<PAGE>
May 1, 1999
Life & Annuity Trust
Prospectus
Equity Value Fund Please read this Prospectus and keep it for future
reference. It is designed to provide you with important
information and to help you decide if the Fund's goals
match your own.
These securities have not been approved or disapproved
by the Securities and Exchange Commission ("SEC") nor
has the SEC passed upon the accuracy or adequacy of this
Prospectus. Any representation to the contrary is a
criminal offense.
Fund shares are NOT deposits or other obligations of, or
issued, endorsed or guaranteed by, Wells Fargo Bank,
N.A. ("Wells Fargo Bank") or any of its affiliates. Fund
shares are NOT insured or guaranteed by the Federal
Deposit Insurance Corporation ("FDIC"), the Federal
Reserve Board or any governmental agency. AN INVESTMENT
IN A FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL.
<PAGE>
Table of Contents
Overview Life & Annuity Trust Funds Overview 4
This section contains Summary of Important Risks 6
important summary
information about Performance History 8
the Fund.
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The Fund Equity Value Fund 10
This section contains General Investment Risks 14
important information
about the Fund. Organization and Management
of the Fund 20
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Your Investment Investing in the Fund 22
Turn to this section Important Information About 25
for information on Your Investment
your investments
including how to buy
and sell Fund shares.
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Glossary 27
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Life & Annuity Trust Funds Overview
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FUND OBJECTIVE
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Equity Value Fund Seeks to provide investors with long-term capital
appreciation.
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4 Life & Annuity Trust Prospectus
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FUND PRINCIPAL STRATEGY
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Equity Value Fund We invest in equity securities that we believe are
undervalued. Dividends are a secondary
consideration when selecting stocks.
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Life & Annuity Trust Prospectus 5
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Summary Of Important Risks
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This section summarizes important risks for the Fund. These are important to
your investment choice. Additional information about these and other risks is
included in the individual Fund Description later in this Prospectus and under
General Investment Risks beginning on page 14. An investment in the Fund is not
a deposit of Wells Fargo Bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
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COMMON RISKS FOR THE FUND
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Equity Securities
The Fund invests in equity securities, which are subject to equity
market risk. This is the risk that stock prices will fluctuate and can
decline and reduce the value of the Fund's portfolio. Certain types of
stock and certain individual stocks selected for the Fund's portfolio
may underperform or decline in value more than the overall market. As of
the date of this Prospectus, the equity markets, as measured by the S&P
500 Index and other commonly used indexes, are trading at or close to
record levels. There can be no guarantee that these levels will
continue. Investments in smaller companies, in 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. The Fund's
investment in foreign companies is also subject to special risks
associated with international investing, including currency, political,
regulatory and diplomatic risks.
Fixed Income Securities
The Fund may invest in debt instruments, such as notes and bonds, which
are subject to credit risk and interest rate risk. Credit risk is the
possibility that an issuer of an instrument will be unable to make
interest payments or repay principal. Changes in the financial strength
of an issuer or changes in the credit rating of a security may affect
its value. Interest rate risk is the risk that interest rates may
increase, which will reduce the resale value of instruments in the
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 the Fund, unless the instrument has
adjustable or variable rate features, which can reduce interest rate
risk. Changes in market interest rates may also extend or shorten the
duration of certain types of instruments, thereby affecting their value
and the return on your investment.
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6 Life & Annuity Trust Prospectus
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SPECIFIC RISKS FOR THE FUND
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Equity Value Fund
Stocks of smaller, medium-sized and foreign companies purchased for this
Fund may be more volatile and less liquid than larger company stocks.
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Life & Annuity Trust Prospectus 7
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Performance History
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The Equity Value Fund has been in operation less than a calendar year, so return
information is not reported for this Fund, otherwise performance information of
the Fund's return performance over time would be illustrated.
The summary information on the previous pages is designed to provide you with an
overview of the Fund. The sections that follow provide more detailed information
about the investments and management of the Fund.
Important information you should look for:
Investment Objective and Investment Policies
What is the Fund trying to achieve? How do we intend to invest your money?
Permitted Investments
A summary of the Fund's key permitted investments and practices.
Important Risk Factors
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.
Financial Highlights
Provides important financial information about each class of shares of the Fund.
Words appearing in italicized print and highlighted in color are defined in the
Glossary.
8 Life & Annuity Trust Prospectus
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Equity Value Fund
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Investment Objective
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.
Permitted Investments
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. During
these periods, the Fund may not achieve its objective of long-term capital
appreciation.
Important Risk Factors
Stocks of smaller, medium-sized and foreign companies purchased for this Fund
may be more volatile and less liquid than larger company stocks.
You should consider the Summary of Important Risks on page 6, the General
Investment Risks beginning on page 14, and the specific risks listed above. They
are all important to your investment choice.
10 Life & Annuity Trust Prospectus
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Portfolio Managers
. Rex Wardlaw, CFA
Principal--Value Equity Team Leader
Has managed the Equity Value Fund since May 1, 1998, and has been with Wells
Fargo/Wells Capital Management since 1986. Since 1993, Mr. Wardlaw has
managed investment funds, pensions assets, and private accounts for Wells
Fargo Bank/Wells Capital Management. Prior to 1993, he was an investment
analyst specializing in general equity market sectors; including utilities,
transportation, basic industries and capital goods. Mr. Wardlaw leads the
Value Equity Investment Team, managing portfolios and directing the research
effort. He has over ten years of investment management experience.
. Allen Wisniewski, CFA
Principal
Has co-managed the Equity Value Fund since May 1, 1998, and has been with
Wells Fargo/Wells Capital Management as a portfolio manager and research
analyst since 1987. Mr. Wisniewski has over eighteen years of equity and
balanced portfolio investment management experience.
. Gregg Giboney, CFA
Principal
Has co-managed the Equity Value Fund since May 1, 1998, and has been with
Wells Fargo/Wells Capital Management as a member of the Value Equity Team
providing security analysis and portfolio management since 1996. Mr. Giboney
was with First Interstate Capital Management prior to 1996 in various
capacities, including fixed-income trading, derivatives management, equity
analysis, stable value asset management and as a portfolio manager for
personal, institutional and trust accounts.
Life & Annuity Trust Prospectus 11
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Equity Value Fund Financial Highlights
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This table is intended to help you understand the Fund's financial performance
for the past 5 years (or since inception, if shorter). KPMG LLP audited this
information which, along with their report and the Fund's financial statements,
is available upon request in the Fund's annual report.
<TABLE>
<CAPTION>
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FOR A SHARE OUTSTANDING
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From inception on
May 1, 1998 to
Dec. 31, 1998
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<S> <C>
Net asset value, beginning of period $ 10.00
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Income from investment operations:
Net investment income 0.07
Net realized and unrealized gain (loss) on
investments (0.45)
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Total from investment operations: (0.38)
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Less distributions:
Dividends from net investment income (0.07)
Distributions from net realized gain 0.00
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Total from distributions: (0.07)
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Net asset value, end of period $ 9.55
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Total return (not annualized)/1/ (3.76)%
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Ratios/supplemental data:
Net assets, end of period (000s) $11,072
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Ratios to average net assets (annualized):
Ratio of expenses to average net assets 1.09%
Ratio of net investment income to
average net assets 1.54%
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Portfolio turnover 27%
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Ratio of expenses to average net assets prior to
waived fees and reimbursed expenses 2.52%
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Ratio of net investment income to average net assets
prior to waived fees and reimbursed expenses(loss) 0.11%
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</TABLE>
/1/ Total returns do not include any sales charges
12 Life & Annuity Trust Prospectus
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General Investment Risks
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Understanding the risks involved in mutual fund investing will help you make an
informed decision that takes into account your risk tolerance and preferences.
You should carefully consider the risks common to investing in all mutual funds,
including the Stagecoach Funds. Certain common risks are identified in the
Summary of Important Risks on page 6. Other risks of mutual fund investing
include the following:
. Unlike bank deposits such as CDs or savings accounts, mutual funds are not
insured by the FDIC.
. We cannot guarantee that we will meet our investment objectives.
. We do not guarantee the performance of a Fund, nor can we assure you that the
market value of your investment will not decline. We will not "make good" any
investment loss you may suffer, nor can anyone we contract with to provide
certain services, such as selling agents or investment advisors, offer or
promise to make good any such losses.
. Share prices--and therefore the value of your investment--will increase and
decrease with changes in the value of the underlying securities and other
investments. This is referred to as price volatility.
. Investing in any mutual fund, including those deemed conservative, involves
risk, including the possible loss of any money you invest.
. An investment in a single Fund, by itself, does not constitute a complete
investment plan.
. The Fund 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 Fund 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 Fund 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.
14 Life & Annuity Trust Prospectus
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Investment practices and risk levels are carefully monitored. Every attempt is
made to ensure that the risk exposure for the Fund remains within the parameters
of its objective.
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 the 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.
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 of
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:
Information Risk-- The risk that information about a security is either
unavailable, incomplete or is inaccurate.
Life & Annuity Trust Prospectus 15
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General Investment Risks
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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.
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.
16 Life & Annuity Trust Prospectus
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Year 2000 Risk-- The Fund's principal service providers have advised the Fund
that they are working on the necessary changes to their computer systems to
avoid any system failure based on an inability to distinguish the year 2000 from
the year 1900, and that they expect their systems to be adapted in time. There
can, of course, be no assurance of success. In addition, the companies or
entities in which the Fund invests also could be adversely impacted by the Year
2000 issue. The extent of such impact cannot be predicted.
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Investment Practice/Risk
The following table lists some of the additional investment practices of
the Fund, 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 it. See the Investment Objective and Investment
Policies for the Fund or the Statement of Additional Information for
more information on these practices.
Remember, the 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
the Fund. See the Specific Risks on page 7, and the "Important Risk
Factors" in the description of the Fund. You should also see the
Statement of Additional Information for additional information about the
investment practices and risks particular to the Fund.
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Life & Annuity Trust Prospectus 17
<PAGE>
General Investment Risks
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<TABLE>
<CAPTION>
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INVESTMENT PRACTICE: RISK:
=========================================================================
<S> <C>
FLOATING AND VARIABLE RATE DEBT
Instruments with interest rates that are Interest Rate and
adjusted either on a schedule or when an Credit Risk
index or benchmark changes.
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REPURCHASE AGREEMENTS
A transaction in which the seller of a Credit and
security agrees to buy back a security Counter-Party Risk
at an agreed upon time and price, usually
with interest.
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OTHER MUTUAL FUNDS
The temporary investment in shares of Market Risk
another mutual fund. A pro rata portion
of the other fund's expenses, in addition
to the expenses paid by the Funds, will be
borne by Fund shareholders.
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FOREIGN SECURITIES
Securities issued by a non-U.S. company or Information, Political,
debt of a foreign government in the form Regulatory, Diplomatic,
of an American Depositary Receipt or similar Liquidity and Currency
instrument. Limited to 25% of total assets. Risk
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OPTIONS
The right or obligation to receive or Credit, Information and
deliver a security or cash payment Liquidity Risk
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
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PRIVATELY ISSUED SECURITIES
Securities that are not publicly traded Liquidity Risk
but which may be resold in accordance with
Rule 144A of the Securiites Act of 1933.
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LOANS OF PORTFOLIO SECURITIES
The practice of loaning securities to Credit, Counter-Party
brokers, dealers and financial institutions and Leverage Risk
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.
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BORROWING POLICIES
The ability to borrow an equivalent of Leverage Risk
10% of total assets (20% for the Allocation
Funds) from banks for temporary purposes
to meet shareholder redemptions.
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ILLIQUID SECURITIES
A security that cannot be readily sold, Liquidity Risk
or cannot be readily sold without negatively
affecting its fair price. Limited to 15% of
total assets (10% for the Money Market Fund).
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</TABLE>
18 Life & Annuity Trust Prospectus
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A number of different entities provide services to the Fund. This section shows
how the Fund is organized, the entities that perform different services, and how
they are compensated. Further information is available in the Statement of
Additional Information for the Fund.
About Life & Annuity Trust
Life & Annuity Trust was organized as a Delaware business trust on October 28,
1993. The Board of Trustees of the Trust supervises the Fund's activities,
monitors its contractual arrangements with various service-providers and decides
upon matters of general policy.
Life & Annuity Trust offers shares of the Fund only to participating Insurance
Companies, and only Participating Insurance Companies and their separate
accounts are considered shareholders of, or investors in, the Fund. 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.
Life & Annuity Trust Prospectus 19
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<TABLE>
<CAPTION>
Organization and Management of the Fund
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<S> <C> <C> <C>
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CONTRACT HOLDERS
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|
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PARTICIPATING INSURANCE COMPANIES
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Assist current and prospective contract holders on their Fund investments
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|
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TRANSFER AND
DIVIDEND DISBURSING SHAREHOLDER
DISTRIBUTOR ADMINISTRATOR AGENT SERVICING AGENTS
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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
and distributes business activities of shares and to customers
shares supervises the
paying of dividends
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|
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INVESTMENT SUB-ADVISORS
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Wells Capital Management Wells Fargo Bank
525 Market St., San Francisco, CA 525 Market St., San Francisco, CA
Manages all other Funds' investment Manages the Funds' investment
activities activities
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|
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CUSTODIAN
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Wells Fargo Bank, 525 Market St., San Francisco, CA
Provides safekeeping for the Fund's assets
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|
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BOARD OF TRUSTEES
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Supervises the Funds' activities
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</TABLE>
In the following sections, the percentages shown are the percentages of the
average daily Net Assets of each Fund class paid on an annual basis for the
services described.
The Investment Advisor
Wells Fargo Bank provides portfolio management and fundamental security analysis
services as the advisor for the Fund. 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 December 31, 1999, Wells Fargo
Bank and its affiliates managed over $121 billion in assets.
20 Life & Annuity Trust Prospectus
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The Fund paid Wells Fargo Bank the following for advisory services (after fee
waivers) for the last fiscal year:
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Equity Value Fund 15%
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The Sub-Advisor
Wells Capital Management ("WCM"), a wholly owned subsidiary of Wells Fargo Bank
N.A., is the sub-advisor for the Fund. As of December 31, 1999, WCM provided
advisory services for assets aggregating in excess of $39 billion.
The Administrator
Wells Fargo Bank provides the Fund with administration services, including
general supervision of the Fund's operation, coordination of the other services
provided to the Fund, compilation of information for reports to the SEC and the
state securities commissions, preparation of proxy statements and shareholder
reports, and general supervision of data compilation in connection with
preparing periodic reports to the Trust's Trustees and officers. Wells Fargo
Bank also furnishes office space and certain facilities to conduct the Fund's
business, and compensates the Trust's Trustees.
Life & Annuity Trust Prospectus 21
<PAGE>
Organization and Management of the Fund
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Shareholder Servicing Plan
We have a shareholder servicing plan for the Fund. We have agreements with
various shareholder servicing agents to process purchase and redemption
requests, to service shareholder accounts, and to provide other related
services. For these services the Fund pays as follows:
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Equity Value Fund 25%
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The Distributor
Stephens, as the principal underwriter of the Fund within the meaning of the
1940 Act, has entered into a Distribution Agreement with Life & Annuity Trust
pursuant to which Stephens has the responsibility for distributing shares of the
Fund.
Stephens, as distributor of the Fund's shares, or the Participating Insurance
Companies that offer VA Contracts and VLI Policies that are funded by the Fund,
bears all of the Fund's marketing expenses. These expenses include the cost of
printing prospectuses, statements of additional information and other sales-
related materials.
The Transfer Agent
Wells Fargo Bank acts as transfer and dividend disbursing agent for the Fund.
After July 17, 1999, Boston Financial Data Services will provide these services
to the Fund.
Investing in the Fund
The Fund is 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 the 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.
Life & Annuity 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.
22 Life & Annuity Trust Prospectus
<PAGE>
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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 Life
& Annuity Trust, orderly portfolio management could be disrupted to the
potential detriment of the VA Contract and VLI Policy holders.
Dividends and Distributions
The 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 Fund declares and pays a quarterly dividend of substantially all of its net
investment income. The Fund generally distributes any capital gains once a year.
Participating Insurance Companies will be informed by January 31 about the
amount and character of dividends and distributions.
Pricing Fund Shares:
. As with all mutual fund investments, the price you pay to purchase shares or
the price you receive when you redeem shares is not determined until after a
request has been received in proper form. We determine the Net Asset Value
("NAV") of the Fund shares each business day as of the close of regular
trading on the NYSE. We determine the NAV by subtracting the Fund class'
liabilities from its total assets, and then dividing the result by the total
number of outstanding shares of that class. The Fund's assets are generally
valued at current market prices. See the Statement of Additional Information
for further disclosure.
. We process requests to buy or sell shares each business day for the non-money
market Funds as of the close of regular trading on the New York Stock
Exchange ("NYSE"), which is usually 1:00 p.m. (Pacific time). Any request we
receive in proper form before the 1:00 p.m. cut off is processed the same
day. Requests we receive after the close are processed the next business day.
. The Fund is generally open for business Monday through Friday. The Fund is
closed each day the NYSE is closed. NYSE holidays include New Year's Day,
Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. When any
holiday falls on a weekend, the NYSE typically is closed on the weekday
immediately before or after such holiday.
Life & Annuity Trust Prospectus 23
<PAGE>
Organization and Management of the Funds
- --------------------------------------------------------------------------------
Taxes
Distributions from the 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, 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 the 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. The 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 Fund and its
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.
24 Life & Annuity Trust Prospectus
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Important Information About Your Investment
On March 25, 1999, the Board of Trustees of Life & Annuity Trust (the "Trust")
approved the reorganization of the Trust's Funds into new portfolios of Wells
Fargo Variable Trust ("Variable Trust"). The reorganization is part of a plan to
consolidate the Wells Fargo Bank-advised fund family with the Norwest Advantage
fund family, following last November's merger of Wells Fargo & Company and
Norwest Corporation. The variable annuity ("VA") and variable life insurance
("VLI") providers through which the Trust's Funds are sold, will present the
reorganization to contractholders for their approval and will vote all shares in
accordance with procedures described in the VA and VLI product prospectuses at a
special meeting that is planned for August 1999.
If the reorganization is approved by contractholders, the following Funds will
be reorganized into the following portfolios of Variable Trust:
Life & Annuity Trust Wells Fargo Variable Trust
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Strategic Growth Fund --> Small Cap Fund
U.S. Government Allocation Fund --> Corporate Bond Fund
Although the investment objective of the Small Cap Fund of Variable Trust is
substantially similar to the investment objective of the Strategic Growth Fund,
the principal investment strategies differ somewhat. The investment objective
and principal investment strategies of the Corporate Bond Fund of Variable Trust
differ from the objective and strategies of the U.S. Government Allocation Fund.
In addition, these Variable Trust portfolios are expected to absorb other
Norwest Select funds. All of the other Funds of the Trust will, if approved by
contractholders, be reorganized into new portfolios of Variable Trust that have
investment objectives and strategies that are substantially identical to the
corresponding Funds. These substantially identical Variable Trust portfolios
will not absorb other funds.
No contractholder action is necessary at this time. The Trust's proxy materials,
which are expected to be mailed in June to all persons who are contractholders
on May 6, 1999, will describe the reorganization in detail, including any effect
on expense ratios. If you buy your shares after that date, you will not be
entitled to vote on the reorganization, but you may request a copy of the proxy
materials.
Life & Annuity Trust Prospectus 25
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Organization and Management of the Fund
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Investors in the Strategic Growth Fund should be aware that an expense ratio
increase of 0.10% is contemplated. U.S. Government Allocation Fund expense
ratios are expected to decline.
For all of the Trust's Funds, the reorganization will not trigger any tax
consequences for contractholders. The reorganization will not trigger any sales
charges.
If you have any questions or, after early June, if you would like to request a
copy of the proxy materials, you should call 1-800-680-8920.
26 Life & Annuity Trust Prospectus
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Glossary
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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.
Life & Annuity Trust Prospectus 27
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Glossary
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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."
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.
28 Life & Annuity Trust Prospectus
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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.
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.
Life & Annuity Trust Prospectus 29
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Glossary
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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.
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.
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."
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.
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.
Public Offering Price (POP)
The NAV with the sales load added.
30 Life & Annuity Trust Prospectus
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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.
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
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.
Life & Annuity Trust Prospectus 31
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Glossary
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Statement of Additional Information
A document that supplements the disclosures made in the Prospectus.
Taxpayer Identification Number
Usually the social security number for an individual or the Employer
Identification Number for a corporation.
Total Return
The 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.
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.
32 Life & Annuity Trust Prospectus
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LIFE & ANNUITY 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 including a
discussion of the market conditions and investment strategies that significantly
affected Fund performance, for the most recent reporting period.
These documents are available free of charge:
1-800-680-8920, or write to:
Life & Annuity Trust
PO Box 7066
San Francisco, CA
94120-7066
Visit the SEC's web site:
http://www.sec.gov, or
Request copies for a fee by writing to:
SEC Public Reference Room,
Washington, DC 20549-6009
(call: 1-800-SEC-0330 for details)
[LOGO OF RECYCLED PAPER]
Printed On Recycled Paper
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NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
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ICA Reg. No. 811-8118 EV LAT P (5/99)
