MASTERWORKS FUNDS INC.
111 Center Street
Little Rock, Arkansas 72201
November 6, 1998
Dear Shareholder:
I am writing to you to summarize the views of the Board of
Directors of MasterWorks Funds Inc. ("MasterWorks") about the Agreement and Plan
of Consolidation you have been asked to vote on in the proxy statement you
recently received. This letter supplements my earlier letter to you that
accompanied the proxy statement and amplifies the Board's recommendation that
you vote to approve the consolidation.
As you know, the proxy statement relates to a special meeting
at which you and other shareholders are being asked to consider an Agreement and
Plan of Consolidation that would combine your Growth Stock Fund ("Growth Stock")
and the Norwest Advantage Funds Large Company Growth Fund ("Large Company").
This letter does not discuss the "fall-back" Plan of Liquidation and Termination
that is also included in the proxy statement.
Reason for Recommending the Consolidation
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The consolidation offers you the opportunity to transfer your
investment in Growth Stock to Large Company without a sales charge and in a
transaction that Large Company's counsel believes should be tax free. While
Large Company has a higher expense ratio, the Board believes that it offers
greater prospects for long-term investment returns and continued growth.
Although past performance does not predict future performance, the Board invites
you to review Large Company's performance history. Among other things, your
Board considered that history favorably in concluding that the consolidation
would be in your best interest and in determining to recommend it for your
approval. If the proposed consolidation is
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approved and consummated, you will receive A Shares of Large Company equal in
value to your shares of Growth Stock.
AS OF MAY 31, 1998, OVER THE PAST ONE YEAR, FIVE YEAR AND TEN YEAR PERIODS,
THE I SHARES OF LARGE COMPANY HAD AVERAGE ANNUAL RETURNS OF 32.39%, 20.39% AND
18.97%, RESPECTIVELY, COMPARED TO RETURNS OF 30.67%, 22.14% AND 18.59% FOR THE
S&P 500 INDEX(1) AND AVERAGE ANNUAL RETURNS OF 25.85%, 18.16% AND 16.43% FOR
COMPARABLE FUNDS AS DETERMINED BY LIPPER ANALYTICAL SERVICES, INC. THE A SHARES
YOU WILL RECEIVE ARE A NEW CLASS THAT LARGE COMPANY BEGAN OFFERING ON OCTOBER 1
OF THIS YEAR. AFTER EXPENSE REIMBURSEMENTS AND FEE WAIVERS, A SHARES HAVE A
0.20% HIGHER TOTAL EXPENSE RATIO THAN I SHARES.(2)
About Large Company
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The focus of Large Company's investment objective - long-term
capital appreciation - and its policies are similar to Growth Stock. Large
Company, however, differs from Growth Stock in that it focuses on larger cap
companies, holds fewer investments and has had significantly lower portfolio
turnover. It's also been a less volatile fund than Growth Stock.
Combining Growth Stock into Large Company offers other
benefits as well. For example, with approximately $1 billion in assets under
management (compared to approximately $200 million for Growth Stock), the
manager of the portfolio through which Large Company's assets are invested may
be able to take advantage of transaction costs that are lower and pricing that
is more favorable than those available to the manager of the portfolio through
which Growth Stock's assets are invested.
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1 The Fund is professionally managed whereas the S&P 500 Index is unmanaged and
is not available for investment.
2 As discussed in the Combined Prospectus/Proxy Statement, purchases of Large
Company shares other than through the consolidation would be subject to sales
charges of up to 5.50%.
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About Large Company's Manager (from the Large Company Prospectus)
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John Dale, CFA, and the co-manager of Large Company's assets, Gary
Nussbaum, CFA, concentrate on large, high-quality, domestic companies that they
believe have superior growth potential. The managers invest primarily in
companies whose market capitalization is greater than approximately $3.7
billion.
Mr. Dale joined Norwest Bank Minnesota, N.A. in 1968. He is currently a
Senior Vice President of Peregrine Capital Management. Mr. Nussbaum has been
associated with Norwest Bank Minnesota, N.A. or its affiliates since 1990 and is
also a Senior Vice President of Peregrine Capital Management.
Again, in closing, the Board believes the consolidation is in your best
interest. Your vote is important, no matter how many shares you own. We hope
you'll vote to approve the Agreement and Plan of Consolidation by returning your
ballot today. If you need another ballot, please call 1-800-733-8481 ext. 448.
Very truly yours,
/s/ R. Greg Feltus
MasterWorks Funds Inc.
R. Greg Feltus
President
