REVISED NOVEMBER 2012 The Sample Master Fund, Ltd. 1 ...

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REVISED

NOVEM
BER

2012











The Sample
Master Fund, Ltd.

1

ANNUAL REPORT

DE C E MBE R 3 1,
2 0 1
2

































1

Add “FINAL” for termination
audit.

Note 1
:

SPECIAL COVER PAGE D
ISCLOSURES REQUIRED
FOR FINANCIAL STATEM
ENTS OF EXEMPT POOLS

UNDER REGULATION

4.7 OR 4.12(b). See The
Sample Commodity Pool Limited Partnership

for example of 4.7 disclosure
.

Note 2
:

The Sample Master Fund, Ltd. is only
for purposes of formatting and disclosure in financial statements. Amounts do not necessarily foot, crossfoot or agree to ot
her financial
statements or footnotes.

Note 3
:

LP’s, LLCs, Trusts or other entity types should use the same Sample Master Fund form
atting but change language (e.g., Partners, Partners’ Capital) to that of the governing
agreement of the Fund.

Note 4
:

See Sample Hedge Fund for additional disclosures when a fund trades other instruments (e.g., credit default swaps, bonds, etc
.).

Note 5
:

Please be aware of the AICPA Practice Aid “Audits of Futures Commission Merchants, Introducing Brokers, and Commodity Pools,”

the most recent years’ CFTC’s “Dear
CPO Letter,” the most recent versions of the AICPA Audit Guide “Audits of Investment Companies
” and the AICPA Audit Guide “Auditing Derivative Instruments, Hedging
Activities, and Investments in Securities,” as well as the most recent AICPA Audit Risk Alerts, “Investment Companies Industr
y Developments” and “Securities Industry
Developments” and th
e AICPA Practice Aid, “Alternative Investments


Audit Considerations.”

Note 6
:

The most recent Dear CPO Letter dated
March 8
,
2012
, refers to the Dear CPO Letters issued in prior years. Please consult these letters as necessary.

Note 7
:

All references to

the AICPA Audit Guide “Audits of Investment Companies” are to the May 1,
2012

version.



THE SAMPLE MASTER FUND, LTD.




_______________________


TABLE OF CONTENTS

_______________________




PAGES



Affirmation of the Commodity Pool Operator
2

1


Independent Auditor’s Report

2



3


Financial Statements
3



Statements of Financial Condition

4



Condensed Schedules of
Investments
4

5



9



Statements of Operations

10



Statements of Changes in Shareholders’ Equity (Net Asset Value)

11



Statements of Cash Flows
5

12



Notes to Financial Statements

13



31





2

Applicable only if the Fund is a commodity pool subject to CFTC regulation and reporting requirements.

3

Commodity pools with a 4.7 exemption are not required to
present comparative financial statements. Please consult with engagement partner/manager to determine
whether single year or comparative financial statements should be presented.

4

If not a condensed schedule of investments, change wording of title (i.e.,

Schedule of Investments).

5

A statement of cash flows may not be required if the Fund qualifies for exemption under FASB ASC 230.

Note
:

If applicable, include in the table of contents separate Statements of Comprehensive Income (see FASB ASC 220). (Refer

to ASU 2011
-
05
Comprehensive Income

which affect
s

all entities that report items of other comprehensive income. For public entities, the amendments are effective for fiscal y
ears, and interim periods within those years, beginning
after December 15, 2011.

For non
-
public entities, the amendments are effective for fiscal years ending after December 15, 2012, and interim and annual periods

thereafter.)



THE SAMPLE MASTER FUND, LTD.

AFFIRMATION OF THE COMMODITY POOL OPERATOR

_______________














To the best of the knowledge and belief of the undersigned, the information contained in the
1

Annual
Report for the year ended
6

December 31,
201
2

is accurate and complete.












John O. Smith, President


Sample Management, Inc.


THE SAMPLE MASTER FUND, LTD.






6

Modify as needed for appropriate reporting period.

Note
:

Affirmation is not required for funds that are n
ot commodity pools subject to CFTC regulation and reporting requirements.



See accompanying notes.


-
4
-

THE SAMPLE MASTER FUND, LTD.

STATEMENTS OF FINANCIAL CONDITION

December 31,
201
2

and
20
1
1

_______________





201
2

201
1

ASSETS


Equity in commodity broker
7

trading account(s)



Cash (deficit)
8

$

223,392

$

(65,769)



United States government securities


1,409,800


2,768,441



Net
unrealized gain (loss) on open futures contracts
9


118,317


(121,161
)





Deposits with commodity broker(s)
7


1,751,509


2,581,511


Cash and cash
equivalents
8
,
10


18,583


27,439


United States government securities


1,000,000


0


Net unrealized gain (loss) on open forward



currency contract
s
9
,
11


40,140


(16,084)


Cash deposits with securities broker(s)


10,326


25,496


Investment securities



(cost


$5,000,167 and $4,137,862)


5,023,803


4,563,930


Receivable for securities sold


227,496


259,003


Investment(s) in other funds


6,465,424


4,828,091





Total assets

$

14,537,281

$

12,269,386

LIABILITIES


Investment securities sold short



(proceeds


$4,906,328 and $4,000,325)

$

4
,876,101

$

4,499,991


Payable for securities purchased


96,104


220,424


Commissions and other trading fees



on open futures contracts


5,161


6,017


Redemption(s) payable


217,912
12


48,664


Accounts payable


6,912


20,798





Total liabilities


5,202,190


4,795,894

SHAREHOLDERS’ EQUITY (NET ASSET VALUE)


Founders Shares, $1.00 par value; 100 shares



authorized, issued and outstanding


100


100


Participating Shares
13
, $0.01 par value, 2,495,000



shares authorized, 50,138 and 44,213 shares issued



and ou
tstanding at December 31,
201
2

and
201
1


9,334,991


7,473,392





Total shareholders’ equity






(Net Asset Value)


9,335,091


7,473,492







$

14,537,281

$

12,269,386







7

Commodity broker means Futures Commission Merchant (FCM) as defined in Note 1., A. Accordingly, only assets on deposit with
CFTC registered FCM’s should be included.

8

FASB

ASC
946
-
305
-
45 provides that amounts held in foreign currencies shall be disclosed separately at value, with acquisition cost shown paren
thetically. If material, consult
with engagement partner and manager regarding presentation.

9

Refer to FASB ASC 815
-
10
-
45

for conditions in which derivative instruments in a loss position may be offset against derivative instruments in a gain posi
tion. Pursuant to FASB
ASC 815
-
10
-
45, net fair value of derivative instruments with one broker or counterparty cannot be offset w
ith the net fair value of derivative instruments with another broker or
counterparty. Accordingly, two financial statement captions may be necessary for each unrealized gain (loss) category and ea
ch other derivative contract category (e.g., option
premium
s paid (received), forward currency contracts, etc.). If each broker or counterparty were to have net unrealized gains, then

only one caption would be necessary (i.e., you
are adding all positive amounts and presenting the sum on the statement of financia
l condition). See Sample Commodity Pool for an example of two financial statement captions:
one for net unrealized gain on open futures contracts and one for net unrealized loss on open futures contracts. An alternat
ive method of presentation would be t
o reflect the
aggregate gross unrealized gains from all brokers as an asset and the aggregate gross unrealized (losses) from all brokers as

a liability.

10

Include cash and cash equivalents held at banks and financial institutions as well as cash held at in
terbank and other derivative market makers (other than FCM’s) in this caption.

11

Caption as appropriate (e.g., forward currency contracts, swap contracts, etc.).

12

The total redemptions payable should equal the sum of the Feeder Funds’ redemptions receivab
le from the Master Fund.

13

The total Feeder Funds’ investments in the Master Fund should equal the total participating net asset value of the Master Fun
d (FASB ASC 946
-
210
-
45
-
6).



See
accompanying notes.


-
5
-

THE SAMPLE MASTER FUND, LTD.

CONDENSED SCHEDULE OF INVESTMENTS

December 31,
201
2

_______________




UNITED STATES GOVERNMENT SECURITIES



Maturity


Fair

% of Net


Face Value

Date

Description

Value

Asset Value


$

1,415,000

01/31/
1
3

U.S. Treasury Bill

$

1,409,800


15.10 %



1,005,000

02/28/
1
3

U.S. Treasury Bill


1,000,000


10.71 %





Total United States government securities






(cost, including accrued interest,


$2,409,800)

$

2,409,800


25.81 %

LONG FUTURES CONTRACTS





Fair

% of Net




Description

Value

Asset Value




Agricultural

$

516,218


5.53 %




Energy


101,768


1.09 %




Interest Rate


(78,411)


(0.84)%




Metal


(601,412)


(6.44)%




Stock Index


104,238


1.11 %


Total long futures contracts

$

42,401


0.45 %

SHORT FUTURES CONTRACTS





Fair

% of Net




Description

Value

Asset Value




Currency

$

60,222


0.65 %




Interest

Rate


36,591


0.39 %




Metal


(63,240)


(0.68)%




Stock Index


42,343


0.45 %


Total short futures contracts

$

75,916


0.81 %


Total futures contracts

$

118,317


1.26 %

FORWARD CURRENCY CONTRACTS





Fair

% of Net




Description

Value

Asset Value




Var
ious long forward currency contracts

$

524,655


5.62 %




Various short forward currency contracts


(484,515
)


(5.19)%


Total forward currency contracts

$

40,140


0.43 %

INVESTMENT SECURITIES





Fair

% of Net




Description

Value

Asset Value



Common
Stocks



Canada




Communications

$

34,272


0.37 %




Health Services


6,153


0.07 %




Machinery and Equipment


20,053


0.21 %




Retail


440,931


4.72 %



Total common stocks


Canada (cost


$434,241)


501,409


5.37 %







Note 1
:

See FASB ASC
946
-
210
-
50 for specific disclosure requirements. See also TPA 6910.16, 6910.17, and 6910.18, and AICPA Audit Guide, “Audits of Inves
tment Companies.”

Note 2
:

Please consult with engagement partner to determine each engagement’s specific method of presenta
tion.

Note 3
:

Consult with engagement partner and manager regarding totaling long and short futures contracts and long and short forward cu
rrency contracts categories.

Note 4
:

Additional information is required when an investment exceeds 5% of net asset va
lue. See FASB ASC 946
-
210
-
50 and TPA 6910.16. See also Sample Commodity Pool and
Sample Hedge Fund.

Note 5
:

The schedule of investments is included only in the Master Fund’s financial statements (FASB ASC 946
-
210
-
45
-
6).




See
accompanying notes.


-
6
-

THE SAMPLE MASTER FUND, LTD.

COND
ENSED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31,
201
2

_______________




INVESTMENT SECURITIES (CONTINUED)





Fair

% of Net




Description

Value

Asset Value



Common Stocks (continued)



Hong Kong




Industrial Machinery and Equipment

(cost


$11,222)

$

12,308


0.13 %



Netherlands




Industrial Machinery and Equipment

(cost


$11,111)


12,555


0.13 %



Singapore




Other

(cost


$20,541)


25,641


0.28 %



Switzerland




Publishing

(cost


$1,798)


2,208


0.02 %



United States




Business
Services


199,518


2.14 %




Communications


430,889


4.62 %




Educational Services


447,823


4.80 %




Electric, Gas and Sanitary Services


954,822


10.23 %




Engineering and Management Services


185,901


1.99 %




Financial Services


550,291


5.89 %




Health Services


440,754


4.72 %




Insurance


671,267


7.19 %




Publishing


436,224


4.67 %




Retail


152,193


1.63 %



Total common stocks


United States (cost


$4,521,254)


4,469,682


47.88 %



Total common stocks (cost


$5,000,167)

$

5,023,803


5
3.81 %

INVESTMENTS IN OTHER FUNDS
14
,
15





Fair

% of Net


Description

Investment Objective


Value

Asset Value


Sample Investee I

Capital appreciation through speculative trading of



futures contracts


$

563,941


6.04 %


Sample Investee II

Capital
appreciation through trading and selling short



publicly traded equity securities



1,992,841


21.35 %


Sample Investee III

To seek above average returns through a value oriented



approach by investing primarily in distressed



companies and long and sho
rt investments in equity



securities



2,251,438


24.12 %


Sample Investee V

Investing in a concentrated portfolio of growth and value



U.S. and non
-
U.S. equities across market capitalizations



with an emphasis on small and mid
-
cap companies



497,100


5.33 %


Sample Investee VIII

Capital appreciation through investing and trading equities,



fixed income securities, futures contracts, forward currency



contracts and other financial instruments, and selling equity



securities short



661,936


7.09 %


O
ther Funds

Various



498,168


5.33 %


Total investments in other funds
16


$

6,465,424


69.26 %







14

Disclosure of proportionate share of individual underlying securities of in
vestee funds in excess of 5% of NAV should be
made

in the condensed schedules of investments or in a
note to the schedule in accordance with requirements of FASB ASC 946
-
210
-
50
-
9. If information is not available concerning investments owned or sold short
by investee funds,
that fact should also be disclosed in a note to the condensed schedule of investments (FASB ASC 946
-
210
-
50
-
10). See Note 9. of Sample Hedge Fund for sample wording.

15

Additional disclosure requirements of FASB ASC 946
-
210
-
50
-
6 and FASB
ASC 820
-
10
-
50
-
6A are contained in Note 9.

16

If cost information is available, disclose in accordance with FASB ASC 946
-
210
-
50
-
6(b).



See
accompanying notes.


-
7
-

THE SAMPLE MASTER FUND, LTD.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31,
201
2

_______________




PROPORTIONAL SHARE OF INVESTMENTS OF SAMPLE
INVESTEE III
(1)


Face

Maturity


Fair

% of Net


Value

Date

Description

Value

Asset Value


$

783,785

01/31/
1
3

U.S. Treasury Bill

$

780,905


8.37 %



556,681

02/28/
1
3

U.S. Treasury Bill


553,911


5.93 %





Total U.S. Treasury Bills (cost, including






accrued interest, $1,334,816)

$

1,334,816


14.30 %






(1)

Represents the Fund’s proportional share of Sample Investee III’s individual underlying investments which exceed 5% of the Fu
nd’s Net Asset
Value at December 31,
201
2
.



INVESTMENT SECURITIES SOLD

SHORT





Fair

% of Net




Description

Value

Asset Value



Common Stocks



Canada




Biotechnology

$

912,443


9.77 %




Computer Services


11,408


0.12 %




Pharmaceuticals


9,547


0.10 %




Semiconductor


26,614


0.29 %




Software


24,483


0.27 %



Total common stocks


Canada (proceeds


$950,311)


984,495


10.55 %



China




Communications Equipment

(proceeds


$15,994)


16,964


0.18 %



United Kingdom




Medical Equipment

(proceeds


$10,654)


35,352


0.38 %



United States




Biotechnology


737,719


7.90 %




Broadcasting


100,729


1.08 %




Communication Equipment


375,741


4.03 %




Computer Services


239,719


2.57 %




Construction


249,491


2.67 %




Gaming Activities


508,151


5.44 %




Medical Equipment


221,473


2.37 %




Oil and Gas O
peration


530,137


5.67 %




Pharmaceuticals


876,130


9.39 %



Total common stocks


United States (proceeds


$3,929,369)


3,839,290


41.13 %



Total investments securities sold short (proceeds


$4,906,328)

$

4,876,101


52.24 %






See
accompanying notes.


-
8
-

THE SAMPLE MASTER
FUND, LTD.

CONDENSED SCHEDULE OF INVESTMENTS

December 31,
20
1
1

_______________




UNITED STATES GOVERNMENT SECURITIES



Maturity


Fair

% of Net


Face Value

Date

Description

Value

Asset Value


$

1,775,000

01/31/
1
2

U.S. Treasury Bill

$

1,768,441


23.66 %



1,005,000

02/28/
1
2

U.S. Treasury Bill


1,000,000


13.38 %





Total United States government securities






(cost, including accrued interest,


$2,768,441)

$

2,768,441


37.04 %

LONG FUTURES CONTRACTS





Fair

% of Net




Description

Value

Asset Value




Agriculture

$

516,218


6.91 %




Energy


101,768


1.36 %




Interest rate


(78,411)


(1.05)%




Metal


(601,412)


(8.05)%




Stock Index


104,238


1.40 %


Total long futures contracts

$

42,401


0.57 %

SHORT FUTURES CONTRACTS





Fair

% of Net




Description

Value

Asset Value




Currency

$

46,320


0.62 %




Energy


(12,865)


(0.17)%




Interest rate


121,937


1.63 %




Metal


14,066


0.19 %




Stock Index


(333,020
)


(4.46)%


Total short futures contracts

$

(163,562
)


(2.19)%


Total futures
contracts

$

(121,161
)


(1.62)%

FORWARD CURRENCY CONTRACTS





Fair

% of Net




Description

Value

Asset Value




Various long forward currency contracts

$

501,330


6.71 %




Various short forward currency contracts


(517,414
)


(6.92)%


Total forward
currency contracts

$

(16,084
)


(0.21)%




















Note 1
:

See FASB ASC 946
-
210
-
50 for specific disclosure requirements. See also TPA 6910.16, 6910.17, and 6910.18 and AICPA Audit Guide, “Audits of Invest
ment Companies.”

Note 2
:

Please consult with

engagement partner to determine each engagement’s specific method of presentation.

Note 3
:

Consult with engagement partner and manager regarding totaling long and short futures contracts and long and short forward cu
rrency contracts categories.

Note 4
:

Ad
ditional information is required when an investment exceeds 5% of net asset value. See FASB ASC 946
-
210
-
50 and TPA 6910.16. See also Sample Commodity Pool and
Sample Hedge Fund.

Note 5
:

The schedule of investments is included only in the Master Fund’s fi
nancial statements (FASB ASC 946
-
210
-
45
-
6).




See
accompanying notes.


-
9
-

THE SAMPLE MASTER FUND, LTD.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31,
20
1
1

_______________




INVESTMENT SECURITIES





Fair

% of Net



Description


Value

Asset Value



Common Stocks



United
States




Biotechnology

$

2,047,629


27.40 %




Broadcasting


51,100


0.68 %




Communication Equipme
nt


225,900


3.02 %




Computer Services


98,500


1.32 %




Construction


56,750


0.76 %




Gaming Activities


98,700


1.32 %




Investment Company


464,322


6.21 %




Medical Equipment


47,990


0.64 %




Oil & Gas Operations


223,723


2.99 %




Pharmaceuticals


572,720


7.66 %




Real Estate Operations


43,776


0.59 %




Semiconductor


228,700


3.06 %




Stock Index


404,120


5.41 %



Total common sto
cks


United States (cost


$4,137,862)

$

4,563,930


61.06 %

INVESTMENTS IN OTHER FUNDS
14
,
15





Fair

% of Net


Description

Investment Objective


Value

Asset Value


Sample Investee I

Capital appreciation through speculative trading of



futures contracts


$

477,441


6.39 %


Sample Investee II

Capital appreciation through trading and selling short



publicly traded equity securities



2,780,095


37.20 %


Sample Investe
e III

To seek above average returns through a value oriented



approach by investing primarily in distressed



companies and long and short investments in equity



securities



1,570,555


21.01 %


Total investments in other funds
16


$

4,828,091


64.60 %

PROPORTIONAL SHARE OF INVESTMENTS OF SAMPLE INVESTEE III
(1)


Face

Maturity


Fair

% of Net


Value

Date

Description

Value

Asset Value


$

1,234,567

05/24/
1
2

U.S. Treasury Bill
(cost, including accrued interest, $1,363,369)

$

1,363,369


18.24 %

INVESTMENT SECURITIES SOLD SHORT





Fair

% of Net



Description


Value

Asset Value



Common Stocks



United States




Communications

$

434,190


5.81 %




Construction


248,200


3.32 %




Oil & Gas Operations


1,748,201


23.39 %




Semiconductor


1,884,600


25.22 %




Software


184,800


2.47 %



Total common stocks


United States (proceeds


$4,000,325)

$

4,499,991


60.21 %





(1)

Represents the Fund’s
proportional share of The Sample Investee III’s underlying investments which exceed 5% of the Fund’s net asset value at Decem
ber

31,
20
1
1
.





See
accompanying notes.


-
10
-

THE SAMPLE MASTER FUND, LTD.

STATEMENTS OF OPERATIONS

For the Years Ended December 31,
201
2

and
20
1
1

______________
_





201
2

20
1
1

TRADING AND INVESTING GAINS (LOSSES
)
17
,
18
,
19


Futures trading gains (losses)
18



Realized


$

(200,919)

$

710,176



Change in unrealized


239,478


(76,401)



Brokerage commissions


(103,545
)


(86,082
)





Gain (loss) from futures trading
18


(64,986
)


547,693


Forward currency trading gains (losses)
18



Realized



10,616


14,875



Change in unrealized


56,224


(170,466
)





Gain (loss) from forward currency trading
18


66,840


(155,591
)


Securities
trading gains (losses)
18



Realized



(220,072)


(785,767)



Change in unrealized


127,461


543,062





(Loss) from securities trading
18


(92,611
)


(242,705
)


Income from other funds
18


106,918


469,563





Total trading and investing gains
17
,
18


16,161


618,960

NET INVESTMENT INCOME
18


Income



Interest income


347,072


441,7
90



Dividend income


381,687


71,731





Total income


728,759


513,521


Expenses



Dividends on securities sold short


26,736


88,409



Operating expenses


23,102


19,306





Total expenses


49,838


107,715





Net investment income
18


678,921


405,806





NET INCOME
18

$

695,082

$

1,024,766







17

Label “Trading Gains (Losses)” if no income from other funds or other investing type gains (losses).

18

Caption as
appropriate (e.g., Gain (Loss), Income (Loss), Income or (Loss)).

19

Per CFTC Regulation 4.22(e)(3), realized gains or losses on regulated commodities transactions and change in unrealized gains

or losses on regulated commodities transactions
may be combine
d with realized gains or losses from trading in non
-
commodity interest transactions and change in unrealized gains or losses from trading in non
-
commodity
interests, respectively, provided that the gains or losses to be combined are part of a related tradi
ng strategy. Consult with client and engagement partner for method of
presentation.

Note 1
:

See CFTC Regulation 4.22(e)(2) and FASB ASC 946
-
20
-
45
-
4 for guidance on presentation in the statement of operations and statement of changes in shareholders’ equit
y (net
asset value) of special profit allocations to the investment manager or similar party. Consult the engagement partner and ma
nager for method of presentation for each audit. See
Sample Hedge Fund for one method of such an allocation.

Note 2
:

Each l
ine item within the statement of operations should agree to the summation of line items reported as allocations from the Mast
er Fund in the Feeder Fund’s financial
statements.

Note 3
:

Voluntary and involuntary waivers are required to be disclosed as a redu
ction of total expenses and the terms of all such waivers should be disclosed in the notes to the financial
statements (FASB ASC 946
-
20
-
50
-
7). See The Sample Hedge Fund for presentation of waived fees.



See
accompanying notes.


-
11
-

THE SAMPLE MASTER FUND, LTD.

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (NET ASSET VALUE)

For the Years Ended December 31,
201
2

and
20
1
1

_______________






Founders Shares



Participating Shares



Shares

Value

Shares

Value

Balances at


December 31,
20
1
0


100

$

100


48,602

$

6,972,049

Net income
20

for the year


ended December 31,
20
1
1




0




1,024,766

Shares issued


0


0


36,337


6,000,000

Shares redeemed


0


0


(40,726
)


(6,523,423
)

Balances at


December 31,
20
1
1


100


100


44,213


7,473,392

Net income
20

for the year


ended December 31,
201
2




0




695,082

Shares issued


0


0


37,139


6,730,426

Shares redeemed


0


0


(31,213
)


(5,563,909
)

Balances at


December 31,
201
2


100

$

100


50,139

$

9,334,999






Net Asset Value Per Share



December 31,


201
2

20
1
1

20
1
0


Founders Shares

$

1.00

$

1.00

$

1.00


Participating Shares

$

186.18

$

169.03

$

143.45







20

Caption as appropriate (e.g., Net income (loss), Ne
t (loss), etc.).

Note 1
:

See FASB ASC 720
-
15
-
25, FASB ASC 946
-
20
-
25
-
5 and 6, FASB ASC 946
-
20
-
35
-
5 and AAG
-
INV par. 8.23
-
8.34 and TPA 6910.23 for treatment of organization and offering
costs. An investment partnership that continually offers its interests
should defer offering costs prior to the commencement of operations and then amortize them to expense over
the period that it continually offers its interests, up to a maximum of twelve months. Also see TPA 6910.23 and 6910.24 whic
h addresses the deferral

and amortization of offering
costs and also discusses the meaning of “continually offer interests.”

Note 2
:

Changes in shareholders’ equity for Participating Shares should correspond to the sum of investment activity of the Feeder Fu
nds.



See
accompanying notes.


-
12
-

THE SAMPLE MASTER
FUND, LTD.

STATEMENTS OF CASH FLOWS

For the Years Ended December 31,
201
2

and
20
1
1

_______________





201
2

20
1
1

C
ash flows
provided by (used in)
21

operating activities
:


Net income


$

695,082

$

1,024,766



Adjustments to reconcile net income to net cash



(
used in)
21

operating activities:




Income from other funds


(106,918)


(469,563)




Investments in other funds


(2,530,415)


0




Redemptions fro
m other funds


815,334


0




Realized loss from trading


410,375


60,716




Change in unrealized gain from trading


(423,163)


(296,195)



22

Purchases of securities


(10,463,987)


(8,546,291)



22

Proceeds from s
ales of securities


10,263,270


8,226,967



22

Proceeds from securities sold short


4,639,247


0



22

Purchases to cover securities sold short


(4,261,900)


0




(Increase) decrease in receivable for securities sold


31,507


(21,504)




(Decrease) in payable for securities purchased


(124,320)


(24,104)




(Decrease) in other liabilities


(14,742
)


34,883





Net cash (
used in
)
21

operating activities


(1,070,630
)


(10,325
)

C
ash flows
provided by (used in)
21

financing activities
:


Proceeds from shares issued


6,730,426


6,000,000


Payments for shares redeemed


(5,394,661
)


(6,474,759
)





Net cash
provided by (used in)
21

financing activities


1,335,765


(474,759
)





Net increase (decrease) in cash and cash equivalents


265,135


(485,084)

Cash and cash equivalents


Beginning of year


(12,834
)


472,250


End of year


$

252,301

$

(12,834
)

End
o
f
y
ear
c
ash
a
nd
c
ash
e
quivalents
c
onsist
o
f:


Cash and cash equivalents

$

18,583

$

27,439


Cash (deficit) in commodity broker trading account(s)


223,392


(65,769)


Cash deposits with securities
broker(s)


10,326


25,496





Total end of year cash and cash equivalents

$

252,301

$

(12,834
)

Non
-
cash operating activities:


During
201
2
, the Fund received securities with a value of $184,666 as payment for a redemption from Sample Investee III.






21

Caption as appr
opriate (i.e., provided by (used in)).

22

FASB ASC 230
-
10
-
45 requires gross disclosure of long
-
term investments, if impractical, consider presenting net. Purchases and sales of short
-
term investments should be
presented net. TPA 6910.20 provides that cost
s and proceeds reported for long transactions are reflected separately from costs and proceeds for short transactions. Addit
ionally,
see TPA 6910.26 and FASB ASC 230
-
10
-
45 for guidance on determining gross versus net presentation.

Note 1
:

A statement of c
ash flows is frequently required for hedge funds given liquidity constraints of certain types of investments (consider illiqu
idity from investments in other funds
and illiquidity of thinly traded securities); however, if a fund meets the criteria for exemp
tion in FASB ASC 230, the statement is not required. Additional guidance regarding the
exemption provisions of FASB ASC 230 is found in TPA 6910.25, “Considerations in Evaluating Whether Certain Liabilities Const
itute “Debt” for Purposes of Assessing
Whet
her an Investment Company Must Present a Statement of Cash Flows.”

Note 2
:

Additional supplemental disclosures of interest paid, income taxes paid and non
-
cash investing and financing activities may be required.

Note 3
:

Line item descriptions should be
consistent with those in the other financial statements.

THE SAMPLE MASTER FUND, LTD.

NOTES TO FINANCIAL STATEMENTS

_______________





-
13
-

Note 1.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



A.

General Description of the Fund
23
,
24



The Sample Master Fund, Ltd. (the Fund) was formed as an exempted Company under the laws of
the Cayman Islands. The Fund engages in the investing and trading of a variety of financial
instruments including futures contracts, forward currency contracts, an
d U.S. and international
equity securities.
25

Additionally, the Fund invests in other investment entities (“funds”). The Fund
is subject to the regulations of the Commodity Futures Trading Commission, an agency of the
United States (U.S.) government which

regulates most aspects of the commodity futures industry;
rules of the National Futures Association, an industry self
-
regulatory organization; the supervision of
the Cayman Islands Monetary Authority, an agency of the Cayman Islands government which
regul
ates most aspects of Cayman Islands mutual funds; and the requirements of the various
commodity exchanges where the Fund executes transactions. Additionally, the Fund is subject to
the requirements of the Futures Commission Merchants (commodity brokers),
other brokers, and
interbank market makers through which the Fund trades.




The Fund has two classes of shares: 100 Founders Shares having a $1.00 par value and 2,495,000
Participating Shares having a par value of $0.01. The Founders Shares have the vot
ing power of the
Fund, but do not participate in profits and losses. The Founders Shares are held by the Investment
Manager (see Note 2.). The Participating Shares have no voting power, except for actions which
vary or abrogate the rights attached to the
ir shares, but participate in the Fund’s profits or losses.




The Fund has been formed to function as a “master fund” to invest the assets of the members of The
Sample Onshore Feeder Fund, LLC, a Delaware limited liability company, and the shareholders of

The Sample Offshore Feeder Fund, Ltd., a Cayman Islands exempted company. The Investment
Manager of the Fund, Sample Management, Inc., is also the Managing Member of The Sample
Onshore Feeder Fund, LLC and the Trading Advisor of The Sample Offshore Feede
r Fund, Ltd.




The Directors of the Fund are John O. Smith, President of the Investment Manager and William
King, Managing Director of the Administrator (see Note 3.). The Fund paid no compensation to the
Directors during the years ended December 31,
201
2

and
201
1
.







23

Pursuant to FASB ASC 272
-
10
-
50
-
3, Limited Liability Companies must disclose (i) a description of any limitation of its members’ liability (such disclosure i
s normally included
in the Market and
Cre
dit

Risks note), (ii) the different classes of members’ interests and respective rights, preferences, and privileges of each clas
s, and (iii) if the LLC has a finite
life, the date the LLC will cease to exist. Additionally, if the LLC does not report sepa
rately the amount of each class in the equity section of the statement of financial condition,
those amounts should be disclosed.

24

Revise as applicable.

25

Use appropriate language regarding specific nature of Fund’s operations with primary focus on instru
ments traded and/or investing activities.

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
14
-

Note 1.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



B.

Method of Reporting



The Fund’s financial statements are presented in accordance with accounting principles generally
accepted in the United States of
America (U.S. GAAP), which require the use of certain estimates
made by the Fund’s management.
26

The Financial Accounting Standards Board (FASB) Accounting
Standards Codification (the Codification), is the single source of U.S. GAAP.



C.

Cash and Cash
Equivalents



Cash and cash equivalents includes cash and
24

investment(s) in money market mutual funds.
Interest
income includes interest
-
equivalen
t dividends on money market mutual funds.



D.

Futures Contracts and Forward Currency Contracts
24



Gains or losses are realized when contracts are

liquidated. As the commodity broker and
interbank market maker each have the individual right of offset, the Fund presents unrealized
gains and unrealized losses on open contracts (the difference between contract trade price and
quoted
27

market price) as
net amounts in the statements of financial condition.
28
,
29

Futures
contracts are stated at fair value using the primary exchange’s closing price. Forward currency
contracts are stated at fair value using spot currency rates provided by [name pricing sourc
e] and
adjusted for interest rates and other typical adjustment factors.
30

Any change in net unrealized
gain or loss from the preceding period is reported in the statement of operations. Brokerage
commissions on futures contracts include other trading fee
s and are charged to expense when
contracts are opened.



E.

Investment Securities



The Fund’s investments are stated at fair value. Investment securities listed or quoted on a national
securities exchange or primary market are valued at the last reporte
d sales price on the valuation
date. If the securities are not listed or quoted on such date, the last quoted “bid” price for long
positions and the last quoted “asked” price for short positions is used.
31

United States government
securities are stated at

cost plus accrued interest, which approximates fair value based on quoted
market prices.
32







26

See Sample Hedge Fund for wording if use of estimates is significant.

27

Delete “quoted” if non
-
exchange traded instruments are utilized by client (e.g., forward currency contracts). Accordingly, in this
instance, since the Fund trades forward contracts,
“quoted” would be omitted.

28

See FASB ASC 825
-
10
-
50
-
21 for disclosure requirements for master netting arrangements.

29

See Sample Commodity Pool for language when there is more than one commodity broker or
interbank market maker or when aggregate net unrealized gains and aggregate net
unrealized losses are presented.

30

Revise, as necessary, to describe client’s valuation methodology.

31

The valuation of securities should be specific to the Fund’s valuation po
licies as specified in the governing agreements/documents.

32

If client values at market value, footnotes should read “United States…are stated at fair value using the closing market pric
e as published by [name source].”

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
15
-

Note 1.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



E.

Investment Securities (continued)



The Fund from time to time may invest in illiquid and restricted, as well as thinly
-
traded, securities.
The Investment Manager values such securities in the Fund’s portfolio at fair value in its good faith
discretion. In valuing such securities, various f
actors are considered, including the price at which the
securities were acquired, recent and/or sustained private sales of an issuer’s securities, recent trends
in the fair value of other companies operating in the same or similar industries, general econo
mic
conditions, the amount of the public float, the existence and terms of any securities registration
rights, the existence and terms of unrestricted securities of the same issuer, changes in the financial
condition and prospects of such issuer and variou
s other factors which may affect fair value. The
estimate of fair value for illiquid and restricted securities is revised periodically, not less frequently
than quarterly, for significant changes in the aforementioned considerations. Although there can b
e
no assurance that these fair value estimates will accurately reflect the price that would be received to
sell such assets, these valuations are part of the calculation of the Fund’s net asset value, which is the
basis on which the investors invest or red
eem from the Fund. At December 31,
201
2

and
201
1
, the
Fund held illiquid and restricted securities with an aggregate fair value of $159,150 and $123,677,
respectively.
33




Security transactions, including United States government securities, are recorded
on the trade date.
Realized gains and losses from security transactions are determined using the identified cost method.
Any change in net unrealized gain or loss from the preceding period is reported in the statement of
operations. Brokerage commissions

and other trading fees are reflected as an adjustment to cost or
proceeds at the time of the transaction. Dividends are recorded on the ex
-
dividend date. Interest
income and interest expense is recorded on the accrual basis.




30
,
34

F.

Investments in Other Funds



Investments in other funds are reported in the Fund’s statement of financial condition at fair value.
Fair value ordinarily repr
esents the Fund’s proportionate share of each other fund’s net asset value
determined for each fund in accordance with such fund’s valuation policies and reported at the time
of the Fund’s valuation by the management of the other fund. Generally, the fair

value of the Fund’s
investment in another fund represents the amount that the Fund could reasonably expect to receive
from such fund if the Fund’s investment was redeemed at the time of the valuation, based on
information reasonably available at the time
the valuation is made and that the Fund believes to be
reliable.
35

The Fund records its proportionate share of other funds’ income or loss in the statement
of operations.







33

In this situation where the Fund i
nvests in illiquid and/or restricted securities, the Method of Reporting policy (Note 1.

B.) would use language when estimates are significant (see
Note 1. B. of “Sample Hedge Fund”).

34

Include if appropriate.

35

If applicable, the accounting policy should
be revised to disclose those instances where investments in other funds are not valued at net asset value as the practical ex
pedient. Per
FASB ASC 820
-
10
-
35
-
59 through 62, such situations are:


(i)

Intended sale of all or a portion of the investment at an

amount different than net asset value.


(ii)

Other situations such as a different measurement date of the underlying fund or different accounting principles of the underl
ying fund.


(iii)

Other situations that in the opinion of management, the practical e
xpedient of net asset value does not represent fair value (e.g., significant liquidity restrictions, etc.).

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
16
-

Note 1.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



G.

Income Taxes
36



The Fund is not subject to taxation in the Cayman Islands, the U.S., or any other jurisdiction;
however, the Fund has elected to be treated as a partnership for U.S. federal income tax purposes.
Accordingly, the Fund prepares calendar ye
ar U.S. and applicable state information tax returns and
reports to its shareholders their allocable shares of the Fund’s income, expenses and trading gains or
losses. The
200
9

through
201
2
36

tax years generally remain subject to examination by U.S. federal
and most state tax authorities.




The Fund applies the provisions of Codification Topic 740,
Income Taxes
, which prescribe the
minimum recogni
tion threshold a tax position must meet in connection with accounting for
uncertainties in income tax positions taken or expected to be taken by an entity before being
measured and recognized in the financial statements. This accounting standard requires
the
evaluation of tax positions taken or expected to be taken in the course of preparing the Fund’s
financial statements to determine whether the tax positions are “more
-
likely
-
than
-
not” of being
sustained by the applicable tax authority. Tax positions wi
th respect to tax at the Fund level not
deemed to meet the “more
-
likely
-
than
-
not” threshold would be recorded as an expense in the current
year. The Fund has elected an accounting policy to classify interest and penalties, if any, as interest
expense. Th
e Directors have concluded there is no tax expense or interest expense related to
uncertainties in income tax positions for the years ended December 31,
201
2

and
201
1
.



34

H.

Foreign Currency Transactions



The Fund’s functional currency is the U.S. dollar; however, it transacts business in currencies other
than the U.S. dollar. Assets and liabilities denominated in currencies other than t
he U.S. dollar are
translated into U.S. dollars at the rates in effect at the date of the statement of financial condition.
Income and expense items denominated in currencies other than the U.S. dollar are translated into
U.S. dollars at the rates in effec
t during the period. Gains and losses resulting from the translation to
U.S. dollars are reported in income currently.



34

I.

Redemptions of Shares
37



Redemptions payable at December 31,
201
2
, represents redemptions approved by the Directors prior
to January 1,
201
3
, which were not effective until January 1,
201
3
. These redemptions have been
recorded as redemptions and redemptions payable at December 31,
201
2
, in accordance with the
provisions of the
Liabilities

Topic of the Codification.



34

J.

Reclassification



Certain amounts in the
201
1

financial statements were reclassified to conform with the
201
2

presentation.







36

Revise as appropriate.

37

Under the provisions of FASB ASC 480
-
10
-
25, liabilities should be recognized when redemption requests, which are to be ef
fective in future periods, have been approved by the
Directors on or before December 31,
2012
, provided both the date and amount of the redemption are fixed (or where the amount of the redemption on a fixed date is det
ermined
by reference to an external in
dex).

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
17
-

Note 1.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINU
ED)



34

K.

Recently Issued Accounting Pronouncements



In May 2011, the FASB issued Accounting Standards Update No. 2011
-
04 (ASU 2011
-
04) entitled
Fair Value Measurement (Topic 820)


Amendments to A
chieve Common Fair Value Measurement
and Disclosure Requirements in U.S. GAAP and IFRSs
. ASU 2011
-
04 was issued to converge fair
value measurement and disclosure guidance in U.S. GAAP with the guidance in the International
Accounting Standards Board’s cur
rently issued International Financial Reporting Standards 13,
Fair
Value Measurement
. The amendments in ASU 2011
-
04 generally represent clarification to the
Fair
Value Measurements and Disclosures

Topic of the Codification, but also include some instances

where a particular principle or requirement for measuring fair value or disclosing information about
fair value measurements has changed. For non
-
public entities, ASU 2011
-
04 is effective for annual
reporting periods beginning after December 15, 2011.
T
he adoption of ASU 2011
-
04 did not have a
material impact on the
Fund
’s financial statements
.
38




In December 2011, FASB issued Accounting Standards Update 2011
-
11 (ASU 2011
-
11), entitled
Balance Sheet (Topic 210)


Disclosures about Offsetting Assets and
Liabilities
. ASU 2011
-
11
enhances current disclosures about financial instruments and derivative instruments that are
either offset on the statement of financial condition or subject to an enforceable master netting
arrangement or similar agreement, irres
pective of whether they are offset on the statement of
financial condition. Entities are required to provide both net and gross information for these
assets and liabilities in order to facilitate comparability between financial statements prepared on
the
basis of U.S. GAAP and financial statements prepared on the basis of IFRS. ASU 2011
-
11 is
effective for annual reporting periods beginning on or after January 1, 2013, and interim periods
within those annual periods. The
Fund

is currently evaluating the
impact ASU 2011
-
11 will
have, however, no material impact on the
Fund
’s financial statements is anticipated.


Note 2.

INVESTMENT MANAGER
39



The Fund has an Investment Management Agreement with Sample Management, Inc. (the Investment
Manager) to provide
trading advice and services to the Fund. The Investment Manager has sole authority
and responsibility for directing the investment of the Fund’s assets. The Investment Manager receives no
compensation from the Fund.







38

For public companies, ASU 2011
-
04 is effective for interim and annual periods beginning after December 15, 2011. Early application by public companies is n
ot permitted.
Nonpublic entities may apply the amendments in ASU 2011
-
04 early, but no earl
ier than interim periods beginning after December 15, 2011.

39

Conform language to applicable agreement.

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
18
-

Note 3.

ADMINISTRATOR
39



The Administrator of the Fund is Sample Administrator (Cayman) Ltd. The Administrator of the Fund
provides various general administrative services to the

Fund, such as processing subscriptions and
redemptions and serving as the Funds’ registrar and transfer agent. The Fund pays fees to the administrator
which are included in operating expenses in the statement of operations.


Note 4.

OPERATING EXPENSES
40



Operating expenses of the Fund are restricted by the Articles of Association to 2% per year of the average
month
-
end Net Assets of the Fund. Actual expenses were less than 2% for both
201
2

and
201
1
.


Note 5.

SHAREHOLDERS’ EQUITY
41



Investments in the Fun
d are made by subscription agreement, subject to acceptance by the Directors. The
Fund is not required to declare and pay dividends, but may do so at the sole discretion of the Directors. A
Shareholder may request and receive redemption of Participating
Shares owned,
42

subject to restrictions in
the Articles of Association.


Note 6.

DEPOSITS WITH COMMODITY BROKER(S)
43



The
Fund

deposits funds with commodity broker(s), subject to Commodity Futures Trading Commission
regulations and various exchange and broker requirements. Margin requirements are satisfied by the
deposit of U.S. Treasury bills and cash with such commodity broker
(s). Accordingly, assets used to meet
margin and other commodity broker or regulatory requirements are partially restricted. The
Fund

earns
interest income on its assets deposited with the commodity broker(s).


Note 7.

DEPOSITS WITH SECURITIES BROKER(S)
43



The Fund deposits cash and securities with securities brokers(s), subject to Securities and Exchange
Commission regulations and broker requirem
ents.
44

Margin requirements are satisfied by the deposit of
cash and securities with such securities broker(s). Accordingly, assets used to meet margin and other
broker or regulatory requirements are partially restricted. The Fund earns or pays interest
on amounts on
deposit with, or borrowed from, such securities broker(s).







40

Only disclose if unique provisions exist.

41

If the Master Fund has direct investors other than the Feeder Funds, make expanded disclosure of the
redemption provisions. See “Sample Commodity Pool Limited Partnership”
for example of such disclosure.

42

Replace “shares owned” with capital if a capital account pool.

43

If only one broker, specify exact broker name in first sentence.

44

If statement of fi
nancial condition uses the caption “due from or (due to) broker,” consider disclosing components (i.e., cash, receivable and/
or payable for unsettled trades, margin
debt, etc.).

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
19
-

Note 8.

FAIR VALUE



F
air value
, as defined in the
Fair Value Measurements and Disclosures

Topic of the Codification,

i
s the
price 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.
The

fair value hierarchy
, as set forth in the
Fair Value
Measurements and Disclosures

Topic
of the Codification,

prioritizes the inputs to valuation techniques
used to measure fair value into three broad levels: quoted market prices in active markets for identical
assets or liabilities (Level 1); inputs other than quoted market prices that are o
bservable for the asset or
liability, either directly or indirectly (Level 2); and unobservable inputs for an asset or liability (Level 3).

If
the inputs used to measure a financial instrument fall within different levels of the fair value hierarchy, the
categorization is based on the lowest level input that is significant to the measurement of that financial
instrument. The Fund recognizes transfers between fair value hierarchy levels at the beginning of the
reporting period.
45



For investment securities categorized as Level 3 fair value measurements, the
Investment Manager values
such securities at fair value in its good faith discretion. In valuing such securities, various factors are
considered, including the price at which th
e securities were acquired, recent and/or sustained private
sales of an issuer’s securities, recent trends in the fair value of other companies operating in the same or
similar industries, general economic conditions, the amount of the public float, the ex
istence and terms
of any securities registration rights, the existence and terms of unrestricted securities of the same issuer,
changes in the financial condition and prospects of such issuer and various other factors which may
affect fair value. Such val
uation technique represents a market approach.
For futures contracts
categorized as Level 2 fair value measurements,
the
Fund
uses

the primary exchange’s closing price to
determine fair value, which represents a market approach. For forward currency cont
racts, which are
categorized as Level 2 fair value measurements, fair value is determined using spot currency rates and
adjusted for interest rates and other typical adjustment factors. Such valuation technique for forward
currency contracts represents bo
th a market approach and an income approach to fair value measurement.
For U.S. government securities, which are categorized as Level 2 fair value measurements, fair value is
determined as cost plus accrued interest, which represents an income approach.
As a practical expedient,
i
nvestments in other funds categorized as either Level 2 or Level 3 fair value measurements are valued at
fair value based on
the
Fund’s
proportionate

share of the other funds’ net asset value, which represents a
market approach.
35
,
46
,
47



The
Fair Value Measurements and Disclosures

Topic of the Codification
provides t
hat if the reporting
entity has the ability to redeem its

investment in another fund at net asset value

at the measurement date,
the investment shall be categorized as a Level 2 fair value measurement, and if the reporting entity cannot
redeem its investment in another
fund

at net asset value at the measurement
date but the investment may be
redeemable at a future date, the reporting entity shall consider the length of time until the investment will
be redeemable in determining whether it will be categorized as a Level 2 or Level 3 fair value
measurement.





45

Revise, as applicable. Under the provisions of
FASB

ASC 820
-
10
-
50
-
2
C

a reporting
entity shall disclose and consistently follow its policy for determining when transfers
between levels of the fair value hierarchy are deemed to have occurred.

The policy about the timing of recognizing transfers shall be the same for transfer
s into the levels as for
transfers out of the levels. Examples of policies for determining the timing of transfers include: (i) the actual date of t
he event or change in circumstance that caused the transfer,
(ii) the beginning of the reporting period, a
nd (iii) the end of the reporting period
.

46

Revise, as applicable, for approach used by management in determining fair value. Under the provisions of FASB ASC 820
-
10
-
50
-
2(bbb),
a description of the valuation
technique(s) and the inputs used in the fair va
lue measurement is required for recurring and nonrecurring fair value measurements categorized within Level 2 and Level 3
of the fair value hierarchy. If there has been a change in valuation technique (for example, changing from a
market approach

to an
income approach

or
the use of an
additional valuation technique), the reporting entity shall disclose that change and the reason(s) for making it. For fair v
alue measurements categorized within Level 3 of
the fair value hierarchy, a reporting entity shall provide quantitati
ve information about the significant unobservable inputs used in the fair value measurement
.

47

Under the provisions of FASB ASC 820
-
10
-
50
-
2f, a reporting entity shall disclose for recurring and nonrecurring measurements categorized within level 3 of the fa
ir
value hierarchy, a description of the valuation processes used by the reporting entity (including, for example, how an entity

decides its valuation policies and procedures
and analyzes changes in fair value measurements from period to period
)
. See FASB

ASC 820
-
10
-
55
-
105 for further guidance.

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
20
-

Note 8
.

FAIR VALUE

(CONTINUED)



The following summarizes the Fund’s assets and liabilities
48

accounted for at fair value at December

31,
201
2

and
20
1
1

using the fair
value hierarchy. Fair value is presented on a gross basis in the table below
even though the
futures and forward currency contracts qualify for net presentation in the statement of
financial condition.
49
,
50




December 31,
201
2



Description

Level 1

Level 2

Level 3

Total


Assets



Futures contracts
(1)

$

1,791,514

$

0

$

0

$

1,791,514



U.S. Treasury

bills


0


2,409,800


0


2,409,800



Forward currency contracts


0


1,096,487


0


1,096,487



Investment securities




U.S. Communication


0


0


159,150


159,150




Other
(2)


4,864,653


0


0


4,864,653



Investments in other funds
51




Real estate


0


0


57,350


57,350




Private equity international


0


0


106,896


106,896




Equity long/short


0


0


2,323,838


2,323,838




Global opportunities


0


0


497,100


497,100




Other
(3)


0


3,480,240


0


3,480,240





Total assets

$

6,656,167

$

6,986,527

$

3,144
,334

$

16,787,028


Liabilities



Investment securities sold short
(2)

$

4,876,101

$

0

$

0

$

4,876,101



Futures contracts
(1)


1,673,197


0


0


1,673,197



Forward currency contracts


0


1,056,347


0


1,056,347





Total liabilities

$

6,549,298

$

1,056,347

$

0

$

7,605,645



December 31,
201
1



Description

Level 1

Level 2

Level 3

Total


Assets



Futures contracts
(1)

$

1,694,307

$

506,408

$

0

$

2,200,715



U.S. Treasury bills


0


2,768,441


0


2,768,441



Forward currency contracts


0


857,411


0


857,411



Investment securities




U.S. communication


0


0


123,677


123,677




Other
(2)


4,413,253


0


0


4,413,253



Investments in other funds
51




Even
t driven


0


0


1,570,555


1,570,555




Other
(3)


0


3,257,536


0


3,257,536




Total assets

$

6,107,560

$

7,389,796

$

1,694,232

$

15,191,588


Liabilities



Investment securities sold short
(2)

$

4,499,991

$

0

$

0

$

4,499,991



Futures contracts
(1)


2,173,126


148,750


0


2,321,876



Forward currency contracts


0


873,495


0


873,495




Total liabilities

$

6,673,117

$

1,022,245

$

0

$

7,695,362





(1)

See Note 10. for the fair values for each type of contract within this category.


(2)

See the
Condensed Schedule of Investments for the fair values by country and industry within this category.


(3)

See Note 9. for the fair values of each fund within this category.





48

Delete “liabilities” if no liabilities exist in the table.

49

Please consult with engagement partner to determine each financial instrument

s specific fair value hierarchy.

50

The fair value disclosures required by
FASB ASC 820
-
10
-
50
-
2(a) through (bb) shall be presented on a gross basis (see FASB ASC 820
-
10
-
50
-
3). Additionally, the disclosures
shall be provided for each class of assets and liabilities.
Per FASB ASC 820
-
10
-
50
-
2B, i
n determining the class, the entity

shall consider the
nature, characteristics, and risks of
the asset or liability and the level of the fair value hierarchy within which the fair value measurement is categorized.
The number of classes may need to be greater for fair
value measurements
categorized within Level 3 of the fair value hierarchy because those measurements have a greater degree of uncertainty and su
bjectivity.
Determining appropriate classes of assets and liabilities for which disclosures about fair value measurements should b
e provided requires judgment. A class of assets
and liabilities will often require greater disaggregation than the line items presented in the statement of financial positio
n. However, a reporting entity shall provide
information sufficient to permit rec
onciliation to the line items presented in the statement of financial position. If another Topic specifies the class for an
asset or a
liability, a reporting entity may use that class in providing the disclosures required in this Topic if that class meets

the requirements in this paragraph
.

51

See provisions of
FASB

ASC 820
-
10
-
35
-
54B

for criteria for determining categorization between Level 2 or Level 3 fair value measurements for investments in other funds
.

Note 1
:

Consult FASB ASC 820
-
10
-
50
-
2 for addition
al disclosures regarding any assets or liabilities measured at fair value on a nonrecurring basis.

Note 2
:

See FASB ASC 820
-
10
-
50
-
2E for disclosures required for each class of assets and liabilities not measured at fair value in the statement of financial

position but for
which the fair value is disclosed.

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
21
-

Note 8.

FAIR VALUE (CONTINUED)



A reconciliation of the beginning and ending
balances for eac
h class of asse
ts and liabilities measured at
fair value on a recurring basis using significant Level 3 inputs during
201
2

and
20
1
1

is as follows:
52



Fair Value Measurements Using


Significant Unobservable Inputs



(Lev
el 3)



Investment

Investments in


Securities

other funds


Total


Balances at De
cember 31,
20
1
0

$

99,600

$

1,368,416

$

1,468,016



Total gains or losses (realized/unrealized)




included in net income
53


24,077


202,139
(1)


226,216


Balances at D
ecember 31,
20
1
1


123,677


1,570,555


1,694,232



Total gains or losses (realized/unrealized)




included in net income (loss)
53


35,473


(44,911)
(1)


(9,438)



Purchases


0


1,250,000


1,250,000



Sales


0


(1,000,000)


(1,000,000)



Transfers in to Level 3
54


0


2,780,095
(
2
)


2,780,095



Transfers out of Level 3
54


0


(1,570,555
)
(
2
)


(1,570,555
)


Balances at

December 31,
201
2

$

159,150

$

2,985,184

$

3,144,334


The amount of total gains or losses for the year



included in net income attributable to the change



in unrealized gains or losses relating to assets



still held at December 31,
20
1
1
55

$

24,077

$

N/A
(
3
)

$

24,077


The amount of total gains or losses for the year



included in net income attributable to
the change



in unrealized gains or losses relating to assets



still held at December 31,
201
2
55

$

35,473

$

N/A
(
3
)

$

35,473






(1)

Reported in the
s
tatement of
o
perations as income
(loss)
from other funds.


(
2
)

Represents transfers to/from Level 2 based on the redemption and liquidity provisions of the other funds in which the Fund in
vests. See Note 9. for the redemption
provisions
of investments in other funds.


(
3
)

The Fund does not separately identify unrealized gains and losses on investments in other funds, as net earnings from investm
ents in other funds are presented as a
single amount in the statement of operations pursuant to

the
Industry


Financial Services

Topic of the Codification.
56







52

FASB
ASC 820
-
10
-
50
-
2 provides that this information be provided separately for each class of assets and liabilities. FASB ASC 820
-
10
-
50
-
2B provides guidance on
determining appropriate classes of assets

and liabilities.

53

FASB ASC 820
-
10
-
50
-
2
(c)

provides that total gains or losses included in earnings be presented separately from gains or losses recognized in other com
prehensive income.

Disclosure is also required for the line item(s) in which those
gains or losses are recognized.

54

FASB ASC 820
-
10
-
50
-
2(c) requires that transfers into Level 3 be disclosed separately from transfers out of Level 3 and requires disclosure of th
e reasons for transfers in and/or
out of Level 3,
and the reporting entity’s
policy for determining when transfers between levels are deemed and have occurred.

55

Pursuant to FASB ASC 820
-
10
-
50
-
2(d), for recurring fair value measurements categorized within Level 3, disclosure is required of the amount of total gains o
r losses for th
e
period included in earnings that is attributable to the change in unrealized gains or losses relating to those assets and lia
bilities held at the end of the reporting period and the line
item(s) in the statement of income (or activities) in which those u
nrealized gains or losses are recognized.

56

Revise and disclose as applicable if the
Fund

separately identifies unrealized gains and losses on investments in other funds.

Note
:

Additional disclosures required for public funds include transfers between Level 1 and Level 2 of the fair value hierarchy, t
he reasons for those transfers, and the
reporting entity’s policy for determining when transfers between levels are deemed to have
occurred. See FASB ASC 820
-
10
-
50
-
2(bb). Additionally, public funds
should refer to
FASB ASC
820
-
10
-
50
-
2(g) and
FASB ASC
820
-
10
-
50
-
2E for additional fair value disclosures that may be applicable. Per FASB 820
-
10
-
50
-
2F, non
-
public entities are not require
d to make these disclosures, unless required by another Topic.

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
22
-

Note 8.

FAIR VALUE (CONTINUED)



Quantitative information about Level 3 fair value measurements is as follows:
57



Fair Value at

Valuation

Unobservable

Range


December 31, 2012


Techniques
58


Inputs
58


(Weighted Average)
58


Investment securities

$

159,15
0

Discounted cash flow

Wei
ghted average






cost of capital

8%


12% (11%)






Long
-
term revenue






growth rate

3%


5% (4%)






Long
-
term pretax






operating margin

7%


13% (9%)






Discount for lack






of marketability

5%


20% (10%)






Control premium

10%


20%
(12%)





Market comparable

EBITDA multiple

6%


12% (9%)





companies

Revenue multiple

1%


3% (2%)






Discount for lack






of marketability

5%


20% (10%)






Control premium

10%


20% (12%)


Investments in other funds


2,985,184

Net Asset Value

N/
A

N/A


Note
9.

INVESTMENT(S) IN OTHER FUND(S
)
59



In
201
2

and
20
1
1
, the
Fund

invested in other funds. These investments are subject to the terms of the
respective Limited Partnership Agreements, Limited Liability Company Agreements, Articles of
Association or Private Placement Memoranda of such other fun
ds.
60



Summarized
information for these investments is as follow
s:
61



Net Asset Value




Net Asset Value


December 31,
20
1
0

Investments

Income

Redemptions

December 31,
201
1


Sample Investee I

$

422,463

$

0

$

54,978

$

0

$

477,441


Sample Investee II


2,567,649


0


212,446


0


2,780,095


Sample Investee III


1,368,416


0


202,139


0


1,570,555




Total

$

4,358,528

$

0

$

469,563

$

0

$

4,828,091


Net Asset Value


Income


Net Asset Value


December 31,
201
1

Investments

(loss)

Redemptions

December 31,
201
2


Sample Investee I

$

477,441

$

0

$

86,500

$

0

$

563,941


Sample Investee II


2,780,095


0


212,746


(1,000,000)


1,992,841


Sample Investee III


1,570,555


0


680,883


0


2,251,438


Sample Investee IV


0


300,000


30,997


0


330,997


Sample Investee V


0


400,000


97,100


0


4
97,100


Sample Investee VI


0


150,000


(92,650)


0


57,350


Sample Investee VII


0


400,000


(293,104)


0


106,896


Sample Investee VIII


0


700,000


(38,064)


0


661,936


The Sample Commodity Pool



Limited Partnership


0


580,415


(577,490
)


0


2,925




Total

$

4,828,091

$

2,530,415

$

106,918

$

(1,000,000
)

$

6,465,424





57

FASB ASC 820
-
10
-
50
-
2(bbb) provides that for fair value measurements categorized within Level 3 of the fair value hierarchy, a reporting entity s
hall provide
quantitative information about the

significant unobservable inputs used in the fair value measurement. A reporting entity is not required to create quantitativ
e
information to comply with this disclosure requirement if quantitative unobservable inputs are not developed by the reporting

en
tity when measuring fair value (for
example, when a reporting entity uses prices from prior transactions or third
-
party pricing information without adjustment). However, when providing this disclosure, a
reporting entity cannot ignore quantitative unobser
vable inputs that are significant to the fair value measurement and are reasonably available to this reporting entity.

58

Revise for specific valuation techniques, unobservable inputs, and range, if applicable, used by management. These examples
are based
on the implementation guidance
provided in FASB ASC 820
-
10
-
55
-
103 and may not necessarily represent the qualitative information applicable in most circumstances.

59

See “Dear CPO Letter” dated
March 8
,
2012

and any subsequent “Dear CPO Letter” for specific
CFTC requirements.

60

Only list those Agreements applicable to investee funds, or if many investee funds, use broader language (e.g., governing agr
eements).

61

This rollforward summary of activity is recommended by AFB&A as informative disclosure; however, i
t is not required by GAAP.
However, per CFTC Regulation 4.22(c)(5)
disclosure is required of the amounts of income associated with each investment in an investee fund that exceeds 5% of the po
ol’s net assets.

If there are only a few investee
funds, consi
der alternate presentation (see Sample Commodity Pool F/S).

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
23
-

Note 9.

INVESTMENTS IN OTHER FUNDS (CONTINUED)



The Investment Manager is also the General Partner of The Sample Commodity Pool Limited Partnership.
The General Partner of The Sample
Commodity Pool Limited Partnership is paid an administrative
management fee of 1/6 of 1% (2% annually) of the month
-
end net assets (as defined in the Limited
Partnership Agreement of The Sample Commodity Pool Limited Partnership).



62

The other fu
nds charged management fees ranging from 0% to 2%
63

annually for the years ended
December

31,
201
2

and
201
1
, respectively. Incentive fees/performance allocations charged by the other
funds ranged from 0% to 25%
63

for the years ended December 31,
201
2

and
201
1
, respectively. The
following presents the Fund’s proportionate share of management fees and incentive fees/performance
allocations from other

funds for the years ended December 31,
201
2

and
201
1
:



Year Ended

Year Ended



December 31,
201
2



December 31,
20
1
1




Incentive Fees/


Incentive Fees/


Management

Performance

Management

Performance





Fees
64



Allocations
64



Fees
64



Allocations
64


Sample Investee I

$

0

$

0

$

2,499

$

8,394


Sample Investee II


6,714


9,612


26,714


49,612


Sample Investee III


10,914


8,415


0


0


Sample In
vestee IV


9,227


2,609


0


0


Sample Investee V


7,640


4,548


0


0


Sample Investee VI


3,205


0


0


0


Sample Investee VII


825


0


0


0


Sample Investee VIII


2,499


0


0


0


The Sample Commodity Pool



Limited Partnership


3,216


0


0


0




$

44,240

$

25,184

$

29,213

$

58,006







62

CFTC Regulation 4.22(c)(5) requires for investments in other funds, disclosure of “the amounts of income, management and ince
ntive fees associated with each investment in an
investee fund that
exceeds 5% of the pool’s net assets. The management and incentive fees associated with an investment in an investee fund tha
t is less than 5% of the pool’s net
assets may be combined and reported in the aggregate with the income, management and incentive
fees of other investee funds that, individually, represent an investment of less
than 5% of the pool’s net assets. If the commodity pool operator is not able to obtain the specific amounts of management an
d incentive fees charged by an investee fund, the
commodity pool operator must disclose the percentage amounts and computational basis for each such fee and include a statemen
t that the CPO is not able to obtain the specific
fee amounts for this fund.”

63

Revise as necessary.

64

If not a commodity pool, fee

rates may be presented either in narrative or tabular format.

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
24
-

Note
9
.

INVESTMENTS IN OTHER FUNDS

(CONTINUED)



Additional information with respect to investment
,
redemption and liquidity provisions
, as well as o
ther
relevant information with respect to the
Fund
’s investments in other
funds

at December

31
,
201
2

and
20
1
1
,
is as follow
s.
65
,
66




Fair Value



Unfunded Commitments



Investment

December 31,

December 31,

Redemption

Redemption

Redemption





Strate
gy
67

201
2

20
1
1

201
2

20
1
1

Frequency

Notice Period

Restrictions


Sample Investee I

Managed









Monthly
(10)

10 days
(10)

None






futures
(1)

$

563,941
(8)

$

477,441

$

0

$

0


Sample Investee II

Equity









Monthly
(11)

10 days
(11)

Cumulative






long/short
(2)


1,992,841
(8)


2,780,095


0


0



monthly gate
(11)


Sample Investee III

Event









Annually
(12)

90 days
(12)

Minimum one year






driven
(3)


2,251,438
(8)


1,570,555


0


0



investment period
(12)


Sample Investee IV

Equity









Variable
(13)

90 days
(13)

Minimum 25 month






long/short
(2)


330,997
(8)


0


0


0



investmen
t period
(13)


Sample Investee V

Global









Variable
(14)

90 days
(14)

Two or three year






opportunities
(4)


497,100
(8)


0


0


0



capital holding
















period
(14)


Sample Investee VI


Real estate
(5)


57,350
(8)


0


0


0

Annually
(15)

90 days
(
15)


None
(15)


Sample Investee VII

Private equity









N/A
(16)

N/A
(16)

(16)






international
(6)


106,896
(16)


0


1,500,000
(9)


1,500,000
(9)


Sample Investee VIII

Multi
-









Quarterly
(17)

45 days
(17)

Minimum one year






strategy
(7)


661,936
(8)


0


0


0



investment period
(17)


The Sample

Managed









Monthly
(10)

10 days
(10)

None



Commodity Pool


futures
(1)



Limited Partnership



2,925
(8)


0


0


0




Total


$

6,465,424

$

4,828,091

$

1,500,000

$

1,500,000







65

FASB ASC 820
-
10
-
50
-
6A requires these disclosures to be by major category of investments
.
Refer to
Footnote
5
8

for guidance on determining appropriate classes
. The Funds
are presented here i
ndividually, although not technically required, however, the restriction on redemption provisions required by FASB ASC 946
-
210
-
50
-
6 must be provided for
each investment exceeding 5% of net asset value.

66

See FASB ASC 820
-
10
-
50
-
6A for additional disclosure
requirements including circumstances in which an otherwise redeemable investment might not be redeemable (e.g., lock
-
up or gate), disclosure of when redemption restrictions might lapse, other significant restrictions on the ability to sell an

investment, e
tc.

67

Investment strategy
typically means

the nature of trading or the “hedge fund style category” whereas, investment objective typically means the overall objective
such as capital
appreciation, etc.

Note
:

See next page for all note explanations.

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
25
-

Note
9
.

INVESTMENTS IN
OTHER FUNDS

(CONTINUED)






(1)

This category consists of investments in funds that speculatively trade futures contracts, both long and short. The trading
decisions for these funds are primarily
technically based with fundamental discretion applied on
an infrequent basis.


(2)

This category includes investments in funds that invest both long and short, primarily in U.S. common stocks. Management of
these funds have the ability to shift
investments from value to growth strategies, from small to large ca
pitalization stocks, and from a net long position to a net short position.


(3)

This category consists of an investment in a fund that invests in approximately 60 percent equities and 40 percent bonds to p
rofit from economic, political, and
government driv
en events. A majority of the investments are targeted at economic policy decisions.


(4)

This category consists of an investment in a fund that holds approximately 80 percent of the fund’s investments in non
-
U.S. common stocks in the healthcare,
energy, i
nformation technology, utilities, and telecommunications sectors and approximately 20 percent of the fund’s investments in di
versified currencies.


(5)

This category consists of an investment in a fund that invests primarily in U.S. commercial real estate.


(6)

This category consists of an investment in a private equity fund that invests primarily in privately held foreign technology
companies.


(7)

This category consists of an investment in a fund that pursues multiple strategies to diversify risks and red
uce volatility. The fund’s composite portfolio includes
investments in approximately 50 percent U.S. common stocks, 30 percent global real estate projects, and 20 percent arbitrage
investments.


(8)

The fair values of these investments have been estimated

using the net asset value per unit (or equivalent), such as net asset value per share or ownership interests in
partners’ capital or members’ capital to which a proportionate share of net assets is attributed.


(9)

This amount represents the amount the Fu
nd has agreed and committed to invest in Sample Investee VII in the future. Upon 30 days advance notice to the Fund by
Sample Investee VII, the Fund may be required to invest a portion or all of such amount in Sample Investee VII.


(10)

The Fund may redeem

all or a portion of its investment on a monthly basis subject to providing 10 days advance written notice to the other fund.


(11)

The Fund may redeem its investment on a monthly basis upon 10 days advance written notice to the general partner of Sample I
nvestee II. The Fund’s redemptions
are restricted to the extent that existing redemption requests exceed 10% of Sample Investee II’s net asset value at the rede
mption date, determined on a cumulative
basis. Redemptions are honored by Sample Investee II p
ro rata if monthly redemptions exceed 10% of its net asset value and on a first month requested basis if
cumulative redemptions requested exceed the cumulative redemption limitation. The Fund has an outstanding redemption request
s of $500,000 and $250,000

at
December 31,
20
1
2

and
20
1
1
, respectively, for redemption from its investment in Sample Investee II. Due to the restrictions of the cumulatively monthl
y gate, the
Fund is restricted at both December 31,
201
2

and
20
1
1

from redeeming
the requested amount
s. Based on communication with the general partner of Sample
Investee II, the Fund estimates receiving the redemption proceeds from these redemption requests as fo
llows:



December 31,
201
2

December 31,
20
1
1



Requested Redemption




Requested Redemptio
n
68




Estimated Amount


Estimated Amount


Month

to be Received

Month

to be Received


May
201
3

$

200,000

July
201
2

$

100,000


June
201
3


200,000

August
201
2


75,000


July
201
3


100,000

September
201
2


75,000



$

500,000


$

250,000



(12)

The Fund may redeem

all or a portion of its investment on an annual basis subject to providing 90 days advance written notice to the general part
ner of this fund;
however, the Fund may not redeem its investment unless it has owned its investment at least one year from the ef
fective redemption dat
e. As of June 30,
201
1
, the
Fund has owned its investment in Sample Investee III for one year and as of such date is permitted to redeem its investment i
n Sample Investee III on an annual
basis.


(13)

Investments are subject to a 25
month lock
-
up period. Withdrawals are permitted on the 25 month anniversary of the respective investment and each December 31
thereafter with at least 90 day prior written notice.


(14)

Investments in this fund are subject to either a two to three year cap
ital holding period. Redemptions are permitted on December 31 of each year after the expiration
of the capital holding period and on the last day of the calendar quarter occurring on or after the expiration of the capital

holding period, with at least 90
days prior
written notice. Funds not
redeemed

after the expiration of a
capital
holding period may be subject to a further two to three year capital holding period. In the event a
redemption subject to a capital holding period is permitted, a redemption
fee of up to 3% may be charged.


(15)

The Fund may redeem all or a portion of its investment on an annual basis subject to providing 90 days advance written notice

to the general partner of this fund;
however, under special circumstances, including, but no
t limited to, the inability of the fund to liquidate positions, the fund may delay part of all of the payment of a
redemption until such time as positions can be liquidated and available for distributions to redeeming investors.


(16)

This investment can n
ever be redeemed. Instead, the nature of the investment in this fund is that distributions are received through liquidation
of the underlying
assets of the fund. It is estimated that the underlying assets of the fund will be liquidated over 5 to 8 years.

At December 31,
201
2
, it is probable that all of the
investments in this fund will be sold at an amount different from the net asset value of the Fund’s ownership interest in thi
s fund’s net asset value. Therefore, the fair
values of the investments in
this fund have been estimated using recent observable transaction information and non
-
binding bids received from potential buyers of
the investments. As of December 31,
201
2
, a buyer or buyers for these investments has not yet been identified. Once a buy
er or buyers for the underlying
investments has been identified, the fund’s management must approve of all relevant terms of the sales transaction before the

sale of the investments can be
consummated.


(17)

This fund requires a minimum one year investment

period. Redemptions are permitted on a calendar quarter basis after the expiration of the minimum one year
investment period and require at least 45 days prior written notice. Capital accounts allocated to Special Situation Account
s together with withdr
awal proceeds
otherwise distributable to a withdrawing partner equal to the limited partner’s pro rata share of any of the investee fund’s
unfunded capital commitments for Special
Investments may not be withdrawn until the underlying Special Investment is
liquidated.







68

This is an example of comparative disclosure, as per
page 20 and

page 21, Sample Investee II was classified as a Level 2 asset at December 31,
2011

and would not have had any
redemption restrictions.

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
26
-

Note
10.

DERIVATIVES
69
,
70



The Fund engages in the speculative trading of futures contracts and forward currency contracts
(collectively, “derivatives”) for the purpose of achieving capital appreciation. None of the Fund’s
derivative instruments are designated as hedging instrument
s, as defined in the
Derivative
s

and Hedging

Topic of the Codification, nor are they used for other risk management purposes. The Investment Manager
actively assesses, manages and monitors risk exposure on derivatives on a contract basis, a sector basis
(
e.g., interest rate derivatives, agricultural derivatives, etc.), and on an overall basis in accordance with
established risk parameters. Due to the speculative nature of the Fund’s derivative trading activity, the
Fund is subject to the risk of substanti
al losses.



The following presents the fair value of derivative contracts at December 31,
201
2

and
20
1
1
. The fair
value of futures contracts and forward currency contracts is presented as an asset if in a gain position and a
liability if in a loss positi
on. Fair value is presented on a gross basis in the table below even though the
futures and forward currency contracts qualify for net presentation in the statement of financial condition.




December 31,
201
2



December 31,
20
1
1



Futures Contracts

Assets

Liabilities

Net

Assets

Liabilities

Net


Agricultural

$

616,566

$

(100,348)

$

516,218

$

1,234,611

$

(718,393)

$

516,218


Currency


104,101


(43,879)


60,222


46,320


0


46,320


Energy


174,383


(72,615)


101,768


101,504


(12,601)


88,903


Interest R
ate


236,217


(278,037)


(41,820)


246,311


(202,785)


43,526


Metal


351,803


(1,016,455)


(664,652)


279,057


(866,403)


(587,346)


Stock Index


308,444


(161,863
)


146,581


211,887


(440,669
)


(228,782
)


Total futures contracts

$

1,791,514

$

(1,673,197
)

$

118,317

$

2,119,690

$

(2,240,851
)

$

(121,161
)


Forward currency contracts

$

1,096,487

$

(1,056,347
)

$

40,140

$

1,437,202

$

(1,453,286
)

$

(16,084
)


Total derivatives

$

2,888,001

$

(2,729,544
)

$

158,457

$

3,556,892

$

(3,694,137
)

$

(137,245
)



Within the
statement of financial condition, the fair value of futures contracts is included in net unrealized
gain (loss) on open futures contracts, and the fair value of forward currency contracts is included in net
unrealized gain (loss) on open forward currency c
ontracts.
63
,
71







69

Although not included in “Sample Master Fund” FASB ASC

815
-
10
-
50
-
4H requires additional disclosure of derivatives with credit risk related contingent features. See Sample
Hedge Fund for example of such disclosures.

70

Information about an entities objectives for holding or issuing derivatives, the context nee
ded to understand those objectives
,

and the strategies for achieving those objectives are
required by FASB ASC 815
-
10
-
50
-
1A. FASB ASC 815
-
10
-
50
-
1B requires this information to be disclosed in the context of each instrument

s primary risk exposure (e.g.,
i
nterest rate, credit, foreign exchange, etc.). Accordingly, this is only an example and the General Partner/Managing Member
or equivalent should be consulted regarding method
of presentation.

71

Consider tabular presentation

of location in the statement of

financial condition
, most likely in the table above.

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
27
-

Note
10.

DERIVATIVES

(CONTINUED)



The following presents the
Fund
’s derivative
trading results and information related to the
volume of the
Fund’s derivative activity for the years end
ed December 31,
201
2

and
20
1
1
.

The below captions of
“Realized” and “Change in Unrealized” correspond to the captions in the statement of operations.




Year Ended December 31,
201
2



Year Ended De
cember 31,
20
1
1




Gain (loss) from trading



Gain (loss) from trading




Change in

Number of


Change in


Number of


Futures Contracts

Realized

Unrealized


Contracts Closed
72

Realized

Unrealized





Contracts Closed
72


Agricultural

$

1,767,430

$

0


3,697

$

(776,304)

$

19,203


6,379


Currency


(405,609)


13,902


2,600


504,906


(12,685)


200


Energy


(778,210)


12,865


987


(887,102)


(58,436)


879


Interest Rate


2,656,411


(85,346)


4,927


3,565,114


(33,707)


2,974


Metal


(909,899)


(77,306)


3,866


(808,988)


(357,636)


3,688


Stock Index


(2,538,688
)


375,363


1,001


(891,060
)


366,840


1,308


Total futures

contracts


(208,565
)


239,478


17,078


706,566


(76,421
)


15,428


Notional Value


Notional Value


of Contracts


of Contracts





Closed
72




Closed
72


Forward currency contracts


10,616


56,224

$

500,490,000


14,875


(170,446
)

$

345,000,000


Total gains (losses) from derivatives



trading


(197,949)


295,702




721,441


(246,867)


Foreign currency translation gains


7,646


0




3,610


0


Total gains (losses) from derivatives



trading per statement of operations

$

(190,303
)

$

295,702



$

725,051

$

(246,867
)



The number of contracts closed for futures contracts represents the number of contracts closed during the
yea
rs

ended December 31,
201
2

and
20
1
1
. The notional value of forward currency contracts closed
represe
nts the U.S. dollar notional value of forward currency contracts closed and settled in cash during the
ye
ars

ended December 31,
201
2

and
20
1
1
.


Note
11.

MARKET AND CREDIT RISKS
73



The Fund engages in the speculative trading of U.S.

and foreign futures contracts and forward currency
contracts
74

(collectively, “derivatives”).
Additionally, the Fund engages in the speculative trading of
investment securities.
The Fund is exposed to both market risk, the risk arising from changes in fa
ir value,
and credit risk, the risk of failure by another party to

perform according to the terms of a contract.







72

FASB ASC 815
-
10
-
50
-
1A provides that entities disclose information that would enable users of its financial statements to understand the volume o
f its derivative activity. These
financial statements p
rovide such information in its disclosure of the number of futures contracts closed during the years ended December 31,
2012

and
2011
, and in its disclosure
of the notional value of forward currency contracts closed during the years ended December 31,
2012

and
2011
. There may be other measurers of volume that management may
consider to be more meaningful (e.g., monthly average contracts closed, etc.) to the financial statement users. Consult clie
nt and engagement partner regarding meaningful
measures of v
olume of derivative activity and method of presentation.

73

FASB ASC 815
-
10
-
50
-
4H requires additional disclosures regarding credit
-
risk
-
related contingent features (e.g., additional collateralization in event credit rating falls below
certain level, etc.).

See Sample Hedge Fund for an example of such disclosure.

74

Only list those actually traded.

Note
:

Note 11. should be tailored to fit each client. For example, if no forward currency contracts or other derivative financial
instruments are traded, the
risks should not be discussed
here.

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
28
-

Note
11.

MARKET AND CREDIT RISKS

(CONTINUED)



Purchase and sale of futures contracts requires margin deposits with the commodity broker(s).

Additional
deposits may be necessary for any loss on contract
fair

value. The Commodity Exchange Act requires a
commodity broker to segregate all customer transactions and assets from such commodity broker’s
proprietary activities. A customer’s cash an
d other property (for example, U.S. Treasury bills) deposited
with a commodity broker are considered commingled with all other customer funds subject to the
commodity broker’s segregation requirements. In the event of a commodity broker’s insolvency, reco
very
may be limited to a pro rata share of segregated funds available. It is possible that the recovered amount
could be less than total cash and other property deposited.



For derivatives, risks arise from changes in the fair value of the contracts. Th
eoretically, the Fund is
exposed to a market risk equal to the notional contract value of futures and forward currency contracts
purchased and unlimited liability on such contracts sold short.



The Fund engages in the speculative trading of securities whi
ch are typically traded on an exchange or in
the over
-
the
-
counter market. The Fund also sells securities not owned at the time of sale (a “short sale”).
Risks arise from short sales due to the possible illiquidity of the securities markets and from potent
ial
adverse movements in security values. Theoretically, short sales expose the Fund to potentially unlimited
liability as the Fund’s ultimate obligation to purchase a security sold short may exceed the amount
recorded in the statement of financial condit
ion.



The Fund has a substantial portion of its assets on deposit with brokers and dealers in securities and other
financial institutions in connection with its trading of certain investment securities, forward currency
contracts and its cash management
activities. Assets deposited with brokers and dealer in securities and
other financial institutions in connection with the Fund’s trading
activities

are partially restricted due to
deposit
,

margin
, or collateral

requirements. In the event of a financial
institution’s insolvency, recovery of
Fund assets on deposit may be limited to account insurance or other protection afforded such deposits.
Since forward currency contracts are traded in unregulated markets between principals, the Fund also
assumes the r
isk of loss from counterparty nonperformance.




















Note
:

Note 11. should be tailored to fit each client. For example, if no forward currency contracts or other derivative financial
instruments are traded, the risks should not be discussed
here.


THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
29
-

Note
11.

MARKET AND CREDIT RISKS

(CONTINUED)



75
,
76

As the Fund deposits a substantial portion of its assets with securities brokers, commodity brokers and
other
financial institutions, the Fund has group concentrations of credit risk with these parties. The
following details
the fair value of the Fund’s accounts held

by these parties at December 31,
201
2

and
20
1
1
:



December 31,
201
2

December 31,
201
1



77

Securities brokers



Sample Security Broker, Inc.

$

158,028

$

0



American Broker, Inc.


0


89,435




Total at securities brokers


158,028


89,435


77

Futures brokers



Sample FCM, Inc.,


1,543,621


2,263,412



Others


207,888


318,099




Total at futures brokers


1,751,509


2,581,511


77

Other financial institutions



Sample FX Counterparty, Inc.


1,057,260


8,881



Others


1,463


2,474



Total at other financial institutions


1,058,723


11,355




Total

$

2,968,260

$

2,682,301






(1)

See Note 9. for details of these investments.



78

The Fund’s investment(s) in other fund(s) are subject to the market and credit risks of futures contracts,
forward currency contracts and other financial instruments
79

held or sold short by these funds(s). The Fund
bears the risk of loss only to the extent of the fair value of its respective investments and, in certain specific
circumstances, dividends, distributions and redemptions received.



The Investment Manager h
as established procedures to actively monitor market risk and minimize credit
risk, although there can be no assurance that it will, in fact, succeed in doing so. The Shareholders bear the
risk of loss only to the extent of the fair value of their respect
ive investments and, in certain specific
circumstances, dividends and redemptions received.







75

FASB ASC 825
-
10
-
50
-
21 requires additional disclosure regarding concentrations of credit risk or group concentrations of credit risk including di
sclosures regarding collateral and
disclosures regarding master netting ar
rangements.

76

FASB ASC 825
-
10
-
50
-
21 requires disclosure of the maximum amount of loss due to credit risk, based on the gross fair value of the financial instr
ument, the entity would incur if
parties to the financial instruments that make up the concentrati
on failed completely to perform according to the terms of the contracts and the collateral or other security, if any,
for the amount due proved to be of no value to the entity. Arthur Bell, CPAs believes the illustrative disclosures presented

in Note 11.
represent a meaningful disclosure regarding
concentrations of credit risk. Clients should consult with their administrators and auditors regarding disclosures related t
o credit risk.

77

The decision to disclose individual names of brokers, interbank market

makers or other counterparties should be based on a “significant” test, with the general guideline being to
disclose the name if they have assets deposited with them by the Fund greater than 5% of the net asset value of the Fund.

78

If applicable.

79

Only
list those actually traded by other funds.

Note
:

Note 11. should be tailored to fit each client. For example, if no forward currency contracts or other derivative financial
instruments are traded, the risks should not be discussed
here.

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
30
-

Note
12
.

INDEMNIFICATIONS



In the normal course of business, the Fund enters into contracts and agreements that contain a variety of
representations and warrant
ies and which provide general indemnifications. The Fund’s maximum
exposure under these arrangements is unknown, as this would involve future claims that may be made
against the Fund that have not yet occurred. The Fund expects the risk of any future obl
igation under these
indemnifications to be remote.


Note
13
.

SUBSEQUENT EVENTS



During the period January 1,
201
3

through March 2,
201
3
, additions of $1,000,000 were made to the Fund
from the shareholders.
80



The
Fund

has evaluated subsequent events through March 2,
201
3
, the date the financial statements were
available to be issued, and has determined that there are no other
81

subsequent events that require
disclosure.
82
,
83







80

Disclose signifi
cant capital transactions occurring subsequent to year end. Consult with engagement partner for determination of “significan
t,” as necessary.

81

Delete “other” if no subsequent events are disclosed.

82

FASB ASC 855
-
10
-
50 requires an entity that is not an SE
C filer to disclose the date through which subsequent events have been evaluated, as well as whether that date is the date
the financial statements were issued or the date the financial statements were available to be issued. In almost all cases,
the date

in which subsequent events have been evaluated
by the General Partner/Directors, etc. will be the date the “financial statements were available to be issued.”

83

For an SEC filer, no disclosure is required regarding the date through which the General Partn
er/Directors, etc. has evaluated subsequent events.

THE SAMPLE MASTER
FUND, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

_______________





-
31
-

Note
14
.

FINANCIAL HIGHLIGHTS
84



The following information presents per share operating performance data and other supplemental financial
data for Participating Shares for the years ended December 31,
201
2

and
20
1
1
. This information has been
derived from information presented in the fina
ncial statements.



Per Share Performance


(for a Participating Share outstanding throughout the entire year)

201
2

20
11


Net asset value per share at beginning of year

$

169.03

$

143.45


Income from operations:
85



Total trading and investing gains (losses)
(1)
85


6.00


16.57



Net investment income
(1)
85


11.15


9.01





Total income from operations
85


17.15


25.58


Net asset value pe
r share at end of year

$

186.18

$

169.03


Total Return
86


10.15

%


17.83

%


Supplemental Data


Ratios to average net asset value:
(2)



Expenses
87


0.62

%


1.53

%



Net investment income
85
,
87


8.49

%


5.80

%



Total returns are calculated based on the change in value o
f a Participating Share during the year. An individual
shareholder’s total returns and ratios may vary from the above total returns and ratios based on the timing of
additions and redemptions.
36






(1)

The net investment income per share is calculated by dividing the net investment income by the average number of
Participating Shares outstanding during the year. Total trading and investing gains
(losses) is a balancing amount necessary to
reconcile the change in net asset value per share with the other per share information.


(2)

Excludes the Fund’s proportionate share of income and expenses from investments in other funds.





84

Some unitized nonregistered funds issue a separate series of units/shares to each individual investor in the Fund, which rema
in outstanding so long as the investor maintains its
investment in the Fund,
and is not closed until the investor fully redeems. In such cases, consult TPA 6910.28, “Reporting Financial Highlights, Net

Asset Value (NAV) Per
Share, Shares Outstanding, and Share Transactions When Investors in Unitized Nonregistered Funds are Issued
Individual Classes or Series of Shares” for further reporting
guidance.

85

Caption as appropriate (i.e., income, (loss), total trading gains, etc.).

86

For periods of less than one year, footnote that amount is not annualized.

87

For periods of less than one
year, annualize and footnote that amount was annualized.

Note
:

Caption descriptions should be the same as captions used in the statement of operations.