WELLS FARGO FUNDS TRUST, 485BPOS, 2000-11-01

WELLS FARGO FUNDS TRUST
485BPOS, 2000-11-01

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<PAGE>

As filed with the Securities and Exchange Commission
on November 1, 2000
Registration No. 333-74295; 811-09253

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ______
Pre-Effective Amendment No. ___ ______
Post-Effective Amendment No. 17 x
------

And

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 ______
Amendment No. 18 x
------

________________________

WELLS FARGO FUNDS TRUST
(Exact Name of Registrant as specified in Charter)
525 Market Street
San Francisco, CA 94163
(Address of Principal Executive Offices, including Zip Code)
__________________________

Registrant's Telephone Number, including Area Code: (800) 643-9691
C. David Messman
Wells Fargo Bank, N.A.
633 Folsom Street, 7th Floor
San Francisco, CA 94107-3600
(Name and Address of Agent for Service)
With a copy to:
Robert M. Kurucza, Esq.
Marco E. Adelfio, Esq.
Morrison & Foerster LLP
2000 Pennsylvania Ave., N.W.
Washington, D.C. 20006

It is proposed that this filing will become effective (check appropriate box):

x Immediately upon filing pursuant to Rule 485(b), or
---

___ on _________ pursuant to Rule 485(b)

___ 60 days after filing pursuant to Rule 485(a)(1), or

___ on _________ pursuant to Rule 485(a)(1)

___ 75 days after filing pursuant to Rule 485(a)(2), or

___ on ___________pursuant to Rule 485(a)(2)

If appropriate, check the following box:

____ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>

WELLS FARGO FUNDS TRUST
-----------------------
Cross Reference Sheet
---------------------

Form N-1A Item Number
---------------------

Part A Prospectus Captions
------ -------------------

1 Front and Back Cover Pages
2 Objectives and Principal Strategies
Important Risks
3 Summary of Expenses
Example of Expenses
4 Objectives and Principal Strategies
Important Risks
See Individual Fund Summaries
General Investment Risks
5 Not applicable
6 Organization and Management of the Funds
7 Your Account
How to Buy Shares
How to Sell Shares
Exchanges
Dividends and Distributions
Taxes
8 Distribution Plan
Exchanges
9 See Individual Fund Summaries

Part B Statement of Additional Information Captions
------ --------------------------------------------

10 Cover Page and Table of Contents
11 Historical Fund Information
Cover Page
12 Investment Restrictions
Additional Investment Policies
Risk Factors
13 Management
14 Capital Stock
15 Management
16 Portfolio Transactions
17 Capital Stock
18 Determination of Net Asset Value
Additional Purchase and Redemption Information
19 Federal Income Taxes
20 Management
21 Performance Calculations
22 Financial Information

Part C Other Information
------ -----------------

23-30 Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of this Document.
<PAGE>

EXPLANATORY NOTE
----------------

This Post-Effective Amendment No. 17 is being filed to add to the
Registration Statement of Wells Fargo Funds Trust (the "Trust"), the audited
financial statements and certain related financial information for the fiscal
year ended June 30, 2000 for the Tax-Free Funds of the Trust, and to make
certain other non-material changes to the Registration Statement.

This Post-Effective Amendment does not affect the Registration Statement
for any of the Trust's other funds.
<PAGE>

WELLS FARGO TAX-FREE
FUNDS

PROSPECTUS

Please read this Prospectus and keep it for future reference. It is designed to
provide you with important information and to help you decide if a Fund's goals
match your own.

These securities have not been approved or disapproved by the U.S. Securities
and Exchange Commission ("SEC"), nor has the SEC passed upon the accuracy or
adequacy of this Prospectus. Any representation to the contrary is a criminal
offense.

Fund shares are NOT deposits or other obligations of, or issued, endorsed or
guaranteed by Wells Fargo Bank, N.A. ("Wells Fargo Bank") or any of its
affiliates. Fund shares are NOT insured or guaranteed by the U.S. Government,
the Federal Deposit Insurance Corporation ("FDIC") or any other governmental
agency. AN INVESTMENT IN A FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS
OF PRINCIPAL.

Arizona Tax-Free Fund
California Limited Term Tax-Free Fund
California Tax-Free Fund
Colorado Tax-Free Fund
Minnesota Tax-Free Fund
National Tax-Free Fund
Oregon Tax-Free Fund
Class A, Class B, Class C

NOVEMBER 1 2000
<PAGE>

[PAGE INTENTIONALLY LEFT BLANK]
<PAGE>

<TABLE>
<CAPTION>
Table of Contents Tax-Free Funds
--------------------------------------------------------------------------------
<S> <C>
Overview Objectives and Principal Strategies 4
This section contains important Summary of Important Risks 6
summary information about the Performance History 10
Funds. Summary of Expenses 18
Key Information 22

--------------------------------------------------------------------------------

The Funds Arizona Tax-Free Fund 24
This section contains important California Limited Term Tax-Free Fund 28
information about the individual California Tax-Free Fund 32
Funds. Colorado Tax-Free Fund 36
Minnesota Tax-Free Fund 40
National Tax-Free Fund 44
Oregon Tax-Free Fund 50
General Investment Risks 54
Organization and Management
of the Funds 58

--------------------------------------------------------------------------------

Your Investment A Choice of Share Classes 60

Turn to this section for Reduced Sales Charges 63
information on how to open an Exchanges 66
account and how to buy, sell and Your Account 67
exchange Fund shares. How to Buy Shares 68
How to Sell Shares 71

--------------------------------------------------------------------------------

Reference Additional Services and

Look here for additional Other Information 73
information and term Table of Predecessors 75
definitions. Portfolio Managers 76
Glossary 77
</TABLE>
<PAGE>

Tax-Free Funds Overview
--------------------------------------------------------------------------------
See the individual Fund descriptions in this Prospectus for further details.
Words appearing in italicized print and highlighted in color are defined in the
glossary.

--------------------------------------------------------------------------------
Fund Objective
--------------------------------------------------------------------------------

Arizona Tax-Free Fund Seeks current income exempt from federal
income tax and Arizona personal income tax.

California Limited Term Seeks current income exempt from federal
Tax-Free Fund income tax and California personal income
tax.

Seeks current income exempt from federal
California Tax-Free Fund income tax and California personal income
tax.

Colorado Tax-Free Fund Seeks current income exempt from federal
income tax and Colorado personal income tax.

Minnesota Tax-Free Fund Seeks current income exempt from federal
income tax and Minnesota personal income tax.

National Tax-Free Fund Seeks current income exempt from federal
income tax.

Oregon Tax-Free Fund Seeks current income exempt from federal
income tax and Oregon personal income tax

4 Tax-Free Funds Prospectus
<PAGE>

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PRINCIPAL STRATEGY
--------------------------------------------------------------------------------

We invest primarily in investment grade Arizona municipal securities of varying
maturities. The portfolio's weighted average maturity will vary depending on
market conditions, economic conditions including interest rates, the differences
in yields between obligations of different maturity lengths, and other factors.
Generally, we attempt to capture greater total return by increasing maturity
when we expect interest rates to decline, and attempt to preserve capital by
shortening maturity when we expect interest rates to increase.

We invest primarily in short- and intermediate-term investment grade California
municipal securities. We buy municipal securities of any maturity length, but we
primarily buy securities with remaining maturities of less than 2 years
(short-term) or 2 to 10 years (intermediate-term). We have some flexibility in
setting the portfolio's dollar-weighted average maturity. Under normal market
conditions, the average expected duration of the Fund's portfolio securities
will be from 1 to 5 years.

We invest primarily in intermediate- to long-term investment grade California
municipal securities. We buy municipal securities of any maturity length, but we
invest substantially all of our assets in securities with remaining maturities
of 2 to 10 years (intermediate-term) or 10 years or longer (long-term). We have
some flexibility in setting the portfolio's dollar-weighted average maturity.

We invest primarily in investment grade Colorado municipal securities of varying
maturities. We expect that the Fund's average portfolio maturity normally will
be greater than 10 years. The Fund's average portfolio maturity may reach or
exceed 20 years in the future. Depending on market conditions, the Fund's
dollar-weighted average maturity could be higher or lower. The Fund emphasizes
investments in municipal securities paying interest income rather than
maintaining the Fund's stability of NAV.

We invest primarily in investment grade Minnesota municipal securities of
varying maturities. There are no restrictions on the Fund's average portfolio
maturity. We expect that the Fund's dollar-weighted average maturity normally
will be greater than 10 years. The Fund's average portfolio maturity may reach
or exceed 20 years in the future. Depending on market conditions, the Fund's
dollar-weighted average maturity could be higher or lower. The Fund emphasizes
investments in municipal securities paying interest income rather than
maintaining the Fund's stability of NAV.

We invest primarily in investment grade municipal securities with average
maturities between 10 and 20 years.

We invest primarily in investment grade Oregon municipal securities of varying
maturities. The portfolio's weighted average maturity will vary depending on
market conditions, economic conditions including interest rates, the differences
in yields between obligations of different maturity lengths, and other factors.
Generally, we attempt to capture greater total return by increasing maturity
when we expect interest rates to decline, and attempt to preserve capital by
shortening maturity when we expect interest rates to increase.

Tax-Free Funds Prospectus 5
<PAGE>

Summary of Important Risks
--------------------------------------------------------------------------------

This section summarizes important risks that are common to all of the Funds
described in this Prospectus, and important risks that relate specifically to
particular Funds. A careful review of the risks of investing in any Fund is
important to your investment choice. Additional information about these and
other risks is included in:

. the individual Fund descriptions later in this Prospectus;

. under the "General Investment Risks"section beginning on page 54;and

. in the Funds' Statement of Additional Information.

An investment in a Fund is not a deposit of Wells Fargo Bank and is not insured
or guaranteed by the FDIC or any other government agency. It is possible to lose
money by investing in a Fund.

--------------------------------------------------------------------------------
COMMON RISKS FOR THE FUNDS
--------------------------------------------------------------------------------

The Funds invest in debt securities, such as notes and bonds, which are subject
to credit risk and interest rate risk. Credit risk is the possibility that an
issuer of an instrument will be unable to make interest payments or repay
principal. Changes in the financial strength of an issuer or changes in the
credit rating of a security may affect its value. Interest rate risk is the risk
that interest rates may increase, which will reduce the resale value of
instruments in a Fund's portfolio, including U.S. Government obligations. Debt
securities with longer maturities are generally more sensitive to interest rate
changes than those with shorter maturities. Changes in market interest rates do
not affect the rate payable on debt instruments held in a Fund, unless the
instrument has adjustable or variable rate features, which can reduce interest
rate risk. Changes in market interest rates may also extend or shorten the
duration of certain types of instruments, such as asset-backed securities,
thereby affecting their value and the return on your investment.

The Funds invest in municipal securities that rely on the creditworthiness or
revenue production of their issuers or auxiliary credit enhancement features.
Municipal securities may be difficult to obtain because of limited supply, which
may increase the cost of such securities and effectively reduce the portfolio's
yield. Typically, less information is available about a municipal issuer than is
available for other types of securities issuers.

Although we strive to invest in municipal securities and other securities with
interest that is exempt from federal personal income taxes, including the
federal alternative minimum tax ("AMT"), some income earned by Fund investments
may be subject to such taxes.

Tax-Free Funds take advantage of tax laws that allow the income from certain
investments to be exempted from federal and, in some cases, state personal
income tax. Capital gains, whether declared by a Fund or realized by the
shareholder through the selling of Fund shares, are generally taxable.

Tax-Free Funds are generally considered non-diversified according to the
Investment Company Act of 1940, as amended ("1940 Act"). The majority of the
issuers of the securities in a Fund's portfolio are located within one state.
Non-diversified, geographically concentrated funds are riskier than similar
funds that are diversified or spread their investments over several geographic
areas. Default by a single security in the portfolio may have a greater negative
effect than a similar default in a diversified portfolio. The National Tax-Free
Fund is considered to be diversified. All other funds in this Prospectus are
considered to be non-diversified.

6 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
FUND SPECIFIC RISKS
--------------------------------------------------------------------------------

Arizona Tax-Free Fund Since we invest heavily in Arizona municipal
securities, events in Arizona are likely to affect
the Fund's investments. The Arizona economy is
based on services, manufacturing, mining, tourism
and the military. Adverse conditions affecting
these sectors could have a disproportionate impact
on Arizona municipal securities. Under its
Constitution, Arizona is not permitted to issue
general obligation bonds secured by the State's
full faith and credit. However, agencies and
instrumentalities of Arizona are authorized to
issue bonds secured by revenues, and local
governments are also authorized to incur
indebtedness. The Fund relies on the availability
of such securities for investment. We may invest
25% or more of our assets in Arizona municipal
securities that are related in such a way that
political, economic or business developments
affecting one obligation would affect others. For
example, we may own different obligations that pay
interest based on the revenue of similar projects.

California Limited Term Since we invest heavily in California municipal
Tax-Free Fund and California securities, events in California are likely to
Tax-Free Fund affect the Fund's investments. For example,
California exports a significant portion of its
economic production to various Pacific rim
countries. Events impacting the Asian economy may
have a disproportionate impact on the California
economy and California municipal securities. In
addition, we may invest 25% or more of our assets
in California municipal securities that are
related in such a way that political, economic or
business developments affecting one obligation
would affect the others. For example, we may own
different obligations that pay interest based on
the revenue of similar projects.

Colorado Tax-Free Fund Since we invest heavily in Colorado municipal
securities, events in Colorado are likely to
affect the Fund's investments. The Colorado
economy is based on services, communications,
transportation, tourism, and manufacturing.
Certain obligations of Colorado State and local
public entities are subject to particular economic
risks, including, but not limited to, the
vulnerabilities of resort economies which depend
on seasonal tourism, the possibility of downturns
in sales tax and other revenues, and fluctuations
in the real estate market. In addition, we may
invest 25% or more of our assets in Colorado
municipal securities that are related in such a
way that political, economic or business
developments affecting one obligation would affect
others. For example, we may own different
obligations that pay interest based on the revenue
of similar projects.

Tax-Free Funds Prospectus 7
<PAGE>

Summary of Important Risks
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
FUND SPECIFIC RISKS
--------------------------------------------------------------------------------

Minnesota Tax-Free Fund Since we invest heavily in Minnesota municipal
securities, events in Minnesota are likely to
affect the Fund's investments. For example, the
state's economy relies significantly on its
agriculture and forestry natural resources.
Adverse conditions affecting these sectors could
have a disproportionate impact on Minnesota
municipal securities. In addition, we may invest
25% or more of our assets in Minnesota municipal
securities that are related in such a way that
political, economic or business developments
affecting one obligation would affect the others.
For example, we may own different obligations that
pay interest based on the revenue of similar
projects.

National Tax-Free Fund The Fund may invest 25% or more of its total
assets in municipal securities that are related in
such a way that political, economic or business
developments affecting one obligation would affect
the others. For example, we may own different
obligations that pay interest based on the revenue
of similar projects.

Oregon Tax-Free Fund Since we invest heavily in Oregon municipal
securities, events in Oregon are likely to affect
the Fund's investments. Oregon does not have a
sales tax, and state tax revenues, derived
principally from corporate and personal income
taxes, are particularly sensitive to economic
recessions. In addition, we may invest 25% or more
of our assets in Oregon municipal securities that
are related in such a way that political, economic
or business developments affecting one obligation
would affect others. For example, we may own
different obligations that pay interest based on
the revenue of similar projects.

8 Tax-Free Funds Prospectus
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<PAGE>

Performance History
--------------------------------------------------------------------------------

The information on the following pages shows you how each Fund has performed and
illustrates the variability of a Fund's returns over time. Each Fund's average
annual returns from inception, and for one-, five- and ten-year periods (as
applicable) are compared to the performance of an appropriate broad-based index.

Please remember that past performance is no guarantee of future results.

Arizona Tax-Free Fund Class A Calendar Year Returns (%)*

[BAR CHART APPEARS HERE]

Best Qtr.: Q1 `95 o 5.51% Worst Qtr.: Q1 `94 o -3.71%

* Returns do not reflect sales charges. If they did, returns would be lower. The
Fund's year-to-date performance through September 30, 2000 was 8.60%.

Average annual total return (%)/1/
Since
for the period ended 12/31/99 1 year 5 years Inception/4/

Class A (Incept. 3/2/92) -10.77 3.68 4.19

Class B (Incept. 9/6/96)/2/ -11.65 3.30 3.79

LB Muni Index/3/ -2.06 6.91 6.30

/1/ Returns reflect applicable sales charges.
/2/ Performance shown for periods prior to the inception of this Class reflects
the performance of the Class A shares adjusted to reflect this Class's fees
and expenses.
/3/ Lehman Brothers Municipal Bond Index.
/4/ March 2, 1992.

10 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

California Limited Term Tax-Free Fund Class A Calendar Year Returns (%)*

[BAR CHART APPEARS HERE]

Best Qtr.: Q1 `95 o 3.41% Worst Qtr.: Q1 `94 o -1.85%

* Returns do not reflect sales charges. If they did, returns would be lower. The
Fund's year-to-date performance through September 30, 2000 was 4.60%.

Average annual total return (%)/1/
Since
for the period ended 12/31/99 1 year 5 year Inception

Class A (Incept. 11/18/92) -4.43 3.73 3.55

LB 3 year Muni Index/2/ 1.96 5.17 4.70

/1/ Returns reflect applicable sales charges.
/2/ Lehman Brothers 3 year Municipal Bond Index.

Tax-Free Funds Prospectus 11
<PAGE>

Performance History
--------------------------------------------------------------------------------

California Tax-Free Fund Class A Calendar Year Returns (%)*

[BAR CHART APPEARS HERE]

Best Qtr.: Q1 `95 o 6.19% Worst Qtr.: Q1 `94 o -4.06%

* Returns do not reflect sales charges. If they did, returns would be lower. The
Fund's year-to-date performance through September 30, 2000 was 8.85%.

Average annual total return (%)/1/

for the period ended 12/31/99 1 year 5 years 10 years

Class A (Incept. 10/6/88) -8.01 5.33 6.15

Class B (Incept. 12/15/97)/2/ -8.94 5.21 5.90

Class C (Incept. 7/1/93)/2/ -5.18 5.54 5.91

LB Muni Index/3/ -2.06 6.91 6.89

12 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

Colorado Tax-Free Fund Class A Calendar Year Returns (%)*

[BAR CHART APPEARS HERE]

Best Qtr.: Q1 `95 o 5.64% Worst Qtr.: Q1 `94 o -5.49%

* Returns do not reflect sales charges. If they did, returns would be lower. The
Fund's year-to-date performance through September 30, 2000 was 7.45%.

Average annual total return (%)/1/

Since
for the period ended 12/31/99 1 year 5 years Inception/4/

Class A (Incept. 6/1/93) -9.74 5.33 4.06

Class B (Incept. 8/2/93)/2/ -10.58 5.21 4.05

LB Muni Index/3/ -2.06 6.91 5.38

Tax-Free Funds Prospectus 13
<PAGE>

Performance History
--------------------------------------------------------------------------------

Minnesota Tax-Free Fund Class A Calendar Year Returns (%)*

[BAR CHART APPEARS HERE]

Best Qtr.: Q1 `95 o 6.84% Worst Qtr.: Q1 `94 o -5.57%

* Returns do not reflect sales charges. If they did, returns would be lower.
The Fund's year-to-date performance through September 30, 2000 was 7.39%.

<TABLE>
<S> <C> <C> <C>
Average annual total return (%)/1/

for the period ended 12/31/99 1 year 5 years 10 years

Class A (Incept. 1/12/88) -10.17 4.85 5.10

Class B (Incept. 8/6/93)/2/ -11.03 4.70 4.78

LB Muni Index/3/ -2.06 6.91 6.89
</TABLE>

/1/ Returns reflect applicable sales charges.
/2/ Performance shown for periods prior to the inception of this Class
reflects the performance of the Class A shares adjusted to reflect this
Class's fees and expenses.
/3/ Lehman Brothers Municipal Bond Index.

14 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

National Tax-Free Fund Class A Calendar Year Returns (%)*

[BAR CHART APPEARS HERE]

Best Qtr.: Q1 `95 o 5.85% Worst Qtr.: Q1 `94 o -5.50%

* Returns do not reflect sales charges. If they did, returns would be lower.
The Fund's year-to-date performance through September 30, 2000 was 7.16%.

Average annual total return (%)/1/

for the period ended 12/31/99 1 year 5 years 10 years

Class A (Incept. 8/1/89) -9.63 5.36 5.33

Class B (Incept. 8/6/93)/2/ -10.57 5.22 5.05

LB Muni Index/3/ -2.06 6.91 6.89

/1/ Returns reflect applicable sales charges. Class C shares have been in
existence for less than one calendar year, therefore, performance is not
shown.
/2/ Performance shown for periods prior to the inception of this Class reflects
the performance of the Class A shares adjusted to reflect this Class's fees
and expenses.
/3/ Lehman Brothers Municipal Bond Index.

Tax-Free Funds Prospectus 15
<PAGE>

Performance History
--------------------------------------------------------------------------------

Oregon Tax-Free Fund Class A Calendar Year Returns (%)*

[BAR CHART APPEARS HERE]

Best Qtr.: Q1 `95 o 6.90% Worst Qtr.: Q1 `94 o -5.31%

* Returns do not reflect sales charges. If they did, returns would be lower.
The Fund's year-to-date performance through September 30, 2000 was 6.68%.

Average annual total return (%)/1/

for the period ended 12/31/99 1 year 5 years 10 years

Class A (Incept. 6/1/88) -10.22 4.23 5.05

Class B (Incept. 9/6/96)/2/ -11.44 3.99 4.73

LB Muni Index/3/ -2.06 6.91 6.89

16 Tax-Free Funds Prospectus
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<PAGE>

Tax-Free Funds
--------------------------------------------------------------------------------

These tables are intended to help you understand the various costs and expenses
you will pay as a shareholder in a Fund. These tables do not reflect charges
that may be imposed in connection with an account through which you hold Fund
shares. A broker/dealer or financial institution maintaining an account through
which you hold Fund shares may charge separate account, service, or transaction
fees on the purchase or sale of Fund shares that would be in addition to the
fees and expenses shown here.

--------------------------------------------------------------------------------
SHAREHOLDER FEES
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
All Funds All Funds All Funds
Class A Class B Class C
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) 4.50% None None

Maximum deferred sales charge (load) (as a percentage of the lower
of the Net Asset Value ("NAV") at purchase or the NAV at redemption) None1 5.00% 1.00%
----------------------------------------------------------------------------------------------------------------------
</TABLE>

--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Arizona Tax-Free Fund
-----------------------------------------------------------
CLASS A CLASS B
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Management Fees 0.40% 0.40%
Distribution (12b-1) Fees 0.00% 0.75%
Other Expenses/2/ 0.70% 0.70%
----------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 1.10% 1.85%
----------------------------------------------------------------------------------------------------------------------
Fee Waivers 0.33% 0.33%
----------------------------------------------------------------------------------------------------------------------
NET EXPENSES/3/ 0.77% 1.52%
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Minnesota Tax-Free Fund
-----------------------------------------------------------
CLASS A CLASS B
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Management Fees 0.40% 0.40%
Distribution (12b-1) Fees 0.00% 0.75%
Other Expenses/2/ 0.72% 0.75%
----------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 1.12% 1.90%
----------------------------------------------------------------------------------------------------------------------
Fee Waivers 0.52% 0.55%
----------------------------------------------------------------------------------------------------------------------
NET EXPENSES/3/ 0.60% 1.35%
----------------------------------------------------------------------------------------------------------------------
</TABLE>

/1/ Class A shares that are purchased at NAV in amounts of $1,000,000 or more
may be assessed a 1.00% CDSC if they are redeemed within one year from the
date of purchase. See "A Choice of Share Classes" for further information.
All other Class A shares will not have a CDSC.
/2/ Other expenses are based on estimated amounts for the current fiscal year.
/3/ The advisor has committed through October 31, 2001 to waive fees and/or
reimburse expenses to the extent necessary to maintain the Fund's net
operating expense ratio shown.

18 Tax-Free Fund Prospectus
<PAGE>

Summary of Expenses
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
California Limited Term
Tax-Free Fund California Tax-Free Fund Colorado Tax-Free Fund
------------------------------------------------------------------------------------------------------------------
CLASS A CLASS A CLASS B CLASS C CLASS A CLASS B
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
0.40% 0.40% 0.40% 0.40% 0.40% 0.40%
0.00% 0.00% 0.75% 0.75% 0.00% 0.75%
0.89% 0.55% 0.56% 0.54% 0.68% 0.70%
------------------------------------------------------------------------------------------------------------------
1.29% 0.95% 1.71% 1.69% 1.08% 1.85%
------------------------------------------------------------------------------------------------------------------
0.54% 0.18% 0.19% 0.17% 0.48% 0.50%
------------------------------------------------------------------------------------------------------------------
0.75% 0.77% 1.52% 1.52% 0.60% 1.35%
------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
National Tax-Free Fund Oregon Tax-Free Fund
---------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0.40% 0.40% 0.40% 0.40% 0.40%
0.00% 0.75% 0.75% 0.00% 0.75%
0.57% 0.58% 0.56% 0.81% 0.82%
---------------------------------------------------------------------------------------------
0.97% 1.73% 1.71% 1.21% 1.97%
---------------------------------------------------------------------------------------------
0.17% 0.18% 0.16% 0.44% 0.45%
---------------------------------------------------------------------------------------------
0.80% 1.55% 1.55% 0.77% 1.52%
---------------------------------------------------------------------------------------------
</TABLE>

Tax-Free Funds Prospectus 19
<PAGE>

Tax-Free Funds
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
EXAMPLE OF EXPENSES
--------------------------------------------------------------------------------

These examples are intended to help you compare the cost of investing in a Fund
with the cost of investing in other mutual funds. The examples assume a fixed
rate of return and that fund operating expenses remain the same. Your actual
costs may be higher or lower than those shown.

You would pay the following expenses on a $10,000 investment assuming a 5%
annual return and that you redeem your shares at the end of each period:

------------------------------------------------------------------
Arizona Tax-Free Fund
---------------------------------------
CLASS A CLASS B
------------------------------------------------------------------
1 YEAR $ 525 $ 655
3 YEARS $ 753 $ 850
5 YEARS $ 998 $ 1,170
10 YEARS $ 1,702 $ 1,853
------------------------------------------------------------------

------------------------------------------------------------------
Minnesota Tax-Free Fund
---------------------------------------
CLASS A CLASS B
------------------------------------------------------------------
1 YEAR $ 509 $ 637
3 YEARS $ 741 $ 844
5 YEARS $ 991 $ 1,175
10 YEARS $ 1,707 $ 1,877
------------------------------------------------------------------

You would pay the following expenses on a $10,000 investment assuming a 5%
annual return and that you do NOT redeem your shares at the end of the periods
shown:
------------------------------------------------------------------
Arizona Tax-Free Fund
---------------------------------------
CLASS A CLASS B
------------------------------------------------------------------
1 YEAR $ 525 $ 155
3 YEARS $ 753 $ 550
5 YEARS $ 998 $ 970
10 YEARS $ 1,702 $ 1,853
------------------------------------------------------------------

------------------------------------------------------------------
Minnesota Tax-Free Fund
---------------------------------------
CLASS A CLASS B
------------------------------------------------------------------
1 YEAR $ 509 $ 137
3 YEARS $ 741 $ 544
5 YEARS $ 991 $ 975
10 YEARS $ 1,707 $ 1,877
------------------------------------------------------------------

20 Tax-Free Funds Prospectus
<PAGE>

Summary of Expenses
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
California Limited Term
Tax-Free Fund California Tax-Free Fund Colorado Tax-Free Fund
--------------------------------------------------------------------------------
CLASS A CLASS A CLASS B CLASS C CLASS A CLASS B
--------------------------------------------------------------------------------
$ 523 $ 525 $ 655 $ 255 $ 509 $ 637
$ 790 $ 722 $ 820 $ 516 $ 732 $ 833
$ 1,076 $ 935 $ 1,110 $ 902 $ 974 $ 1,154
$ 1,891 $ 1,548 $ 1,707 $ 1,984 $ 1,667 $ 1,831
--------------------------------------------------------------------------------

-------------------------------------------------------
National Tax-Free Fund Oregon Tax-Free Fund
-------------------------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B
-------------------------------------------------------
$ 528 $ 658 $ 258 $ 525 $ 655
$ 729 $ 827 $ 523 $ 775 $ 875
$ 946 $ 1,122 $ 913 $ 1,045 $ 1,221
$ 1,571 $ 1,730 $ 2,006 $ 1,813 $ 1,970
-------------------------------------------------------

--------------------------------------------------------------------------------
California Limited Term
Tax-Free Fund California Tax-Free Fund Colorado Tax-Free Fund
--------------------------------------------------------------------------------
CLASS A CLASS A CLASS B CLASS C CLASS A CLASS B
--------------------------------------------------------------------------------
$ 523 $ 525 $ 155 $ 155 $ 509 $ 137
$ 790 $ 722 $ 520 $ 516 $ 732 $ 533
$ 1,076 $ 935 $ 910 $ 902 $ 974 $ 954
$ 1,891 $ 1,548 $ 1,707 $ 1,984 $ 1,667 $ 1,831
--------------------------------------------------------------------------------

-------------------------------------------------------
National Tax-Free Fund Oregon Tax-Free Fund
-------------------------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B
-------------------------------------------------------
$ 528 $ 158 $ 158 $ 525 $ 155
$ 729 $ 527 $ 523 $ 775 $ 575
$ 946 $ 922 $ 913 $ 1,045 $ 1,021
$ 1,571 $ 1,730 $ 2,006 $ 1,813 $ 1,970
-------------------------------------------------------

Tax-Free Funds Prospectus 21

<PAGE>

Key Information
--------------------------------------------------------------------------------

Important information you should look for as you decide to invest in a
Fund:

---------------------------------------------------------------------------
Investment Objective and Investment Strategies
The investment objective of each Fund in this Prospectus is non-
fundamental, that is, it can be changed by a vote of the Board of Trustees
alone. The objectives and strategies descriptions for each Fund tell you:

. what the Fund is trying to achieve;
. how we intend to invest your money; and
. what makes a Fund different from the other Funds offered in this
Prospectus.

---------------------------------------------------------------------------
Permitted Investments
A summary of the Fund's key permitted investments and practices.

---------------------------------------------------------------------------
Important Risk Factors
Describes the key risk factors for the Fund, and includes risks described
in the "Summary of Important Risks" and "General Investment Risks"
sections.

Words appearing in italicized print and highlighted in color are defined in
the Glossary.

22 Tax-Free Funds Prospectus
<PAGE>

This page intentionally left blank
--------------------------------------------------------------------------------
<PAGE>

Arizona Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Manager: Stephen Galiani; Arthur C. Evans

--------------------------------------------------------------------------------

Investment Objective

The Arizona Tax-Free Fund seeks current income exempt from federal income
tax and Arizona personal income tax.

--------------------------------------------------------------------------------

Investment Strategies

We actively manage a portfolio of municipal securities and we buy municipal
securities of any maturity length. The portfolio's dollar-weighted average
maturity will vary depending on market conditions, economic conditions
including interest rates, the differences in yields between obligations of
different maturity lengths and other factors. Generally speaking, we will
attempt to capture greater total return by increasing maturity when we
expect interest rates to decline, and attempt to preserve capital by
shortening maturity when interest rates are expected to increase.

--------------------------------------------------------------------------------

Permitted Investments

Under normal market conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest
exempt from federal income tax;

. at least 65% of total assets in municipal securities that pay interest
exempt from Arizona personal income tax;

. up to 20% of net assets in securities with income subject to federal
income taxes,including the federal AMT; and

. in municipal securities rated in the four highest credit categories by
nationally recognized rating organizations ("NRROs"), and in unrated
securities deemed by the Advisor to be of comparable quality.

We may temporarily hold assets in cash or in money market instruments,
including U.S. Government obligations, shares of other mutual funds and
repurchase agreements, or make other short-term investments either to
maintain liquidity or for short-term defensive purposes when we believe it
is in the best interests of shareholders to do so. During such periods, the
Fund may not achieve its investment objective of current income exempt from
federal income tax and Arizona personal income tax.

24 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

Important Risk Factors

The Fund is considered non-diversified according to the 1940 Act. The majority
of the issuers of the securities in the Fund's portfolio are located within
Arizona. Non-diversified, geographically concentrated funds are riskier than
similar funds that are diversified or spread their investments over several
geographic areas. Default by a single security in the portfolio may have a
greater negative affect than a similar default in a diversified portfolio. Since
we invest heavily in Arizona municipal securities, events in Arizona are likely
to affect the Fund's investments. The Arizona economy is based on services,
manufacturing, mining, tourism and the military. Adverse conditions affecting
these sectors could have a disproportionate impact on Arizona municipal
securities. Under its Constitution, Arizona is not permitted to issue general
obligation bonds secured by the State's full faith and credit. However, agencies
and instrumentalities of Arizona are authorized to issue bonds secured by
revenues, and local governments are also authorized to incur indebtedness. The
Fund relies on the availability of such securities for investment. We may invest
25% or more of our assets in Arizona municipal securities that are related in
such a way that political, economic or business developments affecting one
obligation would affect others. For example, we may own different obligations
that pay interest based on the revenue of similar projects.

Municipal securities rely on the creditworthiness or revenue production of their
issuers. Municipal securities may be difficult to obtain because of limited
supply, which may increase the cost of such securities and effectively reduce
the portfolio's yield. Typically, less information is available about a
municipal issuer than is available for other types of securities issuers.

Although we strive to invest in municipal securities and other securities with
interest that is exempt from federal personal income taxes, including the
federal AMT, some interest earned by Fund investments may be subject to such
taxes.

You should consider the "Summary of Important Risks" section on page 6; the
"General Investment Risks" section beginning on page 54; and the specific risks
listed here. They are all important to your investment choice.

Tax-Free Funds Prospectus 25
<PAGE>

Arizona Tax-Free Fund
--------------------------------------------------------------------------------

This table is intended to help you understand the Fund`s financial performance
for the past 5 years (or since inception, if shorter). Total returns represent
the rate you would have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). KPMG LLP audited this
information which, along with their report and the Fund`s financial statements,
is available upon request in the Fund`s annual report.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING
-------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES--COMMENCED
ON MARCH 2, 1992
----------------------------------------------------------------
June 30, June 30, June 30, Mar. 31,
For the period ended: 2000 1999 1998 1998
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.22 $10.79 $10.77 $10.44

Income from investment operations:
Net investment income (loss) 0.47 0.46 0.12 0.46
Net realized and unrealized gain (loss)
on investments (0.44) (0.38) 0.02 0.53

Total from investment operations 0.03 0.08 0.14 0.99

Less distributions:
Dividends from net investment income (0.47) (0.46) (0.12) (0.46)
Distributions from net realized gain (0.02) (0.19) 0.00 (0.20)

Total from distributions (0.49) (0.65) (0.12) (0.66)

Net asset value, end of period $ 9.76 $10.22 $10.79 $10.77

Total return (not annualized)/1/ 0.52% 0.66% 1.27% 9.67%

Ratios/supplemental data:
Net assets, end of period (000s) $3,939 $5,219 $5,383 $5,467

Ratios to average net assets (annualized):
Ratio of expenses to average net assets 0.73% 0.77% 0.73% 0.64%
Ratio of net investment income (loss) to
average net assets 4.89% 4.28% 4.31% 4.32%

Portfolio turnover 32% 56% 14% 127%

Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses (annualized)/5/ 1.21% 1.61% 1.68% 1.77%
</TABLE>

/1/ Total returns do not include any sales charges, and would have been lower
had certain expenses not been waived or reimbursed during the period shown.
/2/ The Fund changed its fiscal year-end from March 31 to June 30.
/3/ The Fund changed its fiscal year-end from September 30 to March 31.
/4/ The Fund changed investment advisor during this fiscal year.
/5/ During each period, various fees and/or expenses were waived and/or
reimbursed. The ratio of gross expenses to average net assets reflects the
expense ratio in the absence of any waivers and/or reimbursements.

26 Tax-Free Funds Prospectus
<PAGE>

Financial Highlights
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
CLASS B SHARES--COMMENCED
ON SEPTEMBER 6, 1996
-----------------------------------------------------------------------------------------------------------------------------
Mar. 31, Sept. 30, Sept. 30, June 30, June 30, June 30, March 31, March 31, Sept. 30,
1997/3/ 1996/4/ 1995 2000 1999 1998/2/ 1998 1997/3/ 1996/4/
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.45 $10.71 $10.68 $ 9.86 $10.40 $10.39 $10.07 $10.07 $10.00

0.24 0.48 0.17 0.39 0.37 0.09 0.37 0.11 0.01

(0.01) (0.09) 0.06 (0.43) (0.35) 0.01 0.51 (0.00) 0.07

0.23 0.39 0.23 (0.04) 0.02 0.10 0.88 0.11 0.08

(0.24) (0.48) (0.20) (0.39) (0.37) (0.09) (0.37) (0.11) (0.01)

0.00 (0.17) 0.00 (0.02) (0.19) 0.00 (0.19) 0.00 0.00

(0.24) (0.65) (0.20) (0.41) (0.56) (0.09) (0.56) (0.11) (0.01)

$10.44 $10.45 $10.71 $9.41 $ 9.86 $10.40 $10.39 $10.07 $10.07

2.18% 3.60% 2.15% (0.29%) 0.00% 1.00% 8.90% 1.90% 0.76%

$5,744 $7,331 $24,622 $2,592 $1,582 $1,683 $1,546 $ 182 $ 20

0.60% 0.78% 0.45% 1.46% 1.49% 1.45% 1.37% 1.30% 1.16%

4.54% 4.45% 4.73% 4.15% 3.57% 3.59% 3.49% 3.83% 3.59%

77% 42% 62% 32% 56% 14% 127% 77% 42%

1.58% 1.46% 1.35% 1.99% 2.95% 2.62% 3.26% 2.96% 1.81%
</TABLE>

Tax-Free Funds Prospectus 27
<PAGE>

California Limited Term Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Manager: Mary Gail Walton, CFA

---------------------------------------------------------------------------

Investment Objective

The California Limited Term Tax-Free Fund seeks a high level of current income
exempt from federal income tax and California personal income tax, while
preserving capital.

---------------------------------------------------------------------------

Investment Strategies

We actively manage a portfolio of municipal securities. We buy municipal
securities of any maturity length, but we primarily buy securities with
remaining maturities of less than 2 years (short-term) or 2 to 10 years
(intermediate-term). We have some flexibility in setting the portfolio's dollar-
weighted average maturity. Generally speaking, we will attempt to capture
greater total return by increasing dollar-weighted average maturity when we
expect interest rates to decline, and attempt to preserve capital by shortening
maturity when interest rates are expected to increase. Under normal market
conditions, the average expected duration of the Fund's portfolio securities
will be from 1 to 5 years.

---------------------------------------------------------------------------

Permitted Investments

Under normal market conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest
exempt from federal income tax;

. at least 65% of total assets in municipal securities that pay interest
exempt from California personal income tax;

. up to 20% of net assets in securities with income subject to federal
income taxes, including the federal AMT; and

. in municipal securities rated in the four highest credit categories by
NRROs, and in unrated securities deemed by the Advisor to be of
comparable quality.

We may temporarily hold assets in cash or in money market instruments, including
U.S. Government obligations, shares of other mutual funds and repurchase
agreements, or make other short-term investments to maintain liquidity or for
short-term defensive purposes when we believe it is in the best interests of
shareholders to do so. During such periods, the Fund may not achieve its
investment objective of a high level of current income exempt from federal
income tax and California personal income tax.

---------------------------------------------------------------------------

Important Risk Factors

The Fund is considered non-diversified according to the 1940 Act. The majority
of the issuers of the securities in the portfolio are located within California.
Non-diversified, geographically concentrated funds are riskier than similar
funds that are diversified or spread their investments over several geographical
areas. Default by a single security in the portfolio may have a greater negative
effect than a similar default in a diversified portfolio.

28 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

Since we invest heavily in California municipal securities, events in California
are likely to affect the Fund's investments. For example, California exports a
significant portion of its economic production to various Pacific rim countries.
Events impacting the Asian economy may have a disproportionate impact on the
California economy and California municipal securities. In addition, we may
invest 25% or more of our assets in California municipal securities that are
related in such a way that political, economic or business developments
affecting one security would affect the others. For example, we may own
different obligations that pay interest based on the revenue of similar
projects.

Tax-Free Funds Prospectus 29
<PAGE>

California Limited Term Tax-Free Fund
--------------------------------------------------------------------------------

This table is intended to help you understand the Fund's financial performance
for the past 5 years (or since inception, if shorter). Total returns represent
the rate you would have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). KPMG LLP audited this
information which, along with their report and the Fund's financial statements,
is available upon request in the Fund's annual report.

--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING
--------------------------------------------------------------------------------

For the period ended:
----------------------------------
June 30, June 30,
2000 1999
----------------------------------

Net asset value, beginning of period $ 10.23 $ 10.44

Income from investment operations:
Net investment income (loss) 0.40 0.39
Net realized and unrealized gain (loss)
on investments (0.04) (0.09)

Total from investment operations 0.36 0.30

Less distributions:
Dividends from net investment income (0.40) (0.39)
Distributions from net realized gain (0.05) (0.12)

Total from distributions (0.45) (0.51)

Net asset value, end of period $ 10.14 $ 10.23

Total return (not annualized)/4/ 3.67% 2.84%

Ratios/supplemental data:
Net assets, end of period (000s) $34,015 $41,299

Ratios to average net assets (annualized):
Ratio of expenses to average net assets 0.75% 0.75%
Ratio of net investment income (loss) to
average net assets 3.98% 3.70%

Portfolio turnover 60% 68%

Ratio of expenses to average net assets prior to
waived fees and reimbursed expenses
(annualized)/5/ 1.31% 1.42%

/1/ The Fund changed its fiscal year-end from March 31 to June 30.
/2/ The Fund changed its fiscal year-end from September 30 to March 31.
/3/ The Fund changed its fiscal year-end from December 31 to September 30.
/4/ Total returns do not include any sales charges, and would have been lower
had certain expenses not been waived or reimbursed during the period shown.
/5/ During each period, various fees and/or expenses were waived and/or
reimbursed. The ratio of gross expenses to average net assets reflects the
expense ratio in the absence of any waivers and/or reimbursements.

30 Tax-Free Funds Prospectus
<PAGE>

Financial Highlights
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
June 30, Mar. 31, Mar. 31, Sept. 30, Dec. 31,
1999 1998 1997 1996 1995
--------------------------------------------------------------------------------
$ 10.44 $ 10.27 $ 10.26 $ 10.35 $ 9.84

0.10 0.39 0.19 0.29 0.38

0.00 0.20 0.01 (0.09) 0.51

0.10 0.59 0.20 0.20 0.89

(0.10) (0.39) (0.19) (0.29) (0.38)
0.00 (0.03) 0.00 0.00 0.00

(0.10) (0.42) (0.19) (0.29) (0.38)

$ 10.44 $ 10.44 $ 10.27 $ 10.26 $ 10.35

0.93% 5.92% 1.97% 2.01% 9.14%

$54,169 $59,011 $67,647 $82,359 $77,965

0.75% 0.68% 0.65% 0.65% 0.65%

3.72% 3.78% 3.73% 3.83% 3.70%

2% 88% 14% 48% 31%

1.44% 1.29% 1.18% 1.14% 1.22%

Tax-Free Funds Prospectus 31
<PAGE>

California Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Manager: Stephen Galiani

---------------------------------------------------------------------------
Investment Objective

The California Tax-Free Fund seeks to provide investors with a high level
of current income exempt from federal income tax and California personal
income tax, while preserving capital, by investing in medium- to long-term
investment grade municipal securities.

---------------------------------------------------------------------------
Investment Strategies

We actively manage a portfolio of investment grade municipal securities. We
buy municipal securities of any maturity length, but we invest
substantially all of our assets in securities with remaining maturities of
2 to 10 years (intermediate term) or 10 years or longer (long term). We
have some flexibility in setting the portfolio's dollar-weighted average
maturity. Generally speaking, we will attempt to capture greater total
return by increasing dollar-weighted average maturity when we expect
interest rates to decline, and attempt to preserve capital by shortening
maturity when interest rates are expected to increase.

---------------------------------------------------------------------------
Permitted Investments

Under normal market conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest
exempt from federal income tax;

. at least 65% of total assets in municipal securities that pay interest
exempt from California personal income tax;

. up to 20% of net assets in securities with income subject to federal
income taxes,including the federal AMT; and

. in municipal securities rated in the four highest credit categories by
NRROs,and in unrated securities deemed by the Advisor to be of
comparable quality.

We may temporarily hold assets in cash or in money market instruments,
including U.S. Government obligations, shares of other mutual funds and
repurchase agreements, or make other short-term investments either to
maintain liquidity or for short-term defensive purposes when we believe it
is in the best interests of shareholders to do so. During such periods, the
Fund may not achieve its investment objective of a high level of current
income exempt from federal income tax and California personal income tax.

---------------------------------------------------------------------------
Important Risk Factors

The Fund is considered non-diversified according to the 1940 Act. The
majority of the issuers of the securities in the portfolio are located
within California. Non-diversified, geographically concentrated funds are
riskier than similar funds that are diversified or spread their investments
over several geographic areas. Default by a single security in the
portfolio may have a greater negative effect than a similar default in a
diversified portfolio.

32 Tax-Free Funds Prospectus
<PAGE>

---------------------------------------------------------------------------

Since we invest heavily in California municipal securities, events in California
are likely to affect the Fund's investments. For example, California exports a
significant portion of its economic production to various Pacific rim countries.
Events impacting the Asian economy may have a disproportionate impact on the
California economy and California municipal securities. In addition, we may
invest 25% or more of our assets in California municipal securities that are
related in such a way that political, economic or business developments
affecting one obligation would affect the others. For example, we may own
different obligations that pay interest based on the revenue of similar
projects.

Tax-Free Funds Prospectus 33
<PAGE>

California Tax-Free Fund
--------------------------------------------------------------------------------

This table is intended to help you understand the Fund's financial performance
for the past 5 years (or since inception, if shorter). Total returns represent
the rate you would have earned (or lost) on an investment in the (assuming
reinvestment of all dividends and distributions). KPMG LLP audited this
information which, along with their report and the Fund's financial statements,
is available upon request in the Fund's annual report.

FOR A SHARE OUTSTANDING

<TABLE>
<CAPTION>
----------------------------------------------------------------------
CLASS A SHARES--COMMENCED
ON OCTOBER 6, 19881
----------------------------------------------------------------------
June 30, June 30, June 30, Dec. 31, Dec. 31, Dec. 31,
For the period ended: 2000 1999 19983 1997 1996 1995
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.00 $ 11.38 $ 11.32 $ 10.97 $ 11.34 $ 10.67

Income from investment operations:
Net investment income (loss) 0.52 0.51 0.26 0.54 0.57 0.63
Net realized and unrealized gain (loss)
on investments (0.20) (0.23) 0.06 0.42 (0.13) 1.08

Total from investment operations 0.32 0.28 0.32 0.96 0.44 1.71

Less distributions:
Dividends from net investment income (0.52) (0.51) (0.26) (0.54) (0.57) (0.63)
Distributions from net realized gain (0.03) (0.15) 0.00 (0.07) (0.24) (0.41)

Total from distributions (0.55) (0.66) (0.26) (0.61) (0.81) (1.04)

Net asset value, end of period $ 10.77 $ 11.00 $ 11.38 $ 11.32 $ 10.97 $ 11.34

Total return (not annualized)/2/ 3.10% 2.38% 2.86% 9.16% 4.03% 16.38%

Ratios/supplemental data:
Net assets, end of period (000s) $385,746 $461,574 $499,720 $509,844 $239,703 $268,352

Ratios to average net assets (annualized):

Ratio of expenses to average net assets 0.77% 0.77% 0.75% 0.74% 0.71% 0.58%
Ratio of net investment income (loss) to
average net assets 4.89% 4.45% 4.63% 4.84% 5.08% 5.59%

Portfolio turnover 35% 17% 15% 12% 19% 38%

Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses (annualized)/4/ 1.01% 1.10% 1.11% 0.89% 0.82% 0.78%
</TABLE>

/1/ Periods prior to December 31, 1997 have been restated to give effect to the
conversion ratios applied in the consolidation of the Overland Express,
Inc. and Stagecoach Funds, Inc.
/2/ Total returns do not include any sales charges, and would have been lower
had certain expenses not been waived or reimbursed during the period shown.
Total returns for periods less than one year are not annualized.
/3/ The Fund changed its fiscal year-end from December 31 to June 30.
/4/ During each period, various fees and/or expenses were waived and/or
reimbursed. The ratio of gross expenses to average net assets reflects the
expense ratio in the absence of any waivers and/or reimbursements.

34 Tax-Free Funds Prospectus
<PAGE>

Financial Highlights
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES--COMMENCED CLASS C SHARES--COMMENCED
ON DECEMBER 15, 1997 ON JULY 1, 1993
------------------------------------------------------------------------------------------------------------------------------
June 30, June 30, June 30, Dec. 31, June 30, June 30, June 30, Dec. 31, Dec. 31, Dec. 31,
2000 1999 1998 1997 2000 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 11.22 $ 11.60 $ 11.54 $ 11.51 $ 11.22 $ 11.60 $ 11.54 $ 11.19 $ 11.57 $ 10.88

0.45 0.44 0.23 0.02 0.45 0.44 0.23 0.47 0.49 0.56

(0.22) (0.23) 0.06 0.03 (0.22) (0.23) 0.06 0.42 (0.13) 1.10

0.23 0.21 0.29 0.05 (0.23) 0.21 0.29 0.89 0.36 1.66

(0.45) (0.44) (0.23) (0.02) (0.45) (0.44) (0.23) (0.47) (0.49) (0.56)
(0.03) (0.15) 0.00 0.00 (0.03) (0.15) 0.00 (0.07) (0.25) (0.41)

(0.48) (0.59) (0.23) (0.02) (0.48) (0.59) (0.23) (0.54) (0.74) (0.97)

$ 10.97 $ 11.22 $ 11.60 $ 11.54 $ 10.97 $ 11.22 $ 11.60 $ 11.54 $ 11.19 $ 11.57

2.21% 1.69% 2.49% 0.45% 2.21% 1.69% 2.49% 8.11% 3.24% 15.58%

$116,376 $129,699 $99,784 $77,792 $16,959 $22,251 $ 8,249 $ 5,860 $ 6,506 $ 7,063

1.50% 1.47% 1.45% 1.44% 1.50% 1.47% 1.45% 1.48% 1.46% 1.30%

4.16% 3.74% 3.90% 3.95% 4.15% 3.71% 3.90% 4.19% 4.33% 4.87%

35% 17% 15% 12% 35% 17% 15% 12% 19% 38%

1.74% 1.84% 1.82% 1.76% 1.73% 1.81% 1.78% 1.63% 1.59% 1.57%
</TABLE>

Tax-Free Funds Prospectus 35
<PAGE>

Colorado Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Managers: Arthur C. Evans; Stephens Galiani

---------------------------------------------------------------------------

Investment Objective

The Colorado Tax-Free Fund seeks a high level of current income exempt from
federal income tax and Colorado personal income tax consistent with the
preservation of capital.
---------------------------------------------------------------------------

Investment Strategies

We normally invest substantially all of the Fund's assets in investment
grade municipal securities issued by the state of Colorado and its
subdivisions, authorities, instrumentalities, and corporations, and by the
territories and possessions of the United States.

We expect that the Fund's average portfolio maturity normally will be
greater than 10 years. The Fund's average portfolio maturity may reach or
exceed 20 years in the future. Depending on market conditions, the Fund's
dollar-weighted average maturity could be higher or lower. The Fund
emphasizes investments in municipal securities paying interest income
rather than maintaining the Fund's stability of NAV.

---------------------------------------------------------------------------

Permitted Investments

Under normal market conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest
exempt from federal income tax and Colorado personal income tax;

. up to 25% of total assets in securities of related issuers or in
securities of any one issuer, except the U.S. Government;

. up to 20% of net assets in securities with income subject to federal
income taxes, including the federal AMT; and

. in municipal securities rated in the four highest credit categories by
NRROs, and in unrated securities deemed by the Advisor to be of
comparable quality.

We may temporarily hold assets in cash or in money market instruments,
including U.S. Government obligations, shares of other mutual funds and
repurchase agreements, or make other short-term investments either to
maintain liquidity or for short-term defensive purposes when we believe it
is in the best interests of shareholders to do so. During these periods,
the Fund may not achieve its objective of a high level of current income
exempt from federal income tax and Colorado state income taxes consistent
with the preservation of capital.

---------------------------------------------------------------------------

Important Risk Factors

The Fund is considered non-diversified according to the 1940 Act. The
majority of the issuers of the securities in the portfolio are located
within Colorado. Non-diversified, geographically concentrated funds are
riskier than similar funds that are diversified or spread their investments
over several geographical areas. Default by a single security in the
portfolio may have a greater negative effect than a similar default in a
diversified portfolio.

36 Tax-Free Funds Prospectus
<PAGE>

---------------------------------------------------------------------------

Since we invest heavily in Colorado municipal securities, events in Colorado are
likely to affect the Fund's investments. The Colorado economy is based on
services, communications, transportation, tourism, and manufacturing. Certain
obligations of Colorado State and local public entities are subject to
particular economic risks, including, but not limited to, the vulnerabilities of
resort economies which depend on seasonal tourism, the possibility of downturns
in sales tax and other revenues, and fluctuations in the real estate market. In
addition, we may invest 25% or more of our assets in Colorado municipal
securities that are related in such a way that political, economic or business
developments affecting one obligation would affect others. For example, we may
own different obligations that pay interest based on the revenue of similar
projects.

Tax-Free Funds Prospectus 37
<PAGE>

Colorado Tax-Free Fund
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING:
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
CLASS A SHARES--COMMENCED ON JUNE 1, 1993
----------------------------------------------------
June 30, June 30, May 31, May 31,
For the period ended: 2000 1999/3/ 1999 1998
----------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.30 $10.55 $10.69 $10.22

Income from investment operations:
Net investment income (loss) 0.54 0.04 0.51 0.53
Net realized and unrealized gain (loss) (0.46) (0.25) (0.10) 0.47
on investments

Total from investment operations 0.08 (0.21) 0.41 1.00

Less distributions:
Dividends from net investment income (0.54) (0.04) (0.51) (0.53)
Distributions from net realized gain (0.01) 0.00 (0.04) 0.00

Total from distributions (0.55) (0.04) (0.55) (0.53)

Net asset value, end of period $9.83 $10.30 $10.55 $10.69

Total return (not annualized)/1/ 0.87% (1.97%) 3.79% 9.96%

Ratios/supplemental data:
Net assets, end of period (000s) $39,280 $39,066 $39,958 $34,254

Ratios to average net assets (annualized):
Ratio of expenses to average net assets 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to 5.43% 4.94% 4.71% 5.00%
average net assets

Portfolio turnover 106% 11% 77% 70%

Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses (annualized)/2/ 1.03% 1.08% 1.02% 1.04%
</TABLE>

/1/ Total returns do not include any sales charges, and would have been lower
had certain expenses not been waived or reimbursed during the period shown.
/2/ During each period, various fees and/or expenses were waived and/or
reimbursed. The ratio of gross expenses to average net assets reflects the
expense ratio in the absence of any waivers and/or reimbursements.
/3/ The Fund changed its fiscal year-end from May 31 to June 30.

38 Tax-Free Funds Prospectus

<PAGE>

Financial Highlights
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B SHARES--COMMENCED
ON AUGUST 2, 1993
-------------------------------------------------------------------------------------------------------------------
May 31, May 31, June 30, June 30, May 31, May 31, May 31, May 31,
1997 1996 2000 19993 1999 1998 1997 1996
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 9.89 $ 9.90 $ 10.31 $ 10.56 $ 10.71 $10.23 $ 9.90 $ 9.91

0.54 0.53 0.46 0.04 0.43 0.45 0.47 0.46

0.33 (0.01) (0.45) (0.25) (0.11) 0.48 0.33 (0.01)

0.87 0.52 0.01 (0.21) 0.32 0.93 0.80 0.45

(0.54) (0.53) (0.46) (0.04) (0.43) (0.45) (0.47) (0.46)
0.00 0.00 (0.01) 0.00 (0.04) 0.00 0.00 0.00

(0.54) (0.53) (0.47) (0.04) (0.47) (0.45) (0.47) (0.46)

$10.22 $ 9.89 $ 9.85 $ 10.31 $ 10.56 $10.71 $10.23 $ 9.90

9.00% 5.35% 0.22% (2.03%) 2.92% 9.25% 8.19% 4.56%

$27,806 $26,991 $6,842 $10,959 $10,909 $9,156 $7,218 $6,400

0.45% 0.30% 1.35% 1.35% 1.35% 1.35% 1.20% 1.05%

5.36% 5.30% 4.65% 4.17% 3.96% 4.24% 4.60% 4.64%

129% 171% 106% 11% 77% 70% 129% 171%

1.14% 1.13% 1.89% 2.08% 2.03% 2.04% 2.15% 2.16%
</TABLE>

Tax-Free Funds Prospectus 39
<PAGE>

Minnesota Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Manager: Patricia Hovanetz, CFA

---------------------------------------------------------------------------

Investment Objective

The Minnesota Tax-Free Fund seeks a high level of current income exempt
from federal income tax and Minnesota income tax, without assuming undue
risk.

---------------------------------------------------------------------------

Investment Strategies

We normally invest substantially all of the Fund's assets in investment
grade municipal securities issued by the state of Minnesota and its
subdivisions, authorities, instrumentalities, and corporations, and by the
territories and possessions of the United States. We invest at least 80% of
the Fund's net assets in securities with interest exempt from both federal
income taxes and the federal AMT.

There are no restrictions on Minnesota Tax-Free Fund's average portfolio
maturity. We expect that the Fund's dollar-weighted average maturity
normally will be greater than 10 years. The Fund's average portfolio
maturity may reach or exceed 20 years in the future. Depending on market
conditions, the Fund's average dollar-weighted average maturity could be
higher or lower.

We emphasize investments in municipal securities paying interest income
rather than maintaining the Fund's stability of NAV.

---------------------------------------------------------------------------

Permitted Investments

Under normal conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest
exempt from federal income tax and Minnesota income tax;

. up to 25% of total assets in securities of related issuers or in
securities of any one issuer, except the U.S. Government;

. up to 20% of net assets in securities with income subject to federal
income taxes, including the federal AMT; and

. up to 25% of total assets in non-investment grade municipal
securities. During such periods, the Fund may not achieve its
investment objective of a high level of current income without
assuming undue risk.

We may temporarily hold assets in cash or in money market instruments,
including U.S. Government obligations, shares of other mutual funds and
repurchase agreements, or make other short-term investments either to
maintain liquidity or for short-term defensive purposes when we believe it
is in the best interests of shareholders to do so. During these periods,
the Fund may not achieve its objective of a high level of current income
exempt from federal income tax and Minnesota personal income tax without
assuming undue risk.

40 Tax-Free Funds Prospectus
<PAGE>

-------------------------------------------------------------------------------

Important Risk Factors

The Fund is considered non-diversified according to the 1940 Act. The majority
of the issuers of the securities in the portfolio are located within Minnesota.
Non-diversified, geographically concentrated funds are riskier than similar
funds that are diversified or spread their investments over several geographical
areas. Default by a single security in the portfolio may have a greater negative
effect than a similar default in a diversified portfolio. Since we invest
heavily in Minnesota municipal securities, events in Minnesota are likely to
affect the Fund's investments. The Minnesota economy relies significantly on its
agriculture and forestry. Adverse conditions affecting these sectors could have
a disproportionate impact on Minnesota municipal securities. In addition, we may
invest 25% or more of our assets in Minnesota municipal securities that are
related in such a way that political, economic or business developments
affecting one obligation would affect the others. For example, we may own
different obligations that pay interest based on the revenue of similar
projects.

The Fund may invest up to 25% of its total assets in non-investment grade
municipal securities, commonly known as "high yield/high risk securities" or
"junk bonds," which are considered a more speculative investment than investment
grade municipal securities with respect to the issuer's capacity to pay interest
and repay principal. Below investment grade securities also tend to be more
sensitive to economic conditions than higher-rated securities. These securities
generally involve more credit risk.

Tax-Free Funds Prospectus 41
<PAGE>

Minnesota Tax-Free Fund
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING:
------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES--COMMENCED
ON JANUARY 12, 1988
----------------------------------------------------------------
June 30, June 30, May 30, May 31,
For the period ended: 2000 1999 1999 1998
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.74 $10.96 $11.05 $ 10.57

Income from investment operations:

Net investment income (loss) 0.53 0.04 0.51 0.53
Net realized and unrealized gain (loss)
on investments (0.55) (0.22) (0.08) 0.48

Total from investment operations (0.02) (0.18) 0.43 1.01

Less distributions:
Dividends from net investment income (0.53) (0.04) (0.51) (0.53)
Distributions from net realized gain (0.01) 0.00 (0.01) 0.00

Total from distributions (0.54) (0.04) (0.52) (0.53)

Net asset value, end of period $ 10.18 $10.74 $10.96 $ 11.05

Total return (not annualized)/1/ (0.02%) (1.63%) 3.96% 9.71%

Ratios/supplemental data:
Net assets, end of period (000s) $29,551 $37,139 $38,255 $33,597

Ratios to average net assets (annualized):

Ratio of expenses to average net assets 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 5.23% 4.71% 4.61% 4.83%

Portfolio turnover 69% 2% 25% 68%

Ratio of expenses to average net assets waived
prior to fees and reimbursed expenses (annualized)/2/ 1.07% 1.11% 1.03% 1.07%
</TABLE>

/1/ Total returns do not include any sales charges, and would have been lower
had certain expenses not been waived or reimbursed during the period shown.
/2/ During each period, various fees and/or expenses were waived and/or
reimbursed. The ratio of gross expenses reflects the to average net assets
expense ratio in the absence of any waivers and/or reimbursements.
/3/ The Fund changed its fiscal year-end from May 31 to June 30.

42 Tax-Free Funds Prospectus
<PAGE>

Financial Highlights
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
CLASS B SHARES--COMMENCED
ON AUGUST 6, 1993

--------------------------------------------------------------------------------
May 31, May 31, June 30, June 30, May 31, May 31, May 31, May 31,
1997 1996 2000 1999 1999 1998 1997 1996
--------------------------------------------------------------------------------
$ 10.30 $10.45 $10.74 $ 10.96 $ 11.05 $ 10.57 $ 10.30 $10.44

0.54 0.56 0.46 0.04 0.43 0.45 0.46 0.48

0.27 (0.15) (0.55) (0.22) (0.08) 0.48 0.27 (0.14)

0.81 0.41 (0.09) (0.18) 0.35 0.93 0.73 0.34

(0.54) (0.56) (0.46) (0.04) (0.43) (0.45) (0.46) (0.48)
0.00 0.00 (0.01) 0.00 (0.01) 0.00 0.00 0.00

(0.54) (0.56) (0.47) (0.04) (0.44) (0.45) (0.46) (0.48)

$ 10.57 $ 10.30 $ 10.18 $ 10.74 $ 10.96 $ 11.05 $ 10.57 $10.30

7.98% 3.97% (0.76%) (1.69%) 3.18% 8.89% 7.18% 3.28%

$25,739 $26,610 $16,974 $21,366 $21,493 $16,549 $11,128 $8,825

0.60% 0.48% 1.35% 1.35% 1.35% 1.35% 1.34% 1.23%

5.11% 5.26% 4.47% 3.93% 3.85% 4.07% 4.35% 4.51%

97% 77% 69% 2% 25% 68% 97% 77%

1.21% 1.26% 1.93% 2.11% 2.04% 2.08% 2.21% 2.29%

Tax-Free Funds Prospectus 43
<PAGE>

National Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Manager: Stephen Galiani

---------------------------------------------------------------------------

Investment Objective
The National Tax-Free Fund seeks current income exempt from federal income
taxes.

---------------------------------------------------------------------------

Investment Strategies

We actively manage a diversified portfolio invested primarily in investment
grade municipal securities. We invest at least 80% of net assets in
municipal securities paying interest exempt from federal income taxes,
including the federal AMT.

The dollar-weighted average maturity of the Fund's assets normally will be
between 10 and 20 years, but may vary depending on market conditions. In
general, the longer the maturity of a municipal security, the higher the
rate of interest it pays. However, a longer maturity security is generally
subject to greater interest rate risk and price volatility. We emphasize
investments in municipal securities that produce interest income rather
than stability of the Fund's NAV.

---------------------------------------------------------------------------

Permitted Investments
Under normal market conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest
exempt from federal income tax;

. up to 20% of net assets in securities with income subject to federal
income taxes, including the federal AMT; and

. in municipal securities rated in the four highest credit categories by
NRROs, and in unrated securities deemed by the Advisor to be of
comparable quality.

We may temporarily hold assets in cash or in money market instruments,
including U.S. Government obligations, shares of other mutual funds and
repurchase agreements, or make other short-term investments either to
maintain liquidity or for short-term defensive purposes when we believe it
is in the best interests of shareholders to do so. During these periods,
the Fund may not achieve its objective of current income exempt from
federal income taxes.

---------------------------------------------------------------------------

Important Risk Factors

Municipal securities rely on the creditworthiness or revenue production of
their issuers. Municipal securities may be difficult to obtain because of
limited supply, which may increase the cost of such securities and
effectively reduce the portfolio's yield. Typically, less information is
available about a municipal issuer than is available for other types of
securities issuers.

Although we strive to invest in municipal securities and other securities
with interest that is exempt from federal personal income taxes, including
the federal AMT, some interest earned by Fund investments may be subject to
such taxes.

You should consider the "Summary of Important Risks" section on page 6; the
"General Investment Risks" section beginning on page 54; and the specific
risks listed here. They are all important to your investment choice.

44 Tax-Free Funds Prospectus
<PAGE>

This page intentionally left blank
--------------------------------------------------------------------------------
<PAGE>

National Tax-Free Fund
--------------------------------------------------------------------------------

FOR A SHARE OUTSTANDING:

<TABLE>
<CAPTION>
CLASS A SHARES--COMMENCED
ON AUGUST 1, 1989
---------------------------------------------------------
June 30, June 30, May 31, May 31,
For the period ended: 2000 1999 1999 1998
---------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.22 $ 10.44 $ 10.54 $ 10.05

Income from investment operations:
Net investment income (loss) 0.54 0.04 0.52 0.53
Net realized and unrealized gain (loss)
on investments (0.50) (0.22) (0.10) 0.49

Total from investment operations 0.04 (0.18) 0.42 1.02

Less distributions:
Dividends from net investment income (0.53) (0.04) (0.51) (0.53)
Distributions from net realized gain (0.01) 0.00 (0.01) 0.00

Total from distributions (0.54) (0.04) (0.52) (0.53)

Net asset value, end of period $ 9.72 $ 10.22 $ 10.44 $ 10.54

Total return (not annualized)/1/ 0.50% (1.69%) 4.04% 10.33%

Ratios/supplemental data:
Net assets, end of period (000s) $64,859 $41,881 $43,388 $35,121

Ratios to average net assets (annualized):
Ratio of expenses to average net assets
Ratio of net investment income (loss) to 0.75% 0.60% 0.60% 0.60%
average net assets
5.48% 5.10% 4.81% 5.09%

Portfolio turnover
79% 18% 106% 143%
Ratio of expenses to average net assets prior to
waive fees and reimbursed expenses (annualized)/2/ 0.95% 1.02% 0.98% 0.99%
</TABLE>

/1/ Total returns do not include any sales charges, and would have been lower
had certain expenses not been waived or reimbursed during the period shown.

/2/ During each period, various fees and/or expenses were waived and/or
reimbursed. The ratio of gross expenses to average net assets reflects the
expense ratio in the absence of any waivers and/or reimbursements.

/3/ The Fund changed its fiscal year-end from May 31 to June 30.

46 Tax-Free Funds Prospectus
<PAGE>

Financial Highlights
--------------------------------------------------------------------------------

CLASS B SHARES--COMMENCED
ON AUGUST 6, 1993
--------------------------------------------------------------------------------
May 31, May 31, June 30, June 30, May 31, May 31, May 31, May 31,
1997 1996 2000 1999 1999 1998 1997 1996
--------------------------------------------------------------------------------
$ 9.78 $ 9.82 $ 10.22 $ 10.44 $ 10.54 $ 10.05 $ 9.78 $ 9.82

0.54 0.55 0.46 0.04 0.44 0.46 0.46 0.48

0.27 (0.04) (0.50) (0.22) (0.10) 0.48 0.27 (0.04)

0.81 0.51 (0.04) (0.18) 0.34 0.94 0.73 0.44

(0.54) (0.55) (0.45) (0.04) (0.43) (0.45) (0.46) (0.48)
0.00 0.00 (0.01) 0.00 (0.01) 0.00 0.00 0.00

(0.54) (0.55) (0.46) (0.04) (0.44) (0.45) (0.46) (0.48)

$ 10.05 $ 9.78 $ 9.72 $ 10.22 $ 10.44 $ 10.54 $10.05 $ 9.78

8.43% 5.29% (0.24%) (1.76%) 3.26% 9.52% 7.63% 4.50%

$29,217 $33,914 $18,367 $17,878 $17,973 $11,070 $7,329 $5,897

0.50% 0.40% 1.48% 1.35% 1.35% 1.35% 1.26% 1.14%

5.41% 5.54% 4.72% 4.34% 4.05% 4.31% 4.64% 4.77%

152% 126% 79% 18% 106% 143% 152% 126%

1.06% 1.06% 1.78% 2.11% 2.01% 2.05% 2.15% 2.21%

Tax-Free Funds Prospectus 47
<PAGE>

National Tax-Free Fund Financial Highlights
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING:
--------------------------------------------------------------------------------

CLASS C SHARES--COMMENCED
ON NOVEMBER 8, 1999
-------------------------
For the period ended: JUNE 30
2000
-------------------------
Net asset value, beginning of period $9.79

Income from investment operations:
Net investment income (loss) 0.30
Net realized and unrealized gain (loss)
on investments (0.06)

Total from investment operations 0.24

Less distributions:
Dividends from net investment income (0.30)
Distributions from net realized gain 0.00

Total from distributions (0.30)

Net asset value, end of period $ 9.73

Total return (not annualized)/1/ 2.50%

Ratios/supplemental data:
Net assets, end of period (000s) $5,572

Ratios to average net assets (annualized):
Ratio of expenses to average net assets 1.55%
Ratio of net investment income (loss) to
average net assets 4.75%

Portfolio turnover 79%

Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses (annualized)/2/ 1.68%

/1/ Total returns do not include any sales charges, and would have been lower
had certain expenses not been waived or reimbursed during the period shown.

48 Tax-Free Funds Prospectus
<PAGE>

This page intentionally left blank
--------------------------------------------------------------------------------
<PAGE>

Oregon Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Manager: Stephen Galiani

--------------------------------------------------------------------------------
Investment Objective

The Oregon Tax-Free Fund seeks a high level of current income exempt from
federal income tax and Oregon personal income tax.

--------------------------------------------------------------------------------
Investment Strategies

We actively manage a portfolio of investment grade municipal securities and we
buy municipal securities of any maturity length. The portfolio's dollar-weighted
average maturity will vary depending on market conditions, economic conditions
including interest rates, the differences in yields between obligations of
different maturity lengths and other factors. There is no required range for the
portfolio's dollar-weighted average maturity. Generally speaking, we will
attempt to capture greater total return by increasing maturity when we expect
interest rates to decline, and attempt to preserve capital by shortening
maturity when interest rates are expected to increase.

--------------------------------------------------------------------------------
Permitted Investments

Under normal market conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest exempt
from federal income tax;

. at least 65% of total assets in municipal securities that pay interest
exempt from Oregon personal income tax;

. up to 20% of net assets in securities with income subject to federal
personal income taxes, including the federal AMT; and

. in municipal securities rated in the four highest credit categories by
NRROs, and in unrated securities deemed by the Advisor to be of comparable
quality.

We may temporarily hold assets in cash or in money market instruments, including
U.S. Government obligations, shares of other mutual funds and repurchase
agreements, or make other short-term investments either to maintain liquidity or
for short-term defensive purposes when we believe it is in the best interest of
shareholders to do so. During such periods, the Fund may not achieve its
investment objective of a high level of current income exempt from federal
income tax and Oregon personal income tax.

50 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

Important Risk Factors

The Fund is considered non-diversified according to the 1940 Act. The majority
of the issuers of the securities in the portfolio are located within Oregon.
Non-diversified, geographically concentrated Funds are riskier than similar
Funds that are diversified or spread their investments over several geographical
areas. Default by a single security in the portfolio may have a greater negative
effect than a similar default in a diversified portfolio.

Since we invest heavily in Oregon municipal securities, events in Oregon are
likely to affect the Fund's investments. Oregon does not have a sales tax, and
State tax revenues, derived principally from corporate and personal income
taxes, are particularly sensitive to economic recessions. In addition, we may
invest 25% or more of our assets in Oregon municipal securities that are related
in such a way that political, economic or business developments affecting one
obligation would affect others. For example, we may own different obligations
that pay interest based on the revenue of similar projects.

Over the years, a variety of voter initiative and legislative referral measures
on the Oregon general election ballot have been adopted which have had major
impacts on state and local government finances. Several proposals which could
have major impacts are pending on the November 2000 ballot, and similar measures
are expected to be proposed in the future. Oregon's initiative process is
discussed further in the Statement of Additional information. Municipal
securities rely on the creditworthiness or revenue production of their issuers.

Municipal securities may be difficult to obtain because of limited supply, which
may increase the cost of such securities and effectively reduce the portfolio's
yield. Typically, less information is available about a municipal issuer than is
available for other types of securities issuers.

Tax-Free Funds Prospectus 51
<PAGE>

Oregon Tax-Free Fund
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
CLASS A SHARES--COMMENCED
ON JUNE 1, 1988
-------------------------------------------------------
June 30, June 30, June 30, March 31,
For the period ended: 2000 1999 1998/2/ 1998
-------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.10 $ 16.82 $ 16.81 $ 16.29

Income from investment operations:
Net investment income (loss) 0.77 0.75 0.18 0.76
Net realized and unrealized gain (loss)
on investments (0.86) (0.47) 0.01 0.81

Total from investment operations (0.09) 0.28 0.19 1.57

Less distributions:
Dividends from net investment income (0.77) (0.75) (0.18) (0.76)
Dividends from net realized capital gain (0.02) (0.25) 0.00 (0.29)

Total from distributions (0.79) (1.00) (0.18) (1.05)

Net asset value, end of period $ 15.22 $ 16.10 $ 16.82 $ 16.81

Total return (not annualized)/1/ (0.45%) 1.57% 1.16% 9.81%

Ratios/supplemental data:
Net assets, end of period (000s) $21,424 $24,924 $27,665 $27,837

Ratios to average net assets (annualized):
Ratio of expenses to average net assets 0.73% 0.67% 0.67% 0.62%
Ratio of net investment income (loss) to
average net assets 5.02% 4.44% 4.41% 4.54%

Portfolio turnover 51% 54% 24% 82%

Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses (annualized)/5/ 1.21% 1.32% 1.29% 1.36%
</TABLE>

/1/ Total returns do not include any sales charges, and would have been lower
had certain expenses not been waived or reimbursed during the period shown.

/2/ The Fund changed its fiscal year-end from March 31 to June 30.

/3/ The Fund changed its fiscal year-end from September 30 to March 31.

/4/ The Fund changed Investment Advisors.

/5/ During each period, various fees and/or expenses were waived and/or
reimbursed. The ratio of gross expenses to average net assets reflects the
expense ratio in the absence of any waivers and/or reimbursements.

52 Tax-Free Funds Prospectus
<PAGE>

Financial Highlights
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES--COMMENCED
ON SEPTEMBER 6, 1996
------------------------------------------------------------------------------------------------------------------------
March 31, Sept. 30, Sept. 30, June 30, June 30, June 30, March 31, March 31, Sept. 30
1997/3/ 1996/4/ 1995 2000 1999 1998/2/ 1998 1997/3/ 1996
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 16.42 $ 16.38 $ 16.47 $ 9.86 $ 10.31 $ 10.30 $ 10.00 $ 10.07 $ 10.00

0.37 0.79 0.28 0.40 0.37 0.09 0.39 0.17 0.00

(0.10) 0.04 (0.08) (0.52) (0.29) 0.01 0.47 (0.05) 0.07

0.27 0.83 0.20 (0.12) 0.08 0.10 0.86 0.12 0.07

(0.37) (0.79) (0.29) (0.40) (0.37) (0.09) (0.39) (0.17) 0.00
(0.03) 0.00 0.00 (0.01) (0.16) 0.00 (0.17) (0.02) 0.00

(0.40) (0.79) (0.29) (0.41) (0.53) (0.09) (0.56) (0.19) 0.00

$ 16.29 $ 16.42 $ 16.38 $ 9.33 $ 9.86 $ 10.31 $ 10.30 $ 10.00 $ 10.07

1.65% 5.03% 3.67% (1.13%) 0.63% 0.98% 8.77% 1.17% 0.70%

$30,635 $33,676 $50,077 $ 9,657 $10,095 $ 5,956 $ 3,762 $ 287 $ 0

0.60% 0.85% 0.70% 1.51% 1.51% 1.51% 1.43% 1.30% 0.00%

4.52% 4.87% 5.01% 4.24% 3.59% 3.48% 3.56% 3.23% 1.83%

90% 27% 57% 51% 54% 24% 82% 90% 27%

1.31% 1.15% 1.01% 1.96% 2.14% 2.10% 2.39% 2.15% 0.00%
</TABLE>

Tax-Free Funds Prospectus 53
<PAGE>

General Investment Risks
--------------------------------------------------------------------------------

Understanding the risks involved in mutual fund investing will help you make an
informed decision that takes into account your risk tolerance and preferences.
You should carefully consider the risks common to investing in all mutual funds,
including the Wells Fargo Funds. Certain common risks are identified in the
"Summary of Important Risks" section on page 6. Other risks of mutual fund
investing include the following:

. Unlike bank deposits, such as CDs or savings accounts, mutual funds are not
insured by the FDIC.

. We cannot guarantee that we will meet our investment objectives.

. We do not guarantee the performance of a Fund, nor can we assure you that the
market value of your investment will not decline. We will not "make good" any
investment loss you may suffer, nor can anyone we contract with to provide
certain services, such as selling agents or investment advisors, offer or
promise to make good any such losses.

. Share prices--and therefore the value of your investment--will increase and
decrease with changes in the value of the underlying securities and other
investments. This is referred to as price volatility.

. Investing in any mutual fund, including those deemed conservative, involves
risk, including the possible loss of any money you invest.

. An investment in a single Fund, by itself, does not constitute a complete
investment plan.

. Each Fund may continue to hold debt-instruments that cease to be rated by a
NRRO or whose ratings fall below the levels generally permitted for such
Fund, provided Wells Fargo deems the instrument to be of comparable quality
to rated or higher-rated instruments. Unrated or downgraded instruments may
be more susceptible to credit and interest rate risks than investment-grade
securities.

. The Funds may invest a portion of their assets in U.S. Government
obligations, such as securities issued or guaranteed by the Government
National Mortgage Association ("GNMAs"), the Federal National Mortgage
Association ("FNMAs") and the Federal Home Loan Mortgage Corporation
("FHLMCs"). Each are mortgage-backed securities representing partial
ownership of a pool of residential mortgage loans. A "pool" or group of such
mortgages is assembled and, after being approved by the issuing or
guaranteeing entity, is offered to investors through securities dealers.
Mortgage-backed securities are subject to prepayment and extension risk,
which can alter the maturity of the securities and also reduce the rate of
return on the portfolio. It is important to recognize that the U.S.
Government does not guarantee the market value or current yield of those
obligations. Not all U.S. Government obligations are backed by the full faith
and credit of the U.S. Treasury, and the U.S. Government's guarantee does not
extend to the Funds themselves.

. The Funds may also use certain derivative instruments, such as options or
futures contracts. The term "derivatives" covers a wide number of
investments, but in general it refers to any financial instrument whose value
is derived, at least in part, from the price of another security or a
specified index, asset or rate. Some derivatives may be more sensitive to
interest rate changes or market moves, and some may be susceptible to changes
in yields or values due to their structure or contract terms.

Investment practices and risk levels are carefully monitored. Every attempt is
made to ensure that the risk exposure for each Fund remains within the
parameters of its objective.

54 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

What follows is a general list of the types of risks (some of which are
described previously) that may apply to a given Fund and a table showing some of
the additional investment practices that each Fund may use and the risks
associated with them. Additional information about these practices is available
in the Statement of Additional Information.

Counter-Party Risk--The risk that the other party in a repurchase agreement or
other transaction will not fulfill its contract obligation.

Credit Risk--The risk that the issuer of a debt security will be unable to make
interest payments or repay principal on schedule. If an issuer does default, the
affected security could lose all of its value, or be renegotiated at a lower
interest rate or principal amount. Affected securities might also lose
liquidity. Credit risk also includes the risk that a party in a transaction may
not be able to complete the transaction as agreed.

Experience Risk--The risk presented by a new or innovative security. The risk is
that insufficient experience exists to forecast how the security's value might
be affected by various economic conditions.

Extension Risk--The risk that as interest rates rise, prepayments slow, thereby
lengthening the duration and potentially reducing the value of certain asset-
backed securities.

Information Risk--The risk that information about a security is either
unavailable, incomplete or is inaccurate.

Interest Rate Risk--The risk that changes in interest rates can reduce the value
of an existing security. Generally, when interest rates increase, the value of a
debt security decreases. The effect is usually more pronounced for securities
with longer dates to maturity.

Leverage Risk--The risk that a practice, such as lending portfolio securities or
engaging in forward commitment or when-issued securities transactions, may
increase a Fund's exposure to market risk, interest rate risk or other risks by,
in effect, increasing assets available for investment.

Liquidity Risk--The risk that a security cannot be sold at the time desired, or
cannot be sold without adversely affecting the price.

Market Risk--The risk that the value of a stock, bond or other security will be
reduced by market activity. This is a basic risk associated with all securities.

Regulatory Risk--The risk that changes in government regulations will adversely
affect the value of a security. Also the risk that an insufficiently regulated
market might permit inappropriate trading practices.

In addition to the general risks discussed above, you should carefully consider
and evaluate any special risks that may apply to investing in a particular Fund.
See the "Important Risk Factors" in the summary for each Fund. You should also
see the Statement of Additional Information for additional information about the
investment practices and risks particular to each Fund.

Tax-Free Funds Prospectus 55
<PAGE>

General Investment Risks
--------------------------------------------------------------------------------

Investment Practice/Risk
The following table lists some of the additional investment practices of the
Funds, including some not disclosed in the Investment Objective and Investment
Strategies sections of the Prospectus. The risks indicated after the description
of the practice are NOT the only potential risks associated with that practice,
but are among the more prominent. Market risk is assumed for each. See the
Investment Objective and Investment Strategies for each Fund or the Statement of
Additional Information for more information on these practices.

Investment practices and risk levels are carefully monitored. We attempt to
ensure that the risk exposure for each Fund remains within the parameters of its
objective.

Remember, each Fund is designed to meet different investment needs and
objectives.

<TABLE>
<CAPTION>
CALIFORNIA
ARIZONA LIMITED CALIFORNIA COLORADO MINNESOTA NATIONAL OREGON
TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT PRACTICE RISK
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Borrowing Policies
The ability to borrow from banks for Leverage Risk . . . . . . .
temporary purposes to meet shareholder
redemptions.

Floating and Variable Rate Debt
Instruments with interest rates that Interest Rate and . . . . . . .
are adjusted either on a schedule or Credit Risk
when an index or benchmark changes.

Forward Commitment, When-Issued and
Delayed Delivery Transactions
Securities bought or sold for delivery Interest Rate, . . . . . . .
at a later date or bought or sold for Leverage, Credit and
a fixed price at a fixed date. Experience Risk

High Yield Securities
Debt securities of lower quality that Interest Rate
produce generally higher rates of return. and Credit Risk . . . . . . .
These securities, also known as "junk
bonds," tend to be more sensitive to
economic conditions, more volatile, and
less liquid, and are subject to greater
risk of default.

Illiquid Securities
A security that cannot be readily sold, Liquidity Risk . . . . . . .
or cannot be readily sold without
negatively affecting its fair price.
Limited to 15% of total assets.

Loans of Portfolio Securities
The practice of loaning securities to Credit, Counter-Party
brokers, dealers and financial and Leverage Risk . . . . . . .
institutions to increase return on
those securities. Loans may be made up
to Investment Company Act of 1940 limits
(currently one-third of total assets
including the value of the collateral
received).

Mortgage- and Asset-Backed Securities
Securities consisting of undivided Interest Rate, Credit,
fractional interests in pools of Prepayment and . . . . . . .
consumer loans, such as mortgage loans, Experience Risk
car loans credit card debt or receivables
held in trust.
</TABLE>

56 Tax-Free Prospectus
<PAGE>

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
CALIFORNIA
ARIZONA LIMITED CALIFORNIA COLORADO MINNESOTA NATIONAL OREGON
TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
-----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT PRACTICE RISK
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Other Mutual Funds
The temporary investment in shares of Market Risk . . . . . . .
another mutual fund. A pro rata portion
of the other fund's expenses, in addition
to the expenses paid by the Funds, will be
borne by Fund shareholders.

Private Activity Bonds
Bonds that pay interest subject to the Interest Rate, Credit . . . . . . .
federal alternative minimum tax. and Experience Risk
Limited to 20% of net assets.

Repurchase Agreements
A transaction in which the seller of a Credit and . . . . . . .
security agrees to buy back a security Counter-Party Risk
at an agreed upon time and price, usually
with interest.
</TABLE>

Tax-Free Funds Prospectus 57
<PAGE>

Organization and Management of the Funds
--------------------------------------------------------------------------------

A number of different entities provide services to the Funds. This section shows
how the Funds are organized, lists the entities that perform different services,
and explains how these service providers are compensated. Further information is
available in the Statement of Additional Information for the Funds.

About Wells Fargo Funds Trust
Wells Fargo Funds Trust (the "Trust") was organized as a Delaware business trust
on March 10, 1999. The Board of Trustees of the Trust supervises each Fund's
activities, monitors its contractual arrangements with various service providers
and decides upon matters of general policy.

The Trust was created to succeed to the assets and operations of the various
mutual funds in the Stagecoach Family of Funds and the Norwest Advantage Family
of Funds. The holding company of Wells Fargo Bank, the investment advisor to the
Stagecoach Family of Funds, and the holding company of Norwest Investment
Management, Inc., the investment advisor to the Norwest Advantage Family of
Funds, merged in November 1998. Each of the Funds described in this Prospectus
has succeeded to the assets and operations of one or more corresponding Funds of
Stagecoach or Norwest Advantage Funds. The performance and financial statement
history of each Fund's designated predecessor Fund has been assumed by the Wells
Fargo Funds Trust Fund. The succession transactions were approved by the
shareholders of the Stagecoach and Norwest Advantage Funds. The Table on page 75
identifies the Stagecoach or Norwest Advantage Fund predecessors to the Funds.

The Board of Trustees of the Trust supervises the Funds' activities and approves
the selection of various companies hired to manage the Funds' operation. The
major service providers are described in the diagram below. Except for the
advisors, which require shareholder vote to change, if the Board believes that
it is in the best interests of the shareholders, it may make a change in one of
these companies.

--------------------------------------------------------------------------------
INVESTMENT ADVISOR CUSTODIAN
--------------------------------------------------------------------------------
Wells Fargo Bank, N.A. Wells Fargo Bank Minnesota, N.A.
525 Market St., San Francisco, CA 6th & Marquette, Minneapolis, MN
Manages the Funds' investment Provides safekeeping for the
activities Funds' assets
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
INVESTMENT SUB-ADVISOR
--------------------------------------------------------------------------------
Wells Capital Management Incorporated
525 Market St., San Francisco, CA
Manages the Funds' Investment Activities
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
SHAREHOLDER
TRANSFER SERVICING
DISTRIBUTOR ADMINISTRATOR AGENT AGENTS
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stephens Inc. Wells Fargo Bank, N.A. Boston Financial Data Various Agents
111 Center St. 525 Market St. Services, Inc.
Little Rock, AR San Francisco, CA Two Heritage Dr.
Quincy, MA

Markets the Funds Manages the Maintains records Provide
and distributes Funds' business of shares and services to
Fund shares activities supervises the payment customers
of dividends
----------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
FINANCIAL SERVICES FIRMS AND SELLING AGENTS
--------------------------------------------------------------------------------
Advise current and prospective shareholders on their Fund investments
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
SHAREHOLDERS
--------------------------------------------------------------------------------

58 Tax-Free Prospectus
<PAGE>

--------------------------------------------------------------------------------

In the following sections, the percentages shown are the percentages of the
average daily net assets of each Fund class paid on an annual basis for the
services described.

The Investment Advisor
Wells Fargo Bank provides portfolio management and fundamental security
analysis services as the advisor for each of the Funds. Wells Fargo Bank,
founded in 1852, is the oldest bank in the western United States and is one
of the largest banks in the United States. Wells Fargo Bank is a wholly
owned subsidiary of Wells Fargo & Company, a national bank holding company.
As of June 30, 2000, Wells Fargo Bank and its affiliates managed over $161
billion in assets.

The Investment Sub-Advisor
Wells Capital Management Incorporated ("WCM"), a wholly owned subsidiary of
Wells Fargo Bank, N.A., is the sub-advisor for each of the Funds. As of
June 30, 2000, WCM provided investment advice for assets in excess of $80
billion.

The Administrator
Wells Fargo Bank provides the Funds with administration services, including
general supervision of each Fund's operation, coordination of the other
services provided to each Fund, compilation of information for reports to
the SEC and the state securities commissions, preparation of proxy
statements and shareholder reports, and general supervision of data
compilation in connection with preparing periodic reports to the Trust's
Trustees and officers. Wells Fargo Bank also furnishes office space and
certain facilities to conduct each Fund's business. For providing these
services, Wells Fargo Bank is entitled to receive a fee of 0.15% of the
average annual net assets of each Fund.

Shareholder Servicing Plan
We have a shareholder servicing plan for each Fund. We have agreements with
various shareholder servicing agents to process purchase and redemption
requests, to service shareholder accounts, and to provide other related
services. For these services, each Fund pays 0.25% of its average net
assets.

The Transfer Agent
Boston Financial Data Services, Inc. ("BFDS") provides transfer agency and
dividend disbursing services to the Funds. For providing these services,
BFDS receives an annual fee, certain transaction-related fees, and is
reimbursed for out-of-pocket expenses incurred on behalf of the Funds.

Tax-Free Funds Prospectus 59
<PAGE>

A Choice of Share Classes
--------------------------------------------------------------------------------

After choosing a Fund, your next most important choice is which share class to
buy. The following classes of shares are available through this Prospectus:

. Class A Shares--with a front-end sales charge, volume reductions and lower
on-going expenses than Class B and Class C shares.

. Class B Shares--with a contingent deferred sales charge ("CDSC") payable upon
redemption that diminishes over time, and higher on-going expenses than Class
A shares.

. Class C Shares--with a 1.00% CDSC on redemptions made within one year of
purchase, and higher on-going expenses than Class A shares.

The choice between share classes is largely a matter of preference. You should
consider, among other things, the different fees and sales loads assessed on
each share class and the length of time you anticipate holding your investment.
If you prefer to pay sales charges up front, wish to avoid higher on-going
expenses, or, more importantly, you think you may qualify for volume discounts
based on the amount of your investment, then Class A shares may be the choice
for you.

You may prefer to see "every dollar working" from the moment you invest. If so,
then consider Class B or Class C shares. Please note that Class B shares convert
to Class A shares after seven years to avoid the higher on-going expenses
assessed against Class B shares.

Class C shares are available for the California Tax-Free Fund and National Tax-
Free Fund only. They are similar to Class B shares, with some important
differences. Unlike Class B shares, Class C shares do not convert to Class A
shares. The higher on-going expenses will be assessed as long as you hold the
shares. The choice between Class B and Class C shares may depend on how long you
intend to hold Fund shares before redeeming them.

Orders for Class B shares of $250,000 or more are either treated as orders for
Class A shares or they will be refused. For Class C shares, orders of $1,000,000
or more, including purchases made which because of a right of accumulation or
letter of intent would qualify for the purchase of Class A shares without an
initial sales charge, are also either treated as orders for Class A shares or
they will be refused.

Please see the expenses listed for each Fund and the following sales charge
schedules before making your decision. You should also review the "Reduced Sales
Charges" section of the Prospectus. You may wish to discuss this choice with
your financial consultant.

Class A Share Sales Charge Schedule

If you choose to buy Class A shares, you will pay the Public Offering Price
("POP") which is the Net Asset Value ("NAV") plus the applicable sales charge.
Since sales charges are reduced for Class A share purchases above certain dollar
amounts, known as "breakpoint levels," the POP is lower for these purchases.

60 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
CLASS A SHARES LISTED IN THIS PROSPECTUS HAVE THE FOLLOWING SALES CHARGE
SCHEDULE:
--------------------------------------------------------------------------------
FRONT-END SALES FRONT-END SALES
AMOUNT OF CHARGE AS % OF CHARGE AS % OF
PURCHASE PUBLIC OFFERING PRICE AMOUNT INVESTED

Less than $50,000 4.50% 4.71%
$50,000 to $99,999 4.00% 4.17%
$100,000 to $249,999 3.50% 3.63%
$250,000 to $499,999 2.50% 2.56%
$500,000 to $999,999 2.00% 2.04%
$1,000,000 and over/1/ 0.00% 0.00%

/1/ We will assess a 1.00% CDSC on Class A shares purchases of $1,000,000 or
more if they are redeemed within one year from the date of purchase unless the
dealer of record waived its commission with the Fund's approval. Charges are
based on the lower of the NAV on the date of purchase or the date of redemption.

Class B Share CDSC Schedule

If you choose Class B shares, you buy them at NAV and agree that if you redeem
your shares within six years of the purchase date, you will pay a CDSC based on
how long you have held your shares. Certain exceptions apply (see "Class B and
Class C Share CDSC Reductions" and "Waivers for Certain Parties"). The CDSC
schedule is as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
CLASS B SHARES LISTED IN THIS PROSPECTUS HAVE THE FOLLOWING SALES CHARGE SCHEDULE:
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REDEMPTION WITHIN 1 YEAR 2 YEARS 3 YEARS 4 YEARS 5 YEARS 6 YEARS 7 YEARS 8 YEARS

CDSC 5.00% 4.00% 3.00% 3.00% 2.00% 1.00% 0.00% A shares
</TABLE>

The CDSC percentage you pay is based on the lower of the NAV of the shares
on the date of the original purchase, or the NAV of the shares on the date
of redemption. We always process partial redemptions so that the least
expensive shares are redeemed first in order to reduce your sales charges.
After shares are held for six years, the CDSC expires. After shares are
held for seven years, the Class B shares are converted to Class A shares to
reduce your future on-going expenses.

Class B shares received in the reorganization of the Stagecoach Funds in
exchange for Stagecoach Fund shares purchased after July 17, 1999 are also
subject to the above CDSC schedule.

Class B shares received in the reorganization of the Norwest Advantage
Funds in exchange for Norwest Advantage Fund shares purchased after May 18,
1999 are also subject to the above CDSC schedule.

Tax-Free Funds Prospectus 61
<PAGE>

A Choice of Share Classes
--------------------------------------------------------------------------------

Class B shares received in the reorganization of the Stagecoach Funds in
exchange for Stagecoach Fund shares that were purchased prior to July 17, 1999,
but after March 3, 1997, are subject to the following CDSC schedule, and such
shares convert to Class A shares automatically after six years:

--------------------------------------------------------------------------------
CLASS B SHARES RECEIVED IN EXCHANGE FOR STAGECOACH FUND SHARES PURCHASED AFTER
MARCH 3, 1997, BUT BEFORE JULY 17, 1999 HAVE THE FOLLOWING SALES CHARGE
SCHEDULE:
--------------------------------------------------------------------------------
REDEMPTION WITHIN 1 YEAR 2 YEARS 3 YEARS 4 YEARS 5 YEARS 6 YEARS 7 YEARS

CDSC 5.00% 4.00% 3.00% 3.00% 2.00% 1.00% A shares

Class B shares received in the reorganization of the Stagecoach Funds in
exchange for Stagecoach Fund shares that were purchased prior to March 3, 1997
are subject to a CDSC if they are redeemed within four years of the original
purchase. The CDSC Schedule for these shares is below:

--------------------------------------------------------------------------------
CLASS B SHARES RECEIVED IN EXCHANGE FOR STAGECOACH FUND SHARES PURCHASED PRIOR
TO MARCH 3, 1997, HAVE THE FOLLOWING SALES CHARGE SCHEDULE:
--------------------------------------------------------------------------------
REDEMPTION WITHIN 1 YEAR 2 YEARS 3 YEARS 4 YEARS 5 YEARS 6 YEARS 7 YEARS

CDSC 3.00% 2.00% 1.00% 1.00% 0.00% 0.00% A shares

Class B shares received in the reorganization of the Norwest Advantage Funds in
exchange for Norwest Advantage Fund shares purchased prior to May 18, 1999 are
subject to the following sales charge schedule on the exchanged shares, and such
shares convert to Class A shares automatically after seven years:

--------------------------------------------------------------------------------
CLASS B SHARES RECEIVED IN EXCHANGE FOR NORWEST ADVANTAGE FUND SHARES PURCHASED
PRIOR TO MAY 18, 1999, HAVE THE FOLLOWING SALES CHARGE SCHEDULE:
--------------------------------------------------------------------------------
REDEMPTION WITHIN 1 YEAR 2 YEARS 3 YEARS 4 YEARS 5 YEARS 6 YEARS 7 YEARS

CDSC 3.00% 2.00% 2.00% 1.00% 0.00% 0.00% A Shares

If you exchange the Class B shares received in the reorganization for Class B
shares of another Fund, you will retain the CDSC schedules of your exchanged
shares. Additional shares purchased will age at the currently effective higher
CDSC schedule first shown above.

Class C Share CDSC Schedule

If you choose Class C shares, you buy them at NAV and agree that if you redeem
your shares within one year of the purchase date, you will pay a CDSC of 1.00%.

The CDSC percentage you pay is based on the lower of the NAV on the date of the
original purchase, or the NAV on the date of redemption. The Distributor pays
sales commissions of up to 1.00% of the purchase price of Class C shares to
selling agents at the time of the sale, and up to 1.00% annually thereafter.

We always process partial redemptions so that the least expensive shares are
redeemed first in order to reduce your sales charges. Class C shares do not
convert to Class A shares, and therefore continue to pay the higher on-going
expenses.

62 Tax-Free Funds Prospectus
<PAGE>

Reduced Sales Charges
--------------------------------------------------------------------------------

Generally, we offer more sales charge reductions for Class A shares than for
Class B and Class C shares, particularly if you intend to invest greater
amounts.You should consider whether you are eligible for any of the potential
reductions when you are deciding which share class to buy.

Class A Share Reductions

. You pay no sales charges on Fund shares you buy with reinvested
distributions.

. You pay a lower sales charge if you are investing an amount over a
breakpoint level. See the "Class A Share Sales Charge Schedule" above.

. By signing a Letter of Intent ("LOI"),you pay a lower sales charge now in
exchange for promising to invest an amount over a specified breakpoint
within the next 13 months. We will hold in escrow shares equal to
approximately 5% of the amount you intend to buy. If you do not invest the
amount specified in the LOI before the expiration date, we will redeem
enough escrowed shares to pay the difference between the reduced sales load
you paid and the sales load you should have paid. Otherwise, we will
release the escrowed shares when you have invested the agreed amount.

. Rights of Accumulation ("ROA") allow you to combine the amount you invest
with the total NAV of shares you own in other Wells Fargo front-end load
Funds, in which you have already paid a front-end load, in order to reach
breakpoint levels for a reduced load. We give you a discount on the entire
amount of the investment that puts you over the breakpoint level.

. You pay no sales charges on Fund shares you purchase with the proceeds of a
redemption of either Class A or Class B shares within 120 days of the date
of redemption.

. You may reinvest into a Wells Fargo Fund with no sales charge a required
distribution from a pension, retirement, benefits, or similar plan for
which Wells Fargo Bank acts as trustee provided the distribution occurred
within the 30 days prior to your reinvestment.

If you believe you are eligible for any of these reductions, it is up to you to
ask the selling agent or the shareholder servicing agent for the reduction and
to provide appropriate proof of eligibility.

You, or your fiduciary or trustee, may also tell us to extend volume discounts,
including the reductions offered for rights of accumulation and letters of
intent, to include purchases made by:

. a family unit, including children under the age of twenty-one or
single trust estate;

. a trustee or fiduciary purchasing for a single fiduciary relationship; or

. the members of a "qualified group, "which consists of a "company" (as
defined in the Investment Company Act of 1940, as amended), and related
parties of such a "Company," which has been in existence for at least six
months and which has a primary purpose other than acquiring Fund shares at
a discount.

How a Letter of Intent Can Save You Money!

If you plan to invest, for example, $100,000 in a Wells Fargo Fund in
installments over the next year, by signing a letter of intent you would
pay only 3.50% sales load on the entire purchase. Otherwise, you might pay
4.50% on the first $49,999, then 4.00% on the next $50,000!

Tax-Free Funds Prospectus 63
<PAGE>

Reduced Sales Charges
--------------------------------------------------------------------------------

Class B and Class C Share CDSC Reductions

. You pay no CDSC on Fund shares you purchase with reinvested distributions.

. We waive the CDSC for all redemptions made because of scheduled (Rule 72T
withdrawal schedule) or mandatory (withdrawals made after age 70 1/2
according to IRS guidelines) distributions for certain retirement plans.
(See your retirement plan disclosure for details.)

. We waive the CDSC for redemptions made in the event of the shareholder's
death or for a disability suffered after purchasing shares. ("Disability"
is defined by the Internal Revenue Code of 1986.)

. We waive the CDSC for redemptions made at the direction of Wells Fargo Bank
in order to,for example, complete a merger or close an account whose value
has fallen below the minimum balance.

. We waive the Class B share CDSC for withdrawals made by former Norwest
Advantage Fund shareholders in certain qualified accounts up to certain
limits (See the Statement of Additional Information for further details).

. We waive the Class C share CDSC for certain types of accounts.

For Class B shares purchased after May 18, 1999 for former Norwest Advantage
Funds shareholders, after July 17, 1999 for former Stagecoach Funds
shareholders, and for all other shareholders, no CDSC is imposed on withdrawals
that meet all the following circumstances:

. withdrawals are made by participating in the Systematic Withdrawal Plan;

. withdrawals may not exceed 10% of your fund assets (including "free"shares)
annually based on your anniversary date in the Systematic Withdrawal Plan;
and

. you participate in the dividend and capital gain reinvestment program.

Waivers for Certain Parties

If you are eligible for certain waivers, we will sell you Class A shares so you
can avoid higher on-going expenses. The following people can buy Class A shares
at NAV:

. Current and retired employees,directors/trustees and officers of:

. Wells Fargo Funds and its affiliates;

. Wells Fargo Bank & Company and its affiliates;

. Stephens Inc. and its affiliates; and

. Broker-Dealers who act as selling agents.

. and the families of any of the above. Contact your selling agent for
further information.

You may also buy Class A Fund shares at NAV if they are to be included in
certain retirement, benefits, pension or investment "wrap accounts" with whom
Wells Fargo Funds has reached an agreement, or through an omnibus account
maintained with a Fund by a broker/dealer.

We reserve the right to enter into agreements that reduce or eliminate sales
charges for groups or classes of shareholders, or for Fund shares included in
other investment plans such as "wrap accounts." If you own Fund shares as part
of another account or package such as an IRA or a sweep account, you must read
the directions for that account. These directions may supersede the terms and
conditions discussed here.

64 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

Distribution Plan

We have adopted a Distribution Plan ("Plan") pursuant to Rule 12b-1 of the
Investment Company Act of 1940 for the Class B and Class C shares of the Funds.
The Plan authorizes the payment of all or part of the cost of preparing and
distributing Prospectuses and distribution-related services, including ongoing
compensation to selling agents. The Plan also provides that, if and to the
extent any shareholder servicing payments are recharacterized as payments for
distribution-related services, they are approved and payable under the Plan. The
fees paid under this Plan are as follows:

FUND CLASS B CLASS C

Arizona Tax-Free Fund 0.75% N/A

California Limited Term Tax-Free Fund N/A N/A

California Tax-Free Fund 0.75% 0.75%

Colorado Tax-Free Fund 0.75% N/A

Minnesota Tax-Free Fund 0.75% N/A

National Tax-Free Fund 0.75% 0.75%

Oregon Tax-Free Fund 0.75% N/A

These fees are paid out of the Funds' assets on an ongoing basis. Over time,
these fees will increase the cost of your investment and may cost you more than
paying other types of sales charges.

Tax-Free Funds Prospectus 65
<PAGE>

Exchanges
--------------------------------------------------------------------------------

Exchanges between Wells Fargo Funds are two transactions: a sale of shares of
one Fund and the purchase of shares of another. In general, the same rules and
procedures that apply to sales and purchases apply to exchanges. There are,
however, additional factors you should keep in mind while making or considering
an exchange:

. You should carefully read the Prospectus for the Fund into which you wish
to exchange.

. Every exchange involves selling Fund shares and that sale may produce a
capital gain or loss for federal income tax purposes.

. If you are making an initial investment into a new Fund through an
exchange,you must exchange at least the minimum first purchase amount of
the Fund you are redeeming, unless your balance has fallen below that
amount due to market conditions.

. Any exchange between Funds you already own must meet the minimum redemption
and subsequent purchase amounts for the Funds involved.

. Exchanges between Class B shares and the Wells Fargo Money Market Fund
Class B shares will not trigger the CDSC. The new shares will continue to
age according to their original schedule while in the new Fund and will be
charged the CDSC applicable to the original shares upon redemption.
Exchanges into Money Market Fund Class B shares are subject to certain
restrictions in addition to those described above.

. Exchanges from any share class to a money market fund can only be re-
exchanged for the original share class.

. In order to discourage excessive Fund transaction expenses that must be
borne by other shareholders, we reserve the right to limit or reject
exchange orders. Generally, we will notify you 60 days in advance of any
changes in your exchange privileges.

. You may make exchanges between like share classes.You may also exchange
from any Class C shares into the Money Market Fund Class A shares.
Exchanged shares retain any applicable CDSC upon redemption.

66 Tax-Free Funds Prospectus
<PAGE>

Your Account
--------------------------------------------------------------------------------

This section tells you how Fund shares are priced, how to open an account and
how to buy, sell or exchange Fund shares once your account is open.

Pricing Fund Shares

. As with all mutual fund investments, the price you pay to purchase shares
or the price you receive when you redeem shares is not determined until
after a request has been received in proper form.

. We determine the NAV of each class of the Funds' shares each business day
as of the close of regular trading on the New York Stock Exchange ("NYSE").
We determine the NAV by subtracting the Fund class's liabilities from its
total assets, and then dividing the result by the total number of
outstanding shares of that class. Each Fund's assets are generally valued
at current market prices. See the Statement of Additional Information for
further disclosure.

. We process requests to buy or sell shares of the Funds each business day as
of the close of regular trading on the NYSE which is usually 1:00 p.m.
(Pacific time)/3:00 p.m. (Central time). If the markets close early, the
Funds may close early and may value their shares at earlier times under
these circumstances. Any request we receive in proper form before this time
is processed the same day. Requests we receive after the cutoff time are
processed the next business day.

. The Funds are open for business on each day the NYSE is open for
business.NYSE holidays include New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. When any holiday falls on a weekend,
the NYSE typically is closed on the weekday immediately before or after
such holiday.

You Can Buy Fund Shares

. By opening an account directly with the Fund (simply complete and return a
Wells Fargo Funds Application with proper payment);

. Through a brokerage account with an approved selling agent; or

. Through certain retirement, benefit and pension plans, or through certain
packaged investment products (please see the providers of the plan for
instructions).

Minimum Investments

. $1,000 per Fund minimum initial investment;or

. $100 per Fund if you use the Systematic Purchase Program; and

. $100 per Fund for all investments after your initial investment.

We may waive the minimum for Funds you purchase through certain retirement,
benefit and pension plans, through certain packaged investment products, or for
certain classes of shareholders as permitted by the SEC. Check the specific
disclosure statements and Applications for the program through which you intend
to invest.

Tax-Free Funds Prospectus 67
<PAGE>

Your Account
--------------------------------------------------------------------------------

The following section explains how you can buy shares directly from Wells Fargo
Funds. For Funds held through brokerage and other types of accounts, please
consult your selling agent.

--------------------------------------------------------------------------------
BY MAIL
--------------------------------------------------------------------------------
IF YOU ARE BUYING SHARES FOR THE FIRST TIME:
--------------------------------------------------------------------------------
. Complete a Wells Fargo Funds Application. Be sure to indicate the Fund name
and the share class into which you intend to invest (If no choice is
indicated, Class A shares will be designated).Your account will be credited
on the business day that the transfer agent receives your application in
proper order. Failure to complete an Application properly may result in a
delay in processing your request.

. Enclose a check for at least $1,000 made out in the full name and share
class of the Fund.For example, "Wells Fargo Arizona Tax-Free Fund, Class
A." Please note that checks made payable to any entity other than your
Wells Fargo Fund will be returned to you.

. All purchases must be made in U.S.dollars and checks must be drawn on U.S.
banks.

. You may start your account with $100 if you elect the Systematic Purchase
Plan option on the Application.

<TABLE>
<S> <C> <C>
. Mail to: Wells Fargo Funds Overnight Mail Only: Wells Fargo Funds
ATTN: CCSU-Boston Financial ATTN: CCSU-Boston Financial
P.O. Box 8266 66 Brooks Drive
Boston, MA 02266-8266 Braintree, MA 02184
</TABLE>

--------------------------------------------------------------------------------
IF YOU ARE BUYING ADDITIONAL SHARES:
--------------------------------------------------------------------------------
. Make a check payable to the full name and share class of your Fund for at
least $100.Be sure to write your account number on the check as well.

. Enclose the payment stub/card from your statement if available.

. Mail to: Wells Fargo Funds
Attn: CCSU-Boston Financial
PO Box 8266
Boston, MA 02266-8266

68 Tax-Free Funds Prospectus
<PAGE>

How to Buy Shares
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
BY WIRE
--------------------------------------------------------------------------------
IF YOU ARE BUYING SHARES FOR THE FIRST TIME:
--------------------------------------------------------------------------------

. You must first call Investor Services at 1-800-222-8222, option 0 to notify
them of an incoming wire trade.

. If you do not currently have an account, complete a Wells Fargo Funds
Application. You must wire at least $1,000. Be sure to indicate the Fund name
and the share class into which you intend to invest.

. Mail the completed Application. Your account will be credited on the business
day that the transfer agent receives your application in proper order.

. Overnight Application to: Wells Fargo Funds

ATTN: CCSU-Boston Financial
66 Brooks Drive
Braintree, MA 02184

. Wire money to: State Street Bank & Trust Attention:
Boston, MA Wells Fargo Funds
(Name of Fund and
Share Class)
Bank Routing Number:
ABA 011 000028 Account Name:
(Registration Name
Wire Purchase Account Number: Indicated on
9905-437-1 Application)

--------------------------------------------------------------------------------
IF YOU ARE BUYING ADDITIONAL SHARES:
--------------------------------------------------------------------------------

. Instruct your wiring bank to transmit at least $100 according to the
instructions given below. Be sure to have the wiring bank include your
current account number and the name your account is registered in.

Tax-Free Funds Prospectus 69
<PAGE>

Your Account How to Buy Shares
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
BY PHONE
--------------------------------------------------------------------------------
IF YOU ARE BUYING SHARES FOR THE FIRST TIME:
--------------------------------------------------------------------------------

You can only make your first purchase of a Fund by phone if you already have an
existing Wells Fargo Funds Account.

. Call Investor Services and instruct the representative to either:

. transfer at least $1,000 from a linked settlement account, or

. exchange at least $1,000 worth of shares from an existing Wells Fargo
Fund. Please see the "Exchanges" section for special rules.

. Call: 1-800-222-8222, option 0

--------------------------------------------------------------------------------
IF YOU ARE BUYING ADDITIONAL SHARES:
--------------------------------------------------------------------------------

. Call Investor Services and instruct the representative to either:

. transfer at least $100 from a linked settlement account, or

. exchange at least $100 worth of shares from another Wells Fargo Fund.

. Call: 1-800-222-8222, option 0

70 Tax-Free Funds Prospectus
<PAGE>

How to Sell Shares
--------------------------------------------------------------------------------

The following section explains how you can sell shares held directly through an
account with Wells Fargo Funds by mail or telephone. For Fund shares held
through brokerage or other types of accounts, please consult your selling agent.

--------------------------------------------------------------------------------
BY MAIL
--------------------------------------------------------------------------------

. Write a "Letter of Instruction" stating your name, your account number,
the Fund you wish to redeem and the dollar amount ($100 or more) of the
redemption you wish to receive (or write "Full Redemption").

. Make sure all the account owners sign the request exactly as their names
appear on the account application.

. You may request that redemption proceeds be sent to you by check, by ACH
transfer into a bank account, or by wire. Please call Investor Services
regarding requirements for linking bank accounts or for wiring funds. We
reserve the right to charge a fee for wiring funds although it is not
currently our practice to do so.

. Signature Guarantees are required for mailed redemption requests over
$50,000, or if the address on your account was changed within the last 60
days. You can get a signature guarantee at financial institutions such as
a bank or brokerage house. We do not accept notarized signatures.

. Mail to: Wells Fargo Funds
ATTN: CCSU-Boston Financial
PO Box 8266
Boston, MA 02266-8266

--------------------------------------------------------------------------------
BY PHONE
--------------------------------------------------------------------------------

. Call Investor Services to request a redemption of at least $100. Be
prepared to provide your account number and Taxpayer Identification
Number.

. Unless you have instructed us otherwise, only one account owner needs to
call in redemption requests.

. You may request that redemption proceeds be sent to you by check, by
transfer into an ACH-linked bank account, or by wire. Please call Investor
Services regarding requirements for linking bank accounts or for wiring
funds. We reserve the right to charge a fee for wiring funds although it
is not currently our practice to do so.

. Telephone privileges are automatically made available to you unless you
specifically decline them on your Application or subsequently in writing.

. Telephone privileges allow us to accept transaction instructions by anyone
representing themselves as the shareholder and who provides reasonable
confirmation of their identity, such as providing the Taxpayer
Identification Number on the account. We will not be liable for any losses
incurred if we follow telephone instructions we reasonably believe to be
genuine.

. We will not mail the proceeds of a telephone redemption request if the
address on your account was changed in the last 30 days.

. Call: 1-800-222-8222, option 0

Tax-Free Funds Prospectus 71
<PAGE>

Your Account How to Sell Shares
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
GENERAL NOTES FOR SELLING SHARES
--------------------------------------------------------------------------------

. We will process requests to sell shares at the first NAV calculated after a
request in proper form is received. Requests received before the cutoff time
are processed on the same business day.

. Your redemptions are net of any applicable CDSC.

. If you purchased shares through a packaged investment product or retirement
plan, read the directions for selling shares provided by the product or
plan. There may be special requirements that supersede the directions in
this Prospectus.

. We reserve the right to delay payment of a redemption so that we may be
reasonably certain that investments made by check, through ACH or Systematic
Purchase Plan, have been collected. Payments of redemptions also may be
delayed under extraordinary circumstances or as permitted by the SEC in
order to protect remaining shareholders.

. Generally, we pay redemption requests in cash, unless the redemption request
is for more than the lesser of $250,000 or 1% of the net assets of the Fund
by a single shareholder over any ninety-day period. If a request for a
redemption is over these limits, it may be to the detriment of existing
shareholders to pay such redemption in cash. Therefore, we may pay all or
part of the redemption in securities of equal value.

72 Tax-Free Funds Prospectus
<PAGE>

Additional Services and Other Information
--------------------------------------------------------------------------------

Automatic Programs

These programs help you conveniently purchase and/or redeem shares each month.
Once you select a Plan, tell us the day of the month you would like the
transaction to occur. If you do not specify a date, we will process the
transaction on or about the 25th day of the month. Systematic withdrawals may
only be processed on or about the 25th day of the month. Call Investor Services
at 1-800-222-8222, option 0 for more information.

. Systematic Purchase Plan--With this program, you can regularly purchase
shares of a Wells Fargo Fund with money automatically transferred from a
linked bank account. Simply select the Fund you would like to purchase, and
specify an amount of at least $100.

. Systematic Exchange Plan--With this program, you can regularly exchange
shares of a Wells Fargo Fund you own for shares of another Wells Fargo Fund.
The exchange amount must be at least $100. See the "Exchanges" section of
this Prospectus for the conditions that apply to your shares. This feature
may not be available for certain types of accounts.

. Systematic Withdrawal Plan--With this program, you can regularly redeem
shares and receive the proceeds by check or by transfer to a linked bank
account. Simply specify an amount of at least $100. To participate in this
program, you:

. must have a Fund account valued at $10,000 or more;

. must have your distributions reinvested; and

. may not simultaneously participate in the Systematic Purchase Plan.

It generally takes about ten days to establish a Plan once we have received your
instructions. It generally takes about five days to change or cancel
participation in a Plan. We automatically cancel your program if the linked bank
account you specified is closed.

Dividend and Capital Gain Distributions

The Funds in this Prospectus pay any dividends monthly and make capital gains
distributions at least annually. We offer the following distribution options:

. Automatic Reinvestment Option--Lets you buy new shares of the same class of
the Fund that generated the distributions. The new shares are purchased at
NAV generally on the day the income is paid. This option is automatically
assigned to your account unless you specify another option.

. Check Payment Option--Allows you to receive checks for distributions mailed
to your address of record or to another name and address which you have
specified in written, signature guaranteed instructions. If checks remain
uncashed for six months or are undeliverable by the Post Office, we will
reinvest the distributions at the earliest date possible.

. Bank Account Payment Option--Allows you to receive distributions directly in
a checking or savings account through ACH. The bank account must be linked
to your Wells Fargo Fund account. In order to establish a new linked bank
account, you must send a written signature guaranteed instruction along with
a copy of a voided check or deposit slip. Any distribution returned to us
due to an invalid banking instruction will be sent to your address of record
by check at the earliest date possible, and future distributions will be
automatically re-invested.

. Directed Distribution Purchase Option--Lets you buy shares of a different
Wells Fargo Fund of the same share class. The new shares are purchased at
NAV generally on the day the income is paid. In order to establish this
option, you need to identify the Fund and account the

Tax-Free Funds Prospectus 73
<PAGE>

Additional Services and Other Information
--------------------------------------------------------------------------------

distributions are coming from, and the Fund and account to which the
distributions are being directed. You must meet any required minimum purchases
in both Funds prior to establishing this option.

Remember, distributions have the effect of reducing NAV per share by the
amount distributed.

Taxes

This discussion regarding federal and certain state income taxes is based on
laws that were in effect as of the date of this Prospectus. The discussion
summarizes only some of the important income tax considerations that affect the
Funds and you as a shareholder. It is not intended as a substitute for careful
tax planning. You should consult your tax advisor about your specific tax
situation, including the federal, state, local and foreign tax consequences to
you of an investment in a Fund. Federal and certain state income tax
considerations are discussed further in the Statement of Additional Information.

We will pass on to you substantially all of a Fund's net investment income and
capital gains. Distributions of a Fund's net interest income from tax-exempt
securities will not be subject to federal income tax, although a portion of such
distributions could be subject to federal AMT. Distributions of a Fund
attributable to tax-exempt securities of a state and its subdivisions will also
not be subject to the state's individual income taxes if the Fund primarily
invests in such securities. For example, you generally won't be subject to
California individual income tax on distributions from the California Limited
Term Tax-Free Fund or the California Tax-Free Fund to the extent such
distributions are attributable to the Fund's California state and municipal
tax-exempt and certain other securities, although a portion of such
distributions could be subject to California AMT. Distributions of a Fund's
income from other sources and net short-term capital gain will be taxable to you
as ordinary income. Distributions of a Fund's net long-term capital gain, if
any, will be taxable to you as net capital gain. Corporate shareholders will not
be able to deduct any distributions when determining their taxable income.

Taxable distributions from a Fund normally will be taxable to you when paid,
whether you take the distribution in cash or automatically reinvest them in
additional Fund shares. However, distributions declared in October, November and
December of one year and distributed in January of the following year will be
taxable as if they were paid on December 31 of the first year. At the end of
each year, you will be notified as to the tax status of your distributions for
the year.

If you buy Fund shares shortly before it makes a distribution, your distribution
from the Fund will, in effect, be a taxable return for part of your investment.
Similarly, if you buy shares of a Fund when it holds appreciated securities, you
will receive a taxable return of part of your investment if and when the Fund
sells the appreciated securities and realizes the gain. The Funds have built up,
or have the potential to build up, high levels of unrealized appreciation.

Your redemptions (including redemptions in-kind) and exchanges of Fund shares
generally will result in a taxable capital gain or loss, depending on the amount
you receive for your shares (or are deemed to receive in the case of exchanges)
and the amount you paid (or are deemed to have paid) for them. Such gain or loss
will be long-term capital gain or loss if you have held your redeemed or
exchanged Fund shares for more than one year at the time of redemption. In
certain instances, losses realized on the redemption or exchange of Fund shares
may be disallowed.

Foreign shareholders may be subject to different tax treatment, including
withholding taxes. In certain circumstances, U.S. residents will be subject to
backup withholding at a 31% rate on distributions and redemption proceeds paid
by a Fund.

74 Tax-Free Funds Prospectus
<PAGE>

Table of Predecessors
--------------------------------------------------------------------------------

The Funds described in this Prospectus were created as part of the
reorganization of the Stagecoach Family of Funds, advised by Wells Fargo
Bank, N.A., and the Norwest Advantage Family of Funds, advised by Norwest
Investment Management, Inc., into a single mutual fund complex. The
reorganization followed the merger of the advisors' parent companies.

Each Fund is an accounting survivor of a former Stagecoach Funds, Inc. or
Norwest Advantage Funds fund, as indicated in the Table of Predecessors
below. The performance histories and financial highlights of each Fund are
the performance histories and financial highlights of the predecessor fund.

Wells Fargo Funds Trust Predecessor Fund

Arizona Tax-Free Stagecoach Arizona Tax-Free

California Limited Term Tax-Free Stagecoach California Tax-Free Income

California Tax-Free Stagecoach California Tax-Free Bond

Colorado Tax-Free Norwest Advantage Colorado Tax-Free

Minnesota Tax-Free Norwest Advantage Minnesota Tax-Free

National Tax-Free Norwest Advantage Tax-Free Income

Oregon Tax-Free Stagecoach Oregon Tax-Free

Tax-Free Funds Prospectus 75
<PAGE>

Portfolio Managers
--------------------------------------------------------------------------------

Arthur C. Evans
Arizona Tax-Free Fund since 2000
Colorado Tax-Free Fund since 2000
Mr. Evans joined WCM in 2000 managing public fixed-income and municipal
bond mutual funds and institutional private accounts on the Tax-Exempt
Fixed-Income Team. Prior to joining the firm in 2000, Mr. Evans was
responsible for the investment operations of PennCorp Financial Group, a $6
billion life and health insurance company, as its Chief Investment Officer
from 1995 to 1999. He was also an institutional portfolio manager with
Blackrock Financial Management in 1995, and a municipal trader/strategist
with Conning Asset Management from 1993 to 1995. Mr. Evans earned a
master's degree in business administration from the Fuqua School of
Business, Duke University in 1990. He also received a BA in business
administration--finance from the University of Texas at Austin in 1986.

Stephen Galiani
Arizona Tax-Free Fund and its predecessor since 1997
California Tax-Free Fund and its predecessor since 1999
Colorado Tax-Free Fund since 2000 National Tax-Free Fund since 2000
Oregon Tax-Free Fund and its predecessor since 1997
Mr. Galiani joined WCM in 1997 and is the firm's Managing Director for
Municipals with overall managerial responsibility for municipal strategy,
portfolio management, credit research and trade execution. Prior to WCM, he
served as Director of Fixed-Income from 1995 to 1997 for Qualivest Capital
Management. He was President from 1990 to 1995 of Galiani Asset Management
Corporation, an independent advisory practice. Mr. Galiani received a BA in
English from Manhattan College and an MBA from Boston University.

Patricia D. Hovanetz, CFA
Minnesota Tax-Free Fund and its predecessor since 1991
Ms. Hovanetz joined WCM in 1998 as a Principal with the Tax-Exempt Fixed-
Income Team, and simultaneously held the position of Director of Tax-Exempt
Fixed-Income at NIM (since 1997) until WCM and NIM combined investment
advisory services under the WCM name in 1999. Ms. Hovanetz has over 30
years experience in the municipal bond industry and manages over $300
million in municipal bond assets for the Wells Fargo Funds. She also
manages other national tax-exempt assets for institutional accounts and has
been a portfolio manager at NIM since 1988. Ms. Hovanetz attended St. Cloud
State College and the University of Minnesota.

Mary Gail Walton, CFA
California Limited Term Tax-Free Fund since 2000
Ms. Walton has been a municipal bond portfolio manager with Wells Fargo
Bank, N.A. and Wells Capital Management Incorporated for the past nine
years, and currently manages over $3 billion in various tax-exempt
portfolios. She is a Chartered Financial Analyst, and received her BA in
economics in 1983 from the University of Washington.

76 Tax-Free Funds Prospectus
<PAGE>

Glossary
--------------------------------------------------------------------------------

We provide the ACH
following Refers to the "Automated Clearing House" system
definitions to maintained by the Federal Reserve Bank which allows
assist you in banks to process checks, transfer funds and perform
reading this other tasks.
Prospectus. For a
more complete Asset-Backed Securities
understanding of Securities consisting of an undivided fractional
these terms you interest in pools of consumer loans, such as car loans
should consult your or credit card debt, or receivables held in trust.
financial advisor.
Below Investment-Grade
Securities rated BBB or lower by S&P or Baa or lower by
Moody's Investor Services, or that may be unrated
securities or securities considered to be "high risk."

Business Day
Any day the New York Stock Exchange is open is a
business day for the Funds.

Current Income
Earnings in the form of dividends or interest as
opposed to capital growth. See also "total return."

Debt Securities
Generally, a promise to pay interest and repay
principal by an individual or group of individuals sold
as a security. The owner of the security is entitled to
receive any such payments. Examples include bonds and
mortgage- and other asset-backed securities and can
include securities in which the right to receive
interest and principal repayment have been sold
separately.

Derivatives
Securities whose values are derived in part from the
value of another security or index. An example is a
stock option.

Distributions
Dividends and/or capital gains paid by a Fund on its
shares.

Diversified
A diversified fund, as defined by the Investment
Company Act of 1940, is one that invests in cash,
Government securities, other investment companies and
no more than 5% of its total assets in a single issuer.
These policies must apply to 75% of the Funds' total
assets. Non-diversified funds are not required to
follow such investment policies.

Duration
A measure of a security's or portfolio's sensitivity to
changes in interest rates. Duration is usually
expressed in years, with longer durations typically
more sensitive to interest rate changes than shorter
durations.

FDIC
The Federal Deposit Insurance Corporation. This is the
company that provides federally sponsored insurance
covering bank deposits such as savings accounts and
CDs. Mutual funds are not FDIC insured.

FHLMC
FHLMC securities are commonly known as "Freddie Mac"
and are issued by the Federal Home Loan Mortgage
Corporation.

Tax-Free Funds Prospectus 77
<PAGE>

Glossary
--------------------------------------------------------------------------------

FNMA
FNMA securities are known as "Fannie Maes" and are issued by the
Federal National Mortgage Association.

GNMA
GNMA securities are commonly known as "Ginnie Maes" and are issued by
the Government National Mortgage Association.

Investment-Grade Securities
A type of bond rated in the top four investment categories by a
nationally recognized ratings organization. Generally these are bonds
whose issuers are considered to have a strong ability to pay interest
and repay principal, although some investment-grade bonds may have
some speculative characteristics.

Liquidity
The ability to readily sell a security at a fair price.

Money Market Instruments
High-quality short-term instruments meeting the requirements of Rule
2a-7 under the Investment Company Act of 1940, such as bankers'
acceptances, commercial paper, repurchase agreements and government
obligations. In a money market fund, average portfolio maturity does
not exceed 90 days, and all investments have maturities of 397 days or
less at the time of purchase.

Moody's

A nationally recognized ratings organization.

Municipal Securities

Debt obligations of a state or local government entity. The funds may
support general governmental needs or special projects. Virtually all
municipal securities are exempt from federal income taxes and most are
exempt from state and local income taxes, at least in the state of
issue.

Nationally Recognized Rating Organization ("NRRO")
A company that examines the ability of a bond issuer to meet its
obligations and which rates the bonds accordingly.

Net Asset Value ("NAV")
The value of a single fund share. It is determined by adding together
all of a Fund's assets, subtracting accrued expenses and other
liabilities, then dividing by the total number of shares.

Options
An option is the right to buy or sell a security based on an agreed
upon price at a specified time. For example, an option may give the
holder of a stock the right to sell the stock to another party,
allowing the seller to profit if the price has fallen below the agreed
price. Options may also be based on the movement of an index such as
the S&P 500.

Public Offering Price ("POP")
The NAV with the sales load added.

Repurchase Agreement
An agreement between a buyer and seller of a security in which the
seller agrees to repurchase the security at an agreed upon price and
time.

Selling Agent
A person who has an agreement with the Funds' distributors that allows
them to sell a Fund's shares.

78 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------
Shareholder Servicing Agent
Anyone appointed by the Fund to maintain shareholder accounts and
records, assist and provide information to shareholders or perform
similar functions.

Signature Guarantee
A guarantee given by a financial institution that has verified the
identity of the maker of the signature.

Statement of Additional Information
A document that supplements the disclosure made in the Prospectus.

Taxpayer Identification Number
Usually the social security number for an individual or the Employer
Identification Number for a corporation.

Total Return
The total value of capital growth and the value of all distributions,
assuming that distributions were used to purchase additional shares of
the Funds.

U.S. Government Obligations
Obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities.

Weighted Average Maturity
The average maturity for the debt securities in a portfolio on a
dollar-for-dollar basis.

Tax-Free Funds Prospectus 79
<PAGE>

This page intentionally left blank
--------------------------------------------------------------------------------
<PAGE>

YOU MAY WISH TO REVIEW THE FOLLOWING DOCUMENTS:

STATEMENT OF ADDITIONAL INFORMATION supplements the disclosures made by this
Prospectus. The Statement of Additional Information has been filed with the SEC
and incorporated by reference into this Prospectus and is legally part of this
Prospectus.

ANNUAL/SEMI-ANNUAL REPORT provides certain financial and other important
information including a discussion of the market conditions and investment
strategies that significantly affected Fund performance, for the most recent
reporting period.

THESE DOCUMENTS ARE AVAILABLE FREE OF CHARGE:
CALL: 1-800-222-8222; option 1, option 5

WRITE TO:
Wells Fargo Funds PO Box 8266
Boston, MA 02266-8266; or

Visit the SEC's website at http://www.sec.gov

REQUEST COPIES FOR A FEE BY WRITING TO:
SEC Public Reference Room Washington, DC 20549-6009 by electronic
request at [email protected] Call: 1-800-SEC-0330 for details

Funds listed in this prospectus are only available in the states where they are
registered.

ADDITIONAL SERVICES QUESTIONS CAN BE ANSWERED BY CALLING
YOUR SPECIfiC PRODUCT GROUP AT WELLS FARGO BANK:
Wells Fargo Checking and Savings - 1-800-869-3557 Wells Fargo Portfolio
Advisor - 1-800-689-7882
<PAGE>

-----
WELLS
FARGO

-----
FUNDS
-----

Institutional Class

WELLS FARGO TAX-FREE FUNDS
----------------------------

PROSPECTUS
----------------------------

Please read this Prospectus and keep it for future reference. It is designed to
provide you with important information and to help you decide if a Fund's goals
match your own.

Arizona Tax-Free Fund

California Limited Term Tax-Free Fund

California Tax-Free Fund

Colorado Tax-Free Fund

Minnesota Intermediate Tax-Free Fund

Minnesota Tax-Free Fund

National Limited Term Tax-Free Fund

National Tax-Free Fund

Nebraska Tax-Free Fund

Oregon Tax-Free Fund

NOVEMBER 1
2000
<PAGE>

This page intentionally left blank
--------------------------------------------------------------------------------
<PAGE>

<TABLE>
<CAPTION>
Table of Contents Tax-Free Funds
--------------------------------------------------------------------------------
<S> <C>
Overview
Objectives and Principal Strategies 4
This section contains important Summary of Important Risks 6
summary information about the Performance History 10
Funds. Summary of Expenses 20
Key Information 23

--------------------------------------------------------------------------------
The Funds
Arizona Tax-Free Fund 24
This section contains important California Limited Term Tax-Free Fund 28
summary information about the California Tax-Free Fund 32
Funds. Colorado Tax-Free Fund 36
Minnesota Intermediate Tax-Free Fund 40
Minnesota Tax-Free Fund 44
National Limited Term Tax-Free Fund 48
National Tax-Free Fund 50
Nebraska Tax Free Fund 54
Oregon Tax-Free Fund 58
General Investment Risks 62
Organization and Management
of the Funds 66

--------------------------------------------------------------------------------
Your Investment
Your Account 68
Turn to this section for How to Buy Shares 69
information on how to open an How to Sell Shares 70
account and how to buy, sell How to Exchange Shares 71
and exchange Fund shares.

--------------------------------------------------------------------------------
References
Other Information 72
Look here for additional Table of Predecessors 73
information and term Portfolio Managers 74
definitions. Glossary 75
</TABLE>
<PAGE>

--------------------------------------------------------------------------------
FUND OBJECTIVE PRINCIPAL STRATEGY
--------------------------------------------------------------------------------

Arizona Tax-Free Fund Seeks current income exempt from federal income
tax and Arizona personal income tax.

California Limited Term Seeks current income exempt from federal income
Tax-Free Fund tax and California personal income tax.

California Tax-Free Fund Seeks current income exempt from federal income
tax and California personal income tax by
investing in medium- and long-term investment
grade municipal securities.

Colorado Tax-Free Fund Seeks current income exempt from federal income
tax and Colorado personal income tax.

Minnesota Intermediate Seeks current income exempt from federal income
Tax-Free Fund tax and Minnesota personal income tax.

Minnesota Tax-Free Fund Seeks current income exempt from federal income
tax and Minnesota personal income tax.

National Limited Term Seeks current income exempt from federal income
Tax-Free Fund tax.

National Tax-Free Fund Seeks current income exempt from federal income
tax.

Nebraska Tax-Free Fund Seeks current income exempt from federal income
tax and Nebraska personal income tax.

Oregon Tax-Free Fund Seeks current income exempt from federal income
tax and Oregon personal income tax.

4 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
RINCIPAL STRATEGY
--------------------------------------------------------------------------------

We invest primarily in short- and intermediate-term investment grade California
municipal securities. We buy municipal securities of any maturity length, but we
primarily buy securities with remaining maturities of less than 2 years (short-
term) or 2 to 10 years (intermediate-term). We have some flexibility in setting
the portfolio's dollar-weighed average maturity. Under normal market conditions,
the average expected duration of the Fund's portfolio securities will be from 1
to 5 years.

We invest primarily in investment grade Colorado municipal securities of varying
maturities. We expect that the Fund's average portfolio maturity normally will
be greater than 10 years. The Fund's average portfolio maturity may reach or
exceed 20 years in the future. Depending on market conditions, the Fund's
dollar-weighed average maturity could be higher or lower. The Fund emphasizes
investments in municipal securities paying interest income rather than
maintaining the Fund's stability of NAV.

We invest primarily in investment grade Minnesota municipal securities with
average maturities between 5 and 10 years, but this average will vary depending
on anticipated market conditions. We emphasize investments in municipal
securities paying interest income rather than maintaining the Fund's stability
of NAV.

We invest primarily in investment grade municipal securities with average
maturities between 1 and 5 years.

We invest primarily in investment grade municipal securities with average
maturities between 10 and 20 years.

We invest primarily in investment grade Nebraska municipal securities of varying
maturities.The portfolio's weighted average maturity will vary depending on
market conditions, economic conditions including interest rates, the differences
in yields between obligations of different maturity lengths, and other factors.
Generally, we attempt to capture greater total return by increasing maturity
when we expect interest rates to decline, and attempt to preserve capital by
shortening maturity when we expect interest rates to increase.

Tax-Free Funds Prospectus 5
<PAGE>

Summary of Important Risks
--------------------------------------------------------------------------------

. the individual Fund Descriptions later in this Prospectus;

. under the "General Investment Risks" section beginning on page 62; and

. in the Funds' Statement of Additional Information.

An investment in a Fund is not a deposit of Wells Fargo Bank and is not insured
or guaranteed by the FDIC or any other government agency. It is possible to lose
money by investing in a Fund.

--------------------------------------------------------------------------------
COMMON RISKS FOR THE FUNDS
--------------------------------------------------------------------------------

The Funds invest in debt securities, such as notes and bonds, which are
subject to credit risk and interest rate risk. Credit risk is the
possibility that an issuer of an instrument will be unable to make interest
payments or repay principal. Changes in the financial strength of an issuer
or changes in the credit rating of a security may affect its value. Interest
rate risk is the risk that interest rates may increase, which will reduce
the resale value of instruments in a Fund's portfolio, including U.S.
Government obligations. Debt securities with longer maturities are generally
more sensitive to interest rate changes than those with shorter maturities.
Changes in market interest rates do not affect the rate payable on debt
instruments held in a Fund, unless the instrument has adjustable or variable
rate features, which can reduce interest rate risk. Changes in market
interest rates may also extend or shorten the duration of certain types of
instruments, such as asset-backed securities, thereby affecting their value
and the return on your investment.

The Funds may invest in municipal securities that rely on the
creditworthiness or revenue production of their issuers or ancillary credit
enhancement features. Municipal securities may be difficult to obtain
because of limited supply, which may increase the cost of such securities
and effectively reduce the portfolio's yield. Typically, less information is
available about a municipal issuer than is available for other types of
securities issuers.

Although we strive to invest in municipal securities and other securities
with interest that is exempt from federal personal income taxes, including
the federal alternative minimum tax ("AMT"), some income earned by Fund
investments may be subject to such taxes.

Tax-Free Funds are generally considered non-diversified according to the
Investment Company Act of 1940, as amended (the "1940 Act"). The majority of
the issuers of the securities in a Fund's portfolio are located within one
state. Non-diversified, geographically concentrated funds are riskier than
similar funds that are diversified or spread their investments over several
geographic areas. Default by a single security in the portfolio may have a
greater negative effect than a similar default in a diversified portfolio.
The National Limited Term Tax-Free Fund and the National Tax-Free Fund are
considered to be diversified. All other Funds in this Prospectus are
considered to be non-diversified.

6 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
FUND SPECIFIC RISKS
--------------------------------------------------------------------------------

Since we invest heavily in Arizona municipal
securities, events in Arizona are likely to affect
the Fund's investments. The Arizona economy is
based on services, manufacturing, mining, tourism
and the military. Adverse conditions affecting
these sectors could have a disproportionate impact
on Arizona municipal securities. Under its
Constitution, Arizona is not permitted to issue
general obligation bonds secured by the State's
full faith and credit. However, agencies and
Arizona Tax-Free Fund instrumentalities of Arizona are authorized to
issue bonds secured by revenues, and local
governments are also authorized to incur
indebtedness. The Fund relies on the availability
of such securities for investment. We may invest
25% or more of our assets in Arizona municipal
securities that are related in such a way that
political, economic or business developments
affecting one obligation would affect others. For
example, we may own different obligations that pay
interest based on the revenue of similar projects.

Since we invest heavily in California municipal
securities, events in California are likely to
affect the Fund's investments. For example,
California exports a significant portion of its
economic production to various pacific rim
California Limited Term countries. Events impacting the Asian economy may
Tax-Free Fund and California have a disproportionate impact on the California
Tax-Free Fund economy and California municipal securities. In
addition, we may invest 25% or more of our assets
in California municipal securities that are
related in such a way that political, economic or
business developments affecting one obligation
would affect the others. For example, we may own
different obligations that pay interest based on
the revenue of similar projects.

Since we invest heavily in Colorado municipal
securities, events in Colorado are likely to
affect the Fund's investments. The Colorado
economy is based on services, communications,
transportation, tourism, and manufacturing.
Certain obligations of Colorado State and local
public entities are subject to particular economic
risks, including, but not limited to, the
Colorado Tax-Free Fund vulnerabilities of resort economies which depend
on seasonal tourism, the possibility of downturns
in sales tax and other revenues, and fluctuations
in the real estate market. In addition, we may
invest 25% or more of our assets in Colorado
municipal securities that are related in such a
way that political, economic or business
developments affecting one obligation would affect
others. For example, we may own different
obligations that pay interest based on the revenue
of similar projects.

Tax-Free Funds Prospectus 7
<PAGE>

Summary of Important Risks
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
FUND SPECIFIC RISKS
--------------------------------------------------------------------------------

Since we invest heavily in Minnesota municipal
securities, events in Minnesota are likely to
affect each Fund's investments. For example, the
state's economy relies significantly on its
agriculture and forestry natural resources.
Adverse conditions affecting these sectors could
have a disproportionate impact on Minnesota
municipal securities. In addition, we may invest
25% or more of each Fund's total assets in
Minnesota municipal securities that are
Minnesota Intermediate related in such a way that political, economic or
Tax-Free Fund and business developments affecting one obligation
Minnesota Tax-Free Fund would affect the others. For example, we may own
different obligations that pay interest based on
the revenue of similar projects.

Each Fund may invest up to 25% of its total assets
in non- investment grade municipal securities,
commonly known as "high yield/high risk
securities" or "junk bonds," which are considered
a more speculative investment than investment
grade municipal securities.

Each Fund may invest 25% or more of its total
National Limited Term assets in municipal securities that are related
Tax-Free Fund and in such a way that political, economic or business
National Tax-Free Fund developments affecting one obligation would affect
the others. For example, we may own different
obligations that pay interest based on the revenue
of similar projects.

Since we invest heavily in Nebraska municipal
securities, events in Nebraska are likely to
affect the Fund's investments. The Nebraska
economy is primarily based on agriculture and
agricultural processing, but has become
increasingly diversified with relatively steady
growth in the manufacturing, services and finance,
insurance and real estate industries. While these
recent trends have helped diversify the Nebraska
Nebraska Tax-Free Fund economy, it may still be significantly impacted by
changes in agricultural conditions such as the
weather, fluctuations in commodity markets, world
agricultural production, import and export and
decreases in federal agriculture subsidy and
support programs.

Since we invest heavily in Oregon municipal
securities, events in Oregon are likely to affect
the fund's investments. Oregon does not have a
sales tax, and state tax revenues, derived
principally from corporate and personal income
taxes, are particularly sensitive to economic
recessions. In addition, we may invest 25% or more
Oregon Tax-Free Fund of our assets in Oregon municipal securities that
are related in such a way that political, economic
or business developments affecting one obligation
would affect others. For example, we may own
different obligations that pay interest based on
the revenue of similar projects.

8 Tax-Free Funds Prospectus

<PAGE>

This page intentionally left blank
--------------------------------------------------------------------------------

<PAGE>

Performance History
--------------------------------------------------------------------------------

The information on the following pages shows you how each Fund has
performed and illustrates the variability of a Fund's returns over time.
Each Fund's average annual returns from inception, and for one-, five- and
ten-year periods (as applicable) are compared to the performance of an
appropriate broad-based index.

Please remember that past performance is no guarantee of future results.

Arizona Tax-Free Fund Institutional Class Calendar Year Returns (%)*

[GRAPH]

Best Qtr.: Q1 `95 o 5.51% Worst Qtr.: Q1 `94 o -3.71%

*The Fund's year-to-date performance through September 30, 2000 was 8.62%.

Average annual total return (%)
Since
for the period ended 12/31/99 1 year 5 years Inception

Institutional Class (Incept. 10/1/95)/1/ -6.51 4.79 4.91
LB Muni Index/2/ -2.09 6.91 6.30

1. Performance shown for periods prior to the inception of the
Institutional Class shares reflects the performance of the Class A
Shares, which incepted March 2, 1992.
2. Lehman Brothers Municipal Bond Index.

10 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

California Limited Term Tax-Free Fund Institutional Class Calendar Year
Returns (%)*

[GRAPH]

Best Qtr.: Q1 `95 o 3.41% Worst Qtr.: Q1 `94 o -1.85%

*The Fund's year-to-date performance through September 30, 2000 was 4.73%.

Average annual total return (%)
Since
for the period ended 12/31/99 1 year 5 years Inception

Institutional Class (Incept. 9/6/96)/1/ 0.14 4.72 4.25
LB 3 year Muni Index/2/ 1.96 5.17 4.70

1. Performance shown for periods prior to the inception of the
Institutional Class shares reflects the performance of the Class A
Shares, which incepted November 18, 1992.
2. Lehman Brothers 3 year Municipal Bond Index.

Tax-Free Funds Prospectus 11
<PAGE>

Performance History
--------------------------------------------------------------------------------

California Tax-Free Fund Institutional Class Calendar Year Returns (%)*

[GRAPH]

Best Qtr.: Q1 `95 o 6.19% Worst Qtr.: Q1 `94 o -4.06%

*The Fund's year-to-date performance through September 30, 2000 was 8.87%.

Average annual total return (%)

for the period ended 12/31/99 1 year 5 years 10 years

Institutional Class (Incept. 12/15/97)/1/ -3.55 6.34 6.66
LB Muni Index/2/ -2.06 6.91 6.89

1. Performance shown for periods prior to the inception of the
Institutional Class shares reflects the performance of the Class A
shares, which incepted October 6, 1988.
2. Lehman Brothers Municipal Bond Index.

12 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

Colorado Tax-Free Fund Institutional Class Calendar Year Returns (%)*

[GRAPH]

Best Qtr.: Q1 `95 o 5.75% Worst Qtr.: Q1 `94 o -5.39%

*The Fund's year-to-date performance through September 30, 2000 was 7.44%.

Average annual total return (%)
Since
for the period ended 12/31/99 1 year 5 years Inception

Institutional Class (Incept. 8/23/93)/1/ -5.39 6.33 4.81
LB Muni Index/2/ -2.06 6.91 5.38

1. Performance shown for periods prior to the inception of the
Institutional Class shares reflects the performance of the Class A
Shares, which incepted June 1, 1993.
2. Lehman Brothers Municipal Bond Index.

Tax-Free Funds Prospectus 13
<PAGE>

Performance History
--------------------------------------------------------------------------------

Minnesota Intermediate Tax-Free Fund Institutional Class Calendar Year
Returns (%)*

[GRAPH]

Best Qtr.: Q1 `95 o 5.19% Worst Qtr.: Q1 `94 o -3.15%

*The Fund's year-to-date performance through September 30, 2000 was 5.08%.

Average annual total return (%)

for the period ended 12/31/99 1 year 5 years 10 years

Institutional Class (Incept. 10/1/97)/1/ -1.72 5.61 5.63
LB 10 year Muni Index/2/ -1.25 7.12 7.10

1. Performance shown for periods prior to October 1, 1997 reflects the
performance of the predecessor common trust fund, adjusted to reflect
the fees and expenses of the Institutional Class. The common trust
fund was not a registered mutual fund and was not subject to certain
investment limitations and other restrictions which, if applicable,
may have adversely affected performance. The common trust fund's
inception was September 30, 1976.
2. Lehman Brothers 10 year Municipal Bond Index.

14 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

Minnesota Tax-Free Fund Institutional Class Calendar Year Returns (%)*

[GRAPH]

Best Qtr.: Q1 `95 o 6.73% Worst Qtr.: Q1 `94 o -5.48%

*The Fund's year-to-date performance through September 30, 2000 was 7.39%.

Average annual total return (%)

for the period ended 12/31/99 1 year 5 years 10 years

Institutional Class (Incept. 8/2/93)/1/ -5.93 5.80 5.59
LB Muni Index/2/ -2.06 6.91 6.89

1. Performance shown for periods prior to the inception of the
Institutional Class shares reflects the performance of a predecessor
class of shares that was substantially similar to the Institutional
Class shares, whose inception was January 12, 1988.
2. Lehman Brothers Municipal Bond Index.

Tax-Free Funds Prospectus 15
<PAGE>

Performance History
--------------------------------------------------------------------------------

National Limited Term Tax-Free Fund Institutional Class Calendar Year
Returns (%)*

[GRAPH]

Best Qtr.: Q3 `98 o 2.27% Worst Qtr.: Q2 `99 o -1.15%

*The Fund's year-to-date performance through September 30, 2000 was 4.02%.

Average annual total return (%)
Since
for the period ended 12/31/99 1 year Inception

Institutional Class (Incept. 10/1/96) 0.08 5.25
LB 3 year Muni Index/1/ 1.96 4.41

1. Lehman Brothers 3 year Municipal Bond Index.

16 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

National Tax-Free Fund Institutional Class Calendar Year Returns (%)*

[GRAPH]

Best Qtr.: Q1 `95 o 5.85% Worst Qtr.: Q1 `94 o -5.59%

*The Fund's year-to-date performance through September 30, 2000 was 7.43%.

Average annual total return (%)

for the period ended 12/31/99 1 year 5 years 10 years

Institutional Class (Incept. 8/2/93)/1/ -5.44 6.32 5.82
LB Muni Index/2/ -2.06 6.91 6.89

1. Performance shown for periods prior to the inception of the
Institutional Class shares reflects the performance of a predecessor
class of shares that was substantially similar to the Institutional
Class shares, whose inception was August 1, 1989.
2. Lehman Brothers Municipal Bond Index.

Tax-Free Funds Prospectus 17
<PAGE>

Performance History
--------------------------------------------------------------------------------
The Wells Fargo Nebraska Tax-Free Fund was organized as the successor fund
to the Great Plains Tax-Free Bond Fund, which was reorganized into the
Wells Fargo Fund effective September 11, 2000. The historical information
shown for the Nebraska Tax-Free Fund below and throughout this Prospectus
reflects the historical information for the Great Plains Tax-Free Bond
Fund.

Nebraska Tax-Free Fund Institutional Class Calendar Year Returns (%)*

[GRAPH]

Best Qtr.: Q1 `95 o 4.57% Worst Qtr.: Q1 `94 o -3.44%

*The Fund's year-to-date performance through September 30, 2000 was 5.19%.

Average annual total return (%)

for the period ending 12/31/99 1 year 5 years 10 years
Institutional Class (Incept. 9/29/97)/1/ -1.33 4.93 4.97
Lehman Brothers Municipal
Index/7-Year -0.14 6.35 N/A
Lehman Brothers Municipal
Index/10-Year -1.25 7.12 7.10
Lipper Intermediate Municipal
Debt Average -1.37 5.59 5.90

/1/ The Fund operated as a common trust fund for the period from 8/31/89
to the inception date shown, and performance data reflects the
performance of the common trust fund. The common trust fund was not
registered under the Investment Company Act of 1940 ("the Act") and
was not subject to certain investment limitations, diversification
requirements, and other restrictions imposed by the Act and the
Internal Revenue Code, which, if applicable, may have adversely
affected the performance results.
Performance shown for all periods includes the maximum sales charge
applicable to the shares of the predecessor Great Plains Tax-Free Bond
Fund. The Nebraska Tax-Free Fund Institutional Class shares do not
impose sales charges.

18 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

Oregon Tax-Free Fund Institutional Class Calendar Year Returns (%)*

[GRAPH]

Best Qtr.: Q1 `95 o 6.90% Worst Qtr.: Q1 `94 o -5.31%

*The Fund's year-to-date performance through September 30, 2000 was 6.75%.

Average annual total return (%)

for the period ended 12/31/99 1 year 5 years 10 years

Institutional Class (Incept. 10/1/95)/1/ -5.87 5.30 5.59

LB Muni Index/2/ -2.06 6.91 6.89

1. Performance shown for periods prior to the inception of the
Institutional Class shares reflects the performance of the Class A
shares, which incepted June 1, 1988.
2. Lehman Brothers Municipal Bond Index.

Tax-Free Funds Prospectus 19
<PAGE>

Tax-Free Funds
--------------------------------------------------------------------------------

These tables are intended to help you understand the various costs and expenses
you will pay as a shareholder Fund. These tables do not reflect charges that may
be imposed in connection with an account through which you hold Fund shares. A
broker/dealer or financial institution maintaining an account through which you
hold Fund shares may charge separate account, service, or transaction fees on
the purchase or sale of Fund shares that would be in addition to the fees and
expenses shown here.

--------------------------------------------------------------------------------
SHAREHOLDER FEES
--------------------------------------------------------------------------------

All
Funds
--------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) None

Maximum deferred sales charge (load) (as a
percentage of the lower of the Net Asset Value
("NAV") at purchase or the NAV at redemption) None
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
California
Arizona Limited Term California Colorado
Tax-Free Fund Tax-Free Fund Tax-Free Fund Tax-Free Fund
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees 0.40% 0.40% 0.40% 0.40%
Distribution (12b-1) Fees 0.00% 0.00% 0.00% 0.00%
Other Expenses/1/ 0.37% 0.52% 0.25% 0.40%
---------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.77% 0.92% 0.65% 0.80%
---------------------------------------------------------------------------------------------------------------------------------
Fee Waivers 0.17% 0.32% 0.05% 0.20%
---------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES/2/ 0.60% 0.60% 0.60% 0.60%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

/1/ Other expenses are based on estimated amounts for the current fiscal year.
/2/ The advisor has committed through October 31, 2001 to waive fees and/or
reimburse expenses to the extent necessary to maintain the Fund's net
operating expense ratio shown.

20 Tax-Free Funds Prospectus
<PAGE>

Summary of Expenses
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
Minnesota National
Intermediate Minnesota Limited Term National Nebraska Oregon
Tax-Free Fund Tax-Free Fund Tax-Free Fund Tax-Free Fund Tax-Free Fund Tax-Free Fund
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
0.40% 0.40% 0.40% 0.40% 0.50% 0.40%
0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
0.28% 0.46% 0.36% 0.28% 0.54% 0.50%
----------------------------------------------------------------------------------------------------------
0.68% 0.86% 0.76% 0.68% 1.04% 0.90%
----------------------------------------------------------------------------------------------------------
0.08% 0.26% 0.16% 0.08% 0.21% 0.30%
----------------------------------------------------------------------------------------------------------
0.60% 0.60% 0.60% 0.60% 0.83% 0.60%
----------------------------------------------------------------------------------------------------------
</TABLE>

Tax-Free Funds Prospectus 21
<PAGE>

Tax-Free Funds Summary of Expenses
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
EXAMPLE OF EXPENSES
--------------------------------------------------------------------------------

These examples are intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The examples
assume a fixed rate of return and that fund operating expenses remain the
same. Your actual costs may be higher or lower than those shown.

You would pay the following expenses on a $10,000 investment assuming a 5%
annual return and that you redeem your shares at the end of each period:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
California Minnesota
Arizona Limited Term California Colorado Intermediate
Tax-Free Fund Tax-Free Fund Tax-Free Fund Tax-Free Fund Tax-Free Fund
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 YEAR $ 61 $ 61 $ 61 $ 61 $ 61
3 YEARS $ 229 $ 261 $ 203 $ 235 $ 210
5 YEARS $ 411 $ 478 $ 357 $ 425 $ 371
10 YEARS $ 938 $1,102 $ 806 $ 971 $ 839
------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------
National
Minnesota Limited Term National Nebraska Oregon
Tax-Free Fund Tax-Free Fund Tax-Free Fund Tax-Free Fund Tax-Free Fund
------------------------------------------------------------------------------------------------------------
1 YEAR $ 61 $ 61 $ 61 $ 85 $ 61
3 YEARS $ 248 $ 227 $ 210 $ 310 $ 257
5 YEARS $ 451 $ 407 $ 371 $ 554 $ 469
10 YEARS $1,037 $ 927 $ 839 $1,252 $1,080
------------------------------------------------------------------------------------------------------------
</TABLE>

22 Tax-Free Funds Prospectus
<PAGE>

Key Information
--------------------------------------------------------------------------------

Important information you should look for as you decide to invest in a Fund:

The summary information on the previous pages is designed to provide you with an
overview of each Fund. The sections that follow provide more detailed
information about the investments and management of each Fund.
--------------------------------------------------------------------------------
Investment Objective and Investment Strategies

The investment objective of each Fund in this Prospectus is non-fundamental,
that is, it can be changed by a vote of the Board of Trustees alone. The
objectives and strategies descriptions for each Fund tell you:

. what the Fund is trying to achieve;

. how we intend to invest your money; and

. what makes a Fund different from the other Funds offered in this
Prospectus.

--------------------------------------------------------------------------------
Permitted Investments

A summary of the Fund's key permitted investments and practices.

--------------------------------------------------------------------------------
Important Risk Factors

Describes the key risk factors for the Fund, and includes risks described in the
"Summary of Important Risks" and "General Investment Risk" sections.

Words appearing in italicized print and highlighted in color are defined in the
Glossary.

Tax-Free Funds Prospectus 23
<PAGE>

Arizona Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Manager: Stephen Galiani; Arthur C. Evans

--------------------------------------------------------------------------------
Investment Objective

The Arizona Tax-Free Fund seeks current income exempt from federal income tax
and Arizona personal income tax.

Investment Strategies

We actively manage a portfolio of municipal securities and we buy municipal
securities of any maturity length. The portfolio's dollar-weighted average
maturity will vary depending on market conditions, economic conditions including
interest rates, the differences in yields between obligations of different
maturity lengths and other factors. Generally speaking, we will attempt to
capture greater total return by increasing maturity when we expect interest
rates to decline, and attempt to preserve capital by shortening maturity when
interest rates are expected to increase.

--------------------------------------------------------------------------------
Permitted Investments

Under normal market conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest exempt
from federal income tax;

. at least 65% of total assets in municipal securities that pay interest
exempt from Arizona personal income tax;

. up to 20% of net assets in securities with income subject to federal income
taxes, including the federal AMT; and

We may temporarily hold assets in cash or in money market instruments, including
U.S. Government obligations, shares of other mutual funds and repurchase
agreements, or make other short-term investments either to maintain liquidity or
for short-term defensive purposes when we believe it is in the best interests of
shareholders to do so. During such periods, the Fund may not achieve its
investment objective of current income exempt from federal income tax and
Arizona personal income tax.

24 Tax-Free Funds Prospectus
<PAGE>

Important Risk Factors

Since we invest heavily in Arizona municipal securities, events in Arizona are
likely to affect the Fund's investments. The Arizona economy is based on
services, manufacturing, mining, tourism and the military. Adverse conditions
affecting these sectors could have a disproportionate impact on Arizona
municipal securities. Under its Constitution, Arizona is not permitted to issue
general obligation bonds secured by the State's full faith and credit. However,
agencies and instrumentalities of Arizona are authorized to issue bonds secured
by revenues, and local governments are also authorized to incur indebtedness.
The Fund relies on the availability of such securities for investment. We may
invest 25% or more of our assets in Arizona municipal securities that are
related in such a way that political, economic or business developments
affecting one obligation would affect others. For example, we may own different
obligations that pay interest based on the revenue of similar projects.

You should consider the "Summary of Important Risks" section on page 6; the
"General Investment Risks" section beginning on page 62; and the specific risks
listed here. They are all important to your investment choice.

Tax-Free Funds Prospectus 25
<PAGE>

Arizona Tax-Free Fund
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SHARES--
COMMENCED ON OCTOBER 1, 1995

---------------------------------------------------------------------------
June 30, June 30,
For the period ended: 2000 1999
---------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 10.23 $ 10.79

Income from investment operations:

Net investment income (loss) 0.49 0.47
Net realized and unrealized gain (loss)
on investments (0.45) (0.37)

Total from investment operations 0.04 0.10

Less distributions:

Dividends from net investment income (0.49) (0.47)
Distributions from net realized gain (0.02) (0.19)

Total from distributions (0.51) (0.66)

Net asset value, end of period $ 9.76 $ 10.23

Total return (not annualized)/3/ 0.57% 0.76%

Ratios/supplemental data:
Net assets, end of period (000s) $ 9,473 $ 9,556

Ratios to average net assets (annualized):
Ratio of expenses to average net assets 0.59% 0.72%
Ratio of net investment income (loss) to
average net assets 5.04% 4.33%

Portfolio turnover 32% 56%

Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses (annualized)/4/ 0.94% 1.46%
</TABLE>

/1/ The Fund changed its fiscal year-end from March 31 to June 30.
/2/ The Fund changed its fiscal year-end from September 30 to March 31.
/3/ Total returns would have been lower had certain expenses not been
waived or reimbursed during the period shown.
/4/ During each period, various fees and/or expenses were waived and/or
reimbursed. The ratio of gross expenses to average net assets reflects
the expense ratio in the absence of any waivers and/or reimbursements.

26 Tax-Free Funds Prospectus
<PAGE>

Financial Highlights
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
June 30, March 31, March 31, Sept. 30,
1998 1998 1997 1996
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$10.78 $10.44 $10.44 $10.71

0.12 0.49 0.25 0.49

0.01 0.54 0.00 (0.10)

0.13 1.03 0.25 0.39

(0.12) (0.49) (0.25) (0.49)
0.00 (0.20) 0.00 (0.17)

(0.12) (0.69) (0.25) (0.66)

$10.79 $10.78 $10.44 $10.44

1.19% 9.99% 2.38% 3.74%

$10,995 $12,029 $14,349 $15,577

0.68% 0.44% 0.40% 0.48%

4.36% 4.52% 4.73% 4.63%

14% 127% 77% 42%

1.55% 1.55% 1.50% 1.20%
</TABLE>

Tax-Free Funds Prospectus 27
<PAGE>

California Limited Term Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Manager: Mary Gail Walton, CFA

--------------------------------------------------------------------------------

Investment Objective

The California Limited Term Tax-Free Fund seeks a high level of current income
exempt from federal income tax and California personal income tax, while
preserving capital.

Investment Strategies

--------------------------------------------------------------------------------

Permitted Investments

Under normal market conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest exempt
from federal income tax;

. at least 65% of total assets in municipal securities that pay interest exempt
from California personal income tax;

. up to 20% of net assets in securities with income subject to federal income
taxes,including the federal AMT; and

. in municipal securities rated in the four highest credit categories by
NRROs,and in unrated securities deemed by the Advisor to be of comparable
quality.

We may temporarily hold assets in cash or in money market instruments, including
U.S. Government obligations, shares of other mutual funds and repurchase
agreements, or make other short-term investments to maintain liquidity or for
short-term defensive purposes when we believe it is in the best interests of
shareholders to do so. During such periods, the Fund may not achieve its
investment objective of a high level of current income exempt from federal
income tax and California personal income tax.

--------------------------------------------------------------------------------
Important Risk Factors

28 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

Tax-Free Funds Prospectus 29
<PAGE>

California Limited Term Tax-Free Fund
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING
--------------------------------------------------------------------------------

INSTITUTIONAL CLASS SHARES--
COMMENCED ON SEPTEMBER 6, 1996
----------------------------------------------------
June 30, June 30,
For the period ended: 2000 1999
----------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $10.07 $10.27

Income from investment operations:
Net investment income (loss) 0.41 0.39
Net realized and unrealized gain (loss)
on investments (0.04) (0.08)

Total from investment operations 0.37 0.31

Less distributions:
Dividends from net investment income (0.41) (0.39)
Distributions from net realized gain (0.05) (0.12)

Total from distributions (0.46) (0.51)

Net asset value, end of period $9.98 $ 10.07

Total return (not annualized)/3/ 3.79% 2.96%

Ratios/supplemental data:
Net assets, end of period (000s) $4,474 $7,633

Ratios to average net assets (annualized):
Ratio of expenses to average net assets 0.63% 0.70%
Ratio of net investment income (loss) to
average net assets 4.07% 3.75%

Portfolio turnover 60% 68%

Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses (annualized)/4/ 1.07% 1.30%
</TABLE>

/1/ The Fund changed its fiscal year-end from March 31 to June 30.
/2/ The Fund changed its fiscal year-end from September 30 to March 31.
/3/ Total returns would have been lower had certain expenses not been waived or
reimbursed during the period shown.
/4/ During each period, various fees and/or expenses were waived and/or
reimbursed. The ratio of gross expenses to average net assets reflects the
expense ratio in the absence of any waivers and/or reimbursements.

30 Tax-Free Funds Prospectus
<PAGE>

Financial Highlights
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
June 30, March 31, March 31, Sept. 30,
1998 1998 1997 1996
--------------------------------------------------------------------------------
$10.27 $10.11 $10.10 $10.06

0.10 0.39 0.19 0.02

0.00 0.19 0.01 0.04

0.10 0.58 0.20 0.06

(0.10) (0.39) (0.19) (0.02)

0.00 (0.03) 0.00 0.00

(0.10) (0.42) (0.19) (0.02)

$10.27 $10.27 $10.11 $10.10

0.94% 5.91% 2.00% 0.60%

$7,559 $7,069 $7,061 $10,066

0.70% 0.62% 0.60% 0.55%

3.77% 3.84% 3.73% 3.06%

2% 88% 14% 48%

1.40% 1.17% 1.05% 0.92%

Tax-Free Funds Prospectus 31
<PAGE>

California Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Manager: Stephen Galiani

--------------------------------------------------------------------------------

Investment Objective

The California Tax-Free Fund seeks to provide investors with a high level of
current income exempt from federal income tax and California personal income
tax, while preserving capital, by investing in intermediate- to long-term
investment grade municipal securities.

--------------------------------------------------------------------------------

Investment Strategies

We actively manage a portfolio of investment grade municipal securities. We buy
municipal securities of any maturity length, but we invest substantially all of
our assets in securities with remaining maturities of 2 to 10 years
(intermediate term) or 10 years or longer (long term). We have some flexibility
in setting the portfolio's dollar-weighted average maturity. Generally speaking,
we will attempt to capture greater total return by increasing dollar-weighted
average maturity when we expect interest rates to decline, and attempt to
preserve capital by shortening maturity when interest rates are expected to
increase.

--------------------------------------------------------------------------------

Permitted Investments

Under normal market conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest exempt
from federal income tax;

. at least 65% of total assets in municipal securities that pay interest
exempt from California personal income tax;

. up to 20% of net assets in securities with income subject to federal income
taxes, including the federal AMT; and

. in municipal securities rated in the four highest credit categories by
NRROs, and in unrated securities deemed by the Advisor to be of comparable
quality.

We may temporarily hold assets in cash or in money market instruments, including
U.S. Government obligations, shares of other mutual funds and repurchase
agreements, or make other short-term investments either to maintain liquidity or
for short-term defensive purposes when we believe it is in the best interests of
shareholders to do so. During such periods, the Fund may not achieve its
investment objective of a high level of current income exempt from federal
income tax and California personal income tax.

--------------------------------------------------------------------------------

Important Risk Factors

The Fund is considered non-diversified according to the 1940 Act. The majority
of the issuers of the securities in the portfolio are located within California.
Non-diversified, geographically concentrated funds are riskier than similar
funds that are diversified or spread their investments over several geographic
areas. Default by a single security in the portfolio may have a greater negative
effect than a similar default in a diversified portfolio.

32 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

Since we invest heavily in California municipal securities, events in California
are likely to affect the Fund's investments. For example, California exports a
significant portion of its economic production to various Pacific rim countries.
Events impacting the Asian economy may have a disproportionate impact on the
California economy and California municipal securities. In addition, we may
invest 25% or more of our assets in California municipal securities that are
related in such a way that political, economic or business developments
affecting one obligation would affect the others. For example, we may own
different obligations that pay interest based on the revenue of similar
projects.

Tax-Free Funds Prospectus 33
<PAGE>

California Tax-Free Fund Financial Highlights
--------------------------------------------------------------------------------

-------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING
-------------------------------------------------------------------------------

INSTITUTIONAL CLASS SHARES--
COMMENCED ON DECEMBER 15, 1997
-------------------------------------------------------------------------
June 30, June 30, June 30, Dec. 31,
For the period ended: 2000 1999 1998 1997
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.03 $11.40 $11.35 $11.32

Income from investment operations:
Net investment income (loss) 0.54 0.52 0.26 0.03
Net realized and unrealized gain (loss)
on investments (0.21) (0.22) 0.05 0.03

Total from investment operations 0.33 0.30 0.31 0.06

Less distributions:
Dividends from net investment income (0.54) (0.52) (0.26) (0.03)
Distributions from net realized gain (0.03) (0.15) 0.00 0.00

Total from distributions (0.57) (0.67) (0.26) (0.03)

Net asset value, end of period $10.79 $11.03 $11.40 $11.35

Total return (not annualized)/2/ 3.16% 2.46% 2.80% 0.49%

Ratios/supplemental data:
Net assets, end of period (000s) $47,263 $73,625 $82,577 $84,113

Ratios to average net assets (annualized):
Ratio of expenses to average net assets 0.63% 0.72% 0.69% 0.63%
Ratio of net investment income (loss) to
average net assets 5.02% 4.50% 4.69% 4.79%

Portfolio turnover 35% 17% 15% 12%

Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses (annualized)/3/ 0.80% 1.01% 0.98% 0.92%
</TABLE>

/1/ The Fund changed its fiscal year-end from December 31 to June 30.
/2/ Total returns would have been lower had certain expenses not been waived or
reimbursed during the period shown.
/3/ During each period, various fees and/or expenses were waived and/or
reimbursed. The ratio of gross expenses to average net assets reflects the
expense ratio in the absence of any waivers and/or reimbursements.

34 Tax-Free Funds Prospectus
<PAGE>

This page intentionally left blank
--------------------------------------------------------------------------------
<PAGE>

Colorado Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Managers: Arthur C. Evans; Stephen Galiani

--------------------------------------------------------------------------------

Investment Objective

The Colorado Tax-Free Fund seeks a high level of current income exempt from
federal income tax and Colorado personal income tax consistent with the
preservation of capital.

--------------------------------------------------------------------------------

Investment Strategies

We normally invest substantially all of the Fund's assets in investment grade
municipal securities issued by the state of Colorado and its subdivisions,
authorities, instrumentalities, and corporations, and by the territories and
possessions of the United States.

We expect that the Fund's average portfolio maturity normally will be greater
than 10 years. The Fund's average portfolio maturity may reach or exceed 20
years in the future. Depending on market conditions, the Fund's dollar-weighted
average maturity could be higher or lower. The Fund emphasizes investments in
municipal securities paying interest income rather than maintaining the Fund's
stability of NAV.

--------------------------------------------------------------------------------

Permitted Investments

Under normal market conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest exempt
from federal income tax and Colorado personal income tax;

. up to 25% of total assets in securities of related issuers or in securities
of any one issuer, except the U.S. Government;

. invest up to 20% of net assets in securities with income subject to federal
income taxes, including the federal AMT; and

. in municipal securities rated in the four highest credit categories by
NRROs, and in unrated securities deemed by the Advisor to be of comparable
quality.

We may temporarily hold assets in cash or in money market instruments, including
U.S. Government obligations, shares of other mutual funds and repurchase
agreements, or make other short-term investments either to maintain liquidity or
for short-term defensive purposes when we believe it is in the best interests of
shareholders to do so. During these periods, the Fund may not achieve its
objective of a high level of current income exempt from federal income tax and
Colorado state income taxes consistent with the preservation of capital.

--------------------------------------------------------------------------------

Important Risk Factors

The Fund is considered non-diversified according to the 1940 Act. The majority
of the issuers of the securities in the portfolio are located within Colorado.
Non-diversified, geographically concentrated funds are riskier than similar
funds that are diversified or spread their investments over several geographical
areas. Default by a single security in the portfolio may have a greater negative
effect than a similar default in a diversified portfolio.

36 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

Tax-Free Funds Prospectus 37
<PAGE>

Colorado Tax-Free Fund
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SHARES--
COMMENCED ON AUGUST 23, 1993
---------------------------------------------------
June 30, June 30,
2000 1999/3/
For the period ended:
---------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $10.30 $10.55

Income from investment operations:
Net investment income (loss) 0.54 0.04
Net realized and unrealized gain (loss)
on investments (0.45) (0.25)

Total from investment operations 0.09 (0.21)

Less distributions:
Dividends from net investment income (0.54) (0.04)
Distributions from net realized gains (0.01) 0.00

Total from distributions (0.55) (0.04)

Net asset value, end of period $9.84 $10.30

Total return (not annualized)/1/ 0.97% (1.97%)

Ratios/supplemental data:
Net assets, end of period (000s) $44,161 $49,101

Ratios to average net assets (annualized):
Ratio of expenses to average net assets 0.60% 0.60%
Ratio of net investment income (loss) to average
net assets 5.42% 4.93%

Portfolio turnover 106% 11%

Ratio of expenses to average net assets prior to
waived fees and reimbursed expenses (annualized)/2/ 0.86% 1.08%
</TABLE>

/1/ Total returns would have been lower had certain expenses not been waived or
reimbursed during the period shown.
/2/ During each period, various fees and/or expenses were waived and/or
reimbursed. The ratio of gross expenses to average net assets reflects the
expense ratio in the absence of any waivers and/or reimbursements.
/3/ The Fund changed its fiscal year-end from May 31 to June 30.

38 Tax-Free Funds Prospectus
<PAGE>

Financial Highlights
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
May 31, May 31, May 31, May 31,
1999 1998 1997 1996
--------------------------------------------------------------------------------
<S> <C> <C> <C>
$10.69 $10.22 $9.89 $9.90

0.51 0.53 0.54 0.53

(0.10) 0.47 0.33 (0.01)

0.41 1.00 0.87 0.52

(0.51) (0.53) (0.54) (0.53)
(0.04) 0.00 0.00 0.00

(0.55) (0.53) (0.54) (0.53)

$10.55 $10.69 $10.22 $9.89

3.79% 9.97% 9.00% 5.35%

$48,926 $32,342 $25,917 $24,074

0.60% 0.60% 0.45% 0.30%

4.71% 5.01% 5.35% 5.30%

77% 70% 129% 171%

0.99% 1.01% 1.13% 1.13%
</TABLE>

Tax-Free Funds Prospectus 39
<PAGE>

Minnesota Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Manager: Patricia Hovanetz, CFA

---------------------------------------------------------------------------
Investment Objective

The Minnesota Tax-Free Fund seeks a high level of current income exempt from
federal income tax and Minnesota income tax, without assuming undue risk.

---------------------------------------------------------------------------

Investment Strategies

We normally invest substantially all of the Fund's assets in investment grade
municipal securities issued by the state of Minnesota and its subdivisions,
authorities, instrumentalities, and corporations, and by the territories and
possessions of the United States. We invest at least 80% of the Fund's net
assets in securities with interest exempt from both federal income taxes and the
federal AMT.

There are no restrictions on Minnesota Tax-Free Fund's average portfolio
maturity. We expect that the Fund's dollar-weighted average maturity normally
will be greater than 10 years. The Fund's average portfolio maturity may reach
or exceed 20 years in the future. Depending on market conditions, the Fund's
average dollar-weighted average maturity could be higher or lower.

We emphasize investments in municipal securities paying interest income rather
than maintaining the Fund's stability of NAV.

--------------------------------------------------------------------------------

Permitted Investments

Under normal conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest exempt
from federal income tax and Minnesota income tax;

. up to 25% of total assets in securities of related issuers or in securities
of any one issuer, except the U.S. Government;

. up to 20% of net assets in securities with income subject to federal
personal income taxes, including the federal AMT; and

. up to 25% of total assets in non-investment grade municipal securities.
During such periods, the Fund may not achieve its investment objective of a
high level of current income without assuming undue risk.

We may temporarily hold assets in cash or in money market instruments, including
U.S. Government obligations, shares of other mutual funds and repurchase
agreements, or make other short-term investments either to maintain liquidity or
for short-term defensive purposes when we believe it is in the best interests of
shareholders to do so. During these periods, the Fund may not achieve its
objective of a high level of current income exempt from federal income tax and
Minnesota personal income tax without assuming undue risk.

40 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------
Important Risk Factors

Since we invest heavily in Minnesota municipal securities, events in Minnesota
are likely to affect the Fund's investments. The Minnesota economy relies
significantly on its agriculture and forestry. Adverse conditions affecting
these sectors could have a disproportionate impact on Minnesota municipal
securities. In addition, we may invest 25% or more of our assets in Minnesota
municipal securities that are related in such a way that political, economic or
business developments affecting one obligation would affect the others. For
example, we may own different obligations that pay interest based on the revenue
of similar projects.

Tax-Free Funds Prospectus 41
<PAGE>

Minnesota Intermediate Tax-Free Fund Financial Highlights
-------------------------------------------------------------------------------

--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SHARES--
COMMENCED ON OCTOBER 1, 1997
-------------------------------------------------------------
June 30, June 30, May 31, May 31,
For the period ended: 2000 1999/3/ 1999 1998
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.75 $9.91 $10.03 $10.00

Income from investment operations:
Net investment income (loss) 0.48 0.04 0.49 0.33
Net realized and unrealized gain (loss)
on investments (0.28) (0.16) (0.09) 0.03

Total from investment operations 0.20 (0.12) 0.40 0.36

Less distributions:
Dividends from net investment income (0.48) (0.04) (0.49) (0.33)
Distributions from net realized gains 0.00 0.00 (0.03) 0.00

Total from distributions (0.48) (0.04) (0.52) (0.33)

Net asset value, end of period $9.47 $9.75 $9.91 $10.03

Total return (not annualized)/1/ 2.17% (1.21%) 3.95% 3.61%

Ratios/supplemental data:
Net assets, end of period (000s) $184,279 $219,258 $222,953 $209,685

Ratios to average net assets (annualized):
Ratio of expenses to average net assets 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income (loss)
to average net assets 5.05% 4.94% 4.84% 5.02%

Portfolio turnover 29% 1% 20% 15%

Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses (annualized)/2/ 0.68% 0.72% 0.68% 0.72%
</TABLE>

42 Tax-Free Funds Prospectus
<PAGE>

This page intentionally left blank
--------------------------------------------------------------------------------
<PAGE>

Minnesota Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Manager: Patricia Hovanetz, CFA

--------------------------------------------------------------------------------

Investment Objective

The Minnesota Tax-Free Fund seeks a high level of current income exempt from
federal income tax and Minnesota income tax, without assuming undue risk.

--------------------------------------------------------------------------------

Investment Strategies

We normally invest substantially all of the Fund's assets in investment grade
municipal securities issued by the state of Minnesota and its subdivisions,
authorities, instrumentalities, and corporations, and by the territories and
possessions of the United States. We invest at least 80% of the Fund's net
assets in securities with interest exempt from both federal income taxes and the
federal AMT.

There are no restrictions on Minnesota Tax-Free Fund's average portfolio
maturity. We expect that the Fund's dollar-weighted average maturity normally
will be greater than 10 years. The Fund's average portfolio maturity may reach
or exceed 20 years in the future. Depending on market conditions, the Fund's
average dollar-weighted average maturity could be higher or lower.

We emphasize investments in municipal securities paying interest income rather
than maintaining the Fund's stability of NAV.

--------------------------------------------------------------------------------

Permitted Investments

Under normal conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest exempt
from federal income tax and Minnesota income tax;

. up to 25% of total assets in securities of related issuers or in securities
of any one issuer, except the U.S. Government;

. up to 20% of net assets in securities with income subject to federal
personal income taxes, including the federal AMT; and

. up to 25% of total assets in non-investment grade municipal securities.
During such periods, the Fund may not achieve its investment objective of a
high level of current income without assuming undue risk.

We may temporarily hold assets in cash or in money market instruments, including
U.S. Government obligations, shares of other mutual funds and repurchase
agreements, or make other short-term investments either to maintain liquidity or
for short-term defensive purposes when we believe it is in the best interests of
shareholders to do so. During these periods, the Fund may not achieve its
objective of a high level of current income exempt from federal income tax and
Minnesota personal income tax without assuming undue risk.

44 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------
Important Risk Factors

Tax-Free Funds Prospectus 45
<PAGE>

Minnesota Tax-Free Fund
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SHARES --
COMMENCED ON AUGUST 2, 1993
---------------------------------------------------
June 30, June 30,
For the period ended: 2000 1999/3/
---------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $10.74 $10.96

Income from investment operations:
Net investment income (loss) 0.53 0.04
Net realized and unrealized gain (loss)
on investments (0.55) (0.22)

Total from investment operations (0.02) (0.18)

Less distributions:
Dividends from net investment income (0.53) (0.04)
Distributions from net realized gains (0.01) 0.00

Total from distributions (0.54) (0.04)

Net asset value, end of period $10.18 $10.74

Total return (not annualized)/1/ (0.02)% (1.63%)

Ratios/supplemental data:
Net assets, end of period (000s) $2,451 $27,197

Ratios to average net assets (annualized):
Ratio of expenses to average net assets 0.60% 0.60%
Ratio of net investment income (loss) to average
net assets 5.22% 4.69%

Portfolio turnover 69% 2%

Ratio of expenses to average net assets prior to
waived fees and reimbursed expenses (annualized)/2/ 0.91% 1.11%
</TABLE>

46 Tax-Free Funds Prospectus
<PAGE>

Financial Highlights
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
May 31, May 31, May 31, May 31,
1999 1998 1997 1996
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 11.05 $ 10.57 $ 10.30 $ 10.45

0.52 0.53 0.54 0.56

(0.09) 0.48 0.27 (0.15)

0.43 1.01 0.81 0.41

(0.51) (0.53) (0.54) (0.56)
(0.01) 0.00 0.00 0.00

(0.52) (0.53) (0.54) (0.56)

$ 10.96 $ 11.05 $ 10.57 $ 10.30

3.96% 9.71% 7.98% 3.97%

$ 27,261 $ 20,736 $ 11,135 $ 3,988

0.60% 0.60% 0.60% 0.51%

4.62% 4.84% 5.12% 5.24%

25% 68% 97% 77%

1.00% 1.04% 1.23% 1.30%
</TABLE>

Tax-Free Funds Prospectus 47
<PAGE>

National Limited Term Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Manager: Patricia Hovanetz, CFA; Arthur C. Evans

--------------------------------------------------------------------------------

Investment Objective

The National Limited Term Tax-Free Fund seeks current income exempt from federal
income taxes.

--------------------------------------------------------------------------------

Investment Strategies

We actively manage a diversified portfolio invested substantially in investment
grade municipal securities. We invest at least 80% of net assets in municipal
securities that pay interest exempt from federal income taxes, including the
federal AMT.

We maintain the dollar-weighted average maturity of the Fund's assets normally
between 1 and 5 years, but this average will vary depending on anticipated
market conditions. We emphasize investment in municipal securities with interest
income rather than maintaining stability of the Fund's NAV.

--------------------------------------------------------------------------------

Permitted Investments

Under normal market conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest exempt
from federal income tax.

. up to 20% of net assets in certain investments subject to federal personal
income taxes (including the federal AMT); and

. up to 25% of total assets in securities of issuers located in the same
state or in related issuers.

We may temporarily hold assets in cash or in money market instruments, including
U.S. Government obligations, shares of other mutual funds and repurchase
agreements, or make other short-term investments either to maintain liquidity or
for short-term defensive purposes when we believe it is in the best interests of
shareholders to do so. During such periods, the Fund may not achieve its
investment objective of current income exempt from federal income taxes.

--------------------------------------------------------------------------------

Important Risk Factors

Although we strive to invest in municipal securities and other securities with
interest that is exempt from federal personal income taxes, including the
federal AMT, some income earned by Fund investments may be subject to such
taxes.

You should consider the "Summary of Important Risks" section on page 6;
the "General Investment Risks" section beginning on page 62; and the specific
risks listed here. They are all important to your investment choice.

48 Tax-Free Funds Prospectus
<PAGE>

Financial Highlights
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING
--------------------------------------------------------------------------------

INSTITUTIONAL SHARES--
COMMENCED ON OCTOBER 1, 1996
------------------------------------------------------------------
June 30, June 30, May 31, May 31, May 31,
For the period ended: 2000 1993 1999 1998 1997
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.39 $10.54 $10.59 $10.39 $10.00

Income from investment operations:
Net investment income (loss) 0.47 0.04 0.46 0.47 0.31
Net realized and unrealized gain (loss)
on investments (0.20) (0.15) (0.04) 0.21 0.39

Total from investment operations 0.27 (0.11) 0.42 0.68 0.70

Less distributions:
Dividends from net investment income (0.47) (0.04) (0.47) (0.47) (0.31)
Distributions from net realized gain 0.00 0.00 0.00 (0.01) 0.00

Total from distributions (0.47) (0.04) (0.47) (0.48) (0.31)

Net asset value, end of period $10.19 $10.39 $10.54 $10.59 $10.39

Total return (not annualized)/1/ 2.64% (1.08%) 3.97% 6.70% 6.99%

Ratios/supplemental data:
Net assets, end of period (000s) $62,669 $84,419 $88,223 $54,602 $40,990

Ratios to average net assets (annualized):
Ratio of expenses to average net assets 0.61% 0.65% 0.65% 0.65% 0.65%
Ratio of net investment income (loss)
to average net assets 4.53% 4.25% 4.26% 4.47% 4.45%

Portfolio turnover 48% 24% 41% 46% 16%

Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses (annualized)/2/ 0.86% 1.12% 1.04% 1.03% 1.27%
</TABLE>

Tax-Free Funds Prospectus 49
<PAGE>

National Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Manager: Stephen Galiani

--------------------------------------------------------------------------------

Investment Objective

The National Tax-Free Fund seeks current income exempt from federal income
taxes.

--------------------------------------------------------------------------------

Investment Strategies

We actively manage a diversified portfolio invested primarily in investment
grade municipal securities. We invest at least 80% of net assets in municipal
securities paying interest exempt from federal income taxes, including the
federal AMT.

The dollar-weighted average maturity of the Fund's assets normally will be
between 10 and 20 years, but may vary depending on market conditions. In
general, the longer the maturity of a municipal security, the higher the rate of
interest it pays. However, a longer maturity security is generally subject to
greater interest rate risk and price volatility. We emphasize investments in
municipal securities that produce interest income rather than stability of the
Fund's NAV.

--------------------------------------------------------------------------------

Permitted Investments

Under normal market conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest exempt
from federal income tax;

. up to 20% of net assets in securities with income subject to federal income
taxes, including the federal AMT; and

. in municipal securities rated in the four highest credit categories by
NRROs, and in unrated securities deemed by the Advisor to be of comparable
quality.

We may temporarily hold assets in cash or in money market instruments, including
U.S. Government obligations, shares of other mutual funds and repurchase
agreements, or make other short-term investments either to maintain liquidity or
for short-term defensive purposes when we believe it is in the best interests of
shareholders to do so. During these periods, the Fund may not achieve its
objective of current income exempt from federal income taxes.

--------------------------------------------------------------------------------

Important Risk Factors

You should consider the "Summary of Important Risks" section on page 6;
the "General Investment Risks" section beginning on page 62; and the specific
risks listed here. They are all important to your investment choice.

50 Tax-Free Funds Prospectus
<PAGE>

This page intentionally left blank
--------------------------------------------------------------------------------
<PAGE>

National Tax-Free Fund
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING
--------------------------------------------------------------------------------

INSTITUTIONAL CLASS SHARES--
COMMENCED ON AUGUST 2, 1993
------------------------------------
June 30, June 30,
For the period ended: 2000 1999
------------------------------------
<S> <C> <C>
Net asset value, beginning of period $10.22 $10.44

Income from investment operations:
Net investment income (loss) 0.55 0.04
Net realized and unrealized gain (loss)
on investments (0.49) (0.22)

Total from investment operations 0.06 (0.18)

Less distributions:
Dividends from net investment income (0.54) (0.04)
Distributions from net realized gains (0.01) 0.00

Total from distributions (0.55) (0.04)

Net asset value, end of period $9.73 $10.22

Total return (not annualized)/1/ 0.73% (1.69%)

Ratios/supplemental data:
Net assets, end of period (000s) $244,626 $304,170

Ratios to average net assets (annualized):
Ratio of expenses to average net assets 0.60% 0.60%
Ratio of net investment income (loss) to
average net assets 5.58% 5.09%

Portfolio turnover 79% 18%

Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses (annualized)/2/ 0.77% 0.95%
</TABLE>

52 Tax-Free Funds Prospectus
<PAGE>

Financial Highlights
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
May 31, May 31, May 31, May 31,
1999 1998 1997 1998
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$10.54 $10.06 $9.78 $9.82

0.52 0.53 0.54 0.55

(0.10) 0.48 0.28 (0.04)

(0.42) 1.01 0.82 0.51

(0.51) (0.53) (0.54) (0.55)
(0.01) 0.00 0.00 0.00

(0.52) (0.53) (0.54) (0.55)

$10.44 $10.54 $10.06 $9.78

4.04% 10.22% 8.54% 5.29%

$311,757 $286,734 $259,861 $276,159

0.60% 0.60% 0.50% 0.32%

4.83% 5.09% 5.40% 5.57%

106% 143% 152% 126%

0.91% 0.92% 1.03% 1.06%
</TABLE>

Tax-Free Funds Prospectus 53
<PAGE>

Nebraska Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Manager: Stephen Galiani; Mary Jo Sebrell

--------------------------------------------------------------------------------

Investment Objective

The Nebraska Tax-Free Fund seeks current income exempt from federal income taxes
and Nebraska personal income tax.

--------------------------------------------------------------------------------

Investment Strategies

We actively manage a portfolio of municipal securities and we buy municipal
securities of any maturity length. The portfolio's weighted average maturity
will vary depending on market conditions, economic conditions including interest
rates, the differences in yields between obligations of different maturity
lengths and other factors. Generally, we will attempt to capture greater total
return by increasing maturity when we expect interest rates to decline, and
attempt to preserve capital by shortening maturity when interest rates are
expected to increase. We invest primarily in a portfolio of investment grade
municipal securities.

--------------------------------------------------------------------------------

Permitted Investments

Under normal market conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest exempt
from federal income tax;

. at least 65% of total assets in municipal securities that pay interest
exempt from Nebraska personal income tax;

. up to 20% of net assets in securities whose income is subject to the
federal AMT; and

. in municipal obligations rated in the four highest credit categories by
NRROs, and in securities deemed by the Advisor to be of comparable quality.

We may temporarily hold assets in cash or in money market instruments, including
U.S. Government obligations, shares of other mutual funds and repurchase
agreements, or make other short-term investments either to maintain liquidity or
for short-term defensive purposes when we believe it is in the best interests of
shareholders to do so. During these periods, the Fund may not achieve its
objective of current income exempt from federal income taxes and Nebraska
personal income taxes.

54 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

Important Risk Factors

The Fund is considered non-diversified according to the 1940 Act. The majority
of the issuers of the securities in the portfolio are located within Nebraska.
Non-diversified, geographically concentrated funds are riskier than similar
funds that are diversified or spread their investments over several geographical
areas. Default by a single security in the portfolio may have a greater negative
effect than a similar default in a diversified portfolio.

Since we invest heavily in Nebraska municipal securities, events in Nebraska are
likely to affect the Fund's investments. The Nebraska economy is primarily based
on agriculture and agricultural processing, but has become increasingly
diversified with relatively steady growth in the manufacturing, services and
finance, insurance and real estate industries. While these recent trends have
helped diversify the Nebraska economy, it may still be significantly impacted by
changes in agricultural conditions such as the weather, fluctuations in
commodity markets, world agricultural production, import and export and
decreases in federal agriculture subsidy and support programs.

The State of Nebraska does not directly issue debt. The obligations issued by
municipalities or political subdivisions which are permitted to issue debt are
not backed by the State's full faith and credit. Accordingly, the Fund relies on
the availability of, and must individually analyze the economic condition of,
securities issued by the various municipalities and public authorities in
Nebraska. We may invest 25% or more of our assets in Nebraska municipal
securities that are related in such a way that political, economic or business
developments affecting one obligation would affect others.

Municipal securities rely on the creditworthiness or revenue production of their
issuers. Municipal obligations may be difficult to obtain because of limited
supply, which may increase the cost of such securities and effectively reduce
the portfolio's yield. Typically, less information is available about a
municipal issuer than is available for other types of securities issuers.

Tax-Free Funds Prospectus 55
<PAGE>

Nebraska Tax-Free Fund Financial Highlights
--------------------------------------------------------------------------------

The Wells Fargo Nebraska Tax-Free Fund was organized as the successor fund to
the Great Plains Tax-Free Bond Fund, which was reorganized into the Wells Fargo
Fund effective September 11, 2000. The historical information shown for the
Nebraska Tax-Free Fund below reflects the historical information for the Great
Plains Tax-Free Bond Fund.

This table is intended to help you understand the Fund's financial performance
for the past 5 years (or since inception if shorter). Total returns represent
the rate that you would have earned (or lost) on investment in the Fund
(assuming reinvestment of all dividends and distributions). Deloitte & Touche
LLP audited this information which, along with their report and the Fund's
financial statements, is available upon request in the Fund's annual report.

--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
NEBRASKA TAX-FREE FUND
INSTITUTIONAL CLASS
--------------------------------------------
August 31, August 31, August 31,
For the period ended: 2000 1999 1998
--------------------------------------------
<S> <C> <C> <C>
Net asset value beginning of period $9.76 $10.13 $10.00

Income from investment operations:
Net investment income (loss) 0.42 0.42 0.39
Net realized and unrealized gain (loss) on
investments 0.09 (0.36) 0.13
Total from investment operations 0.51 0.06 0.52

Less distributions:
Dividends from net investment income (0.42) (0.42) (0.39)
Distributions from net realized gain 0.00 (0.01) (0.00)

Total from distributions (0.42) (0.43) (0.39)

Net asset value, end of period $9.85 $9.76 $10.13

Total return/3/ 5.43% 0.54% 5.29%

Ratios/supplemental data:
Net assets, end of period (000s) $63,305 $68,443 $67,372

Ratios to average net assets (before voluntary
waivers):
Ratio of expenses to average net assets 0.88% 0.84% 0.87%
Ratio of net investment income (loss) to
average net assets 4.38% 4.16% 4.22%

Portfolio turnover 30% 7% 8%

Ratio of expenses to average net assets (after
voluntary waivers):
Ratio of expenses to average net assets 0.88% 0.83% 0.87%
</TABLE>

/1/ For the period from September 29, 1997 (date of initial public investment).
/2/ Distribution less than $0.01 per share.
/3/ Total returns would have been lower had certain expenses not been waived or
reimbursed during the period shown.
/4/ Annualized.

56 Tax-Free Funds Prospectus

<PAGE>

This page intentionally left blank
--------------------------------------------------------------------------------
<PAGE>

Oregon Tax-Free Fund
--------------------------------------------------------------------------------

Portfolio Manager: Stephen Galiani

--------------------------------------------------------------------------------

Investment Objective

The Oregon Tax-Free Fund seeks a high level of current income exempt from
federal income tax and Oregon personal income tax.

--------------------------------------------------------------------------------

Investment Strategies

--------------------------------------------------------------------------------

Permitted Investments

Under normal market conditions, we invest:

. at least 80% of net assets in municipal securities that pay interest exempt
from federal income tax;

. at least 65% of total assets in municipal securities that pay interest exempt
from Oregon personal income tax;

. up to 20% of net assets in securities with income subject to federal
personal income taxes, including the federal AMT; and

. in municipal securities rated in the four highest credit categories by
NRROs,and in unrated securities deemed by the Advisor to be of comparable
quality.

We may temporarily hold assets in cash or in money market instruments, including
U.S. Government obligations, shares of other mutual funds and repurchase
agreements, or make other short-term investments either to maintain liquidity or
for short-term defensive purposes when we believe it is in the best interest of
shareholders to do so. During such periods, the Fund may not achieve its
investment objective of a high level of current income exempt from federal
income tax and Oregon personal income tax.

58 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

Important Risk Factors

Since we invest heavily in Oregon municipal securities, events in Oregon are
likely to affect the fund's investments. Oregon does not have a sales tax, and
State tax revenues, derived principally from corporate and personal income
taxes, are particularly sensitive to economic recessions. In addition, we may
invest 25% or more of our assets in Oregon municipal securities that are related
in such a way that political, economic or business developments affecting one
obligation would affect others. For example, we may own different obligations
that pay interest based on the revenue of similar projects.

Tax-Free Funds Prospectus 59
<PAGE>

Oregon Tax-Free Fund
--------------------------------------------------------------------------------

This table is intended to help you understand the Fund's financial performance
for the past 5 years (or since inception, if shorter). Total returns represent
the rate you would have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). KPMG LLP audited this
information subsequent to September 30, 1995 which, along with their report and
the Fund's financial statements, is available upon request in the Fund's annual
report.

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SHARES--
COMMENCED ON AUGUST 1, 1995
-----------------------------------------
June 30, June 30,
For the period ended: 2000 1999
-----------------------------------------
<S> <C> <C>
Net asset value, beginning of period $16.10 $16.82

Income from investment operations:
Net investment income (loss) 0.79 0.76
Net realized and unrealized gain (loss)
on investments (0.86) (0.47)

Total from investment operations (0.07) 0.29

Less distributions:
Dividends from net investment income (0.79) (0.76)
Distributions from net realized gains (0.02) (0.25)

Total from distributions (0.81) (1.01)

Net asset value, end of period $15.22 $16.10

Total return (not annualized)/1/ (0.32%) 1.62%

Ratios/supplemental data:
Net assets, end of period (000s) $4,120 $5,903

Ratios to average net assets (annualized):

Ratio of expenses to average net assets 0.61% 0.62%
Ratio of net investment income (loss) to
average net assets 5.14% 4.49%

Portfolio turnover 51% 54%

Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses (annualized)/4/ 1.02% 1.32%
</TABLE>

/1/ Total returns would have been lower had certain expenses not been waived or
reimbursed during the period shown.
/2/ The Fund changed its fiscal year-end from March 31 to June 30.
/3/ The Fund changed its fiscal year-end from September 30 to March 31.
/4/ During each period, various fees and/or expenses were waived and/or
reimbursed. The ratio of gross expenses to average net assets reflects the
expense ratio in the absence of any waivers and/or reimbursement.

60 Tax-Free Funds Prospectus
<PAGE>

Financial Highlights
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
June 30, March 31, March 31, Sept. 30,
19982 1998 1993 1996
--------------------------------------------------------------------------------
<S> <C> <C> <C>
$16.81 $16.28 $16.42 $16.38

0.19 0.79 0.39 0.72

0.01 0.82 (0.11) 0.04

0.20 1.61 0.28 0.76

(0.19) (0.79) (0.39) (0.72)
0.00 (0.29) (0.03) 0.00

(0.19) (1.08) (0.42) (0.72)

$16.82 $16.81 $16.28 $16.42

1.18% 10.08% 1.69% 5.13%

$7,314 $7,635 $8,175 $8,512

0.62% 0.43% 0.40% 0.63%

4.46% 4.72% 4.72% 4.41%

24% 82% 90% 27%

1.26% 1.27% 1.24% 0.93%
</TABLE>

Tax-Free Funds Prospectus 61
<PAGE>

General Investment Risks
--------------------------------------------------------------------------------

. Unlike bank deposits, such as CDs or savings accounts, mutual funds are not
insured by the FDIC.

. We cannot guarantee that we will meet our investment objectives.

. We do not guarantee the performance of a Fund,nor can we assure you that the
market value of your investment will not decline. We will not "make good"
any investment loss you may suffer, nor can anyone we contract with to
provide certain services, such as selling agents or investment advisors,
offer or promise to make good any such losses.

. Investing in any mutual fund,including those deemed conservative,involves
risk,including the possible loss of any money you invest.

. An investment in a single Fund,by itself,does not constitute a complete
investment plan.

. The Funds may invest a portion of their assets in U.S.Government
obligations, such as securities issued or guaranteed by the Government
National Mortgage Association ("GNMAs"), the Federal National Mortgage
Association ("FNMAs") and the Federal Home Loan Mortgage Corporation
("FHLMCs"). Each are mortgage-backed securities representing partial
ownership of a pool of residential mortgage loans. A "pool" or group of such
mortgages is assembled and, after being approved by the issuing or
guaranteeing entity, is offered to investors through securities dealers.
Mortgage-backed securities are subject to prepayment and extension risk,
which can alter the maturity of the securities and also reduce the rate of
return on the portfolio. It is important to recognize that the U.S.
Government does not guarantee the market value or current yield of those
obligations. Not all U.S. Government obligations are backed by the full
faith and credit of the U.S. Treasury, and the U.S. Government's guarantee
does not extend to the Funds themselves.

. The Funds may also use certain derivative instruments,such as options or
futures contracts.The term "derivatives" covers a wide number of
investments, but in general it refers to any financial instrument whose
value is derived, at least in part, from the price of another security or a
specified index, asset or rate. Some derivatives may be more sensitive to
interest rate changes or market moves, and some may be susceptible to
changes in yields or values due to their structure or contract terms.

Investment practices and risk levels are carefully monitored. Every attempt is
made to ensure that the risk exposure for each Fund remains within the
parameters of its objective.

62 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

Counter-Party Risk--The risk that the other party in a repurchase agreement or
other transaction will not fulfill its contract obligation.

Extension Risk--The risk that as interest rates rise, prepayments slow, thereby
lengthening the duration and potentially reducing the value of certain asset-
backed securities.

Information Risk--The risk that information about a security is either
unavailable, incomplete or is inaccurate.

Leverage Risk--The risk that a practice, such as lending portfolio securities or
engaging in forward commitment or when-issued securities transactions, may
increase a Fund's exposure to market risk interest rate risk or other risks by,
in effect, increasing assets available for investment.

Liquidity Risk--The risk that a security cannot be sold at the time desired, or
cannot be sold without adversely affecting the price.

Market Risk--The risk that the value of a stock, bond or other security will be
reduced by market activity. This is a basic risk associated with all securities.

Tax-Free Funds Prospectus 63
<PAGE>

General Investment Risks
--------------------------------------------------------------------------------

Investment Practice/Risk

The following table lists some of the additional investment practices of the
Funds, including some not disclosed in the Investment Objective and Investment
Strategies sections of the Prospectus. The risks indicated after the description
of the practice are NOT the only potential risks associated with that practice,
but are among the more prominent. Market risk is assumed for each. See the
Investment Objective and Investment Strategies for each Fund or the Statement of
Additional Information for more information on these practices.

Investment practices and risk levels are carefully monitored. We attempt to
ensure that the risk exposure for each Fund remains within the parameters of its
objective.

Remember, each Fund is designed to meet different investment needs and
objectives.

<TABLE>
<CAPTION>
CALIFORNIA
LIMITED MINNESOTA
ARIZONA TERM CALIFORNIA COLORADO INTERMEDIATE
TAX- TAX TAX- TAX TAX
FREE FREE FREE FREE FREE
--------------------------------------------------------------------------------------------------------------------------------
INVESTMENT PRACTICE RISK
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Borrowing Policies
The ability to borrow from banks for Leverage Risk . . . . .
temporary purposes to meet shareholder
redemptions.

Floating and Variable Rate Debt
Instruments with interest rates that Interest Rate and . . . . .
are adjusted either on a schedule or Credit Risk
when an index or benchmark changes.

Forward Commitment, When-Issued and
Delayed Delivery Transactions Interest Rate, Leverage,
Securities bought or sold for delivery Credit and Experience Risk . . . . .
at a later date or bought or sold for a
fixed price at a fixed date.

High Yield Securities
Debt securities of lower quality that
produce generally higher rates of return. Interest Rate and
These securities, also known as "junk bonds," Credit Risk .
tend to be more sensitive to economic
conditions, more volatile and less liquid and
are subject to greater risk of default.

Illiquid Securities
A security that cannot be readily sold, or Liquidity Risk
cannot be readily sold without negatively . . . . .
affecting its fair price. Limited to 15% of
total assets.

Loans of Portfolio Securities
The practice of loaning securities to brokers, Credit, Counter-Party and
dealers and financial institutions to increase Leverage Risk . . . . .
return on those securities. Loans may be made
up to Investment Company Act of 1940 limits
(currently one third of total assets including
the value of collateral received).

Mortgage- and Asset-Backed Securities
Securities consisting of undivided fractional Interest Rate, Credit,
interests in pools of consumer loans, such as Prepayment and . . . . .
mortgage loans, car loans, credit card debt, Experience Risk
or receivables held in trust.
</TABLE>

<TABLE>
<CAPTION>
NATIONAL
LIMITED
MINNESOTA TERM NATIONAL NEBRASKA OREGON
TAX TAX TAX TAX TAX
FREE FREE FREE FREE FREE
-------------------------------------------------------------------------------------------------------------------------------
INVESTMENT PRACTICE RISK
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Borrowing Policies
The ability to borrow from banks for Leverage Risk . . . . .
temporary purposes to meet shareholder
redemptions.

Floating and Variable Rate Debt
Instruments with interest rates that Interest Rate and . . . . .
are adjusted either on a schedule or Credit Risk
when an index or benchmark changes.

Illiquid Securities
A security that cannot be readily sold, or Liquidity Risk
cannot be readily sold without negatively . . . . .
affecting its fair price. Limited to 15% of
total assets.

Mortgage- and Asset-Backed Securities
Securities consisting of undivided fractional Interest Rate, Credit,
interests in pools of consumer loans, such as Prepayment and . . . .
mortgage loans, car loans, credit card debt, Experience Risk
or receivables held in trust.
</TABLE>

64 Tax-Free Funds Prospectus
<PAGE>

-------------------------------------------------------------------------------------------------------------------------------

CALIFORNIA
LIMITED MINNESOTA
ARIZONA TERM CALIFORNIA COLORADO INTERMEDIATE
TAX- TAX TAX- TAX TAX
FREE FREE FREE FREE FREE
-------------------------------------------------------------------------------------------------------------------------------
INVESTMENT PRACTICE RISK
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Other Mutual Funds
The temporary investment in shares of another
mutual fund. A pro rata portion of the other Market Risk . . . . .
fund's expenses, in addition to the expenses
paid by the Funds, will be borne by Fund
shareholders.

Private Activity Bonds Interest Rate, Credit
Bonds that pay interest subject to the federal and Experience Risk . . . . .
alternative minimum tax. Limited to 20% of net
assets.

Repurchase Agreements
A transaction in which the seller of a security Credit and Counter-
agrees to buy back a security at an agreed upon Party Risk . . . . .
time and price, usually with interest.
</TABLE>

<TABLE>
<CAPTION>
NATIONAL
LIMITED
MINNESOTA TERM NATIONAL NEBRASKA OREGON
TAX TAX TAX TAX TAX
FREE FREE FREE FREE FREE
-------------------------------------------------------------------------------------------------------------------------------
INVESTMENT PRACTICE RISK
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Other Mutual Funds
The temporary investment in shares of another
mutual fund. A pro rata portion of the other Market Risk . . . . .
fund's expenses, in addition to the expenses
paid by the Funds, will be borne by Fund
shareholders.

Private Activity Bonds Interest Rate, Credit
Bonds that pay interest subject to the federal and Experience Risk . . . . .
alternative minimum tax. Limited to 20% of net
assets.

Tax-Free Funds Prospectus 65
<PAGE>

Organization and Management of the Funds
--------------------------------------------------------------------------------

About Wells Fargo Funds Trust

Wells Fargo Funds Trust ("the Trust") was organized as a Delaware business trust
on March 10, 1999. The Board of Trustees of the Trust supervises each Fund's
activities, monitors its contractual arrangements with various service providers
and decides upon matters of general policy.

The Trust was created to succeed to the assets and operations of the various
mutual funds in the Stagecoach Family of Funds and the Norwest Advantage Family
of Funds. The holding company of Wells Fargo Bank, the investment advisor to the
Stagecoach Family of Funds, and the holding company of Norwest Investment
Management, Inc., the investment advisor to the Norwest Advantage Family of
Funds, merged in November 1998. Each of the Funds described in this Prospectus,
except the Nebraska Tax Free Fund, has succeeded to the assets and operations of
one or more corresponding Funds of Stagecoach or Norwest Advantage Funds. The
Nebraska Tax-Free Fund was organized as the successor fund to the Great Plains
Tax-Free Bond Fund, which was reorganized into the Wells Fargo Fund effective
September 11, 2000. The performance and financial statement history of each
Fund's designated predecessor Fund has been assumed by the Wells Fargo Funds
Trust Fund. The succession transactions were approved by the shareholders of the
Stagecoach, Norwest Advantage and Great Plains Funds. The Table on page 73
identifies the Stagecoach, Norwest Advantage, or Great Plains Fund predecessors
to the Funds.

--------------------------------------------------------------------------------
BOARD OF TRUSTEES
--------------------------------------------------------------------------------
Supervises the Funds' activities
--------------------------------------------------------------------------------
INVESTMENT ADVISOR CUSTODIAN
--------------------------------------------------------------------------------
Wells Fargo Bank, N.A. Wells Fargo Bank Minnesota, N.A.
525 Market St., San Francisco, CA 6th & Marquette, Minneapolis, MN
Manages the Funds' investment activities Provides safekeeping for the
Funds' assets
--------------------------------------------------------------------------------
INVESTMENT SUB-ADVISOR
--------------------------------------------------------------------------------
Wells Capital Management Incorporated
525 Market Street
San Francisco, CA
Manages the Funds' investment activities
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
SHAREHOLDER
TRANSFER SERVICING
DISTRIBUTOR ADMINISTRATOR AGENT AGENTS
--------------------------------------------------------------------------------
Stephens Inc. Wells Fargo Bank, Boston Financial Data Various Agents
111 Center St. N.A. Services, Inc.
Little Rock, AR 525 Market St. Two Heritage Dr.
San Francisco, CA Quincy, MA

Markets the Funds Manages the Maintains records Provide
and distributes Funds' business of shares and services to
Fund shares activities supervises the customers
payment of dividends
--------------------------------------------------------------------------------
FINANCIAL SERVICES FIRMS AND SELLING AGENTS
--------------------------------------------------------------------------------
Advise current and prospective shareholders on their Fund investments
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SHAREHOLDERS
--------------------------------------------------------------------------------

66 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

In the following sections, the percentages shown are the percentages of the
average daily net assets of each Fund class paid on an annual basis for the
services described.

The Investment Advisor

Wells Fargo Bank provides portfolio management and fundamental security analysis
services as the advisor for each of the Funds. Wells Fargo Bank, founded in
1852, is the oldest bank in the western United States and is one of the largest
banks in the United States. Wells Fargo Bank is a wholly owned subsidiary of
Wells Fargo & Company, a national bank holding company. As of June 30, 2000,
Wells Fargo Bank and its affiliates managed over $161 billion in assets.

The Investment Sub-Advisor

Wells Capital Management Incorporated ("WCM"), a wholly owned subsidiary of
Wells Fargo Bank, N.A., is the sub-advisor for each of the Funds. As of June 30,
2000, WCM provided investment advice for assets in excess of $80 billion.

The Administrator

Wells Fargo Bank provides the Funds with administration services, including
general supervision of each Fund's operation, coordination of the other services
provided to each Fund, compilation of information for reports to the SEC and the
state securities commissions, preparation of proxy statements and shareholder
reports, and general supervision of data compilation in connection with
preparing periodic reports to Funds Trust's Trustees and officers. Wells Fargo
Bank also furnishes office space and certain facilities to conduct each Fund's
business. For providing these services, Wells Fargo Bank is entitled to receive
a fee of 0.15% of the average annual net assets of each Fund.

The Transfer Agent

Boston Financial Data Services, Inc. ("BFDS") provides transfer agency and
dividend disbursing services to the Funds. For providing these services, BFDS
receives an annual fee, certain transaction-related fees, and is reimbursed for
out-of-pocket expenses incurred on behalf of the Funds.

Tax-Free Funds Prospectus 67
<PAGE>

Your Account
--------------------------------------------------------------------------------

This section tells you how Fund shares are priced, how to open an account and
how to buy, sell or exchange Fund shares once your account is open.

Pricing Fund Shares

. As with all mutual fund investments, the price you pay to purchase shares
or the price you receive when you redeem shares is not determined until
after a request has been received in proper form.

. We determine the NAV of each Funds' shares each business day as of the
close of regular trading on the New York Stock Exchange ("NYSE"). We
determine the NAV by subtracting the fund class's liabilities from its
total assets, and then dividing the result by the total number of
outstanding shares of that class. Each Fund's assets are generally valued
at current market prices. See the Statement of Additional Information for
further disclosure.

. We process requests to buy or sell shares of the Funds each business day as
of the close of regular trading on the NYSE, which is usually 1:00 p.m.
(Pacific time)/3:00 p.m. (Central time). If the markets close early, the
Funds may close early and may value their shares at earlier times under
these circumstances. Any request we receive in proper form before this time
is processed the same day. Requests we receive after the cutoff time are
processed the next business day.

Typically, Institutional Class shares are bought and held on your behalf by the
Institution through which you are investing. Check with your customer account
representative or your customer account agreement for the rules governing your
investment.

Minimum Investments:

Institutions are required to make a minimum initial investment of $2,000,000 per
Fund. There are no minimum subsequent investment requirements so long as your
Institution maintains account balances at or above the minimum initial
investment amount. Minimum initial investment requirements may be waived for
certain Institutions.

68 Tax-Free Funds Prospectus
<PAGE>

How to Buy Shares
--------------------------------------------------------------------------------

You can open a Fund account and buy Fund shares through an Institution through
which you have established a Customer Account. Investors interested in
purchasing Institutional shares of the Funds should contact an account
representative at their Institution and should understand the following:

. Share purchases are made through a Customer Account at an Institution in
accordance with the terms of the Customer Account involved;

. Institutions are usually the holders of record for Institutional shares
held through Customer Accounts and maintain records reflecting their
customers' beneficial ownership of the shares;

. Institutions are responsible for transmitting their customers'purchase and
redemption orders to the Funds and for delivering required payment on a
timely basis;

. The exercise of voting rights and the delivery of shareholder
communications from the Funds is governed by the terms of the Customer
Account involved; and

. Institutions may charge their customers account fees and may receive fees
from us with respect to investments their customers have made with the
Funds.

Tax-Free Funds Prospectus 69
<PAGE>

Your Account How to Sell Shares
--------------------------------------------------------------------------------

Institutional shares must be redeemed in accordance with the account agreement
governing your Customer Account at the Institution. Please read the Customer
Account agreement with your Institution for rules governing selling shares.

--------------------------------------------------------------------------------
GENERAL NOTES FOR SELLING SHARES
--------------------------------------------------------------------------------
. We process requests we receive from an Institution in proper form before
the close of the NYSE, usually 1:00 p.m. (Pacific time)/3:00 p.m. (Central
time), at the NAV determined on the same business day. Requests we receive
after this time are processed on the next business day.

. Redemption proceeds are usually wired to the redeeming Institution the
following business day.

. If you purchased shares through a packaged investment product or retirement
plan,read the directions for selling shares provided by the product or
plan. There may be special requirements that supersede the directions in
this Prospectus.

. We reserve the right to delay payment of a redemption so that we may be
reasonably certain that investments made by check or through ACH have been
collected. Payments of redemptions also may be delayed under extraordinary
circumstances or as permitted by the SEC in order to protect remaining
shareholders. Payments of redemptions also may be delayed up to seven days
under normal circumstances, although it is not our policy to delay such
payments.

. Generally, we pay redemption requests in cash, unless the redemption
request is for more than the lesser of $250,000 or 1% of the net assets of
the Fund by a single shareholder over a ninety-day period. If a request for
a redemption is over these limits it may be to the detriment of existing
shareholders. Therefore, we may pay the redemption in part on in whole in
securities of equal value.

70 Tax-Free Funds Prospectus
<PAGE>

How to Exchange Shares
--------------------------------------------------------------------------------

. You should carefully read the Prospectus for the Fund into which you wish
to exchange.

. Every exchange involves selling Fund shares and that sale may produce a
capital gain or loss for federal income tax purposes.

. You may make exchanges only between like share classes of non-money market
funds and the Service Class shares of money market Funds.

Contact your account representative for further details.

Tax-Free Funds Prospectus 71
<PAGE>

Other Information
--------------------------------------------------------------------------------

Dividend and Capital Gain Distributions

The Funds in this Prospectus pay any dividends monthly and make any capital
gains distributions at least annually.

Contact your Institution for distribution options.

Remember, distributions have the effect of reducing NAV per share by the amount
distributed.

Taxes

We will pass on to you substantially all of a Fund's net investment income and
capital gains. Distributions of a Fund's net interest income from tax-exempt
securities will not be subject to federal income tax, although a portion of such
distributions could be subject to federal AMT. Distributions of a Fund
attributable to tax-exempt securities of a state and its subdivisions will also
not be subject to the state's individual income taxes if the Fund primarily
invests in such securities. For example, you generally won't be subject to
California individual income tax on distributions from the California Limited
Term Tax-Free Fund or the California Tax-Free Fund to the extent such
distributions are attributable to the Fund's California state and municipal tax-
exempt and certain other securities, although a portion of such distributions
could be subject to California AMT. Distributions of a Fund's income from other
sources and net short-term capital gain will be taxable to you as ordinary
income. Distributions of a Fund's net long-term capital gain, if any, will be
taxable to you as net capital gain. Corporate shareholders will not be able to
deduct any distributions when determining their taxable income.

72 Tax-Free Funds Prospectus
<PAGE>

Table of Predecessors
--------------------------------------------------------------------------------

The Funds, except the Nebraska Tax Free Fund, described in this Prospectus were
created as part of the reorganization of the Stagecoach Family of Funds, advised
by Wells Fargo Bank, N.A., and the Norwest Advantage Family of Funds, advised by
Norwest Investment Management, Inc., into a single mutual fund complex. The
Nebraska Tax-Free Fund was created as part of the reorganization of the Great
Plains Family of Funds, advised by First Commerce Investors, Inc., into Funds of
the Trust. The reorganizations followed the merger of the advisors' parent
companies.

Each Fund is an accounting survivor of a former Stagecoach Funds, Inc., Norwest
Advantage Funds, or Great Plains fund, as indicated in the Table of Predecessors
below. The performance histories and financial highlights of each Fund are the
performance histories and financial highlights of the predecessor fund.

Wells Fargo Funds Trust Predecessor Fund

Arizona Tax-Free Stagecoach Arizona Tax-Free

California Limited Term Tax-Free Stagecoach California Tax-Free Income

California Tax-Free Stagecoach California Tax-Free Bond

Colorado Tax-Free Norwest Advantage Colorado Tax-Free

Minnesota Intermediate Tax-Free Norwest Advantage Minnesota
Intermediate Tax-Free

Minnesota Tax-Free Norwest Advantage Minnesota Tax-Free

National Limited Term Tax-Free Norwest Advantage Limited Term Tax-Free

National Tax-Free Norwest Advantage Tax-Free Income

Nebraska Tax-Free Great Plains Tax-Free Bond

Oregon Tax-Free Stagecoach Oregon Tax-Free

Tax-Free Funds Prospectus 73
<PAGE>

Portfolio Managers
--------------------------------------------------------------------------------

Arthur C. Evans

Arizona Tax-Free Fund since 2000
Colorado Tax-Free Fund since 2000
National Limited Term Tax-Free Fund since 2000
Mr. Evans joined WCM in 2000 managing public fixed-income and municipal bond
mutual funds and institutional private accounts on the Tax-Exempt Fixed-Income
Team. Prior to joining the firm in 2000, Mr. Evans was responsible for the
investment operations of PennCorp Financial Group, a $6 billion life and health
insurance company, as its Chief Investment Officer from 1995 to 1999. He was
also an institutional portfolio manager with Blackrock Financial Management in
1995, and a municipal trader/strategist with Conning Asset Management from 1993
to 1995. Mr. Evans earned a master's degree in business administration from the
Fuqua School of Business, Duke University in 1990. He also received a BA in
business administration--finance from the University of Texas at Austin in 1986.

Stephen Galiani

Arizona Tax-Free Fund and its predecessor since 1997
California Tax-Free Fund and its predecessor since 1999
Colorado Tax-Free Fund since 2000
National Tax-Free Fund since 2000
Nebraska Tax-Free Fund since 2000
Oregon Tax-Free Fund and its predecessor since 1997
Mr. Galiani joined WCM in 1997 and is the firm's Managing Director for
Municipals with overall managerial responsibility for municipal strategy,
portfolio management, credit research and trade execution. Prior to WCM, he
served as Director of Fixed-Income from 1995 to 1997 for Qualivest Capital
Management. He was President from 1990 to 1995 of Galiani Asset Management
Corporation, an independent advisory practice. Mr. Galiani received a BA in
English from Manhattan College and an MBA from Boston University.

Patricia D. Hovanetz, CFA

Minnesota Intermediate Tax-Free Fund and its predecessor since 1997
Minnesota Tax-Free Fund and its predecessor since 1991
National Limited Term Tax-Free Fund and its predecessor since 1999
Ms. Hovanetz joined WCM in 1998 as a Principal with the Tax-Exempt Fixed-Income
Team, and simultaneously held the position of Director of Tax-Exempt Fixed-
Income at NIM (since 1997) until WCM and NIM combined investment advisory
services under the WCM name in 1999. Ms. Hovanetz has over 30 years experience
in the municipal bond industry and manages over $300 million in municipal bond
assets for the Wells Fargo Funds. She also manages other national tax-exempt
assets for institutional accounts and has been a portfolio manager at NIM since
1988. Ms. Hovanetz attended St. Cloud State College and the University of
Minnesota.

Mary Jo Sebrell

Nebraska Tax-Free Fund since 2000
Ms. Sebrell joined WCM in 1982 and manages public fixed-income and municipal
bond mutual funds and individual municipal bond portfolios on the Tax-Exempt
Fixed-Income Team. Prior to joining the firm, she held investment management-
related positions at John Nuveen & Co., Crocker National Bank and Sutro & Co.
She has over 25 years of investment management experience. Ms. Sebrell received
a BA in Elementary Education from Washburn University, Topeka, Kansas in 1966.
She is a member of the National Federation of Municipal Analysts and has served
as secretary, treasurer and program chairperson of the California Society of
Municipal Analysts.

Mary Gail Walton, CFA

California Limited Term Tax-Free Fund since 2000
Ms. Walton has been a municipal bond portfolio manager with Wells Fargo Bank,
N.A. and Wells Capital Management Incorporated for the past nine years, and
currently manages over $3 billion in various tax-exempt portfolios. She is a
Chartered Financial Analyst, and received her BA in economics in 1983 from the
University of Washington.

74 Tax-Free Funds Prospectus
<PAGE>

Glossary

We provide the following definitions to assist you in reading this Prospectus.
for a more complete understanding of these terms you should consult your
financial advisor.

ACH

Refers to the "Automated Clearing House" system maintained by the Federal
reserve Bank which allows banks to process checks, transfer funds and perform
other tasks.

Asset-Backed Securities

Securities consisting of an undivided fractional interest in pools of consumer
loans, such as car loans or credit card debt, or receivables held in trust.

Below Investment-Grade

Securities rated BBB or lower by S&P or Baa or lower by Moody's Investor
Services, or that may be unrated securities or securities considered to be "high
risk."

Business Day

Any day the New York Stock Exchange is open is a business day for the Funds.

Current Income

Earnings in the form of dividends or interest as opposed to capital growth. See
also "total return."

Debt Securities

Generally, a promise to pay interest and repay principal by an individual or
group of individuals sold as a security. The owner of the security is entitled
to receive any such payments. Examples include bonds and mortgage- and other
asset-backed securities and can include securities in which the right to receive
interest and principal repayment have been sold separately.

Derivatives

Securities whose values are derived in part from the value of another security
or index. An example is a stock option.

Distributions

Dividends and/or capital gains paid by a Fund on its shares.

Diversified

A diversified fund, as defined by the Investment Company Act of 1940, is one
that invests in cash, Government securities, other investment companies and no
more than 5% of its total assets in a single issuer. These policies must apply
to 75% of the Funds' total assets. Non-diversified funds are not required to
follow such investment policies.

Duration

A measure of a security's or portfolio's sensitivity to changes in interest
rates. Duration is usually expressed in years, with longer durations typically
more sensitive to interest rate changes than shorter durations.

FDIC

The Federal Deposit Insurance Corporation. This is the company that provides
federally sponsored insurance covering bank deposits such as savings accounts
and CDs. Mutual funds are not FDIC insured.

FHLMC

FHLMC securities are commonly known as "Freddie Mac" and are issued by the
Federal Home Loan Mortgage Corporation.

Tax-Free Funds Prospectus 75
<PAGE>

Glossary
-------------------------------------------------------------------------------

FNMA

FNMA securities are known as "Fannie Maes" and are issued by the Federal
National Mortgage Association.

GNMA

GNMA securities are commonly known as "Ginnie Maes" and are issued by the
Government National Mortgage Association.

Illiquid Security

A security which cannot be readily sold, or cannot be readily sold without
negatively affecting its fair price.

Institution

An affiliate, franchise or correspondent bank of Wells Fargo & Company and other
institutions.

Investment-Grade Securities

A type of bond rated in the top four investment categories by a nationally
recognized ratings organization. Generally these are bonds whose issuers are
considered to have a strong ability to pay interest and repay principal,
although some investment-grade bonds may have some speculative characteristics.

Liquidity

The ability to readily sell a security at a fair price.

Money Market Instruments

High-quality short-term instruments meeting the requirements of Rule 2a-7 under
the Investment Company Act of 1940, such as bankers' acceptances, commercial
paper, repurchase agreements and government obligations. In a money market fund,
average portfolio maturity does not exceed 90 days, and all investments have
maturities of 397 days or less at the time of purchase.

Moody's

A nationally recognized ratings organization.

Municipal securities

Debt obligations of a state or local government entity. The funds may support
general governmental needs or special projects. Virtually all municipal
securities are exempt from federal income taxes and most are exempt from state
and local income taxes, at least in the state of issue.

Nationally Recognized Rating Organization ("NRRO")

A company that examines the ability of a bond issuer to meet its obligations and
which rates the bonds accordingly.

Net Asset Value ("NAV")

The value of a single fund share. It is determined by adding together all of a
Fund's assets, subtracting accrued expenses and other liabilities, then dividing
by the total number of shares.

Options

An option is the right to buy or sell a security based on an agreed upon price
at a specified time. For example, an option may give the holder of a stock the
right to sell the stock to another party, allowing the seller to profit if the
price has fallen below the agreed price. Options may also be based on the
movement of an index such as the S&P 500.

76 Tax-Free Funds Prospectus
<PAGE>

--------------------------------------------------------------------------------

Repurchase Agreement

An agreement between a buyer and seller of a security in which the seller agrees
to repurchase the security at an agreed upon price and time.

Selling Agent

A person who has an agreement with the Funds' distributors that allows them to
sell a Fund's shares.

Statement of Additional Information

A document that supplements the disclosure made in the Prospectus.

Total Return

The total value of capital growth and the value of all distributions, assuming
that distributions were used to purchase additional shares of the Funds.

U.S. Government Obligations

Obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.

Weighted Average Maturity

The average maturity for the debt securities in a portfolio on a dollar-for-
dollar basis.

Tax-Free Funds Prospectus 77
<PAGE>

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--------------------------------------------------------------------------------
<PAGE>

YOU MAY WISH TO REVIEW THE FOLLOWING DOCUMENTS:

STATEMENT OF ADDITIONAL INFORMATION

supplements the disclosures made by this Prospectus. The Statement of Additional
Information has been filed with the SEC and incorporated by reference into this
Prospectus and is legally part of this Prospectus.

ANNUAL/SEMI-ANNUAL REPORT

provides certain financial and other important information including a
discussion of the market conditions and investment strategies that significantly
affected Fund performance, for the most recent reporting period.

THESE DOCUMENTS ARE AVAILABLE FREE OF CHARGE:

Call: 1-800-222-8222; option 1, option 5

WRITE TO:
Wells Fargo Funds
PO Box 8266
Boston, MA 02266-8266; or

Visit the SEC's website at http://www.sec.gov

REQUEST COPIES FOR A FEE BY WRITING TO:
SEC Public Reference Room
Washington, DC 20549-6009
by electronic request at [email protected]
Call: 1-800-SEC-0330 for details

Funds listed in this prospectus are only available in the states where they are
registered.

ADDITIONAL SERVICES QUESTIONS CAN BE ANSWERED BY CALLING YOUR SPECIFIC PRODUCT
GROUP AT WELLS FARGO BANK:

Wells Fargo Checking and Savings - 1-800-869-3557
Wells Fargo Portfolio Advisor - 1-800-689-7882

<PAGE>

WELLS FARGO FUNDS TRUST
Telephone: 1-800-222-8222

STATEMENT OF ADDITIONAL INFORMATION
Dated November 1, 2000

ARIZONA TAX-FREE FUND
CALIFORNIA LIMITED TERM TAX-FREE FUND
CALIFORNIA TAX-FREE FUND
COLORADO TAX-FREE FUND
MINNESOTA INTERMEDIATE TAX-FREE FUND
MINNESOTA TAX-FREE FUND
NATIONAL LIMITED TERM TAX-FREE FUND
NATIONAL TAX-FREE FUND
NEBRASKA TAX-FREE FUND
OREGON TAX-FREE FUND

Class A, Class B, Class C and Institutional Class

Wells Fargo Funds Trust (the "Trust") is an open-end, management investment
company. This Statement of Additional Information ("SAI") contains additional
information about ten funds in the Wells Fargo Funds Trust family of funds
(each, a "Fund" and collectively, the "Funds") -- the Arizona Tax-Free Fund,
California Limited Term Tax-Free Fund, California Tax-Free Fund, Colorado Tax-
Free Fund, Minnesota Intermediate Tax-Free Fund, Minnesota Tax-Free Fund,
National Limited Term Tax-Free Fund, National Tax-Free Fund, Nebraska Tax-Free
Fund and Oregon Tax-Free Fund. Each Fund, except the National Tax-Free and
National Limited Term Tax-Free Funds, is considered non-diversified under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Arizona Tax-
Free Fund, California Tax-Free Fund, Colorado Tax-Free Fund, Minnesota Tax-Free
Fund, National Tax-Free Fund and Oregon Tax-Free Fund offer Class A, Class B and
Institutional Class shares. The California Tax-Free and National Tax-Free Funds
also offer Class C shares. The California Limited Term Tax-Free Income Fund
offers Class A and Institutional Class shares only. The National Limited Term
Tax-Free Fund, Minnesota Intermediate Tax-Free Fund and Nebraska Tax-Free Fund
offer Institutional Class shares only. This SAI relates to all such classes of
shares.

This SAI is not a prospectus and should be read in conjunction with the
Funds' Prospectuses, dated November 1, 2000. All terms used in this SAI that
are defined in the Prospectuses have the meanings assigned in the Prospectus.
Copies of the Prospectuses may be obtained free of charge by calling 1-800-222-
8222 or writing to Wells Fargo Funds, P.O. Box 8266, Boston, MA 02266-8266.
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Historical Fund Information............................................. 1

Investment Policies..................................................... 3

Additional Permitted Investment Activities and Associated Risks......... 4

Special Considerations Affecting Arizona Municipal Obligations.......... 21

Special Considerations Affecting California Municipal Obligations....... 22

Special Considerations Affecting Colorado Municipal Obligations......... 26

Special Considerations Affecting Minnesota Municipal Obligations........ 28

Special Considerations Affecting Nebraska Municipal Obligations......... 30

Special Considerations Affecting Oregon Municipal Obligations........... 31

Management.............................................................. 38

Performance Calculations................................................ 52

Determination of Net Asset Value........................................ 59

Additional Purchase and Redemption Information.......................... 60

Portfolio Transactions.................................................. 61

Fund Expenses........................................................... 63

Income Taxes............................................................ 63

Capital Stock........................................................... 71

Other................................................................... 78

Counsel................................................................. 79

Independent Auditors.................................................... 79

Financial Information................................................... 79

Appendix................................................................ A-1
</TABLE>

i
<PAGE>

HISTORICAL FUND INFORMATION

The Funds in this SAI, except for the Nebraska Tax-Free Fund, were created
as part of the reorganization of the Stagecoach family of funds advised by Wells
Fargo Bank, N.A. ("Wells Fargo Bank" or "Advisor"), and the Norwest Advantage
family of funds advised by Norwest Investment Management, Inc. ("NIM"), into a
single mutual fund complex. The reorganization followed the merger of the
advisors' parent companies.

On March 25, 1999, the Board of Trustees of Norwest Advantage Funds
("Norwest"), the Board of Directors of Stagecoach Funds, Inc. ("Stagecoach") and
the Board of Trustees of the Trust approved an Agreement and Plan of
Reorganization providing for, among other things, the transfer of the assets and
stated liabilities of various predecessor Norwest and Stagecoach portfolios to
each Fund, except for the Nebraska Tax-Free Fund. Prior to November 5, 1999,
the effective date of the consolidation of the Funds and the predecessor Norwest
and Stagecoach portfolios, the Funds had only nominal assets.

On May 9, 2000, the Board of Trustees of Great Plains Funds ("Great
Plains") and the Board of Trustees of the Trust approved an Agreement and Plan
of Reorganization providing for, among other things, the transfer of the assets
and stated liabilities of Great Plains' Tax-Free Bond Fund to the Trust's
Nebraska Tax-Free Fund. The Nebraska Tax-Free Fund was organized as the
successor fund to the Great Plains Tax-Free Bond Fund, which was reorganized
into the Wells Fargo Fund effective September 11, 2000.

The chart below indicates the predecessor Stagecoach, Norwest and Great
Plains Funds that are the accounting survivors of the Wells Fargo Funds.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Wells Fargo Funds Predecessor Fund
--------------------------------------------------------------------------------
<S> <C>
Arizona Tax-Free Stagecoach Arizona Tax-Free
--------------------------------------------------------------------------------
California Limited Term Tax-Free Stagecoach California Tax-Free Income
--------------------------------------------------------------------------------
California Tax-Free Stagecoach California Tax-Free Bond
--------------------------------------------------------------------------------
Colorado Tax-Free Norwest Colorado Tax-Free
--------------------------------------------------------------------------------
Minnesota Intermediate Tax-Free Norwest Minnesota Intermediate Tax-Free
--------------------------------------------------------------------------------
Minnesota Tax-Free Norwest Minnesota Tax-Free
--------------------------------------------------------------------------------
National Limited Term Tax-Free Norwest Limited Term Tax-Free
--------------------------------------------------------------------------------
National Tax-Free Norwest Tax-Free Income
--------------------------------------------------------------------------------
Nebraska Tax-Free Great Plains Tax-Free Bond
--------------------------------------------------------------------------------
Oregon Tax-Free Stagecoach Oregon Tax-Free
--------------------------------------------------------------------------------
</TABLE>

The Arizona Tax-Free Fund commenced operations on November 8, 1999, as
successor to the Stagecoach Arizona Tax-Free Fund. The predecessor Arizona Tax-
Free Fund was originally organized as an investment portfolio of Westcore Trust
under the name Arizona Intermediate Tax-Exempt Fund on March 2, 1992. On
October 1, 1995, the Fund was reorganized as the Pacifica Arizona Tax-Exempt
Fund, an investment portfolio of Pacifica Funds Trust ("Pacifica"). On
September 6, 1996, the Pacifica Arizona Tax-Exempt Fund was reorganized as the
Stagecoach Arizona Tax-Free Fund.

1
<PAGE>

The California Tax-Free and California Limited Term Tax-Free Funds
(sometimes referred to as the "California Funds") commenced operations on
November 8, 1999, as successor to the Stagecoach California Tax-Free Bond and
Stagecoach California Tax-Free Income Funds, respectively. The California Funds
were originally organized as funds of Stagecoach. The California Tax-Free Bond
Fund commenced operations on January 1, 1992 and the California Tax-Free Income
Fund commenced operations on November 18, 1992. On December 12, 1997, the
California Tax-Free Bond Fund of Overland Express Funds, Inc. ("Overland"),
another investment company advised by Wells Fargo Bank, was reorganized with and
into the Stagecoach California Tax-Free Bond Fund.

The Colorado Tax-Free Fund commenced operations on November 8, 1999, as
successor to the Norwest Colorado Tax-Free Fund. The predecessor Norwest Fund
commenced operations on June 1, 1993.

The Minnesota Intermediate Tax-Free Fund commenced operations on November
8, 1999, as successor to the Norwest Minnesota Intermediate Tax-Free Fund. The
predecessor Norwest Fund commenced operations on September 30, 1976.

The Minnesota Tax-Free Fund commenced operations on November 8, 1999, as
successor to the Norwest Minnesota Tax-Free Fund. The predecessor Norwest Fund
commenced operations on January 12, 1988.

The National Limited Term Tax-Free Fund commenced operations on November 8,
1999, as successor to the Norwest Limited Term Tax-Free Fund. The predecessor
Norwest Fund commenced operations on October 1, 1996.

The National Tax-Free Fund commenced operations on November 8, 1999, as
successor to the Stagecoach National Tax-Free Fund and the Norwest Tax-Free
Income Fund. For accounting purposes, the Norwest Tax-Free Income predecessor
portfolio is considered the surviving entity and the financial highlights shown
for periods prior to November 8, 1999 are the financial highlights of the
Norwest Tax-Free Income Fund. The predecessor Norwest Tax-Free Income Fund
commenced operations on August 1, 1989.

The Nebraska Tax-Free Fund commenced operations on September 11, 2000, as
successor to the Great Plains Tax-Free Bond Fund. The predecessor Great Plains
Fund commenced operations on September 29, 1997 as the public successor to a
common trust fund.

The Oregon Tax-Free Fund commenced operations on November 8, 1999, as
successor to the Stagecoach Oregon Tax-Free Fund. The predecessor Oregon Tax-
Free Fund was originally organized as an investment portfolio of Westcore Trust
under the name Oregon Tax-Exempt Fund on June 1, 1988. On October 1, 1995, the
Fund was reorganized as the Pacifica Oregon Tax-Exempt Fund, an investment
portfolio of Pacifica. On September 6, 1996, the Pacifica Oregon Tax-Exempt
Fund was reorganized as the Stagecoach Oregon Tax-Free Fund.

2
<PAGE>

INVESTMENT POLICIES

Fundamental Investment Policies
-------------------------------

Each Fund has adopted the following investment policies, all of which are
fundamental policies; that is, they may not be changed without approval by the
holders of a majority (as defined in the 1940 Act) of the outstanding voting
securities of such Fund.

The Funds may not:

(1) Purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after and as a result thereof, the
value of a Fund's investments in that industry would equal or exceed 25% of the
current value of the Fund's total assets, provided that (i) this restriction
does not limit a Fund's investments in securities of other investment companies,
(ii) this restriction does not limit a Fund's investments in municipal
securities, (iii) each Fund may invest 25% or more of the current value of its
total assets in private activity bonds or notes that are the ultimate
responsibility of non-government issuers conducting their principal business
activity in the same industry; and (iv) each Fund may invest 25% or more of the
current value of its total assets in securities whose issuers are located in the
same state or securities the interest and principal on which are paid from
revenues of similar type projects;

(2) borrow money, except to the extent permitted under the 1940 Act,
including the rules, regulations and exemptions thereunder;

(3) issue senior securities, except to the extent permitted under the 1940
Act, including the rules, regulations and exemptions thereunder;

(4) make loans to other parties if, as a result, the aggregate value of
such loans would exceed one-third of a Fund's total assets. For the purposes of
this limitation, entering into repurchase agreements, lending securities and
acquiring any debt securities are not deemed to be the making of loans;

(5) 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 a Fund's investment program may be deemed to be an underwriting;

(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business); nor

(7) purchase or sell commodities, provided that (i) currency will not be
deemed to be a commodity for purposes of this restriction, (ii) this restriction
does not limit the purchase or sale of futures contracts, forward contracts or
options, and (iii) this restriction does not limit the purchase or sale of
securities or other instruments backed by commodities or the purchase or sale of
commodities acquired as a result of ownership of securities or other
instruments.

3
<PAGE>

Non-Fundamental Investment Policies
-----------------------------------

Each Fund has adopted the following non-fundamental policies which may be
changed by the Trustees of the Trust at any time without approval of such Fund's
shareholders.

(1) Each Fund may invest in shares of other investment companies to the
extent permitted under Section 12(d)(1)(A) and (B) of the 1940 Act, including
the rules, regulations and any orders obtained thereunder.

(2) Each Fund may not invest or hold more than 15% of the Fund's net
assets in illiquid securities. For this purpose, illiquid securities include,
among others, (a) securities that are illiquid by virtue of the absence of a
readily available market or legal or contractual restrictions on resale, (b)
fixed time deposits that are subject to withdrawal penalties and that have
maturities of more than seven days, and (c) repurchase agreements not terminable
within seven days.

(3) Each Fund may lend securities from its portfolio to approved brokers,
dealers and financial institutions, to the extent permitted under the 1940 Act,
including the rules, regulations and exemptions thereunder, which currently
limit such activities to one-third of the value of a Fund's total assets
(including the value of the collateral received). Any such loans of portfolio
securities will be fully collateralized based on values that are marked-to-
market daily.

(4) Each Fund may not make investments for the purpose of exercising
control or management, provided that this restriction does not limit a Fund's
investments in securities of other investment companies or in entities created
under the laws of foreign countries to facilitate investment in securities in
that country.

(5) Each Fund may not purchase securities on margin (except for short-term
credits necessary for the clearance of transactions).

(6) Each Fund may not sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities sold
short (short sales "against the box"), and provided that transactions in futures
contracts and options are not deemed to constitute selling securities short.

General
-------

Notwithstanding the foregoing policies, any other investment companies in
which the Funds may invest have adopted their own investment policies, which may
be more or less restrictive than those listed above, thereby allowing a Fund to
participate in certain investment strategies indirectly that are prohibited
under the fundamental and non-fundamental investment policies listed above.

ADDITIONAL PERMITTED INVESTMENT ACTIVITIES AND ASSOCIATED RISKS

Set forth below are descriptions of certain investments and additional
investment policies for the Funds. For purposes of monitoring the investment
policies and restrictions of the Funds

4
<PAGE>

(with the exception of the loans of portfolio securities policy described
below), the amount of any securities lending collateral held by a Fund will be
excluded in calculating total assets.

Asset-Backed Securities
-----------------------

The Funds may invest in various types of asset-backed securities. Asset-
backed securities are securities that represent an interest in an underlying
security. The asset-backed securities in which the Funds invest may consist of
undivided fractional interests in pools of consumer loans or receivables held in
trust. Examples include certificates for automobile receivables (CARS) and
credit card receivables (CARDS). Payments of principal and interest on these
asset-backed securities are "passed through" on a monthly or other periodic
basis to certificate holders and are typically supported by some form of credit
enhancement, such as a surety bond, limited guaranty, or subordination. The
extent of credit enhancement varies, but usually amounts to only a fraction of
the asset-backed security's par value until exhausted. Ultimately, asset-backed
securities are dependent upon payment of the consumer loans or receivables by
individuals, and the certificate holder frequently has no recourse to the entity
that originated the loans or receivables. The actual maturity and realized yield
will vary based upon the prepayment experience of the underlying asset pool and
prevailing interest rates at the time of prepayment. Asset-backed securities
are relatively new instruments and may be subject to greater risk of default
during periods of economic downturn than other instruments. Also, the secondary
market for certain asset-backed securities may not be as liquid as the market
for other types of securities, which could result in a Fund experiencing
difficulty in valuing or liquidating such securities. The Funds may also invest
in securities backed by pools of mortgages. The investments are described under
the heading "Mortgage-Related Securities."

Bank Obligations
----------------

The Funds may invest in bank obligations, including certificates of
deposit, time deposits, bankers' acceptances and other short-term obligations of
domestic banks, foreign subsidiaries of domestic banks, foreign branches of
domestic banks, and domestic and foreign branches of foreign banks, domestic
savings and loan associations and other banking institutions. With respect to
such securities issued by foreign branches of domestic banks, foreign
subsidiaries of domestic banks, and domestic and foreign branches of foreign
banks, a Fund may be subject to additional investment risks that are different
in some respects from those incurred by a Fund which invests only in debt
obligations of domestic issuers. Such risks include possible future political
and economic developments, the possible imposition of foreign withholding taxes
on interest income payable on the securities, the possible establishment of
exchange controls or the adoption of other foreign governmental restrictions
which might adversely affect the payment of principal and interest on these
securities and the possible seizure or nationalization of foreign deposits. In
addition, foreign branches of U.S. banks and foreign banks may be subject to
less stringent reserve requirements and to different accounting, auditing,
reporting and recordkeeping standards than those applicable to domestic branches
of U.S. banks.

Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.

5
<PAGE>

Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by a Fund will not benefit from insurance from the
Bank Insurance Fund or the Savings Association Insurance Fund administered by
the Federal Deposit Insurance Corporation. Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft drawn on it by a
customer. These instruments reflect the obligation both of the bank and of the
drawer to pay the face amount of the instrument upon maturity. The other short-
term obligations may include uninsured, direct obligations, bearing fixed,
floating- or variable-interest rates.

Bonds
-----

Certain of the debt instruments purchased by the Funds may be bonds. A
bond is an interest-bearing security issued by a company or governmental unit.
The issuer of a bond has a contractual obligation to pay interest at a stated
rate on specific dates and to repay principal (the bond's face value)
periodically or on a specified maturity date. An issuer may have the right to
redeem or "call" a bond before maturity, in which case the investor may have to
reinvest the proceeds at lower market rates. The value of fixed-rate bonds will
tend to fall when interest rates rise and rise when interest rates fall. The
value of "floating-rate" or "variable-rate" bonds, on the other hand, fluctuate
much less in response to market interest rate movements than the value of fixed
rate bonds.

Bonds may be senior or subordinated obligations. Senior obligations
generally have the first claim on a corporation's earnings and assets and, in
the event of liquidation, are paid before subordinated debt. Bonds may be
unsecured (backed only by the issuer's general creditworthiness) or secured
(also backed by specified collateral).

Borrowing
---------

The Funds may borrow money for temporary or emergency purposes, including
the meeting of redemption requests. Borrowing involves special risk
considerations. Interest costs on borrowings may fluctuate with changing market
rates of interest and may partially offset or exceed the return earned on
borrowed funds (or on the assets that were retained rather than sold to meet the
needs for which funds were borrowed). Under adverse market conditions, a Fund
might have to sell portfolio securities to meet interest or principal payments
at a time when investment considerations would not favor such sales. Reverse
repurchase agreements, short sales not against the box, dollar roll transactions
and other similar investments that involve a form of leverage have
characteristics similar to borrowings but are not considered borrowings if the
Fund maintains a segregated account.

Commercial Paper
----------------

The Funds may invest in commercial paper (including variable amount master
demand notes) which refers to short-term, unsecured promissory notes issued by
corporations to finance short-term credit needs. Commercial paper is usually
sold on a discount basis and has a maturity at the time of issuance not
exceeding nine months. Variable amount master demand notes are demand
obligations which permit the investment of fluctuating amounts at varying market
rates of interest pursuant to arrangements between the issuer and a commercial
bank acting as agent for the payee

6
<PAGE>

of such notes whereby both parties have the right to vary the amount of the
outstanding indebtedness on the notes. Investments by the Funds in commercial
paper (including variable rate demand notes and variable rate master demand
notes issued by domestic and foreign bank holding companies, corporations and
financial institutions, as well as similar instruments issued by government
agencies and instrumentalities) will consist of issues that are rated in one of
the two highest rating categories by a Nationally Recognized Ratings
Organization ("NRRO"). Commercial paper may include variable- and floating-rate
instruments.

Convertible Securities
----------------------

The Funds may invest in convertible securities. A convertible security is
generally a debt obligation or preferred stock that may be converted within a
specified period of time into a certain amount of common stock of the same or a
different user. A convertible security provides a fixed-income stream and the
opportunity, through its conversion feature, to participate in the capital
appreciation resulting from a market price advance in its underlying common
stock. As with a straight fixed-income security, a convertible security tends
to increase in market value when interest rates decline and decrease in value
when interest rates rise. Like a common stock, the value of a convertible
security also tends to increase as the market value of the underlying stock
rises, and it tends to decrease as the market value of the underlying stock
declines. Because its value can be influenced by both interest rate and market
movements, a convertible security is not as sensitive to interest rates as a
similar fixed-income security, nor is it as sensitive to changes in share price
as its underlying stock.

The creditworthiness of the issuer of a convertible security may be
important in determining the security's true value. This is because the holder
of a convertible security will have recourse only to the issuer. In addition, a
convertible security may be subject to redemption by the issuer, but only after
a specified date and under circumstances established at the time the security is
issued.

While a Fund uses the same criteria to rate a convertible debt security
that it uses to rate a more conventional debt security, a convertible preferred
stock is treated like a preferred stock for a Fund's financial reporting, credit
rating, and investment limitation purposes. A preferred stock is subordinated
to all debt obligations in the event of insolvency, and an issuer's failure to
make a dividend payment is generally not an event of default entitling the
preferred shareholder to take action. A preferred stock generally has no
maturity date, so that its market value is dependent on the issuer's business
prospects for an indefinite period of time. In addition, distributions from
preferred stock are dividends, rather than interest payments, and are usually
treated as such for corporate tax purposes.

Derivative Securities
---------------------

The Funds may invest in various instruments that may be considered
"derivatives," including structured notes, bonds or other instruments with
interest rates that are determined by reference to changes in the value of other
interest rates, indices or financial indicators ("References") or the relative
change in two or more References. Some derivative securities represent
relatively recent innovations in the bond markets, and the trading market for
these instruments is less developed than the markets for traditional types of
debt instruments. It is

7
<PAGE>

uncertain how these instruments will perform under different economic and
interest rate scenarios. Because certain of these instruments are leveraged,
their market values may be more volatile than other types of bonds and may
present greater potential for capital gain or loss. Derivative securities and
their underlying instruments may experience periods of illiquidity, which could
cause a Fund to hold a security it might otherwise sell or could force the sale
of a security at inopportune times or for prices that do not reflect current
market value. The possibility of default by the issuer or the issuer's credit
provider may be greater for these structured and derivative instruments than for
other types of instruments. As new types of derivative securities are developed
and offered to investors, the Advisor will, consistent with the Funds'
investment objectives, policies and quality standards, consider making
investments in such new types of derivative securities.

Diversification
---------------

Each Fund is non-diversified, except for the National Tax-Free Fund and
National Limited Term Tax-Free Fund, which means that they have greater latitude
than a diversified fund with respect to the investment of their assets in the
securities of relatively few municipal issuers. As non-diversified portfolios,
these Funds may present greater risks than a diversified fund. However, each
Fund intends to comply with applicable diversification requirements of the
Internal Revenue Code. These requirements provide that, as of the last day of
each fiscal quarter: (1) with respect to 50% of its assets, a Fund may not:
(a) own the securities of a single issuer, other than a U.S. Government
security, with a value of more than 5% of the Fund's total assets; or (b) own
more than 10% of the outstanding voting securities of a single issuer; and (2) a
Fund may not own the securities of a single issuer, other than a U.S. Government
security, with a value of more than 25% of the Fund's total assets.

Dollar Roll Transactions
------------------------

The Funds may enter into "dollar roll" transactions wherein a Fund sells
fixed income securities, typically mortgage-backed securities, and makes a
commitment to purchase similar, but not identical, securities at a later date
from the same party. Like a forward commitment, during the roll period no
payment is made for the securities purchased and no interest or principal
payments on the security accrue to the purchaser, but the Fund assumes the risk
of ownership. A Fund is compensated for entering into dollar roll transactions
by the difference between the current sales price and the forward price for the
future purchase, as well as by the interest earned on the cash proceeds of the
initial sale. Like other when-issued securities or firm commitment agreements,
dollar roll transactions involve the risk that the market value of the
securities sold by the Fund may decline below the price at which a Fund is
committed to purchase similar securities. In the event the buyer of securities
under a dollar roll transaction becomes insolvent, the Fund's use of the
proceeds of the transaction may be restricted pending a determination by the
other party, or its trustee or receiver, whether to enforce the Funds obligation
to repurchase the securities. The Fund's will engage in roll transactions for
the purpose of acquiring securities for its portfolio and not for investment
leverage.

8
<PAGE>

Floating- and Variable-Rate Obligations
---------------------------------------

The Funds may purchase floating- and variable-rate obligations such as
demand notes and bonds. Variable-rate demand notes include master demand notes
that are obligations that permit a Fund to invest fluctuating amounts, which may
change daily without penalty, pursuant to direct arrangements between the Fund,
as lender, and the borrower. The interest rate on a floating-rate demand
obligation is based on a known lending rate, such as a bank's prime rate, and is
adjusted automatically each time such rate is adjusted. The interest rate on a
variable-rate demand obligation is adjusted automatically at specified
intervals. The issuer of such obligations ordinarily has a right, after a given
period, to prepay at its discretion the outstanding principal amount of the
obligations plus accrued interest upon a specified number of days' notice to the
holders of such obligations. Frequently, such obligations are secured by
letters of credit or other credit support arrangements provided by banks.

There generally is no established secondary market for these obligations
because they are direct lending arrangements between the lender and borrower.
Accordingly, where these obligations are not secured by letters of credit or
other credit support arrangements, a Fund's right to redeem is dependent on the
ability of the borrower to pay principal and interest on demand. Such
obligations frequently are not rated by credit rating agencies and each Fund may
invest in obligations which are not so rated only if the Advisor determines that
at the time of investment the obligations are of comparable quality to the other
obligations in which such Fund may invest. The Advisor, on behalf of each Fund,
considers on an ongoing basis the creditworthiness of the issuers of the
floating- and variable-rate demand obligations in such Fund's portfolio.
Floating- and variable-rate instruments are subject to interest-rate risk and
credit risk.

The floating- and variable-rate instruments that the Funds may purchase
include certificates of participation in such instruments.

Foreign Currency Transactions
-----------------------------

Funds that make foreign investments may conduct foreign currency exchange
transactions either on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign exchange market or by entering into a forward foreign currency
contract. A forward foreign currency contract ("forward contract") involves an
obligation to purchase or sell a specific amount of a specific currency at a
future date, which may be any fixed number of days (usually less than one year)
from the date of the contract agreed upon by the parties, at a price set at the
time of the contract. Forward contracts are considered to be derivatives. A
Fund enters into forward contracts in order to "lock in" the exchange rate
between the currency it will deliver and the currency it will receive for the
duration of the contract. In addition, a Fund may enter into forward contracts
to hedge against risks arising from securities a Fund owns or anticipates
purchasing, or the U.S. dollar value of interest and dividends paid on those
securities. A Fund will not enter into forward contracts for speculative
purposes. A Fund will not have more than 25% of its total assets committed to
forward contracts, or maintain a net exposure to forward contracts that would
obligate the Fund to deliver an amount of foreign currency in excess of the
value of the Fund's investment securities or other assets denominated in that
currency.

9
<PAGE>

If a Fund makes delivery of the foreign currency at or before the settlement of
a forward contract, it may be required to obtain the currency through the
conversion of assets of the Fund into the currency. The Fund may close out a
forward contract obligating it to purchase a foreign currency by selling an
offsetting contract, in which case it will realize a gain or a loss.

Foreign currency transactions involve certain costs and risks. The Fund incurs
foreign exchange expenses in converting assets from one currency to another.
Forward contracts involve a risk of loss if the Advisor is inaccurate in its
prediction of currency movements. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. The precise matching of forward contract
amounts and the value of the securities involved is generally not possible.
Accordingly, it may be necessary for the Fund to purchase additional foreign
currency if the market value of the security is less than the amount of the
foreign currency the Fund is obligated to deliver under the forward contract and
the decision is made to sell the security and make delivery of the foreign
currency. The use of forward contracts as a hedging technique does not
eliminate fluctuations in the prices of the underlying securities the Fund owns
or intends to acquire, but it does fix a rate of exchange in advance. Although
forward contracts can reduce the risk of loss due to a decline in the value of
the hedged currencies, they also limit any potential gain that might result from
an increase in the value of the currencies.

In addition, there is no systematic reporting of last sale information for
foreign currencies, and there is no regulatory requirement that quotations
available through dealers or other market sources be firm or revised on a timely
basis. Quotation information available is generally representative of very
large transactions in the interbank market. The interbank market in foreign
currencies is a global around-the-clock market. Because foreign currency
transactions occurring in the interbank market involve substantially larger
amounts than those that may be involved in the use of foreign currency options,
a Fund may be disadvantaged by having to deal in an odd lot market (generally
consisting of transactions of less than $1 million) for the underlying foreign
currencies at prices that are less favorable than for round lots.

The Funds have no present intention to enter into currency futures or
options contracts, but may do so in the future. A Fund might take positions in
options on foreign currencies in order to hedge against the risk of foreign
exchange fluctuation on foreign securities the Fund holds in its portfolio or
which it intends to purchase.

Foreign Government Securities
-----------------------------

Foreign Government Securities investments include the securities of
"supranational" organizations such as the International Bank for Reconstruction
and Development and the Inter-American Development Bank if the Advisor believes
that the securities do not present risks inconsistent with the Fund's investment
objective.

Foreign Obligations
-------------------

The Funds may invest in foreign securities through American Depositary
Receipts ("ADRs"), Canadian Depositary Receipts ("CDRs"), European Depositary
Receipts ("EDRs"), International Depositary Receipts ("IDRs") and Global
Depositary Receipts ("GDRs") or other similar

10
<PAGE>

securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs (sponsored or unsponsored) are receipts typically
issued by a U.S. bank or trust company and traded on a U.S. stock exchange, and
CDRs are receipts typically issued by a Canadian bank or trust company that
evidence ownership of underlying foreign securities. Issuers of unsponsored ADRs
are not contractually obligated to disclose material information in the U.S.
and, therefore, such information may not correlate to the market value of the
unsponsored ADR. EDRs and IDRs are receipts typically issued by European banks
and trust companies, and GDRs are receipts issued by either a U.S. or non-U.S.
banking institution, that evidence ownership of the underlying foreign
securities. Generally, ADRs in registered form are designed for use in U.S.
securities markets and EDRs and IDRs in bearer form are designed primarily for
use in Europe. Each Fund may not invest 25% or more of its assets in foreign
obligations.

Investments in foreign obligations involve certain considerations that are not
typically associated with investing in domestic securities. There may be less
publicly available information about a foreign issuer than about a domestic
issuer. Foreign issuers also are not generally subject to the same accounting,
auditing and financial reporting standards or governmental supervision as
domestic issuers. In addition, with respect to certain foreign countries, taxes
may be withheld at the source under foreign tax laws, and there is a possibility
of expropriation or confiscatory taxation, political, social and monetary
instability or diplomatic developments that could adversely affect investments
in, the liquidity of, and the ability to enforce contractual obligations with
respect to, securities of issuers located in those countries. Investment income
on certain foreign securities in which a Fund may invest may be subject to
foreign withholding or other taxes that could reduce the return on these
securities. Tax treaties between the United States and foreign countries,
however, may reduce or eliminate the amount of foreign taxes to which the Fund
would be subject.

Foreign Currency Transactions. The Funds may enter into forward currency
exchange contracts in order to protect against uncertainty in the level of
future foreign exchange rates. A forward currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. These contracts are entered
into the interbank market conducted between currency traders (usually large
commercial banks) and their customers. Forward currency exchange contracts may
be bought or sold to protect the Funds against a possible loss resulting from an
adverse change in the relationship between foreign currencies and the U.S.
dollar, or between foreign currencies. Although such contracts are intended to
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time, they tend to limit any potential gain which might result
should the value of such currency increase.

Forward Commitment, When-Issued and Delayed-Delivery Transactions
-----------------------------------------------------------------

The Funds may purchase or sell securities on a when-issued or delayed
delivery basis and make contracts to purchase or sell securities for a fixed
price at a future date beyond customary settlement time. Delivery and payment
on such transaction normally take place within 120 days after the date of the
commitment to purchase. Securities purchased or sold on a when-issued, delayed-
delivery or forward commitment basis involve a risk of loss if the value of the
security

11
<PAGE>

to be purchased declines, or the value of the security to be sold increases,
before the settlement date. The Funds will establish a segregated account in
which they will maintain cash, U.S. Government obligations or other high-quality
debt instruments in an amount at least equal in value to each such Fund's
commitments to purchase when-issued securities. If the value of these assets
declines, a Fund will place additional liquid assets in the account on a daily
basis so that the value of the assets in the account is equal to the amount of
such commitments.

Geographic Concentration
------------------------

The Funds, except for the National Limited Term Tax-Free and the National
Tax Free Funds, invest principally in municipal securities issued by issuers
within a particular state and the state's political subdivisions. Those Funds
are more susceptible to factors adversely affecting issuers of those municipal
securities than would be a more geographically diverse municipal securities
portfolio. These risks arise from the financial condition of the state and its
political subdivisions. To the extent state or local governmental entities are
unable to meet their financial obligations, the income derived by a Fund, its
ability to preserve or realize appreciation of its portfolio assets or its
liquidity could be impaired.

To the extent a Fund's investments are primarily concentrated in issuers
located in a particular state, the value of the Fund's shares may be especially
affected by factors pertaining to that state's economy and other factors
specifically affecting the ability of issuers of that state to meet their
obligations. As a result, the value of the Fund's assets may fluctuate more
widely than the value of shares of a portfolio investing in securities relating
to a number of different states. The ability of state, county or local
governments and quasi-government agencies to meet their obligations will depend
primarily on the availability of tax and other revenues to those governments and
on their fiscal conditions generally. The amounts of tax and other revenues
available to governmental issuers may be affected from time to time by economic,
political and demographic conditions within their state. In addition,
constitutional or statutory restrictions may limit a government's power to raise
revenues or increase taxes. The availability of federal, state and local aid to
governmental issuers may also affect their ability to meet obligations.
Payments of principal of and interest on private activity securities will depend
on the economic condition of the facility specific revenue source from whose
revenues the payments will be made, which in turn, could be affected by
economic, political or demographic conditions in the state.

High Yield/Junk Bonds
---------------------

The Minnesota Tax-Free and Minnesota Intermediate Tax-Free Funds may invest
in bonds rated below "Baa" by Moody's or "BBB" by S&P (commonly known as "high
yield/high risk securities" or "junk bonds"). Securities rated less than "Baa"
by Moody's or "BBB" by S&P are classified as non-investment grade securities and
are considered speculative by those rating agencies. Junk bonds may be issued
as a consequence of corporate restructuring, such as leveraged buyouts, mergers,
acquisitions, debt recapitalizations, or similar events or by smaller or highly
leveraged companies. Although the growth of the high yield/high risk securities
market in the 1980's had paralleled a long economic expansion, many issuers
subsequently have been affected by adverse economic and market conditions. It
should be recognized that an economic downturn or increase in interest rates is
likely to have a negative effect on: (1) the high yield bond market; (2) the
value of high yield/high risk securities; and (3) the ability of the securities'
issuers to

12
<PAGE>

service their principal and interest payment obligations, to meet their
projected business goals or to obtain additional financing. In addition, the
market for high yield/high risk securities, which is concentrated in relatively
few market makers, may not be as liquid as the market for investment grade
securities.

Illiquid Securities
-------------------

The Funds may invest in securities not registered under the Securities Act
of 1933, as amended (the "1933 Act") and other securities subject to legal or
other restrictions on resale. Because such securities may be less liquid than
other investments, they may be difficult to sell promptly at an acceptable
price. Delay or difficulty in selling securities may result in a loss or be
costly to a Fund.

Guaranteed Investment Contracts. Guaranteed investment contracts ("GICs")
are issued by insurance companies. In purchasing a GIC, a Fund contributes cash
to the insurance company's general account and the insurance company then
credits to the Fund's deposit fund on a monthly basis guaranteed interest at a
specified rate. The GIC provides that this guaranteed interest will not be less
than a certain minimum rate. The insurance company may assess periodic charges
against a GIC for expense and service costs allocable to it. There is no
secondary market for GICs and, accordingly, GICs are generally treated as
illiquid investments. GICs are typically unrated.

Loans of Portfolio Securities
-----------------------------

Each Fund may lend its portfolio securities pursuant to guidelines approved
by the Board of Trustees of the Trust to brokers, dealers and financial
institutions, provided: (1) the loan is secured continuously by collateral
consisting of cash, securities of the U.S. Government, its agencies or
instrumentalities, or an irrevocable letter of credit issued by a bank organized
under the laws of the United States, organized under the laws of a State, or a
foreign bank that has filed an agreement with the Federal Reserve Board to
comply with the same rules and regulations applicable to U.S. banks in
securities credit transactions, and such collateral being maintained on a daily
marked-to-market basis in an amount at least equal to the current market value
of the securities loaned plus any accrued interest or dividends; (2) the Fund
may at any time call the loan and obtain the return of the securities loaned
upon sufficient prior notification; (3) the Fund will receive any interest or
dividends paid on the loaned securities; and (4) the aggregate market value of
securities loaned will not at any time exceed the limits established by the 1940
Act.

A Fund will earn income for lending its securities because cash collateral
pursuant to these loans will be invested subject to the investment objectives,
principal investment strategies and policies of the Fund. In connection with
lending securities, a Fund may pay reasonable finders, administrative and
custodial fees. Loans of securities involve a risk that the borrower may fail
to return the securities or may fail to provide additional collateral. In
either case, a Fund could experience delays in recovering securities or
collateral or could lose all or part of the value of the loaned securities.
Although voting rights, or rights to consent, attendant to securities on loan
pass to the borrower, such loans may be called at any time and will be called so
that the securities may be voted by a Fund if a material event affecting the
investment is to occur. A Fund may pay a portion of the interest or fees earned
from securities lending to a borrower or securities lending

13
<PAGE>

agent. Borrowers and placing brokers may not be affiliated, directly or
indirectly, with the Trust, the Advisor, or the Distributor (as defined below).

Mortgage-Related Securities
---------------------------

The Funds may invest in mortgage-related securities. Mortgage pass-through
securities are securities representing interests in "pools" of mortgages in
which payments of both interest and principal on the securities are made
monthly, in effect "passing through" monthly payments made by the individual
borrowers on the residential mortgage loans which underlie the securities (net
of fees paid to the issuer or guarantor of the securities). Payment of
principal and interest on some mortgage pass-through securities (but not the
market value of the securities themselves) may be guaranteed by the full faith
and credit of the U.S. Government or its agencies or instrumentalities.
Mortgage pass-through securities created by non- government issuers (such as
commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers) may be supported
by various forms of insurance or guarantees, including individual loan, title,
pool and hazard insurance, and letters of credit, which may be issued by
governmental entities, private insurers or the mortgage poolers.

Prepayment Risk. The stated maturities of mortgage-related securities may
be shortened by unscheduled prepayments of principal on the underlying
mortgages. Therefore, it is not possible to predict accurately the average
maturity of a particular mortgage-related security. Variations in the
maturities of mortgage-related securities will affect the yield of the Fund.
Early repayment of principal on mortgage-related securities may expose a Fund to
a lower rate of return upon reinvestment of principal. Also, if a security
subject to prepayment has been purchased at a premium, in the event of
prepayment the value of the premium would be lost. Like other fixed-income
securities, when interest rates rise, the value of a mortgage-related security
generally will decline; however, when interest rates decline, the value of
mortgage-related securities with prepayment features may not increase as much as
other fixed-income securities.

Collateralized Mortgage Obligations ("CMOs") and Adjustable Rate Mortgages
("ARMs"). The Funds may also invest in investment grade CMOs. CMOs may be
collateralized by whole mortgage loans but are more typically collateralized by
portfolios of mortgage pass-through securities guaranteed by the Government
National Mortgage Association ("GNMA"), the Federal Home Loan Mortgage
Corporation ("FHLMC") or Federal National Mortgage Association ("FNMA"). CMOs
are structured into multiple classes, with each class bearing a different stated
maturity. Payments of principal, including prepayments, are first returned to
investors holding the shortest maturity class; investors holding the longer
maturity classes receive principal only after the first class has been retired.
As new types of mortgage-related securities are developed and offered to
investors, the Advisor will, consistent with the Fund's investment objective,
policies and quality standards, consider making investments in such new types of
mortgage-related securities.

The Funds each may invest in ARMs issued or guaranteed by the GNMA, FNMA or
the FHLMC. The full and timely payment of principal and interest on GNMA ARMs
is guaranteed by GNMA and backed by the full faith and credit of the U.S.
Government. FNMA also guarantees full and timely payment of both interest and
principal, while FHLMC guarantees full and timely payment of interest and
ultimate payment of principal. FNMA and FHLMC ARMs are not backed

14
<PAGE>

by the full faith and credit of the United States. However, because FNMA and
FHLMC are government-sponsored enterprises, these securities are generally
considered to be high quality investments that present minimal credit risks. The
yields provided by these ARMs have historically exceeded the yields on other
types of U.S. Government securities with comparable maturities, although there
can be no assurance that this historical performance will continue.

The mortgages underlying ARMs guaranteed by GNMA are typically insured or
guaranteed by the Federal Housing Administration, the Veterans Administration or
the Farmers Home Administration, while those underlying ARMs issued by FNMA or
FHLMC are typically conventional residential mortgages which are not so insured
or guaranteed, but which conform to specific underwriting, size and maturity
standards.

The interest rates on the mortgages underlying the ARMs and some of the
CMOs in which the Funds may invest generally are readjusted at periodic
intervals ranging from one year or less to several years in response to changes
in a predetermined commonly-recognized interest rate index. The adjustable rate
feature should reduce, but will not eliminate, price fluctuations in such
securities, particularly when market interest rates fluctuate. The net asset
value of a Fund's shares may fluctuate to the extent interest rates on
underlying mortgages differ from prevailing market interest rates during interim
periods between interest rate reset dates. Accordingly, investors could
experience some loss if they redeem their shares of a Fund or if the Fund sells
these portfolio securities before the interest rates on the underlying mortgages
are adjusted to reflect prevailing market interest rates. The holder of ARMs
and CMOs are also subject to repayment risk.

The Funds will not invest in CMOs that, at the time of purchase, are "high-
risk mortgage securities" as defined in the then current Federal Financial
Institutions Examination Council Supervisory Policy Statement on Securities
Activities. High-risk mortgage securities are generally those with long
durations or those which are likely to be more sensitive to interest-rate
fluctuations.

Mortgage Participation Certificates. The Funds also may invest in the
following types of FHLMC mortgage pass-through securities. FHLMC issues two
types of mortgage pass-through securities: mortgage participation certificates
("PCs") and guaranteed mortgage certificates ("GMCs"). PCs resemble GNMA
certificates in that each PC represents a pro rata share of all interest and
principal payments made and owed on the underlying pool of mortgages. GMCs also
represent a pro rata interest in a pool of mortgages. These instruments,
however, pay interest semiannually and return principal once a year in
guaranteed minimum payments. These mortgage pass-through securities differ from
bonds in that principal is paid back by the borrower over the length of the loan
rather than returned in a lump sum at maturity. They are called "pass-through"
securities because both interest and principal payments, including prepayments,
are passed through to the holder of the security. PCs and GMCs are both subject
to prepayment risk.

Municipal Bonds
---------------

The Funds may invest in municipal bonds. The two principal classifications
of municipal bonds are "general obligation" and "revenue" bonds. Municipal
bonds are debt obligations issued to obtain funds for various public purposes.
Industrial development bonds are a specific type of revenue bond backed by the
credit and security of a private user. Certain types of

15
<PAGE>

industrial development bonds are issued by or on behalf of public authorities to
obtain funds to provide privately-operated facilities.

From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on municipal obligations. For example, under federal tax legislation
enacted in 1986, interest on certain private activity bonds must be included in
an investor's alternative minimum taxable income, and corporate investors must
treat all tax-exempt interest as an item of tax preference. Moreover the Fund
cannot predict what legislation, if any, may be proposed in the state
legislature regarding the state income tax status of interest on such
obligations, or which proposals, if any, might be enacted. Such proposals, while
pending or if enacted, might materially and adversely affect the availability of
municipal obligations generally for investment by the Fund and the liquidity and
value of the Fund's portfolio. In such an event, the Fund would re-evaluate its
investment objective and policies and consider possible changes in its structure
or possible dissolution.

Certain of the municipal obligations held by the Fund may be insured as to
the timely payment of principal and interest. The insurance policies usually
are obtained by the issuer of the municipal obligation at the time of its
original issuance. In the event that the issuer defaults on interest or
principal payment, the insurer will be notified and will be required to make
payment to the bondholders. There is, however, no guarantee that the insurer
will meet its obligations. In addition, such insurance does not protect against
market fluctuations caused by changes in interest rates and other factors.

Municipal Notes
---------------

The Funds may invest in municipal notes. Municipal notes include, but are
not limited to, tax anticipation notes ("TANs"), bond anticipation notes
("BANs"), revenue anticipation notes ("RANs") and construction loan notes.
Notes sold as interim financing in anticipation of collection of taxes, a bond
sale or receipt of other revenues are usually general obligations of the issuer.

TANs. An uncertainty in a municipal issuer's capacity to raise taxes as a
result of such events as a decline in its tax base or a rise in delinquencies
could adversely affect the issuer's ability to meet its obligations on
outstanding TANs. Furthermore, some municipal issuers mix various tax proceeds
into a general fund that is used to meet obligations other than those of the
outstanding TANs. Use of such a general fund to meet various obligations could
affect the likelihood of making payments on TANs.

BANs. The ability of a municipal issuer to meet its obligations on its
BANs is primarily dependent on the issuer's adequate access to the longer term
municipal bond market and the likelihood that the proceeds of such bond sales
will be used to pay the principal of, and interest on, BANs.

RANs. A decline in the receipt of certain revenues, such as anticipated
revenues from another level of government, could adversely affect an issuer's
ability to meet its obligations on outstanding RANs. In addition, the
possibility that the revenues would, when received, be used

16
<PAGE>

to meet other obligations could affect the ability of the issuer to pay the
principal of, and interest on, RANs.

The values of outstanding municipal securities will vary as a result of
changing market evaluations of the ability of their issuers to meet the interest
and principal payments (i.e., credit risk). Such values also will change in
response to changes in the interest rates payable on new issues of municipal
securities (i.e., market risk). Changes in the value of municipal securities
held in a Fund's portfolio arising from these or other factors will cause
changes in the net asset value per share of the Fund.

Municipal Securities
--------------------

Stand-by Commitments. The Funds may purchase municipal securities together
with the right to resell them to the seller or a third party at an agreed-upon
price or yield within specified periods prior to their maturity dates. Such a
right to resell is commonly known as a stand-by commitment, and the aggregate
price which a Fund pays for securities with a stand-by commitment may be higher
than the price which otherwise would be paid. The primary purpose of this
practice is to permit a Fund to be as fully invested as practicable in municipal
securities while preserving the necessary flexibility and liquidity to meet
unanticipated redemptions. In this regard, a Fund acquires stand-by commitments
solely to facilitate portfolio liquidity and does not exercise its rights
thereunder for trading purposes. Stand-by commitments involve certain expenses
and risks, including the inability of the issuer of the commitment to pay for
the securities at the time the commitment is exercised, non-marketability of the
commitment, and differences between the maturity of the underlying security and
the maturity of the commitment.

The acquisition of a stand-by commitment does not affect the valuation or
maturity of the underlying municipal securities. A Fund values stand-by
commitments at zero in determining net asset value. When a Fund pays directly
or indirectly for a stand-by commitment, its cost is reflected as unrealized
depreciation for the period during which the commitment is held. Stand-by
commitments do not affect the average weighted maturity of the Fund's portfolio
of securities.

Other Investment Companies
--------------------------

The Funds may invest in shares of other open-end management investment
companies, up to the limits prescribed in Section 12(d) of the 1940 Act. Under
the 1940 Act, a Fund's investment in such securities currently is limited to,
subject to certain exceptions, (i) 3% of the total voting stock of any one
investment company, (ii) 5% of such Fund's total assets with respect to any one
investment company and (iii) 10% of such Fund's total assets. Other investment
companies in which the Funds invest can be expected to charge fees for operating
expenses, such as investment advisory and administration fees, that would be in
addition to those charged by the Funds.

Participation Interests
-----------------------

Each Fund may purchase participation interests in loans or instruments in
which the Fund may invest directly that are owned by banks or other
institutions. A participation interest gives a Fund an undivided proportionate
interest in a loan or instrument. Participation interests may

17
<PAGE>

carry a demand feature permitting the holder to tender the interests back to the
bank or other institution. Participation interests, however, do not provide the
Fund with any right to enforce compliance by the borrower, nor any rights of
set-off against the borrower and the Fund may not directly benefit from any
collateral supporting the loan in which it purchased a participation interest.
As a result, the Fund will assume the credit risk of both the borrower and the
lender that is selling the participation interest.

Repurchase Agreements
---------------------

Each Fund may enter into repurchase agreements, wherein the seller of a
security to a Fund agrees to repurchase that security from a Fund at a mutually
agreed upon time and price. A Fund may enter into repurchase agreements only
with respect to securities that could otherwise be purchased by such Fund. All
repurchase agreements will be fully collateralized at 102% based on values that
are marked to market daily. The maturities of the underlying securities in a
repurchase agreement transaction may be greater than twelve months, although the
maximum term of a repurchase agreement will always be less than twelve months.
If the seller defaults and the value of the underlying securities has declined,
a Fund may incur a loss. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the security, the Fund's disposition of the
security may be delayed or limited.

A Fund may not enter into a repurchase agreement with a maturity of more
than seven days, if, as a result, more than 15% of the market value of such
Fund's total net assets would be invested in repurchase agreements with
maturities of more than seven days, restricted securities and illiquid
securities. A Fund will only enter into repurchase agreements with primary
broker/dealers and commercial banks that meet guidelines established by the
Board of Trustees and that are not affiliated with the Advisor. The Funds may
participate in pooled repurchase agreement transactions with other funds advised
by the Advisor.

Reverse Repurchase Agreements
-----------------------------

The Funds may enter into reverse repurchase agreements. Reverse repurchase
agreements are transactions in which a Fund sells a security and simultaneously
commits to repurchase that security from the buyer at an agreed upon price on an
agreed upon future date. The resale price in a reverse repurchase agreement
reflects a market rate of interest that is not related to the coupon rate or
maturity of the sold security. For certain demand agreements, there is no
agreed upon repurchase date and interest payments are calculated daily, often
based on the prevailing overnight repurchase rate. Because certain of the
incidents of ownership of the security are retained by a Fund, reverse
repurchase agreements may be viewed as a form of borrowing by a Fund from the
buyer, collateralized by the security sold by the Fund. A Fund will use the
proceeds of reverse repurchase agreements to Fund redemptions or to make
investments. In most cases these investments either mature or have a demand
feature to resell to the issuer on a date not later than the expiration of the
agreement. Interest costs on the money received in a reverse repurchase
agreement may exceed the return received on the investments made by the Fund
with those monies. Any significant commitment of a Fund's assets to the reverse
repurchase agreements will tend to increase the volatility of a Fund's net asset
value per share.

18
<PAGE>

Stripped Securities
-------------------

The Funds may purchase Treasury receipts, securities of government-
sponsored enterprises (GSEs), and other "stripped" securities that evidence
ownership in either the future interest payments or the future principal
payments on U.S. Government and other obligations. The stripped securities the
Funds may purchase are issued by the U.S. Government (or a U.S. Government
agency or instrumentality) or by private issuers such as banks, corporations and
other institutions at a discount to their face value. The Funds will not
purchase stripped mortgage-backed securities ("SMBS"). The stripped securities
purchased by the Funds generally are structured to make a lump-sum payment at
maturity and do not make periodic payments of principal or interest. Hence, the
duration of these securities tends to be longer and they are therefore more
sensitive to interest rate fluctuations than similar securities that offer
periodic payments over time. The stripped securities purchased by the Funds are
not subject to prepayment or extension risk.

The Funds may purchase participations in trusts that hold U.S. Treasury
securities (such as TIGRs and CATS) or other obligations where the trust
participations evidence ownership in either the future interest payments or the
future principal payments on the obligations. These participations are normally
issued at a discount to their "face value," and can exhibit greater price
volatility than ordinary debt securities because of the way in which their
principal and interest are returned to investors.

Swaps, Caps, Floors and Collars
-------------------------------

A Fund may enter into interest rate, currency and mortgage (or other asset)
swaps, and may purchase and sell interest rate "caps," "floors" and "collars."
Interest rate swaps involve the exchange by a Fund and a counterparty of their
respective commitments to pay or receive interest (e.g., an exchange of floating
rate payments for fixed rate payments). Mortgage swaps are similar to interest
rate swap agreements, except that the contractually-based principal amount (the
"notional principal amount") is tied to a reference pool of mortgages. Currency
swaps' notional principal amount is tied to one or more currencies, and the
exchange commitments can involve payments in the same or different currencies.
The purchase of an interest rate cap entitles the purchaser, to the extent that
a specified index exceeds a predetermined interest rate, to receive payments of
interest on the notional principal amount from the party selling the cap. The
purchase of an interest rate floor entitles the purchaser, to the extent that a
specified index falls below a predetermined value, to receive payments on a
notional principal amount from the party selling the floor. A collar entitles
the purchaser to receive payments to the extent a specified interest rate falls
outside an agreed range.

U.S. Government Obligations
---------------------------

The Funds may invest in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("U.S. Government Obligations").
Payment of principal and interest on U.S. Government Obligations (i) may be
backed by the full faith and credit of the United States (as with U.S. Treasury
bills and GNMA certificates) or (ii) may be backed solely by the issuing or
guaranteeing agency or instrumentality itself (as with FNMA notes). In the
latter case, investors must look principally to the agency or instrumentality
issuing or guaranteeing the obligation for

19
<PAGE>

ultimate repayment, which agency or instrumentality may be privately owned.
There can be no assurance that the U.S. Government will provide financial
support to its agencies or instrumentalities where it is not obligated to do so.
In addition, U.S. Government Obligations are subject to fluctuations in market
value due to fluctuations in market interest rates. As a general matter, the
value of debt instruments, including U.S. Government Obligations, declines when
market interest rates increase and rises when market interest rates decrease.
Certain types of U.S. Government Obligations are subject to fluctuations in
yield or value due to their structure or contract terms.

Warrants
--------

Warrants are securities, typically issued with preferred stock or bonds, that
give the holder the right to purchase a given number of shares of common stock
at a specified price, usually during a specified period of time. The price
usually represents a premium over the applicable market value of the common
stock at the time of the warrant's issuance. Warrants have no voting rights
with respect to the common stock, receive no dividends and have no rights with
respect to the assets of the issuer. Warrants do not pay a fixed dividend.
Investments in warrants involve certain risks, including the possible lack of a
liquid market for the resale of the warrants, potential price fluctuations as a
result of speculation or other factors and failure of the price of the common
stock to rise. A warrant becomes worthless if it is not exercised within the
specified time period.

Zero Coupon Bonds
-----------------

The Funds may invest in zero coupon bonds. Zero coupon bonds are
securities that make no periodic interest payments, but are instead sold at
discounts from face value. The buyer of such a bond receives the rate of return
by the gradual appreciation of the security, which is redeemed at face value on
a specified maturity date. Because zero coupon bonds bear no interest, they are
more sensitive to interest-rate changes and are therefore more volatile. When
interest rates rise, the discount to face value of the security deepens and the
securities decrease more rapidly in value, when interest rates fall, zero coupon
securities rise more rapidly in value because the bonds carry fixed interest
rates that become more attractive in a falling interest rate environment.

Nationally Recognized Ratings Organizations
-------------------------------------------

The ratings of Moody's, S&P, Division of McGraw Hill, Duff & Phelps Credit
Rating Co., Fitch Investors Service, Inc. Thomson Bank Watch and IBCA Inc.
represent their opinions as to the quality of debt securities. It should be
emphasized, however, that ratings are general and not absolute standards of
quality, and debt securities with the same maturity, interest rate and rating
may have different yields while debt securities of the same maturity and
interest rate with different ratings may have the same yield. Subsequent to
purchase by the Funds, an issue of debt securities may cease to be rated or its
rating may be reduced below the minimum rating required for purchase by the
Funds. The Advisor will consider such an event in determining whether the Fund
involved should continue to hold the obligation.

20
<PAGE>

SPECIAL CONSIDERATIONS
AFFECTING ARIZONA MUNICIPAL OBLIGATIONS

Under its Constitution, the State of Arizona is not permitted to issue
general obligation bonds secured by the State's full faith and credit. However,
agencies and instrumentalities of the State are authorized under specified
circumstances to issue bonds secured by revenues. The State enters into certain
lease transactions that are subject to annual renewal at its option. Local
governmental units in the State are also authorized to incur indebtedness. The
major source of financing for such local government indebtedness is an ad
valorem property tax. In addition, to finance public projects, local
governments may issue revenue bonds to be paid from the revenues of an
enterprise or the proceeds of an excise tax, from assessment bonds payable from
special proceeds of an excise tax, or from assessment bonds payable by special
assessments. Arizona local governments have also financed public projects
through leases that are subject to annual appropriation at the option of the
local government.

There are periodic attempts in the form of voter initiatives and
legislative proposals to further limit the amount of annual increases in taxes
that can be levied by the various taxing jurisdictions without voter approval.
It is possible that if such a proposal were enacted, there would be an adverse
impact on State or local government financing. It is not possible to predict
whether any such proposals will be enacted in the future or what would be their
possible impact on state or local government financing.

The State is required by law to maintain a balanced budget. To achieve
this objective, it has in the past utilized a combination of spending
reductions and tax increases. In recent years, the State's fiscal situation has
improved, even while tax reduction measures have been enacted each year since
1992. In 1992, voters passed a measure that requires a two-thirds vote of the
legislature to increase state taxes.

For several decades, the population has grown at a substantially higher
rate than the population of the United States. The State's population is nearly
5 million and, due to continued employment expansion, is expected to record
above-average growth rates, with 150,000 new residents being added each year.
After population growth of 3% in 1999, growth of 2.7% is forecast for 2000 and
2.6% for 2001.

The State's diversified economic base is not dependent on any single
industry. Principal economic sectors include services, manufacturing, mining,
tourism, and the military. Agriculture, at one time a major sector, plays a
much smaller role in the economy.

The economy of the State is growing. At midyear 2000, Arizona was the
leading state for job creation. It is projected that wage and salary
employment will grow by 3.5% in 2000 and 3.1% in 2001. Different parts of the
State have different growth rates and structures. The Phoenix metropolitan area
continues as the perennial second-fastest large metro economy, ranking number 8
among all 290 labor markets as of May 2000. At midyear 2000, metro Tucson led
the nation as the fastest growing metropolitan area. The balance of the State
also grew but at more moderate levels. In July 2000, year-over-year job growth
was 4.5% in Arizona, 5.9% in Tucson and 4.1% in Phoenix.

21
<PAGE>

Personal income, after growing by 7.1% in 1999, is expected to grow by 6.7%
in 2000 and 6.2% in 2001.

Overall, General Fund revenues are expected to continue to grow. The state
government closed FY 2000 with $22.8 million more than anticipated. These funds
carry forward and are available for use in FY 2001. It is projected that the
growth rate of 2001 revenues will be 7.2%.

The Governor's budget proposals in 2000 sought to limit overall spending,
continue the growth of the State's "rainy day" funds, and propose tax reductions
for the ninth consecutive years.

State policy makers have been very successful in recent years in depositing
monies into various accounts that have been established for a "rainy day."
These monies are reserved for a true budget emergency precipitated by an
economic downturn. By the end of FY 2001, the rainy day fund is expected to
reach $425 million, or 7.08% of the General Fund revenues.

SPECIAL CONSIDERATIONS AFFECTING
CALIFORNIA MUNICIPAL OBLIGATIONS

Certain California constitutional amendments, legislative measures,
executive orders, civil actions and voter initiatives, as well as the general
financial condition of the state, could adversely affect the ability of issuers
of California municipal obligations to pay interest and principal on such
obligations. The following information constitutes only a brief summary, does
not purport to be a complete description, and is based on information drawn from
official statements relating to securities offerings of the State of California
and various local agencies, available as of the date of this SAI. While the
Trust has not independently verified such information, it has no reason to
believe that such information is incorrect in any material respect.

The California Economy and General Information. After experiencing strong
----------------------------------------------
growth through much of the 1980s, from mid-1990 to late 1993, the state suffered
a recession with the worst economic, fiscal and budget conditions since the
1930s. Construction, manufacturing (particularly related to defense), exports
and financial services, among others, were all severely affected. Job losses
had been the worst of any post-war recession. California's economy has been
recovering and growing steadily stronger since the start of 1997. The
unemployment rate, while still higher than the national average, fell to an
average of 5.9% in 1998, compared to 10.1% in January 1994. The unsettled
financial situation occurring in certain Asian economies, and its spillover
effect elsewhere, may adversely affect the state's export-related industries
and, therefore, the state's rate of economic growth.

In years past, because of the state's budget problems, the state's General
Obligation bonds were downgraded. In 1996, however, citing California's
improving economy and budget situation, Fitch and Standard & Poor's raised their
ratings for General Obligation bonds from A to A+. In October 1997, Fitch
raised its rating from A+ to AA-, referring to the state's fundamental
strengths, the extent of its economic recovery and the return of financial
stability. In October 1998, Moody's raised its rating from A1 to Aa3 citing the
state's credit condition, including the rebuilding of cash and budget reserves.
There is no assurance that a particular

22
<PAGE>

rating will continue for any given period of time or that any such rating will
not be revised downward or withdrawn entirely if, in the judgment of the agency
originally establishing the rating, circumstances so warrant. A downward
revision or withdrawal of such ratings, or either of them, may have an effect on
the market price of the municipal obligations in which the Funds invest.

State Finances. The moneys of California are segregated into the General
--------------
Fund and over 900 Special Funds, including bond, trust and pension funds. The
General Fund consists of the revenues received by the state's Treasury and not
required by law to be credited to any other fund, as well as earnings from the
investment of state moneys not allocable to another fund. The General Fund is
the principal operating fund for the majority of governmental activities and is
the depository of most major revenue sources of the state. The General Fund may
be expended as the result of appropriation measures by California's Legislature
and approved by the Governor, as well as appropriations pursuant to various
constitutional authorizations and initiative statutes.

The Special Fund for Economic Uncertainties ("SFEU") is funded with General
Fund revenues and was established to protect California from unforeseen revenue
reductions and/or unanticipated expenditure increases. Amounts in the SFEU may
be transferred by the state's Controller to meet cash needs of the General Fund.
The Controller is required to return moneys so transferred without payment of
interest as soon as there are sufficient moneys in the General Fund. Any
appropriation made from the SFEU is deemed an appropriation from the General
Fund, for budgeting and accounting purposes. For year-end reporting purposes,
the Controller is required to add the balance in the SFEU to the balance in the
General Fund so as to show the total moneys then available for General Fund
purposes. In the 2000 Budget Act, signed on June 30, 2000, the Department of
Finance projects the SFEU will have a balance of about $1.781 billion at June
30, 2001.

Inter-fund borrowing has been used for several years to meet temporary
imbalances of receipts and disbursements in the General Fund. As of June 30,
2000, the General Fund had no outstanding loans from the SFEU, General Fund
special accounts or other special funds. The 2000 Budget Act appropriates $78.8
billion from the General Fund, an increase of 17.3 percent over 1999-2000, and
includes expenditures of $15.6 billion from the SFEU and $5.0 billion from bond
funds.

Changes in California Constitutional and Other Laws. In 1978, California
---------------------------------------------------
voters approved an amendment to the California Constitution known as
"Proposition 13," which added Article XIIIA to the California Constitution.
Article XIIIA limits ad valorem taxes on real property and restricts the ability
of taxing authorities to increase real property taxes. However, legislation
passed subsequent to Proposition 13 provided for the redistribution of
California's General Fund surplus to local agencies, the reallocation of
revenues to local agencies and the assumption of certain local obligations by
the state so as to assist California municipal issuers to raise revenue to pay
their bond obligations. It is unknown whether additional revenue redistribution
legislation will be enacted in the future and whether, if enacted, such
legislation will provide sufficient revenue for such California issuers to pay
their obligations.

23
<PAGE>

California is subject to another Constitutional Amendment, Article XIIIB,
which may have an adverse impact on California state and municipal issuers.
Article XIIIB restricts the state from spending certain appropriations in excess
of an appropriation's limit imposed for each state and local government entity.
If revenues exceed such appropriation's limit, such revenues must be returned
either as revisions in the tax rates or fee schedules.

On November 8, 1988, California voters approved "Proposition 98," which
amended Article XIIIB and Article XVI of the state's Constitution. Proposition
98 (as modified by "Proposition 111," which was enacted in 1990), changed state
funding of public education below the university level and the operation of the
state's appropriations limit, primarily by guaranteeing K-14 schools a minimum
share of General Fund revenues. In 1986, California voters approved
"Proposition 62," which provided in part that any tax for general governmental
purposes imposed by a local government be approved by a two-thirds vote of the
governmental entity's legislative body and by a majority of its electorate and
that any special tax imposed by a local government be approved by a two-thirds
vote of the electorate. In September 1995, the California Supreme Court upheld
the constitutionality of Proposition 62, creating uncertainty as to the legality
of certain local taxes enacted by nonchartered cities in California without
voter approval.

In 1996, California voters approved "Proposition 218," which added Articles
XIIIC and XIIID to the state's Constitution generally requiring vote approval
of most tax or fee increases by local governments and curtailing local
government use of benefit assessments to fund certain property-related services
to finance infrastructure. Proposition 218 also limits the use of special
assessments or "property-related" fees to services or infrastructure that confer
a "special benefit" to specific property; police, fire and other services are
now deemed to benefit the public at large and, therefore, could not be funded by
special assessments. Finally, the amendments enable the voters to use their
initiative power to repeal previously-authorized taxes, assessments, fees and
charges. The interpretation and application of Proposition 218 will ultimately
be determined by the courts. Proposition 218 is generally viewed as restricting
the fiscal flexibility of local governments, and for this reason, some ratings
of California cities and counties have been, and others may be, reduced. It
remains to be seen, as such, what impact these Articles will have on existing
and future California security obligations.

Chapter 322, Statutes of 1998 established a vehicle license fee offset
program. Pursuant to this chapter, Vehicle License Fees (a personal property
tax on the value of automobiles, the "VLF") were reduced by 25 percent beginning
January 1, 1999. Chapter 322 also set out a series of "trigger" levels, so that
the percentage fee reduction could be increased in annual stages up to a maximum
of 67.5 percent in 2003 depending on whether future General Fund revenues reach
the target levels. As a result of strong revenue growth, an additional 10
percent reduction for calendar year 2000 was included in the 1999 Budget Act,
and the 2000 Budget Act accelerated the full 67.5 percent reduction to January
1, 2001, two years ahead of schedule. (The savings for calendar years 2001 and
2002 will be in the form of tax rebates.) For 2000-01 and 2001-02, the offset
program and rebates are expected to reduce revenues by $2.599 billion and $3.580
billion, respectively. This loss of local revenue is replaced by the state's
General Fund.

VLF, over and above the costs of collection and refunds authorized by law,
are constitutionally defined local revenues. A continuous appropriation from
the General Fund

24
<PAGE>

replaces the vehicle license fee revenue that local governments would otherwise
lose due to the fee reductions. If in any year the Legislature fails to
appropriate enough funds to fully offset the then-applicable VLF reduction, the
percentage offset will be reduced to assure that local governments are not
disadvantaged.

Other Information. Certain debt obligations held by the Funds may be
-----------------
obligations payable solely from lease payments on real or personal property
leased to the state, cities, counties or their various public entities.
California law provides that a lessor may not be required to make payments
during any period that it is denied use and occupancy of the property in
proportion to such loss. Moreover, the lessor only agrees to appropriate
funding for lease payments in its annual budget for each fiscal year. In case
of a default under the lease, the only remedy available against the lessor is
that of reletting the property; no acceleration of lease payments is permitted.
Each of these factors presents a risk that the lease financing obligations held
by a Fund would not be paid in a timely manner.

Certain debt obligations held by the Funds may be obligations payable
solely from the revenues of health care institutions. The method of
reimbursement for indigent care, California's selective contracting with health
care providers for such care and selective contracting by health insurers for
care of its beneficiaries now in effect under California and federal law may
adversely affect these revenues and, consequently, payment on those debt
obligations.

In 1998, California signed a settlement agreement with the four major
cigarette manufacturers. The State agreed to drop its lawsuit and not to sue in
the future. Tobacco manufacturers agreed to billions of dollars in payments and
restrictions in marketing activities. Under the settlement, the companies
agreed to pay California governments approximately $25 billion over a period of
25 years. Beyond 2025, payments of approximately $1 billion per year will
continue in perpetuity. Under the settlement, half of the moneys will be paid
to the State and half to local governments (all counties and cities of San
Diego, Los Angeles, San Francisco and San Jose). The 2000 Budget Act includes
the receipt of $388 million of settlement money to the General Fund in fiscal
year 2000-01.

The specific amount to be received by the state and local governments is
subject to adjustment. Details in the settlement allow reduction of the
companies' payments for decreases in cigarette sales and certain types of
federal legislation. Settlement payments can increase due to inflation or
increases in cigarette sales. The "first annual" payment, receive in April
2000, was 12 percent lower than the base settlement amount due to reduced sales.
Future payment estimates have been reduced by a similar percentage. If any of
the companies goes into bankruptcy, the state could seek to terminate the
agreement with respect to those companies filing bankruptcy actions, thereby
reinstating all claims against those companies. The state may then pursue those
claims in the bankruptcy litigation, or as otherwise provided by law. The
settlement itself is the subject of lawsuits challenging the settlement and
seeking damages.

25
<PAGE>

SPECIAL CONSIDERATIONS AFFECTING
COLORADO MUNICIPAL OBLIGATIONS

Among the most significant sectors of the State's economy are services,
communications, transportation, tourism and manufacturing of durable and non-
durable goods and tourism. During the mid-1980's, the State's economy was
adversely affected by numerous factors, including the contraction of the energy
sector, layoffs by advanced technology firms and an excess supply of both
residential and nonresidential buildings causing employment in the construction
sector decline. As a result of these conditions, certain areas of the State
experienced particularly high unemployment. Furthermore, in 1986, for the first
time in 32 years, job generation in the State was negative and, in 1986, for the
first time in 21 years, the State experienced negative migration, with more
people leaving the State than moving in.

From 1990 through 1999, there was steady improvement in the Colorado
economy: per-capita income increased approximately 60.1% (5.6% in 1999) and
retail trade sales revenues increased approximately 90.1% (8.7% in 1999). The
State's estimated growth rate is above the national growth rate and the State's
unemployment rate is still below the national unemployment rate (in 1999 the
State's unemployment rate was 2.9%).

The State of Colorado's political subdivisions include approximately 1,600
units of local government in Colorado, including counties, statutory cities and
towns, home-rule cities and counties, school districts and a variety of water,
irrigation, and other special districts and special improvement districts, all
with various constitutional and statutory authority to levy taxes and incur
indebtedness.

The Colorado economy became increasingly diversified during the 1990s,
moving from an economy formerly reliant on agriculture and mining to one based
on services, communications, transportation, tourism and manufacturing. Small
businesses predominate among Colorado businesses. Certain obligations of
Colorado State and local public entities are subject to particular economic
risks, including, but not limited to, the vulnerabilities of resort economies
which depend on seasonal tourism, the possibility of downturns in sales tax and
other revenues, and fluctuations in the real estate market.

The State derives all of its General Fund revenues from taxes. The two
most important sources of these revenues are sales and use taxes and income
taxes, which accounted for approximately 31.0% and 63.8%, respectively, of total
General Fund net collections during fiscal year 1998 and approximately 33.9% and
61.9%, respectively, of total net General Fund net collections during fiscal
year 1999. The ending General Fund balance for fiscal year 1998 was
approximately $718.0 million and for fiscal year 1999 was approximately $345.7
million.

The Colorado Constitution contains strict limitations on the ability of the
State to create debt except under certain very limited circumstances. However,
the constitutional provision has been interpreted not to limit the ability of
the State to issue certain obligations which do not constitute debt, including
short-term obligations which do not extend beyond the fiscal year in which they
are incurred and certain lease purchase obligations which are subject to annual
appropriation. The State is authorized pursuant to State statutes to issue
short-term notes to alleviate temporary cash flow shortfalls. The most recent
issue of such notes, issued on

26
<PAGE>

September 26, 2000, was given the highest rating available for short-term
obligations by Standard & Poors (SP-1+), Fitch (F-1+), and Duff & Phelps Credit
Rating Company (F-1+) (A rating on such notes was not requested from, and
consequently no rating was given by, Moody's). Because of the short-term nature
of such notes, their ratings should not be considered necessarily indicative of
the State's general financial condition.

On November 3, 1992, the Colorado voters approved a State constitutional
amendment (the "TABOR Amendment") that restricts the ability of the State and
local governments to increase taxes, revenues, debt and spending. The TABOR
Amendment provides that its provisions supersede conflicting State
constitutional, State statutory, charter or other State or local provisions.

Among other provisions, the TABOR Amendment requires the establishment of
emergency reserves, limits increases in district revenues and in district fiscal
year spending, and requires voter approval for new taxes, tax increases or debt
not meeting certain exceptions. As a general matter, annual State fiscal year
spending may change not more than inflation plus the percentage change in State
population in the prior calendar year. Annual local district fiscal year
spending may change no more than inflation in the prior calendar year plus
annual local growth, as defined in and subject to the adjustments provided in
the TABOR Amendment. The TABOR Amendment provides that annual district property
tax revenues may change no more than inflation in the prior calendar year plus
annual local growth, as defined in and subject to the adjustments provided in
the TABOR Amendment. District revenues in excess of the limits prescribed by
the TABOR Amendment are required, absent voter approval, to be refunded by any
reasonable method, including temporary tax credits or rate reductions. During
1998 and 1999, the State refunded revenues in excess of the applicable limits
totaling over $6 million and $540 million, respectively, to certain taxpayers in
the State in accordance with the TABOR Amendment. The TABOR Amendment also
provides that a local district may reduce or end its subsidy to any program
(other than public education through grade 12 or as required by federal law)
delegated to it by the State General Assembly for administration.

This description is not intended to constitute a complete description of
all of the provisions of the TABOR Amendment. Furthermore, many provisions of
the TABOR Amendment and their application are unclear. Several statutes have
been enacted since the passage of the TABOR Amendment attempting to clarify the
application of the TABOR Amendment with respect to certain governmental entities
and activities, and numerous court decisions have been rendered interpreting
certain of the TABOR Amendment's provisions, including a recent State Supreme
Court decision holding that certain proposed transportation revenue anticipation
notes would be subject to the TABOR Amendment's requirements for prior voter
approval. However, many provisions of the TABOR Amendment may require further
legislative or judicial clarification. The future impact of the TABOR Amendment
on the financial operations and obligations of the State and local governments
in the State cannot be determined at this time.

The financial operations and obligations of the State and local governments
in Colorado may also be affected directly or indirectly by future changes in
law. Two ballot initiatives included on the ballot for the November 7, 2000
general election, if passed, could potentially have a material adverse effect on
development in the State and the State economy. The first such ballot
initiative, known as Amendment 21 ("Amendment 21"), would amend the State
constitution to require annual tax cuts that would affect a variety of State and
local government taxes and would

27
<PAGE>

not be limited as to total amount over time. The other initiative, known as
Amendment 24 ("Amendment 24"), would amend the State constitution to impose a
wide variety of new restrictions on development in the State, including
requiring voter approval of development that is not subject to certain
exceptions. Both Amendment 21 and Amendment 24 are vague in many respects, and
if passed would be subject to interpretation and possible litigation to clarify
their meaning and application.

SPECIAL CONSIDERATIONS
AFFECTING MINNESOTA MUNICIPAL OBLIGATIONS

The following highlights some of the more significant financial trends and
issues affecting Minnesota and its economy and is based on information drawn
from official statements, government web sites and other resources publicly
available as of the date of this SAI. Wells Fargo Bank has not independently
verified any of the information contained in such resources, but is unaware of
any fact which would render such information inaccurate.

Constitutional State Revenue Limitations. Minnesota's constitutionally
----------------------------------------
prescribed fiscal period is a biennium. No agency or other entity may spend
more than its "allotment." The State's Commissioner of Finance, with the
approval of the Governor, is required to reduce excess allotments to the extent
necessary to balance expenditures and forecasted available resources for the
then current biennium. The Governor may seek legislative action when a large
reduction in expenditures appears necessary, and if the State's legislature is
not in session, the Governor is empowered to convene a special legislative
session.

Effect of Limitations on Ability to Pay Bonds. There are no constitutional
---------------------------------------------
or statutory provisions which would impair the ability of Minnesota
municipalities, agencies or instrumentalities to meet their bond obligations if
the bonds have been properly issued.

Population Trends in the State. Minnesota resident population grew from
------------------------------
4,085,000 in 1980 to 4,387,000 in 1990 or, at an average annual compound rate of
.7 percent compared to the national average at an annual compound rate of .9
percent during this period. Minnesota population is currently forecast by the
U.S. Department of Commerce to grow at annual rate of .8 percent through 2010.

Structure of the State's Economy. Diversity and a significant natural
--------------------------------
resource base are two important characteristics of the State's economy.

At an aggregate level of detail, the structure of the State's economy
parallels the structure of the United States economy as a whole. For 1999,
State employment in ten major sectors was distributed in approximately the same
proportions as national employment. In all sectors, the share of the total
State employment was within two percentage points of national employment share.

Some unique characteristics of the State's economy are apparent in
employment concentrations in industries that comprise the durable goods and non-
durable goods manufacturing categories. In the durable goods industries, the
State's employment highly concentrated in the industrial machinery and
instrument and miscellaneous categories. Of

28
<PAGE>

particular importance is the industrial machinery category in which 30.3 percent
of the State's durable goods employment was concentrated in 1999, as compared to
19.4 percent for the United States as a whole.

The importance of the State's resource base for overall employment is
apparent in the employment mix in non-durable goods industries. In 1999, 29.5
percent of the State's non-durable goods employment was concentrated in food and
kindred industries, and 16.6 percent in paper and allied industries. This
compares to 22.7 percent and 8.9 percent, respectively, for comparable sectors
in the national economy. Over half of the State's acreage is devoted to
agricultural purposes, and nearly one-third to forestry. Printing and
publishing is also relatively more important in the State than in the U.S.

Mining is currently a less significant factor in the State economy than it
once was. Mining employment, primarily in the iron ore or taconite industry,
dropped from 17.3 thousand in 1979 to 7.4 thousand in 1999. It is not expected
that mining employment will return to 1979 levels.

Employment Growth in the State. In the period 1980 to 1990, overall
------------------------------
employment growth in Minnesota lagged behind national growth. However,
manufacturing has been a strong sector, with Minnesota employment outperforming
the U.S. counterpart in both the 1980-1990 and 1990-1999 periods.

In spite of a strong manufacturing sector, during the 1980 to 1990 period
total employment in Minnesota increased 17.9 percent while increasing 20.1
percent nationally. Most of Minnesota's relatively slower growth is associated
with declining agricultural employment and with the two recessions in the U.S.
economy during the early 1980s and which were more sever in Minnesota than
nationwide. Between 1990 and 1999, Minnesota's non-farm employment grew 22.5
percent compared with 15.0 percent nationwide.

Performance of the State's Economy. Since 1980, State per capita personal
----------------------------------
income has been within five percentage points of national per capita personal
income. The State's per capita income has generally remained above the national
average. In 1998, Minnesota per capita personal income was 102.8 percent of the
national average.

During 1998 and 1999, the State's monthly unemployment rate was generally
less than the national unemployment rate, averaging 2.8 percent in 1999, as
compared to the national average of 4.2 percent.

Local Obligations. The State of Minnesota has no obligation to pay any
-----------------
bonds of its political or governmental subdivisions, municipalities,
governmental agencies, or instrumentalities, except that the State has adopted
aid intercept programs under which, subject to appropriations, certain school
and county obligations may be guaranteed. The creditworthiness of local general
obligation bonds is dependent upon the financial condition of the local
government issuer, and the creditworthiness of revenue bonds is dependent upon
the availability of particular designated revenue sources or the financial
conditions of the underlying obligors. Although most of the bonds owned by the
Fund are expected to be obligations other than general obligations of the State
of Minnesota itself, there can be no assurances that the same

29
<PAGE>

factors that adversely affect the economy of the State generally will not also
affect adversely the market value or marketability of such other obligations, or
the ability of the obligors to pay the principal of or interest on such
obligations.

SPECIAL CONSIDERATIONS
AFFECTING NEBRASKA MUNICIPAL OBLIGATIONS

The concentration of the Nebraska Tax-Free Fund in securities issued by
governmental units of only one state exposes the Fund to risks greater than
those of a more diversified portfolio holding securities issued by governmental
units of different states in different regions of the country. Nebraska's
Constitution limits the debt the State may incur and sets certain restrictions
on debt incurred by municipalities and political subdivisions. Accordingly, the
availability of Nebraska municipal securities and the economy of the State will
effect the Fund. The following is a brief summary of data and economic trends
based upon information drawn from government web sites and other resources
publicly available as of the date of this SAI. The Trust has not independently
verified such information, but has no reason to believe that such information is
inaccurate in any material respect.

Governmental Units and Finances
-------------------------------

Nebraska has 93 counties, 535 incorporated municipalities and over 1,500
other political subdivisions or authorities. These include governmental units
such as school districts, utility districts, the Nebraska Educational Facilities
Authority, and the Nebraska Investment Finance Authority. While these various
municipalities and public authorities dominantly rely on independent revenue
sources, such as property taxes, these entities are not immune from State
revenue short falls which lead to reductions in State aid to the entities.
Furthermore, municipal securities issued by public authorities in Nebraska are
not backed by the State's full faith and credit.

Throughout the early and mid 1990s, State and local revenues, in the
aggregate, increased each year at a rate sufficient to cover all increases in
State and local expenditures. The ending balance in the State's general fund
for fiscal year ending 1999 was $292,993,012 and the ending balance of the
general fund for fiscal year ending 2000 is $315,589,812. These ending balances
do not include amounts held in the State's Cash Reserve Fund. The continued
increase in revenues at a level sufficient to cover current and future
expenditures will depend on numerous factors, including the State's economy,
property tax values, and the financial condition of each municipality or public
authority issuing municipal securities.

Generally, the municipal securities issued by the State's various
governmental units have been highly regarded. Notwithstanding, certain Nebraska
municipal securities contained unique risks. Such municipal securities may
include, without limitation, health care providers, nuclear power plants,
facility offerings and other private activity bonds that lack governmental
backing. The Fund's success may be impacted by its ability to adequately
evaluate the unique risks associated with the respective issuers.

30
<PAGE>

Economic Conditions
-------------------

During the mid and late 1990s, Nebraska's economy experienced consistent
growth. State employment steadily increased from 880,246 in 1994 to an
estimated 911,100 in 1999 with almost uniform increases in all non-farm
industries. Nebraska's unemployment rate has consistently been among the lowest
rates in the Nation. From 1994 through 1999, Nebraska's unemployment rate
ranged from 2.6% to 2.9%. Nebraska's per capital income, while below the
national average, grew from $21,168 in 1994 to $25,861 in 1998. Nebraska also
experienced positive net migration and population growth in the mid and late
1990s, reversing net out migration from 1974 to 1990. Based upon Census
information, Nebraska's population increased from 1,621,551 in 1994 to 1,666,028
in 1999.

Historically, national economic downturns have had less economic impact on
Nebraska than other states, while at the same time, Nebraska's economy
traditionally has not grown as fast as others in periods of national economic
expansion. During the 1990s, the Nebraska economy increasingly diversified
away from being heavily dependent agriculture. Increases in manufacturing,
services and finance, insurance and real estate industries have helped to more
uniformly distribute Nebraska's gross state product. However, the Nebraska
economy remains heavily dependent upon agriculture and may be adversely effected
by the farm commodities markets, changes in federal agriculture programs, and
production and weather conditions. Additionally, the diversification of the
State's gross state product over the last decade may effect the Nebraska
economy's response to national economic cycles.

Nebraska's economic trends of the 1990s appear to be continuing into the
year 2000. Preliminary numbers for August 2000 indicate that Nebraska's labor
force totaled 945,252 with an unemployment rate of 2.7%. Non-farm payroll jobs
decreased slightly by 0.6% for the one year period then ending. Manufacturing
jobs also decreased slightly 0.8% over the same period. These numbers and
current economic forecasts indicate that the Nebraska economy will continue to
grow in the near future, but growth rates will slow due in large part to the
State's tight labor market.

As discussed above, most municipal securities owned by the fund are
expected to be obligations of municipalities or other governmental units. Thus,
the actual impact of the State's economy and factors that effect that State's
economy on most of the municipal securities is uncertain. For example, a factor
that may materially effect the State's economy may or may not also effect an
individual municipality's financial condition or the municipality's ability to
meet its obligations pursuant to the respective municipal securities.

SPECIAL CONSIDERATIONS
AFFECTING OREGON MUNICIPAL OBLIGATIONS

The concentration of the Oregon Tax-Free Fund in securities issued by
governmental units of only one state exposes the Fund to risks greater than
those of a more diversified portfolio holding securities issued by governmental
units of different states and different regions of the country.

31
<PAGE>

State Bonds and Revenues. As of June 1, 2000, $2.39 billion (rounded) in
------------------------
general obligation bonds issued by the State of Oregon and its agencies were
outstanding, including $155.6 million (rounded) in general obligation bonds
supported by the budget for the State's general fund and $2.23 billion (rounded)
of revenue supported general obligation bonds. The State's revenue supported
general obligation bonds include $1.41 billion (rounded) of State veteran's
bonds outstanding as of March 31, 2000, which, in the event of poor economic
conditions resulting in an increased number of mortgage defaults, could cease to
be self-supporting. All of the existing and outstanding general obligation
bonds of the State have been issued under specific State constitutional
provisions that authorize the issuance of such bonds and provide authority for
ad valorem taxation to pay the principal of and interest on such bonds. With
the exception of the veteran's bonds, for which no more than two mills on each
dollar valuation may be levied to pay principal and interest, the authority of
the State to tax property for the payment of its general obligation bonds is
unlimited. Since at least 1950, the State has not imposed ad valorem tax for
the payment of any of its obligations because other revenues, including those
generated by the self-supporting bonds, have been sufficient.

In addition to general obligation bonds, various State statutes authorize
the issuance of State revenue bonds and certificates of participation. These
limited obligations of the State or its agencies or instrumentalities may be
payable from a specific project or source, including lease rentals. The State
is not authorized to impose ad valorem taxes on property for the payment of
principal and interest on these bonds, so they are more sensitive to changes in
the economy. There can be no assurance that future economic problems will not
adversely affect the market value of Oregon obligations held by the Fund, or the
ability of the respective obligors (both private and governmental) to make
required payments on such obligations.

Oregon does not have a sales tax. As a result, State tax revenues are
particularly sensitive to economic recessions. The principal sources of State
tax revenues are personal income and corporate income taxes. Since 1983, State
revenues have improved substantially, and in recent years the State has granted
tax refunds because of budget surpluses, as required by statute.

Oregon Economic and Revenue Forecast. A quarterly Economic and Revenue
------------------------------------
Forecast is prepared by the Office of Economic Analysis (referred to herein as
"OEA") of the Oregon Department of Administrative Services. A complete copy of
the State's most recent quarterly Economic and Revenue Forecast is posted at the
Oregon Department of Administrative Services' web site, www.oea.das.state.or.us,
when publicly released. The following is a summary of certain portions of the
materials contained in the Oregon Economic and Revenue Forecast released in
September 2000. The full text of the September 2000 Oregon Economic and Revenue
Forecast is available at the website identified above, or by writing to the
Office of Economic Analysis, Oregon Department of Administrative Services, 155
Cottage Street, NE, Salem, Oregon 97310. The information on the above
referenced web site relating to the Oregon Economic and Revenue Forecast is
believed to be reliable, but neither the Trust nor any of its advisors take any
responsibility for the accuracy thereof, and the Trust and its advisors
disclaim any responsibility to maintain or update any information contained
therein.

32
<PAGE>

Economic Forecast. Rising interest rates, along with slower population
-----------------
growth, are starting to have an impact on Oregon's economy. Nevertheless, the
underlying strength of incomes and consumer confidence should keep the economy
out of recession.

Employment growth in the second quarter of 2000 came in at a negative 0.6
percent annual rate. In terms of year-to-year job growth, Oregon jobs increased
30,200, or 1.9 percent, between May 1999 and May 2000. This places Oregon at
28/th/ in the nation, up from 43/rd/ a year ago. California and Nevada are
ranked 7/th/ and 3/rd/, respectively. Idaho's job growth placed the state at the
4/th/ fastest for the same period, while Washington's job growth has picked up
to 2.4 percent, ranking it 18/th/ among the 50 states. Overall, Oregon's
employment growth is projected to be 1.8 percent in 2000 and 1.7 percent in
2001.

A number of factors appear to be impacting the economy. The Asian
financial crisis that impacted manufacturing has worked its way into the
nonmanufacturing sectors. A very mild winter affected seasonal adjustment
figures. In addition, interest rate hikes by the Federal Reserve are finally
slowing business and consumer spending.

Extended Outlook. The Oregon economy grew slower than the U.S. economy in
----------------
1998 and 1999, the first time since 1985. OEA forecasts the Oregon economy will
again grow slower than the U.S. economy in 2000. However, between 2001 and
2007, the U.S. economy is expected to slow more than the Oregon economy. Annual
job growth for Oregon is expected to be below 2.0 percent until 2003.

Risk Factors. World market growth appears to be underway, with some
------------
question remaining for the Japanese economy. The major risks now facing the
Oregon economy are (1) a sharp and major stock market correction, which would
slow the main driving force in the economic expansion - consumer spending; (2)
further increases in inflation, in that the inflationary environment may cause
the Federal Reserve to tighten interest rates to the point of recession; and (3)
state initiative measures, in that the passage of various state initiatives
could impact the state's economy. See The Referendum and Initiative Process for
-------------------------------------
a detailed discussion of some of these measures.

Demographic Forecast. The State's population is forecasted to increase
--------------------
from 3.301 million in 1999 to 3.606 million in 2007, a 9.2 percent increase.
During the same period, the fastest growth is expected to occur in the 45-64 and
18-24 age groups, the result of baby-boomers and their children entering these
age groups. The 25-44 year age group is expected to decline, and the 5-17 age
group is expected to increase slightly. The elderly population as a whole is
expected to increase by 8.7 percent. The number of young elderly in the 65-74
age group has been declining. This trend is forecasted to reverse only after
the year 2002. On the other hand, the number of oldest elderly (85 and older)
has been growing very rapidly. This group is forecasted to continue to grow at
a very high rate, increasing 33.8 percent between 1999 and 2007.

33
<PAGE>

Revenue Forecast
----------------

1999-2001 Biennium. The September 2000 forecast of general fund revenue is
$10,229.0 million for the 1999-2001 biennium. This is an increase of $79.5
million above the June 2000 forecast, and now exceeds the May 15, 1999 forecast
(the Close of Session or "COS" forecast) by $317.7 million. OEA projects an
ending balance of $431.1 million for the 1999-2001 biennium. The rise in
forecasted revenues stems largely from an increase to the personal income tax
forecast. Overall, personal income tax revenues for the biennium are expected
to be $52.4 million greater than previously forecasted.

The forecast of corporate income tax revenues increased just over $3.0
million above the June 2000 forecast for 1999-2001, and now exceeds the COS
level by $34.5 million.

The 2-percent-surplus kicker calculations for personal and corporate income
taxes apply to the biennium only, rather than to individual fiscal years. Both
corporate and all non-corporate general fund revenues are now expected to exceed
the 1999-2001 COS forecast by more than 2.0 percent. The forecast of all non-
corporate general fund revenues exceeds the COS by 2.9 percent, or $283.3
million, over the biennium. This means that a surplus personal kicker refund is
projected to be paid out in late 2001 on tax year 2000 personal income tax
liability. The forecast of corporate income tax revenue for 1999-2001 is now
4.3 percent, or $34.5 million, above the COS forecast. As a result, a surplus
corporate kicker credit is forecasted for the 2001 tax year.

General Fund Revenue Growth. Actual collections for 1999-2001 are
---------------------------
forecasted to be 22.9 percent above the 1997-99 biennium. However, when
adjusted for federal pension and kicker refunds, collections increase by just
13.4 percent.

As noted in the June 2000 forecast, a reverse effect is shown in 2001-03.
Actual collections are expected to grow just 7.5 percent. This reverse effect
results from projected personal and corporate kickers and large federal pension
refunds that will reduce collections for the biennium. Adjusting for these
refunds shows that growth associated with economic conditions is expected to be
just 9.8 percent.

Extended Revenue Outlook. The forecast of general fund revenues for 2003-
------------------------
05 totals $12,765.8 million, which is 16.1 percent above the previous biennium.
Personal income tax revenue is projected to total $11,056.7 million, while
corporate tax revenue is expected to account for $1,114.4 million. Other
general fund revenues are expected to be $594.7 million for the biennium.

OEA projects general fund revenues totaling $14,351.3 million for the 2005-
07 biennium. Personal income tax revenues are expected to account for $12,541.3
million, while the forecast of corporate tax revenues is $1,209.2 million.
Other general fund revenues are expected to increase only slightly to $600.8
million.

34
<PAGE>

Recent Developments Affecting Government Revenues Not Discussed in the
----------------------------------------------------------------------
Economic and Revenue Forecast.
-----------------------------

Ballot Measure 5. Article XI, section 11b of the Oregon Constitution,
adopted by Oregon's voters in November 1990 ("Ballot Measure 5"), imposed an
aggregate limit on the rate of property taxes, including ad valorem taxes, that
may be levied against any real or personal property. The limit is subject to
certain exceptions, but generally provides that not more than $15 per $1,000 of
real market value can be levied against any piece of property. Of this amount,
$5 may be used for public education, and the remaining $10 may be used for
general governmental purposes.

The limitations of Ballot Measure 5 do not apply to taxes imposed to pay
the principal of and interest on bonded indebtedness authorized by a specific
provision of the State Constitution. Therefore, the ability of the State to
levy taxes to service its constitutionally authorized general obligation bonds
is not subject to the limit. In addition, because the State currently receives
its revenues from sources other than property taxes, Ballot Measure 5 has not
directly affected State revenues.

The tax limitations of Ballot Measure 5 do not apply to user fees,
licenses, excise or income taxes and incurred charges for local improvements.
Since 1990, local governments have begun to rely more heavily on such fees and
taxes to finance certain services and improvements. See, however, The
---
Referendum and Initiative Process for a description of possible impacts on such
---------------------------------
fees and taxes if certain of the measures on the November 2000 are passed.

Ballot Measure 5 has controlled the growth of local property tax revenues
since its adoption. Although the growth in local property valuations during the
1990s somewhat mitigated the potential impacts of Ballot Measure 5, revenues of
local government units in Oregon have generally been adversely affected by the
adoption of Ballot Measure 5. This appears to be particularly true with respect
to school district operating revenues.

Ballot Measure 5 required the State to replace a substantial portion of the
lost revenues of local school districts through the end of fiscal year 1995-96.
Although this obligation has now expired, the extent of revenue loss perceived
to have been incurred by local school districts has caused the State to continue
to provide significant revenue relief to these governmental units.

Ballot Measure 50. At a special election in 1997, Oregon voters approved a
constitutional amendment ("Measure 50"), which imposed additional ad valorem
property tax limitations. Measure 50 limited the assessed value for the tax
year 1997-98 to its 1995-96 "real market value," less ten percent. Thereafter,
Measure 50 limits the valuation growth of property assessments on each unit of
property to three percent per year for future tax years. Measure 50 continues
the general limitations on property tax rates of $5 per $1,000 for public
education and $10 per $1,000 for all other governmental services. Measure 50
also requires that any new property taxes be approved by a majority of the
voters in an election where at least 50% of eligible voters participate, except
in the instance of a general election in even numbered years.

35
<PAGE>

Units of local government that levy and collect property taxes are most
directly affected by Measure 50. The State does not levy or collect property
taxes, but relies instead on state income taxes as the main source of revenue
for the State's general fund. Therefore, Measure 50's main impact on the State
has been to increase pressure on the Legislative Assembly to use State funds to
replace revenues lost by local governments. The impacts of Measure 50 continue
to influence the legislative debates concerning the level at which the State
will provide funding for public schools in Oregon.

The Referendum and Initiative Process. The Oregon Constitution reserves to
-------------------------------------
the people of the State initiative and referendum powers pursuant to which
measures designed to amend the State Constitution or enact legislation, can be
placed on the statewide general election ballot for consideration by the voters.
"Referendum" generally means measures referred to the electors by a legislative
body such as the State Legislative Assembly or the governing body of a city,
county or other political subdivision, while "initiative" generally means a
measure placed before the voters as a result of a petition circulated by one or
more private citizens.

In the 1999 Legislative session, the State Legislative Assembly voted to
refer 21 measures to the electorate in 1999 special elections, or the 2000
primary or general elections, and additional measures have been added by voter
initiative. The measures remaining to be voted on range from dedicating the use
of tobacco settlement money by the Legislature, to increasing the amount of
federal taxes that Oregon taxpayers can deduct from their State income tax
liability, to prohibiting the imposition or increase of a tax, fee or charge
unless approved by voters (with certain exceptions). Certain of these measures
are discussed below. It is difficult to predict the likelihood that any of the
referendum or initiative measures will be approved by the voters.

Any person may file a proposed initiative with the Oregon Secretary of
State's office. The Oregon Attorney General is required by law to draft a
proposed ballot title for the initiative, and interested parties may submit
comments on the legal sufficiency of the proposed ballot title and on whether
the proposed initiative complies with a "one subject only" rule for an
initiative measure. After considering any public comments, the Attorney General
must either certify or revise the draft ballot title. In general, any elector
who timely submitted written comments on the draft ballot title may petition the
Oregon Supreme Court seeking a revision of the certified ballot title.

To have an initiative placed on a general election ballot, the proponents
of the proposed initiative must submit to the Secretary of State initiative
petitions signed by the number of qualified voters equal to a specified
percentage of the total number of votes cast for all candidates for governor in
the most recent gubernatorial election. The initiative petition must be filed
with the Secretary of State not less than four months prior to the general
election at which the proposed measure is to be voted upon. As a practical
matter, proponents of an initiative have approximately two years in which to
gather the necessary number of signatures. State law permits persons
circulating initiative petitions to pay money to persons obtaining signatures
for the petition.

Over the past decade, Oregon has witnessed increasing activity in the
number of initiative petitions that have qualified for the statewide general
election. According to the Elections

36
<PAGE>

Division of the Oregon Secretary of State, the number of initiative petitions
that have qualified for the ballot and the number that have passed in the
general elections during the 1990s and in 2000 are as follows:

<TABLE>
<CAPTION>
Year of General Election Initiatives That Qualified Initiatives That Passed
------------------------ -------------------------- ------------------------
<S> <C> <C>
1990 8 3
1992 7 0
1994 16 8
1996 16 4
1998 10 6
2000 18 to be determined
</TABLE>

Several of the measures on the November 2000 ballot, if passed, are
forecast to have significant impacts on the State's general fund revenues, or
the ability of units of local government to raise the revenues needed for their
operations and to issue bonds for their capital needs. Because OEA publishes a
forecast based upon current law, or these measures are forecast to primarily
affect local government, these impacts were not incorporated into the September
2000 Oregon Economic and Revenue Forecast. The December 2000 forecast will
reflect any revenue impacts that result from the outcome of the 2000 general
election. A complete copy of the December 2000 forecast will be available on
the web at www.oea.das.state.or.us.

Two ballot measures on the November 2000 ballot would change the amount of
federal income taxes paid that may be deducted on Oregon income tax returns.
Ballot Measure 88 would raise the maximum deduction allowed from $3,000 to
$5,000. Ballot Measure 91 would remove the limit in its entirety, making
federal income taxes paid fully deductible on Oregon income tax returns. Though
there will be no forecast of the revenue impact for Ballot Measure 91 unless it
passes, estimates of revenue impacts for Ballot Measure 91 can be found at the
Legislative Revenue Office Internet address:
www.leg.state.or.us/comm/lro/home.htm.

The information on the above referenced web sites relating to the
initiative and referendum process is believed to be reliable, but neither the
Trust nor any of its advisors take any responsibility for the accuracy thereof,
and the Trust and its advisors disclaim any responsibility to maintain or update
any information contained therein.

Although not mentioned in the September 2000 Economic and Revenue Forecast,
Ballot Measure 93, also on the November 2000 ballot, could affect State and
local government revenues generated by taxes, fees and charges. Subject to
certain exceptions, Ballot Measure 93 proposes to prohibit the State, local
governments and taxing districts from imposing any new tax, fee or charge, or
increasing any existing tax, fee or charge, unless voters approve the imposition
or increase of the tax, fee or charge. If passed, Ballot Measure 93 is expected
to impact the State and local governments by limiting their ability to impose or
increase taxes, fees or charges. The actual impact of Ballot Measure 93 on all
units of government in Oregon, if passed, is presently unknown.

37
<PAGE>

It is difficult to predict with certainty the likelihood of a proposed
initiative measure being approved by the voters. There can be no assurance that
additional initiatives that will have a material adverse impact on the financial
condition of the State or units of local government, or the State's or units of
local government's ability to collect the revenues required to repay their
general obligation bonds, revenue bonds or other obligations, will not be
proposed, placed on the ballot, or approved by the voters.

The Oregon Bond Market. There is a relatively small active market for
----------------------
municipal bonds of Oregon issuers other than the general obligations of the
State itself, and the market price of such other bonds may therefore be
volatile. If the Oregon Tax-Free Fund were forced to sell a large volume of
Oregon Obligations owned by it for any reason, such as to meet redemption
requests for a large number of its shares, there is a risk that the large sale
itself would adversely affect the value of the Oregon Tax-Free Fund's portfolio.

MANAGEMENT

The following information supplements, and should be read in conjunction
with, the section in each Prospectus entitled "Organization and Management of
the Funds." The principal occupations during the past five years of the
Trustees and principal executive Officers of the Trust are listed below. The
address of each, unless otherwise indicated, is 525 Market Street, 12th Floor,
San Francisco, CA 94105. Trustees deemed to be "interested persons" of the
Trust for purposes of the 1940 Act are indicated by an asterisk.

<TABLE>
<CAPTION>
Principal Occupations
Name, Age and Address Position During Past 5 Years
--------------------- -------- -------------------
<S> <C> <C>
*Robert C. Brown Trustee Director, Federal Farm Credit Banks Funding
5038 Kestral Parkway South Corporation and Farm Credit System Financial
Sarasota, FL 34231 Assistance Corporation since February 1993.
DOB: 08/21/31

Donald H. Burkhardt Trustee Principal of the Burkhardt Law Firm.
777 South Steele Street
Denver, CO 80209
DOB: 06/04/26

Jack S. Euphrat Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027
DOB: 05/28/22

Thomas S. Goho Trustee Business Associate Professor, Wake Forest
321 Beechcliff Court University, Calloway School of Business and
Winston-Salem, NC 27104 Accountancy since 1994.
DOB: 08/07/42
</TABLE>

38
<PAGE>

<TABLE>
<CAPTION>
Principal Occupations
Name, Age and Address Position During Past 5 Years
--------------------- -------- -------------------
<S> <C> <C>
Peter G. Gordon Trustee Chairman and Co-Founder of Crystal Geyser
Crystal Geyser Water Co. Water Company and President of Crystal Geyser
55 Francisco Street, Suite 410 Roxane Water Company since 1977.
San Francisco, CA 94133
DOB: 09/29/42

*W. Rodney Hughes Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901
DOB: 09/24/26

*Richard M. Leach Trustee President of Richard M. Leach Associates (a
P.O. Box 1888 financial consulting firm) since 1992.
New London, NH 03257
DOB: 07/16/33

*J. Tucker Morse Trustee Private Investor/Real Estate Developer;
10 Legare Street Chairman of Vault Holdings, LLC.
Charleston, SC 29401
DOB: 08/02/44

Timothy J. Penny Trustee Senior Counselor to the public relations firm
500 North State Street of Himle-Horner since January 1995 and Senior
Waseca, MN 56093 Fellow at the Humphrey Institute, Minneapolis,
DOB: 11/19/51 Minnesota (a public policy organization) since
January 1995.

Donald C. Willeke Trustee Principal of the law firm of Willeke & Daniels.
201 Ridgewood Avenue
Minneapolis, MN 55403
DOB: 06/22/40

Michael J. Hogan President Executive Vice President of Wells Fargo Bank,
DOB: 02/04/59 N.A. since July 1999. Senior Vice President
of Wells Fargo Bank, N.A. from April 1997 to
May 1999. Vice President of American Express
Financial Advisors from May 1996 to April
1997, and Director of American Express
Financial Advisors from March 1993 to May 1996.

Karla M. Rabusch Treasurer Senior Vice President of Wells Fargo Bank,
DOB: 04/13/59 N.A., since May 2000. Vice President of Wells
Fargo Bank, N.A. from December 1997 to May
2000. Prior thereto, Director of Managed
Assets Investment Accounting of American
Express Financial Advisors from May 1994 to
November 1997.
</TABLE>

39
<PAGE>

<TABLE>
<CAPTION>
Principal Occupations
Name, Age and Address Position During Past 5 Years
--------------------- -------- -------------------
<S> <C> <C>
C. David Messman Secretary Vice President and Senior Counsel of Wells
DOB: 06/03/60 Fargo Bank, N.A. since January 1996. Prior
thereto, Branch Chief, Division of Investment
Management, U.S. Securities and Exchange
Commission.
</TABLE>

Each of the Trustees and Officers listed above act in the identical
capacities for Wells Fargo Variable Trust and Wells Fargo Core Trust (including
the Trust, collectively the "Fund Complex"). All of the non-interested Trustees
are also members of the Audit and Nominating Committees of the Trust, and of
each other trust in the Fund Complex.

Each Trustee receives an annual retainer (payable quarterly) of $40,000
from the Fund Complex, and also receives a combined fee of $1,000 for attendance
at Fund Complex Board meetings, and a combined fee of $250 for attendance at
committee meetings. If a committee meeting is held absent a full Board meeting,
each attending Trustee will receive a $1,000 combined fee. These fees apply
equally for in-person or telephonic meetings, and Trustees are reimbursed for
all out-of-pocket expenses related to attending meetings. The Trustees do not
receive any retirement benefits or deferred compensation from the Trust or an
other member of the Fund Complex. The Trust's Officers are not compensated by
the Trust for their services. For the period November 8, 1999, closing date of
the reorganization of the Stagecoach and Norwest Funds, through June 30, 2000,
the end of the fiscal period for the Funds, the Trustees have been paid and/or
accrued the following compensation.

Compensation Table
Period Ended June 30, 2000
--------------------------
Trustee Compensation
------- ------------

Robert C. Brown $26,435
Donald H. Burkhardt $25,717
Jack S. Euphrat $30,587
Thomas S. Goho $30,587
Peter G. Gordon $30,587
W. Rodney Hughes $30,087
Richard M. Leach $25,435
J. Tucker Morse $30,087
Timothy J. Penny $26,935
Donald C. Willeke $26,935

As of the date of this SAI, Trustees and Officers of the Trust as a group
beneficially owned less than 1% of the outstanding shares of the Trust.

40
<PAGE>

Investment Advisor. Wells Fargo Bank provides investment advisory services
------------------
to the Funds. As investment advisor, Wells Fargo Bank furnishes investment
guidance and policy direction in connection with the daily portfolio management
of the Funds. Wells Fargo Bank furnishes to the Trust's Board of Trustees
periodic reports on the investment strategy and performance of each Fund. Wells
Fargo Bank provides the Funds with, among other things, money market and fixed-
income research, analysis and statistical and economic data and information
concerning interest rate and securities markets trends, portfolio composition,
and credit conditions.

As compensation for its advisory services, Well Fargo Bank is entitled to
receive a monthly fee at the annual rates indicated below of each Fund's average
daily net assets:

<TABLE>
<CAPTION>
Annual Rate
Fund (as percentage of net assets)
---- -----------------------------
<S> <C>
Arizona Tax-Free Fund 0.40%
California Limited Term Tax-Free Fund 0.40%
California Tax-Free Fund 0.40%
Colorado Tax-Free Fund 0.40%
Minnesota Intermediate Tax-Free Fund 0.40%
Minnesota Tax-Free Fund 0.40%
National Limited Term Tax-Free Fund 0.40%
National Tax-Free Fund 0.40%
Nebraska Tax-Free Fund 0.50%
Oregon Tax-Free Fund 0.40%
</TABLE>

As discussed in the "Historical Fund Information" section, each Fund,
except the Nebraska Tax-Free Fund, was created as part of the reorganization of
the Stagecoach and Norwest Funds. The Nebraska Tax-Free Fund was created as
part of the reorganization of the Wells Fargo Funds and the Great Plains Funds.
Therefore, the information shown below concerning the dollar amount of advisory
(and other) fees paid shows the dollar amount of fees paid to either Wells Fargo
Bank, NIM or FCI by a Fund or its predecessor portfolio that is considered the
surviving entity for accounting purposes.

FORMER STAGECOACH FUNDS

For the periods indicated below, the Funds and their predecessor portfolios
paid Wells Fargo Bank the following advisory fees and Wells Fargo Bank waived
the indicated amounts:

<TABLE>
Year Ended Year Ended
6/30/00 6/30/99
------- -------
Fees Fees Fees Fees
Fund Paid Waived Paid Waived
---- ---- ------ ---- ------
<S> <C> <C> <C> <C>
Arizona Tax-Free $ 19,294 $ 50,271 $ 26,674 $ 60,197
California Tax-Free $2,176,011 $456,760 $1,473,040 $2,020,699
California Limited Term
Tax-Free $ 34,931 $149,091 $ 84,334 $ 189,929
Oregon Tax-Free $ 38,909 $125,374 $ 63,262 $ 144,862
</TABLE>

41
<PAGE>

<TABLE>
<CAPTION>
Three Month
Period Ended Year Ended
6/30/98 3/31/98
------- -------
Fund Fees Fees Fees Fees
---- Paid Waived Paid Waived
---- ------ ---- ------
<S> <C> <C> <C> <C>
Arizona Tax-Free $ 6,959 $ 15,744 $ 29,358 $ 69,926
California Tax-Free $716,047* $979,592* $1,259,094 $ 0**
***
California Limited Term Tax $ 23,651 $ 54,709 $ 106,906 $241,280
Oregon Tax-Free $ 14,994 $ 34,127 $ 57,037 $130,517
</TABLE>
____________________
* These amounts reflect the six-month period ended June 30, 1998.
** These amounts reflect the year ended December 31, 1997. Prior to December
12, 1997, these amounts reflect fees paid by the Overland predecessor
portfolios.

FORMER NORWEST FUNDS

For the periods indicated below, the Funds and their predecessor portfolios
paid to Wells Fargo Bank and NIM the following advisory fees and Wells Fargo
Bank and NIM waived the indicated amounts:

<TABLE>
<CAPTION>
One Month
Year Ended Period Ended
6/30/00 6/30/99
------- -------
Fund Fees Fees Fees Fees
---- Paid Waived Paid Waived
---- ------ ---- ------
<S> <C> <C> <C> <C>
Colorado Tax-Free Fund $181,345 $216,521 $ 34,358 $6,063
Minnesota Intermediate $527,017 $163,315 $ 45,154 $ 0
Tax-Free Fund
Minnesota Tax-Free Fund $117,888 $215,697 $ 28,266 $7,067
National Limited Term $133,497 $182,094 $ 33,863 $1,411
Tax-Free Fund
National Tax-Free Fund $986,654 $538,693 $150,419 $ 29
</TABLE>

<TABLE>
<CAPTION>
Year Ended Year Ended
5/31/99 5/31/98
------- -------
Fund Fees Fees Fees Fees
---- Paid Waived Paid Waived
---- ------ ---- ------
<S> <C> <C> <C> <C>
Colorado Tax-Free Fund $ 372,202 $70,194 $ 195,005 $137,295
Minnesota Intermediate $ 540,960 $ 0 $ 348,564 $ 0
Tax-Free Fund
Minnesota Tax-Free Fund $ 312,365 $81,990 $ 134,553 $163,748
National Limited Term $ 315,346 $29,395 $ 152,654 $ 89,967
Tax-Free Fund
National Tax-Free Fund $1,789,384 $19,399 $1,078,075 $488,601
</TABLE>

42
<PAGE>

FORMER GREAT PLAINS FUND

For the periods indicated below, the predecessor portfolio to the Nebraska
Tax-Free Fund paid to FCI the following advisory fees, without waivers:

<TABLE>
<CAPTION>
Former Great Plains Fund Year Ended Year Ended Period Ended
------------------------ 8/31/00 8/31/99 8/31/98*
------- ------- -------
Fees Fees Fees
Paid Paid Paid
---- ---- ----
<S> <C> <C> <C>
Nebraska Tax-Free Fund $332,541 $340,937 $ 299,741
</TABLE>

* For the eleven-month period from September 29, 1997 (date of initial
public investment of the predecessor fund) to August 31, 1998.

General. Each Fund's Advisory Contract will continue in effect for more
-------
than two years from the effective date provided the continuance is approved
annually (i) by the holders of a majority of the respective Fund's outstanding
voting securities or by the Trust's Board of Trustees and (ii) by a majority of
the Trustees of the Trust who are not parties to the Advisory Contract or
"interested persons" (as defined in the 1940 Act) of any such party. A Fund's
Advisory Contract may be terminated on 60 days' written notice by either party
and will terminate automatically if assigned.

Investment Sub-Advisor. Wells Fargo Bank has engaged Wells Capital
----------------------
Management Incorporated ("WCM") to serve as investment sub-advisor to the Funds.
Subject to the direction of the Trust's Board of Trustees and the overall
supervision and control of Wells Fargo Bank and the Trust, WCM makes
recommendations regarding the investment and reinvestment of the Funds' assets.
WCM furnishes to Wells Fargo Bank periodic reports on the investment activity
and performance of the Funds. WCM also furnishes such additional reports and
information as Wells Fargo Bank and the Trust's Board of Trustees and officers
may reasonably request.

As compensation for its sub-advisory services to each Fund, except for the
Nebraska Tax-Free Fund, WCM is entitled to receive a monthly fee equal to an
annual rate of 0.15% of the first $400 million of the Funds' average daily net
assets, 0.125% of the next $400 million of the Funds' net assets, and 0.10% of
net assets over $800 million. As compensation for its sub-advisory services to
the Nebraska Tax-Free Fund, WCM is entitled to receive a monthly fee equal to an
annual rate of 0.20% of the first $400 million of the Fund's average daily net
assets, 0.175% of the next $400 million of the Fund's net assets, and 0.15% of
net assets over $800 million. These fees may be paid by Wells Fargo Bank or
directly by the Fund. If the sub-advisory fee is paid directly by the Fund, the
compensation paid to Wells Fargo Bank for advisory fees will be reduced
accordingly. Wells Fargo Bank may, from time to time and in its sole
discretion, allocate and reallocate services provided by and fees paid to WCM,
its wholly owned subsidiary.

Administrator. The Trust has retained Wells Fargo Bank as Administrator on
-------------
behalf of each Fund. Under the Administration Agreement between Wells Fargo
Bank and the Trust, Wells Fargo Bank shall provide as administration services,
among other things: (i) general supervision of the Funds' operations, including
coordination of the services performed by each Fund's investment Advisor,
transfer agent, custodian, shareholder servicing agent(s), independent auditors
and legal

43
<PAGE>

counsel, regulatory compliance, including the compilation of information for
documents such as reports to, and filings with, the U.S. Securities and Exchange
Commission ("SEC") and state securities commissions; and preparation of proxy
statements and shareholder reports for each Fund; and (ii) general supervision
relative to the compilation of data required for the preparation of periodic
reports distributed to the Trust's officers and Board of Trustees. Wells Fargo
Bank also furnishes office space and certain facilities required for conducting
the Funds' business together with ordinary clerical and bookkeeping services.
The Administrator is entitled to receive a fee of up to 0.15% of each Fund's
average daily net assets on an annual basis.

As discussed in the "Historical Fund Information" section, the Funds,
except the Nebraska Tax-Free Fund, were created as part of the reorganization of
the Stagecoach and Norwest Funds. The Nebraska Tax-Free Fund was created as
part of the reorganization of the Wells Fargo and Great Plains Funds.
Therefore, the information shown below concerning the dollar amounts of
administration fees paid shows the dollar amount of fees paid to administrators
by a Fund or its predecessor portfolio that is considered the surviving entity
for accounting purposes.

FORMER STAGECOACH FUNDS

The predecessor Stagecoach Funds had retained Wells Fargo Bank as
Administrator from March 25, 1999 through the date of the reorganization of the
Stagecoach and Norwest Funds, on the same terms as are currently in effect.
Prior to March 25, 1999, the predecessor Stagecoach Funds had retained Wells
Fargo Bank as Administrator and Stephens as Co-Administrator on behalf of each
Fund. Wells Fargo Bank and Stephens were entitled to receive monthly fees of
0.03% and 0.04%, respectively, of the average daily net assets of each Fund.
Prior to February 1, 1998, Wells Fargo Bank and Stephens received monthly fees
of 0.04% and 0.02%, respectively, of the average daily net assets of each Fund.
In connection with the change in fees, the responsibility for performing various
administration services was shifted to the Co-Administrator.

For the periods indicated below, the Funds listed below and their
predecessor portfolios paid the following dollar amounts to Wells Fargo Bank and
Stephens for administration and, as applicable, co-administration fees:

<TABLE>
<CAPTION>
Year Ended Year Ended
6/30/00 6/30/99
------- -------
Wells Wells
Fund Fargo Total Fargo Stephens
---- ----- ----- ----- --------
<S> <C> <C> <C> <C>
Arizona Tax-Free $ 24,516 $ 14,351 $ 7,235 $ 7,116
California Limited
Term Tax-Free $ 64,811 $ 45,036 $ 22,528 $ 22,508
California Tax-Free $906,326 $569,825 $288,660 $281,165
Oregon Tax-Free $ 57,171 $ 34,149 $ 17,277 $ 16,872
</TABLE>

44
<PAGE>

<TABLE>
<CAPTION>
Three Month Year Ended
Period Ended 3/31/98
-------
6/30/98
-------
Wells Wells
Fund Total Fargo Stephens Total Fargo Stephens
---- ----- ----- -------- ----- ----- --------
<S> <C> <C> <C> <C> <C> <C>
Arizona Tax-Free $ 3,251 $ 1,398 $ 1,853 $ 12,043 $ 8,069 $ 3,974
California Limited
Term Tax-Free $ 11,046 $ 4,750 $ 6,296 $ 43,808 $29,351 $ 14,457
California Tax-Free $232,768 $100,090 $132,678 $217,623 $43,525 $174,098
Oregon Tax-Free $ 6,989 $ 3,005 $ 3,984 $ 23,433 $15,700 $ 7,733
</TABLE>

FORMER NORWEST FUNDS

With respect to the predecessor Norwest Funds, Forum Financial Services,
Inc. ("Forum") managed all aspects of the operation of the Funds, except those
which were the responsibility of Forum Administrative Services, LLC ("FAdS") as
administrator or Norwest in its capacity as administrator. For the year ended
June 30, 2000, Forum/FAdS and Wells Fargo Bank received administrative fees for
the periods June 1, 1999 through November 5, 1999 and November 8, 1999 through
June 30, 2000, respectively.

For the periods indicated below, the Funds listed below and their
predecessor portfolios paid the following dollar amounts to Wells Fargo Bank and
Forum/FAdS for administration fees:

<TABLE>
<CAPTION>
One Month
Year Ended Period-Ended
6/30/00 6/30/99
-------- --------
Wells Wells Fargo
Fund Fargo Forum/FAds
---- ----- ----------
<S> <C> <C>
Colorado Tax-Free Fund $ 99,322 $ 0
Minnesota Intermediate $200,378 $ 0
Tax-Free Fund
Minnesota Tax-Free Fund $ 85,387 $ 0
National Limited Term $ 66,697 $ 0
Tax-Free Fund
National Tax-Free Fund $370,697 $ 0
</TABLE>

<TABLE>
<CAPTION>
Year-Ended Year-Ended
5/31/99 5/31/98
-------- --------
Fund Forum/FAdS Forum/FAdS
---- ---------- ----------
<S> <C> <C>
Colorado Tax-Free $ 17,604 $ 46,405
Minnesota Intermediate
Tax-Free $ 39,643 $ 42,383
Minnesota Tax-Free $ 20,222 $ 37,636
National Limited Term
Tax-Free $ 1,906 $ 46,116
National Tax-Free $114,604 $268,992
</TABLE>

45
<PAGE>

FORMER GREAT PLAINS FUND

For the periods indicated below, the predecessor portfolio of the Fund paid
the following dollar amounts to Federated Services Company ("FSC") for
administration fees:

<TABLE>
Year-Ended Year-Ended Period-Ended
8/31/00 8/31/99 8/31/98*
-------- -------- ---------
Former Great Plains Fund
------------------------
<S> <C> <C> <C>
Nebraska Tax-Free Fund $ 92,566 $ 94,008 $ 83,702
</TABLE>

___________________
* For the eleven-month period from September 29, 1997 (date of initial public
investment of the predecessor fund) to August 31, 1998.

Distributor. Stephens Inc. ("Stephens" or the "Distributor"), located at
-----------
111 Center Street, Little Rock, Arkansas 72201, serves as the Distributor for
the Funds. Each Fund listed in the chart below has adopted a distribution plan
(a "Plan") under Section 12(b) of the 1940 Act and Rule 12b-1 thereunder (the
"Rule") for its Class B and/or Class C shares. The Plan was adopted by the
Trust's Board of Trustees, including a majority of the Trustees who were not
"interested persons" (as defined in the 1940 Act) of the Funds and who had no
direct or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan (the "Non-Interested Trustees").

Under the Plan and pursuant to the related Distribution Agreement, the
Class B and Class C shares of the Funds listed below pay Stephens up to 0.75% of
the average daily net assets attributable to each Class as compensation for
distribution-related services or as reimbursement for distribution-related
expenses.

<TABLE>
<CAPTION>
Fund Fee
---- ---
<S> <C>
Arizona Tax-Free
Class B 0.75%

California Tax-Free
Class B 0.75%
Class C 0.75%

Colorado Tax-Free
Class B 0.75%

Minnesota Tax-Free
Class B 0.75%

National Tax-Free
Class B 0.75%
Class C 0.75%

Oregon Tax-Free
Class B 0.75%
</TABLE>

46
<PAGE>

The actual fee payable to the Distributor by the above-indicated Funds and
Classes is determined, within such limits, from time to time by mutual agreement
between the Trust and the Distributor and will not exceed the maximum sales
charges payable by mutual funds sold by members of the National Association of
Securities Dealers, Inc. ("NASD") under the Conduct Rules of the NASD. The
Distributor may enter into selling agreements with one or more selling agents
(which may include Wells Fargo Bank and its affiliates) under which such agents
may receive compensation for distribution-related services from the Distributor,
including, but not limited to, commissions or other payments to such agents
based on the average daily net assets of Fund shares attributable to their
customers. The Distributor may retain any portion of the total distribution fee
payable thereunder to compensate it for distribution-related services provided
by it or to reimburse it for other distribution-related expenses.

As discussed in the "Historical Fund Information" section, the Funds listed
below were created as part of the reorganization of the Stagecoach and Norwest
Funds. Therefore, the information shown below concerning the fees received by
the Funds' Distributor shows the fees paid by a Fund or its predecessor
portfolio that is considered the surviving entity for accounting purposes to its
respective distributor for the twelve-month period ended June 30, 2000.

<TABLE>
<CAPTION>
Comp. to Comp. to
Fund/Class Total Advertising Underwriters Br./Dlrs. Other/1/
---------- ----- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Arizona Tax-Free
Class B 15,053.00 - - - 15,053.00

California Tax-Free
Class A 2,025.00 2,025.00 - - -
Class B 863,686.00 - - - 863,686.00
Class C 133,780.00 - 74,272.50 59,507.50 -

Colorado Tax-Free
Class B 35,440.00 - - - 35,440.00

Minnesota Tax-Free
Class B 83,809.00 - - - 83,809.00

National Tax-Free
Class B 97,924.00 - - - 97,924.00
Class C 46,987.00 - 15,183.75 31,803.25 -

Oregon Tax-Free
Class A 82.00 82.00 - - -
Class B 169,259.00 - - - 169,259.00
</TABLE>

47
<PAGE>

/1/ Stephens has entered into an arrangement whereby sales commissions paid to
broker/dealers with respect to sales of Class B shares of the Funds are
financed by an unaffiliated third party lender. Under this financing
arrangement, Stephens has assigned certain amounts that it is entitled to
receive pursuant to the Distribution Plan to the third party lender, as
reimbursement and consideration for these payments.

General. The Plan will continue in effect from year to year if such
-------
continuance is approved by a majority vote of both the Trustees of the Trust and
the Non-Interested Trustees. Any Distribution Agreement related to the Plan
also must be approved by such vote of the Trustees and the Non-Interested
Trustees. Such Agreement will terminate automatically if assigned, and may be
terminated at any time, without payment of any penalty, by a vote of a majority
of the outstanding voting securities of the relevant class of the Fund or by
vote of a majority of the Non-Interested Trustees on not more than 60 days'
written notice. The Plan may not be amended to increase materially the amounts
payable thereunder without the approval of a majority of the outstanding voting
securities of the Fund, and no material amendment to the Plan may be made except
by a majority of both the Trustees of the Trust and the Non-Interested Trustees.

The Plan provides that the Treasurer of the Trust shall provide to the
Trustees, and the Trustees shall review, at least quarterly, a written report of
the amounts expended (and purposes therefor) under the Plan. The Rule also
requires that the selection and nomination of Trustees who are not "interested
persons" of the Trust be made by such disinterested Trustees.

Wells Fargo Bank, an interested person (as that term is defined in Section
2(a)(19) of the 1940 Act) of the Trust, acts as a selling agent for the
respective Funds' shares pursuant to selling agreements with Stephens authorized
under the Plan. As a selling agent, Wells Fargo Bank has an indirect financial
interest in the operation of the Plan. The Board of Trustees has concluded that
the Plan is reasonably likely to benefit the Funds and their shareholders
because the Plan authorizes the relationships with selling agents, including
Wells Fargo Bank, that have previously developed distribution channels and
relationships with the retail customers that the Funds are designed to serve.
The Board believes that these relationships and distribution channels provide
potential for increased Fund assets and ultimately corresponding economic
efficiencies (i.e., lower per-share transaction costs and fixed expenses) that
are generated by increased assets under management.

Shareholder Servicing Agent. Each Fund listed below has approved a
---------------------------
Servicing Plan and has entered into related shareholder servicing agreements
with financial institutions, including Wells Fargo Bank. Under the agreements,
Shareholder Servicing Agents (including Wells Fargo Bank) agree to perform, as
agents for their customers, administrative services, with respect to Fund
shares, which include aggregating and transmitting shareholder orders for
purchases, exchanges and redemptions; maintaining shareholder accounts and
records; and providing such other related services as the Trust or a shareholder
may reasonably request. For providing shareholder services, a Servicing Agent
is entitled to a fee from the applicable Fund, on an annualized basis, of 0.25%
of the average daily net assets of the Class A, Class B and Class C shares owned
of record or beneficially by the customers of the Servicing Agent during the
period for which payment is being made. The Servicing Plan and related forms of
shareholder servicing agreements were approved by the Trust's Board of Trustees
and provide that a Fund shall not be obligated to make any payments under such
Plans or related Agreements that exceed the maximum amounts payable

48
<PAGE>

under the Conduct Rules of the NASD. The amounts payable under the Shareholder
Servicing Plan and Agreements are shown below.

<TABLE>
<CAPTION>
Fund Fee
---- ---
<S> <C>
Arizona Tax-Free
Class A 0.25%
Class B 0.25%

California Limited Term Tax-Free
Class A 0.25%

California Tax-Free
Class A 0.25%
Class B 0.25%
Class C 0.25%

Colorado Tax-Free
Class A 0.25%
Class B 0.25%

Minnesota Tax-Free
Class A 0.25%
Class B 0.25%

National Tax-Free
Class A 0.25%
Class B 0.25%
Class C 0.25%

Oregon Tax-Free
Class A 0.25%
Class B 0.25%
</TABLE>

General. The Servicing Plan will continue in effect from year to year if
-------
such continuance is approved by a majority vote of the Trustees of the Trust,
and the Non-Interested Trustees. Any form of Servicing Agreement related to the
Servicing Plan also must be approved by such vote of the Trustees and Non-
Interested Trustees. Servicing Agreements may be terminated at any time,
without payment of any penalty, by vote of a majority of the Board of Trustees,
including a majority of the Non-Interested Trustees. No material amendment to
the Servicing Plan or related Servicing Agreements may be made except by a
majority of both the Trustees of the Trust and the Non-Interested Trustees.

The Servicing Plan requires that the Administrator shall provide to the
Trustees, and the Trustees shall review, at least quarterly, a written report of
the amounts expended (and purposes therefor) under the Servicing Plan.

49
<PAGE>

Custodian. Wells Fargo Bank Minnesota, N.A. ("Wells Fargo MN" or
---------
"Custodian"), formerly known as Norwest Bank Minnesota, N.A., located at 6th and
Marquette, Minneapolis, Minnesota 55479, acts as Custodian for each Fund. The
Custodian, among other things, maintains a custody account or accounts in the
name of each Fund, receives and delivers all assets for each Fund upon purchase
and upon sale or maturity, collects and receives all income and other payments
and distributions on account of the assets of each Fund, and pays all expenses
of each Fund. For its services as Custodian, Wells Fargo MN is entitled to
receive a fee of 0.02% of the average daily net assets of each Fund.

Fund Accountant. Forum Accounting Services, LLC ("Forum Accounting"),
---------------
located at Two Portland Square, Portland, Maine 04101, serves as Fund Accountant
for the Funds. For its services as Fund Accountant, Forum Accounting is
entitled to receive a monthly base fee per Fund of $5,000. In addition, each
Fund pays a monthly fee of $1,000 per class, and Forum Accounting is entitled to
receive a fee equal to 0.0025% of the average annual daily net assets of each
Fund.

Transfer and Dividend Disbursing Agent. Boston Financial Data Services,
--------------------------------------
Inc. ("BFDS"), located at Two Heritage Drive, Quincy, Massachusetts 02171, acts
as Transfer and Dividend Disbursing Agent for the Funds. For providing such
services, BFDS is entitled to receive a per-account fee plus transaction fees
and certain out-of-pocket costs. BFDS is also entitled to receive a complex
base fee from all the Funds of the Trust, Wells Fargo Core Trust and Wells Fargo
Variable Trust.

Underwriting Commissions. Stephens serves as the principal underwriter
------------------------
distributing securities of the Funds on a continuous basis. For the Tax-Free
Funds of the Trust for the fiscal year ended June 30, 2000, the aggregate dollar
amount of underwriting commissions paid on the sales/redemptions of Fund shares
was $33,219.64. Stephens retained all amounts paid.

Stephens served as principal underwriter of the Stagecoach predecessor
portfolios, Forum served as underwriter of the predecessor Norwest portfolios
and Edgewood Services Inc. served as principal underwriter of the predecessor
Great Plains Fund. The information shown below regarding underwriting
commissions paid for the last three fiscal years reflects the amounts paid by
the predecessor Stagecoach and Norwest fund families.

STAGECOACH FUNDS, INC.
---------------------

For the year-ended September 30, 1999, the aggregate dollar amount of
underwriting commissions paid to Stephens as sales/redemptions of the Stagecoach
fund family shares was $6,214,051. Stephens retained $2,289,826 of such
commissions. For the year-ended September 30, 1999, Wells Fargo Securities Inc.
("WFSI"), an affiliated broker-dealer of the Trust retained $2,324,394.93.

For the three-month period ended June 30, 1998, the aggregate dollar amount
of underwriting commissions paid to Stephens on sales/redemptions of the
Stagecoach fund family shares was $1,546,670. Stephens retained $485,869 of
such commissions and WFSI retained $1,068,673 of such commissions.

50
<PAGE>

For the year ended March 31, 1998, the aggregate dollar amount of underwriting
commissions paid to Stephens on sales/redemptions of the Stagecoach fund family
shares was $7,671,295. Stephens retained $939,892 of such commissions. WFSI
retained $5,348,626 of such commissions.

NORWEST ADVANTAGE FUNDS
-----------------------

For the periods indicated below, the aggregate dollar amount of
underwriting commissions paid to Forum by the predecessor Norwest Fund family
and the amounts retained by Forum are as follows:

Year Ended Year Ended
5/31/99 5/31/98
------- -------

Paid Retained Paid Retained
---- -------- ---- --------
Colorado Tax-Free
Class A $128,000 $2,000 $127,000 $4,000

Minnesota Tax-Free
Class A $141,000 $3,000 $139,000 $6,000

National Tax-Free
Class A $204,000 $ 0 $132,000 $2,000

Code of Ethics.
--------------

The Fund Complex, the Advisor, the Sub-Advisors and Stephens each have
adopted a code of ethics which contains policies on personal securities
transactions by "access persons." These policies substantially comply in all
material respects with the amendments to Rule 17j-1 under the 1940 Act as set
forth in the August 20, 1999 Adopting Release. Each code of ethics, among other
things, permits access persons to invest in certain securities, subject to
various restrictions and requirements. More specifically, each code of ethics
either prohibits its access persons from purchasing or selling securities that
may be purchased or held by a Fund or permits such access persons to purchase or
sell such securities, subject to certain restrictions. For purposes of a code of
ethics, an access person means (i) a director, trustee or officer of a fund or
investment adviser; (ii) any employee of a fund or investment adviser (or any
company in a control relationship to a fund or investment adviser) who, in
connection makes, participates in, or obtains information about the purchase or
sale of securities by a fund, or whose functions relate to the making of any
recommendations with respect to the purchases or sales; and (iii) any natural
person in a control relationship to a fund or investment adviser who obtains
information concerning recommendations made to a fund regarding the purchase or
sale of securities. Portfolio managers and other persons who assist in the
investment process are subject to additional restrictions. The above
restrictions do not apply to purchases or sales of certain types of securities,
including mutual fund shares, money market instruments and certain U.S.
Government securities. To facilitate enforcement, the codes of ethics generally
require that an access person, other than "disinterested" directors or trustees,
submit reports to a designated

51
<PAGE>

compliance person regarding transactions involving securities which are eligible
for purchase by a Fund. The codes of ethics for the Fund Complex, Advisor, Sub-
Advisors and Stephens are on public file with, and are available from, the SEC.

PERFORMANCE CALCULATIONS

The Funds may advertise certain yield and total return information.
Quotations of yield and total return reflect only the performance of a
hypothetical investment in a Fund or class of shares during the particular time
period shown. Yield and total return vary based on changes in the market
conditions and the level of a Fund's expenses, and no reported performance
figure should be considered an indication of performance which may be expected
in the future.

In connection with communicating its performance to current or prospective
shareholders, these figures may also be compared to the performance of other
mutual funds tracked by mutual fund rating services or to unmanaged indices
which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs.

Performance information for a Fund or Class of shares in a Fund may be
useful in reviewing the performance of such Fund or Class of shares and for
providing a basis for comparison with investment alternatives. The performance
of a Fund and the performance of a Class of shares in a Fund, however, may not
be comparable to the performance from investment alternatives because of
differences in the foregoing variables and differences in the methods used to
value portfolio securities, compute expenses and calculate performance.

Performance information may be advertised for non-standardized periods,
including year-to-date and other periods less than a year for the Funds. Annual
and Semi-Annual Reports for the Funds may contain additional performance
information, and are available free of charge upon request.

Average Annual Total Return: The Funds may advertise certain total return
---------------------------
information. As and to the extent required by the SEC, an average annual
compound rate of return ("T") is computed by using the redeemable value at the
end of a specified period ("ERV") of a hypothetical initial investment ("P")
over a period of years ("n") according to the following formula: P(1+T)/n/=ERV.

Average Annual Total Return for the Period Ended June 30, 2000/1/
-----------------------------------------------------------------

Fund Inception/2/ Ten Year Five Year One Year
---- ------------ -------- --------- --------

Arizona Tax-Free
Class A 4.54 N/A 3.08 (3.99)
Class B 4.10 N/A 2.71 (5.06)
Institutional Class 5.21 N/A 4.19 0.57

California Limited Term Tax-Free
Class A 3.71 N/A 3.29 (0.97)
Institutional Class 4.38 N/A 4.30 3.79

52
<PAGE>

Fund Inception/2/ Ten Year Five Year One Year
---- ------------ -------- --------- --------

California Tax-Free
Class A 6.84 6.43 4.85 (1.55)
Class B 6.51 6.16 4.70 (2.68)
Class C 6.51 6.16 5.02 1.23
Institutional Class 7.27 6.93 5.85 3.16

Colorado Tax-Free
Class A 4.40 N/A 4.51 (3.67)
Class B 4.33 N/A 4.38 (4.56)
Institutional Class 5.10 N/A 5.50 0.97

Minnesota Intermediate
Tax-Free 5.95 5.68 4.72 2.17
Institutional Class

Minnesota Tax-Free
Class A 5.63 5.33 3.96 (4.51)
Class B 5.21 5.00 3.80 (5.50)
Institutional Class 6.02 5.81 4.92 (0.02)

National Limited Term
Tax-Free 5.10 N/A N/A 2.64
Institutional Class

National Tax-Free
Class A 5.49 5.52 4.53 (4.02)
Class B 5.16 5.24 4.38 (4.99)
Class C 5.17 5.25 4.74 (1.09)
Institutional Class 5.96 6.04 5.55 0.73

Nebraska Tax-Free
Institutional Class 5.29% 5.30% 4.30% 5.43%

Oregon Tax-Free
Class A 5.59 5.23 3.22 (4.93)
Class B 5.20 4.90 2.99 (5.86)
Institutional Class 6.05 5.77 4.30 (0.32)
____________________

/1/ Return calculations reflect the inclusion of front-end sales charges for
Class A shares and the maximum applicable contingent deferred sales charge
for Class B and Class C shares. The average annual return for the Nebraska
Tax-Free Fund is for the applicable period ended August 31, 2000.

/2/ For purposes of showing performance information, the inception date of each
Fund is as follows: Arizona Tax-Free - March 1, 1992; California Limited
Term Tax-Free - November 18, 1992; California Tax- Free - October 6, 1988;
Colorado Tax-Free - June 1, 1993; Minnesota Intermediate Tax-Free -
September 30, 1976; Minnesota Tax-Free - January 12, 1988; National Limited
Term Tax-Free - October 1, 1996; National Tax-Free -August 1, 1989;
Nebraska Tax Free - August 31, 1989 and Oregon Tax-Free - June 1, 1988. The
actual inception date of each Class may differ from the inception date of
the corresponding Fund.

Cumulative Total Return. In addition to the above performance information,
-----------------------
each Fund may also advertise the cumulative total return of the Fund.
Cumulative total return is based on the overall percentage change in value of a
hypothetical investment in the Fund, assuming all Fund

53
<PAGE>

dividends and capital gain distributions are reinvested, without reflecting the
effect of any sales charge that would be paid by an investor, and is not
annualized.

Cumulative Total Return for the Period Ended June 30, 2000/1/
-------------------------------------------------------------

Fund Inception/2/ Ten Year Five Year One Year
---- ------------ -------- --------- --------
Arizona Tax-Free
Class A 44.78 N/A 16.38 (3.99)
Class B 39.71 N/A 14.31 (5.06)
Institutional Class 52.71 N/A 22.76 0.57

California Limited
Term Tax-Free 32.01 N/A 17.56 (0.97)
Class A 38.59 N/A 23.45 3.79
Institutional Class

California Tax-Free
Class A 117.26 86.41 26.73 (1.55)
Class B 109.58 81.76 25.84 (2.68)
Class C 109.56 81.74 27.76 1.23
Institutional Class 127.81 32.86 32.86 3.16

Colorado Tax-Free
Class A 35.69 N/A 24.71 (3.67)
Class B 35.05 N/A 23.91 (4.56)
Institutional Class 42.23 N/A 30.72 0.97

Minnesota Intermediate
Tax-Free 294.47 73.79 25.93 2.17
Institutional Class

Minnesota Tax-Free
Class A 97.85 68.03 21.43 (4.51)
Class B 88.37 62.97 20.49 (5.50)
Institutional Class 107.17 75.95 27.15 (0.02)

54
<PAGE>

Fund Inception/2/ Ten Year Five Year One Year
---- ------------ -------- --------- --------

National Limited Term
Tax-Free 20.49 N/A N/A 2.64
Institutional Class

National Tax-Free
Class A 79.14 71.21 24.82 (4.02)
Class B 73.23 66.69 23.91 (4.99)
Class C 73.41 66.87 26.04 (1.09)
Institutional 88.01 79.69 31.01 0.73
Class

Nebraska Tax-Free
Institutional Class 76.36% 67.61% 23.44% 5.43%

Oregon Tax-Free
Class A 92.95 66.47 17.19 (4.93)
Class B 84.44 61.37 15.85 (5.86)
Institutional Class 103.24 75.28 23.45 (0.32)

___________________

Yield Calculations: The Funds may, from time to time, include their yields
------------------
and effective yields in advertisements or reports to shareholders or prospective
investors. Quotations of yield for the Funds are based on the investment income
per share earned during a particular seven-day or thirty-day period, less
expenses accrued during a period ("net investment income") and are computed by
dividing net investment income by the offering price per share on the last date
of the period, according to the following formula:

YIELD = 2[(a - b + 1)/6/ - 1]
-----
cd

where a = dividends and interest earned during the period; b = expenses
accrued for the period (net of reimbursements); c = the average daily number of
shares of each class outstanding during the period that were entitled to receive
dividends; and d = the maximum offering price per share each class of shares on
the last day of the period.

Effective Yield: Effective yields for the Funds are based on the change in
---------------
the value of a hypothetical investment (exclusive of capital changes) over a
particular thirty-day period, less a pro-rata share of each Fund's expenses
accrued over that period (the "base period"), and stated as a percentage of the
investment at the start of the base period (the "base period return"). The base
period return is then annualized multiplying by 365/30, with the resulting yield
figure carried to at

55
<PAGE>

least the nearest hundredth of one percent. "Effective yield" for the Funds
assumes that all dividends received during the period have been reinvested.
Calculation of "effective yield" begins with the same "base period return" used
in the calculation of yield, which is then annualized to reflect weekly
compounding pursuant to the following formula:

Effective Thirty-Day Yield = [(Base Period Return +1)365/30]-1

Yield for Period Ended June 30, 2000/1/
---------------------------------------

Thirty-Day Tax-
Fund Thirty-Day Yield Equivalent Yield/2/
---- ---------------- -------------------

Arizona Tax-Free
Class A 5.41 9.43
Class B 4.91 8.56
Institutional Class 5.83 10.17

California Limited
Term Tax-Free 3.60 6.57
Class A 3.92 7.16
Institutional Class

California Tax-Free
Class A 4.74 8.64
Class B 4.11 7.50
Class C 4.10 7.49
Institutional Class 5.12 9.34

Colorado Tax-Free
Class A 5.34 9.27
Class B 4.83 8.40
Institutional Class 5.59 9.71

Minnesota Intermediate
Tax-Free 5.03 9.05
Institutional Class

Minnesota Tax-Free
Class A 5.35 9.63
Class B 4.86 8.74
Institutional Class 5.61 10.09

National Limited Term
Tax-Free
Institutional Class 5.23 8.66

National Tax-Free
Class A 5.37 8.89
Class B 4.88 8.08
Class C 4.88 8.08
Institutional 5.83 9.64
Class

Nebraska Tax-Free Fund
Institutional Class 3.98% 7.06%

56
<PAGE>

Thirty-Day Tax-
Fund Thirty-Day Yield Equivalent Yield/2/
---- ---------------- -------------------

Oregon Tax-Free
Class A 5.19 9.45
Class B 4.69 8.54
Institutional Class 5.61 10.21
____________________

/1/ Return calculations reflect the inclusion of front-end sales charges for
Class A shares and the maximum applicable contingent deferred sales charge
for Class B and Class C shares. Figures are based on contractual net
operating expense ratios as shown in the prospectus.

/2/ Based on a combined federal and state income tax rate of 45.22% for each of
the California Limited Term Tax-Free and California Tax-Free Funds, and
45.04% and 42.72% for the Oregon Tax-Free Fund and the Arizona Tax-Free
Fund, respectively. Based on a combined federal and state income tax rate
of 48.10% for each of the Minnesota Intermediate Tax-Free and Minnesota
Tax-Free Funds; 44.60% for the Colorado Tax-Free Fund; 43.63% for the
Nebraska Tax-Free Fund; and a federal income tax rate of 39.6% for each of
the National Limited Term Tax-Free and National Tax-Free Funds.

The yields for each class of shares will fluctuate from time to time,
unlike bank deposits or other investments that pay a fixed yield for a stated
period of time, and do not provide a basis for determining future yields since
they are based on historical data. Yield is a function of portfolio quality,
composition, maturity and market conditions as well as the expenses allocated to
a Fund or to a particular class of a Fund.

In addition, investors should recognize that changes in the net asset
values of shares of each class of a Fund will affect the yield of the respective
class of shares for any specified period, and such changes should be considered
together with such class' yield in ascertaining such class' total return to
shareholders for the period. Yield information for each class of shares may be
useful in reviewing the performance of the class of shares and for providing a
basis for comparison with investment alternatives. The yield of each class of
shares, however, may not be comparable to the yields from investment
alternatives because of differences in the foregoing variables and differences
in the methods used to value portfolio securities, compute expenses and
calculate yield.

From time to time and only to the extent the comparison is appropriate for
a Fund or a Class of shares, the Trust may quote the performance or price-
earnings ratio of a Fund or a Class of in advertising and other types of
literature as compared with the performance of the S&P Index, the Dow Jones
Industrial Average, the Lehman Brothers 20+ Treasury Index, the Lehman Brothers
5-7 Year Treasury Index, Donoghue's Money Fund Averages, Real Estate Investment
Averages (as reported by the National Association of Real Estate Investment
Trusts), Gold Investment Averages (provided by the World Gold Council), Bank
Averages (which is calculated from figures supplied by the U.S. League of
Savings Institutions based on effective annual rates of interest on both
passbook and certificate accounts), average annualized certificate of deposit
rates (from the Federal Reserve G-13 Statistical Releases or the Bank Rate
Monitor), the Salomon One Year Treasury Benchmark Index, the Consumer Price
Index (as published by the U.S. Bureau of Labor Statistics), other managed or
unmanaged indices or performance data of bonds, municipal securities, stocks or
government securities (including data provided by Ibbotson Associates), or by
other services, companies, publications or persons who monitor mutual funds on
overall performance or other

57
<PAGE>

criteria. The S&P Index and the Dow Jones Industrial Average are unmanaged
indices of selected common stock prices. The performance of a Fund or a class
also may be compared to that of other mutual funds having similar objectives.
This comparative performance could be expressed as a ranking prepared by Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc., Bloomberg
Financial Markets or Morningstar, Inc., independent services which monitor the
performance of mutual funds. The Funds' performance will be calculated by
relating net asset value per share of each class at the beginning of a stated
period to the net asset value of the investment, assuming reinvestment of all
gains distributions paid, at the end of the period. The Funds' comparative
performance will be based on a comparison of yields, as described above, or
total return, as reported by Lipper, Survey Publications, Donoghue or
Morningstar, Inc.

Any such comparisons may be useful to investors who wish to compare past
performance of the Funds or a class of shares with the performance of a Fund's
competitors. Of course, past performance cannot be a guarantee of future
results. The Trust also may include, from time to time, a reference to certain
marketing approaches of the Distributor, including, for example, a reference to
a potential shareholder being contacted by a selected broker or dealer. General
mutual fund statistics provided by the Investment Company Institute may also be
used.

The Trust also may use the following information in advertisements and
other types of literature, only to the extent the information is appropriate for
each class of shares of a Fund: (i) the Consumer Price Index may be used to
assess the real rate of return from an investment in each class of shares of a
Fund; (ii) other government statistics, including, but not limited to, The
Survey of Current Business, may be used to illustrate investment attributes of
each class of shares of a Fund or the general economic, business, investment, or
financial environment in which a Fund operates; (iii) the effect of tax-deferred
compounding on the investment returns of each class of shares of a Fund or on
returns in general, may be illustrated by graphs, charts, etc., where such
graphs or charts would compare, at various points in time, the return from an
investment in each class of shares of the Fund (or returns in general) on a tax-
deferred basis (assuming reinvestment of capital gains and dividends and
assuming one or more tax rates) with the return on a taxable basis; and (iv) the
sectors or industries in which the Fund invests may be compared to relevant
indices of stocks or surveys (e.g., S&P Industry Surveys) to evaluate the
historical performance or current or potential value of each class of shares of
a Fund with respect to the particular industry or sector.

The Trust also may use, in advertisements and other types of literature,
information and statements: (1) showing that bank savings accounts offer a
guaranteed return of principal and a fixed rate of interest, but no opportunity
for capital growth; and (2) describing Wells Fargo Bank, and its affiliates and
predecessors, as one of the first investment managers to advise investment
accounts using asset allocation and index strategies. The Trust also may
include in advertising and other types of literature information and other data
from reports and studies prepared by the Tax Foundation, including information
regarding federal and state tax levels and the related "Tax Freedom Day."

The Trust also may discuss in advertising and other types of literature
that a Fund has been assigned a rating by an NRRO, such as Standard Poor's
Corporation. Such rating would assess the creditworthiness of the investments
held by a Fund. The assigned rating would not be a recommendation to purchase,
sell or hold a Fund's shares since the rating would not comment on the market
price of a Fund's shares or the suitability of a Fund for a particular investor.
In addition,

58
<PAGE>

the assigned rating would be subject to change, suspension or withdrawal as a
result of changes in, or unavailability of, information relating to a Fund or
its investments. The Trust may compare the performance of each class of shares
of a Fund with other investments which are assigned ratings by NRROs. Any such
comparisons may be useful to investors who wish to compare each class' past
performance with other rated investments.

From time to time, a Fund may use the following statements, or variations
thereof, in advertisements and other promotional materials: "Wells Fargo Bank,
as a Shareholder Servicing Agent for the Wells Fargo Funds Trust, provides
various services to its customers that are also shareholders of the Funds.
These services may include access to Wells Fargo Funds Trust's account
information through Automated Teller Machines (ATMs), the placement of purchase
and redemption requests for shares of the Funds through ATMs and the
availability of combined Wells Fargo Bank and Wells Fargo Funds Trust account
statements."

The Trust also may disclose, in advertising and other types of literature,
information and statements that Wells Capital Management, Inc. (formerly, Wells
Fargo Investment Management) a subsidiary of Wells Fargo Bank, is listed in the
top 100 by Institutional Investor magazine in its July 1997 survey "America's
Top 300 Money Managers." This survey ranks money managers in several asset
categories. The Trust also may disclose in advertising and other types of sales
literature the assets and categories of assets under management by the Trust's
investment Advisor and the total amount of assets and mutual fund assets managed
by Wells Fargo Bank. As of June 30, 2000, Wells Fargo Bank and its affiliates
managed over $161 billion in assets.

The Trust may disclose in advertising and other types of literature that
investors can open and maintain Sweep Accounts over the Internet or through
other electronic channels (collectively, "Electronic Channels"). Such
advertising and other literature may discuss the investment options available to
investors, including the types of accounts and any applicable fees. Such
advertising and other literature may disclose that Wells Fargo Bank is the first
major bank to offer an on-line application for a mutual fund account that can be
filled out completely through Electronic Channels. Advertising and other
literature may disclose that Wells Fargo Bank may maintain Web sites, pages or
other information sites accessible through Electronic Channels (an "Information
Site") and may describe the contents and features of the Information Site and
instruct investors on how to access the Information Site and open a Sweep
Account. Advertising and other literature may also disclose the procedures
employed by Wells Fargo Bank to secure information provided by investors,
including disclosure and discussion of the tools and services for accessing
Electronic Channels. Such advertising or other literature may include
discussions of the advantages of establishing and maintaining a Sweep Account
through Electronic Channels and testimonials from Wells Fargo Bank customers or
employees and may also include descriptions of locations where product
demonstrations may occur. The Trust may also disclose the ranking of Wells Fargo
Bank as one of the largest money managers in the United States.

DETERMINATION OF NET ASSET VALUE

Net asset value per share for each class of the Funds is determined as of
the close of regular trading (currently 1:00 p.m. (Pacific time), 3:00 p.m.
(Central time), 4:00 p.m. (Eastern time)) on each day the New York Stock
Exchange ("NYSE") is open for business. Expenses and

59
<PAGE>

fees, including advisory fees, are accrued daily and are taken into account for
the purpose of determining the net asset value of the Funds' shares.

Securities of a Fund for which market quotations are available are valued
at latest prices. Any security for which the primary market is an exchange is
valued at the last sale price on such exchange on the day of valuation or, if
there was no sale on such day, the latest bid price quoted on such day. In the
case of other Fund securities, including U.S. Government securities but
excluding money market instruments and debt securities maturing in 60 days or
less, the valuations are based on latest quoted bid prices. Money market
instruments and debt securities maturing in 60 days or less are valued at
amortized cost. Futures contracts will be marked to market daily at their
respective settlement prices determined by the relevant exchange. Prices may be
furnished by a reputable independent pricing service approved by the Trust's
Board of Trustees. Prices provided by an independent pricing service may be
determined without exclusive reliance on quoted prices and may take into account
appropriate factors such as institutional-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data. All other securities and other assets of
a Fund for which current market quotations are not readily available are valued
at fair value as determined in good faith by the Trust's Board of Trustees and
in accordance with procedures adopted by the Trustees.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Shares of the Funds may be purchased on any day the Funds are open for
business. Each Fund is open for business each day the NYSE is open for trading
(a "Business Day"). Currently, the NYSE is closed on New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day (each a "Holiday"). When any
Holiday falls on a weekend, the NYSE typically is closed on the weekday
immediately before or after such Holiday.

Payment for shares may, in the discretion of the Advisor, be made in the
form of securities that are permissible investments for the Funds. For further
information about this form of payment please contact the Distributor. In
connection with an in-kind securities payment, the Funds will require, among
other things, that the securities be valued on the day of purchase in accordance
with the pricing methods used by a Fund and that such Fund receives satisfactory
assurances that (i) it will have good and marketable title to the securities
received by it; (ii) that the securities are in proper form for transfer to the
Fund; and (iii) adequate information will be provided concerning the basis and
other matters relating to the securities.

Under the 1940 Act, the Funds may suspend the right of redemption or
postpone the date of payment upon redemption for any period during which the
NYSE is closed (other than customary weekend and holiday closings, or during
which trading is restricted, or during which as determined by the SEC by rule or
regulation) an emergency exists as a result of which disposal or valuation of
portfolio securities is not reasonably practicable, or for such periods as the
SEC may permit. The Trust may also redeem shares involuntarily or make payment
for redemption in securities or other property if it appears appropriate to do
so in light of the Trust's responsibilities under the 1940 Act. In addition,
the Trust may redeem shares involuntarily to reimburse the Fund for any losses
sustained by reason of the failure of a shareholder to make full payment for
shares purchased or to

60
<PAGE>

collect any charge relating to a transaction effected for the benefit of a
shareholder which is applicable to shares of a Fund as provided from time to
time in the Prospectus.

The dealer reallowance for Class A share purchases is as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
FRONT-END SALES FRONT-END SALES DEALER
CHARGE AS % CHARGE AS % ALLOWANCE
AMOUNT OF PUBLIC OF NET AMOUNT AS % OF PUBLIC
OF PURCHASE OFFERING PRICE INVESTED OFFERING PRICE
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------------
Less than $50,000 4.50% 4.71% 4.00%
------------------------------------------------------------------------------------------------------
$50,000 to $99,999 4.00% 4.17% 3.50%
------------------------------------------------------------------------------------------------------
$100,000 to $249,999 3.50% 3.63% 3.00%
------------------------------------------------------------------------------------------------------
$250,000 to $499,999 2.50% 2.56% 2.25%
------------------------------------------------------------------------------------------------------
$500,000 to $999,999 2.00% 2.04% 1.75%
------------------------------------------------------------------------------------------------------
$1,000,000 and over/1/ 0.00% 0.00% 1.00%
------------------------------------------------------------------------------------------------------
</TABLE>

/1/ We will assess Class A shares purchases of $1,000,000 or more a 1.00% CDSC
if they are redeemed within one year from the date of purchase. Charges are
based on the lower of the NAV on the date of purchase or the date of redemption.

Purchases and Redemptions Through Brokers and/or Their Affiliates. A broker
-----------------------------------------------------------------
may charge transaction fees on the purchase and/or sale of Fund shares in
addition to those fees described in the Prospectus in the Summary of Expenses.
The Trust has authorized one or more brokers to receive on its behalf purchase
and redemption orders, and such brokers are authorized to designate other
intermediaries to receive purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order for
Fund shares when an authorized broker or, if applicable, a broker's authorized
designee, receives the order.

Reduced Sales Charges for Former Norwest Advantage Fund Class B
---------------------------------------------------------------
Shareholders. No contingent deferred sales charge is imposed on redemptions of
------------
Class B shares of a former Norwest Advantage Fund purchased prior to October 1,
1999, to effect a distribution (other than a lump sum distribution) from an IRA,
Keogh plan or Section 403(b) custodial account or from a qualified retirement
plan.

Reduced Sales Charges for Employees of the Transfer Agent. Employees of
---------------------------------------------------------
Boston Financial Data Services, Inc., transfer agent for the Trust, may purchase
Class A shares at net asset value.

PORTFOLIO TRANSACTIONS

The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policies
established by the Trust's Board of Trustees, Wells Fargo Bank is responsible
for each Fund's portfolio decisions and the placing of portfolio transactions.
In placing orders, it is the policy of the Trust to obtain the best results
taking into account the dealer's general execution and operational facilities,
the type of transaction involved and other factors such as the dealer's risk in
positioning the securities

61
<PAGE>

involved. While Wells Fargo Bank generally seeks reasonably competitive spreads
or commissions, the Funds will not necessarily be paying the lowest spread or
commission available.

Purchases and sales of non-equity securities usually will be principal
transactions. Portfolio securities normally will be purchased or sold from or
to dealers serving as market makers for the securities at a net price. Each of
the Funds also will purchase portfolio securities in underwritten offerings and
may purchase securities directly from the issuer. Generally, municipal
obligations and taxable money market securities are traded on a net basis and do
not involve brokerage commissions. The cost of executing a Fund's portfolio
securities transactions will consist primarily of dealer spreads and
underwriting commissions. Under the 1940 Act, persons affiliated with the Trust
are prohibited from dealing with the Trust as a principal in the purchase and
sale of securities unless an exemptive order allowing such transactions is
obtained from the SEC or an exemption is otherwise available. The Fund may
purchase securities from underwriting syndicates of which Stephens or Wells
Fargo Bank is a member under certain conditions in accordance with the
provisions of a rule adopted under the 1940 Act and in compliance with
procedures adopted by the Board of Trustees.

Wells Fargo Bank, as Advisor to the Funds, may, in circumstances in which
two or more dealers are in a position to offer comparable results for a Fund
portfolio transaction, give preference to a dealer that has provided statistical
or other research services to Wells Fargo Bank. By allocating transactions in
this manner, Wells Fargo Bank is able to supplement its research and analysis
with the views and information of securities firms. Information so received
will be in addition to, and not in lieu of, the services required to be
performed by Wells Fargo Bank under the Advisory Contracts, and the expenses of
Wells Fargo Bank will not necessarily be reduced as a result of the receipt of
this supplemental research information. Furthermore, research services
furnished by dealers through which Wells Fargo Bank places securities
transactions for a Fund may be used by Wells Fargo Bank in servicing its other
accounts, and not all of these services may be used by Wells Fargo Bank in
connection with advising the Funds. In general, transactions executed in the
portfolios for the Tax-Free Funds are not subject to such allocation practices.

Brokerage Commissions and Securities of Regular Broker-Dealers. For the
--------------------------------------------------------------
fiscal year ended June 30, 2000, and for all prior relevant periods, none of the
Tax-Free Funds paid commissions to any person identified under Item 16(b)(1) of
Form N-1A, or held securities of their regular broker-dealers.

Portfolio Turnover. The portfolio turnover rate is not a limiting factor
------------------
when Wells Fargo Bank deems portfolio changes appropriate. Changes may be made
in the portfolios consistent with the investment objectives and policies of the
Funds whenever such changes are believed to be in the best interests of the
Funds and their shareholders. The portfolio turnover rate is calculated by
dividing the lesser of purchases or sales of portfolio securities by the average
monthly value of the Fund's portfolio securities. For purposes of this
calculation, portfolio securities exclude all securities having a maturity when
purchased of one year or less. Portfolio turnover generally involves some
expenses to the Funds, including brokerage commissions or dealer mark-ups and
other transaction costs on the sale of securities and the reinvestment in other
securities. Portfolio

62
<PAGE>

turnover also can generate short-term capital gain tax consequences. Portfolio
turnover rate is not a limiting factor when Wells Fargo Bank deems portfolio
changes appropriate.

FUND EXPENSES

From time to time, Wells Fargo Bank may waive fees from the Funds in whole
or in part. Any such waiver will reduce expenses and, accordingly, have a
favorable impact on a Fund's performance.

Except for the expenses borne by Wells Fargo Bank, the Trust bears all
costs of its operations, including the compensation of its Trustees; advisory,
shareholder servicing and administration fees; payments pursuant to any Plan;
interest charges; taxes; fees and expenses of its independent auditors, legal
counsel, transfer agent and dividend disbursing agent; expenses of redeeming
shares; expenses of preparing and printing Prospectuses (except the expense of
printing and mailing Prospectuses used for promotional purposes, unless
otherwise payable pursuant to a Plan), shareholders' reports, notices, proxy
statements and reports to regulatory agencies; insurance premiums and certain
expenses relating to insurance coverage; trade association membership dues;
brokerage and other expenses connected with the execution of portfolio
transactions; fees and expenses of its Custodian, including those for keeping
books and accounts and calculating the net asset value per share of a Fund;
expenses of shareholders' meetings; expenses relating to the issuance,
registration and qualification of a Fund's shares; pricing services,
organizational expenses and any extraordinary expenses. Expenses attributable to
the Fund are charged against Fund assets. General expenses of the Trust are
allocated among all of the funds of the Trust, including the Funds, in a manner
proportionate to the net assets of each Fund, on a transactional basis, or on
such other basis as the Trust's Board of Trustees deems equitable.

INCOME TAXES

The following information supplements and should be read in conjunction
with the Prospectus section entitled "Taxes." The Prospectus of each Fund
generally describes the tax treatment of distributions by the Fund. This
section of the SAI includes additional information concerning federal income
taxes and, as applicable, certain Arizona, California Colorado, Minnesota and
Oregon taxes.

General. The Trust intends to continue to qualify each Fund as a regulated
-------
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), as long as such qualification is in the best interests of
the Fund's shareholders. Each Fund will be treated as a separate entity for
federal income tax purposes. Thus, the provisions of the Code applicable to
regulated investment companies generally will be applied separately to each
Fund, rather than to the Trust as a whole. In addition, capital gains, net
investment income, and operating expenses will be determined separately for each
Fund. As a regulated investment company, each Fund will not be taxed on its net
investment income and capital gain distributed to its shareholders.

Qualification as a regulated investment company under the Code requires,
among other things, that each Fund derive at least 90% of its annual gross
income from dividends, interest, certain payments with respect to securities
loans, gains from the sale or other disposition of stock

63
<PAGE>

or securities or foreign currencies (to the extent such currency gains are
directly related to the regulated investment company's principal business of
investing in stock or securities) and other income (including, but not limited
to, gains from options, futures or forward contracts) derived with respect to
its business of investing in such stock, securities or currencies; and (b)
diversify its holdings so that, at the end of each quarter of the taxable year,
(i) at least 50% of the market value of the Fund's assets is represented by
cash, government securities and other securities limited in respect of any one
issuer to an amount not greater than 5% of the Fund's assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its assets is invested in the securities of any one issuer (other than
U.S. Government obligations and the securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
determined to be engaged in the same or similar trades or businesses.

The Funds must also distribute or be deemed to distribute to their
shareholders at least 90% of their net investment income (including, for this
purpose, net short-term capital gain) earned in each taxable year. In general,
these distributions must actually or be deemed to be made in the taxable year.
However, in certain circumstances, such distributions may be made in the 12
months following the taxable year. Furthermore, distributions declared in
October, November or December of one taxable year and paid by January 31 of the
following taxable year will be treated as paid by December 31 of the first
taxable year. The Funds intend to pay out substantially all of their net
investment income and net realized capital gains (if any) for each year.

Excise Tax. A 4% nondeductible excise tax will be imposed on each Fund
----------
(other than to the extent of its tax-exempt interest income) to the extent it
does not meet certain minimum distribution requirements by the end of each
calendar year. Each Fund intends to actually or be deemed to distribute
substantially all of its net investment income and net capital gains by the end
of each calendar year and, thus, expects not to be subject to the excise tax.

Taxation of Fund Investments. Except as provided herein, gains and losses
----------------------------
on the sale of portfolio securities by a Fund generally be capital gains and
losses. Such gains and losses will ordinarily be long-term capital gains and
losses if the securities have been held by the Fund for more than one year at
the time of disposition of the securities.

Gains recognized on the disposition of a debt obligation purchased by the
Fund at a market discount (generally at a price less than its principal amount)
will be treated as ordinary income to the extent of the portion of market
discount which accrued, but was not previously recognized pursuant to an
available election, during the term the Fund held the debt obligation.

If a Fund enters into a "constructive sale" of any appreciated position in
stock, a partnership interest, or certain debt instruments, the Fund must
recognize gain (but not loss) with respect to that position. For this purpose,
a constructive sale occurs when the Fund enters into one of the following
transactions with respect to the same or substantially identical property: (i) a
short sale; (ii) an offsetting notional principal contract; or (iii) a futures
or forward contract.

Capital Gain Distributions. Distributions which are designated by a Fund
--------------------------
as capital gain distributions will be taxed to shareholders as long-term term
capital gain (to the extent such

64
<PAGE>

dividends do not exceed the Fund's actual net capital gain for the taxable
year), regardless of how long a shareholder has held Fund shares. Such
distributions will be designated as capital gain distributions in a written
notice mailed by the Fund to its shareholders not later than 60 days after the
close of the Fund's taxable year.

Disposition of Fund Shares. A disposition of Fund shares pursuant to a
--------------------------
redemption (including a redemption in-kind) or an exchange will ordinarily
result in a taxable capital gain or loss, depending on the amount received for
the shares (or are deemed to receive in the case of an exchange) and the cost of
the shares.

If a shareholder exchanges or otherwise disposes of Fund shares within 90
days of having acquired such shares and if, as a result of having acquired those
shares, the shareholder subsequently pays a reduced sales charge on a new
purchase of shares of the Fund or a different regulated investment company, the
sales charge previously incurred in acquiring the Fund's shares shall not be
taken into account (to the extent such previous sales charges do not exceed the
reduction in sales charges on the new purchase) for the purpose of determining
the amount of gain or loss on the disposition, but will be treated as having
been incurred in the acquisition of such other shares. Also, any loss realized
on a redemption or exchange of shares of the Fund will be disallowed to the
extent that substantially identical shares are acquired within the 61-day period
beginning 30 days before and ending 30 days after the shares are disposed of.

If a shareholder receives a designated capital gain distribution (to be
treated by the shareholder as a long-term capital gain) with respect to any Fund
share and such Fund share is held for six months or less, then (unless otherwise
disallowed) any loss on the sale or exchange of that Fund share will be treated
as a long-term capital loss to the extent of the designated capital gain
distribution. In addition, if a shareholder holds Fund shares for six months or
less, any loss on the sale or exchange of those shares will be disallowed to the
extent of the amount of exempt-interest dividends received with respect to the
shares. The Treasury Department is authorized to issue regulations reducing the
six months holding requirement to a period of not less than the greater of 31
days or the period between regular dividend distributions where a Fund regularly
distributes at least 90% of its net tax-exempt interest, if any. No such
regulations have been issued as of the date of this SAI. The loss disallowance
rules described in this paragraph do not apply to losses realized under a
periodic redemption plan.

Federal Income Tax Rates. As of the printing of this SAI, the maximum
------------------------
individual tax rate applicable to ordinary income is 39.6% (marginal tax rates
may be higher for some individuals to reduce or eliminate the benefit of
exemptions and deductions); the maximum individual marginal tax rate applicable
to net capital gain is 20%; and the maximum corporate tax rate applicable to
ordinary income and net capital gain is 35% (marginal tax rates may be higher
for some corporations to reduce or eliminate the benefit of lower marginal
income tax rates). Naturally, the amount of tax payable by an individual or
corporation will be affected by a combination of tax laws covering, for example,
deductions, credits, deferrals, exemptions, sources of income and other matters.

Backup Withholding. The Trust may be required to withhold, subject to
------------------
certain exemptions, at a rate of 31% ("backup withholding") on all distributions
and redemption proceeds (including proceeds from exchanges and redemptions in-
kind) paid or credited to an

65
<PAGE>

individual Fund shareholder, unless the shareholder certifies that the "taxpayer
identification number" ("TIN") provided is correct and that the shareholder is
not subject to backup withholding, or the IRS notifies the Trust that the
shareholder's TIN is incorrect or that the shareholder is subject to backup
withholding. Such tax withheld does not constitute any additional tax imposed on
the shareholder, and may be claimed as a tax payment on the shareholder's
Federal income tax return. An investor must provide a valid TIN upon opening or
reopening an account. Failure to furnish a valid TIN to the Trust also could
subject the investor to penalties imposed by the IRS.

Foreign Shareholders. Under the Code, distributions attributable to income
--------------------
on taxable investments, net short-term capital gain and certain other items
realized by a Fund and paid to a nonresident alien individual, foreign trust
(i.e., trust which a U.S. court is able to exercise primary supervision over
administration of that trust and one or more U.S. persons have authority to
control substantial decisions of that trust), foreign estate (i.e., the income
of which is not subject to U.S. tax regardless of source), foreign corporation,
or foreign partnership (each, a "foreign shareholder") will be subject to U.S.
withholding tax (at a rate of 30% or a lower treaty rate, if applicable).
Withholding will not apply if a distribution paid by the Fund to a foreign
shareholder is "effectively connected" with a U.S. trade or business (or, if an
income tax treaty applies, is attributable to a U.S. permanent establishment of
the foreign shareholder), in which case the reporting and withholding
requirements applicable to U.S. persons will apply. Capital gain distributions
generally are not subject to tax withholding.

New Regulations. On October 6, 1997, the Treasury Department issued new
---------------
regulations (the "New Regulations") which make certain modifications to the
backup withholding, U.S. income tax withholding and information reporting rules
applicable to foreign shareholders. The New Regulations will generally be
effective for payments made after December 31, 2000, subject to certain
transition rules. Among other things, the New Regulations will permit the Funds
to estimate the portion of their distributions qualifying as capital gain
distributions for purposes of determining the portion of such distributions paid
to foreign shareholders that will be subject to federal income tax withholding.
Prospective investors are urged to consult their own tax advisors regarding the
New Regulations.

Tax-Exempt Investors and Tax-Deferred Plans. Shares of a Funds would not
-------------------------------------------
be suitable for tax-exempt institutions and may not be suitable for retirement
plans qualified under Section 401 of the Code, H.R. 10 plans and IRAs since such
plans and accounts are generally tax-exempt and, therefore, would not benefit
from the exempt status of dividends from the Fund. Such dividends may
ultimately be taxable to the beneficiaries when distributed to them.

Additional Considerations for the Funds. If at least 50% of the value of a
---------------------------------------
regulated investment company's total assets at the close of each quarter of its
taxable years consists of obligations the interest on which is exempt from
federal income tax, it will qualify under the Code to pay "exempt-interest
dividends." The Funds intend to so qualify and are designed to provide
investors with a high level of income exempt from federal income tax.

The portion of total dividends paid by a Fund with respect to any taxable
year that constitutes exempt-interest dividends will be the same for all
shareholders receiving dividends during such year. Distributions of capital
gains or income not attributable to interest on the

66
<PAGE>

Fund's tax-exempt obligations will not constitute exempt-interest dividends and
will be taxable to its shareholders. The exemption of interest income derived
from investments in tax-exempt obligations for federal income tax purposes may
not result in a similar exemption under the laws of a particular state or local
taxing authority.

Not later than 60 days after the close of its taxable year, each Fund will
notify its shareholders of the portion of the dividends paid with respect to
such taxable year which constitutes exempt-interest dividends. The aggregate
amount of dividends so designated cannot exceed the excess of the amount of
interest excludable from gross income under Section 103 of the Code received by
the Fund during the taxable year over any amounts disallowed as deductions under
Sections 265 and 171(a)(2) of the Code. Interest on indebtedness incurred to
purchase or carry shares of a Fund will not be deductible to the extent that the
Fund's distributions are exempt from federal income tax.

In addition, the federal alternative minimum tax ("AMT") rules ensure that
at least a minimum amount of tax is paid by taxpayers who obtain significant
benefit from certain tax deductions and exemptions. Some of these deductions
and exemptions have been designated "tax preference items" which must be added
back to taxable income for purposes of calculating AMT. Among the tax
preference items is tax-exempt interest from "private activity bonds." To the
extent that a Fund invests in private activity bonds, its shareholders who pay
AMT will be required to report that portion of Fund dividends attributable to
income from the bonds as a tax preference item in determining their AMT.
Shareholders will be notified of the tax status of distributions made by a Fund.
Persons who may be "substantial users" (or "related persons" of substantial
users) of facilities financed by private activity bonds should consult their tax
advisors before purchasing shares in a Fund. Furthermore, shareholders will not
be permitted to deduct any of their share of a Fund's expenses in computing
their AMT. With respect to a corporate shareholder of a Fund, exempt-interest
dividends paid by the Fund is included in the corporate shareholder's "adjusted
current earnings" as part of its AMT calculation, and may also affect its
federal "environmental tax" liability. As of the printing of this SAI,
individuals are subject to an AMT at a maximum rate of 28% and corporations at a
maximum rate of 20%. Shareholders with questions or concerns about the AMT
should consult own their tax advisors.

Additional Considerations for the Arizona Tax-Free Fund. Individuals,
-------------------------------------------------------
trusts and estates who are subject to Arizona income tax will not be subject to
such tax on dividends paid by the Arizona Tax-Free Fund, to the extent that such
dividends qualify as exempt-interest dividends and are attributable to either
(i) obligations of the State of Arizona or its political subdivisions thereof or
(ii) obligations issued by the governments of Guam, Puerto Rico, or the Virgin
Islands. In addition, dividends paid by the Arizona Tax-Free Fund that are
attributable to interest payments on direct obligations of the U.S. government
will not be subject to Arizona income tax as long as the extent the Arizona Tax-
Free Fund qualifies as a regulated investment company under the Code. Other
distributions from the Arizona Tax-Free Fund, however, such as distributions of
short-term or long-term capital gains, will generally not be exempt from Arizona
income tax.

Because shares of the Arizona Tax-Free Fund are intangibles, they are not
subject to Arizona property tax. Shareholders of the Arizona Tax-Free Fund
should consult their tax advisors about other state and local tax consequences
of their investment in the Arizona Tax-Free Fund. The Trust makes no
representations as to Arizona state and local taxes that may be imposed on a

67
<PAGE>

corporate investor in the Arizona Tax-Free Fund and encourages such investors to
consult with their own tax advisors.

Additional Considerations for the California Limited Term Tax-Free Fund and
---------------------------------------------------------------------------
California Tax-Free Fund. If, at the close of each quarter of its taxable year,
------------------------
at least 50% of the value of the total assets of a regulated investment company
consists of obligations the interest on which, if held by an individual, is
exempt from taxation by California ("California Exempt Securities"), then the
regulated investment company will be qualified to pay dividends exempt from
California state personal income tax to its non-corporate shareholders
(hereinafter referred to as "California exempt-interest dividends"). For this
purpose, California Exempt Securities generally are limited to California
municipal securities and certain U.S. government and U.S. possession
obligations. The California Limited Term Tax-Free Fund and California Tax-Free
Fund (the "California Funds") intends to qualify under the above requirements so
that they can pay California exempt-interest dividends. If the California Funds
do not so qualify, no part of their respective dividends to shareholders will be
exempt from the California state personal income tax.

Within sixty days after the close of its taxable year, the California Funds
will notify their respective shareholders of the portion of the dividends paid
by the respective Fund to each shareholder with respect to such taxable year
which is exempt from California state personal income tax. The total amount of
California exempt-interest dividends paid by the California Funds with respect
to any taxable year cannot exceed the excess of the amount of interest received
by the California Funds for such year on California Exempt Securities over any
amounts that, if the California Funds were treated as individuals, would be
considered expenses related to tax exempt income or amortizable bond premium and
would thus not be deductible under federal income or California state personal
income tax law. The percentage of total dividends paid for any taxable year
which qualifies as California exempt-interest dividends will be the same for all
shareholders receiving dividends from the Fund for such year.

In cases where shareholders are "substantial users" or "related persons"
with respect to California Exempt Securities held by the California Funds, such
shareholders should consult their tax advisors to determine whether California
exempt-interest dividends paid by the Fund with respect to such obligations
retain California state personal income tax exclusion. In this connection rules
similar to those regarding the possible unavailability of federal exempt-
interest dividend treatment to "substantial users" are applicable for California
state tax purposes. Interest on indebtedness incurred by a shareholder to
purchase or carry the California Funds shares is not deductible for California
state personal income tax purposes if the California Funds distribute California
exempt-interest dividends during the shareholder's taxable year.

The foregoing is only a summary of some of the important California state
personal income tax considerations generally affecting the California Funds and
their shareholders. No attempt is made to present a detailed explanation of the
California state personal income tax treatment of the California Funds or their
shareholders, and this discussion is not intended as a substitute for careful
planning. Further, it should be noted that the portion of any California Fund
distributions constituting California exempt-interest dividends is excludable
from income for California state personal income tax purposes only. Any
distributions paid to shareholders subject to California state franchise tax or
California state corporate income tax may be taxable

68
<PAGE>

for such purposes. Accordingly, potential investors in the California Funds,
including, in particular, corporate investors which may be subject to either
California franchise tax or California corporate income tax, should consult
their own tax advisors with respect to the application of such taxes to the
receipt of the California Funds dividends and as to their own California state
tax situation, in general.

Additional Considerations for the Colorado Tax-Free Fund. Individuals,
--------------------------------------------------------
trusts, estates and corporations subject to the Colorado income tax will not be
subject to such tax on dividends paid by the Colorado Tax-Free Fund, to the
extent that such dividends qualify as exempt-interest dividends and are
attributable to (i) interest earned on any obligation of Colorado or its
political subdivisions issued on or after May 1, 1980, which interest is exempt
from federal income taxation under Section 103(a) of the Code, (ii) interest
earned on any obligation of Colorado or its political subdivisions issued before
May 1, 1980 to the extent that such interest is specifically exempt from income
taxation under the Colorado state laws authorizing the issuance of such
obligations, or (iii) interest on obligations of the United States or its
possessions included in federal adjusted gross income. All other distributions,
including distributions attributable to capital gains, generally will be subject
to the Colorado individual and corporate income taxes.

Shareholders of the Colorado Tax-Free Fund should consult their own tax
advisors about other state and local tax consequences of their investment in the
Colorado Tax-Free Fund.

Additional Considerations for the Minnesota Tax-Free and Minnesota
------------------------------------------------------------------
Intermediate Tax-Free Funds. Shareholders of the Funds, who are individuals,
---------------------------
estates, or trusts and who are subject to the regular Minnesota personal income
tax will not be subject to such regular Minnesota tax on Fund dividends to the
extent that such distributions qualify as exempt-interest dividends of a
regulated investment company under Section 852(b)(5) of the Internal Revenue
Code which are derived from interest income on tax-exempt obligations of the
State of Minnesota, or its political or governmental subdivisions,
municipalities, governmental agencies, or instrumentalities ("Minnesota
Sources"). The foregoing will apply, however, only if the portion of the
exempt-interest dividends from such Minnesota Sources that is paid to all
shareholders represents 95% or more of the exempt-interest dividends that are
paid by the Fund. If the 95% test is not met, all exempt-interest dividends
that are paid by the Funds generally will be subject to the regular Minnesota
personal income tax. Even if the 95% test is met, to the extent that exempt-
interest dividends that are paid by the Funds are not derived from the Minnesota
Sources described in the first sentence of this paragraph, such dividends
generally will be subject to the regular Minnesota personal income tax. Other
distributions of the Funds, including distributions from net short-term and
long-term capital gains, are generally not exempt from the regular Minnesota
personal income tax.

State legislation enacted in 1995 provides that it is the intent of the
Minnesota legislature that interest income on obligations of Minnesota
governmental units, including obligations of the Minnesota Sources described
above, and exempt-interest dividends that are derived from interest income on
such obligations, be included in the net income of individuals, estates, and
trusts for Minnesota income tax purposes if it is judicially determined that the
exemption by Minnesota of such interest or such exempt-interest dividends
unlawfully discriminates against interstate commerce because interest income on
obligations, is so included. This provision applies to taxable years that begun
during or after the calendar year in which such judicial decision

69
<PAGE>

becomes final, regardless of the date on which the obligations were issued, and
other remedies apply for previous taxable years. The United States Supreme Court
in 1995 denied certiorari in a case in which an Ohio state court upheld an
exemption for interest income on obligations of Ohio governmental issuers, even
though interest income on obligations of non-Ohio governmental issuers was
subject to tax. In 1997, the United States Supreme Court denied certiorari in a
subsequent case from Ohio, involving the same taxpayer and the same issue, in
which the Ohio Supreme Court refused to reconsider the merits of the case on the
ground that the previous final state court judgment barred any claim arising out
of the transaction that was the subject of the previous action. It cannot be
predicted whether a similar case will be brought in Minnesota or elsewhere, or
what the outcome of such case would be.

Subject to certain limitations that are set forth in the Minnesota rules,
Fund dividends, if any, that are derived from interest on certain United States
obligations are not subject to the regular Minnesota personal income tax or the
Minnesota alternative minimum tax, in the case of shareholders of the Funds who
are individuals, estates, or trusts.

Fund distributions, including exempt-interest dividends, are not excluded
in determining the Minnesota franchise tax on corporations that is measured by
taxable income and alternative minimum taxable income. Fund distributions may
also be taken into account in certain cases in determining the minimum fee that
is imposed on corporations, S corporations, and partnerships.

Additional Considerations for the Nebraska Tax-Free Fund. Individuals,
--------------------------------------------------------
trusts, estates and corporations subject to the Nebraska income tax will not be
subject to such tax on dividends paid by the Nebraska Tax-Free Fund so long as
the Fund continues as a regulated investment company and to the extent that such
dividends qualify as exempt-interest dividends and are attributable to (i)
interest earned on Nebraska municipal securities to the extent that such
interest is specifically exempt from the Nebraska income tax and the Nebraska
alternative minimum tax; or (ii) interest on obligations of the United States or
its territories and possessions to the extent included in federal adjusted gross
income but exempt from state income taxes under the laws of the United States.
Distributions, characterized as long-term capital gains for federal income tax
purposes will generally receive the same characterization for Nebraska tax
purposes. Additionally, if a shareholder is subject to the Nebraska financial
institutions' franchise tax, fund dividends may effect the determination of such
shareholder's franchise tax.

All shareholders of the Nebraska Tax-Free Fund should consultant their own
tax advisors about other State and local tax consequences of their investment in
the Fund.

Additional Considerations for the Oregon Tax-Free Fund. So long as the
------------------------------------------------------
Oregon Tax-Free Fund qualifies to be taxed as a separate "regulated investment
company" under the Code, individuals, trusts and estates will not be subject to
Oregon personal income tax on distributions from the Oregon Tax-Free Fund that
represent "exempt-interest dividends" of a regulated investment company under
the Code paid on municipal obligations of the State of Oregon and its political
subdivisions, the U.S. Virgin Islands, Puerto Rico and Guam. Individuals,
trusts and estates will be subject to Oregon personal income tax on other types
of distributions received from the Oregon Tax-Free Fund, including distributions
of interest on obligations issued by other issuers and all long-term and short-
term capital gains. Shares of the Oregon Tax-Free Fund will not be subject to
the Oregon property tax.

70
<PAGE>

Shareholders of the Oregon Tax-Free Fund should consult their own tax
advisors about other state and local tax consequences of their investments in
the Oregon Tax-Free Fund, which may differ from the federal income tax
consequences of such investments. The Company makes no representations as to
Oregon state and local taxes that may be imposed on a corporate investor in the
Oregon Tax-Free Fund and encourages such investors to consult with their own tax
advisors.

Other Matters. Investors should be aware that the investments to be made
-------------
by the Funds may involve sophisticated tax rules that may result in income or
gain recognition by the Fund without corresponding current cash receipts.
Although the Funds will seek to avoid significant noncash income, such noncash
income could be recognized by the Funds, in which case the Funds may distribute
cash derived from other sources in order to meet the minimum distribution
requirements described above.

The foregoing discussion and the discussions in the Prospectus applicable
to each shareholder address only some of the federal income tax (and, where
applicable Arizona, California, Colorado Minnesota and Oregon taxes)
considerations generally affecting investments in the Funds. Each investor is
urged to consult his or her tax advisor regarding specific questions as to
federal, state, local and foreign taxes.

CAPITAL STOCK

The Funds are ten of the funds in the Wells Fargo Funds Trust family of
funds. The Trust was organized as a Delaware business trust on March 10, 1999.

Most of the Trust's funds are authorized to issue multiple classes of
shares, one class generally subject to a front-end sales charge and, in some
cases, classes subject to a contingent-deferred sales charge, that are offered
to retail investors. Certain of the Trust's funds also are authorized to issue
other classes of shares, which are sold primarily to institutional investors.
Each share in a Fund represents an equal, proportionate interest in the Fund
with all other shares. Shareholders bear their pro rata portion of the Fund's
operating expenses, except for certain class-specific expenses (e.g., any state
securities registration fees, shareholder servicing fees or distribution fees
that may be paid under Rule 12b-1) that are allocated to a particular class.
Please contact Shareholder Services at 1-800-222-8222 if you would like
additional information about other funds or classes of shares offered.

With respect to matters affecting one class but not another, shareholders
vote as a class; for example, the approval of a Plan. Subject to the foregoing,
all shares of a Fund have equal voting rights and will be voted in the
aggregate, and not by series, except where voting by a series is required by law
or where the matter involved only affects one series. For example, a change in
a Fund's fundamental investment policy affects only one series and would be
voted upon only by shareholders of the Fund involved. Additionally, approval of
an advisory contract, since it affects only one Fund, is a matter to be
determined separately by Series. Approval by the shareholders of one Series is
effective as to that Series whether or not sufficient votes are received from
the shareholders of the other Series to approve the proposal as to those Series.

71
<PAGE>

As used in the Prospectuses and in this SAI, the term "majority," when
referring to approvals to be obtained from shareholders of a Class of shares of
a Fund, means the vote of the lesser of (i) 67% of the shares of the Class
represented at a meeting if the holders of more than 50% of the outstanding
shares of the Class are present in person or by proxy, or (ii) more than 50% of
the outstanding shares of the Class of the Fund. The term "majority," when
referring to approvals to be obtained from shareholders of the Fund, means the
vote of the lesser of (i) 67% of the shares of the Fund represented at a meeting
if the holders of more than 50% of the outstanding shares of the Fund are
present in person or by proxy, or (ii) more than 50% of the outstanding shares
of the Fund. The term "majority," when referring to the approvals to be
obtained from shareholders of the Trust as a whole, means the vote of the lesser
of (i) 67% of the Trust's shares represented at a meeting if the holders of more
than 50% of the Trust's outstanding shares are present in person or by proxy, or
(ii) more than 50% of the Trust's outstanding shares.

Shareholders are not entitled to any preemptive rights. All shares are
issued in uncertificated form only, and, when issued, will be fully paid and
non-assessable by the Trust. The Trust may dispense with an annual meeting of
shareholders in any year in which it is not required to elect Trustees under the
1940 Act.

Each share of a class of a Fund represents an equal proportional interest
in the Fund with each other share of the same class and is entitled to such
dividends and distributions out of the income earned on the assets belonging to
the Fund as are declared in the discretion of the Trustees. In the event of the
liquidation or dissolution of the Trust, shareholders of a Fund are entitled to
receive the assets attributable to that Fund that are available for
distribution, and a distribution of any general assets not attributable to a
particular Fund or portfolio that are available for distribution in such manner
and on such basis as the Trustees in their sole discretion may determine.

Set forth below, as of September 30, 2000, is the name, address and share
ownership of each person known by the Trust to have beneficial or record
ownership of 5% or more of a class of a Fund or 5% or more of the voting
securities as a whole. The term "N/A" is used where a shareholder holds 5% or
more of a class, but less than 5% of a Fund as a whole.

5% OWNERSHIP AS OF SEPTEMBER 30, 2000
-------------------------------------

<TABLE>
<CAPTION>
Type of Percentage
Fund Name and Address Ownership of Class
---- ---------------- --------- --------
<S> <C> <C> <C>
ARIZONA TAX-FREE
Class A

DEAN WITTER FOR THE BENEFIT OF Record 5.26%
VIRGINIA N. STEPHENSON-DECOT TTEE Beneficial
P.O. Box 250 Church Street Station
New York, NY 10008-0250
</TABLE>

72
<PAGE>

<TABLE>
<CAPTION>
Type of Percentage
Fund Name and Address Ownership of Class
---- ---------------- --------- --------
<S> <C> <C> <C>
Class B DEAN WITTER FOR THE BENEFIT OF Record 7.49%
ROBERT C. BUNDY Beneficial
390 S Palo Verde Drive
P.O. Box 250 Church Street Station
New York, NY 10008-0250

DEAN WITTER FOR THE BENEFIT OF Record 5.48%
HANNA SCOTT TTEE OF THE Beneficial
P.O. Box 250 Church Street Station
New York, NY 10008-0250

DEAN WITTER FOR THE BENEFIT OF Record 6.75%
H. A. CAPE Beneficial
P.O. Box 250 Church Street Station
New York, NY 10008-0250

DEAN WITTER FOR THE BENEFIT OF Record 6.96%
M. G. LYON & Beneficial
P.O. Box 250 Church Street Station
New York, NY 10008-0250

NORWEST INVESTMENT SERVICES, INC. Record 6.43%
FBO 303496901
Northstar Building East - 9th Floor
608 Second Avenue South
Minneapolis, MN 55479-0162

Institutional Class EMSEG & CO Record 82.51%
STAGECOACH AZ Tax Free FD CL I
c/o Mutual Fund Processing
P.O. Box 1450 NW 8477
Minneapolis, MN 55485-1450

EMSEG & CO Record 12.33%
STAGECOACH AZ Tax Free FD CL I
c/o Mutual Fund Processing
P.O. Box 1450 NW 8477
Minneapolis, MN 55485-1450

CALIFORNIA LIMITED TERM
TAX-FREE
Class A INVESTOR SERVICES GROUP Record 31.78%
FBO Wells Fargo/Portfolio Advisor
Customer
211 South Gulph Road
King of Prussia, PA 19406-3101
</TABLE>

73
<PAGE>

<TABLE>
<CAPTION>
Type of Percentage
Fund Name and Address Ownership of Class
---- ---------------- --------- --------
<S> <C> <C> <C>
Institutional Class WELLS FARGO BANK MN NA FBO Record 40.63%
WF CA LTD TRM TX FR Omnibus
Attn: Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533

WELLS FARGO BANK MN NA FBO Record 47.22%
WF CA LTD TRM TX FR Omnibus
Attn: Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533

WELLS FARGO BANK MN NA FBO Record 7.01%
WF CA LTD TRM TX FR Omnibus
Attn: Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533

CALIFORNIA TAX-FREE
Class A N/A N/A

Class B N/A N/A

Class C MLPF&S FOR THE SOLE BENEFIT Record 6.75%
OF ITS CUSTOMERS
ATTN: Mutual Fund Administration
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484

DEAN WITTER FOR THE BENEFIT OF Record 5.86%
VALENTINO JOHN GANGI & ROSALIE Beneficial
P.O. Box 250 Church Street Station
New York, NY 10008-0250

DEAN WITTER FOR THE BENEFIT OF Record 5.73%
NEILL LEHR CADILLAC INC. Beneficial
P.O. Box 250 Church Street Station
New York, NY 10008-0250

DEAN WITTER FOR THE BENEFIT OF Record 5.58%
ARTHUR L. PEREZ TTEE & MARIA PEREZ Beneficial
P.O. Box 250 Church Street Station
New York, NY 10008-0250

Institutional Class EMSEG & CO Record 21.10%
Stagecoach CA Tax-Free BD FD CL I
c/o Mutual Fund Processing
P.O. Box 1450 NW 8477
Minneapolis, MN 55485-1450
</TABLE>

74
<PAGE>

<TABLE>
<CAPTION>
Type of Percentage
Fund Name and Address Ownership of Class
---- ---------------- --------- --------
<S> <C> <C> <C>
EMSEG & CO Record 61.87%
Stagecoach CA Tax-Free BD FD CL I
c/o Mutual Fund Processing
P.O. Box 1450 NW 8477
Minneapolis, MN 55485-1450

EMSEG & CO Record 5.19%
Stagecoach CA Tax-Free BD FD CL I
c/o Mutual Fund Processing
P.O. Box 1450 NW 8477
Minneapolis, MN 55485-1450

COLORADO TAX-FREE
Class A NORWEST INVESTMENT SERVICES INC. Record 16.16%
FBO 017337991
Northstar Building East - 8th Floor
608 Second Avenue South
Minneapolis, MN 55402-1916

Class B NORWEST INVESTMENT SERVICES INC. Record 5.01%
FBO-104553271
Northstar Building East - 9th Floor
608 Second Avenue, South
Minneapolis, MN 55479-0162

NORWEST INVESTMENT SERVICES INC. Record 6.48%
FBO-300319751
Northstar Building East - 8th Floor
608 Second Avenue, South
Minneapolis, MN 55402-1916

Institutional Class DENTRU & CO Record 91.69%
Non-Discretionary Cash
1740 Broadway Mail 8676
Denver, CO 80274-0001
</TABLE>

75
<PAGE>

<TABLE>
<CAPTION>
Type of Percentage
Fund Name and Address Ownership of Class
---- ---------------- --------- --------
<S> <C> <C> <C>
MINNESOTA INTERMEDIATE
TAX-FREE
Institutional Class WELLS FARGO BANK MN NA FBO Record 73.42%
MINNESOTA INTERMEDIATE
TAX-FREE I
c/o Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533

WELLS FARGO BANK MN NA FBO Record 19.90%
MINNESOTA INTERMEDIATE
TAX-FREE I
c/o Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533

WELLS FARGO BANK MN NA FBO Record 5.02%
MINNESOTA INTERMEDIATE
TAX-FREE I
c/o Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533

MINNESOTA TAX-FREE
Class A N/A N/A

Class B N/A N/A

Institutional Class WELLS FARGO BANK MN NA FBO Record 23.69%
MINNESOTA TAX-FREE I
Attn: Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533

WELLS FARGO BANK MN NA FBO Record 21.43%
MINNESOTA TAX-FREE I
Attn: Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533

WELLS FARGO BANK MN NA FBO Record 54.87%
MINNESOTA TAX-FREE I
Attn: Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533
</TABLE>

76
<PAGE>

<TABLE>
<CAPTION>
Type of Percentage
Fund Name and Address Ownership of Class
---- ---------------- --------- --------
<S> <C> <C> <C>
NATIONAL LIMITED TERM TAX-FREE

Institutional Class WELLS FARGO BANK MN NA FBO Record 31.59%
LIMITED TERM TAX-FREE FUND I
Attn: Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533

WELLS FARGO BANK MN NA FBO Record 26.55%
MINNESOTA TAX-FREE I
Attn: Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533

WELLS FARGO BANK MN NA FBO Record 36.72%
MINNESOTA TAX-FREE I
Attn: Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533

NATIONAL TAX-FREE
Class A N/A N/A

Class B N/A N/A

Class C MLPF&S FOR THE SOLE BENEFIT Record 21.55%
OF ITS CUSTOMERS
ATTN: Mutual Fund Administration
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484

DEAN WITTER FOR THE BENEFIT OF Record 23.05%
WELLS FARGO BANK LOAN COLLATERAL
P.O. Box 250 Church Street Station
New York, NY 10008-0250

Institutional Class WELLS FARGO BANK MN NA FBO Record 8.45%
TAX-FREE INCOME FUND I
Attn: Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533

DENTRU & CO Record 26.94%
Non-Discretionary Cash
1740 Broadway Mail 8676
Denver, CO. 80274-0001
</TABLE>

77
<PAGE>

<TABLE>
<CAPTION>
Type of Percentage
Fund Name and Address Ownership of Class
---- ---------------- --------- --------
<S> <C> <C> <C>
WELLS FARGO BANK MN NA FBO Record 25.86%
TAX-FREE INCOME FUND I
Attn: Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533

WELLS FARGO BANK MN NA FBO Record 37.32%
TAX-FREE INCOME FUND I
Attn: Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533

NEBRASKA TAX-FREE
Institutional Class FIRLIN & CO Record 94.52%
C/O NATIONAL BANK OF COMMERCE
Attn: Trust Resources
P.O. Box 82408
Lincoln, NE 68501-2408

OREGON TAX-FREE
Class A N/A N/A

Class B N/A N/A

Institutional Class NORWEST BANK MN NA FBO Record 20.46%
WF ORE TAX FREE FD R/R
Attn: Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533

NORWEST BANK MN NA FBO Record 76.55%
WF ORE TAX FREE FD C/C
Attn: Mutual Fund OPS
P.O. Box 1533
Minneapolis, MN 55480-1533
</TABLE>

For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. Accordingly, to the extent that a
shareholder identified in the foregoing table is identified as the beneficial
holder of more than 25% of a class (or Fund), or is identified as the holder of
record of more than 25% of a class (or Fund) and has voting and/or investment
powers, it may be presumed to control such class (or Fund).

OTHER

The Trust's Registration Statement, including the Prospectuses and SAI for
the Funds and the exhibits filed therewith, may be examined at the office of the
U.S. Securities and Exchange Commission in Washington, D.C. Statements contained
in the Prospectuses or the SAI as to the

78
<PAGE>

contents of any contract or other document referred to herein or in the
Prospectuses are not necessarily complete, and, in each instance, reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.

COUNSEL

Morrison & Foerster LLP, 2000 Pennsylvania Avenue, N.W., Suite 5500,
Washington, D.C. 20006, as counsel for the Trust, has rendered its opinion as to
certain legal matters regarding the due authorization and valid issuance of the
shares of beneficial interest being sold pursuant to the Funds' Prospectuses.

INDEPENDENT AUDITORS

KPMG LLP, the independent auditors for the Trust, provides audit services,
tax return preparation and assistance and consultation in connection with review
of certain SEC filings. KPMG LLP's address is Three Embarcadero Center, San
Francisco, California 94111.

FINANCIAL INFORMATION

The portfolios of investments and audited financial statements for the
Nebraska Tax-Free Fund for the fiscal year ended August 31, 2000, and for all
other Funds for the year ended June 30, 2000, are hereby incorporated by
reference to the Funds' Annual Reports.

79
<PAGE>

APPENDIX

The following is a description of the ratings given by Moody's and S&P to
corporate and municipal bonds, municipal notes, and corporate and municipal
commercial paper.

Corporate Bonds
---------------

Moody's: The four highest ratings for corporate bonds are "Aaa," "Aa," "A"
-------
and "Baa." Bonds rated "Aaa" are judged to be of the "best quality" and carry
the smallest amount of investment risk. Bonds rated "Aa" are of "high quality by
all standards," but margins of protection or other elements make long-term risks
appear somewhat greater than "Aaa" rated bonds. Bonds rated "A" possess many
favorable investment attributes and are considered to be upper medium grade
obligations. Bonds rated "Baa" are considered to be medium grade obligations;
interest payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well. Moody's
also applies numerical modifiers in its rating system: 1, 2 and 3 in each rating
category from "Aa" through "Baa" in its rating system. The modifier 1 indicates
that the security ranks in the higher end of its category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks
in the lower end.

S&P: The four highest ratings for corporate and municipal bonds are "AAA,"
---
"AA," "A" and "BBB." Bonds rated "AAA" have the "highest rating" assigned by S&P
and have "an extremely strong capacity" to pay interest and repay principal.
Bonds rated "AA" have a "very strong capacity" to pay interest and repay
principal and "differ from the highest rated obligations only in small degree."
Bonds rated "A" have a "strong capacity" to pay interest and repay principal,
but are "somewhat more susceptible" to adverse effects of changes in economic
conditions or other circumstances than bonds in higher rated categories. Bonds
rated "BBB" are regarded as having "adequate protection parameters" to pay
interest and repay principal, but changes in economic conditions or other
circumstances are more likely to lead to a "weakened capacity" to make such
repayments. The ratings from "AA" to "BBB" may be modified by the addition of a
plus or minus sign to show relative standing within the category.

Commercial Paper
----------------

Moody's: The highest rating for commercial paper is "P-1" (Prime-1).
-------
Issuers rated "P-1" have a "superior ability for repayment of senior short-term
debt obligations." Issuers rated "P-2" (Prime-2) "have a strong capacity for
repayment of senior short-term debt obligations," but earnings trends, while
sound, will be subject to more variation.

A-1
<PAGE>

S&P: The "A-1" rating for commercial paper is rated "in the highest
---
category" by S&P and "the obligor's capacity to meet its financial commitment on
the obligation is strong." The "A-1+" rating indicates that said capacity is
"extremely strong." The A-2 rating indicates that said capacity is
"satisfactory," but that corporate and municipal commercial paper rated "A-2" is
"more susceptible" to the adverse effects of changes in economic conditions or
other circumstances than commercial paper rated in higher rating categories.

A-2
<PAGE>

WELLS FARGO FUNDS TRUST
File Nos. 333-74295; 811-09253

PART C
OTHER INFORMATION

Item 23. Exhibits.
--------

Exhibit
Number Description
------ -----------

(a) - Amended and Restated Declaration of Trust, incorporated by
reference to Post-Effective Amendment No. 8, filed December
17, 1999.

(b) - Not applicable.

(d)(1)(i) - Investment Advisory Agreement with Wells Fargo Bank, N.A.,
incorporated by reference to Post-Effective Amendment No.
16, filed October 30, 2000.

(ii) - Fee and Expense Agreement between Wells Fargo Funds Trust
and Wells Fargo Bank, N.A., incorporated by reference to
Post-Effective Amendment No. 16, filed October 30, 2000.

(2)(i) - Sub-Advisory Contract with Barclays Global Fund Advisors,
incorporated by reference to Post-Effective Amendment No.
16, filed October 30, 2000.

(ii) - Sub-Advisory Contract with Galliard Capital Management,
Inc., incorporated by reference to Post-Effective Amendment
No. 16, filed October 30, 2000.

(iii) - Sub-Advisory Contract with Peregrine Capital Management,
Inc., incorporated by reference to Post-Effective Amendment
No. 16, filed October 30, 2000.

(iv) - Sub-Advisory Contract with Schroder Investment Management
North America Inc., incorporated by reference to Post-
Effective Amendment No. 16, filed October 30, 2000.

(v) - Sub-Advisory Contract with Smith Asset Management Group,
L.P., incorporated by reference to Post-Effective Amendment
No. 16, filed October 30, 2000.

C-1
<PAGE>

(vi) - Sub-Advisory Contract with Wells Capital Management
Incorporated, incorporated by reference to Post-effective
Amendment No. 16, filed October 30, 2000.

(vii) - Sub-Advisory Contract with Dresdner RCM Global Investors
LLC, incorporated by reference to Post-Effective Amendment
No. 16, filed October 30, 2000.

(e) - Distribution Agreement with Form of Selling Agreement,
incorporated by reference to Post-effective Amendment
No. 16, filed October 30, 2000.

(f) - Not applicable.

(g)(1) - Custody Agreement with Barclays Global Investors, N.A.,
incorporated by reference to Post-Effective Amendment No.
16, filed October 30, 2000.

(2) - Custody Agreement with Wells Fargo Bank Minnesota, N.A.,
incorporated by reference to Post-Effective Amendment No.
16, filed October 30, 2000.

(i) Delegation Agreement (17f-5) with Wells Fargo Bank
Minnesota, N.A., incorporated by reference to Post-
Effective Amendment No. 16, filed October 30, 2000.

(3) - Securities Lending Agreement by and among Wells Fargo Funds
Trust, Wells Fargo Bank, N.A. and Wells Fargo Bank
Minnesota, N.A., incorporated by reference to Post-
Effective Amendment No. 16, filed October 30, 2000.

(4) - Custody and Accounting Agreement with Investors Bank &
Trust Company, incorporated by reference to Post-Effective
Amendment No. 16, filed October 30, 2000.

(h)(1) - Administration Agreement with Wells Fargo Bank, N.A.,
incorporated by reference to Post-Effective Amendment No.
16, filed October 30, 2000.

(2) - Fund Accounting Agreement with Forum Accounting Services
LLC, incorporated by reference to Post-Effective Amendment
No. 16, filed October 30, 2000.

(3) - Transfer Agency and Service Agreement with Boston Financial
Data Services, Inc., incorporated by reference to Post-
Effective Amendment No. 16, filed October 30, 2000.

(4) - Shareholder Servicing Plan, incorporated by reference to
Post-Effective Amendment No. 16, filed October 30, 2000.

(5) - Form of Shareholder Servicing Agreement, incorporated by
reference to Post-Effective Amendment No. 8, filed December
17, 1999.

C-2
<PAGE>

(i) - Legal Opinion, filed herewith.

(j)(A) - Consent of Independent Auditors for the Tax-Free Funds of
Funds Trust, filed herewith.

(j)(B) - Consent of Independent Auditors for the Great Plains
Tax-Free Bond Fund, filed herewith.

(j)(1) - Power of Attorney, Robert C. Brown, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.

(2) - Power of Attorney, Donald H. Burkhardt, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.

(3) - Power of Attorney, Jack S. Euphrat, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.

(4) - Power of Attorney, Thomas S. Goho, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.

(5) - Power of Attorney, Peter G. Gordon, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.

(6) - Power of Attorney, W. Rodney Hughes, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.

(7) - Power of Attorney, Richard M. Leach, incorporated by
reference to Post-Effective Amendment No. 16, filed October
30, 2000.

(8) - Power of Attorney, J. Tucker Morse, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.

(9) - Power of Attorney, Timothy J. Perry, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.

(10) - Power of Attorney, Donald C. Willeke, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.

C-3
<PAGE>

(11) - Power of Attorney, Michael J. Hogan, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.

(12) - Power of Attorney, Karla M. Rabusch, incorporated by
reference to Post-Effective Amendment No. 10, filed May 10,
2000.

(k) - Not applicable.

(l) - Not applicable.

(m) - Rule 12b-1 Plan, incorporated by reference to Post-
Effective Amendment No. 16, filed October 30, 2000; see
Exhibit (e) above for related Distribution Agreement.

(n) - Rule 18f-3 Plan, incorporated by reference to Post-
Effective Amendment No. 8, filed December 17, 1999.

(p)(1) - Joint Code of Ethics for Funds Trust, Core Trust and
Variable Trust, incorporated by reference to Post-Effective
Amendment No. 15, filed October 2, 2000.

(2) - Wells Fargo Bank, N.A. Code of Ethics, incorporated by
reference to Post-Effective Amendment No. 15, filed October
2, 2000.

(3) - Barclays Global Investors, N.A. Code of Ethics,
incorporated by reference to Post-Effective Amendment No.
15, filed October 2, 2000.

(4) - Dresdner RCM Global Investors, Inc. Code of Ethics,
incorporated by reference to Post-Effective Amendment No.
15, filed October 2, 2000.

(5) - Galliard Capital Management, Inc. Code of Ethics,
incorporated by reference to Post-Effective Amendment No.
15, filed October 2, 2000.

(6) - Peregrine Capital Management, Inc. Code of Ethics,
incorporated by reference to Post-Effective Amendment No.
15, filed October 2, 2000.

(7) - Schroder Investment Management North America, Inc.

C-4
<PAGE>

Code of Ethics, incorporated by reference to Post-Effective
Amendment No. 15, filed October 2, 2000.

(8) Smith Asset Management Group, L.P. Code of Ethics,
incorporated by reference to Post-Effective Amendment No.
15, filed October 2, 2000.

(9) - Wells Capital Management, Inc. Code of Ethics, incorporated
by reference to Post-Effective Amendment No. 15, filed
October 2, 2000.

Item 24. Persons Controlled by or Under Common Control with the Fund.
-----------------------------------------------------------

Registrant believes that no person is controlled by or under common
control with Registrant.

Item 25. Indemnification.
---------------

Article V of the Registrant's Declaration of Trust limits the liability
and, in certain instances, provides for mandatory indemnification of the
Registrant's trustees, officers, employees, agents and holders of beneficial
interests in the Trust. In addition, the Trustees are empowered under Section
3.9 of the Registrant's Declaration of Trust to obtain such insurance policies
as they deem necessary.

Item 26. Business and Other Connections of Investment Adviser.
----------------------------------------------------

(a) Wells Fargo Bank, N.A. ("Wells Fargo Bank"), a wholly-owned
subsidiary of Wells Fargo & Company, serves as investment adviser to all of the
Registrant's investment portfolios, and to certain other registered open-end
management investment companies. Wells Fargo Bank's business is that of a
national banking association with respect to which it conducts a variety of
commercial banking and trust activities.

To the knowledge of Registrant, none of the directors or executive
officers of Wells Fargo Bank is or has been at any time during the past two
fiscal years engaged in any other business, profession, vocation or employment
of a substantial nature, except that certain executive officers also hold
various positions with and engage in business for Wells Fargo & Company and/or
its subsidiaries.

(b) Barclays Global Fund Advisors ("BGFA"), a wholly-owned subsidiary
of Barclays Global Investors, N.A. ("BGI"), serves as an adviser or sub-adviser
to various Funds of the Trust and as adviser or sub-adviser to certain other
open-end management investment companies. The description of BGFA in Parts A
and B of

C-5
<PAGE>

this Registration Statement is incorporated by reference herein. The directors
and officers of BGFA also serve as directors or officers of BGI. To the
knowledge of the Registrant, none of the directors or executive officers of BGFA
is or has been at any time during the past two fiscal years engaged in any other
business, profession, vocation or employment of a substantial nature.

(c) Wells Capital Management, Inc. ("WCM"), a wholly-owned subsidiary
of Wells Fargo Bank, N.A., serves as sub-adviser to various Funds of the Trust.
The description of WCM in Parts A and B of this Registration Statement is
incorporated by reference herein. None of the directors and principal executive
officers of WCM serves, or has served in the past two fiscal years, in such
capacity for any other entity.

(d) Peregrine Capital Management, Inc. ("Peregrine"), an indirect
wholly-owned subsidiary of Wells Fargo & Company, serves as sub-adviser to
various Funds of the Trust. The description of Peregrine in Parts A and B of the
Registration Statement is incorporated by reference herein. To the knowledge of
the Registrant, none of the directors or executive officers of this sub-adviser
is or has been at any time during the last two fiscal years engaged in any other
business, profession, vocation or employment of a substantial nature.

(e) Schroder Investment Management North America Inc. ("SIMNA"), serves
as sub-adviser to various Funds of the Trust. The description of SIMNA in Parts
A and B of the Registration Statement is incorporated by reference herein. The
address is 787 Seventh Avenue, 34th Floor, New York, NY 10019. Schroder Capital
Management International Limited ("Schroder Ltd.") is a United Kingdom affiliate
of SIMNA which provides investment management services to international clients
located principally in the United States. Schroder Ltd. and Schroders p.l.c. are
located at 31 Gresham St., London ECZV 7QA, United Kingdom. To the knowledge of
the Registrant, none of the directors or executive officers of this sub-adviser
is or has been at any time during the last two fiscal years engaged in any other
business, profession, vocation or employment of a substantial nature.

(f) Galliard Capital Management, Inc. ("Galliard"), an indirect,
wholly-owned subsidiary of Wells Fargo & Company serves as sub-adviser to
various Funds of the Trust. The descriptions of Galliard in Parts A and B of
the Registration Statement are incorporated by reference herein. The address of
Galliard is LaSalle Plaza, Suite 2060, 800 LaSalle Avenue, Minneapolis,
Minnesota 55479. To the knowledge of the Registrant, none of the directors or
executive officers of this sub-adviser is or has been at any time during the
last two fiscal years engaged in any other business, profession, vocation or
employment of a substantial nature.

(g) Smith Asset Management, L.P. ("Smith"), an indirect, partially-
owned subsidiary of Wells Fargo & Company serves as sub-adviser to various Funds
of the Trust. The descriptions of Smith in Parts A and B of the Registration
Statement are incorporated by reference herein. The address of Smith is 300
Crescent Court, Suite 750,
<PAGE>

Dallas, Texas 75201. To the knowledge of the Registrant, none of the directors
or executive officers of this sub-adviser is or has been at any time during the
last two fiscal years engaged in any other business, profession, vocation or
employment of a substantial nature.

(h) Golden Capital Management ("Golden"), a division of Smith Asset
Management, L.P. serves as sub-advisor to the OTC Growth Fund of the Trust. The
descriptions of Golden in Parts A and B of the Registration Statement are
incorporated by reference herein. The address of Golden is 10926 David Taylor
Drive, Suite 180, Charlotte, North Carolina 28262. To the knowledge of the
Registrant, none of the directors or executive officers of this sub-adviser is
or has been at any time during the last two fiscal years engaged in any other
business, profession, vocation or employment of a substantial nature.

(i) Dresdner RCM Global Investors LLC ("Dresdner"), an indirect, wholly
owned subsidiary of Dresdner Bank AG, serves as sub-advisor for the Specialized
Technology Fund of the Trust. The descriptions of Dresdner in Parts A and B of
the Registration Statement are incorporated by reference herein. The address of
Dresdner is Four Embarcadero Center, San Francisco, California 94111. To the
knowledge of the Registrant, none of the directors or executive officers of this
sub-adviser is or has been at any time during the last two fiscal years engaged
in any other business, profession, vocation or employment of a substantial
nature.

Item 27. Principal Underwriters.
----------------------

(a) Stephens Inc. ("Stephens"), distributor for the Registrant, does
not presently act as investment adviser for any other registered investment
companies, but does act as principal underwriter for Barclays Global Investors
Funds, Inc., Nations Fund, Inc., Nations Fund Trust, Nations Annuity Trust,
Nations LifeGoal Funds, Inc., Nations Reserves, Nations Funds Trust, Wells Fargo
Variable Trust and Wells Fargo Funds Trust, and is the exclusive placement agent
for Nations Master Investment Portfolio and Wells Fargo Core Trust, all of which
are registered open-end management investment companies.

(b) Information with respect to each director and officer of the
principal underwriter is incorporated by reference to Form ADV and Schedules A
and D thereto, filed by Stephens with the Securities and Exchange Commission
pursuant to the Investment Advisers Act of 1940 (file No. 501-15510).

Item 28. Location of Accounts and Records.
--------------------------------

(a) The Registrant maintains accounts, books and other documents
required by Section 31(a) of the Investment Company Act of 1940 and the rules

C-7
<PAGE>

thereunder (collectively, "Records") at the offices of Wells Fargo Bank, N.A.,
525 Market Street, San Francisco, California 94105.

(b) Wells Fargo Bank maintains all Records relating to its services as
investment adviser and administrator at 525 Market Street, San Francisco,
California 94105.

(c) BGFA and BGI maintain all Records relating to their services as
sub-adviser and custodian, respectively, at 45 Fremont Street, San Francisco,
California 94105.

(d) Stephens maintains all Records relating to its services as
distributor at 111 Center Street, Little Rock, Arkansas 72201.

(e) Wells Fargo Bank Minnesota, N.A. maintains all Records relating to
its services as custodian at 6th & Marquette, Minneapolis, Minnesota 55479-0040.

(f) Wells Capital Management, Inc. maintains all Records relating to
its services as investment sub-adviser at 525 Market Street, San Francisco,
California 94105.

(g) Peregrine Capital Management, Inc. maintains all Records relating
to its services as investment sub-adviser at 800 LaSalle Avenue, Minneapolis,
Minnesota 55479.

(h) Galliard Capital Management, Inc. ("Galliard") maintains all
Records relating to its services as investment sub-adviser at 800 LaSalle
Avenue, Suite 2060, Minneapolis, Minnesota 55479.

(i) Smith Asset Management Group, LP maintains all Records relating to
its services as investment sub-adviser at 500 Crescent Court, Suite 250, Dallas,
Texas 75201.

(j) Golden Capital Management maintains all Records relating to its
services as investment sub-adviser at 10926 David Taylor Drive, Suite 180,
Charlotte, North Carolina 28262.

(k) Schroder Investment Management North America Inc. maintains all
Records relating to its services as investment sub-adviser at 787 Seventh
Avenue, New York, New York 10019.

(l) Dresdner RCM Global Investors, Inc. maintains all Records relating
to its services as investment sub-adviser at Four Embarcadero Center, San
Francisco, California 94111.

C-8
<PAGE>

Item 29. Management Services.
-------------------

Other than as set forth under the captions "Organization and
Management of the Funds" in the Prospectus constituting Part A of this
Registration Statement and "Management" in the Statement of Additional
Information constituting Part B of this Registration Statement, the Registrant
is not a party to any management-related service contract.

Item 30. Undertakings. Not applicable.
------------

C-9
<PAGE>

SIGNATURES
----------

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement on Form N-1A pursuant to Rule 485(b) under the Securities Act of 1933,
and has duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized in the City of San
Francisco, State of California on the 1st day of November, 2000.

WELLS FARGO FUNDS TRUST

By: /s/ Dorothy A. Peters
----------------------
Dorothy A. Peters
Assistant Secretary

Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 17 to its Registration Statement on Form N-1A has been
signed below by the following persons in the capacities and on the date
indicated:

Signature Title Date
--------- ----- ----

* Trustee
------------------------
Robert C. Brown

* Trustee
------------------------
Donald H. Burkhardt

* Trustee
------------------------
Jack S. Euphrat

* Trustee
------------------------
Thomas S. Goho

* Trustee
------------------------
Peter G. Gordon

* Trustee
------------------------
W. Rodney Hughes

* Trustee
------------------------
Richard M. Leach

* Trustee
------------------------
J. Tucker Morse

* Trustee
------------------------
Timothy J. Penny

* Trustee
------------------------
Donald C. Willeke 11/01/2000

*By: /s/ Dorothy A. Peters
--------------------------
Dorothy A. Peters
As Attorney-in-Fact
November 1, 2000
<PAGE>

WELLS FARGO FUNDS TRUST
FILE NOS.333-74295; 811-09253

EXHIBIT INDEX

Exhibit Number Description

EX-99.B(i) Opinion and Consent of Counsel

EX-99.B(j)(A) Consent of Independent Auditors for the Tax-Free Funds
of Funds Trust

EX-99.B(j)(B) Consent of Independent Auditors for the Great Plains
Tax-Free Bond Fund