LIFE & ANNUITY TRUST, 485APOS, 1998-08-26

LIFE & ANNUITY TRUST
485APOS, 1998-08-26

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<PAGE>

As filed with the Securities and Exchange Commission
on August 26, 1998
Registration No. 33-70988; 811-8118

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

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]

Post-Effective Amendment No. 7 [X]

And

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]

Amendment No. 9 [X]
(Check appropriate box or boxes)
________________________

LIFE & ANNUITY TRUST
(Exact Name of Registrant as specified in Certificate of Trust)
111 Center Street
Little Rock, Arkansas 72201
(Address of Principal Executive Offices, including Zip Code)
__________________________

Registrant's Telephone Number, including Area Code: (800) 643-9691
Richard H. Blank, Jr.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
(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

[_] Immediately upon filing pursuant [_] on _________ pursuant
to Rule 485(b), or to Rule 485(b)

[_] 60 Days after filing pursuant [_] on _________ pursuant
to Rule 485(a)(1), or to Rule 485(a)(1)

[X] 75 days after filing pursuant [_] on _________ pursuant
to Rule 485(a)(2), or 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>

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

This Post-Effective Amendment No. 7 to the Registration Statement of Life &
Annuity Trust (the "Trust") is being filed to register the "plain English"
Prospectus and related Statement of Additional Information ("SAI") for the Asset
Allocation, Equity Value, Growth, Money Market, Strategic Growth and U.S.
Government Allocation Funds, to register the new Corporate Bond Fund, and to
make certain other non-material changes.
<PAGE>

LIFE & ANNUITY TRUST
--------------------
Cross Reference Sheet
---------------------

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

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

1 Cover Page
2 Not Applicable
Financial Highlights
3 How to Read the Financial Highlights
4 Participating Insurance Companies
Key Information
Organization and Management of the Funds
5 Organization and Management of the Funds
6 Organization and Management of the Funds
Additional Services and Other Information
7 Investing in the Funds
Additional Services and Other Information
8 Investing in the Funds
9 Not Applicable

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

10 Cover Page
11 Table of Contents
12 Management
Other
13 Investment Restrictions
Additional Permitted Investment Activities
Risk Factors
14 Management
15 Management
Capitol Stock
16 Management
Counsel
Independent Auditors
17 Portfolio Transactions
18 Capital Stock
Other
19 Determination of Net Asset Value
20 Federal Income Taxes
21 Management
Portfolio Transactions
22 Performance Calculations
23 Financial Information
<PAGE>

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

24-32 Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of this Document.
<PAGE>

November 4, 1998

Wells Fargo LAT Trust

Wells Fargo LAT Trust
Prospectus

Asset Allocation Fund Please read this Prospectus and keep it for
future reference. It is designed to provide
Corporate Bond Fund you with important information and to help you
decide if a Fund's goals match your own.
Equity Value Fund
These securities have not been approved or
Growth Fund disapproved by the U.S. Securities and
Exchange Commission ("SEC"), any state
Money Market Fund securities commission or any other regulatory
authority, nor have any of these authorities
Strategic passed upon the accuracy or adequacy of this
Growth Fund Prospectus. Any representation to the contrary
is a criminal offense.
U.S. Government
Allocation Fund Fund shares are NOT deposits or other
obligations of, or issued, endorsed or
Investment Advisor guaranteed by, Wells Fargo Bank, N.A. ("Wells
and Administrator: Fargo Bank"), Barclays Global Investors, N.A.,
Wells Capital Management Incorporated ("Wells
Wells Fargo Bank Capital Management" or "WCM"), or any of
their affiliates. Fund shares are NOT insured
Investment Sub- or guaranteed by the U.S. Government, the
Advisors: Federal Deposit Insurance Corporation ("FDIC"),
the Federal Reserve Board or any other
Barclays Global governmental agency. AN INVESTMENT IN A FUND
Fund Advisors INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS
OF PRINCIPAL.
Wells Capital
Management

Distributor and
Co-Administrator:

Stephens Inc.

<PAGE>

About this Prospectus
- --------------------------------------------------------------------------------

What is a prospectus?

A prospectus provides you with the information you need in order to make an
informed investment decision. It describes how a fund operates and invests its
assets and also contains fee and expense information.

What is different about this Prospectus?

We have rewritten our Prospectus in "plain English" and grouped some of the most
important Fund information together to make it easier to read and understand.

How is the Fund information organized?

After important summary information and the expense fee table, each Fund's
investment objective and financial highlights are presented. The icons below
tell you where various types of information about a Fund can be found.

Important information you should look for:
- --------------------------------------------------------------------------------

[LOGO OF Investment Objective and Investment Policies
ARROW]
What is the Fund trying to achieve? How do we intend to invest
your money? What makes a Fund different from the other Funds
offered in this Prospectus? Look for the arrow icon to find
out.
- --------------------------------------------------------------------------------

[LOGO OF Permitted Investments
PERCENTAGE
SIGN] A summary of the Fund's key permitted investments and practices.
- --------------------------------------------------------------------------------

[LOGO OF Important Risk Factors
EXCLAMATION
POINT] What are key risk factors for the Fund? This will include the
factors described in "General Investment Risks" together with
any special risk factors for the Fund.
- --------------------------------------------------------------------------------

[LOGO OF Additional Fund Facts
ADDITION
SIGN] Provides additional information about the Fund.
- --------------------------------------------------------------------------------

Why is italicized print used throughout this Prospectus?

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

What else do I need to understand about these Funds?

Each Fund has a Statement of Additional Information that supplements the
disclosures made in this Prospectus. You may also want to review the most recent
Annual or Semi-Annual Report. You can order copies of these documents without
charge by calling 1-800-680-8920. The Statement of Additional Information and
other information for the Funds is also available on the SEC's web site
(http://www.sec.gov).

<PAGE>

Table of Contents

Key Information 4

Summary of Expenses ?

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

The Funds Asset Allocation Fund 5

This section Corporate Bond Fund 8
contains important
information about Equity Value Fund 10
the individual
Funds. Growth Fund 13

Money Market Fund 16

Strategic Growth Fund 19

U.S. Government Allocation Fund 22

General Investment Risks 25

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

Your Investment Investing in the Funds 27

Turn to this section Additional Services and
for information on Other Information 32
your investments
including how to buy
and sell Fund shares.

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

Reference Organization and
Management of the Funds 35
Look here for
details on the How to Read the Financial Highlights 40
organization of
the Funds and Glossary 42
term definitions.
<PAGE>

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

Participating Insurance Companies

The Funds are available for purchase through certain variable annuity
contracts ("VA Contracts") and variable life insurance policies ("VLI Policies")
offered by the separate accounts of Participating Insurance Companies.
Individual holders of VA Contracts and VLI Policies are not the "shareholders"
of or "investors" in the Funds. Rather, the Participating Insurance Companies
and their separate accounts are the shareholders or investors, although such
companies will pass through voting rights to the holders of VA Contracts and VLI
Policies. Wells Fargo LAT Trust currently does not foresee any disadvantages to
the holders of VA Contracts and VLI Policies arising from the fact that the
interests of the holders of VA Contracts and VLI Policies may differ.
Nevertheless, Wells Fargo LAT Trust's Board of Trustees intends to monitor
events in order to identify any conflicts which may arise and to determine what
action, if any, should be taken in response to such conflicts. The VA Contracts
and VLI Policies are described in the separate prospectuses issued by the
Participating Insurance Companies. Well Fargo LAT Trust assumes no
responsibility for such prospectuses.

Who are "We"?

In this Prospectus, "We" generally means the Well Fargo LAT Trust Funds. "We"
sometimes refers to the Investment Advisor or other companies hired by the Fund
to perform services. The section on "Organization and Management of the Funds"
further explains how the Funds are organized.

Who are "You"?

In this Prospectus, "You" means the potential investor or the shareholder.

What are the "Funds"?

In this Prospectus, the "Funds" refers to the Wells Fargo LAT Trust Funds listed
on the cover of this Prospectus.

Dividends

We pay dividends, if any, monthly for the Corporate Bond, Money Market and U.S.
Government Allocation Funds. We pay dividends, if any, quarterly for the Asset
Allocation, Equity Value and Growth Funds and we pay dividends, if any, annually
for the Strategic Growth Fund.

4 Wells Fargo LAT Trust Prospectus
<PAGE>

Asset Allocation Fund
- --------------------------------------------------------------------------------

Advisor: Wells Fargo Bank

Sub-Advisor: Barclays Global Fund Advisors
- --------------------------------------------------------------------------------

[LOGO OF Investment Objective
ARROW]
The Asset Allocation Fund seeks to earn over the long-term a
high level of total return, including net realized and
unrealized capital gains and net investment income, consistent
with reasonable risk.

Investment Policies

We allocate and reallocate assets among common stocks, U.S.
Treasury bonds and money market instruments. This strategy is
based on the premise that asset classes are at times undervalued
or overvalued in comparison to one another and that investing in
undervalued asset classes offers better long-term, risk-adjusted
returns.
- --------------------------------------------------------------------------------

[LOGO OF Permitted Investments
PERCENTAGE
SIGN] The asset classes we invest in are composed as follows:

. Stock Investments--We invest in common stocks representative
of the S&P 500 Index. We do not individually select common
stocks on the basis of traditional investment analysis.
Instead, stock investments are made according to a weighted
formula intended to match the total return of the S&P 500
Index as closely as possible;

. Bond Investments--We invest in U.S. Treasury Bonds
representative of the Lehman Brothers 20+ Bond Index. Bonds
on this Index have remaining maturities of twenty years or
more; and

. Money Market Investments--We invest this portion of the Fund
in high-quality money market instruments, including U.S.
Government obligations, obligations of foreign and domestic
banks, short-term corporate debt instruments and repurchase
agreements.

In addition, under normal market conditions, we may invest:

. In call and put options on stock indexes, stock index
futures, options on stock index futures, interest rate and
interest rate futures contracts as a substitute for a
comparable market position in stocks;

. In interest rate and index swaps; and

. Up to 25% of total assets in foreign obligations qualifying
as money market investments.

Wells Fargo LAT Trust Prospectus 5
<PAGE>

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

We manage the allocation of investments in the Fund's portfolio
assuming a "normal" allocation of 60% stocks and 40% bonds. This
is not a "target" allocation but rather a means to set a level
of risk tolerance for the Fund.

We are not required to keep a minimum investment in any of the
three asset classes described above, nor are we prohibited from
investing substantially all of our assets in a single class. The
allocation may shift at any time. In addition, we may
temporarily hold assets in cash or in money market instruments,
including U.S. Government obligations, repurchase agreements and
other short-term investments, to maintain liquidity or when we
believe it is in the best interest of shareholders to do so. The
Fund is a diversified portfolio.
- --------------------------------------------------------------------------------

[LOGO OF Important Risk Factors
EXCLAMATION
POINT] You should consider both the General Investment Risks beginning
on page 25 and the specific risks listed below. They are equally
important to your investment choice.

You should consider that we may incur a higher than average
portfolio turnover ratio due to allocation shifts recommended by
the model. Foreign obligations may entail additional risks. The
value of investments in options on stock indexes is affected by
price level movements for a particular index, rather than price
movements for an individual security.
- --------------------------------------------------------------------------------

[LOGO OF Additional Fund Facts
ADDITION
SIGN] Barclays Global Fund Advisors ("BGFA"), as the Sub-Advisor, uses
a proprietary investment model that analyzes extensive financial
data from numerous sources and recommends a portfolio allocation
for the Fund. The model incorporates assumptions for expected
risks and returns and investor attitudes for risk. The model is
run daily and recommendations are made in 5% increments. No
single person is primarily responsible for recommending either
the asset mix or the mix of securities within a class. The Fund
is not designed to profit from short-term market changes.

6 Wells Fargo LAT Trust Prospectus
<PAGE>

Asset Allocation Fund Financial Highlights
See "How to Read the Financial
Highlights" on page 40.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
(Unaudited)
Six Months From Inception
Ended Year Ended Year Ended Year Ended on April 15,
June 30, Dec. 31, Dec. 31, Dec. 31, 1994 to Dec. 31,
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period $ 11.99 $ 11.42 $ 11.27 $ 9.71 $ 10.00
Net investment income
(loss) 0.24 0.60 0.56 0.55 0.30
Net realized and
unrealized gain (loss)
on investments 1.46 1.73 0.69 2.21 (0.19)
- -------------------------------------------------------------------------------------------------
Total from investment
operations 1.70 2.33 1.25 2.76 0.11
- -------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net
investment income (0.24) (0.60) (0.56) (0.55) (0.30)
Distributions from net
realized gain 0.00 (1.16) (0.54) (0.65) (0.10)
- -------------------------------------------------------------------------------------------------
Total from Distributions (0.24) (1.76) (1.10) (1.20) (0.40)
- -------------------------------------------------------------------------------------------------
Net Asset Value, end of
period $ 13.45 $ 11.99 $ 11.42 $ 11.27 $ 9.71
- -------------------------------------------------------------------------------------------------
Total Return 14.26% 20.88% 11.46% 28.95% 1.13%
- -------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of
period (000) $ 117,229 $ 86,506 $ 51,797 $ 25,467 $ 7,464
- -------------------------------------------------------------------------------------------------
Ratios to average net
assets (annualized):
Ratio of expenses to
average net assets 0.87% 0.80% 0.69% 0.41% 0.00%
Ratio of net investment
income to average net assets 3.99% 5.20% 5.34% 5.58% 6.30%
Portfolio turnover 17% 156% 4% 97% 0%
- -------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses 0.98% 0.85% 0.80% 1.22% 2.24%
- -------------------------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets prior to
waived fees and
reimbursed expenses 3.88% 5.15% 5.23% 4.77% 4.06%
- -------------------------------------------------------------------------------------------------
<CAPTION>
=================================================================================================
PERIOD-END
RETURNS 1998 1997 1996 1995 1994
=================================================================================================
14.26% 20.88% 11.46% 28.95% 1.13%
- -------------------------------------------------------------------------------------------------
</TABLE>

Wells Fargo LAT Trust Prospectus 7
<PAGE>

Corporate Bond Fund
- --------------------------------------------------------------------------------

Portfolio Managers: Graham Allen (since 11/98)
John Burgess (since 11/98)
Jacqueline Flippin (since 11/98)
Daniel Kokoska (since 11/98)
Scott Smith (since 11/98)
- --------------------------------------------------------------------------------

[LOGO OF Investment Objective
ARROW]
The Corporate Bond Fund seeks a high level of current income
consistent with prudent investment risk.

Investment Policies

We seek a high rate of current income by actively managing a
diversified portfolio consisting primarily of corporate debt
securities. When purchasing these securities we consider, among
other things, the yield differences for various corporate
sectors, and the current economic cycle's potential effect on the
various types of bonds. We may invest in securities of any
maturity. Under normal market conditions, we expect to maintain a
dollar-weighted average maturity for portfolio securities of
between 10 and 15 years. We also may invest in U.S. Government
obligations.
- --------------------------------------------------------------------------------

[LOGO OF Permitted Investments
PERCENTAGE
SIGN] Under normal market conditions, we invest:

. at least 65% of our total assets in corporate debt securities;

. in U.S. Government obligations;

. no more than 25% of our total assets in debt securities that
are below investment grade; and

. no more than 25% of our total assets in securities of foreign
issuers.

We may temporarily hold assets in cash or 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 purposes when we believe it is in the best interests
of shareholders to do so.

8 Wells Fargo LAT Trust Prospectus
<PAGE>

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

We may invest in securities regardless of their rating or in
securities that are unrated, or in default at the time of
purchase.

Wells Fargo LAT Trust Prospectus 9
<PAGE>

Equity Value Fund
- --------------------------------------------------------------------------------

Portfolio Managers: Rex Wardlaw (since 5/98)
Allen Wisniewski (since 5/98)
Gregg Giboney (8/98)
- --------------------------------------------------------------------------------

[LOGO OF Investment Objective
ARROW]
The Equity Value Fund seeks to provide investors with long-term
capital appreciation.

Investment Policies

We seek long-term capital appreciation by investing in a
diversified portfolio composed primarily of equity securities
that are trading at low price-to-earnings ratios, as measured
against the stock market as a whole or against the individual
stock's own price history. In addition we look at the price-to-
book value and price-to-cash flow ratios of companies for
indications of attractive valuation. We use both quantitative
and qualitative analysis to identify possible investments.
Dividends are a secondary consideration when selecting stocks.
We may purchase particular stocks when we believe that a history
of strong dividends may increase their market value.
- --------------------------------------------------------------------------------

[LOGO OF Permitted Investments
PERCENT
SIGN] Under normal market conditions, we invest:

. primarily in common stocks of both large, well-established
companies and smaller companies with market capitalization
exceeding $50 million at the time of purchase;

. in debt instruments that may be converted into the common
stock of both U.S. and foreign companies; and

. up to 25% of our assets in foreign companies through American
Depositary Receipts and similar instruments.

We may also purchase convertible debt securities with the same
characteristics as common stock, as well as in preferred stock
and warrants. 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
short-term investments, either to maintain liquidity or for
short-term defensive purposes when we believe it is in the best
interests of shareholders.

10 Wells Fargo LAT Trust Prospectus
<PAGE>

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

Stocks of smaller and medium-sized companies may be more
volatile than larger company stocks. Investments in foreign
markets may also present special risks, including currency,
political, diplomatic, regulatory and liquidity risks.
- -------------------------------------------------------------------------------

[LOGO OF Additional Fund Facts
ADDITION
SIGN] Our strategy of buying stocks with low price-to-earnings ratios
is commonly known as a value strategy.

Wells Fargo LAT Trust Prospectus 11
<PAGE>

Equity Value Fund Financial Highlights

12 Wells Fargo LAT Trust Prospectus
<PAGE>

Growth Fund
- --------------------------------------------------------------------------------

Portfolio Managers: Allen Ayvazian (since 12/97)
Kelli Hill (since 2/97)
- --------------------------------------------------------------------------------

[LOGO OF Investment Objective
ARROW]
The Growth Fund seeks to earn current income and achieve long-
term capital appreciation.

Investment Policies

We seek current income and long-term capital appreciation by
investing primarily in common stocks and preferred stocks and
debt securities that are convertible into common stocks. We
actively manage a diversified portfolio of the securities and we
look for companies that have a strong earnings growth trend that
we believe have above-average prospects for future growth, or
have above-average dividends yields. We look for common stocks
that are trading at low price-to-earnings ratios, as measured
against either the stock market as a whole or against the
stock's own price history. We may also invest in the stocks of
medium-to smaller-size companies that we believe have the
potential to produce high levels of future earnings growth or
when we believe the stock is undervalued.
- --------------------------------------------------------------------------------

[LOGO OF Permitted Investments
PERCENT
SIGN] Under normal market conditions, we invest:

. at least 65% of our total assets in equity securities,
including common and preferred stock, and securities
convertible into common stocks;

. at least 65% of our total assets in income producing
securities;

. the majority of our total assets in issues of companies with
market capitalization that falls within the range of the
Russell 1000 Index (As of June 1998, this range was from $470
million to $296 billion. The range is expected to change
frequently.);

. up to 25% of our total assets in foreign companies through
American Depositary Receipts and similar instruments; and

. up to 15% of our total assets in emerging markets.

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 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.

Wells Fargo LAT Trust Prospectus 13
<PAGE>

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

Smaller and medium-sized companies selected for their earnings
growth potential may be more volatile than larger company
stocks. Investments in foreign and emerging markets may also
present special risks, including currency, political,
diplomatic, regulatory and liquidity risks.
- --------------------------------------------------------------------------------

[LOGO OF Additional Fund Facts
ADDITION
SIGN] We have a quarterly dividend policy. Prior to January 28,
1998, the Fund was known as the "Growth and Income Fund".

14 Wells Fargo LAT Trust Prospectus
<PAGE>

Growth Fund Financial Highlights

See "How to Read the Financial Highlights" on page 40.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
====================================================================================================================
FOR A SHARE OUTSTANDING
====================================================================================================================
(Unaudited)
Six Months From Inception
Ended Year Ended Year Ended Year Ended on April 12,
June 30, Dec. 31, Dec. 31, Dec. 31, 1994 to Dec. 31,
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 16.79 $ 15.34 $ 12.91 $ 10.30 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.06 0.19 0.20 0.22 0.14
Net realized and unrealized gain (loss)
on investments 2.78 2.48 2.68 2.77 0.30
- ----------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.84 2.67 2.88 2.99 0.44
- ----------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.06) (0.19) (0.20) (0.22) (0.14)
Distributions from net realized gain 0.00 (1.03) (0.25) (0.16) 0.00
- ----------------------------------------------------------------------------------------------------------------------
Total from distributions: (0.06) (1.22) (0.45) (0.38) (0.14)
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 19.57 $ 16.79 $ 15.34 $ 12.91 $ 10.30
- ----------------------------------------------------------------------------------------------------------------------
Total return (not annualized) 16.94% 17.33% 22.44% 29.19% 4.47%
- ----------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s) $ 90,461 $ 71,944 $ 33,381 $ 10,920 $ 2,136
- ----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets (annualized):
Ratio of expenses to average net assets 0.98% 0.65% 0.60% 0.43% 0.00%
Ratio of net investment income to
average net assets 0.71% 1.19% 1.53% 2.05% 3.00%
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover 44% 124% 95% 84% 21%
- ----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to
waived fees and reimbursed expenses 1.08% 1.01% 1.12% 2.02% 10.18%
- --------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets prior to waived fees and reimbursed
expenses (loss) 0.61% 0.83% 1.01% 0.46% (7.18)%
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
====================================================================================================================
PERIOD-END RETURNS 1998 1997 1996 1995 1994
====================================================================================================================
These returns reflect fee waivers and 16.94% 17.33% 22.44% 29.19% 4.47%
reimbursements, and are not a guarantee of
future performance.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

Wells Fargo LAT Trust Prospectus 15
<PAGE>

Money Market Fund
- --------------------------------------------------------------------------------

Advisor: Wells Fargo Bank

Sub-Advisor: Wells Capital Management
- --------------------------------------------------------------------------------

[LOGO OF Investment Objective
ARROW]
The Money Market Fund seeks to provide investors with a high
level of income, while preserving capital and liquidity, by
investing in high quality, short-term securities.

Investment Policies

We actively manage a portfolio of U.S. dollar-denominated, high
quality money market instruments, including debt obligations
with remaining maturities of 397 days or less. We maintain an
overall dollar-weighted average maturity of 90 days or less. We
may also make certain other investments including, for example,
repurchase agreements.
- --------------------------------------------------------------------------------

[LOGO OF Permitted Investments
PERCENTAGE
SIGN] Under normal market conditions, we invest in:

. commercial paper rated at the date of purchase as "P-1" by
Moody's or "A-1+" or "A-1" by S&P;

. negotiable certificates of deposits and banker's acceptances;

. repurchase agreements;

. U.S. Government obligations;

. short-term, U.S. dollar-denominated debt obligations of U.S.
branches of foreign banks and foreign branches of U.S. banks;

. municipal obligations; and

. shares of other money market funds.

16 Wells Fargo LAT Trust Prospectus
<PAGE>

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

[LOGO OF Important Risk Factors
EXCLAMATION
POINT] You should consider both the General Investment Risks listed on
page 25 and the specific risks listed below. They are both
important to your investment choice.

There is no guarantee that we will be able to maintain a $1.00
per share net asset value. Fluctuations in share value may cause
a loss or gain in principal. Generally, short-term funds do not
earn as high a level of income as funds that invest in longer-
term instruments. No government agency either directly or
indirectly insures or guarantees the performance of the Fund.
- --------------------------------------------------------------------------------

[LOGO OF
ADDITION
SIGN]

Wells Fargo LAT Trust Prospectus 17
<PAGE>

Money Market Fund Financial Highlights

See "How to Read the Financial Highlights" on page 40.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===================================================================================================================================
FOR A SHARE OUTSTANDING
===================================================================================================================================
(Unaudited)
Six Months From Inception
Ended Year Ended Year Ended Year Ended on May 19,
June 30, Dec. 31, Dec. 31, Dec. 31, 1994 to Dec. 31,
For the period ended: 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.02 0.05 0.05 0.05 0.03
Net realized and unrealized
gain (loss) on investments 0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.02 0.05 0.05 0.05 0.03
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income (0.02) (0.05) (0.05) (0.05) (0.03)
Distributions from net realized
gain 0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total from distributions: (0.02) (0.05) (0.05) (0.05) (0.03)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total return 2.41% 5.04% 4.72% 5.41% 2.71%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000) $ 14,481 $ 14,788 $ 12,667 $ 5,823 $ 1,492
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets
(annualized):
Ratio of expenses to average
net assets 0.77% 0.53% 0.51% 0.42% 0.00%
Ratio of net investment income
to average net assets 4.81% 4.95% 4.64% 5.15% 4.63%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover N/A N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net
assets prior to waived fees and
reimbursed expenses 1.22% 1.07% 1.22% 3.83% 11.43%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets prior to
waived fees and reimbursed
expenses 4.36% 4.41% 3.93% 1.74% (6.80%)
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
===================================================================================================================================
PERIOD-END RETURNS 1998 1997 1996 1995 1994
===================================================================================================================================
These returns reflect fee waivers and reimbursements, 2.41% 5.04% 4.72% 5.41% 2.71%
and are not a guarantee of future performance.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

18 Wells Fargo LAT Trust Prospectus
<PAGE>

Strategic Growth Fund
- -------------------------------------------------------------------------------

Portfolio Managers: Jon Hickman (since 5/98)
Chris Greene (since 5/98)
- -------------------------------------------------------------------------------

[LOGO OF Investment Objective
ARROW]
The Strategic Growth Fund seeks to provide investors with an
above-average level of capital appreciation.

Investment Policies

We seek an above-average level of capital appreciation for
investors willing to assume above-average risk. We actively
manage a broadly diversified equity portfolio of companies
expected to have strong growth in revenues, earnings and assets.
We select a range of companies from different industry groups,
with the majority of our holdings consisting of established
growth companies, turnaround or acquisition candidates, or
attractive larger capitalization companies.
- -------------------------------------------------------------------------------

[LOGO OF Permitted Investments
PERCENT
SIGN] Under normal market conditions, we may invest:

. in at least 20 common stock issues spread across a number of
different industry groups;

. at least 65% of our assets in common stocks and securities
which are convertible into common stocks that we believe have
better-than-average prospects to increase in value;

. up to 40% of our assets in initial public offerings and/or
small and newer equity issues;

. at least 65% of our assets in companies whose market
capitalization at the time we buy their stock is within the
capitalization range of the companies listed on the Russell
MidCap/TM/ Index (As of June 1998, this range was from $470
million to $11.3 billion. The range is expected to change
frequently.);

. up to 15% of our assets in emerging markets; and

. up to 15% of our assets in certain call and put options.

We may invest in preferred stock or investment-grade debt
securities that are convertible into common stock, and in money
market instruments to maintain liquidity, to meet expected
redemption requests or as a defensive measure when we believe
that the basic investment strategy is not in the best interests
of shareholders. Generally, these defensive investments are
temporary and will not exceed 35% of total assets.

Wells Fargo LAT Trust Prospectus 19
<PAGE>

Strategic Growth Fund
- -------------------------------------------------------------------------------

[LOGO OF Important Risk Factors
EXCLAMATION
POINT] You should consider both the General Investment Risks beginning
on page 25 and the specific risks listed below. They are both
important to your investment choice. This Fund is designed for
investors willing to assume above average risk. We may invest in
companies that:

. pay low or no dividends;

. have smaller market capitalization;

. have less market liquidity;

. have no or relatively short operating histories or are newly
public;

. have aggressive capital structures, including high debt
levels; or

. are involved in rapidly growing or changing industries and/or
new technologies.

The Fund's share price may rise and fall more than the share
prices of other funds. Investments in foreign and emerging
markets may also present special risks, including currency,
political, diplomatic, regulatory and liquidity risks. In
addition, our active trading investment strategy may result in a
higher-than-average portfolio turnover ratio, increased trading
expenses, and short-term capital gains that pass through to the
Fund's shareholders.
- --------------------------------------------------------------------------------

[LOGO OF Additional Fund Facts
ADDITION
SIGN] We have an annual dividend policy.

20 Wells Fargo LAT Trust Prospectus
<PAGE>

Strategic Growth Fund Financial Highlights

(Unaudited)
From Inception
on May 1,
1998 to June 30,
For the period ended: 1998
- -------------------------------------------------------------------------------
<S> <C>
Net Asset Value, beginning of
period $ 10.00
- -------------------------------------------------------------------------------
Net investment income (loss) 0.00
Net realized and unrealized
gain (loss) on investments 2.83
- -------------------------------------------------------------------------------
Total from investment operations 2.83
- --------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment
income 0.00
Distributions from net realized
gain 0.00
- -------------------------------------------------------------------------------
Total from Distributions 0.00
- -------------------------------------------------------------------------------
Net Asset Value, end of Period $ 12.83
- -------------------------------------------------------------------------------
Total return 28.30%
- -------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000) $ 336
- -------------------------------------------------------------------------------
Ratios to average net assets
(annualized):
Ratio of expenses to average
net assets 1.06%
Ratio of net investment income
to average net assets 0.13%
- -------------------------------------------------------------------------------
Portfolio turnover 102%
- -------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed expenses 36.72%
Ratio of net investment income
(loss) to average net assets
prior to waived fees and
reimbursed expenses (35.53%)
- -------------------------------------------------------------------------------
<CAPTION>
===============================================================================
PERIOD-END RETURNS 1998
===============================================================================
These returns reflect fee waivers 28.30%
and reimbursements, and are not
a guarantee of future performance.
- -------------------------------------------------------------------------------
</TABLE>

Wells Fargo LAT Trust Prospectus 21
<PAGE>

U.S. Government Allocation Fund
- --------------------------------------------------------------------------------

Advisor: Wells Fargo Bank

Sub-Advisor: Barclays Global Fund Advisors
- --------------------------------------------------------------------------------

[LOGO OF Investment Objective
ARROW]
The U.S. Government Allocation Fund seeks over the long-term a
high level of total return, including net realized and
unrealized capital gains and net investment income, consistent
with reasonable risk.

Investment Policies

We allocate and reallocate assets among long-term U.S. Treasury
bonds, intermediate-term U.S. Treasury notes, and short-term
money market instruments. This strategy is based on the premise
that asset classes are at times undervalued or overvalued in
comparison to one another and that investing in undervalued
asset classes offers better long-term, risk-adjusted returns.
- --------------------------------------------------------------------------------

[LOGO OF Permitted Investments
PERCENTAGE
SIGN] The asset classes we invest in are composed as follows:

. Long-Term Investments -- We invest in U.S. Treasury bonds
representative of the Lehman Brothers 20+ Bond Index. Bonds
on this Index have maturities of twenty years or more.

. Intermediate-Term Investments -- We invest in U.S. Treasury
securities representative of the Lehman Brothers U.S.
Government Intermediate Bond Index. Bonds on this Index have
maturities of one to twenty years.

. Short-Term Investments -- We invest in high-quality money
market instruments, including U.S. Government obligations,
obligations of foreign and domestic banks, short-term
corporate debt instruments and repurchase agreements.

In addition, under normal market conditions, we invest:

. at least 65% of total assets in U.S. Government obligations;
and

. up to 25% of total assets in foreign obligations qualifying
as money market investments.

As long as we keep 65% of assets in U.S. Government obligations,
we are not required to keep a minimum investment in any of the
three asset classes, nor are we prohibited from investing
substantially all of our assets in a single asset class. The
allocation may shift at any time. In addition, we may
temporarily hold assets in cash or in money market instruments,
including U.S. Government obligations,

22 Wells Fargo LAT Trust Prospectus
<PAGE>

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

repurchase agreements and other short-term investments, to
maintain liquidity or when we believe it is in the best
interests of shareholders to do so. The Fund is a diversified
portfolio.
- --------------------------------------------------------------------------------

We may incur a higher than average portfolio turnover ratio due
to allocation shifts recommended by the model. Foreign
obligations may entail additional risks.
- --------------------------------------------------------------------------------

[LOGO OF Additional Fund Facts
ADDITION
SIGN] Barclays Global Fund Advisors, as the Sub-Advisor, uses a
proprietary investment model that analyzes extensive financial
data from numerous sources and recommends a portfolio
allocation. The model incorporates assumptions for expected
risks and returns and investor attitudes for risk. The model is
run daily and recommendations are made in 5% increments. No
person is primarily responsible for recommending either the
asset mix or the mix of securities within a class. The Fund is
not designed to profit from short-term market changes.

Wells Fargo LAT Trust Prospectus 23
<PAGE>

U.S. Government Allocation Fund Financial Highlights

- ---------------------------------------------------------------------------------------------
Portfolio turnover 98% 135% 222% 405% 130%
- ---------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets prior
to waived fees and
reimbursed expenses 1.09% 0.97% 1.18% 2.46% 12.73%
- ---------------------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets prior to
waived fees and
reimbursed expenses 4.79% 5.42% 5.17% 3.81% (5.38%)
- ---------------------------------------------------------------------------------------------
<CAPTION>
=============================================================================================
PERIOD-END RETURNS 1998 1997 1996 1995 1994
=============================================================================================
These returns reflect fee 2.66% 7.47% 3.99% 14.40% 0.41%
waivers and reimbursements,
and are not a guarantee of
future performance.
- ---------------------------------------------------------------------------------------------
</TABLE>

24 Wells Fargo LAT Trust Prospectus
<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 all mutual funds, including
the Stagecoach Funds. Chief among these risks are the following:

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

. We cannot guarantee we will meet our investment objectives. Also, we
cannot guarantee that we will be able to maintain a $1.00 per share net
asset value for the Money Market Fund.

. 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 perform certain functions, 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.

The Funds invest in securities that involve particular kinds of risk.

. The Funds invest in equities that are subject to equity market risk. This
is the risk that stock prices will fluctuate and can decline and reduce the
value of the portfolio. Certain types of stock and certain stocks selected
for a Fund's portfolio may underperform or decline in value more than the
overall market. As of the date of this Prospectus, the equity market, as
measured by the S&P 500 Index and other commonly used indexes, is trading
at or close to record levels. There can be no guarantee that these
performance levels will continue.

. The Funds invest in debt instruments, such as notes and bonds, that are
subject to credit risk and interest rate risk. Credit risk is the
possibility that an issuer of a security 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 possibility that interest rates may increase and
reduce the resale value of securities in a Fund's portfolio. Debt
instruments 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

Wells Fargo LAT Trust Prospectus 25
<PAGE>

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

adjustable or variable rate features. 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 Corporate Bond fund may continue to hold debt instruments
that cease to be rated by a nationally recognized ratings organization or
whose rating falls below the levels permitted for such Fund, provided Wells
Fargo Bank deems the securities to be of comparable quality to rated or
higher-rated securities. Unrated or downgraded securities may be more
susceptible to interest rate and credit risk than rated or higher-rated
securities.

. The Funds that invest in smaller companies, foreign companies (including
investments made through American Depositary Receipts and similar
instruments), and in emerging markets are subject to additional risks,
including less liquidity and greater price volatility. A Fund's investment
in foreign and emerging markets may also be subject to special risks
associated with international trade, including currency, political,
regulatory and diplomatic risk.

. The Funds may invest a portion of their assets in U.S. Government
obligations. 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 Asset Allocation, Equity Value and U.S. Government Allocation 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.

. The Asset Allocation, U.S. Government Allocation and Corporate Bond Funds
also invest a portion of their assets in GNMAs, FNMAs and 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 entity, is offered to investors
through securities dealers. Once approved by GNMA, a government corporation
within the U.S. Department of Housing and Urban Development, the timely
payment of interest and principal of a GNMA security is guaranteed by the
full faith and credit of the U.S. Government. FNMA and FHLMC are federally
chartered corporations supervised by the U.S. Government acting as
government-sponsored enterprises. FNMA and FHLMC securities are not direct
obligations of the U.S. Treasury, and are supported by the credit of FNMA or
FHLMC only. FNMA guarantees timely payment of interest and principal on its
securities; FHLMC guarantees timely payment of interest and ultimate payment
of principal only.

. The Corporate Bond Fund may enter into forward currency exchange contracts
("forward contracts") to try to reduce currency exchange risks to the Funds
from foreign securities investments. A forward contract is an obligation to
buy or sell a specific currency for an agreed price at a future date which
is individually negotiated and privately traded by currency traders and
their customers.

. The market value of lower rated, fixed-income securities and unrated
securities of comparable quality tends to reflect individual developments
affecting the issuer to a greater extent than the market value of higher
rated securities, which react primarily to fluctuations in the general level
of interest rates. Lower rated securities also tend to be more sensitive to
economic conditions than higher rated securities. These lower rated fixed-
income securities are considered by the rating agencies, on balance, to be
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation
and generally involve more credit risk than securities in the higher rating
categories. Even securities rate "BBB" by S&P or by Moody's ratings which are
considered investment grade, possess some speculative characteristics.

What follows is a general list of the types of risks (some of which are
described above) 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.

26 Wells Fargo LAT Trust Prospectus
<PAGE>

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

Currency Risk-- The risk that a change in the exchange rate between U.S. dollars
and a foreign currency may reduce the value of an investment made in a security
denominated in that foreign currency.

Diplomatic Risk-- The risk that an adverse change in the diplomatic relations
between the United States and another country might reduce the value or
liquidity of investments in either country.

Emerging Market Risk-- The risk that the emerging market, as defined in the
glossary, may be more sensitive to certain economic changes. For example,
emerging market countries are often dependent on international trade and are
therefore often vulnerable to recessions in other countries. They may have
obsolete financial systems, have volatile currencies and may be more sensitive
than more mature markets to a variety of economic factors. Emerging market
securities may also be less liquid than securities of more developed countries
and could be difficult to sell, particularly during a market downturn.

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 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, 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.

Political Risk-- The risk that political actions, events or instability may be
unfavorable for investments made in a particular nation's or region's industry,
government or markets.

Prepayment Risk-- The risk that, as interest rates fall, homeowners will
refinance existing mortgages, causing mortgage-backed securities to have reduced
yields.

Wells Fargo LAT Trust Prospectus 27
<PAGE>

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

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.

Year 2000 Risk-- Many computer software systems in use today cannot distinguish
the Year 2000 from the Year 1900. Most of the services provided to the Funds
depend on the proper functioning of computer systems. Any failure to adapt these
systems in time could hamper the Funds' operations and services. The Funds'
principal service providers have advised the Funds that they are working on the
necessary changes to their systems and that they expect their systems to be
adapted in time. There can, of course, be no assurance of success. In addition,
because the Year 2000 issue affects virtually all organizations and governments,
the companies or entities in which the Funds invest also could be adversely
impacted by the Year 2000 issue. The extent of such impact cannot be
predicted.

========================================================================
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 Policies 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 Policies 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.

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.
========================================================================

28 Wells Fargo LAT Trust Prospectus
<PAGE>

<TABLE>
<CAPTION>
US
ASSET CORPORATE EQUITY MONEY STRATEGIC GOVERNMENT
ALLOCATION BOND VALUE GROWTH MARKET GROWTH ALLOCATION
====================================================================================================================================
INVESTMENT PRACTICE: RISK:
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FLOATING AND VARIABLE RATE DEBT
Instruments with interest rates Interest Rate and * * * * * * *
that are adjusted either on a Credit Risk
schedule or when an index or
benchmark changes.
- ------------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
A transaction in which the seller Credit and * * * * * * *
of a security agrees to buy back Counter-Party Risk
a security at an agreed upon time
and price, usually with interest.
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER MUTUAL FUNDS
The temporary investment in Market Risk * * * * * * *
shares of 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.
- ------------------------------------------------------------------------------------------------------------------------------------
FOREIGN OBLIGATIONS
Dollar-denominated debt obligations of Information, Liquidity *
foreign branches of U.S. banks or U.S. Political, Regulatory,
branches of foreign banks. and Diplomatic Risk
- ------------------------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES
Securities issued by a non-U.S. company Information, Political, * * * * * *
or debt of a foreign government, Regulatory, Diplomatic,
sometimes in the form of an American Liquidity and Currency
Depositary Receipt or similar Risk
instrument. Limited to 25% of total
assets.
- ------------------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS
Investments in companies located Information, Political * *
or operating in countries considered Regulatory, Diplomatic
developing or to have "emerging" and Currency Risk
stock markets. Generally, these
investments have the same type of
risks as foreign securities, but
to a higher degree. Limited to
15% of total assets.
- ------------------------------------------------------------------------------------------------------------------------------------
OPTIONS
The right or obligation to receive Credit, Information and
or deliver a security or cash Liquidity Risk
payment depending on the security's
price or the performance of an index
or benchmark.
- ------------------------------------------------------------------------------------------------------------------------------------
Options on Specific Securities * * *
Options on a Stock Index *
Stock Index Futures and options * * *
on Stock Index Futures
to protect liquidity and
portfolio value
- ------------------------------------------------------------------------------------------------------------------------------------
PRIVATELY ISSUED SECURITIES
Securities that are not publicly Liquidity Risk * * * * * *
traded but which may be resold
in accordance with Rule 144A of
the Securities Act of 1933.
- ------------------------------------------------------------------------------------------------------------------------------------
LOANS OF PORTFOLIO SECURITIES
The practice of loaning securities Credit, Counter-Party * * * * * *
to brokers, dealers and financial and Leverage Risk
institutions to increase return on
those securities. Loans may be
made in accordance with existing
investment policies and may not
exceed 33 1/3% of total assets.
- ------------------------------------------------------------------------------------------------------------------------------------
BORROWING POLICIES
The ability to borrow an equivalent Leverage Risk * * * * * * *
of 10% of total assets (20% for the
Allocation Funds) from banks for
temporary purposes to meet
shareholder redemptions.
- ------------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES
A security that cannot be readily Liquidity Risk * * * * * * *
sold, or cannot be readily sold
without negatively affecting its fair
price. Limited to 15% of total
assets (10% for the Money Market
Fund).
- ------------------------------------------------------------------------------------------------------------------------------------
STRIPPED OBLIGATIONS
Securities that give ownership to Interest Rate Risk *
either future payments of interest or
a future payment of principal, but
not both. These securities tend to
have greater interest rate sensitivity
than conventional debt obligations.
The Corporate Bond Fund may invest up
to 20% of assets in interest-only or
principal-obligations, or a combination thereof.
- ------------------------------------------------------------------------------------------------------------------------------------
FORWARD COMMITMENTS, WHEN ISSUED
SECURITIES AND DELAYED DELIVERY
TRANSACTIONS Interest Rate, *
Securities bought or sold for Leverage, Credit and
delivery at a later date or bought or Experience Risk
sold for a fixed price at a fixed date.
- ------------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES
Securities consisting of an undivided Interest Rate, Credit * * *
fractional interest in pools of and Experience Risk
consumer loans, such as car loans or
credit card debt, or receivables held
in trust.
- ------------------------------------------------------------------------------------------------------------------------------------
HIGH YIELD SECURITIES
Fixed-income securities of lower Interest Rate and *
quality that produce generally Credit Risk
higher rates of return. These
securities tend to be more sensitive
to economic conditions and during
sustained periods of rising interest
rates, may experience interest and/or
principal defaults.
- ------------------------------------------------------------------------------------------------------------------------------------
LOAN PARTICIPATIONS
Debt obligations that represent a Credit Risk *
portion of a larger loan made by a
bank. Generally sold without
guarantee or recourse, some
participations sell at a discount
because of the borrower's credit
problems. Limited to 5% of total
assets.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Life and Annuity Trust Prospectus 29
<PAGE>

Investing in the Funds
- --------------------------------------------------------------------------------

INVESTING IN THE FUNDS

The Funds are available for purchase through certain VA Contracts and VLI
Policies offered by the separate accounts of Participating Insurance Companies.
The separate accounts of the Participating Insurance Companies place orders
to purchase and redeem shares of each Fund based on, among other things, the
amount of premium payments to be invested and the amount of surrender and
transfer requests (as defined in the prospectuses describing the VA Contracts
and VLI Policies issued by the Participating Insurance Companies) to be
effected on that day pursuant to VA Contracts and VLI policies. Please refer to
the prospectus provided by your selling agent for more detailed information
describing the separate accounts.

Wells Fargo LAT Trust does not assess any fees, either when it sells or when
it redeems its shares. Surrender charges, mortality and expense risk fees and
other charges may be assessed by Participating Insurance Companies under the VA
Contracts or VLI Policies. These fees and charges are described in the
Participating Insurance Companies' prospectuses.

Should any conflict between VA Contract and VLI Policy holders arise which
would require that a substantial amount of net assets be withdrawn from a Fund
of Wells Fargo LAT Trust, orderly portfolio management could be disrupted to the
potential detriment of the VA Contract and VLI Policy holders.

DIVIDENDS AND DISTRIBUTIONS

Each Fund is treated separately in determining the amounts of dividends of
net investment income and distributions of capital gains payable to its
shareholders. Dividends and distributions are automatically reinvested on the
payment date for each shareholder's account in additional shares of the Fund
that paid the dividend or distribution at NAV or are paid in cash at the
election of the Participating Insurance Company.

The Asset Allocation, Equity Value and Growth Funds declare and pay a
quarterly dividend, the Strategic Growth Fund declares and pays an annual
dividend and the Corporate Bond and U.S. Government Allocation Fund declares
and pays a monthly dividend, of substantially all of their respective net
investment income. The Money Market Fund declares dividends daily and pays the
dividends monthly. The Funds generally distribute any capital gains once a
year. Participating Insurance Companies will be informed by January 31 about
the amount and character of dividends and distributions of the previous year
from the relevant Fund for federal income tax purposes.

IMPORTANT INFORMATION:

. Read this prospectus carefully. Discuss any questions you have with your
selling agent. You may also ask for copies of the Statement of Additional
Information or Annual Report. Copies are available free of charge from your
selling agent or by calling 1-800-222-8222.

. We process requests to buy or sell shares each business day. Requests we
receive in proper form for the Non-Money Market Funds before 1:00 PM
(Pacific time) are generally processed at 1:00 PM on the same day. Requests
we receive in proper form for the Money Market Fund before 9:00 AM (Pacific
time) generally are processed at 9:00 AM on the same day. Requests we
receive after these cut-off times are processed the next business day.

. 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 Non-Money Market Fund as of 1:00 PM (Pacific
time), and of the Money Market Fund as of 9:00 AM (Pacific time), each
business day. We determine the NAV by subtracting the Fund liabilities from
its total assets, and then dividing the result by the total number of
outstanding shares. Each Fund's assets are generally valued at current market
prices. See the Statement of Additional Information for further disclosure.

. We will process all requests to buy and sell shares at the first NAV
calculated after the request in proper form is received.

. We reserve the right to reject any purchase orders, and to delay payment of
redemptions so that we may be reasonably certain of investment ownership. We
may suspend redemption or postpone payment of a redemption for any period
during which the NYSE is closed, or during which trading is restricted or an
emergency exists.

30 Wells Fargo LAT Trust Prospectus
<PAGE>

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

Taxes

Distributions from a Fund's net investment income and net short-term capital
gain, if any, are taxable to the Fund's shareholders as ordinary income.
Distributions from a Fund's net long-term capital gains are taxable to the
Fund's shareholders as long-term capital gains. In general, distributions will
be taxable when paid, whether such distributions are taken in cash or are
automatically reinvested in additional Fund shares. However, dividends declared
in October, November or December of one year and distributed in January of the
following year will be taxable as if they were paid by December 31 of the first
year.

As described in the prospectuses of the Participating Insurance Companies,
individual holders of VA Contracts and VLI Policies may qualify for favorable
tax treatment. In order to qualify for such treatment, the Internal Revenue Code
of 1986, as amended (the "Code"), requires, among other things, that the
"separate accounts" of the Participating Insurance Companies, which maintain and
invest net proceeds form the VA Contracts and VLI Policies, to be "adequately
diversified." See "Taxation of a Separate Account of a Participating Insurance
Company" in the SAI. Subject to certain conditions, for purposes of the
"adequate diversification" test, shares of a Fund will not be treated as single
investment. Rather, the separate account will be treated as the owner of its
proportionate share of each of the assets of the Fund. Each Fund intends to
satisfy the relevant conditions of the Code and Treasury Regulations so that its
shares held in a separate account of a Participating Insurance Company, and the
VA Contracts and VLI Policies underlying such account, may qualify for favorable
tax treatment.

The foregoing discussion regarding taxes is based on tax laws which were in
effect as of the date of this Prospectus and summarizes only some of the
material federal income tax considerations affecting the Funds and their
shareholders. It is not intended as a substitute for careful tax planning and
does not discuss state, local or foreign income tax considerations; you should
consult your own tax advisor with respect to your specific tax situation.
Please see the SAI for further federal income tax considerations. Federal
income taxation of separate accounts of life insurance companies, VA Contracts
and VLI Policies is discussed in the Prospectuses of the Participating
Insurance Companies.

Wells Fargo LAT Trust Prospectus 31
<PAGE>

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

32 Wells Fargo LAT Trust Prospectus
<PAGE>

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

Wells Fargo & Company/Norwest Merger - Wells Fargo & Company, the parent company
of Wells Fargo Bank, has signed a definitive agreement to merge with Norwest
Corporation. The proposed merger is subject to certain regulatory approvals and
must be approved by shareholders of both holding companies. The merger is
expected to close in the second half of 1998. The combined company will be
called Wells Fargo & Company. Wells Fargo Bank has advised the Funds that the
merger will not reduce the level or quality of advisory and other services
provided by Wells Fargo Bank to the Funds.

Wells Fargo LAT Trust Prospectus 33
<PAGE>

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

Statement of Additional Information - Additional information about some of the
topics discussed in this Prospectus as well as details about performance
calculations, servicing plan, tax issues and other important issues are
available in the Statement of Additional Information for the Funds. The
Statement of Additional Information should be read along with this Prospectus
and may be obtained free of charge by calling 1-800-680-8920.

Glass-Steagall Act - Morrison & Foerster LLP, counsel to the Funds and
special counsel to Wells Fargo Bank, has advised us and Wells Fargo Bank that
Wells Fargo Bank and its affiliates may perform the services contemplated
by the Advisory Contracts and detailed in this Prospectus and the Statement of
Additional Information without violation of the Glass-Steagall Act. Counsel has
pointed out that future judicial or administrative decisions, or future federal
or state laws may prevent these entities from continuing in their roles.

Voting Rights - All shares of the Funds have equal voting rights and are voted
in the aggregate, rather than by series, unless the matter affects only one
series. A shareholder of record is entitled to one vote for each share owned and
fractional votes for each fractional share owned. For a detailed description of
voting rights, see the "Capital Stock" section of the Statement of Additional
Information.

34 Wells Fargo LAT Trust Prospectus
<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, the entities that perform different services, and
how they are compensated. Further information is available in the Statement of
Additional Information for the Funds.

About Wells Fargo LAT Trust

Wells Fargo LAT Trust was organized as a Delaware business trust on October
28, 1993. 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.

Wells Fargo LAT Trust offers shares of the Funds only to Participating
Insurance Companies, and only Participating Insurance Companies and their
separate accounts are considered shareholders of, or investors in, the Funds.
Although the Participating Insurance Companies and their separate accounts are
the shareholders or investors, such companies will pass through voting rights
to their VA Contract and VLI Policy holders. For a discussion of the voting
rights of VA Contract and VLI Policy holders, please refer to the Participating
Insurance Companies' prospectuses.

When matters are submitted for shareholder vote, shareholders of each Fund
have one vote for each full share and fractional votes for fractional shares
held. A separate vote of a Fund is required on any matter affecting the Fund on
which shareholders are entitled to vote, such as approval of a Fund's agreement
with the Fund's investment adviser. Shareholders of one Fund are not entitled
to vote on a matter that does not affect that Fund but that does require a
separate vote of the other Funds. Normally no annual meetings of shareholders
will be held unless and until such time as less than a majority of Trustees
holding office have been elected by shareholders, at which time the Trustees
then in office will call a shareholders' meeting for the election of
Trustees.

A more detailed description of the voting rights and attributes of the shares
is contained in the "Capital Stock" section of the Funds' Statement of
Additional Information.

================================================================================
CONTRACT HOLDERS
================================================================================
|
================================================================================
PARTICIPATING INSURANCE COMPANIES
================================================================================
Assist current and prospective contract holders with Fund investments
- --------------------------------------------------------------------------------
|
================================================================================
TRANSFER AND
DISTRIBUTOR & DIVIDEND DISBURSING SHAREHOLDER
CO-ADMINISTRATOR ADMINISTRATOR AGENT SERVICING AGENTS
================================================================================
Stephens Inc. Wells Fargo Bank Wells Fargo Bank Various Agents
111 Center St. 525 Market St. 525 Market St.
Little Rock, AR San Francisco, CA San Francisco, CA

Markets the Funds, Manages the Funds' Maintains records Provide services
distributes shares, business activities of shares and to customers
and manages the supervises the
Funds' business paying of dividends
activities
- -------------------------------------------------------------------------------
|
================================================================================
INVESTMENT SUB-ADVISORS
================================================================================
Barclay's Global Investors, 45 Fremont, Wells Capital Management,
San Francisco, CA 525 Market St., San Francisco, CA
Manages the Funds' investment activities Manages the Funds' investment
activities
- --------------------------------------------------------------------------------
|
================================================================================
INVESTMENT ADVISOR CUSTODIAN
================================================================================
Wells Fargo Bank, 525 Market St., Wells Fargo Bank, 525 Market St.,
San Francisco, CA San Francisco, CA
Manages the Funds' investment activities Provides safekeeping for the
Non-Allocation Funds' assets
Barclay's Global Investors N.A.
45 Fremont, San Francisco CA
Provides safekeeping for the
Allocation Funds' assets
- --------------------------------------------------------------------------------
|
================================================================================
BOARD OF TRUSTEES
================================================================================
Supervises the Funds' activities
- --------------------------------------------------------------------------------

Wells Fargo LAT Trust Prospectus 35
<PAGE>

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

We do not hold annual shareholder meetings. We may hold special shareholder
meetings to ask shareholders to vote on items such as electing or removing board
members, amending fundamental investment strategies or policies.

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 Statement of Additional Information has more detailed
information about the investment advisor and the other service providers and
plans described here.

The Investment Advisor

Wells Fargo Bank is 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
August 1, 1998, Wells Fargo Bank and its affiliates managed over $63 billion
in assets. The Funds paid Wells Fargo Bank the following for advisory services
(after fee waivers) for the last fiscal year:

<TABLE>
<CAPTION>
<S> <C>
-------------------------------------------------------------------------------
Asset Allocation Fund .60%
-------------------------------------------------------------------------------
Corporate Bond Fund N/A
-------------------------------------------------------------------------------
Equity Value Fund N/A
-------------------------------------------------------------------------------
Growth Fund .52%
-------------------------------------------------------------------------------
Money Market Fund .27%
-------------------------------------------------------------------------------
Strategic Growth Fund N/A
-------------------------------------------------------------------------------
US Government Allocation Fund .45%
-------------------------------------------------------------------------------
</TABLE>

The Sub-Advisor

Wells Fargo Bank has engaged BGFA to provide sub-advisory services to the
Asset Allocation and U.S. Government Allocation Funds. Wells Fargo Bank
retains authority over the management of each Fund and the investment and
disposition of each Fund's assets.

As compensation for it sub-advisory services, BGFA is entitled to receive a
monthly fee equal to an annual rate of 0.15% of the first $900 million of the
Asset Allocation Fund's average daily net assets and 0.10% of net assets over
$900 million. As compensation for sub-advisory services for the U.S. Government
Allocation Fund, BGFA is entitled to receive a monthly fee equal to an annual
rate of 0.05% of the first $75 million of the U.S. Government Allocation Fund's
average daily net assets, 0.04% of the next $75 million of such Fund's net
assets, and 0.03% of net assets over $150 million. For the year ended December
31, 1997, BGFA actually received payment for its sub-advisory services at the
rate of 0.15% and 0.10% of the average daily net assets of the Asset Allocation
and the U.S. Government Allocation Funds, respectively. BGFA is located at 45
Fremont, San Francisco, California 94105. BGFA is a wholly owned
subsidiary of BGI and is an indirect subsidiary of Barclays Bank PLC.

Wells Capital Management ("WCM"), a wholly owned subsidiary of Wells Fargo Bank
N.A. is the sub-advisor for each of the Non-Allocation Funds. As of August 1,
1998, WCM provided advisory services for assets aggregating in excess of $32
billion. For providing sub-advisory services to the Equity Value, Growth and
Strategic Growth Funds, WCM is entitled to receive from Wells Fargo Bank N.A.
.25% of each Fund's assets up to the first $200 million, .20% of the next $200
million in assets, and .15% of all assets over $400 million. For providing sub-
advisory services to the Corporate Bond Fund, WCM is entitled to receive from
Wells Fargo Bank N.A. .15% of the Fund's assets up to the first $400 million,
.125% of the next $400 million in assets, and .10% of all assets over $800
million. For providing sub-advisory services to the Money Market Fund, WCM is
entitled to receive from Wells Fargo Bank .05% of the funds assets up to the
first $960 million and .04% of all assets above $960 million. WCM is entitled to
receive from Wells Fargo Bank a minimum annual sub-advisory fee of $120,000 per
Fund. This minimum annual fee payable to WCM does not affect the advisory fee
paid by the Funds to Wells Fargo Bank.

36 Wells Fargo LAT Trust Prospectus

<PAGE>

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

The Administrator and Co-Administrator

Wells Fargo Bank as administrator and Stephens as co-administrator provide
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 and Stephens also
furnish office space and certain facilities to conduct each Fund's business, and
Stephens compensates the Trust's Trustees, officers and employees who are
affiliated with Stephens. For these administration services, Wells Fargo Bank
and Stephens are entitled to receive monthly fees at the annual rates of .03%
and .04%, respectively, of each Fund's average daily net assets. Wells Fargo
Bank and Stephens may delegate certain of their administration duties to sub-
administrators. Prior to February 1, 1998, Wells Fargo Bank and Stephens were
entitled to receive monthly fees at the annual rates of .04% and .02%,
respectively, of each Fund's average daily net assets for performing
administration services. In connection with the change in fees, the
responsibility for performing various administration services was shifted to the
co-administrator.

Prior to February 1, 1997, Stephens provided substantially the same services
as sole administrator to the Funds. For these administration services,
Stephens was entitled to a monthly fee at the annual rate of .03% of each
Fund's average daily net assets.

The Distributor

Stephens is the Funds' co-administrator and distributes the Funds' shares.
Stephens is a full service broker/dealer and investment advisory firm located
at 111 Center Street, Little Rock, Arkansas 72201. Stephens and its predecessor
have been providing securities and investment services for more than 60 years.
Additionally, they have been providing discretionary portfolio management
services since 1983. Stephens currently manages investment portfolios for
pension and profit sharing plans, individual investors, foundations, insurance
companies and university endowments.

Stephens, as the principal underwriter of the Funds within the meaning of
the 1940 Act, has entered into a Distribution Agreement with Wells Fargo LAT
Trust pursuant to which Stephens has the responsibility for distributing
shares of the Funds.

Stephens, as distributor of each Fund's shares, or the Participating
Insurance Companies that offer VA Contracts and VLI Policies that are funded
by the Funds, bears all of the Funds' marketing expenses. These expenses
include the cost of printing prospectuses, statements of additional
information and other sales-related materials.

Wells Fargo LAT Trust Prospectus 37
<PAGE>

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

Shareholder Servicing Plan

We have a Shareholder Servicing Plan for the Funds. 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 as follows:

CLASS A
---------------------------------------------------
<S> <C>
Asset Allocation Fund .25%
---------------------------------------------------
Corporate Bond Fund .25%
---------------------------------------------------
Equity Value Fund .25%
---------------------------------------------------
Growth Fund .25%
---------------------------------------------------
Money Market Fund .25%
---------------------------------------------------
Strategic Growth Fund .25%
---------------------------------------------------
U.S. Government Allocation .25%
---------------------------------------------------
</TABLE>

Portfolio Managers

The following is a list of portfolio managers identified within the various
Funds' summaries. More detailed biographical information is available in the
Statement of Additional Information.

. Allen J. Ayvazian

Managing Director and Chief Equity Officer
With Wells Fargo since 1989.

. Gregg Giboney, CFA

With Wells Fargo since 1996. Worked for First Interstate Capital Management
since 1978 prior to joining Wells Fargo.

. Chris Greene

Joined Wells Fargo in 1997. Worked for Hambrecht & Quist from 1994 and for
GB Capital Management for two years prior to that. Worked for Wood Island
Associates prior to GB Capital.

38 Wells Fargo LAT Trust Prospectus
<PAGE>

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

. Graham Allen

Joined Wells Fargo in January 1998. Worked for Bradford & Marzec, Inc. as an
International Portfolio Manager from August 1988, to January 1998, and
worked for Heron Financial Corp. as a High Yield Portfolio Manager from June
1985, to August 1988.

. John (Jack) Burgess

Joined Wells Fargo in April 1998. Worked at an independent financial advisor
practice in Los Angeles from 1995 to 1998. Prior to that, he worked for
Aurora National Life Assurance; and associated companies Executive Life
Insurance Co and Sallis Advisors, Inc. where he managed both equity and fixed
income investments from 1988 to 1995. Jack has also held investment
management or analysis positions at Bradford & Marzec, Inc., Massachusetts
Capital Resources Co., and Bank of Boston.

. Jacqueline Flippin

Joined Wells Fargo in January 1998. Worked for McMorgan & Co. as a Portfolio
Manager from October 1994, to January 1998, and worked for Teachers
Insurance Annuity Association, College Retirement Equity Fund as a Portfolio
Manager from August 1986, to October 1994.

. Jon R. Hickman

Managing Director
With Wells Fargo since 1986.

. Kelli Hill

With Wells Fargo since 1987.

. Daniel Kokoszka, CFA

Joined Wells Fargo in February 1998. Worked for Bradford & Marzec, Inc. where
he was on the international portfolio management team for more than four
years. Prior to that time he worked for Lockheed Corporation in the corporate
finance, mergers and acquisitions and venture capital areas.

. Scott Smith, CFA

With Wells Fargo since 1988.

. Rex Wardlaw, CFA

With Wells Fargo since 1996. Worked for First Interstate Capital Management
since 1986 prior to joining Wells Fargo.

. Allen Wisniewski, CFA

With Wells Fargo since 1987.

Wells Fargo LAT Trust Prospectus 39
<PAGE>

How to Read the Financial Highlights
- --------------------------------------------------------------------------------

After the description of each Fund, there are charts showing important financial
information about the Fund. The charts are called "Financial Highlights" and are
designed to help you understand the past performance of the Fund. The financial
statements, from which these Financial Highlights were derived, were audited by
KPMG Peat Marwick LLP. The financial statements are included in each Fund's most
recent Annual or Semi-Annual Report and are available free of charge by calling
1-800-680-8920.

Here is an explanation of some terms that will help you read these charts.

Net Asset Value (NAV)-- The net value of one share of a class of a Fund.
See the Glossary for a more detailed definition.

Net Investment Income-- Net investment income is calculated by subtracting the
aggregate Fund expenses from the Funds' investment income. The number in the
financial highlights is the net investment income of a class divided by the
number of outstanding shares of that class. The amount distributed to
shareholders is listed under the heading "Less Distributions--Dividends from Net
Investment Income."

Net Realized and Unrealized Gain (Loss) on Investments-- We continually buy and
sell investments. The profit on an investment sold for more than its purchase
price is a realized capital gain while a loss on an investment sold for less
than its purchase price is a realized capital loss. An unrealized gain or loss
occurs when an investment gains or loses value but is not sold. The amount of
capital gain or loss per share that was paid to shareholders is listed under the
heading "Less Distributions--Distributions From Net Realized Gains."

Net Assets-- The value of the investments in a Fund's portfolio (after
accounting for expenses) that are attributable to a particular class of the
Funds.

Portfolio Turnover-- Portfolio turnover reflects the trading activity in the
Fund's portfolio and is expressed as a percentage of a Fund's investment
portfolio. For example, a Fund with a 50% portfolio turnover has sold and bought
half of its investment portfolio during the given period.

40 Wells Fargo LAT Trust Prospectus
<PAGE>

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

Ratio of Expenses to Average Net Assets-- This ratio reflects the amount paid
by a Fund to cover the costs of its daily operations, and includes advisory,
administration and other operating expenses. It is expressed as a percentage
of the average daily net assets of a class.

Ratio of Net Investment Income (Loss) to Average Net Assets-- This ratio is the
result of dividing net investment income (or loss) by average net assets

Total Return-- The annual return on an investment, including any appreciation or
decline in share value, assumes reinvestment of all dividends and capital gains,
reflects fee waivers and excludes sales loads.

Wells Fargo LAT Trust Prospectus 41
<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 adviser.

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.

American Depository Receipts ("ADRs")

Receipts for non-U.S. company stocks. The stocks underlying ADRs are typically
held in bank vaults. The ADR's owner is entitled to any capital gains or
dividends. ADRs are one way of owning an equity interest in foreign companies.

Annual and Semi-Annual Report

A document that provides certain financial and other important information for
the most recent reporting period and each Fund's portfolio of investments.

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 Non-Money
Market Funds. Any day that is not a federal bank holiday is a business day for
the Money Market Fund.

Capital Appreciation, Capital Growth

The increase in the value of a security. See also "Total Return".

Capitalization

When referring to the size of a company, capitalization means the total number
of a company's outstanding shares of stock multiplied by the price per share.
This is an accepted method of determining a company's size and is sometimes
referred to as "market capitalization".

Capital Structure

Refers to how a company has raised money to operate. Can include, for example,
borrowing or selling stock.

Commercial Paper

Debt instruments issued by banks, corporations and other issuers to finance
short-term credit needs. Commercial paper typically is of high credit quality
and offers below market interest rates.

Convertible Debt Securities

Bonds or notes that are exchangeable for equity securities at a set price on a
set date or at the election of the holder.

Current Income

Earnings in the form of dividends or interest as opposed to capital growth. See
also "Total Return".

42 Wells Fargo LAT Trust Prospectus
<PAGE>

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

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-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.

Dollar-Denominated

Securities issued by foreign banks, companies or governments in U.S. dollars.

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.

Emerging Markets

Markets associated with a country that is considered by international financial
organizations, such as the International Finance Corporation and the
International Bank for Reconstruction and Development, and the international
financial community to have an "emerging" stock market. Such markets may be
under-capitalized, have less-developed legal and financial systems or may have
less stable currencies than markets in the developed world.

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.

Wells Fargo LAT Trust Prospectus 43
<PAGE>

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

Illiquid Security

A security which cannot be readily sold, or cannot be readily sold without
negatively affecting its fair price.

Index Swaps

The exchange with another party of cash flows based on the performance of an
index of securities or a portion of an index that usually includes dividends or
income.

Interest Rate Futures

Agreements to buy or sell finance instruments or cash at a particular time and
price based on movements in interest rate. Unlike Options, in which the holder
may or may not execute the right, a futures contract must be fulfilled.

Initial Public Offering

The first time a company's stock is offered for sale to the public.

Investment-Grade Debt

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.

Lehman Brothers 20+ Bond Index

An unmanaged index composed of U.S. Treasury bonds with 20 years or longer dates
to maturity.

Liquidity

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

Moody's

A nationally recognized ratings organization.

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 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
for 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.

44 Wells Fargo LAT Trust Prospectus
<PAGE>

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

Public Offering Price (POP)

The NAV with the sales load added.

Price-to-Earnings Ratio

The ratio between a stock's price and its historical, current or anticipated
earnings. Low ratios typically indicate a high yield. High ratios are
characteristic of growth stocks which generally have low current yields.

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.

Russell Indexes

The Russell 1000 Index used by the Growth Fund is an index comprised of the 1000
largest firms listed on the Russell 3000 Index. The Russell 3000 Index is a
listing of 3000 corporations by the Frank Russell Company that is intended to be
representative of the U.S. economy. Similarly, the Russell Midcap Index used by
the Strategic Growth Fund is a listing of the 800 smallest companies in the
Russell 1000 Index.

Selling Agent

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

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.

S&P, S&P 500 Index

Standard and Poors, a nationally recognized ratings organization. S&P's also
publishes various indexes or lists of companies representative of sectors of the
U.S. economy.

Statement of Additional Information

A document that supplements the disclosures made in the Prospectus.

Wells Fargo LAT Trust Prospectus 45
<PAGE>

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

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.

Turnover Ratio

The percentage of the securities held in a Fund's portfolio, other than short-
term securities, that were bought or sold within a year.

Undervalued

Describes a stock that is believed to be worth more than its current price.

U.S. Government Obligations

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

Value Strategy

A strategy of investing which tries to identify and buy undervalued stocks under
the assumption that the stock will eventually rise to its "fair market"
value.

Warrants

The right to buy a stock at a set price for a set time.

Weighted-Average Maturity

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

Zero Coupon Bonds

Bonds that make no periodic interest payments and which are usually sold at a
discount of their face value. Zero coupon bonds are subject to interest rate and
credit risk.

46 Wells Fargo LAT Trust Prospectus
<PAGE>

WELLS FARGO LAT TRUST

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 is incorporated by reference into
this Prospectus and is legally part of this Prospectus.

Annual/Semi-Annual Report
provides certain financial and other important information for the most recent
reporting period and each Fund's portfolio of investments.

These are available free of
charge by calling

1-800-680-8920, or from

Wells Fargo LAT Trust
c/o American Skandia
PO Box 883
Shelton, CT
06484-0883

=======================================================================
WELLS FARGO LAT FUNDS:
-----------------------------------------------------------------------

. are NOT insured by the FDIC.
. are NOT obligations or deposits of Wells Fargo Bank, nor guaranteed
by the Bank.
. involve investment risk, including possible loss of principal.
=======================================================================

[LOGO OF RECYCLED PAPER]
Printed on Recycled Paper LAT P (11/98)
<PAGE>

WELLS FARGO LAT TRUST
800-680-8920

STATEMENT OF ADDITIONAL INFORMATION

DATED NOVEMBER 9, 1998

ASSET ALLOCATION FUND
CORPORATE BOND FUND
EQUITY VALUE FUND
GROWTH FUND
MONEY MARKET FUND
STRATEGIC GROWTH FUND
U.S. GOVERNMENT ALLOCATION FUND

Wells Fargo LAT Trust (the "Trust") is an open-end series investment company.
This Statement of Additional Information ("SAI") contains additional information
about seven of the series of Wells Fargo LAT Trust -- the ASSET ALLOCATION FUND,
CORPORATE BOND FUND, EQUITY VALUE FUND, GROWTH FUND (formerly, the "Growth and
Income Fund"), MONEY MARKET FUND, STRATEGIC GROWTH FUND AND U.S. GOVERNMENT
ALLOCATION FUND (each, a "Fund" and collectively, the "Funds"). The investment
objective of each Fund is described in the Prospectus under "Investment
Objectives and Policies."

This SAI is not a prospectus and should be read in conjunction with the Funds'
Prospectus, dated November 4, 1998. All terms used in this SAI that are defined
in the Prospectus have the meanings assigned in the Prospectus. A copy of the
Prospectus may be obtained without charge by calling (800) 680-8920 or by
writing to American Skandia, P.O. Box 883, Shelton, Connecticut 06484-0883,
Attn: Stagecoach Variable Annuity Administration.

dc-126908
<PAGE>

TABLE OF CONTENTS

<TABLE>
<S> <C>
Investment Restrictions............................................ 1
Investment Models.................................................. 4
Additional Permitted Investment Activities......................... 6
Risk Factors....................................................... 29
Management......................................................... 37
Performance Calculations........................................... 46
Determination of Net Asset Value................................... 51
Additional Purchase and Redemption Information..................... 52
Portfolio Transactions............................................. 53
Fund Expenses...................................................... 56
Federal Income Taxes............................................... 56
Capital Stock...................................................... 60
Other.............................................................. 63
Counsel............................................................ 63
Independent Auditors............................................... 63
Financial Information.............................................. 63
Appendix........................................................... A-1
</TABLE>
i
<PAGE>

INVESTMENT RESTRICTIONS

Fundamental Investment Policies. The Funds are subject to the following
investment restrictions, all of which are fundamental policies; that is, they
may not be changed, without approval by the vote of the holders of a majority
(as defined in the Investment Company Act of 1940, as amended (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 the purchase and as a
result thereof, the value of any Fund's investments in that industry would be
25% or more of the current value of such Fund's total assets, provided that
there is no limitation with respect to investments in (i) obligations of the
U.S. Government, its agencies or instrumentalities; (ii) in the case of the
Asset Allocation Fund, any industry in which the S&P 500 Index becomes
concentrated to the same degree during the same period; (iii) in the case of
the Asset Allocation Fund, its money market instruments may be invested in the
banking industry (but the Fund will not do so unless the Securities and
Exchange Commission ("SEC") staff confirms that it does not object to the Fund
reserving freedom of action to concentrate investments in the banking
industry); and (iv) in the case of the Money Market Fund, the obligations of
domestic banks (for the purpose of this restriction, domestic bank obligations
do not include obligations of U.S. branches of foreign banks or obligations of
foreign branches of U.S. banks);

(2) purchase or sell real estate or real estate limited partnerships (other
than securities secured by real estate or interests therein or securities
issued by companies that invest in real estate or interests therein);

(3) invest in commodities, except that the Asset Allocation and U.S.
Government Allocation Funds (together, the "Allocation Funds") and the
Corporate Bond, Equity Value and Strategic Growth Funds may purchase and sell
(i.e., write) options and futures contracts, including those relating to
indices and options on futures contracts or indices and, together with the
Growth Fund, may purchase securities of an issuer which invests or deals in
commodities or commodity contracts;

(4) purchase interests, leases, or limited partnership interests in oil,
gas, or other mineral exploration or development programs, except that the
Corporate Bond Fund may purchase publicly traded securities of companies
engaging in whole or in part in such activities;

(5) purchase securities on margin (except for short-term credits necessary
for the clearance of transactions and, in the case of the Corporate Bond,
Equity Value, Strategic Growth and Allocation Funds, except for margin
payments in connection with options, futures and options on futures) or make
short sales of securities;

(6) underwrite securities of other issuers, except to the extent that the
purchase of permitted investments directly from the issuer thereof or from an
underwriter for an issuer and the later

1
<PAGE>

disposition of such securities in accordance with a Fund's investment program
may be deemed to be an underwriting;

(7) make investments for the purpose of exercising control or management;

(8) issue senior securities, except that the Growth, Equity Value, Money
Market and Strategic Growth Funds may borrow from banks up to 10%, and the
Allocation Funds may borrow up to 20%, of the current value of their
respective net assets for temporary purposes only in order to meet
redemptions, and these borrowings may be secured by the pledge of up to 10%
and 20%, respectively, (i.e., amounts equal to the amount borrowed, except
that the Equity Value Fund may pledge up to 15% to secure 10%) of the current
value of its net assets (but investments may not be purchased while any such
outstanding borrowing in excess of 5% of a Fund's net assets exists).
Securities held in escrow or separate accounts in connection with a Fund's
investment practices described in this SAI or in the Prospectus are not deemed
to be pledged for purposes of this limitation;

(9) write, purchase or sell puts, calls, or combinations thereof, except as
may be described in the Funds' offering documents and except that the Asset
Allocation, Growth, Money Market and Strategic Growth Funds may purchase
securities with put rights in order to maintain liquidity, and except that the
Equity Value and Growth Funds may invest up to 5% and the Strategic Growth
Fund may invest up to 15% of its net assets in such securities, in accordance
with their investment policies stated below; [CORPORATE BOND FUND
RESTRICTIONS?]

(10) in the case of the Asset Allocation, Equity Value, Growth, Strategic
Growth and U.S. Government Allocation Funds, purchase securities of any issuer
(except securities issued or guaranteed by the U.S. Government, its agencies
and instrumentalities) if, as a result, with respect to 75% of a Fund's
assets, more than 5% of the value of a Fund's total assets would be invested
in the securities of any one issuer or the Fund's ownership would be more than
10% of the outstanding voting securities of such issuer; or

(11) in the case of the Money Market Fund, make loans of portfolio
securities or other assets, except that loans for purposes of this restriction
will not include the purchase of fixed time deposits, repurchase agreements,
commercial paper and other short-term obligations, and other types of debt
instruments commonly sold in public or private offerings; the Non-Money Market
Funds may lend portfolio securities to brokers, dealers and financial
institutions as described below.

Non-Fundamental Investment Policies. Each Fund has adopted the following non-
fundamental policies which may be changed by a vote of a majority of the
Trustees of the Trust or at any time without approval of such Fund's
shareholders.

(1) Each Fund may invest in shares of other registered investment
companies, subject to the limitations of Section 12(d)(1) of the 1940 Act.
Under the 1940 Act, a Fund's investment in

2
<PAGE>

such securities currently is generally limited to, subject to certain
exceptions, (i) 3% of the total voting stock of any one investment company, (ii)
5% of such Fund's net assets with respect to any one investment company, and
(iii) 10% of such Fund's net assets in the aggregate. 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 a Fund.

(2) Each Fund may not invest or hold more than 15% (10% for the Money
Market Fund), of it'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 invest up to 25% of its net assets in securities of
foreign governmental and foreign private issuers that are denominated in and pay
interest in U.S. dollars.

(4) Each Fund may lend securities from its portfolio to brokers, dealers
and financial institutions, in amounts not to exceed (in the aggregate) one-
third of each Fund's total assets. Any such loans of portfolio securities will
be fully collateralized based on values that are marked to market daily. The
Funds will not enter into any portfolio security lending arrangement having a
duration of longer than one year.

In addition, as provided in Rule 2a-7 under the 1940 Act, the Money Market
Fund may only purchase "Eligible Securities" (as defined in Rule 2a-7) and only
if, immediately after such purchase: the Money Market Fund would have no more
than 5% of its total assets in "First Tier Securities" (as defined in Rule 2a-7)
of any one issuer, excluding government securities and except as otherwise
permitted for temporary purposes and for certain guarantees and unconditional
puts; the Money Market Fund would own no more than 10% of the voting securities
of any one issuer; the Money Market Fund would have no more than 5% of its total
assets in "Second Tier Securities" (as defined in Rule 2a-7); and the Money
Market Fund would have no more than the greater of $1 million or 1% of its total
assets in Second Tier Securities of any one issuer.

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<PAGE>

INVESTMENT MODELS

This section contains supplemental information about the proprietary
investment model used by Barclays Global Fund Advisors ("BGFA") to manage each
Fund's portfolio.

ASSET ALLOCATION MODEL. BGFA compares the Asset Allocation Fund's investments
daily to the Asset Allocation Model's recommended allocation. The investment
model recommends allocations among each asset class in 5% increments only. Any
recommended reallocation will be implemented in accordance with trading policies
that have been designed to take advantage of market opportunities and to reduce
transaction costs. Under current trading policies employed by BGFA, recommended
reallocations may be implemented promptly upon receipt of recommendations or may
not be acted upon for as long as two or three months thereafter depending on
factors such as the percentage change from previous recommendations and the
consistency of recommended reallocations over a period of time. In addition, the
Asset Allocation Fund generally will invest the net proceeds from the sale of
shares of the Fund and will liquidate existing Fund investments to meet net
redemption requirements in a manner that best allows the Fund's existing asset
allocation to follow that recommended by the Model. Notwithstanding any
recommendation of the Model to the contrary, the Asset Allocation Fund will
generally maintain at least that portion of its assets in money market
instruments reasonably considered necessary to meet redemption requirements. In
general, cash maintained for short-term liquidity needs is only invested in U.S.
Treasury bills, shares of other mutual funds and repurchase agreements. There is
no requirement that the Fund maintain positions in any particular asset class or
classes.

Wells Fargo Bank and BGFA manage other portfolios which also invest in
accordance with the Asset Allocation Model. The performance of each of those
other portfolios is likely to vary among themselves and from the performance of
the Fund. Such variation in performance is primarily due to different
equilibrium asset mix assumptions used for the various portfolios, timing
differences in the implementation of the model's recommendations and differences
in expenses and liquidity requirements.

There are 500 common stocks, including Wells Fargo & Company stock, which make
up the S&P 500 Index. Standard & Poor's Ratings Group ("S&P") occasionally
makes changes in the S&P 500 Index based on its criteria for inclusion of stocks
in the S&P 500 Index. The S&P 500 Index is market-capitalization-weighted so
that each stock in the S&P 500 Index represents its proportion of the total
market value of all stocks in the S&P 500 Index. In making its stock
investments, the policy of the Asset Allocation Fund is to invest its assets in
substantially the same stocks, and in substantially the same percentages, as the
S&P 500 Index, including Wells Fargo & Company stock.

A key component of the Asset Allocation Model is a set of assumptions
concerning expected risk and return and investor attitudes toward risk which are
incorporated into the asset allocation decision. The principal inputs of
financial data to the Asset Allocation Model currently are (i) consensus
estimates of the earnings, dividends and payout ratios on a broad cross-section
of common stocks as reported by independent financial reporting services which
survey a broad

4
<PAGE>

cross-section of Wall Street analysts, (ii) the estimated current yield to
maturity on new long-term corporate bonds rated "AA" by S&P, (iii) the present
yield on money market instruments, (iv) the historical statistical standard
deviation in investment return for each class of asset, and (v) the historical
statistical correlation of investment returns among the various asset classes in
which the Asset Allocation Fund invests. Using these data, the Asset Allocation
Model is run daily to determine the recommended asset allocation. The model's
recommendations are presently made in 5% increments.

Although BGFA intends to use the Model as bases for its investment decisions,
BGFA may change from time to time the criteria and methods it uses to implement
the Model's recommendations if it believes such a change is desirable for the
Fund. Nevertheless, Wells Fargo Bank has continuing and exclusive authority over
the management of the Fund, the conduct of its affairs and the disposition of
the Funds' assets, and Wells Fargo Bank has the right to reject BGFA's
investment decisions for the Fund if Wells Fargo Bank determines that any such
decision is not consistent with the best interests of the Fund.

U.S. GOVERNMENT ALLOCATION MODEL. BGFA compares the U.S. Government
Allocation Fund's investments daily to the U.S. Government Allocation Model's
recommended allocation. The investment model recommends allocations among each
asset class in 5% increments only. Any recommended reallocation will be
implemented in accordance with trading policies that have been designed to take
advantage of market opportunities and to reduce transaction costs. Under current
trading policies employed by BGFA, recommended reallocations may be implemented
promptly upon receipt of recommendations or may not be acted upon for as long as
two to three months thereafter depending on factors such as the percentage
change from previous recommendations and the consistency of recommended
reallocations over a period of time. In addition, the U.S. Government Allocation
Fund generally will invest the net proceeds from the sale of shares of the Fund
and will liquidate existing Fund investments to meet net redemption requirements
in a manner that best allows the Fund's existing asset allocation to follow the
allocation recommended by the computer Model. Notwithstanding any recommendation
of the computer model to the contrary, the Fund will generally maintain at least
that portion of its assets in money market instruments reasonably considered
necessary to meet redemption requirements. In general, cash maintained for
short-term liquidity needs is only invested in U.S. Treasury bills, shares other
mutual funds and repurchase agreements. There is no requirement that the Fund
maintain positions in any particular asset class or classes.

BGFA manages other funds which invest in accordance with a substantially
similar version of the Model. The performance of each of those other funds is
likely to vary among themselves and from the performance of the U.S. Government
Allocation Fund. Such variation in performance is primarily due to timing
differences in the implementation of the Model's recommendations, differences in
expenses and liquidity requirements, and the ability of other funds to invest a
higher portion of their assets in short-term investments that may generate a
higher yield, but are not issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.

A key component of the U.S. Government Allocation Model is a set of
assumptions concerning expected risk and return and investor attitudes toward
risk, which are incorporated

5
<PAGE>

into the allocation decision. The principal inputs of financial data to the
model currently are: (i) yields on 90-day U.S. Treasury bills, 5-year U.S.
Treasury notes and 30-year U.S. Treasury bonds; (ii) the expected statistical
standard deviation in investment returns for each class of fixed income
instrument; and (iii) the expected statistical correlation of investment return
among the various classes of fixed income instruments. Using these and other
data, the Model is run daily to determine the recommended allocation. The
Model's recommendations are presently implemented in 10% increments. Because the
Fund may shift its investment allocations significantly from time to time, its
performance may differ from funds which invest in one asset class or from funds
with a constant mix of assets.

ADDITIONAL PERMITTED INVESTMENT ACTIVITIES

ASSET-BACKED SECURITIES. The Corporate Bond, Equity Value, Growth and
Strategic Growth Funds may purchase asset-backed securities unrelated to
mortgage loans. These asset-backed securities 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 letter of credit, 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.

BANK OBLIGATIONS. The Equity Value and Strategic Growth 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

6
<PAGE>

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 U.S. 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.

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 ("FDIC"). 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 Corporate Bond Fund
may be bonds. The Corporate Bond Fund invests no more than 25% in bonds that
are below investment grade. 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. Most bonds
bear interest income at a "coupon" rate that is fixed for the life of the bond.
The value of a fixed rate bond usually rises when market interest rates fall,
and falls when market interest rates rise. Accordingly, a fixed rate bond's
yield (income as a percent of the bond's current value) may differ from its
coupon rate as its value rises or falls.

Other types of bonds bear income at an interest rate that is adjusted
periodically. Because of their adjustable interest rates, the value of
"floating-rate" or "variable-rate" bonds fluctuates much less in response to
market interest rate movements than the value of fixed rate bonds. Also, the
Fund may treat some of these bonds as having a shorter maturity for purposes of
calculating the weighted average maturity of their investment portfolios. 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).

COMMERCIAL PAPER. The Allocation Funds, Corporate Bond, Equity Value and
Strategic Growth 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

7
<PAGE>

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 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 Statistical Ratings
Organization ("NRSRO"). Commercial paper may include variable- and floating-rate
instruments.

CONVERTIBLE SECURITIES (LOWER-RATED SECURITIES). The [CORPORATE BOND,] Equity
Value, Growth, and Strategic Growth Funds may invest in convertible securities
that are not rated in one of the four highest rating categories by a NRSRO. The
yields on such lower rated securities, which include securities also known as
junk bonds, generally are higher than the yields available on higher-rated
securities. However, investments in lower rated securities and comparable
unrated securities generally involve greater volatility of price and risk of
loss of income and principal, including the probability of default by or
bankruptcy of the issuers of such securities. Lower rated securities and
comparable unrated securities (a) will likely have some quality and protective
characteristics that, in the judgment of the rating organization, are outweighed
by large uncertainties or major risk exposures to adverse conditions and (b) are
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation.
Accordingly, it is possible that these types of factors could, in certain
instances, reduce the value of securities held in a Fund's portfolio, with a
commensurate effect on the value of the Fund's shares.

While the market values of lower rated securities and comparable unrated
securities tend to react less to fluctuations in interest rate levels than the
market values of higher-rated securities, the market values of certain lower
rated securities and comparable unrated securities also tend to be more
sensitive to individual corporate developments and changes in economic
conditions than higher-rated securities. In addition, lower rated securities
and comparable unrated securities generally present a higher degree of credit
risk. Issuers of lower rated securities and comparable unrated securities often
are highly leveraged and may not have more traditional methods of financing
available to them so that their ability to service their debt obligations during
an economic downturn or during sustained periods of rising interest rates may be
impaired. The risk of loss due to default by such issuers is significantly
greater because lower rated securities and comparable unrated securities
generally are unsecured and frequently are subordinated to the prior payment of
senior indebtedness. The Funds may incur additional expenses to the extent that
it is required to seek recovery upon a default in the payment of principal or
interest on their portfolio holdings. The existence of limited markets for
lower rated securities and comparable unrated securities may diminish a Fund's
ability to (a) obtain accurate market quotations for purposes of valuing such
securities and calculating its net asset value and (b) sell the securities at
fair value either to meet redemption requests or to respond to changes in the
economy or in financial markets.

8
<PAGE>

Certain lower rated debt securities and comparable unrated securities
frequently have call or buy-back features that permit their issuers to call or
repurchase the securities from their holders, such as a Fund. If an issuer
exercises these rights during periods of declining interest rates, a Fund may
have to replace the security with a lower yielding security, thus resulting in a
decreased return to the Fund.

The market for certain lower rated securities and comparable unrated
securities is relatively new and has not weathered a major economic recession.
The effect that such a recession might have on such securities is not known.
Any such recession, however, could disrupt severely the market for such
securities and adversely affect the value of such securities. Any such economic
downturn also could adversely affect the ability of the issuers of such
securities to repay principal and pay interest thereon.

The Funds may invest in convertible securities that provide current income and
are issued by companies with the characteristics described above for each Fund
and that have a strong earnings and credit record. The Funds may purchase
convertible securities that are fixed-income debt securities or preferred
stocks, and which may be converted at a stated price within a specified period
of time into a certain quantity of the common stock of the same issuer.
Convertible securities, while usually subordinate to similar nonconvertible
securities, are senior to common stocks in an issuer's capital structure.
Convertible securities offer flexibility by providing the investor with a steady
income stream (which generally yield a lower amount than similar nonconvertible
securities and a higher amount than common stocks) as well as the opportunity to
take advantage of increases in the price of the issuer's common stock through
the conversion feature. Fluctuations in the convertible security's price can
reflect changes in the market value of the common stock or changes in market
interest rates. At most, 5% of each Fund's net assets will be invested, at the
time of purchase, in convertible securities that are not rated in the four
highest rating categories by one or more NRSROs, such as Moody's Investors
Service, Inc. ("Moody's") or S&P, or unrated but determined by the advisor to be
of comparable quality.

CORPORATE REORGANIZATIONS. The Equity Value and Strategic Growth Funds may
invest in securities for which a tender or exchange offer has been made or
announced, and in securities of companies for which a merger, consolidation,
liquidation or similar reorganization proposal has been announced if, in the
judgment of Wells Fargo Bank, there is a reasonable prospect of capital
appreciation significantly greater than the added portfolio turnover expenses
inherent in the short-term nature of such transactions. The principal risk
associated with such investments is that such offers or proposals may not be
consummated within the time and under the terms contemplated at the time of the
investment, in which case, unless such offers or proposals are replaced by
equivalent or increased offers or proposals which are consummated, the Funds may
sustain a loss.

CUSTODIAL RECEIPTS FOR TREASURY SECURITIES. The [CORPORATE BOND,] Equity
Value and Strategic Growth 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

9
<PAGE>

principal and interest are returned to investors. Investments by a Fund in such
participations will not exceed 5% of the value of that Fund's total assets.

DERIVATIVE SECURITIES. The Corporate Bond Fund 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 reference
to changes in the value of other interest rates, indices or financial indicators
("References") or the relative change in two or more References. The Fund may
also hold derivative instruments that have interest rates that re-set inversely
to changing current market rates and/or have embedded interest rate floors and
caps that require the issuer to pay an adjusted interest rate if market rates
fall below or rise above a specified rate. These instruments 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 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. The
embedded option features of other derivative instruments could limit the amount
of appreciation the Fund can realize on its investment, could cause the 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. In some cases, it may be difficult to determine the fair value of a
structured or derivative instrument because of a lack of reliable objective
information and an established secondary market for some instruments may not
exist. As new types of derivative 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
derivative securities.

Emerging Markets. The Growth and Strategic Growth Funds each may invest up to
-------------------
15% of its assets in equity securities of companies in "emerging markets." The
Funds consider countries with emerging markets to include the following: (i)
countries with an emerging stock market as defined by the International Finance
Corporation; (ii) countries with low- to middle-income economies according to
the International Bank for Reconstruction and Development (more commonly
referred to as the World Bank); and (iii) countries listed in World Bank
publications as developing. The advisor may invest in those emerging markets
that have a relatively low gross national product per capita, compared to the
world's major economies, and which exhibit potential for rapid economic growth.
The advisor believes that investment in equity securities of emerging market
issuers offers significant potential for long-term capital appreciation. Equity
securities of emerging market issuers may include common stock, preferred stocks
(including convertible preferred stocks) and warrants; bonds, notes and
debentures convertible into common or preferred stock; equity interests in
foreign investment funds or trusts and real estate investment trust securities.
The Funds may invest in American Depository Receipts ("ADRs"), Canadian
Depository Receipts ("CDRs"), European Depository Receipts ("EDRs"), Global
Depository Receipts ("GDRs") and International Depository Receipts ("IDRs") of
such issuers.

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<PAGE>

Emerging market countries include, but are not limited to: Argentina, Brazil,
Chile, China, the Czech Republic, Columbia, Ecuador, Greece, Hong Kong,
Indonesia, India, Malaysia, Mexico, the Philippines, Poland, Portugal, Peru,
Russia, Singapore, South Africa, Thailand, Taiwan and Turkey. A company is
considered in a country, market or region if it conducts its principal business
activities there, namely, if it derives a significant portion (at least 50%) of
its revenues or profits from goods produced or sold, investments made, or
services performed therein or has at least 50% of its assets situated in such
country, market or region.

There are special risks involved in investing in emerging-market countries.
Many investments in emerging markets can be considered speculative, and their
prices can be much more volatile than in the more developed nations of the
world. This difference reflects the greater uncertainties of investing in less
established markets and economies. The financial markets of emerging markets
countries are generally less well capitalized and thus securities of issuers
based in such countries may be less liquid. Most are heavily dependent on
international trade, and some are especially vulnerable to recessions in other
countries. Many of these countries are also sensitive to world commodity prices.
Some countries may still have obsolete financial systems, economic problems or
archaic legal systems. In addition, many of these nations are experiencing
political and social uncertainties.

FLOATING- AND VARIABLE-RATE OBLIGATIONS. The Funds may purchase floating- and
variable-rate obligations. Each Fund may purchase floating- and variable-rate
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 rates on these notes may fluctuate
from time to time. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in 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. 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. Frequently, such obligations are
secured by letters of credit or other credit support arrangements provided by
banks. Because these obligations are direct lending arrangements between the
lender and borrower, it is not contemplated that such instruments generally will
be traded, and there generally is no established secondary market for these
obligations, although they are redeemable at face value. 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 Wells Fargo Bank determines that at the time of
investment the obligations are of comparable quality to the other obligations in
which such Fund may invest. Wells Fargo Bank, 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. No Fund will invest
more than 15% of the value of its total net assets in floating- or variable-rate
demand obligations whose demand feature is not exercisable within seven days.
Such obligations may be treated as

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<PAGE>

liquid, provided that an active secondary market exists. 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.

The Equity Value Fund may also hold floating- and variable-rate instruments
that have interest rates that re-set inversely to changing current market rates
and/or have embedded interest rate floors and caps that require the issuer to
pay an adjusted interest rate if market rates fall below or rise above a
specified rate. These instruments 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 uncertain how
these instruments will perform under different economic and interest-rate
scenarios. The market value of these instruments may be more volatile than other
types of debt instruments and may present greater potential for capital-gain or
loss. In some cases, it may be difficult to determine the fair value of a
structured or derivative instrument because of a lack of reliable objective
information and an established secondary market for some instruments may not
exist.

FOREIGN OBLIGATIONS. The Funds may invest in foreign securities through ADRs,
CDRs, EDRs, IDRs and GDRs or other similar 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 securities 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.

FOREIGN CURRENCY TRANSACTIONS. The [CORPORATE BOND AND] Equity Value 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

12
<PAGE>

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.

Because the Funds may invest in securities denominated in currencies other
than the U.S. dollar and may temporarily hold funds in bank deposits or other
money market investments denominated in foreign currencies, they may be affected
favorably or unfavorably by exchange control regulations or changes in the
exchange rate between such currencies and the dollar. Changes in foreign
currency exchange rates influence values within a Fund from the perspective of
U.S. investors. Changes in foreign currency exchange rates may also affect the
value of dividends and interest earned, gains and losses realized on the sale of
securities, and any net investment income and gains to be distributed to
shareholders by a Fund. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets. These forces are affected by the international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors.

Investments in foreign securities also involve certain inherent risks, such as
political or economic instability of the issuer or the country of issue, the
difficulty of predicting international trade patterns and the possibility of
imposition of exchange controls. Such securities may also be subject to greater
fluctuations in price than securities of domestic corporations. In addition,
there may be less publicly available information about a foreign company than
about a domestic company. Foreign companies generally are not subject to uniform
accounting, auditing and financial reporting standards comparable to those
applicable to domestic companies. Investments in foreign securities and forward
contracts may also be subject to withholding and other taxes imposed by foreign
governments. With respect to certain foreign countries, there is also a
possibility of expropriation or confiscatory taxation, or diplomatic
developments which could affect investments in those countries.

FORWARD COMMITMENTS, WHEN-ISSUED PURCHASES AND DELAYED-DELIVERY TRANSACTIONS.
------------------------------------------------------------------------------
Each Fund 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. 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 to be purchased declines, or the value of the
security to be sold increases, before the settlement date. Although each Fund
will generally purchase securities with the intention of acquiring them, a Fund
may dispose of securities purchased on a when-issued, delayed-delivery or a
forward commitment basis before settlement when deemed appropriate by the
advisor. Securities purchased on a when-issued or forward commitment basis may
expose the relevant Fund to risk because they may experience such fluctuations
prior to their actual delivery. Purchasing securities on a when-issued or
forward commitment basis can involve the additional risk that the yield
available in the market when the delivery takes place actually may be higher
than that obtained in the transaction itself.

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<PAGE>

Each Fund will segregate cash, U.S. Government obligations or other high-
quality debt instruments in an amount at least equal in value to the Fund's
commitments to purchase when-issued securities. If the value of these assets
declines, the Fund will segregate additional liquid assets on a daily basis so
that the value of the segregated assets is equal to the amount of such
commitments.

ILLIQUID SECURITIES. The Funds may invest in securities not registered under
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 the Fund. The Fund may
invest up to 15% of its net assets in illiquid securities.

LOANS OF PORTFOLIO SECURITIES. Each Non-Money Market Fund may lend its
portfolio securities to brokers, dealers and financial institutions, provided:
(1) the loan is secured continuously by collateral consisting of U.S. Government
securities or cash or letters of credit maintained on a daily marked-to-market
basis in an amount at least equal to the current market value of the securities
loaned; (2) the Fund may at any time call the loan and obtain the return of the
securities loaned within five business days; (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 one third of the
total assets of the Fund.

A Fund will earn income for lending its securities because cash collateral
pursuant to these loans will be invested in short-term money market instruments.
In connection with lending securities, a Fund may pay reasonable finders,
administrative and custodial fees. A Fund will not enter into any security
lending arrangement having a duration longer than one year. 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. When a Fund lends its securities, it continues to
receive interest or dividends on the securities loaned and may simultaneously
earn interest on the collateral received from the borrower or from the
investment of cash collateral in readily marketable, high-quality, short-term
obligations. 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 placing broker.
Borrowers and placing brokers may not be affiliated, directly or indirectly,
with Wells Fargo Bank, Stephens Inc. or any of their affiliates.

LOWER RATED SECURITIES. The Corporate Bond Income Fund may invest up to
[100%] of its net assets in non-investment grade bonds. These are commonly
known as "junk bonds." Their default and other risks are greater than those of
higher rated securities. You should carefully consider these risks before
investing in the Fund.

Various investment services publish ratings of some of the types of securities
in which the Fund may invest. Higher yields are ordinarily available from
securities in the lower rating categories, such as securities rated Ba or lower
Moody's Investors Service, Inc. ("Moody's) or

14
<PAGE>

BB or lower by Standard & Poor's Ratings Group ("S&P"), or from unrated
securities deemed by advisors to be of comparable quality. These ratings
represent the opinions of the rating services with respect to the issuer's
ability to pay interest and repay principal. They do not purport to reflect the
risk of fluctuations in market value and are not absolute standards of quality.
These ratings will be considered in connection with the investment of the Fund's
assets but will not be a determining or limiting factor.

The Fund may invest in securities regardless of their rating or in securities
that are unrated, including up to 5% of its assets in securities that are in
default at the time of purchase. As an operating policy, however, the Fund will
generally invest in securities that are rated at least Caa by Moody's or CCC by
S&P, except for defaulted securities as noted below, or that are unrated but of
comparable quality as determined by the Advisor. Unrated debt securities are
not necessarily of lower quality than rated securities but they may not be
attractive to as many buyers.

The Fund may also buy debt securities of issuers that are not currently paying
interest, as well as issuers who are in default, and may keep an issue that has
defaulted. The Fund will buy defaulted debt securities if, in the opinion of
advisors, they may present an opportunity for later price recovery, the issuer
may resume interest payments, or other advantageous developments appear likely
in the near future. In general, securities that default lose much of their
value before the actual default so that the security, and thus the net asset
value of the Fund would be impacted before the default. Defaulted debt
securities may be illiquid and, as such, will be part of the 15% limit discussed
under "Illiquid Investments."

If the rating on an issue held in the Fund's portfolio is changed by the
rating service or the security goes into default, this event will be considered
by the Fund in its evaluation of the overall investment merits of that security
but will not generally result in an automatic sale of the security.

Rather than relying principally on the ratings assigned by rating services,
the investment analysis of securities being considered for the Fund's portfolio
may also include, among other things, consideration of relative values based on
such factors as anticipated cash flow, interest or dividend coverage, asset
coverage, earnings prospects, the experience and managerial strength of the
issuer, responsiveness to changes in interest rates and business conditions,
debt maturity schedules and borrowing requirements, and the issuer's changing
financial condition and the public recognition of such change.

Certain of the high yielding, fixed-income securities in which the Fund may
invest may be purchased at a discount. When held to maturity or retired, these
securities may include an element of capital gain. Capital losses may be
realized when securities purchased at a premium, that is, in excess of their
stated or par value, are held to maturity or are called or redeemed at a price
lower than their purchase price. Capital gains or losses also may be realized
upon the sale of securities.

MONEY MARKET INSTRUMENTS AND TEMPORARY INVESTMENTS. The Funds may invest in
the following types of high quality money market instruments that have remaining
maturities not

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<PAGE>

exceeding one year: (i) U.S. Government obligations; (ii) negotiable
certificates of deposit, bankers' acceptances and fixed time deposits and other
obligations of domestic banks (including foreign branches) that have more than
$1 billion in total assets at the time of investment and are members of the
Federal Reserve System or are examined by the Comptroller of the Currency or
whose deposits are insured by the FDIC; (iii) commercial paper rated at the date
of purchase "Prime-1" by Moody's or "A-1" or "A-1--" by S&P, or, if unrated, of
comparable quality as determined by Wells Fargo Bank, as investment advisor; and
(iv) repurchase agreements. The Funds also may invest in short-term U.S. dollar-
denominated obligations of foreign banks (including U.S. branches) that at the
time of investment: (i) have more than $10 billion, or the equivalent in other
currencies, in total assets; (ii) are among the 75 largest foreign banks in the
world as determined on the basis of assets; (iii) have branches or agencies in
the United States; and (iv) in the opinion of Wells Fargo Bank, as investment
advisor, are of comparable quality to obligations of U.S. banks which may be
purchased by the Funds.

Letters of Credit. Certain of the debt obligations (including certificates of
participation, commercial paper and other short-term obligations) which the
Funds may purchase may be backed by an unconditional and irrevocable letter of
credit of a bank, savings and loan association or insurance company which
assumes the obligation for payment of principal and interest in the event of
default by the issuer. Only banks, savings and loan associations and insurance
companies which, in the opinion of Wells Fargo Bank, are of comparable quality
to issuers of other permitted investments of the Fund may be used for letter of
credit-backed investments.

Repurchase Agreements. A Fund may enter into repurchase agreements, wherein
the seller of a security to the Fund agrees to repurchase that security from the
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
the 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. Each Fund may not enter
into a repurchase agreement with a maturity of more than seven days, if, as a
result, more than 15% (10% for the Money Market Fund) 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 investment advisor. The
Funds may participate in pooled repurchase agreement transactions with other
funds advised by Wells Fargo Bank.

MORTGAGE-RELATED SECURITIES. The Allocation and Corporate Bond 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

16
<PAGE>

residential mortgage loans which underlie the securities (net of fees paid to
the issuer or guarantor of the securities). The stated maturities of pass-
through obligations 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 pass-through obligation. Variations in the
maturities of pass-through obligations will affect the yield of a Fund. Early
repayment of principal on mortgage pass-through securities (arising from
prepayments of principal due to sale of the underlying property, refinancing, or
foreclosure, net of fees and costs which may be incurred) 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. 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.

The Corporate Bond Fund may also invest in investment grade Collateralized
Mortgage Obligations ("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.

Adjustable Rate Mortgages ("ARMs") and Collateralized Mortgage Obligations
("CMOs"). The Allocation and Corporate Bond Funds 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 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.

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<PAGE>

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.

In a CMO, a series of bonds or certificates is issued in multiple classes.
Each class of CMOs, often referred to as a "tranche," is issued at a specified
coupon rate and has a stated maturity or final distribution date. The principal
and interest payment on the underlying mortgages may be allocated among the
classes of CMOs in several ways. Typically, payments of principal, including any
prepayments, on the underlying mortgages are applied to the classes in the order
of their respective stated maturities or final distribution dates, so that no
payment of principal is made on CMOs of a class until all CMOs of other classes
having earlier stated maturities or final distribution dates have been paid in
full. One or more classes of CMOs may have coupon rates that reset periodically
based on an index, such as the London Interbank Offered Rate ("LIBOR").

The interest rates on the mortgages underlying the ARMs and some of the CMOs
in which the relevant Fund may invest generally are readjusted at periodic
intervals ranging from one year or less to several years in response to changes
in a predetermined interest rate index. There are two main categories of
indices: those based on U.S. Treasury securities and those derived from a
calculated measure, such as a cost-of-funds index or a moving average of
mortgage rates. Commonly utilized indices include the one-year and five-year
constant maturity Treasury note rates, the three-month Treasury bill rate, the
180-day Treasury bill rate, rates on longer-term Treasury securities, the
National Median Cost of Funds, the one-month, three-month, six-month or one-year
LIBOR, a published prime rate or commercial paper rates. Certain of these
indices follow overall market interest rates more closely than others.

Adjustable rate mortgages, a common form of residential financing, generally
have a specified maturity date. Most provide for amortization of principal in a
manner similar to fixed-rate mortgages, but have interest rates that change in
response to changes in a specified interest rate index. The rate of interest
due on such a mortgage is calculated by adding an agreed-upon "margin" to the
specified index, although there generally are limitations or "caps" on interest
rate movements in any given period or over the life of the mortgage. To the
extent that the interest rates on adjustable rate mortgages cannot be adjusted
in response to interest rate changes because of interest rate caps, the ARMs or
CMOs backed by such mortgages are likely to respond to changes in market rates
more like fixed rate securities. In other words, interest rate increases in
excess of such caps can be expected to cause CMOs or ARMs backed by mortgages
that have such caps to decline in value to a greater extent than would be the
case in the absence of such caps. Conversely, interest rate decreases below
interest rate floors can be expected to cause the CMOs or ARMs backed by
mortgages that have such floors to increase in value to a greater extent than
would be the case in the absence of such floors.

These adjustable rate features should reduce, but will not eliminate, price
fluctuations in such securities, particularly when market interest rates
fluctuate. Since the interest rates on mortgages typically are reset at most
annually and generally are subject to caps, it can be expected that the prices
of ARMs and CMOs backed by such mortgages will fluctuate to the extent
prevailing market

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<PAGE>

interest rates are not reflected in the interest rates payable on the underlying
ARMs. In this regard, the net asset value of a Funds' shares could 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 principal loss or less gain than
might otherwise be achieved if they redeem their shares of a Fund or if the
Funds 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 certain CMOs receives not only monthly scheduled
payments of principal and interest, but also may receive unscheduled principal
payments representing prepayments on the underlying mortgages. Changes in
market interest rates and interest rate indexes can affect these prepayment
rates, thereby shortening or lengthening their duration, the holder therefore,
may have to reinvest the periodic payments and any unscheduled prepayments of
principal it receives at a rate of interest which is lower than the rate on the
ARMs and CMOs held by it.

CMOs backed by fixed rate mortgages share many of the rate, duration and
investment risks described above because of their contractual and investment
features and because of factors such as the prepayment rates on the underlying
fixed rate mortgages.

The Corporate Bond Fund 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 (the "FFIEC Policy Statement"). Under the FFIEC Policy
Statement, a CMO qualifies as a "high-risk mortgage security" if it meets an
Average Life Test, an Average Life Sensitivity Test, or a Price Sensitivity
Test. A CMO meets the Average Life Test if it has an expected weighted average
life greater than 10 years. A CMO meets the Average Life Sensitivity Test if the
expected weighted average life of the CMO either (i) extends by more than 4
years, assuming an immediate and sustained parallel shift in the yield curve of
plus 300 basis points, or (ii) shortens by more than 6 years, assuming an
immediate and sustained parallel shift in the yield curve of minus 300 basis
points. A CMO meets the Price Sensitivity Test if an immediate and sustained
parallel shift in the yield curve of plus or minus 300 basis points would result
in an estimated change in the price of the CMO of more than 17 percent. Under
the FFIEC Policy Statement, a CMO floating-rate debt class, i.e., a CMO the rate
of which adjusts at least annually on a one-for-one basis with a conventional,
widely used market interest rate index (such as the London Interbank Offered
Rate), will not be subject to the Average Life and Average Life Sensitivity
Tests if it bears a rate that is below the contractual cap on the instrument.

OPTIONS TRADING. The Non-Money Market Funds may purchase or sell options on
individual securities or options on indices of securities as described below.
The purchaser of an option risks a total loss of the premium paid for the option
if the price of the underlying security does not increase or decrease
sufficiently to justify exercise. The seller of an option, on the other hand,
will recognize the premium as income if the option expires unrecognized but
foregoes any capital appreciation in excess of the exercise price in the case of
a call option and may be required to pay a price in excess of current market
value in the case of a put option.

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<PAGE>

Call and Put Options on Specific Securities. The Equity Value Fund may invest
in call and put options on a specific security. The Strategic Growth Fund may
invest up to 15% of its assets, represented by the premium paid, in the purchase
of call and put options in respect of specific securities (or groups of
"baskets" of specific securities). The Equity Value Fund may purchase put and
call options listed on a national securities exchange and issued by the Options
Clearing Corporation in an amount not exceeding 5% of its net assets.

A call option gives the purchaser of the option the right to buy, and
obligates the writer to sell, an underlying security at the exercise price at
any time during the option period. Conversely, a put option gives the purchaser
of the option the right to sell, and obligates the writer to buy, an underlying
security at the exercise price at any time during the option period. Investments
by a Fund in off-exchange options will be treated as "illiquid" and therefore
subject to the Fund's policy of not investing more than 15% of its net assets in
illiquid securities.

The Equity Value Fund may write covered call option contracts and secured put
options as Wells Fargo Bank deems appropriate. A covered call option is a call
option for which the writer of the option owns the security covered by the
option. Covered call options written by a Fund expose the Fund during the term
of the option (i) to the possible loss of opportunity to realize appreciation in
the market price of the underlying security or (ii) to possible loss caused by
continued holding of a security which might otherwise have been sold to protect
against depreciation in the market price of the security. If a Fund writes a
secured put option, it assumes the risk of loss should the market value of the
underlying security decline below the exercise price of the option. The
aggregate value of the securities subject to options written by a Fund will not
exceed 25%. The use of covered call options and securities put options will not
be a primary investment technique of the Funds, and they are expected to be used
infrequently. If the advisor is incorrect in its forecast of market value or
other factors when writing the foregoing options, a Fund would be in a worse
position than it would have been had the foregoing investment techniques not
been used.

Each Fund may engage in unlisted over-the-counter options with broker/dealers
deemed creditworthy by the advisor. Closing transactions for such options are
usually effected directly with the same broker/dealer that effected the original
option transaction. A Fund bears the risk that the broker/dealer will fail to
meet its obligations. There is no assurance that a liquid secondary trading
market exists for closing out an unlisted option position. Furthermore, unlisted
options are not subject to the protections afforded purchasers of listed options
by the Options Clearing Corporation, which performs the obligations of its
members who fail to perform in connection with the purchase or sale of options.

Each Fund may buy put and call options and write covered call and secured put
options. Options trading is a highly specialized activity which entails greater
than ordinary investment risk. Options may be more volatile than the underlying
instruments, and therefore, on a percentage basis, an investment in options may
be subject to greater fluctuation than an investment in the underlying
instruments themselves. Purchasing options is a specialized investment
technique that entails a substantial risk of a complete loss of the amounts paid
as premiums to the writer of the option.

The Funds may also write covered call and secured put options from time to
time as the advisor deems appropriate. By writing a covered call option, a Fund
forgoes the opportunity to profit from

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<PAGE>

an increase in the market of the underlying security above the exercise price
except insofar as the premium represents such a profit, and it is not able to
sell the underlying security until the option expires or is exercised or the
Fund effects a closing purchase transaction by purchasing an option of the same
series. If a Fund writes a secured put option, it assumes the risk of loss
should the market value of the underlying security decline below the exercise
price of the option. If the advisor is incorrect in its forecast of market value
or other factors when writing the foregoing options, the Fund would be in a
worse position than it would have been had the foregoing investment techniques
not been used.

A call option for a particular security gives the purchaser of the option the
right to buy, and a writer the obligation to sell, the underlying security at
the stated exercise price at any time prior to the expiration of the option,
regardless of the market price of the security. The premium paid to the writer
is in consideration for undertaking the obligation under the option contract. A
put option for a particular security gives the purchaser the right to sell the
security at the stated exercise price at any time prior to the expiration date
of the option, regardless of the market price of the security. Options on
indices provide the holder with the right to make or receive a cash settlement
upon exercise of the option. With respect to options on indices, the amount of
the settlement equals the difference between the closing price of the index at
the time of exercise and the exercise price of the option expressed in dollars,
times a specified multiple.

The Funds will write call options only if they are "covered." In the case of a
call option on a security or currency, the option is "covered" if a Fund owns
the instrument underlying the call or has an absolute and immediate right to
acquire that instrument without additional cash consideration (or, if additional
cash consideration is required, cash, U.S. Government securities or other liquid
high grade debt obligations, in such amount are held in a segregated account by
the Fund's custodian) upon conversion or exchange of other securities held by
it. For a call option on an index, the option is covered if a Fund maintains
with its custodian a diversified portfolio of securities comprising the index or
liquid assets equal to the contract value. A call option is also covered if a
Fund holds a call on the same instrument or index as the call written where the
exercise price of the call held is (i) equal to or less than the exercise price
of the call written, or (ii) greater than the exercise price of the call written
provided the difference is maintained by the Fund in liquid assets in a
segregated account with its custodian. The Funds will write put options only if
they are "secured" by liquid assets maintained in a segregated account by the
Funds' custodian in an amount not less than the exercise price of the option at
all times during the option period.

A Fund's obligation to sell an instrument subject to a covered call option
written by it, or to purchase an instrument subject to a secured put option
written by it, may be terminated prior to the expiration date of the option by
the Fund's execution of a closing purchase transaction, which is effected by
purchasing on an exchange an option of the same series (i.e., same underlying
instrument, exercise price and expiration date) as the option previously
written. Such a purchase does not result in the ownership of an option. A
closing purchase transaction is ordinarily effected to realize a profit on an
outstanding option, to prevent an underlying instrument from being called, to
permit the sale of the underlying instrument or to permit the writing of a new
option containing different terms on such underlying instrument. The cost of
such a liquidation purchase plus transaction costs may be greater than the
premium received upon the original option, in which event the Fund will have
incurred a loss in the transaction. There is no assurance that a liquid
secondary

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<PAGE>

market will exist for any particular option. An option writer, unable to effect
a closing purchase transaction, will not be able to sell the underlying
instrument (in the case of a covered call option) or liquidate the segregated
account (in the case of a secured put option) until the option expires or the
optioned instrument or currency is delivered upon exercise with the result that
the writer in such circumstances will be subject to the risk of market decline
or appreciation in the instrument during such period.

When a Fund purchases an option, the premium paid by it is recorded as an
asset of the Fund. When a Fund writes an option, an amount equal to the net
premium (the premium less the commission) received by a Fund is included in the
liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of this asset or deferred credit will be
subsequently marked-to-market to reflect the current value of the option
purchased or written. The current value of the traded option is the last sale
price or, in the absence of a sale, the current bid price. If an option
purchased by a Fund expires unexercised the Fund realizes a loss equal to the
premium paid. If a Fund enters into a closing sale transaction on an option
purchased by it, the Fund realizes a gain if the premium received by the Fund on
the closing transaction is more than the premium paid to purchase the option, or
a loss if it is less. If an option written by a Fund expires on the stipulated
expiration date or if a Fund enters into a closing purchase transaction, it
realizes a gain (or loss if the cost of a closing purchase transaction exceeds
the net premium received when the option is sold) and the deferred credit
related to such option is eliminated. If an option written by a Fund is
exercised, the proceeds of the sale are increased by the net premium originally
received and the Fund realizes a gain or loss.

There are several risks associated with transactions in options. For example,
there are significant differences between the securities, currency and options
markets that could result in an imperfect correlation between these markets,
causing a given transaction not to achieve its objectives. In addition, a liquid
secondary market for particular options, whether traded over-the-counter or on
an exchange, may be absent for reasons that include the following: there may be
insufficient trading interest in certain options; restrictions may be imposed by
an exchange on opening transactions or closing transactions or both; trading
halts, suspensions or other restrictions may be imposed with respect to
particular classes or series of options or underlying securities or currencies;
unusual or unforeseen circumstances may interrupt normal operations on an
exchange; the facilities of an exchange or the Options Clearing Corporation may
not be adequate at all times to handle current trading value; or one or more
exchanges could, for economic or other reasons, decide or be compelled at some
future date to discontinue the trading of options (or a particular class or
series of options), in which event the secondary market on that exchange (or in
that class or series of options) would cease to exist, although outstanding
options that had been issued by the Options Clearing Corporation as a result of
trades on that exchange would continue to be exercisable in accordance with
their terms. A Fund is likely to be unable to control losses by closing its
position where a liquid secondary market does not exist. A decision as to
whether, when and how to use options involves the exercise of skill and
judgment, and even a well-conceived transaction may be unsuccessful to some
degree because of market behavior or unexpected events.

The Strategic Growth Fund may purchase or sell options on individual
securities or options on indices of securities as described below. The purchaser
of an option risks a total loss of the premium paid for the option if the price
of the underlying security does not increase or decrease

22
<PAGE>

sufficiently to justify exercise. The seller of an option, on the other hand,
will recognize the premium as income if the option expires unrecognized but
foregoes any capital appreciation in excess of the exercise price in the case of
a call option and may be required to pay a price in excess of current market
value in the case of a put option.

The Strategic Growth Fund may engage in unlisted over-the-counter options with
broker/dealers deemed creditworthy by the advisor. Closing transactions for such
options are usually effected directly with the same broker/dealer that effected
the original option transaction. A Fund bears the risk that the broker/dealer
will fail to meet its obligations. There is no assurance that a liquid secondary
trading market exists for closing out an unlisted option position. Furthermore,
unlisted options are not subject to the protections afforded purchasers of
listed options by the Options Clearing Corporation, which performs the
obligations of its members who fail to perform in connection with the purchase
or sale of options.

Stock Index Options. The Equity Value and Strategic Growth Funds may purchase
call and put options and write covered call options on stock indices listed on
national securities exchanges or traded in the over-the-counter market to the
extent of 25% of the value of its net assets.

The effectiveness of purchasing or writing stock index options will depend
upon the extent to which price movements in a Fund's investment portfolio
correlate with price movements of the stock index selected. Because the value of
a stock index option depends upon changes to the price of all stocks comprising
the index rather than the price of a particular stock, whether a Fund will
realize a gain or loss from the purchase or writing of options on an index
depends upon movements in the price of all stocks in the index, rather than
movements in the price of a particular stock. Accordingly, successful use by a
Fund of options on stock indexes will be subject to Wells Fargo Bank's ability
to correctly analyze movements in the direction of the stock market generally or
of particular industry or market segments.

Stock Index Futures Contracts and Options on Stock Index Futures Contracts.
The Equity Value and Strategic Growth Funds may participate in stock index
futures contracts and options on stock index futures contracts. A futures
transaction involves a firm agreement to buy or sell a commodity or financial
instrument at a particular price on a specified future date, while an option
transaction generally involves a right, which may or may not be exercised, to
buy or sell a commodity of financial instrument at a particular price on a
specified future date. Futures contracts and options are standardized and
exchange-traded, where the exchange serves as the ultimate counterparty for all
contracts. Consequently, the only credit risk on futures contracts is the
creditworthiness of the exchange. Futures contracts, however, are subject to
market risk (i.e., exposure to adverse price changes).

A stock index futures contract is an agreement in which one party agrees to
deliver to the other an amount of cash equal to a specific dollar amount
multiplied by the difference between the value of a specific stock index at the
close of the last trading day of the contract and the price at which the
agreement is made. As the aggregate market value of the stocks in the index
changes, the value of the index also changes. In the event that the index level
rises above the level at which the stock index futures contract was sold, the
seller of the stock index futures contract realizes a loss determined by the
difference between the two index levels at the time of expiration of the stock

23
<PAGE>

index futures contract, and the purchaser realizes a gain in that amount. In the
event the index level falls below the level at which the stock index futures
contract was sold, the seller recognizes a gain determined by the difference
between the two index levels at the expiration of the stock index futures
contract, and the purchaser realizes a loss. Stock index futures contracts
expire on a fixed date, currently one to seven months from the date of the
contract, and are settled upon expiration of the contract.

Stock index futures contracts may be purchased to protect a Fund against an
increase in the prices of stocks that Fund intends to purchase. If a Fund is
unable to invest its cash (or cash equivalents) in stock in an orderly fashion,
a Fund may purchase a stock index futures contract to offset any increase in the
price of the stock. However, it is possible that the market may decline instead,
resulting in a loss on the stock index futures contract. If a Fund then
concludes not to invest in stock at that time, or if the price of the securities
to be purchased remains constant or increases, a Fund realizes a loss on the
stock index futures contract that is not offset by a reduction in the price of
securities purchased. The Funds also may buy or sell stock index futures
contracts to close out existing futures positions.

The Funds also may purchase put options on stock index futures contracts.
Sales of such options may also be made to close out an open option position. The
Funds may, for example, purchase a put option on a particular stock index
futures contract or stock index to protect against a decline in the value of the
common stocks it holds. If the stocks in the index decline in value, the put
should become more valuable and the Funds could sell it to offset losses in the
value of the common stocks. In this way, put options may be used to achieve the
same goals the Funds seek in selling futures contracts. A put option on a stock
index future gives the purchaser the right, in return for a premium paid, to
assume a short (i.e., the right to sell stock index futures) position in a stock
index futures contract at a specified exercise price ("strike price") at any
time during the period of the option. If the option is exercised by the holder
before the last trading date during the option period, the holder receives the
futures position, as well as any balance in the futures margin account. If an
option is exercised on the last trading day prior to the expiration date of the
option, the settlement is made entirely in cash in an amount equal to the
difference between the strike price and the closing level of the relevant index
on the expiration date.

Wells Fargo Bank expects that an increase or decrease in the index in relation
to the strike price level would normally correlate to an increase or decrease
(but not necessarily to the same extent) in the value of a Fund's common stock
portfolio against which the option was written. Thus, any loss in the option
transaction may be offset by an increase in the value of the common stock
portfolio to the extent changes in the index correlate to changes in the value
of that portfolio. The Funds may liquidate the put options they have purchased
by effecting a closing sale transaction rather than exercising the option. This
is accomplished by selling an option of the same series as the option previously
purchased. There is no guarantee that the Funds will be able to effect the
closing sale transaction. The Funds realize a gain from a closing sale
transaction if the price at which the transaction is effected exceeds the
premium paid to purchase the option and, if less, the Funds realize a loss.

The Funds may each invest in stock index futures in order to protect the value
of common stock investments or to maintain liquidity, provided not more than 5%
of a Fund's net assets are

24
<PAGE>

committed to such transactions. A stock index future obligates the seller to
deliver (and the purchaser to take), effectively, an amount of cash equal to a
specific dollar amount times the difference between the value of a specific
stock index at the close of the last trading day of the contract and the price
at which the agreement is made. No physical delivery of the underlying stocks in
the index is made. With respect to stock indices that are permitted investments,
the Funds intend to purchase and sell futures contracts on the stock index for
which it can obtain the best price with consideration also given to liquidity.
There can be no assurance that a liquid market will exist at the time when a
Fund seeks to close out a futures contract or a futures option position. Lack of
a liquid market may prevent liquidation of an unfavorable position.

OTHER INVESTMENT COMPANIES. The Funds may invest in shares of other
registered 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 generally limited to, subject to certain exceptions, (i) 3% of the
total voting stock of any one investment company, (ii) 5% of such Fund's net
assets with respect to any one investment company and (iii) 10% of such Fund's
net assets in aggregate. 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.

PRIVATELY ISSUED SECURITIES. The [CORPORATE BOND,] Equity Value, Growth and
Strategic Growth Funds may invest in privately issued securities, including
those which may be resold only in accordance with Rule 144A under the Securities
Act of 1933 ("Rule 144A Securities"). Rule 144A Securities are restricted
securities that are not publicly traded. Accordingly, the liquidity of the
market for specific Rule 144A Securities may vary. Delay or difficulty in
selling such securities may result in a loss to a Fund. Privately issued or Rule
144A securities that are determined by the investment advisor to be "illiquid"
are subject to the Funds' policy of not investing more than 15% of its net
assets in illiquid securities. The investment advisor, under guidelines
approved by Board of Trustees of the Trust, will evaluate the liquidity
characteristics of each Rule 144A Security proposed for purchase by a Fund on a
case-by-case basis and will consider the following factors, among others, in
their evaluation: (1) the frequency of trades and quotes for the Rule 144A
Security; (2) the number of dealers willing to purchase or sell the Rule 144A
Security and the number of other potential purchasers; (3) dealer undertakings
to make a market in the Rule 144A Security; and (4) the nature of the Rule 144A
Security and the nature of the marketplace trades (e.g., the time needed to
dispose of the Rule 144A Security, the method of soliciting offers and the
mechanics of transfer).

SHORT-TERM CORPORATE DEBT INSTRUMENTS. The Corporate Bond and Allocation
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 that 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 of such notes whereby both parties have the
right to vary the amount of the outstanding indebtedness on the notes.

25
<PAGE>

The Funds also may invest in nonconvertible corporate debt securities (e.g.,
bonds and debentures) with no more than one Year remaining to maturity at the
date of settlement. The Funds will invest only in such corporate bonds and
debentures that are rated at the time of purchase at least "Aa" by Moody's or
"AA" by S&P.

STRIPPED SECURITIES. The Non-Money Market Funds may purchase Treasury
receipts 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.

TEMPORARY INVESTMENTS. The Funds may hold a certain portion of its assets in
cash or short-term investments in order to maintain adequate liquidity for
redemption requests or other cash management needs or for temporary defensive
purposes during periods of unusual market volatility. The short-term investments
that the Funds may purchase include, among other things, U.S. government
obligations, shares of other mutual funds, repurchase agreements, obligations of
domestic banks and short-term obligations of foreign banks, corporations and
other entities. Some of these short-term investments are described below.

Letters of Credit. Certain of the debt obligations (including certificates of
participation, commercial paper and other short-term obligations) which the
Funds may purchase may be backed by an unconditional and irrevocable letter of
credit of a bank, savings and loan association or insurance company which
assumes the obligation for payment of principal and interest in the event of
default by the issuer. Only banks, savings and loan associations and insurance
companies which, in the opinion of Wells Fargo Bank, are of comparable quality
to issuers of other permitted investments of such Fund may be used for letter of
credit-backed investments.

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 Funds' disposition of the security may be delayed or limited.

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<PAGE>

A Fund may not enter into a repurchase agreement with a maturity of more than
seven days, if, as a result, more than 15% (10% for the U.S. Government Income
and Variable Rate Government Funds) 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 Directors and that are
not affiliated with the investment advisor. The Funds may participate in pooled
repurchase agreement transactions with other funds advised by Wells Fargo Bank.

UNRATED AND DOWNGRADED INVESTMENTS. The Funds may purchase instruments that
are not rated if, in the opinion of Wells Fargo Bank, such obligations are
comparable to other rated investments that are permitted to be purchased by such
Fund. After purchase by a Fund, a security may cease to be rated or its rating
may be reduced below the minimum required for purchase by such Fund. Neither
event requires an immediate sale of such security by such Fund. To the extent
the ratings given by Moody's or S&P may change as a result of changes in such
organizations or their rating systems, each Fund will attempt to use comparable
ratings as standards for investments in accordance with the investment policies
contained in the Prospectus and in this SAI. The ratings of Moody's and S&P are
more fully described in the Appendix.

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 Government National Mortgage Association
("GNMA") certificates) or (ii) may be backed solely by the issuing or
guaranteeing agency or instrumentality itself (as with Federal National Mortgage
Association ("FNMA") notes). In the latter case investors must look principally
to the agency or instrumentality issuing or guaranteeing the obligation for
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.

WHEN-ISSUED SECURITIES. Certain of the securities in which the Non-Money
Market Funds may invest may be purchased on a when-issued basis, in which case
delivery and payment normally take place within 45 days (120 days with respect
to the Growth Fund) after the date of the commitment to purchase. These Funds
will only make commitments to purchase securities on a when-issued basis with
the intention of actually acquiring the securities, but may sell them before the
settlement date if it is deemed advisable. When-issued securities are subject to
market fluctuation, and no income accrues to the purchaser during the period
prior to issuance. The purchase price and the interest rate that will be
received on debt instruments are fixed at the time the purchaser enters into the
commitment. Purchasing a security on a when-issued basis can involve a risk that
the market price at the time of delivery may be lower than the agreed-upon

27
<PAGE>

purchase price, in which case there could be an unrealized loss at the time of
delivery. Each Fund currently does not intend to invest more than 5% of its
assets in when-issued securities during the coming year.

WARRANTS. Each of the Equity Value, Growth and Strategic Growth Funds may
invest no more than 5% of its net assets at the time of purchase in warrants
(other than those that have been acquired in units or attached to other
securities), and not more than 2% of its net assets in warrants which are not
listed on the New York or American Stock Exchange. Warrants represent rights to
purchase securities at a specific price valid for a specific period of time. The
prices of warrants do not necessarily correlate with the prices of the
underlying securities. The Funds may only purchase warrants on securities in
which the Fund may invest directly.

ZERO COUPON BONDS. The [CORPORATE BOND,] Equity Value and Strategic Growth
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 STATISTICAL RATINGS ORGANIZATIONS. The ratings of
Moody's Investors Service, Inc., Standard & Poor's Ratings Group, 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 a Fund, an issue of debt securities may cease to be
rated or its rating may be reduced below the minimum rating required for
purchase by a Fund. The advisor will consider such an event in determining
whether the Fund involved should continue to hold the obligation.

The payment of principal and interest on debt securities purchased by the
Funds depends upon the ability of the issuers to meet their obligations. An
issuer's obligations under its debt securities are subject to the provisions of
bankruptcy, insolvency, and other laws affecting the rights and remedies of
creditors, such as the Federal Bankruptcy Code, and laws, if any, which may be
enacted by federal or state legislatures extending the time for payment of
principal or interest, or both, or imposing other constraints upon enforcement
of such obligations or, in the case of

28
<PAGE>

governmental entities, upon the ability of such entities to levy taxes. The
power or ability of an issuer to meet its obligations for the payment of
interest and principal of its debt securities may be materially adversely
affected by litigation or other conditions. Further, it should also be, noted
with respect to all municipal obligations issued after August 15, 1986 (August
31, 1986 in the case of certain bonds), the issuer must comply with certain
rules formerly applicable only to "industrial development bonds" which, if the
issuer fails to observe them, could cause interest on the municipal obligations
to become taxable retroactive to the date of issue.

RISK FACTORS

Investments in a Fund are not bank deposits or obligations of Wells Fargo
Bank, are not insured by the FDIC and are not insured against loss of principal.
When the value of the securities that a Fund owns declines, so does the value of
your Fund shares. You should be prepared to accept some risk with the money you
invest in a Fund.

Equity Securities

The portfolio equity securities of each Fund are subject to equity market
risk. Equity market risk is the risk that stock prices will fluctuate or
decline over short or even extended periods. Throughout most of 1997, the stock
market, as measured by the S&P 500 Index and other commonly used indices, has
been trading at or close to record levels. There can be no guarantee that these
performance levels will continue. The portfolio debt instruments of a Fund are
subject to credit and interest-rate risk. Credit risk is the risk that issuers
of the debt instruments in which a Fund invests may default on the payment of
principal and/or interest. Interest-rate risk is the risk that increases in
market interest rates may adversely affect the value of the debt instruments in
which the Funds invest and hence the value of your investment in a Fund.

The market value of a Fund's investment in fixed-income securities will change
in response to various factors, such as changes in market interest-rates and the
relative financial strength of an issuer. During periods of falling interest
rates, the value of fixed-income securities generally rises. Conversely, during
periods of rising interest rates, the value of such securities generally
declines. Debt securities with longer maturities, which tend to produce higher
yields, are subject to potentially greater capital appreciation and depreciation
than obligations with shorter maturities. Fluctuations in the market value of
fixed-income securities can be reduced, but not eliminated, by variable and
floating-rate features.

Securities rated in the fourth highest rating category are regarded by S&P as
having an adequate capacity 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. Moody's considers such securities as having
speculative characteristics. Subsequent to its purchase by the Fund, an issue of
securities may cease to be rated or its rating may be reduced below the minimum
rating required for purchase by the Fund. The advisor will consider such an
event in determining whether a Fund should continue to hold the obligation.
Securities rated below the fourth highest rating category (sometimes called
"junk bonds") are often considered to be speculative and involve greater risk of
default or price changes due to changes in the issuer's credit-worthiness. The
market

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<PAGE>

prices of these securities may fluctuate more than higher quality securities and
may decline significantly in periods of general economic difficulty.

There may be some additional risks associated with investments in smaller
and/or newer companies because their shares tend to be less liquid than
securities of larger companies. Further, shares of small and new companies are
generally more sensitive to purchase and sale transactions and changes in the
issuer's financial condition and, therefore, the prices of such stocks may be
more volatile than those of larger company stocks and may be subject to more
abrupt price movements than securities of larger companies.

Investing in the securities of issuers in any foreign country, including
American Depository Receipts ("ADRs") and European Depository Receipts ("EDRs")
and similar securities, involves special risks and considerations not typically
associated with investing in U.S. companies. These include differences in
accounting, auditing and financial reporting standards; generally higher
commission rates on foreign portfolio transactions; the possibility of
nationalization, expropriation or confiscatory taxation; adverse changes in
investment or exchange control regulations (which may include suspension of the
ability to transfer currency from a country); and political, social and monetary
or diplomatic developments that could affect U.S. investments in foreign
countries. Additionally, dispositions of foreign securities and dividends and
interest payable on those securities may be subject to foreign taxes, including
withholding taxes. Foreign securities often trade with less frequency and volume
than domestic securities and, therefore, may exhibit greater price volatility.
Additional costs associated with an investment in foreign securities may include
higher custodial fees than apply to domestic custodial arrangements and
transaction costs of foreign currency conversions. Changes in foreign exchange
rates also will affect the value of securities denominated or quoted in
currencies other than the U.S. dollar. A Fund's performance may be affected
either unfavorably or favorably by fluctuations in the relative rates of
exchange between the currencies of different nations, by exchange control
regulations and by indigenous economic and political developments.

There are special risks involved in investing in emerging-market countries.
Many investments in emerging markets can be considered speculative, and their
prices can be much more volatile than in the more developed nations of the
world. This difference reflects the greater uncertainties of investing in less
established markets and economies. In addition, the financial markets of
emerging markets countries are generally less well capitalized and thus
securities of issuers based in such countries may be less liquid. Further, such
markets may be vulnerable to high inflation and interest rates. Most are
heavily dependent on international trade, and some are especially vulnerable to
recessions in other countries. Some of these countries are also sensitive to
world commodity prices and may be subject to political and social uncertainties.

Illiquid securities, which may include certain restricted securities, may be
difficult to sell promptly at an acceptable price. Certain restricted securities
may be subject to legal restrictions on resale. Delay or difficulty in selling
securities may result in a loss or be costly to a Fund.

The advisor may use certain derivative investments or techniques, such as
buying and selling options and futures contracts and entering into currency
exchange contracts or swap agreements, to adjust the risk and return
characteristics of a Fund's portfolio. Derivatives are financial instruments

30
<PAGE>

whose value is derived, at least in part, from the price of another security or
a specified asset, index or rate. Some derivatives may be more sensitive than
direct securities to changes in interest rates or sudden market moves. Some
derivatives also may be susceptible to fluctuations in yield or value due to
their structure or contract terms. If a Fund's advisor judges market conditions
incorrectly, the use of certain derivatives could result in a loss, regardless
of the advisor's intent in using the derivatives.

The Non-Allocation Funds pursue an active trading investment strategy, and the
length of time a Fund has held a particular security is not generally a
consideration in investment decisions. Accordingly, the portfolio turnover rate
for the Funds may be higher than that of other funds that do not pursue an
active trading investment strategy. Portfolio turnover generally involves some
expense to a Fund, including brokerage commissions or dealer mark-ups and other
transaction costs on the sale of securities and the reinvestment in other
securities. Portfolio turnover also can generate short-term capital gains tax
consequences.

Debt Securities

The portfolio debt instruments of a Fund may be subject to credit risk. Credit
risk is the risk that the issuers of securities in which a Fund invests may
default in the payment of principal and/or interest. Interest rate risk is the
risk that increases in market interest rates may adversely affect the value of
the debt instruments in which a Fund invests and hence the value of your
investment in a Fund.

The market value of a Fund's investments in fixed-income securities will
change in response to various factors, such as changes in market interest rates
and the relative financial strength of an issuer. During periods of falling
interest rates, the value of fixed-income securities generally rises.
Conversely, during periods of rising interest rates, the value of such
securities generally declines. Debt securities with longer maturities, which
tend to produce higher yields, are subject to potentially greater price
fluctuation than obligations with shorter maturities. Fluctuations in the market
value of fixed-income securities can be reduced, but not eliminated, by variable
rate or floating rate features. In addition, some of the asset-backed securities
in which the Funds invest are subject to extension risk. This is the risk that
when interest rates rise, prepayments of the underlying obligations slow,
thereby lengthening the duration and potentially reducing the value of these
securities.

Although some of the Funds' portfolio securities are guaranteed by the U.S.
Government, its agencies or instrumentalities, such securities are subject to
interest rate risk and the market value of these securities, upon which the
Funds' daily net asset value are based, will fluctuate. No assurance can be
given that the U.S. Government would provide financial support to its agencies
or instrumentalities where it is not obligated to do so.

Although GNMA securities are guaranteed by the U.S. Government as to timely
payment of principal and interest and ARMs are guaranteed by the U.S.
Government, its agencies or instrumentalities (including government-sponsored
enterprises as noted above), the market value of these securities, upon which
the Funds' daily net asset value is based, will fluctuate. The Funds are subject
to interest-rate risk, that is, the risk that increases in interest rates may
adversely affect the

31
<PAGE>

value of the securities in which the Funds invest, and hence the value of your
investment in the Funds. The value of the securities in which a Fund invests
generally changes inversely to changes in interest rates. However, the
adjustable-rate feature of the mortgages underlying the ARMs and the CMOs in
which a Fund may invest should reduce, but will not eliminate, price
fluctuations in such securities, particularly during periods of extreme
fluctuations in market interest rates.

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 by the full
faith and credit of the U.S. Government. However, because FNMA and FHLMC are
government-sponsored enterprises, these securities are considered by some
investors 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. Of course, there
can be no assurance that this historical performance will continue or that
either Fund, which are diversified funds, will meet its investment objective.

Moreover, no assurance can be given that the U.S. Government would supply
financial support to U.S. Government-sponsored enterprises such as FNMA and
FHLMC in the event of a default in payment on the underlying mortgages which the
government- sponsored enterprise is unable to make good. Principal on the
mortgages underlying the mortgage pass-through securities in which the Funds may
invest may be prepaid in advance of maturity. Such prepayments tend to increase
when interest rates decline and may present a Fund with more principal to invest
at lower rates. The converse also tends to be the case.

S&P and Moody's assign ratings based upon their judgment of the risk of
default (i.e., the risk that the issuer or guarantor may default in the payment
of principal and/or interest) of the securities underlying the CMOs. However,
investors should understand that most of the risk of these securities comes from
interest-rate risk (i.e., the risk that market interest rates may adversely
affect the value of the securities in which a Fund invests) and not from the
risk of default. CMOs may have significantly greater interest rate risk than
traditional government securities with identical ratings. The adjustable-rate
portions of CMOs have significantly less interest rate risk.

The Funds may invest in illiquid securities which may include certain
restricted securities. Illiquid securities may be difficult to sell promptly at
an acceptable price. Certain restricted securities may be subject to legal
restrictions on resale. Delay or difficulty in selling securities may result in
a loss or be costly to a Fund.

Wells Fargo Bank may use certain derivative investments or techniques, such as
investments in floating- and variable-rate instruments, structured notes and
certain U.S. Government obligations, to adjust the risk and return
characteristics of a Fund's portfolio. Derivatives are financial instruments
whose value is derived, at least in part, from the price of another security or
a specified asset, index or rate. Some derivatives may be more sensitive than
direct securities to changes in interest rates or sudden market moves. Some
derivatives also may be susceptible to fluctuations in yield or value due to
their structure or contract terms. If Wells Fargo Bank judges market

32
<PAGE>

conditions incorrectly, the use of certain derivatives could result in a loss,
regardless of Wells Fargo Bank's intent in using the derivatives.

The Funds may invest up to 25% of their assets in "Yankee Bonds." Yankee Bonds
are U.S. dollar-denominated debt obligations issued in the U.S. by foreign banks
and corporations. Such investments may involve special risks and considerations
not typically associated with investing in U.S. companies. These include
differences in accounting, auditing and financial reporting standards; generally
higher commission rates on foreign portfolio transactions; the possibility of
nationalization, expropriation or confiscatory taxation; adverse changes in
investment or exchange control regulations (which may include suspension of the
ability to transfer currency from a country); and political instability which
could affect U.S. investments in foreign countries. Additionally, dispositions
of foreign securities and dividends and interest payable on those securities may
be subject to foreign taxes, including withholding taxes. Foreign securities
often trade with less frequency and volume than domestic securities and,
therefore, may exhibit greater price volatility. A Fund's investments may be
affected either unfavorably or favorably by fluctuations in the relative rates
of exchange between the currencies of different nations, by exchange control
regulations and by indigenous economic and political developments.

Concentration. As market conditions change, it is conceivable that all of the
assets of the Strategic Income Fund could be invested in common stocks or,
conversely, in debt securities. It is a fundamental policy of the Fund that
concentration of investment in a single industry may not exceed 25% of the
Fund's total assets.

High Yielding, Fixed-Income Securities. Because of the Corporate Bond Fund's
policy of investing in higher yielding, higher risk securities, an investment in
a Fund is accompanied by a higher degree of risk than is present with an
investment in higher rated, lower yielding securities. Accordingly, an
investment in the Fund should not be considered a complete investment program
and should be carefully evaluated for its appropriateness in light of your
overall investment needs and goals. You should also consider the increased risk
of loss to principal that is present with an investment in higher risk
securities such as those in which the Fund invests.

The market value of lower rated, fixed-income securities and unrated
securities of comparable quality, commonly known as junk bonds, tends to reflect
individual developments affecting the issuer to a greater extent than the market
value of higher rated securities, which react primarily to fluctuations in the
general level of interest rates. Lower rated securities also tend to be more
sensitive to economic conditions than higher rated securities. These lower
rated fixed-income securities are considered by the rating agencies, on balance,
to be predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation and
will generally involve more credit risk than securities in the higher rating
categories. Even securities rated triple B by S&P or by Moody's, ratings which
are considered investment grade, possess some speculative characteristics.

Issuers of high yielding, fixed-income securities are often highly leveraged
and may not have more traditional methods of financing available to them.
Therefore, the risk associated with acquiring the securities of these issuers is
generally greater than is the case with higher rated securities. For example,
during an economic downturn or a sustained period of rising interest

33
<PAGE>

rates, highly leveraged issuers of high yielding securities may experience
financial stress. During these periods, these issuers may not have sufficient
cash flow to meet their interest payment obligations. The issuer's ability to
service its debt obligations may also be adversely affected by specific
developments affecting the issuer, the issuer's inability to meet specific
projected business forecasts, or the unavailability of additional financing. The
risk of loss due to default by the issuer may be significantly greater for the
holders of high yielding securities because the securities are generally
unsecured and are often subordinated to other creditors of the issuer. Current
prices for defaulted bonds are generally significantly lower than their purchase
price, and the Fund may have unrealized losses on defaulted securities that are
reflected in the price of the Fund's shares. In general, securities that default
lose much of their value in the time period before the actual default so that
the Fund's net assets are impacted prior to the default. The Funds may retain an
issue that has defaulted because the issue may present an opportunity for
subsequent price recovery.

High yielding, fixed-income securities frequently have call or buy-back
features that permit an issuer to call or repurchase the securities from the
Fund. Although these securities are typically not callable for a period from
three to five years after their issuance, if a call was exercised by the issuer
during periods of declining interest rates, Advisors may find it necessary to
replace the securities with lower yielding securities, which could result in
less net investment income to the Fund. The premature disposition of a high
yielding security due to a call or buy-back feature, the deterioration of the
issuer's creditworthiness, or a default may also make it more difficult for the
Fund to manage the timing of its receipt of income, which may have tax
implications. The Fund may be required under the Code and U.S. Treasury
regulations to accrue income for income tax purposes on any defaulted
obligations and to distribute the income to the Fund's shareholders even though
the Fund is not currently receiving interest or principal payments on these
obligations. In order to generate cash to satisfy any or all of these
distribution requirements, the Fund may be required to dispose of portfolio
securities that it otherwise would have continued to hold or to use cash flows
from other sources such as the sale of the Fund shares.

The Corporate Bond Fund may have difficulty disposing of certain high yielding
securities because there may be a thin trading market for a particular security
at any given time. The market for lower rated, fixed-income securities
generally tends to be concentrated among a smaller number of dealers than is the
case for securities that trade in a broader secondary retail market. Generally,
buyers of these securities are predominantly dealers and other institutional
buyers, rather than individuals. To the extent the secondary trading market for
a particular high yielding, fixed-income security does exist, it is generally
not as liquid as the secondary market for higher rated securities. Reduced
liquidity in the secondary market may have an adverse impact on market price and
the Fund's ability to dispose of particular issues, when necessary, to meet the
Fund's liquidity needs or in response to a specific economic event, such as a
deterioration in the creditworthiness of the issuer. Reduced liquidity in the
secondary market for certain securities may also make it more difficult for the
Fund to obtain market quotations based on actual trades for purposes of valuing
the Fund's portfolio. Current values for these high yield issues are obtained
from pricing services and/or a limited number of dealers and may be based upon
factors other that actual sales.

34
<PAGE>

The Corporate Bond Fund is authorized to acquire high yielding, fixed-income
securities that are sold without registration under the federal securities laws
and therefore carry restrictions on resale. While many high yielding securities
have been sold with registration rights, covenants and penalty provisions for
delayed registration, if the Fund is required to sell restricted securities
before the securities have been registered, it may be deemed an underwriter of
the securities under the 1933 Act, which entails special responsibilities and
liabilities. The Fund may incur special costs in disposing of restricted
securities; however, the Fund will generally incur no costs when the issuer is
responsible for registering the securities.

The Corporate Bond Fund may acquire high yielding, fixed-income securities
during an initial underwriting. These securities involve special risks because
they are new issues. The advisor will carefully review their credit and other
characteristics.

The high yield securities market is relatively new and much of its growth
prior to 1990 paralleled a long economic expansion. The recession that began in
1990 disrupted the market for high yielding securities and adversely affected
the value of outstanding securities and the ability of issuers of such
securities to meet their obligations. Although the economy has improved
considerably and high yielding securities have performed more consistently since
that time, there is no assurance that the adverse effects previously experienced
will not reoccur. For example, the highly publicized defaults of some high
yield issuers during 1989 and 1990 and concerns regarding a sluggish economy
that continued into 1993, depressed the prices for many of these securities.
While market prices may be temporarily depressed due to these factors, the
ultimate price of any security will generally reflect the true operating results
of the issuer. Factors adversely impacting the market value of high yielding
securities will adversely impact the Fund's NAV. In addition, a Fund may incur
additional expenses to the extent it is required to seek recovery upon a default
in the payment of principal or interest on its portfolio holdings. The Fund will
rely on the advisors' judgment, analysis and experience in evaluating the
creditworthiness of an issuer. In this evaluation, the advisor will take into
consideration, among other things, the issuer's financial resources, its
sensitivity to economic conditions and trends, its operating history, the
quality of the issuer's management and regulatory matters.

Money Market Fund

The Money Market Fund under the 1940 Act, must comply with certain investment
criteria designed to provide liquidity, reduce risk, and allow the Funds to
maintain a stable net asset value of $1.00 per share. The Fund's dollar-
weighted average portfolio maturity must not exceed 90 days. Any security that
the Fund purchases must have a remaining maturity of not more than 397 days (13
months). In addition, any security that the Fund purchases must present minimal
credit risks and be of "high quality," or be of the "highest quality." "High
quality" means to be rated in the top two rating categories and "highest
quality" means to be rated only in the top rating category, by the requisite
NRSROs or, if unrated, determined to be of comparable quality to such rated
securities by Wells Fargo Bank, as the Fund's investment advisor, under
guidelines adopted by the Board of Trustees of the Trust.

Generally, securities in which the Fund invests will not earn as high a yield
as securities of longer maturity and/or of lesser quality that are more subject
to market volatility. Each Fund

35
<PAGE>

attempts to maintain the value of its shares at a constant $1.00 per share,
although there can be no assurance that a Fund will always be able to do so.

General

There is, of course, no assurance that a Fund will achieve its investment
objective or be successful in preventing or minimizing the risk of loss that is
inherent in investing in particular types of investment products.

36
<PAGE>

MANAGEMENT

The following information supplements, and should be read in conjunction with,
the section in the Prospectus entitled "Management of the Funds." The principal
occupations during the past five years of the Trustees and executive officers of
Wells Fargo LAT Trust are listed below. The address of each, unless otherwise
indicated, is 111 Center Street, Little Rock, Arkansas 72201. Trustees deemed to
be "interested persons" of Wells Fargo LAT 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>
Jack S. Euphrat, 75 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027

*R. Greg Feltus, 46 Trustee, Chairman Executive Vice President of Stephens Inc.;
and President President of Stephens Insurance Services Inc.;
Senior Vice President of Stephens Sports
Management Inc.; and President of Investor
Brokerage Insurance Inc.

Thomas S. Goho, 55 Trustee Associate Professor of Finance of the School of
321 Beechcliff Court Business and Accounting at Wake Forest
Winston-Salem, NC 27104 University since 1982.

Peter G. Gordon, 54 Director Chairman and Co-Founder of Crystal Geyser Water
Crystal Geyser Water Co. Company and President of Crystal Geyser Roxane
55 Francisco Street Water Company since 1977.
San Francisco, CA 94133

Joseph N. Hankin, 57 Trustee President of Westchester Community College
75 Grasslands Road since 1971; Adjunct Professor of Columbia
Valhalla, NY 10595 University Teachers College since 1976.

*W. Rodney Hughes, 71 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901

*J. Tucker Morse, 53 Trustee Private Investor; Chairman of Home Account
4 Beaufain Street Network, Inc. Real Estate Developer; Chairman
Charleston, SC 29401 of Renaissance Properties Ltd.; President of
Morse Investment Corporation; and Co-Managing
Partner of Main Street Ventures.
</TABLE>

37
<PAGE>

<TABLE>
<CAPTION>
Principal Occupations
Name, Age and Address Position During Past 5 Years
- --------------------- -------- -------------------
<S> <C> <C>
Richard H. Blank, Jr., 41 Chief Operating Vice President of Stephens Inc.; Director of
Officer, Secretary Stephens Sports Management Inc.; and Director
and Treasurer of Capo Inc.
</TABLE>

38
<PAGE>

Compensation Table
Year Ended December 31, 1997
----------------------------

<TABLE>
<CAPTION>
Total Compensation
Aggregate Compensation from Registrant
Name and Position from Registrant and Fund Complex
----------------- --------------- ----------------
<S> <C> <C>
Jack S. Euphrat $9,500 $28,750
Trustee

R. Greg Feltus $ 0 $ 0
Trustee

Thomas S. Goho $9,500 $28,750
Trustee

Joseph N. Hankin $9,500 $28,750
Trustee

W. Rodney Hughes $8,500 $25,750
Trustee

Robert M. Joses $9,500 $28,750
Trustee

J. Tucker Morse $8,500 $25,750
Trustee
</TABLE>

As of January 1, 1998, Peter G. Gordon replaced Robert M. Joses on the
Board of Trustees of the Wells Fargo Fund Complex.

Trustees of the Trust are compensated annually by the Trust and by all the
registrants in the Fund complex they serve as indicated above and also are
reimbursed for all out-of-pocket expenses relating to attendance at board
meetings. Stagecoach Funds, Inc. Stagecoach Trust and the Trust are considered
to be members of the same fund complex as such term is defined in Form N-1A
under the 1940 Act (the "Wells Fargo Fund Complex"). Overland Express Funds,
Inc. and Master Investment Trust, two investment companies previously advised by
Wells Fargo Bank, were part of the Wells Fargo Fund Complex prior to December
12, 1997. These companies are no longer part of the Wells Fargo Fund Complex.
MasterWorks Funds Inc., Master Investment Portfolio, and Managed Series
Investment Trust together form a separate fund complex (the "BGFA The Fund
Complex"). Each of the Trustees and Officers of the Trust serves in the
identical capacity as directors and officers or as trustees and/or officers of
each registered open-end management investment company in both the Wells Fargo
and BGFA Fund Complexes, except for Joseph N. Hankin and Peter G. Gordon, who
only serve the aforementioned members of the Wells Fargo

39
<PAGE>

Fund Complex. The Trustees are compensated by other companies and trusts within
a Fund complex for their services as directors/trustees to such companies and
trusts. Currently the Trustees do not receive any retirement benefits or
deferred compensation from the Trust or any other member of the Fund complex.

As of the date of this SAI, Trustees and officers of Wells Fargo LAT Trust, as
a group, beneficially owned less than 1% of the outstanding interests of Wells
Fargo LAT Trust.

INVESTMENT ADVISOR. Each of the Funds is advised by Wells Fargo Bank pursuant
to an Advisory Contract. The Advisory Contracts provide that Wells Fargo Bank
shall furnish to the Funds investment guidance and policy direction in
connection with the daily portfolio management of each Fund. Under the Advisory
Contracts, Wells Fargo Bank furnishes to the Board of Trustees periodic reports
on the investment strategy and performance of each Fund. Wells Fargo Bank has
agreed to provide to the Funds, among other things, money market and fixed-
income research, analysis and statistical and economic data and information
concerning interest rate and security market trends, portfolio composition,
credit conditions and, in the case of the Money Market Fund, the U.S. Government
Allocation Fund and the Asset Allocation Fund, average maturities of the
portfolios of each Fund. As compensation for its advisory services, Wells Fargo
Bank is entitled to receive a monthly fee at the annual rate of 0.60% of each
Fund's average daily net assets, with the exceptions of the Corporate Bond Fund
and the Money Market Fund, from which Wells Fargo Bank is entitled to receive
0.50% and 0.45%, respectively, of each such Fund's average daily net assets.

For the years ended December 31, 1995, 1996 and 1997, each of the Funds below
paid to Wells Fargo Bank as compensation for its advisory services the amounts
indicated below and Wells Fargo Bank waived the indicated amounts:

<TABLE>

Year Ended Year Ended Year Ended
12/31/95 12/31/96 12/31/97
-------- -------- --------
Fees Fees Fees Fees Fees Fees
Fund Paid Waived Paid Waived Paid Waived
---- ---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
Asset Allocation $0 $85,107 $213,961 $24,043 $419,704 $ 0
Growth $0 $19,169 $ 81,759 $46,059 $277,841 $40,391
Money Market $0 $ 9,854 $ 15,620 $27,451 $ 42,375 $29,403
U.S. Government Allocation $0 $12,949 $ 6,751 $42,413 $ 86,904 $28,118
</TABLE>

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 Wells Fargo LAT Trust's Board of Trustees and (ii) by a
majority of the Trustees of Wells Fargo LAT 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.

40
<PAGE>

INVESTMENT SUB-ADVISOR. Barclays Global Fund Advisors ("BGFA") serves as sub-
advisor to the Asset Allocation and U.S. Government Allocation Funds pursuant to
a Sub-Advisory Contract (the "Sub-Advisory Contract") among Wells Fargo LAT
Trust, Wells Fargo Bank and BGFA. Subject to the direction of Wells Fargo LAT
Trust's Board of Trustees and the overall supervision and control of Wells Fargo
Bank and Wells Fargo LAT Trust, BGFA makes recommendations regarding the
investment and reinvestment of the Asset Allocation and U.S. Government
Allocation Funds' assets. BGFA is responsible for implementing and monitoring
the performance of the asset allocation model employed with respect to these
Funds. BGFA furnishes to Wells Fargo Bank periodic reports on the investment
activity and performance of these Funds and such additional reports and
information as Wells Fargo Bank and Wells Fargo LAT Trust's Board of Trustees
and officers may reasonably request. BGFA was created by the reorganization of
Wells Fargo Nikko Investment Advisors ("WFNIA"), a former affiliate of Wells
Fargo Bank, with and into an affiliate of Wells Fargo Institutional Trust
Company, N.A. ("WFITC"). Prior to January 1, 1996, WFNIA provided sub-advisory
services directly to the Asset Allocation and U.S. Government Allocation Funds.
As compensation for its sub-advisory services, BGFA is entitled to receive a
monthly fee equal to an annual rate of 0.15% of the first $900 million of the
Asset Allocation Fund's average daily net assets and 0.10% of net assets over
$900 million. As compensation for sub-advisory services for the U.S. Government
Allocation Fund, BGFA is entitled to receive a monthly fee equal to an annual
rate of 0.05% of the first $75 million of the U.S. Government Allocation Fund's
average daily net assets, 0.04% of the next $75 million of such Fund's net
assets, and 0.03% of net assets over $150 million.

Prior to May 1, 1998, BGFA was entitled to receive a monthly fee equal to an
annual rate of 0.20% of the first $500 million of the Asset Allocation Fund's
average daily net assets, 0.15% of the next $500 million of such Fund's net
assets, and 0.10% of net assets over $1 billion. Also prior to May 1, 1998,
BGFA was entitled to receive a monthly fee equal to an annual rate of 0.05% of
the first $100 million of the U.S. Government Allocation Fund's average daily
net assets, 0.04% of the next $50 million of such Fund's net assets, and 0.03%
of net assets over $150 million. Prior to October 30, 1997, BGFA was entitled
to receive a monthly fee equal to an annual rate of 0.20% of the Asset
Allocation Fund's average daily net assets and 0.15% of the U.S. Government
Allocation net assets.

As of May 1, 1998, Wells Capital Management ("WCM") serves as sub-advisor to
the Non-Allocation Funds. As sub-advisor, WCM makes recommendations regarding
the investment and reinvestment of the Funds' assets, furnishes to Wells Fargo
Bank periodic reports on the investment activity and performance of the Funds,
and 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, WCM is entitled to receive a monthly
fee equal to an annual rate of 0.25% of the first $200 million of the Equity
Value, Growth and Strategic Growth Funds' average daily net assets, 0.20% of the
next $200 million of such Funds' net assets, and 0.15% of net assets over $400
million. As compensation for sub-advisory services for the Corporate Bond Fund,
WCM is entitled to receive a monthly fee equal to an annual rate of 0.15% of the
first $400 million of the Corporate Bond Fund's average daily net assets, 0.125%
of the next $400 million of such Fund's net assets, and 0.10% of net assets over
$800 million. As compensation for sub-advisory services for the Money Market
Fund, WCM is

41
<PAGE>

entitled to receive a monthly fee equal to an annual rate of 0.05% of the first
$960 million of the Money Market Fund's average daily net assets and 0.04% of
net assets over $960 million. WCM receives a minimum annual fee from each Fund
of $120,000. This minimum annual fee does not increase the advisory fees paid by
the Funds to Wells Fargo Bank.

For the years ended December 31, 1995, 1996 and 1997, Wells Fargo Bank paid to
WFNIA / BGFA the amounts indicated below for its services as sub-advisor to the
Asset Allocation and U.S. Government Allocation Funds. WFNIA / BGFA did not
waive any sub-advisory fees.

<TABLE>
<CAPTION>
YEAR ENDED Year Ended Year Ended
12/31/95 12/31/96 12/31/97
Fund Fees Paid Fees Paid Fees Paid
- ---- --------- --------- ---------
<S> <C> <C> <C>
Asset Allocation $ 28,442 $ 79,587 $ 131,848
U.S. Government Allocation $ 3,251 $ 12,320 $ 24,439
</TABLE>

General. Each Fund's Sub-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 (ii) by the Company's Board of Directors, including a
majority of the Directors of the Company who are not parties to the Sub-Advisory
Contract or "interested persons" (as defined in the 1940 Act) of any such party.
A Fund's Sub-Advisory Contract may be terminated on 60 days written notice by
either party and will terminate automatically if assigned.

PORTFOLIO MANAGERS.
------------------

Mr. Allen Ayvazian, as co-manager, has been responsible for the day-to-day
management of the portfolio of the Growth Fund since December 15, 1997. Mr.
Ayvazian joined Wells Fargo Bank in 1989 and is the Chair of the Equity Policy
Committee.

Ms. Kelli Hill, as co-manager, has been responsible for the day-to-day
management of the portfolio of the Growth Fund since February 1, 1997. Ms. Hill
joined Wells Fargo Bank in 1987 and manages client portfolios. Prior to joining
Wells Fargo Bank, Ms. Hill worked as an institutional equity trader for E.F.
Hutton. Ms. Hill holds a B.A. from the University of Southern California in
International Relations and Economics and is working toward her chartered
financial analyst designation.

Mr. Rex Wardlaw, as co-manager, has been responsible for the day-to-day
management of the portfolio of the Equity Value Fund since February 1, 1997.
Mr. Wardlaw joined Wells Fargo Bank in 1996 and has eight years of investment
experience. Prior to joining Wells Fargo Bank, Mr. Wardlaw was a portfolio
manager for First Interstate Bank since 1986. He is the Private Client Services
investment manager for the Portland office and is responsible for stock market
research in healthcare, basic industries and transportation sectors. He holds
an M.B.A. from the University of Oregon and a B.A. from Northwest Nazarene
College. Mr. Wardlaw is a chartered financial analyst and a member of the
Portland Society of Financial Analysts. He is also a

42
<PAGE>

member of the Association for Investment management and Research and the
American Association of Individual Investors.

Mr. Allen Wisniewski has been responsible, as co-manager, for the day-to-day
management of the portfolio of the Equity Value Fund since May 1998. He also is
responsible for managing equity and balanced accounts for high-net-worth
individuals and pensions. Mr. Wisniewski joined Wells Fargo Bank in April 1987
with the acquisition of Bank of America's consumer trust services, where he was
a portfolio manager. He received his B.A. and M.B.A. in Economics and Finance
from the University of California at Los Angeles. He is a member of the Los
Angeles Society of Financial Analysts.

Mr. Jon Hickman has been responsible for the day-to-day management of the
Strategic Growth Fund since May 1998. Mr. Hickman has over sixteen years'
experience in the investment management field. He joined Wells Fargo Bank in
1986 managing equity and balanced portfolios for individuals and employee
benefit plans. He is a senior member of Wells Fargo Bank's Equity Strategy
Committee. Mr. Hickman has a B.A. and an M.B.A. in Finance from Brigham Young
University.

Mr. Chris Greene joined Wells Fargo Bank on April 1, 1997, and has been
responsible as portfolio co-manager of the Strategic Growth Fund since May 1998.
Immediately prior to joining Wells Fargo Bank, Mr. Greene worked for three years
in the Mergers & Acquisitions group for Hambrecht & Quist, an investment banking
firm focusing on growth companies. Before that, he worked for two years at GB
Capital Management and prior to that, he worked at Wood Island Associates, firms
focusing on equity and fixed-income securities. He has over five years
experience in the industry. Mr. Greene received his B.A. in Economics from
Claremont McKenna College.

Mr. Graham Allen joined Wells Fargo Bank in January 1998 and has been
responsible, as a portfolio co-manager, for the day-to-day management of the
Corporate Bond Fund since November 1998. Prior to January 1998, Mr. Allen had
worked for Bradford & Marzec, Inc. as an International Portfolio Manager since
August 1988, and he had worked for Heron Financial Corp. as a High Yield
Portfolio Manager from June, 1985 to August 1988. Educated in England, Mr.
Allen is a Fellow Chartered Accountant, a recognized UK Accounting body.

Ms. Jacqueline Flippin joined Wells Fargo Bank in January 1998 and has been
responsible, as a portfolio co-manager, for the day-to-day management of the
Corporate Bond Fund since November 1998. Ms. Flippin had worked for McMorgan &
Co. as a Portfolio Manager from October 1994 to January, 1998 and had worked for
the Teachers Insurance Annuity Association, College Retirement Equity Fund as a
Portfolio Manager from August 1986 to October 1994. Ms. Flippin received her
B.A. from Northwestern University and her M.B.A. from New York University.

Mr. Daniel Kokoszka joined Wells Fargo Bank in February 1998 and has been
responsible, as a portfolio co-manager for the day-to-day management of the
Corporate Bond Fund since November 1998. Prior to February 1998, Mr. Kokoszka
had worked for Bradford & Marzec, Inc. on their international portfolio
management team for more than four years. Previously, Mr.

43
<PAGE>

Kokoszka worked for Lockheed Corporation in the corporate finance, mergers and
acquisitions and venture capital areas. Mr. Kokoszka is a Chartered Financial
Analyst, a Certified Management Accountant and is Certified in Financial
Management. Mr. Kokoszka received his B.S. from Villanova University, an M.S.
from George Washington University, an M.S. from George Washington University and
his M.B.A. from the University of Rochester.

Mr. John Burgess joined Wells Fargo Bank in April 1998 and has been
responsible, as a portfolio co-manager, for the day-to-day management of the
Corporate Bond Fund since November 1998. Prior to April 1998, Mr. Burgess had
worked as an independent financial advisor since August, 1995. Prior to that,
Mr. Burgess had worked for Executive Life Insurance Co. and associated Companies
from 1998 to July 1995. Previously, Mr. Burgess worked for Bradford & Marzec,
Inc. Mr. Burgess received his B.A. from Harvard College and a J.D. from Harvard
Law School.

Mr. Scott Smith assumed responsibility as a portfolio co-manager for the day-
to-day management of the Corporate Bond Fund in November 1998. He joined Wells
Fargo Bank in 1988 as a taxable money market portfolio specialist. Currently,
Mr. Smith holds the position of liquidity management specialist/portfolio
manager with Wells Fargo Bank. His experience includes a position with a
private money management firm with mutual fund investment operations. Mr. Smith
holds a B.A. from the University of San Diego and is a chartered financial
analyst.

ADMINISTRATOR AND CO-ADMINISTRATOR. The Trust has retained Wells Fargo Bank
as administrator and Stephens Inc. ("Stephens") as co-administrator on behalf of
each Fund. The Administration Agreement between Wells Fargo and each Fund, and
the Co-Administration Agreement among Wells Fargo Bank, Stephens and each Fund,
state that Wells Fargo Bank and Stephens shall provide as administration
services, among other things: (i) general supervision of the operation of each
Fund, including coordination of the services performed by the Fund's investment
advisor, transfer agent, custodian, shareholder servicing agent(s), independent
public accountants and legal counsel, regulatory compliance, including the
compilation of information for documents such as reports to, and filings with,
the SEC and state securities commissions; and preparation of proxy statements
and shareholder reports for the Fund; and (ii) general supervision relative to
the compilation of data required for the preparation of periodic reports
distributed to Wells Fargo LAT Trust's officers and Board of Trustees. Wells
Fargo Bank and Stephens also furnish office space and certain facilities
required for conducting the business of each Fund together with ordinary
clerical and bookkeeping services. Stephens pays the compensation of Wells Fargo
LAT Trust's Trustees, officers and employees who are affiliated with Stephens.
The administrator and co-administrator are entitled to receive a monthly fee of
0.03% and 0.04%, respectively, of the average daily net assets of each Fund.
Prior to May 1, 1998, the administrator and co-administrator were entitled to
receive a monthly fee 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.

Prior to February 1, 1997 Stephens served as sole administrator to the Funds.
Stephens performed substantially the same services now provided by Stephens and
Wells Fargo Bank and

44
<PAGE>

was entitled to monthly administration fees at the annual rate of 0.03% of each
Fund's average daily net assets. For the years ended December 31, 1995 and 1996,
Stephens was paid, and for the year ended December 31, 1997, Wells Fargo and
Stephens were paid, administration fees as follows:

<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
Fund 12/31/95 12/31/96 12/31/97
---- -------- -------- --------
<S> <C> <C> <C>
Asset Allocation $0 $16,872 $36,082
Growth $0 $ 6,291 $28,024
Money Market $0 $ 0 $ 8,107
U.S. Government Allocation $0 $ 0 $10,010
</TABLE>

CUSTODIAN. Wells Fargo Bank acts as Custodian for the Non-Allocation Funds.
Barclays Global Investors, N.A. ("BGI") acts as Custodian for the Asset
Allocation and U.S. Government Allocation Funds. 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 to the Equity Non-Allocation Funds, Wells Fargo Bank
is entitled to an asset-based fee and transaction charges. BGI is not entitled
to receive compensation for its services as Custodian to the Allocation Funds so
long as its subsidiary, BGFA, is entitled to receive fees for providing
investment advisory services to such Funds.

FUND ACCOUNTANT. Wells Fargo Bank acts as Fund Accountant for each Fund. The
Fund Accountant, among other things, computes net asset values on a daily basis,
and performance calculations on a regular basis and as requested by the Funds.
For providing such services, Wells Fargo Bank will be entitled to receive from
each Fund a monthly base fee of $2,000, plus a fee equal to an annual rate of
0.070% of the first $50,000,000 of the Fund's average daily net assets, 0.045%
of the next $50,000,000, and 0.020% of the average daily net assets in excess of
$100,000,000.

TRANSFER AND DIVIDEND DISBURSING AGENT. Wells Fargo Bank acts as Transfer and
Dividend Disbursing Agent for the Funds. For its services as transfer and
dividend disbursing agent to the Funds, Wells Fargo Bank is entitled to receive
monthly payments at the annual rate of 0.10% of the Money Market Fund's average
daily net assets and 0.14% of each other Fund's average daily net assets. Under
the transfer agency agreement in place for the year ended December 31, 1997,
Wells Fargo Bank was entitled to be compensated at an annual rate of 0.05% of
each Fund's average daily net assets when the assets of each Fund exceeded $20
million.

For the years ended December 31, 1995, 1996 and 1997, Wells Fargo Bank waived
all fees and expenses payable to it under the transfer agency and custody
agreements with the Funds, except for $55,960 of transfer agency fees paid by
the Asset Allocation Fund for the year ended December 31, 1997.

45
<PAGE>

SHAREHOLDER SERVICING AGENT. Wells Fargo LAT Trust has approved a Servicing
Plan on behalf of each Fund and has approved the Funds' entry into related
shareholder servicing agreements with financial institutions, including American
Skandia Life Insurance Company. 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 Company to 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 the average daily net assets of
the class of shares owned of record or beneficially by the customers of the
Servicing Agent during the period for which payment is being made. For
providing these services, a shareholder servicing agent is entitled to a fee
from the Fund of up to 0.25%, on an annualized basis, of the average daily net
asset value of the Fund shares owned by or attributable to such customers of the
Shareholder Servicing Agent. The Servicing Plan and related shareholder
servicing agreements were approved by Wells Fargo LAT Trust's Board of Trustees
including a majority of the Trustees who were not "interested persons" (as
defined in the Act) of the Funds and who had no direct or indirect financial
interest in the operation of the Servicing Plan or in any agreement related to
the Servicing Plan (the "Servicing Plan Qualified Trustees"). The actual fee
payable to servicing agents under the Servicing Plan for the Funds is
determined, within such limits, from time to time by mutual agreement between
Wells Fargo LAT Trust and each servicing agent and will not exceed the maximum
amounts payable by mutual funds sold by members of the NASD under the Conduct
Rules of the NASD.

General. The Servicing Plan for the Funds will continue in effect from year
-------
to year if such continuance is approved by a majority vote of the Trustees of
Wells Fargo LAT Trust, including the Trustees who are not "interested" persons,
as defined under the 1940 Act. Any form of servicing agreement related to the
Servicing Plan also must be approved by such vote of the Trustees. Servicing
agreements may be terminated at any time, without payment of any penalty, by
vote of a majority of the Trustees who are not "interested" persons, as defined
under the 1940 Act. No material amendment to the Servicing Plan may be made
except by a majority vote of the Trustees, including the Trustees who are not
"interested" persons, as defined under the 1940 Act.

The Servicing Plan for the Funds 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.

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.

46
<PAGE>

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 yield of a Fund and the
yield of a Class of shares in a Fund, 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.

Performance information may be advertised for non-standardized periods,
including year-to-date and other periods less than a year for the Funds.

AVERAGE ANNUAL TOTAL RETURN: Each Fund may advertise certain total return
information. Any Fund advertising would be accompanied by performance
information of the related insurance company separate accounts or by an
explanation that Fund performance information does not reflect separate account
fees and charges. As and to the extent required by the SEC, an average annual
total rate of return ("T") is computed by using the redeemable value at the end
of a specified period ("ERV") of a hypothetical initial investment of $1,000
("P") over a period of years ("n") according to the following formula:
P(1+T)n = ERV.

CUMULATIVE TOTAL RETURN: In addition to the above performance information,
the Funds may advertise cumulative total return of shares. Cumulative total
return of shares is computed on a per share basis and assumes the reinvestment
of dividends and distributions. Cumulative total return of shares generally is
expressed as a percentage rate which is calculated by combining the income and
principal charges for a specified period and dividing by the net asset value per
share at the beginning of the period. Advertisements may include the percentage
rate of total return of shares or may include the value of a hypothetical
investment in shares at the end of the period which assumes the application of
the percentage rate of total return.

For the periods ended December 31, 1997, the following chart provides the
average annual and cumulative total returns for the Funds listed below:

47
<PAGE>

CUMULATIVE
AVERAGE ANNUAL TOTAL RETURN: TOTAL
RETURN:

<TABLE>
<CAPTION>
ONE YEAR ENDED THREE YEARS ENDED INCEPTION TO INCEPTION TO
FUND 12/31/97 12/31/97 12/31/97 12/31/97
---- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Asset Allocation 20.88% 20.21% 16.22% 75.69%
Growth 17.33% 22.89% 19.51% 93.89%
U.S. Government Allocation 7.47% 8.54% 6.89% 28.38%
</TABLE>

YIELD CALCULATIONS: The [CORPORATE BOND AND] U.S. Government Allocation Funds
may advertise certain yield information. As and to the extent required by the
SEC, yield is calculated based on a 30-day (or one month) period, computed by
dividing the net investment income per share earned during the period by the net
asset value per share on the last day of the period, according to the following
formula: YIELD = 2[((a-b/cd)+1)6-1], 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 outstanding during the period that were
entitled to receive dividends; and d = the net asset value per share on the last
day of the period. The net investment income of each Fund includes actual
interest income, plus or minus amortized purchase discount (which may include
original issue discount) or premium, less accrued expenses. Realized and
unrealized gains and losses on portfolio securities are not included in a Fund's
net investment income. The U.S. Government Allocation Fund's 30-day yield for
the 30 days ended December 31, 1997 was 4.16%.

In addition, the Money Market Fund may advertise certain yield information.
Current yield for the Money Market Fund is calculated based on the net changes,
exclusive of capital changes, over a seven-day period, in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of the period, subtracting a hypothetical charge reflecting deductions from
shareholder accounts, and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7) with the resulting yield figure
carried to at least the nearest hundredth of one percent. The Fund's seven-day
yield for the period ended December 31, 1997 was 5.09%.

The yields for the [CORPORATE BOND,] U.S. Government Allocation, and Money
Market Funds 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 the Fund.

In addition, investors should recognize that changes in the net asset value of
shares of the [CORPORATE BOND AND] U.S. Government Allocation Funds will affect
the yield of the Funds for any specified period, and such changes should be
considered together with the Fund's yield in

48
<PAGE>

ascertaining the Fund's total return to shareholders for the period. Yield
information for the Funds may be useful in reviewing the performance of the
Funds and for providing a basis for comparison with investment alternatives. The
yield of a Fund, 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, Wells Fargo LAT Trust may quote the Fund's performance or price-earning
ratio in advertising and other types of literature as compared to the
performance of the S&P 500 Index, the Dow Jones Industrial Average, the Wilshire
5000 Equity Index, 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), Ten Year U.S.
Government Bond Average, S&P's Corporate Bond Yield Averages, Schabacter
Investment Management Indices, Salomon Brothers High Grade Bond Index, Lehman
Brothers Long-Term High Quality Government/Corporate Bond Index, other managed
or unmanaged indices or performance data of bonds, 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 criteria. The S&P 500 Index and the Dow Jones Industrial
Average are unmanaged indices of selected common stock prices. Unmanaged indices
may assume the reinvestment of dividends, but generally do not reflect
deductions for administrative and management costs and expenses. Managed indices
generally do reflect such deductions.

The Funds' performance also may be compared to those 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 is calculated by relating net asset value per share at the beginning
of a stated period to the net asset value of the investment, assuming
reinvestment of all gains distributions and dividends paid, at the end of the
period. The Money Market Fund's 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 a Fund's
past performance with that of its competitors. Of course, past performance
cannot be a guarantee of future results. Wells Fargo LAT 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 holder being
contacted by a selected broker or dealer. General mutual fund statistics
provided by the Investment Company Institute may also be used.

49
<PAGE>

Wells Fargo LAT Trust also may disclose, in advertising and other types of
literature, information and statements that Wells Capital Management, Inc.
("WCM" formerly, WFIM), a division 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.
Wells Fargo LAT Trust also may disclose in advertising and other types of sales
literature the assets and categories of assets under management by its
investment advisor or sub-advisor and the total amount of assets and mutual fund
assets managed by Wells Fargo Bank. As of October 31, 1998, Wells Fargo Bank and
its affiliates provided investment advisory services for approximately $62
billion of assets of individuals, trusts, estates and institutions and $23
billion of mutual fund assets.

In addition, Wells Fargo LAT 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. Wells
Fargo LAT 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."

Wells Fargo LAT Trust also may use the following information in advertisements
and other types of literature, only to the extent the information is appropriate
for a Fund: (i) the Consumer Price Index may be used to assess the real rate of
return from an investment in a Fund; (ii) other government statistics,
including, but not limited to, The Survey of Current Business, may be used to
illustrate investment attributes 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 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 a 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 a Fund
invests may be compared to relevant indices of stocks or surveys (e.g., S&P
Industry Surveys) to evaluate a Fund's historical performance or current or
potential value with respect to the particular industry or sector.

From time to time, Wells Fargo LAT Trust also may include in advertisements or
other marketing materials a discussion of certain of the objectives of the
investment strategy of the U.S. Government Allocation Fund and the Asset
Allocation Fund and a comparison of this strategy with other investment
strategies. In particular, the responsiveness of these Funds to changing market
conditions may be discussed. For example, Wells Fargo LAT Trust may describe the
benefits derived by having Wells Fargo Bank, as Investment Advisor, and BGFA, as
investment sub-advisor, monitor and reallocate investments among the three asset
categories described in the Funds' Prospectus. Wells Fargo LAT Trust's
advertising or other marketing material also might set forth illustrations
depicting examples of recommended allocations in different market conditions. It
may state, for example, that when the model indicates that stocks

50
<PAGE>

represent a better value than bonds or money market instruments, the Asset
Allocation Fund might consist of 70% stocks, 25% bonds and 5% money market
instruments and that when the model indicates that bonds represent a better
value than stocks or money market instruments, the balance of assets might shift
to 60% bonds, 20% stocks and 20% money market instruments.

Wells Fargo LAT Trust also may discuss in advertising and other types of
literature that a Fund has been assigned a rating by an NRSRO, 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
net asset value of the Fund's shares or the suitability of the Fund for a
particular investor. In addition, the assigned rating would be subject to
change, suspension or withdrawal as a result of changes in, or unavailability
of, information relating to the Fund or its investments. Wells Fargo LAT Trust
may compare a Fund's performance with other investments which are assigned
ratings by NRSROs. Any such comparisons may be useful to investors who wish to
compare the Fund's past performance with other rated investments.

DETERMINATION OF NET ASSET VALUE

Net asset value per share for each of the Non-Money Market Funds is determined
by the custodian of the Fund at 1:00 p.m. (Pacific time) on each day the New
York Stock Exchange ("NYSE") is open for trading. Net asset value per share for
the Money Market Fund is determined by the custodian at 9:00 a.m. (Pacific time)
on each day Wells Fargo Bank is open for business.

NON-MONEY MARKET FUNDS. Securities of a Non-Money Market Fund for which
market quotations are available are valued at latest prices. Securities for
which the primary market is a national securities exchange or the National
Association of Securities Dealers Automated Quotations National Market System
are valued at last sale prices. In the absence of any sale of such securities on
the valuation date and in the case of other securities, including U.S.
Government obligations but excluding debt instruments maturing in 60 days or
less, the valuations are based on latest quoted bid prices. Debt instruments
maturing in 60 days or less are valued at amortized cost. Futures contracts are
marked to market daily at their respective settlement prices determined by the
relevant exchange. These prices are not necessarily final closing prices but are
intended to represent prices prevailing during the final 30 seconds of the
trading day. Options listed on a national exchange are valued at the last sale
price on the exchange on which they are traded at the close of the NYSE, or, in
the absence of any sale on the valuation date, at latest quoted bid prices.
Options not listed on a national exchange are valued at latest quoted bid
prices. In all cases, bid prices are furnished by a reputable independent
pricing service approved by the 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 the Funds for which current
market quotations are not readily available are valued at fair value as
determined in good faith by Wells Fargo LAT Trust's Trustees and in accordance
with procedures adopted by the Trustees.

51
<PAGE>

MONEY MARKET FUND. As indicated under "Investing in the Funds" in the
Prospectus, the Money Market Fund uses the amortized cost method to determine
the value of its portfolio securities pursuant to Rule 2a-7 under the 1940 Act.
The amortized cost method involves valuing a security at its cost and amortizing
any discount or premium over the period until maturity, regardless of the impact
of fluctuating interest rates on the market value of the security. While this
method provides certainty in valuation, it may result in periods during which
the value, as determined by amortized cost, is higher or lower than the price
that the Money Market Fund would receive if the security were sold. During these
periods, the yield to a shareholder may differ somewhat from that which could be
obtained from a similar fund that uses a method of valuation based upon market
prices. Thus, during periods of declining interest rates, if the use of the
amortized cost method resulted in a lower value of the Money Market Fund's
portfolio on a particular day, a prospective investor in the Fund would be able
to obtain a somewhat higher yield than would result from investment in a fund
using solely market values, and existing Fund shareholders would receive
correspondingly less income. The converse would apply during periods of rising
interest rates.

Rule 2a-7 provides that in order to value its portfolio using the amortized
cost method, a fund must maintain a dollar-weighted average portfolio maturity
of 90 days or less, purchase securities having remaining maturities (as defined
in Rule 2a-7) of thirteen months or less and invest only in those high-quality
securities that are determined by the Board of Trustees to present minimal
credit risks. The maturity of an instrument is generally deemed to be the period
remaining until the date when the principal amount thereof is due or the date on
which the instrument is to be redeemed. However, Rule 2a-7 provides that the
maturity of an instrument may be deemed shorter in the case of certain
instruments, including certain variable and floating rate instruments subject to
demand features. Pursuant to the Rule, the Board is required to establish
procedures designed to stabilize, to the extent reasonably possible, a fund's
price per share as computed for the purpose of sales and redemptions at $1.00.
Such procedures include review of the Money Market Fund's portfolio holdings by
the Board of Trustees, at such intervals as it may deem appropriate, to
determine whether the Money Market Fund's net asset value calculated by using
available market quotations deviates from $1.00 per share based on amortized
cost. The extent of any deviation is examined by the Board of Trustees. If such
deviation exceeds 1/2 of 1%, the Board will promptly consider what action, if
any, will be initiated. In the event the Board determines that a deviation
exists that may result in material dilution or other unfair results to investors
or existing shareholders, the Board will take such corrective action as it
regards as necessary and appropriate, including the sale of portfolio
instruments prior to maturity to realize capital gains or losses or to shorten
average portfolio maturity.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Payment for shares may, in the discretion of the advisor, be made in the form
of securities that are permissible investments for the Funds as described in the
Prospectuses. For further information about this form of payment please contact
Stephens. 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

52
<PAGE>

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.

As indicated in the Prospectus, the Trust may suspend redemption rights or
postpone redemption payments for such periods as are permitted under the 1940
Act. 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 Wells Fargo LAT Trust's responsibilities under the 1940 Act.

PORTFOLIO TRANSACTIONS

Purchases and sales of equity securities on a securities exchange are effected
through brokers who charge a negotiated commission for their services. Orders
may be directed to any broker including, to the extent and in the manner
permitted by applicable law, Stephens or Wells Fargo Securities Inc. In the
over-the-counter market, securities are generally traded on a "net" basis with
dealers acting as principal for their own accounts without a stated commission,
although the price of the security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price that includes
an amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount.

Purchases and sales of non-equity securities are usually principal
transactions. Non-equity securities normally are purchased or sold from or to
dealers serving as market makers for the securities at a net price. Each of the
Funds also may purchase portfolio securities in underwritten offerings and may
purchase securities directly from the issuer. Generally, money market securities
are traded on a net basis and do not involve brokerage commissions. The cost of
executing non-equity securities transactions consists primarily of dealer
spreads and underwriting commissions. Under the 1940 Act, persons affiliated
with Wells Fargo LAT Trust are prohibited from dealing with Wells Fargo LAT
Trust as principals 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.

Wells Fargo LAT 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 Wells Fargo LAT Trust's Board of Trustees, Wells Fargo
Bank, as advisor, or BGFA, as sub-advisor, is responsible for each Fund's
portfolio decisions and the placing of portfolio transactions. In placing
orders, it is the policy of Wells Fargo LAT 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 involved. Wells Fargo Bank and BGFA generally seek
reasonably competitive spreads or commissions.

In assessing the best overall terms available for any transaction, Wells Fargo
Bank and BGFA consider factors deemed relevant, including the breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing

53
<PAGE>

basis. As a result, the Master Portfolio may pay a broker/dealer which furnishes
brokerage and research services a higher commission than that which may be
charged by another broker/dealer for effecting the same transaction. Such
brokerage and research services might consist of reports and statistics relating
to specific companies or industries, general summaries of groups of stocks or
bonds and their comparative earnings and yields, or broad overviews of the
stock, bond and government securities markets and the economy.

Supplementary research information so received is in addition to, and not in
lieu of, services required to be performed by Wells Fargo Bank and BGFA and does
not reduce the advisory fees payable by a Fund. The Board of Trustees will
periodically review the commissions paid by each Fund to consider whether the
commissions paid over representative periods of time appear to be reasonable in
relation to the benefits inuring to the Fund. It is possible that certain of the
supplementary research or other services received will primarily benefit one or
more other investment companies or other accounts for which investment
discretion is exercised. Conversely, a Fund may be the primary beneficiary of
the research or services received as a result of portfolio transactions effected
for such other account or investment company.

Under Section 28(e) of the Securities Exchange Act of 1934, an advisor shall
not be "deemed to have acted unlawfully or to have breached its fiduciary duty"
solely because under certain circumstances it has caused the account to pay a
higher commission than the lowest available. To obtain the benefit of Section
28(e), an advisor must make a good faith determination that the commissions paid
are "reasonable in relation to the value of the brokerage and research services
provided . . . viewed in terms of either that particular transaction or its
overall responsibilities with respect to the accounts as to which it exercises
investment discretion and that the services provided by a broker provide an
advisor with lawful and appropriate assistance in the performance of its
investment decision-making responsibilities." Accordingly, the price to a Fund
in any transaction may be less favorable than that available from another
broker/dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered.

Broker/dealers may furnish statistical, research and other information or
services which are deemed to be beneficial to a Fund's investment programs.
Research services received from brokers supplement the advisors' own research
and may include the following types of information: statistical and background
information on industry groups and individual companies; forecasts and
interpretations with respect to U.S. and foreign economies, securities, market,
specific industry groups and individual companies; information on political
developments; portfolio management strategies; performance information on
securities and information concerning prices of securities; and information
supplied by specialized services with respect to the performance, investment
activities and fees and expenses of other mutual funds. Such information may be
communicated electronically, orally or in written form. Research services may
also include the providing of equipment used to communicate research
information, the arranging of meetings with management of companies and the
providing of access to consultants who supply research information.

The outside research assistance may be useful, since the brokers utilized by
the funds as a group may follow a broader universe of securities and other
matters than the staff of Wells Fargo

54
<PAGE>

Bank and/or BGFA can follow. In addition, this research may provide Wells Fargo
Bank and/or BGFA with a diverse perspective on financial markets. Research
services which are provided to Wells Fargo Bank and/or BGFA by brokers are
available for the benefit of all accounts managed or advised by Wells Fargo Bank
and/or BGFA. It is the opinion of Wells Fargo Bank that this material is
beneficial in supplementing their research and analysis; and, therefore, it may
benefit the Funds by improving the qualify of Wells Fargo Bank's investment
advice. The advisory fees paid by the Funds are not reduced because Wells Fargo
Bank and BGFA may receive such services.

BROKERAGE COMMISSIONS. For the year ended December 31, 1997, the Asset
Allocation and Growth Funds paid brokerage commissions in the amount of $5,722
and $184,263, respectively. For the year ended December 31, 1996, the Asset
Allocation and Growth Funds paid brokerage commissions in the amount of $2,682
and $85,137, respectively. For the year ended December 31, 1995, the Asset
Allocation and the Growth Funds paid brokerage commissions in the amount of $656
and $31,290, respectively. The other Funds did not pay brokerage commissions
during these periods.

SECURITIES OF REGULAR BROKER/DEALERS. On December 31, 1997, the Funds owned
securities (repurchase agreements) of their "regular brokers or dealers," as
defined in the 1940 Act, or their parents as follows:

<TABLE>
<CAPTION>
FUND Amount Regular Broker/Dealer
---- ------ ---------------------
<S> <C> <C>
Growth $2,793,000 Goldman Sachs & Co
$1,923,000 J.P. Morgan
Money Market $2,208,000 Goldman Sachs & Co
$3,679,000 HSBC Securities
$ 192,000 J P Morgan
$2,679,000 Morgan Stanley
</TABLE>

The other Funds did not own securities of their "regular brokers or dealers"
on December 31, 1997.

PORTFOLIO TURNOVER. For the year ended December 31, 1997, the portfolio
turnover rates for the Asset Allocation Fund, the Growth Fund and the U.S.
Government Allocation Fund were 156%, 124% and 135% respectively. The higher
portfolio turnover rates for the U.S. Government Allocation Fund should not
materially adversely affect this Fund because portfolio transactions ordinarily
will be made directly with principals on a net basis (although they may be
subject to markups) and, consequently, this Fund usually will not incur
brokerage expenses. Because the portfolio of the Money Market Fund consists of
securities with relatively short-term maturities, the Money Market Fund can
expect to experience a high portfolio turnover. A high portfolio turnover rate
should not adversely affect the Fund, however, because portfolio transactions
ordinarily will be made directly with principals on a net basis (although they
may be subject to markups) and, consequently, the Money Market Fund usually will
not incur brokerage

55
<PAGE>

expenses. The portfolio turnover rate will not be a limiting factor when Wells
Fargo Bank deems portfolio changes appropriate.

FUND EXPENSES

From time to time, Wells Fargo Bank and Stephens may waive fees from the Funds
in whole or in part. Any such waiver will reduce expenses of a Fund and,
accordingly, have a favorable impact on such Fund's performance. Except for the
expenses borne by Wells Fargo Bank and Stephens, the Funds bear all costs of
their respective operations, including the compensation of Wells Fargo LAT
Trust's trustees who are not officers or employees of Wells Fargo Bank or
Stephens or any of their affiliates; advisory, shareholder servicing, and
administration fees; payments pursuant to any Plans; interest charges; taxes;
fees and expenses of independent auditors; legal counsel, transfer agent and
dividend disbursing agent; expenses of redeeming Fund 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' or investors' 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 the custodian, including those of keeping books and accounts and
calculating the net asset value of each Fund; expenses of shareholders' or
investors' meetings; expenses relating to the issuance, registration and
qualification of shares of the Funds; pricing services; organizational expenses;
and any extraordinary expenses. Expenses attributable to a Fund are charged
against the respective assets of the Fund. A pro rata portion of the expenses of
Wells Fargo LAT Trust are charged against the assets of a Fund.

FEDERAL INCOME TAXES

The following information supplements and should be read in conjunction with
the Prospectus section entitled "Taxes." The Prospectus of the Funds describes
generally the tax treatment of the Funds and their shareholders (i.e., the
Participating Insurance Companies and their separate accounts). This section of
the SAI includes additional information concerning federal income taxes.

IN GENERAL. Each of the Funds intends to qualify as a separate "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). If so qualified, each Fund will not be subject to federal income tax
on its annual net investment income and net capital gains to the extent such net
investment income and net capital gains are distributed to the Fund's
shareholders.

For a Fund to qualify as a regulated investment company under the Code, the
following requirements must also be satisfied: (a) at least 90% of the Fund's
annual gross income must be derived from dividends, interest, certain payments
with respect to securities loans, gains from the sale or other disposition of
stock or securities or foreign currencies (to the extent such currency gains are
directly related to the Fund's principal business of investing in stock or
securities) and

56
<PAGE>

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; (b) the Fund must 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; and (c) for taxable years
beginning before August 5, 1997, the Fund, in general, must derive less than 30%
of its gross income in a taxable year from the sale or other disposition of
securities or options thereon held for less than three months.

Each Fund must also distribute or be deemed to distribute to its shareholders
at least 90% of its net investment income (which, for this purpose, includes net
short-term capital gains) earned in each taxable year. Although a Fund must
ordinarily make such distributions during the taxable year in which it realized
the net investment income, in certain circumstances, the Fund may make such
distributions in the following taxable year. Furthermore, distributions to a
shareholder of record declared in October, November or December of one taxable
year and paid by January 31 of the following taxable year are treated as paid by
December 31 of the first taxable year.

EXCISE TAX. A 4% non-deductible excise tax will be imposed on each Fund 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 PORTFOLIO INVESTMENTS. Except as provided herein, gains and
losses on the sale of portfolio securities by a Fund will 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 (including tax-exempt
obligations purchased after April 30, 1993) purchased by a 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 an option granted by a Fund lapses or is terminated through a closing
transaction, such as a repurchase by the Fund of the option from its holder, the
Fund will realize a short-term capital gain or loss, depending on whether the
premium income is greater or less than the amount paid by the Fund in the
closing transaction. Some realized capital losses may be deferred if they
result from a position which is part of a "straddle," discussed below. If
securities are sold by a Fund pursuant to the exercise of a call option written
by it, the Fund will add the premium

57
<PAGE>

received to the sale price of the securities delivered in determining the amount
of gain or loss on the sale. If securities are purchased by a Fund pursuant to
the exercise of a put option written by it, the Fund will subtract the premium
received from its cost basis in the securities purchased.

The amount of any gain or loss realized by a Fund on closing out a regulated
futures contract or a nonequity option will generally result in a realized
capital gain or loss for federal income tax purposes. Such contracts and
options held at the end of each fiscal year will be required to be "marked to
market" for federal income tax purposes pursuant to Section 1256 of the Code.
In this regard, they will be deemed to have been sold at market value. Under
Section 1256 of the Code, sixty percent (60%) of any net gain or loss recognized
on these deemed sales and sixty percent (60%) of any net realized gain or loss
from any actual sales, will generally be treated as long-term capital gain or
loss, and the remainder will be treated as short-term capital gain or loss.
Transactions that qualify as designated hedges are excepted from the "mark-to-
market" rule and the "60%/40%" rule.

Under Section 988 of the Code, a Fund will generally recognize ordinary income
or loss to the extent gain or loss realized on the disposition of portfolio
securities is attributable to changes in foreign currency exchange rates. In
addition, gain or loss realized on the disposition of a foreign currency forward
contract, futures contract, option or similar financial instrument, or of
foreign currency itself, will generally be treated as ordinary income or loss.
The Funds will attempt to monitor Section 988 transactions, where applicable, to
avoid adverse tax impact.

Offsetting positions held by the Funds involving certain financial forward,
futures or options contracts may be considered, for federal income tax purposes,
to constitute "straddles." "Straddles" are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of
"straddles" is governed by Section 1092 of the Code which, in certain
circumstances, overrides or modifies the provisions of Section 1256 of the Code,
described above. If a Fund were treated as entering into "straddles" by
engaging in certain financial forward, futures or option contracts, such
straddles could be characterized as "mixed straddles" if the futures, forwards,
or options comprising a part of such straddles were governed by Section 1256 of
the Code. A Fund may make one or more elections with respect to "mixed
straddles." Depending upon which election is made, if any, the results with
respect to the Fund may differ. Generally, to the extent the straddle rules
apply to positions established by a Fund, losses realized by the Fund may be
deferred to the extent of unrealized gain in any offsetting positions.
Moreover, as a result of the straddle and the conversion transaction rules,
short-term capital loss on straddle positions may be recharacterized as long-
term capital loss, and long-term capital gain may be characterized as short-term
capital gain or ordinary income.

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.

58
<PAGE>

If a Fund purchases shares in a "passive foreign investment company" ("PFIC"),
the Fund may be subject to federal income tax and an interest charge imposed by
the Internal Revenue Service upon certain distributions from the PFIC or the
Fund's disposition of its PFIC shares. If a Fund invests in a PFIC, the Fund
intends to make an available election to mark-to-market its interest in PFIC
shares. Under the election, the Fund will be treated as recognizing at the end
of each taxable year the difference, if any, between the fair market value of
its interest in the PFIC shares and its basis in such shares. In some
circumstances, the recognition of loss may be suspended. The Fund will adjust
its basis in the PFIC shares by the amount of income (or loss) recognized.
Although such income (or loss) will be taxable to the Fund as ordinary income
(or loss) notwithstanding any distributions by the PFIC, the Fund will not be
subject to federal income tax or the interest charge with respect to its
interest in the PFIC if it makes the available election if it makes the
available election.

Income and dividends received by the Fund from sources within foreign
countries and gains on the disposition of foreign securities may be subject to
withholding and other taxes imposed by foreign countries.

TAXATION OF A SEPARATE ACCOUNT OF A PARTICIPATING INSURANCE COMPANY. Under
the Code, the investments of a segregated asset account, such as the separate
accounts of the Participating Insurance Companies, must be "adequately
diversified" in order for the holders of the VA Contracts or VLI Policies
underlying the account to receive the tax-favored tax treatment generally
afforded holders of annuities or life insurance policies.

In general, the investments of a segregated asset account are considered to be
"adequately diversified" only if (i) no more than 55% of the value of the total
assets of the account is represented by any one investment; (ii) no more than
70% of the value of the total assets of the account is represented by any two
investments; (iii) no more than 80% of the value of the total assets of the
account is represented by any three investments; and (iv) no more than 90% of
the value of the total assets of the account is represented by any four
investments. In general, all securities of the same issuer are treated as a
single investment for such purposes. However, Treasury Regulations provide a
"look-through rule" with respect to a segregated asset account's investments in
a regulated investment company for purposes of the applicable diversification
requirements, provided certain conditions are satisfied by the regulated
investment company. In particular, if the beneficial interests in the regulated
investment company are held by one or more segregated asset accounts of one or
more insurance companies, and if public access to such regulated investment
company is available exclusively through the purchase of a VA Contract or VLI
Policy, then a segregated asset account's beneficial interest in the regulated
investment company is not treated as a single investment. Instead, a pro rata
portion of each asset of the regulated investment company is treated as an asset
of the segregated asset account.

Each Fund intends to satisfy the relevant conditions at all times to enable
the corresponding separate accounts to be "adequately diversified."
Accordingly, each separate account of the Participating Insurance Companies will
be able to treat its interests in a Fund as ownership of a pro rata portion of
each asset of the Fund, so that individual holders of the VA Contracts or VLI

59
<PAGE>

Policies underlying the separate account will qualify for favorable federal
income tax treatment under the Code.

For information concerning the federal income tax consequences for the holders
of VA Contracts and VLI Policies, such holders should consult the prospectus
used in connection with the issuance of their particular contracts or policies
and should consult their own tax advisors.

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 28%; 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). The amount of tax payable by an individual or corporation,
however, may be affected by a combination of tax laws covering, for example,
deductions, credits, deferrals, exemptions, sources of income and other matters.

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 Funds without corresponding current cash receipts. Although
each Fund will seek to avoid significant noncash income, such noncash income
could be recognized by a Fund, in which case the Fund 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 tax considerations generally
affecting investments in the Portfolio. Each investor is urged to consult his
or her tax advisor regarding specific questions as to Federal, state, local or
foreign taxes.

CAPITAL STOCK

Wells Fargo LAT Trust, an open-end, management investment company, was
organized as a Delaware Business Trust on October 28, 1993. As of the date of
this SAI, Wells Fargo LAT Trust's Board of Trustees has authorized the issuance
of seven series of shares, each representing an unlimited number of beneficial
interests -- the Asset Allocation Fund, the Equity Value Fund, the Corporate
Bond Fund, the Growth Fund, the Money Market Fund, the Strategic Growth Fund and
the U.S. Government Allocation Fund -- and the Board of Trustees may, in the
future, authorize the creation of additional investment portfolios.

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 would be voted upon only by shareholders of
the Fund involved. Additionally, approval of an advisory contract is a matter to
be determined separately by Fund. Approval by the shareholders of one Fund is
effective as to that Fund whether or not sufficient votes are received from the

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<PAGE>

Shareholders of the other investment portfolios to approve the proposal as to
those investment portfolios. As used in the Prospectus and in this SAI, 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 shareholders of more than 50% of the outstanding
interests 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 Wells Fargo LAT Trust as a
whole, means the vote of the lesser of (i) 67% of Wells Fargo LAT Trust's shares
represented at a meeting if the shareholders of more than 50% of Wells Fargo LAT
Trust's outstanding shares are present in person or by proxy, or (ii) more than
50% of Wells Fargo LAT Trust's outstanding shares. Shareholders are entitled to
one vote for each full share held and fractional votes for fractional shares
held.

Wells Fargo LAT 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.
However, Wells Fargo LAT Trust has undertaken to hold a special meeting of its
shareholders for the purpose of voting on the question of removal of a Trustee
or Trustees if requested in writing by the shareholders of at least 10% of Wells
Fargo LAT Trust's outstanding voting shares, and to assist in communicating with
other shareholders as required by Section 16(c) of the 1940 Act.

Each share of a Fund represents an equal proportional interest in the Fund
with each other share 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
Wells Fargo LAT Trust, shareholders of a Fund are entitled to receive the assets
attributable to the Fund that are available for distribution, and a distribution
of any general assets not attributable to a particular investment portfolio that
are available for distribution in such manner and on such basis as the Trustees
in their sole discretion may determine.

Shareholders are not entitled to any preemptive rights. All shares, when
issued as described in the Prospectus, will be fully paid and non-assessable by
Wells Fargo LAT Trust.

Set forth below 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 the voting
securities of a Fund as a whole.

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<PAGE>

5% OWNERSHIP AS OF NOVEMBER 1, 1998
<TABLE>
<CAPTION>
Name And Address Percentage
Name of Fund of Shareholder of Class Capacity
------------ -------------- -------- --------
<S> <C> <C> <C>
Asset Allocation American Skandia Life 99.93% Record
P.O. Box 883
Shelton, CT 06484

Equity Value American Skandia Life [99.93%] Record
P.O. Box 883
Shelton, CT 06484

Growth American Skandia Life 99.94% Record
P.O. Box 883
Shelton, CT 06484

Money Market American Skandia Life 99.79% Record
P.O. Box 883
Shelton, CT 06484

Strategic Growth American Skandia Life [99.79%] Record
P.O. Box 883
Shelton, CT 06484

U.S. Government American Skandia Life 94.35% Record
Allocation P.O. Box 883
Shelton, CT 06484

Security Equity 5.52% Record
Life Insurance Co.
84 Business Park Drive
Suite 303
Armonk, NY 10504
</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).

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<PAGE>

OTHER

The Registration Statement, including the Prospectus, the SAI and the exhibits
filed therewith, may be examined at the office of the SEC in Washington, D.C.
Statements contained in the Prospectus or the SAI as to the contents of any
contract or other document referred to herein or in the Prospectus 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.

The portfolio of investments, audited financial statements and independent
auditors' report for the Funds of Wells Fargo LAT Trust for the year ended
December 31, 1997 are attached to this SAI

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' Prospectus.

INDEPENDENT AUDITORS

KPMG Peat Marwick LLP has been selected as the independent auditors for Wells
Fargo LAT Trust. KPMG Peat Marwick LLP provides audit services, tax return
preparation and assistance and consultation in connection with review of certain
SEC filings. KPMG Peat Marwick LLP's address is Three Embarcadero Center, San
Francisco, California 94111.

FINANCIAL INFORMATION

The portfolio of investments, audited financial statements and independent
auditors' report for the Funds for the year ended December 31, 1997, are hereby
incorporated by reference to the Annual Reports as filed with the SEC on March
11, 1998.

The portfolios of investments, audited financial statements and independent
auditors report for the Funds for the period ended June 30, 1998 are hereby
incorporated by reference to the Company's Annual Reports as filed with the SEC
on August 31, 1998.

Annual and Semi-Annual Reports may be obtained by calling 1-800-222-8222.

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<PAGE>

APPENDIX

The following is a description of the ratings given by Moody's and S&P to
corporate bonds and 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 have speculative
characteristics as well. Moody's applies numerical modifiers: 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 bonds are "AAA,""AA,""A" and
"BBB." Bonds rated "AAA" have the highest ratings 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 issued 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 an "adequate capacity" 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.

CORPORATE COMMERCIAL PAPER

MOODY'S: The highest rating for corporate commercial paper is "P-1" (Prime-1).
Issuers rated "P-1" have a "superior capacity for repayment of short-term
promissory obligations." Issuers rated "P-2" (Prime-2) "have a strong capacity
for repayment of short-term promissory obligations," but earnings trends, while
sound, will be subject to more variation.

S&P: The "A-1" rating for corporate commercial paper indicates that the
"degree of safety regarding timely payment is either overwhelming or very
strong." Commercial paper with "overwhelming safety characteristics" will be
rated "A-1+." Commercial paper with a strong capacity for timely payments on
issues will be rated "A-2."

A-1
<PAGE>

LIFE & ANNUITY TRUST
FILE NOS. 33-70988; 811-8118

PART C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits.
---------------------------------

(a) Financial Statements:

The following audited financial statements for the Asset Allocation,
Growth (formerly, Growth and Income), Money Market and U.S. Government
Allocation Funds are included in Part B, Item 23:

Portfolio of Investments - December 31, 1997
Statement of Assets and Liabilities - December 31, 1997
Statement of Operations for the year ended December 31, 1997
Statements of Changes in Net Assets for the year ended December 31,
1997 Financial Highlights for the year ended December 31, 1997
Notes to the Financial Statements - December 31, 1997

(b) Exhibits:

<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
1(a) - Declaration of Trust, incorporated by reference to Post-
Effective Amendment No. 4, filed April 30, 1997.

1(b) - Amendment No. 1 to the Declaration of Trust, incorporated by
reference to Post-Effective Amendment No. 4, filed April 30,
1997.

1(c) - Amendment No. 2 to the Declaration of Trust, filed April 30,
1998.

1(d) - Amendment No. 3 to the Declaration of Trust, filed herewith.

2 - By-Laws, incorporated by reference to Post-Effective
Amendment No. 4, filed April 30, 1997.

3 - Not applicable

4 - Not applicable

5(a)(i) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Asset Allocation Fund and U.S. Government Allocation
Fund, incorporated by reference to Post-Effective Amendment
No. 4, filed April 30, 1997.

5(a)(ii) - Sub-Advisory Contract with Barclays Global Fund Advisors on
behalf of the Asset Allocation and U.S. Government
Allocation Fund, filed herewith.
</TABLE>

C-1
<PAGE>

<TABLE>
<S> <C>
5(b)(i) - Advisory Contract with Wells Fargo Bank, N.A. on behalf of
the Growth and Income Fund and the Money Market Fund,
incorporated by reference to Post-Effective Amendment No. 4,
filed April 30, 1997.

5(b)(ii) - Form of Advisory Contract with Wells Fargo Bank, N.A. on
behalf of the Equity Value and Strategic Growth Funds, filed
April 30, 1998.

5(b)(iii) - Sub-Advisory Contract with Wells Capital Management on
behalf of the Equity Value, Growth, Money Market and
Strategic Growth Funds, filed herewith.

6(a) - Distribution Agreement with Stephens Inc. on behalf of each
Fund, incorporated by reference to Post-Effective Amendment
No. 4, filed April 30, 1997.

6(b) - Participation Agreement with American Skandia Life Assurance
Corporation, incorporated by reference to Post-Effective
Amendment No. 4, filed April 30, 1997.

7 - Not applicable

8(a) - Custody Agreement with Wells Fargo Institutional Trust
Company, N.A. on behalf of the Asset Allocation Fund and the
U.S. Government Allocation Fund, incorporated by reference
to Post-Effective Amendment No. 2, filed on April 25, 1995,
and filed herewith.

8(b) - Custody Agreement with Wells Fargo Bank, N.A. on behalf of
the Equity Value, Growth, Money Market and Strategic Growth
Funds, filed April 30, 1998.

9(a) - Administration Agreement with Wells Fargo Bank, N.A. on
behalf of the Funds, filed herewith.

9(b) - Co-Administration Agreement with Stephens Inc. on behalf of
the Funds, filed herewith.

9(c) - Agency Agreement with Wells Fargo Bank, N.A. on behalf of
the Funds, filed April 30, 1998.

10 - Opinion and Consent of Counsel, filed herewith.

11 - Not applicable.

12 - Not applicable

13 - Investment Letter, incorporated by reference to the
Registration Statement on Form N-1A, filed on October 28,
1993.

14 - Not applicable

15 - Not applicable

16 - Schedule of Computation of Performance Data, filed April 30,
1998.
</TABLE>

C-2
<PAGE>

<TABLE>
<S> <C>
17 - Powers of Attorney for Joseph N. Hankin, Jack S. Euphrat, R.
Greg Feltus, Thomas S. Goho, W. Rodney Hughes, Tucker Morse
and Peter G. Gordon, filed April 30, 1998.
</TABLE>

Item 25. Persons Controlled by or Under
Common Control with Registrant.
------------------------------

No person is controlled by or under common control with Registrant.

Item 26. Number of Holders of Securities.
-------------------------------

As of July 31, 1998 the number of record holders of each class of
securities of the Registrant was as follows:

<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Asset Allocation Fund 3

Equity Value Fund 2

Growth Fund 2

Money Market Fund 2

Strategic Growth Fund 2

U.S. Government Allocation Fund 3
</TABLE>

Item 27. 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 and its Funds. 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 28. Business and Other Connections
of Investment Adviser.
------------------------------

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

C-3
<PAGE>

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 the Registrant, none of the directors or executive
officers of Wells Fargo Bank, except those set forth below, 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. Set forth below are the names and principal businesses
of the directors and executive officers of Wells Fargo Bank who are or during
the past two fiscal years have been engaged in any other business, profession,
vocation or employment of a substantial nature for their own account or in the
capacity of director, officer, employee, partner or trustee. All the directors
of Wells Fargo Bank also serve as directors of Wells Fargo & Company.

<TABLE>
<CAPTION>
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ------------------- -----------------------------------------
<S> <C>
H. Jesse Arnelle Senior Partner of Arnelle, Hastie, McKee, Willis & Greene
Director 455 Market Street
San Francisco, CA 94105

Director of FPL Group, Inc.
700 Universe Blvd.
P.O. Box 14000
North Palm Beach, FL 33408

Michael R. Bowlin Chairman of the Board, Chief Executive Officer, Chief Operating
Officer and President of Atlantic Richfield Co. (ARCO)
Highway 150
Santa Paula, CA 93060

Edward Carson Chairman of the Board and Chief Executive Officer of
First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071

Director of Aztar Corporation
2390 East Camelback Road Suite 400
Phoenix, AZ 85016

Director of Castle & Cook, Inc.
10900 Wilshire Blvd.
Los Angeles, CA 90024
</TABLE>

C-4
<PAGE>

<TABLE>
<S> <C>
William S. Davila President and Director of The Vons Companies, Inc.
Director 618 Michillinda Avenue
Arcadia, CA 91007

Officer of Western Association of Food Chains
825 Colorado Blvd. #203
Los Angeles, CA 90041

Rayburn S. Dezember Director of CalMat Co.
Director 3200 San Fernando Road
Los Angeles, CA 90065

Director of Tejon Ranch Co.
P.O. Box 1000
Lebec, CA 93243

Director of Turner Casting Corp.
P.O. Box 1099
Cudahy, CA 90201

Director of The Bakersfield Californian
P.O. Box 440
1707 I Street
Bakersfield, CA 93302

Director of Kern County Economic Development Corp.
P.O. Box 1229
2700 M Street, Suite 225
Bakersfield, CA 93301

Chairman of the Board of Trustees of Whittier College
13406 East Philadelphia Avenue
P.O. Box 634
Whittier, CA 90608

Paul Hazen Chairman of the Board of Directors
Chairman of the and Chief Executive Officer of
Board of Directors Wells Fargo & Company
420 Montgomery Street
San Francisco, CA 94105

Director of Pacific Telesis Group
130 Kearny Street
San Francisco, CA 94108

Director of Phelps Dodge Corp.
2600 North Central Avenue
Phoenix, AZ 85004

Director of Safeway Inc.
Fourth and Jackson Streets
Oakland, CA 94660

Robert K. Jaedicke Accounting Professor and Dean Emeritus of
</TABLE>

C-5
<PAGE>

<TABLE>
<S> <C>
Director Graduate School of Business, Stanford University
Stanford, CA 94305

Director of Homestake Mining Co.
650 California Street
San Francisco, CA 94108

Director of California Water Service Company
1720 North First Street
San Jose, CA 95112

Director of Boise Cascade Corp.
1111 West Jefferson Street
P.O. Box 50
Boise, ID 83728

Director of Enron Corp.
1400 Smith Street
Houston, TX 77002
Director of GenCorp, Inc.
175 Ghent Road
Fairlawn, OH 44333

Thomas L. Lee Chairman and Chief Executive Officer
of The Newhall Land and Farming Company
10302 Avenue 7 1-2
Firebaugh, CA 93622

Director of Calmat Co.
501 El Charro Rod
Pleasanton, CA 94588

Director of the Los Angeles Area Chamber of Commerce

Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071

Ellen M. Newman President of Ellen Newman Associates
Director 323 Geary Street, Suite 507
San Francisco, CA 94102

Chair of Board of Trustees of
University of California at San Francisco Foundation
250 Executive Park Blvd., Suite 2000
San Francisco, CA 94143

Director of American Conservatory Theater
30 Grant Avenue
San Francisco, CA 94108

Director of California Chamber of Commerce
1201 K Street, 12th Floor
Sacramento, CA 95814
</TABLE>

C-6
<PAGE>

<TABLE>
<S> <C>
Philip J. Quigley Chairman, Chief Executive Officer and
Director Director of Pacific Telesis Group
130 Kearney Street, Rm. 3700
San Francisco, CA 94108

Director of Varian Associates
3050 Hansen Way
P.O. Box 10800
Palo Alto, CA 94303

Carl E. Reichardt Director of Ford Motor Company
Director The American Road
Dearborn, MI 48121

Director of Hospital Corporation of America,
HCA-Hospital Corp. of America
One Park Plaza
Nashville, TN 37203

Director of Pacific Gas and Electric Company
77 Beale Street
San Francisco, CA 94105

Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355

Donald B. Rice President, Chief Operating Officer and Director of
Director Teledyne, Inc.
2049 Century Park East
Los Angeles, CA 90067

Director of Vulcan Materials Company
One Metroplex Drive
Birmingham, AL 35209

Retired Secretary of the Air Force

Richard J. Stegemeier Chairman (Emeritus) of Unocal Corp
44141 Yucca Avenue
Lancaster, CA 93534

Director of Foundation Health Corporation
166 4th
Fort Irwin, CA 92310

Director of Halliburton Company
3600 Lincoln Plaza
500 North Alcard Street
Dallas, TX 75201

Director of Northrop Grumman corp.
1840 Century Park East
</TABLE>

C-7
<PAGE>

<TABLE>
<S> <C>
Los Angeles, CA 90067

Director of Outboard Marine Corporation
100 Seahorse Drive
Waukegan, IL 60085

Director of Pacific Enterprises
555 West Fifth Street Suite 2900
Los Angeles, CA 90031

Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071

Susan G. Swenson President and Chief Executive Officer of Cellular One
Director 651 Gateway Blvd.
San Francisco, CA 94080

David M. Tellep Chairman of the Board of Directors and
Chief Executive Officer of Lockheed Martin Corp.
6801 Rockledge Drive
Bethesda, MD 20817

Director of Edison International and
Southern California Edison Company
2244 Walnut Grove Ave.
Rosemead, CA 91770

Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071

Chang-Lin Tien Chancellor of University of California at Berkeley
Director UC at Berkeley
Berkeley, CA 94720

John A. Young President, Director and Chief Executive Officer of
Director Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304

Director of Chevron Corporation
225 Bush Street
San Francisco, CA 94104

William F. Zuendt President and Chief Operating Officer of
President Wells Fargo & Company
420 Montgomery Street
San Francisco, CA 94105

Director of 3Com Corp.
5400 Bayfront Plaza
</TABLE>

C-8
<PAGE>

<TABLE>
<S> <C>
P.O. Box 58145
Santa Clara, CA 95052

Director of MasterCard International
888 Seventh Avenue
New York, NY 10106

Trustee of Golden Gate University
536 Mission Street
San Francisco, CA 94163
</TABLE>

Barclays Global Fund Advisors ("BGFA"), a wholly-owned subsidiary of
Barclays Global Investors, N.A. ("BGI", formerly, Wells Fargo Institutional
Trust Company), serves as sub-adviser to the Asset Allocation and U.S.
Government Allocation Funds of the Trust and as adviser or sub-adviser to
certain other open-end management investment companies.

The directors and officers of BGFA consist primarily of persons who
during the past two years have been active in the investment management business
of the former sub-adviser to the Asset Allocation and U.S. Government
Allocation Funds, Wells Fargo Nikko Investment Advisors ("WFNIA") and, in some
cases, the service business of BGI. With the exception of Irving Cohen, each of
the directors and executive officers of BGFA will also have substantial
responsibilities as directors and/or officers of BGI. To the knowledge of the
Registrant, except as set forth below, 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.

<TABLE>
<CAPTION>
Name and Position Principal Business(es) During at
at BGFA Least the Last Two Fiscal Years
- ------- -------------------------------
<S> <C>
Frederick L.A. Grauer Director of BGFA and Co-Chairman and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105

Patricia Dunn Director of BGFA and C-Chairman and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105

Lawrence G. Tint Chairman of the Board of Directors of BGFA
Chairman and Director and Chief Executive Officer of BGI
45 Fremont Street, San Francisco, CA 94105

Geoffrey Fletcher Chief Financial Officer of BGFA and BGI since May 1997
Chief Financial Officer 45 Fremont Street, San Francisco, CA 94105
Managing Director and Principal Accounting Officer at
Bankers Trust Company from 1988 - 1997
505 Market Street, San Francisco, CA 94105
</TABLE>

Prior to January 1, 1996, WFNIA served as sub-adviser to the Asset
Allocation and U.S. Government Allocation Funds of the Trust and as adviser or
sub-adviser to various other

C-9
<PAGE>

open-end management investment companies. For additional information, see
"Organization and Management of the Funds" in the Prospectus and "Management" in
the Statement of Additional Information for the Funds. For information as to the
business, profession, vocation or employment of a substantial nature of each of
the officers and management committees of WFNIA, reference is made to WFNIA's
Form ADV and Schedules A and D filed under the Investment Advisers Act of 1940,
File No. 801-36479, incorporated herein by reference.

Item 29. 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 MasterWorks Funds Inc.,
Stagecoach Funds, Inc. and Stagecoach Trust, Nations Fund, Inc., Nations Fund
Trust, Nations Fund Portfolios, Inc., Nations LifeGoal Funds, Inc. and Nations
Institutional Reserves, and is the exclusive placement agent for Managed Series
Investment Trust and Master Investment Portfolio, 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 Advisors Act of 1940 (file No. 501-15510).

Item 30. 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
thereunder (collectively, "Records") at the offices of Stephens Inc., 111 Center
Street, Little Rock, Arkansas 72201.

(b) Wells Fargo Bank maintains all Records relating to its services as
investment adviser, administrator and custodian and transfer and dividend
disbursing agent 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, to the Asset Allocation and U.S.
Government Allocation Funds at 45 Fremont, San Francisco, California 94105.

(d) Stephens maintains all Records relating to its services as sponsor,
co- administrator and distributor at 111 Center Street, Little Rock, Arkansas
72201.

Item 31. Management Services.
-------------------

C-10
<PAGE>

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 32. Undertakings.
-------------

(a) Not Applicable.

(b) Not applicable.

(c) Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of its most current annual report to
shareholders, upon request and without charge.

(d) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the provisions
set forth above in response to Item 27, or otherwise, the
registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
policy as expressed in such Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a trustee, officer or controlling person of
the registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.

(e) Registrant undertakes to hold a special meeting of its
shareholders for the purpose of voting on the question of removal
of a trustee or trustees if requested in writing by the holders of
at least 10% of the Trust's outstanding voting securities, and to
assist in communicating with other shareholders as required by
Section 16(c) of the Investment Company Act of 1940.

C-11
<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 Registration Statement pursuant to
Rule 485(a)(2) under the Securities Act of 1933 and has duly caused this
Amendment to its Registration Statement on Form N-1A to be signed on its behalf
by the undersigned, thereto duly authorized in the City of Little Rock, State of
Arkansas on the 26th day of August, 1998.

LIFE & ANNUITY TRUST

By /s/ Richard H. Blank, Jr.
-------------------------
(Richard H. Blank, Jr.)
Secretary and Treasurer
(Principal Financial Officer)

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated:

Signature Title Date
--------- ----- ----
<S> <C> <C>
* Trustee, Chairman and President
------------------------- (Principal Executive Officer)
(R. Greg Feltus)

/s/ Richard H. Blank, Jr. Secretary and Treasurer 8/26/98
------------------------- (Principal Financial Officer)
(Richard H. Blank, Jr.)

* Trustee
-------------------------
(Jack S. Euphrat)

* Trustee
-------------------------
(Thomas S. Goho)

* Trustee
-------------------------
(Peter G. Gordon)

* Trustee
-------------------------
(Joseph N. Hankin)

* Trustee
-------------------------
(W. Rodney Hughes)

* Trustee
-------------------------
(J. Tucker Morse)

*By: /s/ Richard H. Blank, Jr.
-------------------------
Richard H. Blank, Jr.
As Attorney-in-Fact
August 26, 1998
</TABLE>
<PAGE>

LIFE & ANNUITY TRUST
FILE NOS. 33-70988; 811-8118

EXHIBIT INDEX
<TABLE>
<CAPTION>

EXHIBIT NUMBER DESCRIPTION
<S> <C>
EX-99.B1(d) Amendment No. 3 to the Declaration of Trust

EX-99.B5(a)(ii) Sub-Advisory Contract with Barclays Global Fund Advisors on
behalf of the Asset Allocation Fund

EX-99.B5(b)(iii) Sub-Advisory Contract with Wells Capital Management on behalf
of the Equity Value, Growth, Money Market and Strategic Growth
Funds

EX-99.B8(a) Custody Agreement with Wells Fargo Institutional Trust
Company, N.A. on behalf of the Asset Allocation Fund and the
U.S. Government Allocation Fund

EX-99.B9(a) Administration Agreement with Wells Fargo Bank, N.A. on behalf
of the Funds

EX-99.B9(b) Co-Administration Agreement with Wells Fargo Bank, N.A. and
Stephens Inc. on behalf of the Funds

EX-99.B10 Opinion of Counsel - Morrison & Foerster LLP
</TABLE>

<PAGE>

AMENDMENT NUMBER THREE TO THE

DECLARATION OF TRUST

LIFE & ANNUITY TRUST

This AMENDMENT NUMBER THREE to the DECLARATION OF TRUST of the Life &
Annuity Trust (the "Trust") is made on the 30th day of July, 1998 by the parties
signatory hereto, as trustees (hereinafter called the "Trustees").

W I T N E S S E T H :
- - - - - - - - - -

WHEREAS, the Trustees desire to add one new series of Interests, pursuant
to a vote of the majority of the Trustees held at the July 30, 1998 meeting of
the Board.

NOW, THEREFORE, the Trustees hereby declare that Paragraph 9.8(e) of
Article IX of the Trust's Declaration of Trust, dated October 26, 1993, is
amended, effective immediately, as follows:

ARTICLE IX

Holders
-------

9.8 Series of Interests. If the Trustees shall divide the Trust
-------------------
Property into two or more series the following provisions shall be applicable:

(e) There shall be seven series of Interests designated as the
"Asset Allocation Fund Series," the "Corporate Bond Fund Series," the "Equity
Value Fund Series," the "Growth Fund Series," the "Money Market Fund Series,"
the "Strategic Growth Fund Series," and the "U.S. Government Allocation Fund
Series." Each such series will consist of an unlimited number of Interests, and
shall have the rights and privileges as set forth herein.
<PAGE>

SIGNATURES

IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the 30th day of July, 1998.

Signature Title
--------- -----
<S> <C>
*
- ------------------------------- Trustee, Chairman and President
R. Greg Feltus (Principal Executive Officer)

/s/ Richard H. Blank, Jr.
- ------------------------------- Secretary and Treasurer
Richard H. Blank, Jr. (Principal Financial Officer)

*
- ------------------------------- Trustee
Jack S. Euphrat

*
- ------------------------------- Trustee
Thomas S. Goho

*
- ------------------------------- Trustee
Peter G. Gordon

*
- -------------------------------- Trustee
Joseph N. Hankin

*
- -------------------------------- Trustee
W. Rodney Hughes

*
- -------------------------------- Trustee
J. Tucker Morse

*By: /s/ Richard H. Blank, Jr.
---------------------------
Richard H. Blank, Jr.
As Attorney-in-Fact
July 30, 1998
</TABLE>

<PAGE>

SUB-ADVISORY CONTRACT

WELLS FARGO BANK, N.A.
525 Market Street
San Francisco, CA 94163

January 1, 1996

Barclays Global Fund Advisors
45 Fremont, 17th Floor
San Francisco, California 94105

Dear Sirs:

This will confirm the agreement by and among Wells Fargo Bank, N.A. (the
"Adviser"), Life & Annuity Trust (the "Trust"), on behalf of each Fund listed on
attached Appendix I (each, a "Fund" and collectively, the "Funds"), and Barclays
Global Fund Advisors (the "Sub-Adviser") as follows:

1. The Trust is a registered open-end management investment company
currently consisting of a number of investment portfolios, but which may from
time to time consist of a greater or lesser number of investment portfolios.
The Trust proposes to engage in the business of investing and reinvesting the
assets of the Funds in the manner and in accordance with the investment
objective and restrictions specified in the Trust's Registration Statement, as
amended from time to time (the "Registration Statement"), filed by the Trust
under the Investment Company Act of 1940 (the "Act") and the Securities Act of
1933. Copies of the Registration Statement have been furnished to the Adviser.
Any amendments to the Registration Statement shall be furnished to the Adviser
promptly.

2. The Trust has engaged the Adviser to manage the investing and
reinvesting of the assets of the Funds and to provide the advisory services
specified in the Advisory Contract between the Trust and the Adviser, dated as
of the date hereof, subject to the overall supervision of the Board of Trustees
of the Trust. Pursuant to Administration and Co-Administration Agreements
between the Trust, on behalf of the Funds, and the Administrator and Co-
Administrator (the "Administrators"), the Trust has engaged the Administrators
to provide the administration services specified therein.

3. (a) The Adviser hereby employs the Sub-Adviser to perform for the
Funds certain sub-advisory services and the Sub-Adviser hereby accepts such
employment. The Adviser shall retain the authority to establish and modify,
from time to time, the investment strategies and approaches to be followed by
the Sub-Adviser, subject, in all respects, to the supervision and direction of
the Trust's Board of Trustees and subject to compliance with the investment
objectives, policies and restrictions set forth in the Registration Statement.

1
<PAGE>

(b) Subject to the overall supervision and control of the Adviser and
the Trust, the Sub-Adviser shall be responsible for investing and reinvesting
the Funds' assets in a manner consistent with the investment strategies and
approaches referenced in subparagraph (a), above. In this regard, the Sub-
Adviser shall be responsible for implementing and monitoring the performance of
the investment model employed with respect to a Fund, in accordance with the
investment objective, policies and restrictions set forth in the Registration
Statement, the Act, and the provisions of the Internal Revenue Code of 1986
relating to investment companies, and shall furnish to the Adviser periodic
reports on the investment activity and performance of the Funds. The Sub-
Adviser shall also furnish such additional reports and information as the
Adviser and the Trust's Board of Trustees and officers shall reasonably request.

(c) The Sub-Adviser shall, at its expense, employ or associate with
itself such persons as the Sub-Adviser believes appropriate to assist it in
performing its obligations under this contract.

4. The Adviser shall be responsible for fees paid to the Sub-Adviser for
its services hereunder. The Sub-Adviser agrees that it shall have no claim
against the Trust or the Funds respecting compensation under this contract. In
consideration of the services to be rendered by the Sub-Adviser under this
contract, the Adviser shall pay the Sub-Adviser monthly fees at the rates
specified on Appendix I hereto. If the fee payable to the Sub-Adviser pursuant
to this Paragraph 4 begins to accrue on a day after the first day of any month
or if this contract terminates before the end of any month, the fee for the
period from the effective date to the end of the month, or from the beginning of
that month to the termination date, shall be prorated according to the
proportion that such period bears to the full month in which the effectiveness
or termination occurs. For purposes of calculating the monthly fee, the value
of a Fund's net assets shall be computed in the manner specified in the
Registration Statement and the Trust's Declaration of Trust for the computation
of the value of such Fund's net assets in connection with the determination of
the net asset value of Fund shares.

5. The Sub-Adviser shall give the Trust the benefit of the Sub-Adviser's
best judgment and efforts in rendering services under this contract. As
consideration and as an inducement to the Sub-Adviser's undertaking to render
these services, the Trust and the Adviser agree that the Sub-Adviser shall not
be liable under this contract for any mistake in judgment or in any other event
whatsoever except for lack of good faith, provided that nothing in this contract
shall be deemed to protect or purport to protect the Sub-Adviser against any
liability to the Adviser, the Trust or the holders of interests of the Funds to
which the Sub-Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of the Sub-
Adviser's duties under this contract or by reason of reckless disregard of its
obligations and duties hereunder.

6. This contract shall become effective as of its execution date and
shall thereafter continue in effect, provided that this contract shall continue
in effect for a period of more than two years from the date hereof only so long
as the continuance is specifically approved at least annually (a) by the vote of
a majority of a Fund's outstanding voting securities (as defined in the Act) or
by the Trust's Board of Trustees and (b) by the vote, cast in person at a
meeting called for

2
<PAGE>

the purpose of continuing this Sub-Advisory Contract, of a majority of the
Trust's Trustees who are not parties to this contract or "interested persons"
(as defined in the Act) of any such party. This contract may be terminated at
any time by the Trust, without the payment of any penalty, by a vote of a
majority of such Fund's outstanding voting securities (as defined in the Act) or
by a vote of a majority of the Trust's entire Board of Trustees on 60 days'
written notice to the Sub-Adviser, or by the Sub-Adviser on 60 days' written
notice to the Trust. This contract shall terminate automatically in the event of
its assignment (as defined in the Act).

7. Except to the extent necessary to perform the Sub-Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Sub-Adviser, or any affiliate of the Sub-Adviser, or
any employee of the Sub-Adviser, to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, firm, individual or association.

8. The Trust shall own and control all records generated on behalf of
the Trust as a result of services provided under this contract. In addition,
the Trust shall have the right to inspect, audit, and/or copy all records
pertaining to the performance of services under this contract.

9. This contract shall be governed by and construed in accordance with
the laws of the State of California.

3
<PAGE>

If the foregoing correctly sets forth the agreement by and among the
Adviser, the Trust and the Sub-Adviser, please so indicate by signing and
returning to the Trust the enclosed copy hereof.

Very truly yours,

WELLS FARGO BANK, N.A.

By: /s/ Michael J. Hogan
--------------------
Name: Michael J. Hogan
Title: Senior Vice President

By: /s/ Elizabeth A. Gottfried
--------------------------
Name: Elizabeth A. Gottfried
Title: Vice President

AGREED to as of the date set forth above
and as amended on October 30, 1997and
January 29, 1998:

BARCLAYS GLOBAL FUND ADVISORS

By: /s/ Stephen E. Rogers
---------------------
Name: Stephen E. Rogers
Title: Principal

ACCEPTED as of the date set forth above
and as amended on October 30, 1997and
January 29, 1998:

LIFE & ANNUITY TRUST
on behalf of each Fund listed on
attached Appendix I

By: /s/ Richard H. Blank, Jr.
-------------------------
Richard H. Blank, Jr.
Chief Operating Officer

4
<PAGE>

APPENDIX I

Sub-advisory fees shall be paid monthly on the first business day of each
month, at the annual rates specified below of each Fund's average daily value
(as determined on each day that such value is determined for the Fund at the
time set forth in the Prospectus for determining net asset value per share)
during the preceding month.

Fund Investment Advisory Fee
---- -----------------------

Asset Allocation Fund 0.15% of first $900 million
0.10% over $900 million

U.S. Government Allocation Fund 0.05% of first $75 million
0.04% of next $75 million
0.03% over $150 million

Approved as amended: October 30, 1997
Approved as amended: January 29, 1998

<PAGE>

EXHIBIT 99.B5

SUB-ADVISORY CONTRACT

WELLS FARGO BANK, N.A.
525 Market Street
San Francisco, CA 94163

May 1, 1998

Wells Capital Management
525 Market Street
San Francisco, California 94163

Dear Sirs:

This will confirm the agreement by and among Wells Fargo Bank, N.A. (the
"Advisor"), Life & Annuity Trust (the "Trust"), on behalf of each Fund listed on
attached Appendix I, (each, a "Fund" and collectively, the "Funds") and Wells
Capital Management (the "Sub-Advisor") as follows:

1. The Trust is a registered open-end management investment company
currently consisting of a number of investment portfolios, but which may from
time to time consist of a greater or lesser number of investment portfolios. The
Trust proposes to engage in the business of investing and reinvesting the assets
of the Funds in the manner and in accordance with the investment objective and
restrictions specified in the Trust's Registration Statement, as amended from
time to time (the "Registration Statement"), filed by the Trust under the
Investment Company Act of 1940 (the "Act") and the Securities Act of 1933.
Copies of the Registration Statement have been furnished to the Advisor. Any
amendments to the Registration Statement shall be furnished to the Advisor
promptly.

2. The Trust has engaged the Advisor to manage the investing and
reinvesting of the Funds' assets and to provide the advisory services specified
elsewhere in the Advisory Contract between the Trust and the Advisor, subject to
the overall supervision of the Board of Trustees of the Trust. Pursuant to
Administration and Co-Administration Agreements between and among the Trust, on
behalf of the Funds, and the administrator and co-administrator (the
"Administrators"), the Trust has engaged the Administrators to provide the
administration services specified therein.

3. (a) The Advisor hereby employs the Sub-Advisor to perform for the Funds
certain advisory services and the Sub-Advisor hereby accepts such employment.
The Advisor shall retain the authority to establish and modify, from time to
time, the investment strategies and approaches followed by the Sub-Advisor,
subject, in all respects, to the supervision and direction of the Trust's Board
of Trustees and subject to compliance with the investment objective, policies
and restrictions set forth in the Registration Statement.
<PAGE>

(b) Subject to the overall supervision and control of the Advisor and the
Trust, the Sub-Advisor shall be responsible for investing and reinvesting the
Funds' assets in a manner consistent with the investment strategies and
approaches referenced in subparagraph (a), above. In this regard, the Sub-
Advisor, in accordance with the investment objective, policies and restrictions
set forth in the Registration Statement, shall be responsible for implementing
and monitoring the performance of the investment model employed with respect to
a Fund and shall furnish to the Advisor periodic reports on the investment
activity and performance of the Funds. The Sub-Advisor shall also furnish such
additional reports and information as the Advisor and the Trust's Board of
Trustees and officers shall reasonably request.

(c) The Sub-Advisor shall, at its expense, employ or associate with
itself such persons as the Sub-Advisor believes appropriate to assist it in
performing its obligations under this contract.

4. The Advisor shall be responsible for the fees paid to the Sub-Advisor
for its services thereunder. The Sub-Advisor agrees that it shall have no claim
against the Trust or the Fund respecting compensation under this contract. In
consideration of the services to be rendered by the Sub-Advisor under this
contract, the Advisor shall pay the Sub-Advisor monthly fees at the rates
specified on Appendix 1 hereto. If the fee payable to the Sub-Advisor pursuant
to this Paragraph 4 begins to accrue on a day after the first day of any month
or if this contract terminates before the end of any month, the fee for the
period from the effective date to the end of the month or from the beginning of
that month to the termination date, shall be prorated according to the
proportion that such period bears to the full month in which the effectiveness
or termination occurs. For purposes of calculating the monthly fee, the value of
a Fund's net assets shall be computed in the manner specified in the
Registration Statement for the computation of the value of such Fund's net
assets in connection with the determination of the net asset value of Fund
shares.

5. The Sub-Advisor shall give the Trust the benefit of the Sub-Advisor's
best judgment and efforts in rendering services under this contract. As
consideration and as an inducement to the Sub-Advisor's undertaking to render
these services, the Trust and the Advisor agree that the Sub-Advisor shall not
be liable under this contract for any mistake in judgment or in any other event
whatsoever except for lack of good faith, provided that nothing in this contract
shall be deemed to protect or purport to protect the Sub-Advisor against any
liability to the Advisor, the Trust or its shareholders to which the Sub-Advisor
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Sub-Advisor's duties under this contract or
by reason of reckless disregard of its obligations and duties thereunder.

6. This contract shall become effective as of its execution date and shall
thereafter continue in effect, provided that this contract shall continue in
effect for a period of more than two years from the date hereof only so long as
the continuance is specifically approved at least annually (a) by the vote of a
majority of a Fund's outstanding voting securities (as defined in the Act) or by
the Trust's Board of Trustees and (b) by the vote, cast in person at a meeting
called specifically for the purpose of continuing this Sub-Advisory Contract, of
a majority of the Trust's Trustees who are not parties to this contract or
"interested persons" (as defined in the

2
<PAGE>

Act) of any such party. This contract may be terminated, upon 60 days' written
notice to the Sub-Advisor, by the Trust, without the payment of any penalty, by
a vote of a majority of such Fund's outstanding voting securities (as defined in
the Act) or by a vote of a majority of the Trust's entire Board of Trustees. The
Sub-Advisor may terminate this contract on 60 days' written notice to the Trust.
This contract shall terminate automatically in the event of its assignment (as
defined in the Act).

7. Except to the extent necessary to perform the Sub-Advisor's obligations
under this contract, nothing herein shall be deemed to limit or restrict the
right of the Sub-Advisor, or any affiliate of the Sub-Advisor, or any employee
of the Sub-Advisor, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.

8. This contract shall be governed by and construed in accordance with the
laws of the State of California.

3
<PAGE>
PAGE>

If the foregoing correctly sets forth the agreement by and among the Trust,
the Advisor and the Sub-Advisor, please so indicate by signing and returning to
the Trust the enclosed copy hereof.

Very truly yours,

WELLS FARGO BANK, N.A.

By: /s/ Michael J. Hogan
------------------------------
Name: Michael J. Hogan
Title: Senior Vice President

By: /a/ Elizabeth A. Gottfried
------------------------------
Name: Elizabeth A. Gottfried
Title: Vice President

AGREED to as of the date set forth above:

WELLS CAPITAL MANAGEMENT, INC.

By: /s/ Robert Bissell
Name: Robert Bissell
Title: Executive Vice President

ACCEPTED as of the date
set forth above:

LIFE & ANNUITY TRUST,
on behalf of each Fund listed on
attached Appendix I

By: /s/ Richard H. Blank, Jr.
---------------------------
Richard H. Blank, Jr.
Chief Operating Officer

4
<PAGE>

APPENDIX I

FUND FEE (PER FUND)
- ------------------------------------------------------------------------------------------
<S> <C>
Equity Value Fund 0.25% of the first $200 million in assets
Growth Fund 0.20% of the next $200 million in assets
Strategic Growth Fund 0.15% of all assets over $400 million
- ------------------------------------------------------------------------------------------
Money Market Fund 0.05% of the first $960 million in assets
0.04% of all assets above $960 million
- ------------------------------------------------------------------------------------------
Corporate Bond Fund 0.15% of the first $400 million in assets
0.125% of the next $400 million in assets
0.10% of all assets over $800 million
- ------------------------------------------------------------------------------------------
</TABLE>

Approved: April 30, 1998

Approved as amended: July 30, 1998 to include the Corporate Bond Fund

<PAGE>

CUSTODY AGREEMENT

This Agreement is made as of the 15th day of November, 1993 (the "Agreement"),
by and between VARIABLE INSURANCE PRODUCT TRUST on behalf of the Funds listed at
Exhibit A (each a "Fund"), and Wells Fargo Institutional Trust Company, N.A., a
special purpose trust company (the "Custodian").

WITNESSETH:

that for and in consideration of the mutual promises hereinafter set forth the
Fund and the Custodian agree as follows:

1. Definitions
-----------

The word "securities" as used herein include stocks, shares, bonds,
debentures, notes, mortgages, or other obligations and any
certificates, receipts, warrants, options or other instruments
representing rights to receive, purchase, or subscribe for the same or
evidencing or representing any other rights or interests therein, or
in any property or assets.

The words "officers' certificate" shall mean a certification in
writing signed in the name of the Fund by those persons who are
officers of the Fund who are duly authorized to sign by the Board of
Trustees of the Fund (the "Board of Trustees").

2. Names, Titles and Signatures of Trust's Officers
------------------------------------------------

An officer of the Fund will certify to Custodian the names and
signatures of those persons authorized to sign the officers'
certificates described in Section 1 hereof, and the names of the
members of the Board of Trustees, together with any charges which may
occur from time to time.

3. Appointments of Custodian: Receipt and Disbursement of Money
------------------------------------------------------------

A. The Fund hereby appoints Custodian as custodian of all securities
and moneys at any time owned by the Fund during the term of this
Agreement. Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth.

B. Custodian shall open and maintain a separate account or accounts
in the name of the Fund. Custodian shall hold in such account or
accounts, subject to the provisions hereof, all cash received by
it from or for the account of the Fund. Custodian shall make
payments of cash to, or for the account of, the Fund from such
cash only (a) for the purchase of securities for the portfolio of
the Fund upon the delivery of such securities to Custodian,
registered in the name of the Fund or in the name of the nominee
of Custodian referred to in Section 7 hereof or in the proper form
for transfer, (b) for the purchase or redemption of shares of
beneficial ownership of the Fund, (c) for the payment of interest,
dividends, taxes,

1
<PAGE>

Trustee's fees or operating expenses (including, without
limitation, fees for legal, accounting and auditing services and
expense for printing and postage), (d) for payments in connection
with the conversion, exchange or surrender of securities owned or
subscribed to by the Fund held by or to be delivered to Custodian,
or (e) for other purposes certified by resolution of the Fund's
Board of Trustees. Before making any such payment Custodian shall
receive instructions from the Fund requesting such payment.

C. Custodian is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received by
Custodian for the account of the Fund.

4. Receipt of Securities
---------------------

Custodian shall hold in a separate account, pursuant to the provisions
hereof, all securities received by it from or for the account of the
Fund. All such securities are to be held or disposed of by Custodian
for, and subject at all times to the instructions of, the Fund
pursuant to the terms of this Agreement. Custodian shall have no
power or authority to assign, hypothecate, pledge or otherwise dispose
of any such securities and investments, except pursuant to the
direction of the Fund and only for the account of such Fund as set
forth in Section 5 of this Agreement.

5. Transfer, Exchange, Redelivery, etc. of Securities
--------------------------------------------------

Custodian shall have power to release or deliver any securities of the
Fund held by it pursuant to this Agreement on the direction of the
Fund. Custodian agrees to transfer, exchange or deliver securities
held by it hereunder only (a) for sales of such securities for the
account of such Fund upon receipt by Custodian of payment therefor,
(b) when such securities are called, redeemed or retired or otherwise
become payable, (c) for examination by an broker selling any such
securities in accordance with "street delivery" custom, (d) in
exchange for, or upon conversion into, other securities alone or other
securities and cash whether pursuant to any plan or merger,
consolidation, reorganization, recapitalization or readjustment, or
otherwise, (e) upon conversion of such securities pursuant to their
terms into other securities, (f) upon exercise of subscription,
purchase or other similar rights represented by such securities, (g)
for the purpose of exchanging interim receipts or temporary securities
for definitive securities, (h) for other proper purposes. As to any
deliveries made by Custodian pursuant to items (a), (b), (d), (e),
(f), or (g), securities or cash receivable in exchange therefor shall
be deliverable to Custodian. Before making any such transfer,
exchange or delivery, Custodian shall receive (and may rely upon) an
officers' certificate requesting such transfer, exchange or delivery,
and stating that it is for a purpose permitted under the terms of
items (a) through (g) inclusive of this Section 5 and also, in respect
of item (h), upon receipt of an officers' certificate specifying the
securities to be delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom delivery of such securities
shall be made; provided, however,

2
<PAGE>

that an officers' certificate need not precede any such transfer,
exchange or delivery of a money market instrument if an authorized
officer of the Fund issues appropriate oral instructions to Custodian
and an appropriate officers' certificate is received by Custodian
within two business days thereafter.

6. Custodian's Acts Without Instructions
-------------------------------------

Unless and until Custodian receives an officers' certificate or other
written instructions to the contrary, Custodian shall: (a) present for
payment all coupons and other income items held by it for the account
of the Fund which call for payment upon presentation and hold the cash
received by it upon such payment for the account of the Fund; (b)
collect interest and cash dividends received, with notice to the Fund,
for the account of the Fund; (c) hold for the account of the Fund
hereunder all stock dividends, rights and similar securities issued
with respect to any -securities held by it hereunder; and (d) execute
as agent on behalf of the Fund all necessary ownership certificates
required by the Internal Revenue Code or the Income Tax Regulations of
the United States Treasury Department or under the laws of any state
now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the
extent it may lawfully do so.

7. Registration of Securities
--------------------------

Except as otherwise directed by an officers' certificate Custodian
shall register all securities, except such as are in bearer form, in
nominee form, and shall execute and deliver all such certificates in
connection therewith as may be required by such laws or regulations or
under the laws of any state. Custodian shall use its best efforts to
insure that the specific securities held by it hereunder shall be at
all times identifiable in its records.

The Fund shall from time to time furnish to Custodian appropriate
instruments to enable Custodian to hold or deliver in proper form for
transfer, or to register in the name of a nominee, any securities
which it may hold for the account of the Fund and which from time to
time may be registered in the name of the Fund.

8. Voting and Other Action
-----------------------

Neither Custodian nor any nominee of Custodian shall vote any of the
securities held hereunder by or for the account of the Fund, except in
Custodian shall execute and deliver such certificates in connection
with securities delivered to it or by it under this Agreement as may
be required, under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the
laws of any state, to exempt from taxation any exemptable transfers
and/or deliveries of any such securities.

3
<PAGE>

9. Concerning Custodian
--------------------

Custodian shall be paid as compensation for its services pursuant to
this Agreement such compensation as may from time to time be agreed
upon in writing among the parties hereto. Until modified in writing
such compensation shall be as set forth in Exhibit B attached hereto.

Custodian shall not be liable for any action taken in good faith upon
any certificate herein described or certified copy of any resolution
of the Board of Trustees, and may rely on the genuineness of any such
document which it may in good faith believe-to have been validly
executed.

The Fund agrees to reimburse and make Custodian and its nominee whole
from all taxes, charges, expenses, assessments, claims, and
liabilities including reasonable attorney's fees) incurred or assessed
against it or by its nominee in connection with the performance of
this Agreement, except such as may arise from Custodian's or its
nominee's own negligent action, negligent failure to act or willful
misconduct. In the event of any advance of cash for any purpose made
by Custodian resulting from orders or instructions of the Fund, or in
the event that Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Agreement (except such as may
arise from Custodian or its nominee's own negligent action, negligent
failure to act or willful misconduct, and excluding any compensation
payable by the Fund to Custodian hereunder), any property at any time
held for the account of the Fund shall be security therefor.

Custodian shall reimburse, indemnify and make the Fund whole for any
actual loss or damages, including reasonable fees and expenses of
counsel, arising from Custodian's negligent action, negligent failure
to act or its willful misconduct.

10. Reports by Custodian
--------------------

Custodian shall furnish the Fund from time to time with a statement
summarizing all transactions and entries for the account of the Fund.
Custodian shall furnish the Fund at the end of every month with a list
of the portfolio securities held for the Fund showing the aggregate
cost of each issue. Custodian shall furnish the Fund, at the close of
each quarter of the Fund's fiscal year, with a list showing the cost
of the securities held by it for the Fund hereunder, adjusted for all
commitments confirmed by the Fund as of such close, certified by a
duly authorized officer of Custodian. The books and records of
Custodian pertaining to its actions under this Agreement shall be open
to inspection and audit at reasonable times by officers of, and
auditors employed by, the Fund.

11. Termination of Agreement
------------------------

This Agreement may be terminated by the Fund on ninety (90) days
notice, given in writing and sent by registered mail to Custodian at
4S Fremont Street, San Francisco, California 94105, or to the Fund at
525 Market Street, Suite 1200, San

4
<PAGE>

Francisco, California 94163. Upon termination of this Agreement,
pending appointment of a successor to Custodian, Custodian shall
deliver cash, securities or other property of the Fund only to a bank
(as defined in the Investment Company Act of 1940, as amended "1940
Act") located in San Francisco, California of its own selection,
having an aggregate capital, surplus and undivided profits, as shown
by its last published report of condition of not less than Two Million
Dollars ($2,000,000) as custodian for the Fund to be held under terms
similar to those of this Agreement provided, however, that Custodian
shall not be required to make any such delivery or payment until full
payment shall have been made by the Fund of all liabilities
constituting a charge on or against Custodian, and until full payment
shall have been made to Custodian of all its fees, compensation, costs
and expenses, subject to the provisions of Section 10 of this
Agreement. This Agreement may not be assigned by Custodian without the
consent of the Fund, authorized or approved by a resolution of its
Board of Trustees.

12. Deposits of Securities in Securities Depositories
-------------------------------------------------

No provision of the Agreement shall be deemed to prevent the use by
Custodian of a central securities clearing agency or securities
depository; provided, however, that Custodian and the central
securities clearing agency or securities depository meet all
applicable federal and state laws and regulations (including all
applicable requirements of the 1940 Act, as amended, and the rules and
regulations promulgated thereunder) and the Board of Trustees approves
by resolution the use of such central securities clearing agency or
securities depository.

13. Records
-------

To the extent that Custodian in any capacity prepares or maintains any
records required to be maintained and preserved by the Fund pursuant
to the provisions of the 1940 Act or the rules and regulations
promulgated thereunder, Custodian agrees to make any such records
available to the Fund upon request and to preserve such records for
the periods prescribed in Rule 31a-2 under the 1940 Act.

The Trust shall own and control all records generated on behalf of the
Trust as a result of services provided under this agreement. In
addition, the Trust shall have the right to inspect, audit, and/or
copy all records pertaining to the performance of services under this
agreement.

14. Miscellaneous
-------------

This agreement has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of the
Trust. The obligation of this agreement shall only be binding upon
the assets and property of the relevant Fund, as provided for in the
Trust's Agreement and Declaration of Trust, and

5
<PAGE>

shall not be binding upon any trustee, officer or shareholder of the
Trust or Fund individually.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date above-written by their respective representatives
thereunto duly authorized.

Executed in several counterparts, each of which is an original.

VARIABLE INSURANCE PRODUCT
TRUST

By: /s/ R. Greg Feltus
---------------------------------------

Title: President
------------------------------------

By: /s/ Richard H. Blank, Jr.
---------------------------------------

Title: Chief Operating Officer
------------------------------------

WELLS FARGO INSTITUTIONAL TRUST
COMPANY, N.A.

By: /s/ Judith Root
---------------------------------------

Title: Principal
------------------------------------

By: /s/ Judith N. Nolte
-------------------------------------

Title: Principal
------------------------------------

6
<PAGE>

EXHIBIT A
---------

VARIABLE INSURANCE PRODUCT TRUST FUNDS
--------------------------------------

Asset Allocation Fund

U.S. Government Allocation Fund

A-i

<PAGE>

ADMINISTRATION AGREEMENT

LIFE & ANNUITY TRUST
111 Center Street
Little Rock, Arkansas 72201

THIS AGREEMENT is made as of this 1st day of May, 1998, by and between the
Life & Annuity Trust, a Delaware business trust ("Life & Annuity") and Wells
Fargo Bank, N.A., a national banking association ("Wells Fargo").

WHEREAS, Life & Annuity is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and

WHEREAS, Life & Annuity desires to retain Wells Fargo to render certain
administrative services to Life & Annuity's investment portfolios listed in
Appendix A (individually, a "Fund" and collectively, the "Funds"), and Wells
Fargo is willing to render such services; and

WHEREAS, Life & Annuity is retaining Stephens Inc. pursuant to a separate
Co-Administration Agreement with Life & Annuity and Wells Fargo to provide
certain other administrative services.

WITNESSETH:

NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed by the parties as follows:

1. Appointment. Life & Annuity hereby appoints Wells Fargo to act as
-----------
Administrator of the Funds, and Wells Fargo hereby accepts such appointment and
agrees to render such services and duties set forth in Paragraph 3, for the
compensation and on the terms herein provided. Each new investment portfolio
established in the future by Life & Annuity shall automatically become a "Fund"
for all purposes hereunder as if it were listed in Appendix A, absent written
notification to the contrary by either Life & Annuity or Wells Fargo.

2. Delivery of Documents. Life & Annuity shall furnish to, or cause to be
---------------------
furnished to, Wells Fargo originals of, or copies of, all books, records, and
other documents and papers related in any way to the administration of Life &
Annuity.

3. Duties as Administrator. Wells Fargo shall, at its expense, provide
-----------------------
the following administrative services in connection with the operations of Life
& Annuity and the Funds:

(a) track authorized vs. issued shares;

1
<PAGE>

(b) furnish statistical and research data;

(c) coordinate (or assist in) the preparation and filing with the U.S.
Securities and Exchange Commission of registration statements, notices, reports,
and other material required to be filed under applicable laws;

(d) coordinate (or assist in) the preparation of reports and other
information materials regarding the Funds including proxies and other
shareholder communications, and review prospectuses;

(e) prepare expense table information for annual updates;

(f) provide legal and regulatory advice to the Funds in connection with its
other administrative functions;

(g) provide office facilities and clerical support for the Funds;

(h) develop and implement procedures for monitoring compliance with
regulatory requirements and compliance with the Funds' investment objectives,
policies and restrictions;

(i) provide liaison with the Funds' independent auditors;

(j) prepare and file tax returns;

(k) review payments of Fund expenses;

(l) prepare expense budgeting and accruals;

(m) provide communication, coordination, and supervision services with
regard to the Funds' transfer agent, custodian, fund accountant, co-
administrator, and other service organizations that render recordkeeping or
shareholder communication services;

(n) provide information to the Funds' distributor concerning fund
performance and administration;

(o) assist Life & Annuity in the development of additional investment
portfolios;

(p) provide reports to the Funds' board of trustees regarding its
activities;

(q) assist in the preparation and assembly of meeting materials, including
comparable fee information, as required, for the Funds' board of trustees; and

2
<PAGE>

(r) provide any other administrative services reasonably necessary for the
operation of the Funds other than those services that are to be provided by
Stephens pursuant to its Co-Administration Agreement with Life & Annuity and
Wells Fargo, and by Life & Annuity's transfer and dividend disbursing agent,
custodian, and fund accountant, provided that nothing in this Agreement shall be
deemed to require Wells Fargo to provide any services that may not be provided
by it under applicable banking laws and regulations.

In performing all services under this agreement, Wells Fargo shall: (a) act
in conformity with Life & Annuity's Declaration of Trust and By-Laws, the 1940
Act, and any other applicable laws as may be amended from time to time; and Life
& Annuity's registration statement under the Securities Act of 1933 and the 1940
Act, as may be amended from time to time; (b) consult and coordinate with legal
counsel to Life & Annuity as necessary and appropriate; and (c) advise and
report to Life & Annuity and its legal counsel, as necessary and appropriate,
with respect to any compliance or other matters that come to its attention.

In connection with its duties under this Paragraph 3, Wells Fargo may, at
its own expense, enter into sub-administration agreements with other service
providers, provided that each such service provider agrees with Wells Fargo to
comply with all relevant provisions of the 1940 Act, the Investment Advisers Act
of 1940, any other applicable laws as may be amended from time to time, and all
relevant rules thereunder. Wells Fargo will provide Life & Annuity with a copy
of each sub-administration agreement it executes relating to Life & Annuity.
Wells Fargo will be liable for acts or omissions of any such sub-administrators
under the standards of care described herein under Paragraph 5.

In performing its services under this agreement, Wells Fargo shall
cooperate and coordinate with Stephens as necessary and appropriate and shall
provide such information to Stephens as is reasonably necessary or appropriate
for Stephens to perform its obligations to Life & Annuity.

4. Compensation. In consideration of the administration services to be
------------
rendered by Wells Fargo under this agreement, Life & Annuity shall pay Wells
Fargo a monthly fee at the annual rate of 0.03% of the average daily value (as
determined on each business day at the time set forth in the Prospectus for
determining net asset value per share) of the Funds' net assets during the
preceding month. If the fee payable to Wells Fargo pursuant to this Paragraph 4
begins to accrue before the end of any month or if this agreement terminates
before the end of any month, the fee for the period from the effective date to
the end of that month or from the beginning of that month to the termination
date, respectively, shall be prorated according to the proportion that the
period bears to the full month in which the effectiveness or termination occurs.
For purposes of calculating each such monthly fee, the value of each Fund's net
assets shall be computed in the manner specified in the Prospectus and Life &
Annuity's Declaration of Trust for the computation of the value of the Fund's
net assets in connection with the determination of the net asset value of Fund
shares. For purposes of this agreement, a "business day" is any day that Life &
Annuity is open for trading.

5. Limitation of Liability; Indemnification.
----------------------------------------

3
<PAGE>

(a) Wells Fargo shall not be liable for any error of judgment or mistake of
law or for any loss suffered by Life & Annuity in connection with the
performance of its obligations and duties under this agreement, except a loss
resulting from Wells Fargo's willful misfeasance, bad faith, or negligence in
the performance of its obligations and duties or that of its agents or sub-
administrators, or by reason of its or their reckless disregard thereof. Any
person, even though also an officer, director, employee or agent of Wells Fargo,
shall be deemed, when rendering services to Life & Annuity or acting on any
business of Life & Annuity (other than services or business in connection with
Wells Fargo's duties as Administrator hereunder) to be acting solely for Life &
Annuity and not as an officer, director, employee, or agent or one under the
control or discretion of Wells Fargo even though paid by it.

(b) Life & Annuity, on behalf of each Fund, will indemnify Wells Fargo
against and hold it harmless from any and all losses, claims, damages,
liabilities, or expenses (including reasonable counsel fees and expenses)
resulting from any claim, demand, action, or suit relating to the particular
Fund and not resulting from willful misfeasance, bad faith, or negligence of
Wells Fargo or its agents or sub-administrators in the performance of such
obligations and duties, or by reason of its or their reckless disregard thereof.
Wells Fargo will not confess any claim or settle or make any compromise in any
instance in which Life & Annuity will be asked to provide indemnification,
except with Life & Annuity's prior written consent. Any amounts payable by Life
& Annuity under this Paragraph 5(b) shall be satisfied only against the assets
of the Fund involved in the claim, demand, action, or suit and not against the
assets of any other Fund.

6. Life & Annuity expenses. Except as provided in each of Life &
-----------------------
Annuity's advisory contracts and its co-administration and distribution
agreements with Stephens, Life & Annuity shall bear all costs of its operations,
including the compensation of its trustees who are entitled to receive
compensation; advisory and administration fees; payments of distribution-related
expenses pursuant to any Rule 12b-1 Plan under the 1940 Act; governmental fees;
interest charges; taxes; fees and expenses of its independent accountants, 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 Rule 12b-1 Plan), shareholders' reports,
notices, proxy statements and reports to regulatory agencies; travel expenses of
trustees, officers and employees; office supplies; insurance premiums and
certain expenses relating to insurance coverage; trade association membership
dues; brokerage and other expenses connected with the execution of portfolio
securities transactions; fees and expenses of any custodian, including those for
keeping books and accounts and calculating the net asset value per share of the
Funds; expenses of shareholders' meetings; expenses relating to the issuance,
registration and qualification of shares of the Funds; pricing services, if any;
organizational expenses; and any extraordinary expenses. Expenses attributable
to one or more, but not all, of the Funds are charged against the assets of the
relevant Funds. General expenses of the Funds are allocated among the Funds in
a manner proportionate to the net assets of each Fund, on a transactional basis
or on such other basis as the Board of Trustees deems equitable.

4
<PAGE>

7. Amendment. This agreement may be amended at any time by mutual
---------
agreement in writing of Life & Annuity and Wells Fargo, provided that the Board
of Trustees of Life & Annuity approve any such amendment in advance.

8. Administrator's other businesses. Except to the extent necessary to
--------------------------------
perform Wells Fargo's obligations under this agreement, nothing herein shall be
deemed to limit or restrict the right of Wells Fargo, or any affiliate or
employee of Wells Fargo, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.

9. Duration. This agreement shall become effective on its execution date
--------
and shall remain in full force and effect for one year or until terminated
pursuant to the provisions in Paragraph 10, and it may be reapproved at least
annually by the Board of Trustees, including a majority of the trustees who are
not interested persons of Life & Annuity or any party to this agreement, as
defined by the 1940 Act.

10. Termination of Agreement. This agreement may be terminated at any
------------------------
time, without the payment of any penalty, by a vote of a majority of the members
of Life & Annuity's Board of Trustees, on 60 days' written notice to Wells
Fargo; or by Wells Fargo on 60 days' written notice to Life & Annuity.

11. Expense waivers. If in any fiscal year the total expenses of a Fund
---------------
incurred by, or allocated to, the Fund excluding taxes, interest, brokerage
commissions and other portfolio transaction expenses, other expenditures that
are capitalized in accordance with generally accepted accounting principles,
extraordinary expenses and amounts accrued or paid under a Rule 12b-1 Plan of
the Fund, but including the fees provided for in Paragraph 4 and those provided
for pursuant to the Fund's Advisory Agreement ("includible expenses"), exceed
the applicable voluntary expense waivers, if any, set forth in the Prospectus,
Wells Fargo shall waive or reimburse that portion of the excess derived by
multiplying the excess by a fraction, the numerator of which shall be the
percentage at which the excess portion attributable to the fee payable pursuant
to this agreement is calculated under Paragraph 4 hereof, and the denominator of
which shall be the sum of such percentage plus the percentage at which the
excess portion attributable to the fee payable pursuant to the Fund's Advisory
Agreement is calculated (the "Applicable Ratio"), but only to the extent of the
fee hereunder for the fiscal year. If the fees payable under this agreement
and/or the Fund's Advisory Agreement contributing to such excess portion are
calculated at more than one percentage rate, the Applicable Ratio shall be
calculated separately on the basis of, and applied separately to, the portions
of the fees calculated at the different rates. At the end of each month of Life
& Annuity's fiscal year, Life & Annuity shall review the includible expenses
accrued during that fiscal year to the end of that period and shall estimate the
includible expenses for the balance of that fiscal year. If as a result of that
review and estimation it appears likely that the includible expenses will exceed
the limitations referred to in this Paragraph 11 for a fiscal year with respect
to the Fund, the monthly fee set forth in Paragraph 4 payable to Wells Fargo for
such month shall be reduced, subject to a later adjustment, by an amount equal
to the Applicable Ratio times the pro rata portion (prorated on

5
<PAGE>

the basis of the remaining months of the fiscal year, including the month just
ended) of the amount by which the includible expenses for the fiscal year are
expected to exceed the limitations provided for in this Paragraph 11. For
purposes of computing the excess, if any, over the most restrictive applicable
expense limitation, the value of the Fund's net assets shall be computed in the
manner specified in Paragraph 4, and any reimbursements required to be made by
Wells Fargo shall be made once a year promptly after the end of Life & Annuity's
fiscal year.

12. Life & Annuity not bound to violate its Declaration. Nothing in this
---------------------------------------------------
agreement shall require Life & Annuity to take any action contrary to any
provision of its Declaration of Trust or to any applicable statute or
regulation.

13. Miscellaneous.
-------------

(a) Any notice or other instrument authorized or required by this
agreement to be given in writing to Life & Annuity or Wells Fargo shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.

To Life & Annuity:

Life & Annuity Trust
111 Center Street
Little Rock, Arkansas 72201
Attention: Richard H. Blank

To Wells Fargo:

Wells Fargo Bank, N.A.
525 Market Street, 19th Floor
San Francisco, California 94105
Attention: Michael J. Hogan

(b) This agreement shall extend to and be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
agreement shall not be subject to assignment (as that term is defined under the
1940 Act) without the written consent of the other party.

(d) This agreement may be executed in any number of counterparts each
of which shall be deemed to be an original and which collectively shall be
deemed to constitute only one agreement.

6
<PAGE>

(e) The captions of this agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.

In witness whereof, the parties have caused this agreement to be executed
by their duly authorized officers as of the day and year first above written.

LIFE & ANNUITY TRUST

By: /s/ Richard H. Blank
-------------------------------
Richard H. Blank
Chief Operating Officer

WELLS FARGO BANK, N.A.

By: /s/ Michael J. Hogan
-------------------------------
Michael J. Hogan
Senior Vice President

By: /s/ Elizabeth A. Gottfried
-------------------------------
Elizabeth A. Gottfried
Vice President

7
<PAGE>

Appendix A
Life & Annuity Funds

Asset Allocation Fund
Corporate Bond Fund
Equity Value Fund
Growth Fund
Money Market Fund
Strategic Growth Fund
U.S. Government Allocation Fund

Approved: January 16, 1997
Approved as Amended: January 29, 1998 to change the fee rate and to include the
Equity Value and Strategic Growth Funds

<PAGE>

CO-ADMINISTRATION AGREEMENT

LIFE & ANNUITY TRUST
111 Center Street
Little Rock, Arkansas 72201

THIS AGREEMENT is made as of this 1st day of May, 1998, by and among the
Life & Annuity Trust, a Delaware business trust ("Life & Annuity"), Stephens
Inc. ("Stephens"), an Arkansas corporation, and Wells Fargo Bank, N.A., a
national banking association ("Wells Fargo").

WHEREAS, Life & Annuity is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and

WHEREAS, Life & Annuity desires to retain Stephens to render certain co-
administrative services to Life & Annuity's investment portfolios listed in
Appendix A (individually, a "Fund" and collectively, the "Funds"), and Stephens
is willing to render such services; and

WHEREAS, Life & Annuity is retaining Wells Fargo pursuant to a separate
Administration Agreement to provide certain other administrative services.

WITNESSETH:

NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed by the parties as follows:

1. Appointment. Life & Annuity hereby appoints Stephens to act as Co-
-----------
Administrator of the Funds, subject to the control and supervision of Wells
Fargo and the overall supervision of the Board of Trustees of Life & Annuity.
Stephens hereby accepts such appointment and agrees to render such services and
duties set forth in Paragraph 3, for the compensation and on the terms herein
provided, the performance of which Wells Fargo agrees to supervise. Each new
investment portfolio established in the future by Life & Annuity shall
automatically become a "Fund" for all purposes hereunder as if it were listed in
Appendix A, absent written notification to the contrary by either Life &
Annuity, Wells Fargo, or Stephens.

2. Delivery of Documents. Life & Annuity and Wells Fargo shall furnish
---------------------
Stephens with originals of, or copies of, all books, records, and other
documents and papers related in any way to the administration of Life & Annuity.

3. Duties as Co-Administrator. Stephens shall, at its expense, provide
--------------------------
the following co-administrative services in connection with the operations of
Life & Annuity and the Funds:

1
<PAGE>

(a) prepare and file with the states registration statements, notices,
reports, and other material required to be filed under applicable laws;

(b) prepare and file Form 24F-2s and N-SARs;

(c) review bills submitted to the Funds and, upon determining that a bill
is appropriate, allocating amounts to the appropriate Funds and instructing the
Funds' custodian to pay such bills;

(d) provide officers at no cost to the Funds;

(e) provide office space and facilities;

(f) provide reports to the Funds' board of trustees ("Board") regarding its
activities;

(g) assist in the preparation and assembly of Board meeting materials,
including comparable fee information, as required;

(h) prepare and retain original minutes of Board meetings, shareholder
meetings, and other official corporate records; and

(i) maintain and preserve the records of the Funds, including financial and
corporate records;

(j) coordinate (or assist in) the preparation of shareholder reports and
other information materials regarding the Funds;

(k) provide legal and regulatory advice to the Funds in connection with its
other administrative functions;

(l) provide liaison with the Funds' independent auditors;

(m) establish and maintain a service desk to assist in handling Fund
administrative activities; and

(n) provide any other administrative services reasonably necessary for
the operation of the Funds, as Life & Annuity, Wells Fargo, and Stephens shall
agree from time to time, other than those services that are to be provided by
Wells Fargo pursuant to its Administration Agreement with Life & Annuity, and by
Life & Annuity's transfer and dividend disbursing agent, custodian, and fund
accountant.

In performing all services under this agreement, Stephens shall: (a)
act in conformity with Life & Annuity's Declaration of Trust and By-Laws, the
1940 Act, the Investment Advisers Act

2
<PAGE>

of 1940, as applicable, and any other applicable laws as may be amended from
time to time; and Life & Annuity's registration statement under the Securities
Act of 1933 and the 1940 Act, as may be amended from time to time; (b) consult
and coordinate with legal counsel to Life & Annuity as necessary and
appropriate; and (c) advise and report to Life & Annuity and its legal counsel,
as necessary and appropriate, with respect to any compliance or other matters
that come to its attention.

Nothing in this Agreement shall be deemed to require Wells Fargo to
provide any supervisory services that may not be provided by it under applicable
banking laws and regulations.

In connection with its duties under this Paragraph 3, Stephens may, at
its own expense, enter into sub-administration agreements with other service
providers, provided that: (a) each such service provider agrees with Stephens
to comply with all relevant provisions of the 1940 Act, the Investment Advisers
Act of 1940, any other applicable laws as may be amended from time to time, and
all relevant rules thereunder; and (b) Wells Fargo agrees to the appointment of
such service provider. Stephens will provide Life & Annuity and Wells Fargo
with a copy of each sub-administration agreement it executes relating to Life &
Annuity. Stephens will be liable for acts or omissions of any such sub-
administrators under the standards of care described herein under Paragraph 5.

In performing its services under this agreement, Stephens shall
cooperate and coordinate with Wells Fargo as necessary and appropriate and shall
provide such information to Wells Fargo as is reasonably necessary or
appropriate for Wells Fargo to perform its obligations to Life & Annuity.
Similarly, Wells Fargo shall cooperate and coordinate with Stephens as necessary
and appropriate and shall provide such information to Stephens as is reasonably
necessary or appropriate for Stephens to perform its obligations to Life &
Annuity.

4. Compensation. In consideration of the administration services to
------------
be rendered by Stephens under this agreement, Life & Annuity shall pay Stephens
a monthly fee at the annual rate of 0.04% of the average daily value (as
determined on each business day at the time set forth in the Prospectus for
determining net asset value per share) of the Funds' net assets during the
preceding month. If the fee payable to Stephens pursuant to this Paragraph 4
begins to accrue before the end of any month or if this agreement terminates
before the end of any month, the fee for the period from the effective date to
the end of that month or from the beginning of that month to the termination
date, respectively, shall be prorated according to the proportion that the
period bears to the full month in which the effectiveness or termination occurs.
For purposes of calculating each such monthly fee, the value of each Fund's net
assets shall be computed in the manner specified in the Prospectus and Life &
Annuity's Declaration of Trust for the computation of the value of the Fund's
net assets in connection with the determination of the net asset value of Fund
shares. For purposes of this agreement, a "business day" is any day that Life &
Annuity is open for trading.

3
<PAGE>

5. Limitation of Liability; Indemnification.
----------------------------------------

(a) Stephens shall not be liable for any error of judgment or mistake
of law or for any loss suffered by Life & Annuity in connection with the
performance of its obligations and duties under this agreement, except a loss
resulting from Stephens' willful misfeasance, bad faith, or negligence in the
performance of its obligations and duties, or by reason of its reckless
disregard thereof. Any person, even though also an officer, director, employee
or agent of Stephens, shall be deemed, when rendering services to Life & Annuity
or acting on any business of Life & Annuity (other than services or business in
connection with Stephens' duties as Co-Administrator hereunder) to be acting
solely for Life & Annuity and not as an officer, director, employee, or agent or
one under the control or discretion of Stephens even though paid by it.

Wells Fargo shall not be liable for any error of judgment or mistake
of law or for any loss suffered by Life & Annuity in connection with Stephens'
performance of its obligations and duties under this Agreement, except a loss
resulting from Wells Fargo's willful misfeasance, bad faith, or negligence in
failing to supervise Stephens as required by this Agreement.

(b) Life & Annuity, on behalf of each Fund, will indemnify Stephens
against and hold it harmless from any and all losses, claims, damages,
liabilities, or expenses (including reasonable counsel fees and expenses)
resulting from any claim, demand, action, or suit relating to the particular
Fund and not resulting from willful misfeasance, bad faith, or negligence of
Stephens in the performance of such obligations and duties, or by reason of its
reckless disregard thereof. Stephens will not confess any claim or settle or
make any compromise in any instance in which Life & Annuity will be asked to
provide indemnification, except with Life & Annuity's prior written consent.
Any amounts payable by Life & Annuity under this Paragraph 5(b) shall be
satisfied only against the assets of the Fund involved in the claim, demand,
action, or suit and not against the assets of any other Fund.

6. Life & Annuity expenses. Except as provided in each of Life &
-----------------------
Annuity's advisory contracts and its Administration Agreement with Wells Fargo,
Life & Annuity shall bear all costs of its operations, including the
compensation of its trustees who are not affiliated with Stephens or any of
their affiliates; advisory and administration fees; payments of distribution-
related expenses pursuant to any Rule 12b-1 Plan under the 1940 Act;
governmental fees; interest charges; taxes; fees and expenses of its independent
accountants, 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 Rule 12b-1 Plan), shareholders'
reports, notices, proxy statements and reports to regulatory agencies; travel
expenses of trustees, officers and employees; office supplies; insurance
premiums and certain expenses relating to insurance coverage; trade association
membership dues; brokerage and other expenses connected with the execution of
portfolio securities transactions; fees and expenses of any custodian, including
those for keeping books and accounts and calculating the net asset value per
share of the Funds; expenses of shareholders' meetings; expenses relating to the
issuance, registration and qualification of shares of the Funds; pricing
services, if any; organizational

4
<PAGE>

expenses; and any extraordinary expenses. Expenses attributable to one or more,
but not all, of the Funds are charged against the assets of the relevant Funds.
General expenses of the Funds are allocated among the Funds in a manner
proportionate to the net assets of each Fund, on a transactional basis or on
such other basis as the Board of Trustees deems equitable.

7. Amendment. This agreement may be amended at any time by mutual
---------
agreement in writing of Life & Annuity, Stephens, and Wells Fargo, provided that
the Board of Trustees of Life & Annuity approve any such amendment in advance.

8. Co-Administrator's other businesses. Except to the extent
-----------------------------------
necessary to perform Stephens' obligations under this agreement, nothing herein
shall be deemed to limit or restrict the right of Stephens, or any affiliate or
employee of Stephens, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.

9. Duration. This agreement shall become effective on its execution
--------
date and shall remain in full force and effect for one year or until terminated
pursuant to the provisions in Paragraph 10, and it may be reapproved at least
annually by the Board of Trustees, including a majority of the trustees who are
not interested persons of Life & Annuity or any party to this agreement, as
defined by the 1940 Act.

10. Termination of Agreement. This agreement may be terminated at
------------------------
any time, without the payment of any penalty by a vote of a majority of the
members of Life & Annuity's Board of Trustees, on 60 days' written notice to
Stephens and Wells Fargo; or by Stephens on 60 days' written notice to Life &
Annuity and Wells Fargo; or by Wells Fargo on 60 days' written notice to Life &
Annuity and Stephens.

11. Confidentiality. Stephens shall keep confidential all books,
---------------
records, information, and data pertaining to the business of Life & Annuity and
its prior, present, or potential shareholders that are exchanged or received
pursuant to the performance of Stephens' duties under this agreement and
Stephens shall not disclose the aforementioned to any other person, except as
Life & Annuity shall specifically authorize or as required by law, and the
aforementioned documents, information, and data shall not be used for any
purpose other than performance of its responsibilities and duties under this
agreement.

12. Life & Annuity not bound to violate its Declaration. Nothing in
---------------------------------------------------
this agreement shall require Life & Annuity to take any action contrary to any
provision of its Declaration of Trust or to any applicable statute or
regulation.

5
<PAGE>

13. Miscellaneous.
-------------

(a) Any notice or other instrument authorized or required by this
agreement to be given in writing to Life & Annuity, Wells Fargo, or Stephens
shall be sufficiently given if addressed to that party and received by it at its
office set forth below or at such other place as it may from time to time
designate in writing.

To Life & Annuity:

Life & Annuity Trust
111 Center Street
Little Rock, Arkansas 72201
Attention: Richard H. Blank

To Stephens:

Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
Attention: Richard H. Blank

To Wells Fargo:

Wells Fargo Bank, N.A.
525 Market Street, 19th Floor
San Francisco, California 94105
Attention: Michael J. Hogan

(d) This agreement may be executed in any number of counterparts each
of which shall be deemed to be an original and which collectively shall be
deemed to constitute only one agreement.

(e) The captions of this agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.

6
<PAGE>

In witness whereof, the parties have caused this agreement to be
executed by their duly authorized officers in the day and year first above
written.

LIFE & ANNUITY TRUST

By: /s/ Richard H. Blank
--------------------------
Richard H. Blank
Chief Operating Officer

STEPHENS INC.

By: /s/ Richard H. Blank
--------------------------
Richard H. Blank
Vice President

WELLS FARGO BANK, N.A.

By: /s/ Michael J. Hogan
--------------------------
Michael J. Hogan
Senior Vice President

By: /s/ Elizabeth a. Gottfried
--------------------------
Elizabeth A. Gottfried
Vice President

7
<PAGE>

Appendix A
Life & Annuity Funds

Asset Allocation Fund
Corporate Bond Fund
Equity Value Fund
Growth Fund
Money Market Fund
Strategic Growth Fund
U.S. Government Allocation Fund

Approved: January 16, 1997
Approved as Amended: January 29, 1998 to change the fee rate and include the
Equity Value and Strategic Growth Funds

<PAGE>

[MORRISON & FOERSTER LLP LETTERHEAD]

August 26, 1998

Life & Annuity Trust
111 Center Street
Little Rock, Arkansas 72201

Re: Shares of Common Stock of
Life & Annuity Trust
-------------------------

Ladies/Gentlemen:

We refer to Post-Effective Amendment No. 7 and Amendment No. 9 to the
Registration Statement on Form N-1A (SEC File Nos. 33-70988 and 811-8118) (the
"Registration Statement") of Life & Annuity Trust (the "Trust") relating to the
registration of an indefinite number of shares of common stock of the Corporate
Bond Fund (the "Shares").

We have been requested by the Trust to furnish this opinion as Exhibit 10
to the Registration Statement.

We have examined documents relating to the organization of the Trust and
its series and the authorization and issuance of shares of its series.

Based upon and subject to the foregoing, we are of the opinion that:

The issuance and sale of the Shares by the Trust has been duly and
validly authorized by all appropriate corporate action, and assuming delivery by
sale or in accord with the Trust's dividend reinvestment plan in accordance with
the description set forth in the Funds' current prospectuses under the
Securities Act of 1933, as amended, the Shares will be legally issued, fully
paid and nonassessable by the Trust.
<PAGE>

We consent to the inclusion of this opinion as an exhibit to the
Registration Statement.

In addition, we hereby consent to the use of our name and to the
reference to the description of advice rendered by our firm under the heading
"Organization and Management of the Funds" in the Prospectus, which is included
as part of the Registration Statement.

Very truly yours,

/s/ MORRISON & FOERSTER LLP

MORRISON & FOERSTER LLP