<PAGE>
MASTERWORKS FUNDS INC.
111 CENTER STREET
LITTLE ROCK, ARKANSAS 72201
1-888-204-3956
- --------------------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF THE
MONEY MARKET FUND
TO BE HELD ON AUGUST 14, 1998
- --------------------------------------------------------------------------------
To the Shareholders of the MONEY MARKET FUND (the "Fund") of MasterWorks Funds
Inc. (the "Company"):
PLEASE TAKE NOTE THAT A SPECIAL MEETING OF SHAREHOLDERS (THE "SPECIAL
MEETING") OF THE FUND WILL BE HELD ON FRIDAY, AUGUST 14, 1998 AT 11:00 A.M.
(CENTRAL TIME) AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE, 111 CENTER STREET,
LITTLE ROCK, ARKANSAS 72201.
The Special Meeting is being called for the following purposes:
1. To consider approval of the proposal to reorganize the Fund into a
master/feeder structure, with amendments to certain fundamental
investment restrictions to permit the fund to invest all of its assets
in another investment company (as set forth in the accompanying Proxy
Statement and Appendix A thereto) (the "Reorganization").
2. To consider approval of a proposed change to an investment policy that
would allow the Fund to reserve freedom to concentrate in bank
obligations to the extent permitted by applicable rules or
interpretations. The Master Portfolio will have an identical
concentration policy.
The terms of the proposed advisory contract for the Master Portfolio are
identical in all material respects to the terms of the current advisory contract
for the Fund with BGFA except that (i) Wells Fargo Bank will no-longer act as
sub-adviser and (ii) the advisory fee level will be lower than the advisory fee
level currently in effect. BGFA will assume Wells Fargo Bank's duties as sub-
adviser.
These proposals and any other matters that are properly raised at, or are
incident to the conduct of, the Special Meeting may be considered either at the
Special Meeting or any adjournment(s) thereof, including any adjournment(s)
necessary to obtain requisite quorums and/or approvals.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSALS.
The Board of Directors of the Company has fixed the close of business on
June 19, 1998 as the record date for the determination of Fund shareholders
entitled to receive notice of and to vote at the Special Meeting or at any
adjournment(s) thereof. The enclosed Proxy Statement contains further
information regarding the Special Meeting and the proposals to be considered.
YOUR PROXY IS VERY IMPORTANT TO US. SIGNED BUT UNMARKED PROXY BALLOTS WILL BE
COUNTED IN DETERMINING WHETHER A QUORUM IS PRESENT AND (EXCEPT FOR BROKER "NON-
VOTES" AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT) WILL BE VOTED IN FAVOR
OF THE PROPOSALS AND IN THE DISCRETION OF THE PROXY AGENTS AS TO OTHER MATTERS
THAT MAY COME PROPERLY BEFORE, OR ON MATTERS INCIDENT TO THE CONDUCT OF, THE
SPECIAL MEETING. Whether or not you intend to attend the Special Meeting in
person, please return your Proxy Ballot. You may vote in any one of the
following three ways:
1. Mark, sign, date and return the enclosed Proxy Ballot in the
enclosed postage-paid envelope; or
2. Vote by telephone by calling SCC toll-free at 1-800-733-8481, Ext.
498 from 6:00 a.m. to 8:00 p.m. (Pacific time) (a confirmation of
your telephone vote will be mailed to you); or
3. Mark, sign, date and fax the enclosed Proxy Ballot to SCC AT 1-800-
733-1885 (a confirmation of your telefacsimile vote will be mailed
to you).
1
<PAGE>
By Order of the Board of Directors
MasterWorks Funds Inc.
/s/ RICHARD H. BLANK
-------------------------
Richard H. Blank, Jr.
SECRETARY
July 9, 1998
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YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS
OF THE NUMBER OF SHARES THAT YOU OWN.
PLEASE VOTE BY MAIL, TELEPHONE
OR TELEFACSIMILE IMMEDIATELY.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT NOTICE: PLEASE COMPLETE THE
ENCLOSED PROXY BALLOT AND RETURN IT AS SOON AS POSSIBLE.
FOR YOUR CONVENIENCE, YOU MAY VOTE BY CALLING SHAREHOLDER
COMMUNICATIONS CORP. ("SCC") TOLL-FREE AT 1-800-733-8481, EXT. 498
FROM 6:00 A.M. TO 8:00 P.M. PACIFIC TIME.
YOU ALSO MAY VOTE BY FAXING YOUR
PROXY BALLOT TO SCC AT 1-800-733-1885.
A CONFIRMATION OF YOUR TELEPHONE OR TELEFACSIMILE
VOTE WILL BE MAILED TO YOU.
- --------------------------------------------------------------------------------
MASTERWORKS FUNDS INC.
111 Center Street
Little Rock, Arkansas 72201
July 9, 1998
Dear Shareholder of the Money Market Fund:
We are pleased to invite you to a Special Meeting of Shareholders of the
Money Market Fund (the "Fund") of MasterWorks Funds Inc. (the "Company") to be
held on Friday, August 14, 1998. At the Special Meeting, shareholders of the
Fund will be asked to approve a reorganization to a master/feeder structure (the
"Reorganization") as described below and in the accompanying Proxy Statement.
You will also be asked to approve a proposed change to an investment policy to
allow the Fund to reserve freedom to concentrate in bank obligations to the
extent permitted by applicable rules or interpretations.
The accompanying proxy materials describe a transaction involving the
conversion of the Fund into a master/feeder fund that would invest substantially
all of its assets in the new Money Market Master Portfolio (the "Master
Portfolio"). Barclays Global Fund Advisors ("BGFA") will continue in its
capacity as investment adviser to the Master Portfolio.
BGFA has indicated that the Master Portfolio will continue operation with
the Fund's existing management, investment professionals and resources
essentially intact. BGFA has advised the Board of Directors of the Company that
under the proposed Reorganization no material changes to the Fund's investment
philosophy, policies or strategies are contemplated.
The Board of Directors believes that the proposed Reorganization of the
Fund into a master/feeder structure offers significant potential benefits to
shareholders. Under this structure, the Fund will become a feeder fund and will
invest all of its assets in a newly established master portfolio. The
Reorganization will involve reallocating certain fees and expenses, such as
advisory fees and expenses, to the Master Portfolio level and changes to certain
specific fee levels. However, the Reorganization will not result in any
increase in overall fees. Indeed, an eventual reduction in fee levels is the
principal potential benefit of the Reorganization.
The Company also asks for your approval of a proposed change to an
investment policy to allow the Fund to concentrate in bank obligations to the
extent permitted by applicable rules or interpretations. Approval of this
proposal will involve approval of an amendment to a fundamental investment
restriction that would otherwise limit the Fund's authority to invest in bank
obligations (other than certain domestic bank obligations) to less than 25% of
the Fund's total assets.
As described in detail in the accompanying proxy materials, the Special
Meeting is being called to request shareholder approval of the following
specific proposals:
1. To approve the Reorganization of the Fund into a master/feeder
structure. Under this structure, the Fund would pursue its investment
objective by investing in a newly established Master Portfolio of
another investment company that would be advised by
1
<PAGE>
BGFA, instead of investing directly in a portfolio of securities. The
Master Portfolio will have the same investment objective, policies and
restrictions as the Fund. As part of this approval, Fund shareholders
will be approving, in effect, amendments to certain fundamental
investment restrictions of the Fund that would otherwise preclude the
Fund from investing all of its assets in a Master Portfolio. The
purpose of the Reorganization is to provide the Fund with the
opportunity to achieve certain benefits, including cost savings,
associated with the Master Portfolio's potentially larger asset base.
2. To approve a proposed change to an investment policy that would allow
the Fund to reserve freedom to concentrate in bank obligations to the
extent permitted by applicable rules or interpretations. The Master
Portfolio will have an identical concentration policy.
THE COMPANY'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THESE PROPOSALS AND
RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSALS.
---
The formal Notice of Special Meeting, a Proxy Statement and a Proxy
Ballot are enclosed. Whether or not you intend to attend the Special Meeting,
please complete and return your Proxy Ballot. You may vote by proxy in any of
three ways:
1. Mark, sign, date and return the enclosed Proxy Ballot in the
enclosed postage-paid envelope; or
2. Vote by telephone by calling SCC toll-free at 1-800-733-8481, Ext.
498 from 6:00 a.m. to 8:00 p.m. (Pacific time) (a confirmation of
your telephone vote will be mailed to you); or
3. Mark, sign, date and fax the enclosed Proxy Ballot to SCC at 1-800-
733-1885 (a confirmation of your telefacsimile vote will be mailed
to you).
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT
YOU OWN. PLEASE VOTE BY RETURNING YOUR PROXY BALLOT TODAY, EITHER IN THE
ENCLOSED POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE AT 1-800-733-1885, OR BY
CALLING SCC TOLL-FREE AT 1-800-733-8481, EXT. 498.
If you have any questions regarding the enclosed materials or the Special
Meeting, please call the Company at 1-888-204-3956. We look forward to
receiving your vote very soon.
Sincerely,
MasterWorks Funds Inc.
/s/ GREG FELTUS
____________________________
R. Greg Feltus
PRESIDENT AND CHAIRMAN
OF THE BOARD
2
<PAGE>
PROXY STATEMENT
JULY 9, 1998
SPECIAL MEETING OF SHAREHOLDERS
OF THE
MONEY MARKET FUND
OF
MASTERWORKS FUNDS INC.
111 CENTER STREET
LITTLE ROCK, ARKANSAS 72201
1-888-204-3956
INTRODUCTION
This Proxy Statement is being furnished to shareholders of the Money
Market Fund (the "Fund") and MasterWorks Funds Inc. (the "Company") in
connection with the solicitation of proxies by the Company's Board of Directors
to be used at a Special Meeting of Shareholders (the "Special Meeting"), and at
any adjournment(s) thereof, to be held on Friday, August 14, 1998 beginning at
11:00 a.m. (Central time) at the Company's principal office, 111 Center Street,
Little Rock, Arkansas 72201. Your proxy is being solicited for the purposes set
forth below and in the accompanying Notice of Special Meeting.
Shareholders of record of the Fund at the close of business on June 19,
1998 (the "Record Date") are entitled to notice of and to vote at the Special
Meeting or any adjournment(s) thereof. As of the Record Date, there were
171,876,140.96 outstanding shares of the Fund, each of which is entitled to a
single vote. This Proxy Statement is first being mailed to shareholders on or
about July 13, 1998. The Company will furnish, without charge, a copy of its
annual report and most recent semi-annual report upon request directed to the
Company at its principal executive office or by calling the Company at 1-888-
204-3956.
If, by the time scheduled for the Special Meeting, a quorum is not
present or if a quorum is present but sufficient votes in favor of the Proposals
are not received, the persons named as proxy agents may propose one or more
adjournments of the Special Meeting to permit further solicitation of proxies.
Any such adjournment(s) will require the affirmative vote of a majority of the
shares present in person or by proxy at the session of the Special Meeting to be
adjourned.
PROPOSALS
The Special Meeting has been called for the principal purpose of
considering a reorganization of the Company's Fund, as described in more detail
below (the "Reorganization"). If the Reorganization is approved in all
respects, the Fund will invest in a portfolio of another open-end management
investment company whose investment objective, policies and restrictions will be
the same as those of the Fund (the "Master Portfolio").
Fund shareholders also are being asked to approve a proposed change to an
investment policy to allow the Fund to reserve freedom to concentrate in bank
obligations to the extent permitted by applicable rules or interpretations.
Approval of this proposal will involve approval of an amendment to a fundamental
investment restriction that would otherwise limit the Fund's authority to invest
in bank obligations (other than certain domestic bank obligations) to less than
25% of the Fund's total assets. The proposed investment policy is expected to
provide the Fund with greater flexibility in pursuing its investment objective.
The Master Portfolio will have an identical concentration policy.
Your Board of Directors recommends that you vote FOR the Reorganization
and the amendment to the investment policy as described more fully below in this
Proxy Statement.
For further discussion of the proposal, please refer to the Question and
Answer Summary that begins on page 2 below and the detailed discussion under the
proposal that begins on page 2 of this Proxy Statement.
<PAGE>
SUMMARY OF PROPOSALS
Q. WHY IS THE REORGANIZATION BEING RECOMMENDED?
A. The purpose of the Reorganization is to provide the Fund with the opportunity
to achieve certain benefits associated with a larger asset base. Currently,
the Fund's shares are offered for sale primarily to retail investors. In
contrast, it is anticipated that the Master Portfolio will be available
directly to institutional investors, and indirectly through other mutual
funds and similar collective investment vehicles to a broad range of
investors. Any significant increase in assets should provide various
benefits to Fund shareholders. Specifically, higher asset levels at the
Master Portfolio level should enable the Master Portfolio to spread certain
expenses, primarily advisory fees and administration expenses, but also
certain fixed third-party expenses, over a larger asset base, thereby
reducing per-share expense levels. Reductions in per-share expense levels
should have a favorable impact on the total return of the Fund. A larger
asset base also could benefit portfolio management by permitting larger
individual portfolio investments, which should result in reduced transaction
costs and/or more favorable pricing.
Q. HOW WILL THE REORGANIZATION AFFECT OVERALL FEES AND EXPENSES?
A. The Reorganization will involve reallocating certain fees and expenses, such
as advisory fees and expenses, to the Master Portfolio level and changes to
certain specific fee levels. However, the Reorganization will not result in
any increase in overall fees. Indeed, an eventual reduction in fee levels is
the principal potential benefit of the Reorganization.
Q. IS THERE ANY SALES LOAD, SALES CHARGE, COMMISSION, OR OTHER TRANSACTIONAL FEE
IMPOSED IN CONNECTION WITH THE REORGANIZATION?
A. No. The transfer of Fund assets to the Master Portfolio will be effected
without any sales load, sales charge, commission or other transactional fee
being imposed.
Q. WHO WILL ADVISE THE MASTER PORTFOLIO?
A. BGFA will provide advisory services to the Master Portfolio, under
arrangements that are substantially identical to those currently in effect
for the Fund with the exception that Wells Fargo Bank will not serve as sub-
adviser. Stephens Inc. ("Stephens") will continue to serve as sponsor,
distributor and administrator of the Fund and will serve as placement agent
and co-administrator of the Master Portfolio. Barclays Global Investors, N.A.
("BGI") will serve as co-administrator to both the Fund and Master Portfolio.
Q. WHAT ASPECTS OF THE FUND'S CURRENT INVESTMENT RESTRICTIONS LIMIT THE FUND'S
ABILITY TO INVEST ITS ASSETS IN BANK OBLIGATIONS?
A. Currently, the Fund's authority to invest in bank obligations (other than
certain domestic bank obligations) is limited to less than 25% of the Fund's
total assets. The Fund is proposing to reserve freedom to concentrate in
obligations of banks, to the extent permitted by applicable rules or
interpretations.
Q. WHY IS IT RECOMMENDED THAT THE FUND BE GIVEN SUCH FREEDOM?
A. The freedom to concentrate in these bank obligations would provide the Fund
with greater flexibility in pursuing its investment objective.
PROPOSAL 1
TO CONSIDER APPROVAL OF THE PROPOSAL TO REORGANIZE THE FUND
REORGANIZATION TO INVEST FUND ASSETS IN THE MASTER PORTFOLIO
The Board of Directors of the Company is asking shareholders of the Fund
to authorize the exchange of the Fund's investable assets (securities and cash)
for a beneficial interest in the Master Portfolio, which has the same investment
objective, policies and restrictions as the Fund. The Master Portfolio is a
newly formed series of an existing open-end management investment company,
Master Investment Portfolio ("MIP" or the "Trust"). After the Reorganization,
the only investment securities that will be held by the Fund will be the
interests in the Master Portfolio. BGFA, which presently serves as the Fund's
adviser, will serve as investment adviser to the Master Portfolio. The Fund
will no longer directly engage an adviser or sub-adviser to manage its assets
because all of its
2
<PAGE>
investable assets will be invested in the Master Portfolio. If the Proposal is
approved by the Fund's shareholders, the Reorganization is expected to occur by
August 31, 1998, or as promptly as practicable thereafter.
Under this proposed operating structure, which is known as a
master/feeder structure (the Fund being known as a "feeder" and a Master
Portfolio as a "master"), the Fund will pursue its existing investment objective
through investment in the Master Portfolio, rather than through direct
investments in securities. The Master Portfolio in turn will invest in
securities of the same type and in accordance with the same objective, policies
and restrictions of the Fund. Shareholders will continue to hold shares of the
Fund, and the Fund will hold interests in the Master Portfolio. The value of a
shareholder's investment in the Fund will be the same immediately after the
Fund's investment in the Master Portfolio as immediately before that investment.
Of course, the value of a shareholder's investment in the Fund will fluctuate
thereafter, based on the investment performance of the Master Portfolio. The
investment experience of the Fund will be based directly upon the investment
experience of the Master Portfolio. After the Reorganization, fees and expenses
will be reallocated between the Fund and Master Portfolio, with advisory and
custodial fee and expense obligations being transferred to the Master Portfolio
level and distribution, transfer agency and shareholder servicing fee
obligations being retained at the Fund level. Although some itemized fee levels
will change, the overall fee level will not increase as a result of the
Reorganization. Fund shareholders will have no appraisal rights, since the
proposed Reorganization will involve no exchange of their securities for other
securities. Of course, Fund shareholders may still redeem their shares at any
time before, during or after the Reorganization.
The Master Portfolio constitutes a series in MIP, which is organized as a
Delaware business trust. The Master Portfolio has been established to serve as
the investment portfolio for various institutional investors, including
collective investment vehicles, that have the same investment objectives and
policies as the Master Portfolio. These vehicles may include, among other types
of investors, registered mutual funds and private or off-shore investment funds.
Other mutual funds that may invest in the Master Portfolio may have different
expenses and, therefore, different yields/returns than the Fund. The interests
in MIP's Master Portfolio are not available for purchase directly by members of
the general public. The Money Market Fund of MasterWorks Funds Inc., which is a
registered management investment company organized as a Maryland corporation,
will invest in MIP's Money Market Master Portfolio.
INVESTORS
As of February 28, 1998, the net assets of the Fund were approximately
$180,323,004. The Company was organized as a Maryland corporation on October
15, 1992, and currently offers shares of twelve series, including the Fund.
COMPARATIVE EXPENSES
Following are tables showing the actual fees and expenses of the Fund for
the annual period ended February 28, 1998, and a pro forma adjustment thereof,
assuming that the Fund had invested all of its investable assets in the Master
Portfolio for the entire period then ended. The pro forma adjustment assumes
that: (i) there were no holders of interests in Master Portfolio other than the
Fund; and (ii) the average daily net assets of the Master Portfolio during the
period was equal to the actual average daily net assets of the Fund during the
period. All amounts are annualized and reflect certain fee waivers and expense
reimbursements as more fully described below.
MONEY MARKET FUND
FOR THE PERIOD ENDED FEBRUARY 28, 1998
<TABLE>
<CAPTION>
Actual Pro Forma
--------- -----------------------------------------
Master
Fund Portfolio Total
-------- --------- --------
<S> <C> <C> <C> <C>
Annual Fund Operating Expenses
Management Fees............................. 0.35% 0.00% 0.10% 0.10%
Co-Administration Fees...................... 0.10% 0.35% 0.00% 0.35%
Total Fund Operating Expenses................. 0.45% 0.35% 0.10% 0.45%
</TABLE>
The fees and expenses are described more fully in the Prospectus for the
Fund. The investment advisory fee for the Fund is an effective fee based on the
Fund's total net assets at the time of calculation. The Company, on behalf of
the Fund, currently pays BGFA a monthly fee at the annual rate of 0.35% of the
Fund's average daily net assets as compensation for its advisory services.
Wells Fargo Bank currently serves as sub-adviser to the Fund and is entitled to
receive from BGFA an amount equal to 0.05% of the average daily net assets of
the
3
<PAGE>
Fund as compensation for its sub-advisory services. After the Reorganization,
the Company, on behalf of the Master Portfolio, will pay BGFA a monthly fee at
the annual rate of 0.10% of the Fund's average daily net assets as compensation
for its advisory services. The Master Portfolio will not engage an investment
sub-adviser.
With regard to the co-administration fees paid by the Fund, Stephens Inc.
and BGI currently are entitled to receive jointly a monthly fee at an annual
rate of 0.10% of the average daily net assets of the Fund for such services.
After the Reorganization, Stephens and BGI will jointly receive 0.35% of the
average daily net assets of the Fund for such services. Stephens and BGI will
not be entitled to receive co-administration fees from the Master Portfolio so
long as they receive fees for providing such services to the Fund.
BGFA, BGI and Stephens may elect, at their discretion, to waive or
reimburse all or a portion of their respective fees charged to, or expenses paid
by, the Fund and Master Portfolio. Any such waiver or reimbursement will reduce
the Master Portfolio's expenses (of which the Fund pays its pro rata portion) or
Fund's expenses and, accordingly, have a favorable impact on the Master
Portfolio's/Fund's total return. However, there can be no assurances that such
waivers or reimbursements will occur.
The Reorganization will involve reallocating certain fees and expenses,
such as advisory fees and expenses, to the Master Portfolio level and changes to
certain specific fee levels. However, the Reorganization will not result in any
increase in overall fees. The Fund's administration fees would increase in the
same measure as its advisory fees would decrease. An eventual reduction in fee
levels is the principal potential benefit of the Reorganization.
The Fund would be able to withdraw its investment in the Master Portfolio
at any time if the Company's Board of Directors were to determine that to do so
would be in the best interests of the Fund and the Fund's shareholders. Upon
any such withdrawal, the Board of Directors would consider what action might be
taken, including the investment of all of the investable assets of the Fund in
another pooled investment vehicle.
The proposed transfer of assets of the Fund is expected to have no tax
consequences for the Fund or its shareholders. The Fund intends to continue to
qualify for treatment as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended. In each taxable year the Fund so
qualifies, it will be relieved of federal income tax on that part of its
investment company taxable income that is distributed to shareholders. The
Master Portfolio intends to be treated as a partnership for tax purposes and
does not expect to be required to pay any federal income or excise taxes. Of
course, distributions from the Fund will continue to be taxable to Fund
shareholders as ordinary income or capital gain, as the case may be. If you
hold shares of the Fund in a tax-deferred retirement plan, distributions from
the Fund will not be subject to income tax unless you take withdrawals from your
retirement plan account.
RISKS OF MASTER-FEEDER STRUCTURE
There are certain potential risks to the Fund related to investment of
all of its assets in the Master Portfolio. Large-scale redemptions by other
investors of their interests in the Master Portfolio could have adverse effects
on the Fund, such as requiring the liquidation of a significant portion of the
Master Portfolio's holdings at a time when it could be disadvantageous to do so.
The absence of substantial industry experience with the master-feeder structure
could result in accounting or other operational difficulties. Other
interestholders in the Master Portfolio may have a greater ownership interest in
the Master Portfolio than the Fund's interest and, therefore, could have
effective voting control over the operation of the Master Portfolio.
In the event the Fund is required to redeem its interests in the Master
Portfolio for any reason (for instance, because its shareholders did not approve
changes in the Fund's investment policies parallel to changes approved for the
Master Portfolio by a majority of its interestholders), the Fund's Board of
Directors might attempt to find an appropriate substitute investment vehicle in
which to invest Fund assets. The Board's inability to find a suitable
substitute investment vehicle could have a significant effect on the Fund's
shareholders.
The Fund may cease investing in the Master Portfolio only if the Board of
Directors of the Company were to determine that such action is in the best
interests of the Fund and its shareholders. In that event, the Board of
Directors would consider alternative arrangements, including investing all of
the Fund's assets in another investment company with substantially the same
investment objective, policies and restrictions as the Fund.
Whenever the Fund, as an interestholder of the Master Portfolio, is
requested to vote on any matter submitted to the interestholders of the Master
Portfolio, the Fund will hold a meeting of its shareholders to consider such
matters. The Fund will cast its votes in proportion to the votes received from
its shareholders. Shares for which the Fund receives no voting instructions
will be treated as having been voted in the same proportion as the votes
received from the other Fund shareholders.
4
<PAGE>
AMENDMENTS TO FUNDAMENTAL INVESTMENT RESTRICTIONS
In conjunction with the approval of the Reorganization, the Board of
Directors also approved the amendment of certain fundamental investment
restrictions of the Fund necessary to permit the Reorganization. Certain
investment restrictions of the Fund currently prohibit the Fund from pursuing
its investment objective by investing in the Master Portfolio. Amendments to
the fundamental restrictions may be made only with the approval of shareholders.
Accordingly, in approving the Reorganization, shareholders also are being asked
to approve, in effect, the following amendments to the fundamental investment
restrictions necessary to permit the Reorganization of the Fund.
Basically, certain fundamental investment restrictions for the Fund would
be amended by adding, where appropriate, express authority for the Fund to
invest its investable assets in an open-end management investment company with
the same investment objective, policies and restrictions as the Fund. The
Fund's current fundamental restrictions with the changes approved are discussed
below and a complete list is in Appendix A to this Proxy Statement.
RESTRICTION NO. 1
Following is fundamental Investment Restriction No. 1 of the Fund with
the proposed additional language in BOLD FACE, ITALICIZED type:
The Fund may not:
(1) purchase the securities of issuers conducting their principal
business activity in the same industry if, immediately after the purchase and as
a result thereof, the value of the Fund's investments in that industry would be
25% or more of the current value of the Fund's total assets, provided that there
is no limitation with respect to investments in (i) obligations of the U.S.
Government, its agencies or instrumentalities; (ii) obligations of domestic
banks (for the purpose of this exception, domestic bank obligations do not
include obligations of U.S. branches of foreign banks or obligations of foreign
branches of U.S. banks); AND PROVIDED FURTHER, THAT THE FUND MAY INVEST ALL ITS
ASSETS IN A DIVERSIFIED, OPEN-END MANAGEMENT INVESTMENT COMPANY, OR A SERIES
THEREOF, WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE, POLICIES AND
RESTRICTIONS AS THE FUND, WITHOUT REGARD TO THE LIMITATIONS SET FORTH IN THIS
PARAGRAPH (1);
RESTRICTION NO. 6
Following is fundamental Investment Restriction No. 6 of the Fund with
the proposed additional language in BOLD FACE, ITALICIZED type:
The Fund may not:
(6) underwrite securities of other issuers, except to the extent that the
purchase of permitted investments directly from the issuer thereof or from an
underwriter for an issuer and the later disposition of such securities in
accordance with the Fund's investment program may be deemed to be an
underwriting; AND PROVIDED FURTHER, THAT THE PURCHASE BY THE FUND OF SECURITIES
ISSUED BY A DIVERSIFIED, OPEN-END MANAGEMENT INVESTMENT COMPANY, OR A SERIES
THEREOF, WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE, POLICIES AND
RESTRICTIONS AS THE FUND SHALL NOT CONSTITUTE AN UNDERWRITING FOR PURPOSES OF
THIS PARAGRAPH (6);
RESTRICTION NO. 7
Following is fundamental Investment Restriction No. 7 of the Fund with
the proposed additional language in BOLD FACE, ITALICIZED type:
The Fund may not:
(7) make investments for the purpose of exercising control or management;
PROVIDED THAT THE FUND MAY INVEST ALL ITS ASSETS IN A DIVERSIFIED, OPEN-END
MANAGEMENT INVESTMENT COMPANY, OR A SERIES THEREOF, WITH SUBSTANTIALLY THE SAME
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS AS THE FUND, WITHOUT REGARD TO
THE LIMITATIONS SET FORTH IN THIS PARAGRAPH (7);
RESTRICTION NO. 10
Following is fundamental Investment Restriction No. 10 of the Fund with
the proposed additional language in BOLD FACE, ITALICIZED type:
The Fund may not:
5
<PAGE>
(10) purchase securities of any issuer (except securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities) if, as a
result, with respect to 75% of its total assets, more than 5% of the value of
the Fund's total assets would be invested in the securities of any one issuer
or, with respect to 100% of its total assets, the Fund's ownership would be more
than 10% of the outstanding voting securities of such issuer, PROVIDED THAT THE
FUND MAY INVEST ALL ITS ASSETS IN A DIVERSIFIED, OPEN-END MANAGEMENT INVESTMENT
COMPANY, OR A SERIES THEREOF, WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE,
POLICIES AND RESTRICTIONS AS THE FUND, WITHOUT REGARD TO THE LIMITATIONS SET
FORTH IN THIS PARAGRAPH (10); OR.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors has carefully considered Proposal 1, which will
authorize the Reorganization of the Fund to a master-feeder structure, including
necessary amendments to the Fund's fundamental investment restrictions. At a
meeting held on June 11, 1998, the Board approved this proposal and determined
to seek shareholder authorization of the actions necessary for the Fund to
invest all its investable assets in the Master Portfolio of the Trust. The
Board believes, based primarily on its discussions with Stephens and BGFA, that,
over time, the Master Portfolio will attract assets from other collective
investment vehicles that have complementary or differing distribution
arrangements and from other investors who may not otherwise invest in the Fund.
The purpose of the Reorganization is to provide the Fund with the
opportunity to achieve certain potential benefits associated with a larger asset
base. Currently, the Fund's shares are offered for sale primarily to retail
investors. In contrast, it is anticipated that the Master Portfolio in which
Fund assets will be invested after the Reorganization will be available directly
to institutional investors, and indirectly through other mutual funds and
similar collective investment vehicles to a broad range of investors. Other
existing mutual funds with similar investment objectives that already have
significant assets also may elect to invest in the Master Portfolio. Any
significant increase should provide various benefits to Fund shareholders.
The Board of Directors also recognized that Stephens, BGI and BGFA could
benefit from the proposed Reorganization. For example, BGI or BGFA could reduce
their risk in sponsoring and distributing new collective investment vehicles by
having such vehicles invest in the Master Portfolio. The proposed
Reorganization could benefit BGFA by increasing their assets under management
through the Master Portfolio, thereby allowing BGFA to earn additional advisory
and related fees.
The Directors of the Company believe that the aggregate per share fees
and expenses of the Fund and the Master Portfolio will be no higher than the
fees and expenses that would be incurred by the Fund if it continued to operate
under the arrangements and structure that are currently in force.
Based on their consideration, analysis and evaluation of the above
factors, the Company's Board of Directors, including a majority of the Directors
who are not "interested persons" of the Company as defined in the Investment
Company Act of 1940 (the "1940 Act"), believe that it is in the best interests
of the Fund and its shareholders for shareholders to approve all actions
necessary to enable the Fund to invest all of its investable assets in the
corresponding Master Portfolio of the Company. It is the intention of the
persons named in the accompanying proxy to treat any properly authorized proxy
that lacks specific voting instruction as authorizing them to vote FOR the
proposed Reorganization.
VOTE REQUIRED - PROPOSAL 1
THE REORGANIZATION OF THE FUND INTO A MASTER-FEEDER STRUCTURE HAS BEEN
APPROVED BY THE BOARD OF DIRECTORS FOR THE REASONS SPECIFIED ABOVE. The
favorable vote of the holders of a "majority" (as defined in the 1940 Act) of
the outstanding shares of the Fund is required to approve the proposed
Reorganization, including the changes in the Fund's fundamental investment
restrictions. Under the 1940 Act, the vote of the holders of a "majority" means
the vote of the holders of the lesser of (a) 67% or more of the shares of the
Fund present at the meeting or represented by proxy if the holders of 50% or
more of such shares are so present or represented, or (b) more than 50% of such
outstanding shares. Proxy votes will be voted as instructed, and properly
authorized proxies for which no voting instructions are received will be voted
in favor of Proposal 1, except that broker "non-vote" shares will not be voted
but will count towards the meeting quorum.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS OF THE FUND VOTE FOR
PROPOSAL 1. THE PERSONS NAMED IN THE ACCOMPANYING PROXY BALLOT INTEND TO TREAT
ANY PROXY THAT LACKS A SPECIFIC VOTING INSTRUCTION AS AUTHORIZING THEM TO VOTE
FOR THE PROPOSAL. If the shareholders of the Fund do not approve the proposed
Reorganization, or the Reorganization is not consummated for any other reason,
the Company's Board of Directors will consider what action to take, including
considering whether to retain the current Fund structure.
6
<PAGE>
PROPOSAL 2
TO CONSIDER APPROVAL OF A PROPOSAL TO AUTHORIZE THE FUND
TO INVEST IN BANK OBLIGATIONS TO THE EXTENT PERMITTED
UNDER APPLICABLE RULES OR INTERPRETATIONS
On June 11, 1998 the Board of Directors of the Company, including a
majority of the independent Directors, approved a proposal to authorize the Fund
to invest in bank obligations to the extent permitted under applicable rules or
interpretations. In conjunction with the approval, the Board approved an
amendment to a fundamental investment restriction that would otherwise limit the
Fund's authority to invest in bank obligations (other than certain domestic bank
obligations) to less than 25% of the Fund's total assets. Any amendments to the
Fund's fundamental investment restrictions are subject to approval by the Fund's
shareholders and cannot be implemented by the Fund until such shareholder
approval has been obtained. Accordingly, shareholders are being asked to
approve an amendment to an investment restriction to permit the Fund greater
flexibility to make such investments.
Basically, the fundamental investment policy set forth below contains the
concentration policy for the Fund. This fundamental investment restriction of
the Fund would be amended by deleting the bracketed language and adding the
italicized language. Current Securities and Exchange Commission ("SEC") rules
and interpretations permit funds to reserve freedom to concentrate in
obligations of domestic banks and, for this purpose, to treat foreign branches
of domestic banks as "domestic banks" only if the domestic parent would be
unconditionally liable in the event that the foreign branch failed to pay on its
instruments for any reason. Current SEC rules and interpretations permit funds
to treat domestic branches of foreign banks as "domestic banks" for purposes of
this restriction only if it can be demonstrated that they are subject to the
same regulation as United States banks. Current SEC rules and interpretations
do not permit funds to reserve freedom to concentrate in any other obligations
of foreign banks.
The Directors believe that approval of this amendment is in the best
interests of the Fund and its shareholders.
AMENDMENT TO FUNDAMENTAL INVESTMENT RESTRICTION NO. 1
Following is Fundamental Investment Restriction No. 1 of the Fund with
the proposed deletions shown in [brackets] and the proposed insert shown in
BOLD-FACE, ITALICIZED TYPE:
The Fund may not:
(1) purchase the securities of issuers conducting their principal
business activity in the same industry if, immediately after the purchase and as
a result thereof, the value of the Fund's investments in that industry would be
25% or more of the current value of the Fund's total assets, provided that there
is no limitation with respect to investments in (i) obligations of the U.S.
Government, its agencies or instrumentalities; (ii) obligations of [domestic]
banks [(for the purpose of this exception, domestic bank obligations do not
include obligations of U.S. branches of foreign banks or obligations of foreign
branches of U.S. banks)], TO THE EXTENT THAT THE SEC, BY RULE OR INTERPRETATION,
PERMITS FUNDS TO RESERVE FREEDOM TO CONCENTRATE IN SUCH OBLIGATIONS; AND
PROVIDED FURTHER, THAT THE FUND MAY INVEST ALL ITS ASSETS IN A DIVERSIFIED,
OPEN-END MANAGEMENT INVESTMENT COMPANY, OR A SERIES THEREOF, WITH SUBSTANTIALLY
THE SAME INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS AS THE FUND, WITHOUT
REGARD TO THE LIMITATIONS SET FORTH IN THIS PARAGRAPH (1).
VOTE REQUIRED - PROPOSAL 2
THIS CHANGE TO THE FUND'S FUNDAMENTAL INVESTMENT LIMITATION HAS BEEN
APPROVED BY THE BOARD OF DIRECTORS FOR THE REASONS SPECIFIED ABOVE. The
favorable vote of the holders of a "majority" (as defined in the 1940 Act) of
the outstanding shares of the Fund is required to approve Proposal 2. Under the
1940 Act, the vote of the holders of a "majority" means the vote of the holders
of the lesser of (a) 67% or more of the shares of the Fund present at the
meeting or represented by proxy if the holders of 50% or more of such shares are
so present or represented, or (b) more than 50% of the outstanding shares.
Proxy votes will be voted as instructed, and properly authorized proxies for
which no voting instructions are received will be voted in favor of Proposal 2,
except that broker "non-vote" shares will not be voted but will count towards
the meeting quorum.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS OF THE FUND VOTE FOR
PROPOSAL 2. THE PERSONS NAMED IN THE ACCOMPANYING PROXY BALLOT INTEND TO TREAT
ANY PROXY THAT LACKS A SPECIFIC VOTING INSTRUCTION AS AUTHORIZING THEM TO VOTE
FOR THE PROPOSAL.
If the shareholders of the Fund do not approve Proposal 2 or Proposal 2
is not consummated for any other reason, the Company's Board of Directors will
consider what action to take, if any.
7
<PAGE>
MISCELLANEOUS
PROCEDURAL MATTERS
Each shareholder of the Fund will be entitled to one vote for each share
and a fractional vote for each fractional share held by such shareholder with
respect to any proposal on which the shareholder is entitled to vote.
Shareholders holding a one-third of the outstanding shares of the Fund at the
close of business on the Record Date will constitute a quorum for the approval
of the Proposal described in the accompanying Notice of Special Meeting and in
this Proxy Statement.
If, by the time scheduled for the Special Meeting, a quorum is not
present, or if a quorum is present but sufficient votes in favor of the Proposal
are not received, the persons named as proxy agents may move for one or more
adjournments of the Special Meeting to permit further solicitation of proxies
with respect to the Proposal. Any such adjournment(s) will require the
affirmative vote of a majority of the shares present in person or by proxy at
the session of the Special Meeting to be adjourned. The persons named as proxy
agents will vote in favor of such adjournment(s) those shares that they are
entitled to vote that do not contain specific instructions to the contrary
including abstentions (but excluding broker non-votes). They will vote against
any such adjournment(s) only those proxies required to be voted against such
Proposal.
The duly appointed proxy agents may, in their discretion, vote upon such
other matters as may come properly before, or on matters incident to the conduct
of, the Special Meeting or any adjournment(s) thereof, including any proposal to
adjourn a meeting at which a quorum is present to permit the continued
solicitation of proxies in favor of the Proposal. The Company believes that the
voting procedures described herein are valid in accordance with state law that
governs such matters.
REVOCATION OF PROXY
Any shareholder may revoke his or her proxy at any time prior to its
exercise by (i) furnishing written notification of such revocation, which, to be
effective, must be signed, include the shareholder's name and account number, be
addressed to the Secretary of the Company at its principal executive office, 111
Center Street, Little Rock, Arkansas 72201, and be received prior to the
Special Meeting; (ii) signing another proxy of a later date; or (iii) personally
casting his or her vote at the Special Meeting or any adjournment(s) thereof.
SUBSTANTIAL SHAREHOLDERS
As of the close of business on June 19, 1998, there were no beneficial
owners of 5% or more of the outstanding shares of the Fund.
As of the close of business on June 19, 1998, the Record Date, the
Officers and Directors of the Company as a group did not own beneficially in
excess of 1% of the outstanding shares of the Fund.
VOTING PROCEDURES
If the accompanying Proxy Ballot is executed properly and returned,
shares represented by it will be voted at the Special Meeting in accordance with
the instructions on the proxy. If no instructions are specified, however,
shares will be voted for the approval of the Proposal; and, in the discretion of
the proxy agents, on any other matter properly presented at, or incident to the
conduct of, the Special Meeting. If a proxy represents a broker "non-vote"
(that is, a proxy from a broker or nominee indicating that such person has not
received instructions from the beneficial owner or other person entitled to vote
shares on a particular matter with respect to which the broker or nominee does
not have discretionary power) or is marked with an abstention, the shares
represented thereby will be considered to be present at the Special Meeting for
purposes of determining the existence of a quorum for the transaction of
business, but broker non-votes will not constitute a vote "for" or "against" the
Proposal. Abstentions will have the effect of a vote against a Proposal.
AFFILIATED BROKER COMMISSIONS; OTHER AFFILIATED PAYMENTS; DISTRIBUTOR
For the year ended February 28, 1998, the Fund paid no brokerage
commissions in connection with purchases and sales of portfolio securities to
any parties that would be treated, for purposes of Item 22(a)(1)(ii) of Schedule
14A under the Securities Exchange Act of 1934 (the "1934 Act"), as an affiliated
broker. Stephens Inc., 111 Center Street, Little Rock, Arkansas 72201, also
serves as the Fund's sponsor, administrator and distributor.
8
<PAGE>
SOLICITATION OF PROXIES AND PAYMENT OF EXPENSES
The cost of soliciting proxies for the Special Meeting, consisting
principally of printing and mailing expenses, will be borne by BGI and/or
Stephens. Proxies will be solicited in the initial, and any supplemental,
solicitation by mail and may be solicited in person, by telephone, telegraph or
other electronic means by personnel or agents of the Company, BGFA, and/or
Stephens.
OTHER BUSINESS
The Board of Directors of the Company knows of no other business to be
brought before the Special Meeting. If any other matters come before the
Special Meeting, however, including any proposal to adjourn the Special Meeting
to permit the continued solicitation of proxies in favor of the Proposal, it is
their intention that proxy ballots that do not contain specific instructions to
the contrary will be voted on such matters in accordance with the judgment of
the persons named therein as proxy agents.
FUTURE SHAREHOLDER PROPOSALS
Pursuant to rules adopted by the Securities and Exchange Commission under
the 1934 Act, investors may request inclusion in the Board's proxy statement for
shareholder meetings certain proposals for action which they intend to introduce
at such meeting. Any shareholder proposals must be presented a reasonable time
before the proxy materials for the next meeting are sent to shareholders. The
submission of a proposal does not guarantee its inclusion in the Company's proxy
statement and is subject to limitations under the 1934 Act. It is not presently
anticipated that the Company will hold regular meetings of shareholders, and no
anticipated date of the next meeting can be provided.
9
<PAGE>
APPENDIX A
INVESTMENT RESTRICTIONS
Set forth below are the Fund's investment restrictions with the
modifications proposed in the Proxy Statement. Proposed additions are shown in
BOLD FACE, ITALICIZED type, and proposed deletions are shown in [brackets].
The Fund is subject to the following investment restrictions, all of
which are fundamental policies.
The Fund may not:
(1) purchase the securities of issuers conducting their principal
business activity in the same industry if, immediately after the purchase and as
a result thereof, the value of any Fund's investments in that industry would be
25% or more of the current value of the Fund's total assets, provided that there
is no limitation with respect to investments in (i) obligations of the U.S.
Government, its agencies or instrumentalities; (ii) obligations of [domestic]
banks [(for the purpose of this exception, domestic bank obligations do not
include obligations of U.S. branches of foreign banks or obligations of foreign
branches of U.S. banks)], TO THE EXTENT THAT THE SEC, BY RULE OR INTERPRETATION,
PERMITS FUNDS TO RESERVE FREEDOM TO CONCENTRATE IN SUCH OBLIGATIONS; AND
PROVIDED FURTHER, THAT THE FUND MAY INVEST ALL ITS ASSETS IN A DIVERSIFIED,
OPEN-END MANAGEMENT INVESTMENT COMPANY, OR A SERIES THEREOF, WITH SUBSTANTIALLY
THE SAME INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS AS THE FUND, WITHOUT
REGARD TO THE LIMITATIONS SET FORTH IN THIS PARAGRAPH (1);
(2) purchase or sell real estate or real estate limited partnerships
(other than securities secured by real estate or interests therein or securities
issued by companies that invest in real estate or interests therein);
(3) purchase commodities or commodity contracts (including futures
contracts), except that the Fund may purchase securities of an issuer which
invests or deals in commodities or commodity contracts;
(4) purchase interests, leases, or limited partnership interests in oil,
gas, or other mineral exploration or development programs;
(5) purchase securities on margin (except for short-term credits
necessary for the clearance of transactions and except for margin payments in
connection with options, futures and options on futures) or make short sales of
securities;
(6) underwrite securities of other issuers, except to the extent that the
purchase of permitted investments directly from the issuer thereof or from an
underwriter for an issuer and the later disposition of such securities in
accordance with the Fund's investment program may be deemed to be an
underwriting; AND PROVIDED FURTHER, THAT THE PURCHASE BY THE FUND OF SECURITIES
ISSUED BY A DIVERSIFIED, OPEN-END MANAGEMENT INVESTMENT COMPANY, OR A SERIES
THEREOF, WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE, POLICIES AND
RESTRICTIONS AS THE FUND SHALL NOT CONSTITUTE AN UNDERWRITING FOR PURPOSES OF
THIS PARAGRAPH (6);
(7) make investments for the purpose of exercising control or management;
PROVIDED THAT THE FUND MAY INVEST ALL ITS ASSETS IN A DIVERSIFIED, OPEN-END
MANAGEMENT INVESTMENT COMPANY, OR A SERIES THEREOF, WITH SUBSTANTIALLY THE SAME
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS AS THE FUND, WITHOUT REGARD TO
THE LIMITATIONS SET FORTH IN THIS PARAGRAPH (7);
(8) borrow money or issue senior securities as defined in the 1940 Act,
except that the Fund may borrow from banks up to 10% of the current value of its
net assets for temporary purposes only in order to meet redemptions, and these
borrowings may be secured by the pledge of up to 10% of the current value of its
net assets (but investments may not be purchased while any such outstanding
borrowing in excess of 5% of its net assets exists);
(9) write, purchase or sell puts, calls, straddles, spreads, warrants,
options or any combination thereof, except that the Money Market Fund may
purchase securities with put rights in order to maintain liquidity;
(10) purchase securities of any issuer (except securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities) if, as a
result, with respect to 75% of its total assets, more than 5% of the value of
the Fund's total assets would be invested in the securities of any one issuer
or, with respect to 100% of its total assets the Fund's ownership would be more
than 10% of the outstanding voting securities of such issuer, PROVIDED THAT THE
FUND MAY INVEST ALL ITS ASSETS IN A DIVERSIFIED, OPEN-END MANAGEMENT INVESTMENT
COMPANY, OR A SERIES THEREOF, WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE,
POLICIES AND RESTRICTIONS AS THE FUND, WITHOUT REGARD TO THE LIMITATIONS SET
FORTH IN THIS PARAGRAPH (10); or
<PAGE>
(11) make loans, except that the Fund may purchase or hold debt
instruments or lend its portfolio securities in accordance with its investment
policies, and may enter into repurchase agreements.
2
<PAGE>
MASTERWORKS FUNDS INC.
PROXY SERVICES
POST OFFICE BOX 9002
FARMINGDALE, NY 11735-9812
MASTERWORKS MONEY MARKET FUND
SPECIAL MEETING OF SHAREHOLDERS ON AUGUST 14, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
MASTERWORKS FUNDS INC.
The undersigned hereby appoints Richard H Blank, Jr., Ann Bonsteel and
Michael W. Nolte (the "Proxy Agents"), and each of them, attorneys and
proxies of the undersigned, each with power of substitution and
resubstitution, to attend, vote and act for the undersigned at the
Special Meeting of Shareholders, and at any adjournment(s) thereof, of
the Money Market Fund (the "Fund") of MasterWorks Funds Inc. (the
"Company") to be held at the Company's principal executives offices,
111 Center Street, Little Rock, Arkansas, 77201, beginning at 11:00
a.m. (Central Time), on Friday, August 14, 1998. The Proxy Agents shall
cast votes according to the number of shares of the Fund that the
undersigned may be entitled to vote with respect to the proposals set
forth below, in accordance with the instructions indicated, if any, and
shall have all the powers that the undersigned would possess if
personally present. The undersigned hereby revokes any prior proxy to
vote at such Special Meeting, and hereby ratifies and confirms all that
said Proxy Agents, or any of them, may lawfully do by virtue hereof or
thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL
MEETING OF SHAREHOLDERS OF THE FUND AND THE PROXY STATEMENT, DATED JULY
9, 1998.
Please use this Proxy Ballot to vote only shares of the Fund listed below.
Please call Shareholder Communications Corp. if you need additional Proxy
Ballots.
- -------------------------------------------------------------------------------
For your convenience, you may vote by calling Shareholder Communications Corp.
("SCC") toll-free at 1-800-733-8481, Ext. 498 from 6:00 a.m. to 8:00 p.m.
Pacific time. You may also vote by faxing the Proxy Ballot to SCC at 1-800-733-
1885. A confirmation of your telephone or telefacsimile vote will be mailed to
you.
- -------------------------------------------------------------------------------
BY SIGNING AND DATING THE LOWER PORTION OF THIS PROXY BALLOT, YOU AUTHORIZE THE
PROXY AGENTS TO VOTE ON THE PROPOSALS AS MARKED, OR, IF NOT MARKED, TO VOTE
"FOR" THE PROPOSALS, AND TO USE THEIR DISCRETION TO VOTE ON ANY OTHER MATTERS
THAT MAY PROPERLY COME BEFORE, OR ARE INCIDENT TO THE CONDUCT OF, THE SPECIAL
MEETING. WHETHER OR NOT YOU INTEND TO ATTEND THE SPECIAL MEETING IN PERSON,
PLEASE COMPLETE, DETACH AND MAIL THE LOWER PORTION OF THIS PROXY BALLOT AT ONCE
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
KEEP THIS
PORTION FOR
TO VOTE, MARK BLOCK BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X] YOUR RECORDS
- --------------------------------------------------------------------------------
MASTERWORKS FUNDS INC. MONEY MARKET FUND DETACH AND
RETURN THIS
PORTION ONLY
VOTE ON PROPOSALS
1. Approval of the proposal to reorganize the Fund into FOR AGAINST ABSTAIN
a "master/feeder" structure with amended fundamental [ ] [ ] [ ]
investment restrictions to permit the Fund to invest
its assets in a corresponding Master Portfolio.
2. Approval of the proposal to authorize the Fund to FOR AGAINST ABSTAIN
change an investment policy to allow the Fund to [ ] [ ] [ ]
reserve freedom to concentrate in bank obligations
to the extent permitted by applicable rules and
interpretations.
Please sign below exactly as your name(s) appears hereon. Corporate proxy
ballot(s) must be signed in full corporate name by an authorized officer. When
shares are registered with joint owners, all joint owners should consider
their individual circumstances to determine whether one owner or all owners
will sign. Fiduciaries must give full titles as such. Proxy ballots signed or
telephoned by one owner will be presumed to be valid absent prior written
notification to the Company that more than one owner is required for valid
execution.
Date:____________________, 1998
- --------------------------------------
Signature
- --------------------------------------
Signature (Joint Owner)
