UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number 811-21666

HATTERAS MASTER FUND, L.P.
(Exact name of registrant as specified in charter)

8540 COLONNADE CENTER DRIVE, SUITE 401
RALEIGH, NORTH CAROLINA 27615
(Address of principal executive offices) (Zip code)

DAVID B. PERKINS
8540 COLONNADE CENTER DRIVE, SUITE 401
RALEIGH, NORTH CAROLINA 27615
(Name and address of agent for service)

Registrant's telephone number, including area code: (919) 846-2324

Date of fiscal year end: MARCH 31

Date of reporting period: SEPTEMBER 30, 2006

Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.

ITEM 1. REPORTS TO STOCKHOLDERS.

HATTERAS MASTER FUND, L.P.

FINANCIAL STATEMENTS

FOR THE PERIOD OF APRIL 1, 2006 TO SEPTEMBER 30, 2006

UNAUDITED

HATTERAS MASTER FUND, L.P.

FOR THE PERIOD OF APRIL 1, 2006 TO SEPTEMBER 30, 2006

UNAUDITED

TABLE OF CONTENTS

Schedule of Investments ................................................... 1
Statement of Assets and Liabilities ....................................... 5
Statement of Operations ................................................... 6
Statement of Changes in Partners' Capital ................................. 7
Statement of Cash Flows ................................................... 8
Notes to Financial Statements ............................................. 9
Board of Directors ........................................................ 16
Fund Management ........................................................... 17
Other Information ......................................................... 18

HATTERAS MASTER FUND, L.P.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2006 (UNAUDITED)

INVESTMENT OBJECTIVE AS A PERCENTAGE OF TOTAL PARTNERS' CAPITAL

Percentages are as follows:

(PIE CHART)

Opportunistic Equity (32.01%)
Private Equity Composite (8.71%)
Real Estate Composite (6.33%)
Other assets in excess of liabilities (0.36%)
Absolute Return (20.27%)
Energy and Natural Resources (13.26%)
Enhanced Fixed Income (19.06%)

COST FAIR VALUE
----------- ------------

INVESTMENTS IN UNDERLYING FUNDS (99.64%)
ABSOLUTE RETURN (20.27%)
AQR Global Asset Institutional Fund II, L.P. (a, b) $ 4,471,305 $ 4,252,663
Black River Global Multi-Strategy Leveraged Fund, LLC (a, b) 6,000,000 6,271,408
Wellington Partners, LLC (a, b) 3,785,759 4,659,489
Courage Special Situations Fund, L.P. (a, b) 4,827,675 5,272,185
De Shaw Composite Fund, LLC (a, b) 10,000,000 10,714,199
Deephaven Event Fund, LLC (a, b) 7,000,000 7,436,175
Montrica Global Oppurtunities Fund, L.P. (a, b) 5,000,000 5,017,830
OZ Asia Domestic Partners, L.P. (a, b) 7,000,000 7,329,239
Smith Breeden Mortgage Partners, L.P. (a, b) 4,413,258 4,874,999
Stark Investments, L.P. (a, b) 8,000,000 8,075,614
Waterstone Market Neutral Fund, L.P. (a, b) 3,000,000 3,041,065
------------
66,944,866
------------

See Notes to Financial Statements

HATTERAS MASTER FUND, L.P.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2006 (UNAUDITED) (CONTINUED)

COST FAIR VALUE
----------- ------------

ENERGY AND NATURAL RESOURCES (13.26%)
Blackrock All Cap Energy Hedge Fund, LLB (a, b) $ 4,234,684 $ 3,707,684
Arclight Energy Partners Fund III, L.P. (a, b) 625,943 603,097
Black River Commodity Multi Strategy Fund, L.P. (a, b) 7,000,000 7,117,734
Cambridge Energy, L.P. (a, b) 2,566,534 3,714,220
Centennial Energy Partners, L.P. (a, b) 5,000,000 4,398,857
EnerVest Energy Institutional Fund X-A, L.P. (a, b) 2,568,183 2,640,391
Merit Energy Partners F-II, L.P. (a, b) 338,191 338,268
Natural Gas Partners Energy Tech, L.P. (a, b) 164,500 145,991
Natural Gas Partners VIII, L.P. (a, b) 1,216,889 1,178,400
Ospraie Special Opportunities Fund, L.P. (a, b) 3,750,000 3,712,665
Southport Energy Plus Partners, L.P. (a, b) 5,083,819 6,984,349
Touradji Deeprock Partners, L.P. (a, b) 4,000,000 4,116,708
Treaty Oak Partners, L.P. (a, b) 5,000,000 5,134,386
------------
43,792,750
------------
ENHANCED FIXED INCOME (19.06%)
ARX Global High Yield Securities Fund I, L.P. (a, b) 7,000,000 7,409,275
BDCM Partners I, L.P. (a, b) 8,500,000 10,005,662
Blackrock International Bond Fund (a) 2,900,000 2,855,069
Contrarian Capital Fund I, L.P. (a, b) 8,880,064 10,595,378
D.B. Zwirn Special Opportunities Fund, L.P. (a, b) 6,500,000 7,100,193
Drawbridge Special Opportunities Fund, L.P. (a, b) 7,000,000 7,170,739
Greylock Global Opportunity Fund, L.P. (a, b) 4,922,405 5,292,952
Lazard Emerging Income, L.P. (a, b) 3,000,000 3,238,349
Melody Fund, L.P. (a, b) 3,000,000 3,164,020
Ore Hill Fund, L.P. (a, b) 5,221,928 6,096,284
------------
62,927,921
------------

See Notes to Financial Statements

HATTERAS MASTER FUND, L.P.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2006 (UNAUDITED) (CONTINUED)

COST FAIR VALUE
----------- ------------

OPPORTUNISTIC EQUITY (32.01%)
Artis Technology Qualified 2X, L.P. (a, b) $ 5,000,000 $ 5,435,973
Asian Century Quest Fund (QP) L.P. (a, b) 3,000,000 3,037,259
CCM Small Cap Value Qualified Fund, L.P. (a, b) 2,500,000 2,405,396
CRM Windridge Partners, L.P. (a, b) 4,522,017 5,202,773
DE Shaw Oculus Fund LLC (a, b) 5,000,000 5,260,882
Ellerston GEMS Offshore Fund, L.P. (a, b) 7,000,000 7,327,138
GMO Mean Reversion Fund A (a, b) 5,770,065 6,385,258
Gradient Europe Fund, L.P. (a, b) 3,500,000 5,219,453
Healthcor, L.P. (a, b) 11,000,000 12,200,403
Liberty Square Strategic Partners IV (Asia), L.P. (a, b) 7,000,000 7,245,135
Sansar Capital, L.P. (a, b) 5,000,000 5,550,360
SCP Domestic Fund, L.P. (a, b) 4,002,947 4,696,754
SR Global Fund, L.P. (Class C) International (a, b) 3,457,674 5,023,290
SR Global Fund, L.P. (Class G) Emerging (a, b) 4,281,970 6,325,034
SR Global Fund, L.P. (Class H) Japan (a, b) 3,665,240 4,588,215
Standard Pacific Japan Fund, L.P. (a, b) 5,500,000 4,967,356
Steeple Capital Fund I, L.P. (a, b) 1,000,000 969,350
The Platinum Fund Ltd. (a, b) 2,535,461 3,009,767
The Raptor Global Fund, L.P. (a, b) 2,500,000 2,891,620
Visium Long Bias Fund, L.P. (a, b) 5,964,983 5,742,800
Witches Rock Fund, L.P. (a, b) 2,003,000 2,240,759
------------
105,724,975
------------
PRIVATE EQUITY COMPOSITE (8.71%)
Actis Umbrella Fund, L.P. (a, b) 398,426 339,000
BDCM Opportunity Fund II, L.P. (a, b) 277,493 258,006
Brazos Equity Fund II, L.P. (a, b) 907,461 805,960
Carlyle Japan Partners II, L.P. 1,539 --
Claremont Creek Ventures, L.P. (a, b) 280,000 210,316
Crosslink Crossover Fund IV, L.P. (a, b) 6,883,399 7,759,835
Great Point Partners VII, L.P. (a, b) 300,000 300,000
Halifax Fund II, L.P. (a, b) 523,995 415,711
Hancock Park Capital III, L.P. (a, b) 900,000 877,571
Integral Capital Partners VII, L.P. (a, b) 6,000,000 6,203,199
OCM European Principal Opportunties Fund, L.P. (a, b) 2,080,307 2,071,871

See Notes to Financial Statements

HATTERAS MASTER FUND, L.P.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 2006 (UNAUDITED) (CONTINUED)

COST FAIR VALUE
----------- ------------

PRIVATE EQUITY COMPOSITE (8.71%) (CONTINUED)
OCM Mezzanine Fund II, L.P. (a, b) $ 2,475,000 $ 2,521,044
Pipe Equity Partners, LLC (a, b) 3,824,693 4,349,038
Private Equity Investment Fund IV, L.P. (a, b) 461,688 462,164
Roundtable Healthcare Partners II, L.P. (a, b) 723,699 638,516
Sanderling Venture Partners VI Co-Investment Fund, L.P. (a, b) 250,000 212,569
Sanderling Venture Partners VI, L.P. (a, b) 350,000 294,891
Sterling Capital Partners II, L.P. (a, b) 450,274 390,284
VCFA Private Equity Partners IV, L.P. (a, b) 545,214 487,951
VCFA Private Equity Partners V, L.P. (a, b) 160,000 160,000
------------
28,757,926
------------
REAL ESTATE COMPOSITE (6.33%)
Benson Elliot Real Estate Partners II, L.P. (a, b) 85,338 48,523
Colony Edge, L.P. (a, b) 2,000,000 2,066,515
Colony Investors VII, L.P. (a, b) 1,137,951 1,154,514
ING Clarion CRA Hedge Fund, L.P. (a, b) 2,356,915 3,294,793
ING Clarion Global, L.P. (a, b) 3,000,000 3,269,010
Mercury Special Situtitions Fund, L.P. (a, b) 3,000,000 2,763,769
Oak Hill Plus, L.P. (a, b) 2,000,000 1,887,646
Security Capital Preferred Growth, Inc. (b) 1,714,042 2,039,253
Transwestern Mezzanine Realty Partner II, LLC (b) 752,562 796,656
Wells Street Partners, LLC (a, b) 2,686,675 3,585,401
------------
20,906,080
------------

TOTAL INVESTMENTS IN UNDERLYING FUNDS (COST $302,701,165) 329,054,518

OTHER ASSETS IN EXCESS OF LIABILITIES (0.36%) 1,197,799
------------
PARTNERS' CAPITAL -- 100.00% $330,252,317
============

(a) - Non-income producing securities

(b) - Securities are issued in private placement transactions and as such are
restricted as to resale.

Total cost and value of restricted securities as of September 30, 2006 was
$299,801,165 and $326,199,449 respectively.

See Notes to Financial Statements

HATTERAS MASTER FUND, L.P.
STATEMENT OF ASSETS AND LIABILITIES - SEPTEMBER 30, 2006 (UNAUDITED)

ASSETS
Investments in Underlying Funds, at fair value (cost $302,701,165) $329,054,518
Cash and cash equivalents 3,653,400
Investments in Underlying Funds paid in advance 6,900,000
Receivables from investment 16,014
Dividends and interest receivables 28,918
Withholding tax refund receivable 26,478
Prepaid assets 58,218
------------
TOTAL ASSETS $339,737,546
============
LIABILITIES AND PARTNERS' CAPITAL
Contributions received in advance $ 9,036,230
Management fees payable 275,235
Professional fees payable 43,875
Board of directors' fees payable 3,037
Accounting and administration fees payable 46,660
Organizational fees payable 25,393
Payable to affiliates 19,587
Line of credit fee payable 18,987
Risk management expense payable 11,458
Custodian fees payable 4,683
Investor servicing fees payable 84
------------
TOTAL LIABILITIES 9,485,229
------------
PARTNERS' CAPITAL $330,252,317
------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $339,737,546
============

See Notes to Financial Statements

HATTERAS MASTER FUND, L.P.
STATEMENT OF OPERATIONS - APRIL 1, 2006 TO SEPTEMBER 30, 2006 (UNAUDITED)

INVESTMENT INCOME
Dividends $ 220,849
Interest 61,173
-----------
TOTAL INVESTMENT INCOME 282,022
-----------
OPERATING EXPENSES
Management fees 1,423,162
Risk management expense 129,383
Accounting and administration fees 133,497
Professional fees 93,670
Insurance expense 53,170
Board of directors' fees 18,750
Interest expense 8,043
Custodian fees 12,659
Line of credit fees 40,383
Other expenses 22,901
-----------
TOTAL OPERATING EXPENSES 1,935,618
-----------
NET INVESTMENT LOSS (1,653,596)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS IN UNDERLYING FUNDS
Net realized gain on investments in Underlying Funds 406,412
Net change in unrealized appreciation on investments in Underlying Funds 2,069,108
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS IN UNDERLYING FUNDS 2,475,520
-----------
NET INCREASE IN PARTNERS' CAPITAL RESULTING FROM OPERATIONS $ 821,924
===========

See Notes to Financial Statements

HATTERAS MASTER FUND, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL - APRIL 1, 2006 TO SEPTEMBER 30, 2006
(UNAUDITED)

LIMITED
PARTNERS'
CAPITAL*
------------

PARTNERS' CAPITAL, AT MARCH 31, 2005 $116,826,646
Capital contributions 77,428,383
Capital withdrawals (2,250,000)
Net investment loss (1,894,577)
Net realized loss on investments in Underlying Funds (89,064)
Net increase in unrealized appreciation on
investments in Underlying Funds 23,499,600
------------
PARTNERS' CAPITAL, AT MARCH 31, 2006 $213,520,988
Capital contributions 116,409,405
Capital withdrawals (500,000)
Net investment loss (1,653,596)
Net realized gain on investments in Underlying Funds 406,412
Net increase in unrealized appreciation on
investments in Underlying Funds 2,069,108
------------
PARTNERS' CAPITAL, AT SEPTEMBER 30, 2006 $330,252,317
============

See Notes to Financial Statements

HATTERAS MASTER FUND, L.P.
STATEMENT OF CASH FLOWS - APRIL 1, 2006 TO SEPTEMBER 30, 2006
(UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in partners' capital resulting from operations $ 821,924
Adjustments to reconcile net increase in partners' capital from
investment operations to net cash used for operating activities:
Purchases of Underlying Funds (133,892,989)
Proceeds from redemptions of Underlying Funds 20,162,853
Net realized gain on investments in Underlying Funds (406,412)
Net change in unrealized appreciation on investments in Underlying Funds (2,069,108)
Decrease in investments in Underlying Funds paid in Advance 12,600,000
Increase in Withholding Tax refund receivable (26,478)
Decrease in receivables from redemptions of Underlying Funds 391,525
Increase in dividends and interest receivables (4,597)
Decrease in prepaid assets 61,926
Increase in payable to affiliates 19,586
Increase in line of credit fee payable 18,987
Increase in management fees payable 97,180
Decrease in professional fees payable (30,750)
Increase in accounting and administration fees payable 12,342
Decrease in risk management expense payable (4,352)
Increase in custodian fees payable 2,124
Increase in board of directors' fees payable 3,037
Decrease in investor servicing fees payable (16)
-------------
Net cash used in operating activities (102,243,218)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions (including contributions received in advance) 102,870,691
Capital withdrawals (500,000)
-------------
Net cash provided by financing activities 102,370,691
-------------
Net change in cash and cash equivalents 127,473
Cash and cash equivalents at beginning of period 3,525,927
-------------
Cash and cash equivalents at end of period $ 3,653,400
=============

See Notes to Financial Statements

HATTERAS MASTER FUND, L.P.
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2006 (UNAUDITED)

1. ORGANIZATION

Hatteras Master Fund, L.P. (the "Master Fund") was organized as a limited
partnership under the laws of the State of Delaware on October 29, 2004.
The Master Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a closed-end, non-diversified management
investment company. The Master Fund is managed by Hatteras Investment
Partners, LLC (the "Investment Manager"), a Delaware limited liability
company registered as an investment adviser under the Investment Advisers
Act of 1940, as amended. The objective of the Master Fund is to generate
consistent long-term appreciation and returns across all market cycles. To
achieve its objective, the Master Fund will provide its limited partners
(each, a "Limited Partner" and together, the "Limited Partners") with
access to a broad range of investment strategies and asset categories,
trading advisors ("Advisors") and overall asset allocation services
typically available on a collective basis to larger institutions.
Generally, the Investment Manager intends to select Advisors that
collectively employ widely diversified investment strategies and engage in
such techniques as opportunistic equity, enhanced fixed income, absolute
return, private equity, real estate and energy/natural resources. However,
the Investment Manager may also retain Advisors who utilize other
strategies. The Master Fund invests with each Advisor either by becoming a
participant in an investment vehicle operated by the Advisor (an
"Underlying Fund") or by placing assets in an account directly managed by
the Advisor. The Master Fund commenced operations on January 1, 2005. Prior
to January 1, 2005, the Master Fund engaged in no transactions other than
those related to organizational matters and the sale of a $100,000 interest
to Hatteras Diversified Strategies Fund, LP.

Hatteras Investment Management LLC, a Delaware limited liability company,
serves as the General Partner of the Master Fund (the "General Partner").
The General Partner has initially appointed a Board of Directors (the
"Board") and, to the fullest extent permitted by applicable law, has
irrevocably delegated to the Board its rights and powers to monitor and
oversee the business affairs of the Master Fund, including the complete and
exclusive authority to oversee and establish policies regarding the
management, conduct and operation of the Master Fund's business.

On January 3, 2005, the Master Fund received capital contributions totaling
$116,269,458, including contributions in the form of transfers-in-kind from
Hatteras Diversified Strategies Fund, LP and Hatteras Diversified
Strategies Offshore Fund, Ltd. for $72,386,769 and $16,620,182,
respectively. In addition, the Hatteras Diversified Strategies Offshore
Fund, Ltd. transferred receivables in the amount of $17,242,388 and
liquidated $10,020,119 of the Fund's securities at December 31, 2004 and
reinvested the proceeds in the Master Fund.

2. SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America. The
following is a summary of significant accounting and reporting policies
used in preparing the financial statement.

HATTERAS MASTER FUND, L.P.
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2006 (UNAUDITED) (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

A. INVESTMENT VALUATION - INVESTMENTS IN UNDERLYING FUNDS

The Master Fund will value interests in the Underlying Funds at fair value,
which ordinarily will be the value determined by their respective
investment managers, in accordance with procedures established by the
Board. Investments in Underlying Funds are subject to the terms of the
Underlying Funds' offering documents. Valuations of the Underlying Funds
may be subject to estimates and are net of management and performance
incentive fees or allocations payable to the Underlying Funds' as required
by the Underlying Funds' offering documents. If the Investment Manager
determines that the most recent value reported by the Underlying Fund does
not represent fair value or if the Underlying Fund fails to report a value
to the Master Fund, a fair value determination is made under procedures
established by and under the general supervision of the Board. Because of
the inherent uncertainty in valuation, the estimated values may differ from
the values that would have been used had a ready market for the securities
existed, and the differences could be material.

B. INVESTMENT INCOME

Interest income is recorded on an accrual basis. Dividend income is
recorded on the ex-dividend date, except that certain dividends from
private equity investments are recorded as soon as the information is
available to the Master Fund. The Underlying Funds generally do not make
regular cash distributions of income and gains and so are generally
considered non-income producing securities, however the Master Fund owns
securities that are income producing and disburse regular cash
distributions.

C. FUND EXPENSES

The Master Fund will bear all expenses incurred in the business of the
Master Fund, including, but not limited to, the following: all costs and
expenses related to portfolio transactions and positions for the Master
Fund's account; legal fees; accounting and auditing fees; costs of
insurance; registration expenses; certain offering and organization costs;
and expenses of meetings of the Board.

D. INCOME TAXES

The Master Fund is treated as a partnership for federal income tax purposes
and therefore not subject to federal income tax. For income tax purposes,
the individual partners will be taxed upon their distributive share of each
item of the Master Fund's income, gain, loss, deductions and credits.

HATTERAS MASTER FUND, L.P.
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2006 (UNAUDITED) (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

E. CASH AND CASH EQUIVALENTS

Cash and cash equivalents includes amounts held in interest bearing DDA
accounts. At September 30, 2006 the Master Fund held $3,653,400 in interest
bearing DDA accounts.

F. USE OF ESTIMATES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires the
Master Fund to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
and the reported amounts of income and expense during the reporting period.
Actual results could differ from these estimates.

3. ALLOCATION OF PARTNERS' CAPITAL

Net profits or net losses of the Master Fund for each Allocation Period (as
defined below) will be allocated among and credited to or debited against
the capital accounts of the Limited Partners. Allocation Periods begin on
the day after the last day of the preceding Allocation Period and end at
the close of business on (1) the last day of each month, (2) the last day
of each taxable year; (3) the day preceding each day on which interests are
purchased, (4) the day on which interests are repurchased, or (5) the day
on which any amount is credited to or debited from the capital account of
any Limited Partner other than an amount to be credited to or debited from
the capital accounts of all Limited Partners in accordance with their
respective investment percentages.

4. MANAGEMENT FEE, RELATED PARTY TRANSACTIONS AND OTHER

The Investment Manager is responsible for providing day-to-day investment
management services to the Master Fund, subject to the ultimate supervision
of and subject to any policies established by the Board, pursuant to the
terms of an investment management agreement with the Master Fund (the
"Investment Management Agreement"). Under the Investment Management
Agreement, the Investment Manager is responsible for developing,
implementing and supervising the Master Fund's investment program.

In consideration for such services, the Master Fund pays the Investment
Manager a monthly management fee equal to 1/12th of 1.00% (1.00% on an
annualized basis) of the aggregate value of its partners' capital
determined as of the last day of the month (before repurchase of
interests). Prior to July 1, 2005, the Master Fund paid a management fee
based on the net asset value as of the first business day of each fiscal
quarter.

HATTERAS MASTER FUND, L.P.
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2006 (UNAUDITED) (CONTINUED)

4. MANAGEMENT FEE, RELATED PARTY TRANSACTIONS AND OTHER (CONTINUED)

Each member of the Board who is not an "interested person" of the Master
Fund (the "Independent Board"), as defined by the 1940 Act, receives an
annual retainer of $10,000. All Board members are reimbursed by the Master
Fund for all reasonable out-of-pocket expenses incurred by them in
performing their duties.

UMB Bank, n.a. serves as custodian of the Master Fund's assets and provides
custodial services for the Master Fund. UMB Investment Services Group
serves as administrator and accounting agent to the Master Fund and
provides certain accounting, record keeping and investor related services.
The Master Fund pays a monthly fee to the administrator based upon average
partners' capital, subject to certain minimums.

5. INVESTMENT TRANSACTIONS

Total purchases of Underlying Funds for the period ended September 30,
2006, amounted to $133,892,989. Total proceeds from redemptions of
Underlying Funds for the period ended September 30, 2006, amounted to
$20,162,853. The cost of investments in Underlying Funds for Federal income
tax purposes is adjusted for items of taxable income allocated to the
Master Fund from the Underlying Funds. The Master Fund relies upon actual
and estimated tax information provided by the underlying funds as to the
amounts of taxable income allocated to the Master Fund as of September 30,
2006.

6. RISK FACTORS

An investment in the Master Fund involves significant risks that should be
carefully considered prior to investing and should only be considered by
persons financially able to maintain their investment and who can afford a
loss of a substantial part or all of such investment. The Master Fund
intends to invest substantially all of its available capital in securities
of private investment companies. These investments will generally be
restricted securities that are subject to substantial holding periods or
are not traded in public markets at all, so that the Master Fund may not be
able to resell some of its securities holdings for extended periods, which
may be several years. Investments in the Underlying Funds may be restricted
from early redemptions or subject to fees for early redemptions as part of
contractual obligations agreed to by the Advisor on behalf of the Master
Fund. Underlying Funds generally require the Advisor to provide advanced
notice of its intent to redeem the Master Fund's total or partial interest
and may delay or deny a redemption request depending on the Underlying
Funds' governing agreements. No guarantee or representation is made that
the investment objective will be met.

HATTERAS MASTER FUND, L.P.
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2006 (UNAUDITED) (CONTINUED)

7. USAGE OF UNSECURED, UNCOMMITTED REVOLVING LOAN FACILITIES

The Master Fund has entered into a revolving loan facility for the purpose
to finance short timing differences between the redemption of investments
or receipt of partnership capital and the redemption of partnership capital
accounts; the investment in new managers; or as general working capital.

8. REPURCHASE OF PARTNERS' INTERESTS

The Board may, from time to time and in its sole discretion, cause the
Master Fund to repurchase interests from Limited Partners pursuant to
written tenders by Limited Partners at such times and on such terms and
conditions as established by the Board. In determining whether the Master
Fund should offer to repurchase interests, the Board will consider the
recommendation of the Investment Manager. Beginning on March 31, 2006, the
Investment Manager expects that it will generally recommend to the Board
that the Master Fund offer to repurchase interests from Limited Partners on
a quarterly basis as of March 31, June 30, September 30 and December 31 of
each year. The Master Fund does not intend to distribute to the Partners
any of the Master Fund's income, but intends to reinvest substantially all
income and gains allocable to the Partners. A Partner may, therefore, be
allocated taxable income and gains and not receive any cash distribution.

9. INDEMNIFICATION

In the normal course of business, the Master Fund enters into contracts
that provide general indemnifications. The Master Fund's maximum exposure
under these agreements is dependent on future claims that may be made
against the Master Fund, and therefore cannot be established; however,
based on experience, the risk of loss from such claims is considered
remote.

10. COMMITMENTS

As of September 30, 2006, the Master Fund had outstanding investment
commitments to Underlying Funds totaling $85,337,876.

11. FINANCIAL HIGHLIGHTS

The financial highlights are intended to help you understand the Master
Fund's financial performance for the past period. The total returns in the
table represent the rate that a typical Limited Partner would be expected
to have earned or lost on an investment in the Master Fund. The ratios and
total return amounts are calculated based on the Limited Partner group
taken as a whole. An individual Limited Partner's results may vary from
those shown below due to the timing of capital transactions.

HATTERAS MASTER FUND, L.P.
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2006 (UNAUDITED) (CONTINUED)

11. FINANCIAL HIGHLIGHTS (CONCLUDED)

The ratios are calculated by dividing total dollars of net investment
income or expenses, as applicable, by the average of total monthly limited
partners' capital. The ratios do not reflect the Master Fund's
proportionate share of income and expenses from Underlying Funds.

Total return amounts are calculated by geometrically linking returns based
on the change in value during each accounting period. The total return
amounts have not been annualized for the periods less than a year.

FOR THE PERIOD FROM JANUARY
FOR THE SIX 1, 2005 (COMMENCEMENT
MONTH PERIOD ENDED FOR THE YEAR ENDED OF OPERATIONS)
SEPTEMBER 30, 2006 MARCH 31, 2006 THROUGH MARCH 31, 2005
------------------ ------------------ ---------------------------

Total return amortizing organizational expenses* --** --** 0.23%
Total return 0.06% 13.79% 0.17%
Partners' capital, end of period (000) $330,252 $213,521 $116,827
Portfolio Turnover 7.38% 19.35% 3.72%

ANNUALIZED RATIOS:
Net Investment loss (0.60)% (1.23)% (1.43)%
Total Expenses 0.71% 1.52% 1.50%

* Return is indicative of amortizing organizational expenses over 60 months
for tax purposes.

** Organizational costs were fully expensed as of 3/31/05.

HATTERAS MASTER FUND, L.P.
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2006 (UNAUDITED) (CONCLUDED)

12. NEW ACCOUNTING PRONOUNCEMENTS

In July 2006, the financial Accounting Standards Board issued
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -- an
Interpretation of FASB Statement No. 109" (the interpretation"). The
Interpretation establishes for all entities, including pass-through
entities such as Funds, a minimum threshold for financial statements
recognition of the benefit of positions taken in filing tax returns
(including whether an entity is taxable in a particular jurisdiction), and
required certain expanded tax disclosures. The Interpretation is effective
for fiscal years beginning after December 15, 2006 and is to be applied to
all open tax years as of the date of effectiveness.

Management has recently begun to evaluate the application of the
Interpretation to the Funds, and is not in a position at this time to
estimate the significance of its impact, if any, on the Funds' financial
statements.

In September 2006, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 157, "Fair Value
Measurements." The Statement defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles
(GAAP), and expands disclosures about fair value hierarchy that
distinguishes between (1) market participant assumptions developed based on
market data obtained from sources independent of the reporting entity
(observable inputs). The Statement is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and is to be
applied prospectively as of the beginning of the fiscal year in which this
Statement is initially applied. Management has recently begun to evaluate
the application of the Statement to the Funds, and is not in a position at
this time to evaluate the significance of its impact, if any, on the Funds'
financial statements.

13. SUBSEQUENT EVENTS

During the period from October 1, 2006 through October 30, 2006, there were
additional capital contributions and capital withdrawals of $14,835,046.48
and $5,798,816 respectively.

HATTERAS MASTER FUND, L.P.
BOARD OF DIRECTORS (UNAUDITED)

The identity of the Board Members and brief biographical information is set
forth below.

Number of Portfolios
Term of Office; Principal Occupation(s) During Past in Fund Complex'
Position(s) Held Length of Time 5 years and Other Directorships Held Overseen by Director
Name, Address & Age with the Fund Served by Director or Officer
------------------- ------------------ --------------- ------------------------------------ --------------------

INTERESTED DIRECTORS

David B. Perkins, 43 Chief Executive 3 year term; Mr. Perkins has been Chairman and 3
1000 Watermeet Lane Officer and Since Inception CEO since inception of the Funds.
Raleigh, NC 27614 Chairman of the Mr. Perkins became the President and
Board of Directors Managing Principal of the Investment
Manager in September 2003 and became
the co-founder and Managing Partner
of CapFinancial Partners, LLC in
April 2003. Prior to that, he was
Managing Partner at Wachovia
Securities Financial Network, Inc.
from June 2002 to September 2003 and
Managing Principal of CapTrust
Financial Advisors, LLC from October
1997 to June 2002.

INDEPENDENT DIRECTORS

Steve E. Moss, 52 Director: Chairman 3 year term; Mr. Moss is a principal of Holden, 3
918 Meadow Lane of the Audit Since December Moss, Knott, Clark, Copley & Hoyle,
Henderson, NC 27536 Committee 2004 P.A. and has been a member manager
of HMKCT Properties, LLC since
January 1996. Mr. Moss as been a
Director and Member of the Audit
Committee of the Fund since
December 2004.

H. Alexander Holmes, 63 Director: Audit 3 year term; Mr. Holmes founded Holmes Advisory 3
3408 Landor Road Committee Member Since December Services, LLC, a financial
Raleigh, NC 27609 2004 consultation firm, in 1993. Mr.
Holmes has been a Director and
Member of the Audit Committee of the
Fund since December 2004.

Gregory S. Sellers, 46 Director: Audit 3 year term; Mr. Sellers became the Chief 3
2643 Steeplechase Road Committee Member Since December Financial Officer and a director of
Gastonia, NC 28056 2004 Kings Plush, Inc., a fabric
manufacturer, in April 2003. Prior
to that, he was the Vice President
of Finance at Parksdale Mills, Inc.,
a cotton and cotton blend yarns
producer, from January 1991 to April
2003. Mr. Sellers has been a
Director and Member of the Audit
Committee for the Fund since
December 2004.

HATTERAS MASTER FUND, L.P.
FUND MANAGEMENT (UNAUDITED)

Set forth below is the name, age, position with the Fund, length of term of
office, and the principal occupation for the last five years of each of the
persons currently serving as Executive Officers of the Fund. Unless otherwise
noted, the business address of each officer is 8540 Colonnade Center Drive,
Suite 401, Raleigh, NC 27615.

Number of Portfolios
Term of Office; Principal Occupation(s) During Past in Fund Complex'
Position(s) Held Length of Time 5 years and Other Directorships Held Overseen by Director
Name, Address & Age with the Fund Served by Director or Officer
------------------- ---------------- --------------- ------------------------------------ --------------------

OFFICERS

J. Michael Fields, 32 Chief Financial Since Inception Mr. Fields has been the CFO since N/A
8540 Colonnade Officer inception of the Funds. Mr. Fields
Center Drive, Suite 401 became a Director of the Investment
Raleigh, NC 27615 Manager in September 2003. Prior to
joining the Investment Manager, Mr.
Fields was employed by CapTrust
Financial Advisors from August 2002
to September 2003. Prior to joining
CapTrust, Mr. Fields was employed by
Morgan Stanley in Atlanta, Georgia
from January 2000 to August 2002.

Denise Buchanan, 43 Chief Compliance Since Inception Ms. Buchanan has been the CCO since N/A
8540 Colonnade Officer inception of the Funds. Ms.
Center Drive, Suite 401 Buchanan became the Compliance
Raleigh, NC 27615 Officer with CapFinancial Partners,
LLC ("CapTrust") in November 2003.
Prior to joining CapTrust, Ms.
Buchanan was President of
Broker/Dealer Sales & Consulting,
Inc. from 2001 to November 2003.
Previously, Ms. Buchanan was the
Director of Compliance for Atlantic
Capital Management, LLC from 1996 to
2001.

Vickey Collins, 39 Secretary Since Inception Ms. Collins has been the Secretary N/A
8540 Colonnade of the Funds since inception. She
Drive, Suite 401 became the Operations Manager for
Raleigh, NC 27615 the Investment Manager in September
2004. Prior to joining the
Investment Manager, she was employed
with McKinely Capital Management
from 1994 to 2004.

HATTERAS MASTER FUND, L.P.
OTHER INFORMATION (UNAUDITED)

PROXY VOTING

A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities and
shareholders record of actual proxy votes cast is available at www.sec.gov
and may be obtained at no additional charge by calling 1-800-504-9070.

AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULES

The Fund files its complete schedule of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. The Fund's
Form N-Q is available, without charge and upon request, on the SEC's
website at http://www.sec.gov or may be reviewed and copied at the SEC's
Public Reference Room in Washington, DC. Information on the Public
Reference Room may be obtained by calling (800) SEC-0330.

ITEM 2. CODE OF ETHICS.

Not applicable to semi-annual reports.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

Not applicable to semi-annual reports.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Not applicable to semi-annual reports.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable to semi-annual reports.

ITEM 6. SCHEDULE OF INVESTMENTS.

Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.

Not applicable.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.

ITEM 11. CONTROLS AND PROCEDURES.

(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR
270.30a-3(c))) are effective, as of a date within 90 days of the filing date of
the report that includes the disclosure required by this paragraph, based on
their evaluation of these controls and procedures required by Rule 30a-3(b)
under the 1940 Act (17 CFR 270.30a-3(b)) and Rules13a-15(b) or 15d-15(b) under
the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).

(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR
270.30a-3(d)) that occurred during the registrant's second fiscal quarter of the
period covered by this report that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over financial
reporting.

ITEM 12. EXHIBITS.

(a)(1) Not applicable.

(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section
302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

(a)(3) Not applicable.

(b) Not applicable.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

(registrant) HATTERAS MASTER FUND, L.P.

By (Signature and Title)* /s/ DAVID B. PERKINS
------------------------------------------
David B. Perkins, President &
Chief Executive Officer
(principal executive officer)

Date DECEMBER 5, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

By (Signature and Title)* /s/ DAVID B. PERKINS
------------------------------------------
David B. Perkins, President &
Chief Executive Officer
(principal executive officer)

Date DECEMBER 5, 2006

By (Signature and Title)* /s/ J. MICHAEL FIELDS
------------------------------------------
J. Michael Fields, Chief Financial Officer
(principal financial officer)

Date DECEMBER 5, 2006

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