Should I apply for PhD with a 4 on my master thesis? Today, I just got the very bad news that I just got 4 on my master thesis

Marks:
Excellent – 5 (> 80%)
Good – 4 (60–79%)
Satisfactory – 3 (41–59%)
Unsatisfactory – 2 (&lt; 40%)
 I am applying for a PhD. I don't know how to tell people I just got 4 on my thesis.
I begin to doubt if I am suitable for PhD.  I did have very high expectation for this thesis. Finally, the result let me down. 

My goal is to apply for one position with funding. I don't care the ranking of the university. below is the comments from my supervisor.
You  should apply, for the  following reasons:


First, you really  want  to do  a PhD. This should  be reason #1
A PhD is an adequation between a candidate, an advisor and a subject (possibly  a team), thus:
Grades matter, but adequation is more important. And you have timelessness.


A MSc is a first time test into research, but: 


The topics are often not the same. You can excel in a PhD, while having performed modestly in a MSc. The  converse may happen, too, because:
MSc and PhD are quite different, require seemingly different skills