valued at the last available bid price received from independent pricing services as of the close of the last business day of the reporting period.

The Master considered prices for commodity futures, swap and option contracts to be based on unadjusted quoted prices in active markets for identical assets and liabilities (Level 1). The values of U.S. Treasury bills,non-exchange-traded forward, swap and certain option contracts for which market quotations are not readily available are priced by pricing services that derive fair values for those assets and liabilities from observable inputs (Level 2). As of and for the years ended December 31, 2018 (termination of operations) and 2017, the Master did not hold any derivative instruments that were priced at fair value using unobservable inputs through the application of the General Partner’s assumptions and internal valuation pricing models (Level 3). There were no open positions as of December 31, 2018 (termination of operations).

MB Master Fund L.P.

Notes to Financial Statements (Liquidation Basis)

December 31, 2017	Total		Level 1		Level 2		Level 3
Assets
Futures	$	1,308,111	$	1,308,111	$	-	$	-
Options purchased		849,052		849,052		-		-
Total assets	$	2,157,163	$	2,157,163	$	-	$	-
Liabilities
Futures	$	1,195,835	$	1,195,835	$	-	$	-
Options written		533,767		533,767		-		-
Total liabilities	$	1,729,602	$	1,729,602	$	-	$	-

6. Subscriptions, Distributions and Redemptions:

Subscriptions were accepted monthly from investors who became limited partners on the first day of the month after their subscriptions were processed. Distributions were made on apro-rata basis at the sole discretion of the General Partner. No distributions were made to date, except for distribution of interest income to feeder funds, as applicable. Generally, a limited partner withdrew all or part of its capital contribution and undistributed profits, if any, from the Master as of the end of any month (the “Redemption Date”) after a request for redemption had been made to the General Partner at least three days in advance of the Redemption Date. Such withdrawals were classified as a liability when the limited partner elected to redeem and informed the Master. However, a limited partner also had the right to request a withdrawal as of the end of any day if such request was received by the General Partner at least three days in advance of the proposed withdrawal day.

7. Financial Highlights:

Financial highlights for the limited partner class as a whole for the years ended December 31, 2018 (termination of operations), 2017 and 2016 were as follows:

	2018*		2017		2016
Ratios to Average Limited Partners’ Capital:
Net investment income (loss)**		0.2%		(0.5)%		(1.6)%
Operating expenses before expense reimbursements		2.0%		1.3 %		2.0 %
Expense reimbursements		(1.1)%		(0.1)%		(0.1)%
Operating expenses after expense reimbursements		0.9%		1.2 %		1.9 %
Total return		(5.6)%		(0.6)%		10.4%

* Average partners’ capital is calculated usingpre-liquidation partners’ capital.

** Interest income less total expenses, net of expense reimbursements.

The above ratios and total return may have varied for individual investors based on the timing of capital transactions during the year. Additionally, these ratios were calculated for the limited partner class using the limited partners’ share of income, expenses and average partners’ capital.

MB Master Fund L.P.

Notes to Financial Statements (Liquidation Basis)

8. Financial Instrument Risks:

In the normal course of business, the Master was party to financial instruments withoff-balance sheet risk, including derivative financial instruments and derivative commodity instruments. These financial instruments may have included futures, forward, option and swap contracts, whose values were based upon an underlying asset, index, or reference rate, and generally represented future commitments to exchange currencies or cash balances, or to purchase or sell other financial instruments at specific terms at specified future dates, or, in the case of derivative commodity instruments, to have a reasonable possibility to be settled in cash, through physical delivery or with another financial instrument. These instruments may have been traded on an exchange, a swap execution facility orover-the-counter (“OTC”). Exchange-traded instruments included futures and certain standardized forward, swap and option contracts. Certain swap contracts may have also been traded on a swap execution facility or OTC. OTC contracts were negotiated between contracting parties and also included certain forward and option contracts. Specific market movements of commodities or futures contracts underlying an option cannot accurately predicted. The purchaser of an option may lose the entire premium paid for the option. The writer (or seller) of an option has unlimited risk. Each of these instruments was subject to various risks similar to those related to the underlying financial instruments, including market and credit risk. In general, the risks associated with OTC contracts were greater than those associated with exchange-traded instruments because of the greater risk of default by the counterparty to an OTC contract.

Futures Contracts. The Master traded futures contracts. A futures contract is a firm commitment to buy or sell a specified quantity of investments, currency or a standardized amount of a deliverable grade commodity, at a specified price on a specified future date, unless the contract is closed before the delivery date or the delivery quantity is something where physical delivery cannot occur (such as the S&P 500 Index), whereby such contract is settled in cash. Payments (“variation margin”) may have been made or received by the Master each business day, depending on the daily fluctuations in the value of the underlying contracts, and were recorded as unrealized gains or losses by the Master. When the contract was closed, the Master recorded a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Transactions in futures contracts require participants to make both initial margin deposits of cash or other assets and variation margin deposits, through the futures broker, directly with the exchange on which the contracts are traded. Net realized gains (losses) and net change in unrealized gains (losses) on futures contracts are included in the Statements of Income and Expenses.

Options. The Master may have purchased and written (sold) both exchange-listed and OTC options on commodities or financial instruments. An option is a contract allowing, but not requiring, its holder to buy (call) or sell (put) a specific or standard commodity or financial instrument at a specified price during a specified time period. The option premium is the total price paid or received for the option contract. When the Master wrote an option, the premium received was recorded as a liability in the Statements of Financial Condition and marked to market daily. When the Master purchased an option, the premium paid was recorded as an asset in the Statements of Financial Condition and marked to market daily. Net realized gains (losses) and net change in unrealized gains (losses) on option contracts are included in the Statements of Income and Expenses.

As both a buyer and seller of options, the Master paid or received a premium at the outset and then bore the risk of unfavorable changes in the price of the contract underlying the option. Written options exposed the Master to potentially unlimited liability; for purchased options the risk of loss was limited to the premiums paid. Certain written put options permitted cash settlement and did not require the option holder to own the reference asset. The Master did not consider these contracts to be guarantees.

MB Master Fund L.P.

Notes to Financial Statements (Liquidation Basis)

Futures-style Options. The Master may have traded futures-style option contracts. Unlike traditional option contracts, the premiums for futures-style option contracts were not received or paid upon the onset of the trade. The premiums were recognized and received or paid as part of the sales price when the contract was closed. Similar to a futures contract, variation margin for the futures-style option contract may have been made or received by the Master each business day, depending on the daily fluctuations in the value of the underlying contracts, and were recorded as unrealized gains or losses by the Master. Transactions in futures-style option contracts require participants to make both initial margin deposits of cash or other assets and variation margin deposits, through the futures broker, directly with the exchange on which the contracts are traded. Futures-style option contracts are presented as part of “Net unrealized appreciation on open futures contracts” or “Net unrealized depreciation on open futures contracts,” as applicable, in the Statements of Financial Condition. Net realized gains (losses) and net change in unrealized gains (losses) on futures-style option contracts are included in the Statements of Income and Expenses.

London Metals Exchange Forward Contracts. Metal contracts traded on the London Metals Exchange (“LME”) represent a firm commitment to buy or sell a specified quantity of aluminum, copper, lead, nickel, tin or zinc. LME contracts traded by the Master were cash settled based on prompt dates published by the LME. Variation margin may have been made or received by the Master each business day, depending on the daily fluctuations in the value of the underlying contracts, and were recorded as unrealized gains or losses by the Master. A contract is considered offset when all long positions have been matched with a like number of short positions settling on the same prompt date. When the contract was closed at the prompt date, the Master recorded a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Transactions in LME contracts require participants to make both initial margin deposits of cash or other assets and variation margin deposits, through the broker, directly with the LME. Net realized gains (losses) and net change in unrealized gains (losses) on metal contracts are included in the Statements of Income and Expenses.

Market risk is the potential for changes in the value of the financial instruments traded by the Master due to market changes, including interest and foreign exchange rate movements and fluctuations in commodity or security prices. Market risk is directly impacted by the volatility and liquidity in the markets in which the related underlying assets are traded. The Master was exposed to market risk equal to the value of futures and forward contracts purchased and unlimited liability on such contracts sold short.

Credit risk is the possibility that a loss may occur due to the failure of a counterparty to perform according to the terms of a contract. The Master’s risk of loss in the event of a counterparty default was typically limited to the amounts recognized in the Statements of Financial Condition and was not represented by the contract or notional amounts of the instruments. The Master’s risk of loss was reduced through the use of legally enforceable master netting agreements with counterparties that permitted the Master to offset unrealized gains and losses and other assets and liabilities with such counterparties upon the occurrence of certain events. The Master had credit risk and concentration risk, as MS&Co. or an MS&Co. affiliate was the sole counterparty or broker with respect to the Master’s assets. Credit risk with respect to exchange-traded instruments was reduced to the extent that, through MS&Co. or an MS&Co. affiliate, the Master’s counterparty was an exchange or clearing organization.

The General Partner monitored and attempted to mitigate the Master’s risk exposure on a daily basis through financial, credit and risk management monitoring systems and, accordingly, believed that it had effective procedures for evaluating and limiting the credit and market risks to which the Master may have been subject. These monitoring systems generally allowed the General Partner to statistically analyze actual trading results with risk-adjusted performance indicators and correlation statistics. In addition, online monitoring systems provided account analysis of futures, forward and option contracts by sector, margin requirements, gain and loss transactions and collateral positions.

The majority of these instruments matured within one year of the inception date. However, due to the nature of the Master’s business, these instruments may not have been held to maturity.

MB Master Fund L.P.

Notes to Financial Statements (Liquidation Basis)

In the ordinary course of business, the Master entered into contracts and agreements that contained various representations and warranties and which provided general indemnifications. The Master’s maximum exposure under these arrangements cannot be determined, as this could include future claims that have not yet been made against the Master. The Master considered the risk of any future obligation relating to these indemnifications to be remote.

9. Subsequent Events:

The General Partner evaluates events that occur after the balance sheet date but before and up until financial statements are issued. The General Partner has assessed the subsequent events through March 19, 2019, the date the financial statements were available to be issued and has determined that, other than disclosed below and in Note 10, “Liquidation of the Master,” there were no subsequent events requiring adjustment to or disclosure in the financial statements.

Effective March 6, 2019, Maureen O’Toole resigned as a director of the General Partner.

10. Liquidation of the Master:

Payment of the Master’s liquidation redemptions payable to the Funds was made on January 3, 2019.