The Supreme Ultimate, a term Chou Tun-Yi took from the Book of Changes is infinite and imperishable, and the source of the cosmos. It provides the ethics, the Moral Order, the Law for all things, yet it equates with the Ultimateless (explained later).
For Chou Tun-Yi, Law = the controlling non-physical principle of every object and creature.
Tao has one meaning for Confucians as the "Standard of human conduct" but for the Taoists another meaning as the reality behind the cosmos.
Yin and Yang are evolved out of the Supreme Ultimate. They are the negative and positive, the quiescent and active, female and male, soft and hard, dark and bright principle. Through their interaction they bring about all phenomena. Sometimes one prevails, sometimes the other, but at no time is either ever absent.
The Five Elements are produced by Yin and Yang.
These five stages are successively cyclical and involutionary from spirit down to matter. Ether, though invisible, is considered material.
Neo-Confucians reject the Buddhist view that the world is illusory.
The term Ultimateless was used by Lao Tzu, who also called it the Limitless.
Chou Tun-Yi was influenced by a learned scholar of the classics, Mu Hsiu, who received his ideas from a hermit Chung Fang, who was a disciple of famous Taoist, Chen Tuan.
-- Notebooks Category 15: The Orient > Chapter 3: China, Japan, Tibet > # 118