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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORMN-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number:811-09253
Wells Fargo Funds Trust
(Exact name of registrant as specified in charter)
525 Market St., San Francisco, CA 94105
(Address of principal executive offices) (Zip code)
Alexander Kymn
Wells Fargo Funds Management, LLC
525 Market St., San Francisco, CA 94105
(Name and address of agent for service)
Registrant’s telephone number, including area code:800-222-8222
Date of fiscal year end: September 30
Registrant is making a filing for 12 of its series: Wells Fargo Diversified Capital Builder Fund, Wells Fargo Diversified Income Builder Fund, Wells Fargo Index Asset Allocation Fund, Wells Fargo International Bond Fund, Wells Fargo Strategic Income Fund, Wells Fargo C&B Mid Cap Value Fund, Wells Fargo Common Stock Fund, Wells Fargo Discovery Fund, Wells Fargo Enterprise Fund, Wells Fargo Opportunity Fund, Wells Fargo Special Mid Cap Value Fund, and Wells Fargo Global Investment Grade Credit Fund.
Date of reporting period: March 31, 2019
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ITEM 1. | REPORT TO STOCKHOLDERS |
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Semi-Annual Report
March 31, 2019
Wells Fargo Diversified Capital Builder Fund
Beginning on January 1, 2021, as permitted by new regulations adopted by the Securities and Exchange Commission, paper copies of the Wells Fargo Funds’ annual and semi-annual shareholder reports issued after this date will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website, and you will be notified by mail each time a report is posted and provided with a website address to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-222-8222 or by enrolling at wellsfargo.com/advantagedelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports; if you invest directly with the Fund, you can call 1-800-222-8222. Your election to receive reports in paper will apply to all Wells Fargo Funds held in your account with your financial intermediary or, if you are a direct investor, to all Wells Fargo Funds that you hold.
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Reduce clutter. Save trees.
Sign up for electronic delivery of prospectuses and shareholder reports atwellsfargo.com/advantagedelivery
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Financial statements | ||||
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The views expressed and any forward-looking statements are as of March 31, 2019, unless otherwise noted, and are those of the Fund managers and/or Wells Fargo Asset Management. Discussions of individual securities, or the markets generally, or any Wells Fargo Fund are not intended as individual recommendations. Future events or results may vary significantly from those expressed in any forward-looking statements. The views expressed are subject to change at any time in response to changing circumstances in the market. Wells Fargo and the Fund disclaim any obligation to publicly update or revise any views expressed or forward-looking statements.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
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2 | Wells Fargo Diversified Capital Builder Fund | Letter to shareholders (unaudited) |
Andrew Owen
President
Wells Fargo Funds
December’s S&P 500 Index performance was the worst since 1931.
Dear Shareholder:
We are pleased to offer you this semi-annual report for the Wells Fargo Diversified Capital Builder Fund for the six-month period that ended March 31, 2019. Concerns about interest rate increases in the U.S., trade tensions, and geopolitical events drove equity losses and restrained bond returns during the fourth quarter of 2018. Investor sentiment improved during the first quarter of 2019 thanks to a shift in U.S. Federal Reserve (Fed) policy and consistent, if not spectacular, economic and business growth metrics.
For the period, U.S. stocks, as measured by the S&P 500 Index,1 lost 1.72% and international stocks, as measured by the MSCI ACWI ex USA Index (Net),2 fell 2.33%. Based on the MSCI EM Index (Net),3 emerging market stocks added 1.71%. For bond investors, the Bloomberg Barclays U.S. Aggregate Bond Index4 added 4.63% while the Bloomberg Barclays Global Aggregate ex-USD Index5 added 2.44%. The Bloomberg Barclays Municipal Bond Index6 added 4.63%, and the ICE BofAML U.S. High Yield Index7 gained 2.39%.
Conflicting data unsettled markets during the fourth quarter.
November’s U.S. midterm elections shifted control of the House of Representatives from Republicans to Democrats, presaging potential partisan clashes. Third-quarter U.S. gross domestic product was announced at an annualized 3.4% rate, lower than the second-quarter rate. Brexit efforts stalled ahead of the March 2019 deadline. The People’s Bank of China cut reserve requirement ratios, accelerated infrastructure spending, and cut taxes even as the value of the yuan declined to low levels last seen in 2008.
December’s S&P 500 Index performance was the worst since 1931. Globally, fixed-income investments fared better than stocks during the last two months of the year. The Fed increased the federal funds rate by 25 bps in December 2018 to a target range of between 2.25% and 2.50% and softened its outlook for 2019 rate increases.
The market climbs a wall of worry.
Investors entered 2019 with reasons to be concerned. A partial U.S. government shutdown driven by partisan spending and immigration policy disputes extended into January. Investors expected high levels of stock market volatility to continue based on the VIX8.
1 | The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index with each stock’s weight in the index proportionate to its market value. You cannot invest directly in an index. |
2 | The Morgan Stanley Capital International (MSCI) All Country World Index (ACWI) ex USA Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. You cannot invest directly in an index. |
3 | The MSCI Emerging Markets (EM) Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure large- and mid-cap equity market performance of emerging markets. The MSCI EM Index (Net) consists of the following 24 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and the United Arab Emirates. You cannot invest directly in an index. |
4 | The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid adjustable-rate mortgage pass-throughs), asset-backed securities, and commercial mortgage-backed securities. You cannot invest directly in an index. |
5 | The Bloomberg Barclays Global Aggregate ex-USD Index is an unmanaged index that provides a broad-based measure of the global investment-grade fixed-income markets excluding the U.S. dollar-denominated debt market. You cannot invest directly in an index. |
6 | The Bloomberg Barclays Municipal Bond Index is an unmanaged index composed of long-term tax-exempt bonds with a minimum credit rating of Baa. You cannot invest directly in an index. |
7 | The ICE BofAML U.S. High Yield Index is a market-capitalization-weighted index of domestic and Yankee high-yield bonds. The index tracks the performance of high-yield securities traded in the U.S. bond market. You cannot invest directly in an index. Copyright 2019. ICE Data Indices, LLC. All rights reserved. |
8 | The Chicago Board Options Exchange Market Volatility Index (VIX) is a popular measure of the implied volatility of S&P 500 Index options. It represents one measure of the market’s expectation of stock market volatility over the next 30-day period. You cannot invest directly in an index. |
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Letter to shareholders (unaudited) | Wells Fargo Diversified Capital Builder Fund | 3 |
January’s returns tended to support the investing adage that markets climb a wall of worry. The S&P 500 Index gained 8.01% for the month that ended January 31, 2019, its best monthly performance in 30 years. Returns for the MSCI ACWI ex USA Index (Net), the Bloomberg Barclays U.S. Aggregate Bond Index, and the Bloomberg Barclays Global Aggregate ex-USD Index also were positive. The Fed indicated that it would pause its program of regular rate increases during 2019 as inflation remained low. Businesses and investors responded positively to the shift in policy.
In February, concerns over slowing global growth reemerged. The Bureau of Economic Analysis announced fourth-quarter 2018 gross domestic product grew at an annualized 2.2% rate, down from the 4.2% annualized rate for the second quarter and the 3.4% annualized rate for the third quarter. Analysts attributed the lower growth rate to a slowing housing market and larger trade deficit. The U.S. Department of Labor said that the economy created just 20,000 jobs in February 2019. In a February report, the Bank of England forecast the slowest growth since the financial crisis for 2019. China and the U.S., while putting future tariffs on hold for the time being, continued to wrangle over trade issues.
By the end of March 2019, the combination of dovish Fed sentiment and consistent, if not spectacular, economic and business metrics reinforced investors’ enthusiasm for equity investing. Monthly job creation data regained its momentum. Corporate profits, while lower than 2018’s lofty levels, remained consistent. Inflation rates were relatively low in the U.S., Europe, and Japan. China announced a roughly $300 billion stimulus package through tax and fee cuts intended to reinvigorate economic growth.
Don’t let short-term uncertainty derail long-term investment goals.
Periods of investment uncertainty can present challenges, but experience has taught us that maintaining long-term investment goals can be an effective way to plan for the future. To help you create a sound strategy based on your personal goals and risk tolerance, Wells Fargo Funds offers more than 100 mutual funds spanning a wide range of asset classes and investment styles. Although diversification cannot guarantee an investment profit or prevent losses, we believe it can be an effective way to manage investment risk and potentially smooth out overall portfolio performance. We encourage investors to know their investments and to understand that appropriate levels of risk-taking may unlock opportunities.
Thank you for choosing to invest with Wells Fargo Funds. We appreciate your confidence in us and remain committed to helping you meet your financial needs.
Sincerely,
Andrew Owen
President
Wells Fargo Funds
January’s returns tended to support the investing adage that markets climb a wall of worry.
For further information about your Fund, contact your investment professional, visit our website atwfam.com, or call us directly at1-800-222-8222.
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4 | Wells Fargo Diversified Capital Builder Fund | Performance highlights (unaudited) |
Investment objective
The Fund seeks long-term total return, consisting of capital appreciation and current income.
Manager
Wells Fargo Funds Management, LLC
Subadviser
Wells Capital Management Incorporated
Portfolio manager
Robert Junkin‡
Margaret Patel
Average annual total returns (%) as of March 31, 2019
Including sales charge | Excluding sales charge | Expense ratios1 (%) | ||||||||||||||||||||||||||||||||
Inception date | 1 year | 5 year | 10 year | 1 year | 5 year | 10 year | Gross | Net2 | ||||||||||||||||||||||||||
Class A (EKBAX)3 | 1-20-1998 | 0.47 | 8.40 | 13.39 | 6.58 | 9.69 | 14.08 | 1.12 | 1.12 | |||||||||||||||||||||||||
Class C (EKBCX)3 | 1-22-1998 | 4.77 | 8.87 | 13.23 | 5.77 | 8.87 | 13.23 | 1.87 | 1.87 | |||||||||||||||||||||||||
Administrator Class (EKBDX)4 | 7-30-2010 | – | – | – | 6.68 | 9.84 | 14.27 | 1.04 | 1.04 | |||||||||||||||||||||||||
Institutional Class (EKBYX)3 | 1-26-1998 | – | – | – | 6.99 | 10.11 | 14.50 | 0.79 | 0.78 | |||||||||||||||||||||||||
Diversified Capital Builder Blended Index5 | – | – | – | – | 8.59 | 9.19 | 14.89 | – | – | |||||||||||||||||||||||||
ICE BofAML U.S. Cash Pay High Yield Index6 | – | – | – | – | 5.96 | 4.68 | 11.12 | – | – | |||||||||||||||||||||||||
Russell 1000® Index7 | – | – | – | – | 9.30 | 10.63 | 16.05 | – | – |
Figures quoted represent past performance, which is no guarantee of future results, and do not reflect taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance shown without sales charges would be lower if sales charges were reflected. Current performance may be lower or higher than the performance data quoted, which assumes the reinvestment of dividends and capital gains. Current month-end performance is available on the Fund’s website, wfam.com
Index returns do not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses, or any taxes. It is not possible to invest directly in an index.
For Class A shares, the maximum front-end sales charge is 5.75%. For Class C shares, the maximum contingent deferred sales charge is 1.00%. Performance including a contingent deferred sales charge assumes the sales charge for the corresponding time period. Administrator Class and Institutional Class shares are sold without a front-end sales charge or contingent deferred sales charge.
Balanced funds may invest in stocks and bonds. Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. Bond values fluctuate in response to the financial condition of individual issuers, general market and economic conditions, and changes in interest rates. Changes in market conditions and government policies may lead to periods of heightened volatility in the bond market and reduced liquidity for certain bonds held by the Fund. In general, when interest rates rise, bond values fall and investors may lose principal value. Interest rate changes and their impact on the Fund and its share price can be sudden and unpredictable. Certain investment strategies tend to increase the total risk of an investment (relative to the broader market). The Fund is exposed to foreign investment risk, high-yield securities risk, and smaller-company securities risk. Consult the Fund’s prospectus for additional information on these and other risks.
Please see footnotes on page 5.
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Performance highlights (unaudited) | Wells Fargo Diversified Capital Builder Fund | 5 |
Ten largest holdings (%) as of March 31, 20198 | ||||
Danaher Corporation | 3.25 | |||
Amphenol Corporation Class A | 3.22 | |||
American Electric Power Company Incorporated | 2.98 | |||
CMS Energy Corporation | 2.79 | |||
Atmos Energy Corporation | 2.73 | |||
DTE Energy Company | 2.72 | |||
Leidos Holdings Incorporated | 2.61 | |||
Akamai Technologies Incorporated | 2.45 | |||
Resideo Funding Incorporated, 6.13%, 11-1-2026 | 2.41 | |||
Thermo Fisher Scientific Incorporated | 2.33 |
Portfolio composition as of March 31, 20199 |
|
‡ | Mr. Junkin became a portfolio manager of the Fund on April 1, 2019. |
1 | Reflects the expense ratios as stated in the most recent prospectuses. The expense ratios shown are subject to change and may differ from the annualized expense ratios shown in the financial highlights of this report. |
2 | The manager has contractually committed through January 31, 2020, to waive fees and/or reimburse expenses to the extent necessary to cap the expenses of each class after fee waivers at 1.20% for Class A, 1.95% for Class C, 1.05% for Administrator Class, and 0.78% for Institutional Class. Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the expense cap. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. Without this cap, the Fund’s returns would have been lower. The expense ratio paid by an investor is the net expense ratio (the total annual fund operating expenses after fee waivers) as stated in the prospectuses. |
3 | Historical performance shown for this class prior to July 12, 2010, is based on the performance of the same class of the Fund’s predecessor, Evergreen Diversified Capital Builder Fund. |
4 | Historical performance shown for Administrator Class shares prior to their inception reflects the performance of Institutional Class shares and has been adjusted to reflect the higher expenses applicable to Administrator Class shares. |
5 | Source: Wells Fargo Funds Management, LLC. The Diversified Capital Builder Blended Index is composed 75% of the Russell 1000® Index and 25% of the ICE BofAML U.S. Cash Pay High Yield Index. You cannot invest directly in an index. |
6 | The ICE BofAML U.S. Cash Pay High Yield Index is an unmanaged market index that provides a broad-based performance measure of the non-investment grade U.S. domestic bond index. You cannot invest directly in an index. Copyright 2019. ICE Data Indices, LLC. All rights reserved. |
7 | The Russell 1000® Index measures the performance of the 1,000 largest companies in the Russell 3000® Index, which represents approximately 92% of the total market capitalization of the Russell 3000® Index. You cannot invest directly in an index. |
8 | The ten largest holdings, excluding cash, cash equivalents and any money market funds, are calculated based on the value of the investments divided by total net assets of the Fund. Holdings are subject to change and may have changed since the date specified. |
9 | Amounts are calculated based on the total long-term investments of the Fund. These amounts are subject to change and may have changed since the date specified. |
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6 | Wells Fargo Diversified Capital Builder Fund | Fund expenses (unaudited) |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (if any) on redemptions and (2) ongoing costs, including management fees, distribution (12b-1) and/or shareholder servicing fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period from October 1, 2018 to March 31, 2019.
Actual expenses
The “Actual” line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the “Actual” line under the heading entitled “Expenses paid during period” for your applicable class of shares to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The “Hypothetical” line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and contingent deferred sales charges. Therefore, the “Hypothetical” line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 10-1-2018 | Ending account value 3-31-2019 | Expenses paid during the period¹ | Annualized net expense ratio | |||||||||||||
Class A | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 993.73 | $ | 5.57 | 1.12 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,019.35 | $ | 5.64 | 1.12 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 989.75 | $ | 9.28 | 1.87 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,015.61 | $ | 9.40 | 1.87 | % | ||||||||
Administrator Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 994.13 | $ | 5.17 | 1.04 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,019.75 | $ | 5.24 | 1.04 | % | ||||||||
Institutional Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 995.35 | $ | 3.88 | 0.78 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.04 | $ | 3.93 | 0.78 | % |
1 | Expenses paid is equal to the annualized net expense ratio of each class multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year (to reflect the one-half-year period). |
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Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Diversified Capital Builder Fund | 7 |
Security name | Shares | Value | ||||||||||||||
Common Stocks: 78.61% |
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Communication Services: 0.22% |
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Interactive Media & Services: 0.22% |
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Alphabet Incorporated Class A † | 2,000 | $ | 2,353,780 | |||||||||||||
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Consumer Discretionary: 0.46% | ||||||||||||||||
Specialty Retail: 0.46% | ||||||||||||||||
The Home Depot Incorporated | 25,000 | 4,797,250 | ||||||||||||||
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Consumer Staples: 0.71% | ||||||||||||||||
Food Products: 0.71% | ||||||||||||||||
Lamb Weston Holdings Incorporated | 100,001 | 7,494,075 | ||||||||||||||
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Energy: 3.68% | ||||||||||||||||
Oil, Gas & Consumable Fuels: 3.68% | ||||||||||||||||
Andeavor Logistics LP | 145,000 | 5,112,700 | ||||||||||||||
Centennial Resource Development Class A † | 230,000 | 2,021,700 | ||||||||||||||
Kinder Morgan Incorporated | 350,000 | 7,003,500 | ||||||||||||||
ONEOK Incorporated | 275,000 | 19,206,000 | ||||||||||||||
Plains All American Pipeline LP | 105,000 | 2,573,550 | ||||||||||||||
The Williams Companies Incorporated | 100,000 | 2,872,000 | ||||||||||||||
38,789,450 | ||||||||||||||||
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Financials: 0.40% | ||||||||||||||||
Banks: 0.40% | ||||||||||||||||
PNC Financial Services Group Incorporated | 10,000 | 1,226,600 | ||||||||||||||
Regions Financial Corporation | 210,000 | 2,971,500 | ||||||||||||||
4,198,100 | ||||||||||||||||
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Health Care: 14.88% | ||||||||||||||||
Health Care Equipment & Supplies: 7.68% | ||||||||||||||||
Abbott Laboratories | 300,000 | 23,982,000 | ||||||||||||||
Becton Dickinson & Company | 90,000 | 22,475,700 | ||||||||||||||
Danaher Corporation | 260,000 | 34,325,200 | ||||||||||||||
Electrocore LLC Ǡ | 30,000 | 210,000 | ||||||||||||||
80,992,900 | ||||||||||||||||
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Health Care Providers & Services: 1.30% | ||||||||||||||||
HCA Holdings Incorporated | 105,000 | 13,689,900 | ||||||||||||||
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Life Sciences Tools & Services: 5.04% | ||||||||||||||||
Agilent Technologies Incorporated | 220,000 | 17,683,600 | ||||||||||||||
Bio-Rad Laboratories Incorporated Class A † | 15,000 | 4,585,200 | ||||||||||||||
Thermo Fisher Scientific Incorporated | 90,000 | 24,634,800 | ||||||||||||||
Waters Corporation † | 25,000 | 6,292,750 | ||||||||||||||
53,196,350 | ||||||||||||||||
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Pharmaceuticals: 0.86% | ||||||||||||||||
Merck KGaA ADR | 400,000 | 9,138,000 | ||||||||||||||
|
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The accompanying notes are an integral part of these financial statements.
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8 | Wells Fargo Diversified Capital Builder Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Industrials: 10.13% | ||||||||||||||||
Aerospace & Defense: 3.76% | ||||||||||||||||
Curtiss-Wright Corporation | 130,000 | $ | 14,734,200 | |||||||||||||
Huntington Ingalls Industries Incorporated | 65,000 | 13,468,000 | ||||||||||||||
Lockheed Martin Corporation | 20,000 | 6,003,200 | ||||||||||||||
Raytheon Company | 30,000 | 5,462,400 | ||||||||||||||
39,667,800 | ||||||||||||||||
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Building Products: 0.50% | ||||||||||||||||
Apogee Enterprises Incorporated | 140,000 | 5,248,600 | ||||||||||||||
Resideo Technologies Incorporated † | 2,500 | 48,225 | ||||||||||||||
5,296,825 | ||||||||||||||||
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Electrical Equipment: 1.22% | ||||||||||||||||
AMETEK Incorporated | 155,000 | 12,860,350 | ||||||||||||||
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Industrial Conglomerates: 0.87% | ||||||||||||||||
Honeywell International Incorporated | 15,000 | 2,383,800 | ||||||||||||||
Roper Industries Incorporated | 20,000 | 6,839,400 | ||||||||||||||
9,223,200 | ||||||||||||||||
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Machinery: 3.78% | ||||||||||||||||
IDEX Corporation | 120,000 | 18,208,800 | ||||||||||||||
John Bean Technologies Corporation | 170,000 | 15,621,300 | ||||||||||||||
Oshkosh Corporation | 80,000 | 6,010,400 | ||||||||||||||
39,840,500 | ||||||||||||||||
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Information Technology: 28.81% | ||||||||||||||||
Communications Equipment: 1.03% | ||||||||||||||||
Palo Alto Networks Incorporated † | 45,000 | 10,929,600 | ||||||||||||||
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Electronic Equipment, Instruments & Components: 6.88% | ||||||||||||||||
Amphenol Corporation Class A | 360,000 | 33,998,400 | ||||||||||||||
Corning Incorporated | 670,000 | 22,177,000 | ||||||||||||||
FLIR Systems Incorporated | 345,000 | 16,415,100 | ||||||||||||||
72,590,500 | ||||||||||||||||
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IT Services: 5.06% | ||||||||||||||||
Akamai Technologies Incorporated † | 360,000 | 25,815,600 | ||||||||||||||
Leidos Holdings Incorporated | 430,000 | 27,558,700 | ||||||||||||||
53,374,300 | ||||||||||||||||
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Semiconductors & Semiconductor Equipment: 7.56% | ||||||||||||||||
Advanced Micro Devices Incorporated † | 480,000 | 12,249,600 | ||||||||||||||
Broadcom Incorporated | 80,000 | 24,056,800 | ||||||||||||||
Cypress Semiconductor Corporation | 900,000 | 13,428,000 | ||||||||||||||
Microchip Technology Incorporated « | 205,000 | 17,006,800 | ||||||||||||||
Micron Technology Incorporated † | 135,000 | 5,579,550 | ||||||||||||||
Texas Instruments Incorporated | 70,000 | 7,424,900 | ||||||||||||||
79,745,650 | ||||||||||||||||
|
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The accompanying notes are an integral part of these financial statements.
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Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Diversified Capital Builder Fund | 9 |
Security name | Shares | Value | ||||||||||||||
Software: 7.15% | ||||||||||||||||
Adobe Systems Incorporated † | 60,000 | $ | 15,989,400 | |||||||||||||
Ansys Incorporated † | 80,000 | 14,616,800 | ||||||||||||||
Nutanix Incorporated Class A † | 150,000 | 5,661,000 | ||||||||||||||
Salesforce.com Incorporated † | 70,000 | 11,085,900 | ||||||||||||||
ServiceNow Incorporated † | 37,000 | 9,120,130 | ||||||||||||||
Synopsys Incorporated † | 165,000 | 18,999,750 | ||||||||||||||
75,472,980 | ||||||||||||||||
|
| |||||||||||||||
Technology Hardware, Storage & Peripherals: 1.13% | ||||||||||||||||
Pure Storage Incorporated Class A † | 325,000 | 7,081,750 | ||||||||||||||
Western Digital Corporation | 100,000 | 4,806,000 | ||||||||||||||
11,887,750 | ||||||||||||||||
|
| |||||||||||||||
Materials: 7.61% | ||||||||||||||||
Chemicals: 5.23% | ||||||||||||||||
Ashland Global Holdings Incorporated | 30,000 | 2,343,900 | ||||||||||||||
Celanese Corporation Series A | 75,000 | 7,395,750 | ||||||||||||||
Eastman Chemical Company | 75,000 | 5,691,000 | ||||||||||||||
Huntsman Corporation | 280,000 | 6,297,200 | ||||||||||||||
LyondellBasell Industries NV Class A | 280,000 | 23,542,400 | ||||||||||||||
Olin Corporation | 60,000 | 1,388,400 | ||||||||||||||
The Sherwin-Williams Company | 9,000 | 3,876,390 | ||||||||||||||
Tronox Holdings plc Class A | 150,000 | 1,972,500 | ||||||||||||||
Westlake Chemical Corporation | 40,000 | 2,714,400 | ||||||||||||||
55,221,940 | ||||||||||||||||
|
| |||||||||||||||
Containers & Packaging: 2.38% | ||||||||||||||||
AptarGroup Incorporated | 60,000 | 6,383,400 | ||||||||||||||
Avery Dennison Corporation | 75,000 | 8,475,000 | ||||||||||||||
Berry Global Group Incorporated † | 190,000 | 10,235,300 | ||||||||||||||
25,093,700 | ||||||||||||||||
|
| |||||||||||||||
Real Estate: 0.49% | ||||||||||||||||
Equity REITs: 0.49% | ||||||||||||||||
Saul Centers Incorporated | 100,000 | 5,137,000 | ||||||||||||||
|
| |||||||||||||||
Utilities: 11.22% | ||||||||||||||||
Electric Utilities: 2.98% | ||||||||||||||||
American Electric Power Company Incorporated | 375,000 | 31,406,250 | ||||||||||||||
|
| |||||||||||||||
Gas Utilities: 2.73% | ||||||||||||||||
Atmos Energy Corporation | 280,000 | 28,820,400 | ||||||||||||||
|
| |||||||||||||||
Multi-Utilities: 5.51% | ||||||||||||||||
CMS Energy Corporation | 530,000 | 29,436,200 | ||||||||||||||
DTE Energy Company | 230,000 | 28,690,200 | ||||||||||||||
58,126,400 | ||||||||||||||||
|
| |||||||||||||||
Total Common Stocks (Cost $698,027,205) | 829,344,950 | |||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
10 | Wells Fargo Diversified Capital Builder Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Corporate Bonds and Notes: 18.45% | ||||||||||||||||
Communication Services: 0.23% | ||||||||||||||||
Media: 0.23% | ||||||||||||||||
McGraw-Hill Global Education Holdings LLC «144A | 7.88 | % | 5-15-2024 | $ | 3,000,000 | $ | 2,430,000 | |||||||||
|
| |||||||||||||||
Consumer Discretionary: 0.19% | ||||||||||||||||
Hotels, Restaurants & Leisure: 0.19% | ||||||||||||||||
Speedway Motorsports Incorporated | 5.13 | 2-1-2023 | 2,000,000 | 2,015,000 | ||||||||||||
|
| |||||||||||||||
Consumer Staples: 0.29% | ||||||||||||||||
Food Products: 0.29% | ||||||||||||||||
Lamb Weston Holdings Incorporated 144A | 4.63 | 11-1-2024 | 1,000,000 | 1,010,000 | ||||||||||||
Lamb Weston Holdings Incorporated 144A | 4.88 | 11-1-2026 | 2,000,000 | 2,027,500 | ||||||||||||
3,037,500 | ||||||||||||||||
|
| |||||||||||||||
Energy: 0.10% | ||||||||||||||||
Oil, Gas & Consumable Fuels: 0.10% | ||||||||||||||||
Plains All American Pipeline LP | 4.65 | 10-15-2025 | 1,000,000 | 1,042,499 | ||||||||||||
|
| |||||||||||||||
Health Care: 5.11% | ||||||||||||||||
Health Care Equipment & Supplies: 0.69% | ||||||||||||||||
Teleflex Incorporated | 4.88 | 6-1-2026 | 7,175,000 | 7,309,531 | ||||||||||||
|
| |||||||||||||||
Health Care Providers & Services: 4.33% | ||||||||||||||||
AMN Healthcare Incorporated 144A | 5.13 | 10-1-2024 | 16,512,000 | 16,284,960 | ||||||||||||
Davita Incorporated | 5.00 | 5-1-2025 | 10,000,000 | 9,582,500 | ||||||||||||
Davita Incorporated | 5.13 | 7-15-2024 | 1,000,000 | 987,500 | ||||||||||||
HCA Incorporated | 5.38 | 2-1-2025 | 10,000,000 | 10,600,000 | ||||||||||||
HealthSouth Corporation | 5.13 | 3-15-2023 | 1,000,000 | 1,012,768 | ||||||||||||
West Street Merger Subordinate Bond Incorporated 144A | 6.38 | 9-1-2025 | 7,400,000 | 7,196,500 | ||||||||||||
45,664,228 | ||||||||||||||||
|
| |||||||||||||||
Pharmaceuticals: 0.09% | ||||||||||||||||
Catalent Pharma Solutions Incorporated 144A | 4.88 | 1-15-2026 | 1,000,000 | 990,000 | ||||||||||||
|
| |||||||||||||||
Industrials: 5.21% | ||||||||||||||||
Aerospace & Defense: 0.80% | ||||||||||||||||
TransDigm Group Incorporated | 6.38 | 6-15-2026 | 7,000,000 | 6,928,950 | ||||||||||||
TransDigm Group Incorporated | 6.50 | 5-15-2025 | 1,500,000 | 1,522,650 | ||||||||||||
8,451,600 | ||||||||||||||||
|
| |||||||||||||||
Commercial Services & Supplies: 0.14% | ||||||||||||||||
Acco Brands Corporation 144A | 5.25 | 12-15-2024 | 1,500,000 | 1,470,000 | ||||||||||||
|
| |||||||||||||||
Electrical Equipment: 2.41% | ||||||||||||||||
Resideo Funding Incorporated 144A | 6.13 | 11-1-2026 | 24,612,000 | 25,411,890 | ||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Diversified Capital Builder Fund | 11 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Machinery: 1.09% | ||||||||||||||||
HD Supply Incorporated 144A | 5.38 | % | 10-15-2026 | $ | 1,000,000 | $ | 1,020,000 | |||||||||
SPX FLOW Incorporated 144A | 5.88 | 8-15-2026 | 10,500,000 | 10,552,500 | ||||||||||||
11,572,500 | ||||||||||||||||
|
| |||||||||||||||
Trading Companies & Distributors: 0.77% |
| |||||||||||||||
WESCO Distribution Incorporated | 5.38 | 6-15-2024 | 8,000,000 | 8,100,000 | ||||||||||||
|
| |||||||||||||||
Information Technology: 3.68% | ||||||||||||||||
Communications Equipment: 0.55% | ||||||||||||||||
CommScope Incorporated 144A | 5.50 | 6-15-2024 | 6,000,000 | 5,874,600 | ||||||||||||
|
| |||||||||||||||
Electronic Equipment, Instruments & Components: 1.23% | ||||||||||||||||
TTM Technologies Incorporated 144A | 5.63 | 10-1-2025 | 13,505,000 | 12,981,681 | ||||||||||||
|
| |||||||||||||||
IT Services: 1.13% | ||||||||||||||||
First Data Corporation 144A | 5.00 | 1-15-2024 | 2,000,000 | 2,048,000 | ||||||||||||
Gartner Incorporated 144A | 5.13 | 4-1-2025 | 9,779,000 | 9,883,635 | ||||||||||||
11,931,635 | ||||||||||||||||
|
| |||||||||||||||
Software: 0.77% | ||||||||||||||||
Nuance Communications Company | 6.00 | 7-1-2024 | 3,000,000 | 3,081,570 | ||||||||||||
Symantec Corporation 144A | 5.00 | 4-15-2025 | 5,000,000 | 5,009,111 | ||||||||||||
8,090,681 | ||||||||||||||||
|
| |||||||||||||||
Materials: 3.01% | ||||||||||||||||
Chemicals: 2.43% | ||||||||||||||||
Koppers Incorporated 144A | 6.00 | 2-15-2025 | 8,190,000 | 8,005,725 | ||||||||||||
Olin Corporation | 5.50 | 8-15-2022 | 6,000,000 | 6,270,000 | ||||||||||||
Platform Specialty Products Corporation 144A | 5.88 | 12-1-2025 | 3,000,000 | 3,010,800 | ||||||||||||
Rayonier Advanced Materials Products Incorporated 144A | 5.50 | 6-1-2024 | 6,835,000 | 6,424,900 | ||||||||||||
Valvoline Incorporated | 4.38 | 8-15-2025 | 2,000,000 | 1,915,000 | ||||||||||||
25,626,425 | ||||||||||||||||
|
| |||||||||||||||
Containers & Packaging: 0.58% | ||||||||||||||||
Berry Global Incorporated 144A | 4.50 | 2-15-2026 | 2,000,000 | 1,900,400 | ||||||||||||
Berry Global Incorporated | 5.13 | 7-15-2023 | 4,120,000 | 4,181,800 | ||||||||||||
6,082,200 | ||||||||||||||||
|
| |||||||||||||||
Real Estate: 0.43% | ||||||||||||||||
Equity REITs: 0.43% | ||||||||||||||||
Iron Mountain Incorporated 144A | 5.38 | 6-1-2026 | 2,000,000 | 1,970,000 | ||||||||||||
Iron Mountain Incorporated | 5.75 | 8-15-2024 | 2,500,000 | 2,525,000 | ||||||||||||
4,495,000 | ||||||||||||||||
|
| |||||||||||||||
Utilities: 0.20% | ||||||||||||||||
Independent Power & Renewable Electricity Producers: 0.20% | ||||||||||||||||
NRG Energy Incorporated | 5.75 | 1-15-2028 | 2,000,000 | 2,120,000 | ||||||||||||
|
| |||||||||||||||
Total Corporate Bonds and Notes (Cost $193,880,877) |
| 194,696,970 | ||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
12 | Wells Fargo Diversified Capital Builder Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Yankee Corporate Bonds and Notes: 2.15% | ||||||||||||||||
Financials: 0.44% | ||||||||||||||||
Diversified Financial Services: 0.44% | ||||||||||||||||
Tronox Finance plc 144A | 5.75 | % | 10-1-2025 | $ | 5,000,000 | $ | 4,637,500 | |||||||||
|
| |||||||||||||||
Health Care: 0.22% | ||||||||||||||||
Pharmaceuticals: 0.22% | ||||||||||||||||
Mallinckrodt plc 144A | 5.50 | 4-15-2025 | 3,000,000 | 2,340,000 | ||||||||||||
|
| |||||||||||||||
Information Technology: 1.49% | ||||||||||||||||
Technology Hardware, Storage & Peripherals: 1.49% | ||||||||||||||||
Seagate HDD | 4.75 | 6-1-2023 | 9,500,000 | 9,610,992 | ||||||||||||
Seagate HDD | 4.88 | 6-1-2027 | 6,396,000 | 6,102,207 | ||||||||||||
15,713,199 | ||||||||||||||||
|
| |||||||||||||||
Total Yankee Corporate Bonds and Notes (Cost $22,738,242) | 22,690,699 | |||||||||||||||
|
| |||||||||||||||
Yield | Shares | |||||||||||||||
Short-Term Investments: 1.23% | ||||||||||||||||
Investment Companies: 1.23% | ||||||||||||||||
Securities Lending Cash Investments LLC (l)(r)(u) | 2.55 | 10,900,002 | 10,901,092 | |||||||||||||
Wells Fargo Government Money Market Fund Select Class (l)(u) | 2.38 | 2,031,423 | 2,031,423 | |||||||||||||
Total Short-Term Investments (Cost $12,932,515) | 12,932,515 | |||||||||||||||
|
|
Total investments in securities (Cost $927,578,839) | 100.44 | % | 1,059,665,134 | |||||
Other assets and liabilities, net | (0.44 | ) | (4,632,159 | ) | ||||
|
|
|
| |||||
Total net assets | 100.00 | % | $ | 1,055,032,975 | ||||
|
|
|
|
† | Non-income-earning security |
« | All or a portion of this security is on loan. |
144A | The security may be resold in transactions exempt from registration, normally to qualified institutional buyers, pursuant to Rule 144A under the Securities Act of 1933. |
(l) | The issuer of the security is an affiliated person of the Fund as defined in the Investment Company Act of 1940. |
(r) | The investment is a non-registered investment company purchased with cash collateral received from securities on loan. |
(u) | The rate represents the 7-day annualized yield at period end. |
Abbreviations:
ADR | American depositary receipt |
REIT | Real estate investment trust |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Diversified Capital Builder Fund | 13 |
Investments in Affiliates
An affiliated investment is an investment in which the Fund owns at least 5% of the outstanding voting shares of the issuer or as a result of other relationships, such as the Fund and the issuer having the same investment manager. Transactions with issuers that were either affiliated persons of the Fund at the beginning of the period or the end of the period were as follows:
Shares, beginning of period | Shares purchased | Shares sold | Shares, end of period | Net realized gains (losses) | Net change in unrealized gains (losses) | Income from affiliated securities | Value, end of period | % of net assets | ||||||||||||||||||||||||||||
Short-Term Investments | ||||||||||||||||||||||||||||||||||||
Investment Companies | ||||||||||||||||||||||||||||||||||||
Securities Lending Cash Investments LLC | 14,415,390 | 59,231,472 | 62,746,860 | 10,900,002 | $ | 0 | $ | 0 | $ | 177,261 | $ | 10,901,092 | ||||||||||||||||||||||||
Wells Fargo Government Money Market Fund Select Class | 22,600,022 | 247,014,249 | 267,582,848 | 2,031,423 | 0 | 0 | 288,952 | 2,031,423 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
$ | 0 | $ | 0 | $ | 466,213 | $ | 12,932,515 | 1.23 | % | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
14 | Wells Fargo Diversified Capital Builder Fund | Statement of assets and liabilities—March 31, 2019 (unaudited) |
Assets | ||||
Investments in unaffiliated securities (including $10,676,773 on loan), at value (cost $914,646,324) | $ | 1,046,732,619 | ||
Investments in affiliated securities, at value (cost $12,932,515) | 12,932,515 | |||
Receivable for investments sold | 7,269,407 | |||
Receivable for Fund shares sold | 2,737,754 | |||
Receivable for dividends and interest | 4,634,547 | |||
Prepaid expenses and other assets | 198,604 | |||
|
| |||
Total assets | 1,074,505,446 | |||
|
| |||
Liabilities | ||||
Payable upon receipt of securities loaned | 10,899,872 | |||
Payable for investments purchased | 7,034,603 | |||
Payable for Fund shares redeemed | 607,045 | |||
Management fee payable | 547,853 | |||
Administration fees payable | 161,816 | |||
Distribution fee payable | 65,879 | |||
Trustees’ fees and expenses payable | 1,242 | |||
Accrued expenses and other liabilities | 154,161 | |||
|
| |||
Total liabilities | 19,472,471 | |||
|
| |||
Total net assets | $ | 1,055,032,975 | ||
|
| |||
NET ASSETS CONSIST OF | ||||
Paid-in capital | $ | 901,578,746 | ||
Total distributable earnings | 153,454,229 | |||
|
| |||
Total net assets | $ | 1,055,032,975 | ||
|
| |||
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE | ||||
Net assets – Class A | $ | 591,591,608 | ||
Shares outstanding – Class A1 | 58,338,146 | |||
Net asset value per share – Class A | $10.14 | |||
Maximum offering price per share – Class A2 | $10.76 | |||
Net assets – Class C | $ | 105,574,555 | ||
Shares outstanding – Class C1 | 10,431,978 | |||
Net asset value per share – Class C | $10.12 | |||
Net assets – Administrator Class | $ | 11,909,482 | ||
Shares outstanding – Administrator Class1 | 1,173,395 | |||
Net asset value per share – Administrator Class | $10.15 | |||
Net assets – Institutional Class | $ | 345,957,330 | ||
Shares outstanding – Institutional Class1 | 34,357,023 | |||
Net asset value per share – Institutional Class | $10.07 |
1 | The Fund has an unlimited number of authorized shares. |
2 | Maximum offering price is computed as 100/94.25 of net asset value. On investments of $50,000 or more, the offering price is reduced. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of operations—six months ended March 31, 2019 (unaudited) | Wells Fargo Diversified Capital Builder Fund | 15 |
Investment income | ||||
Dividends | $ | 7,343,692 | ||
Interest | 6,188,109 | |||
Income from affiliated securities | 308,118 | |||
|
| |||
Total investment income | 13,839,919 | |||
|
| |||
Expenses | ||||
Management fee | 3,040,465 | |||
Administration fees | ||||
Class A | 565,299 | |||
Class C | 123,160 | |||
Administrator Class | 7,321 | |||
Institutional Class | 198,821 | |||
Shareholder servicing fees | ||||
Class A | 672,974 | |||
Class C | 146,619 | |||
Administrator Class | 14,079 | |||
Distribution fee | ||||
Class C | 439,857 | |||
Custody and accounting fees | 24,434 | |||
Professional fees | 22,992 | |||
Registration fees | 54,597 | |||
Shareholder report expenses | 54,597 | |||
Trustees’ fees and expenses | 10,969 | |||
Other fees and expenses | 17,162 | |||
|
| |||
Total expenses | 5,393,346 | |||
Less: Fee waivers and/or expense reimbursements | (20,124 | ) | ||
|
| |||
Net expenses | 5,373,222 | |||
|
| |||
Net investment income | 8,466,697 | |||
|
| |||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | ||||
Net realized gains on investments | 26,026,179 | |||
Net change in unrealized gains (losses) on investments | (41,927,275 | ) | ||
|
| |||
Net realized and unrealized gains (losses) on investments | (15,901,096 | ) | ||
|
| |||
Net decrease in net assets resulting from operations | $ | (7,434,399 | ) | |
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
16 | Wells Fargo Diversified Capital Builder Fund | Statement of changes in net assets |
Six months ended (unaudited) | Year ended September 30, 2018 | |||||||||||||||
Operations | ||||||||||||||||
Net investment income | $ | 8,466,697 | $ | 9,550,632 | ||||||||||||
Net realized gains on investments | 26,026,179 | 45,547,043 | ||||||||||||||
Net change in unrealized gains (losses) on investments | (41,927,275 | ) | 53,496,076 | |||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (7,434,399 | ) | 108,593,751 | |||||||||||||
|
| |||||||||||||||
Distributions to shareholders from net investment income and net realized gains | ||||||||||||||||
Class A | (32,511,852 | ) | (31,088,631 | ) | ||||||||||||
Class C | (7,166,981 | ) | (5,826,986 | ) | ||||||||||||
Administrator Class | (695,834 | ) | (638,260 | ) | ||||||||||||
Institutional Class | (19,273,631 | ) | (16,658,344 | ) | ||||||||||||
|
| |||||||||||||||
Total distributions to shareholders | (59,648,298 | ) | (54,212,221 | ) | ||||||||||||
|
| |||||||||||||||
Capital share transactions | Shares | Shares | ||||||||||||||
Proceeds from shares sold | ||||||||||||||||
Class A | 6,732,559 | 65,489,734 | 4,168,569 | 43,865,273 | ||||||||||||
Class C | 2,568,136 | 24,977,068 | 3,054,283 | 32,032,658 | ||||||||||||
Administrator Class | 138,083 | 1,338,782 | 507,748 | 5,354,505 | ||||||||||||
Institutional Class | 8,382,114 | 81,506,647 | 10,093,186 | 106,245,129 | ||||||||||||
|
| |||||||||||||||
173,312,231 | 187,497,565 | |||||||||||||||
|
| |||||||||||||||
Reinvestment of distributions | ||||||||||||||||
Class A | 3,329,904 | 31,214,958 | 2,909,042 | 29,709,824 | ||||||||||||
Class C | 748,073 | 6,973,095 | 555,563 | 5,639,821 | ||||||||||||
Administrator Class | 73,683 | 691,237 | 60,161 | 615,499 | ||||||||||||
Institutional Class | 1,888,462 | 17,597,958 | 1,566,794 | 15,933,541 | ||||||||||||
|
| |||||||||||||||
56,477,248 | 51,898,685 | |||||||||||||||
|
| |||||||||||||||
Payment for shares redeemed | ||||||||||||||||
Class A | (4,537,509 | ) | (44,097,575 | ) | (7,765,843 | ) | (81,546,998 | ) | ||||||||
Class C | (5,001,503 | ) | (48,528,036 | ) | (2,906,268 | ) | (30,438,895 | ) | ||||||||
Administrator Class | (307,257 | ) | (3,134,647 | ) | (290,129 | ) | (3,037,359 | ) | ||||||||
Institutional Class | (6,094,716 | ) | (58,377,974 | ) | (7,121,216 | ) | (73,887,823 | ) | ||||||||
|
| |||||||||||||||
(154,138,232 | ) | (188,911,075 | ) | |||||||||||||
|
| |||||||||||||||
Net increase in net assets resulting from capital share transactions | 75,651,247 | 50,485,175 | ||||||||||||||
|
| |||||||||||||||
Total increase in net assets | 8,568,550 | 104,866,705 | ||||||||||||||
|
| |||||||||||||||
Net assets | ||||||||||||||||
Beginning of period | 1,046,464,425 | 941,597,720 | ||||||||||||||
|
| |||||||||||||||
End of period | $ | 1,055,032,975 | $ | 1,046,464,425 | ||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Diversified Capital Builder Fund | 17 |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS A | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $10.88 | $10.30 | $9.96 | $9.12 | $9.31 | $7.89 | ||||||||||||||||||
Net investment income | 0.08 | 1 | 0.10 | 0.14 | 1 | 0.17 | 0.11 | 0.09 | ||||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.20 | ) | 1.06 | 1.12 | 1.71 | (0.20 | ) | 1.41 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (0.12 | ) | 1.16 | 1.26 | 1.88 | (0.09 | ) | 1.50 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.08 | ) | (0.09 | ) | (0.14 | ) | (0.15 | ) | (0.10 | ) | (0.08 | ) | ||||||||||||
Net realized gains | (0.54 | ) | (0.49 | ) | (0.78 | ) | (0.89 | ) | 0.00 | 0.00 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total distributions to shareholders | (0.62 | ) | (0.58 | ) | (0.92 | ) | (1.04 | ) | (0.10 | ) | (0.08 | ) | ||||||||||||
Net asset value, end of period | $10.14 | $10.88 | $10.30 | $9.96 | $9.12 | $9.31 | ||||||||||||||||||
Total return2 | (0.63 | )% | 11.72 | % | 13.62 | % | 22.85 | % | (1.05 | )% | 19.10 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.12 | % | 1.11 | % | 1.12 | % | 1.14 | % | 1.19 | % | 1.21 | % | ||||||||||||
Net expenses | 1.12 | % | 1.11 | % | 1.12 | % | 1.14 | % | 1.19 | % | 1.20 | % | ||||||||||||
Net investment income | 1.72 | % | 0.96 | % | 1.43 | % | 1.77 | % | 1.17 | % | 1.09 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 35 | % | 31 | % | 54 | % | 73 | % | 69 | % | 82 | % | ||||||||||||
Net assets, end of period (000s omitted) | $591,592 | $574,760 | $551,272 | $467,503 | $402,303 | $431,388 |
1 | Calculated based upon average shares outstanding. |
2 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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18 | Wells Fargo Diversified Capital Builder Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS C | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $10.86 | $10.28 | $9.96 | $9.12 | $9.32 | $7.90 | ||||||||||||||||||
Net investment income | 0.05 | 0.02 | 0.08 | 0.10 | 0.05 | 0.03 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.21 | ) | 1.06 | 1.11 | 1.72 | (0.22 | ) | 1.41 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (0.16 | ) | 1.08 | 1.19 | 1.82 | (0.17 | ) | 1.44 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.04 | ) | (0.01 | ) | (0.09 | ) | (0.09 | ) | (0.03 | ) | (0.02 | ) | ||||||||||||
Net realized gains | (0.54 | ) | (0.49 | ) | (0.78 | ) | (0.89 | ) | 0.00 | 0.00 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total distributions to shareholders | (0.58 | ) | (0.50 | ) | (0.87 | ) | (0.98 | ) | (0.03 | ) | (0.02 | ) | ||||||||||||
Net asset value, end of period | $10.12 | $10.86 | $10.28 | $9.96 | $9.12 | $9.32 | ||||||||||||||||||
Total return1 | (1.03 | )% | 10.88 | % | 12.85 | % | 21.96 | % | (1.88 | )% | 18.21 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.87 | % | 1.87 | % | 1.87 | % | 1.89 | % | 1.94 | % | 1.96 | % | ||||||||||||
Net expenses | 1.87 | % | 1.87 | % | 1.87 | % | 1.89 | % | 1.94 | % | 1.95 | % | ||||||||||||
Net investment income | 0.97 | % | 0.21 | % | 0.65 | % | 1.03 | % | 0.41 | % | 0.34 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 35 | % | 31 | % | 54 | % | 73 | % | 69 | % | 82 | % | ||||||||||||
Net assets, end of period (000s omitted) | $105,575 | $131,601 | $117,346 | $67,630 | $53,373 | $45,670 |
1 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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Financial highlights | Wells Fargo Diversified Capital Builder Fund | 19 |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | |||||||||||||||||||||||
ADMINISTRATOR CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $10.89 | $10.32 | $9.97 | $9.12 | $9.32 | $7.90 | ||||||||||||||||||
Net investment income | 0.09 | 1 | 0.11 | 1 | 0.16 | 1 | 0.18 | 1 | 0.14 | 1 | 0.12 | 1 | ||||||||||||
Net realized and unrealized gains (losses) on investments | (0.21 | ) | 1.06 | 1.12 | 1.73 | (0.22 | ) | 1.41 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (0.12 | ) | 1.17 | 1.28 | 1.91 | (0.08 | ) | 1.53 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.08 | ) | (0.11 | ) | (0.15 | ) | (0.17 | ) | (0.12 | ) | (0.11 | ) | ||||||||||||
Net realized gains | (0.54 | ) | (0.49 | ) | (0.78 | ) | (0.89 | ) | 0.00 | 0.00 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total distributions to shareholders | (0.62 | ) | (0.60 | ) | (0.93 | ) | (1.06 | ) | (0.12 | ) | (0.11 | ) | ||||||||||||
Net asset value, end of period | $10.15 | $10.89 | $10.32 | $9.97 | $9.12 | $9.32 | ||||||||||||||||||
Total return2 | (0.59 | )% | 11.73 | % | 13.75 | % | 23.14 | % | (0.92 | )% | 19.39 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.04 | % | 1.03 | % | 1.04 | % | 1.06 | % | 1.05 | % | 1.04 | % | ||||||||||||
Net expenses | 1.04 | % | 1.03 | % | 1.04 | % | 1.03 | % | 0.95 | % | 0.95 | % | ||||||||||||
Net investment income | 1.79 | % | 1.04 | % | 1.58 | % | 1.89 | % | 1.41 | % | 1.33 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 35 | % | 31 | % | 54 | % | 73 | % | 69 | % | 82 | % | ||||||||||||
Net assets, end of period (000s omitted) | $11,909 | $13,821 | $10,225 | $21,398 | $7,898 | $9,411 |
1 | Calculated based upon average shares outstanding. |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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20 | Wells Fargo Diversified Capital Builder Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | |||||||||||||||||||||||
INSTITUTIONAL CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $10.81 | $10.25 | $9.90 | $9.07 | $9.27 | $7.85 | ||||||||||||||||||
Net investment income | 0.10 | 0.14 | 0.19 | 0.20 | 0.15 | 0.13 | 1 | |||||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.21 | ) | 1.05 | 1.11 | 1.71 | (0.21 | ) | 1.41 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (0.11 | ) | 1.19 | 1.30 | 1.91 | (0.06 | ) | 1.54 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.09 | ) | (0.14 | ) | (0.17 | ) | (0.19 | ) | (0.14 | ) | (0.12 | ) | ||||||||||||
Net realized gains | (0.54 | ) | (0.49 | ) | (0.78 | ) | (0.89 | ) | 0.00 | 0.00 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total distributions to shareholders | (0.63 | ) | (0.63 | ) | (0.95 | ) | (1.08 | ) | (0.14 | ) | (0.12 | ) | ||||||||||||
Net asset value, end of period | $10.07 | $10.81 | $10.25 | $9.90 | $9.07 | $9.27 | ||||||||||||||||||
Total return2 | (0.46 | )% | 12.04 | % | 14.11 | % | 23.28 | % | (0.75 | )% | 19.68 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 0.79 | % | 0.79 | % | 0.79 | % | 0.81 | % | 0.79 | % | 0.78 | % | ||||||||||||
Net expenses | 0.78 | % | 0.78 | % | 0.78 | % | 0.78 | % | 0.77 | % | 0.78 | % | ||||||||||||
Net investment income | 2.07 | % | 1.30 | % | 1.71 | % | 2.14 | % | 1.58 | % | 1.52 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 35 | % | 31 | % | 54 | % | 73 | % | 69 | % | 82 | % | ||||||||||||
Net assets, end of period (000s omitted) | $345,957 | $326,283 | $262,754 | $122,769 | $97,251 | $100,160 |
1 | Calculated based upon average shares outstanding. |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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Notes to financial statements (unaudited) | Wells Fargo Diversified Capital Builder Fund | 21 |
1. ORGANIZATION
Wells Fargo Funds Trust (the “Trust”), a Delaware statutory trust organized on March 10, 1999, is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As an investment company, the Trust follows the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946, Financial Services – Investment Companies. These financial statements report on the Wells Fargo Diversified Capital Builder Fund (the “Fund”) which is a diversified series of the Trust.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Fund, are in conformity with U.S. generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Securities valuation
All investments are valued each business day as of the close of regular trading on the New York Stock Exchange (generally 4 p.m. Eastern Time), although the Fund may deviate from this calculation time under unusual or unexpected circumstances.
Equity securities that are listed on a foreign or domestic exchange or market are valued at the official closing price or, if none, the last sales price. If no sale occurs on the principal exchange or market that day, a fair value price will be determined in accordance with the Fund’s Valuation Procedures.
Debt securities are valued at the evaluated bid price provided by an independent pricing service (e.g. taking into account various factors, including yields, maturities, or credit ratings) or, if a reliable price is not available, the quoted bid price from an independent broker-dealer.
Investments in registered open-end investment companies are valued at net asset value. Interests in non-registered investment companies that are redeemable at net asset value are fair valued normally at net asset value.
Investments which are not valued using any of the methods discussed above are valued at their fair value, as determined in good faith by the Board of Trustees of the Fund. The Board of Trustees has established a Valuation Committee comprised of the Trustees and has delegated to it the authority to take any actions regarding the valuation of portfolio securities that the Valuation Committee deems necessary or appropriate, including determining the fair value of portfolio securities, unless the determination has been delegated to the Wells Fargo Asset Management Pricing Committee at Wells Fargo Funds Management, LLC (“Funds Management”). The Board of Trustees retains the authority to make or ratify any valuation decisions or approve any changes to the Valuation Procedures as it deems appropriate. On a quarterly basis, the Board of Trustees receives reports on any valuation actions taken by the Valuation Committee or the Wells Fargo Asset Management Pricing Committee which may include items for ratification.
Securities lending
The Fund may lend its securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The Fund continues to receive interest or dividends on the securities loaned. The Fund receives collateral in the form of cash or securities with a value at least equal to the value of the securities on loan. The value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. In a securities lending transaction, the net asset value of the Fund will be affected by an increase or decrease in the value of the securities loaned and by an increase or decrease in the value of the instrument in which collateral is invested. The amount of securities lending activity undertaken by the Fund fluctuates from time to time. In the event of default or bankruptcy by the borrower, the Fund may be prevented from recovering the loaned securities or gaining access to the collateral or may experience delays or costs in doing so. In addition, the investment of any cash collateral received may lose all or part of its value. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.
The Fund lends its securities through an unaffiliated securities lending agent. Cash collateral received in connection with its securities lending transactions is invested in Securities Lending Cash Investments, LLC (the “Securities Lending Fund”). The Securities Lending Fund is exempt from registration under Section 3(c)(7) of the 1940 Act and is managed by Funds Management and is subadvised by Wells Capital Management Incorporated (“WellsCap”), an affiliate of Funds Management and an indirect wholly owned subsidiary of Wells Fargo & Company (“Wells Fargo”). Funds Management receives an advisory fee starting at 0.05% and declining to 0.01% as the average daily net assets of the Securities Lending Fund increase. All of the fees received by Funds Management are paid to WellsCap for its services as subadviser. The Securities Lending Fund seeks to provide a positive return compared to the daily Fed Funds Open Rate by investing in high-quality, U.S. dollar-denominated
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22 | Wells Fargo Diversified Capital Builder Fund | Notes to financial statements (unaudited) |
short-term money market instruments. Securities Lending Fund investments are valued at the evaluated bid price provided by an independent pricing service. Income earned from investment in the Securities Lending Fund (net of fees and rebates), if any, is included in income from affiliated securities on the Statement of Operations.
Security transactions and income recognition
Securities transactions are recorded on a trade date basis. Realized gains or losses are recorded on the basis of identified cost.
Dividend income is recognized on the ex-dividend date.
Interest income is accrued daily and bond discounts are accreted and premiums are amortized daily. To the extent debt obligations are placed on non-accrual status, any related interest income may be reduced by writing off interest receivables when the collection of all or a portion of interest has been determined to be doubtful based on consistently applied procedures and the fair value has decreased. If the issuer subsequently resumes interest payments or when the collectability of interest is reasonably assured, the debt obligation is removed from non-accrual status.
Distributions to shareholders
Distributions to shareholders are recorded on the ex-dividend date and paid from net investment income quarterly and any net realized gains are paid at least annually. Such distributions are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles. Dividend sources are estimated at the time of declaration. The tax character of distributions is determined as of the Fund’s fiscal year end. Therefore, a portion of the Fund’s distributions made prior to the Fund’s fiscal year end may be categorized as a tax return of capital at year end.
Federal and other taxes
The Fund intends to continue to qualify as a regulated investment company by distributing substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required.
The Fund’s income and federal excise tax returns and all financial records supporting those returns for the prior three fiscal years are subject to examination by the federal and Delaware revenue authorities. Management has analyzed the Fund’s tax positions taken on federal, state, and foreign tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability.
As of March 31, 2019, the aggregate cost of all investments for federal income tax purposes was $927,287,676 and the unrealized gains (losses) consisted of:
Gross unrealized gains | $ | 160,424,910 | ||
Gross unrealized losses | (28,047,452 | ) | ||
Net unrealized gains | $ | 132,377,458 |
Class allocations
The separate classes of shares offered by the Fund differ principally in applicable sales charges, distribution, shareholder servicing, and administration fees. Class specific expenses are charged directly to that share class. Investment income, common expenses, and realized and unrealized gains (losses) on investments are allocated daily to each class of shares based on the relative proportion of net assets of each class.
3. FAIR VALUATION MEASUREMENTS
Fair value measurements of investments are determined within a framework that has established a fair value hierarchy based upon the various data inputs utilized in determining the value of the Fund’s investments. The three-level hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Fund’s investments are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The inputs are summarized into three broad levels as follows:
∎ | Level 1 – quoted prices in active markets for identical securities |
∎ | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
∎ | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
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Notes to financial statements (unaudited) | Wells Fargo Diversified Capital Builder Fund | 23 |
The inputs or methodologies used for valuing investments in securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used in valuing the Fund’s assets and liabilities as of March 31, 2019:
Quoted prices (Level 1) | Other significant observable inputs (Level 2) | Significant (Level 3) | Total | |||||||||||||
Assets | ||||||||||||||||
Investments in: | ||||||||||||||||
Common stocks | ||||||||||||||||
Communication services | $ | 2,353,780 | $ | 0 | $ | 0 | $ | 2,353,780 | ||||||||
Consumer discretionary | 4,797,250 | 0 | 0 | 4,797,250 | ||||||||||||
Consumer staples | 7,494,075 | 0 | 0 | 7,494,075 | ||||||||||||
Energy | 38,789,450 | 0 | 0 | 38,789,450 | ||||||||||||
Financials | 4,198,100 | 0 | 0 | 4,198,100 | ||||||||||||
Health care | 157,017,150 | 0 | 0 | 157,017,150 | ||||||||||||
Industrials | 106,888,675 | 0 | 0 | 106,888,675 | ||||||||||||
Information technology | 304,000,780 | 0 | 0 | 304,000,780 | ||||||||||||
Materials | 80,315,640 | 0 | 0 | 80,315,640 | ||||||||||||
Real estate | 5,137,000 | 0 | 0 | 5,137,000 | ||||||||||||
Utilities | 118,353,050 | 0 | 0 | 118,353,050 | ||||||||||||
Corporate bonds and notes | 0 | 194,696,970 | 0 | 194,696,970 | ||||||||||||
Yankee corporate bonds and notes | 0 | 22,690,699 | 0 | 22,690,699 | ||||||||||||
Short-term investments | ||||||||||||||||
Investment companies | 2,031,423 | 10,901,092 | 0 | 12,932,515 | ||||||||||||
Total assets | $ | 831,376,373 | $ | 228,288,761 | $ | 0 | $ | 1,059,665,134 |
Additional sector, industry or geographic detail is included in the Portfolio of Investments.
At March 31, 2019, the Fund did not have any transfers into/out of Level 3.
4. TRANSACTIONS WITH AFFILIATES
Management fee
Funds Management, an indirect wholly owned subsidiary of Wells Fargo, is the manager of the Fund and provides advisory and fund-level administrative services under an investment management agreement. Under the investment management agreement, Funds Management is responsible for, among other services, implementing the investment objectives and strategies of the Fund, supervising the subadviser and providing fund-level administrative services in connection with the Fund’s operations. As compensation for its services under the investment management agreement, Funds Management is entitled to receive a management fee at the following annual rate based on the Fund’s average daily net assets:
Average daily net assets | Management fee | |||
First $500 million | 0.650 | % | ||
Next $500 million | 0.600 | |||
Next $2 billion | 0.550 | |||
Next $2 million | 0.525 | |||
Next $5 million | 0.490 | |||
Over $10 billion | 0.480 |
For the six months ended March 31, 2019, the management fee was equivalent to an annual rate of 0.63% of the Fund’s average daily net assets.
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24 | Wells Fargo Diversified Capital Builder Fund | Notes to financial statements (unaudited) |
Funds Management has retained the services of a subadviser to provide daily portfolio management to the Fund. The fee for subadvisory services is borne by Funds Management. WellsCap is the subadviser to the Fund and is entitled to receive a fee from Funds Management at an annual rate starting at 0.35% and declining to 0.20% as the average daily net assets of the Fund increase.
Administration fees
Under a class-level administration agreement, Funds Management provides class-level administrative services to the Fund, which includes paying fees and expenses for services provided by the transfer agent, sub-transfer agents, omnibus account servicers and record-keepers. As compensation for its services under the class-level administration agreement, Funds Management receives an annual fee which is calculated based on the average daily net assets of each class as follows:
Class-level administration fee | ||||
Class A, Class C | 0.21 | % | ||
Administrator Class, Institutional Class | 0.13 |
Funds Management has contractually waived and/or reimbursed management and administration fees to the extent necessary to maintain certain net operating expense ratios for the Fund. When each class of the Fund has exceeded its expense cap, Funds Management has waived fees and/or reimbursed expenses from fund level expenses on a proportionate basis and then from class specific expenses. When only certain classes exceed their expense caps, waivers and/or reimbursements are applied against class specific expenses before fund level expenses. Funds Management has committed through January 31, 2020 to waive fees and/or reimburse expenses to the extent necessary to cap the Fund’s expenses at 1.20% for Class A shares, 1.95% for Class C shares, 1.05% for Administrator Class shares and 0.78% for Institutional Class shares. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees.
Distribution fee
The Trust has adopted a distribution plan for Class C shares of the Fund pursuant to Rule 12b-1 under the 1940 Act. A distribution fee is charged to Class C shares and paid to Wells Fargo Funds Distributor, LLC (“Funds Distributor”), the principal underwriter, at an annual rate of 0.75% of the average daily net assets of Class C shares.
In addition, Funds Distributor is entitled to receive the front-end sales charge from the purchase of Class A shares and a contingent deferred sales charge on the redemption of certain Class A shares. Funds Distributor is also entitled to receive the contingent deferred sales charges from redemptions of Class C shares. For the six months ended March 31, 2019, Funds Distributor received $26,156 from the sale of Class A shares and $174 in contingent deferred sales charges from redemptions of Class C shares. No contingent deferred sales charges were incurred by Class A for the six months ended March 31, 2019.
Shareholder servicing fees
The Trust has entered into contracts with one or more shareholder servicing agents, whereby Class A, Class C, and Administrator Class of the Fund are charged a fee at an annual rate of 0.25% of the average daily net assets of each respective class. A portion of these total shareholder servicing fees were paid to affiliates of Wells Fargo.
Interfund transactions
The Fund may purchase or sell portfolio investment securities to certain other Wells Fargo affiliates pursuant toRule 17a-7 under the 1940 Act and under procedures adopted by the Board of Trustees. The procedures have been designed to ensure that these interfund transactions, which do not incur broker commissions, are effected at current market prices
5. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, excluding U.S. government obligations (if any) and short-term securities, for the six months ended March 31, 2019 were $374,440,345 and $338,711,544, respectively.
6. BANK BORROWINGS
The Trust (excluding the money market funds), Wells Fargo Master Trust and Wells Fargo Variable Trust are parties to a $280,000,000 revolving credit agreement whereby the Fund is permitted to use bank borrowings for temporary or emergency purposes, such as to fund shareholder redemption requests. Interest under the credit agreement is charged to the Fund based on a borrowing rate equal to the higher of the Federal Funds rate in effect on that day plus 1.25% or the overnight LIBOR rate in effect on that day plus 1.25%. In addition, an annual commitment fee equal to 0.25% of the unused balance is allocated to each participating fund.
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Notes to financial statements (unaudited) | Wells Fargo Diversified Capital Builder Fund | 25 |
For the six months ended March 31, 2019, there were no borrowings by the Fund under the agreement.
7. INDEMNIFICATION
Under the Trust’s organizational documents, the officers and Trustees have been granted certain indemnification rights against certain liabilities that may arise out of performance of their duties to the Trust. Additionally, in the normal course of business, the Trust may enter into contracts with service providers that contain a variety of indemnification clauses. The Trust’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated.
8. NEW ACCOUNTING PRONOUNCEMENTS
In August 2018, FASB issued Accounting Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820)Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.ASU 2018-13 updates the disclosure requirements for fair value measurements by modifying or removing certain disclosures and adding certain new disclosures. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management has adopted the removal and modification of disclosures early, as permitted, and will adopt the additional new disclosures at the effective date.
In March 2017, FASB issued ASU No. 2017-08,Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium. The amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 is effective for fiscal years beginning after December 15, 2018 and for interim periods within those fiscal years. Management is currently evaluating the potential impact of this new guidance to the financial statements.
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26 | Wells Fargo Diversified Capital Builder Fund | Other information (unaudited) |
PROXY VOTING INFORMATION
A description of the policies and procedures used to determine how to vote proxies relating to portfolio securities is available, upon request, by calling1-800-222-8222, visiting our website atwfam.com, or visiting the SEC website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent12-month period ended June 30 is available on the Fund’s website atwfam.comor by visiting the SEC website at sec.gov.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for the Fund are publicly available monthly on the Fund’s website (wfam.com), on a one-month delayed basis. In addition, top ten holdings information (excluding derivative positions) for the Fund is publicly available on the Fund’s website on a monthly, seven-day or more delayed basis. The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which is available by visiting the SEC website at sec.gov. In addition, the Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330.
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Other information (unaudited) | Wells Fargo Diversified Capital Builder Fund | 27 |
BOARD OF TRUSTEES AND OFFICERS
Each of the Trustees and Officers1 listed in the table below acts in identical capacities for each fund in the Wells Fargo family of funds, which consists of 151 mutual funds comprising the Wells Fargo Funds Trust, Wells Fargo Variable Trust, Wells Fargo Master Trust and four closed-end funds (collectively the “Fund Complex”). This table should be read in conjunction with the Prospectus and the Statement of Additional Information2. The mailing address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, however, each Trustee serves such term until reaching the mandatory retirement age established by the Trustees.
Independent Trustees
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company directorships | |||
William R. Ebsworth (Born 1957) | Trustee, since 2015 | Retired. From 1984 to 2013, equities analyst, portfolio manager, research director and chief investment officer at Fidelity Management and Research Company in Boston, Tokyo, and Hong Kong, and retired in 2013 as Chief Investment Officer of Fidelity Strategic Advisers, Inc. where he led a team of investment professionals managing client assets. Prior thereto, Board member of Hong Kong Securities Clearing Co., Hong Kong Options Clearing Corp., the Thailand International Fund, Ltd., Fidelity Investments Life Insurance Company, and Empire Fidelity Investments Life Insurance Company. Audit Committee Chair and Investment Committee Chair of the Vincent Memorial Hospital Endowment (non-profit organization). Mr. Ebsworth is a CFA® charterholder. | N/A | |||
Jane A. Freeman (Born 1953) | Trustee, since 2015; Chair Liaison, since 2018 | Retired. From 2012 to 2014 and 1999 to 2008, Chief Financial Officer of Scientific Learning Corporation. From 2008 to 2012, Ms. Freeman provided consulting services related to strategic business projects. Prior to 1999, Portfolio Manager at Rockefeller & Co. and Scudder, Stevens & Clark. Board member of the Harding Loevner Funds from 1996 to 2014, serving as both Lead Independent Director and chair of the Audit Committee. Board member of the Russell Exchange Traded Funds Trust from 2011 to 2012 and the chair of the Audit Committee. Ms. Freeman is a Board Member of The Ruth Bancroft Garden (non-profit organization). She is also an inactive Chartered Financial Analyst. | N/A | |||
Isaiah Harris, Jr.3 (Born 1952) | Trustee, since 2009; Audit Committee Chairman, since 2019 | Retired. Chairman of the Board of CIGNA Corporation since 2009, and Director since 2005. From 2003 to 2011, Director of Deluxe Corporation. Prior thereto, President and CEO of BellSouth Advertising and Publishing Corp. from 2005 to 2007, President and CEO of BellSouth Enterprises from 2004 to 2005 and President of BellSouth Consumer Services from 2000 to 2003. Emeritus member of the Iowa State University Foundation Board of Governors. Emeritus Member of the Advisory Board of Iowa State University School of Business. Advisory Board Member, Palm Harbor Academy (private school). Advisory Board Member, Child Evangelism Fellowship (non-profit). Mr. Harris is a certified public accountant (inactive status). | CIGNA Corporation | |||
Judith M. Johnson (Born 1949) | Trustee, since 2008; Audit Committee Chairman, from 2009 to 2018 | Retired. Prior thereto, Chief Executive Officer and Chief Investment Officer of Minneapolis Employees Retirement Fund from 1996 to 2008. Ms. Johnson is an attorney, certified public accountant and a certified managerial accountant. | N/A |
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28 | Wells Fargo Diversified Capital Builder Fund | Other information (unaudited) |
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company directorships | |||
David F. Larcker (Born 1950) | Trustee, since 2009 | James Irvin Miller Professor of Accounting at the Graduate School of Business, Stanford University, Director of the Corporate Governance Research Initiative and Senior Faculty of The Rock Center for Corporate Governance since 2006. From 2005 to 2008, Professor of Accounting at the Graduate School of Business, Stanford University. Prior thereto, Ernst & Young Professor of Accounting at The Wharton School, University of Pennsylvania from 1985 to 2005. | N/A | |||
Olivia S. Mitchell (Born 1953) | Trustee, since 2006; Nominating and Governance Committee Chairman, since 2018 | International Foundation of Employee Benefit Plans Professor, Wharton School of the University of Pennsylvania since 1993. Director of Wharton’s Pension Research Council and Boettner Center on Pensions & Retirement Research, and Research Associate at the National Bureau of Economic Research. Previously, Cornell University Professor from 1978 to 1993. | N/A | |||
Timothy J. Penny (Born 1951) | Trustee, since 1996; Chairman, since 2018 | President and Chief Executive Officer of Southern Minnesota Initiative Foundation, a non-profit organization, since 2007. Member of the Board of Trustees of NorthStar Education Finance, Inc., a non-profit organization, since 2007. | N/A | |||
James G. Polisson (Born 1959) | Trustee, since 2018 | Retired. Chief Marketing Officer, Source (ETF) UK Services, Ltd, from 2015 to 2017. From 2012 to 2015, Principal of The Polisson Group, LLC, a management consulting, corporate advisory and principal investing company. Chief Executive Officer and Managing Director at Russell Investments, Global Exchange Traded Funds from 2010 to 2012. Managing Director of Barclays Global Investors from 1998 to 2010 and Global Chief Marketing Officer for iShares and Barclays Global Investors from 2000 to 2010. Trustee of the San Francisco Mechanics’ Institute, a non-profit organization, from 2013 to 2015. Board member of the Russell Exchange Traded Fund Trust from 2011 to 2012. Director of Barclays Global Investors Holdings Deutschland GmbH from 2006 to 2009. Mr. Polisson is an attorney and has a retired status with the Massachusetts and District of Columbia Bar Associations. | N/A | |||
Pamela Wheelock (Born 1959) | Trustee, since 2018 | Board member of the Destination Medical Center Economic Development Agency, Rochester, Minnesota since 2019. Chief Operating Officer, Twin Cities Habitat for Humanity from 2017 to 2019. Vice President of University Services, University of Minnesota from 2012 to 2016. Prior thereto, on the Board of Directors, Governance Committee and Finance Committee for the Minnesota Philanthropy Partners (Saint Paul Foundation) from 2012 to 2018, Interim Chief Executive Officer of Blue Cross Blue Shield of Minnesota from 2011 to 2012, Chairman of the Board from 2009 to 2012 and Board Director from 2003 to 2015. Vice President, Leadership and Community Engagement, Bush Foundation, Saint Paul, Minnesota (a private foundation) from 2009 to 2011. Executive Vice President and Chief Financial Officer, Minnesota Sports and Entertainment from 2004 to 2009 and Senior Vice President from 2002 to 2004. Executive Vice President of the Minnesota Wild Foundation from 2004 to 2008. Commissioner of Finance, State of Minnesota, from 1999 to 2002. Currently Board Chair of the Minnesota Wild Foundation since 2010. | N/A |
* | Length of service dates reflect the Trustee’s commencement of service with the Trust’s predecessor entities, where applicable. |
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Other information (unaudited) | Wells Fargo Diversified Capital Builder Fund | 29 |
Officers
Name and year of birth | Position held and length of service | Principal occupations during past five years or longer | ||||
Andrew Owen (Born 1960) | President, since 2017 | Executive Vice President of Wells Fargo & Company and Head of Affiliated Managers, Wells Fargo Asset Management, since 2014. In addition, Mr. Owen is currently President, Chief Executive Officer and Director of Wells Fargo Funds Management, LLC since 2017. Prior thereto, Executive Vice President responsible for marketing, investments and product development for Wells Fargo Funds Management, LLC, from 2009 to 2014. | ||||
Jeremy DePalma1 (Born 1974) | Treasurer, since 2012 | Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010 and head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010. | ||||
Alexander Kymn (Born 1973) | Secretary and Chief Legal Officer, since 2018 | Senior Company Counsel of Wells Fargo Bank, N.A. since 2018 (previously Senior Counsel from 2007 to 2018). Vice President of Wells Fargo Funds Management, LLC from 2008 to 2014. | ||||
Michael H. Whitaker (Born 1967) | Chief Compliance Officer, since 2016 | Senior Vice President and Chief Compliance Officer since 2016. Senior Vice President and Chief Compliance Officer for Fidelity Investments from 2007 to 2016. | ||||
David Berardi (Born 1975) | Assistant Treasurer, since 2009 | Vice President of Wells Fargo Funds Management, LLC since 2009. Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010. Manager of Fund Reporting and Control for Evergreen Investment Management Company, LLC from 2004 to 2010. |
1 | Jeremy DePalma acts as Treasurer of 86 funds and Assistant Treasurer of 65 funds in the Fund Complex. |
2 | The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request, by calling1-800-222-8222 or by visiting the website atwfam.com. |
3 | Mr. Harris became Chairman of the Audit Committee effective January 1, 2019. |
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30 | Wells Fargo Diversified Capital Builder Fund | Appendix A (unaudited) |
SALES CHARGE REDUCTIONS AND WAIVERS FOR CERTAIN INTERMEDIARIES
Raymond James & Associates, Inc., Raymond James Financial Services & Raymond James affiliates (“Raymond James”)
Effective on or about March 1, 2019, shareholders purchasing Fund shares through a Raymond James platform or account will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in the Fund’s Prospectus or SAI.
Front-end Sales Load Waivers on Class A shares Available at Raymond James
• | Shares purchased in an investment advisory program. |
• | Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family). |
• | Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James. |
• | Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement). |
• | A shareholder in the fund’s Class C shares will have their shares automatically exchanged at net asset value to Class A shares (or the appropriate share class) of the fund if the shares are no longer subject to a CDSC and the exchange is in line with the policies and procedures of Raymond James. |
CDSC Waivers on Class A and C Shares Available at Raymond James
• | Death or disability of the shareholder. |
• | Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus. |
• | Return of excess contributions from an IRA Account. |
• | Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70½ as described in the Fund’s prospectus. |
• | Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James. |
• | Shares acquired through a right of reinstatement. |
Front-end Load Discounts Available at Raymond James: Breakpoints, and/or Rights of Accumulation
• | Breakpoints as described in the Fund’s Prospectus. |
• | Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets. |
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For more information
More information about Wells Fargo Funds is available free upon request. To obtain literature, please write, visit the Fund’s website, or call:
Wells Fargo Funds
P.O. Box 219967
Kansas City, MO 64121-9967
Website: wfam.com
Individual investors: 1-800-222-8222
Retail investment professionals: 1-888-877-9275
Institutional investment professionals:
1-866-765-0778
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. Before investing, please consider the investment objectives, risks, charges, and expenses of the investment. For a current prospectus and, if available, a summary prospectus, containing this information, call1-800-222-8222 or visit the Fund’s website atwfam.com. Read the prospectus carefully before you invest or send money.
Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management firms owned by Wells Fargo & Company. These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by Wells Fargo Funds Distributor, LLC (a broker-dealer and Member FINRA).
This material is for general informational and educational purposes only and is NOT intended to provide investment advice or a recommendation of any kind—including a recommendation for any specific investment, strategy, or plan.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
© 2019 Wells Fargo Funds Management, LLC. All rights reserved.
![]() | 401599 05-19 SA225/SAR225 03-19 |
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Semi-Annual Report
March 31, 2019
Wells Fargo Diversified Income Builder Fund
Beginning on January 1, 2021, as permitted by new regulations adopted by the Securities and Exchange Commission, paper copies of the Wells Fargo Funds’ annual and semi-annual shareholder reports issued after this date will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website, and you will be notified by mail each time a report is posted and provided with a website address to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-222-8222 or by enrolling at wellsfargo.com/advantagedelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports; if you invest directly with the Fund, you can call 1-800-222-8222. Your election to receive reports in paper will apply to all Wells Fargo Funds held in your account with your financial intermediary or, if you are a direct investor, to all Wells Fargo Funds that you hold.
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Financial statements | ||||
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The views expressed and any forward-looking statements are as of March 31, 2019, unless otherwise noted, and are those of the Fund managers and/or Wells Fargo Asset Management. Discussions of individual securities, or the markets generally, or any Wells Fargo Fund are not intended as individual recommendations. Future events or results may vary significantly from those expressed in any forward-looking statements. The views expressed are subject to change at any time in response to changing circumstances in the market. Wells Fargo and the Fund disclaim any obligation to publicly update or revise any views expressed or forward-looking statements.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
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2 | Wells Fargo Diversified Income Builder Fund | Letter to shareholders (unaudited) |
Andrew Owen
President
Wells Fargo Funds
December’s S&P 500 Index performance was the worst since 1931.
Dear Shareholder:
We are pleased to offer you this semi-annual report for the Wells Fargo Diversified Income Builder Fund for thesix-month period that ended March 31, 2019. Concerns about interest rate increases in the U.S., trade tensions, and geopolitical events drove equity losses and restrained bond returns during the fourth quarter of 2018. Investor sentiment improved during the first quarter of 2019 thanks to a shift in U.S. Federal Reserve (Fed) policy and consistent, if not spectacular, economic and business growth metrics.
For the period, U.S. stocks, as measured by the S&P 500 Index,1 lost 1.72% and international stocks, as measured by the MSCI ACWI ex USA Index (Net),2 fell 2.33%. Based on the MSCI EM Index (Net),3 emerging market stocks added 1.71%. For bond investors, the Bloomberg Barclays U.S. Aggregate Bond Index4 added 4.63% while the Bloomberg Barclays Global Aggregateex-USD Index5 added 2.44%. The Bloomberg Barclays Municipal Bond Index6 added 4.63%, and the ICE BofAML U.S. High Yield Index7 gained 2.39%.
Conflicting data unsettled markets during the fourth quarter.
November’s U.S. midterm elections shifted control of the House of Representatives from Republicans to Democrats, presaging potential partisan clashes. Third-quarter U.S. gross domestic product was announced at an annualized 3.4% rate, lower than the second-quarter rate. Brexit efforts stalled ahead of the March 2019 deadline. The People’s Bank of China cut reserve requirement ratios, accelerated infrastructure spending, and cut taxes even as the value of the yuan declined to low levels last seen in 2008.
December’s S&P 500 Index performance was the worst since 1931. Globally, fixed-income investments fared better than stocks during the last two months of the year. The Fed increased the federal funds rate by 25 bps in December 2018 to a target range of between 2.25% and 2.50% and softened its outlook for 2019 rate increases.
The market climbs a wall of worry.
Investors entered 2019 with reasons to be concerned. A partial U.S. government shutdown driven by partisan spending and immigration policy disputes extended into January. Investors expected high levels of stock market volatility to continue based on the VIX8.
1 | The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index with each stock’s weight in the index proportionate to its market value. You cannot invest directly in an index. |
2 | The Morgan Stanley Capital International (MSCI) All Country World Index (ACWI) ex USA Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. You cannot invest directly in an index. |
3 | The MSCI Emerging Markets (EM) Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure large- and mid-cap equity market performance of emerging markets. The MSCI EM Index (Net) consists of the following 24 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and the United Arab Emirates. You cannot invest directly in an index. |
4 | The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid adjustable-rate mortgage pass-throughs), asset-backed securities, and commercial mortgage-backed securities. You cannot invest directly in an index. |
5 | The Bloomberg Barclays Global Aggregate ex-USD Index is an unmanaged index that provides a broad-based measure of the global investment-grade fixed-income markets excluding the U.S. dollar-denominated debt market. You cannot invest directly in an index. |
6 | The Bloomberg Barclays Municipal Bond Index is an unmanaged index composed of long-term tax-exempt bonds with a minimum credit rating of Baa. You cannot invest directly in an index. |
7 | The ICE BofAML U.S. High Yield Index is a market-capitalization-weighted index of domestic and Yankee high-yield bonds. The index tracks the performance of high-yield securities traded in the U.S. bond market. You cannot invest directly in an index. Copyright 2019. ICE Data Indices, LLC. All rights reserved. |
8 | The Chicago Board Options Exchange Market Volatility Index (VIX) is a popular measure of the implied volatility of S&P 500 Index options. It represents one measure of the market’s expectation of stock market volatility over the next 30-day period. You cannot invest directly in an index. |
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Letter to shareholders (unaudited) | Wells Fargo Diversified Income Builder Fund | 3 |
January’s returns tended to support the investing adage that markets climb a wall of worry. The S&P 500 Index gained 8.01% for the month that ended January 31, 2019, its best monthly performance in 30 years. Returns for the MSCI ACWI ex USA Index (Net), the Bloomberg Barclays U.S. Aggregate Bond Index, and the Bloomberg Barclays Global Aggregateex-USD Index also were positive. The Fed indicated that it would pause its program of regular rate increases during 2019 as inflation remained low. Businesses and investors responded positively to the shift in policy.
In February, concerns over slowing global growth reemerged. The Bureau of Economic Analysis announced fourth-quarter 2018 gross domestic product grew at an annualized 2.2% rate, down from the 4.2% annualized rate for the second quarter and the 3.4% annualized rate for the third quarter. Analysts attributed the lower growth rate to a slowing housing market and larger trade deficit. The U.S. Department of Labor said that the economy created just 20,000 jobs in February 2019. In a February report, the Bank of England forecast the slowest growth since the financial crisis for 2019. China and the U.S., while putting future tariffs on hold for the time being, continued to wrangle over trade issues.
By the end of March 2019, the combination of dovish Fed sentiment and consistent, if not spectacular, economic and business metrics reinforced investors’ enthusiasm for equity investing. Monthly job creation data regained its momentum. Corporate profits, while lower than 2018’s lofty levels, remained consistent. Inflation rates were relatively low in the U.S., Europe, and Japan. China announced a roughly $300 billion stimulus package through tax and fee cuts intended to reinvigorate economic growth.
Don’t let short-term uncertainty derail long-term investment goals.
Periods of investment uncertainty can present challenges, but experience has taught us that maintaining long-term investment goals can be an effective way to plan for the future. To help you create a sound strategy based on your personal goals and risk tolerance, Wells Fargo Funds offers more than 100 mutual funds spanning a wide range of asset classes and investment styles. Although diversification cannot guarantee an investment profit or prevent losses, we believe it can be an effective way to manage investment risk and potentially smooth out overall portfolio performance. We encourage investors to know their investments and to understand that appropriate levels of risk-taking may unlock opportunities.
Thank you for choosing to invest with Wells Fargo Funds. We appreciate your confidence in us and remain committed to helping you meet your financial needs.
Sincerely,
Andrew Owen
President
Wells Fargo Funds
January’s returns tended to support the investing adage that markets climb a wall of worry.
For further information about your Fund, contact your investment professional, visit our website atwfam.com, or call us directly at1-800-222-8222.
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4 | Wells Fargo Diversified Income Builder Fund | Performance highlights (unaudited) |
Investment objective
The Fund seeks long-term total return, consisting of current income and capital appreciation.
Manager
Wells Fargo Funds Management, LLC
Subadviser
Wells Capital Management Incorporated
Portfolio managers
Kandarp R. Acharya, CFA®‡, FRM
Margaret Patel
Average annual total returns (%) as of March 31, 2019
Including sales charge | Excluding sales charge | Expense ratios1 (%) | ||||||||||||||||||||||||||||||||
Inception date | 1 year | 5 year | 10 year | 1 year | 5 year | 10 year | Gross | Net2 | ||||||||||||||||||||||||||
Class A (EKSAX)3 | 4-14-1987 | -0.82 | 4.38 | 8.90 | 5.24 | 5.63 | 9.55 | 1.04 | 0.85 | |||||||||||||||||||||||||
Class C (EKSCX)3 | 2-1-1993 | 3.25 | 4.84 | 8.73 | 4.25 | 4.84 | 8.73 | 1.79 | 1.60 | |||||||||||||||||||||||||
Class R6 (EKSRX)4 | 7-31-2018 | – | – | – | 5.44 | 5.98 | 9.97 | 0.61 | 0.42 | |||||||||||||||||||||||||
Administrator Class (EKSDX)5 | 7-30-2010 | – | – | – | 5.26 | 5.77 | 9.76 | 0.96 | 0.77 | |||||||||||||||||||||||||
Institutional Class (EKSYX)3 | 1-13-1997 | – | – | – | 5.55 | 6.00 | 9.99 | 0.71 | 0.52 | |||||||||||||||||||||||||
Diversified Income Builder Blended Index6 | – | – | – | – | 7.28 | 6.29 | 12.46 | – | – | |||||||||||||||||||||||||
ICE BofAML U.S. Cash Pay High Yield Index7 | – | – | – | – | 5.96 | 4.68 | 11.12 | – | – | |||||||||||||||||||||||||
Russell 1000® Index8 | – | – | – | – | 9.30 | 10.63 | 16.05 | – | – |
Figures quoted represent past performance, which is no guarantee of future results, and do not reflect taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance shown without sales charges would be lower if sales charges were reflected. Current performance may be lower or higher than the performance data quoted, which assumes the reinvestment of dividends and capital gains. Currentmonth-end performance is available on the Fund’s website, wfam.com.
Index returns do not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses, or any taxes. It is not possible to invest directly in an index.
For Class A shares, the maximumfront-end sales charge is 5.75%. For Class C shares, the maximum contingent deferred sales charge is 1.00%. Performance including a contingent deferred sales charge assumes the sales charge for the corresponding time period. Class R6, Administrator Class, and Institutional Class shares are sold without afront-end sales charge or contingent deferred sales charge.
Balanced funds may invest in stocks and bonds. Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. Bond values fluctuate in response to the financial condition of individual issuers, general market and economic conditions, and changes in interest rates. Changes in market conditions and government policies may lead to periods of heightened volatility in the bond market and reduced liquidity for certain bonds held by the Fund. In general, when interest rates rise, bond values fall and investors may lose principal value. Interest rate changes and their impact on the Fund and its share price can be sudden and unpredictable. Certain investment strategies tend to increase the total risk of an investment (relative to the broader market). The Fund is exposed to foreign investment risk, high-yield securities risk, and smaller-company securities risk. Consult the Fund’s prospectus for additional information on these and other risks.
Please see footnotes on page 5.
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Performance highlights (unaudited) | Wells Fargo Diversified Income Builder Fund | 5 |
Ten largest holdings (%) as of March 31, 20199 | ||||
TTM Technologies Incorporated,5.63%, 10-1-2025 | 2.33 | |||
Lamb Weston Holdings Incorporated, 4.63%,11-1-2024 | 1.93 | |||
Koppers Incorporated, 6.00%,2-15-2025 | 1.89 | |||
Iron Mountain Incorporated, 4.88%,9-15-2027 | 1.69 | |||
Tronox Finance plc, 5.75%,10-1-2025 | 1.63 | |||
Cheniere Corpus Christi Holdings LLC,5.13%, 6-30-2027 | 1.46 | |||
Valvoline Incorporated, 4.38%,8-15-2025 | 1.41 | |||
Versum Materials Incorporated, 5.50%,9-30-2024 | 1.36 | |||
AMN Healthcare Incorporated, 5.13%,10-1-2024 | 1.35 | |||
WESCO Distribution Incorporated,5.38%, 6-15-2024 | 1.33 |
Portfolio composition as of March 31, 201910 |
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‡ | CFA® and Chartered Financial Analyst®are trademarks owned by CFA Institute. |
1 | Reflects the expense ratios as stated in the most recent prospectuses. The expense ratios shown are subject to change and may differ from the annualized expense ratios shown in the financial highlights of this report. |
2 | The manager has contractually committed through January 31, 2020, to waive fees and/or reimburse expenses to the extent necessary to cap the expenses of each class after fee waivers at the amounts shown. Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the expense cap. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. Without this cap, the Fund’s returns would have been lower. The expense ratio paid by an investor is the net expense ratio (the total annual fund operating expenses after fee waivers) as stated in the prospectuses. |
3 | Historical performance shown for this class prior to July 12, 2010, is based on the performance of the same class of the Fund’s predecessor, Evergreen Diversified Income Builder Fund. |
4 | Historical performance shown for the Class R6 shares prior to their inception reflects the performance of the Institutional Class shares, and is not adjusted to reflect Class R6 expenses. If these expenses had been included, returns for Class R6 would be higher. |
5 | Historical performance shown for the Administrator Class shares prior to their inception reflects the performance of the Institutional Class shares, adjusted to reflect the higher expenses applicable to the Administrator Class shares. |
6 | Source: Wells Fargo Funds Management, LLC. The Diversified Income Builder Blended Index is composed 65% of the ICE BofAML U.S. Cash Pay High Yield Index and 35% of the Russell 1000® Index. Prior to January 2, 2018, the Diversified Income Builder Blended Index was composed 75% of the ICE BofAML U.S. Cash Pay High Yield Index and 25% of the Russell 1000® Index. You cannot invest directly in an index. |
7 | The ICE BofAML U.S. Cash Pay High Yield Index is an unmanaged market index that provides a broad-based performance measure of the noninvestment grade U.S. domestic bond index. You cannot invest directly in an index. Copyright 2019. ICE Data Indices, LLC. All rights reserved. |
8 | The Russell 1000® Index measures the performance of the 1,000 largest companies in the Russell 3000® Index, which represents approximately 92% of the total market capitalization of the Russell 3000® Index. You cannot invest directly in an index. |
9 | The ten largest holdings, excluding cash, cash equivalents and any money market funds, are calculated based on the value of the investments divided by total net assets of the Fund. Holdings are subject to change and may have changed since the date specified. |
10 | Amounts are calculated based on the total long-term investments of the Fund. These amounts are subject to change and may have changed since the date specified. |
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6 | Wells Fargo Diversified Income Builder Fund | Fund expenses (unaudited) |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (if any) on redemptions and (2) ongoing costs, including management fees, distribution(12b-1) and/or shareholder servicing fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of thesix-month period and held for the entire period from October 1, 2018 to March 31, 2019.
Actual expenses
The “Actual” line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the “Actual” line under the heading entitled “Expenses paid during period” for your applicable class of shares to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The “Hypothetical” line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs
of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and contingent deferred sales charges. Therefore, the “Hypothetical” line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 10-1-2018 | Ending account value 3-31-2019 | Expenses paid during the period¹ | Annualized net expense ratio | |||||||||||||
Class A | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,016.53 | $ | 4.27 | 0.85 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.69 | $ | 4.28 | 0.85 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,012.55 | $ | 8.03 | 1.60 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,016.95 | $ | 8.05 | 1.60 | % | ||||||||
Class R6 | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,019.11 | $ | 2.11 | 0.42 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,022.84 | $ | 2.12 | 0.42 | % | ||||||||
Administrator Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,017.17 | $ | 3.87 | 0.77 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.09 | $ | 3.88 | 0.77 | % | ||||||||
Institutional Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,018.63 | $ | 2.62 | 0.52 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,022.34 | $ | 2.62 | 0.52 | % |
1 | Expenses paid is equal to the annualized net expense ratio of each class multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year (to reflect theone-half-year period). |
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Diversified Income Builder Fund | 7 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Asset-Backed Securities: 0.20% | ||||||||||||||||
Hertz Vehicle Financing LLC Series2019-1A Class B 144A | 4.10 | % | 3-25-2023 | $ | 1,380,000 | $ | 1,397,403 | |||||||||
|
| |||||||||||||||
Total Asset-Backed Securities (Cost $1,398,975) | 1,397,403 | |||||||||||||||
|
| |||||||||||||||
Shares | ||||||||||||||||
Common Stocks: 27.90% | ||||||||||||||||
Communication Services: 0.82% | ||||||||||||||||
Diversified Telecommunication Services: 0.72% | ||||||||||||||||
AT&T Incorporated | 58,120 | 1,822,643 | ||||||||||||||
China Communications Services Corporation Limited H Shares | 256,000 | 228,282 | ||||||||||||||
China Telecom Corporation Limited H Shares | 276,000 | 153,295 | ||||||||||||||
PCCW Limited | 1,867,000 | 1,160,639 | ||||||||||||||
PT Telekomunikasi Indonesia Persero Tbk | 1,629,300 | 451,948 | ||||||||||||||
Verizon Communications Incorporated | 18,745 | 1,108,392 | ||||||||||||||
4,925,199 | ||||||||||||||||
|
| |||||||||||||||
Wireless Telecommunication Services: 0.10% |
| |||||||||||||||
China Mobile Limited | 36,500 | 371,977 | ||||||||||||||
SK Telecom Company Limited | 644 | 142,689 | ||||||||||||||
Turkcell Iletisim Hizmetleri AS | 60,101 | 130,324 | ||||||||||||||
644,990 | ||||||||||||||||
|
| |||||||||||||||
Consumer Discretionary: 1.49% |
| |||||||||||||||
Auto Components: 0.05% |
| |||||||||||||||
Huayu Automotive Systems Company Limited Class A | 68,600 | 208,040 | ||||||||||||||
Xinyi Glass Holdings Limited | 110,000 | 126,115 | ||||||||||||||
334,155 | ||||||||||||||||
|
| |||||||||||||||
Automobiles: 0.42% |
| |||||||||||||||
Geely Automobile Holdings Limited | 77,000 | 147,135 | ||||||||||||||
General Motors Company | 25,514 | 946,569 | ||||||||||||||
Guangzhou Automobile Group Company Limited H Shares | 256,000 | 302,310 | ||||||||||||||
Hyundai Motor Company | 2,358 | 248,243 | ||||||||||||||
Peugeot SA | 50,738 | 1,237,340 | ||||||||||||||
2,881,597 | ||||||||||||||||
|
| |||||||||||||||
Hotels, Restaurants & Leisure: 0.59% |
| |||||||||||||||
Extended Stay America Incorporated |
| 66,302 | 1,190,121 | |||||||||||||
Genting Malaysia Bhd |
| 141,600 | 110,991 | |||||||||||||
Genting Singapore Limited |
| 971,563 | 745,564 | |||||||||||||
Las Vegas Sands Corporation |
| 12,754 | 777,484 | |||||||||||||
Sands China Limited |
| 48,400 | 243,235 | |||||||||||||
Starbucks Corporation |
| 13,050 | 970,137 | |||||||||||||
4,037,532 | ||||||||||||||||
|
| |||||||||||||||
Household Durables: 0.12% |
| |||||||||||||||
Coway Company Limited |
| 1,826 | 152,019 | |||||||||||||
Midea Group Company Limited Class A |
| 42,999 | 311,797 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
8 | Wells Fargo Diversified Income Builder Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Household Durables(continued) |
| |||||||||||||||
Qingdao Haier Company Limited A Shares |
| 123,399 | $ | 314,181 | ||||||||||||
777,997 | ||||||||||||||||
|
| |||||||||||||||
Leisure Products: 0.03% |
| |||||||||||||||
Giant Manufacturing Company Limited | 30,000 | 214,143 | ||||||||||||||
|
| |||||||||||||||
Specialty Retail: 0.06% |
| |||||||||||||||
Chow Tai Fook Jewellery Company Limited | 154,400 | 156,171 | ||||||||||||||
Mr Price Group Limited | 9,181 | 120,591 | ||||||||||||||
Petrobras Distribuidora SA | 20,600 | 121,800 | ||||||||||||||
398,562 | ||||||||||||||||
|
| |||||||||||||||
Textiles, Apparel & Luxury Goods: 0.22% |
| |||||||||||||||
Kering SA | 2,331 | 1,336,686 | ||||||||||||||
Makalot Industrial Company Limited | 24,000 | 168,200 | ||||||||||||||
1,504,886 | ||||||||||||||||
|
| |||||||||||||||
Consumer Staples: 1.05% | ||||||||||||||||
Beverages: 0.02% | ||||||||||||||||
Thai Beverage PCL | 206,000 | 128,441 | ||||||||||||||
|
| |||||||||||||||
Food & Staples Retailing: 0.42% |
| |||||||||||||||
Koninklijke Ahold Delhaize NV | 57,500 | 1,530,278 | ||||||||||||||
Wal-Mart de Mexico SAB de CV | 101,000 | 270,006 | ||||||||||||||
Wal-Mart Stores Incorporated | 10,911 | 1,064,150 | ||||||||||||||
2,864,434 | ||||||||||||||||
|
| |||||||||||||||
Food Products: 0.47% |
| |||||||||||||||
Inner Mongolia Yili Industrial Group Company Limited Class A | 92,199 | 399,380 | ||||||||||||||
Lamb Weston Holdings Incorporated | 20,000 | 1,498,800 | ||||||||||||||
Nestle SA | 11,902 | 1,134,321 | ||||||||||||||
Uni-President Enterprises Corporation | 78,000 | 189,303 | ||||||||||||||
3,221,804 | ||||||||||||||||
|
| |||||||||||||||
Household Products: 0.14% |
| |||||||||||||||
The Procter & Gamble Company | 9,225 | 959,861 | ||||||||||||||
|
| |||||||||||||||
Energy: 5.76% |
| |||||||||||||||
Energy Equipment & Services: 0.02% |
| |||||||||||||||
Hi-Crush Partners LP | 11,581 | 51,535 | ||||||||||||||
USA Compression Partners LP | 4,401 | 68,700 | ||||||||||||||
120,235 | ||||||||||||||||
|
| |||||||||||||||
Oil, Gas & Consumable Fuels: 5.74% |
| |||||||||||||||
Alliance Resource Partners LP | 13,391 | 272,641 | ||||||||||||||
American Midstream Partners | 5,116 | 26,450 | ||||||||||||||
Andeavor Logistics LP | 46,379 | 1,635,324 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Diversified Income Builder Fund | 9 |
Security name | Shares | Value | ||||||||||||||
Oil, Gas & Consumable Fuels(continued) |
| |||||||||||||||
Antero Midstream Corporation | 29,312 | $ | 403,919 | |||||||||||||
Black Stone Minerals LP | 11,312 | 199,544 | ||||||||||||||
BP Midstream Partners LP | 6,137 | 88,802 | ||||||||||||||
Buckeye Partners LP | 19,803 | 673,698 | ||||||||||||||
Calumet Specialty Products LP † | 8,046 | 28,644 | ||||||||||||||
Capital Product Partners LP | 1,826 | 19,132 | ||||||||||||||
Cheniere Energy Partners LP | 5,386 | 225,835 | ||||||||||||||
China Petroleum & Chemical Corporation H Shares | 234,000 | 184,518 | ||||||||||||||
CNX Midstream Partners LP | 3,438 | 52,292 | ||||||||||||||
ConocoPhillips | 16,500 | 1,101,210 | ||||||||||||||
Consol Coal Resources LP | 676 | 11,945 | ||||||||||||||
Crestwood Equity Partners LP | 6,235 | 219,410 | ||||||||||||||
CrossAmerica Partners LP | 3,812 | 69,607 | ||||||||||||||
DCP Midstream LP | 11,626 | 384,239 | ||||||||||||||
Delek Logistics Partners LP | 1,095 | 35,511 | ||||||||||||||
Diamond S Shipping Incorporated † | 1,253 | 13,031 | ||||||||||||||
Dorchester Minerals LP | 3,740 | 68,292 | ||||||||||||||
Enable Midstream Partners LP | 5,578 | 79,877 | ||||||||||||||
Energy Transfer Equity LP | 303,289 | 4,661,552 | ||||||||||||||
Enlink Midstream LLC | 33,210 | 424,424 | ||||||||||||||
Enterprise Products Partners | 191,113 | 5,561,388 | ||||||||||||||
Enviva Partners LP | 1,567 | 50,536 | ||||||||||||||
EQT Midstream Partners LP | 8,374 | 386,628 | ||||||||||||||
Foresight Energy LP | 3,735 | 9,860 | ||||||||||||||
Gaslog Partners LP | 4,096 | 92,692 | ||||||||||||||
Genesis Energy LP | 13,889 | 323,614 | ||||||||||||||
Global Partners LP | 3,589 | 70,560 | ||||||||||||||
Golar LNG Partners LP | 6,242 | 80,584 | ||||||||||||||
Green Plains Partners LP | 1,474 | 23,348 | ||||||||||||||
Hess Midstream Partners LP | 2,143 | 45,432 | ||||||||||||||
Hoegh LNG Partners LP | 2,218 | 43,362 | ||||||||||||||
Holly Energy Partners LP | 5,837 | 157,541 | ||||||||||||||
JXTG Holdings Incorporated | 117,900 | 538,810 | ||||||||||||||
Kimbell Royalty Partners LP | 2,804 | 51,229 | ||||||||||||||
Kinder Morgan Incorporated | 100,000 | 2,001,000 | ||||||||||||||
KNOT Offshore Partners LP | 3,114 | 59,135 | ||||||||||||||
Lukoil PJSC ADR | 3,723 | 333,581 | ||||||||||||||
Magellan Midstream Partners LP | 29,410 | 1,783,128 | ||||||||||||||
Martin Midstream Partners LP | 4,323 | 53,821 | ||||||||||||||
MPLX LP | 36,804 | 1,210,484 | ||||||||||||||
Natural Resource Partners LP | 1,025 | 43,050 | ||||||||||||||
NGL Energy Partners LP | 15,971 | 224,073 | ||||||||||||||
Noble Midstream Partners LP | 2,798 | 100,756 | ||||||||||||||
NuStar Energy LP | 11,578 | 311,332 | ||||||||||||||
Oasis Midstream Partners LP | 1,392 | 28,285 | ||||||||||||||
ONEOK Incorporated | 24,000 | 1,676,160 | ||||||||||||||
PBF Logistics LP | 2,860 | 60,117 | ||||||||||||||
PetroChina Company Limited H Shares | 380,000 | 246,396 | ||||||||||||||
Phillips 66 | 9,575 | 911,253 | ||||||||||||||
Phillips 66 Partners LP | 6,855 | 358,859 | ||||||||||||||
Plains All American Pipeline LP | 126,111 | 3,090,981 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
10 | Wells Fargo Diversified Income Builder Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Oil, Gas & Consumable Fuels(continued) |
| |||||||||||||||
Plains GP Holdings LP Class A | 20,494 | $ | 510,710 | |||||||||||||
Reliance Industries Limited GDR 144A | 10,665 | 427,667 | ||||||||||||||
Repsol YPF SA | 68,083 | 1,165,439 | ||||||||||||||
S-Oil Corporation | 1,788 | 141,137 | ||||||||||||||
Shell Midstream Partners LP | 15,850 | 324,133 | ||||||||||||||
SK Innovation Company Limited | 1,773 | 280,375 | ||||||||||||||
Snam SpA | 147,800 | 759,174 | ||||||||||||||
Sprague Resources LP | 1,317 | 24,338 | ||||||||||||||
Summit Midstream Partners LP | 5,289 | 51,462 | ||||||||||||||
Sunoco LP | 7,243 | 225,692 | ||||||||||||||
Tallgrass Energy GP LP | 18,517 | 465,517 | ||||||||||||||
TC Pipelines LP | 6,794 | 253,824 | ||||||||||||||
Teekay LNG Partners LP | 6,977 | 104,376 | ||||||||||||||
Teekay Offshore Partners LP | 14,263 | 17,116 | ||||||||||||||
The Williams Companies Incorporated | 60,000 | 1,723,200 | ||||||||||||||
USD Partners LP | 1,353 | 14,639 | ||||||||||||||
Valero Energy Corporation | 9,271 | 786,459 | ||||||||||||||
Viper Energy Partners LP | 7,861 | 260,671 | ||||||||||||||
Western Midstream Partners LP | 26,253 | 823,294 | ||||||||||||||
39,167,115 | ||||||||||||||||
|
| |||||||||||||||
Financials: 3.58% | ||||||||||||||||
Banks: 1.36% | ||||||||||||||||
Absa Group Limited | 28,780 | 303,383 | ||||||||||||||
Agricultural Bank of China Limited H Shares | 317,000 | 146,184 | ||||||||||||||
Banco de Brasil SA | 16,700 | 207,804 | ||||||||||||||
Banco Santander Brasil SA | 19,100 | 214,496 | ||||||||||||||
Bancolombia SA ADR | 3,290 | 167,987 | ||||||||||||||
Bangkok Bank PCL | 64,200 | 436,969 | ||||||||||||||
Bank of China Limited H Shares | 660,000 | 299,314 | ||||||||||||||
Bank Pekao SA | 4,644 | 133,052 | ||||||||||||||
China Construction Bank H Shares | 770,000 | 660,144 | ||||||||||||||
CIMB Group Holdings Bhd | 146,800 | 185,186 | ||||||||||||||
Citigroup Incorporated | 13,375 | 832,193 | ||||||||||||||
Credicorp Limited | 620 | 148,769 | ||||||||||||||
CTBC Financial Holding Company Limited | 245,000 | 162,562 | ||||||||||||||
Hana Financial Group Incorporated | 4,380 | 140,456 | ||||||||||||||
HDFC Bank Limited ADR | 3,634 | 421,217 | ||||||||||||||
ICICI Bank Limited ADR | 40,963 | 469,436 | ||||||||||||||
Industrial & Commercial Bank of China Limited H Shares | 719,000 | 526,659 | ||||||||||||||
JPMorgan Chase & Company | 13,597 | 1,376,424 | ||||||||||||||
Kasikornbank PCL | 36,000 | 213,266 | ||||||||||||||
KB Financial Group Incorporated | 6,066 | 223,647 | ||||||||||||||
PT Bank Rakyat Indonesia Tbk | 1,703,400 | 492,838 | ||||||||||||||
Public Bank Bhd | 35,600 | 201,959 | ||||||||||||||
Royal Bank of Canada | 9,500 | 716,721 | ||||||||||||||
Sberbank of Russia ADR | 27,800 | 368,628 | ||||||||||||||
Standard Bank Group Limited | 17,634 | 226,378 | ||||||||||||||
9,275,672 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Diversified Income Builder Fund | 11 |
Security name | Shares | Value | ||||||||||||||
Capital Markets: 0.79% |
| |||||||||||||||
3i Group plc | 62,073 | $ | 796,181 | |||||||||||||
Ares Capital Corporation | 87,753 | 1,504,086 | ||||||||||||||
B3 SA Brasil Bolsa Balcao | 48,800 | 400,336 | ||||||||||||||
Banco BTG Pactual SA | 25,400 | 234,840 | ||||||||||||||
Bursa Malaysia Bhd | 57,600 | 96,929 | ||||||||||||||
CITIC Securities Company Limited H Shares | 134,500 | 313,207 | ||||||||||||||
Intermediate Capital Group | 62,006 | 860,091 | ||||||||||||||
Macquarie Group Limited | 8,484 | 779,634 | ||||||||||||||
Moscow ExchangeMICEX-RTS PJSC | 157,233 | 218,279 | ||||||||||||||
NH Investment & Securities Company Limited | 14,720 | 174,420 | ||||||||||||||
5,378,003 | ||||||||||||||||
|
| |||||||||||||||
Diversified Financial Services: 0.25% |
| |||||||||||||||
Compass Diversified Holdings | 64,950 | 1,019,066 | ||||||||||||||
ORIX Corporation | 47,800 | 685,537 | ||||||||||||||
1,704,603 | ||||||||||||||||
|
| |||||||||||||||
Insurance: 0.58% |
| |||||||||||||||
Allianz AG | 3,373 | 750,225 | ||||||||||||||
BB Seguridade Participacoes SA | 19,500 | 132,080 | ||||||||||||||
Cathay Financial Holding Company | 150,000 | 218,767 | ||||||||||||||
China Life Insurance Company H Shares | 79,000 | 212,345 | ||||||||||||||
Legal & General Group plc | 317,284 | 1,137,667 | ||||||||||||||
PICC Property & Casualty Company Limited H Shares | 222,000 | 252,261 | ||||||||||||||
Ping An Insurance Group Company H Shares | 56,400 | 631,540 | ||||||||||||||
Powszechny Zaklad Ubezpieczen SA | 12,515 | 132,015 | ||||||||||||||
Samsung Fire & Marine Insurance | 755 | 200,207 | ||||||||||||||
Sanlam Limited | 50,109 | 256,158 | ||||||||||||||
3,923,265 | ||||||||||||||||
|
| |||||||||||||||
Mortgage REITs: 0.60% |
| |||||||||||||||
Annaly Capital Management Incorporated | 87,925 | 878,371 | ||||||||||||||
Ladder Capital Corporation | 84,135 | 1,431,978 | ||||||||||||||
MFA Financial Incorporated | 115,229 | 837,715 | ||||||||||||||
New Residential Investment Corporation | 55,640 | 940,872 | ||||||||||||||
4,088,936 | ||||||||||||||||
|
| |||||||||||||||
Health Care: 3.27% | ||||||||||||||||
Biotechnology: 0.34% | ||||||||||||||||
Amgen Incorporated | 6,572 | 1,248,549 | ||||||||||||||
Gilead Sciences Incorporated | 16,760 | 1,089,568 | ||||||||||||||
2,338,117 | ||||||||||||||||
|
| |||||||||||||||
Health Care Equipment & Supplies: 0.86% |
| |||||||||||||||
Abbott Laboratories | 25,000 | 1,998,500 | ||||||||||||||
Becton Dickinson & Company | 8,000 | 1,997,840 | ||||||||||||||
Danaher Corporation | 14,000 | 1,848,280 | ||||||||||||||
5,844,620 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
12 | Wells Fargo Diversified Income Builder Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Health Care Providers & Services: 0.43% |
| |||||||||||||||
CVS Health Corporation | 25,375 | $ | 1,368,474 | |||||||||||||
Life Healthcare Group Holdings Limited | 89,215 | 165,956 | ||||||||||||||
UnitedHealth Group Incorporated | 5,570 | 1,377,238 | ||||||||||||||
2,911,668 | ||||||||||||||||
|
| |||||||||||||||
Life Sciences Tools & Services: 0.80% |
| |||||||||||||||
Agilent Technologies Incorporated | 16,000 | 1,286,080 | ||||||||||||||
Thermo Fisher Scientific Incorporated | 7,000 | 1,916,040 | ||||||||||||||
Waters Corporation † | 9,000 | 2,265,390 | ||||||||||||||
5,467,510 | ||||||||||||||||
|
| |||||||||||||||
Pharmaceuticals: 0.84% |
| |||||||||||||||
Eli Lilly & Company | 12,850 | 1,667,416 | ||||||||||||||
GlaxoSmithKline plc | 52,390 | 1,089,582 | ||||||||||||||
Roche Holding AG | 3,719 | 1,024,662 | ||||||||||||||
Sanofi SA | 9,721 | 858,623 | ||||||||||||||
Takeda Pharmaceutical Company Limited | 27,200 | 1,109,548 | ||||||||||||||
5,749,831 | ||||||||||||||||
|
| |||||||||||||||
Industrials: 2.88% |
| |||||||||||||||
Aerospace & Defense: 0.83% |
| |||||||||||||||
Curtiss-Wright Corporation | 14,000 | 1,586,760 | ||||||||||||||
Huntington Ingalls Industries Incorporated | 8,000 | 1,657,600 | ||||||||||||||
Raytheon Company | 9,000 | 1,638,720 | ||||||||||||||
Singapore Technologies Engineering Limited | 279,958 | 772,583 | ||||||||||||||
5,655,663 | ||||||||||||||||
|
| |||||||||||||||
Building Products: 0.01% |
| |||||||||||||||
Resideo Technologies Incorporated † | 2,000 | 38,580 | ||||||||||||||
|
| |||||||||||||||
Commercial Services & Supplies: 0.11% |
| |||||||||||||||
Intrum Justitia AB | 26,172 | 751,608 | ||||||||||||||
|
| |||||||||||||||
Construction & Engineering: 0.11% |
| |||||||||||||||
China Communications Construction Company Limited H Shares | 272,000 | 281,357 | ||||||||||||||
China State Construction Engineering Corporation Limited Class A | 228,400 | 208,001 | ||||||||||||||
China State Construction International Holdings | 286,000 | 267,785 | ||||||||||||||
757,143 | ||||||||||||||||
|
| |||||||||||||||
Electrical Equipment: 0.18% |
| |||||||||||||||
AMETEK Incorporated | 15,000 | 1,244,550 | ||||||||||||||
|
| |||||||||||||||
Industrial Conglomerates: 0.47% |
| |||||||||||||||
Honeywell International Incorporated | 17,025 | 2,705,613 | ||||||||||||||
Sime Darby Bhd | 413,700 | 225,977 | ||||||||||||||
The Bidvest Group Limited | 19,508 | 261,616 | ||||||||||||||
3,193,206 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Diversified Income Builder Fund | 13 |
Security name | Shares | Value | ||||||||||||||
Machinery: 0.91% |
| |||||||||||||||
Crane Company | 14,766 | $ | 1,249,499 | |||||||||||||
CRRC Corporation Limited H Shares | 240,000 | 226,243 | ||||||||||||||
Hyundai Robotics Company Limited | 398 | 116,760 | ||||||||||||||
IDEX Corporation | 9,000 | 1,365,660 | ||||||||||||||
Ingersoll-Rand plc | 9,225 | 995,839 | ||||||||||||||
John Bean Technologies Corporation | 20,000 | 1,837,800 | ||||||||||||||
Sany Heavy Industry Company Limited Class A | 211,800 | 402,786 | ||||||||||||||
6,194,587 | ||||||||||||||||
|
| |||||||||||||||
Trading Companies & Distributors: 0.19% |
| |||||||||||||||
Mitsubishi Corporation | 46,470 | 1,288,900 | ||||||||||||||
|
| |||||||||||||||
Transportation Infrastructure: 0.07% |
| |||||||||||||||
China Merchants Port Holdings Company Limited | 120,000 | 255,594 | ||||||||||||||
Grupo Aeroportuario del Pacifico SAB de CV Class B | 24,740 | 219,330 | ||||||||||||||
474,924 | ||||||||||||||||
|
| |||||||||||||||
Information Technology: 5.11% | ||||||||||||||||
Communications Equipment: 0.31% | ||||||||||||||||
Cisco Systems Incorporated | 39,112 | 2,111,657 | ||||||||||||||
|
| |||||||||||||||
Electronic Equipment, Instruments & Components: 0.88% |
| |||||||||||||||
Amphenol Corporation Class A | 25,000 | 2,361,000 | ||||||||||||||
Corning Incorporated | 65,000 | 2,151,500 | ||||||||||||||
Delta Electronics Incorporated | 53,000 | 273,422 | ||||||||||||||
FLIR Systems Incorporated | 22,000 | 1,046,760 | ||||||||||||||
Hon Hai Precision Industry | 57,600 | 137,363 | ||||||||||||||
5,970,045 | ||||||||||||||||
|
| |||||||||||||||
IT Services: 0.61% |
| |||||||||||||||
Computacenter plc | 66,260 | 954,481 | ||||||||||||||
DXC Technology Company | 11,480 | 738,279 | ||||||||||||||
Infosys Limited SP ADR | 51,403 | 561,835 | ||||||||||||||
Leidos Holdings Incorporated | 30,000 | 1,922,700 | ||||||||||||||
4,177,295 | ||||||||||||||||
|
| |||||||||||||||
Semiconductors & Semiconductor Equipment: 1.18% |
| |||||||||||||||
Broadcom Incorporated | 7,000 | 2,104,970 | ||||||||||||||
Cypress Semiconductor Corporation | 100,000 | 1,492,000 | ||||||||||||||
KLA-Tencor Corporation | 7,950 | 949,310 | ||||||||||||||
Mediatek Incorporated | 29,000 | 265,813 | ||||||||||||||
Microchip Technology Incorporated | 9,000 | 746,640 | ||||||||||||||
SK Hynix Incorporated | 3,220 | 210,487 | ||||||||||||||
Taiwan Semiconductor Manufacturing Company Limited | 154,000 | 1,226,684 | ||||||||||||||
Texas Instruments Incorporated | 10,000 | 1,060,700 | ||||||||||||||
8,056,604 | ||||||||||||||||
|
| |||||||||||||||
Software: 1.21% |
| |||||||||||||||
Adobe Systems Incorporated † | 7,000 | �� | 1,865,430 | |||||||||||||
Microsoft Corporation | 24,491 | 2,888,469 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
14 | Wells Fargo Diversified Income Builder Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Software(continued) |
| |||||||||||||||
Oracle Corporation | 21,400 | $ | 1,149,394 | |||||||||||||
Synopsys Incorporated † | 20,000 | 2,303,000 | ||||||||||||||
8,206,293 | ||||||||||||||||
|
| |||||||||||||||
Technology Hardware, Storage & Peripherals: 0.92% |
| |||||||||||||||
Advantech Company Limited | 30,000 | 249,185 | ||||||||||||||
Apple Incorporated | 8,215 | 1,560,439 | ||||||||||||||
Asustek Computer Incorporated | 17,000 | 123,003 | ||||||||||||||
Chicony Electronics Company Limited | 59,000 | 137,256 | ||||||||||||||
Lenovo Group Limited | 1,196,000 | 1,075,645 | ||||||||||||||
Samsung Electronics Company Limited | 33,385 | 1,313,224 | ||||||||||||||
Western Digital Corporation | 20,000 | 961,200 | ||||||||||||||
Xerox Corporation | 26,430 | 845,231 | ||||||||||||||
6,265,183 | ||||||||||||||||
|
| |||||||||||||||
Materials: 1.01% |
| |||||||||||||||
Chemicals: 0.32% |
| |||||||||||||||
Celanese Corporation Series A | 6,000 | 591,660 | ||||||||||||||
Ciner Resources LP | 585 | 14,771 | ||||||||||||||
CVR Partners LP | 8,459 | 33,498 | ||||||||||||||
LyondellBasell Industries NV Class A | 18,000 | 1,513,440 | ||||||||||||||
Westlake Chemical Partners LP | 2,282 | 51,824 | ||||||||||||||
2,205,193 | ||||||||||||||||
|
| |||||||||||||||
Metals & Mining: 0.63% |
| |||||||||||||||
Anglo American plc | 48,866 | 1,306,960 | ||||||||||||||
Fortescue Metals Group Limited | 265,089 | 1,338,290 | ||||||||||||||
Korea Zinc Company Limited | 536 | 219,575 | ||||||||||||||
Polymetal International plc | 20,349 | 229,097 | ||||||||||||||
POSCO | 632 | 140,865 | ||||||||||||||
Steel Dynamics Incorporated | 18,275 | 644,559 | ||||||||||||||
Suncoke Energy Partners LP | 2,260 | 28,137 | ||||||||||||||
Ternium SA | 6,867 | 186,920 | ||||||||||||||
Vale SA | 13,300 | 173,003 | ||||||||||||||
4,267,406 | ||||||||||||||||
|
| |||||||||||||||
Paper & Forest Products: 0.06% |
| |||||||||||||||
Mondi plc | 8,101 | 179,158 | ||||||||||||||
Nine Dragons Paper Holdings Limited | 211,000 | 201,056 | ||||||||||||||
Pope Resources LP | 381 | 25,325 | ||||||||||||||
405,539 | ||||||||||||||||
|
| |||||||||||||||
Real Estate: 0.93% |
| |||||||||||||||
Equity REITs: 0.46% |
| |||||||||||||||
Growthpoint Properties Limited | 117,784 | 199,344 | ||||||||||||||
Hospitality Properties Trust | 43,150 | 1,135,277 | ||||||||||||||
Saul Centers Incorporated |
| 35,000 | 1,797,950 | |||||||||||||
3,132,571 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Diversified Income Builder Fund | 15 |
Security name | Shares | Value | ||||||||||||||
Real Estate Management & Development: 0.47% |
| |||||||||||||||
Aroundtown SA |
| 85,208 | $ | 702,528 | ||||||||||||
China Merchants Shekou Industrial Zone Holdings Company Limited |
| 68,700 | 235,536 | |||||||||||||
China Overseas Land & Investment Limited |
| 80,800 | 306,733 | |||||||||||||
China Resources Land Limited |
| 94,000 | 421,506 | |||||||||||||
China Vanke Company Limited Class A |
| 73,394 | 335,505 | |||||||||||||
Shimao Property Holding Limited |
| 395,500 | 1,236,890 | |||||||||||||
3,238,698 | ||||||||||||||||
|
| |||||||||||||||
Utilities: 2.00% | ||||||||||||||||
Electric Utilities: 0.31% | ||||||||||||||||
American Electric Power Company Incorporated |
| 24,000 | 2,010,000 | |||||||||||||
Enel Americas SA ADR |
| 14,229 | 127,065 | |||||||||||||
2,137,065 | ||||||||||||||||
|
| |||||||||||||||
Gas Utilities: 0.59% |
| |||||||||||||||
AmeriGas Partners LP |
| 8,859 | 273,477 | |||||||||||||
Atmos Energy Corporation |
| 20,000 | 2,058,600 | |||||||||||||
Star Group LP |
| 5,420 | 52,032 | |||||||||||||
Suburban Propane Partners LP |
| 7,940 | 177,935 | |||||||||||||
Superior Plus Corporation |
| 173,800 | 1,489,138 | |||||||||||||
4,051,182 | ||||||||||||||||
|
| |||||||||||||||
Independent Power & Renewable Electricity Producers: 0.19% |
| |||||||||||||||
Brookfield Renewable Partner LP |
| 11,281 | 360,428 | |||||||||||||
Drax Group plc |
| 165,406 | 815,198 | |||||||||||||
Huaneng Renewables Corporation Limited H Shares |
| 518,000 | 143,853 | |||||||||||||
1,319,479 | ||||||||||||||||
|
| |||||||||||||||
Multi-Utilities: 0.88% |
| |||||||||||||||
Brookfield Infrastructure Partners LP |
| 17,499 | 732,683 | |||||||||||||
CMS Energy Corporation |
| 37,000 | 2,054,980 | |||||||||||||
DTE Energy Company |
| 16,000 | 1,995,840 | |||||||||||||
Engie SA |
| 79,063 | 1,177,789 | |||||||||||||
5,961,292 | ||||||||||||||||
|
| |||||||||||||||
Water Utilities: 0.03% |
| |||||||||||||||
Beijing Enterprises Water Group Limited | 280,000 | 172,995 | ||||||||||||||
|
| |||||||||||||||
Total Common Stocks (Cost $171,010,782) |
| 190,140,834 | ||||||||||||||
|
| |||||||||||||||
Interest rate | Maturity date | Principal | ||||||||||||||
Corporate Bonds and Notes: 48.52% | ||||||||||||||||
Communication Services: 1.02% | ||||||||||||||||
Media: 1.02% |
| |||||||||||||||
McGraw-Hill Global Education Holdings LLC 144A | 7.88 | % | 5-15-2024 | $ | 8,598,000 | 6,964,380 | ||||||||||
|
| |||||||||||||||
Consumer Discretionary: 2.44% |
| |||||||||||||||
Auto Components: 1.42% |
| |||||||||||||||
Dana Holding Corporation | 5.50 | 12-15-2024 | 3,925,000 | 3,905,375 | ||||||||||||
Tenneco Incorporated | 5.00 | 7-15-2026 | 7,250,000 | 5,800,000 | ||||||||||||
9,705,375 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
16 | Wells Fargo Diversified Income Builder Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Hotels, Restaurants & Leisure: 0.36% |
| |||||||||||||||
1929 Fieldhouse LLC / West Ward Street Development Corporation 144A | 5.25 | % | 6-1-2020 | $ | 2,410,000 | $ | 2,428,455 | |||||||||
|
| |||||||||||||||
Specialty Retail: 0.66% |
| |||||||||||||||
Group 1 Automotive Incorporated | 5.00 | 6-1-2022 | 4,453,000 | 4,464,133 | ||||||||||||
|
| |||||||||||||||
Consumer Staples: 2.21% |
| |||||||||||||||
Food Products: 2.21% |
| |||||||||||||||
Lamb Weston Holdings Incorporated 144A | 4.63 | 11-1-2024 | 13,000,000 | 13,130,000 | ||||||||||||
Post Holdings Incorporated 144A | 5.00 | 8-15-2026 | 2,000,000 | 1,945,000 | ||||||||||||
15,075,000 | ||||||||||||||||
|
| |||||||||||||||
Energy: 1.46% |
| |||||||||||||||
Oil, Gas & Consumable Fuels: 1.46% |
| |||||||||||||||
Cheniere Corpus Christi Holdings LLC | 5.13 | 6-30-2027 | 9,500,000 | 9,963,125 | ||||||||||||
|
| |||||||||||||||
Financials: 0.68% |
| |||||||||||||||
Banks: 0.52% |
| |||||||||||||||
Allied Irish Banks plc (5 Year EUR Swap +7.34%) ± | 7.38 | 12-29-2049 | 3,000,000 | 3,583,992 | ||||||||||||
|
| |||||||||||||||
Diversified Financial Services: 0.16% |
| |||||||||||||||
Toll Road Investment Part II 144A¤ | 0.00 | 2-15-2030 | 2,000,000 | 1,070,070 | ||||||||||||
|
| |||||||||||||||
Health Care: 10.56% |
| |||||||||||||||
Health Care Equipment & Supplies: 2.51% |
| |||||||||||||||
Hologic Incorporated 144A | 4.38 | 10-15-2025 | 7,000,000 | 6,963,600 | ||||||||||||
Teleflex Incorporated | 4.63 | 11-15-2027 | 1,984,000 | 1,967,890 | ||||||||||||
Teleflex Incorporated | 4.88 | 6-1-2026 | 8,000,000 | 8,150,000 | ||||||||||||
17,081,490 | ||||||||||||||||
|
| |||||||||||||||
Health Care Providers & Services: 4.88% |
| |||||||||||||||
AMN Healthcare Incorporated 144A | 5.13 | 10-1-2024 | 9,335,000 | 9,206,644 | ||||||||||||
Davita Incorporated | 5.00 | 5-1-2025 | 9,000,000 | 8,624,250 | ||||||||||||
HCA Incorporated | 5.38 | 2-1-2025 | 5,500,000 | 5,830,000 | ||||||||||||
HealthSouth Corporation | 5.13 | 3-15-2023 | 2,000,000 | 2,025,535 | ||||||||||||
St. Joseph’s Hospital & Medical Center | 3.93 | 7-1-2022 | 2,000,000 | 2,015,528 | ||||||||||||
West Street Merger Subordinate Bond Incorporated 144A | 6.38 | 9-1-2025 | 5,700,000 | 5,543,250 | ||||||||||||
33,245,207 | ||||||||||||||||
|
| |||||||||||||||
Health Care Technology: 1.19% |
| |||||||||||||||
Quintiles IMS Holdings Incorporated 144A | 4.88 | 5-15-2023 | 7,000,000 | 7,123,200 | ||||||||||||
Quintiles IMS Holdings Incorporated 144A | 5.00 | 10-15-2026 | 1,000,000 | 1,023,130 | ||||||||||||
8,146,330 | ||||||||||||||||
|
| |||||||||||||||
Life Sciences Tools & Services: 0.77% |
| |||||||||||||||
Charles River Laboratories Incorporated 144A | 5.50 | 4-1-2026 | 5,075,000 | 5,265,313 | ||||||||||||
|
| |||||||||||||||
Pharmaceuticals: 1.21% |
| |||||||||||||||
Catalent Pharma Solutions Incorporated 144A | 4.88 | 1-15-2026 | 8,300,000 | 8,217,000 | ||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Diversified Income Builder Fund | 17 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Industrials: 9.15% |
| |||||||||||||||
Aerospace & Defense: 2.10% |
| |||||||||||||||
Moog Incorporated 144A | 5.25 | % | 12-1-2022 | $ | 5,500,000 | $ | 5,582,500 | |||||||||
TransDigm Group Incorporated | 6.38 | 6-15-2026 | 8,800,000 | 8,710,680 | ||||||||||||
14,293,180 | ||||||||||||||||
|
| |||||||||||||||
Commercial Services & Supplies: 1.14% |
| |||||||||||||||
Acco Brands Corporation 144A | 5.25 | 12-15-2024 | 5,000,000 | 4,900,000 | ||||||||||||
Eastern Maine Healthcare | 5.02 | 7-1-2036 | 1,000,000 | 997,451 | ||||||||||||
South Nassau Communities | 4.65 | 8-1-2048 | 2,000,000 | 1,832,792 | ||||||||||||
7,730,243 | ||||||||||||||||
|
| |||||||||||||||
Construction & Engineering: 0.28% |
| |||||||||||||||
Aecom Company | 5.13 | 3-15-2027 | 2,000,000 | 1,932,500 | ||||||||||||
|
| |||||||||||||||
Electrical Equipment: 0.91% |
| |||||||||||||||
Resideo Funding Incorporated 144A | 6.13 | 11-1-2026 | 6,000,000 | 6,195,000 | ||||||||||||
|
| |||||||||||||||
Machinery: 3.39% |
| |||||||||||||||
Actuant Corporation | 5.63 | 6-15-2022 | 1,165,000 | 1,175,194 | ||||||||||||
HD Supply Incorporated 144A | 5.38 | 10-15-2026 | 8,100,000 | 8,262,000 | ||||||||||||
Oshkosh Corporation | 5.38 | 3-1-2025 | 3,675,000 | 3,771,469 | ||||||||||||
SPX FLOW Incorporated 144A | 5.63 | 8-15-2024 | 4,500,000 | 4,522,500 | ||||||||||||
SPX FLOW Incorporated 144A | 5.88 | 8-15-2026 | 5,328,000 | 5,354,640 | ||||||||||||
23,085,803 | ||||||||||||||||
|
| |||||||||||||||
Trading Companies & Distributors: 1.33% |
| |||||||||||||||
WESCO Distribution Incorporated | 5.38 | 6-15-2024 | 8,974,000 | 9,086,175 | ||||||||||||
|
| |||||||||||||||
Information Technology: 7.72% |
| |||||||||||||||
Communications Equipment: 0.85% |
| |||||||||||||||
CommScope Technologies Finance LLC 144A | 5.00 | 3-15-2027 | 6,500,000 | 5,763,420 | ||||||||||||
|
| |||||||||||||||
Electronic Equipment, Instruments & Components: 2.78% |
| |||||||||||||||
Anixter International Incorporated | 5.13 | 10-1-2021 | 3,000,000 | 3,090,000 | ||||||||||||
TTM Technologies Incorporated 144A | 5.63 | 10-1-2025 | 16,495,000 | 15,855,819 | ||||||||||||
18,945,819 | ||||||||||||||||
|
| |||||||||||||||
IT Services: 0.30% |
| |||||||||||||||
Gartner Incorporated 144A | 5.13 | 4-1-2025 | 2,000,000 | 2,021,400 | ||||||||||||
|
| |||||||||||||||
Semiconductors & Semiconductor Equipment: 2.38% |
| |||||||||||||||
Micron Technology Incorporated | 5.50 | 2-1-2025 | 6,750,000 | 6,959,993 | ||||||||||||
Versum Materials Incorporated 144A | 5.50 | 9-30-2024 | 8,834,000 | 9,286,743 | ||||||||||||
16,246,736 | ||||||||||||||||
|
| |||||||||||||||
Software: 0.30% |
| |||||||||||||||
Nuance Communications Company | 6.00 | 7-1-2024 | 2,000,000 | 2,054,380 | ||||||||||||
|
| |||||||||||||||
Technology Hardware, Storage & Peripherals: 1.11% |
| |||||||||||||||
Diebold Incorporated | 8.50 | 4-15-2024 | 8,500,000 | 7,565,000 | ||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
18 | Wells Fargo Diversified Income Builder Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Materials: 10.59% |
| |||||||||||||||
Chemicals: 7.68% |
| |||||||||||||||
Koppers Incorporated 144A | 6.00 | % | 2-15-2025 | $ | 13,150,000 | $ | 12,854,125 | |||||||||
Olin Corporation | 5.13 | 9-15-2027 | 5,000,000 | 5,056,250 | ||||||||||||
Olin Corporation | 5.50 | 8-15-2022 | 5,500,000 | 5,747,500 | ||||||||||||
Rayonier Advanced Materials Products Incorporated 144A | 5.50 | 6-1-2024 | 8,945,000 | 8,408,300 | ||||||||||||
ScottsMiracle-Gro Company | 5.25 | 12-15-2026 | 4,000,000 | 3,940,000 | ||||||||||||
ScottsMiracle-Gro Company | 6.00 | 10-15-2023 | 6,000,000 | 6,225,000 | ||||||||||||
Valvoline Incorporated | 4.38 | 8-15-2025 | 10,000,000 | 9,575,000 | ||||||||||||
Valvoline Incorporated | 5.50 | 7-15-2024 | 500,000 | 508,750 | ||||||||||||
52,314,925 | ||||||||||||||||
|
| |||||||||||||||
Containers & Packaging: 2.59% |
| |||||||||||||||
Ball Corporation | 4.00 | 11-15-2023 | 1,000,000 | 1,007,500 | ||||||||||||
Ball Corporation | 5.00 | 3-15-2022 | 2,500,000 | 2,593,750 | ||||||||||||
Berry Global Incorporated | 5.13 | 7-15-2023 | 6,500,000 | 6,597,500 | ||||||||||||
Sealed Air Corporation 144A | 5.25 | 4-1-2023 | 4,650,000 | 4,824,375 | ||||||||||||
Sealed Air Corporation 144A | 5.50 | 9-15-2025 | 2,500,000 | 2,631,750 | ||||||||||||
17,654,875 | ||||||||||||||||
|
| |||||||||||||||
Metals & Mining: 0.32% |
| |||||||||||||||
Commercial Metals Company | 4.88 | 5-15-2023 | 2,150,000 | 2,155,375 | ||||||||||||
|
| |||||||||||||||
Real Estate: 2.69% |
| |||||||||||||||
Equity REITs: 2.69% |
| |||||||||||||||
Equinix Incorporated | 5.38 | 5-15-2027 | 5,000,000 | 5,237,500 | ||||||||||||
Equinix Incorporated | 5.75 | 1-1-2025 | 1,500,000 | 1,555,313 | ||||||||||||
Iron Mountain Incorporated 144A | 4.88 | 9-15-2027 | 12,000,000 | 11,520,000 | ||||||||||||
18,312,813 | ||||||||||||||||
|
| |||||||||||||||
Total Corporate Bonds and Notes (Cost $337,141,212) |
| 330,567,514 | ||||||||||||||
|
| |||||||||||||||
Foreign Corporate Bonds and Notes @: 2.97% | ||||||||||||||||
Financials: 2.97% | ||||||||||||||||
Banks: 2.97% | ||||||||||||||||
ABN AMRO Bank NV (EUR) (5 Year EUR Swap +3.90%) ± | 4.75 | 12-31-2099 | 3,000,000 | 3,232,323 | ||||||||||||
Banco Bilbao Vizcaya Argentaria SA (EUR) (5 Year EUR Swap +6.60%) ± | 6.75 | 12-29-2049 | 3,000,000 | 3,446,340 | ||||||||||||
Bankia SA (EUR) (5 Year EUR Swap +6.22%) ± | 6.38 | 12-31-2099 | 3,000,000 | 3,293,739 | ||||||||||||
Cooperatieve Rabobank UA (EUR) (5 Year EUR Swap +6.70%) ± | 6.63 | 12-29-2049 | 2,800,000 | 3,418,362 | ||||||||||||
Governor & Company of The Bank of Ireland (EUR) (5 Year EUR Swap +6.96%) ± | 7.38 | 12-29-2049 | 3,000,000 | 3,537,693 | ||||||||||||
Nykredit Realkredit AS (EUR) (5 Year EUR Swap +5.99%) ± | 6.25 | 12-29-2049 | 2,800,000 | 3,316,791 | ||||||||||||
Total Foreign Corporate Bonds and Notes (Cost $20,344,846) | 20,245,248 | |||||||||||||||
|
| |||||||||||||||
Municipal Obligations: 4.15% |
| |||||||||||||||
Colorado: 0.33% |
| |||||||||||||||
Health Revenue: 0.33% |
| |||||||||||||||
Denver CO Health & Hospital Authority Series B | 4.65 | 12-1-2023 | $ | 1,205,000 | 1,252,525 | |||||||||||
Denver CO Health & Hospital Authority Series B | 4.90 | 12-1-2024 | 250,000 | 260,988 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Diversified Income Builder Fund | 19 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Health Revenue(continued) | ||||||||||||||||
Denver CO Health & Hospital Authority Series B | 5.00 | % | 12-1-2025 | $ | 275,000 | $ | 287,295 | |||||||||
Denver CO Health & Hospital Authority Series B | 5.15 | 12-1-2026 | 445,000 | 466,747 | ||||||||||||
2,267,555 | ||||||||||||||||
|
| |||||||||||||||
Florida: 0.15% |
| |||||||||||||||
Education Revenue: 0.15% |
| |||||||||||||||
Florida HEFAR Jacksonville University Project Series A2 144A | 5.43 | 6-1-2027 | 1,000,000 | 1,015,890 | ||||||||||||
|
| |||||||||||||||
Guam: 0.09% |
| |||||||||||||||
Airport Revenue: 0.09% |
| |||||||||||||||
Guam Port Authority Series C | 3.78 | 7-1-2021 | 635,000 | 641,121 | ||||||||||||
|
| |||||||||||||||
Illinois: 0.82% |
| |||||||||||||||
GO Revenue: 0.34% |
| |||||||||||||||
Chicago IL Project Series C1 | 7.78 | 1-1-2035 | 2,000,000 | 2,299,240 | ||||||||||||
|
| |||||||||||||||
Miscellaneous Revenue: 0.48% |
| |||||||||||||||
Chicago IL Board of Education Taxable Build America Bonds Series E | 6.04 | 12-1-2029 | 1,255,000 | 1,275,130 | ||||||||||||
Chicago IL Certificate of Participation River Point Plaza Redevelopment Project Series A 144A | 4.84 | 4-15-2028 | 2,000,000 | 2,003,700 | ||||||||||||
3,278,830 | ||||||||||||||||
|
| |||||||||||||||
5,578,070 | ||||||||||||||||
|
| |||||||||||||||
Indiana: 0.07% |
| |||||||||||||||
Health Revenue: 0.07% |
| |||||||||||||||
Knox County IN Good Samaritian Hospital Project Industry Economic Development Series B | 5.90 | 4-1-2034 | 480,000 | 469,747 | ||||||||||||
|
| |||||||||||||||
Iowa: 0.17% |
| |||||||||||||||
GO Revenue: 0.17% |
| |||||||||||||||
Coralville IA Series C | 5.00 | 5-1-2030 | 1,200,000 | 1,168,812 | ||||||||||||
|
| |||||||||||||||
Michigan: 0.49% |
| |||||||||||||||
Miscellaneous Revenue: 0.49% |
| |||||||||||||||
Wayne County MI Recovery Zone Economic Development Build America Bonds | 10.00 | 12-1-2040 | 3,000,000 | 3,308,670 | ||||||||||||
|
| |||||||||||||||
New Jersey: 0.30% |
| |||||||||||||||
Education Revenue: 0.15% |
| |||||||||||||||
New Jersey Educational Facilities Authority Georgian Court University Series H | 4.25 | 7-1-2028 | 1,000,000 | 1,003,170 | ||||||||||||
|
| |||||||||||||||
Utilities Revenue: 0.15% |
| |||||||||||||||
Newark NJ Redevelopment Area Public Service Electric & Gas Project 144A | 4.49 | 12-1-2047 | 1,000,000 | 1,018,150 | ||||||||||||
|
| |||||||||||||||
2,021,320 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
20 | Wells Fargo Diversified Income Builder Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
New York: 0.17% |
| |||||||||||||||
Health Revenue: 0.05% |
| |||||||||||||||
Jefferson County NY Civic Facility Development Corporation Refunding Bond Series B Samaritan Medical Center Obligated Group | 4.25 | % | 11-1-2028 | $ | 330,000 | $ | 329,901 | |||||||||
|
| |||||||||||||||
Utilities Revenue: 0.12% |
| |||||||||||||||
New York Energy R&D Authority Green Bond Series A | 4.81 | 4-1-2034 | 800,000 | 820,624 | ||||||||||||
|
| |||||||||||||||
1,150,525 | ||||||||||||||||
|
| |||||||||||||||
Oklahoma: 0.30% |
| |||||||||||||||
Health Revenue: 0.08% |
| |||||||||||||||
Oklahoma Development Finance Authority | 5.45 | 8-15-2028 | 500,000 | 548,515 | ||||||||||||
|
| |||||||||||||||
Miscellaneous Revenue: 0.22% |
| |||||||||||||||
Woodward County OK Educational Facilities Authority Mooreland Public Schools Project Series B | 4.63 | 9-15-2025 | 1,500,000 | 1,510,095 | ||||||||||||
|
| |||||||||||||||
2,058,610 | ||||||||||||||||
|
| |||||||||||||||
Oregon: 0.08% |
| |||||||||||||||
Health Revenue: 0.08% |
| |||||||||||||||
Clackamas County OR Hospital Facility Authority Series C | 4.00 | 11-15-2022 | 550,000 | 550,649 | ||||||||||||
|
| |||||||||||||||
Pennsylvania: 0.29% |
| |||||||||||||||
Housing Revenue: 0.29% |
| |||||||||||||||
Philadelphia PA IDA MFHR University Square Apartments Low Income Housing Project 144A | 5.00 | 12-1-2020 | 2,000,000 | 1,986,040 | ||||||||||||
|
| |||||||||||||||
Tennessee: 0.30% |
| |||||||||||||||
Tax Revenue: 0.30% |
| |||||||||||||||
Bristol TN Industrial Development Board The Pinnacle Project Series A 144A | 5.13 | 12-1-2042 | 2,000,000 | 2,011,820 | ||||||||||||
|
| |||||||||||||||
Texas: 0.07% |
| |||||||||||||||
Education Revenue: 0.07% |
| |||||||||||||||
Clifton TX Higher Education Finance Corporation International Leadership Texas | 6.13 | 8-15-2023 | 500,000 | 503,670 | ||||||||||||
|
| |||||||||||||||
Virginia: 0.31% |
| |||||||||||||||
Tax Revenue: 0.31% |
| |||||||||||||||
Mosaic District VA CDA SeriesA-T | 7.25 | 3-1-2036 | 2,000,000 | 2,101,160 | ||||||||||||
|
| |||||||||||||||
Wisconsin: 0.21% |
| |||||||||||||||
Education Revenue: 0.21% |
| |||||||||||||||
Public Finance Authority Burrell College of Osteopathic Medicine Project 144A | 5.13 | 6-1-2028 | 1,360,000 | 1,437,710 | ||||||||||||
|
| |||||||||||||||
Total Municipal Obligations (Cost $27,975,051) |
| 28,271,369 | ||||||||||||||
|
| |||||||||||||||
Non-Agency Mortgage-Backed Securities: 0.23% |
| |||||||||||||||
JPMorgan Mortgage Trust Series2019-2 Class A3 144A±± | 4.00 | 8-25-2049 | 1,580,000 | 1,599,238 | ||||||||||||
|
| |||||||||||||||
TotalNon-Agency Mortgage-Backed Securities (Cost $1,599,750) |
| 1,599,238 | ||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Diversified Income Builder Fund | 21 |
Security name | Dividend yield | Shares | Value | |||||||||||||
Preferred Stocks: 0.23% |
| |||||||||||||||
Energy: 0.05% |
| |||||||||||||||
Oil, Gas & Consumable Fuels: 0.05% |
| |||||||||||||||
Petroleo Brasil SP ADR | 2.28 | % | 21,601 | $ | 308,894 | |||||||||||
|
| |||||||||||||||
Financials: 0.11% |
| |||||||||||||||
Banks: 0.11% |
| |||||||||||||||
Banco Bradesco SA | 0.11 | 32,200 | 353,140 | |||||||||||||
Itaúsa Investimentos Itaú SA | 6.68 | 122,700 | 375,432 | |||||||||||||
728,572 | ||||||||||||||||
|
| |||||||||||||||
Information Technology: 0.02% |
| |||||||||||||||
Technology Hardware, Storage & Peripherals: 0.02% |
| |||||||||||||||
Samsung Electronics Company Limited | 0.99 | 4,686 | 149,650 | |||||||||||||
|
| |||||||||||||||
Materials: 0.02% |
| |||||||||||||||
Chemicals: 0.02% |
| |||||||||||||||
Sociedad Quimica y Minera de Chile SA Class B | 0.83 | 3,908 | 150,168 | |||||||||||||
|
| |||||||||||||||
Utilities: 0.03% |
| |||||||||||||||
Electric Utilities: 0.03% |
| |||||||||||||||
Companhia Energetica de Minas Gerais SA | 0.88 | 58,600 | 208,038 | |||||||||||||
|
| |||||||||||||||
Total Preferred Stocks (Cost $1,216,842) |
| 1,545,322 | ||||||||||||||
|
| |||||||||||||||
Interest rate | Maturity date | Principal | ||||||||||||||
Yankee Corporate Bonds and Notes: 9.45% |
| |||||||||||||||
Financials: 6.53% |
| |||||||||||||||
Banks: 3.85% |
| |||||||||||||||
Barclays plc (5 Year USD Swap +4.84%) ± | 7.75 | 12-31-2099 | $ | 3,660,000 | 3,666,222 | |||||||||||
BNP Paribas SA (5 Year USD Swap +6.31%) ± | 7.63 | 12-29-2049 | 3,460,000 | 3,628,675 | ||||||||||||
Credit Agricole SA (5 Year USD Swap +4.90%) 144A± | 7.88 | 12-29-2049 | 1,750,000 | 1,878,132 | ||||||||||||
Credit Agricole SA (5 Year USD Swap +6.19%) 144A± | 8.13 | 12-29-2049 | 1,750,000 | 1,965,516 | ||||||||||||
DNB Bank ASA (5 Year USD Swap +5.08%) ± | 6.50 | 12-29-2049 | 3,690,000 | 3,791,475 | ||||||||||||
HSBC Holdings plc (5 Year USD ICE Swap Rate 11:00am NY +4.37%) ± | 6.38 | 12-29-2049 | 3,690,000 | 3,809,925 | ||||||||||||
Lloyds Banking Group plc (5 Year USD Swap +4.76%) ± | 7.50 | 4-30-2049 | 3,665,000 | 3,774,950 | ||||||||||||
Societe Generale SA (5 Year USD ICE Swap Rate 11:00am NY +5.87%) 144A± | 8.00 | 12-29-2049 | 3,535,000 | 3,755,938 | ||||||||||||
26,270,833 | ||||||||||||||||
|
| |||||||||||||||
Capital Markets: 0.53% |
| |||||||||||||||
Credit Suisse Group AG (5 Year USD Swap +4.60%) 144A± | 7.50 | 12-29-2049 | 3,395,000 | 3,590,022 | ||||||||||||
|
| |||||||||||||||
Diversified Financial Services: 2.15% |
| |||||||||||||||
Tronox Finance plc 144A | 5.75 | 10-1-2025 | 12,000,000 | 11,130,000 | ||||||||||||
UBS Group Funding Switzerland AG (5 Year USD Swap +4.87%) ± | 7.00 | 12-29-2049 | 3,330,000 | 3,508,987 | ||||||||||||
14,638,987 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
22 | Wells Fargo Diversified Income Builder Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Health Care: 1.32% |
| |||||||||||||||
Pharmaceuticals: 1.32% |
| |||||||||||||||
Mallinckrodt plc 144A | 5.50 | % | 4-15-2025 | $ | 5,655,000 | $ | 4,410,900 | |||||||||
Mallinckrodt plc 144A | 5.63 | 10-15-2023 | 5,500,000 | 4,565,000 | ||||||||||||
8,975,900 | ||||||||||||||||
|
| |||||||||||||||
Industrials: 1.60% |
| |||||||||||||||
Electrical Equipment: 1.60% |
| |||||||||||||||
Sensata Technologies BV 144A | 4.88 | 10-15-2023 | 6,700,000 | 6,901,000 | ||||||||||||
Sensata Technologies BV 144A | 5.63 | 11-1-2024 | 3,750,000 | 3,993,750 | ||||||||||||
10,894,750 | ||||||||||||||||
|
| |||||||||||||||
Total Yankee Corporate Bonds and Notes (Cost $66,013,238) |
| 64,370,492 | ||||||||||||||
|
| |||||||||||||||
Yield | Shares | |||||||||||||||
Short-Term Investments: 4.88% |
| |||||||||||||||
Investment Companies: 4.85% |
| |||||||||||||||
Wells Fargo Government Money Market Fund Select Class (l)(u) | 2.38 | 33,039,664 | 33,039,664 | |||||||||||||
|
| |||||||||||||||
Principal | ||||||||||||||||
U.S. Treasury Securities: 0.03% |
| |||||||||||||||
U.S. Treasury Bill (z)# | 1.19 | 4-2-2019 | $ | 207,000 | 206,986 | |||||||||||
|
| |||||||||||||||
Total Short-Term Investments (Cost $33,246,650) |
| 33,246,650 | ||||||||||||||
|
|
Total investments in securities (Cost $659,947,346) | 98.53 | % | 671,384,070 | |||||
Other assets and liabilities, net | 1.47 | 9,982,832 | ||||||
|
|
|
| |||||
Total net assets | 100.00 | % | $ | 681,366,902 | ||||
|
|
|
|
144A | The security may be resold in transactions exempt from registration, normally to qualified institutional buyers, pursuant to Rule 144A under the Securities Act of 1933. |
† | Non-income-earning security |
± | Variable rate investment. The rate shown is the rate in effect at period end. |
¤ | The security is issued in zero coupon form with no periodic interest payments |
@ | Foreign bond principal is denominated in the local currency of the issuer. |
±± | The coupon of the security is adjusted based on the principal and interest payments received from the underlying pool of mortgages as well as the credit quality and the actual prepayment speed of the underlying mortgages. |
(l) | The issuer of the security is an affiliated person of the Fund as defined in the Investment Company Act of 1940. |
(u) | The rate represents the7-day annualized yield at period end. |
(z) | Zero coupon security. The rate represents the purchase yield to maturity. |
# | All or a portion of this security is segregated as collateral for investments in derivative instruments. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Diversified Income Builder Fund | 23 |
Abbreviations:
ADR | American depositary receipt |
CDA | Community Development Authority |
EUR | Euro |
GDR | Global depositary receipt |
GO | General obligation |
HEFAR | Higher Education Facilities Authority Revenue |
IDA | Industrial Development Authority |
MFHR | Multifamily housing revenue |
R&D | Research & development |
REIT | Real estate investment trust |
Futures Contracts
Description | Number of contracts | Expiration date | Notional cost | Notional value | Unrealized gains | Unrealized losses | ||||||||||||||||||
Short | ||||||||||||||||||||||||
British Pound Futures | (79) | 6-17-2019 | $ | (6,451,735 | ) | $ | (6,446,400 | ) | $ | 5,335 | $ | 0 |
Forward Foreign Currency Contracts
Currency to be received | Currency to be delivered | Counterparty | Settlement date | Unrealized gains | Unrealized losses | |||||||||
27,256,994 USD | 23,900,000 EUR | Citibank | 6-28-2019 | $ | 245,393 | $ | 0 |
Investments in Affiliates
An affiliated investment is an investment in which the Fund owns at least 5% of the outstanding voting shares of the issuer or as a result of other relationships, such as the Fund and the issuer having the same investment manager. Transactions with issuers that were either affiliated persons of the Fund at the beginning of the period or the end of the period were as follows:
Shares, beginning of period | Shares purchased | Shares sold | Shares, end of period | Net realized gains (losses) | Net change in unrealized gains (losses) | Income from affiliated securities | Value, end of period | % of net assets | ||||||||||||||||||||||||||||
Short-Term Investments | ||||||||||||||||||||||||||||||||||||
Investment Companies | ||||||||||||||||||||||||||||||||||||
Wells Fargo Government Money Market Fund Select Class | 71,872,762 | 121,865,049 | 160,698,147 | 33,039,664 | $ | 0 | $ | 0 | $ | 332,448 | $ | 33,039,664 | 4.85 | % |
The accompanying notes are an integral part of these financial statements.
Table of Contents
24 | Wells Fargo Diversified Income Builder Fund | Statement of assets and liabilities—March 31, 2019 (unaudited) |
Assets | ||||
Investments in unaffiliated securities, at value (cost $626,907,682) | $ | 638,344,406 | ||
Investments in affiliated securities, at value (cost $33,039,664) | 33,039,664 | |||
Cash | 370,255 | |||
Foreign currency, at value (cost $3,284,562) | 2,930,308 | |||
Receivable for investments sold | 218,700 | |||
Receivable for Fund shares sold | 1,806,804 | |||
Receivable for dividends and interest | 7,778,588 | |||
Receivable for daily variation margin on open futures contracts | 26,169 | |||
Unrealized gains on forward foreign currency contracts | 245,393 | |||
Prepaid expenses and other assets | 170,275 | |||
|
| |||
Total assets | 684,930,562 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 1,561,791 | |||
Payable for Fund shares redeemed | 1,222,339 | |||
Cash collateral due to broker for forward foreign currency contracts | 360,000 | |||
Management fee payable | 196,374 | |||
Administration fees payable | 100,420 | |||
Distribution fee payable | 87,590 | |||
Trustees’ fees and expenses payable | 2,617 | |||
Accrued expenses and other liabilities | 32,529 | |||
|
| |||
Total liabilities | 3,563,660 | |||
|
| |||
Total net assets | $ | 681,366,902 | ||
|
| |||
NET ASSETS CONSIST OF | ||||
Paid-in capital | $ | 681,320,533 | ||
Total distributable earnings | 46,369 | |||
|
| |||
Total net assets | $ | 681,366,902 | ||
|
| |||
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE | ||||
Net assets – Class A | $ | 235,790,252 | ||
Shares outstanding – Class A1 | 39,242,143 | |||
Net asset value per share – Class A | $6.01 | |||
Maximum offering price per share – Class A2 | $6.38 | |||
Net assets – Class C | $ | 139,002,638 | ||
Shares outstanding – Class C1 | 23,079,726 | |||
Net asset value per share – Class C | $6.02 | |||
Net assets – Class R6 | $ | 23,750 | ||
Shares outstanding – Class R61 | 4,052 | |||
Net asset value per share – Class R6 | $5.86 | |||
Net assets – Administrator Class | $ | 13,413,815 | ||
Shares outstanding – Administrator Class1 | 2,286,943 | |||
Net asset value per share – Administrator Class | $5.87 | |||
Net assets – Institutional Class | $ | 293,136,447 | ||
Shares outstanding – Institutional Class1 | 49,978,503 | |||
Net asset value per share – Institutional Class | $5.87 |
1 | The Fund has an unlimited number of authorized shares. |
2 | Maximum offering price is computed as 100/94.25 of net asset value. On investments of $50,000 or more, the offering price is reduced. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of operations—six months ended March 31, 2019 (unaudited) | Wells Fargo Diversified Income Builder Fund | 25 |
Investment income | ||||
Interest | $ | 14,020,740 | ||
Dividends (net of foreign withholding taxes of $80,830) | 3,394,922 | |||
Income from affiliated securities | 332,448 | |||
|
| |||
Total investment income | 17,748,110 | |||
|
| |||
Expenses | ||||
Management fee | 1,863,611 | |||
Administration fees | ||||
Class A | 230,138 | |||
Class C | 157,004 | |||
Class R6 | 4 | |||
Administrator Class | 12,897 | |||
Institutional Class | 193,460 | |||
Shareholder servicing fees | ||||
Class A | 273,974 | |||
Class C | 186,910 | |||
Administrator Class | 24,571 | |||
Distribution fee | ||||
Class C | 560,730 | |||
Custody and accounting fees | 18,249 | |||
Professional fees | 32,543 | |||
Registration fees | 51,897 | |||
Shareholder report expenses | 54,597 | |||
Trustees’ fees and expenses | 11,827 | |||
Other fees and expenses | 9,289 | |||
|
| |||
Total expenses | 3,681,701 | |||
Less: Fee waivers and/or expense reimbursements | (703,688 | ) | ||
|
| |||
Net expenses | 2,978,013 | |||
|
| |||
Net investment income | 14,770,097 | |||
|
| |||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | ||||
Net realized gains (losses) on: | ||||
Unaffiliated securities | (12,004,739 | ) | ||
Futures contracts | (838,169 | ) | ||
Forward foreign currency contracts | 338,300 | |||
|
| |||
Net realized losses on investments | (12,504,608 | ) | ||
|
| |||
Net change in unrealized gains (losses) on: | ||||
Unaffiliated securities | 4,062,943 | |||
Futures contracts | (19,679 | ) | ||
Forward foreign currency contracts | 245,393 | |||
|
| |||
Net change in unrealized gains (losses) on investments | 4,288,657 | |||
|
| |||
Net realized and unrealized gains (losses) on investments | (8,215,951 | ) | ||
|
| |||
Net increase in net assets resulting from operations | $ | 6,554,146 | ||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
26 | Wells Fargo Diversified Income Builder Fund | Statement of changes in net assets |
Six months ended March 31, 2019 (unaudited) | Year ended September 30, 2018 | |||||||||||||||
Operations | ||||||||||||||||
Net investment income | $ | 14,770,097 | $ | 25,677,784 | ||||||||||||
Net realized gains (losses) on investments | (12,504,608 | ) | 31,343,912 | |||||||||||||
Net change in unrealized gains (losses) on investments | 4,288,657 | (33,794,120 | ) | |||||||||||||
|
| |||||||||||||||
Net increase in net assets resulting from operations | 6,554,146 | 23,227,576 | ||||||||||||||
|
| |||||||||||||||
Distributions to shareholders from net investment income and net realized gains | ||||||||||||||||
Class A | (14,428,751 | ) | (10,518,893 | ) | ||||||||||||
Class C | (9,576,985 | ) | (6,577,828 | ) | ||||||||||||
Class R6 | (1,664 | ) | (138 | )1 | ||||||||||||
Administrator Class | (1,756,111 | ) | (1,793,521 | ) | ||||||||||||
Institutional Class | (20,332,737 | ) | (16,782,186 | ) | ||||||||||||
|
| |||||||||||||||
Total distributions to shareholders | (46,096,248 | ) | (35,672,566 | ) | ||||||||||||
|
| |||||||||||||||
Capital share transactions | Shares | Shares | ||||||||||||||
Proceeds from shares sold | ||||||||||||||||
Class A | 7,441,265 | 43,895,031 | 11,145,149 | 70,956,206 | ||||||||||||
Class C | 3,160,416 | 18,576,654 | 6,785,413 | 43,270,788 | ||||||||||||
Class R6 | 0 | 0 | 4,052 | 1 | 25,000 | 1 | ||||||||||
Administrator Class | 487,800 | 2,823,568 | 1,384,053 | 8,606,856 | ||||||||||||
Institutional Class | 12,906,104 | 73,942,460 | 22,967,858 | 142,978,608 | ||||||||||||
|
| |||||||||||||||
139,237,713 | 265,837,458 | |||||||||||||||
|
| |||||||||||||||
Reinvestment of distributions | ||||||||||||||||
Class A | 2,376,964 | 13,627,650 | 1,561,264 | 9,891,159 | ||||||||||||
Class C | 1,530,564 | 8,772,889 | 946,882 | 6,011,290 | ||||||||||||
Administrator Class | 286,014 | 1,600,069 | �� | 263,760 | 1,637,316 | |||||||||||
Institutional Class | 2,959,904 | 16,586,751 | 2,194,831 | 13,596,513 | ||||||||||||
|
| |||||||||||||||
40,587,359 | 31,136,278 | |||||||||||||||
|
| |||||||||||||||
Payment for shares redeemed | ||||||||||||||||
Class A | (7,103,761 | ) | (41,545,544 | ) | (10,590,623 | ) | (67,150,218 | ) | ||||||||
Class C | (7,904,758 | ) | (46,582,542 | ) | (7,154,705 | ) | (45,403,714 | ) | ||||||||
Administrator Class | (3,805,307 | ) | (21,394,924 | ) | (3,003,395 | ) | (18,651,958 | ) | ||||||||
Institutional Class | (20,120,906 | ) | (115,871,155 | ) | (21,127,558 | ) | (130,722,169 | ) | ||||||||
|
| |||||||||||||||
(225,394,165 | ) | (261,928,059 | ) | |||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from capital share transactions | (45,569,093 | ) | 35,045,677 | |||||||||||||
|
| |||||||||||||||
Total increase (decrease) in net assets | (85,111,195 | ) | 22,600,687 | |||||||||||||
|
| |||||||||||||||
Net assets | ||||||||||||||||
Beginning of period | 766,478,097 | 743,877,410 | ||||||||||||||
|
| |||||||||||||||
End of period | $ | 681,366,902 | $ | 766,478,097 | ||||||||||||
|
|
1. | For the period from July 31, 2018 (commencement of class operations) to September 30, 2018 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Diversified Income Builder Fund | 27 |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS A | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $6.33 | $6.42 | $6.13 | $5.71 | $6.37 | $6.13 | ||||||||||||||||||
Net investment income | 0.12 | 0.21 | 0.20 | 0.20 | 0.21 | 0.23 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.05 | ) | (0.01 | ) | 0.35 | 0.64 | (0.31 | ) | 0.38 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | 0.07 | 0.20 | 0.55 | 0.84 | (0.10 | ) | 0.61 | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.11 | ) | (0.19 | ) | (0.22 | )�� | (0.21 | ) | (0.21 | ) | (0.23 | ) | ||||||||||||
Net realized gains | (0.28 | ) | (0.10 | ) | (0.04 | ) | (0.21 | ) | (0.35 | ) | (0.14 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total distributions to shareholders | (0.39 | ) | (0.29 | ) | (0.26 | ) | (0.42 | ) | (0.56 | ) | (0.37 | ) | ||||||||||||
Net asset value, end of period | $6.01 | $6.33 | $6.42 | $6.13 | $5.71 | $6.37 | ||||||||||||||||||
Total return1 | 1.65 | % | 3.23 | % | 9.16 | % | 15.39 | % | (1.92 | )% | 10.13 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.06 | % | 1.04 | % | 1.05 | % | 1.08 | % | 1.11 | % | 1.13 | % | ||||||||||||
Net expenses | 0.85 | % | 0.90 | % | 1.05 | % | 1.08 | % | 1.08 | % | 1.08 | % | ||||||||||||
Net investment income | 4.05 | % | 3.34 | % | 3.29 | % | 3.55 | % | 3.38 | % | 3.60 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 24 | % | 50 | % | 29 | % | 38 | % | 63 | % | 52 | % | ||||||||||||
Net assets, end of period (000s omitted) | $235,790 | $231,176 | $220,977 | $154,496 | $127,242 | $143,062 |
1 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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28 | Wells Fargo Diversified Income Builder Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS C | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $6.34 | $6.44 | $6.14 | $5.72 | $6.39 | $6.14 | ||||||||||||||||||
Net investment income | 0.10 | 0.17 | 0.16 | 0.16 | 1 | 0.16 | 1 | 0.18 | ||||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.05 | ) | (0.02 | ) | 0.35 | 0.63 | (0.32 | ) | 0.39 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | 0.05 | 0.15 | 0.51 | 0.79 | (0.16 | ) | 0.57 | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.09 | ) | (0.15 | ) | (0.17 | ) | (0.16 | ) | (0.16 | ) | (0.18 | ) | ||||||||||||
Net realized gains | (0.28 | ) | (0.10 | ) | (0.04 | ) | (0.21 | ) | (0.35 | ) | (0.14 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total distributions to shareholders | (0.37 | ) | (0.25 | ) | (0.21 | ) | (0.37 | ) | (0.51 | ) | (0.32 | ) | ||||||||||||
Net asset value, end of period | $6.02 | $6.34 | $6.44 | $6.14 | $5.72 | $6.39 | ||||||||||||||||||
Total return2 | 1.25 | % | 2.32 | % | 8.51 | % | 14.51 | % | (2.81 | )% | 9.47 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.81 | % | 1.79 | % | 1.80 | % | 1.83 | % | 1.86 | % | 1.88 | % | ||||||||||||
Net expenses | 1.60 | % | 1.65 | % | 1.80 | % | 1.83 | % | 1.83 | % | 1.83 | % | ||||||||||||
Net investment income | 3.30 | % | 2.59 | % | 2.54 | % | 2.80 | % | 2.62 | % | 2.85 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 24 | % | 50 | % | 29 | % | 38 | % | 63 | % | 52 | % | ||||||||||||
Net assets, end of period (000s omitted) | $139,003 | $166,750 | $165,513 | $129,856 | $110,457 | $111,045 |
1 | Calculated based upon average shares outstanding |
2 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Diversified Income Builder Fund | 29 |
(For a share outstanding throughout each period)
CLASS R6 | Six months ended March 31, 2019 (unaudited) | Year ended September 30, 20181 | ||||||
Net asset value, beginning of period | $6.18 | $6.17 | ||||||
Net investment income | 0.13 | 2 | 0.02 | 2 | ||||
Net realized and unrealized gains (losses) on investments | (0.04 | ) | 0.02 | |||||
|
|
|
| |||||
Total from investment operations | 0.09 | 0.04 | ||||||
Distributions to shareholders from | ||||||||
Net investment income | (0.13 | ) | (0.03 | ) | ||||
Net realized gains | (0.28 | ) | 0.00 | |||||
|
|
|
| |||||
Total distributions to shareholders | (0.41 | ) | (0.03 | ) | ||||
Net asset value, end of period | $5.86 | $6.18 | ||||||
Total return3 | 1.91 | % | 0.71 | % | ||||
Ratios to average net assets (annualized) | ||||||||
Gross expenses | 0.62 | % | 0.64 | % | ||||
Net expenses | 0.42 | % | 0.41 | % | ||||
Net investment income | 4.47 | % | 2.31 | % | ||||
Supplemental data | ||||||||
Portfolio turnover rate | 24 | % | 50 | % | ||||
Net assets, end of period (000s omitted) | $24 | $25 |
1 | For the period from July 31, 2018 (commencement of class operations) to September 30, 2018 |
2 | Calculated based upon average shares outstanding |
3 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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30 | Wells Fargo Diversified Income Builder Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
ADMINISTRATOR CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $6.19 | $6.29 | $6.00 | $5.60 | $6.25 | $6.01 | ||||||||||||||||||
Net investment income | 0.12 | 1 | 0.21 | 1 | 0.21 | 1 | 0.21 | 1 | 0.21 | 1 | 0.24 | |||||||||||||
Net realized and unrealized gains (losses) on investments | (0.04 | ) | (0.01 | ) | 0.34 | 0.61 | (0.30 | ) | 0.38 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | 0.08 | 0.20 | 0.55 | 0.82 | (0.09 | ) | 0.62 | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.12 | ) | (0.20 | ) | (0.22 | ) | (0.21 | ) | (0.21 | ) | (0.24 | ) | ||||||||||||
Net realized gains | (0.28 | ) | (0.10 | ) | (0.04 | ) | (0.21 | ) | (0.35 | ) | (0.14 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total distributions to shareholders | (0.40 | ) | (0.30 | ) | (0.26 | ) | (0.42 | ) | (0.56 | ) | (0.38 | ) | ||||||||||||
Net asset value, end of period | $5.87 | $6.19 | $6.29 | $6.00 | $5.60 | $6.25 | ||||||||||||||||||
Total return2 | 1.72 | % | 3.21 | % | 9.45 | % | 15.45 | % | (1.69 | )% | 10.46 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 0.97 | % | 0.96 | % | 0.97 | % | 1.00 | % | 0.97 | % | 0.96 | % | ||||||||||||
Net expenses | 0.77 | % | 0.81 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | ||||||||||||
Net investment income | 4.07 | % | 3.40 | % | 3.51 | % | 3.72 | % | 3.56 | % | 3.77 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 24 | % | 50 | % | 29 | % | 38 | % | 63 | % | 52 | % | ||||||||||||
Net assets, end of period (000s omitted) | $13,414 | $32,938 | $41,975 | $70,051 | $31,367 | $48,690 |
1 | Calculated based upon average shares outstanding |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Diversified Income Builder Fund | 31 |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
INSTITUTIONAL CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $6.19 | $6.28 | $6.00 | $5.59 | $6.25 | $6.01 | ||||||||||||||||||
Net investment income | 0.13 | 0.23 | 0.24 | 0.23 | 0.24 | 0.25 | 1 | |||||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.05 | ) | (0.01 | ) | 0.31 | 0.61 | (0.32 | ) | 0.38 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | 0.08 | 0.22 | 0.55 | 0.84 | (0.08 | ) | 0.63 | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.12 | ) | (0.21 | ) | (0.23 | ) | (0.22 | ) | (0.23 | ) | (0.25 | ) | ||||||||||||
Net realized gains | (0.28 | ) | (0.10 | ) | (0.04 | ) | (0.21 | ) | (0.35 | ) | (0.14 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total distributions to shareholders | (0.40 | ) | (0.31 | ) | (0.27 | ) | (0.43 | ) | (0.58 | ) | (0.39 | ) | ||||||||||||
Net asset value, end of period | $5.87 | $6.19 | $6.28 | $6.00 | $5.59 | $6.25 | ||||||||||||||||||
Total return2 | 1.86 | % | 3.62 | % | 9.49 | % | 15.88 | % | (1.65 | )% | 10.68 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 0.72 | % | 0.71 | % | 0.72 | % | 0.75 | % | 0.71 | % | 0.70 | % | ||||||||||||
Net expenses | 0.52 | % | 0.57 | % | 0.71 | % | 0.71 | % | 0.69 | % | 0.70 | % | ||||||||||||
Net investment income | 4.37 | % | 3.67 | % | 3.60 | % | 3.92 | % | 3.76 | % | 3.98 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 24 | % | 50 | % | 29 | % | 38 | % | 63 | % | 52 | % | ||||||||||||
Net assets, end of period (000s omitted) | $293,136 | $335,589 | $315,413 | $124,116 | $77,558 | $61,133 |
1 | Calculated based upon average shares outstanding |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
32 | Wells Fargo Diversified Income Builder Fund | Notes to financial statements (unaudited) |
1. ORGANIZATION
Wells Fargo Funds Trust (the “Trust”), a Delaware statutory trust organized on March 10, 1999, is anopen-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As an investment company, the Trust follows the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”)Accounting Standards Codification Topic 946, Financial Services – Investment Companies. These financial statements report on the Wells Fargo Diversified Income Builder Fund (the “Fund”) which is a diversified series of the Trust.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Fund, are in conformity with U.S. generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Securities valuation
All investments are valued each business day as of the close of regular trading on the New York Stock Exchange (generally 4 p.m. Eastern Time), although the Fund may deviate from this calculation time under unusual or unexpected circumstances.
Debt securities are valued at the evaluated bid price provided by an independent pricing service (e.g. taking into account various factors, including yields, maturities, or credit ratings) or, if a reliable price is not available, the quoted bid price from an independent broker-dealer.
Equity securities and futures contracts that are listed on a foreign or domestic exchange or market are valued at the official closing price or, if none, the last sales price. If no sale occurs on the principal exchange or market that day, a fair value price will be determined in accordance with the Fund’s Valuation Procedures.
The values of securities denominated in foreign currencies are translated into U.S. dollars at rates provided by an independent foreign currency pricing source at a time each business day specified by the Wells Fargo Asset Management Pricing Committee at Wells Fargo Funds Management, LLC (“Funds Management”)
Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore may not fully reflect trading or events that occur after the close of the principal exchange in which the foreign securities are traded, but before the close of the New York Stock Exchange. If such trading or events are expected to materially affect the value of such securities, then fair value pricing procedures approved by the Board of Trustees of the Fund are applied. These procedures take into account multiple factors including movements in U.S. securities markets after foreign exchanges close. Foreign securities that are fair valued under these procedures are categorized as Level 2 and the application of these procedures may result in transfers between Level 1 and Level 2. Depending on market activity, such fair valuations may be frequent. Such fair value pricing may result in net asset values that are higher or lower than net asset values based on the last reported sales price or latest quoted bid price. On March 31, 2019, such fair value pricing was not used in pricing foreign securities.
Investments in registeredopen-end investment companies are valued at net asset value. Interests in non-registered investment companies that are redeemable at net asset value are fair valued normally at net asset value.
Investments which are not valued using any of the methods discussed above are valued at their fair value, as determined in good faith by the Board of Trustees. The Board of Trustees has established a Valuation Committee comprised of the Trustees and has delegated to it the authority to take any actions regarding the valuation of portfolio securities that the Valuation Committee deems necessary or appropriate, including determining the fair value of portfolio securities, unless the determination has been delegated to the Wells Fargo Asset Management Pricing Committee.The Board of Trustees retains the authority to make or ratify any valuation decisions or approve any changes to the Valuation Procedures as it deems appropriate. On a quarterly basis, the Board of Trustees receives reports on any valuation actions taken by the Valuation Committee or the Wells Fargo Asset Management Pricing Committee which may include items for ratification.
Foreign currency translation
The accounting records of the Fund are maintained in U.S. dollars. The values of other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at rates provided by an independent foreign currency pricing source at a time each business day specified by the Wells Fargo Asset Management Pricing Committee. Purchases and sales of securities, and income and expenses are converted at the rate of exchange on the respective dates of such transactions.
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Notes to financial statements (unaudited) | Wells Fargo Diversified Income Builder Fund | 33 |
Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded and the U.S. dollar equivalent of the amounts actually paid or received. Net unrealized foreign exchange gains and losses arise from changes in the fair value of assets and liabilities other than investments in securities resulting from changes in exchange rates. The changes in net assets arising from changes in exchange rates of securities and the changes in net assets resulting from changes in market prices of securities are not separately presented. Such changes are included in net realized and unrealized gains or losses from investments.
Forward foreign currency contracts
The Fund is subject to foreign currency risk in the normal course of pursuing its investment objectives. A forward foreign currency contract is an agreement between two parties to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund enters into forward foreign currency contracts to facilitate transactions in foreign-denominated securities and to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. Forward foreign currency contracts are recorded at the forward rate andmarked-to-market daily. When the contracts are closed, realized gains and losses arising from such transactions are recorded as realized gains or losses on forward foreign currency contracts. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. The Fund’s maximum risk of loss from counterparty credit risk is the unrealized gains on the contracts. This risk may be mitigated if there is a master netting arrangement between the Fund and the counterparty.
Securities lending
The Fund may lend its securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The Fund continues to receive interest or dividends on the securities loaned. The Fund receives collateral in the form of cash or securities with a value at least equal to the value of the securities on loan. The value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. In a securities lending transaction, the net asset value of the Fund will be affected by an increase or decrease in the value of the securities loaned and by an increase or decrease in the value of the instrument in which collateral is invested. The amount of securities lending activity undertaken by the Fund fluctuates from time to time. In the event of default or bankruptcy by the borrower, the Fund may be prevented from recovering the loaned securities or gaining access to the collateral or may experience delays or costs in doing so. In addition, the investment of any cash collateral received may lose all or part of its value. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.
The Fund lends its securities through an unaffiliated securities lending agent. Cash collateral received in connection with its securities lending transactions is invested in Securities Lending Cash Investments, LLC (the “Securities Lending Fund”). The Securities Lending Fund is exempt from registration under Section 3(c)(7) of the 1940 Act and is managed by Funds Management and is subadvised by Wells Capital Management Incorporated (“WellsCap”), an affiliate of Funds Management and an indirect wholly owned subsidiary of Wells Fargo & Company (“Wells Fargo”). Funds Management receives an advisory fee starting at 0.05% and declining to 0.01% as the average daily net assets of the Securities Lending Fund increase. All of the fees received by Funds Management are paid to WellsCap for its services as subadviser. The Securities Lending Fund seeks to provide a positive return compared to the daily Fed Funds Open Rate by investing in high-quality, U.S. dollar-denominated short-term money market instruments. Securities Lending Fund investments are valued at the evaluated bid price provided by an independent pricing service. Income earned from investment in the Securities Lending Fund (net of fees and rebates), if any, is included in income from affiliated securities on the Statement of Operations.
When-issued transactions
The Fund may purchase securities on a forward commitment or when-issued basis. The Fund records a when-issued transaction on the trade date and will segregate assets in an amount at least equal in value to the Fund’s commitment to purchase when-issued securities. Securities purchased on a when-issued basis aremarked-to-market daily and the Fund begins earning interest on the settlement date. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract.
Futures contracts
The Fund is subject to foreign currency risk in the normal course of pursuing its investment objectives. Futures contracts are agreements between the Fund and a counterparty to buy or sell a specific amount of a commodity, financial instrument or currency at specified price and on a specified date. The Fund may buy and sell futures contracts in order to
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34 | Wells Fargo Diversified Income Builder Fund | Notes to financial statements (unaudited) |
gain exposure to, or protect against, changes in foreign exchange rates. The primary risks associated with the use of futures contracts are the imperfect correlation between changes in market values of securities held by the Fund and the prices of futures contracts, and the possibility of an illiquid market. Futures contracts are generally entered into on a regulated futures exchange and cleared through a clearinghouse associated with the exchange. With futures contracts, there is minimal counterparty risk to the Fund since futures contracts are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures contracts against default.
Upon entering into a futures contracts, the Fund is required to deposit either cash or securities (initial margin) with the broker in an amount equal to a certain percentage of the contract value. Subsequent payments (variation margin) are paid to or from the broker each day equal to the daily changes in the contract value. Such payments are recorded as unrealized gains or losses and, if any, shown as variation margin receivable (payable) in the Statement of Assets and Liabilities. Should the Fund fail to make requested variation margin payments, the broker can gain access to the initial margin to satisfy the Fund’s payment obligations. When the contracts are closed, a realized gain or loss is recorded in the Statement of Operations.
Security transactions and income recognition
Securities transactions are recorded on a trade date basis. Realized gains or losses are recorded on the basis of identified cost.
Interest income is accrued daily and bond discounts are accreted and premiums are amortized daily. To the extent debt obligations are placed onnon-accrual status, any related interest income may be reduced by writing off interest receivables when the collection of all or a portion of interest has been determined to be doubtful based on consistently applied procedures and the fair value has decreased. If the issuer subsequently resumes interest payments or when the collectability of interest is reasonably assured, the debt obligation is removed fromnon-accrual status.
Dividend income is recognized on theex-dividend date, except for certain dividends from foreign securities, which are recorded as soon as the custodian verifies theex-dividend date. Dividend income from foreign securities is recorded net of foreign taxes withheld where recovery of such taxes is not assured.
Distributions to shareholders
Distributions to shareholders are recorded on theex-dividend date and paid from net investment income monthly and any net realized gains are paid at least annually. Such distributions are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles. Dividend sources are estimated at the time of declaration. The tax character of distributions is determined as of the Fund’s fiscal year end. Therefore, a portion of the Fund’s distributions made prior to the Fund’s fiscal year end may be categorized as a tax return of capital at year end.
Federal and other taxes
The Fund intends to continue to qualify as a regulated investment company by distributing substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required.
The Fund’s income and federal excise tax returns and all financial records supporting those returns for the prior three fiscal years are subject to examination by the federal and Delaware revenue authorities. Management has analyzed the Fund’s tax positions taken on federal, state, and foreign tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability.
As of March 31, 2019, the aggregate cost of all investments for federal income tax purposes was $659,466,009 and the unrealized gains (losses) consisted of:
Gross unrealized gains | $ | 30,893,598 | ||
Gross unrealized losses | (18,724,809 | ) | ||
Net unrealized gains | $ | 12,168,789 |
Class allocations
The separate classes of shares offered by the Fund differ principally in applicable sales charges, distribution, shareholder servicing, and administration fees. Class specific expenses are charged directly to that share class. Investment income,
Table of Contents
Notes to financial statements (unaudited) | Wells Fargo Diversified Income Builder Fund | 35 |
common expenses, and realized and unrealized gains (losses) on investments are allocated daily to each class of shares based on the relative proportion of net assets of each class.
3. FAIR VALUATION MEASUREMENTS
Fair value measurements of investments are determined within a framework that has established a fair value hierarchy based upon the various data inputs utilized in determining the value of the Fund’s investments. The three-level hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Fund’s investments are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The inputs are summarized into three broad levels as follows:
∎ | Level 1 – quoted prices in active markets for identical securities |
∎ | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
∎ | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
The inputs or methodologies used for valuing investments in securities are not necessarily an indication of the risk associated with investing in those securities.
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36 | Wells Fargo Diversified Income Builder Fund | Notes to financial statements (unaudited) |
The following is a summary of the inputs used in valuing the Fund’s assets and liabilities as of March 31, 2019:
Quoted prices (Level 1) | Other significant observable inputs (Level 2) | Significant (Level 3) | Total | |||||||||||||
Assets | ||||||||||||||||
Investments in: | ||||||||||||||||
Asset-backed securities | $ | 0 | $ | 1,397,403 | $ | 0 | $ | 1,397,403 | ||||||||
Common stocks | ||||||||||||||||
Communication services | 5,570,189 | 0 | 0 | 5,570,189 | ||||||||||||
Consumer discretionary | 10,148,872 | 0 | 0 | 10,148,872 | ||||||||||||
Consumer staples | 7,174,540 | 0 | 0 | 7,174,540 | ||||||||||||
Energy | 39,287,350 | 0 | 0 | 39,287,350 | ||||||||||||
Financials | 24,370,479 | 0 | 0 | 24,370,479 | ||||||||||||
Health care | 22,311,746 | 0 | 0 | 22,311,746 | ||||||||||||
Industrials | 19,599,161 | 0 | 0 | 19,599,161 | ||||||||||||
Information technology | 34,787,077 | 0 | 0 | 34,787,077 | ||||||||||||
Materials | 6,878,138 | 0 | 0 | 6,878,138 | ||||||||||||
Real estate | 6,371,269 | 0 | 0 | 6,371,269 | ||||||||||||
Utilities | 13,642,013 | 0 | 0 | 13,642,013 | ||||||||||||
Corporate bonds and notes | 0 | 330,567,514 | 0 | 330,567,514 | ||||||||||||
Foreign corporate bonds and notes | 0 | 20,245,248 | 0 | 20,245,248 | ||||||||||||
Municipal obligations | 0 | 28,271,369 | 0 | 28,271,369 | ||||||||||||
Non-agency mortgage-backed securities | 0 | 1,599,238 | 0 | 1,599,238 | ||||||||||||
Preferred stocks | ||||||||||||||||
Energy | 308,894 | 0 | 0 | 308,894 | ||||||||||||
Financials | 728,572 | 0 | 0 | 728,572 | ||||||||||||
Information technology | 149,650 | 0 | 0 | 149,650 | ||||||||||||
Materials | 150,168 | 0 | 0 | 150,168 | ||||||||||||
Utilities | 208,038 | 0 | 0 | 208,038 | ||||||||||||
Yankee corporate bonds and notes | 0 | 64,370,492 | 0 | 64,370,492 | ||||||||||||
Short-term investments | 0 | |||||||||||||||
Investment companies | 33,039,664 | 0 | 0 | 33,039,664 | ||||||||||||
U.S. Treasury securities | 206,986 | 0 | 0 | 206,986 | ||||||||||||
224,932,806 | 446,451,264 | 0 | 671,384,070 | |||||||||||||
Futures contracts | 5,335 | 0 | 0 | 5,335 | ||||||||||||
Forward foreign currency contracts | 0 | 245,393 | 0 | 245,393 | ||||||||||||
Total assets | $ | 224,938,141 | $ | 446,696,657 | $ | 0 | $ | 671,634,798 |
Additional sector, industry or geographic detail is included in the Portfolio of Investments.
Futures contracts and forward foreign currency contracts are reported at their cumulative unrealized gains (losses) at measurement date as reported in the tables following the Portfolio of Investments. For futures contracts, the current day’s variation margin is reported on the Statement of Assets and Liabilities. All other assets and liabilities are reported at their market value at measurement date.
At March 31, 2019, the Fund did not have any transfers into/out of Level 3.
4. TRANSACTIONS WITH AFFILIATES
Management fee
Funds Management, an indirect wholly owned subsidiary of Wells Fargo, is the manager of the Fund and provides advisory and fund-level administrative services under an investment management agreement. Under the investment
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Notes to financial statements (unaudited) | Wells Fargo Diversified Income Builder Fund | 37 |
management agreement, Funds Management is responsible for, among other services, implementing the investment objectives and strategies of the Fund, supervising the subadviser and providing fund-level administrative services in connection with the Fund’s operations. As compensation for its services under the investment management agreement, Funds Management is entitled to receive a management fee at the following annual rate based on the Fund’s average daily net assets:
Average daily net assets | Management fee | |||
First $500 million | 0.550 | % | ||
Next $500 million | 0.525 | |||
Next $2 billion | 0.500 | |||
Next $2 billion | 0.475 | |||
Next $5 billion | 0.440 | |||
Over $10 billion | 0.430 |
For the six months ended March 31, 2019, the management fee was equivalent to an annual rate of 0.54% of the Fund’s average daily net assets.
Funds Management has retained the services of a subadviser to provide daily portfolio management to the Fund. The fee for subadvisory services is borne by Funds Management. WellsCap is the subadviser to the Fund and is entitled to receive a fee from Funds Management at an annual rate starting at 0.35% and declining to 0.20% as the average daily net assets of the Fund increase.
Administration fees
Under a class-level administration agreement, Funds Management provides class-level administrative services to the Fund, which includes paying fees and expenses for services provided by the transfer agent,sub-transfer agents, omnibus account servicers and record-keepers. As compensation for its services under the class-level administration agreement, Funds Management receives an annual fee which is calculated based on the average daily net assets of each class as follows:
Class-level administration fee | ||||
Class A, Class C | 0.21 | % | ||
Class R6 | 0.03 | |||
Administrator Class, Institutional Class | 0.13 |
Funds Management has contractually waived and/or reimbursed management and administration fees to the extent necessary to maintain certain net operating expense ratios for the Fund. When each class of the Fund has exceeded its expense cap, Funds Management has waived fees and/or reimbursed expenses from fund level expenses on a proportionate basis and then from class specific expenses. When only certain classes exceed their expense caps, waivers and/or reimbursements are applied against class specific expenses before fund level expenses. Funds Management has committed through January 31, 2020 to waive fees and/or reimburse expenses to the extent necessary to cap the Fund’s expenses at 0.85% for Class A shares, 1.60% for Class C shares, 0.42% for Class R6 shares, 0.77% for Administrator Class shares, and 0.52% for Institutional Class shares. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees.
Distribution fee
The Trust has adopted a distribution plan for Class C shares of the Fund pursuant to Rule12b-1 under the 1940 Act. A distribution fee is charged to Class C shares and paid to Wells Fargo Funds Distributor, LLC (“Funds Distributor”), the principal underwriter, at an annual rate of 0.75% of the average daily net assets of Class C shares.
In addition, Funds Distributor is entitled to receive thefront-end sales charge from the purchase of Class A shares and a contingent deferred sales charge on the redemption of certain Class A shares. Funds Distributor is also entitled to receive the contingent deferred sales charges from redemptions of Class C shares. For the six months ended March 31, 2019, Funds Distributor received $21,804 from the sale of Class A shares and $270 in contingent deferred sales charges from redemptions of Class C shares. No contingent deferred sales charges were incurred by Class A for the six months ended March 31, 2019.
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38 | Wells Fargo Diversified Income Builder Fund | Notes to financial statements (unaudited) |
Shareholder servicing fees
The Trust has entered into contracts with one or more shareholder servicing agents, whereby Class A, Class C, and Administrator Class of the Fund are charged a fee at an annual rate of 0.25% of the average daily net assets of each respective class. A portion of these total shareholder servicing fees were paid to affiliates of Wells Fargo.
Interfund transactions
The Fund may purchase or sell portfolio investment securities to certain other Wells Fargo affiliates pursuant toRule 17a-7 under the 1940 Act and under procedures adopted by the Board of Trustees. The procedures have been designed to ensure that these interfund transactions, which do not incur broker commissions, are effected at current market prices.
5. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, excluding U.S. government obligations (if any) and short-term securities, for the six months ended March 31, 2019 were $152,612,266 and $190,294,680, respectively.
6. DERIVATIVE TRANSACTIONS
During the six months ended March 31, 2019, the Fund entered into futures contracts and forward foreign currency contracts for economic hedging purposes.
The volume of the Fund’s futures contracts and forward foreign currency contracts during the six months ended March 31, 2019 was as follows:
Futures contracts | ||||
Average notional balance on long futures | $ | 13,197,709 | ||
Average notional balance on short futures | 2,189,368 | |||
Forward foreign currency contracts | ||||
Average contract amounts to buy | $ | 2,080,991 | ||
Average contract amounts to sell | 18,994,666 |
The fair value, realized gains or losses and change in unrealized gains or losses, if any, on derivative instruments are reflected in the corresponding financial statement captions.
For certain types of derivative transactions, the Fund has entered into International Swaps and Derivatives Association, Inc. master agreements (“ISDA Master Agreements”) or similar agreements with approved counterparties. The ISDA Master Agreements or similar agreements may have requirements to deliver/deposit securities or cash to/with an exchange or broker-dealer as collateral and allows the Fund to offset, with each counterparty, certain derivative financial instrument’s assets and/or liabilities with collateral held or pledged. Collateral requirements differ by type of derivative. Collateral or margin requirements are set by the broker or exchange clearinghouse for exchange traded derivatives while collateral terms are contract specific forover-the-counter traded derivatives. Cash collateral that has been pledged to cover obligations of the Fund under ISDA Master Agreements or similar agreements, if any, are reported separately in the Statement of Assets and Liabilities. Securities pledged as collateral, if any, are noted in the Portfolio of Investments. With respect to balance sheet offsetting, absent an event of default by the counterparty or a termination of the agreement, the reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities are not offset across transactions between the Fund and the applicable counterparty. A reconciliation of the gross amounts on the Statement of Assets and Liabilities to the net amounts by counterparty, including any collateral exposure, is as follows:
Counterparty | Gross amounts of assets in the Statement of Assets and Liabilities | Amounts subject to netting agreements | Collateral received | Net amount of assets | ||||||||
Citibank | $245,393 | $0 | $ | (245,393 | ) | $ | 0 |
7. BANK BORROWINGS
The Trust (excluding the money market funds), Wells Fargo Master Trust and Wells Fargo Variable Trust are parties to a $280,000,000 revolving credit agreement whereby the Fund is permitted to use bank borrowings for temporary or emergency purposes, such as to fund shareholder redemption requests. Interest under the credit agreement is charged to the Fund based on a borrowing rate equal to the higher of the Federal Funds rate in effect on that day plus 1.25% or the overnight LIBOR rate in effect on that day plus 1.25%. In addition, an annual commitment fee equal to 0.25% of the unused balance is allocated to each participating fund.
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Notes to financial statements (unaudited) | Wells Fargo Diversified Income Builder Fund | 39 |
For the six months ended March 31, 2019, there were no borrowings by the Fund under the agreement.
8. INDEMNIFICATION
Under the Trust’s organizational documents, the officers and Trustees have been granted certain indemnification rights against certain liabilities that may arise out of performance of their duties to the Trust. Additionally, in the normal course of business, the Trust may enter into contracts with service providers that contain a variety of indemnification clauses. The Trust’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated.
9. NEW ACCOUNTING PRONOUNCEMENTS
In August 2018, FASB issued Accounting Standards Update (“ASU”)No. 2018-13, Fair Value Measurement (Topic 820)Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU2018-13 updates the disclosure requirements for fair value measurements by modifying or removing certain disclosures and adding certain new disclosures. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management has adopted the removal and modification of disclosures early, as permitted, and will adopt the additional new disclosures at the effective date.
In March 2017, FASB issued ASUNo. 2017-08,Premium Amortization on Purchased Callable Debt Securities. ASU2017-08 shortens the amortization period for certain callable debt securities held at a premium. The amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. ASU2017-08 is effective for fiscal years beginning after December 15, 2018 and for interim periods within those fiscal years. Management is currently evaluating the potential impact of this new guidance to the financial statements.
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40 | Wells Fargo Diversified Income Builder Fund | Other information (unaudited) |
PROXY VOTING INFORMATION
A description of the policies and procedures used to determine how to vote proxies relating to portfolio securities is available, upon request, by calling1-800-222-8222, visiting our website atwfam.com, or visiting the SEC website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent12-month period ended June 30 is available on the Fund’s website atwfam.comor by visiting the SEC website at sec.gov.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for the Fund are publicly available monthly on the Fund’s website (wfam.com), on aone-month delayed basis. In addition, top ten holdings information (excluding derivative positions) for the Fund is publicly available on the Fund’s website on a monthly,seven-day or more delayed basis. The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on FormN-Q, which is available by visiting the SEC website at sec.gov. In addition, the Fund’s FormN-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling1-800-SEC-0330.
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Other information (unaudited) | Wells Fargo Diversified Income Builder Fund | 41 |
BOARD OF TRUSTEES AND OFFICERS
Each of the Trustees and Officers1 listed in the table below acts in identical capacities for each fund in the Wells Fargo family of funds, which consists of 151 mutual funds comprising the Wells Fargo Funds Trust, Wells Fargo Variable Trust, Wells Fargo Master Trust and fourclosed-end funds (collectively the “Fund Complex”). This table should be read in conjunction with the Prospectus and the Statement of Additional Information2. The mailing address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, however, each Trustee serves such term until reaching the mandatory retirement age established by the Trustees.
Independent Trustees
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company | |||||
William R. Ebsworth (Born 1957) | Trustee, since 2015 | Retired. From 1984 to 2013, equities analyst, portfolio manager, research director and chief investment officer at Fidelity Management and Research Company in Boston, Tokyo, and Hong Kong, and retired in 2013 as Chief Investment Officer of Fidelity Strategic Advisers, Inc. where he led a team of investment professionals managing client assets. Prior thereto, Board member of Hong Kong Securities Clearing Co., Hong Kong Options Clearing Corp., the Thailand International Fund, Ltd., Fidelity Investments Life Insurance Company, and Empire Fidelity Investments Life Insurance Company. Audit Committee Chair and Investment Committee Chair of the Vincent Memorial Hospital Endowment(non-profit organization). Mr. Ebsworth is a CFA® charterholder. | N/A | |||||
Jane A. Freeman (Born 1953) | Trustee, since 2015; Chair Liaison, since 2018 | Retired. From 2012 to 2014 and 1999 to 2008, Chief Financial Officer of Scientific Learning Corporation. From 2008 to 2012, Ms. Freeman provided consulting services related to strategic business projects. Prior to 1999, Portfolio Manager at Rockefeller & Co. and Scudder, Stevens & Clark. Board member of the Harding Loevner Funds from 1996 to 2014, serving as both Lead Independent Director and chair of the Audit Committee. Board member of the Russell Exchange Traded Funds Trust from 2011 to 2012 and the chair of the Audit Committee. Ms. Freeman is a Board Member of The Ruth Bancroft Garden(non-profit organization). She is also an inactive Chartered Financial Analyst. | N/A | |||||
Isaiah Harris, Jr.3 (Born 1952) | Trustee, since 2009; Audit Committee Chairman, since 2019 | Retired. Chairman of the Board of CIGNA Corporation since 2009, and Director since 2005. From 2003 to 2011, Director of Deluxe Corporation. Prior thereto, President and CEO of BellSouth Advertising and Publishing Corp. from 2005 to 2007, President and CEO of BellSouth Enterprises from 2004 to 2005 and President of BellSouth Consumer Services from 2000 to 2003. Emeritus member of the Iowa State University Foundation Board of Governors. Emeritus Member of the Advisory Board of Iowa State University School of Business. Advisory Board Member, Palm Harbor Academy (private school). Advisory Board Member, Child Evangelism Fellowship(non-profit). Mr. Harris is a certified public accountant (inactive status). | CIGNA Corporation | |||||
Judith M. Johnson (Born 1949) | Trustee, since 2008; Audit Committee Chairman, from 2009 to 2018 | Retired. Prior thereto, Chief Executive Officer and Chief Investment Officer of Minneapolis Employees Retirement Fund from 1996 to 2008. Ms. Johnson is an attorney, certified public accountant and a certified managerial accountant. | N/A |
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42 | Wells Fargo Diversified Income Builder Fund | Other information (unaudited) |
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company | |||
David F. Larcker (Born 1950) | Trustee, since 2009 | James Irvin Miller Professor of Accounting at the Graduate School of Business, Stanford University, Director of the Corporate Governance Research Initiative and Senior Faculty of The Rock Center for Corporate Governance since 2006. From 2005 to 2008, Professor of Accounting at the Graduate School of Business, Stanford University. Prior thereto, Ernst & Young Professor of Accounting at The Wharton School, University of Pennsylvania from 1985 to 2005. | N/A | |||
Olivia S. Mitchell (Born 1953) | Trustee, since 2006; Nominating and Governance Committee Chairman, since 2018 | International Foundation of Employee Benefit Plans Professor, Wharton School of the University of Pennsylvania since 1993. Director of Wharton’s Pension Research Council and Boettner Center on Pensions & Retirement Research, and Research Associate at the National Bureau of Economic Research. Previously, Cornell University Professor from 1978 to 1993. | N/A | |||
Timothy J. Penny (Born 1951) | Trustee, since 1996; Chairman, since 2018 | President and Chief Executive Officer of Southern Minnesota Initiative Foundation, anon-profit organization, since 2007. Member of the Board of Trustees of NorthStar Education Finance, Inc., anon-profit organization, since 2007. | N/A | |||
James G. Polisson (Born 1959) | Trustee, since 2018 | Retired. Chief Marketing Officer, Source (ETF) UK Services, Ltd, from 2015 to 2017. From 2012 to 2015, Principal of The Polisson Group, LLC, a management consulting, corporate advisory and principal investing company. Chief Executive Officer and Managing Director at Russell Investments, Global Exchange Traded Funds from 2010 to 2012. Managing Director of Barclays Global Investors from 1998 to 2010 and Global Chief Marketing Officer for iShares and Barclays Global Investors from 2000 to 2010. Trustee of the San Francisco Mechanics’ Institute, anon-profit organization, from 2013 to 2015. Board member of the Russell Exchange Traded Fund Trust from 2011 to 2012. Director of Barclays Global Investors Holdings Deutschland GmbH from 2006 to 2009. Mr. Polisson is an attorney and has a retired status with the Massachusetts and District of Columbia Bar Associations. | N/A | |||
Pamela Wheelock (Born 1959) | Trustee, since 2018 | Board member of the Destination Medical Center Economic Development Agency, Rochester, Minnesota since 2019. Chief Operating Officer, Twin Cities Habitat for Humanity from 2017 to 2019. Vice President of University Services, University of Minnesota from 2012 to 2016. Prior thereto, on the Board of Directors, Governance Committee and Finance Committee for the Minnesota Philanthropy Partners (Saint Paul Foundation) from 2012 to 2018, Interim Chief Executive Officer of Blue Cross Blue Shield of Minnesota from 2011 to 2012, Chairman of the Board from 2009 to 2012 and Board Director from 2003 to 2015. Vice President, Leadership and Community Engagement, Bush Foundation, Saint Paul, Minnesota (a private foundation) from 2009 to 2011. Executive Vice President and Chief Financial Officer, Minnesota Sports and Entertainment from 2004 to 2009 and Senior Vice President from 2002 to 2004. Executive Vice President of the Minnesota Wild Foundation from 2004 to 2008. Commissioner of Finance, State of Minnesota, from 1999 to 2002. Currently Board Chair of the Minnesota Wild Foundation since 2010. | N/A |
* | Length of service dates reflect the Trustee’s commencement of service with the Trust’s predecessor entities, where applicable. |
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Other information (unaudited) | Wells Fargo Diversified Income Builder Fund | 43 |
Officers
Name and year of birth | Position held and length of service | Principal occupations during past five years or longer | ||||
Andrew Owen (Born 1960) | President, since 2017 | Executive Vice President of Wells Fargo & Company and Head of Affiliated Managers, Wells Fargo Asset Management, since 2014. In addition, Mr. Owen is currently President, Chief Executive Officer and Director of Wells Fargo Funds Management, LLC since 2017. Prior thereto, Executive Vice President responsible for marketing, investments and product development for Wells Fargo Funds Management, LLC, from 2009 to 2014. | ||||
Jeremy DePalma1 (Born 1974) | Treasurer, since 2012 | Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010 and head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010. | ||||
Alexander Kymn (Born 1973) | Secretary and Chief Legal Officer, since 2018 | Senior Company Counsel of Wells Fargo Bank, N.A. since 2018 (previously Senior Counsel from 2007 to 2018). Vice President of Wells Fargo Funds Management, LLC from 2008 to 2014. | ||||
Michael H. Whitaker (Born 1967) | Chief Compliance Officer, since 2016 | Senior Vice President and Chief Compliance Officer since 2016. Senior Vice President and Chief Compliance Officer for Fidelity Investments from 2007 to 2016. | ||||
David Berardi (Born 1975) | Assistant Treasurer, since 2009 | Vice President of Wells Fargo Funds Management, LLC since 2009. Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010. Manager of Fund Reporting and Control for Evergreen Investment Management Company, LLC from 2004 to 2010. |
1 | Jeremy DePalma acts as Treasurer of 86 funds and Assistant Treasurer of 65 funds in the Fund Complex. |
2 | The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request, by calling1-800-222-8222 or by visiting the website atwfam.com. |
3 | Mr. Harris became Chairman of the Audit Committee effective January 1, 2019. |
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44 | Wells Fargo Diversified Income Builder Fund | Appendix A (unaudited) |
SALES CHARGE REDUCTIONS AND WAIVERS FOR CERTAIN INTERMEDIARIES
Raymond James & Associates, Inc., Raymond James Financial Services & Raymond James affiliates (“Raymond James”)
Effective on or about March 1, 2019, shareholders purchasing Fund shares through a Raymond James platform or account will be eligible only for the following load waivers(front-end sales charge waivers and contingent deferred, orback-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in the Fund’s Prospectus or SAI.
Front-end Sales Load Waivers on Class A shares Available at Raymond James
• | Shares purchased in an investment advisory program. |
• | Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family). |
• | Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James. |
• | Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to afront-end or deferred sales load (known as Rights of Reinstatement). |
• | A shareholder in the fund’s Class C shares will have their shares automatically exchanged at net asset value to Class A shares (or the appropriate share class) of the fund if the shares are no longer subject to a CDSC and the exchange is in line with the policies and procedures of Raymond James. |
CDSC Waivers on Class A and C Shares Available at Raymond James
• | Death or disability of the shareholder. |
• | Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus. |
• | Return of excess contributions from an IRA Account. |
• | Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70½ as described in the Fund’s prospectus. |
• | Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James. |
• | Shares acquired through a right of reinstatement. |
Front-end Load Discounts Available at Raymond James: Breakpoints, and/or Rights of Accumulation
• | Breakpoints as described in the Fund’s Prospectus. |
• | Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets. |
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For more information
More information about Wells Fargo Funds is available free upon request. To obtain literature, please write, visit the Fund’s website, or call:
Wells Fargo Funds
P.O. Box 219967
Kansas City, MO 64121-9967
Website: wfam.com
Individual investors: 1-800-222-8222
Retail investment professionals: 1-888-877-9275
Institutional investment professionals:
1-866-765-0778
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. Before investing, please consider the investment objectives, risks, charges, and expenses of the investment. For a current prospectus and, if available, a summary prospectus, containing this information, call1-800-222-8222 or visit the Fund’s website atwfam.com. Read the prospectus carefully before you invest or send money.
Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management firms owned by Wells Fargo & Company. These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by Wells Fargo Funds Distributor, LLC (a broker-dealer and Member FINRA).
This material is for general informational and educational purposes only and is NOT intended to provide investment advice or a recommendation of any kind—including a recommendation for any specific investment, strategy, or plan.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
© 2019 Wells Fargo Funds Management, LLC. All rights reserved.
![]() | 401600 05-19 SA226/SAR226 03-19 |
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Semi-Annual Report
March 31, 2019
Wells Fargo Index Asset Allocation Fund
Beginning on January 1, 2021, as permitted by new regulations adopted by the Securities and Exchange Commission, paper copies of the Wells Fargo Funds’ annual and semi-annual shareholder reports issued after this date will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website, and you will be notified by mail each time a report is posted and provided with a website address to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-222-8222 or by enrolling at wellsfargo.com/advantagedelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports; if you invest directly with the Fund, you can call 1-800-222-8222. Your election to receive reports in paper will apply to all Wells Fargo Funds held in your account with your financial intermediary or, if you are a direct investor, to all Wells Fargo Funds that you hold.
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Reduce clutter. Save trees.
Sign up for electronic delivery of prospectuses and shareholder reports atwellsfargo.com/advantagedelivery
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The views expressed and any forward-looking statements are as of March 31, 2019, unless otherwise noted, and are those of the Fund managers and/or Wells Fargo Asset Management. Discussions of individual securities, or the markets generally, or any Wells Fargo Fund are not intended as individual recommendations. Future events or results may vary significantly from those expressed in any forward-looking statements. The views expressed are subject to change at any time in response to changing circumstances in the market. Wells Fargo and the Fund disclaim any obligation to publicly update or revise any views expressed or forward-looking statements.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
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2 | Wells Fargo Index Asset Allocation Fund | Letter to shareholders (unaudited) |
Andrew Owen
President
Wells Fargo Funds
December’s S&P 500 Index performance was the worst since 1931.
Dear Shareholder:
We are pleased to offer you this semi-annual report for the Wells Fargo Index Asset Allocation Fund for thesix-month period that ended March 31, 2019. Concerns about interest rate increases in the U.S., trade tensions, and geopolitical events drove equity losses and restrained bond returns during the fourth quarter of 2018. Investor sentiment improved during the first quarter of 2019 thanks to a shift in U.S. Federal Reserve (Fed) policy and consistent, if not spectacular, economic and business growth metrics.
For the period, U.S. stocks, as measured by the S&P 500 Index,1 lost 1.72% and international stocks, as measured by the MSCI ACWI ex USA Index (Net),2 fell 2.33%. Based on the MSCI EM Index (Net),3 emerging market stocks added 1.71%. For bond investors, the Bloomberg Barclays U.S. Aggregate Bond Index4 added 4.63% while the Bloomberg Barclays Global Aggregateex-USD Index5 added 2.44%. The Bloomberg Barclays Municipal Bond Index6 added 4.63%, and the ICE BofAML U.S. High Yield Index7 gained 2.39%.
Conflicting data unsettled markets during the fourth quarter.
November’s U.S. midterm elections shifted control of the House of Representatives from Republicans to Democrats, presaging potential partisan clashes. Third-quarter U.S. gross domestic product was announced at an annualized 3.4% rate, lower than the second-quarter rate. Brexit efforts stalled ahead of the March 2019 deadline. The People’s Bank of China cut reserve requirement ratios, accelerated infrastructure spending, and cut taxes even as the value of the yuan declined to low levels last seen in 2008.
December’s S&P 500 Index performance was the worst since 1931. Globally, fixed-income investments fared better than stocks during the last two months of the year. The Fed increased the federal funds rate by 25 bps in December 2018 to a target range of between 2.25% and 2.50% and softened its outlook for 2019 rate increases.
The market climbs a wall of worry.
Investors entered 2019 with reasons to be concerned. A partial U.S. government shutdown driven by partisan spending and immigration policy disputes extended into January. Investors expected high levels of stock market volatility to continue based on the VIX8.
1 | The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index with each stock’s weight in the index proportionate to its market value. You cannot invest directly in an index. |
2 | The Morgan Stanley Capital International (MSCI) All Country World Index (ACWI) ex USA Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. You cannot invest directly in an index. |
3 | The MSCI Emerging Markets (EM) Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure large- andmid-cap equity market performance of emerging markets. The MSCI EM Index (Net) consists of the following 24 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and the United Arab Emirates. You cannot invest directly in an index. |
4 | The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid adjustable-rate mortgage pass-throughs), asset-backed securities, and commercial mortgage-backed securities. You cannot invest directly in an index. |
5 | The Bloomberg Barclays Global Aggregateex-USD Index is an unmanaged index that provides a broad-based measure of the global investment-grade fixed-income markets excluding the U.S. dollar-denominated debt market. You cannot invest directly in an index. |
6 | The Bloomberg Barclays Municipal Bond Index is an unmanaged index composed of long-termtax-exempt bonds with a minimum credit rating of Baa. You cannot invest directly in an index. |
7 | The ICE BofAML U.S. High Yield Index is a market-capitalization-weighted index of domestic and Yankee high-yield bonds. The index tracks the performance of high-yield securities traded in the U.S. bond market. You cannot invest directly in an index. Copyright 2019. ICE Data Indices, LLC. All rights reserved. |
8 | The Chicago Board Options Exchange Market Volatility Index (VIX) is a popular measure of the implied volatility of S&P 500 Index options. It represents one measure of the market’s expectation of stock market volatility over the next30-day period. You cannot invest directly in an index. |
Table of Contents
Letter to shareholders (unaudited) | Wells Fargo Index Asset Allocation Fund | 3 |
January’s returns tended to support the investing adage that markets climb a wall of worry. The S&P 500 Index gained 8.01% for the month that ended January 31, 2019, its best monthly performance in 30 years. Returns for the MSCI ACWI ex USA Index (Net), the Bloomberg Barclays U.S. Aggregate Bond Index, and the Bloomberg Barclays Global Aggregateex-USD Index also were positive. The Fed indicated that it would pause its program of regular rate increases during 2019 as inflation remained low. Businesses and investors responded positively to the shift in policy.
In February, concerns over slowing global growth reemerged. The Bureau of Economic Analysis announced fourth-quarter 2018 gross domestic product (GDP) grew at an annualized 2.2% rate, down from the 4.2% annualized rate for the second quarter and the 3.4% annualized rate for the third quarter. Analysts attributed the lower growth rate to a slowing housing market and larger trade deficit. The U.S. Department of Labor said that the economy created just 20,000 jobs in February 2019. In a February report, the Bank of England forecast the slowest growth since the financial crisis for 2019. China and the U.S., while putting future tariffs on hold for the time being, continued to wrangle over trade issues.
By the end of March 2019, the combination of dovish Fed sentiment and consistent, if not spectacular, economic and business metrics reinforced investors’ enthusiasm for equity investing. Monthly job creation data regained its momentum. Corporate profits, while lower than 2018’s lofty levels, remained consistent. Inflation rates were relatively low in the U.S., Europe, and Japan. China announced a roughly $300 billion stimulus package through tax and fee cuts intended to reinvigorate economic growth.
Don’t let short-term uncertainty derail long-term investment goals.
Periods of investment uncertainty can present challenges, but experience has taught us that maintaining long-term investment goals can be an effective way to plan for the future. To help you create a sound strategy based on your personal goals and risk tolerance, Wells Fargo Funds offers more than 100 mutual funds spanning a wide range of asset classes and investment styles. Although diversification cannot guarantee an investment profit or prevent losses, we believe it can be an effective way to manage investment risk and potentially smooth out overall portfolio performance. We encourage investors to know their investments and to understand that appropriate levels of risk-taking may unlock opportunities.
Thank you for choosing to invest with Wells Fargo Funds. We appreciate your confidence in us and remain committed to helping you meet your financial needs.
Sincerely,
Andrew Owen
President
Wells Fargo Funds
January’s returns tended to support the investing adage that markets climb a wall of worry.
For further information about your Fund, contact your investment professional, visit our website atwfam.com, or call us directly at1-800-222-8222.
Table of Contents
4 | Wells Fargo Index Asset Allocation Fund | Performance highlights (unaudited) |
Investment objective
The Fund seeks long-term total return, consisting of capital appreciation and current income.
Manager
Wells Fargo Funds Management, LLC
Subadviser
Wells Capital Management Incorporated
Portfolio managers
Kandarp R. Acharya, CFA®‡, FRM
Petros N. Bocray, CFA®‡, FRM
Christian L. Chan, CFA®‡
Average annual total returns (%) as of March 31, 2019
Including sales charge | Excluding sales charge | Expense ratios1 (%) | ||||||||||||||||||||||||||||||||
Inception date | 1 year | 5 year | 10 year | 1 year | 5 year | 10 year | Gross | Net2 | ||||||||||||||||||||||||||
Class A (SFAAX) | 11-13-1986 | 1.26 | 6.66 | 11.79 | 7.42 | 7.94 | 12.46 | 1.08 | 1.08 | |||||||||||||||||||||||||
Class C (WFALX) | 4-1-1998 | 5.64 | 7.14 | 11.62 | 6.64 | 7.14 | 11.62 | 1.83 | 1.83 | |||||||||||||||||||||||||
Administrator Class (WFAIX) | 11-8-1999 | – | �� | – | 7.61 | 8.16 | 12.72 | 1.00 | 0.90 | |||||||||||||||||||||||||
Institutional Class (WFATX)3 | 10-31-2016 | – | – | – | 7.79 | 8.24 | 12.76 | 0.75 | 0.75 | |||||||||||||||||||||||||
Index Asset Allocation Blended Index4 | – | – | – | – | 7.70 | 8.94 | 11.94 | – | – | |||||||||||||||||||||||||
Bloomberg Barclays U.S. Treasury Index5 | – | – | – | – | 4.22 | 2.16 | 2.43 | – | – | |||||||||||||||||||||||||
S&P 500 Index6 | – | – | – | – | 9.50 | 10.91 | 15.92 | – | – |
Figures quoted represent past performance, which is no guarantee of future results, and do not reflect taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance shown without sales charges would be lower if sales charges were reflected. Current performance may be lower or higher than the performance data quoted, which assumes the reinvestment of dividends and capital gains. Currentmonth-end performance is available on the Fund’s website, wfam.com.
Index returns do not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses, or any taxes. It is not possible to invest directly in an index.
For Class A shares, the maximumfront-end sales charge is 5.75%. For Class C shares, the maximum contingent deferred sales charge is 1.00%. Performance including a contingent deferred sales charge assumes the sales charge for the corresponding time period. Administrator Class and Institutional Class shares are sold without afront-end sales charge or contingent deferred sales charge.
Balanced funds may invest in stocks and bonds. Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. Bond values fluctuate in response to the financial condition of individual issuers, general market and economic conditions, and changes in interest rates. Changes in market conditions and government policies may lead to periods of heightened volatility in the bond market and reduced liquidity for certain bonds held by the Fund. In general, when interest rates rise, bond values fall and investors may lose principal value. Interest-rate changes and their impact on the Fund and its share price can be sudden and unpredictable. The use of derivatives may reduce returns and/or increase volatility. Consult the Fund’s prospectus for additional information on these and other risks.
Please see footnotes on page 5.
Table of Contents
Performance highlights (unaudited) | Wells Fargo Index Asset Allocation Fund | 5 |
Ten largest holdings (%) as of March 31, 20197 | ||||
Microsoft Corporation | 2.29 | |||
Apple Incorporated | 2.12 | |||
Amazon.com Incorporated | 1.85 | |||
Facebook Incorporated Class A | 1.00 | |||
Berkshire Hathaway Incorporated Class B | 0.99 | |||
Johnson & Johnson | 0.94 | |||
Alphabet Incorporated Class C | 0.91 | |||
Alphabet Incorporated Class A | 0.89 | |||
Exxon Mobil Corporation | 0.87 | |||
JPMorgan Chase & Company | 0.84 |
Sector distribution as of March 31, 20198 |
|
Neutral target allocation |
|
Effective allocation as of March 31, 20199 |
![]() |
‡ | CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute. |
1 | Reflects the expense ratios as stated in the most recent prospectuses. The expense ratios shown are subject to change and may differ from the annualized expense ratios shown in the financial highlights of this report. |
2 | The manager has contractually committed through January 31, 2020, to waive fees and/or reimburse expenses to the extent necessary to cap the expenses of each class after fee waivers at the amounts shown. Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the expense cap. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. Without this cap, the Fund’s returns would have been lower. The expense ratio paid by an investor is the net expense ratio (the total annual fund operating expenses after fee waivers) as stated in the prospectuses. |
3 | Historical performance shown for the Institutional Class shares prior to their inception reflects the performance of the Administrator Class shares, and is not adjusted to reflect the expenses of the Institutional Class shares. If these expenses had been included, returns for Institutional Class shares would be higher. |
4 | Source: Wells Fargo Funds Management, LLC. Effective April 1, 2015, the Index Asset Allocation Blended Index is composed 60% of the S&P 500 Index and 40% of the Bloomberg Barclays U.S. Treasury Index. Prior to April 1, 2015, the Index Asset Allocation Blended Index was composed 60% of the S&P 500 Index and 40% of the Bloomberg Barclays U.S. Treasury 20+ Year Index. You cannot invest directly in an index. |
5 | The Bloomberg Barclays U.S. Treasury Index is an unmanaged index of prices of U.S. Treasury bonds with maturities of 1 to 30 years. You cannot invest directly in an index. |
6 | The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value weighted index with each stock’s weight in the index proportionate to its market value. You cannot invest directly in an index. |
7 | The ten largest holdings, excluding cash, cash equivalents and any money market funds, are calculated based on the value of the investments divided by total net assets of the Fund. Holdings are subject to change and may have changed since the date specified. |
8 | Amounts are calculated based on the total long-term investments of the Fund. These amounts are subject to change and may have changed since the date specified. |
9 | Effective allocation includes the effect of any tactical futures overlay that may be in place. These amounts are subject to change and may have changed since the date specified. |
Table of Contents
6 | Wells Fargo Index Asset Allocation Fund | Fund expenses (unaudited) |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (if any) on redemptions and (2) ongoing costs, including management fees, distribution(12b-1) and/or shareholder servicing fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of thesix-month period and held for the entire period from October 1, 2018 to March 31, 2019.
Actual expenses
The “Actual” line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the “Actual” line under the heading entitled “Expenses paid during period” for your applicable class of shares to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The “Hypothetical” line of the table below provides information about hypothetical account values and hypothetical
expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and contingent deferred sales charges. Therefore, the “Hypothetical” line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 10-1-2018 | Ending account value 3-31-2019 | Expenses paid during the period¹ | Annualized net expense ratio | |||||||||||||
Class A | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,004.24 | $ | 5.40 | 1.08 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,019.55 | $ | 5.44 | 1.08 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,000.55 | $ | 9.13 | 1.83 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,015.81 | $ | 9.20 | 1.83 | % | ||||||||
Administrator Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,005.17 | $ | 4.50 | 0.90 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.44 | $ | 4.53 | 0.90 | % | ||||||||
Institutional Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,006.18 | $ | 3.75 | 0.75 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.19 | $ | 3.78 | 0.75 | % |
1 | Expenses paid is equal to the annualized net expense ratio of each class multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year (to reflect theone-half-year period). |
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Index Asset Allocation Fund | 7 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Agency Securities: 0.01% | ||||||||||||||||
FNMA Series2002-T1 Class A4 | 9.50 | % | 11-25-2031 | $ | 41,167 | $ | 48,149 | |||||||||
|
| |||||||||||||||
Total Agency Securities (Cost $41,167) | 48,149 | |||||||||||||||
|
| |||||||||||||||
Shares | ||||||||||||||||
Common Stocks: 59.65% | ||||||||||||||||
Communication Services: 6.02% | ||||||||||||||||
Diversified Telecommunication Services: 1.22% | ||||||||||||||||
AT&T Incorporated | 238,418 | 7,476,788 | ||||||||||||||
CenturyLink Incorporated | 31,181 | 373,860 | ||||||||||||||
Verizon Communications Incorporated | 135,015 | 7,983,433 | ||||||||||||||
15,834,081 | ||||||||||||||||
|
| |||||||||||||||
Entertainment: 1.10% | ||||||||||||||||
Activision Blizzard Incorporated | 24,704 | 1,124,773 | ||||||||||||||
Electronic Arts Incorporated † | 9,719 | 987,742 | ||||||||||||||
Netflix Incorporated † | 14,150 | 5,045,324 | ||||||||||||||
Take-Two Interactive Software Incorporated † | 3,660 | 345,394 | ||||||||||||||
The Walt Disney Company | 57,120 | 6,342,034 | ||||||||||||||
Viacom Incorporated Class B | 11,535 | 323,787 | ||||||||||||||
14,169,054 | ||||||||||||||||
|
| |||||||||||||||
Interactive Media & Services: 2.87% | ||||||||||||||||
Alphabet Incorporated Class A † | 9,729 | 11,449,963 | ||||||||||||||
Alphabet Incorporated Class C † | 9,989 | 11,720,194 | ||||||||||||||
Facebook Incorporated Class A † | 77,639 | 12,941,645 | ||||||||||||||
TripAdvisor Incorporated † | 3,342 | 171,946 | ||||||||||||||
Twitter Incorporated † | 23,539 | 773,962 | ||||||||||||||
37,057,710 | ||||||||||||||||
|
| |||||||||||||||
Media: 0.83% | ||||||||||||||||
CBS Corporation Class B | 11,332 | 538,610 | ||||||||||||||
Charter Communications Incorporated Class A † | 5,652 | 1,960,735 | ||||||||||||||
Comcast Corporation Class A | 147,464 | 5,895,611 | ||||||||||||||
Discovery Communications Incorporated Class A Ǡ | 5,100 | 137,802 | ||||||||||||||
Discovery Communications Incorporated Class C † | 11,701 | 297,439 | ||||||||||||||
DISH Network Corporation Class A † | 7,515 | 238,150 | ||||||||||||||
Fox Corporation Class A † | 11,422 | 419,302 | ||||||||||||||
Fox Corporation Class B † | 5,263 | 188,836 | ||||||||||||||
Interpublic Group of Companies Incorporated | 12,524 | 263,129 | ||||||||||||||
News Corporation Class A | 12,499 | 155,488 | ||||||||||||||
News Corporation Class B | 4,026 | 50,285 | ||||||||||||||
Omnicom Group Incorporated | 7,281 | 531,440 | ||||||||||||||
10,676,827 | ||||||||||||||||
|
| |||||||||||||||
Consumer Discretionary: 6.04% | ||||||||||||||||
Auto Components: 0.07% | ||||||||||||||||
Aptiv plc | 8,500 | 675,665 | ||||||||||||||
BorgWarner Incorporated | 6,780 | 260,420 | ||||||||||||||
936,085 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
8 | Wells Fargo Index Asset Allocation Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Automobiles: 0.22% | ||||||||||||||||
Ford Motor Company | 128,598 | $ | 1,129,090 | |||||||||||||
General Motors Company | 42,831 | 1,589,030 | ||||||||||||||
Harley-Davidson Incorporated | 5,223 | 186,252 | ||||||||||||||
2,904,372 | ||||||||||||||||
|
| |||||||||||||||
Distributors: 0.06% | ||||||||||||||||
Genuine Parts Company | 4,762 | 533,487 | ||||||||||||||
LKQ Corporation † | 10,262 | 291,236 | ||||||||||||||
824,723 | ||||||||||||||||
|
| |||||||||||||||
Diversified Consumer Services: 0.01% | ||||||||||||||||
H&R Block Incorporated | 6,734 | 161,212 | ||||||||||||||
|
| |||||||||||||||
Hotels, Restaurants & Leisure: 1.10% | ||||||||||||||||
Carnival Corporation | 12,906 | 654,592 | ||||||||||||||
Chipotle Mexican Grill Incorporated † | 795 | 564,696 | ||||||||||||||
Darden Restaurants Incorporated | 4,027 | 489,160 | ||||||||||||||
Hilton Worldwide Holdings Incorporated | 9,553 | 793,950 | ||||||||||||||
Marriott International Incorporated Class A | 9,182 | 1,148,576 | ||||||||||||||
McDonald’s Corporation | 24,936 | 4,735,346 | ||||||||||||||
MGM Resorts International | 16,608 | 426,161 | ||||||||||||||
Norwegian Cruise Line Holdings Limited † | 7,104 | 390,436 | ||||||||||||||
Royal Caribbean Cruises Limited | 5,582 | 639,809 | ||||||||||||||
Starbucks Corporation | 40,613 | 3,019,170 | ||||||||||||||
Wynn Resorts Limited | 3,163 | 377,409 | ||||||||||||||
Yum! Brands Incorporated | 9,992 | 997,302 | ||||||||||||||
14,236,607 | ||||||||||||||||
|
| |||||||||||||||
Household Durables: 0.19% | ||||||||||||||||
D.R. Horton Incorporated | 11,143 | 461,097 | ||||||||||||||
Garmin Limited | 3,960 | 341,946 | ||||||||||||||
Leggett & Platt Incorporated | 4,280 | 180,702 | ||||||||||||||
Lennar Corporation Class A | 9,391 | 461,004 | ||||||||||||||
Mohawk Industries Incorporated † | 2,008 | 253,309 | ||||||||||||||
Newell Rubbermaid Incorporated | 12,693 | 194,711 | ||||||||||||||
Pulte Group Incorporated | 8,357 | 233,662 | ||||||||||||||
Whirlpool Corporation | 2,081 | 276,544 | ||||||||||||||
2,402,975 | ||||||||||||||||
|
| |||||||||||||||
Internet & Direct Marketing Retail: 2.16% | ||||||||||||||||
Amazon.com Incorporated † | 13,392 | 23,847,804 | ||||||||||||||
Booking Holdings Incorporated † | 1,461 | 2,549,314 | ||||||||||||||
eBay Incorporated | 28,024 | 1,040,811 | ||||||||||||||
Expedia Group Incorporated | 3,800 | 452,200 | ||||||||||||||
27,890,129 | ||||||||||||||||
|
| |||||||||||||||
Leisure Products: 0.04% | ||||||||||||||||
Hasbro Incorporated | 3,783 | 321,631 | ||||||||||||||
Mattel Incorporated Ǡ | 11,273 | 146,549 | ||||||||||||||
468,180 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Index Asset Allocation Fund | 9 |
Security name | Shares | Value | ||||||||||||||
Multiline Retail: 0.31% | ||||||||||||||||
Dollar General Corporation | 8,545 | $ | 1,019,419 | |||||||||||||
Dollar Tree Incorporated † | 7,739 | 812,905 | ||||||||||||||
Kohl’s Corporation | 5,363 | 368,814 | ||||||||||||||
Macy’s Incorporated | 9,993 | 240,132 | ||||||||||||||
Nordstrom Incorporated | 3,467 | 153,865 | ||||||||||||||
Target Corporation | 17,041 | 1,367,711 | ||||||||||||||
3,962,846 | ||||||||||||||||
|
| |||||||||||||||
Specialty Retail: 1.42% |
| |||||||||||||||
Advance Auto Parts Incorporated | 2,343 | 399,552 | ||||||||||||||
AutoZone Incorporated † | 812 | 831,585 | ||||||||||||||
Best Buy Company Incorporated | 7,597 | 539,843 | ||||||||||||||
CarMax Incorporated † | 5,552 | 387,530 | ||||||||||||||
Foot Locker Incorporated | 3,672 | 222,523 | ||||||||||||||
L Brands Incorporated | 7,474 | 206,133 | ||||||||||||||
Lowe’s Companies Incorporated | 26,036 | 2,850,161 | ||||||||||||||
O’Reilly Automotive Incorporated † | 2,554 | 991,718 | ||||||||||||||
Ross Stores Incorporated | 12,109 | 1,127,348 | ||||||||||||||
The Gap Incorporated | 6,970 | 182,475 | ||||||||||||||
The Home Depot Incorporated | 36,688 | 7,040,060 | ||||||||||||||
The TJX Companies Incorporated | 40,286 | 2,143,618 | ||||||||||||||
Tiffany & Company | 3,538 | 373,436 | ||||||||||||||
Tractor Supply Company | 3,951 | 386,250 | ||||||||||||||
ULTA Beauty Incorporated † | 1,834 | 639,571 | ||||||||||||||
18,321,803 | ||||||||||||||||
|
| |||||||||||||||
Textiles, Apparel & Luxury Goods: 0.46% |
| |||||||||||||||
Capri Holdings Limited † | 4,966 | 227,195 | ||||||||||||||
HanesBrands Incorporated | 11,784 | 210,698 | ||||||||||||||
Nike Incorporated Class B | 40,978 | 3,450,757 | ||||||||||||||
PVH Corporation | 2,464 | 300,485 | ||||||||||||||
Ralph Lauren Corporation | 1,713 | 222,142 | ||||||||||||||
Tapestry Incorporated | 9,446 | 306,901 | ||||||||||||||
Under Armour Incorporated Class A Ǡ | 6,097 | 128,891 | ||||||||||||||
Under Armour Incorporated Class C † | 6,255 | 118,032 | ||||||||||||||
VF Corporation | 10,578 | 919,334 | ||||||||||||||
5,884,435 | ||||||||||||||||
|
| |||||||||||||||
Consumer Staples: 4.37% |
| |||||||||||||||
Beverages: 1.07% |
| |||||||||||||||
Brown-Forman Corporation Class B | 5,419 | 286,015 | ||||||||||||||
Constellation Brands Incorporated Class A | 5,454 | 956,250 | ||||||||||||||
Molson Coors Brewing Company Class B | 6,137 | 366,072 | ||||||||||||||
Monster Beverage Corporation † | 12,840 | 700,807 | ||||||||||||||
PepsiCo Incorporated | 45,854 | 5,619,408 | ||||||||||||||
The Coca-Cola Company | 125,592 | 5,885,241 | ||||||||||||||
13,813,793 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
10 | Wells Fargo Index Asset Allocation Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Food & Staples Retailing: 0.88% |
| |||||||||||||||
Costco Wholesale Corporation | 14,368 | $ | 3,479,068 | |||||||||||||
Sysco Corporation | 15,411 | 1,028,838 | ||||||||||||||
The Kroger Company | 26,109 | 642,281 | ||||||||||||||
Wal-Mart Stores Incorporated | 46,366 | 4,522,076 | ||||||||||||||
Walgreens Boots Alliance Incorporated | 26,078 | 1,649,955 | ||||||||||||||
11,322,218 | ||||||||||||||||
|
| |||||||||||||||
Food Products: 0.69% |
| |||||||||||||||
Archer Daniels Midland Company | 18,309 | 789,667 | ||||||||||||||
Campbell Soup Company | 6,270 | 239,075 | ||||||||||||||
ConAgra Foods Incorporated | 15,743 | 436,711 | ||||||||||||||
General Mills Incorporated | 19,487 | 1,008,452 | ||||||||||||||
Hormel Foods Corporation « | 8,874 | 397,200 | ||||||||||||||
Kellogg Company | 8,210 | 471,090 | ||||||||||||||
Lamb Weston Holdings Incorporated | 4,793 | 359,187 | ||||||||||||||
McCormick & Company Incorporated | 3,983 | 599,959 | ||||||||||||||
Mondelez International Incorporated Class A | 47,051 | 2,348,786 | ||||||||||||||
The Hershey Company | 4,538 | 521,099 | ||||||||||||||
The J.M. Smucker Company | 3,701 | 431,167 | ||||||||||||||
The Kraft Heinz Company | 20,308 | 663,056 | ||||||||||||||
Tyson Foods Incorporated Class A | 9,636 | 669,027 | ||||||||||||||
8,934,476 | ||||||||||||||||
|
| |||||||||||||||
Household Products: 1.01% |
| |||||||||||||||
Church & Dwight Company Incorporated | 7,988 | 568,985 | ||||||||||||||
Colgate-Palmolive Company | 28,065 | 1,923,575 | ||||||||||||||
Kimberly-Clark Corporation | 11,218 | 1,389,910 | ||||||||||||||
The Clorox Company | 4,178 | 670,402 | ||||||||||||||
The Procter & Gamble Company | 81,560 | 8,486,318 | ||||||||||||||
13,039,190 | ||||||||||||||||
|
| |||||||||||||||
Personal Products: 0.10% |
| |||||||||||||||
Coty Incorporated Class A | 14,696 | 169,004 | ||||||||||||||
The Estee Lauder Companies Incorporated Class A | 7,120 | 1,178,716 | ||||||||||||||
1,347,720 | ||||||||||||||||
|
| |||||||||||||||
Tobacco: 0.62% |
| |||||||||||||||
Altria Group Incorporated | 61,158 | 3,512,304 | ||||||||||||||
Philip Morris International Incorporated | 50,613 | 4,473,683 | ||||||||||||||
7,985,987 | ||||||||||||||||
|
| |||||||||||||||
Energy: 3.24% |
| |||||||||||||||
Energy Equipment & Services: 0.32% |
| |||||||||||||||
Baker Hughes Incorporated | 16,751 | 464,338 | ||||||||||||||
Halliburton Company | 28,345 | 830,509 | ||||||||||||||
Helmerich & Payne Incorporated | 3,553 | 197,405 | ||||||||||||||
National Oilwell Varco Incorporated | 12,481 | 332,494 | ||||||||||||||
Schlumberger Limited | 45,047 | 1,962,698 | ||||||||||||||
TechnipFMC plc | 13,875 | 326,340 | ||||||||||||||
4,113,784 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Index Asset Allocation Fund | 11 |
Security name | Shares | Value | ||||||||||||||
Oil, Gas & Consumable Fuels: 2.92% |
| |||||||||||||||
Anadarko Petroleum Corporation | 16,248 | $ | 738,959 | |||||||||||||
Apache Corporation | 12,252 | 424,654 | ||||||||||||||
Cabot Oil & Gas Corporation | 13,777 | 359,580 | ||||||||||||||
Chevron Corporation | 61,985 | 7,635,312 | ||||||||||||||
Cimarex Energy Company | 3,315 | 231,719 | ||||||||||||||
Concho Resources Incorporated | 6,531 | 724,680 | ||||||||||||||
ConocoPhillips | 36,838 | 2,458,568 | ||||||||||||||
Devon Energy Corporation | 14,280 | 450,677 | ||||||||||||||
Diamondback Energy Incorporated | 5,020 | 509,681 | ||||||||||||||
EOG Resources Incorporated | 18,865 | 1,795,571 | ||||||||||||||
Exxon Mobil Corporation | 138,302 | 11,174,802 | ||||||||||||||
Hess Corporation | 8,305 | 500,210 | ||||||||||||||
HollyFrontier Corporation | 5,127 | 252,607 | ||||||||||||||
Kinder Morgan Incorporated | 63,346 | 1,267,553 | ||||||||||||||
Marathon Oil Corporation | 26,650 | 445,322 | ||||||||||||||
Marathon Petroleum Corporation | 22,044 | 1,319,333 | ||||||||||||||
Noble Energy Incorporated | 15,737 | 389,176 | ||||||||||||||
Occidental Petroleum Corporation | 24,446 | 1,618,325 | ||||||||||||||
ONEOK Incorporated | 13,399 | 935,786 | ||||||||||||||
Phillips 66 Company | 13,715 | 1,305,257 | ||||||||||||||
Pioneer Natural Resources Company | 5,488 | 835,713 | ||||||||||||||
The Williams Companies Incorporated | 39,362 | 1,130,480 | ||||||||||||||
Valero Energy Corporation | 13,670 | 1,159,626 | ||||||||||||||
37,663,591 | ||||||||||||||||
|
| |||||||||||||||
Financials: 7.60% |
| |||||||||||||||
Banks: 3.22% |
| |||||||||||||||
Bank of America Corporation | 293,964 | 8,110,467 | ||||||||||||||
BB&T Corporation | 24,997 | 1,163,110 | ||||||||||||||
Citigroup Incorporated | 77,016 | 4,791,936 | ||||||||||||||
Citizens Financial Group Incorporated | 15,083 | 490,198 | ||||||||||||||
Comerica Incorporated | 5,226 | 383,170 | ||||||||||||||
Fifth Third Bancorp | 25,290 | 637,814 | ||||||||||||||
First Republic Bank | 5,397 | 542,183 | ||||||||||||||
Huntington Bancshares Incorporated | 34,393 | 436,103 | ||||||||||||||
JPMorgan Chase & Company | 107,165 | 10,848,313 | ||||||||||||||
KeyCorp | 33,180 | 522,585 | ||||||||||||||
M&T Bank Corporation | 4,539 | 712,714 | ||||||||||||||
People’s United Financial Incorporated | 12,412 | 204,053 | ||||||||||||||
PNC Financial Services Group Incorporated | 14,861 | 1,822,850 | ||||||||||||||
Regions Financial Corporation | 33,522 | 474,336 | ||||||||||||||
SunTrust Banks Incorporated | 14,499 | 859,066 | ||||||||||||||
SVB Financial Group † | 1,729 | 384,460 | ||||||||||||||
US Bancorp | 49,171 | 2,369,550 | ||||||||||||||
Wells Fargo & Company (l) | 134,338 | 6,491,212 | ||||||||||||||
Zions Bancorporation | 6,108 | 277,364 | ||||||||||||||
41,521,484 | ||||||||||||||||
|
| |||||||||||||||
Capital Markets: 1.57% |
| |||||||||||||||
Affiliated Managers Group Incorporated | 1,704 | 182,515 | ||||||||||||||
Ameriprise Financial Incorporated | 4,431 | 567,611 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
12 | Wells Fargo Index Asset Allocation Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Capital Markets(continued) |
| |||||||||||||||
Bank of New York Mellon Corporation | 28,800 | $ | 1,452,384 | |||||||||||||
BlackRock Incorporated | 3,978 | 1,700,078 | ||||||||||||||
CBOE Holdings Incorporated | 3,681 | 351,315 | ||||||||||||||
CME Group Incorporated | 11,655 | 1,918,180 | ||||||||||||||
E*TRADE Financial Corporation | 8,038 | 373,204 | ||||||||||||||
Franklin Resources Incorporated | 9,696 | 321,325 | ||||||||||||||
Intercontinental Exchange Incorporated | 18,570 | 1,413,920 | ||||||||||||||
Invesco Limited | 13,030 | 251,609 | ||||||||||||||
Moody’s Corporation | 5,433 | 983,862 | ||||||||||||||
Morgan Stanley | 42,493 | 1,793,205 | ||||||||||||||
MSCI Incorporated | 2,766 | 549,991 | ||||||||||||||
Northern Trust Corporation | 7,159 | 647,245 | ||||||||||||||
Raymond James Financial Incorporated | 4,144 | 333,219 | ||||||||||||||
S&P Global Incorporated | 8,119 | 1,709,455 | ||||||||||||||
State Street Corporation | 12,422 | 817,492 | ||||||||||||||
T. Rowe Price Group Incorporated | 7,719 | 772,826 | ||||||||||||||
The Charles Schwab Corporation | 38,721 | 1,655,710 | ||||||||||||||
The Goldman Sachs Group Incorporated | 11,185 | 2,147,408 | ||||||||||||||
The NASDAQ OMX Group Incorporated | 3,788 | 331,412 | ||||||||||||||
20,273,966 | ||||||||||||||||
|
| |||||||||||||||
Consumer Finance: 0.40% |
| |||||||||||||||
American Express Company | 22,520 | 2,461,436 | ||||||||||||||
Capital One Financial Corporation | 15,345 | 1,253,533 | ||||||||||||||
Discover Financial Services | 10,748 | 764,828 | ||||||||||||||
Synchrony Financial | 21,430 | 683,617 | ||||||||||||||
5,163,414 | ||||||||||||||||
|
| |||||||||||||||
Diversified Financial Services: 1.00% |
| |||||||||||||||
Berkshire Hathaway Incorporated Class B † | 63,587 | 12,773,992 | ||||||||||||||
Jefferies Financial Group Incorporated | 8,602 | 161,632 | ||||||||||||||
12,935,624 | ||||||||||||||||
|
| |||||||||||||||
Insurance: 1.41% |
| |||||||||||||||
AFLAC Incorporated | 24,507 | 1,225,350 | ||||||||||||||
American International Group Incorporated | 28,403 | 1,223,033 | ||||||||||||||
Aon plc | 7,851 | 1,340,166 | ||||||||||||||
Arthur J. Gallagher & Company | 5,997 | 468,366 | ||||||||||||||
Assurant Incorporated | 2,017 | 191,433 | ||||||||||||||
Brighthouse Financial Incorporated † | 3,819 | 138,592 | ||||||||||||||
Chubb Limited | 14,954 | 2,094,756 | ||||||||||||||
Cincinnati Financial Corporation | 4,943 | 424,604 | ||||||||||||||
Everest Reinsurance Group Limited | 1,326 | 286,363 | ||||||||||||||
Lincoln National Corporation | 6,653 | 390,531 | ||||||||||||||
Loews Corporation | 8,954 | 429,165 | ||||||||||||||
Marsh & McLennan Companies Incorporated | 16,508 | 1,550,101 | ||||||||||||||
MetLife Incorporated | 31,257 | 1,330,610 | ||||||||||||||
Principal Financial Group Incorporated | 8,470 | 425,109 | ||||||||||||||
Prudential Financial Incorporated | 13,369 | 1,228,344 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Index Asset Allocation Fund | 13 |
Security name | Shares | Value | ||||||||||||||
Insurance(continued) |
| |||||||||||||||
The Allstate Corporation | 10,822 | $ | 1,019,216 | |||||||||||||
The Hartford Financial Services Group Incorporated | 11,756 | 584,508 | ||||||||||||||
The Progressive Corporation | 19,101 | 1,376,991 | ||||||||||||||
The Travelers Companies Incorporated | 8,590 | 1,178,204 | ||||||||||||||
Torchmark Corporation | 3,312 | 271,418 | ||||||||||||||
Unum Group | 7,014 | 237,284 | ||||||||||||||
Willis Towers Watson plc | 4,223 | 741,770 | ||||||||||||||
18,155,914 | ||||||||||||||||
|
| |||||||||||||||
Health Care: 8.69% |
| |||||||||||||||
Biotechnology: 1.41% |
| |||||||||||||||
AbbVie Incorporated | 48,070 | 3,873,961 | ||||||||||||||
Alexion Pharmaceuticals Incorporated † | 7,369 | 996,141 | ||||||||||||||
Amgen Incorporated | 20,258 | 3,848,615 | ||||||||||||||
Biogen Incorporated † | 6,486 | 1,533,161 | ||||||||||||||
Celgene Corporation † | 22,902 | 2,160,575 | ||||||||||||||
Gilead Sciences Incorporated | 41,527 | 2,699,670 | ||||||||||||||
Incyte Corporation † | 5,811 | 499,804 | ||||||||||||||
Regeneron Pharmaceuticals Incorporated † | 2,562 | 1,052,008 | ||||||||||||||
Vertex Pharmaceuticals Incorporated † | 8,388 | 1,542,973 | ||||||||||||||
18,206,908 | ||||||||||||||||
|
| |||||||||||||||
Health Care Equipment & Supplies: 2.09% |
| |||||||||||||||
Abbott Laboratories | 57,232 | 4,575,126 | ||||||||||||||
ABIOMED Incorporated † | 1,432 | 408,965 | ||||||||||||||
Align Technology Incorporated † | 2,366 | 672,725 | ||||||||||||||
Baxter International Incorporated | 15,568 | 1,265,834 | ||||||||||||||
Becton Dickinson & Company | 8,787 | 2,194,378 | ||||||||||||||
Boston Scientific Corporation † | 44,846 | 1,721,189 | ||||||||||||||
Danaher Corporation | 20,470 | 2,702,449 | ||||||||||||||
Dentsply Sirona Incorporated | 7,254 | 359,726 | ||||||||||||||
Edwards Lifesciences Corporation † | 6,773 | 1,295,878 | ||||||||||||||
Hologic Incorporated † | 8,724 | 422,242 | ||||||||||||||
IDEXX Laboratories Incorporated † | 2,798 | 625,633 | ||||||||||||||
Intuitive Surgical Incorporated † | 3,725 | 2,125,411 | ||||||||||||||
Medtronic plc | 43,657 | 3,976,280 | ||||||||||||||
ResMed Incorporated | 4,663 | 484,812 | ||||||||||||||
Stryker Corporation | 10,079 | 1,990,804 | ||||||||||||||
Teleflex Incorporated | 1,508 | 455,657 | ||||||||||||||
The Cooper Companies Incorporated | 1,604 | 475,057 | ||||||||||||||
Varian Medical Systems Incorporated † | 2,953 | 418,499 | ||||||||||||||
Zimmer Biomet Holdings Incorporated | 6,650 | 849,205 | ||||||||||||||
27,019,870 | ||||||||||||||||
|
| |||||||||||||||
Health Care Providers & Services: 1.64% |
| |||||||||||||||
AmerisourceBergen Corporation | 5,069 | 403,087 | ||||||||||||||
Anthem Incorporated | 8,353 | 2,397,144 | ||||||||||||||
Cardinal Health Incorporated | 9,693 | 466,718 | ||||||||||||||
Centene Corporation † | 13,407 | 711,912 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
14 | Wells Fargo Index Asset Allocation Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Health Care Providers & Services(continued) |
| |||||||||||||||
Cigna Corporation | 12,344 | $ | 1,985,162 | |||||||||||||
CVS Health Corporation | 42,145 | 2,272,880 | ||||||||||||||
DaVita HealthCare Partners Incorporated † | 4,122 | 223,783 | ||||||||||||||
HCA Holdings Incorporated | 8,640 | 1,126,483 | ||||||||||||||
Henry Schein Incorporated | 4,947 | 297,364 | ||||||||||||||
Humana Incorporated | 4,407 | 1,172,262 | ||||||||||||||
Laboratory Corporation of America Holdings † | 3,205 | 490,301 | ||||||||||||||
McKesson Corporation | 6,247 | 731,274 | ||||||||||||||
Quest Diagnostics Incorporated | 4,376 | 393,490 | ||||||||||||||
UnitedHealth Group Incorporated | 31,203 | 7,715,254 | ||||||||||||||
Universal Health Services Incorporated Class B | 2,719 | 363,721 | ||||||||||||||
WellCare Health Plans Incorporated † | 1,614 | 435,377 | ||||||||||||||
21,186,212 | ||||||||||||||||
|
| |||||||||||||||
Health Care Technology: 0.05% |
| |||||||||||||||
Cerner Corporation † | 10,546 | 603,337 | ||||||||||||||
|
| |||||||||||||||
Life Sciences Tools & Services: 0.64% |
| |||||||||||||||
Agilent Technologies Incorporated | 10,365 | 833,139 | ||||||||||||||
Illumina Incorporated † | 4,802 | 1,491,933 | ||||||||||||||
IQVIA Holdings Incorporated † | 5,167 | 743,273 | ||||||||||||||
Mettler-Toledo International Incorporated † | 809 | 584,907 | ||||||||||||||
PerkinElmer Incorporated | 3,618 | 348,630 | ||||||||||||||
Thermo Fisher Scientific Incorporated | 13,156 | 3,601,060 | ||||||||||||||
Waters Corporation † | 2,334 | 587,491 | ||||||||||||||
8,190,433 | ||||||||||||||||
|
| |||||||||||||||
Pharmaceuticals: 2.86% |
| |||||||||||||||
Allergan plc | 10,201 | 1,493,528 | ||||||||||||||
Bristol-Myers Squibb Company | 53,379 | 2,546,712 | ||||||||||||||
Eli Lilly & Company | 28,108 | 3,647,294 | ||||||||||||||
Johnson & Johnson | 86,851 | 12,140,901 | ||||||||||||||
Merck & Company Incorporated | 84,138 | 6,997,757 | ||||||||||||||
Mylan NV † | 16,786 | 475,715 | ||||||||||||||
Nektar Therapeutics † | 5,676 | 190,714 | ||||||||||||||
Perrigo Company plc | 4,087 | 196,830 | ||||||||||||||
Pfizer Incorporated | 180,899 | 7,682,781 | ||||||||||||||
Zoetis Incorporated | 15,609 | 1,571,358 | ||||||||||||||
36,943,590 | ||||||||||||||||
|
| |||||||||||||||
Industrials: 5.66% |
| |||||||||||||||
Aerospace & Defense: 1.53% |
| |||||||||||||||
Arconic Incorporated | 14,081 | 269,088 | ||||||||||||||
General Dynamics Corporation | 8,810 | 1,491,357 | ||||||||||||||
Harris Corporation | 3,842 | 613,606 | ||||||||||||||
Huntington Ingalls Industries Incorporated | 1,354 | 280,549 | ||||||||||||||
L-3 Technologies Incorporated | 2,588 | 534,086 | ||||||||||||||
Lockheed Martin Corporation | 8,005 | 2,402,781 | ||||||||||||||
Northrop Grumman Corporation | 5,514 | 1,486,574 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Index Asset Allocation Fund | 15 |
Security name | Shares | Value | ||||||||||||||
Aerospace & Defense(continued) |
| |||||||||||||||
Raytheon Company | 9,188 | $ | 1,672,951 | |||||||||||||
Textron Incorporated | 7,644 | 387,245 | ||||||||||||||
The Boeing Company | 17,108 | 6,525,333 | ||||||||||||||
TransDigm Group Incorporated † | 1,589 | 721,390 | ||||||||||||||
United Technologies Corporation | 26,428 | 3,406,305 | ||||||||||||||
19,791,265 | ||||||||||||||||
|
| |||||||||||||||
Air Freight & Logistics: 0.37% |
| |||||||||||||||
C.H. Robinson Worldwide Incorporated | 4,490 | 390,585 | ||||||||||||||
Expeditors International of Washington Incorporated | 5,598 | 424,888 | ||||||||||||||
FedEx Corporation | 7,883 | 1,430,055 | ||||||||||||||
United Parcel Service Incorporated Class B | 22,712 | 2,537,839 | ||||||||||||||
4,783,367 | ||||||||||||||||
|
| |||||||||||||||
Airlines: 0.24% |
| |||||||||||||||
Alaska Air Group Incorporated | 4,011 | 225,097 | ||||||||||||||
American Airlines Group Incorporated | 13,007 | 413,102 | ||||||||||||||
Delta Air Lines Incorporated | 20,117 | 1,039,043 | ||||||||||||||
Southwest Airlines Company | 16,148 | 838,243 | ||||||||||||||
United Continental Holdings Incorporated † | 7,275 | 580,400 | ||||||||||||||
3,095,885 | ||||||||||||||||
|
| |||||||||||||||
Building Products: 0.17% |
| |||||||||||||||
A.O. Smith Corporation | 4,611 | 245,859 | ||||||||||||||
Allegion plc | 3,087 | 280,022 | ||||||||||||||
Fortune Brands Home & Security Incorporated | 4,602 | 219,101 | ||||||||||||||
Johnson Controls International plc | 29,839 | 1,102,253 | ||||||||||||||
Masco Corporation | 9,614 | 377,926 | ||||||||||||||
2,225,161 | ||||||||||||||||
|
| |||||||||||||||
Commercial Services & Supplies: 0.24% |
| |||||||||||||||
Cintas Corporation | 2,768 | 559,440 | ||||||||||||||
Copart Incorporated † | 6,585 | 398,985 | ||||||||||||||
Republic Services Incorporated | 7,045 | 566,277 | ||||||||||||||
Rollins Incorporated | 4,813 | 200,317 | ||||||||||||||
Waste Management Incorporated | 12,745 | 1,324,333 | ||||||||||||||
3,049,352 | ||||||||||||||||
|
| |||||||||||||||
Construction & Engineering: 0.05% |
| |||||||||||||||
Fluor Corporation | 4,573 | 168,286 | ||||||||||||||
Jacobs Engineering Group Incorporated | 3,832 | 288,128 | ||||||||||||||
Quanta Services Incorporated | 4,622 | 174,434 | ||||||||||||||
630,848 | ||||||||||||||||
|
| |||||||||||||||
Electrical Equipment: 0.29% |
| |||||||||||||||
AMETEK Incorporated | 7,419 | 615,554 | ||||||||||||||
Eaton Corporation plc | 13,831 | 1,114,225 | ||||||||||||||
Emerson Electric Company | 20,055 | 1,373,166 | ||||||||||||||
Rockwell Automation Incorporated | 3,904 | 684,996 | ||||||||||||||
3,787,941 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
16 | Wells Fargo Index Asset Allocation Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Industrial Conglomerates: 0.91% |
| |||||||||||||||
3M Company | 18,811 | $ | 3,908,550 | |||||||||||||
General Electric Company | 285,219 | 2,849,338 | ||||||||||||||
Honeywell International Incorporated | 23,797 | 3,781,819 | ||||||||||||||
Roper Industries Incorporated | 3,385 | 1,157,568 | ||||||||||||||
11,697,275 | ||||||||||||||||
|
| |||||||||||||||
Machinery: 0.94% |
| |||||||||||||||
Caterpillar Incorporated | 18,745 | 2,539,760 | ||||||||||||||
Cummins Incorporated | 4,713 | 744,041 | ||||||||||||||
Deere & Company | 10,380 | 1,659,139 | ||||||||||||||
Dover Corporation | 4,731 | 443,768 | ||||||||||||||
Flowserve Corporation | 4,271 | 192,793 | ||||||||||||||
Fortive Corporation | 9,630 | 807,861 | ||||||||||||||
Illinois Tool Works Incorporated | 9,845 | 1,413,053 | ||||||||||||||
Ingersoll-Rand plc | 7,897 | 852,481 | ||||||||||||||
PACCAR Incorporated | 11,300 | 769,982 | ||||||||||||||
Parker-Hannifin Corporation | 4,220 | 724,236 | ||||||||||||||
Pentair plc | 5,115 | 227,669 | ||||||||||||||
Snap-on Incorporated | 1,815 | 284,084 | ||||||||||||||
Stanley Black & Decker Incorporated | 4,936 | 672,135 | ||||||||||||||
Wabtec Corporation | 4,592 | 338,522 | ||||||||||||||
Xylem Incorporated | 5,860 | 463,174 | ||||||||||||||
12,132,698 | ||||||||||||||||
|
| |||||||||||||||
Professional Services: 0.18% |
| |||||||||||||||
Equifax Incorporated | 3,943 | 467,246 | ||||||||||||||
IHS Markit Limited † | 11,851 | 644,457 | ||||||||||||||
Nielsen Holdings plc | 11,627 | 275,211 | ||||||||||||||
Robert Half International Incorporated | 3,884 | 253,081 | ||||||||||||||
Verisk Analytics Incorporated | 5,348 | 711,284 | ||||||||||||||
2,351,279 | ||||||||||||||||
|
| |||||||||||||||
Road & Rail: 0.63% |
| |||||||||||||||
CSX Corporation | 25,307 | 1,893,470 | ||||||||||||||
J.B. Hunt Transport Services Incorporated | 2,849 | 288,575 | ||||||||||||||
Kansas City Southern | 3,301 | 382,850 | ||||||||||||||
Norfolk Southern Corporation | 8,729 | 1,631,363 | ||||||||||||||
Union Pacific Corporation | 23,634 | 3,951,605 | ||||||||||||||
8,147,863 | ||||||||||||||||
|
| |||||||||||||||
Trading Companies & Distributors: 0.11% |
| |||||||||||||||
Fastenal Company | 9,363 | 602,135 | ||||||||||||||
United Rentals Incorporated † | 2,594 | 296,365 | ||||||||||||||
W.W. Grainger Incorporated | 1,473 | 443,270 | ||||||||||||||
1,341,770 | ||||||||||||||||
|
| |||||||||||||||
Information Technology: 12.62% |
| |||||||||||||||
Communications Equipment: 0.75% | ||||||||||||||||
Arista Networks Incorporated † | 1,700 | 534,582 | ||||||||||||||
Cisco Systems Incorporated | 143,536 | 7,749,509 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Index Asset Allocation Fund | 17 |
Security name | Shares | Value | ||||||||||||||
Communications Equipment(continued) | ||||||||||||||||
F5 Networks Incorporated † | 1,935 | $ | 303,660 | |||||||||||||
Juniper Networks Incorporated | 11,362 | 300,752 | ||||||||||||||
Motorola Solutions Incorporated | 5,362 | 752,932 | ||||||||||||||
9,641,435 | ||||||||||||||||
|
| |||||||||||||||
Electronic Equipment, Instruments & Components: 0.28% |
| |||||||||||||||
Amphenol Corporation Class A | 9,716 | 917,579 | ||||||||||||||
Corning Incorporated | 25,651 | 849,048 | ||||||||||||||
FLIR Systems Incorporated | 4,404 | 209,542 | ||||||||||||||
IPG Photonics Corporation † | 1,154 | 175,154 | ||||||||||||||
Keysight Technologies Incorporated † | 6,119 | 533,577 | ||||||||||||||
TE Connectivity Limited | 11,084 | 895,033 | ||||||||||||||
3,579,933 | ||||||||||||||||
|
| |||||||||||||||
IT Services: 3.07% |
| |||||||||||||||
Accenture plc Class A | 20,796 | 3,660,512 | ||||||||||||||
Akamai Technologies Incorporated † | 5,305 | 380,422 | ||||||||||||||
Alliance Data Systems Corporation | 1,498 | 262,120 | ||||||||||||||
Automatic Data Processing Incorporated | 14,256 | 2,277,253 | ||||||||||||||
Broadridge Financial Solutions Incorporated | 3,773 | 391,222 | ||||||||||||||
Cognizant Technology Solutions Corporation Class A | 18,733 | 1,357,206 | ||||||||||||||
DXC Technology Company | 8,729 | 561,362 | ||||||||||||||
Fidelity National Information Services Incorporated | 10,568 | 1,195,241 | ||||||||||||||
Fiserv Incorporated † | 12,834 | 1,132,986 | ||||||||||||||
FleetCor Technologies Incorporated † | 2,803 | 691,192 | ||||||||||||||
Gartner Incorporated † | 2,947 | 447,001 | ||||||||||||||
Global Payments Incorporated | 5,157 | 704,034 | ||||||||||||||
International Business Machines Corporation | 29,017 | 4,094,299 | ||||||||||||||
Jack Henry & Associates Incorporated | 2,520 | 349,625 | ||||||||||||||
MasterCard Incorporated Class A | 29,492 | 6,943,891 | ||||||||||||||
Paychex Incorporated | 10,455 | 838,491 | ||||||||||||||
PayPal Holdings Incorporated † | 38,357 | 3,982,991 | ||||||||||||||
The Western Union Company | 14,290 | 263,936 | ||||||||||||||
Total System Services Incorporated | 5,308 | 504,313 | ||||||||||||||
VeriSign Incorporated † | 3,437 | 624,022 | ||||||||||||||
Visa Incorporated Class A | 57,097 | 8,917,980 | ||||||||||||||
39,580,099 | ||||||||||||||||
|
| |||||||||||||||
Semiconductors & Semiconductor Equipment: 2.32% |
| |||||||||||||||
Advanced Micro Devices Incorporated † | 28,174 | 719,000 | ||||||||||||||
Analog Devices Incorporated | 12,060 | 1,269,556 | ||||||||||||||
Applied Materials Incorporated | 30,848 | 1,223,432 | ||||||||||||||
Broadcom Incorporated | 12,905 | 3,880,663 | ||||||||||||||
Intel Corporation | 146,798 | 7,883,053 | ||||||||||||||
KLA-Tencor Corporation | 5,382 | 642,665 | ||||||||||||||
Lam Research Corporation | 4,959 | 887,711 | ||||||||||||||
Maxim Integrated Products Incorporated | 8,931 | 474,861 | ||||||||||||||
Microchip Technology Incorporated « | 7,721 | 640,534 | ||||||||||||||
Micron Technology Incorporated † | 36,168 | 1,494,823 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
18 | Wells Fargo Index Asset Allocation Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Semiconductors & Semiconductor Equipment(continued) |
| |||||||||||||||
NVIDIA Corporation | 19,614 | $ | 3,521,890 | |||||||||||||
Qorvo Incorporated † | 4,001 | 286,992 | ||||||||||||||
QUALCOMM Incorporated | 39,667 | 2,262,209 | ||||||||||||||
Skyworks Solutions Incorporated | 5,677 | 468,239 | ||||||||||||||
Texas Instruments Incorporated | 30,662 | 3,252,318 | ||||||||||||||
Xilinx Incorporated | 8,272 | 1,048,807 | ||||||||||||||
29,956,753 | ||||||||||||||||
|
| |||||||||||||||
Software: 3.83% |
| |||||||||||||||
Adobe Systems Incorporated † | 15,903 | 4,237,990 | ||||||||||||||
Ansys Incorporated † | 2,733 | 499,346 | ||||||||||||||
Autodesk Incorporated † | 7,130 | 1,110,997 | ||||||||||||||
Cadence Design Systems Incorporated † | 9,127 | 579,656 | ||||||||||||||
Citrix Systems Incorporated | 4,078 | 406,413 | ||||||||||||||
Fortinet Incorporated † | 4,717 | 396,086 | ||||||||||||||
Intuit Incorporated | 8,451 | 2,209,176 | ||||||||||||||
Microsoft Corporation | 250,473 | 29,540,786 | ||||||||||||||
Oracle Corporation | 83,067 | 4,461,529 | ||||||||||||||
Red Hat Incorporated † | 5,763 | 1,052,900 | ||||||||||||||
Salesforce.com Incorporated † | 24,919 | 3,946,422 | ||||||||||||||
Symantec Corporation | 20,898 | 480,445 | ||||||||||||||
Synopsys Incorporated † | 4,880 | 561,932 | ||||||||||||||
49,483,678 | ||||||||||||||||
|
| |||||||||||||||
Technology Hardware, Storage & Peripherals: 2.37% |
| |||||||||||||||
Apple Incorporated | 144,071 | 27,366,286 | ||||||||||||||
Hewlett Packard Enterprise Company | 44,959 | 693,717 | ||||||||||||||
HP Incorporated | 49,902 | 969,596 | ||||||||||||||
NetApp Incorporated | 8,057 | 558,672 | ||||||||||||||
Seagate Technology plc | 8,361 | 400,408 | ||||||||||||||
Western Digital Corporation | 9,411 | 452,293 | ||||||||||||||
Xerox Corporation | 6,557 | 209,693 | ||||||||||||||
30,650,665 | ||||||||||||||||
|
| |||||||||||||||
Materials: 1.57% |
| |||||||||||||||
Chemicals: 1.17% | ||||||||||||||||
Air Products & Chemicals Incorporated | 7,181 | 1,371,284 | ||||||||||||||
Albemarle Corporation « | 3,437 | 281,765 | ||||||||||||||
Celanese Corporation Series A | 4,172 | 411,401 | ||||||||||||||
CF Industries Holdings Incorporated | 7,307 | 298,710 | ||||||||||||||
DowDuPont Incorporated | 73,526 | 3,919,671 | ||||||||||||||
Eastman Chemical Company | 4,560 | 346,013 | ||||||||||||||
Ecolab Incorporated | 8,264 | 1,458,927 | ||||||||||||||
FMC Corporation | 4,404 | 338,315 | ||||||||||||||
International Flavors & Fragrances Incorporated | 3,307 | 425,909 | ||||||||||||||
Linde plc | 18,003 | 3,167,268 | ||||||||||||||
LyondellBasell Industries NV Class A | 9,943 | 836,007 | ||||||||||||||
PPG Industries Incorporated | 7,712 | 870,453 | ||||||||||||||
The Mosaic Company | 11,585 | 316,386 | ||||||||||||||
The Sherwin-Williams Company | 2,657 | 1,144,396 | ||||||||||||||
15,186,505 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Index Asset Allocation Fund | 19 |
Security name | Shares | Value | ||||||||||||||
Construction Materials: 0.07% |
| |||||||||||||||
Martin Marietta Materials Incorporated | 2,049 | $ | 412,218 | |||||||||||||
Vulcan Materials Company | 4,312 | 510,541 | ||||||||||||||
922,759 | ||||||||||||||||
|
| |||||||||||||||
Containers & Packaging: 0.19% |
| |||||||||||||||
Avery Dennison Corporation | 2,741 | 309,733 | ||||||||||||||
Ball Corporation | 10,924 | 632,063 | ||||||||||||||
International Paper Company | 13,085 | 605,443 | ||||||||||||||
Packaging Corporation of America | 3,095 | 307,581 | ||||||||||||||
Sealed Air Corporation | 5,094 | 234,630 | ||||||||||||||
WestRock Company | 8,383 | 321,488 | ||||||||||||||
2,410,938 | ||||||||||||||||
|
| |||||||||||||||
Metals & Mining: 0.14% |
| |||||||||||||||
Freeport-McMoRan Incorporated | 47,455 | 611,695 | ||||||||||||||
Newmont Mining Corporation | 17,520 | 626,690 | ||||||||||||||
Nucor Corporation | 9,954 | 580,816 | ||||||||||||||
1,819,201 | ||||||||||||||||
|
| |||||||||||||||
Real Estate: 1.85% |
| |||||||||||||||
Equity REITs: 1.81% | ||||||||||||||||
Alexandria Real Estate Equities Incorporated | 3,692 | 526,332 | ||||||||||||||
American Tower Corporation | 14,383 | 2,834,314 | ||||||||||||||
Apartment Investment & Management Company Class A | 5,243 | 263,670 | ||||||||||||||
AvalonBay Communities Incorporated | 4,521 | 907,500 | ||||||||||||||
Boston Properties Incorporated | 5,049 | 675,960 | ||||||||||||||
Crown Castle International Corporation | 13,572 | 1,737,216 | ||||||||||||||
Digital Realty Trust Incorporated | 6,805 | 809,795 | ||||||||||||||
Duke Realty Corporation | 11,728 | 358,642 | ||||||||||||||
Equinix Incorporated | 2,726 | 1,235,314 | ||||||||||||||
Equity Residential | 12,080 | 909,866 | ||||||||||||||
Essex Property Trust Incorporated | 2,147 | 620,998 | ||||||||||||||
Extra Space Storage Incorporated | 4,168 | 424,761 | ||||||||||||||
Federal Realty Investment Trust | 2,432 | 335,251 | ||||||||||||||
HCP Incorporated | 15,603 | 488,374 | ||||||||||||||
Host Hotels & Resorts Incorporated | 24,308 | 459,421 | ||||||||||||||
Iron Mountain Incorporated | 9,362 | 331,977 | ||||||||||||||
Kimco Realty Corporation | 13,818 | 255,633 | ||||||||||||||
Mid-America Apartment Communities Incorporated | 3,726 | 407,364 | ||||||||||||||
Prologis Incorporated | 20,599 | 1,482,098 | ||||||||||||||
Public Storage Incorporated | 4,885 | 1,063,855 | ||||||||||||||
Realty Income Corporation | 9,927 | 730,230 | ||||||||||||||
Regency Centers Corporation | 5,487 | 370,318 | ||||||||||||||
SBA Communications Corporation † | 3,667 | 732,153 | ||||||||||||||
Simon Property Group Incorporated | 10,111 | 1,842,325 | ||||||||||||||
SL Green Realty Corporation | 2,739 | 246,291 | ||||||||||||||
The Macerich Company | 3,460 | 149,991 | ||||||||||||||
UDR Incorporated | 9,000 | 409,140 | ||||||||||||||
Ventas Incorporated | 11,652 | 743,514 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
20 | Wells Fargo Index Asset Allocation Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Equity REITs(continued) | ||||||||||||||||
Vornado Realty Trust | 5,670 | $ | 382,385 | |||||||||||||
Welltower Incorporated | 12,613 | 978,769 | ||||||||||||||
Weyerhaeuser Company | 24,386 | 642,327 | ||||||||||||||
23,355,784 | ||||||||||||||||
|
| |||||||||||||||
Real Estate Management & Development: 0.04% | ||||||||||||||||
CBRE Group Incorporated Class A † | 10,186 | 503,698 | ||||||||||||||
|
| |||||||||||||||
Utilities: 1.99% |
| |||||||||||||||
Electric Utilities: 1.19% | ||||||||||||||||
Alliant Energy Corporation | 7,704 | 363,090 | ||||||||||||||
American Electric Power Company Incorporated | 16,111 | 1,349,296 | ||||||||||||||
Duke Energy Corporation | 23,728 | 2,135,520 | ||||||||||||||
Edison International | 10,647 | 659,262 | ||||||||||||||
Entergy Corporation | 6,183 | 591,280 | ||||||||||||||
Evergy Incorporated | 8,315 | 482,686 | ||||||||||||||
Eversource Energy | 10,336 | 733,339 | ||||||||||||||
Exelon Corporation | 31,649 | 1,586,564 | ||||||||||||||
FirstEnergy Corporation | 16,431 | 683,694 | ||||||||||||||
NextEra Energy Incorporated | 15,610 | 3,017,725 | ||||||||||||||
Pinnacle West Capital Corporation | 3,659 | 349,727 | ||||||||||||||
PPL Corporation | 23,487 | 745,477 | ||||||||||||||
The Southern Company | 33,811 | 1,747,352 | ||||||||||||||
Xcel Energy Incorporated | 16,784 | 943,429 | ||||||||||||||
15,388,441 | ||||||||||||||||
|
| |||||||||||||||
Gas Utilities: 0.03% |
| |||||||||||||||
Atmos Energy Corporation | 3,816 | 392,781 | ||||||||||||||
|
| |||||||||||||||
Independent Power & Renewable Electricity Producers: 0.06% |
| |||||||||||||||
AES Corporation | 21,655 | 391,522 | ||||||||||||||
NRG Energy Incorporated | 9,165 | 389,329 | ||||||||||||||
780,851 | ||||||||||||||||
|
| |||||||||||||||
Multi-Utilities: 0.66% | ||||||||||||||||
Ameren Corporation | 7,982 | 587,076 | ||||||||||||||
CenterPoint Energy Incorporated | 16,347 | 501,853 | ||||||||||||||
CMS Energy Corporation | 9,256 | 514,078 | ||||||||||||||
Consolidated Edison Incorporated | 10,478 | 888,639 | ||||||||||||||
Dominion Energy Incorporated | 26,151 | 2,004,736 | ||||||||||||||
DTE Energy Company | 5,938 | 740,706 | ||||||||||||||
NiSource Incorporated | 12,174 | 348,907 | ||||||||||||||
Public Service Enterprise Group Incorporated | 16,502 | 980,384 | ||||||||||||||
Sempra Energy | 8,935 | 1,124,559 | ||||||||||||||
WEC Energy Group Incorporated | 10,298 | 814,366 | ||||||||||||||
8,505,304 | ||||||||||||||||
|
| |||||||||||||||
Water Utilities: 0.05% |
| |||||||||||||||
American Water Works Company Incorporated | 5,895 | 614,613 | ||||||||||||||
|
| |||||||||||||||
Total Common Stocks (Cost $346,217,830) |
| 769,960,692 | ||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Index Asset Allocation Fund | 21 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Non-Agency Mortgage-Backed Securities: 0.00% |
| |||||||||||||||
Citigroup Mortgage Loan Trust Incorporated Series 2004-HYB4 Class AA (1 Month LIBOR +0.33 %) ± | 2.82 | % | 12-25-2034 | $ | 10,306 | $ | 9,863 | |||||||||
|
| |||||||||||||||
TotalNon-Agency Mortgage-Backed Securities (Cost $10,306) |
| 9,863 | ||||||||||||||
|
| |||||||||||||||
U.S. Treasury Securities: 37.66% | ||||||||||||||||
U.S. Treasury Bond | 2.13 | 9-30-2024 | 1,844,000 | 1,830,530 | ||||||||||||
U.S. Treasury Bond | 2.13 | 11-30-2024 | 1,852,000 | 1,837,387 | ||||||||||||
U.S. Treasury Bond | 2.25 | 8-15-2046 | 2,681,000 | 2,396,353 | ||||||||||||
U.S. Treasury Bond | 2.50 | 2-15-2045 | 2,860,000 | 2,704,488 | ||||||||||||
U.S. Treasury Bond | 2.50 | 2-15-2046 | 2,659,000 | 2,506,419 | ||||||||||||
U.S. Treasury Bond | 2.50 | 5-15-2046 | 2,643,000 | 2,489,995 | ||||||||||||
U.S. Treasury Bond | 2.75 | 8-15-2042 | 1,340,000 | 1,337,069 | ||||||||||||
U.S. Treasury Bond | 2.75 | 11-15-2042 | 1,781,000 | 1,775,921 | ||||||||||||
U.S. Treasury Bond | 2.75 | 8-15-2047 | 2,582,000 | 2,551,339 | ||||||||||||
U.S. Treasury Bond | 2.75 | 11-15-2047 | 2,602,000 | 2,570,695 | ||||||||||||
U.S. Treasury Bond | 2.88 | 5-15-2028 | 4,464,000 | 4,641,339 | ||||||||||||
U.S. Treasury Bond | 2.88 | 5-15-2043 | 2,534,000 | 2,578,246 | ||||||||||||
U.S. Treasury Bond | 2.88 | 8-15-2045 | 2,862,000 | 2,906,831 | ||||||||||||
U.S. Treasury Bond | 2.88 | 11-15-2046 | 2,645,000 | 2,683,848 | ||||||||||||
U.S. Treasury Bond | 3.00 | 5-15-2042 | 904,000 | 942,385 | ||||||||||||
U.S. Treasury Bond | 3.00 | 11-15-2044 | 2,772,000 | 2,880,823 | ||||||||||||
U.S. Treasury Bond | 3.00 | 5-15-2045 | 2,864,000 | 2,977,665 | ||||||||||||
U.S. Treasury Bond | 3.00 | 11-15-2045 | 2,835,000 | 2,949,064 | ||||||||||||
U.S. Treasury Bond | 3.00 | 2-15-2047 | 2,651,000 | 2,757,351 | ||||||||||||
U.S. Treasury Bond | 3.00 | 5-15-2047 | 2,626,000 | 2,727,655 | ||||||||||||
U.S. Treasury Bond | 3.00 | 2-15-2048 | 2,812,000 | 2,916,461 | ||||||||||||
U.S. Treasury Bond | 3.00 | 8-15-2048 | 2,099,000 | 2,177,876 | ||||||||||||
U.S. Treasury Bond | 3.13 | 11-15-2041 | 846,000 | 901,750 | ||||||||||||
U.S. Treasury Bond | 3.13 | 2-15-2042 | 1,066,000 | 1,135,248 | ||||||||||||
U.S. Treasury Bond | 3.13 | 2-15-2043 | 1,783,000 | 1,892,975 | ||||||||||||
U.S. Treasury Bond | 3.13 | 8-15-2044 | 2,827,000 | 3,003,356 | ||||||||||||
U.S. Treasury Bond | 3.13 | 5-15-2048 | 2,895,000 | 3,076,955 | ||||||||||||
U.S. Treasury Bond | 3.38 | 5-15-2044 | 2,936,000 | 3,251,849 | ||||||||||||
U.S. Treasury Bond | 3.50 | 2-15-2039 | 731,000 | 829,742 | ||||||||||||
U.S. Treasury Bond | 3.63 | 8-15-2043 | 2,200,000 | 2,533,180 | ||||||||||||
U.S. Treasury Bond | 3.63 | 2-15-2044 | 2,898,000 | 3,340,737 | ||||||||||||
U.S. Treasury Bond | 3.75 | 8-15-2041 | 929,000 | 1,089,216 | ||||||||||||
U.S. Treasury Bond | 3.75 | 11-15-2043 | 2,870,000 | 3,371,689 | ||||||||||||
U.S. Treasury Bond | 3.88 | 8-15-2040 | 946,000 | 1,128,844 | ||||||||||||
U.S. Treasury Bond | 4.25 | 5-15-2039 | 681,000 | 853,059 | ||||||||||||
U.S. Treasury Bond | 4.25 | 11-15-2040 | 977,000 | 1,226,173 | ||||||||||||
U.S. Treasury Bond | 4.38 | 2-15-2038 | 381,000 | 482,798 | ||||||||||||
U.S. Treasury Bond | 4.38 | 11-15-2039 | 757,000 | 963,667 | ||||||||||||
U.S. Treasury Bond | 4.38 | 5-15-2040 | 1,078,000 | 1,374,029 | ||||||||||||
U.S. Treasury Bond | 4.38 | 5-15-2041 | 842,000 | 1,075,951 | ||||||||||||
U.S. Treasury Bond | 4.50 | 2-15-2036 | 837,000 | 1,061,388 | ||||||||||||
U.S. Treasury Bond | 4.50 | 5-15-2038 | 428,000 | 551,284 | ||||||||||||
U.S. Treasury Bond | 4.50 | 8-15-2039 | 721,000 | 932,681 | ||||||||||||
U.S. Treasury Bond | 4.63 | 2-15-2040 | 1,276,000 | 1,678,339 | ||||||||||||
U.S. Treasury Bond | 4.75 | 2-15-2037 | 264,000 | 346,923 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
22 | Wells Fargo Index Asset Allocation Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
U.S. Treasury Securities(continued) | ||||||||||||||||
U.S. Treasury Bond | 4.75 | % | 2-15-2041 | $ | 1,084,000 | $ | 1,452,772 | |||||||||
U.S. Treasury Bond | 5.00 | 5-15-2037 | 375,000 | 507,642 | ||||||||||||
U.S. Treasury Bond | 5.25 | 11-15-2028 | 479,000 | 595,270 | ||||||||||||
U.S. Treasury Bond | 5.25 | 2-15-2029 | 349,000 | 435,677 | ||||||||||||
U.S. Treasury Bond | 5.38 | 2-15-2031 | 752,000 | 978,423 | ||||||||||||
U.S. Treasury Bond | 5.50 | 8-15-2028 | 369,000 | 464,652 | ||||||||||||
U.S. Treasury Bond | 6.13 | 11-15-2027 | 525,000 | 677,517 | ||||||||||||
U.S. Treasury Bond | 6.13 | 8-15-2029 | 293,000 | 392,425 | ||||||||||||
U.S. Treasury Bond | 6.25 | 5-15-2030 | 478,000 | 655,047 | ||||||||||||
U.S. Treasury Bond | 6.38 | 8-15-2027 | 224,000 | 291,830 | ||||||||||||
U.S. Treasury Bond | 6.88 | 8-15-2025 | 224,000 | 284,358 | ||||||||||||
U.S. Treasury Note | 2.88 | 9-30-2023 | 2,444,000 | 2,510,542 | ||||||||||||
U.S. Treasury Note | 1.13 | 3-31-2020 | 1,987,000 | 1,962,551 | ||||||||||||
U.S. Treasury Note | 1.13 | 4-30-2020 | 1,330,000 | 1,312,180 | ||||||||||||
U.S. Treasury Note | 1.13 | 2-28-2021 | 3,264,000 | 3,192,855 | ||||||||||||
U.S. Treasury Note | 1.13 | 6-30-2021 | 3,343,000 | 3,262,428 | ||||||||||||
U.S. Treasury Note | 1.13 | 7-31-2021 | 2,232,000 | 2,174,892 | ||||||||||||
U.S. Treasury Note | 1.13 | 8-31-2021 | 2,233,000 | 2,174,122 | ||||||||||||
U.S. Treasury Note | 1.13 | 9-30-2021 | 2,188,000 | 2,130,052 | ||||||||||||
U.S. Treasury Note | 1.25 | 1-31-2020 | 3,442,000 | 3,408,656 | ||||||||||||
U.S. Treasury Note | 1.25 | 2-29-2020 | 1,745,000 | 1,726,868 | ||||||||||||
U.S. Treasury Note | 1.25 | 3-31-2021 | 3,250,000 | 3,186,143 | ||||||||||||
U.S. Treasury Note | 1.25 | 10-31-2021 | 2,188,000 | 2,133,556 | ||||||||||||
U.S. Treasury Note | 1.25 | 7-31-2023 | 1,829,000 | 1,755,126 | ||||||||||||
U.S. Treasury Note | 1.38 | 1-15-2020 | 1,638,000 | 1,624,563 | ||||||||||||
U.S. Treasury Note | 1.38 | 1-31-2020 | 2,293,000 | 2,273,563 | ||||||||||||
U.S. Treasury Note | 1.38 | 2-15-2020 | 1,667,000 | 1,651,958 | ||||||||||||
U.S. Treasury Note | 1.38 | 2-29-2020 | 3,442,000 | 3,409,597 | ||||||||||||
U.S. Treasury Note | 1.38 | 3-31-2020 | 3,442,000 | 3,407,042 | ||||||||||||
U.S. Treasury Note | 1.38 | 4-30-2020 | 3,442,000 | 3,404,756 | ||||||||||||
U.S. Treasury Note | 1.38 | 5-31-2020 | 1,380,000 | 1,363,990 | ||||||||||||
U.S. Treasury Note | 1.38 | 8-31-2020 | 3,350,000 | 3,303,414 | ||||||||||||
U.S. Treasury Note | 1.38 | 9-15-2020 | 1,598,000 | 1,576,215 | ||||||||||||
U.S. Treasury Note | 1.38 | 9-30-2020 | 3,356,000 | 3,307,626 | ||||||||||||
U.S. Treasury Note | 1.38 | 10-31-2020 | 3,178,000 | 3,130,330 | ||||||||||||
U.S. Treasury Note | 1.38 | 1-31-2021 | 3,192,000 | 3,138,758 | ||||||||||||
U.S. Treasury Note | 1.38 | 4-30-2021 | 3,245,000 | 3,186,184 | ||||||||||||
U.S. Treasury Note | 1.38 | 5-31-2021 | 3,248,000 | 3,187,227 | ||||||||||||
U.S. Treasury Note | 1.38 | 6-30-2023 | 1,733,000 | 1,673,090 | ||||||||||||
U.S. Treasury Note | 1.38 | 8-31-2023 | 1,817,000 | 1,751,915 | ||||||||||||
U.S. Treasury Note | 1.38 | 9-30-2023 | 1,778,000 | 1,712,784 | ||||||||||||
U.S. Treasury Note | 1.50 | 4-15-2020 | 1,675,000 | 1,659,755 | ||||||||||||
U.S. Treasury Note | 1.50 | 5-15-2020 | 1,678,000 | 1,661,548 | ||||||||||||
U.S. Treasury Note | 1.50 | 5-31-2020 | 3,442,000 | 3,406,908 | ||||||||||||
U.S. Treasury Note | 1.50 | 6-15-2020 | 1,680,000 | 1,662,153 | ||||||||||||
U.S. Treasury Note | 1.50 | 7-15-2020 | 1,683,000 | 1,664,526 | ||||||||||||
U.S. Treasury Note | 1.50 | 8-15-2020 | 1,684,000 | 1,664,068 | ||||||||||||
U.S. Treasury Note | 1.50 | 1-31-2022 | 1,625,000 | 1,592,373 | ||||||||||||
U.S. Treasury Note | 1.50 | 2-28-2023 | 1,635,000 | 1,590,740 | ||||||||||||
U.S. Treasury Note | 1.50 | 3-31-2023 | 1,679,000 | 1,632,434 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Index Asset Allocation Fund | 23 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
U.S. Treasury Securities(continued) | ||||||||||||||||
U.S. Treasury Note | 1.50 | % | 8-15-2026 | $ | 4,143,000 | $ | 3,909,794 | |||||||||
U.S. Treasury Note | 1.63 | 3-15-2020 | 1,667,000 | 1,654,823 | ||||||||||||
U.S. Treasury Note | 1.63 | 6-30-2020 | 3,442,000 | 3,409,731 | ||||||||||||
U.S. Treasury Note | 1.63 | 7-31-2020 | 3,213,000 | 3,181,121 | ||||||||||||
U.S. Treasury Note | 1.63 | 10-15-2020 | 1,591,000 | 1,573,785 | ||||||||||||
U.S. Treasury Note | 1.63 | 11-30-2020 | 2,166,000 | 2,141,209 | ||||||||||||
U.S. Treasury Note | 1.63 | 8-15-2022 | 1,250,000 | 1,225,635 | ||||||||||||
U.S. Treasury Note | 1.63 | 8-31-2022 | 2,373,000 | 2,326,096 | ||||||||||||
U.S. Treasury Note | 1.63 | 11-15-2022 | 2,108,000 | 2,064,440 | ||||||||||||
U.S. Treasury Note | 1.63 | 4-30-2023 | 1,711,000 | 1,670,631 | ||||||||||||
U.S. Treasury Note | 1.63 | 5-31-2023 | 1,714,000 | 1,672,757 | ||||||||||||
U.S. Treasury Note | 1.63 | 10-31-2023 | 1,824,000 | 1,776,049 | ||||||||||||
U.S. Treasury Note | 1.63 | 2-15-2026 | 4,269,000 | 4,081,397 | ||||||||||||
U.S. Treasury Note | 1.63 | 5-15-2026 | 4,111,000 | 3,923,436 | ||||||||||||
U.S. Treasury Note | 1.75 | 10-31-2020 | 1,585,000 | 1,570,388 | ||||||||||||
U.S. Treasury Note | 1.75 | 11-15-2020 | 1,588,000 | 1,573,361 | ||||||||||||
U.S. Treasury Note | 1.75 | 12-31-2020 | 3,353,000 | 3,320,518 | ||||||||||||
U.S. Treasury Note | 1.75 | 11-30-2021 | 2,003,000 | 1,977,806 | ||||||||||||
U.S. Treasury Note | 1.75 | 2-28-2022 | 1,637,000 | 1,614,939 | ||||||||||||
U.S. Treasury Note | 1.75 | 3-31-2022 | 1,640,000 | 1,617,642 | ||||||||||||
U.S. Treasury Note | 1.75 | 4-30-2022 | 1,612,000 | 1,589,142 | ||||||||||||
U.S. Treasury Note | 1.75 | 5-15-2022 | 1,448,000 | 1,427,355 | ||||||||||||
U.S. Treasury Note | 1.75 | 5-31-2022 | 2,343,000 | 2,309,228 | ||||||||||||
U.S. Treasury Note | 1.75 | 6-30-2022 | 2,347,000 | 2,312,437 | ||||||||||||
U.S. Treasury Note | 1.75 | 9-30-2022 | 1,771,000 | 1,742,706 | ||||||||||||
U.S. Treasury Note | 1.75 | 1-31-2023 | 1,684,000 | 1,654,596 | ||||||||||||
U.S. Treasury Note | 1.75 | 5-15-2023 | 3,117,000 | 3,058,191 | ||||||||||||
U.S. Treasury Note | 1.88 | 6-30-2020 | 1,888,000 | 1,876,126 | ||||||||||||
U.S. Treasury Note | 1.88 | 12-15-2020 | 1,619,000 | 1,606,984 | ||||||||||||
U.S. Treasury Note | 1.88 | 11-30-2021 | 1,649,000 | 1,633,347 | ||||||||||||
U.S. Treasury Note | 1.88 | 1-31-2022 | 2,358,000 | 2,334,881 | ||||||||||||
U.S. Treasury Note | 1.88 | 2-28-2022 | 2,348,000 | 2,324,612 | ||||||||||||
U.S. Treasury Note | 1.88 | 3-31-2022 | 2,371,000 | 2,348,124 | ||||||||||||
U.S. Treasury Note | 1.88 | 4-30-2022 | 2,376,000 | 2,351,126 | ||||||||||||
U.S. Treasury Note | 1.88 | 5-31-2022 | 1,795,000 | 1,775,928 | ||||||||||||
U.S. Treasury Note | 1.88 | 7-31-2022 | 2,337,000 | 2,310,526 | ||||||||||||
U.S. Treasury Note | 1.88 | 8-31-2022 | 1,754,000 | 1,733,719 | ||||||||||||
U.S. Treasury Note | 1.88 | 9-30-2022 | 2,248,000 | 2,222,095 | ||||||||||||
U.S. Treasury Note | 1.88 | 10-31-2022 | 1,650,000 | 1,630,213 | ||||||||||||
U.S. Treasury Note | 1.88 | 8-31-2024 | 1,968,000 | 1,929,639 | ||||||||||||
U.S. Treasury Note | 2.00 | 1-31-2020 | 1,760,000 | 1,754,363 | ||||||||||||
U.S. Treasury Note | 2.00 | 7-31-2020 | 1,306,000 | 1,299,725 | ||||||||||||
U.S. Treasury Note | 2.00 | 9-30-2020 | 2,093,000 | 2,082,126 | ||||||||||||
U.S. Treasury Note | 2.00 | 11-30-2020 | 2,266,000 | 2,253,696 | ||||||||||||
U.S. Treasury Note | 2.00 | 1-15-2021 | 1,617,000 | 1,608,347 | ||||||||||||
U.S. Treasury Note | 2.00 | 2-28-2021 | 2,421,000 | 2,407,666 | ||||||||||||
U.S. Treasury Note | 2.00 | 5-31-2021 | 1,559,000 | 1,550,109 | ||||||||||||
U.S. Treasury Note | 2.00 | 8-31-2021 | 1,641,000 | 1,631,192 | ||||||||||||
U.S. Treasury Note | 2.00 | 10-31-2021 | 1,649,000 | 1,639,016 | ||||||||||||
U.S. Treasury Note | 2.00 | 11-15-2021 | 2,485,000 | 2,470,439 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
24 | Wells Fargo Index Asset Allocation Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
U.S. Treasury Securities(continued) | ||||||||||||||||
U.S. Treasury Note | 2.00 | % | 12-31-2021 | $ | 2,300,000 | $ | 2,286,703 | |||||||||
U.S. Treasury Note | 2.00 | 2-15-2022 | 1,679,000 | 1,668,900 | ||||||||||||
U.S. Treasury Note | 2.00 | 7-31-2022 | 1,778,000 | 1,765,290 | ||||||||||||
U.S. Treasury Note | 2.00 | 10-31-2022 | 2,238,000 | 2,220,865 | ||||||||||||
U.S. Treasury Note | 2.00 | 11-30-2022 | 4,261,000 | 4,227,711 | ||||||||||||
U.S. Treasury Note | 2.00 | 2-15-2023 | 3,077,000 | 3,051,278 | ||||||||||||
U.S. Treasury Note | 2.00 | 4-30-2024 | 1,930,000 | 1,907,307 | ||||||||||||
U.S. Treasury Note | 2.00 | 5-31-2024 | 1,934,000 | 1,910,807 | ||||||||||||
U.S. Treasury Note | 2.00 | 6-30-2024 | 1,939,000 | 1,914,687 | ||||||||||||
U.S. Treasury Note | 2.00 | 2-15-2025 | 4,486,000 | 4,414,680 | ||||||||||||
U.S. Treasury Note | 2.00 | 8-15-2025 | 4,495,000 | 4,414,406 | ||||||||||||
U.S. Treasury Note | 2.00 | 11-15-2026 | 4,255,000 | 4,154,276 | ||||||||||||
U.S. Treasury Note | 2.13 | 8-31-2020 | 1,477,000 | 1,472,327 | ||||||||||||
U.S. Treasury Note | 2.13 | 1-31-2021 | 1,409,000 | 1,404,487 | ||||||||||||
U.S. Treasury Note | 2.13 | 6-30-2021 | 1,516,000 | 1,511,381 | ||||||||||||
U.S. Treasury Note | 2.13 | 8-15-2021 | 2,440,000 | 2,432,470 | ||||||||||||
U.S. Treasury Note | 2.13 | 9-30-2021 | 1,633,000 | 1,628,024 | ||||||||||||
U.S. Treasury Note | 2.13 | 12-31-2021 | 1,626,000 | 1,621,300 | ||||||||||||
U.S. Treasury Note | 2.13 | 6-30-2022 | 1,615,000 | 1,610,079 | ||||||||||||
U.S. Treasury Note | 2.13 | 12-31-2022 | 4,298,000 | 4,282,218 | ||||||||||||
U.S. Treasury Note | 2.13 | 11-30-2023 | 1,638,000 | 1,629,874 | ||||||||||||
U.S. Treasury Note | 2.13 | 2-29-2024 | 1,960,000 | 1,949,358 | ||||||||||||
U.S. Treasury Note | 2.13 | 3-31-2024 | 1,961,000 | 1,951,042 | ||||||||||||
U.S. Treasury Note | 2.13 | 7-31-2024 | 1,927,000 | 1,914,128 | ||||||||||||
U.S. Treasury Note | 2.13 | 5-15-2025 | 4,466,000 | 4,421,514 | ||||||||||||
U.S. Treasury Note | 2.25 | 2-29-2020 | 1,913,000 | 1,910,534 | ||||||||||||
U.S. Treasury Note | 2.25 | 2-15-2021 | 1,767,000 | 1,765,412 | ||||||||||||
U.S. Treasury Note | 2.25 | 3-31-2021 | 1,440,000 | 1,439,550 | ||||||||||||
U.S. Treasury Note | 2.25 | 4-30-2021 | 1,514,000 | 1,513,231 | ||||||||||||
U.S. Treasury Note | 2.25 | 7-31-2021 | 2,618,000 | 2,617,284 | ||||||||||||
U.S. Treasury Note | 2.25 | 12-31-2023 | 1,886,000 | 1,886,810 | ||||||||||||
U.S. Treasury Note | 2.25 | 1-31-2024 | 1,914,000 | 1,914,822 | ||||||||||||
U.S. Treasury Note | 2.25 | 10-31-2024 | 1,882,000 | 1,879,942 | ||||||||||||
U.S. Treasury Note | 2.25 | 11-15-2024 | 4,492,000 | 4,485,157 | ||||||||||||
U.S. Treasury Note | 2.25 | 12-31-2024 | 1,911,000 | 1,908,387 | ||||||||||||
U.S. Treasury Note | 2.25 | 11-15-2025 | 4,512,000 | 4,493,846 | ||||||||||||
U.S. Treasury Note | 2.25 | 2-15-2027 | 4,295,000 | 4,264,969 | ||||||||||||
U.S. Treasury Note | 2.25 | 8-15-2027 | 4,252,000 | 4,214,961 | ||||||||||||
U.S. Treasury Note | 2.25 | 11-15-2027 | 4,284,000 | 4,242,331 | ||||||||||||
U.S. Treasury Note | 2.38 | 12-31-2020 | 1,317,000 | 1,318,286 | ||||||||||||
U.S. Treasury Note | 2.38 | 1-31-2023 | 2,325,000 | 2,337,897 | ||||||||||||
U.S. Treasury Note | 2.38 | 8-15-2024 | 4,465,000 | 4,489,592 | ||||||||||||
U.S. Treasury Note | 2.38 | 5-15-2027 | 4,355,000 | 4,363,166 | ||||||||||||
U.S. Treasury Note | 2.50 | 3-31-2023 | 2,278,000 | 2,301,937 | ||||||||||||
U.S. Treasury Note | 2.50 | 8-15-2023 | 2,662,000 | 2,691,844 | ||||||||||||
U.S. Treasury Note | 2.50 | 5-15-2024 | 4,360,000 | 4,412,116 | ||||||||||||
U.S. Treasury Note | 2.50 | 1-31-2025 | 1,936,000 | 1,959,141 | ||||||||||||
U.S. Treasury Note | 2.63 | 8-15-2020 | 3,367,000 | 3,378,574 | ||||||||||||
U.S. Treasury Note | 2.63 | 11-15-2020 | 5,315,000 | 5,339,084 | ||||||||||||
U.S. Treasury Note | 2.63 | 2-28-2023 | 2,359,000 | 2,394,109 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Index Asset Allocation Fund | 25 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
U.S. Treasury Securities(continued) | ||||||||||||||||
U.S. Treasury Note | 2.63 | % | 6-30-2023 | $ | 2,304,000 | $ | 2,340,900 | |||||||||
U.S. Treasury Note | 2.63 | 3-31-2025 | 1,884,000 | 1,919,546 | ||||||||||||
U.S. Treasury Note | 2.75 | 4-30-2023 | 2,279,000 | 2,324,847 | ||||||||||||
U.S. Treasury Note | 2.75 | 5-31-2023 | 2,334,000 | 2,382,139 | ||||||||||||
U.S. Treasury Note | 2.75 | 7-31-2023 | 2,347,000 | 2,397,149 | ||||||||||||
U.S. Treasury Note | 2.75 | 8-31-2023 | 2,402,000 | 2,454,450 | ||||||||||||
U.S. Treasury Note | 2.75 | 11-15-2023 | 3,936,000 | 4,023,791 | ||||||||||||
U.S. Treasury Note | 2.75 | 2-15-2024 | 3,410,000 | 3,489,922 | ||||||||||||
U.S. Treasury Note | 2.75 | 2-28-2025 | 1,955,000 | 2,005,250 | ||||||||||||
U.S. Treasury Note | 2.75 | 6-30-2025 | 1,959,000 | 2,010,424 | ||||||||||||
U.S. Treasury Note | 2.75 | 8-31-2025 | 2,020,000 | 2,073,420 | ||||||||||||
U.S. Treasury Note | 2.75 | 2-15-2028 | 3,068,000 | 3,158,362 | ||||||||||||
U.S. Treasury Note | 2.88 | 4-30-2025 | 1,884,000 | 1,946,408 | ||||||||||||
U.S. Treasury Note | 2.88 | 5-31-2025 | 1,939,000 | 2,003,154 | ||||||||||||
U.S. Treasury Note | 2.88 | 7-31-2025 | 1,949,000 | 2,014,779 | ||||||||||||
U.S. Treasury Note | 2.88 | 8-15-2028 | 3,133,000 | 3,258,565 | ||||||||||||
U.S. Treasury Note | 3.00 | 9-30-2025 | 1,994,000 | 2,077,499 | ||||||||||||
U.S. Treasury Note | 3.13 | 5-15-2021 | 1,657,000 | 1,685,609 | ||||||||||||
U.S. Treasury Note | 3.50 | 5-15-2020 | 2,864,000 | 2,898,905 | ||||||||||||
U.S. Treasury Note | 3.63 | 2-15-2020 | 2,648,000 | 2,674,790 | ||||||||||||
U.S. Treasury Note | 3.63 | 2-15-2021 | 2,765,000 | 2,831,749 | ||||||||||||
U.S. Treasury Note | 6.00 | 2-15-2026 | 445,000 | 548,463 | ||||||||||||
U.S. Treasury Note | 6.25 | 8-15-2023 | 378,000 | 440,710 | ||||||||||||
U.S. Treasury Note | 6.50 | 11-15-2026 | 296,000 | 381,482 | ||||||||||||
U.S. Treasury Note | 6.63 | 2-15-2027 | 215,000 | 280,886 | ||||||||||||
U.S. Treasury Note | 6.75 | 8-15-2026 | 221,000 | 286,817 | ||||||||||||
U.S. Treasury Note | 7.13 | 2-15-2023 | 260,000 | 306,871 | ||||||||||||
U.S. Treasury Note | 7.25 | 8-15-2022 | 261,000 | 303,137 | ||||||||||||
U.S. Treasury Note | 7.50 | 11-15-2024 | 240,000 | 305,634 | ||||||||||||
U.S. Treasury Note | 7.63 | 11-15-2022 | 140,000 | 166,102 | ||||||||||||
U.S. Treasury Note | 7.63 | 2-15-2025 | 216,000 | 278,952 | ||||||||||||
U.S. Treasury Note | 7.88 | 2-15-2021 | 180,000 | 198,239 | ||||||||||||
U.S. Treasury Note | 8.00 | 11-15-2021 | 511,000 | 584,975 | ||||||||||||
U.S. Treasury Note | 8.13 | 5-15-2021 | 181,000 | 202,649 | ||||||||||||
U.S. Treasury Note | 8.13 | 8-15-2021 | 175,000 | 198,427 | ||||||||||||
U.S. Treasury Note | 8.50 | 2-15-2020 | 162,000 | 170,518 | ||||||||||||
U.S. Treasury Note | 8.75 | 5-15-2020 | 130,000 | 139,120 | ||||||||||||
U.S. Treasury Note | 8.75 | 8-15-2020 | 288,000 | 312,570 | ||||||||||||
Total U.S. Treasury Securities (Cost $482,267,391) | 486,063,190 | |||||||||||||||
|
| |||||||||||||||
Yield | Shares | |||||||||||||||
Short-Term Investments: 2.59% |
| |||||||||||||||
Investment Companies: 2.44% |
| |||||||||||||||
Securities Lending Cash Investments LLC (l)(r)(u) | 2.55 | 957,247 | 957,342 | |||||||||||||
Wells Fargo Government Money Market Fund Select Class (l)(u) | 2.38 | 30,506,112 | 30,506,112 | |||||||||||||
31,463,454 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
26 | Wells Fargo Index Asset Allocation Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Yield | Maturity date | Principal | Value | ||||||||||||
U.S. Treasury Securities: 0.15% |
| |||||||||||||||
U.S. Treasury Bill (z)# | 1.19 | % | 4-2-2019 | $ | 693,000 | $ | 692,954 | |||||||||
U.S. Treasury Bill (z)# | 2.29 | 4-23-2019 | 1,314,000 | 1,312,073 | ||||||||||||
2,005,027 | ||||||||||||||||
|
| |||||||||||||||
Total Short-Term Investments (Cost $33,468,428) |
| 33,468,481 | ||||||||||||||
|
|
Total investments in securities (Cost $862,005,122) | 99.91 | % | 1,289,550,375 | |||||
Other assets and liabilities, net | 0.09 | 1,177,829 | ||||||
|
|
|
| |||||
Total net assets | 100.00 | % | $ | 1,290,728,204 | ||||
|
|
|
|
† | Non-income-earning security |
« | All or a portion of this security is on loan. |
(l) | The issuer of the security is an affiliated person of the Fund as defined in the Investment Company Act of 1940. |
± | Variable rate investment. The rate shown is the rate in effect at period end. |
(r) | The investment is anon-registered investment company purchased with cash collateral received from securities on loan. |
(u) | The rate represents the7-day annualized yield at period end. |
(z) | Zero coupon security. The rate represents the current yield to maturity. |
# | All or a portion of this security is segregated as collateral for investments in derivative instruments. |
Abbreviations:
FNMA | Federal National Mortgage Association |
LIBOR | London Interbank Offered Rate |
REIT | Real estate investment trust |
Futures Contracts
Description | Number of contracts | Expiration date | Notional cost | Notional value | Unrealized gains | Unrealized losses | ||||||||||||||||||
Long | ||||||||||||||||||||||||
Chicago Board Option Exchange VIX Future | 161 | 5-22-2019 | $ | 2,579,465 | $ | 2,628,325 | $ | 48,860 | $ | 0 | ||||||||||||||
S&P 500E-Mini Index | 36 | 6-21-2019 | 5,054,030 | 5,108,040 | 54,010 | 0 | ||||||||||||||||||
5-Year U.S. Treasury Notes | 219 | 6-28-2019 | 25,141,249 | 25,366,359 | 225,110 | 0 | ||||||||||||||||||
Short | ||||||||||||||||||||||||
S&P 500E-Mini Index | (206) | 6-21-2019 | (28,941,760 | ) | (29,229,340 | ) | 0 | (287,580 | ) | |||||||||||||||
|
|
|
| |||||||||||||||||||||
$ | 327,980 | $ | (287,580 | ) | ||||||||||||||||||||
|
|
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Index Asset Allocation Fund | 27 |
Investments in Affiliates
An affiliated investment is an investment in which the Fund owns at least 5% of the outstanding voting shares of the issuer or as a result of other relationships, such as the Fund and the issuer having the same investment manager. Transactions with issuers that were either affiliated persons of the Fund at the beginning of the period or the end of the period were as follows:
Shares, beginning of period | Shares purchased | Shares sold | Shares, end of period | Net realized gains (losses) | Net change in unrealized gains (losses) | Income from affiliated securities | Value, end of period | % of net assets | ||||||||||||||||||||||||||||
Common Stocks | ||||||||||||||||||||||||||||||||||||
Financials | ||||||||||||||||||||||||||||||||||||
Banks | ||||||||||||||||||||||||||||||||||||
Wells Fargo & Company | 140,237 | 5,925 | 11,824 | 134,338 | $ | 10,423 | $ | (597,645 | ) | $ | 122,346 | $ | 6,491,212 | 0.50 | % | |||||||||||||||||||||
Short-Term Investments | ||||||||||||||||||||||||||||||||||||
Investment Companies | ||||||||||||||||||||||||||||||||||||
Securities Lending Cash Investments LLC | 1,344,731 | 13,498,930 | 13,886,414 | 957,247 | 34 | (34 | ) | 16,527 | 957,342 | |||||||||||||||||||||||||||
Wells Fargo Government Money Market Fund Select Class | 15,043,298 | 107,559,225 | 92,096,411 | 30,506,112 | 0 | 0 | 165,927 | 30,506,112 | ||||||||||||||||||||||||||||
31,463,454 | 2.44 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
$ | 10,457 | $ | (597,679 | ) | $ | 304,800 | $ | 37,954,666 | 2.94 | % | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
28 | Wells Fargo Index Asset Allocation Fund | Statement of assets and liabilities—March 31, 2019 (unaudited) |
Assets | ||||
Investments in unaffiliated securities (including $935,502 of securities loaned), at value (cost $826,506,029) | $ | 1,251,595,709 | ||
Investments in affiliated securities, at value (cost $35,499,093) | 37,954,666 | |||
Receivable for Fund shares sold | 1,098,727 | |||
Receivable for dividends and interest | 3,637,129 | |||
Receivable for daily variation margin on open futures contracts | 42,131 | |||
Receivable for securities lending income | 34 | |||
Prepaid expenses and other assets | 485,200 | |||
|
| |||
Total assets | 1,294,813,596 | |||
|
| |||
Liabilities | ||||
Payable for Fund shares redeemed | 1,014,991 | |||
Payable upon receipt of securities loaned | 957,012 | |||
Payable for investments purchased | 775,871 | |||
Management fee payable | 609,213 | |||
Payable for daily variation margin on open futures contracts | 268,573 | |||
Administration fees payable | 205,369 | |||
Distribution fee payable | 89,054 | |||
Trustees’ fees and expenses payable | 1,080 | |||
Accrued expenses and other liabilities | 164,229 | |||
|
| |||
Total liabilities | 4,085,392 | |||
|
| |||
Total net assets | $ | 1,290,728,204 | ||
|
| |||
NET ASSETS CONSIST OF | ||||
Paid-in capital | $ | 878,098,096 | ||
Total distributable earnings | 412,630,108 | |||
|
| |||
Total net assets | $ | 1,290,728,204 | ||
|
| |||
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE | ||||
Net assets – Class A | $ | 815,323,266 | ||
Shares outstanding – Class A1 | 24,271,563 | |||
Net asset value per share – Class A | $33.59 | |||
Maximum offering price per share – Class A2 | $35.64 | |||
Net assets – Class C | $ | 142,233,547 | ||
Shares outstanding – Class C1 | 6,966,181 | |||
Net asset value per share – Class C | $20.42 | |||
Net assets – Administrator Class | $ | 217,218,471 | ||
Shares outstanding – Administrator Class1 | 6,465,236 | |||
Net asset value per share – Administrator Class | $33.60 | |||
Net assets – Institutional Class | $ | 115,952,920 | ||
Shares outstanding – Institutional Class1 | 3,455,595 | |||
Net asset value per share – Institutional Class | $33.56 |
1 | The Fund has an unlimited number of authorized shares. |
2 | Maximum offering price is computed as 100/94.25 of net asset value. On investments of $50,000 or more, the offering price is reduced. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of operations—six months ended March 31, 2019 (unaudited) | Wells Fargo Index Asset Allocation Fund | 29 |
Investment income | ||||
Dividends | $ | 7,693,108 | ||
Interest | 5,189,650 | |||
Income from affiliated securities | 291,192 | |||
|
| |||
Total investment income | 13,173,950 | |||
|
| |||
Expenses | ||||
Management fee | 3,790,136 | |||
Administration fees | ||||
Class A | 822,064 | |||
Class C | 151,116 | |||
Administrator Class | 134,234 | |||
Institutional Class | 70,778 | |||
Shareholder servicing fees | ||||
Class A | 978,648 | |||
Class C | 179,900 | |||
Administrator Class | 257,376 | |||
Distribution fee | ||||
Class C | 539,700 | |||
Custody and accounting fees | 49,863 | |||
Professional fees | 25,431 | |||
Registration fees | 56,397 | |||
Shareholder report expenses | 61,707 | |||
Trustees’ fees and expenses | 10,969 | |||
Other fees and expenses | 70,309 | |||
|
| |||
Total expenses | 7,198,628 | |||
Less: Fee waivers and/or expense reimbursements | (316,466 | ) | ||
|
| |||
Net expenses | 6,882,162 | |||
|
| |||
Net investment income | 6,291,788 | |||
|
| |||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | ||||
Net realized gains on: | ||||
Unaffiliated securities | 7,981,453 | |||
Affiliated securities | 10,457 | |||
Futures contracts | 583,222 | |||
|
| |||
Net realized gains on investments | 8,575,132 | |||
|
| |||
Net change in unrealized gains (losses) on: | ||||
Unaffiliated securities | (9,439,182 | ) | ||
Affiliated securities | (597,679 | ) | ||
Futures contracts | (635,946 | ) | ||
|
| |||
Net change in unrealized gains (losses) on investments | (10,672,807 | ) | ||
|
| |||
Net realized and unrealized gains (losses) on investments | (2,097,675 | ) | ||
|
| |||
Net increase in net assets resulting from operations | $ | 4,194,113 | ||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
30 | Wells Fargo Index Asset Allocation Fund | Statement of changes in net assets |
Six months ended March 31, 2019 (unaudited) | Year ended September 30, 2018 | |||||||||||||||
Operations | ||||||||||||||||
Net investment income | $ | 6,291,788 | $ | 9,894,627 | ||||||||||||
Net realized gains on investments | 8,575,132 | 39,659,948 | ||||||||||||||
Net change in unrealized gains (losses) on investments | (10,672,807 | ) | 71,110,422 | |||||||||||||
|
| |||||||||||||||
Net increase in net assets resulting from operations | 4,194,113 | 120,664,997 | ||||||||||||||
|
| |||||||||||||||
Distributions to shareholders from net investment income and net realized gains |
| |||||||||||||||
Net investment income | ||||||||||||||||
Class A | (26,506,393 | ) | (11,409,252 | ) | ||||||||||||
Class C | (4,556,813 | ) | (919,168 | ) | ||||||||||||
Administrator Class | (7,220,054 | ) | (3,520,207 | ) | ||||||||||||
Institutional Class | (3,874,237 | ) | (1,662,226 | ) | ||||||||||||
|
| |||||||||||||||
Total distributions to shareholders | (42,157,497 | ) | (17,510,853 | ) | ||||||||||||
|
| |||||||||||||||
Capital share transactions | Shares | Shares | ||||||||||||||
Proceeds from shares sold | ||||||||||||||||
Class A | 1,063,622 | 34,675,046 | 868,341 | 29,002,760 | ||||||||||||
Class C | 1,021,076 | 20,037,652 | 1,103,845 | 22,374,800 | ||||||||||||
Administrator Class | 843,620 | 27,519,267 | 1,794,727 | 59,667,463 | ||||||||||||
Institutional Class | 611,866 | 19,856,825 | 2,309,266 | 76,336,619 | ||||||||||||
|
| |||||||||||||||
102,088,790 | 187,381,642 | |||||||||||||||
|
| |||||||||||||||
Reinvestment of distributions | ||||||||||||||||
Class A | 809,685 | 25,837,340 | 335,827 | 11,110,101 | ||||||||||||
Class C | 213,127 | 4,123,803 | 41,176 | 823,476 | ||||||||||||
Administrator Class | 224,693 | 7,175,396 | 105,701 | 3,497,234 | ||||||||||||
Institutional Class | 79,205 | 2,527,843 | 33,425 | 1,106,808 | ||||||||||||
|
| |||||||||||||||
39,664,382 | 16,537,619 | |||||||||||||||
|
| |||||||||||||||
Payment for shares redeemed | ||||||||||||||||
Class A | (1,582,996 | ) | (51,640,662 | ) | (2,943,621 | ) | (97,771,815 | ) | ||||||||
Class C | (1,545,342 | ) | (30,626,217 | ) | (1,723,765 | ) | (34,885,653 | ) | ||||||||
Administrator Class | (856,692 | ) | (27,787,761 | ) | (4,039,923 | ) | (133,486,696 | ) | ||||||||
Institutional Class | (431,615 | ) | (13,992,038 | ) | (1,057,098 | ) | (35,104,912 | ) | ||||||||
|
| |||||||||||||||
(124,046,678 | ) | (301,249,076 | ) | |||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from capital share transactions | 17,706,494 | (97,329,815 | ) | |||||||||||||
|
| |||||||||||||||
Total increase (decrease) in net assets | (20,256,890 | ) | 5,824,329 | |||||||||||||
|
| |||||||||||||||
Net assets | ||||||||||||||||
Beginning of period | 1,310,985,094 | 1,305,160,765 | ||||||||||||||
|
| |||||||||||||||
End of period | $ | 1,290,728,204 | $ | 1,310,985,094 | ||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Index Asset Allocation Fund | 31 |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS A | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $34.63 | $31.99 | $29.61 | $28.72 | $28.20 | $24.48 | ||||||||||||||||||
Net investment income | 0.17 | 0.27 | 0.25 | 0.22 | 0.27 | 0.38 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.09 | ) | 2.83 | 2.67 | 2.45 | 0.76 | 3.72 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | 0.08 | 3.10 | 2.92 | 2.67 | 1.03 | 4.10 | ||||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.16 | ) | (0.27 | ) | (0.27 | ) | (0.21 | ) | (0.22 | ) | (0.38 | ) | ||||||||||||
Net realized gains | (0.96 | ) | (0.19 | ) | (0.27 | ) | (1.57 | ) | (0.29 | ) | 0.00 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total distributions to shareholders | (1.12 | ) | (0.46 | ) | (0.54 | ) | (1.78 | ) | (0.51 | ) | (0.38 | ) | ||||||||||||
Net asset value, end of period | $33.59 | $34.63 | $31.99 | $29.61 | $28.72 | $28.20 | ||||||||||||||||||
Total return1 | 0.42 | % | 9.76 | % | 9.99 | % | 9.68 | % | 3.62 | % | 16.83 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.11 | % | 1.08 | % | 1.09 | % | 1.10 | % | 1.22 | % | 1.20 | % | ||||||||||||
Net expenses | 1.08 | % | 1.07 | % | 1.09 | % | 1.10 | % | 1.15 | % | 1.15 | % | ||||||||||||
Net investment income | 1.04 | % | 0.80 | % | 0.79 | % | 0.79 | % | 0.90 | % | 1.42 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 7 | % | 9 | % | 9 | % | 8 | % | 43 | % | 9 | % | ||||||||||||
Net assets, end of period (000s omitted) | $815,323 | $830,487 | $822,769 | $828,421 | $736,276 | $708,873 |
1 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
32 | Wells Fargo Index Asset Allocation Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS C | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $21.07 | $19.45 | $17.99 | $17.47 | $17.20 | $14.94 | ||||||||||||||||||
Net investment income | 0.03 | 0.01 | 0.01 | 0.01 | 1 | 0.05 | 0.11 | |||||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.06 | ) | 1.73 | 1.62 | 1.48 | 0.45 | 2.27 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (0.03 | ) | 1.74 | 1.63 | 1.49 | 0.50 | 2.38 | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.04 | ) | (0.00 | )2 | (0.01 | ) | (0.02 | ) | (0.05 | ) | (0.12 | ) | ||||||||||||
Net realized gains | (0.58 | ) | (0.12 | ) | (0.16 | ) | (0.95 | ) | (0.18 | ) | 0.00 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total distributions to shareholders | (0.62 | ) | (0.12 | ) | (0.17 | ) | (0.97 | ) | (0.23 | ) | (0.12 | ) | ||||||||||||
Net asset value, end of period | $20.42 | $21.07 | $19.45 | $17.99 | $17.47 | $17.20 | ||||||||||||||||||
Total return3 | 0.06 | % | 8.97 | % | 9.14 | % | 8.86 | % | 2.86 | % | 15.96 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.86 | % | 1.83 | % | 1.84 | % | 1.85 | % | 1.98 | % | 1.95 | % | ||||||||||||
Net expenses | 1.83 | % | 1.82 | % | 1.84 | % | 1.85 | % | 1.90 | % | 1.90 | % | ||||||||||||
Net investment income | 0.28 | % | 0.05 | % | 0.04 | % | 0.03 | % | 0.10 | % | 0.67 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 7 | % | 9 | % | 9 | % | 8 | % | 43 | % | 9 | % | ||||||||||||
Net assets, end of period (000s omitted) | $142,234 | $153,322 | $152,820 | $136,881 | $62,019 | $24,093 |
1 | Calculated based upon average shares outstanding |
2 | Amount is less than $0.005. |
3 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Index Asset Allocation Fund | 33 |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
ADMINISTRATOR CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $34.64 | $31.99 | $29.63 | $28.75 | $28.21 | $24.49 | ||||||||||||||||||
Net investment income | 0.20 | 0.32 | 0.30 | 0.28 | 0.35 | 0.45 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.09 | ) | 2.84 | 2.68 | 2.45 | 0.76 | 3.72 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | 0.11 | 3.16 | 2.98 | 2.73 | 1.11 | 4.17 | ||||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.19 | ) | (0.32 | ) | (0.35 | ) | (0.28 | ) | (0.28 | ) | (0.45 | ) | ||||||||||||
Net realized gains | (0.96 | ) | (0.19 | ) | (0.27 | ) | (1.57 | ) | (0.29 | ) | 0.00 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total distributions to shareholders | (1.15 | ) | (0.51 | ) | (0.62 | ) | (1.85 | ) | (0.57 | ) | (0.45 | ) | ||||||||||||
Net asset value, end of period | $33.60 | $34.64 | $31.99 | $29.63 | $28.75 | $28.21 | ||||||||||||||||||
Total return1 | 0.52 | % | 9.94 | % | 10.20 | % | 9.91 | % | 3.89 | % | 17.12 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.03 | % | 1.00 | % | 0.99 | % | 1.02 | % | 1.09 | % | 1.04 | % | ||||||||||||
Net expenses | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | ||||||||||||
Net investment income | 1.22 | % | 0.97 | % | 0.96 | % | 0.98 | % | 1.12 | % | 1.68 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 7 | % | 9 | % | 9 | % | 8 | % | 43 | % | 9 | % | ||||||||||||
Net assets, end of period (000s omitted) | $217,218 | $216,611 | $268,512 | $206,908 | $85,380 | $59,783 |
1 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
34 | Wells Fargo Index Asset Allocation Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | |||||||||||
INSTITUTIONAL CLASS | 2018 | 20171 | ||||||||||
Net asset value, beginning of period | $34.59 | $31.96 | $29.27 | |||||||||
Net investment income | 0.22 | 0.39 | 0.35 | |||||||||
Net realized and unrealized gains (losses) on investments | (0.07 | ) | 2.81 | 3.03 | ||||||||
|
|
|
|
|
| |||||||
Total from investment operations | 0.15 | 3.20 | 3.38 | |||||||||
Distributions to shareholders from | ||||||||||||
Net investment income | (0.22 | ) | (0.38 | ) | (0.42 | ) | ||||||
Net realized gains | (0.96 | ) | (0.19 | ) | (0.27 | ) | ||||||
|
|
|
|
|
| |||||||
Total distributions to shareholders | (1.18 | ) | (0.57 | ) | (0.69 | ) | ||||||
Net asset value, end of period | $33.56 | $34.59 | $31.96 | |||||||||
Total return2 | 0.62 | % | 10.11 | % | 11.70 | % | ||||||
Ratios to average net assets (annualized) | ||||||||||||
Gross expenses | 0.78 | % | 0.75 | % | 0.74 | % | ||||||
Net expenses | 0.75 | % | 0.74 | % | 0.74 | % | ||||||
Net investment income | 1.37 | % | 1.13 | % | 1.08 | % | ||||||
Supplemental data | ||||||||||||
Portfolio turnover rate | 7 | % | 9 | % | 9 | % | ||||||
Net assets, end of period (000s omitted) | $115,953 | $110,566 | $61,060 |
1 | For the period from October 31, 2016 (commencement of class operations) to September 30, 2017 |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Notes to financial statements (unaudited) | Wells Fargo Index Asset Allocation Fund | 35 |
1. ORGANIZATION
Wells Fargo Funds Trust (the “Trust”), a Delaware statutory trust organized on March 10, 1999, is anopen-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As an investment company, the Trust follows the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”)Accounting Standards Codification Topic 946, Financial Services – Investment Companies. These financial statements report on the Wells Fargo Index Asset Allocation Fund (the “Fund”) which is a diversified series of the Trust.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Fund, are in conformity with U.S. generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Securities valuation
All investments are valued each business day as of the close of regular trading on the New York Stock Exchange (generally 4 p.m. Eastern Time), although the Fund may deviate from this calculation time under unusual or unexpected circumstances.
Equity securities and futures contracts that are listed on a foreign or domestic exchange or market are valued at the official closing price or, if none, the last sales price. If no sale occurs on the principal exchange or market that day, a fair value price will be determined in accordance with the Fund’s Valuation Procedures.
Debt securities are valued at the evaluated bid price provided by an independent pricing service (e.g. taking into account various factors, including yields, maturities, or credit ratings) or, if a reliable price is not available, the quoted bid price from an independent broker-dealer.
Investments in registeredopen-end investment companies are valued at net asset value. Interests innon-registered investment companies that are redeemable at net asset value are fair valued normally at net asset value.
Investments which are not valued using any of the methods discussed above are valued at their fair value, as determined in good faith by the Board of Trustees of the Fund. The Board of Trustees has established a Valuation Committee comprised of the Trustees and has delegated to it the authority to take any actions regarding the valuation of portfolio securities that the Valuation Committee deems necessary or appropriate, including determining the fair value of portfolio securities, unless the determination has been delegated to the Wells Fargo Asset Management Pricing Committee at Wells Fargo Funds Management, LLC (“Funds Management”). The Board of Trustees retains the authority to make or ratify any valuation decisions or approve any changes to the Valuation Procedures as it deems appropriate. On a quarterly basis, the Board of Trustees receives reports on any valuation actions taken by the Valuation Committee or the Wells Fargo Asset Management Pricing Committee which may include items for ratification.
Securities lending
The Fund may lend its securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The Fund continues to receive interest or dividends on the securities loaned. The Fund receives collateral in the form of cash or securities with a value at least equal to the value of the securities on loan. The value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. In a securities lending transaction, the net asset value of the Fund will be affected by an increase or decrease in the value of the securities loaned and by an increase or decrease in the value of the instrument in which collateral is invested. The amount of securities lending activity undertaken by the Fund fluctuates from time to time. In the event of default or bankruptcy by the borrower, the Fund may be prevented from recovering the loaned securities or gaining access to the collateral or may experience delays or costs in doing so. In addition, the investment of any cash collateral received may lose all or part of its value. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.
The Fund lends its securities through an unaffiliated securities lending agent. Cash collateral received in connection with its securities lending transactions is invested in Securities Lending Cash Investments, LLC (the “Securities Lending Fund”). The Securities Lending Fund is exempt from registration under Section 3(c)(7) of the 1940 Act and is managed by Funds Management and is subadvised by Wells Capital Management Incorporated (“WellsCap”), an affiliate of Funds Management and an indirect wholly owned subsidiary of Wells Fargo & Company (“Wells Fargo”). Funds Management receives an advisory fee starting at 0.05% and declining to 0.01% as the average daily net assets of the Securities Lending
Table of Contents
36 | Wells Fargo Index Asset Allocation Fund | Notes to financial statements (unaudited) |
Fund increase. All of the fees received by Funds Management are paid to WellsCap for its services as subadviser. The Securities Lending Fund seeks to provide a positive return compared to the daily Fed Funds Open Rate by investing in high-quality, U.S. dollar-denominated short-term money market instruments. Securities Lending Fund investments are valued at the evaluated bid price provided by an independent pricing service. Income earned from investment in the Securities Lending Fund (net of fees and rebates), if any, is included in income from affiliated securities on the Statement of Operations.
Futures contracts
The Fund is subject to interest rate risk and equity price risk in the normal course of pursuing its investment objectives. Futures contracts are agreements between the Fund and a counterparty to buy or sell a specific amount of a commodity, financial instrument or currency at specified price and on a specified date. The Fund may buy and sell futures contracts in order to gain exposure to, or protect against, changes in interest rates and security values. The primary risks associated with the use of futures contracts are the imperfect correlation between changes in market values of securities held by the Fund and the prices of futures contracts, and the possibility of an illiquid market. Futures contracts are generally entered into on a regulated futures exchange and cleared through a clearinghouse associated with the exchange. With futures contracts, there is minimal counterparty risk to the Fund since futures contracts are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures contracts against default.
Upon entering into a futures contracts, the Fund is required to deposit either cash or securities (initial margin) with the broker in an amount equal to a certain percentage of the contract value. Subsequent payments (variation margin) are paid to or from the broker each day equal to the daily changes in the contract value. Such payments are recorded as unrealized gains or losses and, if any, shown as variation margin receivable (payable) in the Statement of Assets and Liabilities. Should the Fund fail to make requested variation margin payments, the broker can gain access to the initial margin to satisfy the Fund’s payment obligations. When the contracts are closed, a realized gain or loss is recorded in the Statement of Operations.
Security transactions and income recognition
Securities transactions are recorded on a trade date basis. Realized gains or losses are recorded on the basis of identified cost.
Dividend income is recognized on theex-dividend date.
Interest income is accrued daily and bond discounts are accreted and premiums are amortized daily. To the extent debt obligations are placed onnon-accrual status, any related interest income may be reduced by writing off interest receivables when the collection of all or a portion of interest has been determined to be doubtful based on consistently applied procedures and the fair value has decreased. If the issuer subsequently resumes interest payments or when the collectability of interest is reasonably assured, the debt obligation is removed fromnon-accrual status.
Distributions to shareholders
Distributions to shareholders are recorded on the ex-dividend date and paid from net investment income quarterly and any net realized gains are paid at least annually. Such distributions are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles. Dividend sources are estimated at the time of declaration. The tax character of distributions is determined as of the Fund’s fiscal year end. Therefore, a portion of the Fund’s distributions made prior to the Fund’s fiscal year end may be categorized as a tax return of capital at year end.
Federal and other taxes
The Fund intends to continue to qualify as a regulated investment company by distributing substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required.
The Fund’s income and federal excise tax returns and all financial records supporting those returns for the prior three fiscal years are subject to examination by the federal and Delaware revenue authorities. Management has analyzed the Fund’s tax positions taken on federal, state, and foreign tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability.
Table of Contents
Notes to financial statements (unaudited) | Wells Fargo Index Asset Allocation Fund | 37 |
As of March 31, 2019, the aggregate cost of all investments for federal income tax purposes was $861,420,730 and the unrealized gains (losses) consisted of:
Gross unrealized gains | $ | 428,457,625 | ||
Gross unrealized losses | (287,580 | ) | ||
Net unrealized gains | $ | 428,170,045 |
Class allocations
The separate classes of shares offered by the Fund differ principally in applicable sales charges, distribution, shareholder servicing, and administration fees. Class specific expenses are charged directly to that share class. Investment income, common expenses, and realized and unrealized gains (losses) on investments are allocated daily to each class of shares based on the relative proportion of net assets of each class.
3. FAIR VALUATION MEASUREMENTS
Fair value measurements of investments are determined within a framework that has established a fair value hierarchy based upon the various data inputs utilized in determining the value of the Fund’s investments. The three-level hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Fund’s investments are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The inputs are summarized into three broad levels as follows:
∎ | Level 1 – quoted prices in active markets for identical securities |
∎ | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
∎ | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
The inputs or methodologies used for valuing investments in securities are not necessarily an indication of the risk associated with investing in those securities.
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38 | Wells Fargo Index Asset Allocation Fund | Notes to financial statements (unaudited) |
The following is a summary of the inputs used in valuing the Fund’s assets and liabilities as of March 31, 2019:
Quoted prices (Level 1) | Other significant observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total | |||||||||||||
Assets | ||||||||||||||||
Investments in: | ||||||||||||||||
Agency securities | $ | 0 | $ | 48,149 | $ | 0 | $ | 48,149 | ||||||||
Common stocks | ||||||||||||||||
Communication services | 77,737,672 | 0 | 0 | 77,737,672 | ||||||||||||
Consumer discretionary | 77,993,367 | 0 | 0 | 77,993,367 | ||||||||||||
Consumer staples | 56,443,384 | 0 | 0 | 56,443,384 | ||||||||||||
Energy | 41,777,375 | 0 | 0 | 41,777,375 | ||||||||||||
Financials | 98,050,402 | 0 | 0 | 98,050,402 | ||||||||||||
Health care | 112,150,350 | 0 | 0 | 112,150,350 | ||||||||||||
Industrials | 73,034,704 | 0 | 0 | 73,034,704 | ||||||||||||
Information technology | 162,892,563 | 0 | 0 | 162,892,563 | ||||||||||||
Materials | 20,339,403 | 20,339,403 | ||||||||||||||
Real estate | 23,859,482 | 0 | 0 | 23,859,482 | ||||||||||||
Utilities | 25,681,990 | 0 | 0 | 25,681,990 | ||||||||||||
Non-agency mortgage-backed securities | 0 | 9,863 | 0 | 9,863 | ||||||||||||
U.S. Treasury securities | 486,063,190 | 0 | 0 | 486,063,190 | ||||||||||||
Short-term investments | ||||||||||||||||
Investment companies | 30,506,112 | 957,342 | 0 | 31,463,454 | ||||||||||||
U.S. Treasury securities | 2,005,027 | 0 | 2,005,027 | |||||||||||||
1,288,535,021 | 1,015,354 | 0 | 1,289,550,375 | |||||||||||||
Futures contracts | 327,980 | 0 | 0 | 327,980 | ||||||||||||
Total assets | $ | 1,288,863,001 | $ | 1,015,354 | $ | 0 | $ | 1,289,878,355 | ||||||||
Liabilities | ||||||||||||||||
Futures contracts | $ | 287,580 | $ | 0 | $ | 0 | $ | 287,580 | ||||||||
Total liabilities | $ | 287,580 | $ | 0 | $ | 0 | $ | 287,580 |
Additional sector, industry or geographic detail is included in the Portfolio of Investments.
Future contracts are reported at the cumulative unrealized gains (losses) at measurement date as reported in the table following the Portfolio of Investments. For futures contracts, the current day’s variation margin is reported on the Statement of Assets and Liabilities. All other assets and liabilities are reported at their market value at measurement date.
At March 31, 2019, the Fund did not have any transfers into/out of Level 3.
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Notes to financial statements (unaudited) | Wells Fargo Index Asset Allocation Fund | 39 |
4. TRANSACTIONS WITH AFFILIATES
Management fee
Funds Management, an indirect wholly owned subsidiary of Wells Fargo, is the manager of the Fund and provides advisory and fund-level administrative services under an investment management agreement. Under the investment management agreement, Funds Management is responsible for, among other services, implementing the investment objectives and strategies of the Fund, supervising the subadviser and providing fund-level administrative services in connection with the Fund’s operations. As compensation for its services under the investment management agreement, Funds Management is entitled to receive a management fee at the following annual rate based on the Fund’s average daily net assets:
Average daily net assets | Management fee | |||
First $500 million | 0.650 | % | ||
Next $500 million | 0.600 | |||
Next $2 billion | 0.550 | |||
Next $2 billion | 0.525 | |||
Next $5 billion | 0.490 | |||
Over $10 billion | 0.480 |
For the six months ended March 31, 2019, the management fee was equivalent to an annual rate of 0.61% of the Fund’s average daily net assets.
Funds Management has retained the services of a subadviser to provide daily portfolio management to the Fund. The fee for subadvisory services is borne by Funds Management. WellsCap is the subadviser to the Fund and is entitled to receive a fee from Funds Management at an annual rate starting at 0.15% and declining to 0.10% as the average daily net assets of the Fund increase.
Administration fees
Under a class-level administration agreement, Funds Management provides class-level administrative services to the Fund, which includes paying fees and expenses for services provided by the transfer agent,sub-transfer agents, omnibus account servicers and record-keepers. As compensation for its services under the class-level administration agreement, Funds Management receives an annual fee which is calculated based on the average daily net assets of each class as follows:
Class-level administration fee | ||||
Class A, Class C | 0.21 | % | ||
Administrator Class, Institutional Class | 0.13 |
Funds Management has contractually waived and/or reimbursed management and administration fees to the extent necessary to maintain certain net operating expense ratios for the Fund. When each class of the Fund has exceeded its expense cap, Funds Management has waived fees and/or reimbursed expenses from fund level expenses on a proportionate basis and then from class specific expenses. When only certain classes exceed their expense caps, waivers and/or reimbursements are applied against class specific expenses before fund level expenses. Funds Management has committed through January 31, 2020 to waive fees and/or reimburse expenses to the extent necessary to cap the Fund’s expenses at 1.08% for Class A shares, 1.83% for Class C shares, 0.90% for Administrator Class and 0.75% for Institutional Class shares. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees.
Distribution fee
The Trust has adopted a distribution plan for Class C shares of the Fund pursuant to Rule12b-1 under the 1940 Act. A distribution fee is charged to Class C shares and paid to Wells Fargo Funds Distributor, LLC (“Funds Distributor”), the principal underwriter, at an annual rate of 0.75% of the average daily net assets of Class C shares.
In addition, Funds Distributor is entitled to receive thefront-end sales charge from the purchase of Class A shares and a contingent deferred sales charge on the redemption of certain Class A shares. Funds Distributor is also entitled to receive the contingent deferred sales charges from redemptions of Class C shares. For the six months ended March 31, 2019,
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40 | Wells Fargo Index Asset Allocation Fund | Notes to financial statements (unaudited) |
Funds Distributor received $22,133 from the sale of Class A shares and $130 in contingent deferred sales charges from redemptions of Class C shares. No contingent deferred sales charges were incurred by Class A for the six months ended March 31, 2019.
Shareholder servicing fees
The Trust has entered into contracts with one or more shareholder servicing agents, whereby Class A, Class C, and Administrator Class of the Fund are charged a fee at an annual rate of 0.25% of the average daily net assets of each respective class. A portion of these total shareholder servicing fees were paid to affiliates of Wells Fargo.
Interfund transactions
The Fund may purchase or sell portfolio investment securities to certain other Wells Fargo affiliates pursuant toRule 17a-7 under the 1940 Act and under procedures adopted by the Board of Trustees. The procedures have been designed to ensure that these interfund transactions, which do not incur broker commissions, are effected at current market prices.
5. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six months ended March 31, 2019 were as follows:
Purchases at cost | Sales proceeds | |||||
U.S. government | Non-U.S. government | U.S. government | Non-U.S. government | |||
$41,792,761 | $41,140,775 | $64,225,923 | $41,108,253 |
6. DERIVATIVE TRANSACTIONS
During the six months ended March 31, 2019, the Fund entered into futures contracts to manage the duration of the portfolio and to gain market exposure to certain asset classes by implementing tactical asset allocation shifts. The Fund had an average notional amount of $85,509,292 and $19,636,774 in long and short futures contracts, respectively, during the six months ended March 31, 2019.
A summary of the location of derivative instruments on the financial statements by primary risk exposure is outlined following tables.
The fair value of derivative instruments as of March 31, 2019 was as follows for the Fund:
Asset derivatives | Liability derivatives | |||||||||||
Statement of Assets and Liabilities location | Fair value | Statement of Assets and Liabilities location | Fair value | |||||||||
Equity risk | Unrealized gains on futures contracts | $ | 102,870 | * | Unrealized losses on futures contracts | $ | 287,580 | * | ||||
Interest rate risk | Unrealized gains on futures contracts | 225,110 | * | Unrealized losses on futures contracts | 0 | * | ||||||
$ | 327,980 | $ | 287,580 |
* | Amount represents cumulative unrealized gains (losses) as reported in the table following the Portfolio of Investments. Only the current day’s variation margin as of March 31, 2019 is reported separately on the Statement of Assets and Liabilities. |
The effect of derivative instruments on the Statement of Operations for the six months ended March 31, 2019 was as follows for the Fund:
Amount of realized gains (losses) on derivatives | Change in unrealized gains (losses) on derivatives | |||||||
Equity risk | $ | (399,827 | ) | $ | (325,350 | ) | ||
Interest rate risk | 983,049 | (310,596 | ) | |||||
$ | 583,222 | $ | (635,946 | ) |
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Notes to financial statements (unaudited) | Wells Fargo Index Asset Allocation Fund | 41 |
7. BANK BORROWINGS
The Trust (excluding the money market funds), Wells Fargo Master Trust and Wells Fargo Variable Trust are parties to a $280,000,000 revolving credit agreement whereby the Fund is permitted to use bank borrowings for temporary or emergency purposes, such as to fund shareholder redemption requests. Interest under the credit agreement is charged to the Fund based on a borrowing rate equal to the higher of the Federal Funds rate in effect on that day plus 1.25% or the overnight LIBOR rate in effect on that day plus 1.25%. In addition, an annual commitment fee equal to 0.25% of the unused balance is allocated to each participating fund.
For the six months ended March 31, 2019, there were no borrowings by the Fund under the agreement.
8. INDEMNIFICATION
Under the Trust’s organizational documents, the officers and Trustees have been granted certain indemnification rights against certain liabilities that may arise out of performance of their duties to the Trust. Additionally, in the normal course of business, the Trust may enter into contracts with service providers that contain a variety of indemnification clauses. The Trust’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated.
9. NEW ACCOUNTING PRONOUNCEMENTS
In August 2018, FASB issued Accounting Standards Update (“ASU”)No. 2018-13, Fair Value Measurement (Topic 820)Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU2018-13 updates the disclosure requirements for fair value measurements by modifying or removing certain disclosures and adding certain new disclosures. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management has adopted the removal and modification of disclosures early, as permitted, and will adopt the additional new disclosures at the effective date.
In March 2017, FASB issued ASU No. 2017-08,Premium Amortization on Purchased Callable Debt Securities.ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium. The amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 is effective for fiscal years beginning after December 15, 2018 and for interim periods within those fiscal years. Management is currently evaluating the potential impact of this new guidance to the financial statements.
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42 | Wells Fargo Index Asset Allocation Fund | Other information (unaudited) |
PROXY VOTING INFORMATION
A description of the policies and procedures used to determine how to vote proxies relating to portfolio securities is available, upon request, by calling1-800-222-8222, visiting our website atwfam.com, or visiting the SEC website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent12-month period ended June 30 is available on the Fund’s website atwfam.comor by visiting the SEC website at sec.gov.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for the Fund are publicly available monthly on the Fund’s website (wfam.com), on aone-month delayed basis. In addition, top ten holdings information (excluding derivative positions) for the Fund is publicly available on the Fund’s website on a monthly,seven-day or more delayed basis. The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on FormN-Q, which is available by visiting the SEC website at sec.gov. In addition, the Fund’s FormN-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling1-800-SEC-0330.
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Other information (unaudited) | Wells Fargo Index Asset Allocation Fund | 43 |
BOARD OF TRUSTEES AND OFFICERS
Each of the Trustees and Officers1 listed in the table below acts in identical capacities for each fund in the Wells Fargo family of funds, which consists of 151 mutual funds comprising the Wells Fargo Funds Trust, Wells Fargo Variable Trust, Wells Fargo Master Trust and fourclosed-end funds (collectively the “Fund Complex”). This table should be read in conjunction with the Prospectus and the Statement of Additional Information2. The mailing address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, however, each Trustee serves such term until reaching the mandatory retirement age established by the Trustees.
Independent Trustees
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other directorships | |||
William R. Ebsworth (Born 1957) | Trustee, since 2015 | Retired. From 1984 to 2013, equities analyst, portfolio manager, research director and chief investment officer at Fidelity Management and Research Company in Boston, Tokyo, and Hong Kong, and retired in 2013 as Chief Investment Officer of Fidelity Strategic Advisers, Inc. where he led a team of investment professionals managing client assets. Prior thereto, Board member of Hong Kong Securities Clearing Co., Hong Kong Options Clearing Corp., the Thailand International Fund, Ltd., Fidelity Investments Life Insurance Company, and Empire Fidelity Investments Life Insurance Company. Audit Committee Chair and Investment Committee Chair of the Vincent Memorial Hospital Endowment(non-profit organization). Mr. Ebsworth is a CFA® charterholder. | N/A | |||
Jane A. Freeman (Born 1953) | Trustee, since 2015; Chair Liaison, since 2018 | Retired. From 2012 to 2014 and 1999 to 2008, Chief Financial Officer of Scientific Learning Corporation. From 2008 to 2012, Ms. Freeman provided consulting services related to strategic business projects. Prior to 1999, Portfolio Manager at Rockefeller & Co. and Scudder, Stevens & Clark. Board member of the Harding Loevner Funds from 1996 to 2014, serving as both Lead Independent Director and chair of the Audit Committee. Board member of the Russell Exchange Traded Funds Trust from 2011 to 2012 and the chair of the Audit Committee. Ms. Freeman is a Board Member of The Ruth Bancroft Garden(non-profit organization). She is also an inactive Chartered Financial Analyst. | N/A | |||
Isaiah Harris, Jr.3 (Born 1952) | Trustee, since 2009; Audit Committee Chairman, since 2019 | Retired. Chairman of the Board of CIGNA Corporation since 2009, and Director since 2005. From 2003 to 2011, Director of Deluxe Corporation. Prior thereto, President and CEO of BellSouth Advertising and Publishing Corp. from 2005 to 2007, President and CEO of BellSouth Enterprises from 2004 to 2005 and President of BellSouth Consumer Services from 2000 to 2003. Emeritus member of the Iowa State University Foundation Board of Governors. Emeritus Member of the Advisory Board of Iowa State University School of Business. Advisory Board Member, Palm Harbor Academy (private school). Advisory Board Member, Child Evangelism Fellowship(non-profit). Mr. Harris is a certified public accountant (inactive status). | CIGNA Corporation | |||
Judith M. Johnson (Born 1949) | Trustee, since 2008; Audit Committee Chairman, from 2009 to 2018 | Retired. Prior thereto, Chief Executive Officer and Chief Investment Officer of Minneapolis Employees Retirement Fund from 1996 to 2008. Ms. Johnson is an attorney, certified public accountant and a certified managerial accountant. | N/A |
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44 | Wells Fargo Index Asset Allocation Fund | Other information (unaudited) |
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other directorships | |||
David F. Larcker (Born 1950) | Trustee, since 2009 | James Irvin Miller Professor of Accounting at the Graduate School of Business, Stanford University, Director of the Corporate Governance Research Initiative and Senior Faculty of The Rock Center for Corporate Governance since 2006. From 2005 to 2008, Professor of Accounting at the Graduate School of Business, Stanford University. Prior thereto, Ernst & Young Professor of Accounting at The Wharton School, University of Pennsylvania from 1985 to 2005. | N/A | |||
Olivia S. Mitchell (Born 1953) | Trustee, since 2006; Nominating and Governance Committee Chairman, since 2018 | International Foundation of Employee Benefit Plans Professor, Wharton School of the University of Pennsylvania since 1993. Director of Wharton’s Pension Research Council and Boettner Center on Pensions & Retirement Research, and Research Associate at the National Bureau of Economic Research. Previously, Cornell University Professor from 1978 to 1993. | N/A | |||
Timothy J. Penny (Born 1951) | Trustee, since 1996; Chairman, since 2018 | President and Chief Executive Officer of Southern Minnesota Initiative Foundation, anon-profit organization, since 2007. Member of the Board of Trustees of NorthStar Education Finance, Inc., anon-profit organization, since 2007. | N/A | |||
James G. Polisson (Born 1959) | Trustee, since 2018 | Retired. Chief Marketing Officer, Source (ETF) UK Services, Ltd, from 2015 to 2017. From 2012 to 2015, Principal of The Polisson Group, LLC, a management consulting, corporate advisory and principal investing company. Chief Executive Officer and Managing Director at Russell Investments, Global Exchange Traded Funds from 2010 to 2012. Managing Director of Barclays Global Investors from 1998 to 2010 and Global Chief Marketing Officer for iShares and Barclays Global Investors from 2000 to 2010. Trustee of the San Francisco Mechanics’ Institute, anon-profit organization, from 2013 to 2015. Board member of the Russell Exchange Traded Fund Trust from 2011 to 2012. Director of Barclays Global Investors Holdings Deutschland GmbH from 2006 to 2009. Mr. Polisson is an attorney and has a retired status with the Massachusetts and District of Columbia Bar Associations. | N/A | |||
Pamela Wheelock (Born 1959) | Trustee, since 2018 | Board member of the Destination Medical Center Economic Development Agency, Rochester, Minnesota since 2019. Chief Operating Officer, Twin Cities Habitat for Humanity from 2017 to 2019. Vice President of University Services, University of Minnesota from 2012 to 2016. Prior thereto, on the Board of Directors, Governance Committee and Finance Committee for the Minnesota Philanthropy Partners (Saint Paul Foundation) from 2012 to 2018, Interim Chief Executive Officer of Blue Cross Blue Shield of Minnesota from 2011 to 2012, Chairman of the Board from 2009 to 2012 and Board Director from 2003 to 2015. Vice President, Leadership and Community Engagement, Bush Foundation, Saint Paul, Minnesota (a private foundation) from 2009 to 2011. Executive Vice President and Chief Financial Officer, Minnesota Sports and Entertainment from 2004 to 2009 and Senior Vice President from 2002 to 2004. Executive Vice President of the Minnesota Wild Foundation from 2004 to 2008. Commissioner of Finance, State of Minnesota, from 1999 to 2002. Currently Board Chair of the Minnesota Wild Foundation since 2010. | N/A |
* | Length of service dates reflect the Trustee’s commencement of service with the Trust’s predecessor entities, where applicable. |
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Other information (unaudited) | Wells Fargo Index Asset Allocation Fund | 45 |
Officers
Name and year of birth | Position held and length of service | Principal occupations during past five years or longer | ||||
Andrew Owen (Born 1960) | President, since 2017 | Executive Vice President of Wells Fargo & Company and Head of Affiliated Managers, Wells Fargo Asset Management, since 2014. In addition, Mr. Owen is currently President, Chief Executive Officer and Director of Wells Fargo Funds Management, LLC since 2017. Prior thereto, Executive Vice President responsible for marketing, investments and product development for Wells Fargo Funds Management, LLC, from 2009 to 2014. | ||||
Jeremy DePalma1 (Born 1974) | Treasurer, since 2012 | Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010 and head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010. | ||||
Alexander Kymn (Born 1973) | Secretary and Chief Legal Officer, since 2018 | Senior Company Counsel of Wells Fargo Bank, N.A. since 2018 (previously Senior Counsel from 2007 to 2018). Vice President of Wells Fargo Funds Management, LLC from 2008 to 2014. | ||||
Michael H. Whitaker (Born 1967) | Chief Compliance Officer, since 2016 | Senior Vice President and Chief Compliance Officer since 2016. Senior Vice President and Chief Compliance Officer for Fidelity Investments from 2007 to 2016. | ||||
David Berardi (Born 1975) | Assistant Treasurer, since 2009 | Vice President of Wells Fargo Funds Management, LLC since 2009. Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010. Manager of Fund Reporting and Control for Evergreen Investment Management Company, LLC from 2004 to 2010. |
1 | Jeremy DePalma acts as Treasurer of 86 funds and Assistant Treasurer of 65 funds in the Fund Complex. |
2 | The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request, by calling1-800-222-8222 or by visiting the website atwfam.com. |
3 | Mr. Harris became Chairman of the Audit Committee effective January 1, 2019. |
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46 | Wells Fargo Index Asset Allocation Fund | Appendix A (unaudited) |
SALES CHARGE REDUCTIONS AND WAIVERS FOR CERTAIN INTERMEDIARIES
Raymond James & Associates, Inc., Raymond James Financial Services & Raymond James affiliates (“Raymond James”)
Effective on or about March 1, 2019, shareholders purchasing Fund shares through a Raymond James platform or account will be eligible only for the following load waivers(front-end sales charge waivers and contingent deferred, orback-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in the Fund’s Prospectus or SAI.
Front-end Sales Load Waivers on Class A shares Available at Raymond James
• | Shares purchased in an investment advisory program. |
• | Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family). |
• | Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James. |
• | Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to afront-end or deferred sales load (known as Rights of Reinstatement). |
• | A shareholder in the fund’s Class C shares will have their shares automatically exchanged at net asset value to Class A shares (or the appropriate share class) of the fund if the shares are no longer subject to a CDSC and the exchange is in line with the policies and procedures of Raymond James. |
CDSC Waivers on Class A and C Shares Available at Raymond James
• | Death or disability of the shareholder. |
• | Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus. |
• | Return of excess contributions from an IRA Account. |
• | Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70½ as described in the Fund’s prospectus. |
• | Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James. |
• | Shares acquired through a right of reinstatement. |
Front-end Load Discounts Available at Raymond James: Breakpoints, and/or Rights of Accumulation
• | Breakpoints as described in the Fund’s Prospectus. |
• | Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets. |
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For more information
More information about Wells Fargo Funds is available free upon request. To obtain literature, please write, visit the Fund’s website, or call:
Wells Fargo Funds
P.O. Box 219967
Kansas City, MO 64121-9967
Website: wfam.com
Individual investors: 1-800-222-8222
Retail investment professionals: 1-888-877-9275
Institutional investment professionals:1-866-765-0778
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. Before investing, please consider the investment objectives, risks, charges, and expenses of the investment. For a current prospectus and, if available, a summary prospectus, containing this information, call1-800-222-8222 or visit the Fund’s website atwfam.com. Read the prospectus carefully before you invest or send money.
Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management firms owned by Wells Fargo & Company. These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by Wells Fargo Funds Distributor, LLC (a broker-dealer and Member FINRA).
This material is for general informational and educational purposes only and is NOT intended to provide investment advice or a recommendation of any kind—including a recommendation for any specific investment, strategy, or plan.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
© 2019 Wells Fargo Funds Management, LLC. All rights reserved.
![]() | 401601 05-19 SA227/SAR227 03-19 |
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Semi-Annual Report
March 31, 2019
Wells Fargo International Bond Fund
Beginning on January 1, 2021, as permitted by new regulations adopted by the Securities and Exchange Commission, paper copies of the Wells Fargo Funds’ annual and semi-annual shareholder reports issued after this date will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website, and you will be notified by mail each time a report is posted and provided with a website address to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-222-8222 or by enrolling at wellsfargo.com/advantagedelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports; if you invest directly with the Fund, you can call 1-800-222-8222. Your election to receive reports in paper will apply to all Wells Fargo Funds held in your account with your financial intermediary or, if you are a direct investor, to all Wells Fargo Funds that you hold.
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The views expressed and any forward-looking statements are as of March 31, 2019, unless otherwise noted, and are those of the Fund managers and/or Wells Fargo Asset Management. Discussions of individual securities, or the markets generally, or any Wells Fargo Fund are not intended as individual recommendations. Future events or results may vary significantly from those expressed in any forward-looking statements. The views expressed are subject to change at any time in response to changing circumstances in the market. Wells Fargo and the Fund disclaim any obligation to publicly update or revise any views expressed or forward-looking statements.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
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2 | Wells Fargo International Bond Fund | Letter to shareholders (unaudited) |
Andrew Owen
President
Wells Fargo Funds
December’s S&P 500 Index performance was the worst since 1931.
Dear Shareholder:
We are pleased to offer you this semi-annual report for the Wells Fargo International Bond Fund for the six-month period that ended March 31, 2019. Concerns about interest rate increases in the U.S., trade tensions, and geopolitical events drove equity losses and restrained bond returns during the fourth quarter of 2018. Investor sentiment improved during the first quarter of 2019 thanks to a shift in U.S. Federal Reserve (Fed) policy and consistent, if not spectacular, economic and business growth metrics.
For the period, U.S. stocks, as measured by the S&P 500 Index,1 lost 1.72% and international stocks, as measured by the MSCI ACWI ex USA Index (Net),2 fell 2.33%. Based on the MSCI EM Index (Net),3 emerging market stocks added 1.71%. For bond investors, the Bloomberg Barclays U.S. Aggregate Bond Index4 added 4.63% while the Bloomberg Barclays Global Aggregate ex-USD Index5 added 2.44%. The Bloomberg Barclays Municipal Bond Index6 added 4.63%, and the ICE BofAML U.S. High Yield Index7 gained 2.39%.
Conflicting data unsettled markets during the fourth quarter.
November’s U.S. midterm elections shifted control of the House of Representatives from Republicans to Democrats, presaging potential partisan clashes. Third-quarter U.S. gross domestic product was announced at an annualized 3.4% rate, lower than the second-quarter rate. Brexit efforts stalled ahead of the March 2019 deadline. The People’s Bank of China cut reserve requirement ratios, accelerated infrastructure spending, and cut taxes even as the value of the yuan declined to low levels last seen in 2008.
December’s S&P 500 Index performance was the worst since 1931. Globally, fixed-income investments fared better than stocks during the last two months of the year. The Fed increased the federal funds rate by 25 bps in December 2018 to a target range of between 2.25% and 2.50% and softened its outlook for 2019 rate increases.
The market climbs a wall of worry.
Investors entered 2019 with reasons to be concerned. A partial U.S. government shutdown driven by partisan spending and immigration policy disputes extended into January. Investors expected high levels of stock market volatility to continue based on the VIX8.
1 | The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index with each stock’s weight in the index proportionate to its market value. You cannot invest directly in an index. |
2 | The Morgan Stanley Capital International (MSCI) All Country World Index (ACWI) ex USA Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. You cannot invest directly in an index. |
3 | The MSCI Emerging Markets (EM) Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure large- and mid-cap equity market performance of emerging markets. The MSCI EM Index (Net) consists of the following 24 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and the United Arab Emirates. You cannot invest directly in an index. |
4 | The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid adjustable-rate mortgage pass-throughs), asset-backed securities, and commercial mortgage-backed securities. You cannot invest directly in an index. |
5 | The Bloomberg Barclays Global Aggregate ex-USD Index is an unmanaged index that provides a broad-based measure of the global investment-grade fixed-income markets excluding the U.S. dollar-denominated debt market. You cannot invest directly in an index. |
6 | The Bloomberg Barclays Municipal Bond Index is an unmanaged index composed of long-term tax-exempt bonds with a minimum credit rating of Baa. You cannot invest directly in an index. |
7 | The ICE BofAML U.S. High Yield Index is a market-capitalization-weighted index of domestic and Yankee high-yield bonds. The index tracks the performance of high-yield securities traded in the U.S. bond market. You cannot invest directly in an index. Copyright 2019. ICE Data Indices, LLC. All rights reserved. |
8 | The Chicago Board Options Exchange Market Volatility Index (VIX) is a popular measure of the implied volatility of S&P 500 Index options. It represents one measure of the market’s expectation of stock market volatility over the next 30-day period. You cannot invest directly in an index. |
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Letter to shareholders (unaudited) | Wells Fargo International Bond Fund | 3 |
January’s returns tended to support the investing adage that markets climb a wall of worry. The S&P 500 Index gained 8.01% for the month that ended January 31, 2019, its best monthly performance in 30 years. Returns for the MSCI ACWI ex USA Index (Net), the Bloomberg Barclays U.S. Aggregate Bond Index, and the Bloomberg Barclays Global Aggregate ex-USD Index also were positive. The Fed indicated that it would pause its program of regular rate increases during 2019 as inflation remained low. Businesses and investors responded positively to the shift in policy.
In February, concerns over slowing global growth reemerged. The Bureau of Economic Analysis announced fourth-quarter 2018 gross domestic product grew at an annualized 2.2% rate, down from the 4.2% annualized rate for the second quarter and the 3.4% annualized rate for the third quarter. Analysts attributed the lower growth rate to a slowing housing market and larger trade deficit. The U.S. Department of Labor said that the economy created just 20,000 jobs in February 2019. In a February report, the Bank of England forecast the slowest growth since the financial crisis for 2019. China and the U.S., while putting future tariffs on hold for the time being, continued to wrangle over trade issues.
By the end of March 2019, the combination of dovish Fed sentiment and consistent, if not spectacular, economic and business metrics reinforced investors’ enthusiasm for equity investing. Monthly job creation data regained its momentum. Corporate profits, while lower than 2018’s lofty levels, remained consistent. Inflation rates were relatively low in the U.S., Europe, and Japan. China announced a roughly $300 billion stimulus package through tax and fee cuts intended to reinvigorate economic growth.
Don’t let short-term uncertainty derail long-term investment goals.
Periods of investment uncertainty can present challenges, but experience has taught us that maintaining long-term investment goals can be an effective way to plan for the future. To help you create a sound strategy based on your personal goals and risk tolerance, Wells Fargo Funds offers more than 100 mutual funds spanning a wide range of asset classes and investment styles. Although diversification cannot guarantee an investment profit or prevent losses, we believe it can be an effective way to manage investment risk and potentially smooth out overall portfolio performance. We encourage investors to know their investments and to understand that appropriate levels of risk-taking may unlock opportunities.
Thank you for choosing to invest with Wells Fargo Funds. We appreciate your confidence in us and remain committed to helping you meet your financial needs.
Sincerely,
Andrew Owen
President
Wells Fargo Funds
January’s returns tended to support the investing adage that markets climb a wall of worry.
For further information about your Fund, contact your investment professional, visit our website atwfam.com, or call us directly at1-800-222-8222.
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4 | Wells Fargo International Bond Fund | Performance highlights (unaudited) |
Investment objective
The Fund seeks total return, consisting of income and capital appreciation.
Manager
Wells Fargo Funds Management, LLC
Subadviser
Wells Fargo Asset Management (International), LLC
Portfolio managers
Michael Lee
Alex Perrin
Lauren van Biljon, CFA®‡*
Peter Wilson
Average annual total returns (%) as of March 31, 2019
Including sales charge | Excluding sales charge | Expense ratios1 (%) | ||||||||||||||||||||||||||||||||
Inception date | 1 year | 5 year | 10 year | 1 year | 5 year | 10 year | Gross | Net2 | ||||||||||||||||||||||||||
Class A (ESIYX)3 | 9-30-2003 | -9.67 | -1.97 | 1.75 | -5.44 | -1.06 | 2.22 | 1.08 | 1.03 | |||||||||||||||||||||||||
Class C (ESIVX)3 | 9-30-2003 | -7.12 | -1.79 | 1.45 | -6.12 | -1.79 | 1.45 | 1.83 | 1.78 | |||||||||||||||||||||||||
Class R6 (ESIRX)4 | 11-30-2012 | – | – | – | -4.99 | -0.67 | 2.58 | 0.70 | 0.65 | |||||||||||||||||||||||||
Administrator Class (ESIDX)5 | 7-30-2010 | – | – | – | -5.22 | -0.88 | 2.39 | 1.02 | 0.85 | |||||||||||||||||||||||||
Institutional Class (ESICX)3 | 12-15-1993 | – | – | – | -5.18 | -0.74 | 2.53 | 0.75 | 0.70 | |||||||||||||||||||||||||
Bloomberg Barclays Global Aggregate ex-USD Index6 | – | – | – | – | -4.13 | -0.26 | 2.46 | – | – |
Figures quoted represent past performance, which is no guarantee of future results, and do not reflect taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance shown without sales charges would be lower if sales charges were reflected. Current performance may be lower or higher than the performance data quoted, which assumes the reinvestment of dividends and capital gains. Current month-end performance is available on the Fund’s website,wfam.com.
Index returns do not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses, or any taxes. It is not possible to invest directly in an index.
For Class A shares, the maximum front-end sales charge is 4.50%. For Class C shares, the maximum contingent deferred sales charge is 1.00%. Performance including a contingent deferred salescharge assumes the sales charge for the corresponding time period. Class R6, Administrator Class, and Institutional Class shares are sold without a front-end sales charge or contingent deferred sales charge.
Bond values fluctuate in response to the financial condition of individual issuers, general market and economic conditions, and changes in interest rates. Changes in market conditions and government policies may lead to periods of heightened volatility in the bond market and reduced liquidity for certain bonds held by the Fund. In general, when interest rates rise, bond values fall and investors may lose principal value. Interest rate changes and their impact on the fund and its share price can be sudden and unpredictable. Foreign investments are especially volatile and can rise or fall dramatically due to differences in the political and economic conditions of the host country. These risks are generally intensified in emerging markets. The use of derivatives may reduce returns and/or increase volatility. Securities issued by U.S. government agencies or government-sponsored entities may not be guaranteed by the U.S. Treasury. Certain investment strategies tend to increase the total risk of an investment (relative to the broader market). The Fund is exposed to high-yield securities risk and geographic risk. Consult the Fund’s prospectus for additional information on these and other risks.
Please see footnotes on page 5.
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Performance highlights (unaudited) | Wells Fargo International Bond Fund | 5 |
Ten largest holdings (%) as of March 31, 20197 | ||||
Poland, 2.50%, 7-25-2027 | 5.35 | |||
Canada, 2.00%, 6-1-2028 | 4.71 | |||
Mexico, 8.50%, 5-31-2028 | 4.15 | |||
Malaysia, 3.73%, 6-15-2028 | 3.98 | |||
Australian Government Bond Series 136, 4.75%, 4-21-2027 | 3.68 | |||
New Zealand, 4.50%, 4-15-2027 | 3.42 | |||
Singapore, 2.75%, 3-1-2046 | 3.38 | |||
Italy Buoni Poliennali del Tesoro, 1.45%, 11-15-2024 | 3.02 | |||
Hungary, 3.00%, 10-27-2027 | 2.99 | |||
Indonesia, 7.50%, 8-15-2032 | 2.74 |
Portfolio composition as of March 31, 20198 |
|
‡ | CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute. |
* | Ms. van Biljon became a portfolio manager of the Fund on October 3, 2018. |
1 | Reflects the expense ratios as stated in the most recent prospectuses. The expense ratios shown are subject to change and may differ from the annualized expense ratios shown in the financial highlights of this report. |
2 | The manager has contractually committed through January 31, 2020, to waive fees and/or reimburse expenses to the extent necessary to cap the expenses of each class after fee waivers at the amounts shown. Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the expense cap. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. Without this cap, the Fund’s returns would have been lower. The expense ratio paid by an investor is the net expense ratio (the total annual fund operating expenses after fee waivers) as stated in the prospectuses. |
3 | Historical performance shown for this class prior to July 12, 2010, is based on the performance of the same class of the Fund’s predecessor, Evergreen International Bond Fund. |
4 | Historical performance shown for Class R6 shares prior to their inception reflects the performance of Institutional Class shares and includes the higher expenses applicable to Institutional Class shares. If these expenses had not been included, returns for Class R6 shares would be higher. |
5 | Historical performance shown for Administrator Class shares prior to their inception reflects the performance of Institutional Class shares and has been adjusted to reflect the higher expenses applicable to Administrator Class shares. |
6 | The Bloomberg Barclays Global Aggregate ex-USD Index is an unmanaged index that provides a broad-based measure of the global investment grade fixed income markets excluding the U.S. dollar denominated debt market. You cannot invest directly in an index. |
7 | The ten largest holdings, excluding cash, cash equivalents and any money market funds, are calculated based on the value of the investments divided by total net assets of the Fund. Holdings are subject to change and may have changed since the date specified. |
8 | Amounts are calculated based on the total long-term investments of the Fund. These amounts are subject to change and may have changed since the date specified. |
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6 | Wells Fargo International Bond Fund | Fund expenses (unaudited) |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (if any) on redemptions and (2) ongoing costs, including management fees, distribution (12b-1) and/or shareholder servicing fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period from October 1, 2018 to March 31, 2019.
Actual expenses
The “Actual” line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the “Actual” line under the heading entitled “Expenses paid during period” for your applicable class of shares to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The “Hypothetical” line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and contingent deferred sales charges. Therefore, the “Hypothetical” line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 10-1-2018 | Ending account value 3-31-2019 | Expenses paid during the period¹ | Annualized net expense ratio | |||||||||||||
Class A | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,041.28 | $ | 5.24 | 1.03 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,019.80 | $ | 5.19 | 1.03 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,037.55 | $ | 9.04 | 1.78 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,016.06 | $ | 8.95 | 1.78 | % | ||||||||
Class R6 | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,043.61 | $ | 3.31 | 0.65 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.69 | $ | 3.28 | 0.65 | % | ||||||||
Administrator Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,042.05 | $ | 4.33 | 0.85 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.69 | $ | 4.28 | 0.85 | % | ||||||||
Institutional Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,042.73 | $ | 3.56 | 0.70 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.44 | $ | 3.53 | 0.70 | % |
1 | Expenses paid is equal to the annualized net expense ratio of each class multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year (to reflect the one-half-year period). |
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Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo International Bond Fund | 7 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Corporate Bonds and Notes: 7.86% |
| |||||||||||||||
United States: 7.86% | ||||||||||||||||
Abbott Laboratories (Health Care, Health Care Equipment & Supplies) | 3.40 | % | 11-30-2023 | $ | 353,000 | $ | 360,426 | |||||||||
AbbVie Incorporated (Health Care, Biotechnology) | 4.25 | 11-14-2028 | 825,000 | 843,428 | ||||||||||||
Amazon.com Incorporated (Consumer Discretionary, Internet & Direct Marketing Retail) | 3.15 | 8-22-2027 | 750,000 | 756,232 | ||||||||||||
Apple Incorporated (Information Technology, Technology Hardware, Storage & Peripherals) | 2.90 | 9-12-2027 | 750,000 | 740,042 | ||||||||||||
B.A.T. Capital Corporation (Consumer Staples, Tobacco) | 3.56 | 8-15-2027 | 750,000 | 710,722 | ||||||||||||
Bank of America Corporation (3 Month LIBOR +1.21%) (Financials, Banks) ± | 3.97 | 2-7-2030 | 775,000 | 790,703 | ||||||||||||
Bayer US Finance LLC (Health Care, Pharmaceuticals) 144A | 4.25 | 12-15-2025 | 600,000 | 606,835 | ||||||||||||
BP Capital Markets America Incorporated (Energy, Oil, Gas & Consumable Fuels) | 3.22 | 4-14-2024 | 825,000 | 836,000 | ||||||||||||
Broadcom Incorporated (Information Technology, Semiconductors & Semiconductor Equipment) %%144A | 4.25 | 4-15-2026 | 1,725,000 | 1,712,252 | ||||||||||||
CVS Health Corporation (Health Care, Health Care Providers & Services) | 4.10 | 3-25-2025 | 600,000 | 616,360 | ||||||||||||
Discovery Communications LLC (Communication Services, Media) | 3.95 | 3-20-2028 | 700,000 | 680,746 | ||||||||||||
DowDuPont Incorporated (Materials, Chemicals) | 4.21 | 11-15-2023 | 800,000 | 836,918 | ||||||||||||
Fox Corporation (Communication Services, Media) 144A | 4.03 | 1-25-2024 | 300,000 | 311,304 | ||||||||||||
Goldman Sachs Group Incorporated (Financials, Capital Markets) | 3.75 | 2-25-2026 | 750,000 | 753,338 | ||||||||||||
JPMorgan Chase & Company (Financials, Banks) | 3.30 | 4-1-2026 | 750,000 | 751,487 | ||||||||||||
Microsoft Corporation (Information Technology, Software) | 2.40 | 8-8-2026 | 750,000 | 727,774 | ||||||||||||
Qualcomm Incorporated (Information Technology, Semiconductors & Semiconductor Equipment) | 3.25 | 5-20-2027 | 750,000 | 732,690 | ||||||||||||
Verizon Communications Incorporated (Communication Services, Diversified Telecommunication Services) | 4.33 | 9-21-2028 | 750,000 | 795,168 | ||||||||||||
Walmart Incorporated (Consumer Staples, Food & Staples Retailing) | 3.70 | 6-26-2028 | 750,000 | 789,634 | ||||||||||||
Total Corporate Bonds and Notes (Cost $14,245,390) |
| 14,352,059 | ||||||||||||||
|
| |||||||||||||||
Foreign Corporate Bonds and Notes @: 1.67% | ||||||||||||||||
Austria: 0.09% | ||||||||||||||||
Sappi Papier Holding Gmbh (Materials, Paper & Forest Products, EUR) 144A | 3.13 | 4-15-2026 | 150,000 | 169,415 | ||||||||||||
|
| |||||||||||||||
France: 0.25% | ||||||||||||||||
Casino Guichard Perrachon SA (Consumer Staples, Food & Staples Retailing, EUR) | 4.50 | 3-7-2024 | 400,000 | 444,843 | ||||||||||||
|
| |||||||||||||||
Luxembourg: 0.17% | ||||||||||||||||
LSF10 Wolverine Investment SCA (Financials, Diversified Financial Services, EUR) | 5.00 | 3-15-2024 | 275,000 | 310,383 | ||||||||||||
|
| |||||||||||||||
Netherlands: 0.36% | ||||||||||||||||
Selecta Group BV (Consumer Discretionary, Internet & Direct Marketing Retail, EUR) | 5.88 | 2-1-2024 | 300,000 | 342,835 | ||||||||||||
Sigma Holdco BV (Consumer Staples, Food Products, EUR) | 5.75 | 5-15-2026 | 300,000 | 315,483 | ||||||||||||
658,318 | ||||||||||||||||
|
| |||||||||||||||
United Kingdom: 0.80% | ||||||||||||||||
CPUK Finance Limited (Consumer Discretionary, Consumer Finance, GBP) | 4.25 | 2-28-2047 | 250,000 | 324,442 | ||||||||||||
Ocado Group plc (Consumer Discretionary, Internet & Direct Marketing Retail, GBP) | 4.00 | 6-15-2024 | 300,000 | 396,004 | ||||||||||||
Pinnacle Bidco plc (Consumer Discretionary, Consumer Finance, GBP) | 6.38 | 2-15-2025 | 200,000 | 267,617 | ||||||||||||
RAC Bond Company plc (Consumer Discretionary, Automobiles, GBP) | 5.00 | 11-6-2022 | 400,000 | 474,530 | ||||||||||||
1,462,593 | ||||||||||||||||
|
| |||||||||||||||
Total Foreign Corporate Bonds and Notes (Cost $3,152,983) |
| 3,045,552 | ||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
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8 | Wells Fargo International Bond Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Foreign Government Bonds @: 81.46% | ||||||||||||||||
Australian Government Bond Series 136 (AUD) | 4.75 | % | 4-21-2027 | 7,700,000 | $ | 6,726,013 | ||||||||||
Australian Government Bond Series 148 (AUD) | 2.75 | 11-21-2027 | 2,600,000 | 1,997,152 | ||||||||||||
Brazil (BRL) | 10.00 | 1-1-2021 | 7,775,000 | 2,074,007 | ||||||||||||
Brazil (BRL) | 10.00 | 1-1-2023 | 3,400,000 | 918,340 | ||||||||||||
Brazil (BRL) | 10.00 | 1-1-2025 | 8,845,000 | 2,401,368 | ||||||||||||
Canada (CAD) | 2.00 | 6-1-2028 | 11,150,000 | 8,609,534 | ||||||||||||
Canada (CAD) 144A | 2.65 | 12-15-2028 | 5,000,000 | 3,923,897 | ||||||||||||
Colombia (COP) | 6.00 | 4-28-2028 | 14,375,000,000 | 4,383,829 | ||||||||||||
Colombia (COP) | 7.75 | 9-18-2030 | 7,300,000,000 | 2,488,539 | ||||||||||||
Czech Republic (CZK) | 0.75 | 2-23-2021 | 14,300,000 | 608,754 | ||||||||||||
France (EUR) 144A | 2.00 | 5-25-2048 | 900,000 | 1,182,005 | ||||||||||||
Hungary (HUF) | 3.00 | 10-27-2027 | 1,500,000,000 | 5,458,932 | ||||||||||||
India (INR) | 7.17 | 1-8-2028 | 125,000,000 | 1,767,954 | ||||||||||||
India (INR) | 7.80 | 4-11-2021 | 80,000,000 | 1,181,725 | ||||||||||||
India (INR) | 8.79 | 11-8-2021 | 180,000,000 | 2,728,257 | ||||||||||||
Indonesia (IDR) | 7.50 | 8-15-2032 | 74,500,000,000 | 4,996,784 | ||||||||||||
Indonesia (IDR) | 8.38 | 3-15-2024 | 24,250,000,000 | 1,783,226 | ||||||||||||
Indonesia (IDR) | 8.38 | 9-15-2026 | 23,700,000,000 | 1,742,133 | ||||||||||||
Italy Buoni Poliennali del Tesoro (EUR) | 1.45 | 11-15-2024 | 5,000,000 | 5,507,525 | ||||||||||||
Italy Buoni Poliennali del Tesoro (EUR) | 2.20 | 6-1-2027 | 2,225,000 | 2,489,200 | ||||||||||||
Korea Treasury Bond (KRW) | 2.00 | 3-10-2020 | 2,685,000,000 | 2,369,851 | ||||||||||||
Korea Treasury Bond (KRW) | 2.38 | 3-10-2023 | 2,640,000,000 | 2,378,821 | ||||||||||||
Malaysia (MYR) | 3.66 | 10-15-2020 | 3,050,000 | 750,461 | ||||||||||||
Malaysia (MYR) | 3.73 | 6-15-2028 | 29,900,000 | 7,273,174 | ||||||||||||
Malaysia (MYR) | 3.90 | 11-30-2026 | 4,500,000 | 1,119,431 | ||||||||||||
Malaysia (MYR) | 3.96 | 9-15-2025 | 4,100,000 | 1,019,636 | ||||||||||||
Mexico (MXN) | 5.75 | 3-5-2026 | 42,750,000 | 1,945,463 | ||||||||||||
Mexico (MXN) | 8.50 | 5-31-2029 | 143,200,000 | 7,584,043 | ||||||||||||
Mexico (MXN) | 10.00 | 12-5-2024 | 11,650,000 | 658,880 | ||||||||||||
New South Wales (AUD) | 5.00 | 8-20-2024 | 1,550,000 | 1,281,606 | ||||||||||||
New South Wales (AUD) | 6.00 | 5-1-2020 | 2,350,000 | 1,746,166 | ||||||||||||
New Zealand (NZD) | 2.75 | 4-15-2037 | 1,085,000 | 802,561 | ||||||||||||
New Zealand (NZD) | 3.00 | 4-20-2029 | 1,390,000 | 1,049,203 | ||||||||||||
New Zealand (NZD) | 4.50 | 4-15-2027 | 7,575,000 | 6,254,250 | ||||||||||||
Poland (PLN) | 2.50 | 7-25-2027 | 38,000,000 | 9,772,673 | ||||||||||||
Queensland Treasury Corporation (AUD) 144A | 2.75 | 8-20-2027 | 2,400,000 | 1,775,360 | ||||||||||||
Queensland Treasury Corporation (AUD) 144A | 4.75 | 7-21-2025 | 3,000,000 | 2,483,558 | ||||||||||||
Republic of Peru (PEN) | 5.70 | 8-12-2024 | 3,750,000 | 1,194,520 | ||||||||||||
Republic of Peru (PEN) | 6.35 | 8-12-2028 | 9,625,000 | 3,143,686 | ||||||||||||
Republic of South Africa (ZAR) | 7.75 | 2-28-2023 | 15,500,000 | 1,074,029 | ||||||||||||
Republic of South Africa (ZAR) | 8.75 | 2-28-2048 | 56,100,000 | 3,511,316 | ||||||||||||
Republic of South Africa (ZAR) | 10.50 | 12-21-2026 | 35,800,000 | 2,736,469 | ||||||||||||
Romania (RON) | 3.25 | 4-29-2024 | 5,675,000 | 1,270,993 | ||||||||||||
Romania (RON) | 3.40 | 3-8-2022 | 2,500,000 | 578,042 | ||||||||||||
Romania (RON) | 5.00 | 2-12-2029 | 8,000,000 | 1,889,630 | ||||||||||||
Romania (RON) | 5.75 | 4-29-2020 | 6,750,000 | 1,625,120 | ||||||||||||
Singapore (SGD) | 2.63 | 5-1-2028 | 4,000,000 | 3,083,977 | ||||||||||||
Singapore (SGD) | 2.75 | 3-1-2046 | 8,050,000 | 6,170,093 | ||||||||||||
Thailand (THB) | 3.85 | 12-12-2025 | 27,000,000 | 932,880 | ||||||||||||
Turkey (TRY) | 9.40 | 7-8-2020 | 2,300,000 | 350,641 | ||||||||||||
Turkey (TRY) | 10.70 | 2-17-2021 | 4,050,000 | 599,274 | ||||||||||||
Turkey (TRY) | 11.00 | 2-24-2027 | 900,000 | 109,766 |
The accompanying notes are an integral part of these financial statements.
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Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo International Bond Fund | 9 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Foreign Government Bonds @(continued) | ||||||||||||||||
Turkey (TRY) | 13.00 | % | 11-13-2019 | 7,195,000 | $ | 1,212,717 | ||||||||||
United Kingdom Gilt Bonds (GBP) | 1.25 | 7-22-2027 | 865,000 | 1,157,310 | ||||||||||||
United Kingdom Gilt Bonds (GBP) | 1.50 | 7-22-2047 | 3,825,000 | 4,914,116 | ||||||||||||
Total Foreign Government Bonds (Cost $149,016,661) |
| 148,788,890 | ||||||||||||||
|
| |||||||||||||||
U.S. Treasury Securities: 4.12% | ||||||||||||||||
U.S. Treasury Bond | 3.13 | 11-15-2028 | $ | 4,400,000 | 4,672,078 | |||||||||||
U.S. Treasury Note | 2.63 | 2-15-2029 | 2,800,000 | 2,854,469 | ||||||||||||
Total U.S. Treasury Securities (Cost $7,451,300) |
| 7,526,547 | ||||||||||||||
|
| |||||||||||||||
Yankee Corporate Bonds and Notes: 3.74% | ||||||||||||||||
Canada: 0.43% | ||||||||||||||||
Alimentation Couche-Tard Incorporated (Consumer Staples, Food & Staples Retailing) | 3.55 | 7-26-2027 | 800,000 | 782,668 | ||||||||||||
|
| |||||||||||||||
Cayman Islands: 0.87% | ||||||||||||||||
Tencent Holdings Limited (Communication Services, Interactive Media & Services) | 3.60 | 1-19-2028 | 1,000,000 | 987,539 | ||||||||||||
UPCB Finance IV Limited (Financials, Diversified Financial Services) | 5.38 | 1-15-2025 | 600,000 | 609,000 | ||||||||||||
1,596,539 | ||||||||||||||||
|
| |||||||||||||||
France: 0.82% | ||||||||||||||||
Danone SA (Consumer Staples, Food Products) | 2.95 | 11-2-2026 | 750,000 | 719,508 | ||||||||||||
Electricite de France SA (Utilities, Electric Utilities) | 4.50 | 9-21-2028 | 750,000 | 774,245 | ||||||||||||
1,493,753 | ||||||||||||||||
|
| |||||||||||||||
Ireland: 0.27% | ||||||||||||||||
Ardagh Packaging Finance plc (Financials, Diversified Financial Services) | 4.63 | 5-15-2023 | 500,000 | 503,125 | ||||||||||||
|
| |||||||||||||||
Spain: 0.42% | ||||||||||||||||
Telefonica Emisiones SAU (Communication Services, Diversified Telecommunication Services) | 4.10 | 3-8-2027 | 750,000 | 759,968 | ||||||||||||
|
| |||||||||||||||
United Kingdom: 0.93% | ||||||||||||||||
International Game Technology plc (Consumer Discretionary, Hotels, Restaurants & Leisure) | 6.25 | 2-15-2022 | 500,000 | 519,375 | ||||||||||||
Jaguar Land Rover Automobiles plc (Consumer Discretionary, Automobiles) | 3.50 | 3-15-2020 | 600,000 | 595,500 | ||||||||||||
Vodafone Group plc (Communication Services, Wireless Telecommunication Services) | 4.38 | 5-30-2028 | 575,000 | 584,986 | ||||||||||||
1,699,861 | ||||||||||||||||
|
| |||||||||||||||
Total Yankee Corporate Bonds and Notes (Cost $6,764,377) |
| 6,835,914 | ||||||||||||||
|
| |||||||||||||||
Yield | Shares | |||||||||||||||
Short-Term Investments: 1.42% | ||||||||||||||||
Investment Companies: 1.42% | ||||||||||||||||
Wells Fargo Government Money Market Fund Select Class (l)(u)## | 2.38 | 2,601,873 | 2,601,873 | |||||||||||||
|
| |||||||||||||||
Total Short-Term Investments (Cost $2,601,873) |
| 2,601,873 | ||||||||||||||
|
|
Total investments in securities (Cost $183,232,584) | 100.27 | % | 183,150,835 | |||||
Other assets and liabilities, net | (0.27 | ) | (487,364 | ) | ||||
|
|
|
| |||||
Total net assets | 100.00 | % | $ | 182,663,471 | ||||
|
|
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
10 | Wells Fargo International Bond Fund | Portfolio of investments—March 31, 2019 (unaudited) |
± | Variable rate investment. The rate shown is the rate in effect at period end. |
%% | The security is issued on a when-issued basis. |
144A | The security may be resold in transactions exempt from registration, normally to qualified institutional buyers, pursuant to Rule 144A under the Securities Act of 1933. |
@ | Foreign bond principal is denominated in the local currency of the issuer. |
(l) | The issuer of the security is an affiliated person of the Fund as defined in the Investment Company Act of 1940. |
(u) | The rate represents the 7-day annualized yield at period end. |
## | All or a portion of this security is segregated for when-issued securities. |
Abbreviations:
AUD | Australian dollar |
BRL | Brazilian real |
CAD | Canadian dollar |
COP | Colombian peso |
CZK | Czech koruna |
EUR | Euro |
GBP | Great British pound |
HUF | Hungarian forint |
IDR | Indonesian rupiah |
INR | Indian rupee |
JPY | Japanese yen |
KRW | Republic of Korea won |
LIBOR | London Interbank Offered Rate |
MXN | Mexican peso |
MYR | Malaysian ringgit |
NZD | New Zealand dollar |
PEN | Peruvian sol |
PLN | Polish zloty |
RON | Romanian lei |
SGD | Singapore dollar |
THB | Thai baht |
TRY | Turkish lira |
ZAR | South African rand |
Forward Foreign Currency Contracts
Currency to be received | Currency to be delivered | Counterparty | Settlement date | Unrealized gains | Unrealized losses | |||||||||
$2,125,000,000 IDR | $148,841 USD | State Street Bank | 4-23-2019 | $ | 0 | $ | (10 | ) | ||||||
24,350,000,000 IDR | 1,727,686 USD | State Street Bank | 4-23-2019 | 0 | (22,261 | ) | ||||||||
2,500,000,000 IDR | 175,562 USD | State Street Bank | 4-23-2019 | 0 | (467 | ) | ||||||||
7,019,696 USD | 101,575,000,000 IDR | State Street Bank | 4-23-2019 | 0 | (94,412 | ) | ||||||||
21,000,000 EUR | 23,972,550 USD | State Street Bank | 4-29-2019 | 0 | (361,926 | ) | ||||||||
4,300,000 EUR | 4,913,976 USD | State Street Bank | 4-29-2019 | 0 | (79,419 | ) | ||||||||
300,000 EUR | 341,467 USD | State Street Bank | 4-29-2019 | 0 | (4,173 | ) | ||||||||
570,290 USD | 500,000 EUR | State Street Bank | 4-29-2019 | 8,132 | 0 | |||||||||
854,448 USD | 750,000 EUR | State Street Bank | 4-29-2019 | 11,211 | 0 | |||||||||
973,619 USD | 850,000 EUR | State Street Bank | 4-29-2019 | 17,951 | 0 | |||||||||
1,998,855 USD | 1,750,000 EUR | State Street Bank | 4-29-2019 | 31,303 | 0 | |||||||||
2,403,979 USD | 2,100,000 EUR | State Street Bank | 4-29-2019 | 42,917 | 0 | |||||||||
1,140,113 USD | 1,000,000 EUR | State Street Bank | 4-29-2019 | 15,798 | 0 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo International Bond Fund | 11 |
Forward Foreign Currency Contracts (continued)
Currency to be received | Currency to be delivered | Counterparty | Settlement date | Unrealized gains | Unrealized losses | |||||||||
2,430,277 USD | 2,135,000 EUR | State Street Bank | 4-29-2019 | $ | 29,863 | $ | 0 | |||||||
1,701,408 USD | 1,500,000 EUR | State Street Bank | 4-29-2019 | 14,935 | 0 | |||||||||
393,631 USD | 350,000 EUR | State Street Bank | 4-29-2019 | 121 | 0 | |||||||||
119,000,000 HUF | 432,950 USD | State Street Bank | 5-6-2019 | 0 | (16,333 | ) | ||||||||
170,000,000 HUF | 611,111 USD | State Street Bank | 5-6-2019 | 0 | (15,944 | ) | ||||||||
175,000,000 HUF | 626,067 USD | State Street Bank | 5-6-2019 | 0 | (13,395 | ) | ||||||||
240,000,000 HUF | 864,221 USD | State Street Bank | 5-6-2019 | 0 | (23,986 | ) | ||||||||
154,400,000 HUF | 556,778 USD | State Street Bank | 5-6-2019 | 0 | (16,226 | ) | ||||||||
95,000,000 HUF | 337,766 USD | State Street Bank | 5-6-2019 | 0 | (5,173 | ) | ||||||||
7,998,975 USD | 2,185,000,000 HUF | State Street Bank | 5-6-2019 | 349,332 | 0 | |||||||||
850,000 NZD | 577,765 USD | State Street Bank | 5-13-2019 | 1,524 | 0 | |||||||||
8,809,302 USD | 12,950,000 NZD | State Street Bank | 5-13-2019 | 0 | (16,336 | ) | ||||||||
1,375,000 AUD | 977,537 USD | State Street Bank | 5-21-2019 | 0 | (306 | ) | ||||||||
1,275,000 AUD | 910,940 USD | State Street Bank | 5-21-2019 | 0 | (4,781 | ) | ||||||||
200,000 AUD | 141,692 USD | State Street Bank | 5-21-2019 | 451 | 0 | |||||||||
220,000 AUD | 156,226 USD | State Street Bank | 5-21-2019 | 131 | 0 | |||||||||
8,675,635 USD | 12,190,000 AUD | State Street Bank | 5-21-2019 | 12,042 | 0 | |||||||||
5,882,110 USD | 8,300,000 AUD | State Street Bank | 5-21-2019 | 0 | (16,809 | ) | ||||||||
2,250,000,000 JPY | 20,451,534 USD | State Street Bank | 5-31-2019 | 0 | (57,332 | ) | ||||||||
784,120 USD | 86,500,000 JPY | State Street Bank | 5-31-2019 | 76 | 0 | |||||||||
1,368,075 USD | 150,000,000 JPY | State Street Bank | 5-31-2019 | 8,462 | 0 | |||||||||
678,149 USD | 75,000,000 JPY | State Street Bank | 5-31-2019 | 0 | (1,658 | ) | ||||||||
1,206,454 USD | 133,000,000 JPY | State Street Bank | 5-31-2019 | 930 | 0 | |||||||||
399,107 USD | 535,000 CAD | State Street Bank | 6-7-2019 | 0 | (1,890 | ) | ||||||||
317,283 USD | 425,000 CAD | State Street Bank | 6-7-2019 | 0 | (1,267 | ) | ||||||||
3,508,790 USD | 4,700,000 CAD | State Street Bank | 6-7-2019 | 0 | (13,990 | ) | ||||||||
3,325,000 GBP | 4,393,768 USD | State Street Bank | 6-10-2019 | 0 | (48,292 | ) | ||||||||
392,153 USD | 300,000 GBP | State Street Bank | 6-10-2019 | 79 | 0 | |||||||||
6,000,000 ZAR | 411,254 USD | State Street Bank | 6-12-2019 | 1,069 | 0 | |||||||||
865,000,000 JPY | 7,837,111 USD | State Street Bank | 6-12-2019 | 10,590 | 0 | |||||||||
1,435,000 ZAR | 98,248 USD | State Street Bank | 6-12-2019 | 366 | 0 | |||||||||
1,685,000 PLN | 448,798 USD | State Street Bank | 6-12-2019 | 0 | (8,945 | ) | ||||||||
7,976,293 USD | 30,550,000 PLN | State Street Bank | 6-12-2019 | 1,501 | 0 | |||||||||
4,887,047 USD | 71,800,000 ZAR | State Street Bank | 6-12-2019 | 0 | (47,088 | ) | ||||||||
3,335,000,000 JPY | 30,095,340 USD | State Street Bank | 6-18-2019 | 176,223 | 0 | |||||||||
|
|
|
| |||||||||||
$ | 735,007 | $ | (872,419 | ) | ||||||||||
|
|
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
12 | Wells Fargo International Bond Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Investments in Affiliates
An affiliated investment is an investment in which the Fund owns at least 5% of the outstanding voting shares of the issuer or as a result of other relationships, such as the Fund and the issuer having the same investment manager. Transactions with issuers that were either affiliated persons of the Fund at the beginning of the period or the end of the period were as follows:
Shares, beginning of period | Shares purchased | Shares sold | Shares, end of period | Net realized gains (losses) | Net change in unrealized gains (losses) | Income from affiliated securities | Value, end of period | % of net assets | ||||||||||||||||||||||||||||
Short-Term Investments | ||||||||||||||||||||||||||||||||||||
Investment Companies | ||||||||||||||||||||||||||||||||||||
Wells Fargo Government Money Market Fund Select Class | 1,592,910 | 72,686,916 | 71,677,953 | 2,601,873 | $ | 0 | $ | 0 | $ | 23,537 | $ | 2,601,873 | 1.42 | % |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of assets and liabilities—March 31, 2019 (unaudited) | Wells Fargo International Bond Fund | 13 |
Assets | ||||
Investments in unaffiliated securities, at value (cost $180,630,711) | $ | 180,548,962 | ||
Investments in affiliated securities, at value (cost $2,601,873) | 2,601,873 | |||
Receivable for investments sold | 1,015,717 | |||
Receivable for Fund shares sold | 63,526 | |||
Receivable for interest | 2,399,619 | |||
Unrealized gains on forward foreign currency contracts | 735,007 | |||
Prepaid expenses and other assets | 306,516 | |||
|
| |||
Total assets | 187,671,220 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 2,920,416 | |||
Unrealized losses on forward foreign currency contracts | 872,419 | |||
Due to custodian bank, foreign currency, at value (cost $647,620) | 657,350 | |||
Payable for Fund shares redeemed | 460,843 | |||
Management fee payable | 55,417 | |||
Contingent tax liability | 24,605 | |||
Administration fees payable | 13,749 | |||
Trustees’ fees and expenses payable | 2,056 | |||
Distribution fee payable | 894 | |||
|
| |||
Total liabilities | 5,007,749 | |||
|
| |||
Total net assets | $ | 182,663,471 | ||
|
| |||
NET ASSETS CONSIST OF | ||||
Paid-in capital | $ | 204,260,327 | ||
Total distributable loss | (21,596,856 | ) | ||
|
| |||
Total net assets | $ | 182,663,471 | ||
|
| |||
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE | ||||
Net assets – Class A | $ | 14,125,453 | ||
Shares outstanding – Class A1 | 1,400,340 | |||
Net asset value per share – Class A | $10.09 | |||
Maximum offering price per share – Class A2 | $10.57 | |||
Net assets – Class C | $ | 1,370,405 | ||
Shares outstanding – Class C1 | 141,756 | |||
Net asset value per share – Class C | $9.67 | |||
Net assets – Class R6 | $ | 21,651,501 | ||
Shares outstanding – Class R61 | 2,105,091 | |||
Net asset value per share – Class R6 | $10.29 | |||
Net assets – Administrator Class | $ | 19,553,339 | ||
Shares outstanding – Administrator Class1 | 1,925,075 | |||
Net asset value per share – Administrator Class | $10.16 | |||
Net assets – Institutional Class | $ | 125,962,773 | ||
Shares outstanding – Institutional Class1 | 12,287,486 | |||
Net asset value per share – Institutional Class | $10.25 |
1 | The Fund has an unlimited number of authorized shares. |
2 | Maximum offering price is computed as 100/95.50 of net asset value. On investments of $50,000 or more, the offering price is reduced. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
14 | Wells Fargo International Bond Fund | Statement of operations—six months ended March 31, 2019 (unaudited) |
Investment income | ||||
Interest (net of foreign interest withholding taxes of $68,409) | $ | 6,319,515 | ||
Income from affiliated securities | 23,537 | |||
|
| |||
Total investment income | 6,343,052 | |||
|
| |||
Expenses | ||||
Management fee | 849,195 | |||
Administration fees | ||||
Class A | 15,088 | |||
Class C | 1,673 | |||
Class R6 | 4,562 | |||
Administrator Class | 11,384 | |||
Institutional Class | 83,573 | |||
Shareholder servicing fees | ||||
Class A | 23,574 | |||
Class C | 2,613 | |||
Administrator Class | 28,461 | |||
Distribution fee | ||||
Class C | 7,841 | |||
Custody and accounting fees | 158,589 | |||
Professional fees | 28,026 | |||
Registration fees | 37,438 | |||
Shareholder report expenses | 51,658 | |||
Trustees’ fees and expenses | 12,701 | |||
Interest expense | 5,081 | |||
Other fees and expenses | 8,323 | |||
|
| |||
Total expenses | 1,329,780 | |||
Less: Fee waivers and/or expense reimbursements | (282,091 | ) | ||
|
| |||
Net expenses | 1,047,689 | |||
|
| |||
Net investment income | 5,295,363 | |||
|
| |||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | ||||
Net realized losses on: | ||||
Unaffiliated securities | (17,336,684 | ) | ||
Forward foreign currency contracts | (3,883,940 | ) | ||
|
| |||
Net realized losses on investments | (21,220,624 | ) | ||
|
| |||
Net change in unrealized gains (losses) on: | ||||
Unaffiliated securities | 20,378,387 | |||
Forward foreign currency contracts | 6,170,772 | |||
|
| |||
Net change in unrealized gains (losses) on investments | 26,549,159 | |||
|
| |||
Net realized and unrealized gains (losses) on investments | 5,328,535 | |||
|
| |||
Net increase in net assets resulting from operations | $ | 10,623,898 | ||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of changes in net assets | Wells Fargo International Bond Fund | 15 |
Six months ended March 31, 2019 (unaudited) | Year ended September 30, 2018 | |||||||||||||||
Operations | ||||||||||||||||
Net investment income | $ | 5,295,363 | $ | 14,884,133 | ||||||||||||
Net realized gains (losses) on investments | (21,220,624 | ) | 1,924,156 | |||||||||||||
Net change in unrealized gains (losses) on investments | 26,549,159 | (41,587,049 | ) | |||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | 10,623,898 | (24,778,760 | ) | |||||||||||||
|
| |||||||||||||||
Capital share transactions | Shares | Shares | ||||||||||||||
Proceeds from shares sold | ||||||||||||||||
Class A | 190,704 | 1,898,241 | 1,692,946 | 17,128,341 | ||||||||||||
Class C | 2,589 | 24,451 | 23,686 | 231,626 | ||||||||||||
Class R6 | 185,660 | 1,844,415 | 4,470,576 | 47,127,812 | ||||||||||||
Administrator Class | 203,293 | 1,998,627 | 1,854,064 | 19,444,887 | ||||||||||||
Institutional Class | 1,375,789 | 13,661,217 | 7,578,500 | 78,408,711 | ||||||||||||
|
| |||||||||||||||
19,426,951 | 162,341,377 | |||||||||||||||
|
| |||||||||||||||
Payment for shares redeemed | ||||||||||||||||
Class A | (3,384,271 | ) | (32,594,669 | ) | (3,876,760 | ) | (38,897,182 | ) | ||||||||
Class C | (145,290 | ) | (1,384,490 | ) | (88,726 | ) | (868,829 | ) | ||||||||
Class R6 | (3,125,697 | ) | (30,892,997 | ) | (2,380,029 | ) | (24,249,955 | ) | ||||||||
Administrator Class | (1,140,999 | ) | (11,164,255 | ) | (2,955,066 | ) | (30,390,707 | ) | ||||||||
Institutional Class | (14,070,265 | ) | (141,815,852 | ) | (25,163,647 | ) | (261,878,241 | ) | ||||||||
|
| |||||||||||||||
(217,852,263 | ) | (356,284,914 | ) | |||||||||||||
|
| |||||||||||||||
Net decrease in net assets resulting from capital share transactions | (198,425,312 | ) | (193,943,537 | ) | ||||||||||||
|
| |||||||||||||||
Total decrease in net assets | (187,801,414 | ) | (218,722,297 | ) | ||||||||||||
|
| |||||||||||||||
Net assets | ||||||||||||||||
Beginning of period | 370,464,885 | 589,187,182 | ||||||||||||||
|
| |||||||||||||||
End of period | $ | 182,663,471 | $ | 370,464,885 | ||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
16 | Wells Fargo International Bond Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | Year ended October 31 | ||||||||||||||||||||||||||
CLASS A | 2018 | 2017 | 20161 | 2015 | 2014 | 2013 | ||||||||||||||||||||||
Net asset value, beginning of period | $9.69 | $10.31 | $10.77 | $9.74 | $10.84 | $11.32 | $11.83 | |||||||||||||||||||||
Net investment income | 0.15 | 2 | 0.27 | 2 | 0.26 | 2 | 0.24 | 2 | 0.31 | 2 | 0.37 | 2 | 0.36 | 2 | ||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.25 | (0.89 | ) | (0.57 | ) | 0.85 | (1.33 | ) | (0.34 | ) | (0.73 | ) | ||||||||||||||||
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| |||||||||||||||
Total from investment operations | 0.40 | (0.62 | ) | (0.31 | ) | 1.09 | (1.02 | ) | 0.03 | (0.37 | ) | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||||||
Net investment income | 0.00 | 0.00 | 0.00 | 0.00 | (0.05 | ) | (0.12 | ) | (0.02 | ) | ||||||||||||||||||
Net realized gains | 0.00 | 0.00 | (0.15 | ) | (0.06 | ) | (0.03 | ) | (0.39 | ) | (0.12 | ) | ||||||||||||||||
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| |||||||||||||||
Total distributions to shareholders | 0.00 | 0.00 | (0.15 | ) | (0.06 | ) | (0.08 | ) | (0.51 | ) | (0.14 | ) | ||||||||||||||||
Net asset value, end of period | $10.09 | $9.69 | $10.31 | $10.77 | $9.74 | $10.84 | $11.32 | |||||||||||||||||||||
Total return3 | 4.13 | % | (6.01 | )% | (2.78 | )% | 11.24 | % | (9.50 | )% | 0.26 | % | (3.18 | )% | ||||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||||||
Gross expenses | 1.23 | % | 1.08 | % | 1.03 | % | 1.08 | % | 1.06 | % | 1.05 | % | 1.05 | % | ||||||||||||||
Net expenses | 1.03 | % | 1.03 | % | 1.03 | % | 1.03 | % | 1.03 | % | 1.03 | % | 1.03 | % | ||||||||||||||
Net investment income | 3.44 | % | 2.75 | % | 2.61 | % | 2.64 | % | 3.07 | % | 3.29 | % | 2.93 | % | ||||||||||||||
Supplemental data | ||||||||||||||||||||||||||||
Portfolio turnover rate | 55 | % | 99 | % | 68 | % | 96 | % | 136 | % | 103 | % | 129 | % | ||||||||||||||
Net assets, end of period (000s omitted) | $14,125 | $44,519 | $69,885 | $54,399 | $79,727 | $102,624 | $113,846 |
1 | For the eleven months ended September 30, 2016. The Fund changed its fiscal year end from October 31 to September 30, effective September 30, 2016. |
2 | Calculated based upon average shares outstanding |
3 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo International Bond Fund | 17 |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | Year ended October 31 | ||||||||||||||||||||||||||
CLASS C | 2018 | 2017 | 20161 | 2015 | 2014 | 2013 | ||||||||||||||||||||||
Net asset value, beginning of period | $9.32 | $10.00 | $10.52 | $9.58 | $10.70 | $11.19 | $11.76 | |||||||||||||||||||||
Net investment income | 0.11 | 2 | 0.19 | 2 | 0.18 | 2 | 0.17 | 2 | 0.23 | 2 | 0.28 | 2 | 0.26 | 2 | ||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.24 | (0.87 | ) | (0.55 | ) | 0.83 | (1.32 | ) | (0.34 | ) | (0.71 | ) | ||||||||||||||||
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| |||||||||||||||
Total from investment operations | 0.35 | (0.68 | ) | (0.37 | ) | 1.00 | (1.09 | ) | (0.06 | ) | (0.45 | ) | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||||||
Net investment income | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | (0.04 | ) | (0.00 | )3 | |||||||||||||||||||
Net realized gains | 0.00 | 0.00 | (0.15 | ) | (0.06 | ) | (0.03 | ) | (0.39 | ) | (0.12 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total distributions to shareholders | 0.00 | 0.00 | (0.15 | ) | (0.06 | ) | (0.03 | ) | (0.43 | ) | (0.12 | ) | ||||||||||||||||
Net asset value, end of period | $9.67 | $9.32 | $10.00 | $10.52 | $9.58 | $10.70 | $11.19 | |||||||||||||||||||||
Total return4 | 3.76 | % | (6.80 | )% | (3.43 | )% | 10.49 | % | (10.21 | )% | (0.52 | )% | (3.84 | )% | ||||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||||||
Gross expenses | 1.97 | % | 1.83 | % | 1.78 | % | 1.83 | % | 1.81 | % | 1.80 | % | 1.80 | % | ||||||||||||||
Net expenses | 1.78 | % | 1.78 | % | 1.78 | % | 1.78 | % | 1.78 | % | 1.78 | % | 1.78 | % | ||||||||||||||
Net investment income | 2.71 | % | 2.00 | % | 1.88 | % | 1.86 | % | 2.33 | % | 2.54 | % | 2.15 | % | ||||||||||||||
Supplemental data | ||||||||||||||||||||||||||||
Portfolio turnover rate | 55 | % | 99 | % | 68 | % | 96 | % | 136 | % | 103 | % | 129 | % | ||||||||||||||
Net assets, end of period (000s omitted) | $1,370 | $2,652 | $3,493 | $5,520 | $6,895 | $11,597 | $16,097 |
1 | For the eleven months ended September 30, 2016. The Fund changed its fiscal year end from October 31 to September 30, effective September 30, 2016. |
2 | Calculated based upon average shares outstanding |
3 | Amount is less than $0.005. |
4 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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18 | Wells Fargo International Bond Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | Year ended October 31 | ||||||||||||||||||||||||||
CLASS R6 | 2018 | 2017 | 20161 | 2015 | 2014 | 20132 | ||||||||||||||||||||||
Net asset value, beginning of period | $9.86 | $10.45 | $10.88 | $9.80 | $10.88 | $11.36 | $11.80 | |||||||||||||||||||||
Net investment income | 0.17 | 3 | 0.31 | 3 | 0.30 | 3 | 0.28 | 3 | 0.35 | 3 | 0.42 | 3 | 0.39 | 3 | ||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.26 | (0.90 | ) | (0.58 | ) | 0.86 | (1.34 | ) | (0.35 | ) | (0.69 | ) | ||||||||||||||||
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| |||||||||||||||
Total from investment operations | 0.43 | (0.59 | ) | (0.28 | ) | 1.14 | (0.99 | ) | 0.07 | (0.30 | ) | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||||||
Net investment income | 0.00 | 0.00 | 0.00 | 0.00 | (0.06 | ) | (0.16 | ) | (0.02 | ) | ||||||||||||||||||
Net realized gains | 0.00 | 0.00 | (0.15 | ) | (0.06 | ) | (0.03 | ) | (0.39 | ) | (0.12 | ) | ||||||||||||||||
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|
|
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|
| |||||||||||||||
Total distributions to shareholders | 0.00 | 0.00 | (0.15 | ) | (0.06 | ) | (0.09 | ) | (0.55 | ) | (0.14 | ) | ||||||||||||||||
Net asset value, end of period | $10.29 | $9.86 | $10.45 | $10.88 | $9.80 | $10.88 | $11.36 | |||||||||||||||||||||
Total return4 | 4.36 | % | (5.65 | )% | (2.48 | )% | 11.69 | % | (9.18 | )% | 0.60 | % | (2.52 | )% | ||||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||||||
Gross expenses | 0.85 | % | 0.72 | % | 0.65 | % | 0.70 | % | 0.68 | % | 0.67 | % | 0.68 | % | ||||||||||||||
Net expenses | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | ||||||||||||||
Net investment income | 3.83 | % | 3.18 | % | 3.01 | % | 3.00 | % | 3.46 | % | 3.64 | % | 3.70 | % | ||||||||||||||
Supplemental data | ||||||||||||||||||||||||||||
Portfolio turnover rate | 55 | % | 99 | % | 68 | % | 96 | % | 136 | % | 103 | % | 129 | % | ||||||||||||||
Net assets, end of period (000s omitted) | $21,652 | $49,749 | $30,876 | $12,501 | $13,152 | $5,729 | $2,433 |
1 | For the eleven months ended September 30, 2016. The Fund changed its fiscal year end from October 31 to September 30, effective September 30, 2016. |
2 | For the period from November 30, 2012 (commencement of class operations) to October 31, 2013 |
3 | Calculated based upon average shares outstanding |
4 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo International Bond Fund | 19 |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | Year ended October 31 | ||||||||||||||||||||||||||
ADMINISTRATOR CLASS | 2018 | 2017 | 20161 | 2015 | 2014 | 2013 | ||||||||||||||||||||||
Net asset value, beginning of period | $9.75 | $10.36 | $10.80 | $9.75 | $10.84 | $11.32 | $11.81 | |||||||||||||||||||||
Net investment income | 0.16 | 2 | 0.29 | 2 | 0.28 | 2 | 0.26 | 2 | 0.33 | 2 | 0.39 | 2 | 0.36 | 2 | ||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.25 | (0.90 | ) | (0.57 | ) | 0.85 | (1.34 | ) | (0.34 | ) | (0.71 | ) | ||||||||||||||||
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| |||||||||||||||
Total from investment operations | 0.41 | (0.61 | ) | (0.29 | ) | 1.11 | (1.01 | ) | 0.05 | (0.35 | ) | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||||||
Net investment income | 0.00 | 0.00 | 0.00 | 0.00 | (0.05 | ) | (0.14 | ) | (0.02 | ) | ||||||||||||||||||
Net realized gains | 0.00 | 0.00 | (0.15 | ) | (0.06 | ) | (0.03 | ) | (0.39 | ) | (0.12 | ) | ||||||||||||||||
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|
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|
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|
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| |||||||||||||||
Total distributions to shareholders | 0.00 | 0.00 | (0.15 | ) | (0.06 | ) | (0.08 | ) | (0.53 | ) | (0.14 | ) | ||||||||||||||||
Net asset value, end of period | $10.16 | $9.75 | $10.36 | $10.80 | $9.75 | $10.84 | $11.32 | |||||||||||||||||||||
Total return3 | 4.21 | % | (5.89 | )% | (2.59 | )% | 11.44 | % | (9.36 | )% | 0.43 | % | (2.98 | )% | ||||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||||||
Gross expenses | 1.17 | % | 1.01 | % | 0.97 | % | 1.02 | % | 0.99 | % | 0.99 | % | 0.99 | % | ||||||||||||||
Net expenses | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | ||||||||||||||
Net investment income | 3.63 | % | 2.93 | % | 2.80 | % | 2.85 | % | 3.26 | % | 3.47 | % | 3.15 | % | ||||||||||||||
Supplemental data | ||||||||||||||||||||||||||||
Portfolio turnover rate | 55 | % | 99 | % | 68 | % | 96 | % | 136 | % | 103 | % | 129 | % | ||||||||||||||
Net assets, end of period (000s omitted) | $19,553 | $27,911 | $41,045 | $50,825 | $266,849 | $359,383 | $334,778 |
1 | For the eleven months ended September 30, 2016. The Fund changed its fiscal year end from October 31 to September 30, effective September 30, 2016. |
2 | Calculated based upon average shares outstanding |
3 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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20 | Wells Fargo International Bond Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | Year ended October 31 | ||||||||||||||||||||||||||
INSTITUTIONAL CLASS | 2018 | 2017 | 20161 | 2015 | 2014 | 2013 | ||||||||||||||||||||||
Net asset value, beginning of period | $9.83 | $10.43 | $10.86 | $9.79 | $10.87 | $11.35 | $11.82 | |||||||||||||||||||||
Net investment income | 0.17 | 2 | 0.31 | 2 | 0.29 | 2 | 0.27 | 2 | 0.35 | 2 | 0.41 | 2 | 0.37 | |||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.25 | (0.91 | ) | (0.57 | ) | 0.86 | (1.34 | ) | (0.35 | ) | (0.70 | ) | ||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total from investment operations | 0.42 | (0.60 | ) | (0.28 | ) | 1.13 | (0.99 | ) | 0.06 | (0.33 | ) | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||||||
Net investment income | 0.00 | 0.00 | 0.00 | 0.00 | (0.06 | ) | (0.15 | ) | (0.02 | ) | ||||||||||||||||||
Net realized gains | 0.00 | 0.00 | (0.15 | ) | (0.06 | ) | (0.03 | ) | (0.39 | ) | (0.12 | ) | ||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total distributions to shareholders | 0.00 | 0.00 | (0.15 | ) | (0.06 | ) | (0.09 | ) | (0.54 | ) | (0.14 | ) | ||||||||||||||||
Net asset value, end of period | $10.25 | $9.83 | $10.43 | $10.86 | $9.79 | $10.87 | $11.35 | |||||||||||||||||||||
Total return3 | 4.27 | % | (5.75 | )% | (2.48 | )% | 11.60 | % | (9.20 | )% | 0.55 | % | (2.78 | )% | ||||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||||||
Gross expenses | 0.89 | % | 0.74 | % | 0.70 | % | 0.75 | % | 0.73 | % | 0.72 | % | 0.72 | % | ||||||||||||||
Net expenses | 0.70 | % | 0.70 | % | 0.70 | % | 0.70 | % | 0.70 | % | 0.70 | % | 0.70 | % | ||||||||||||||
Net investment income | 3.78 | % | 3.06 | % | 2.96 | % | 2.95 | % | 3.41 | % | 3.62 | % | 3.26 | % | ||||||||||||||
Supplemental data | ||||||||||||||||||||||||||||
Portfolio turnover rate | 55 | % | 99 | % | 68 | % | 96 | % | 136 | % | 103 | % | 129 | % | ||||||||||||||
Net assets, end of period (000s omitted) | $125,963 | $245,633 | $443,888 | $553,208 | $689,964 | $832,072 | $1,115,163 |
1 | For the eleven months ended September 30, 2016. The Fund changed its fiscal year end from October 31 to September 30, effective September 30, 2016. |
2 | Calculated based upon average shares outstanding |
3 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Notes to financial statements (unaudited) | Wells Fargo International Bond Fund | 21 |
1. ORGANIZATION
Wells Fargo Funds Trust (the “Trust”), a Delaware statutory trust organized on March 10, 1999, is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As an investment company, the Trust follows the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946, Financial Services – Investment Companies. These financial statements report on the Wells Fargo International Bond Fund (the “Fund”) which is a diversified series of the Trust.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Fund, are in conformity with U.S. generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Securities valuation
All investments are valued each business day as of the close of regular trading on the New York Stock Exchange (generally 4 p.m. Eastern Time), although the Fund may deviate from this calculation time under unusual or unexpected circumstances.
Debt securities are valued at the evaluated bid price provided by an independent pricing service service (e.g. taking into account various factors, including yields, maturities, or credit ratings) or, if a reliable price is not available, the quoted bid price from an independent broker-dealer.
The values of securities denominated in foreign currencies are translated into U.S. dollars at rates provided by an independent foreign currency pricing source at a time each business day specified by the Wells Fargo Asset Management Pricing Committee at Wells Fargo Funds Management, LLC (“Funds Management”)
Investments in registered open-end investment companies are valued at net asset value.
Investments which are not valued using any of the methods discussed above are valued at their fair value, as determined in good faith by the Board of Trustees of the Fund. The Board of Trustees has established a Valuation Committee comprised of the Trustees and has delegated to it the authority to take any actions regarding the valuation of portfolio securities that the Valuation Committee deems necessary or appropriate, including determining the fair value of portfolio securities, unless the determination has been delegated to the Wells Fargo Asset Management Pricing Committee. The Board of Trustees retains the authority to make or ratify any valuation decisions or approve any changes to the Valuation Procedures as it deems appropriate. On a quarterly basis, the Board of Trustees receives reports on any valuation actions taken by the Valuation Committee or the Wells Fargo Asset Management Pricing Committee which may include items for ratification.
Foreign currency translation
The accounting records of the Fund are maintained in U.S. dollars. The values of other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at rates provided by an independent foreign currency pricing source at a time each business day specified by the Wells Fargo Asset Management Pricing Committee. Purchases and sales of securities, and income and expenses are converted at the rate of exchange on the respective dates of such transactions. Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded and the U.S. dollar equivalent of the amounts actually paid or received. Net unrealized foreign exchange gains and losses arise from changes in the fair value of assets and liabilities other than investments in securities resulting from changes in exchange rates. The changes in net assets arising from changes in exchange rates of securities and the changes in net assets resulting from changes in market prices of securities are not separately presented. Such changes are included in net realized and unrealized gains or losses from investments.
Forward foreign currency contracts
The Fund is subject to foreign currency risk in the normal course of pursuing its investment objectives. A forward foreign currency contract is an agreement between two parties to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund enters into forward foreign currency contracts to facilitate transactions in foreign-denominated securities and to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. Forward foreign currency contracts are recorded at the forward rate and marked-to-market daily. When the contracts are
Table of Contents
22 | Wells Fargo International Bond Fund | Notes to financial statements (unaudited) |
closed, realized gains and losses arising from such transactions are recorded as realized gains or losses on forward foreign currency contracts. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. The Fund’s maximum risk of loss from counterparty credit risk is the unrealized gains on the contracts. This risk may be mitigated if there is a master netting arrangement between the Fund and the counterparty.
When-issued transactions
The Fund may purchase securities on a forward commitment or when-issued basis. The Fund records a when-issued transaction on the trade date and will segregate assets in an amount at least equal in value to the Fund’s commitment to purchase when-issued securities. Securities purchased on a when-issued basis are marked-to-market daily and the Fund begins earning interest on the settlement date. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract.
Security transactions and income recognition
Securities transactions are recorded on a trade date basis. Realized gains or losses are recorded on the basis of identified cost.
Interest income is accrued daily and bond discounts are accreted and premiums are amortized daily. To the extent debt obligations are placed on non-accrual status, any related interest income may be reduced by writing off interest receivables when the collection of all or a portion of interest has been determined to be doubtful based on consistently applied procedures and the fair value has decreased. If the issuer subsequently resumes interest payments or when the collectability of interest is reasonably assured, the debt obligation is removed from non-accrual status.
Income from foreign securities is recorded net of foreign taxes withheld where recovery of such taxes is not assured.
Distributions to shareholders
Distributions to shareholders are recorded on the ex-dividend date and paid from net investment income quarterly and any net realized gains are paid at least annually. Such distributions are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles. Dividend sources are estimated at the time of declaration. The tax character of distributions is determined as of the Fund’s fiscal year end. Therefore, a portion of the Fund’s distributions made prior to the Fund’s fiscal year end may be categorized as a tax return of capital at year end.
Federal and other taxes
The Fund intends to continue to qualify as a regulated investment company by distributing substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required.
The Fund’s income and federal excise tax returns and all financial records supporting those returns for the prior three fiscal years are subject to examination by the federal and Delaware revenue authorities. Management has analyzed the Fund’s tax positions taken on federal, state, and foreign tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability.
As of March 31, 2019, the aggregate cost of all investments for federal income tax purposes was $176,498,223 and the unrealized gains (losses) consisted of:
Gross unrealized gains | $ | 11,505,019 | ||
Gross unrealized losses | (4,989,819 | ) | ||
Net unrealized gains | $ | 6,515,200 |
As of September 30, 2018, the Fund had capital loss carryforwards which consisted of $5,740,832 in short-term capital losses and $1,023,725 in long-term capital losses.
As of September 30, 2018, the Fund had current year net deferred post-October capital losses consisting of $554,050 in long-term losses which was recognized on the first day of the current fiscal year.
As of September 30, 2018, the Fund had a qualified late-year ordinary loss of $3,203,994 which was recognized on the first day of the current fiscal year.
Table of Contents
Notes to financial statements (unaudited) | Wells Fargo International Bond Fund | 23 |
Class allocations
The separate classes of shares offered by the Fund differ principally in applicable sales charges, distribution, shareholder servicing, and administration fees. Class specific expenses are charged directly to that share class. Investment income, common expenses, and realized and unrealized gains (losses) on investments are allocated daily to each class of shares based on the relative proportion of net assets of each class.
3. FAIR VALUATION MEASUREMENTS
Fair value measurements of investments are determined within a framework that has established a fair value hierarchy based upon the various data inputs utilized in determining the value of the Fund’s investments. The three-level hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Fund’s investments are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The inputs are summarized into three broad levels as follows:
∎ | Level 1 – quoted prices in active markets for identical securities |
∎ | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
∎ | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
The inputs or methodologies used for valuing investments in securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used in valuing the Fund’s assets and liabilities as of March 31, 2019:
Quoted prices (Level 1) | Other significant observable inputs (Level 2) | Significant (Level 3) | Total | |||||||||||||
Assets | ||||||||||||||||
Investments in: | ||||||||||||||||
Corporate bonds and notes | $ | 0 | $ | 14,352,059 | $ | 0 | $ | 14,352,059 | ||||||||
Foreign corporate bonds and notes | 0 | 3,045,552 | 0 | 3,045,552 | ||||||||||||
Foreign government bonds | 0 | 148,788,890 | 0 | 148,788,890 | ||||||||||||
U.S. Treasury securities | 7,526,547 | 0 | 0 | 7,526,547 | ||||||||||||
Yankee corporate bonds and notes | 0 | 6,835,914 | 0 | 6,835,914 | ||||||||||||
Short-term investments | ||||||||||||||||
Investment companies | 2,601,873 | 0 | 0 | 2,601,873 | ||||||||||||
10,128,420 | 173,022,415 | 0 | 183,150,835 | |||||||||||||
Forward foreign currency contracts | 0 | 735,007 | 0 | 735,007 | ||||||||||||
Total assets | $ | 10,128,420 | $ | 173,757,422 | $ | 0 | $ | 183,885,842 | ||||||||
Liabilities | ||||||||||||||||
Forward foreign currency contracts | $ | 0 | $ | 872,419 | $ | 0 | $ | 872,419 | ||||||||
Total liabilities | $ | 0 | $ | 872,419 | $ | 0 | $ | 872,419 |
Additional sector, industry or geographic detail is included in the Portfolio of Investments.
Forward foreign currency contracts are reported at their cumulative unrealized gains (losses) at measurement date as reported in the table following the Portfolio of Investments. All other assets and liabilities are reported at their market value at measurement date.
At March 31, 2019, the Fund did not have any transfers into/out of Level 3.
Table of Contents
24 | Wells Fargo International Bond Fund | Notes to financial statements (unaudited) |
4. TRANSACTIONS WITH AFFILIATES
Management fee
Funds Management, an indirect wholly owned subsidiary of Wells Fargo & Company (“Wells Fargo”), is the manager of the Fund and provides advisory and fund-level administrative services under an investment management agreement. Under the investment management agreement, Funds Management is responsible for, among other services, implementing the investment objectives and strategies of the Fund, supervising the subadviser and providing fund-level administrative services in connection with the Fund’s operations. As compensation for its services under the investment management agreement, Funds Management is entitled to receive a management fee at the following annual rate based on the Fund’s average daily net assets:
Average daily net assets | Management fee | |||
First $500 million | 0.600 | % | ||
Next $500 million | 0.575 | |||
Next $2 billion | 0.550 | |||
Next $2 billion | 0.525 | |||
Next $5 billion | 0.490 | |||
Over $10 billion | 0.480 |
For the six months ended March 31, 2019, the management fee was equivalent to an annual rate of 0.60% of the Fund’s average daily net assets.
Funds Management has retained the services of a subadviser to provide daily portfolio management to the Fund. The fee for subadvisory services is borne by Funds Management. Wells Capital Asset Management (International), LLC, an affiliate of Funds Management and an indirect wholly owned subsidiary of Wells Fargo, is the subadviser to the Fund and is entitled to receive a fee from Funds Management at an annual rate starting at 0.35% and declining to 0.20% as the average daily net assets of the Fund increase.
Administration fees
Under a class-level administration agreement, Funds Management provides class-level administrative services to the Fund, which includes paying fees and expenses for services provided by the transfer agent, sub-transfer agents, omnibus account servicers and record-keepers. As compensation for its services under the class-level administration agreement, Funds Management receives an annual fee which is calculated based on the average daily net assets of each class as follows:
Class-level administration fee | ||||
Class A, Class C | 0.16 | % | ||
Class R6 | 0.03 | |||
Administrator Class | 0.10 | |||
Institutional Class | 0.08 |
Funds Management has contractually waived and/or reimbursed management and administration fees to the extent necessary to maintain certain net operating expense ratios for the Fund. When each class of the Fund has exceeded its expense cap, Funds Management has waived fees and/or reimbursed expenses from fund level expenses on a proportionate basis and then from class specific expenses. When only certain classes exceed their expense caps, waivers and/or reimbursements are applied against class specific expenses before fund level expenses. Funds Management has committed through January 31, 2020 to waive fees and/or reimburse expenses to the extent necessary to cap the Fund’s expenses at 1.03% for Class A shares, 1.78% for Class C shares, 0.65% for Class R6 shares, 0.85% for Administrator Class shares, and 0.70% for Institutional Class shares. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees.
Distribution fee
The Trust has adopted a distribution plan for Class C shares of the Fund pursuant to Rule 12b-1 under the 1940 Act. A distribution fee is charged to Class C shares and paid to Wells Fargo Funds Distributor, LLC (“Funds Distributor”), the principal underwriter, at an annual rate of 0.75% of the average daily net assets of Class C shares.
Table of Contents
Notes to financial statements (unaudited) | Wells Fargo International Bond Fund | 25 |
In addition, Funds Distributor is entitled to receive the front-end sales charge from the purchase of Class A shares and a contingent deferred sales charge on the redemption of certain Class A shares. Funds Distributor is also entitled to receive the contingent deferred sales charges from redemptions of Class C shares. For the six months ended March 31, 2019, Funds Distributor received $43 from the sale of Class A shares. No contingent deferred sales charges were incurred by Class A and Class C shares for the six months ended March 31, 2019.
Shareholder servicing fees
The Trust has entered into contracts with one or more shareholder servicing agents, whereby Class A, Class C, and Administrator Class of the Fund are charged a fee at an annual rate of 0.25% of the average daily net assets of each respective class. A portion of these total shareholder servicing fees were paid to affiliates of Wells Fargo.
Interfund transactions
The Fund may purchase or sell portfolio investment securities to certain other Wells Fargo affiliates pursuant toRule 17a-7 under the 1940 Act and under procedures adopted by the Board of Trustees. The procedures have been designed to ensure that these interfund transactions, which do not incur broker commissions, are effected at current market prices.
5. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six months ended March 31, 2019 were as follows:
Purchases at cost | Sales proceeds | |||||
U.S. government | Non-U.S. government | U.S. government | Non-U.S. government | |||
$47,026,471 | $105,893,592 | $63,583,214 | $284,826,432 |
6. DERIVATIVE TRANSACTIONS
During the six months ended March 31, 2019, the Fund entered into forward foreign currency contracts for hedging purposes. The Fund had average contract amounts of $233,572,823 and $187,286,419 in forward foreign currency contracts to buy and forward foreign currency contracts to sell, respectively, during the six months ended March 31, 2019.
The fair value, realized gains or losses and change in unrealized gains or losses, if any, on derivative instruments are reflected in the corresponding financial statement captions.
For certain types of derivative transactions, the Fund has entered into International Swaps and Derivatives Association, Inc. master agreements (“ISDA Master Agreements”) or similar agreements with approved counterparties. The ISDA Master Agreements or similar agreements may have requirements to deliver/deposit securities or cash to/with an exchange or broker-dealer as collateral and allows the Fund to offset, with each counterparty, certain derivative financial instrument’s assets and/or liabilities with collateral held or pledged. Collateral requirements differ by type of derivative. Collateral or margin requirements are set by the broker or exchange clearinghouse for exchange traded derivatives while collateral terms are contract specific for over-the-counter traded derivatives. Cash collateral that has been pledged to cover obligations of the Fund under ISDA Master Agreements or similar agreements, if any, are reported separately in the Statement of Assets and Liabilities. Securities pledged as collateral, if any, are noted in the Portfolio of Investments. With respect to balance sheet offsetting, absent an event of default by the counterparty or a termination of the agreement, the reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities are not offset across transactions between the Fund and the applicable counterparty. A reconciliation of the gross amounts on the Statement of Assets and Liabilities to the net amounts by counterparty, including any collateral exposure, is as follows:
Counterparty | Gross amounts of assets in the Statement of Assets and Liabilities | Amounts subject to netting agreements | Collateral received | Net amount of assets | ||||||||
State Street Bank | $735,007 | $(735,007) | $ | 0 | $ | 0 | ||||||
Counterparty | Gross amounts of liabilities in the Statement of Assets and Liabilities | Amounts subject to netting agreements | Collateral pledged | Net amount of liabilities | ||||||||
State Street Bank | $872,419 | $(735,007) | $ | 0 | $ | 137,412 |
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26 | Wells Fargo International Bond Fund | Notes to financial statements (unaudited) |
7. BANK BORROWINGS
The Trust (excluding the money market funds), Wells Fargo Master Trust and Wells Fargo Variable Trust are parties to a $280,000,000 revolving credit agreement whereby the Fund is permitted to use bank borrowings for temporary or emergency purposes, such as to fund shareholder redemption requests. Interest under the credit agreement is charged to the Fund based on a borrowing rate equal to the higher of the Federal Funds rate in effect on that day plus 1.25% or the overnight LIBOR rate in effect on that day plus 1.25%. In addition, an annual commitment fee equal to 0.25% of the unused balance is allocated to each participating fund.
During the six months ended March 31, 2019, the Fund had average borrowings outstanding of $137,324 (on an annualized basis) at an average rate of 3.70% and paid interest in the amount of $5,081.
8. INDEMNIFICATION
Under the Trust’s organizational documents, the officers and Trustees have been granted certain indemnification rights against certain liabilities that may arise out of performance of their duties to the Trust. Additionally, in the normal course of business, the Trust may enter into contracts with service providers that contain a variety of indemnification clauses. The Trust’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated.
9. NEW ACCOUNTING PRONOUNCEMENTS
In August 2018, FASB issued Accounting Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820)Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 updates the disclosure requirements for fair value measurements by modifying or removing certain disclosures and adding certain new disclosures. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management has adopted the removal and modification of disclosures early, as permitted, and will adopt the additional new disclosures at the effective date.
In March 2017, FASB issued ASU No. 2017-08,Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium. The amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 is effective for fiscal years beginning after December 15, 2018 and for interim periods within those fiscal years. Management is currently evaluating the potential impact of this new guidance to the financial statements.
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Other information (unaudited) | Wells Fargo International Bond Fund | 27 |
PROXY VOTING INFORMATION
A description of the policies and procedures used to determine how to vote proxies relating to portfolio securities is available, upon request, by calling1-800-222-8222, visiting our website atwfam.com, or visiting the SEC website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website atwfam.comor by visiting the SEC website at sec.gov.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for the Fund are publicly available monthly on the Fund’s website (wfam.com), on a one-month delayed basis. In addition, top ten holdings information (excluding derivative positions) for the Fund is publicly available on the Fund’s website on a monthly, seven-day or more delayed basis. The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which is available by visiting the SEC website at sec.gov. In addition, the Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330.
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28 | Wells Fargo International Bond Fund | Other information (unaudited) |
BOARD OF TRUSTEES AND OFFICERS
Each of the Trustees and Officers1 listed in the table below acts in identical capacities for each fund in the Wells Fargo family of funds, which consists of 151 mutual funds comprising the Wells Fargo Funds Trust, Wells Fargo Variable Trust, Wells Fargo Master Trust and four closed-end funds (collectively the “Fund Complex”). This table should be read in conjunction with the Prospectus and the Statement of Additional Information2. The mailing address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, however, each Trustee serves such term until reaching the mandatory retirement age established by the Trustees.
Independent Trustees
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company directorships | |||
William R. Ebsworth (Born 1957) | Trustee, since 2015 | Retired. From 1984 to 2013, equities analyst, portfolio manager, research director and chief investment officer at Fidelity Management and Research Company in Boston, Tokyo, and Hong Kong, and retired in 2013 as Chief Investment Officer of Fidelity Strategic Advisers, Inc. where he led a team of investment professionals managing client assets. Prior thereto, Board member of Hong Kong Securities Clearing Co., Hong Kong Options Clearing Corp., the Thailand International Fund, Ltd., Fidelity Investments Life Insurance Company, and Empire Fidelity Investments Life Insurance Company. Audit Committee Chair and Investment Committee Chair of the Vincent Memorial Hospital Endowment (non-profit organization). Mr. Ebsworth is a CFA® charterholder. | N/A | |||
Jane A. Freeman (Born 1953) | Trustee, since 2015; Chair Liaison, since 2018 | Retired. From 2012 to 2014 and 1999 to 2008, Chief Financial Officer of Scientific Learning Corporation. From 2008 to 2012, Ms. Freeman provided consulting services related to strategic business projects. Prior to 1999, Portfolio Manager at Rockefeller & Co. and Scudder, Stevens & Clark. Board member of the Harding Loevner Funds from 1996 to 2014, serving as both Lead Independent Director and chair of the Audit Committee. Board member of the Russell Exchange Traded Funds Trust from 2011 to 2012 and the chair of the Audit Committee. Ms. Freeman is a Board Member of The Ruth Bancroft Garden (non-profit organization). She is also an inactive Chartered Financial Analyst. | N/A | |||
Isaiah Harris, Jr.3 (Born 1952) | Trustee, since 2009; Audit Committee Chairman, since 2019 | Retired. Chairman of the Board of CIGNA Corporation since 2009, and Director since 2005. From 2003 to 2011, Director of Deluxe Corporation. Prior thereto, President and CEO of BellSouth Advertising and Publishing Corp. from 2005 to 2007, President and CEO of BellSouth Enterprises from 2004 to 2005 and President of BellSouth Consumer Services from 2000 to 2003. Emeritus member of the Iowa State University Foundation Board of Governors. Emeritus Member of the Advisory Board of Iowa State University School of Business. Advisory Board Member, Palm Harbor Academy (private school). Advisory Board Member, Child Evangelism Fellowship (non-profit). Mr. Harris is a certified public accountant (inactive status). | CIGNA Corporation | |||
Judith M. Johnson (Born 1949) | Trustee, since 2008; Audit Committee Chairman, from 2009 to 2018 | Retired. Prior thereto, Chief Executive Officer and Chief Investment Officer of Minneapolis Employees Retirement Fund from 1996 to 2008. Ms. Johnson is an attorney, certified public accountant and a certified managerial accountant. | N/A |
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Other information (unaudited) | Wells Fargo International Bond Fund | 29 |
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company directorships | |||
David F. Larcker (Born 1950) | Trustee, since 2009 | James Irvin Miller Professor of Accounting at the Graduate School of Business, Stanford University, Director of the Corporate Governance Research Initiative and Senior Faculty of The Rock Center for Corporate Governance since 2006. From 2005 to 2008, Professor of Accounting at the Graduate School of Business, Stanford University. Prior thereto, Ernst & Young Professor of Accounting at The Wharton School, University of Pennsylvania from 1985 to 2005. | N/A | |||
Olivia S. Mitchell (Born 1953) | Trustee, since 2006; Nominating and Governance Committee Chairman, since 2018 | International Foundation of Employee Benefit Plans Professor, Wharton School of the University of Pennsylvania since 1993. Director of Wharton’s Pension Research Council and Boettner Center on Pensions & Retirement Research, and Research Associate at the National Bureau of Economic Research. Previously, Cornell University Professor from 1978 to 1993. | N/A | |||
Timothy J. Penny (Born 1951) | Trustee, since 1996; Chairman, since 2018 | President and Chief Executive Officer of Southern Minnesota Initiative Foundation, a non-profit organization, since 2007. Member of the Board of Trustees of NorthStar Education Finance, Inc., a non-profit organization, since 2007. | N/A | |||
James G. Polisson (Born 1959) | Trustee, since 2018 | Retired. Chief Marketing Officer, Source (ETF) UK Services, Ltd, from 2015 to 2017. From 2012 to 2015, Principal of The Polisson Group, LLC, a management consulting, corporate advisory and principal investing company. Chief Executive Officer and Managing Director at Russell Investments, Global Exchange Traded Funds from 2010 to 2012. Managing Director of Barclays Global Investors from 1998 to 2010 and Global Chief Marketing Officer for iShares and Barclays Global Investors from 2000 to 2010. Trustee of the San Francisco Mechanics’ Institute, a non-profit organization, from 2013 to 2015. Board member of the Russell Exchange Traded Fund Trust from 2011 to 2012. Director of Barclays Global Investors Holdings Deutschland GmbH from 2006 to 2009. Mr. Polisson is an attorney and has a retired status with the Massachusetts and District of Columbia Bar Associations. | N/A | |||
Pamela Wheelock (Born 1959) | Trustee, since 2018 | Board member of the Destination Medical Center Economic Development Agency, Rochester, Minnesota since 2019. Chief Operating Officer, Twin Cities Habitat for Humanity from 2017 to 2019. Vice President of University Services, University of Minnesota from 2012 to 2016. Prior thereto, on the Board of Directors, Governance Committee and Finance Committee for the Minnesota Philanthropy Partners (Saint Paul Foundation) from 2012 to 2018, Interim Chief Executive Officer of Blue Cross Blue Shield of Minnesota from 2011 to 2012, Chairman of the Board from 2009 to 2012 and Board Director from 2003 to 2015. Vice President, Leadership and Community Engagement, Bush Foundation, Saint Paul, Minnesota (a private foundation) from 2009 to 2011. Executive Vice President and Chief Financial Officer, Minnesota Sports and Entertainment from 2004 to 2009 and Senior Vice President from 2002 to 2004. Executive Vice President of the Minnesota Wild Foundation from 2004 to 2008. Commissioner of Finance, State of Minnesota, from 1999 to 2002. Currently Board Chair of the Minnesota Wild Foundation since 2010. | N/A |
* | Length of service dates reflect the Trustee’s commencement of service with the Trust’s predecessor entities, where applicable. |
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30 | Wells Fargo International Bond Fund | Other information (unaudited) |
Officers
Name and year of birth | Position held and length of service | Principal occupations during past five years or longer | ||||
Andrew Owen (Born 1960) | President, since 2017 | Executive Vice President of Wells Fargo & Company and Head of Affiliated Managers, Wells Fargo Asset Management, since 2014. In addition, Mr. Owen is currently President, Chief Executive Officer and Director of Wells Fargo Funds Management, LLC since 2017. Prior thereto, Executive Vice President responsible for marketing, investments and product development for Wells Fargo Funds Management, LLC, from 2009 to 2014. | ||||
Nancy Wiser1 (Born 1967) | Treasurer, since 2012 | Executive Vice President of Wells Fargo Funds Management, LLC since 2011. Chief Operating Officer and Chief Compliance Officer at LightBox Capital Management LLC, from 2008 to 2011. | ||||
Alexander Kymn (Born 1973) | Secretary and Chief Legal Officer, since 2018 | Senior Company Counsel of Wells Fargo Bank, N.A. since 2018 (previously Senior Counsel from 2007 to 2018). Vice President of Wells Fargo Funds Management, LLC from 2008 to 2014. | ||||
Michael H. Whitaker (Born 1967) | Chief Compliance Officer, since 2016 | Senior Vice President and Chief Compliance Officer since 2016. Senior Vice President and Chief Compliance Officer for Fidelity Investments from 2007 to 2016. | ||||
David Berardi (Born 1975) | Assistant Treasurer, since 2009 | Vice President of Wells Fargo Funds Management, LLC since 2009. Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010. Manager of Fund Reporting and Control for Evergreen Investment Management Company, LLC from 2004 to 2010. | ||||
Jeremy DePalma1 (Born 1974) | Assistant Treasurer, since 2009 | Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010 and head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010. |
1 | Nancy Wiser acts as Treasurer of 65 funds in the Fund Complex. Jeremy DePalma acts as Treasurer of 86 funds and Assistant Treasurer of 65 funds in the Fund Complex. |
2 | The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request, by calling1-800-222-8222 or by visiting the website atwfam.com. |
3 | Mr. Harris became Chairman of the Audit Committee effective January 1, 2019. |
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Appendix A (unaudited) | Wells Fargo International Bond Fund | 31 |
SALES CHARGE REDUCTIONS AND WAIVERS FOR CERTAIN INTERMEDIARIES
Raymond James & Associates, Inc., Raymond James Financial Services & Raymond James affiliates (“Raymond James”)
Effective on or about March 1, 2019, shareholders purchasing Fund shares through a Raymond James platform or account will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in the Fund’s Prospectus or SAI.
Front-end Sales Load Waivers on Class A shares Available at Raymond James
• | Shares purchased in an investment advisory program. |
• | Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family). |
• | Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James. |
• | Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement). |
• | A shareholder in the fund’s Class C shares will have their shares automatically exchanged at net asset value to Class A shares (or the appropriate share class) of the fund if the shares are no longer subject to a CDSC and the exchange is in line with the policies and procedures of Raymond James. |
CDSC Waivers on Class A and C Shares Available at Raymond James
• | Death or disability of the shareholder. |
• | Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus. |
• | Return of excess contributions from an IRA Account. |
• | Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70½ as described in the Fund’s prospectus. |
• | Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James. |
• | Shares acquired through a right of reinstatement. |
Front-end Load Discounts Available at Raymond James: Breakpoints, and/or Rights of Accumulation
• | Breakpoints as described in the Fund’s Prospectus. |
• | Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets. |
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For more information
More information about Wells Fargo Funds is available free upon request. To obtain literature, please write, visit the Fund’s website, or call:
Wells Fargo Funds
P.O. Box 219967
Kansas City, MO 64121-9967
Website: wfam.com
Individual investors: 1-800-222-8222
Retail investment professionals: 1-888-877-9275
Institutional investment professionals:
1-866-765-0778
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. Before investing, please consider the investment objectives, risks, charges, and expenses of the investment. For a current prospectus and, if available, a summary prospectus, containing this information, call1-800-222-8222 or visit the Fund’s website atwfam.com. Read the prospectus carefully before you invest or send money.
Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management firms owned by Wells Fargo & Company. These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by Wells Fargo Funds Distributor, LLC (a broker-dealer and Member FINRA).
This material is for general informational and educational purposes only and is NOT intended to provide investment advice or a recommendation of any kind—including a recommendation for any specific investment, strategy, or plan.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
© 2019 Wells Fargo Funds Management, LLC. All rights reserved.
![]() | 401602 05-19 SA235/SAR235 03-19 |
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Semi-Annual Report
March 31, 2019
Wells Fargo Strategic Income Fund
Beginning on January 1, 2021, as permitted by new regulations adopted by the Securities and Exchange Commission, paper copies of the Wells Fargo Funds’ annual and semi-annual shareholder reports issued after this date will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website, and you will be notified by mail each time a report is posted and provided with a website address to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-222-8222 or by enrolling at wellsfargo.com/advantagedelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports; if you invest directly with the Fund, you can call 1-800-222-8222. Your election to receive reports in paper will apply to all Wells Fargo Funds held in your account with your financial intermediary or, if you are a direct investor, to all Wells Fargo Funds that you hold.
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The views expressed and any forward-looking statements are as of March 31, 2019, unless otherwise noted, and are those of the Fund managers and/or Wells Fargo Asset Management. Discussions of individual securities, or the markets generally, or any Wells Fargo Fund are not intended as individual recommendations. Future events or results may vary significantly from those expressed in any forward-looking statements. The views expressed are subject to change at any time in response to changing circumstances in the market. Wells Fargo and the Fund disclaim any obligation to publicly update or revise any views expressed or forward-looking statements.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
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2 | Wells Fargo Strategic Income Fund | Letter to shareholders (unaudited) |
Andrew Owen
President
Wells Fargo Funds
December’s S&P 500 Index performance was the worst since 1931.
Dear Shareholder:
We are pleased to offer you this semi-annual report for the Wells Fargo Strategic Income Fund for the six-month period that ended March 31, 2019. Concerns about interest rate increases in the U.S., trade tensions, and geopolitical events drove equity losses and restrained bond returns during the fourth quarter of 2018. Investor sentiment improved during the first quarter of 2019 thanks to a shift in U.S. Federal Reserve (Fed) policy and consistent, if not spectacular, economic and business growth metrics.
For the period, U.S. stocks, as measured by the S&P 500 Index,1 lost 1.72% and international stocks, as measured by the MSCI ACWI ex USA Index (Net),2 fell 2.33%. Based on the MSCI EM Index (Net),3 emerging market stocks added 1.71%. For bond investors, the Bloomberg Barclays U.S. Aggregate Bond Index4 added 4.63% while the Bloomberg Barclays Global Aggregate ex-USD Index5 added 2.44%. The Bloomberg Barclays Municipal Bond Index6 added 4.63%, and the ICE BofAML U.S. High Yield Index7 gained 2.39%.
Conflicting data unsettled markets during the fourth quarter.
November’s U.S. midterm elections shifted control of the House of Representatives from Republicans to Democrats, presaging potential partisan clashes. Third-quarter U.S. gross domestic product was announced at an annualized 3.4% rate, lower than the second-quarter rate. Brexit efforts stalled ahead of the March 2019 deadline. The People’s Bank of China cut reserve requirement ratios, accelerated infrastructure spending, and cut taxes even as the value of the yuan declined to low levels last seen in 2008.
December’s S&P 500 Index performance was the worst since 1931. Globally, fixed-income investments fared better than stocks during the last two months of the year. The Fed increased the federal funds rate by 25 bps in December 2018 to a target range of between 2.25% and 2.50% and softened its outlook for 2019 rate increases.
The market climbs a wall of worry.
Investors entered 2019 with reasons to be concerned. A partial U.S. government shutdown driven by partisan spending and immigration policy disputes extended into January. Investors expected high levels of stock market volatility to continue based on the VIX8.
1 | The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index with each stock’s weight in the index proportionate to its market value. You cannot invest directly in an index. |
2 | The Morgan Stanley Capital International (MSCI) All Country World Index (ACWI) ex USA Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. You cannot invest directly in an index. |
3 | The MSCI Emerging Markets (EM) Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure large- and mid-cap equity market performance of emerging markets. The MSCI EM Index (Net) consists of the following 24 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and the United Arab Emirates. You cannot invest directly in an index. |
4 | The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid adjustable-rate mortgage pass-throughs), asset-backed securities, and commercial mortgage-backed securities. You cannot invest directly in an index. |
5 | The Bloomberg Barclays Global Aggregate ex-USD Index is an unmanaged index that provides a broad-based measure of the global investment-grade fixed-income markets excluding the U.S. dollar-denominated debt market. You cannot invest directly in an index. |
6 | The Bloomberg Barclays Municipal Bond Index is an unmanaged index composed of long-term tax-exempt bonds with a minimum credit rating of Baa. You cannot invest directly in an index. |
7 | The ICE BofAML U.S. High Yield Index is a market-capitalization-weighted index of domestic and Yankee high-yield bonds. The index tracks the performance of high-yield securities traded in the U.S. bond market. You cannot invest directly in an index. Copyright 2019. ICE Data Indices, LLC. All rights reserved. |
8 | The Chicago Board Options Exchange Market Volatility Index (VIX) is a popular measure of the implied volatility of S&P 500 Index options. It represents one measure of the market’s expectation of stock market volatility over the next 30-day period. You cannot invest directly in an index. |
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Letter to shareholders (unaudited) | Wells Fargo Strategic Income Fund | 3 |
January’s returns tended to support the investing adage that markets climb a wall of worry. The S&P 500 Index gained 8.01% for the month that ended January 31, 2019, its best monthly performance in 30 years. Returns for the MSCI ACWI ex USA Index (Net), the Bloomberg Barclays U.S. Aggregate Bond Index, and the Bloomberg Barclays Global Aggregate ex-USD Index also were positive. The Fed indicated that it would pause its program of regular rate increases during 2019 as inflation remained low. Businesses and investors responded positively to the shift in policy.
In February, concerns over slowing global growth reemerged. The Bureau of Economic Analysis announced fourth-quarter 2018 gross domestic product grew at an annualized 2.2% rate, down from the 4.2% annualized rate for the second quarter and the 3.4% annualized rate for the third quarter. Analysts attributed the lower growth rate to a slowing housing market and larger trade deficit. The U.S. Department of Labor said that the economy created just 20,000 jobs in February 2019. In a February report, the Bank of England forecast the slowest growth since the financial crisis for 2019. China and the U.S., while putting future tariffs on hold for the time being, continued to wrangle over trade issues.
By the end of March 2019, the combination of dovish Fed sentiment and consistent, if not spectacular, economic and business metrics reinforced investors’ enthusiasm for equity investing. Monthly job creation data regained its momentum. Corporate profits, while lower than 2018’s lofty levels, remained consistent. Inflation rates were relatively low in the U.S., Europe, and Japan. China announced a roughly $300 billion stimulus package through tax and fee cuts intended to reinvigorate economic growth.
Don’t let short-term uncertainty derail long-term investment goals.
Periods of investment uncertainty can present challenges, but experience has taught us that maintaining long-term investment goals can be an effective way to plan for the future. To help you create a sound strategy based on your personal goals and risk tolerance, Wells Fargo Funds offers more than 100 mutual funds spanning a wide range of asset classes and investment styles. Although diversification cannot guarantee an investment profit or prevent losses, we believe it can be an effective way to manage investment risk and potentially smooth out overall portfolio performance. We encourage investors to know their investments and to understand that appropriate levels of risk-taking may unlock opportunities.
Thank you for choosing to invest with Wells Fargo Funds. We appreciate your confidence in us and remain committed to helping you meet your financial needs.
Sincerely,
Andrew Owen
President
Wells Fargo Funds
January’s returns tended to support the investing adage that markets climb a wall of worry.
For further information about your Fund, contact your investment professional, visit our website atwfam.com, or call us directly at1-800-222-8222.
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4 | Wells Fargo Strategic Income Fund | Performance highlights (unaudited) |
Investment objective
The Fund seeks total return, consisting of a high level of current income and capital appreciation.
Manager
Wells Fargo Funds Management, LLC
Subadvisers
Wells Fargo Asset Management (International), LLC
Wells Capital Management Incorporated
Portfolio managers
Niklas Nordenfelt, CFA®‡
Alex Perrin
Scott M. Smith, CFA®‡
Lauren van Biljon, CFA®‡*
Noah Wise, CFA®‡
Average annual total returns (%) as of March 31, 2019
Including sales charge | Excluding sales charge | Expense ratios1 (%) | ||||||||||||||||||||||||||||||||
Inception date | 1 year | 5 year | Since inception | 1 year | 5 year | Since inception | Gross | Net2 | ||||||||||||||||||||||||||
Class A (WSIAX) | 1-31-2013 | -1.83 | 1.27 | 1.17 | 2.28 | 2.09 | 1.85 | 1.47 | 0.92 | |||||||||||||||||||||||||
Class C (WSICX) | 1-31-2013 | 0.50 | 1.34 | 1.11 | 1.50 | 1.34 | 1.11 | 2.22 | 1.67 | |||||||||||||||||||||||||
Administrator Class (WSIDX) | 1-31-2013 | – | – | – | 2.39 | 2.19 | 1.98 | 1.41 | 0.77 | |||||||||||||||||||||||||
Institutional Class (WSINX) | 1-31-2013 | – | – | – | 2.52 | 2.40 | 2.17 | 1.14 | 0.62 | |||||||||||||||||||||||||
Bloomberg Barclays U.S. Universal Bond Index3 | – | – | – | – | 4.53 | 3.00 | 2.61 | + | – | – | ||||||||||||||||||||||||
ICE BofAML 3-Month LIBOR Constant Maturity Index4 | – | – | – | – | 2.48 | 0.99 | 0.86 | + | – | – |
+ | Return is based on inception date of the Fund’s classes. |
Figures quoted represent past performance, which is no guarantee of future results, and do not reflect taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance shown without sales charges would be lower if sales charges were reflected. Current performance may be lower or higher than the performance data quoted, which assumes the reinvestment of dividends and capital gains. Current month-end performance is available on the Fund’s website,wfam.com.
Index returns do not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses, or any taxes. It is not possible to invest directly in an index.
For Class A shares, the maximum front-end sales charge is 4.00%. For Class C shares, the maximum contingent deferred sales charge is 1.00%. Performance including a contingent deferred sales charge assumes the sales charge for the corresponding time period. Administrator Class and Institutional Class shares are sold without a front-end sales charge or contingent deferred sales charge.
Bond values fluctuate in response to the financial condition of individual issuers, general market and economic conditions, and changes in interest rates. Changes in market conditions and government policies may lead to periods of heightened volatility in the bond market and reduced liquidity for certain bonds held by the Fund. In general, when interest rates rise, bond values fall and investors may lose principal value. Interest rate changes and their impact on the Fund and its share price can be sudden and unpredictable. High-yield securities have a greater risk of default and tend to be more volatile than higher-rated debt securities. Loans are subject to risks similar to those associated with other below investment- grade bond investments, such as credit risk (for example, risk of issuer default), below-investment-grade bond risk (for example, risk of greater volatility in value), and risk that the loan may become illiquid or difficult to price. Foreign investments are especially volatile and can rise or fall dramatically due to differences in the political and economic conditions of the host country. These risks are generally intensified in emerging markets. The use of derivatives may reduce returns and/or increase volatility. Certain investment strategies tend to increase the total risk of an investment (relative to the broader market). The Fund is exposed to mortgage- and asset-backed securities risk, regulatory risk, and geographic risk. Consult the Fund’s prospectus for additional information on these and other risks.
Please see footnotes on page 5.
Table of Contents
Performance highlights (unaudited) | Wells Fargo Strategic Income Fund | 5 |
Ten largest holdings (%) as of March 31, 20195 | ||||
iShares JPMorgan USD Emerging Markets Bond ETF | 1.79 | |||
Foundation Finance Trust Series 2019-1A Class A, 3.86%, 11-15-2034 | 1.22 | |||
Mexico, 6.50%, 6-9-2022 | 1.10 | |||
SPDR Bloomberg Barclays Short Term High Yield Bond ETF | 1.09 | |||
Poland, 2.50%, 7-25-2027 | 1.07 | |||
Bowman Park CLO Limited Series 2014-1A Class AR, 3.83%, 11-23-2025 | 1.07 | |||
Vaneck Vectors JPMorgan Emerging Markets Local Currency Bond ETF | 0.97 | |||
Indonesia, 7.88%, 4-15-2019 | 0.96 | |||
Citigroup Commercial Mortgage Trust Series 2018-C6 Class AS, 4.64%, 11-10-2051 | 0.94 | |||
Coinstar Funding LLC Series 2017-1A Class A2,5.22%, 4-25-2047 | 0.94 |
Portfolio composition as of March 31, 20196 |
|
‡ | CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute. |
* | Ms. van Biljon became a portfolio manager of the Fund on October 3, 2018. |
1 | Reflects the expense ratios as stated in the most recent prospectuses, which include the impact of 0.02% in acquired fund fees and expenses. The expense ratios shown are subject to change and may differ from the annualized expense ratios shown in the financial highlights of this report, which do not include acquired fund fees and expenses. |
2 | The manager has contractually committed through January 31, 2020, to waive fees and/or reimburse expenses to the extent necessary to cap the expenses of each class after fee waivers at 0.90% for Class A, 1.65% for Class C, 0.75% for Administrator, and 0.60% for Institutional Class. Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the expense cap. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. Without this cap, the Fund’s returns would have been lower. The expense ratio paid by an investor is the net expense ratio (the total annual fund operating expenses after fee waivers) as stated in the prospectuses. |
3 | The Bloomberg Barclays U.S. Universal Bond Index is an unmanaged market-value-weighted performance benchmark for the U.S. dollar–denominated bond market, which includes investment-grade, high-yield, and emerging markets debt securities with maturities of one year or more. You cannot invest directly in an index. |
4 | The ICE BofA Merrill Lynch 3-Month LIBOR Constant Maturity Index is based on the assumed purchase of a synthetic instrument having 3 months to maturity and with a coupon equal to the closing quote for 3-Month LIBOR. That issue is sold the following day (priced at a yield equal to the current day closing 3-Month LIBOR rate) and is rolled into a new 3-Month instrument. The index, therefore, will always have a constant maturity equal to exactly 3 months. You cannot invest directly in an index. Copyright 2018. ICE Data Indices, LLC. All rights reserved. |
5 | The ten largest holdings, excluding cash, cash equivalents and any money market funds, are calculated based on the value of the investments divided by total net assets of the Fund. Holdings are subject to change and may have changed since the date specified. |
6 | Amounts are calculated based on the total long-term investments of the Fund. These amounts are subject to change and may have changed since the date specified. |
Table of Contents
6 | Wells Fargo Strategic Income Fund | Fund expenses (unaudited) |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (if any) on redemptions and (2) ongoing costs, including management fees, distribution (12b-1) and/or shareholder servicing fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period from October 1, 2018 to March 31, 2019.
Actual expenses
The “Actual” line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the “Actual” line under the heading entitled “Expenses paid during period” for your applicable class of shares to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The “Hypothetical” line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and contingent deferred sales charges. Therefore, the “Hypothetical” line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 10-1-2018 | Ending account value 3-31-2019 | Expenses paid during the period¹ | Annualized net expense ratio | |||||||||||||
Class A | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,025.56 | $ | 4.55 | 0.90 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.44 | $ | 4.53 | 0.90 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,021.66 | $ | 8.32 | 1.65 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,016.70 | $ | 8.30 | 1.65 | % | ||||||||
Administrator Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,023.38 | $ | 3.78 | 0.75 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.19 | $ | 3.78 | 0.75 | % | ||||||||
Institutional Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,027.54 | $ | 3.03 | 0.60 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.94 | $ | 3.02 | 0.60 | % |
1 | Expenses paid is equal to the annualized net expense ratio of each class multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year (to reflect the one-half-year period). |
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Strategic Income Fund | 7 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Asset-Backed Securities: 8.14% |
| |||||||||||||||
AmeriCredit Automobile Receivables Trust Series 2015-4 Class D | 3.72 | % | 12-8-2021 | $ | 300,000 | $ | 303,013 | |||||||||
AmeriCredit Automobile Receivables Trust Series 2018-3 Class D | 4.04 | 11-18-2024 | 1,500,000 | 1,528,055 | ||||||||||||
Ascentium Equipment Receivables LLC Series 2016-1A Class B 144A | 2.85 | 7-10-2020 | 283,553 | 283,631 | ||||||||||||
Avis Budget Rental Car Funding LLC Series 2016-1A Class A 144A | 2.99 | 6-20-2022 | 230,000 | 230,351 | ||||||||||||
Avis Budget Rental Car Funding LLC Series 2017-1A Class C 144A | 4.15 | 9-20-2023 | 650,000 | 649,843 | ||||||||||||
Bank of the West Auto Trust Series 2018-1 Class C 144A | 3.98 | 5-15-2024 | 1,500,000 | 1,533,742 | ||||||||||||
Capital Auto Receivables Trust Series 2018-2 Class C 144A | 3.69 | 12-20-2023 | 1,200,000 | 1,209,649 | ||||||||||||
Chesapeake Funding II LLC Series 2017-3A Class C 144A | 2.78 | 8-15-2029 | 800,000 | 795,978 | ||||||||||||
Chesapeake Funding II LLC Series 2017-4A Class D 144A | 3.26 | 11-15-2029 | 400,000 | 393,414 | ||||||||||||
Coinstar Funding LLC Series 2017-1A Class A2 144A | 5.22 | 4-25-2047 | 1,586,738 | 1,616,976 | ||||||||||||
Dell Equipment Finance Trust Series 2017-2 Class D 144A | 3.27 | 10-23-2023 | 400,000 | 399,032 | ||||||||||||
DRB Prime Student Loan Trust Series 2017-C Class C 144A | 3.29 | 11-25-2042 | 489,662 | 483,819 | ||||||||||||
Hertz Vehicle Financing LLC Series 2015-1A Class B 144A | 3.52 | 3-25-2021 | 1,500,000 | 1,497,389 | ||||||||||||
SMB Private Education Loan Trust Series 2015-C Class C 144A | 4.50 | 9-17-2046 | 290,000 | 303,506 | ||||||||||||
SoFi Consumer Loan Program Trust Series 2016-3A 144A | 3.05 | 12-26-2025 | 151,057 | 151,096 | ||||||||||||
SoFi Consumer Loan Program Trust Series 2018-1 Class C 144A | 3.97 | 2-25-2027 | 700,000 | 700,445 | ||||||||||||
SoFi Professional Loan Program LLC Series 2017-E Class B 144A | 3.49 | 11-26-2040 | 300,000 | 296,262 | ||||||||||||
Store Master Funding LLC Series 2014-1A Class A2 144A | 5.00 | 4-20-2044 | 97,583 | 98,319 | ||||||||||||
Tesla Auto Lease Trust Series 2018-A Class E 144A | 4.94 | 3-22-2021 | 350,000 | 351,070 | ||||||||||||
Tesla Auto Lease Trust Series 2018-B Class D 144A | 5.29 | 11-22-2021 | 1,200,000 | 1,212,662 | ||||||||||||
Total Asset-Backed Securities (Cost $13,924,923) |
| 14,038,252 | ||||||||||||||
|
| |||||||||||||||
Corporate Bonds and Notes: 20.78% | ||||||||||||||||
Communication Services: 3.62% | ||||||||||||||||
Diversified Telecommunication Services: 1.38% | ||||||||||||||||
AT&T Incorporated | 5.25 | 3-1-2037 | 1,360,000 | 1,433,462 | ||||||||||||
Hughes Satellite Systems Corporation | 6.50 | 6-15-2019 | 700,000 | 703,570 | ||||||||||||
Verizon Communications Incorporated | 5.50 | 3-16-2047 | 205,000 | 240,370 | ||||||||||||
2,377,402 | ||||||||||||||||
|
| |||||||||||||||
Entertainment: 0.09% | ||||||||||||||||
Live Nation Entertainment Incorporated 144A | 4.88 | 11-1-2024 | 150,000 | 150,938 | ||||||||||||
|
| |||||||||||||||
Media: 1.88% | ||||||||||||||||
CCO Holdings LLC | 5.25 | 9-30-2022 | 50,000 | 50,938 | ||||||||||||
CCO Holdings LLC 144A | 5.38 | 5-1-2025 | 150,000 | 154,875 | ||||||||||||
Charter Communications Operating LLC | 4.91 | 7-23-2025 | 700,000 | 738,152 | ||||||||||||
Cox Communications Incorporated 144A | 3.50 | 8-15-2027 | 200,000 | 195,855 | ||||||||||||
CSC Holdings LLC 144A | 5.50 | 5-15-2026 | 200,000 | 205,560 | ||||||||||||
Discovery Communications LLC | 3.80 | 3-13-2024 | 100,000 | 100,864 | ||||||||||||
Gray Television Incorporated 144A | 5.13 | 10-15-2024 | 50,000 | 50,125 | ||||||||||||
Gray Television Incorporated 144A | 5.88 | 7-15-2026 | 150,000 | 152,655 | ||||||||||||
Interpublic Group of Companies Incorporated | 4.65 | 10-1-2028 | 750,000 | 781,526 | ||||||||||||
National CineMedia LLC | 6.00 | 4-15-2022 | 175,000 | 176,750 | ||||||||||||
Nielsen Finance LLC 144A | 5.00 | 4-15-2022 | 75,000 | 74,250 | ||||||||||||
Outfront Media Capital Corporation | 5.88 | 3-15-2025 | 100,000 | 102,500 | ||||||||||||
Salem Media Group Incorporated 144A | 6.75 | 6-1-2024 | 50,000 | 45,250 | ||||||||||||
The E.W. Scripps Company 144A | 5.13 | 5-15-2025 | 150,000 | 142,875 | ||||||||||||
Time Warner Cable Incorporated | 3.80 | 2-15-2027 | 265,000 | 263,641 | ||||||||||||
3,235,816 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
8 | Wells Fargo Strategic Income Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Wireless Telecommunication Services: 0.27% | ||||||||||||||||
Sprint Communications Incorporated 144A | 7.00 | % | 3-1-2020 | $ | 150,000 | $ | 153,938 | |||||||||
Sprint Spectrum Company 144A | 5.15 | 9-20-2029 | 65,000 | 66,463 | ||||||||||||
T-Mobile USA Incorporated | 4.75 | 2-1-2028 | 25,000 | 24,781 | ||||||||||||
T-Mobile USA Incorporated | 6.38 | 3-1-2025 | 220,000 | 229,086 | ||||||||||||
474,268 | ||||||||||||||||
|
| |||||||||||||||
Consumer Discretionary: 1.72% | ||||||||||||||||
Auto Components: 0.32% | ||||||||||||||||
Adient Global Holdings 144A | 3.50 | 8-15-2024 | 515,000 | 434,674 | ||||||||||||
Allison Transmission Incorporated 144A | 5.00 | 10-1-2024 | 50,000 | 49,875 | ||||||||||||
Allison Transmission Incorporated 144A | 5.88 | 6-1-2029 | 25,000 | 25,281 | ||||||||||||
Cooper Tire & Rubber Company | 8.00 | 12-15-2019 | 50,000 | 51,438 | ||||||||||||
561,268 | ||||||||||||||||
|
| |||||||||||||||
Automobiles: 0.05% | ||||||||||||||||
Ford Motor Company | 7.45 | 7-16-2031 | 80,000 | 85,353 | ||||||||||||
|
| |||||||||||||||
Distributors: 0.15% | ||||||||||||||||
LKQ Corporation | 4.75 | 5-15-2023 | 250,000 | 251,475 | ||||||||||||
|
| |||||||||||||||
Diversified Consumer Services: 0.16% | ||||||||||||||||
Carriage Services Incorporated 144A | 6.63 | 6-1-2026 | 25,000 | 25,563 | ||||||||||||
Service Corporation International | 4.63 | 12-15-2027 | 150,000 | 149,063 | ||||||||||||
Service Corporation International | 5.38 | 5-15-2024 | 100,000 | 102,625 | ||||||||||||
277,251 | ||||||||||||||||
|
| |||||||||||||||
Hotels, Restaurants & Leisure: 0.43% | ||||||||||||||||
Hilton Domestic Operating Company Incorporated 144A | 5.13 | 5-1-2026 | 225,000 | 228,375 | ||||||||||||
KFC Holding Company 144A | 5.00 | 6-1-2024 | 250,000 | 255,000 | ||||||||||||
Wyndham Hotels & Resorts Company 144A | 5.38 | 4-15-2026 | 250,000 | 253,750 | ||||||||||||
737,125 | ||||||||||||||||
|
| |||||||||||||||
Specialty Retail: 0.54% | ||||||||||||||||
Asbury Automotive Group Incorporated | 6.00 | 12-15-2024 | 175,000 | 179,979 | ||||||||||||
Group 1 Automotive Incorporated | 5.00 | 6-1-2022 | 50,000 | 50,125 | ||||||||||||
Levi Strauss & Company | 5.00 | 5-1-2025 | 150,000 | 154,500 | ||||||||||||
Lithia Motors Incorporated 144A | 5.25 | 8-1-2025 | 175,000 | 175,875 | ||||||||||||
Penske Auto Group Incorporated | 5.38 | 12-1-2024 | 150,000 | 149,250 | ||||||||||||
Penske Auto Group Incorporated | 5.75 | 10-1-2022 | 50,000 | 50,813 | ||||||||||||
Sonic Automotive Incorporated | 5.00 | 5-15-2023 | 175,000 | 168,000 | ||||||||||||
928,542 | ||||||||||||||||
|
| |||||||||||||||
Textiles, Apparel & Luxury Goods: 0.07% | ||||||||||||||||
The William Carter Company 144A | 5.63 | 3-15-2027 | 75,000 | 77,531 | ||||||||||||
Wolverine World Wide Incorporated 144A | 5.00 | 9-1-2026 | 50,000 | 48,625 | ||||||||||||
126,156 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Strategic Income Fund | 9 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Consumer Staples: 0.16% | ||||||||||||||||
Food Products: 0.16% | ||||||||||||||||
Darling Ingredients Incorporated 144A%% | 5.25 | % | 4-15-2027 | $ | 25,000 | $ | 25,375 | |||||||||
Darling Ingredients Incorporated | 5.38 | 1-15-2022 | 250,000 | 253,750 | ||||||||||||
279,125 | ||||||||||||||||
|
| |||||||||||||||
Energy: 2.94% | ||||||||||||||||
Energy Equipment & Services: 0.49% | ||||||||||||||||
Bristow Group Incorporated 144A« | 8.75 | 3-1-2023 | 125,000 | 90,000 | ||||||||||||
Diamond Offshore Drilling Incorporated | 4.88 | 11-1-2043 | 125,000 | 79,063 | ||||||||||||
Era Group Incorporated | 7.75 | 12-15-2022 | 40,000 | 39,500 | ||||||||||||
Hilcorp Energy Company 144A | 5.75 | 10-1-2025 | 175,000 | 171,938 | ||||||||||||
NGPL PipeCo LLC 144A | 4.88 | 8-15-2027 | 200,000 | 202,000 | ||||||||||||
NGPL PipeCo LLC 144A | 7.77 | 12-15-2037 | 100,000 | 120,000 | ||||||||||||
Oceaneering International Incorporated | 6.00 | 2-1-2028 | 150,000 | 142,500 | ||||||||||||
845,001 | ||||||||||||||||
|
| |||||||||||||||
Oil, Gas & Consumable Fuels: 2.45% | ||||||||||||||||
Archrock Partners LP 144A | 6.88 | 4-1-2027 | 25,000 | 25,493 | ||||||||||||
Baker Hughes LLC | 2.77 | 12-15-2022 | 520,000 | 516,808 | ||||||||||||
Buckeye Partners LP | 5.60 | 10-15-2044 | 400,000 | 384,692 | ||||||||||||
Carrizo Oil & Gas Incorporated | 8.25 | 7-15-2025 | 100,000 | 103,500 | ||||||||||||
Cheniere Corpus Christi Holdings LLC | 5.13 | 6-30-2027 | 75,000 | 78,656 | ||||||||||||
Cheniere Energy Partners LP | 5.25 | 10-1-2025 | 100,000 | 102,250 | ||||||||||||
Cheniere Energy Partners LP 144A | 5.63 | 10-1-2026 | 100,000 | 102,500 | ||||||||||||
Denbury Resources Incorporated 144A | 9.00 | 5-15-2021 | 75,000 | 72,938 | ||||||||||||
Denbury Resources Incorporated 144A | 9.25 | 3-31-2022 | 100,000 | 96,500 | ||||||||||||
EnLink Midstream Partners LP | 4.40 | 4-1-2024 | 50,000 | 49,500 | ||||||||||||
EnLink Midstream Partners LP | 4.85 | 7-15-2026 | 225,000 | 223,313 | ||||||||||||
Exterran Partners LP | 6.00 | 4-1-2021 | 150,000 | 149,888 | ||||||||||||
Murphy Oil Corporation | 5.75 | 8-15-2025 | 155,000 | 160,055 | ||||||||||||
Murphy Oil Corporation | 6.88 | 8-15-2024 | 50,000 | 52,938 | ||||||||||||
Nabors Industries Incorporated | 5.75 | 2-1-2025 | 150,000 | 134,435 | ||||||||||||
Phillips 66 | 4.88 | 11-15-2044 | 250,000 | 274,539 | ||||||||||||
Rockies Express Pipeline LLC 144A | 5.63 | 4-15-2020 | 150,000 | 153,188 | ||||||||||||
Rockies Express Pipeline LLC 144A | 6.88 | 4-15-2040 | 75,000 | 80,495 | ||||||||||||
Rose Rock Midstream LP | 5.63 | 11-15-2023 | 100,000 | 93,910 | ||||||||||||
SemGroup Corporation | 7.25 | 3-15-2026 | 125,000 | 121,250 | ||||||||||||
Southern Star Central Corporation 144A | 5.13 | 7-15-2022 | 200,000 | 199,500 | ||||||||||||
Sunoco Logistics Partner LP | 5.40 | 10-1-2047 | 750,000 | 748,324 | ||||||||||||
Tallgrass Energy Partners LP 144A | 5.50 | 9-15-2024 | 275,000 | 281,875 | ||||||||||||
Ultra Resources Incorporated 144A | 7.13 | 4-15-2025 | 75,000 | 15,375 | ||||||||||||
4,221,922 | ||||||||||||||||
|
| |||||||||||||||
Financials: 4.51% | ||||||||||||||||
Banks: 0.58% | ||||||||||||||||
Bank of America Corporation (3 Month LIBOR +4.55%) ± | 6.30 | 12-29-2049 | 265,000 | 287,856 | ||||||||||||
JPMorgan Chase & Company (3 Month LIBOR +3.25%) ± | 5.15 | 12-29-2049 | 350,000 | 352,433 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
10 | Wells Fargo Strategic Income Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Banks(continued) | ||||||||||||||||
JPMorgan Chase & Company (3 Month LIBOR +3.30%) ± | 6.00 | % | 12-31-2049 | $ | 100,000 | $ | 104,258 | |||||||||
PNC Financial Services (3 Month LIBOR +3.30%) ± | 5.00 | 12-29-2049 | 250,000 | 246,250 | ||||||||||||
990,797 | ||||||||||||||||
|
| |||||||||||||||
Capital Markets: 0.57% | ||||||||||||||||
Blackstone Holdings Finance Company LLC 144A | 3.15 | 10-2-2027 | 100,000 | 97,213 | ||||||||||||
Goldman Sachs Group Incorporated | 4.25 | 10-21-2025 | 765,000 | 783,591 | ||||||||||||
MSCI Incorporated 144A | 4.75 | 8-1-2026 | 100,000 | 102,750 | ||||||||||||
983,554 | ||||||||||||||||
|
| |||||||||||||||
Consumer Finance: 1.73% | ||||||||||||||||
FirstCash Incorporated 144A | 5.38 | 6-1-2024 | 175,000 | 178,939 | ||||||||||||
Ford Motor Credit Company LLC | 3.20 | 1-15-2021 | 1,500,000 | 1,478,700 | ||||||||||||
General Motors Financial Company Incorporated | 5.65 | 1-17-2029 | 170,000 | 175,748 | ||||||||||||
LPL Holdings Incorporated 144A | 5.75 | 9-15-2025 | 250,000 | 253,200 | ||||||||||||
Springleaf Finance Corporation | 7.13 | 3-15-2026 | 25,000 | 25,453 | ||||||||||||
Springleaf Finance Corporation | 7.75 | 10-1-2021 | 150,000 | 161,625 | ||||||||||||
Synchrony Financial | 3.95 | 12-1-2027 | 750,000 | 709,135 | ||||||||||||
2,982,800 | ||||||||||||||||
|
| |||||||||||||||
Diversified Financial Services: 0.13% | ||||||||||||||||
Brookfield Finance LLC | 4.00 | 4-1-2024 | 200,000 | 202,938 | ||||||||||||
Vantiv LLC 144A | 4.38 | 11-15-2025 | 25,000 | 25,735 | ||||||||||||
228,673 | ||||||||||||||||
|
| |||||||||||||||
Insurance: 1.44% | ||||||||||||||||
American Equity Investment Life Insurance Company | 5.00 | 6-15-2027 | 100,000 | 101,639 | ||||||||||||
Brighthouse Financial Incorporated | 3.70 | 6-22-2027 | 75,000 | 67,648 | ||||||||||||
Brighthouse Financial Incorporated | 4.70 | 6-22-2047 | 700,000 | 557,461 | ||||||||||||
Guardian Life Insurance Company 144A | 4.85 | 1-24-2077 | 200,000 | 210,551 | ||||||||||||
HUB International Limited 144A | 7.00 | 5-1-2026 | 100,000 | 99,000 | ||||||||||||
Lincoln National Corporation | 7.00 | 6-15-2040 | 855,000 | 1,134,287 | ||||||||||||
MetLife Incorporated | 6.40 | 12-15-2066 | 200,000 | 214,500 | ||||||||||||
USI Incorporated 144A | 6.88 | 5-1-2025 | 100,000 | 97,125 | ||||||||||||
2,482,211 | ||||||||||||||||
|
| |||||||||||||||
Mortgage REITs: 0.06% | ||||||||||||||||
CC Holdings GS V LLC | 3.85 | 4-15-2023 | 100,000 | 102,430 | ||||||||||||
|
| |||||||||||||||
Health Care: 2.39% | ||||||||||||||||
Biotechnology: 0.49% | ||||||||||||||||
Celgene Corporation | 3.45 | 11-15-2027 | 850,000 | 841,756 | ||||||||||||
|
| |||||||||||||||
Health Care Equipment & Supplies: 0.13% | ||||||||||||||||
Hologic Incorporated 144A | 4.38 | 10-15-2025 | 225,000 | 223,830 | ||||||||||||
|
| |||||||||||||||
Health Care Providers & Services: 1.77% | ||||||||||||||||
CHS Incorporated | 5.13 | 8-1-2021 | 175,000 | 172,043 | ||||||||||||
CVS Health Corporation | 5.05 | 3-25-2048 | 730,000 | 735,792 | ||||||||||||
Davita Incorporated | 5.00 | 5-1-2025 | 150,000 | 143,738 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Strategic Income Fund | 11 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Health Care Providers & Services(continued) | ||||||||||||||||
Halfmoon Parent Incorporated 144A | 4.38 | % | 10-15-2028 | $ | 750,000 | $ | 777,354 | |||||||||
Highmark Incorporated 144A | 6.13 | 5-15-2041 | 850,000 | 971,007 | ||||||||||||
MPH Acquisition Holdings LLC 144A | 7.13 | 6-1-2024 | 25,000 | 24,938 | ||||||||||||
MPT Operating Partnership LP | 5.25 | 8-1-2026 | 200,000 | 205,750 | ||||||||||||
Select Medical Corporation | 6.38 | 6-1-2021 | 25,000 | 25,063 | ||||||||||||
3,055,685 | ||||||||||||||||
|
| |||||||||||||||
Industrials: 1.24% | ||||||||||||||||
Aerospace & Defense: 0.04% | ||||||||||||||||
RBS Global & Rexnord LLC 144A | 4.88 | 12-15-2025 | 75,000 | 74,063 | ||||||||||||
|
| |||||||||||||||
Airlines: 0.26% | ||||||||||||||||
BBA US Holdings Incorporated 144A | 5.38 | 5-1-2026 | 275,000 | 283,250 | ||||||||||||
United Airlines | 4.15 | 2-25-2033 | 150,000 | 155,404 | ||||||||||||
438,654 | ||||||||||||||||
|
| |||||||||||||||
Commercial Services & Supplies: 0.41% | ||||||||||||||||
Advanced Disposal Services Incorporated 144A | 5.63 | 11-15-2024 | 50,000 | 51,000 | ||||||||||||
Aramark Services Incorporated 144A | 5.00 | 4-1-2025 | 200,000 | 204,800 | ||||||||||||
Covanta Holding Corporation | 5.88 | 3-1-2024 | 75,000 | 76,875 | ||||||||||||
Covanta Holding Corporation | 6.00 | 1-1-2027 | 100,000 | 99,750 | ||||||||||||
KAR Auction Services Incorporated 144A | 5.13 | 6-1-2025 | 275,000 | 271,906 | ||||||||||||
704,331 | ||||||||||||||||
|
| |||||||||||||||
Electrical Equipment: 0.09% | ||||||||||||||||
Resideo Funding Incorporated 144A | 6.13 | 11-1-2026 | 150,000 | 154,875 | ||||||||||||
|
| |||||||||||||||
Industrial Conglomerates: 0.23% | ||||||||||||||||
General Electric Company (3 Month LIBOR +3.33%) ± | 5.00 | 12-29-2049 | 430,000 | 400,782 | ||||||||||||
|
| |||||||||||||||
Machinery: 0.13% | ||||||||||||||||
Stevens Holding Company Incorporated 144A | 6.13 | 10-1-2026 | 150,000 | 154,500 | ||||||||||||
Trimas Corporation 144A | 4.88 | 10-15-2025 | 75,000 | 73,875 | ||||||||||||
228,375 | ||||||||||||||||
|
| |||||||||||||||
Transportation Infrastructure: 0.08% | ||||||||||||||||
Toll Road Investors Partnership II LP 144A¤ | 0.00 | 2-15-2027 | 200,000 | 133,669 | ||||||||||||
|
| |||||||||||||||
Information Technology: 2.03% | ||||||||||||||||
Communications Equipment: 0.42% | ||||||||||||||||
Motorola Solutions Incorporated | 5.50 | 9-1-2044 | 750,000 | 730,912 | ||||||||||||
|
| |||||||||||||||
Electronic Equipment, Instruments & Components: 0.06% | ||||||||||||||||
Arrow Electronics Incorporated | 3.50 | 4-1-2022 | 100,000 | 100,623 | ||||||||||||
|
| |||||||||||||||
IT Services: 0.25% | ||||||||||||||||
First Data Corporation 144A | 5.00 | 1-15-2024 | 25,000 | 25,600 | ||||||||||||
Gartner Incorporated 144A | 5.13 | 4-1-2025 | 325,000 | 328,478 | ||||||||||||
Zayo Group LLC | 6.38 | 5-15-2025 | 75,000 | 75,375 | ||||||||||||
429,453 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
12 | Wells Fargo Strategic Income Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Semiconductors & Semiconductor Equipment: 0.39% | ||||||||||||||||
Broadcom Corporation | 3.88 | % | 1-15-2027 | $ | 695,000 | $ | 664,410 | |||||||||
|
| |||||||||||||||
Software: 0.36% | ||||||||||||||||
CDK Global Incorporated | 5.00 | 10-15-2024 | 200,000 | 205,340 | ||||||||||||
Citrix Systems Incorporated | 4.50 | 12-1-2027 | 250,000 | 246,985 | ||||||||||||
SS&C Technologies Incorporated 144A | 5.50 | 9-30-2027 | 25,000 | 25,250 | ||||||||||||
Symantec Corporation 144A | 5.00 | 4-15-2025 | 150,000 | 150,273 | ||||||||||||
627,848 | ||||||||||||||||
|
| |||||||||||||||
Technology Hardware, Storage & Peripherals: 0.55% | ||||||||||||||||
Diamond 1 Finance Corporation 144A | 8.35 | 7-15-2046 | 575,000 | 694,998 | ||||||||||||
NCR Corporation | 5.00 | 7-15-2022 | 50,000 | 49,875 | ||||||||||||
NCR Corporation | 5.88 | 12-15-2021 | 100,000 | 101,680 | ||||||||||||
NCR Corporation | 6.38 | 12-15-2023 | 100,000 | 102,818 | ||||||||||||
949,371 | ||||||||||||||||
|
| |||||||||||||||
Materials: 0.55% | ||||||||||||||||
Containers & Packaging: 0.49% | ||||||||||||||||
Crown Americas Capital Corporation V | 4.25 | 9-30-2026 | 150,000 | 145,125 | ||||||||||||
Crown Americas Capital Corporation VI | 4.75 | 2-1-2026 | 75,000 | 75,360 | ||||||||||||
Owens-Illinois Incorporated 144A | 6.38 | 8-15-2025 | 50,000 | 52,375 | ||||||||||||
Silgan Holdings Incorporated | 3.25 | 3-15-2025 | 500,000 | 578,991 | ||||||||||||
851,851 | ||||||||||||||||
|
| |||||||||||||||
Metals & Mining: 0.06% | ||||||||||||||||
Novelis Corporation 144A | 5.88 | 9-30-2026 | 75,000 | 74,625 | ||||||||||||
Novelis Corporation 144A | 6.25 | 8-15-2024 | 25,000 | 25,563 | ||||||||||||
100,188 | ||||||||||||||||
|
| |||||||||||||||
Real Estate: 0.72% | ||||||||||||||||
Equity REITs: 0.32% | ||||||||||||||||
CoreCivic Incorporated | 4.63 | 5-1-2023 | 100,000 | 96,500 | ||||||||||||
ESH Hospitality Incorporated 144A | 5.25 | 5-1-2025 | 150,000 | 149,063 | ||||||||||||
Sabra Health Care LP | 5.38 | 6-1-2023 | 250,000 | 252,813 | ||||||||||||
The Geo Group Incorporated | 5.88 | 10-15-2024 | 50,000 | 43,625 | ||||||||||||
542,001 | ||||||||||||||||
|
| |||||||||||||||
Real Estate Management & Development: 0.40% | ||||||||||||||||
Newmark Group Incorporated | 6.13 | 11-15-2023 | 290,000 | 298,999 | ||||||||||||
Washington Prime Group | 3.85 | 4-1-2020 | 400,000 | 398,080 | ||||||||||||
697,079 | ||||||||||||||||
|
| |||||||||||||||
Utilities: 0.90% | ||||||||||||||||
Electric Utilities: 0.29% | ||||||||||||||||
NextEra Energy Operating Partners LP 144A | 4.50 | 9-15-2027 | 125,000 | 121,875 | ||||||||||||
Oglethorpe Power Corporation | 4.25 | 4-1-2046 | 400,000 | 375,303 | ||||||||||||
497,178 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Strategic Income Fund | 13 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Gas Utilities: 0.01% | ||||||||||||||||
Suburban Propane Partners LP | 5.88 | % | 3-1-2027 | $ | 25,000 | $ | 23,688 | |||||||||
|
| |||||||||||||||
Independent Power & Renewable Electricity Producers: 0.60% | ||||||||||||||||
NSG Holdings LLC 144A | 7.75 | 12-15-2025 | 83,818 | 89,685 | ||||||||||||
Pattern Energy Group Incorporated 144A | 5.88 | 2-1-2024 | 325,000 | 330,688 | ||||||||||||
TerraForm Global Operating LLC 144A | 6.13 | 3-1-2026 | 25,000 | 24,375 | ||||||||||||
TerraForm Power Operating LLC 144A | 4.25 | 1-31-2023 | 75,000 | 74,099 | ||||||||||||
TerraForm Power Operating LLC 144A | 5.00 | 1-31-2028 | 525,000 | 506,625 | ||||||||||||
1,025,472 | ||||||||||||||||
|
| |||||||||||||||
Total Corporate Bonds and Notes (Cost $34,924,710) |
| 35,818,201 | ||||||||||||||
|
| |||||||||||||||
Shares | ||||||||||||||||
Exchange-Traded Funds: 4.45% | ||||||||||||||||
iShares JPMorgan USD Emerging Markets Bond ETF |
| 28,000 | 3,081,680 | |||||||||||||
SPDR Bloomberg Barclays Short Term High Yield Bond ETF |
| 69,000 | 1,880,250 | |||||||||||||
Vaneck Vectors JPMorgan Emerging Markets Local Currency Bond ETF |
| 50,000 | 1,668,000 | |||||||||||||
Vanguard Intermediate-Term Corporate Bond ETF « |
| 12,000 | 1,042,440 | |||||||||||||
Total Exchange-Traded Funds (Cost $7,546,630) |
| 7,672,370 | ||||||||||||||
|
| |||||||||||||||
Principal | ||||||||||||||||
Foreign Corporate Bonds and Notes @: 7.79% |
| |||||||||||||||
Communication Services: 0.92% | ||||||||||||||||
Diversified Telecommunication Services: 0.59% | ||||||||||||||||
Cellnex Telecom SA (EUR) | 2.38 | 1-16-2024 | 500,000 | 568,868 | ||||||||||||
Global Switch Holdings Limited (EUR) | 2.25 | 5-31-2027 | 400,000 | 453,142 | ||||||||||||
1,022,010 | ||||||||||||||||
|
| |||||||||||||||
Media: 0.33% | ||||||||||||||||
Altice Luxembourg SA (EUR) | 7.25 | 5-15-2022 | 300,000 | 340,007 | ||||||||||||
Altice SA 144A (EUR) | 7.25 | 5-15-2022 | 200,000 | 226,671 | ||||||||||||
566,678 | ||||||||||||||||
|
| |||||||||||||||
Consumer Discretionary: 1.14% | ||||||||||||||||
Auto Components: 0.28% | ||||||||||||||||
HP Pelzer Holding GmbH 144A (EUR) | 4.13 | 4-1-2024 | 450,000 | 479,124 | ||||||||||||
|
| |||||||||||||||
Automobiles: 0.33% | ||||||||||||||||
Peugeot SA Company (EUR) | 2.00 | 3-20-2025 | 500,000 | 571,632 | ||||||||||||
|
| |||||||||||||||
Diversified Consumer Services: 0.27% | ||||||||||||||||
Intertrust Group BV 144A (EUR) | 3.38 | 11-15-2025 | 400,000 | 458,235 | ||||||||||||
|
| |||||||||||||||
Hotels, Restaurants & Leisure: 0.26% | ||||||||||||||||
Accor SA (EUR) | 1.25 | 1-25-2024 | 400,000 | 456,415 | ||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
14 | Wells Fargo Strategic Income Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Consumer Staples: 0.80% | ||||||||||||||||
Food & Staples Retailing: 0.24% | ||||||||||||||||
Casino Guichard Perracho SA (EUR) | 3.58 | % | 2-7-2025 | 400,000 | $ | 415,453 | ||||||||||
|
| |||||||||||||||
Food Products: 0.56% | ||||||||||||||||
Danone SA (EUR) (5 Year EUR Swap +1.43%) ± | 1.75 | 12-31-2099 | 400,000 | 439,233 | ||||||||||||
Sigma Holdings Company BV 144A (EUR) | 5.75 | 5-15-2026 | 500,000 | 525,805 | ||||||||||||
965,038 | ||||||||||||||||
|
| |||||||||||||||
Energy: 0.07% | ||||||||||||||||
Oil, Gas & Consumable Fuels: 0.07% | ||||||||||||||||
Total SA (EUR) (5 Year EUR Swap +3.78%) ± | 3.88 | 12-29-2049 | 100,000 | 121,792 | ||||||||||||
|
| |||||||||||||||
Financials: 2.93% | ||||||||||||||||
Banks: 1.81% | ||||||||||||||||
Asian Development Bank (INR) | 6.45 | 8-8-2021 | 36,000,000 | 513,016 | ||||||||||||
Bankia SA (EUR) (5 Year EUR Swap +5.82%) ± | 6.00 | 12-31-2099 | 600,000 | 658,691 | ||||||||||||
Caixa Geral de Depositos SA (EUR) (5 Year EUR Swap +5.50%) ± | 5.75 | 6-28-2028 | 400,000 | 475,597 | ||||||||||||
European Bank for Reconstruction and Development (EUR) | 6.00 | 5-4-2020 | 38,500,000 | 548,059 | ||||||||||||
International Finance Corporation (INR) | 7.80 | 6-3-2019 | 29,900,000 | 430,620 | ||||||||||||
International Finance Corporation (INR) | 5.85 | 11-25-2022 | 35,250,000 | 491,965 | ||||||||||||
3,117,948 | ||||||||||||||||
|
| |||||||||||||||
Diversified Financial Services: 0.86% | ||||||||||||||||
Fiat Chrysler Automobiles Bank SpA (EUR) | 1.00 | 11-15-2021 | 400,000 | 453,135 | ||||||||||||
JAB Holdings BV (EUR) | 1.75 | 6-25-2026 | 400,000 | 455,328 | ||||||||||||
LKQ European Holdings BV Company 144A (EUR) | 3.63 | 4-1-2026 | 500,000 | 575,346 | ||||||||||||
1,483,809 | ||||||||||||||||
|
| |||||||||||||||
Thrifts & Mortgage Finance: 0.26% | ||||||||||||||||
Deutsche Pfandbriefbank AG (EUR) (5 Year EUR Swap +2.75%) ± | 2.88 | 6-28-2027 | 400,000 | 441,534 | ||||||||||||
|
| |||||||||||||||
Industrials: 0.83% | ||||||||||||||||
Commercial Services & Supplies: 0.50% | ||||||||||||||||
Paprec Holding SA 144A (EUR) | 4.00 | 3-31-2025 | 450,000 | 427,262 | ||||||||||||
Prosegur Cash SA (EUR) | 1.38 | 2-4-2026 | 400,000 | 436,003 | ||||||||||||
863,265 | ||||||||||||||||
|
| |||||||||||||||
Road & Rail: 0.33% | ||||||||||||||||
Europcar Groupe SA 144A (EUR) | 4.13 | 11-15-2024 | 500,000 | 560,548 | ||||||||||||
|
| |||||||||||||||
Information Technology: 0.27% | ||||||||||||||||
IT Services: 0.27% | ||||||||||||||||
Capgemini SE (EUR) | 1.00 | 10-18-2024 | 400,000 | 457,999 | ||||||||||||
|
| |||||||||||||||
Real Estate: 0.32% | ||||||||||||||||
Equity REITs: 0.26% | ||||||||||||||||
Unibail Rodamco SE (EUR) (5 Year EUR Swap +1.68%) ± | 2.13 | 12-31-2099 | 400,000 | 444,025 | ||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Strategic Income Fund | 15 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Real Estate Management & Development: 0.06% | ||||||||||||||||
ATF Netherlands BV (EUR) | 1.50 | % | 7-15-2024 | 100,000 | $ | 114,130 | ||||||||||
|
| |||||||||||||||
Utilities: 0.51% | ||||||||||||||||
Electric Utilities: 0.26% | ||||||||||||||||
Innogy Finance BV (EUR) | 1.50 | 7-31-2029 | 400,000 | 458,559 | ||||||||||||
|
| |||||||||||||||
Multi-Utilities: 0.25% | ||||||||||||||||
EP Infrastructure AS (EUR) | 1.66 | 4-26-2024 | 400,000 | 429,460 | ||||||||||||
|
| |||||||||||||||
Total Foreign Corporate Bonds and Notes (Cost $13,643,210) |
| 13,427,654 | ||||||||||||||
|
| |||||||||||||||
Foreign Government Bonds @: 8.04% | ||||||||||||||||
Brazil (BRL) | 10.00 | 1-1-2021 | 2,440,000 | 650,923 | ||||||||||||
Brazil (BRL) | 10.00 | 1-1-2027 | 2,615,000 | 708,064 | ||||||||||||
Colombia (COP) | 7.00 | 9-11-2019 | 4,550,000,000 | 1,443,293 | ||||||||||||
Indonesia (IDR) | 7.88 | 4-15-2019 | 23,525,000,000 | 1,653,110 | ||||||||||||
Malaysia (MYR) | 3.88 | 3-10-2022 | 6,000,000 | 1,489,323 | ||||||||||||
Mexico (MXN) | 6.50 | 6-9-2022 | 38,260,000 | 1,898,231 | ||||||||||||
Poland (PLN) | 2.50 | 7-25-2027 | 7,205,000 | 1,852,950 | ||||||||||||
Republic of Peru (PEN) | 5.70 | 8-12-2024 | 4,465,000 | 1,422,275 | ||||||||||||
Republic of South Africa (ZAR) | 6.75 | 3-31-2021 | 20,325,000 | 1,404,279 | ||||||||||||
Republic of South Africa (ZAR) | 8.75 | 2-28-2048 | 7,975,000 | 499,158 | ||||||||||||
Turkey (TRY) | 13.00 | 11-13-2019 | 5,000,000 | 842,750 | ||||||||||||
Total Foreign Government Bonds (Cost $13,992,627) |
| 13,864,356 | ||||||||||||||
|
| |||||||||||||||
Loans: 2.83% | ||||||||||||||||
Communication Services: 0.59% | ||||||||||||||||
Diversified Telecommunication Services: 0.20% | ||||||||||||||||
Intelsat Jackson Holdings SA (1 Month LIBOR +3.75%) ± | 6.24 | 11-27-2023 | $ | 340,332 | 334,907 | |||||||||||
|
| |||||||||||||||
Media: 0.25% |
| |||||||||||||||
Ancestry.com Incorporated (1 Month LIBOR +3.25%) ± | 5.75 | 10-19-2023 | 198,977 | 197,568 | ||||||||||||
Gray Television Incorporated (1 Month LIBOR +2.50%) ± | 4.98 | 1-2-2026 | 99,750 | 98,566 | ||||||||||||
Mission Broadcasting Incorporated (1 Month LIBOR +2.25%) ± | 4.74 | 1-17-2024 | 21,544 | 21,178 | ||||||||||||
Nexstar Broadcasting Incorporated (1 Month LIBOR +2.25%) ± | 4.75 | 1-17-2024 | 117,060 | 115,071 | ||||||||||||
432,383 | ||||||||||||||||
|
| |||||||||||||||
Wireless Telecommunication Services: 0.14% | ||||||||||||||||
Sprint Communications Incorporated (1 Month LIBOR +2.50%) ± | 5.00 | 2-2-2024 | 248,731 | 241,891 | ||||||||||||
|
| |||||||||||||||
Consumer Discretionary: 0.63% | ||||||||||||||||
Auto Components: 0.08% | ||||||||||||||||
Allison Transmission Incorporated (1 Month LIBOR +1.75%) ± | 3.00 | 9-23-2022 | 141,087 | 141,499 | ||||||||||||
|
| |||||||||||||||
Distributors: 0.17% | ||||||||||||||||
Spin Holdco Incorporated (3 Month LIBOR +3.25%) ± | 6.03 | 11-14-2022 | 301,003 | 292,199 | ||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
16 | Wells Fargo Strategic Income Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Hotels, Restaurants & Leisure: 0.38% | ||||||||||||||||
CCM Merger Incorporated (1 Month LIBOR +2.25%) ± | 4.75 | % | 8-8-2021 | $ | 266,167 | $ | 265,057 | |||||||||
Four Seasons Holdings Incorporated (1 Month LIBOR +2.00%) ± | 4.50 | 11-30-2023 | 198,982 | 197,199 | ||||||||||||
Greektown Holdings LLC (1 Month LIBOR +2.75%) ± | 5.25 | 4-25-2024 | 189,873 | 189,556 | ||||||||||||
651,812 | ||||||||||||||||
|
| |||||||||||||||
Energy: 0.11% | ||||||||||||||||
Oil, Gas & Consumable Fuels: 0.11% | ||||||||||||||||
Traverse Midstream Partners LLC (1 Month LIBOR +4.00%) ± | 6.50 | 9-27-2024 | 199,000 | 198,503 | ||||||||||||
|
| |||||||||||||||
Financials: 0.11% | ||||||||||||||||
Diversified Financial Services: 0.11% | ||||||||||||||||
Nielsen Finance LLC (1 Month LIBOR +2.00%) ± | 4.49 | 10-4-2023 | 199,492 | 195,614 | ||||||||||||
|
| |||||||||||||||
Health Care: 0.31% | ||||||||||||||||
Health Care Technology: 0.11% | ||||||||||||||||
Emerald Bidco Incorporated (1 Month LIBOR +2.75%) ± | 5.25 | 10-23-2023 | 198,982 | 194,505 | ||||||||||||
|
| |||||||||||||||
Pharmaceuticals: 0.20% | ||||||||||||||||
Valeant Pharmaceuticals International Incorporated (1 Month LIBOR +3.00%) ± | 5.48 | 6-2-2025 | 337,213 | 334,806 | ||||||||||||
|
| |||||||||||||||
Industrials: 0.44% | ||||||||||||||||
Commercial Services & Supplies: 0.05% | ||||||||||||||||
KAR Auction Services Incorporated (3 Month LIBOR +2.25%) ±‡ | 4.88 | 3-11-2021 | 86,782 | 86,674 | ||||||||||||
|
| |||||||||||||||
Communications Equipment: 0.29% | ||||||||||||||||
Charter Communications Operating LLC (1 Month LIBOR +2.00%) ± | 4.50 | 4-30-2025 | 497,481 | 493,750 | ||||||||||||
|
| |||||||||||||||
Machinery: 0.10% | ||||||||||||||||
Columbus McKinnon Corporation (3 Month LIBOR +2.50%) ±‡ | 5.10 | 1-31-2024 | 177,173 | 176,509 | ||||||||||||
|
| |||||||||||||||
Information Technology: 0.51% | ||||||||||||||||
Electronic Equipment, Instruments & Components: 0.35% | ||||||||||||||||
Dell Incorporated (1 Month LIBOR +2.00%) ± | 4.50 | 9-7-2023 | 609,278 | 601,899 | ||||||||||||
|
| |||||||||||||||
IT Services: 0.16% |
| |||||||||||||||
First Data Corporation (1 Month LIBOR +2.00%) ± | 4.49 | 7-8-2022 | 206,326 | 205,806 | ||||||||||||
First Data Corporation (1 Month LIBOR +2.00%) ± | 4.49 | 4-26-2024 | 75,000 | 74,765 | ||||||||||||
280,571 | ||||||||||||||||
|
| |||||||||||||||
Real Estate: 0.13% | ||||||||||||||||
Real Estate Management & Development: 0.13% | ||||||||||||||||
Capital Automotive LP (1 Month LIBOR +2.50%) ± | 5.00 | 3-24-2024 | 223,461 | 221,016 | ||||||||||||
|
| |||||||||||||||
Total Loans (Cost $4,944,723) |
| 4,878,538 | ||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Strategic Income Fund | 17 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Municipal Obligations: 0.84% | ||||||||||||||||
Illinois: 0.60% | ||||||||||||||||
GO Revenue: 0.52% | ||||||||||||||||
Chicago IL Refunding Bonds Taxable Project Series E | 6.05 | % | 1-1-2029 | $ | 155,000 | $ | 162,276 | |||||||||
Illinois Taxable Pension | 5.10 | 6-1-2033 | 750,000 | 736,965 | ||||||||||||
899,241 | ||||||||||||||||
|
| |||||||||||||||
Tax Revenue: 0.08% | ||||||||||||||||
Chicago IL Transit Authority Taxable Pension Funding Series A | 6.90 | 12-1-2040 | 100,000 | 131,317 | ||||||||||||
|
| |||||||||||||||
1,030,558 | ||||||||||||||||
|
| |||||||||||||||
Maryland: 0.06% | ||||||||||||||||
Education Revenue: 0.06% | ||||||||||||||||
Maryland Health & HEFAR Green Street Academy Series B 144A | 6.75 | 7-1-2023 | 100,000 | 99,061 | ||||||||||||
|
| |||||||||||||||
Pennsylvania: 0.06% | ||||||||||||||||
Health Revenue: 0.06% | ||||||||||||||||
Quakertown PA General Authority USDA Loan Anticipation Notes Series 2017-B | 3.80 | 7-1-2021 | 100,000 | 99,487 | ||||||||||||
|
| |||||||||||||||
Texas: 0.12% | ||||||||||||||||
Transportation Revenue: 0.12% | ||||||||||||||||
North Texas Tollway Authority Build America Bonds Subordinate Lien Series B-2 | 8.91 | 2-1-2030 | 210,000 | 219,868 | ||||||||||||
|
| |||||||||||||||
Total Municipal Obligations (Cost $1,438,800) |
| 1,448,974 | ||||||||||||||
|
| |||||||||||||||
Non-Agency Mortgage-Backed Securities: 28.08% | ||||||||||||||||
321 Henderson Receivables LLC Series 2013-2A Class A 144A | 4.21 | 3-15-2062 | 1,056,295 | 1,121,344 | ||||||||||||
321 Henderson Receivables LLC Series 2015-2A Class A 144A | 3.87 | 3-15-2058 | 395,026 | 407,465 | ||||||||||||
ALM Loan Funding Series 2016-18A Class A2R (3 Month LIBOR +1.65%) 144A± | 4.44 | 1-15-2028 | 600,000 | 597,932 | ||||||||||||
Arroyo Mortgage Trust Series 2019-1 Class A1 144A±± | 3.81 | 1-25-2049 | 785,980 | 791,402 | ||||||||||||
Atrium Hotel Portfolio Trust Series 2018 Class A (1 Month LIBOR +0.95%) 144A± | 3.43 | 6-15-2035 | 1,000,000 | 997,554 | ||||||||||||
Avant Loans Funding Trust Series 2019-A Class A 144A | 3.48 | 7-15-2022 | 1,550,000 | 1,549,902 | ||||||||||||
Avery Point CLO Limited Series 2015-6A Class AR (3 Month LIBOR +1.05%) 144A± | 3.78 | 8-5-2027 | 750,000 | 748,914 | ||||||||||||
BB-UBS Trust Series 2012-TFT Class C 144A±± | 3.47 | 6-5-2030 | 150,000 | 146,732 | ||||||||||||
BCC Funding Corporation Series 2016-1 Class B 144A | 2.73 | 4-20-2022 | 400,000 | 398,945 | ||||||||||||
Bluemountain CLO Limited Series 2012-2A Class AR2 (3 Month LIBOR +1.05%) 144A± | 3.69 | 11-20-2028 | 1,500,000 | 1,498,190 | ||||||||||||
BlueMountain CLO Limited Series 2015-3A Class A1R (3 Month LIBOR +1.00%) 144A± | 3.76 | 4-20-2031 | 700,000 | 692,249 | ||||||||||||
Bowman Park CLO Limited Series 2014-1A Class AR (3 Month LIBOR +1.18%) 144A± | 3.83 | 11-23-2025 | 1,839,318 | 1,839,618 | ||||||||||||
CIFC Funding Limited Series 2018-1A Class B (3 Month LIBOR +1.40%) 144A± | 4.18 | 4-18-2031 | 1,000,000 | 981,300 | ||||||||||||
Citigroup Commercial Mortgage Trust Series 2018-C6 Class AS | 4.64 | 11-10-2051 | 1,500,000 | 1,628,397 | ||||||||||||
Cole Park CLO Limited Series 2015-1A Class BR (3 Month LIBOR +1.60%) 144A± | 4.36 | 10-20-2028 | 1,000,000 | 991,761 | ||||||||||||
CommonBond Student Loan Trust Series 2018-CGS Class C 144A | 4.35 | 2-25-2046 | 1,600,000 | 1,607,711 | ||||||||||||
Consumer Lending Receivables LLC Series 2019-A Class A 144A | 3.52 | 4-15-2026 | 1,601,602 | 1,601,602 | ||||||||||||
Consumer Loan Underlying Bond Credit Trust Series 2018-P2 Class B 144A | 4.10 | 10-15-2025 | 500,000 | 504,816 | ||||||||||||
Consumer Loan Underlying Bond Credit Trust Series 2018-P3 Class A 144A | 3.82 | 1-15-2026 | 1,321,669 | 1,328,569 | ||||||||||||
Foundation Finance Trust Series 2019-1A Class A 144A | 3.86 | 11-15-2034 | 2,100,000 | 2,099,675 | ||||||||||||
FREMF Mortgage Trust Series 2017-K724 Class B 144A±± | 3.49 | 11-25-2023 | 400,000 | 395,327 | ||||||||||||
GS Mortgage Security Trust Series 2014-GC22 Class AS | 4.11 | 6-10-2047 | 1,450,000 | 1,494,423 | ||||||||||||
GS Mortgage Security Trust Series 2018-LUAU Class B (1 Month LIBOR +1.40%) 144A± | 3.88 | 11-15-2032 | 1,600,000 | 1,590,611 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
18 | Wells Fargo Strategic Income Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Non-Agency Mortgage-Backed Securities(continued) | ||||||||||||||||
Harley Marine Financing LLC Barge Series 2018-1A Class A2 144A | 5.68 | % | 5-15-2043 | $ | 682,500 | $ | 588,130 | |||||||||
Longtrain Leasing III LLC Series 2015-1A Class A2 144A | 4.06 | 1-15-2045 | 500,000 | 510,449 | ||||||||||||
Marlette Funding Trust Series 2018-3A Class A 144A | 3.20 | 9-15-2028 | 369,207 | 369,392 | ||||||||||||
Marlette Funding Trust Series 2018-4A Class B 144A | 4.21 | 12-15-2028 | 1,100,000 | 1,119,094 | ||||||||||||
Marlette Funding Trust Series 2019-1A Class A 144A | 3.44 | 4-16-2029 | 1,500,000 | 1,504,824 | ||||||||||||
MidOcean Credit CLO Limited Series 2016-5A Class B1R (3 Month LIBOR +1.60%) 144A± | 4.36 | 7-19-2028 | 500,000 | 495,876 | ||||||||||||
Motel 6 Trust Series 2017-MTL6 Class A (1 Month LIBOR +0.92%) 144A± | 3.40 | 8-15-2034 | 1,353,093 | 1,347,153 | ||||||||||||
MP CLO VIII Limited Series 2015-2A Class AR (3 Month LIBOR +0.91%) 144A± | 3.67 | 10-28-2027 | 600,000 | 597,310 | ||||||||||||
Navistar Financial Dealer Note Series 2018-1 Class D (1 Month LIBOR +1.55%) 144A± | 4.04 | 9-25-2023 | 600,000 | 600,674 | ||||||||||||
New Residential Mortgage Loan Series 2019-NQM2 Class A1 144A±± | 3.60 | 4-25-2049 | 1,000,000 | 1,004,762 | ||||||||||||
Onemain Financial Issuance Trust Series 2019-1A Class D 144A | 4.22 | 2-14-2031 | 1,500,000 | 1,516,996 | ||||||||||||
Oxford Finance Funding Trust Series 2019-1A Series A2 144A | 4.46 | 2-15-2027 | 800,000 | 809,328 | ||||||||||||
SoFi Consumer Loan Program Trust Series 2017-2 Class A 144A | 3.28 | 2-25-2026 | 864,560 | 866,843 | ||||||||||||
SoFi Consumer Loan Program Trust Series 2018-4 Class D 144A | 4.76 | 11-26-2027 | 300,000 | 308,804 | ||||||||||||
SoFi Professional Loan Program LLC Series 2016-A Class A2 144A | 2.76 | 12-26-2036 | 178,849 | 177,645 | ||||||||||||
Spirit Master Funding LLC Series 2017-1A Class A 144A | 4.36 | 12-20-2047 | 297,704 | 303,966 | ||||||||||||
Store Master Funding LLC Series 2015-1A Class A1 144A | 3.75 | 4-20-2045 | 1,352,975 | 1,357,558 | ||||||||||||
Taco Bell Funding LLC Series 2018-1A Class A21 144A | 4.32 | 11-25-2048 | 1,496,250 | 1,539,492 | ||||||||||||
TCI Symphony CLO Limited Series 2016-1A Class BR (3 Month LIBOR +1.65%) 144A± | 4.45 | 10-13-2029 | 1,500,000 | 1,488,483 | ||||||||||||
Textainer Marine Containers Limited Series 2017-1A Class B 144A | 4.85 | 5-20-2042 | 140,502 | 141,001 | ||||||||||||
Textainer Marine Containers Limited Series 2017-2A Class B 144A | 4.75 | 6-20-2042 | 86,059 | 86,054 | ||||||||||||
Venture CDO Limited Series 2016-23A Class AR (3 Month LIBOR +1.07%) 144A± | 3.83 | 7-19-2028 | 700,000 | 696,950 | ||||||||||||
Venture CDO Limited Series 2017-28A Class A2 (3 Month LIBOR +1.11%) 144A± | 3.87 | 7-20-2030 | 1,180,000 | 1,172,026 | ||||||||||||
Venture CDO Limited Series 2018-35A Class AS (3 Month LIBOR +1.15%) 144A± | 3.65 | 10-22-2031 | 1,300,000 | 1,312,366 | ||||||||||||
Verus Securitization Trust Series 2019-1 Class A1 144A±± | 3.84 | 2-25-2059 | 988,813 | 996,102 | ||||||||||||
Voya CLO Limited Series 2015-1A Class A1R (3 Month LIBOR +0.90%) 144A± | 3.68 | 1-18-2029 | 1,500,000 | 1,487,561 | ||||||||||||
Voya CLO Limited Series 2019-1A Class A (3 Month LIBOR +1.17%) 144A± | 3.81 | 4-15-2029 | 1,000,000 | 999,980 | ||||||||||||
Total Non-Agency Mortgage-Backed Securities (Cost $48,184,592) |
| 48,413,258 | ||||||||||||||
|
| |||||||||||||||
Expiration date | Shares | |||||||||||||||
Rights: 0.00% |
| |||||||||||||||
Utilities: 0.00% | ||||||||||||||||
Independent Power & Renewable Electricity Producers: 0.00% | ||||||||||||||||
Vistra Energy Corporation † | 12-31-2046 | 6,516 | 4,887 | |||||||||||||
|
| |||||||||||||||
Total Rights (Cost $6,785) |
| 4,887 | ||||||||||||||
|
| |||||||||||||||
Maturity date | Principal | |||||||||||||||
U. S. Treasury Securities: 1.04% | ||||||||||||||||
U.S. Treasury Bond | 3.00 | 8-15-2048 | $ | 500,000 | 518,789 | |||||||||||
U.S. Treasury Bond | 3.38 | 11-15-2048 | 1,140,000 | 1,271,679 | ||||||||||||
Total U.S. Treasury Securities (Cost $1,704,090) |
| 1,790,468 | ||||||||||||||
|
| |||||||||||||||
Yankee Corporate Bonds and Notes: 6.00% | ||||||||||||||||
Communication Services: 0.78% | ||||||||||||||||
Wireless Telecommunication Services: 0.78% | ||||||||||||||||
British Telecommunication | 5.13 | 12-4-2028 | 800,000 | 857,170 | ||||||||||||
Vodafone Group plc (5 Year USD Swap +4.87%) %%± | 7.00 | 4-4-2079 | 475,000 | 482,799 | ||||||||||||
1,339,969 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Strategic Income Fund | 19 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Energy: 1.50% | ||||||||||||||||
Energy Equipment & Services: 0.07% | ||||||||||||||||
Ensco plc | 5.75 | % | 10-1-2044 | $ | 175,000 | $ | 112,438 | |||||||||
|
| |||||||||||||||
Oil, Gas & Consumable Fuels: 1.43% | ||||||||||||||||
Baytex Energy Corporation 144A | 5.63 | 6-1-2024 | 150,000 | 139,313 | ||||||||||||
Canadian Natural Resources Limited | 3.85 | 6-1-2027 | 750,000 | 751,344 | ||||||||||||
Comision Federal de Electricidad 144A | 4.75 | 2-23-2027 | 250,000 | 252,270 | ||||||||||||
Petroleos Mexicanos Company | 5.38 | 3-13-2022 | 500,000 | 509,500 | ||||||||||||
Woodside Finance Limited 144A | 3.70 | 3-15-2028 | 850,000 | 820,323 | ||||||||||||
2,472,750 | ||||||||||||||||
|
| |||||||||||||||
Financials: 2.59% | ||||||||||||||||
Banks: 1.73% | ||||||||||||||||
ABN AMRO Bank NV 144A | 4.75 | 7-28-2025 | 200,000 | 207,770 | ||||||||||||
Banco Internacional del Peru SAA Interbank 144A | 3.38 | 1-18-2023 | 300,000 | 298,155 | ||||||||||||
Banistmo SA 144A | 3.65 | 9-19-2022 | 100,000 | 98,375 | ||||||||||||
BPCE SA 144A | 5.15 | 7-21-2024 | 305,000 | 318,455 | ||||||||||||
Credit Agricole SA (5 Year USD Swap +6.19%) 144A± | 8.13 | 12-29-2049 | 265,000 | 297,635 | ||||||||||||
Intesa Sanpaolo SpA 144A | 5.71 | 1-15-2026 | 635,000 | 620,288 | ||||||||||||
Perrigo Finance Unlimited Company | 4.38 | 3-15-2026 | 400,000 | 390,062 | ||||||||||||
UBS Group Funding Limited 144A | 4.13 | 9-24-2025 | 250,000 | 258,280 | ||||||||||||
The Governor and Company of The Bank of Ireland (5 Year EUR Swap +6.96%) ± | 7.38 | 12-29-2049 | 425,000 | 501,173 | ||||||||||||
2,990,193 | ||||||||||||||||
|
| |||||||||||||||
Capital Markets: 0.30% | ||||||||||||||||
Cadillac Fairview Corporation Limited 144A | 4.13 | 2-1-2029 | 240,000 | 251,897 | ||||||||||||
Credit Suisse Group AG 144A | 3.57 | 1-9-2023 | 260,000 | 260,973 | ||||||||||||
512,870 | ||||||||||||||||
|
| |||||||||||||||
Diversified Financial Services: 0.05% | ||||||||||||||||
Intelsat Jackson Holdings SA | 5.50 | 8-1-2023 | 100,000 | 88,750 | ||||||||||||
|
| |||||||||||||||
Insurance: 0.37% |
| |||||||||||||||
Swiss Re Finance (Luxembourg) (5 Year Treasury Constant Maturity +3.58%) 144A%%± | 5.00 | 4-2-2049 | 400,000 | 405,322 | ||||||||||||
Validus Holdings Limited | 8.88 | 1-26-2040 | 160,000 | 235,472 | ||||||||||||
640,794 | ||||||||||||||||
|
| |||||||||||||||
Thrifts & Mortgage Finance: 0.14% | ||||||||||||||||
Nationwide Building Society (5 Year USD ICE Swap Rate 11:00am NY +1.85%) 144A± | 4.13 | 10-18-2032 | 250,000 | 232,929 | ||||||||||||
|
| |||||||||||||||
Health Care: 0.57% | ||||||||||||||||
Pharmaceuticals: 0.57% | ||||||||||||||||
Bausch Health Companies Incorporated 144A | 5.50 | 3-1-2023 | 25,000 | 25,121 | ||||||||||||
Bausch Health Companies Incorporated 144A | 5.50 | 11-1-2025 | 50,000 | 51,063 | ||||||||||||
Bausch Health Companies Incorporated 144A | 6.13 | 4-15-2025 | 225,000 | 222,750 | ||||||||||||
Bausch Health Companies Incorporated 144A | 7.00 | 3-15-2024 | 25,000 | 26,450 | ||||||||||||
Teva Pharmaceutical Finance BV | 2.20 | 7-21-2021 | 200,000 | 190,710 | ||||||||||||
Teva Pharmaceutical Finance Netherlands II BV | 4.50 | 3-1-2025 | 400,000 | 458,707 | ||||||||||||
974,801 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
20 | Wells Fargo Strategic Income Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Industrials: 0.52% | ||||||||||||||||
Commercial Services & Supplies: 0.12% | ||||||||||||||||
Ritchie Brothers Auctioneers Incorporated 144A | 5.38 | % | 1-15-2025 | $ | 200,000 | $ | 203,750 | |||||||||
|
| |||||||||||||||
Electrical Equipment: 0.12% | ||||||||||||||||
Sensata Technologies BV 144A | 6.25 | 2-15-2026 | 200,000 | 212,000 | ||||||||||||
|
| |||||||||||||||
Transportation Infrastructure: 0.28% | ||||||||||||||||
Asciano Finance Limited 144A | 4.63 | 9-23-2020 | 170,000 | 172,760 | ||||||||||||
Mexico City Airport Trust 144A | 5.50 | 7-31-2047 | 337,000 | 310,040 | ||||||||||||
482,800 | ||||||||||||||||
|
| |||||||||||||||
Materials: 0.04% | ||||||||||||||||
Containers & Packaging: 0.04% | ||||||||||||||||
OI European Group BV 144A | 4.00 | 3-15-2023 | 75,000 | 73,594 | ||||||||||||
|
| |||||||||||||||
Total Yankee Corporate Bonds and Notes (Cost $10,065,479) |
| 10,337,638 | ||||||||||||||
|
| |||||||||||||||
Yankee Government Bonds: 1.70% | ||||||||||||||||
Bermuda 144A | 3.72 | 1-25-2027 | 850,000 | 838,313 | ||||||||||||
Federal Democratic Republic of Ethiopia | 6.63 | 12-11-2024 | 200,000 | 203,280 | ||||||||||||
Mongolia Government | 5.63 | 5-1-2023 | 200,000 | 201,990 | ||||||||||||
Oman Government International Bond | 5.63 | 1-17-2028 | 400,000 | 374,904 | ||||||||||||
Province of Cordoba 144A | 7.13 | 8-1-2027 | 550,000 | 386,931 | ||||||||||||
Province of Santa Fe | 7.00 | 3-23-2023 | 350,000 | 299,254 | ||||||||||||
Republic of Rwanda | 6.63 | 5-2-2023 | 200,000 | 205,398 | ||||||||||||
Republic of Sri Lanka | 5.75 | 1-18-2022 | 200,000 | 199,494 | ||||||||||||
The Dominican Republic | 6.88 | 1-29-2026 | 200,000 | 219,500 | ||||||||||||
Total Yankee Government Bonds (Cost $3,053,126) |
| 2,929,064 | ||||||||||||||
|
| |||||||||||||||
Yield | Shares | |||||||||||||||
Short-Term Investments: 10.84% | ||||||||||||||||
Investment Companies: 10.57% | ||||||||||||||||
Securities Lending Cash Investments LLC (l)(r)(u) | 2.55 | 1,099,727 | 1,099,837 | |||||||||||||
Wells Fargo Government Money Market Fund Select | 2.38 | 17,123,757 | 17,123,757 | |||||||||||||
18,223,594 | ||||||||||||||||
|
| |||||||||||||||
Maturity date | Principal | |||||||||||||||
U.S. Treasury Securities: 0.27% | ||||||||||||||||
U.S. Treasury Bill (z)# | 2.38 | 6-13-2019 | $ | 470,000 | 467,743 | |||||||||||
|
| |||||||||||||||
Total Short-Term Investments (Cost $18,691,304) |
| 18,691,337 | ||||||||||||||
|
|
Total investments in securities (Cost $172,120,999) | 100.53 | % | 173,314,997 | |||||
Other assets and liabilities, net | (0.53 | ) | (908,607 | ) | ||||
|
|
|
| |||||
Total net assets | 100.00 | % | $ | 172,406,390 | ||||
|
|
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Strategic Income Fund | 21 |
144A | The security may be resold in transactions exempt from registration, normally to qualified institutional buyers, pursuant to Rule 144A under the Securities Act of 1933. |
%% | The security is issued on a when-issued basis. |
« | All or a portion of this security is on loan. |
± | Variable rate investment. The rate shown is the rate in effect at period end. |
¤ | The security is issued in zero coupon form with no periodic interest payments. |
@ | Foreign bond principal is denominated in the local currency of the issuer. |
‡ | Security is valued using significant unobservable inputs. |
±± | The coupon of the security is adjusted based on the principal and interest payments received from the underlying pool of mortgages as well as the credit quality and the actual prepayment speed of the underlying mortgages. |
† | Non-income-earning security |
(l) | The issuer of the security is an affiliated person of the Fund as defined in the Investment Company Act of 1940. |
(r) | The investment is a non-registered investment company purchased with cash collateral received from securities on loan. |
(u) | The rate represents the 7-day annualized yield at period end. |
## | All or a portion of this security is segregated for when-issued securities. |
(z) | Zero coupon security. The rate represents the current yield to maturity. |
# | All or a portion of this security is segregated as collateral for investments in derivative instruments. |
Abbreviations:
Ambac | Ambac Financial Group Incorporated |
BRL | Brazilian real |
CAB | Capital appreciation bond |
COP | Colombian peso |
EUR | Euro |
GO | General obligation |
HEFAR | Higher Education Facilities Authority Revenue |
IDA | Industrial Development Authority |
IDR | Indonesian rupiah |
INR | Indian rupee |
LIBOR | London Interbank Offered Rate |
MXN | Mexican peso |
MYR | Malaysian ringgit |
PEN | Peruvian sol |
PLN | Polish zloty |
REIT | Real estate investment trust |
TRY | Turkish lira |
ZAR | South African rand |
Futures Contracts
Description | Number of contracts | Expiration date | Notional cost | Notional value | Unrealized gains | Unrealized losses | ||||||||||||||||||
Long | ||||||||||||||||||||||||
Euro BTP Future | 4 | 6-6-2019 | $ | 569,496 | $ | 580,932 | $ | 11,436 | $ | 0 | ||||||||||||||
Short | ||||||||||||||||||||||||
Euro-Bund Futures | (2) | 6-6-2019 | (365,620 | ) | (373,184 | ) | 0 | (7,564 | ) | |||||||||||||||
Euro-Bund Futures | (10) | 6-6-2019 | (1,480,919 | ) | (1,493,498 | ) | 0 | (12,579 | ) | |||||||||||||||
U.S. Ultra Bond | (21) | 6-19-2019 | (3,385,711 | ) | (3,528,000 | ) | 0 | (142,289 | ) | |||||||||||||||
10-Year Ultra Futures | (53) | 6-19-2019 | (6,890,999 | ) | (7,037,406 | ) | 0 | (146,407 | ) | |||||||||||||||
10-Year U.S. Treasury Notes | (73) | 6-19-2019 | (8,928,715 | ) | (9,067,969 | ) | 0 | (139,254 | ) | |||||||||||||||
2-Year U.S. Treasury Notes | (76) | 6-28-2019 | (16,133,249 | ) | (16,195,125 | ) | 0 | (61,876 | ) | |||||||||||||||
5-Year U.S. Treasury Notes | (155) | 6-28-2019 | (17,777,271 | ) | (17,953,359 | ) | 0 | (176,088 | ) | |||||||||||||||
|
|
|
| |||||||||||||||||||||
$ | 11,436 | $ | (686,057 | ) | ||||||||||||||||||||
|
|
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
22 | Wells Fargo Strategic Income Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Forward Foreign Currency Contracts
Currency to be received | Currency to be delivered | Counterparty | Settlement date | Unrealized gains | Unrealized losses | |||||||||
940,000 GBP | 1,096,715 EUR | State Street Bank | 4-15-2019 | $ | 0 | $ | (2,313 | ) | ||||||
1,000,000 GBP | 1,282,401 USD | State Street Bank | 4-15-2019 | 20,910 | 0 | |||||||||
940,000 GBP | 1,096,715 EUR | State Street Bank | 4-15-2019 | 0 | (4,173 | ) | ||||||||
2,486,576 USD | 1,940,000 GBP | State Street Bank | 4-15-2019 | 0 | (41,847 | ) | ||||||||
1,666,435 USD | 24,000,000,000 IDR | State Street Bank | 4-22-2019 | 0 | (14,693 | ) | ||||||||
1,255,705 USD | 1,000,000 EUR | State Street Bank | 4-29-2019 | 18,958 | 0 | |||||||||
1,905,812 USD | 28,000,000 ZAR | State Street Bank | 6-12-2019 | 0 | (18,363 | ) | ||||||||
1,516,307 USD | 4,770,000,000 COP | State Street Bank | 6-27-2019 | 26,820 | 0 | |||||||||
14,461,033 USD | 12,680,000 EUR | Citibank | 6-28-2019 | 132,465 | 0 | |||||||||
|
|
|
| |||||||||||
$ | 199,153 | $ | (81,389 | ) | ||||||||||
|
|
|
|
Centrally Cleared Credit Default Swaps
Reference index | Fixed rate received | Payment frequency | Maturity date | Notional amount | Value | Premiums (received) | Unrealized gains | Unrealized losses | ||||||||||||||||||||||||
Sell protection | ||||||||||||||||||||||||||||||||
Markit CDX Emerging Markets Index | 1.00 | % | Quarterly | 12-20-2023 | 950,000 USD | $ | (33,513 | ) | $ | (38,486 | ) | $ | 4,973 | $ | 0 | |||||||||||||||||
Markit CDX North America Investment Grade Index | 5.00 | % | Quarterly | 12-20-2023 | 2,940,000 USD | 195,771 | 95,589 | 100,182 | 0 | |||||||||||||||||||||||
Markit iTraxx Europe Crossover Index | 5.00 | % | Quarterly | 12-20-2023 | 986,660 EUR | 108,043 | 95,788 | 12,255 | 0 | |||||||||||||||||||||||
Markit iTraxx Europe Index | 1.00 | % | Quarterly | 12-20-2023 | 1,855,000 EUR | 39,290 | 31,293 | 7,997 | 0 | |||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||
$ | 184,184 | $ | 125,407 | $ | 0 | |||||||||||||||||||||||||||
|
|
|
|
|
|
Investments in Affiliates
An affiliated investment is an investment in which the Fund owns at least 5% of the outstanding voting shares of the issuer or as a result of other relationships, such as the Fund and the issuer having the same investment manager. Transactions with issuers that were either affiliated persons of the Fund at the beginning of the period or the end of the period were as follows:
Shares, beginning of period | Shares purchased | Shares sold | Shares, end of period | Net realized gains (losses) | Net change in unrealized gains (losses) | Income from affiliated securities | Value, end of period | % of net assets | ||||||||||||||||||||||||||||
Short-Term Investments | ||||||||||||||||||||||||||||||||||||
Investment Companies | ||||||||||||||||||||||||||||||||||||
Securities Lending Cash Investments LLC | 0 | 46,957,370 | 45,857,643 | 1,099,727 | $ | 0 | $ | 0 | $ | 23,487 | $ | 1,099,837 | ||||||||||||||||||||||||
Wells Fargo Government Money Market Fund Select Class | 5,204,420 | 189,023,542 | 177,104,205 | 17,123,757 | 0 | 0 | 147,545 | 17,123,757 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
$ | 0 | $ | 0 | $ | 171,032 | $ | 18,223,594 | 10.57 | % | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of assets and liabilities—March 31, 2019 (unaudited) | Wells Fargo Strategic Income Fund | 23 |
Assets | ||||
Investments in unaffiliated securities (including $1,077,697 of securities loaned), at value (cost $153,897,405) | $ | 155,091,403 | ||
Investments in affiliated securities, at value (cost $18,223,594) | 18,223,594 | |||
Cash segregated for centrally cleared swaps | 504,861 | |||
Foreign currency, at value (cost $6,356) | 6,582 | |||
Receivable for investments sold | 134,384 | |||
Receivable for Fund shares sold | 130,573 | |||
Receivable for interest | 1,481,846 | |||
Receivable for securities lending income | 115 | |||
Receivable for daily variation margin on open futures contracts | 95,170 | |||
Receivable for daily variation margin on centrally cleared swaps | 18,997 | |||
Unrealized gains on forward foreign currency contracts | 199,153 | |||
Prepaid expenses and other assets | 107,409 | |||
|
| |||
Total assets | 175,994,087 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 2,134,919 | |||
Payable upon receipt of securities loaned | 1,099,837 | |||
Unrealized losses on forward foreign currency contracts | 81,389 | |||
Payable for Fund shares redeemed | 54,855 | |||
Management fee payable | 56,776 | |||
Administration fees payable | 11,660 | |||
Trustees’ fees and expenses payable | 1,837 | |||
Payable for daily variation margin on open futures contracts | 1,032 | |||
Distribution fee payable | 287 | |||
Due to custodian bank | 394 | |||
Accrued expenses and other liabilities | 144,711 | |||
|
| |||
Total liabilities | 3,587,697 | |||
|
| |||
Total net assets | $ | 172,406,390 | ||
|
| |||
NET ASSETS CONSIST OF | ||||
Paid-in capital | $ | 173,002,580 | ||
Total distributable loss | (596,190 | ) | ||
|
| |||
Total net assets | $ | 172,406,390 | ||
|
| |||
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE | ||||
Net assets – Class A | $ | 1,158,383 | ||
Shares outstanding – Class A1 | 123,089 | |||
Net asset value per share – Class A | $9.41 | |||
Maximum offering price per share – Class A2 | $9.80 | |||
Net assets – Class C | $ | 451,985 | ||
Shares outstanding – Class C1 | 48,102 | |||
Net asset value per share – Class C | $9.40 | |||
Net assets – Administrator Class | $ | 769,652 | ||
Shares outstanding – Administrator Class1 | 81,442 | |||
Net asset value per share – Administrator Class | $9.45 | |||
Net assets – Institutional Class | $ | 170,026,370 | ||
Shares outstanding – Institutional Class1 | 18,082,227 | |||
Net asset value per share – Institutional Class | $9.40 |
1 | The Fund has an unlimited number of authorized shares. |
2 | Maximum offering price is computed as 100/96 of net asset value. On investments of $50,000 or more, the offering price is reduced. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
24 | Wells Fargo Strategic Income Fund | Statement of operations—six months ended March 31, 2019 (unaudited) |
Investment income | ||||
Interest (net of foreign interest withholding taxes of $14,966) | $ | 2,869,103 | ||
Dividends | 245,118 | |||
Income from affiliated securities | 155,666 | |||
|
| |||
Total investment income | 3,269,887 | |||
|
| |||
Expenses | ||||
Management fee | 371,453 | |||
Administration fees | ||||
Class A | 934 | |||
Class C | 388 | |||
Administrator Class | 772 | |||
Institutional Class | 55,324 | |||
Shareholder servicing fees | ||||
Class A | 1,459 | |||
Class C | 606 | |||
Administrator Class | 1,930 | |||
Distribution fee | ||||
Class C | 1,818 | |||
Custody and accounting fees | 19,030 | |||
Professional fees | 27,778 | |||
Registration fees | 29,222 | |||
Shareholder report expenses | 14,219 | |||
Trustees’ fees and expenses | 10,969 | |||
Other fees and expenses | 3,212 | |||
|
| |||
Total expenses | 539,114 | |||
Less: Fee waivers and/or expense reimbursements | (109,143 | ) | ||
|
| |||
Net expenses | 429,971 | |||
|
| |||
Net investment income | 2,839,916 | |||
|
| |||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | ||||
Net realized gains (losses) on: | ||||
Unaffiliated securities | (303,151 | ) | ||
Futures contracts | (888,353 | ) | ||
Forward foreign currency contracts | 394,217 | |||
Centrally cleared swap contracts | 143,964 | |||
|
| |||
Net realized losses on investments | (653,323 | ) | ||
|
| |||
Net change in unrealized gains (losses) on: | ||||
Unaffiliated securities | 2,277,181 | |||
Futures contracts | (852,376 | ) | ||
Forward foreign currency contracts | 194,694 | |||
Centrally cleared swap contracts | 124,743 | |||
|
| |||
Net change in unrealized gains (losses) on investments | 1,744,242 | |||
|
| |||
Net realized and unrealized gains (losses) on investments | 1,090,919 | |||
|
| |||
Net increase in net assets resulting from operations | $ | 3,930,835 | ||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of changes in net assets | Wells Fargo Strategic Income Fund | 25 |
Six months ended March 31, 2019 (unaudited) | Year ended September 30, 2018 | |||||||||||||||
Operations | ||||||||||||||||
Net investment income | $ | 2,839,916 | $ | 1,753,605 | ||||||||||||
Net realized gains (losses) on investments | (653,323 | ) | 867,473 | |||||||||||||
Net change in unrealized gains (losses) on investments | 1,744,242 | (1,713,628 | ) | |||||||||||||
|
| |||||||||||||||
Net increase in net assets resulting from operations | 3,930,835 | 907,450 | ||||||||||||||
|
| |||||||||||||||
Distributions to shareholders from net investment income and net realized gains | ||||||||||||||||
Class A | (24,797 | ) | (40,704 | ) | ||||||||||||
Class C | (8,484 | ) | (12,934 | ) | ||||||||||||
Administrator Class | (26,786 | ) | (108,162 | ) | ||||||||||||
Institutional Class | (2,967,122 | ) | (1,581,265 | ) | ||||||||||||
|
| |||||||||||||||
Total distributions to shareholders | (3,027,189 | ) | (1,743,065 | ) | ||||||||||||
|
| |||||||||||||||
Capital share transactions | Shares | Shares | ||||||||||||||
Proceeds from shares sold | ||||||||||||||||
Class A | 49,654 | 464,497 | 215,486 | 2,047,731 | ||||||||||||
Class C | 13,696 | 126,180 | 37,056 | 354,156 | ||||||||||||
Administrator Class | 7,156 | 67,124 | 533,993 | 5,101,091 | ||||||||||||
Institutional Class | 15,194,210 | 141,586,921 | 2,003,885 | 19,068,416 | ||||||||||||
|
| |||||||||||||||
142,244,722 | 26,571,394 | |||||||||||||||
|
| |||||||||||||||
Reinvestment of distributions | ||||||||||||||||
Class A | 2,663 | 24,685 | 4,259 | 40,371 | ||||||||||||
Class C | 919 | 8,484 | 1,362 | 12,886 | ||||||||||||
Administrator Class | 2,853 | 26,582 | 11,373 | 107,817 | ||||||||||||
Institutional Class | 308,257 | 2,851,361 | 166,687 | 1,581,265 | ||||||||||||
|
| |||||||||||||||
2,911,112 | 1,742,339 | |||||||||||||||
|
| |||||||||||||||
Payment for shares redeemed | ||||||||||||||||
Class A | (63,456 | ) | (590,928 | ) | (179,015 | ) | (1,698,518 | ) | ||||||||
Class C | (21,409 | ) | (199,817 | ) | (25,570 | ) | (242,124 | ) | ||||||||
Administrator Class | (507,075 | ) | (4,772,810 | ) | (25,370 | ) | (241,452 | ) | ||||||||
Institutional Class | (2,214,467 | ) | (20,517,875 | ) | (2,163,121 | ) | (20,590,368 | ) | ||||||||
|
| |||||||||||||||
(26,081,430 | ) | (22,772,462 | ) | |||||||||||||
|
| |||||||||||||||
Net increase in net assets resulting from capital share transactions | 119,074,404 | 5,541,271 | ||||||||||||||
|
| |||||||||||||||
Total increase in net assets | 119,978,050 | 4,705,656 | ||||||||||||||
|
| |||||||||||||||
Net assets | ||||||||||||||||
Beginning of period | 52,428,340 | 47,722,684 | ||||||||||||||
|
| |||||||||||||||
End of period | $ | 172,406,390 | $ | 52,428,340 | ||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
26 | Wells Fargo Strategic Income Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | Year ended October 31 | ||||||||||||||||||||||||||
CLASS A | 2018 | 2017 | 20161 | 2015 | 2014 | 20132 | ||||||||||||||||||||||
Net asset value, beginning of period | $9.43 | $9.59 | $9.25 | $9.13 | $9.72 | $9.66 | $10.00 | |||||||||||||||||||||
Net investment income | 0.17 | 3 | 0.31 | 3 | 0.33 | 3 | 0.31 | 0.34 | 0.37 | 0.27 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.00 | 4 | (0.16 | ) | 0.22 | (0.01 | ) | (0.69 | ) | (0.05 | ) | (0.36 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total from investment operations | 0.17 | 0.15 | 0.55 | 0.30 | (0.35 | ) | 0.32 | (0.09 | ) | |||||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||||||
Net investment income | (0.19 | ) | (0.31 | ) | (0.21 | ) | (0.13 | ) | (0.22 | ) | (0.26 | ) | (0.25 | ) | ||||||||||||||
Tax basis return of capital | 0.00 | 0.00 | 0.00 | (0.05 | ) | (0.02 | ) | 0.00 | 0.00 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total distributions to shareholders | (0.19 | ) | (0.31 | ) | (0.21 | ) | (0.18 | ) | (0.24 | ) | (0.26 | ) | (0.25 | ) | ||||||||||||||
Net asset value, end of period | $9.41 | $9.43 | $9.59 | $9.25 | $9.13 | $9.72 | $9.66 | |||||||||||||||||||||
Total return5 | 1.89 | % | 1.59 | % | 6.05 | % | 3.34 | % | (3.64 | )% | 3.36 | % | (0.89 | )% | ||||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||||||
Gross expenses | 1.11 | % | 1.45 | % | 1.78 | % | 1.80 | % | 1.63 | % | 1.51 | % | 1.85 | % | ||||||||||||||
Net expenses | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | ||||||||||||||
Net investment income | 3.69 | % | 3.26 | % | 3.47 | % | 3.85 | % | 3.77 | % | 4.02 | % | 3.76 | % | ||||||||||||||
Supplemental data | ||||||||||||||||||||||||||||
Portfolio turnover rate | 80 | % | 50 | % | 65 | % | 52 | % | 53 | % | 51 | % | 39 | % | ||||||||||||||
Net assets, end of period (000s omitted) | $1,158 | $1,266 | $896 | $1,047 | $928 | $714 | $518 |
1 | For the eleven months ended September 30, 2016. The Fund changed its fiscal year end from October 31 to September 30, effective September 30, 2016. |
2 | For the period from January 31, 2013 (commencement of class operations) to October 31, 2013 |
3 | Calculated based upon average shares outstanding |
4 | Amount is less than $0.005. |
5 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Strategic Income Fund | 27 |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | Year ended October 31 | ||||||||||||||||||||||||||
CLASS C | 2018 | 2017 | 20161 | 2015 | 2014 | 20132 | ||||||||||||||||||||||
Net asset value, beginning of period | $9.41 | $9.57 | $9.22 | $9.10 | $9.71 | $9.65 | $10.00 | |||||||||||||||||||||
Net investment income | 0.15 | 0.23 | 0.28 | 0.25 | 0.28 | 0.31 | 0.21 | |||||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.00 | 3 | (0.15 | ) | 0.19 | (0.02 | ) | (0.68 | ) | (0.06 | ) | (0.37 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total from investment operations | 0.15 | 0.08 | 0.47 | 0.23 | (0.40 | ) | 0.25 | (0.16 | ) | |||||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||||||
Net investment income | (0.16 | ) | (0.24 | ) | (0.12 | ) | (0.08 | ) | (0.19 | ) | (0.19 | ) | (0.19 | ) | ||||||||||||||
Tax basis return of capital | 0.00 | 0.00 | 0.00 | (0.03 | ) | (0.02 | ) | 0.00 | 0.00 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total distributions to shareholders | (0.16 | ) | (0.24 | ) | (0.12 | ) | (0.11 | ) | (0.21 | ) | (0.19 | ) | (0.19 | ) | ||||||||||||||
Net asset value, end of period | $9.40 | $9.41 | $9.57 | $9.22 | $9.10 | $9.71 | $9.65 | |||||||||||||||||||||
Total return4 | 1.61 | % | 0.88 | % | 5.20 | % | 2.67 | % | (4.35 | )% | 2.61 | % | (1.51 | )% | ||||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||||||
Gross expenses | 1.85 | % | 2.20 | % | 2.59 | % | 2.54 | % | 2.37 | % | 2.25 | % | 2.60 | % | ||||||||||||||
Net expenses | 1.65 | % | 1.65 | % | 1.65 | % | 1.65 | % | 1.65 | % | 1.65 | % | 1.65 | % | ||||||||||||||
Net investment income | 2.97 | % | 2.52 | % | 2.80 | % | 3.10 | % | 3.02 | % | 3.25 | % | 3.01 | % | ||||||||||||||
Supplemental data | ||||||||||||||||||||||||||||
Portfolio turnover rate | 80 | % | 50 | % | 65 | % | 52 | % | 53 | % | 51 | % | 39 | % | ||||||||||||||
Net assets, end of period (000s omitted) | $452 | $517 | $403 | $766 | $711 | $835 | $518 |
1 | For the eleven months ended September 30, 2016. The Fund changed its fiscal year end from October 31 to September 30, effective September 30, 2016. |
2 | For the period from January 31, 2013 (commencement of class operations) to October 31, 2013 |
3 | Amount is less than $0.005. |
4 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
28 | Wells Fargo Strategic Income Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | Year ended October 31 | ||||||||||||||||||||||||||
ADMINISTRATOR CLASS | 2018 | 2017 | 20161 | 2015 | 2014 | 20132 | ||||||||||||||||||||||
Net asset value, beginning of period | $9.46 | $9.61 | $9.29 | $9.16 | $9.74 | $9.66 | $10.00 | |||||||||||||||||||||
Net investment income | 0.18 | 3 | 0.33 | 3 | 0.34 | 3 | 0.33 | 3 | 0.37 | 0.39 | 0.28 | |||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.00 | 4 | (0.16 | ) | 0.20 | (0.01 | ) | (0.70 | ) | (0.05 | ) | (0.37 | ) | |||||||||||||||
|
|
|
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|
|
|
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|
|
|
|
|
| |||||||||||||||
Total from investment operations | 0.18 | 0.17 | 0.54 | 0.32 | (0.33 | ) | 0.34 | (0.09 | ) | |||||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||||||
Net investment income | (0.19 | ) | (0.32 | ) | (0.22 | ) | (0.14 | ) | (0.22 | ) | (0.26 | ) | (0.25 | ) | ||||||||||||||
Tax basis return of capital | 0.00 | 0.00 | 0.00 | (0.05 | ) | (0.03 | ) | 0.00 | 0.00 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total distributions to shareholders | (0.19 | ) | (0.32 | ) | (0.22 | ) | (0.19 | ) | (0.25 | ) | (0.26 | ) | (0.25 | ) | ||||||||||||||
Net asset value, end of period | $9.45 | $9.46 | $9.61 | $9.29 | $9.16 | $9.74 | $9.66 | |||||||||||||||||||||
Total return5 | 1.95 | % | 1.81 | % | 5.91 | % | 3.52 | % | (3.51 | )% | 3.63 | % | (0.85 | )% | ||||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||||||
Gross expenses | 1.10 | % | 1.38 | % | 1.72 | % | 1.74 | % | 1.56 | % | 1.46 | % | 1.79 | % | ||||||||||||||
Net expenses | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | ||||||||||||||
Net investment income | 3.82 | % | 3.48 | % | 3.64 | % | 4.00 | % | 3.92 | % | 4.18 | % | 3.90 | % | ||||||||||||||
Supplemental data | ||||||||||||||||||||||||||||
Portfolio turnover rate | 80 | % | 50 | % | 65 | % | 52 | % | 53 | % | 51 | % | 39 | % | ||||||||||||||
Net assets, end of period (000s omitted) | $770 | $5,471 | $562 | $597 | $496 | $554 | $496 |
1 | For the eleven months ended September 30, 2016. The Fund changed its fiscal year end from October 31 to September 30, effective September 30, 2016. |
2 | For the period from January 31, 2013 (commencement of class operations) to October 31, 2013 |
3 | Calculated based upon average shares outstanding |
4 | Amount is less than $0.005. |
5 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Strategic Income Fund | 29 |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | Year ended October 31 | ||||||||||||||||||||||||||
INSTITUTIONAL CLASS | 2018 | 2017 | 20161 | 2015 | 2014 | 20132 | ||||||||||||||||||||||
Net asset value, beginning of period | $9.42 | $9.58 | $9.24 | $9.14 | $9.71 | $9.66 | $10.00 | |||||||||||||||||||||
Net investment income | 0.19 | 3 | 0.34 | 0.35 | 3 | 0.34 | 0.40 | 0.41 | 3 | 0.29 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.00 | 4 | (0.16 | ) | 0.24 | (0.02 | ) | (0.71 | ) | (0.07 | ) | (0.36 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total from investment operations | 0.19 | 0.18 | 0.59 | 0.32 | (0.31 | ) | 0.34 | (0.07 | ) | |||||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||||||
Net investment income | (0.21 | ) | (0.34 | ) | (0.25 | ) | (0.16 | ) | (0.23 | ) | (0.29 | ) | (0.27 | ) | ||||||||||||||
Tax basis return of capital | 0.00 | 0.00 | 0.00 | (0.06 | ) | (0.03 | ) | 0.00 | 0.00 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total distributions to shareholders | (0.21 | ) | (0.34 | ) | (0.25 | ) | (0.22 | ) | (0.26 | ) | (0.29 | ) | (0.27 | ) | ||||||||||||||
Net asset value, end of period | $9.40 | $9.42 | $9.58 | $9.24 | $9.14 | $9.71 | $9.66 | |||||||||||||||||||||
Total return5 | 2.06 | % | 1.93 | % | 6.43 | % | 3.55 | % | (3.28 | )% | 3.60 | % | (0.66 | )% | ||||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||||||
Gross expenses | 0.75 | % | 1.12 | % | 1.40 | % | 1.46 | % | 1.19 | % | 1.14 | % | 1.52 | % | ||||||||||||||
Net expenses | 0.60 | % | 0.60 | % | 0.60 | % | 0.60 | % | 0.60 | % | 0.60 | % | 0.60 | % | ||||||||||||||
Net investment income | 4.02 | % | 3.54 | % | 3.71 | % | 4.16 | % | 4.04 | % | 4.25 | % | 4.05 | % | ||||||||||||||
Supplemental data | ||||||||||||||||||||||||||||
Portfolio turnover rate | 80 | % | 50 | % | 65 | % | 52 | % | 53 | % | 51 | % | 39 | % | ||||||||||||||
Net assets, end of period (000s omitted) | $170,026 | $45,175 | $45,862 | $23,190 | $17,564 | $38,664 | $23,338 |
1 | For the eleven months ended September 30, 2016. The Fund changed its fiscal year end from October 31 to September 30, effective September 30, 2016. |
2 | For the period from January 31, 2013 (commencement of class operations) to October 31, 2013 |
3 | Calculated based upon average shares outstanding |
4 | Amount is less than $0.005. |
5 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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30 | Wells Fargo Strategic Income Fund | Notes to financial statements (unaudited) |
1. ORGANIZATION
Wells Fargo Funds Trust (the “Trust”), a Delaware statutory trust organized on March 10, 1999, is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As an investment company, the Trust follows the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946, Financial Services – Investment Companies. These financial statements report on the Wells Fargo Strategic Income Fund (the “Fund”) which is a diversified series of the Trust.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Fund, are in conformity with U.S. generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Securities valuation
All investments are valued each business day as of the close of regular trading on the New York Stock Exchange (generally 4 p.m. Eastern Time), although the Fund may deviate from this calculation time under unusual or unexpected circumstances.
Debt securities are valued at the evaluated bid price provided by an independent pricing service (e.g. taking into account various factors, including yields, maturities, or credit ratings) or, if a reliable price is not available, the quoted bid price from an independent broker-dealer.
Equity securities and futures contracts that are listed on a foreign or domestic exchange or market are valued at the official closing price or, if none, the last sales price. If no sale occurs on the principal exchange or market that day, a fair value price will be determined in accordance with the Fund’s Valuation Procedures.
Swap contracts are valued at the evaluated price provided by an independent pricing service or, if a reliable price is not available, the quoted bid price from an independent broker-dealer.
The values of securities denominated in foreign currencies are translated into U.S. dollars at rates provided by an independent foreign currency pricing source at a time each business day specified by the Wells Fargo Asset Management Pricing Committee at Wells Fargo Funds Management, LLC (“Funds Management”).
Investments in registered open-end investment companies are valued at net asset value. Interests in non-registered investment companies that are redeemable at net asset value are fair valued normally at net asset value.
Investments which are not valued using any of the methods discussed above are valued at their fair value, as determined in good faith by the Board of Trustees of the Fund. The Board of Trustees has established a Valuation Committee comprised of the Trustees and has delegated to it the authority to take any actions regarding the valuation of portfolio securities that the Valuation Committee deems necessary or appropriate, including determining the fair value of portfolio securities, unless the determination has been delegated to the Wells Fargo Asset Management Pricing Committee. The Board of Trustees retains the authority to make or ratify any valuation decisions or approve any changes to the Valuation Procedures as it deems appropriate. On a quarterly basis, the Board of Trustees receives reports on any valuation actions taken by the Valuation Committee or the Wells Fargo Asset Management Pricing Committee which may include items for ratification.
Foreign currency translation
The accounting records of the Fund are maintained in U.S. dollars. The values of other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at rates provided by an independent foreign currency pricing source at a time each business day specified by the Wells Fargo Asset Management Pricing Committee. Purchases and sales of securities, and income and expenses are converted at the rate of exchange on the respective dates of such transactions. Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded and the U.S. dollar equivalent of the amounts actually paid or received. Net unrealized foreign exchange gains and losses arise from changes in the fair value of assets and liabilities other than investments in securities resulting from changes in exchange rates. The changes in net assets arising from changes in exchange rates of securities and the changes in net assets resulting from changes in market prices of securities are not separately presented. Such changes are included in net realized and unrealized gains or losses from investments.
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Notes to financial statements (unaudited) | Wells Fargo Strategic Income Fund | 31 |
Forward foreign currency contracts
The Fund is subject to foreign currency risk in the normal course of pursuing its investment objectives. A forward foreign currency contract is an agreement between two parties to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund enters into forward foreign currency contracts to facilitate transactions in foreign-denominated securities and to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. Forward foreign currency contracts are recorded at the forward rate and marked-to-market daily. When the contracts are closed, realized gains and losses arising from such transactions are recorded as realized gains or losses on forward foreign currency contracts. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. The Fund’s maximum risk of loss from counterparty credit risk is the unrealized gains on the contracts. This risk may be mitigated if there is a master netting arrangement between the Fund and the counterparty.
Securities lending
The Fund may lend its securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The Fund continues to receive interest or dividends on the securities loaned. The Fund receives collateral in the form of cash or securities with a value at least equal to the value of the securities on loan. The value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. In a securities lending transaction, the net asset value of the Fund will be affected by an increase or decrease in the value of the securities loaned and by an increase or decrease in the value of the instrument in which collateral is invested. The amount of securities lending activity undertaken by the Fund fluctuates from time to time. In the event of default or bankruptcy by the borrower, the Fund may be prevented from recovering the loaned securities or gaining access to the collateral or may experience delays or costs in doing so. In addition, the investment of any cash collateral received may lose all or part of its value. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.
The Fund lends its securities through an unaffiliated securities lending agent. Cash collateral received in connection with its securities lending transactions is invested in Securities Lending Cash Investments, LLC (the “Securities Lending Fund”). The Securities Lending Fund is exempt from registration under Section 3(c)(7) of the 1940 Act and is managed by Funds Management and is subadvised by Wells Capital Management Incorporated (“WellsCap”), an affiliate of Funds Management and an indirect wholly owned subsidiary of Wells Fargo & Company (“Wells Fargo”). Funds Management receives an advisory fee starting at 0.05% and declining to 0.01% as the average daily net assets of the Securities Lending Fund increase. All of the fees received by Funds Management are paid to WellsCap for its services as subadviser. The Securities Lending Fund seeks to provide a positive return compared to the daily Fed Funds Open Rate by investing in high-quality, U.S. dollar-denominated short-term money market instruments. Securities Lending Fund investments are valued at the evaluated bid price provided by an independent pricing service. Income earned from investment in the Securities Lending Fund (net of fees and rebates), if any, is included in income from affiliated securities on the Statement of Operations.
When-issued transactions
The Fund may purchase securities on a forward commitment or when-issued basis. The Fund records a when-issued transaction on the trade date and will segregate assets in an amount at least equal in value to the Fund’s commitment to purchase when-issued securities. Securities purchased on a when-issued basis are marked-to-market daily and the Fund begins earning interest on the settlement date. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract.
Loans
The Fund may invest in direct debt instruments which are interests in amounts owed to lenders by corporate or other borrowers. The loans pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. Investments in loans may be in the form of participations in loans or assignments of all or a portion of loans from third parties. When the Fund purchases participations, it generally has no rights to enforce compliance with terms of the loan agreement with the borrower. As a result, the Fund assumes the credit risk of both the borrower and the lender that is selling the participation. When the Fund purchases assignments from lenders, it acquires direct rights against the borrower on the loan and may enforce compliance by the borrower with the terms of the loan agreement. Loans may include fully funded term loans or unfunded loan commitments, which are contractual obligations for future funding.
Futures contracts
The Fund is subject to interest rate risk and foreign currency risk in the normal course of pursuing its investment objectives. Futures contracts are agreements between the Fund and a counterparty to buy or sell a specific amount of a
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32 | Wells Fargo Strategic Income Fund | Notes to financial statements (unaudited) |
commodity, financial instrument or currency at specified price and on a specified date. The Fund may buy and sell futures contracts in order to gain exposure to, or protect against, changes in interest rate and foreign exchange rates. The primary risks associated with the use of futures contracts are the imperfect correlation between changes in market values of securities held by the Fund and the prices of futures contracts, and the possibility of an illiquid market. Futures contracts are generally entered into on a regulated futures exchange and cleared through a clearinghouse associated with the exchange. With futures contracts, there is minimal counterparty risk to the Fund since futures contracts are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures contracts against default.
Upon entering into a futures contracts, the Fund is required to deposit either cash or securities (initial margin) with the broker in an amount equal to a certain percentage of the contract value. Subsequent payments (variation margin) are paid to or from the broker each day equal to the daily changes in the contract value. Such payments are recorded as unrealized gains or losses and, if any, shown as variation margin receivable (payable) in the Statement of Assets and Liabilities. Should the Fund fail to make requested variation margin payments, the broker can gain access to the initial margin to satisfy the Fund’s payment obligations. When the contracts are closed, a realized gain or loss is recorded in the Statement of Operations.
Swap contracts
Swap contracts are agreements between the Fund and a counterparty to exchange a series of cash flows over a specified period. Swap agreements are privately negotiated contracts between the Fund and a counterparty in the OTC market and may be entered into as a bilateral contract (“OTC swaps”) or centrally cleared (“centrally cleared swaps”) with a central clearinghouse.
For OTC swaps, any upfront premiums paid and any upfront fees received are shown as swap premiums paid and swap premiums received, respectively, in the Statement of Assets and Liabilities and amortized over the term of the contract. The daily fluctuations in market value are recorded as unrealized gains or losses on OTC swaps in the Statement of Assets and Liabilities. Payments received or paid are recorded in the Statement of Operations as realized gains or losses, respectively. When an OTC swap is terminated, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund’s basis in the contract, if any. Generally, the basis of the contract is the premium received or paid.
In a centrally cleared swap, immediately following execution of the swap contract, the swap contract is novated to a central counterparty (the “CCP”) and the Fund’s counterparty on the swap agreement becomes the CCP. Upon entering into a centrally cleared swap, the Fund is required to deposit an initial margin with the broker in the form of cash or securities. Securities deposited as initial margin are designated in the Portfolio of Investments and cash deposited is shown as cash segregated for centrally cleared swaps in the Statement of Assets and Liabilities. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). The variation margin is recorded as an unrealized gain (or loss) and shown as variation margin receivable (or payable) on centrally cleared swaps in the Statement of Assets and Liabilities. Payments received from (paid to) the counterparty, including at termination, are recorded as realized gains (losses) in the Statement of Operations.
Credit default swaps
The Fund is subject to credit risk in the normal course of pursuing its investment objectives. The Fund may enter into credit default swaps for hedging or speculative purposes to provide or receive a measure of protection against default on a referenced entity, obligation or index or a basket of single-name issuers or traded indexes. An index credit default swap references all the names in the index, and if a credit event is triggered, the credit event is settled based on that name’s weight in the index. Credit default swaps are agreements in which the protection buyer pays fixed periodic payments to the protection seller in consideration for a promise from the protection seller to make a specific payment should a negative credit event take place with respect to the referenced entity (e.g., bankruptcy, failure to pay, obligation acceleration, repudiation, moratorium or restructuring).
The Fund may enter into credit default swaps as either the seller of protection or the buyer of protection. If the Fund is the buyer of protection and a credit event occurs, the Fund will either receive from the seller an amount equal to the notional amount of the swap and deliver the referenced security or underlying securities comprising the index, or receive a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index. If the Fund is the seller of protection and a credit event occurs, the Fund will either pay the buyer an amount equal to the notional amount of the swap and take delivery of the referenced security or underlying securities comprising the index or pay a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index.
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Notes to financial statements (unaudited) | Wells Fargo Strategic Income Fund | 33 |
As the seller of protection, the Fund is subject to investment exposure on the notional amount of the swap and has assumed the risk of default of the underlying security or index. As the buyer of protection, the Fund could be exposed to risks if the seller of the protection defaults on its obligation to perform, or if there are unfavorable changes in the fluctuation of interest rates.
Certain credit default swap contracts entered into by the Fund provide for conditions that result in events of default or termination that enable the counterparty to the agreement to cause an early termination of the transactions under those agreements.
Security transactions and income recognition
Securities transactions are recorded on a trade date basis. Realized gains or losses are recorded on the basis of identified cost.
Interest income is accrued daily and bond discounts are accreted and premiums are amortized daily. To the extent debt obligations are placed on non-accrual status, any related interest income may be reduced by writing off interest receivables when the collection of all or a portion of interest has been determined to be doubtful based on consistently applied procedures and the fair value has decreased. If the issuer subsequently resumes interest payments or when the collectability of interest is reasonably assured, the debt obligation is removed from non-accrual status.
Dividend income is recognized on the ex-dividend date.
Income from foreign securities is recorded net of foreign taxes withheld where recovery of such taxes is not assured.
Income dividends and capital gain distributions from investment companies are recorded on the ex-dividend date. Capital gain distributions from investment companies are treated as realized gains.
Distributions to shareholders
Distributions to shareholders are recorded on the ex-dividend date and paid from net investment income monthly and any net realized gains are paid at least annually. Such distributions are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles. Dividend sources are estimated at the time of declaration. The tax character of distributions is determined as of the Fund’s fiscal year end. Therefore, a portion of the Fund’s distributions made prior to the Fund’s fiscal year end may be categorized as a tax return of capital at year end.
Federal and other taxes
The Fund intends to continue to qualify as a regulated investment company by distributing substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required.
The Fund’s income and federal excise tax returns and all financial records supporting those returns for the prior three fiscal years are subject to examination by the federal and Delaware revenue authorities. Management has analyzed the Fund’s tax positions taken on federal, state, and foreign tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability.
As of March 31, 2019, the aggregate cost of all investments for federal income tax purposes was $172,134,779 and the unrealized gains (losses) consisted of:
Gross unrealized gains | $ | 2,881,691 | ||
Gross unrealized losses | (2,132,923 | ) | ||
Net unrealized gains | $ | 748,768 |
As of September 30, 2018, the Fund had capital loss carryforwards which consisted of $469,892 in short-term capital losses and $414,571 in long-term capital losses.
Class allocations
The separate classes of shares offered by the Fund differ principally in applicable sales charges, distribution, shareholder servicing, and administration fees. Class specific expenses are charged directly to that share class. Investment income, common expenses, and realized and unrealized gains (losses) on investments are allocated daily to each class of shares based on the relative proportion of net assets of each class.
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34 | Wells Fargo Strategic Income Fund | Notes to financial statements (unaudited) |
3. FAIR VALUATION MEASUREMENTS
Fair value measurements of investments are determined within a framework that has established a fair value hierarchy based upon the various data inputs utilized in determining the value of the Fund’s investments. The three-level hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Fund’s investments are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The inputs are summarized into three broad levels as follows:
∎ | Level 1 – quoted prices in active markets for identical securities |
∎ | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
∎ | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
The inputs or methodologies used for valuing investments in securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used in valuing the Fund’s assets and liabilities as of March 31, 2019:
Quoted prices (Level 1) | Other significant observable inputs (Level 2) | Significant (Level 3) | Total | |||||||||||||
Assets | ||||||||||||||||
Investments in: | ||||||||||||||||
Asset-backed securities | $ | 0 | $ | 14,038,252 | $ | 0 | $ | 14,038,252 | ||||||||
Corporate bonds and notes | 0 | 35,818,201 | 0 | 35,818,201 | ||||||||||||
Exchange-traded funds | 7,672,370 | 0 | 0 | 7,672,370 | ||||||||||||
Foreign corporate bonds and notes | 0 | 13,427,654 | 0 | 13,427,654 | ||||||||||||
Foreign government bonds | 0 | 13,864,356 | 0 | 13,864,356 | ||||||||||||
Loans | 0 | 4,615,355 | 263,183 | 4,878,538 | ||||||||||||
Municipal obligations | 0 | 1,448,974 | 0 | 1,448,974 | ||||||||||||
Non-agency mortgage-backed securities | 0 | 48,413,258 | 0 | 48,413,258 | ||||||||||||
Rights | ||||||||||||||||
Utilities | 0 | 4,887 | 0 | 4,887 | ||||||||||||
U.S. Treasury securities | 1,790,468 | 0 | 0 | 1,790,468 | ||||||||||||
Yankee corporate bonds and notes | 0 | 10,337,638 | 0 | 10,337,638 | ||||||||||||
Yankee government bonds | 0 | 2,929,064 | 0 | 2,929,064 | ||||||||||||
Short-term investments | ||||||||||||||||
Investment companies | 17,123,757 | 1,099,837 | 0 | 18,223,594 | ||||||||||||
U.S. Treasury securities | 467,743 | 0 | 0 | 467,743 | ||||||||||||
27,054,338 | 145,997,476 | 263,183 | 173,314,997 | |||||||||||||
Centrally cleared swap contracts | 0 | 125,407 | 0 | 125,407 | ||||||||||||
Forward foreign currency contracts | 0 | 199,153 | 0 | 199,153 | ||||||||||||
Futures contracts | 11,436 | 0 | 0 | 11,436 | ||||||||||||
Total assets | $ | 27,065,774 | $ | 146,322,036 | $ | 263,183 | $ | 173,650,993 | ||||||||
Liabilities | ||||||||||||||||
Forward foreign currency contracts | $ | 0 | $ | 81,389 | $ | 0 | $ | 81,389 | ||||||||
Futures contracts | 686,057 | 0 | 0 | 686,057 | ||||||||||||
Total liabilities | $ | 686,057 | $ | 81,389 | $ | 0 | $ | 767,446 |
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Notes to financial statements (unaudited) | Wells Fargo Strategic Income Fund | 35 |
Additional sector, industry or geographic detail is included in the Portfolio of Investments.
Futures contracts, forward foreign currency contracts and centrally cleared swap contracts are reported at their cumulative unrealized gains (losses) at measurement date as reported in the tables following the Portfolio of Investments. For futures contracts and centrally cleared swaps, the current day’s variation margin is reported on the Statement of Assets and Liabilities. All other assets and liabilities are reported at their market value at measurement date.
At March 31, 2019, the Fund had no material transfers into/out of Level 3.
4. TRANSACTIONS WITH AFFILIATES
Funds Management, an indirect wholly owned subsidiary of Wells Fargo, is the manager of the Fund and provides advisory and fund-level administrative services under an investment management agreement. Under the investment management agreement, Funds Management is responsible for, among other services, implementing the investment objectives and strategies of the Fund, supervising the subadvisers and providing fund-level administrative services in connection with the Fund’s operations. As compensation for its services under the investment management agreement, Funds Management is entitled to receive a management fee at the following annual rate based on the Fund’s average daily net assets:
Average daily net assets | Management fee | |||
First $500 million | 0.525 | % | ||
Next $500 million | 0.500 | |||
Next $2 billion | 0.475 | |||
Next $2 billion | 0.450 | |||
Next $5 billion | 0.415 | |||
Over $10 billion | 0.405 |
For the six months ended March 31, 2019, the management fee was equivalent to an annual rate of 0.525% of the Fund’s average daily net assets.
Funds Management has retained the services of certain subadvisers to provide daily portfolio management to the Fund. The fee for subadvisory services is borne by Funds Management. WellsCap is a subadviser to the Fund and is entitled to receive a fee from Funds Management at an annual rate starting at 0.30% and declining to 0.15% as the average daily net assets of the Fund increase. Wells Fargo Asset Management (International), LLC, an affiliate of Funds Management and an indirect wholly owned subsidiary of Wells Fargo, is also a subadviser to the Fund and is entitled to receive a fee from Funds Management at an annual rate starting at 0.35% and declining to 0.20% as the average daily net assets of the Fund increase.
Administration fees
Under a class-level administration agreement, Funds Management provides class-level administrative services to the Fund, which includes paying fees and expenses for services provided by the transfer agent, sub-transfer agents, omnibus account servicers and record-keepers. As compensation for its services under the class-level administration agreement, Funds Management receives an annual fee which is calculated based on the average daily net assets of each class as follows:
Class-level administration fee | ||||
Class A, Class C | 0.16 | % | ||
Administrator Class | 0.10 | |||
Institutional Class | 0.08 |
Funds Management has contractually waived and/or reimbursed management and administration fees to the extent necessary to maintain certain net operating expense ratios for the Fund. When each class of the Fund has exceeded its expense cap, Funds Management has waived fees and/or reimbursed expenses from fund level expenses on a proportionate basis and then from class specific expenses. When only certain classes exceed their expense caps, waivers and/or reimbursements are applied against class specific expenses before fund level expenses. Funds Management has committed through January 31, 2020 to waive fees and/or reimburse expenses to the extent necessary to cap the Fund’s
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36 | Wells Fargo Strategic Income Fund | Notes to financial statements (unaudited) |
expenses at 0.90% for Class A shares, 1.65% for Class C shares, 0.75% for Administrator Class shares, and 0.60% for Institutional Class shares. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees.
Distribution fee
The Trust has adopted a distribution plan for Class C shares of the Fund pursuant to Rule 12b-1 under the 1940 Act. A distribution fee is charged to Class C shares and paid to Wells Fargo Funds Distributor, LLC (“Funds Distributor”), the principal underwriter, at an annual rate of 0.75% of the average daily net assets of Class C shares.
In addition, Funds Distributor is entitled to receive the front-end sales charge from the purchase of Class A shares and a contingent deferred sales charge on the redemption of certain Class A shares. Funds Distributor is also entitled to receive the contingent deferred sales charges from redemptions of Class C shares. For the six months ended March 31, 2019, Funds Distributor received $308 from the sale of Class A shares. No contingent deferred sales charges were incurred by Class A and Class C shares for the six months ended March 31, 2019.
Shareholder servicing fees
The Trust has entered into contracts with one or more shareholder servicing agents, whereby Class A, Class C, and Administrator Class of the Fund are charged a fee at an annual rate of 0.25% of the average daily net assets of each respective class. A portion of these total shareholder servicing fees were paid to affiliates of Wells Fargo.
Interfund transactions
The Fund may purchase or sell portfolio investment securities to certain other Wells Fargo affiliates pursuant to Rule17a-7 under the 1940 Act and under procedures adopted by the Board of Trustees. The procedures have been designed to ensure that these interfund transactions, which do not incur broker commissions, are effected at current market prices. Pursuant to these procedures, the Fund had $733,750 and $901,569 in interfund purchases and sales, respectively, during the six months ended March 31, 2019.
5. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six months ended March 31, 2019 were as follows:
Purchases at cost | Sales proceeds | |||||
U.S. government | Non-U.S. government | U.S. government | Non-U.S. government | |||
$79,324,181 | $135,764,225 | $77,729,196 | $28,061,743 |
6. DERIVATIVE TRANSACTIONS
During the six months ended March 31, 2019, the Fund entered into futures contracts and forward foreign currency contracts for economic hedging purposes and credit default swap contracts as a substitute for taking a position in the underlying security or index to potentially enhance the Fund’s total return.
The volume of the Fund’s derivative activity during the six months ended March 31, 2019 was as follows:
Futures contracts | ||||
Average notional balance on long futures | $ | 567,410 | ||
Average notional balance on short futures | 55,449,509 | |||
Forward foreign currency contracts | ||||
Average contract amounts to buy | 6,690,895 | |||
Average contract amounts to sell | 27,940,106 | |||
Credit default swap contracts | ||||
Average notional balance | 10,224,014 |
The Fund’s credit default swap may contain provisions for early termination in the event the net assets of the Fund declines below specific levels identified by the counterparty. If these levels are triggered, the counterparty may terminate the transaction and seek payment or request full collateralization of the derivative transactions in net liability positions.
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Notes to financial statements (unaudited) | Wells Fargo Strategic Income Fund | 37 |
A summary of the location of derivative instruments on the financial statements by primary risk exposure is outlined in the following table.
The fair value of derivative instruments as of March 31, 2019 was as follows for the Fund:
Asset derivatives | Liability derivatives | |||||||||||
Statement of Assets and Liabilities location | Fair value | Statement of Assets and Liabilities location | Fair value | |||||||||
Interest rate risk | Unrealized gains on futures contracts | $ | 0 | * | Unrealized losses on futures contracts | $ | 665,914 | * | ||||
Foreign currency risk | Unrealized gains on futures contracts | 11,436 | * | Unrealized losses on futures contracts | 20,143 | * | ||||||
Unrealized gains on forward foreign currency contracts | 199,153 | Unrealized losses on forward foreign currency contracts | 81,389 | |||||||||
Credit risk | Net unrealized gains on swap contracts | 125,407 | * | Net unrealized losses on swap contracts | 0 | * | ||||||
$ | 335,996 | $ | 767,446 |
* | Amount represents cumulative unrealized gains (losses) as reported in the tables following the Portfolio of Investments. Only the current day’s variation margin as of March 31, 2019 is reported separately on the Statement of Assets and Liabilities. |
The effect of derivative instruments on the Statement of Operations for the six months ended March 31, 2019 was as follows for the Fund:
Amount of realized gains (losses) on derivatives | ||||||||||||||||
Futures contracts | Forward foreign currency contracts | Swap contracts | Total | |||||||||||||
Interest rate risk | $ | (903,948 | ) | $ | 0 | $ | 0 | $ | (903,948 | ) | ||||||
Foreign currency risk | 15,595 | 394,217 | 0 | 409,812 | ||||||||||||
Credit risk | 0 | 0 | 143,964 | 143,964 | ||||||||||||
$ | (888,353 | ) | $ | 394,217 | $ | 143,964 | $ | (350,172 | ) | |||||||
Change in unrealized gains (losses) on derivatives | ||||||||||||||||
Futures contracts | Forward foreign currency contracts | Swap contracts | Total | |||||||||||||
Interest rate risk | $ | (823,202 | ) | $ | 0 | $ | 0 | $ | (823,202 | ) | ||||||
Foreign currency risk | (29,174 | ) | 194,694 | 0 | 165,520 | |||||||||||
Credit risk | 0 | 0 | 124,743 | 124,743 | ||||||||||||
$ | (852,376 | ) | $ | 194,694 | $ | 124,743 | $ | (532,939 | ) |
For certain types of derivative transactions, the Fund has entered into International Swaps and Derivatives Association, Inc. master agreements (“ISDA Master Agreements”) or similar agreements with approved counterparties. The ISDA Master Agreements or similar agreements may have requirements to deliver/deposit securities or cash to/with an exchange or broker-dealer as collateral and allows the Fund to offset, with each counterparty, certain derivative financial instrument’s assets and/or liabilities with collateral held or pledged. Collateral requirements differ by type of derivative. Collateral or margin requirements are set by the broker or exchange clearinghouse for exchange traded derivatives while collateral terms are contract specific for over-the-counter traded derivatives. Cash collateral that has been pledged to cover obligations of the Fund under ISDA Master Agreements or similar agreements, if any, are reported separately in the Statement of Assets and Liabilities. Securities pledged as collateral, if any, are noted in the Portfolio of Investments. With respect to balance sheet offsetting, absent an event of default by the counterparty or a termination of the agreement, the reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities are not offset across
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38 | Wells Fargo Strategic Income Fund | Notes to financial statements (unaudited) |
transactions between the Fund and the applicable counterparty. A reconciliation of the gross amounts on the Statement of Assets and Liabilities to the net amounts by counterparty, including any collateral exposure, is as follows:
Counterparty | Gross amounts of assets in the Statement of Assets and Liabilities | Amounts subject to netting agreements | Collateral received | Net amount of assets | ||||||||||||
State Street | $ 66,688 | $ | (66,688 | ) | $ | 0 | $ | 0 | ||||||||
Citibank | 132,465 | 0 | 0 | 132,465 | ||||||||||||
Counterparty | Gross amounts of liabilities in the Statement of Assets and Liabilities | Amounts subject to netting agreements | Collateral pledged | Net amount of liabilities | ||||||||||||
State Street | $ | 81,389 | $ | (66,688 | ) | $ | 0 | $ | 14,701 |
7. BANK BORROWINGS
The Trust (excluding the money market funds), Wells Fargo Master Trust and Wells Fargo Variable Trust are parties to a $280,000,000 revolving credit agreement whereby the Fund is permitted to use bank borrowings for temporary or emergency purposes, such as to fund shareholder redemption requests. Interest under the credit agreement is charged to the Fund based on a borrowing rate equal to the higher of the Federal Funds rate in effect on that day plus 1.25% or the overnight LIBOR rate in effect on that day plus 1.25%. In addition, an annual commitment fee equal to 0.25% of the unused balance is allocated to each participating fund.
For the six months ended March 31, 2019, there were no borrowings by the Fund under the agreement.
8. INDEMNIFICATION
Under the Trust’s organizational documents, the officers and Trustees have been granted certain indemnification rights against certain liabilities that may arise out of performance of their duties to the Trust. Additionally, in the normal course of business, the Trust may enter into contracts with service providers that contain a variety of indemnification clauses. The Trust’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated.
9. NEW ACCOUNTING PRONOUNCEMENTS
In August 2018, FASB issued Accounting Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820)Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 updates the disclosure requirements for fair value measurements by modifying or removing certain disclosures and adding certain new disclosures. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management has adopted the removal and modification of disclosures early, as permitted, and will adopt the additional new disclosures at the effective date.
In March 2017, FASB issued ASU No. 2017-08,Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium. The amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 is effective for fiscal years beginning after December 15, 2018 and for interim periods within those fiscal years. Management is currently evaluating the potential impact of this new guidance to the financial statements.
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Other information (unaudited) | Wells Fargo Strategic Income Fund | 39 |
PROXY VOTING INFORMATION
A description of the policies and procedures used to determine how to vote proxies relating to portfolio securities is available, upon request, by calling1-800-222-8222, visiting our website atwfam.com, or visiting the SEC website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent12-month period ended June 30 is available on the Fund’s website atwfam.comor by visiting the SEC website at sec.gov.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for the Fund are publicly available monthly on the Fund’s website (wfam.com), on aone-month delayed basis. In addition, top ten holdings information (excluding derivative positions) for the Fund is publicly available on the Fund’s website on a monthly, seven-day or more delayed basis. The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which is available by visiting the SEC website at sec.gov. In addition, the Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330.
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40 | Wells Fargo Strategic Income Fund | Other information (unaudited) |
BOARD OF TRUSTEES AND OFFICERS
Each of the Trustees and Officers1 listed in the table below acts in identical capacities for each fund in the Wells Fargo family of funds, which consists of 151 mutual funds comprising the Wells Fargo Funds Trust, Wells Fargo Variable Trust, Wells Fargo Master Trust and four closed-end funds (collectively the “Fund Complex”). This table should be read in conjunction with the Prospectus and the Statement of Additional Information2. The mailing address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, however, each Trustee serves such term until reaching the mandatory retirement age established by the Trustees.
Independent Trustees
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or | |||
William R. Ebsworth (Born 1957) | Trustee, since 2015 | Retired. From 1984 to 2013, equities analyst, portfolio manager, research director and chief investment officer at Fidelity Management and Research Company in Boston, Tokyo, and Hong Kong, and retired in 2013 as Chief Investment Officer of Fidelity Strategic Advisers, Inc. where he led a team of investment professionals managing client assets. Prior thereto, Board member of Hong Kong Securities Clearing Co., Hong Kong Options Clearing Corp., the Thailand International Fund, Ltd., Fidelity Investments Life Insurance Company, and Empire Fidelity Investments Life Insurance Company. Audit Committee Chair and Investment Committee Chair of the Vincent Memorial Hospital Endowment (non-profit organization). Mr. Ebsworth is a CFA® charterholder. | N/A | |||
Jane A. Freeman (Born 1953) | Trustee, since 2015; Chair Liaison, since 2018 | Retired. From 2012 to 2014 and 1999 to 2008, Chief Financial Officer of Scientific Learning Corporation. From 2008 to 2012, Ms. Freeman provided consulting services related to strategic business projects. Prior to 1999, Portfolio Manager at Rockefeller & Co. and Scudder, Stevens & Clark. Board member of the Harding Loevner Funds from 1996 to 2014, serving as both Lead Independent Director and chair of the Audit Committee. Board member of the Russell Exchange Traded Funds Trust from 2011 to 2012 and the chair of the Audit Committee. Ms. Freeman is a Board Member of The Ruth Bancroft Garden (non-profit organization). She is also an inactive Chartered Financial Analyst. | N/A | |||
Isaiah Harris, Jr.3 (Born 1952) | Trustee, since 2009; Audit Committee Chairman, since 2019 | Retired. Chairman of the Board of CIGNA Corporation since 2009, and Director since 2005. From 2003 to 2011, Director of Deluxe Corporation. Prior thereto, President and CEO of BellSouth Advertising and Publishing Corp. from 2005 to 2007, President and CEO of BellSouth Enterprises from 2004 to 2005 and President of BellSouth Consumer Services from 2000 to 2003. Emeritus member of the Iowa State University Foundation Board of Governors. Emeritus Member of the Advisory Board of Iowa State University School of Business. Advisory Board Member, Palm Harbor Academy (private school). Advisory Board Member, Child Evangelism Fellowship (non-profit). Mr. Harris is a certified public accountant (inactive status). | CIGNA Corporation | |||
Judith M. Johnson (Born 1949) | Trustee, since 2008; Audit Committee Chairman, from 2009 to 2018 | Retired. Prior thereto, Chief Executive Officer and Chief Investment Officer of Minneapolis Employees Retirement Fund from 1996 to 2008. Ms. Johnson is an attorney, certified public accountant and a certified managerial accountant. | N/A |
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Other information (unaudited) | Wells Fargo Strategic Income Fund | 41 |
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or | |||
David F. Larcker (Born 1950) | Trustee, since 2009 | James Irvin Miller Professor of Accounting at the Graduate School of Business, Stanford University, Director of the Corporate Governance Research Initiative and Senior Faculty of The Rock Center for Corporate Governance since 2006. From 2005 to 2008, Professor of Accounting at the Graduate School of Business, Stanford University. Prior thereto, Ernst & Young Professor of Accounting at The Wharton School, University of Pennsylvania from 1985 to 2005. | N/A | |||
Olivia S. Mitchell (Born 1953) | Trustee, since 2006; Nominating and Governance Committee Chairman, since 2018 | International Foundation of Employee Benefit Plans Professor, Wharton School of the University of Pennsylvania since 1993. Director of Wharton’s Pension Research Council and Boettner Center on Pensions & Retirement Research, and Research Associate at the National Bureau of Economic Research. Previously, Cornell University Professor from 1978 to 1993. | N/A | |||
Timothy J. Penny (Born 1951) | Trustee, since 1996; Chairman, since 2018 | President and Chief Executive Officer of Southern Minnesota Initiative Foundation, a non-profit organization, since 2007. Member of the Board of Trustees of NorthStar Education Finance, Inc., a non-profit organization, since 2007. | N/A | |||
James G. Polisson (Born 1959) | Trustee, since 2018 | Retired. Chief Marketing Officer, Source (ETF) UK Services, Ltd, from 2015 to 2017. From 2012 to 2015, Principal of The Polisson Group, LLC, a management consulting, corporate advisory and principal investing company. Chief Executive Officer and Managing Director at Russell Investments, Global Exchange Traded Funds from 2010 to 2012. Managing Director of Barclays Global Investors from 1998 to 2010 and Global Chief Marketing Officer for iShares and Barclays Global Investors from 2000 to 2010. Trustee of the San Francisco Mechanics’ Institute, a non-profit organization, from 2013 to 2015. Board member of the Russell Exchange Traded Fund Trust from 2011 to 2012. Director of Barclays Global Investors Holdings Deutschland GmbH from 2006 to 2009. Mr. Polisson is an attorney and has a retired status with the Massachusetts and District of Columbia Bar Associations. | N/A | |||
Pamela Wheelock (Born 1959) | Trustee, since 2018 | Board member of the Destination Medical Center Economic Development Agency, Rochester, Minnesota since 2019. Chief Operating Officer, Twin Cities Habitat for Humanity from 2017 to 2019. Vice President of University Services, University of Minnesota from 2012 to 2016. Prior thereto, on the Board of Directors, Governance Committee and Finance Committee for the Minnesota Philanthropy Partners (Saint Paul Foundation) from 2012 to 2018, Interim Chief Executive Officer of Blue Cross Blue Shield of Minnesota from 2011 to 2012, Chairman of the Board from 2009 to 2012 and Board Director from 2003 to 2015. Vice President, Leadership and Community Engagement, Bush Foundation, Saint Paul, Minnesota (a private foundation) from 2009 to 2011. Executive Vice President and Chief Financial Officer, Minnesota Sports and Entertainment from 2004 to 2009 and Senior Vice President from 2002 to 2004. Executive Vice President of the Minnesota Wild Foundation from 2004 to 2008. Commissioner of Finance, State of Minnesota, from 1999 to 2002. Currently Board Chair of the Minnesota Wild Foundation since 2010. | N/A |
* | Length of service dates reflect the Trustee’s commencement of service with the Trust’s predecessor entities, where applicable. |
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42 | Wells Fargo Strategic Income Fund | Other information (unaudited) |
Officers
Name and year of birth | Position held and length of service | Principal occupations during past five years or longer | ||||
Andrew Owen (Born 1960) | President, since 2017 | Executive Vice President of Wells Fargo & Company and Head of Affiliated Managers, Wells Fargo Asset Management, since 2014. In addition, Mr. Owen is currently President, Chief Executive Officer and Director of Wells Fargo Funds Management, LLC since 2017. Prior thereto, Executive Vice President responsible for marketing, investments and product development for Wells Fargo Funds Management, LLC, from 2009 to 2014. | ||||
Nancy Wiser1 (Born 1967) | Treasurer, since 2012 | Executive Vice President of Wells Fargo Funds Management, LLC since 2011. Chief Operating Officer and Chief Compliance Officer at LightBox Capital Management LLC, from 2008 to 2011. | ||||
Alexander Kymn (Born 1973) | Secretary and Chief Legal Officer, since 2018 | Senior Company Counsel of Wells Fargo Bank, N.A. since 2018 (previously Senior Counsel from 2007 to 2018). Vice President of Wells Fargo Funds Management, LLC from 2008 to 2014. | ||||
Michael H. Whitaker (Born 1967) | Chief Compliance Officer, since 2016 | Senior Vice President and Chief Compliance Officer since 2016. Senior Vice President and Chief Compliance Officer for Fidelity Investments from 2007 to 2016. | ||||
David Berardi (Born 1975) | Assistant Treasurer, since 2009 | Vice President of Wells Fargo Funds Management, LLC since 2009. Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010. Manager of Fund Reporting and Control for Evergreen Investment Management Company, LLC from 2004 to 2010. | ||||
Jeremy DePalma1 (Born 1974) | Assistant Treasurer, since 2009 | Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010 and head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010. |
1 | Nancy Wiser acts as Treasurer of 65 funds in the Fund Complex. Jeremy DePalma acts as Treasurer of 86 funds and Assistant Treasurer of 65 funds in the Fund Complex. |
2 | The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request, by calling 1-800-222-8222 or by visiting the website atwfam.com. |
3 | Mr. Harris became Chairman of the Audit Committee effective January 1, 2019. |
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Appendix A (unaudited) | Wells Fargo Strategic Income Fund | 43 |
SALES CHARGE REDUCTIONS AND WAIVERS FOR CERTAIN INTERMEDIARIES
Raymond James & Associates, Inc., Raymond James Financial Services & Raymond James affiliates (“Raymond James”)
Effective on or about March 1, 2019, shareholders purchasing Fund shares through a Raymond James platform or account will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in the Fund’s Prospectus or SAI.
Front-end Sales Load Waivers on Class A shares Available at Raymond James
• | Shares purchased in an investment advisory program. |
• | Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family). |
• | Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James. |
• | Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement). |
• | A shareholder in the fund’s Class C shares will have their shares automatically exchanged at net asset value to Class A shares (or the appropriate share class) of the fund if the shares are no longer subject to a CDSC and the exchange is in line with the policies and procedures of Raymond James. |
CDSC Waivers on Class A and C Shares Available at Raymond James
• | Death or disability of the shareholder. |
• | Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus. |
• | Return of excess contributions from an IRA Account. |
• | Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70½ as described in the Fund’s prospectus. |
• | Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James. |
• | Shares acquired through a right of reinstatement. |
Front-end Load Discounts Available at Raymond James: Breakpoints, and/or Rights of Accumulation
• | Breakpoints as described in the Fund’s Prospectus. |
• | Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets. |
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For more information
More information about Wells Fargo Funds is available free upon request. To obtain literature, please write, visit the Fund’s website, or call:
Wells Fargo Funds
P.O. Box 219967
Kansas City, MO 64121-9967
Website: wfam.com
Individual investors: 1-800-222-8222
Retail investment professionals: 1-888-877-9275
Institutional investment professionals:
1-866-765-0778
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. Before investing, please consider the investment objectives, risks, charges, and expenses of the investment. For a current prospectus and, if available, a summary prospectus, containing this information, call1-800-222-8222 or visit the Fund’s website atwfam.com. Read the prospectus carefully before you invest or send money.
Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management firms owned by Wells Fargo & Company. These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by Wells Fargo Funds Distributor, LLC (a broker-dealer and Member FINRA).
This material is for general informational and educational purposes only and is NOT intended to provide investment advice or a recommendation of any kind—including a recommendation for any specific investment, strategy, or plan.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
© 2019 Wells Fargo Funds Management, LLC. All rights reserved.
![]() | 401603 05-19 SA263/SAR263 03-19 |
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Semi-Annual Report
March 31, 2019
Wells Fargo C&B Mid Cap Value Fund
Beginning on January 1, 2021, as permitted by new regulations adopted by the Securities and Exchange Commission, paper copies of the Wells Fargo Funds’ annual and semi-annual shareholder reports issued after this date will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website, and you will be notified by mail each time a report is posted and provided with a website address to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-222-8222 or by enrolling at wellsfargo.com/advantagedelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports; if you invest directly with the Fund, you can call 1-800-222-8222. Your election to receive reports in paper will apply to all Wells Fargo Funds held in your account with your financial intermediary or, if you are a direct investor, to all Wells Fargo Funds that you hold.
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2 | ||||
4 | ||||
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7 | ||||
Financial statements | ||||
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12 | ||||
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The views expressed and any forward-looking statements are as of March 31, 2019, unless otherwise noted, and are those of the Fund managers and/or Wells Fargo Asset Management. Discussions of individual securities, or the markets generally, or any Wells Fargo Fund are not intended as individual recommendations. Future events or results may vary significantly from those expressed in any forward-looking statements. The views expressed are subject to change at any time in response to changing circumstances in the market. Wells Fargo and the Fund disclaim any obligation to publicly update or revise any views expressed or forward-looking statements.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
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2 | Wells Fargo C&B Mid Cap Value Fund | Letter to shareholders (unaudited) |
Andrew Owen
President
Wells Fargo Funds
December’s S&P 500 Index performance was the worst since 1931.
Dear Shareholder:
We are pleased to offer you this semi-annual report for the Wells Fargo C&B Mid Cap Value Fund for the six-month period that ended March 31, 2019. Concerns about interest rate increases in the U.S., trade tensions, and geopolitical events drove equity losses and restrained bond returns during the fourth quarter of 2018. Investor sentiment improved during the first quarter of 2019 thanks to a shift in U.S. Federal Reserve (Fed) policy and consistent, if not spectacular, economic and business growth metrics.
For the period, U.S. stocks, as measured by the S&P 500 Index,1 lost 1.72% and international stocks, as measured by the MSCI ACWI ex USA Index (Net),2 fell 2.33%. Based on the MSCI EM Index (Net),3 emerging market stocks added 1.71%. For bond investors, the Bloomberg Barclays U.S. Aggregate Bond Index4 added 4.63% while the Bloomberg Barclays Global Aggregate ex-USD Index5 added 2.44%. The Bloomberg Barclays Municipal Bond Index6 added 4.63%, and the ICE BofAML U.S. High Yield Index7 gained 2.39%.
Conflicting data unsettled markets during the fourth quarter.
November’s U.S. midterm elections shifted control of the House of Representatives from Republicans to Democrats, presaging potential partisan clashes. Third-quarter U.S. gross domestic product was announced at an annualized 3.4% rate, lower than the second-quarter rate. Brexit efforts stalled ahead of the March 2019 deadline. The People’s Bank of China cut reserve requirement ratios, accelerated infrastructure spending, and cut taxes even as the value of the yuan declined to low levels last seen in 2008.
December’s S&P 500 Index performance was the worst since 1931. Globally, fixed-income investments fared better than stocks during the last two months of the year. The Fed increased the federal funds rate by 25 bps in December 2018 to a target range of between 2.25% and 2.50% and softened its outlook for 2019 rate increases.
The market climbs a wall of worry.
Investors entered 2019 with reasons to be concerned. A partial U.S. government shutdown driven by partisan spending and immigration policy disputes extended into January. Investors expected high levels of stock market volatility to continue based on the VIX8.
1 | The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index with each stock’s weight in the index proportionate to its market value. You cannot invest directly in an index. |
2 | The Morgan Stanley Capital International (MSCI) All Country World Index (ACWI) ex USA Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. You cannot invest directly in an index. |
3 | The MSCI Emerging Markets (EM) Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure large- and mid-cap equity market performance of emerging markets. The MSCI EM Index (Net) consists of the following 24 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and the United Arab Emirates. You cannot invest directly in an index. |
4 | The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid adjustable-rate mortgage pass-throughs), asset-backed securities, and commercial mortgage-backed securities. You cannot invest directly in an index. |
5 | The Bloomberg Barclays Global Aggregate ex-USD Index is an unmanaged index that provides a broad-based measure of the global investment-grade fixed-income markets excluding the U.S. dollar-denominated debt market. You cannot invest directly in an index. |
6 | The Bloomberg Barclays Municipal Bond Index is an unmanaged index composed of long-term tax-exempt bonds with a minimum credit rating of Baa. You cannot invest directly in an index. |
7 | The ICE BofAML U.S. High Yield Index is a market-capitalization-weighted index of domestic and Yankee high-yield bonds. The index tracks the performance of high-yield securities traded in the U.S. bond market. You cannot invest directly in an index. Copyright 2019. ICE Data Indices, LLC. All rights reserved. |
8 | The Chicago Board Options Exchange Market Volatility Index (VIX) is a popular measure of the implied volatility of S&P 500 Index options. It represents one measure of the market’s expectation of stock market volatility over the next 30-day period. You cannot invest directly in an index. |
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Letter to shareholders (unaudited) | Wells Fargo C&B Mid Cap Value Fund | 3 |
January’s returns tended to support the investing adage that markets climb a wall of worry. The S&P 500 Index gained 8.01% for the month that ended January 31, 2019, its best monthly performance in 30 years. Returns for the MSCI ACWI ex USA Index (Net), the Bloomberg Barclays U.S. Aggregate Bond Index, and the Bloomberg Barclays Global Aggregate ex-USD Index also were positive. The Fed indicated that it would pause its program of regular rate increases during 2019 as inflation remained low. Businesses and investors responded positively to the shift in policy.
In February, concerns over slowing global growth reemerged. The Bureau of Economic Analysis announced fourth-quarter 2018 gross domestic product (GDP) grew at an annualized 2.2% rate, down from the 4.2% annualized rate for the second quarter and the 3.4% annualized rate for the third quarter. Analysts attributed the lower growth rate to a slowing housing market and larger trade deficit. The U.S. Department of Labor said that the economy created just 20,000 jobs in February 2019. In a February report, the Bank of England forecast the slowest growth since the financial crisis for 2019. China and the U.S., while putting future tariffs on hold for the time being, continued to wrangle over trade issues.
By the end of March 2019, the combination of dovish Fed sentiment and consistent, if not spectacular, economic and business metrics reinforced investors’ enthusiasm for equity investing. Monthly job creation data regained its momentum. Corporate profits, while lower than 2018’s lofty levels, remained consistent. Inflation rates were relatively low in the U.S., Europe, and Japan. China announced a roughly $300 billion stimulus package through tax and fee cuts intended to reinvigorate economic growth.
Don’t let short-term uncertainty derail long-term investment goals.
Periods of investment uncertainty can present challenges, but experience has taught us that maintaining long-term investment goals can be an effective way to plan for the future. To help you create a sound strategy based on your personal goals and risk tolerance, Wells Fargo Funds offers more than 100 mutual funds spanning a wide range of asset classes and investment styles. Although diversification cannot guarantee an investment profit or prevent losses, we believe it can be an effective way to manage investment risk and potentially smooth out overall portfolio performance. We encourage investors to know their investments and to understand that appropriate levels of risk-taking may unlock opportunities.
Thank you for choosing to invest with Wells Fargo Funds. We appreciate your confidence in us and remain committed to helping you meet your financial needs.
Sincerely,
Andrew Owen
President
Wells Fargo Funds
January’s returns tended to support the investing adage that markets climb a wall of worry.
For further information about your Fund, contact your investment professional, visit our website atwfam.com, or call us directly at1-800-222-8222.
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4 | Wells Fargo C&B Mid Cap Value Fund | Performance highlights (unaudited) |
Investment objective
The Fund seeks maximum long-term total return (current income and capital appreciation), consistent with minimizing risk to principal.
Manager
Wells Fargo Funds Management, LLC
Subadviser
Cooke and Bieler, L.P.
Portfolio managers
Andrew B. Armstrong, CFA®‡
Steve Lyons, CFA®‡
Michael M. Meyer, CFA®‡
Edward W. O’Connor, CFA®‡
R. James O’Neil, CFA®‡
Mehul Trivedi, CFA®‡
William Weber, CFA®‡
Average annual total returns (%) as of March 31, 2019
Including sales charge | Excluding sales charge | Expense ratios1 (%) | ||||||||||||||||||||||||||||||||
Inception date | 1 year | 5 year | 10 year | 1 year | 5 year | 10 year | Gross | Net2 | ||||||||||||||||||||||||||
Class A (CBMAX) | 7-26-2004 | -3.86 | 6.03 | 14.35 | 2.00 | 7.29 | 15.03 | 1.30 | 1.26 | |||||||||||||||||||||||||
Class C (CBMCX) | 7-26-2004 | 0.25 | 6.49 | 14.17 | 1.25 | 6.49 | 14.17 | 2.05 | 2.01 | |||||||||||||||||||||||||
Class R6 (CMBYX)3 | 7-31-2018 | – | – | – | 2.44 | 7.66 | 15.40 | 0.87 | 0.81 | |||||||||||||||||||||||||
Administrator Class (CBMIX) | 7-26-2004 | – | – | – | 2.12 | 7.38 | 15.10 | 1.22 | 1.16 | |||||||||||||||||||||||||
Institutional Class (CBMSX) | 7-26-2004 | – | – | – | 2.37 | 7.65 | 15.39 | 0.97 | 0.91 | |||||||||||||||||||||||||
Russell Midcap® Value Index4 | – | – | – | – | 2.89 | 7.22 | 16.39 | – | – |
Figures quoted represent past performance, which is no guarantee of future results, and do not reflect taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance shown without sales charges would be lower if sales charges were reflected. Current performance may be lower or higher than the performance data quoted, which assumes the reinvestment of dividends and capital gains. Current month-end performance is available on the Fund’s website, wfam.com.
Index returns do not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses, or any taxes. It is not possible to invest directly in an index.
For Class A shares, the maximum front-end sales charge is 5.75%. For Class C shares, the maximum contingent deferred sales charge is 1.00%. Performance including a contingent deferred sales charge assumes the sales charge for the corresponding time period. Class R6, Administrator Class, and Institutional Class shares are sold without a front-end sales charge or contingent deferred sales charge.
Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. Smaller-company stocks tend to be more volatile and less liquid than those of larger companies. Consult the Fund’s prospectus for additional information on these and other risks.
Please see footnotes on page 5.
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Performance highlights (unaudited) | Wells Fargo C&B Mid Cap Value Fund | 5 |
Ten largest holdings (%) as of March 31, 20195 | ||||
Colfax Corporation | 4.04 | |||
Fidelity National Financial Incorporated | 3.71 | |||
Schweitzer-Mauduit International Incorporated | 3.37 | |||
Arrow Electronics Incorporated | 3.25 | |||
Reliance Steel & Aluminum Company | 2.96 | |||
Gildan Activewear Incorporated | 2.81 | |||
Crown Holdings Incorporated | 2.80 | |||
FirstCash Financial Services Incorporated | 2.76 | |||
AerCap Holdings NV | 2.73 | |||
Helen of Troy Limited | 2.62 |
Sector distribution as of March 31, 20196 |
|
‡ | CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute. |
1 | Reflects the expense ratios as stated in the most recent prospectuses, which include the impact of 0.01% in acquired fund fees and expenses. The expense ratios shown are subject to change and may differ from the annualized expense ratios shown in the financial highlights of this report, which do not include acquired fund fees and expenses. |
2 | The manager has contractually committed through January 31, 2020, to waive fees and/or reimburse expenses to the extent necessary to cap the expenses of each class after fee waivers at 1.25% for Class A, 2.00% for Class C, 0.80% for Class R6, 1.15% for Administrator Class, and 0.90% for Institutional Class. Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the expense cap. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. Without this cap, the Fund’s returns would have been lower. The expense ratio paid by an investor is the net expense ratio (the total annual fund operating expenses after fee waivers) as stated in the prospectuses. |
3 | Historical performance shown for the Class R6 shares prior to their inception reflects the performance of the Institutional Class shares, and is not adjusted to reflect Class R6 expenses. If these expenses had been included, returns for Class R6 would be higher. |
4 | The Russell Midcap® Value Index measures the performance of those Russell Midcap companies with lower price/book ratios and lower forecasted growth values. The stocks are also members of the Russell 1000® Value Index. You cannot invest directly in an index. |
5 | The ten largest holdings, excluding cash, cash equivalents and any money market funds, are calculated based on the value of the investments divided by total net assets of the Fund. Holdings are subject to change and may have changed since the date specified. |
6 | Amounts are calculated based on the total long-term investments of the Fund. These amounts are subject to change and may have changed since the date specified. |
Table of Contents
6 | Wells Fargo C&B Mid Cap Value Fund | Fund expenses (unaudited) |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (if any) on redemptions and (2) ongoing costs, including management fees, distribution (12b-1) and/or shareholder servicing fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period from October 1, 2018 to March 31, 2019.
Actual expenses
The “Actual” line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the “Actual” line under the heading entitled “Expenses paid during period” for your applicable class of shares to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The “Hypothetical” line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and contingent deferred sales charges. Therefore, the “Hypothetical” line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 10-1-2018 | Ending account value 3-31-2019 | Expenses paid during the period¹ | Annualized net expense ratio | |||||||||||||
Class A | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 964.22 | $ | 6.12 | 1.25 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,018.70 | $ | 6.29 | 1.25 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 960.57 | $ | 9.78 | 2.00 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,014.96 | $ | 10.05 | 2.00 | % | ||||||||
Class R6 | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 966.34 | $ | 3.92 | 0.80 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.94 | $ | 4.03 | 0.80 | % | ||||||||
Administrator Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 964.72 | $ | 5.63 | 1.15 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,019.20 | $ | 5.79 | 1.15 | % | ||||||||
Institutional Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 965.90 | $ | 4.41 | 0.90 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.44 | $ | 4.53 | 0.90 | % |
1 | Expenses paid is equal to the annualized net expense ratio of each class multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year (to reflect the one-half-year period). |
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo C&B Mid Cap Value Fund | 7 |
Security name | Shares | Value | ||||||||||||||
Common Stocks: 95.81% | ||||||||||||||||
Communication Services: 2.15% | ||||||||||||||||
Media: 2.15% | ||||||||||||||||
Omnicom Group Incorporated | 98,600 | $ | 7,196,814 | |||||||||||||
|
| |||||||||||||||
Consumer Discretionary: 11.36% | ||||||||||||||||
Hotels, Restaurants & Leisure: 0.95% | ||||||||||||||||
Extended Stay America Incorporated | 176,500 | 3,168,175 | ||||||||||||||
|
| |||||||||||||||
Household Durables: 4.47% | ||||||||||||||||
Helen of Troy Limited † | 75,500 | 8,754,980 | ||||||||||||||
Whirlpool Corporation | 46,500 | 6,179,385 | ||||||||||||||
14,934,365 | ||||||||||||||||
|
| |||||||||||||||
Specialty Retail: 1.54% | ||||||||||||||||
Williams-Sonoma Incorporated | 91,100 | 5,126,197 | ||||||||||||||
|
| |||||||||||||||
Textiles, Apparel & Luxury Goods: 4.40% | ||||||||||||||||
Gildan Activewear Incorporated | 260,600 | 9,373,782 | ||||||||||||||
HanesBrands Incorporated | 297,200 | 5,313,936 | ||||||||||||||
14,687,718 | ||||||||||||||||
|
| |||||||||||||||
Financials: 22.83% | ||||||||||||||||
Banks: 4.39% | ||||||||||||||||
Commerce Bancshares Incorporated | 116,605 | 6,770,086 | ||||||||||||||
TCF Financial Corporation | 381,400 | 7,891,166 | ||||||||||||||
14,661,252 | ||||||||||||||||
|
| |||||||||||||||
Capital Markets: 2.52% | ||||||||||||||||
State Street Corporation | 127,900 | 8,417,099 | ||||||||||||||
|
| |||||||||||||||
Consumer Finance: 5.31% | ||||||||||||||||
FirstCash Financial Services Incorporated | 106,400 | 9,203,600 | ||||||||||||||
Synchrony Financial | 266,600 | 8,504,540 | ||||||||||||||
17,708,140 | ||||||||||||||||
|
| |||||||||||||||
Insurance: 10.61% | ||||||||||||||||
Arch Capital Group Limited † | 234,900 | 7,591,968 | ||||||||||||||
Fidelity National Financial Incorporated | 338,700 | 12,379,485 | ||||||||||||||
RenaissanceRe Holdings Limited | 32,864 | 4,715,984 | ||||||||||||||
The Progressive Corporation | 56,300 | 4,058,667 | ||||||||||||||
Torchmark Corporation | 81,200 | 6,654,340 | ||||||||||||||
35,400,444 | ||||||||||||||||
|
| |||||||||||||||
Health Care: 9.86% | ||||||||||||||||
Health Care Providers & Services: 5.86% | ||||||||||||||||
Cardinal Health Incorporated | 134,200 | 6,461,730 | ||||||||||||||
Laboratory Corporation of America Holdings † | 51,700 | 7,909,066 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
8 | Wells Fargo C&B Mid Cap Value Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Health Care Providers & Services(continued) | ||||||||||||||||
MEDNAX Incorporated † | 190,300 | $ | 5,170,451 | |||||||||||||
19,541,247 | ||||||||||||||||
|
| |||||||||||||||
Life Sciences Tools & Services: 2.39% | ||||||||||||||||
Syneos Health Incorporated † | 154,300 | 7,986,568 | ||||||||||||||
|
| |||||||||||||||
Pharmaceuticals: 1.61% | ||||||||||||||||
Perrigo Company plc | 111,600 | 5,374,656 | ||||||||||||||
|
| |||||||||||||||
Industrials: 25.80% | ||||||||||||||||
Aerospace & Defense: 1.81% | ||||||||||||||||
Hexcel Corporation | 87,400 | 6,044,584 | ||||||||||||||
|
| |||||||||||||||
Building Products: 3.88% | ||||||||||||||||
Johnson Controls International plc | 195,000 | 7,203,300 | ||||||||||||||
Quanex Building Products Corporation | 360,900 | 5,734,701 | ||||||||||||||
12,938,001 | ||||||||||||||||
|
| |||||||||||||||
Commercial Services & Supplies: 1.60% | ||||||||||||||||
Steelcase Incorporated Class A | 367,900 | 5,352,945 | ||||||||||||||
|
| |||||||||||||||
Electrical Equipment: 4.45% | ||||||||||||||||
AMETEK Incorporated | 81,164 | 6,734,177 | ||||||||||||||
Eaton Corporation plc | 100,700 | 8,112,392 | ||||||||||||||
14,846,569 | ||||||||||||||||
|
| |||||||||||||||
Machinery: 11.33% | ||||||||||||||||
Colfax Corporation † | 454,200 | 13,480,656 | ||||||||||||||
Donaldson Company Incorporated | 118,800 | 5,947,128 | ||||||||||||||
Gates Industrial Corporation plc † | 365,900 | 5,247,006 | ||||||||||||||
Snap-on Incorporated | 43,200 | 6,761,664 | ||||||||||||||
Woodward Governor Company | 67,200 | 6,376,608 | ||||||||||||||
37,813,062 | ||||||||||||||||
|
| |||||||||||||||
Trading Companies & Distributors: 2.73% | ||||||||||||||||
AerCap Holdings NV † | 195,400 | 9,093,916 | ||||||||||||||
|
| |||||||||||||||
Information Technology: 10.98% | ||||||||||||||||
Electronic Equipment, Instruments & Components: 5.13% | ||||||||||||||||
Arrow Electronics Incorporated † | 140,900 | 10,857,754 | ||||||||||||||
TE Connectivity Limited | 77,600 | 6,266,200 | ||||||||||||||
17,123,954 | ||||||||||||||||
|
| |||||||||||||||
IT Services: 4.90% | ||||||||||||||||
Alliance Data Systems Corporation | 23,400 | 4,094,532 | ||||||||||||||
Amdocs Limited | 128,800 | 6,969,368 | ||||||||||||||
Genpact Limited | 150,000 | 5,277,000 | ||||||||||||||
16,340,900 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo C&B Mid Cap Value Fund | 9 |
Security name | Shares | Value | ||||||||||||||
Semiconductors & Semiconductor Equipment: 0.95% | ||||||||||||||||
Applied Materials Incorporated | 79,800 | $ | 3,164,868 | |||||||||||||
|
| |||||||||||||||
Materials: 10.85% | ||||||||||||||||
Chemicals: 1.72% | ||||||||||||||||
Axalta Coating Systems Limited † | 226,800 | 5,717,628 | ||||||||||||||
|
| |||||||||||||||
Containers & Packaging: 2.80% | ||||||||||||||||
Crown Holdings Incorporated † | 171,400 | 9,353,298 | ||||||||||||||
|
| |||||||||||||||
Metals & Mining: 2.96% | ||||||||||||||||
Reliance Steel & Aluminum Company | 109,500 | 9,883,470 | ||||||||||||||
|
| |||||||||||||||
Paper & Forest Products: 3.37% | ||||||||||||||||
Schweitzer-Mauduit International Incorporated | 290,576 | 11,251,103 | ||||||||||||||
|
| |||||||||||||||
Real Estate: 1.98% | ||||||||||||||||
Real Estate Management & Development: 1.98% | ||||||||||||||||
CBRE Group Incorporated Class A † | 133,400 | 6,596,630 | ||||||||||||||
|
| |||||||||||||||
Total Common Stocks (Cost $281,446,493) | 319,723,603 | |||||||||||||||
|
| |||||||||||||||
Yield | ||||||||||||||||
Short-Term Investments: 4.04% | ||||||||||||||||
Investment Companies: 4.04% | ||||||||||||||||
Wells Fargo Government Money Market Fund Select Class (l)(u) | 2.38 | % | 13,476,133 | 13,476,133 | ||||||||||||
|
| |||||||||||||||
Total Short-Term Investments (Cost $13,476,133) |
| 13,476,133 | ||||||||||||||
|
|
Total investments in securities (Cost $294,922,626) | 99.85 | % | 333,199,736 | |||||
Other assets and liabilities, net | 0.15 | 490,496 | ||||||
|
|
|
| |||||
Total net assets | 100.00 | % | $ | 333,690,232 | ||||
|
|
|
|
† | Non-income-earning security |
(l) | The issuer of the security is an affiliated person of the Fund as defined in the Investment Company Act of 1940. |
(u) | The rate represents the 7-day annualized yield at period end. |
Investments in Affiliates
An affiliated investment is an investment in which the Fund owns at least 5% of the outstanding voting shares of the issuer or as a result of other relationships, such as the Fund and the issuer having the same investment manager. Transactions with issuers that were either affiliated persons of the Fund at the beginning of the period or the end of the period were as follows:
Shares, beginning of period | Shares purchased | Shares sold | Shares, end of period | Net realized gains (losses) | Net change in unrealized gains (losses) | Income from affiliated securities | Value, end of period | % of net assets | ||||||||||||||||||||||||||||
Short-Term Investments | ||||||||||||||||||||||||||||||||||||
Investment Companies | ||||||||||||||||||||||||||||||||||||
Securities Lending Cash Investments LLC * | 14,621,190 | 17,885,111 | 32,506,301 | 0 | $ | 239 | $ | (239 | ) | $ | 64,313 | $ | 0 | |||||||||||||||||||||||
Wells Fargo Government Money Market Fund Select Class | 21,485,564 | 63,712,555 | 71,721,986 | 13,476,133 | 0 | 0 | 139,047 | 13,476,133 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
$ | 239 | $ | (239 | ) | $ | 203,360 | $ | 13,476,133 | 4.04 | % | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
* | No longer held at the end of the period. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
10 | Wells Fargo C&B Mid Cap Value Fund | Statement of assets and liabilities—March 31, 2019 (unaudited) |
Assets | ||||
Investments in unaffiliated securities, at value (cost $281,446,493) | $ | 319,723,603 | ||
Investments in affiliated securities, at value (cost $13,476,133) | 13,476,133 | |||
Receivable for Fund shares sold | 886,534 | |||
Receivable for dividends | 402,466 | |||
Prepaid expenses and other assets | 69,625 | |||
|
| |||
Total assets | 334,558,361 | |||
|
| |||
Liabilities | ||||
Payable for Fund shares redeemed | 418,314 | |||
Management fee payable | 197,711 | |||
Payable for investments purchased | 149,555 | |||
Administration fees payable | 43,036 | |||
Distribution fee payable | 3,252 | |||
Trustees’ fees and expenses payable | 1,512 | |||
Accrued expenses and other liabilities | 54,749 | |||
|
| |||
Total liabilities | 868,129 | |||
|
| |||
Total net assets | $ | 333,690,232 | ||
|
| |||
NET ASSETS CONSIST OF | ||||
Paid-in capital | $ | 296,489,965 | ||
Total distributable earnings | 37,200,267 | |||
|
| |||
Total net assets | $ | 333,690,232 | ||
|
| |||
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE | ||||
Net assets – Class A | $ | 101,869,544 | ||
Shares outstanding – Class A1 | 2,793,933 | |||
Net asset value per share – Class A | $36.46 | |||
Maximum offering price per share – Class A2 | $38.68 | |||
Net assets – Class C | $ | 5,050,424 | ||
Shares outstanding – Class C1 | 148,061 | |||
Net asset value per share – Class C | $34.11 | |||
Net assets – Class R6 | $ | 12,471,686 | ||
Shares outstanding – Class R61 | 339,5391 | |||
Net asset value per share – Class R6 | $36.73 | |||
Net assets – Administrator Class | $ | 19,234,160 | ||
Shares outstanding – Administrator Class1 | 521,651 | |||
Net asset value per share – Administrator Class | $36.87 | |||
Net assets – Institutional Class | $ | 195,064,418 | ||
Shares outstanding – Institutional Class1 | 5,310,805 | |||
Net asset value per share – Institutional Class | $36.73 |
1 | The Fund has an unlimited number of authorized shares. |
2 | Maximum offering price is computed as 100/94.25 of net asset value. On investments of $50,000 or more, the offering price is reduced. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of operations—six months ended March 31, 2019 (unaudited) | Wells Fargo C&B Mid Cap Value Fund | 11 |
Investment income | ||||
Dividends (net of foreign withholding taxes of $11,626) | $ | 2,641,074 | ||
Income from affiliated securities | 145,881 | |||
|
| |||
Total investment income | 2,786,955 | |||
|
| |||
Expenses | ||||
Management fee | 1,171,419 | |||
Administration fees | ||||
Class A | 103,376 | |||
Class C | 7,124 | |||
Class R6 | 1,257 | |||
Administrator Class | 12,197 | |||
Institutional Class | 116,998 | |||
Shareholder servicing fees | ||||
Class A | 123,067 | |||
Class C | 8,481 | |||
Administrator Class | 23,456 | |||
Distribution fee | ||||
Class C | 25,443 | |||
Custody and accounting fees | 10,738 | |||
Professional fees | 19,916 | |||
Registration fees | 50,097 | |||
Shareholder report expenses | 31,588 | |||
Trustees’ fees and expenses | 10,969 | |||
Other fees and expenses | 8,489 | |||
|
| |||
Total expenses | 1,724,615 | |||
Less: Fee waivers and/or expense reimbursements | (90,035 | ) | ||
|
| |||
Net expenses | 1,634,580 | |||
|
| |||
Net investment income | 1,152,375 | |||
|
| |||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | ||||
Net realized gains (losses) on: | ||||
Unaffiliated securities | (21,425 | ) | ||
Affiliated securities | 239 | |||
|
| |||
Net realized losses on investments | (21,186 | ) | ||
|
| |||
Net change in unrealized gains (losses) on: | ||||
Unaffiliated securities | (13,477,269 | ) | ||
Affiiliated securities | (239 | ) | ||
|
| |||
Net change in unrealized gains (losses) on investments | (13,477,508 | ) | ||
|
| |||
Net realized and unrealized gains (losses) on investments | (13,498,694 | ) | ||
|
| |||
Net decrease in net assets resulting from operations | $ | (12,346,319 | ) | |
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
12 | Wells Fargo C&B Mid Cap Value Fund | Statement of changes in net assets |
Six months ended March 31, 2019 (unaudited) | Year ended September 30, 2018 | |||||||||||||||
Operations | ||||||||||||||||
Net investment income | $ | 1,152,375 | $ | 972,703 | ||||||||||||
Net realized gains (losses) on investments | (21,186 | ) | 15,512,927 | |||||||||||||
Net change in unrealized gains (losses) on investments | (13,477,508 | ) | 7,326,810 | |||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (12,346,319 | ) | 23,812,440 | |||||||||||||
|
| |||||||||||||||
Distributions to shareholders from net investment income and net realized gains | ||||||||||||||||
Class A | (159,086 | ) | (10,376 | ) | ||||||||||||
Class R6 | (76,727 | ) | 0 | 1 | ||||||||||||
Administrator Class | (60,977 | ) | (21,699 | ) | ||||||||||||
Institutional Class | (1,010,122 | ) | (345,183 | ) | ||||||||||||
|
| |||||||||||||||
Total distributions to shareholders | (1,306,912 | ) | (377,258 | ) | ||||||||||||
|
| |||||||||||||||
Capital share transactions | Shares | Shares | ||||||||||||||
Proceeds from shares sold | ||||||||||||||||
Class A | 171,171 | 5,989,453 | 304,664 | 11,072,438 | ||||||||||||
Class C | 21,061 | 648,171 | 35,196 | 1,207,072 | ||||||||||||
Class R6 | 399,543 | 14,120,673 | 669 | 1 | 25,000 | 1 | ||||||||||
Administrator Class | 62,218 | 2,230,449 | 398,153 | 14,622,451 | ||||||||||||
Institutional Class | 1,510,692 | 52,554,038 | 4,171,649 | 152,624,942 | ||||||||||||
|
| |||||||||||||||
75,542,784 | 179,551,903 | |||||||||||||||
|
| |||||||||||||||
Reinvestment of distributions | ||||||||||||||||
Class A | 4,720 | 154,816 | 278 | 10,143 | ||||||||||||
Class R6 | 995 | 32,841 | 0 | 1 | 0 | 1 | ||||||||||
Administrator Class | 1,590 | 52,718 | 473 | 17,442 | ||||||||||||
Institutional Class | 30,350 | 1,001,844 | 8,408 | 308,732 | ||||||||||||
|
| |||||||||||||||
1,242,219 | 336,317 | |||||||||||||||
|
| |||||||||||||||
Payment for shares redeemed | ||||||||||||||||
Class A | (321,774 | ) | (11,372,554 | ) | (651,887 | ) | (23,945,939 | ) | ||||||||
Class C | (108,753 | ) | (3,604,473 | ) | (58,143 | ) | (2,005,684 | ) | ||||||||
Class R6 | (61,668 | ) | (2,163,943 | ) | 0 | 1 | 0 | 1 | ||||||||
Administrator Class | (88,705 | ) | (3,128,098 | ) | (450,885 | ) | (16,245,676 | ) | ||||||||
Institutional Class | (1,466,904 | ) | (50,218,202 | ) | (1,924,282 | ) | (70,722,538 | ) | ||||||||
|
| |||||||||||||||
(70,487,270 | ) | (112,919,837 | ) | |||||||||||||
|
| |||||||||||||||
Net increase in net assets resulting from capital share transactions | 6,297,733 | 66,968,383 | ||||||||||||||
|
| |||||||||||||||
Total increase (decrease) in net assets | (7,355,498 | ) | 90,403,565 | |||||||||||||
|
| |||||||||||||||
Net assets | ||||||||||||||||
Beginning of period | 341,045,730 | 250,642,165 | ||||||||||||||
|
| |||||||||||||||
End of period | $ | 333,690,232 | $ | 341,045,730 | ||||||||||||
|
|
1 | For the period from July 31, 2018 (commencement of class operations) to September 30, 2018 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo C&B Mid Cap Value Fund | 13 |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS A | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $37.88 | $35.07 | $29.27 | $25.12 | $25.26 | $23.74 | ||||||||||||||||||
Net investment income (loss) | 0.09 | 0.06 | (0.00 | )1,2 | 0.07 | 1 | 0.05 | 1 | 0.06 | |||||||||||||||
Net realized and unrealized gains (losses) on investments | (1.45 | ) | 2.75 | 5.82 | 4.13 | (0.14 | ) | 1.55 | ||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (1.36 | ) | 2.81 | 5.82 | 4.20 | (0.09 | ) | 1.61 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.06 | ) | (0.00 | )3 | (0.02 | ) | (0.05 | ) | (0.05 | ) | (0.09 | ) | ||||||||||||
Net asset value, end of period | $36.46 | $37.88 | $35.07 | $29.27 | $25.12 | $25.26 | ||||||||||||||||||
Total return4 | (3.58 | )% | 8.02 | % | 19.89 | % | 16.73 | % | (0.36 | )% | 6.78 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.29 | % | 1.29 | % | 1.30 | % | 1.33 | % | 1.35 | % | 1.35 | % | ||||||||||||
Net expenses | 1.25 | % | 1.25 | % | 1.25 | % | 1.24 | % | 1.20 | % | 1.20 | % | ||||||||||||
Net investment income (loss) | 0.52 | % | 0.16 | % | (0.00 | )% | 0.27 | % | 0.18 | % | 0.24 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 25 | % | 39 | % | 54 | % | 35 | % | 41 | % | 55 | % | ||||||||||||
Net assets, end of period (000s omitted) | $101,870 | $111,354 | $115,258 | $120,020 | $19,862 | $21,465 |
1 | Calculated based upon average shares outstanding |
2 | Amount is more than $(0.005). |
3 | Amount is less than $0.005. |
4 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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14 | Wells Fargo C&B Mid Cap Value Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS C | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $35.51 | $33.12 | $27.83 | $24.02 | $24.29 | $22.92 | ||||||||||||||||||
Net investment loss | (0.05 | )1 | (0.20 | )1 | (0.26 | ) | (0.14 | )1 | (0.15 | )1 | (0.13 | )1 | ||||||||||||
Net realized and unrealized gains (losses) on investments | (1.35 | ) | 2.59 | 5.55 | 3.95 | (0.12 | ) | 1.50 | ||||||||||||||||
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|
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|
|
|
|
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|
| |||||||||||||
Total from investment operations | (1.40 | ) | 2.39 | 5.29 | 3.81 | (0.27 | ) | 1.37 | ||||||||||||||||
Net asset value, end of period | $34.11 | $35.51 | $33.12 | $27.83 | $24.02 | $24.29 | ||||||||||||||||||
Total return2 | (3.94 | )% | 7.22 | % | 19.01 | % | 15.86 | % | (1.11 | )% | 5.98 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 2.04 | % | 2.04 | % | 2.05 | % | 2.08 | % | 2.10 | % | 2.10 | % | ||||||||||||
Net expenses | 2.00 | % | 2.00 | % | 2.00 | % | 1.98 | % | 1.95 | % | 1.95 | % | ||||||||||||
Net investment loss | (0.32 | )% | (0.59 | )% | (0.74 | )% | (0.55 | )% | (0.57 | )% | (0.52 | )% | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 25 | % | 39 | % | 54 | % | 35 | % | 41 | % | 55 | % | ||||||||||||
Net assets, end of period (000s omitted) | $5,050 | $8,371 | $8,567 | $7,314 | $6,737 | $7,531 |
1 | Calculated based upon average shares outstanding |
2 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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Financial highlights | Wells Fargo C&B Mid Cap Value Fund | 15 |
(For a share outstanding throughout each period)
CLASS R6 | Six months ended (unaudited) | Year ended September 30, 20181 | ||||||
Net asset value, beginning of period | $38.27 | $37.39 | ||||||
Net investment income | 0.20 | 2 | 0.08 | 2 | ||||
Net realized and unrealized gains (losses) on investments | (1.51 | ) | 0.80 | |||||
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|
|
| |||||
Total from investment operations | (1.31 | ) | 0.88 | |||||
Distributions to shareholders from | ||||||||
Net investment income | (0.23 | ) | 0.00 | |||||
Net asset value, end of period | $36.73 | $38.27 | ||||||
Total return3 | (3.37 | )% | 2.35 | % | ||||
Ratios to average net assets (annualized) | ||||||||
Gross expenses | 0.86 | % | 0.86 | % | ||||
Net expenses | 0.80 | % | 0.80 | % | ||||
Net investment income | 1.17 | % | 1.24 | % | ||||
Supplemental data | ||||||||
Portfolio turnover rate | 25 | % | 39 | % | ||||
Net assets, end of period (000s omitted) | $12,472 | $26 |
1 | For the period from July 31, 2018 (commencement of class operations) to September 30, 2018 |
2 | Calculated based upon average shares outstanding |
3 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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16 | Wells Fargo C&B Mid Cap Value Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
ADMINISTRATOR CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $38.35 | $35.52 | $29.63 | $25.42 | $25.54 | $24.01 | ||||||||||||||||||
Net investment income | 0.11 | 1 | 0.10 | 1 | 0.04 | 1 | 0.08 | 1 | 0.06 | 1 | 0.07 | 1 | ||||||||||||
Net realized and unrealized gains (losses) on investments | (1.48 | ) | 2.78 | 5.89 | 4.19 | (0.13 | ) | 1.56 | ||||||||||||||||
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|
|
|
|
|
|
|
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|
| |||||||||||||
Total from investment operations | (1.37 | ) | 2.88 | 5.93 | 4.27 | (0.07 | ) | 1.63 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.11 | ) | (0.05 | ) | (0.04 | ) | (0.06 | ) | (0.05 | ) | (0.10 | ) | ||||||||||||
Net asset value, end of period | $36.87 | $38.35 | $35.52 | $29.63 | $25.42 | $25.54 | ||||||||||||||||||
Total return2 | (3.53 | )% | 8.13 | % | 20.02 | % | 16.82 | % | (0.30 | )% | 6.82 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.21 | % | 1.21 | % | 1.22 | % | 1.25 | % | 1.21 | % | 1.19 | % | ||||||||||||
Net expenses | 1.15 | % | 1.15 | % | 1.15 | % | 1.15 | % | 1.15 | % | 1.15 | % | ||||||||||||
Net investment income | 0.61 | % | 0.26 | % | 0.12 | % | 0.28 | % | 0.22 | % | 0.26 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 25 | % | 39 | % | 54 | % | 35 | % | 41 | % | 55 | % | ||||||||||||
Net assets, end of period (000s omitted) | $19,234 | $20,960 | $21,267 | $8,302 | $9,725 | $12,830 |
1 | Calculated based upon average shares outstanding |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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Financial highlights | Wells Fargo C&B Mid Cap Value Fund | 17 |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
INSTITUTIONAL CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $38.26 | $35.41 | $29.53 | $25.34 | $25.49 | $23.95 | ||||||||||||||||||
Net investment income | 0.16 | 0.19 | 0.16 | 0.16 | 0.10 | 0.14 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | (1.49 | ) | 2.78 | 5.82 | 4.17 | (0.12 | ) | 1.55 | ||||||||||||||||
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|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (1.33 | ) | 2.97 | 5.98 | 4.33 | (0.02 | ) | 1.69 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.20 | ) | (0.12 | ) | (0.10 | ) | (0.14 | ) | (0.13 | ) | (0.15 | ) | ||||||||||||
Net asset value, end of period | $36.73 | $38.26 | $35.41 | $29.53 | $25.34 | $25.49 | ||||||||||||||||||
Total return2 | (3.41 | )% | 8.41 | % | 20.30 | % | 17.11 | % | (0.09 | )%1 | 7.09 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 0.96 | % | 0.96 | % | 0.97 | % | 1.00 | % | 0.94 | % | 0.92 | % | ||||||||||||
Net expenses | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | ||||||||||||
Net investment income | 0.89 | % | 0.56 | % | 0.37 | % | 0.54 | % | 0.47 | % | 0.54 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 25 | % | 39 | % | 54 | % | 35 | % | 41 | % | 55 | % | ||||||||||||
Net assets, end of period (000s omitted) | $195,064 | $200,335 | $105,550 | $38,161 | $18,229 | $33,881 |
1 | Total return reflects adjustments to conform with generally accepted accounting principles. |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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18 | Wells Fargo C&B Mid Cap Value Fund | Notes to financial statements (unaudited) |
1. ORGANIZATION
Wells Fargo Funds Trust (the “Trust”), a Delaware statutory trust organized on March 10, 1999, is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As an investment company, the Trust follows the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946, Financial Services – Investment Companies. These financial statements report on the Wells Fargo C&B Mid Cap Value Fund (the “Fund”) which is a diversified series of the Trust.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Fund, are in conformity with U.S. generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Securities valuation
All investments are valued each business day as of the close of regular trading on the New York Stock Exchange (generally 4 p.m. Eastern Time), although the Fund may deviate from this calculation time under unusual or unexpected circumstances.
Equity securities that are listed on a foreign or domestic exchange or market are valued at the official closing price or, if none, the last sales price. If no sale occurs on the principal exchange or market that day, a fair value price will be determined in accordance with the Fund’s Valuation Procedures.
Investments in registered open-end investment companies are valued at net asset value. Interests in non-registered investment companies that are redeemable at net asset value are fair valued normally at net asset value.
Investments which are not valued using any of the methods discussed above are valued at their fair value, as determined in good faith by the Board of Trustees of the Fund. The Board of Trustees has established a Valuation Committee comprised of the Trustees and has delegated to it the authority to take any actions regarding the valuation of portfolio securities that the Valuation Committee deems necessary or appropriate, including determining the fair value of portfolio securities, unless the determination has been delegated to the Wells Fargo Asset Management Pricing Committee at Wells Fargo Funds Management, LLC (“Funds Management”). The Board of Trustees retains the authority to make or ratify any valuation decisions or approve any changes to the Valuation Procedures as it deems appropriate. On a quarterly basis, the Board of Trustees receives reports on any valuation actions taken by the Valuation Committee or the Wells Fargo Asset Management Pricing Committee which may include items for ratification.
Securities lending
The Fund may lend its securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The Fund continues to receive interest or dividends on the securities loaned. The Fund receives collateral in the form of cash or securities with a value at least equal to the value of the securities on loan. The value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. In a securities lending transaction, the net asset value of the Fund will be affected by an increase or decrease in the value of the securities loaned and by an increase or decrease in the value of the instrument in which collateral is invested. The amount of securities lending activity undertaken by the Fund fluctuates from time to time. In the event of default or bankruptcy by the borrower, the Fund may be prevented from recovering the loaned securities or gaining access to the collateral or may experience delays or costs in doing so. In addition, the investment of any cash collateral received may lose all or part of its value. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.
The Fund lends its securities through an unaffiliated securities lending agent. Cash collateral received in connection with its securities lending transactions is invested in Securities Lending Cash Investments, LLC (the “Securities Lending Fund”). The Securities Lending Fund is exempt from registration under Section 3(c)(7) of the 1940 Act and is managed by Funds Management and is subadvised by Wells Capital Management Incorporated (“WellsCap”), an affiliate of Funds Management and an indirect wholly owned subsidiary of Wells Fargo & Company (“Wells Fargo”). Funds Management receives an advisory fee starting at 0.05% and declining to 0.01% as the average daily net assets of the Securities Lending Fund increase. All of the fees received by Funds Management are paid to WellsCap for its services as subadviser. The Securities Lending Fund seeks to provide a positive return compared to the daily Fed Funds Open Rate by investing in high-quality, U.S. dollar-denominated short-term money market instruments. Securities Lending Fund investments are
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Notes to financial statements (unaudited) | Wells Fargo C&B Mid Cap Value Fund | 19 |
valued at the evaluated bid price provided by an independent pricing service. Income earned from investment in the Securities Lending Fund (net of fees and rebates), if any, is included in income from affiliated securities on the Statement of Operations.
Security transactions and income recognition
Securities transactions are recorded on a trade date basis. Realized gains or losses are recorded on the basis of identified cost.
Dividend income is recognized on the ex-dividend date. Dividend income is recorded net of foreign taxes withheld where recovery of such taxes is not assured.
Distributions to shareholders
Distributions to shareholders from net investment income and any net realized gains are recorded on the ex-dividend date and paid at least annually. Such distributions are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles. Dividend sources are estimated at the time of declaration. The tax character of distributions is determined as of the Fund’s fiscal year end. Therefore, a portion of the Fund’s distributions made prior to the Fund’s fiscal year end may be categorized as a tax return of capital at year end.
Federal and other taxes
The Fund intends to continue to qualify as a regulated investment company by distributing substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required.
The Fund’s income and federal excise tax returns and all financial records supporting those returns for the prior three fiscal years are subject to examination by the federal and Delaware revenue authorities. Management has analyzed the Fund’s tax positions taken on federal, state, and foreign tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability.
As of March 31, 2019, the aggregate cost of all investments for federal income tax purposes was $294,085,686 and the unrealized gains (losses) consisted of:
Gross unrealized gains | $ | 49,915,370 | ||
Gross unrealized losses | (10,801,320 | ) | ||
Net unrealized gains | $ | 39,114,050 |
Class allocations
The separate classes of shares offered by the Fund differ principally in applicable sales charges, distribution, shareholder servicing, and administration fees. Class specific expenses are charged directly to that share class. Investment income, common expenses, and realized and unrealized gains (losses) on investments are allocated daily to each class of shares based on the relative proportion of net assets of each class.
3. FAIR VALUATION MEASUREMENTS
Fair value measurements of investments are determined within a framework that has established a fair value hierarchy based upon the various data inputs utilized in determining the value of the Fund’s investments. The three-level hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Fund’s investments are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The inputs are summarized into three broad levels as follows:
∎ | Level 1 – quoted prices in active markets for identical securities |
∎ | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
∎ | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
The inputs or methodologies used for valuing investments in securities are not necessarily an indication of the risk associated with investing in those securities.
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20 | Wells Fargo C&B Mid Cap Value Fund | Notes to financial statements (unaudited) |
The following is a summary of the inputs used in valuing the Fund’s assets and liabilities as of March 31, 2019:
Quoted prices (Level 1) | Other significant observable inputs (Level 2) | Significant (Level 3) | Total | |||||||||||||
Assets | ||||||||||||||||
Investments in: | ||||||||||||||||
Common stocks | ||||||||||||||||
Communication services | $ | 7,196,814 | $ | 0 | $ | 0 | $ | 7,196,814 | ||||||||
Consumer discretionary | 37,916,455 | 0 | 0 | 37,916,455 | ||||||||||||
Financials | 76,186,935 | 0 | 0 | 76,186,935 | ||||||||||||
Health care | 32,902,471 | 0 | 0 | 32,902,471 | ||||||||||||
Industrials | 86,089,077 | 0 | 0 | 86,089,077 | ||||||||||||
Information technology | 36,629,722 | 0 | 0 | 36,629,722 | ||||||||||||
Materials | 36,205,499 | 0 | 0 | 36,205,499 | ||||||||||||
Real estate | 6,596,630 | 0 | 0 | 6,596,630 | ||||||||||||
Short-term investments | ||||||||||||||||
Investment companies | 13,476,133 | 0 | 0 | 13,476,133 | ||||||||||||
Total assets | $ | 333,199,736 | $ | 0 | $ | 0 | $ | 333,199,736 |
Additional sector, industry or geographic detail is included in the Portfolio of Investments.
At March 31, 2019, the Fund did not have any transfers into/out of Level 3.
4. TRANSACTIONS WITH AFFILIATES AND OTHER EXPENSES
Management fee
Funds Management, an indirect wholly owned subsidiary of Wells Fargo, is the manager of the Fund and provides advisory and fund-level administrative services under an investment management agreement. Under the investment management agreement, Funds Management is responsible for, among other services, implementing the investment objectives and strategies of the Fund, supervising the subadviser and providing fund-level administrative services in connection with the Fund’s operations. As compensation for its services under the investment management agreement, Funds Management is entitled to receive a management fee at the following annual rate based on the Fund’s average daily net assets:
Average daily net assets | Management fee | |||
First $500 million | 0.750 | % | ||
Next $500 million | 0.725 | |||
Next $1 billion | 0.700 | |||
Next $2 billion | 0.675 | |||
Next $1 billion | 0.650 | |||
Next $5 billion | 0.640 | |||
Next $2 billion | 0.630 | |||
Next $4 billion | 0.620 | |||
Over $16 billion | 0.610 |
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Notes to financial statements (unaudited) | Wells Fargo C&B Mid Cap Value Fund | 21 |
Prior to January 31, 2019, the management fee rate was as follows:
Average daily net assets | Management fee | |||
First $500 million | 0.750 | % | ||
Next $500 million | 0.725 | |||
Next $1 billion | 0.700 | |||
Next $2 billion | 0.675 | |||
Next $1 billion | 0.650 | |||
Next $5 billion | 0.640 | |||
Over $10 billion | 0.630 |
For the six months ended March 31, 2019, the management fee was equivalent to an annual rate of 0.75% of the Fund’s average daily net assets.
Funds Management has retained the services of a subadviser to provide daily portfolio management to the Fund. The fee for subadvisory services is borne by Funds Management. Cooke & Bieler, L.P., which is not an affiliate of Funds Management, is the subadviser to the Fund and is entitled to receive a fee from Funds Management at an annual rate starting at 0.45% and declining to 0.35% as the average daily net assets of the Fund increase.
Administration fees
Under a class-level administration agreement, Funds Management provides class-level administrative services to the Fund, which includes paying fees and expenses for services provided by the transfer agent, sub-transfer agents, omnibus account servicers and record-keepers. As compensation for its services under the class-level administration agreement, Funds Management receives an annual fee which is calculated based on the average daily net assets of each class as follows:
Class-level administration fee | ||||
Class A, Class C | 0.21 | % | ||
Class R6 | 0.03 | |||
Administrator Class, Institutional Class | 0.13 |
Funds Management has contractually waived and/or reimbursed management and administration fees to the extent necessary to maintain certain net operating expense ratios for the Fund. When each class of the Fund has exceeded its expense cap, Funds Management has waived fees and/or reimbursed expenses from fund level expenses on a proportionate basis and then from class specific expenses. When only certain classes exceed their expense caps, waivers and/or reimbursements are applied against class specific expenses before fund level expenses. Funds Management has committed through January 31, 2020 to waive fees and/or reimburse expenses to the extent necessary to cap the Fund’s expenses at 1.25% for Class A shares, 2.00% for Class C shares, 0.80% for Class R6 shares, 1.15% for Administrator Class shares, and 0.90% for Institutional Class shares. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees.
Distribution fee
The Trust has adopted a distribution plan for Class C shares of the Fund pursuant to Rule 12b-1 under the 1940 Act. A distribution fee is charged to Class C shares and paid to Wells Fargo Funds Distributor, LLC (“Funds Distributor”), the principal underwriter, at an annual rate of 0.75% of the average daily net assets of Class C shares.
In addition, Funds Distributor is entitled to receive the front-end sales charge from the purchase of Class A shares and a contingent deferred sales charge on the redemption of certain Class A shares. Funds Distributor is also entitled to receive the contingent deferred sales charges from redemptions of Class C shares. For the six months ended March 31, 2019, Funds Distributor received $3,122 from the sale of Class A shares. No contingent deferred sales charges were incurred by Class A shares and Class C shares for the six months ended March 31, 2019.
Shareholder servicing fees
The Trust has entered into contracts with one or more shareholder servicing agents, whereby Class A, Class C, and Administrator Class of the Fund are charged a fee at an annual rate of 0.25% of the average daily net assets of each respective class. A portion of these total shareholder servicing fees were paid to affiliates of Wells Fargo.
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22 | Wells Fargo C&B Mid Cap Value Fund | Notes to financial statements (unaudited) |
Interfund transactions
The Fund may purchase or sell portfolio investment securities to certain other Wells Fargo affiliates pursuant toRule 17a-7 under the 1940 Act and under procedures adopted by the Board of Trustees. The procedures have been designed to ensure that these interfund transactions, which do not incur broker commissions, are effected at current market prices.
5. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, excluding U.S. government obligations (if any) and short-term securities, for the six months ended March 31, 2019 were $87,181,580 and $74,592,467, respectively.
6. BANK BORROWINGS
The Trust (excluding the money market funds), Wells Fargo Master Trust and Wells Fargo Variable Trust are parties to a $280,000,000 revolving credit agreement whereby the Fund is permitted to use bank borrowings for temporary or emergency purposes, such as to fund shareholder redemption requests. Interest under the credit agreement is charged to the Fund based on a borrowing rate equal to the higher of the Federal Funds rate in effect on that day plus 1.25% or the overnight LIBOR rate in effect on that day plus 1.25%. In addition, an annual commitment fee equal to 0.25% of the unused balance is allocated to each participating fund.
For the year ended March 31, 2019, there were no borrowings by the Fund under the agreement.
7. CONCENTRATION RISK
Concentration risk result from exposure to a limited number of sectors. A fund that invests a substantial portion of its assets in any sector may be more affected by changes in that sector than would be a fund whose investments are not heavily weighted in any sector.
8. INDEMNIFICATION
Under the Trust’s organizational documents, the officers and Trustees have been granted certain indemnification rights against certain liabilities that may arise out of performance of their duties to the Trust. Additionally, in the normal course of business, the Trust may enter into contracts with service providers that contain a variety of indemnification clauses. The Trust’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated.
9. NEW ACCOUNTING PRONOUNCEMENT
In August 2018, FASB issued Accounting Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820)Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 updates the disclosure requirements for fair value measurements by modifying or removing certain disclosures and adding certain new disclosures. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management has adopted the removal and modification of disclosures early, as permitted, and will adopt the additional new disclosures at the effective date.
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Other information (unaudited) | Wells Fargo C&B Mid Cap Value Fund | 23 |
PROXY VOTING INFORMATION
A description of the policies and procedures used to determine how to vote proxies relating to portfolio securities is available, upon request, by calling1-800-222-8222, visiting our website atwfam.com, or visiting the SEC website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent12-month period ended June 30 is available on the Fund’s website atwfam.comor by visiting the SEC website at sec.gov.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for the Fund are publicly available monthly on the Fund’s website (wfam.com), on a one-month delayed basis. In addition, top ten holdings information (excluding derivative positions) for the Fund is publicly available on the Fund’s website on a monthly, seven-day or more delayed basis. The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which is available by visiting the SEC website at sec.gov. In addition, the Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330.
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24 | Wells Fargo C&B Mid Cap Value Fund | Other information (unaudited) |
BOARD OF TRUSTEES AND OFFICERS
Each of the Trustees and Officers1 listed in the table below acts in identical capacities for each fund in the Wells Fargo family of funds, which consists of 151 mutual funds comprising the Wells Fargo Funds Trust, Wells Fargo Variable Trust, Wells Fargo Master Trust and four closed-end funds (collectively the “Fund Complex”). This table should be read in conjunction with the Prospectus and the Statement of Additional Information2. The mailing address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, however, each Trustee serves such term until reaching the mandatory retirement age established by the Trustees.
Independent Trustees
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company directorships | |||
William R. Ebsworth (Born 1957) | Trustee, since 2015 | Retired. From 1984 to 2013, equities analyst, portfolio manager, research director and chief investment officer at Fidelity Management and Research Company in Boston, Tokyo, and Hong Kong, and retired in 2013 as Chief Investment Officer of Fidelity Strategic Advisers, Inc. where he led a team of investment professionals managing client assets. Prior thereto, Board member of Hong Kong Securities Clearing Co., Hong Kong Options Clearing Corp., the Thailand International Fund, Ltd., Fidelity Investments Life Insurance Company, and Empire Fidelity Investments Life Insurance Company. Audit Committee Chair and Investment Committee Chair of the Vincent Memorial Hospital Endowment (non-profit organization). Mr. Ebsworth is a CFA® charterholder. | N/A | |||
Jane A. Freeman (Born 1953) | Trustee, since 2015; Chair Liaison, since 2018 | Retired. From 2012 to 2014 and 1999 to 2008, Chief Financial Officer of Scientific Learning Corporation. From 2008 to 2012, Ms. Freeman provided consulting services related to strategic business projects. Prior to 1999, Portfolio Manager at Rockefeller & Co. and Scudder, Stevens & Clark. Board member of the Harding Loevner Funds from 1996 to 2014, serving as both Lead Independent Director and chair of the Audit Committee. Board member of the Russell Exchange Traded Funds Trust from 2011 to 2012 and the chair of the Audit Committee. Ms. Freeman is a Board Member of The Ruth Bancroft Garden (non-profit organization). She is also an inactive Chartered Financial Analyst. | N/A | |||
Isaiah Harris, Jr.3 (Born 1952) | Trustee, since 2009; Audit Committee Chairman, since 2019 | Retired. Chairman of the Board of CIGNA Corporation since 2009, and Director since 2005. From 2003 to 2011, Director of Deluxe Corporation. Prior thereto, President and CEO of BellSouth Advertising and Publishing Corp. from 2005 to 2007, President and CEO of BellSouth Enterprises from 2004 to 2005 and President of BellSouth Consumer Services from 2000 to 2003. Emeritus member of the Iowa State University Foundation Board of Governors. Emeritus Member of the Advisory Board of Iowa State University School of Business. Advisory Board Member, Palm Harbor Academy (private school). Advisory Board Member, Child Evangelism Fellowship (non-profit). Mr. Harris is a certified public accountant (inactive status). | CIGNA Corporation | |||
Judith M. Johnson (Born 1949) | Trustee, since 2008; Audit Committee Chairman, from 2009 to 2018 | Retired. Prior thereto, Chief Executive Officer and Chief Investment Officer of Minneapolis Employees Retirement Fund from 1996 to 2008. Ms. Johnson is an attorney, certified public accountant and a certified managerial accountant. | N/A |
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Other information (unaudited) | Wells Fargo C&B Mid Cap Value Fund | 25 |
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company directorships | |||
David F. Larcker (Born 1950) | Trustee, since 2009 | James Irvin Miller Professor of Accounting at the Graduate School of Business, Stanford University, Director of the Corporate Governance Research Initiative and Senior Faculty of The Rock Center for Corporate Governance since 2006. From 2005 to 2008, Professor of Accounting at the Graduate School of Business, Stanford University. Prior thereto, Ernst & Young Professor of Accounting at The Wharton School, University of Pennsylvania from 1985 to 2005. | N/A | |||
Olivia S. Mitchell (Born 1953) | Trustee, since 2006; Nominating and Governance Committee Chairman, since 2018 | International Foundation of Employee Benefit Plans Professor, Wharton School of the University of Pennsylvania since 1993. Director of Wharton’s Pension Research Council and Boettner Center on Pensions & Retirement Research, and Research Associate at the National Bureau of Economic Research. Previously, Cornell University Professor from 1978 to 1993. | N/A | |||
Timothy J. Penny (Born 1951) | Trustee, since 1996; Chairman, since 2018 | President and Chief Executive Officer of Southern Minnesota Initiative Foundation, a non-profit organization, since 2007. Member of the Board of Trustees of NorthStar Education Finance, Inc., a non-profit organization, since 2007. | N/A | |||
James G. Polisson (Born 1959) | Trustee, since 2018 | Retired. Chief Marketing Officer, Source (ETF) UK Services, Ltd, from 2015 to 2017. From 2012 to 2015, Principal of The Polisson Group, LLC, a management consulting, corporate advisory and principal investing company. Chief Executive Officer and Managing Director at Russell Investments, Global Exchange Traded Funds from 2010 to 2012. Managing Director of Barclays Global Investors from 1998 to 2010 and Global Chief Marketing Officer for iShares and Barclays Global Investors from 2000 to 2010. Trustee of the San Francisco Mechanics’ Institute, a non-profit organization, from 2013 to 2015. Board member of the Russell Exchange Traded Fund Trust from 2011 to 2012. Director of Barclays Global Investors Holdings Deutschland GmbH from 2006 to 2009. Mr. Polisson is an attorney and has a retired status with the Massachusetts and District of Columbia Bar Associations. | N/A | |||
Pamela Wheelock (Born 1959) | Trustee, since 2018 | Board member of the Destination Medical Center Economic Development Agency, Rochester, Minnesota since 2019. Chief Operating Officer, Twin Cities Habitat for Humanity from 2017 to 2019. Vice President of University Services, University of Minnesota from 2012 to 2016. Prior thereto, on the Board of Directors, Governance Committee and Finance Committee for the Minnesota Philanthropy Partners (Saint Paul Foundation) from 2012 to 2018, Interim Chief Executive Officer of Blue Cross Blue Shield of Minnesota from 2011 to 2012, Chairman of the Board from 2009 to 2012 and Board Director from 2003 to 2015. Vice President, Leadership and Community Engagement, Bush Foundation, Saint Paul, Minnesota (a private foundation) from 2009 to 2011. Executive Vice President and Chief Financial Officer, Minnesota Sports and Entertainment from 2004 to 2009 and Senior Vice President from 2002 to 2004. Executive Vice President of the Minnesota Wild Foundation from 2004 to 2008. Commissioner of Finance, State of Minnesota, from 1999 to 2002. Currently the Board Chair of Minnesota Wild Foundation since 2010. | N/A |
* | Length of service dates reflect the Trustee’s commencement of service with the Trust’s predecessor entities, where applicable. |
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26 | Wells Fargo C&B Mid Cap Value Fund | Other information (unaudited) |
Officers
Name and year of birth | Position held and length of service | Principal occupations during past five years or longer | ||||
Andrew Owen (Born 1960) | President, since 2017 | Executive Vice President of Wells Fargo & Company and Head of Affiliated Managers, Wells Fargo Asset Management, since 2014. In addition, Mr. Owen is currently President, Chief Executive Officer and Director of Wells Fargo Funds Management, LLC since 2017. Prior thereto, Executive Vice President responsible for marketing, investments and product development for Wells Fargo Funds Management, LLC, from 2009 to 2014. | ||||
Nancy Wiser1 (Born 1967) | Treasurer, since 2012 | Executive Vice President of Wells Fargo Funds Management, LLC since 2011. Chief Operating Officer and Chief Compliance Officer at LightBox Capital Management LLC, from 2008 to 2011. | ||||
Alexander Kymn (Born 1973) | Secretary and Chief Legal Officer, since 2018 | Senior Company Counsel of Wells Fargo Bank, N.A. since 2018 (previously Senior Counsel from 2007 to 2018). Vice President of Wells Fargo Funds Management, LLC from 2008 to 2014. | ||||
Michael H. Whitaker (Born 1967) | Chief Compliance Officer, since 2016 | Senior Vice President and Chief Compliance Officer since 2016. Senior Vice President and Chief Compliance Officer for Fidelity Investments from 2007 to 2016. | ||||
David Berardi (Born 1975) | Assistant Treasurer, since 2009 | Vice President of Wells Fargo Funds Management, LLC since 2009. Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010. Manager of Fund Reporting and Control for Evergreen Investment Management Company, LLC from 2004 to 2010. | ||||
Jeremy DePalma1 (Born 1974) | Assistant Treasurer, since 2009 | Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010 and head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010. |
1 | Nancy Wiser acts as Treasurer of 65 funds in the Fund Complex. Jeremy DePalma acts as Treasurer of 86 funds and Assistant Treasurer of 65 funds in the Fund Complex. |
2 | The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request, by calling1-800-222-8222 or by visiting the website atwfam.com. |
3 | Mr. Harris became Chairman of the Audit Committee effective January 1, 2019. |
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Appendix A (unaudited) | Wells Fargo C&B Mid Cap Value Fund | 27 |
SALES CHARGE REDUCTIONS AND WAIVERS FOR CERTAIN INTERMEDIARIES
Raymond James & Associates, Inc., Raymond James Financial Services & Raymond James affiliates (“Raymond James”)
Effective on or about March 1, 2019, shareholders purchasing Fund shares through a Raymond James platform or account will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in the Fund’s Prospectus or SAI.
Front-end Sales Load Waivers on Class A shares Available at Raymond James
• | Shares purchased in an investment advisory program. |
• | Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family). |
• | Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James. |
• | Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement). |
• | A shareholder in the fund’s Class C shares will have their shares automatically exchanged at net asset value to Class A shares (or the appropriate share class) of the fund if the shares are no longer subject to a CDSC and the exchange is in line with the policies and procedures of Raymond James. |
CDSC Waivers on Class A and C Shares Available at Raymond James
• | Death or disability of the shareholder. |
• | Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus. |
• | Return of excess contributions from an IRA Account. |
• | Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70½ as described in the Fund’s prospectus. |
• | Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James. |
• | Shares acquired through a right of reinstatement. |
Front-end Load Discounts Available at Raymond James: Breakpoints, and/or Rights of Accumulation
• | Breakpoints as described in the Fund’s Prospectus. |
• | Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets. |
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For more information
More information about Wells Fargo Funds is available free upon request. To obtain literature, please write, visit the Fund’s website, or call:
Wells Fargo Funds
P.O. Box 219967
Kansas City, MO 64121-9967
Website: wfam.com
Individual investors: 1-800-222-8222
Retail investment professionals: 1-888-877-9275
Institutional investment professionals:1-866-765-0778
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. Before investing, please consider the investment objectives, risks, charges, and expenses of the investment. For a current prospectus and, if available, a summary prospectus, containing this information, call1-800-222-8222 or visit the Fund’s website atwfam.com. Read the prospectus carefully before you invest or send money.
Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management firms owned by Wells Fargo & Company. These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by Wells Fargo Funds Distributor, LLC (a broker-dealer and Member FINRA).
This material is for general informational and educational purposes only and is NOT intended to provide investment advice or a recommendation of any kind—including a recommendation for any specific investment, strategy, or plan.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
© 2019 Wells Fargo Funds Management, LLC. All rights reserved.
![]() | 401607 05-19 SA228/SAR228 03-19 |
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Semi-Annual Report
March 31, 2019
Wells Fargo Common Stock Fund
Beginning on January 1, 2021, as permitted by new regulations adopted by the Securities and Exchange Commission, paper copies of the Wells Fargo Funds’ annual and semi-annual shareholder reports issued after this date will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website, and you will be notified by mail each time a report is posted and provided with a website address to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-222-8222 or by enrolling at wellsfargo.com/advantagedelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports; if you invest directly with the Fund, you can call 1-800-222-8222. Your election to receive reports in paper will apply to all Wells Fargo Funds held in your account with your financial intermediary or, if you are a direct investor, to all Wells Fargo Funds that you hold.
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Financial statements | ||||
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The views expressed and any forward-looking statements are as of March 31, 2019, unless otherwise noted, and are those of the Fund managers and/or Wells Fargo Asset Management. Discussions of individual securities, or the markets generally, or any Wells Fargo Fund are not intended as individual recommendations. Future events or results may vary significantly from those expressed in any forward-looking statements. The views expressed are subject to change at any time in response to changing circumstances in the market. Wells Fargo and the Fund disclaim any obligation to publicly update or revise any views expressed or forward-looking statements.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
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2 | Wells Fargo Common Stock Fund | Letter to shareholders (unaudited) |
Andrew Owen
President
Wells Fargo Funds
December’s S&P 500 Index performance was the worst since 1931.
Dear Shareholder:
We are pleased to offer you this semi-annual report for the Wells Fargo Common Stock Fund for the six-month period that ended March 31, 2019. Concerns about interest rate increases in the U.S., trade tensions, and geopolitical events drove equity losses and restrained bond returns during the fourth quarter of 2018. Investor sentiment improved during the first quarter of 2019 thanks to a shift in U.S. Federal Reserve (Fed) policy and consistent, if not spectacular, economic and business growth metrics.
For the period, U.S. stocks, as measured by the S&P 500 Index,1 lost 1.72% and international stocks, as measured by the MSCI ACWI ex USA Index (Net),2 fell 2.33%. Based on the MSCI EM Index (Net),3 emerging market stocks added 1.71%. For bond investors, the Bloomberg Barclays U.S. Aggregate Bond Index4 added 4.63% while the Bloomberg Barclays Global Aggregate ex-USD Index5 added 2.44%. The Bloomberg Barclays Municipal Bond Index6 added 4.63%, and the ICE BofAML U.S. High Yield Index7 gained 2.39%.
Conflicting data unsettled markets during the fourth quarter.
November’s U.S. midterm elections shifted control of the House of Representatives from Republicans to Democrats, presaging potential partisan clashes. Third-quarter U.S. gross domestic product was announced at an annualized 3.4% rate, lower than the second-quarter rate. Brexit efforts stalled ahead of the March 2019 deadline. The People’s Bank of China cut reserve requirement ratios, accelerated infrastructure spending, and cut taxes even as the value of the yuan declined to low levels last seen in 2008.
December’s S&P 500 Index performance was the worst since 1931. Globally, fixed-income investments fared better than stocks during the last two months of the year. The Fed increased the federal funds rate by 25 bps in December 2018 to a target range of between 2.25% and 2.50% and softened its outlook for 2019 rate increases.
The market climbs a wall of worry.
Investors entered 2019 with reasons to be concerned. A partial U.S. government shutdown driven by partisan spending and immigration policy disputes extended into January. Investors expected high levels of stock market volatility to continue based on the VIX8.
1 | The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index with each stock’s weight in the index proportionate to its market value. You cannot invest directly in an index. |
2 | The Morgan Stanley Capital International (MSCI) All Country World Index (ACWI) ex USA Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. You cannot invest directly in an index. |
3 | The MSCI Emerging Markets (EM) Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure large- and mid-cap equity market performance of emerging markets. The MSCI EM Index (Net) consists of the following 24 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and the United Arab Emirates. You cannot invest directly in an index. |
4 | The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid adjustable-rate mortgage pass-throughs), asset-backed securities, and commercial mortgage-backed securities. You cannot invest directly in an index. |
5 | The Bloomberg Barclays Global Aggregate ex-USD Index is an unmanaged index that provides a broad-based measure of the global investment-grade fixed-income markets excluding the U.S. dollar-denominated debt market. You cannot invest directly in an index. |
6 | The Bloomberg Barclays Municipal Bond Index is an unmanaged index composed of long-term tax-exempt bonds with a minimum credit rating of Baa. You cannot invest directly in an index. |
7 | The ICE BofAML U.S. High Yield Index is a market-capitalization-weighted index of domestic and Yankee high-yield bonds. The index tracks the performance of high-yield securities traded in the U.S. bond market. You cannot invest directly in an index. Copyright 2019. ICE Data Indices, LLC. All rights reserved. |
8 | The Chicago Board Options Exchange Market Volatility Index (VIX) is a popular measure of the implied volatility of S&P 500 Index options. It represents one measure of the market’s expectation of stock market volatility over the next 30-day period. You cannot invest directly in an index. |
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Letter to shareholders (unaudited) | Wells Fargo Common Stock Fund | 3 |
January’s returns tended to support the investing adage that markets climb a wall of worry. The S&P 500 Index gained 8.01% for the month that ended January 31, 2019, its best monthly performance in 30 years. Returns for the MSCI ACWI ex USA Index (Net), the Bloomberg Barclays U.S. Aggregate Bond Index, and the Bloomberg Barclays Global Aggregate ex-USD Index also were positive. The Fed indicated that it would pause its program of regular rate increases during 2019 as inflation remained low. Businesses and investors responded positively to the shift in policy.
In February, concerns over slowing global growth reemerged. The Bureau of Economic Analysis announced fourth-quarter 2018 gross domestic product grew at an annualized 2.2% rate, down from the 4.2% annualized rate for the second quarter and the 3.4% annualized rate for the third quarter. Analysts attributed the lower growth rate to a slowing housing market and larger trade deficit. The U.S. Department of Labor said that the economy created just 20,000 jobs in February 2019. In a February report, the Bank of England forecast the slowest growth since the financial crisis for 2019. China and the U.S., while putting future tariffs on hold for the time being, continued to wrangle over trade issues.
By the end of March 2019, the combination of dovish Fed sentiment and consistent, if not spectacular, economic and business metrics reinforced investors’ enthusiasm for equity investing. Monthly job creation data regained its momentum. Corporate profits, while lower than 2018’s lofty levels, remained consistent. Inflation rates were relatively low in the U.S., Europe, and Japan. China announced a roughly $300 billion stimulus package through tax and fee cuts intended to reinvigorate economic growth.
Don’t let short-term uncertainty derail long-term investment goals.
Periods of investment uncertainty can present challenges, but experience has taught us that maintaining long-term investment goals can be an effective way to plan for the future. To help you create a sound strategy based on your personal goals and risk tolerance, Wells Fargo Funds offers more than 100 mutual funds spanning a wide range of asset classes and investment styles. Although diversification cannot guarantee an investment profit or prevent losses, we believe it can be an effective way to manage investment risk and potentially smooth out overall portfolio performance. We encourage investors to know their investments and to understand that appropriate levels of risk-taking may unlock opportunities.
Thank you for choosing to invest with Wells Fargo Funds. We appreciate your confidence in us and remain committed to helping you meet your financial needs.
Sincerely,
Andrew Owen
President
Wells Fargo Funds
January’s returns tended to support the investing adage that markets climb a wall of worry.
For further information about your Fund, contact your investment professional, visit our website atwfam.com, or call us directly at1-800-222-8222.
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4 | Wells Fargo Common Stock Fund | Performance highlights (unaudited) |
Investment objective
The Fund seeks long-term capital appreciation.
Manager
Wells Fargo Funds Management, LLC
Subadviser
Wells Capital Management Incorporated
Portfolio managers
Ann M. Miletti
Christopher G. Miller, CFA®‡
Average annual total returns (%) as of March 31, 2019
Including sales charge | Excluding sales charge | Expense ratios1 (%) | ||||||||||||||||||||||||||||||||
Inception date | 1 year | 5 year | 10 year | 1 year | 5 year | 10 year | Gross | Net2 | ||||||||||||||||||||||||||
Class A (SCSAX) | 11-30-2000 | -2.40 | 5.47 | 14.18 | 3.54 | 6.73 | 14.86 | 1.26 | 1.26 | |||||||||||||||||||||||||
Class C (STSAX) | 11-30-2000 | 1.81 | 5.94 | 14.00 | 2.81 | 5.94 | 14.00 | 2.01 | 2.01 | |||||||||||||||||||||||||
Class R6 (SCSRX)3 | 6-28-2013 | – | – | – | 3.99 | 7.19 | 15.28 | 0.83 | 0.83 | |||||||||||||||||||||||||
Administrator Class (SCSDX)4 | 7-30-2010 | – | – | – | 3.70 | 6.89 | 15.02 | 1.18 | 1.11 | |||||||||||||||||||||||||
Institutional Class (SCNSX)5 | 7-30-2010 | – | – | – | 4.01 | 7.17 | 15.26 | 0.93 | 0.86 | |||||||||||||||||||||||||
Russell 2500TM Index6 | – | – | – | – | 4.48 | 7.79 | 16.23 | – | – |
Figures quoted represent past performance, which is no guarantee of future results, and do not reflect taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance shown without sales charges would be lower if sales charges were reflected. Current performance may be lower or higher than the performance data quoted, which assumes the reinvestment of dividends and capital gains. Current month-end performance is available on the Fund’s website,wfam.com.
Index returns do not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses, or any taxes. It is not possible to invest directly in an index.
For Class A shares, the maximum front-end sales charge is 5.75%. For Class C shares, the maximum contingent deferred sales charge is 1.00%. Performance including a contingent deferred sales charge assumes the sales charge for the corresponding time period. Class R6, Administrator Class, and Institutional Class shares are sold without a front-end sales charge or contingent deferred sales charge.
Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. Smaller-company stocks tend to be more volatile and less liquid than those of larger companies. Certain investment strategies tend to increase the total risk of an investment (relative to the broader market). The Fund is exposed to foreign investment risk. Consult the Fund’s prospectus for additional information on these and other risks.
Please see footnotes on page 5.
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Performance highlights (unaudited) | Wells Fargo Common Stock Fund | 5 |
Ten largest holdings (%) as of March 31, 20197 | ||||
LivaNova plc | 2.97 | |||
E*TRADE Financial Corporation | 2.42 | |||
Raymond James Financial Incorporated | 1.90 | |||
AMETEK Incorporated | 1.90 | |||
Hologic Incorporated | 1.70 | |||
Physicians Realty Trust | 1.68 | |||
Laboratory Corporation of America Holdings | 1.66 | |||
Willis Towers Watson plc | 1.63 | |||
Stericycle Incorporated | 1.62 | |||
CoreSite Realty Corporation | 1.60 |
Sector distribution as of March 31, 20198 |
|
‡ | CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute. |
1 | Reflects the expense ratios as stated in the most recent prospectuses, which include the impact of 0.01% in acquired fund fees and expenses. The expense ratios shown are subject to change and may differ from the annualized expense ratios shown in the financial highlights of this report, which do not include acquired fund fees and expenses. |
2 | The manager has contractually committed through January 31, 2020, to waive fees and/or reimburse expenses to the extent necessary to cap the expenses of each class after fee waivers at 1.26% for Class A, 2.01% for Class C, 0.85% for Class R6, 1.10% for Administrator Class, and 0.85% for Institutional Class. Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the expense cap. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. Without this cap, the Fund’s returns would have been lower. The expense ratio paid by an investor is the net expense ratio (the total annual fund operating expenses after fee waivers) as stated in the prospectuses. |
3 | Historical performance shown for Class R6 shares prior to their inception reflects the performance of Institutional Class shares, and includes the higher expenses applicable to Institutional Class shares. If these expenses had not been included, the returns for Class R6 shares would be higher. |
4 | Historical performance shown for Administrator Class shares prior to their inception reflects the performance of Class A shares, and includes the higher expenses applicable to Class A shares. If these expenses had not been included, the returns for Administrator Class shares would be higher. |
5 | Historical performance shown for Institutional Class shares prior to their inception reflects the performance of Class A shares, and includes the higher expenses applicable to Class A shares. If these expenses had not been included, the returns for Institutional Class shares would be higher. |
6 | The Russell 2500TM Index measures the performance of the 2,500 smallest companies in the Russell 3000® Index, which represents approximately 16% of the total market capitalization of the Russell 3000® Index. You cannot invest directly in an index. |
7 | The ten largest holdings, excluding cash, cash equivalents and any money market funds, are calculated based on the value of the investments divided by total net assets of the Fund. Holdings are subject to change and may have changed since the date specified. |
8 | Amounts are calculated based on the total long-term investments of the Fund. These amounts are subject to change and may have changed since the date specified. |
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6 | Wells Fargo Common Stock Fund | Fund expenses (unaudited) |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (if any) on redemptions and (2) ongoing costs, including management fees, distribution (12b-1) and/or shareholder servicing fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period from October 1, 2018 to March 31, 2019.
Actual expenses
The “Actual” line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the “Actual” line under the heading entitled “Expenses paid during period” for your applicable class of shares to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The “Hypothetical” line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and contingent deferred sales charges. Therefore, the “Hypothetical” line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 10-1-2018 | Ending account value 3-31-2019 | Expenses paid during the period¹ | Annualized net expense ratio | |||||||||||||
Class A | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 962.12 | $ | 6.16 | 1.26 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,018.65 | $ | 6.34 | 1.26 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 958.81 | $ | 9.82 | 2.01 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,014.91 | $ | 10.10 | 2.01 | % | ||||||||
Class R6 | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 963.74 | $ | 4.06 | 0.83 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.79 | $ | 4.18 | 0.83 | % | ||||||||
Administrator Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 962.47 | $ | 5.38 | 1.10 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,019.45 | $ | 5.54 | 1.10 | % | ||||||||
Institutional Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 964.06 | $ | 4.16 | 0.85 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.69 | $ | 4.28 | 0.85 | % |
1 | Expenses paid is equal to the annualized net expense ratio of each class multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year (to reflect the one-half-year period). |
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Common Stock Fund | 7 |
Security name | Shares | Value | ||||||||||||||
Common Stocks: 97.94% |
| |||||||||||||||
Communication Services: 1.01% | ||||||||||||||||
Media: 1.01% | ||||||||||||||||
Interpublic Group of Companies Incorporated | 516,973 | $ | 10,861,603 | |||||||||||||
|
| |||||||||||||||
Consumer Discretionary: 7.91% | ||||||||||||||||
Auto Components: 1.33% | ||||||||||||||||
Dana Incorporated | 805,009 | 14,280,860 | ||||||||||||||
|
| |||||||||||||||
Diversified Consumer Services: 0.70% | ||||||||||||||||
Houghton Mifflin Harcourt Company † | 1,034,281 | 7,519,223 | ||||||||||||||
|
| |||||||||||||||
Hotels, Restaurants & Leisure: 1.28% | ||||||||||||||||
Jack in the Box Incorporated | 168,929 | 13,693,385 | ||||||||||||||
|
| |||||||||||||||
Household Durables: 1.98% | ||||||||||||||||
Mohawk Industries Incorporated † | 64,381 | 8,121,663 | ||||||||||||||
Whirlpool Corporation | 99,245 | 13,188,668 | ||||||||||||||
21,310,331 | ||||||||||||||||
|
| |||||||||||||||
Internet & Direct Marketing Retail: 1.24% | ||||||||||||||||
Expedia Group Incorporated | 112,064 | 13,335,616 | ||||||||||||||
|
| |||||||||||||||
Specialty Retail: 1.38% | ||||||||||||||||
Tractor Supply Company | 151,741 | 14,834,200 | ||||||||||||||
|
| |||||||||||||||
Consumer Staples: 1.31% | ||||||||||||||||
Household Products: 1.31% | ||||||||||||||||
Church & Dwight Company Incorporated | 197,446 | 14,064,079 | ||||||||||||||
|
| |||||||||||||||
Energy: 5.04% | ||||||||||||||||
Oil, Gas & Consumable Fuels: 5.04% | ||||||||||||||||
Cimarex Energy Company | 207,392 | 14,496,701 | ||||||||||||||
Concho Resources Incorporated | 102,715 | 11,397,256 | ||||||||||||||
Targa Resources Corporation | 325,805 | 13,537,198 | ||||||||||||||
WPX Energy Incorporated † | 1,122,928 | 14,721,586 | ||||||||||||||
54,152,741 | ||||||||||||||||
|
| |||||||||||||||
Financials: 16.95% | ||||||||||||||||
Banks: 4.78% | ||||||||||||||||
PacWest Bancorp | 311,937 | 11,731,951 | ||||||||||||||
Sterling Bancorp | 767,231 | 14,293,514 | ||||||||||||||
Webster Financial Corporation | 263,050 | 13,328,744 | ||||||||||||||
Wintrust Financial Corporation | 178,818 | 12,039,816 | ||||||||||||||
51,394,025 | ||||||||||||||||
|
| |||||||||||||||
Capital Markets: 4.32% | ||||||||||||||||
E*TRADE Financial Corporation | 559,726 | 25,988,078 | ||||||||||||||
Raymond James Financial Incorporated | 253,268 | 20,365,280 | ||||||||||||||
46,353,358 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
8 | Wells Fargo Common Stock Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Insurance: 7.85% | ||||||||||||||||
Arch Capital Group Limited † | 392,648 | $ | 12,690,383 | |||||||||||||
CNO Financial Group Incorporated | 959,244 | 15,520,568 | ||||||||||||||
First American Financial Corporation | 214,406 | 11,041,909 | ||||||||||||||
Reinsurance Group of America Incorporated | 105,025 | 14,911,450 | ||||||||||||||
RenaissanceRe Holdings Limited | 88,401 | 12,685,544 | ||||||||||||||
Willis Towers Watson plc | 99,350 | 17,450,828 | ||||||||||||||
84,300,682 | ||||||||||||||||
|
| |||||||||||||||
Health Care: 12.24% | ||||||||||||||||
Biotechnology: 2.17% | ||||||||||||||||
Agios Pharmaceuticals Incorporated †« | 44,729 | 3,016,524 | ||||||||||||||
BioMarin Pharmaceutical Incorporated † | 63,637 | 5,652,875 | ||||||||||||||
Neurocrine Biosciences Incorporated † | 92,850 | 8,180,085 | ||||||||||||||
Sage Therapeutics Incorporated † | 40,661 | 6,467,132 | ||||||||||||||
23,316,616 | ||||||||||||||||
|
| |||||||||||||||
Health Care Equipment & Supplies: 5.99% | ||||||||||||||||
Haemonetics Corporation † | 162,246 | 14,193,280 | ||||||||||||||
Hologic Incorporated † | 377,156 | 18,254,350 | ||||||||||||||
LivaNova plc † | 327,377 | 31,837,413 | ||||||||||||||
64,285,043 | ||||||||||||||||
|
| |||||||||||||||
Health Care Providers & Services: 4.08% | ||||||||||||||||
Humana Incorporated | 39,265 | 10,444,490 | ||||||||||||||
Laboratory Corporation of America Holdings † | 116,597 | 17,837,009 | ||||||||||||||
Universal Health Services Incorporated Class B | 116,237 | 15,549,023 | ||||||||||||||
43,830,522 | ||||||||||||||||
|
| |||||||||||||||
Industrials: 18.54% | ||||||||||||||||
Aerospace & Defense: 0.98% | ||||||||||||||||
Hexcel Corporation | 152,434 | 10,542,335 | ||||||||||||||
|
| |||||||||||||||
Airlines: 1.90% | ||||||||||||||||
Alaska Air Group Incorporated | 161,446 | 9,060,350 | ||||||||||||||
Spirit Airlines Incorporated † | 215,139 | 11,372,248 | ||||||||||||||
20,432,598 | ||||||||||||||||
|
| |||||||||||||||
Building Products: 1.31% | ||||||||||||||||
Fortune Brands Home & Security Incorporated | 296,432 | 14,113,128 | ||||||||||||||
|
| |||||||||||||||
Commercial Services & Supplies: 3.83% | ||||||||||||||||
Republic Services Incorporated | 154,360 | 12,407,457 | ||||||||||||||
Steelcase Incorporated Class A | 781,282 | 11,367,653 | ||||||||||||||
Stericycle Incorporated † | 319,082 | 17,364,442 | ||||||||||||||
41,139,552 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Common Stock Fund | 9 |
Security name | Shares | Value | ||||||||||||||
Electrical Equipment: 3.12% | ||||||||||||||||
AMETEK Incorporated | 245,279 | $ | 20,350,799 | |||||||||||||
Sensata Technologies Holding plc † | 291,178 | 13,108,834 | ||||||||||||||
33,459,633 | ||||||||||||||||
|
| |||||||||||||||
Industrial Conglomerates: 1.46% | ||||||||||||||||
Carlisle Companies Incorporated | 128,009 | 15,696,464 | ||||||||||||||
|
| |||||||||||||||
Machinery: 2.65% | ||||||||||||||||
Gardner Denver Holdings Incorporated † | 490,661 | 13,645,282 | ||||||||||||||
Rexnord Corporation † | 586,956 | 14,756,074 | ||||||||||||||
28,401,356 | ||||||||||||||||
|
| |||||||||||||||
Road & Rail: 1.46% | ||||||||||||||||
Genesee & Wyoming Incorporated Class A † | 179,778 | 15,665,855 | ||||||||||||||
|
| |||||||||||||||
Trading Companies & Distributors: 1.83% | ||||||||||||||||
Air Lease Corporation | 185,760 | 6,380,856 | ||||||||||||||
MRC Global Incorporated † | 755,674 | 13,209,182 | ||||||||||||||
19,590,038 | ||||||||||||||||
|
| |||||||||||||||
Information Technology: 18.92% | ||||||||||||||||
Electronic Equipment, Instruments & Components: 1.01% | ||||||||||||||||
Avnet Incorporated | 250,094 | 10,846,577 | ||||||||||||||
|
| |||||||||||||||
IT Services: 6.53% | ||||||||||||||||
Amdocs Limited | 243,782 | 13,191,044 | ||||||||||||||
Black Knight Incorporated † | 235,772 | 12,849,574 | ||||||||||||||
Genpact Limited | 464,319 | 16,334,742 | ||||||||||||||
Global Payments Incorporated | 111,510 | 15,223,345 | ||||||||||||||
WEX Incorporated † | 64,962 | 12,472,054 | ||||||||||||||
70,070,759 | ||||||||||||||||
|
| |||||||||||||||
Semiconductors & Semiconductor Equipment: 4.41% | ||||||||||||||||
Brooks Automation Incorporated | 395,326 | 11,594,912 | ||||||||||||||
Marvell Technology Group Limited | 807,268 | 16,056,561 | ||||||||||||||
Maxim Integrated Products Incorporated | 191,347 | 10,173,920 | ||||||||||||||
ON Semiconductor Corporation † | 464,898 | 9,562,952 | ||||||||||||||
47,388,345 | ||||||||||||||||
|
| |||||||||||||||
Software: 6.97% | ||||||||||||||||
8x8 Incorporated † | 795,802 | 16,075,200 | ||||||||||||||
Cornerstone OnDemand Incorporated † | 276,568 | 15,150,395 | ||||||||||||||
Nuance Communications Incorporated † | 912,728 | 15,452,485 | ||||||||||||||
Proofpoint Incorporated † | 116,967 | 14,203,303 | ||||||||||||||
Zendesk Incorporated † | 164,625 | 13,993,125 | ||||||||||||||
74,874,508 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
10 | Wells Fargo Common Stock Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Materials: 5.28% | ||||||||||||||||
Chemicals: 1.23% | ||||||||||||||||
Axalta Coating Systems Limited † | 521,215 | $ | 13,139,830 | |||||||||||||
|
| |||||||||||||||
Containers & Packaging: 1.26% | ||||||||||||||||
Crown Holdings Incorporated † | 248,592 | 13,565,665 | ||||||||||||||
|
| |||||||||||||||
Metals & Mining: 2.79% | ||||||||||||||||
Royal Gold Incorporated | 157,504 | 14,321,839 | ||||||||||||||
Steel Dynamics Incorporated | 444,007 | 15,660,127 | ||||||||||||||
29,981,966 | ||||||||||||||||
|
| |||||||||||||||
Real Estate: 10.74% | ||||||||||||||||
Equity REITs: 10.74% | ||||||||||||||||
Camden Property Trust | 152,024 | 15,430,436 | ||||||||||||||
CoreSite Realty Corporation | 160,921 | 17,221,765 | ||||||||||||||
Four Corners Property Trust Incorporated | 247,797 | 7,334,791 | ||||||||||||||
Hudson Pacific Properties Incorporated | 376,829 | 12,970,454 | ||||||||||||||
Physicians Realty Trust | 956,472 | 17,991,238 | ||||||||||||||
SBA Communications Corporation † | 86,151 | 17,200,909 | ||||||||||||||
Sun Communities Incorporated | 140,235 | 16,620,652 | ||||||||||||||
Taubman Centers Incorporated | 198,600 | 10,501,964 | ||||||||||||||
115,272,209 | ||||||||||||||||
|
| |||||||||||||||
Total Common Stocks (Cost $783,156,844) |
| 1,051,713,102 | ||||||||||||||
|
| |||||||||||||||
Exchange-Traded Funds: 0.64% | ||||||||||||||||
SPDR S&P Biotech ETF « | 76,016 | 6,882,489 | ||||||||||||||
|
| |||||||||||||||
Total Exchange-Traded Funds (Cost $3,409,715) |
| 6,882,489 | ||||||||||||||
|
| |||||||||||||||
Yield | ||||||||||||||||
Short-Term Investments: 2.19% | ||||||||||||||||
Investment Companies: 2.19% | ||||||||||||||||
Securities Lending Cash Investments LLC (l)(r)(u) | 2.55 | % | 7,902,218 | 7,903,008 | ||||||||||||
Wells Fargo Government Money Market Fund Select Class (l)(u) | 2.38 | 15,578,487 | 15,578,487 | |||||||||||||
Total Short-Term Investments (Cost $23,481,260) |
| 23,481,495 | ||||||||||||||
|
|
Total investments in securities (Cost $810,047,819) | 100.77 | % | 1,082,077,086 | |||||
Other assets and liabilities, net | (0.77 | ) | (8,311,270 | ) | ||||
|
|
|
| |||||
Total net assets | 100.00 | % | $ | 1,073,765,816 | ||||
|
|
|
|
† | Non-income-earning security |
« | All or a portion of this security is on loan. |
(l) | The issuer of the security is an affiliated person of the Fund as defined in the Investment Company Act of 1940. |
(r) | The investment is a non-registered investment company purchased with cash collateral received from securities on loan. |
(u) | The rate represents the 7-day annualized yield at period end. |
Abbreviations:
REIT | Real estate investment trust |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Common Stock Fund | 11 |
Investments in Affiliates
An affiliated investment is an investment in which the Fund owns at least 5% of the outstanding voting shares of the issuer or as a result of other relationships, such as the Fund and the issuer having the same investment manager. Transactions with issuers that were either affiliated persons of the Fund at the beginning of the period or the end of the period were as follows:
Shares, beginning of period | Shares purchased | Shares sold | Shares, end of period | Net realized gains (losses) | Net change in unrealized gains (losses) | Income from affiliated securities | Value, end of period | % of net | ||||||||||||||||||||||||||||
Short-Term Investments | ||||||||||||||||||||||||||||||||||||
Investment Companies | ||||||||||||||||||||||||||||||||||||
Securities Lending Cash Investments LLC | 13,692,114 | 48,907,924 | 54,697,820 | 7,902,218 | $ | 1,134 | $ | (1,134 | ) | $ | 102,534 | $ | 7,903,008 | |||||||||||||||||||||||
Wells Fargo Government Money Market Fund Select Class | 35,775,121 | 125,338,426 | 145,535,060 | 15,578,487 | 0 | 0 | 220,138 | 15,578,487 | ||||||||||||||||||||||||||||
�� |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
$ | 1,134 | $ | (1,134 | ) | $ | 322,672 | $ | 23,481,495 | 2.19 | % | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
12 | Wells Fargo Common Stock Fund | Statement of assets and liabilities—March 31, 2019 (unaudited) |
Assets | ||||
Investments in unaffiliated securities (including $7,739,746 of securities loaned), at value (cost $786,566,559) | $ | 1,058,595,591 | ||
Investments in affiliated securities, at value (cost $23,481,260) | 23,481,495 | |||
Receivable for investments sold | 3,062,890 | |||
Receivable for Fund shares sold | 108,739 | |||
Receivable for dividends | 1,070,381 | |||
|
| |||
Total assets | 1,086,319,096 | |||
|
| |||
Liabilities | ||||
Payable upon receipt of securities loaned | 7,900,500 | |||
Payable for investments purchased | 2,781,713 | |||
Management fee payable | 689,670 | |||
Payable for Fund shares redeemed | 670,480 | |||
Administration fees payable | 175,181 | |||
Distribution fee payable | 5,891 | |||
Trustees’ fees and expenses payable | 2,584 | |||
Accrued expenses and other liabilities | 327,261 | |||
|
| |||
Total liabilities | 12,553,280 | |||
|
| |||
Total net assets | $ | 1,073,765,816 | ||
|
| |||
NET ASSETS CONSIST OF | ||||
Paid-in capital | $ | 755,203,626 | ||
Total distributable earnings | 318,562,190 | |||
|
| |||
Total net assets | $ | 1,073,765,816 | ||
|
| |||
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE | ||||
Net assets – Class A | $ | 873,408,331 | ||
Shares outstanding – Class A1 | 43,467,151 | |||
Net asset value per share – Class A | $20.09 | |||
Maximum offering price per share – Class A2 | $21.32 | |||
Net assets – Class C | $ | 9,054,160 | ||
Shares outstanding – Class C1 | 642,704 | |||
Net asset value per share – Class C | $14.09 | |||
Net assets – Class R6 | $ | 36,570,994 | ||
Shares outstanding – Class R61 | 1,716,468 | |||
Net asset value per share – Class R6 | $21.31 | |||
Net assets – Administrator Class | $ | 3,525,300 | ||
Shares outstanding – Administrator Class1 | 171,586 | |||
Net asset value per share – Administrator Class | $20.55 | |||
Net assets – Institutional Class | $ | 151,207,031 | ||
Shares outstanding – Institutional Class1 | 7,119,258 | |||
Net asset value per share – Institutional Class | $21.24 |
1 | The Fund has an unlimited number of authorized shares. |
2 | Maximum offering price is computed as 100/94.25 of net asset value. On investments of $50,000 or more, the offering price is reduced. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of operations—six months ended March 31, 2019 (unaudited) | Wells Fargo Common Stock Fund | 13 |
Investment income | ||||
Dividends | $ | 7,146,785 | ||
Income from affiliated securities | 238,315 | |||
|
| |||
Total investment income | 7,385,100 | |||
|
| |||
Expenses | ||||
Management fee | 4,103,629 | |||
Administration fees | ||||
Class A | 907,751 | |||
Class C | 13,695 | |||
Class R6 | 5,123 | |||
Administrator Class | 2,913 | |||
Institutional Class | 97,365 | |||
Shareholder servicing fees | ||||
Class A | 1,080,656 | |||
Class C | 16,304 | |||
Administrator Class | 5,601 | |||
Distribution fee | ||||
Class C | 48,912 | |||
Custody and accounting fees | 33,178 | |||
Professional fees | 25,826 | |||
Registration fees | 37,916 | |||
Shareholder report expenses | 33,178 | |||
Trustees’ fees and expenses | 12,451 | |||
Other fees and expenses | 17,938 | |||
|
| |||
Total expenses | 6,442,436 | |||
Less: Fee waivers and/or expense reimbursements | (72,408 | ) | ||
|
| |||
Net expenses | 6,370,028 | |||
|
| |||
Net investment income | 1,015,072 | |||
|
| |||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | ||||
Net realized gains on investments: | ||||
Unaffiliated securities | 59,335,764 | |||
Affiliated securities | 1,134 | |||
|
| |||
Net realized gains on investments | 59,336,898 | |||
|
| |||
Net change in unrealized gains (losses) on: | ||||
Unaffiliated securities | (111,116,465 | ) | ||
Affiliated securities | (1,134 | ) | ||
|
| |||
Net change in unrealized gains (losses) on investments | (111,117,599 | ) | ||
|
| |||
Net realized and unrealized gains (losses) on investments | (51,780,701 | ) | ||
|
| |||
Net decrease in net assets resulting from operations | $ | (50,765,629 | ) | |
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
14 | Wells Fargo Common Stock Fund | Statement of changes in net assets |
Six months ended (unaudited) | Year ended September 30, 2018 | |||||||||||||||
Operations | ||||||||||||||||
Net investment income (loss) | $ | 1,015,072 | $ | (1,480,238 | ) | |||||||||||
Net realized gains on investments | 59,336,898 | 168,782,075 | ||||||||||||||
Net change in unrealized gains (losses) on investments | (111,117,599 | ) | (10,618,967 | ) | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (50,765,629 | ) | 156,682,870 | |||||||||||||
|
| |||||||||||||||
Distributions to shareholders from net investment income and net realized gains | ||||||||||||||||
Class A | (128,198,379 | ) | (97,640,556 | ) | ||||||||||||
Class C | (2,840,840 | ) | (2,494,352 | ) | ||||||||||||
Class R6 | (4,757,555 | ) | (11,401,103 | ) | ||||||||||||
Administrator Class | (749,896 | ) | (613,023 | ) | ||||||||||||
Institutional Class | (20,825,630 | ) | (16,747,502 | ) | ||||||||||||
|
| |||||||||||||||
Total distributions to shareholders | (157,372,300 | ) | (128,896,536 | ) | ||||||||||||
|
| |||||||||||||||
Capital share transactions | Shares | Shares | ||||||||||||||
Proceeds from shares sold | ||||||||||||||||
Class A | 675,088 | 13,272,414 | 651,357 | 15,351,401 | ||||||||||||
Class C | 100,573 | 1,300,981 | 43,484 | 772,480 | ||||||||||||
Class R6 | 221,720 | 4,868,909 | 278,881 | 6,924,814 | ||||||||||||
Administrator Class | 4,422 | 90,197 | 37,039 | 896,077 | ||||||||||||
Institutional Class | 355,847 | 7,600,546 | 894,739 | 22,089,498 | ||||||||||||
|
| |||||||||||||||
27,133,047 | 46,034,270 | |||||||||||||||
|
| |||||||||||||||
Reinvestment of distributions | ||||||||||||||||
Class A | 6,577,466 | 122,340,875 | 4,106,240 | 92,965,271 | ||||||||||||
Class C | 202,645 | 2,648,573 | 137,871 | 2,350,702 | ||||||||||||
Class R6 | 240,179 | 4,729,116 | 481,095 | 11,397,143 | ||||||||||||
Administrator Class | 36,844 | 700,411 | 24,808 | 571,322 | ||||||||||||
Institutional Class | 1,038,739 | 20,390,438 | 696,871 | 16,460,103 | ||||||||||||
|
| |||||||||||||||
150,809,413 | 123,744,541 | |||||||||||||||
|
| |||||||||||||||
Payment for shares redeemed | ||||||||||||||||
Class A | (3,311,144 | ) | (64,769,986 | ) | (4,413,777 | ) | (104,881,783 | ) | ||||||||
Class C | (559,264 | ) | (7,813,018 | ) | (295,049 | ) | (5,313,557 | ) | ||||||||
Class R6 | (159,479 | ) | (3,415,206 | ) | (3,965,442 | ) | (93,857,873 | ) | ||||||||
Administrator Class | (114,972 | ) | (2,166,948 | ) | (76,020 | ) | (1,845,632 | ) | ||||||||
Institutional Class | (967,924 | ) | (20,961,497 | ) | (1,608,638 | ) | (39,681,646 | ) | ||||||||
|
| |||||||||||||||
(99,126,655 | ) | (245,580,491 | ) | |||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from capital share transactions | 78,815,805 | (75,801,680 | ) | |||||||||||||
|
| |||||||||||||||
Total decrease in net assets | (129,322,124 | ) | (48,015,346 | ) | ||||||||||||
|
| |||||||||||||||
Net assets | ||||||||||||||||
Beginning of period | 1,203,087,940 | 1,251,103,286 | ||||||||||||||
|
| |||||||||||||||
End of period | $ | 1,073,765,816 | $ | 1,203,087,940 | ||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
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Financial highlights | Wells Fargo Common Stock Fund | 15 |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS A | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $24.58 | $24.06 | $21.50 | $21.62 | $24.79 | $24.45 | ||||||||||||||||||
Net investment income (loss) | 0.01 | (0.04 | ) | (0.09 | ) | (0.01 | )1 | (0.04 | )1 | (0.07 | ) | |||||||||||||
Net realized and unrealized gains (losses) on investments | (1.20 | ) | 3.10 | 3.48 | 2.45 | (0.32 | ) | 2.48 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (1.19 | ) | 3.06 | 3.39 | 2.44 | (0.36 | ) | 2.41 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net realized gains | (3.30 | ) | (2.54 | ) | (0.83 | ) | (2.56 | ) | (2.81 | ) | (2.07 | ) | ||||||||||||
Net asset value, end of period | $20.09 | $24.58 | $24.06 | $21.50 | $21.62 | $24.79 | ||||||||||||||||||
Total return2 | 3.79 | % | 13.62 | % | 16.10 | % | 12.43 | % | (1.76 | )% | 10.26 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.26 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.27 | % | 1.28 | % | ||||||||||||
Net expenses | 1.26 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.26 | % | 1.26 | % | ||||||||||||
Net investment income (loss) | 0.13 | % | (0.18 | )% | (0.38 | )% | (0.05 | )% | (0.19 | )% | (0.27 | )% | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 19 | % | 33 | % | 35 | % | 32 | % | 51 | % | 38 | % | ||||||||||||
Net assets, end of period (000s omitted) | $873,408 | $971,731 | $942,596 | $924,864 | $127,732 | $277,517 |
1 | Calculated based upon average shares outstanding |
2 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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16 | Wells Fargo Common Stock Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS C | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $18.40 | $18.75 | $17.04 | $17.77 | $21.02 | $21.18 | ||||||||||||||||||
Net investment loss | (0.05 | )1 | (0.17 | )1 | (0.20 | )1 | (0.14 | )1 | (0.18 | ) | (0.22 | )1 | ||||||||||||
Net realized and unrealized gains (losses) on investments | (0.96 | ) | 2.36 | 2.74 | 1.97 | (0.26 | ) | 2.13 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (1.01 | ) | 2.19 | 2.54 | 1.83 | (0.44 | ) | 1.91 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net realized gains | (3.30 | ) | (2.54 | ) | (0.83 | ) | (2.56 | ) | (2.81 | ) | (2.07 | ) | ||||||||||||
Net asset value, end of period | $14.09 | $18.40 | $18.75 | $17.04 | $17.77 | $21.02 | ||||||||||||||||||
Total return2 | (4.12 | )% | 12.74 | % | 15.29 | % | 11.52 | % | (2.49 | )% | 9.42 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 2.01 | % | 2.00 | % | 2.00 | % | 2.00 | % | 2.02 | % | 2.03 | % | ||||||||||||
Net expenses | 2.01 | % | 2.00 | % | 2.00 | % | 2.00 | % | 2.00 | % | 2.01 | % | ||||||||||||
Net investment loss | (0.68 | )% | (0.94 | )% | (1.14 | )% | (0.87 | )% | (0.93 | )% | (1.01 | )% | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 19 | % | 33 | % | 35 | % | 32 | % | 51 | % | 38 | % | ||||||||||||
Net assets, end of period (000s omitted) | $9,054 | $16,541 | $18,978 | $22,902 | $25,668 | $30,245 |
1 | Calculated based upon average shares outstanding |
2 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Common Stock Fund | 17 |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS R6 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $25.80 | $25.03 | $22.25 | $22.20 | $25.27 | $24.78 | ||||||||||||||||||
Net investment income | 0.06 | 1 | 0.05 | 1 | 0.01 | 0.07 | 1 | 0.05 | 0.07 | 1 | ||||||||||||||
Net realized and unrealized gains (losses) on investments | (1.25 | ) | 3.26 | 3.60 | 2.54 | (0.31 | ) | 2.49 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (1.19 | ) | 3.31 | 3.61 | 2.61 | (0.26 | ) | 2.56 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net realized gains | (3.30 | ) | (2.54 | ) | (0.83 | ) | (2.56 | ) | (2.81 | ) | (2.07 | ) | ||||||||||||
Net asset value, end of period | $21.31 | $25.80 | $25.03 | $22.25 | $22.20 | $25.27 | ||||||||||||||||||
Total return2 | (3.63 | )% | 14.12 | % | 16.56 | % | 12.91 | % | (1.29 | )% | 10.76 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 0.83 | % | 0.82 | % | 0.82 | % | 0.82 | % | 0.80 | % | 0.80 | % | ||||||||||||
Net expenses | 0.83 | % | 0.82 | % | 0.82 | % | 0.82 | % | 0.80 | % | 0.80 | % | ||||||||||||
Net investment income | 0.57 | % | 0.20 | % | 0.05 | % | 0.32 | % | 0.28 | % | 0.27 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 19 | % | 33 | % | 35 | % | 32 | % | 51 | % | 38 | % | ||||||||||||
Net assets, end of period (000s omitted) | $36,571 | $36,477 | $115,641 | $101,436 | $95,037 | $95,213 |
1 | Calculated based upon average shares outstanding |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
18 | Wells Fargo Common Stock Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
ADMINISTRATOR CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $25.04 | $24.42 | $21.78 | $21.84 | $24.98 | $24.59 | ||||||||||||||||||
Net investment income (loss) | 0.03 | 1 | (0.01 | )1 | (0.06 | )1 | 0.02 | (0.01 | )1 | (0.02 | )1 | |||||||||||||
Net realized and unrealized gains (losses) on investments | (1.22 | ) | 3.17 | 3.53 | 2.48 | (0.32 | ) | 2.48 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (1.19 | ) | 3.16 | 3.47 | 2.50 | (0.33 | ) | 2.46 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net realized gains | (3.30 | ) | (2.54 | ) | (0.83 | ) | (2.56 | ) | (2.81 | ) | (2.07 | ) | ||||||||||||
Net asset value, end of period | $20.55 | $25.04 | $24.42 | $21.78 | $21.84 | $24.98 | ||||||||||||||||||
Total return2 | (3.75 | )% | 13.84 | % | 16.26 | % | 12.59 | % | (1.62 | )% | 10.41 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.18 | % | 1.17 | % | 1.17 | % | 1.17 | % | 1.12 | % | 1.11 | % | ||||||||||||
Net expenses | 1.10 | % | 1.10 | % | 1.10 | % | 1.10 | % | 1.10 | % | 1.09 | % | ||||||||||||
Net investment income (loss) | 0.26 | % | (0.04 | )% | (0.27 | )% | 0.03 | % | (0.03 | )% | (0.07 | )% | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 19 | % | 33 | % | 35 | % | 32 | % | 51 | % | 38 | % | ||||||||||||
Net assets, end of period (000s omitted) | $3,525 | $6,141 | $6,336 | $16,720 | $18,050 | $45,364 |
1 | Calculated based upon average shares outstanding |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Common Stock Fund | 19 |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
INSTITUTIONAL CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $25.73 | $24.97 | $22.20 | $22.16 | $25.25 | $24.77 | ||||||||||||||||||
Net investment income | 0.06 | 1 | 0.05 | 1 | 0.00 | 1,2 | 0.06 | 1 | 0.03 | 0.03 | ||||||||||||||
Net realized and unrealized gains (losses) on investments | (1.25 | ) | 3.25 | 3.60 | 2.54 | (0.31 | ) | 2.52 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (1.19 | ) | 3.30 | 3.60 | 2.60 | (0.28 | ) | 2.55 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net realized gains | (3.30 | ) | (2.54 | ) | (0.83 | ) | (2.56 | ) | (2.81 | ) | (2.07 | ) | ||||||||||||
Net asset value, end of period | $21.24 | $25.73 | $24.97 | $22.20 | $22.16 | $25.25 | ||||||||||||||||||
Total return3 | (3.59 | )% | 14.12 | % | 16.55 | % | 12.88 | % | (1.38 | )% | 10.72 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 0.93 | % | 0.92 | % | 0.92 | % | 0.92 | % | 0.86 | % | 0.85 | % | ||||||||||||
Net expenses | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | ||||||||||||
Net investment income | 0.53 | % | 0.21 | % | 0.02 | % | 0.28 | % | 0.24 | % | 0.14 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 19 | % | 33 | % | 35 | % | 32 | % | 51 | % | 38 | % | ||||||||||||
Net assets, end of period (000s omitted) | $151,207 | $172,197 | $167,552 | $173,175 | $226,729 | $223,525 |
1 | Calculated based upon average shares outstanding |
2 | Amount is less than $0.005. |
3 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
20 | Wells Fargo Common Stock Fund | Notes to financial statements (unaudited) |
1. ORGANIZATION
Wells Fargo Funds Trust (the “Trust”), a Delaware statutory trust organized on March 10, 1999, is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As an investment company, the Trust follows the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946, Financial Services – Investment Companies. These financial statements report on the Wells Fargo Common Stock Fund (the “Fund”) which is a diversified series of the Trust.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Fund, are in conformity with U.S. generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Securities valuation
All investments are valued each business day as of the close of regular trading on the New York Stock Exchange (generally 4 p.m. Eastern Time), although the Fund may deviate from this calculation time under unusual or unexpected circumstances.
Equity securities that are listed on a foreign or domestic exchange or market are valued at the official closing price or, if none, the last sales price. If no sale occurs on the principal exchange or market that day, a fair value price will be determined in accordance with the Fund’s Valuation Procedures.
Investments in registered open-end investment companies are valued at net asset value. Interests in non-registered investment companies that are redeemable at net asset value are fair valued normally at net asset value.
Investments which are not valued using any of the methods discussed above are valued at their fair value, as determined in good faith by the Board of Trustees of the Fund. The Board of Trustees has established a Valuation Committee comprised of the Trustees and has delegated to it the authority to take any actions regarding the valuation of portfolio securities that the Valuation Committee deems necessary or appropriate, including determining the fair value of portfolio securities, unless the determination has been delegated to the Wells Fargo Asset Management Pricing Committee at Wells Fargo Funds Management, LLC (“Funds Management”). The Board of Trustees retains the authority to make or ratify any valuation decisions or approve any changes to the Valuation Procedures as it deems appropriate. On a quarterly basis, the Board of Trustees receives reports on any valuation actions taken by the Valuation Committee or the Wells Fargo Asset Management Pricing Committee which may include items for ratification.
Securities lending
The Fund may lend its securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The Fund continues to receive interest or dividends on the securities loaned. The Fund receives collateral in the form of cash or securities with a value at least equal to the value of the securities on loan. The value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. In a securities lending transaction, the net asset value of the Fund will be affected by an increase or decrease in the value of the securities loaned and by an increase or decrease in the value of the instrument in which collateral is invested. The amount of securities lending activity undertaken by the Fund fluctuates from time to time. In the event of default or bankruptcy by the borrower, the Fund may be prevented from recovering the loaned securities or gaining access to the collateral or may experience delays or costs in doing so. In addition, the investment of any cash collateral received may lose all or part of its value. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.
The Fund lends its securities through an unaffiliated securities lending agent. Cash collateral received in connection with its securities lending transactions is invested in Securities Lending Cash Investments, LLC (the “Securities Lending Fund”). The Securities Lending Fund is exempt from registration under Section 3(c)(7) of the 1940 Act and is managed by Funds Management and is subadvised by Wells Capital Management Incorporated (“WellsCap”), an affiliate of Funds Management and an indirect wholly owned subsidiary of Wells Fargo & Company (“Wells Fargo”). Funds Management receives an advisory fee starting at 0.05% and declining to 0.01% as the average daily net assets of the Securities Lending Fund increase. All of the fees received by Funds Management are paid to WellsCap for its services as subadviser. The Securities Lending Fund seeks to provide a positive return compared to the daily Fed Funds Open Rate by investing in high-quality, U.S. dollar-denominated short-term money market instruments. Securities Lending Fund investments are
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Notes to financial statements (unaudited) | Wells Fargo Common Stock Fund | 21 |
valued at the evaluated bid price provided by an independent pricing service. Income earned from investment in the Securities Lending Fund (net of fees and rebates), if any, is included in income from affiliated securities on the Statement of Operations
Security transactions and income recognition
Securities transactions are recorded on a trade date basis. Realized gains or losses are recorded on the basis of identified cost.
Dividend income is recognized on the ex-dividend date.
Income dividends and capital gain distributions from investment companies are recorded on the ex-dividend date. Capital gain distributions from investment companies are treated as realized gains.
Distributions to shareholders
Distributions to shareholders from net investment income and any net realized gains are recorded on the ex-dividend date and paid at least annually. Such distributions are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles. Dividend sources are estimated at the time of declaration. The tax character of distributions is determined as of the Fund’s fiscal year end. Therefore, a portion of the Fund’s distributions made prior to the Fund’s fiscal year end may be categorized as a tax return of capital at year end.
Federal and other taxes
The Fund intends to continue to qualify as a regulated investment company by distributing substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required.
The Fund’s income and federal excise tax returns and all financial records supporting those returns for the prior three fiscal years are subject to examination by the federal and Delaware revenue authorities. Management has analyzed the Fund’s tax positions taken on federal, state, and foreign tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability.
As of March 31, 2019, the aggregate cost of all investments for federal income tax purposes was $808,739,374 and the unrealized gains (losses) consisted of:
Gross unrealized gains | $ | 297,002,555 | ||
Gross unrealized losses | (23,664,843 | ) | ||
Net unrealized gains | $ | 273,337,712 |
Class allocations
The separate classes of shares offered by the Fund differ principally in applicable sales charges, distribution, shareholder servicing, and administration fees. Class specific expenses are charged directly to that share class. Investment income, common expenses, and realized and unrealized gains (losses) on investments are allocated daily to each class of shares based on the relative proportion of net assets of each class.
3. FAIR VALUATION MEASUREMENTS
Fair value measurements of investments are determined within a framework that has established a fair value hierarchy based upon the various data inputs utilized in determining the value of the Fund’s investments. The three-level hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Fund’s investments are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The inputs are summarized into three broad levels as follows:
∎ | Level 1 – quoted prices in active markets for identical securities |
∎ | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
∎ | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
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22 | Wells Fargo Common Stock Fund | Notes to financial statements (unaudited) |
The inputs or methodologies used for valuing investments in securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used in valuing the Fund’s assets and liabilities as of March 31, 2019:
Quoted prices (Level 1) | Other significant observable inputs (Level 2) | Significant (Level 3) | Total | |||||||||||||
Assets | ||||||||||||||||
Investments in: | ||||||||||||||||
Common stocks | ||||||||||||||||
Communication services | $ | 10,861,603 | $ | 0 | $ | 0 | $ | 10,861,603 | ||||||||
Consumer discretionary | 84,973,615 | 0 | 0 | 84,973,615 | ||||||||||||
Consumer staples | 14,064,079 | 0 | 0 | 14,064,079 | ||||||||||||
Energy | 54,152,741 | 0 | 0 | 54,152,741 | ||||||||||||
Financials | 182,048,065 | 0 | 0 | 182,048,065 | ||||||||||||
Health care | 131,432,181 | 0 | 0 | 131,432,181 | ||||||||||||
Industrials | 199,040,959 | 0 | 0 | 199,040,959 | ||||||||||||
Information technology | 203,180,189 | 0 | 0 | 203,180,189 | ||||||||||||
Materials | 56,687,461 | 0 | 0 | 56,687,461 | ||||||||||||
Real estate | 115,272,209 | 0 | 0 | 115,272,209 | ||||||||||||
Exchange-traded funds | 6,882,489 | 0 | 0 | 6,882,489 | ||||||||||||
Short-term investments | ||||||||||||||||
Investment companies | 15,578,487 | 7,903,008 | 0 | 23,481,495 | ||||||||||||
Total assets | $ | 1,074,174,078 | $ | 7,903,008 | $ | 0 | $ | 1,082,077,086 |
Additional sector, industry or geographic detail is included in the Portfolio of Investments.
At March 31, 2019, the Fund did not have any transfers into/out of Level 3.
4. TRANSACTIONS WITH AFFILIATES AND OTHER EXPENSES
Management fee
Funds Management Wells Fargo, is the manager of the Fund and provides advisory and fund-level administrative services under an investment management agreement. Under the investment management agreement, Funds Management is responsible for, among other services, implementing the investment objectives and strategies of the Fund, supervising the subadviser and providing fund-level administrative services in connection with the Fund’s operations. As compensation for its services under the investment management agreement, Funds Management is entitled to receive a management fee at the following annual rate based on the Fund’s average daily net assets:
Average daily net assets | Management fee | |||
First $500 million | 0.800 | % | ||
Next $500 million | 0.750 | |||
Next $1 billion | 0.700 | |||
Next $2 billion | 0.675 | |||
Next $1 billion | 0.650 | |||
Next $5 billion | 0.640 | |||
Over $10 billion | 0.630 |
For the six months ended March 31, 2019, the management fee was equivalent to an annual rate of 0.77% of the Fund’s average daily net assets.
Funds Management has retained the services of a subadviser to provide daily portfolio management to the Fund. The fee for subadvisory services is borne by Funds Management. WellsCap is the subadviser to the Fund and is entitled to receive a fee from Funds Management at an annual rate starting at 0.45% and declining to 0.30% as the average daily net assets of the Fund increase.
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Notes to financial statements (unaudited) | Wells Fargo Common Stock Fund | 23 |
Administration fees
Under a class-level administration agreement, Funds Management provides class-level administrative services to the Fund, which includes paying fees and expenses for services provided by the transfer agent, sub-transfer agents, omnibus account servicers and record-keepers. As compensation for its services under the class-level administration agreement, Funds Management receives an annual fee which is calculated based on the average daily net assets of each class as follows:
Class-level administration fee | ||||
Class A, Class C, | 0.21 | % | ||
Class R6 | 0.03 | |||
Administrator Class, Institutional Class | 0.13 |
Funds Management has contractually waived and/or reimbursed management and administration fees to the extent necessary to maintain certain net operating expense ratios for the Fund. When each class of the Fund has exceeded its expense cap, Funds Management has waived fees and/or reimbursed expenses from fund level expenses on a proportionate basis and then from class specific expenses. When only certain classes exceed their expense caps, waivers and/or reimbursements are applied against class specific expenses before fund level expenses. Funds Management has committed through January 31, 2020 to waive fees and/or reimburse expenses to the extent necessary to cap the Fund’s expenses at 1.26% for Class A shares, 2.01% for Class C shares, 0.85% for Class R6 shares, 1.10% for Administrator Class shares, and 0.85% for Institutional Class shares. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees.
Distribution fee
The Trust has adopted a distribution plan for Class C shares of the Fund pursuant to Rule 12b-1 under the 1940 Act. A distribution fee is charged to Class C shares and paid to Wells Fargo Funds Distributor, LLC (“Funds Distributor”), the principal underwriter, at an annual rate of 0.75% of the average daily net assets of Class C shares.
In addition, Funds Distributor is entitled to receive the front-end sales charge from the purchase of Class A shares and a contingent deferred sales charge on the redemption of certain Class A shares. Funds Distributor is also entitled to receive the contingent deferred sales charges from redemptions of Class C shares. For the six months ended March 31, 2019, Funds Distributor received $871 from the sale of Class A shares and $13 in contingent deferred sales charges from redemptions of Class C shares. No contingent deferred sales charges were incurred by Class A for the six months ended March 31, 2019.
Shareholder servicing fees
The Trust has entered into contracts with one or more shareholder servicing agents, whereby Class A, Class C, and Administrator Class of the Fund are charged a fee at an annual rate of 0.25% of the average daily net assets of each respective class. A portion of these total shareholder servicing fees were paid to affiliates of Wells Fargo.
Interfund transactions
The Fund may purchase or sell portfolio investment securities to certain other Wells Fargo affiliates pursuant toRule 17a-7 under the 1940 Act and under procedures adopted by the Board of Trustees. The procedures have been designed to ensure that these interfund transactions, which do not incur broker commissions, are effected at current market prices.
5. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, excluding U.S. government obligations (if any) and short-term securities, for the six months ended March 31, 2019 were $203,896,703 and $261,770,244, respectively.
6. BANK BORROWINGS
The Trust (excluding the money market funds), Wells Fargo Master Trust and Wells Fargo Variable Trust are parties to a $280,000,000 revolving credit agreement whereby the Fund is permitted to use bank borrowings for temporary or emergency purposes, such as to fund shareholder redemption requests. Interest under the credit agreement is charged to the Fund based on a borrowing rate equal to the higher of the Federal Funds rate in effect on that day plus 1.25% or the overnight LIBOR rate in effect on that day plus 1.25%. In addition, an annual commitment fee equal to 0.25% of the unused balance is allocated to each participating fund.
For the six months ended March 31, 2019, there were no borrowings by the Fund under the agreement.
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24 | Wells Fargo Common Stock Fund | Notes to financial statements (unaudited) |
7. INDEMNIFICATION
Under the Trust’s organizational documents, the officers and Trustees have been granted certain indemnification rights against certain liabilities that may arise out of performance of their duties to the Trust. Additionally, in the normal course of business, the Trust may enter into contracts with service providers that contain a variety of indemnification clauses. The Trust’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated.
8. NEW ACCOUNTING PRONOUNCEMENTS
In August 2018, FASB issued Accounting Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820)Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 updates the disclosure requirements for fair value measurements by modifying or removing certain disclosures and adding certain new disclosures. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management has adopted the removal and modification of disclosures early, as permitted, and will adopt the additional new disclosures at the effective date.
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Other information (unaudited) | Wells Fargo Common Stock Fund | 25 |
PROXY VOTING INFORMATION
A description of the policies and procedures used to determine how to vote proxies relating to portfolio securities is available, upon request, by calling1-800-222-8222, visiting our website atwfam.com, or visiting the SEC website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent12-month period ended June 30 is available on the Fund’s website atwfam.comor by visiting the SEC website at sec.gov.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for the Fund are publicly available monthly on the Fund’s website (wfam.com), on a one-month delayed basis. In addition, top ten holdings information (excluding derivative positions) for the Fund is publicly available on the Fund’s website on a monthly, seven-day or more delayed basis. The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which is available by visiting the SEC website at sec.gov. In addition, the Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330.
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26 | Wells Fargo Common Stock Fund | Other information (unaudited) |
BOARD OF TRUSTEES AND OFFICERS
Each of the Trustees and Officers1 listed in the table below acts in identical capacities for each fund in the Wells Fargo family of funds, which consists of 151 mutual funds comprising the Wells Fargo Funds Trust, Wells Fargo Variable Trust, Wells Fargo Master Trust and four closed-end funds (collectively the “Fund Complex”). This table should be read in conjunction with the Prospectus and the Statement of Additional Information2. The mailing address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, however, each Trustee serves such term until reaching the mandatory retirement age established by the Trustees.
Independent Trustees
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company directorships | |||
William R. Ebsworth (Born 1957) | Trustee, since 2015 | Retired. From 1984 to 2013, equities analyst, portfolio manager, research director and chief investment officer at Fidelity Management and Research Company in Boston, Tokyo, and Hong Kong, and retired in 2013 as Chief Investment Officer of Fidelity Strategic Advisers, Inc. where he led a team of investment professionals managing client assets. Prior thereto, Board member of Hong Kong Securities Clearing Co., Hong Kong Options Clearing Corp., the Thailand International Fund, Ltd., Fidelity Investments Life Insurance Company, and Empire Fidelity Investments Life Insurance Company. Audit Committee Chair and Investment Committee Chair of the Vincent Memorial Hospital Endowment (non-profit organization). Mr. Ebsworth is a CFA® charterholder. | N/A | |||
Jane A. Freeman (Born 1953) | Trustee, since 2015; Chair Liaison, since 2018 | Retired. From 2012 to 2014 and 1999 to 2008, Chief Financial Officer of Scientific Learning Corporation. From 2008 to 2012, Ms. Freeman provided consulting services related to strategic business projects. Prior to 1999, Portfolio Manager at Rockefeller & Co. and Scudder, Stevens & Clark. Board member of the Harding Loevner Funds from 1996 to 2014, serving as both Lead Independent Director and chair of the Audit Committee. Board member of the Russell Exchange Traded Funds Trust from 2011 to 2012 and the chair of the Audit Committee. Ms. Freeman is a Board Member of The Ruth Bancroft Garden (non-profit organization). She is also an inactive Chartered Financial Analyst. | N/A | |||
Isaiah Harris, Jr.3 (Born 1952) | Trustee, since 2009; Audit Committee Chairman, since 2019 | Retired. Chairman of the Board of CIGNA Corporation since 2009, and Director since 2005. From 2003 to 2011, Director of Deluxe Corporation. Prior thereto, President and CEO of BellSouth Advertising and Publishing Corp. from 2005 to 2007, President and CEO of BellSouth Enterprises from 2004 to 2005 and President of BellSouth Consumer Services from 2000 to 2003. Emeritus member of the Iowa State University Foundation Board of Governors. Emeritus Member of the Advisory Board of Iowa State University School of Business. Advisory Board Member, Palm Harbor Academy (private school). Advisory Board Member, Child Evangelism Fellowship (non-profit). Mr. Harris is a certified public accountant (inactive status). | CIGNA Corporation | |||
Judith M. Johnson (Born 1949) | Trustee, since 2008; Audit Committee Chairman, from 2009 to 2018 | Retired. Prior thereto, Chief Executive Officer and Chief Investment Officer of Minneapolis Employees Retirement Fund from 1996 to 2008. Ms. Johnson is an attorney, certified public accountant and a certified managerial accountant. | N/A |
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Other information (unaudited) | Wells Fargo Common Stock Fund | 27 |
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company directorships | |||
David F. Larcker (Born 1950) | Trustee, since 2009 | James Irvin Miller Professor of Accounting at the Graduate School of Business, Stanford University, Director of the Corporate Governance Research Initiative and Senior Faculty of The Rock Center for Corporate Governance since 2006. From 2005 to 2008, Professor of Accounting at the Graduate School of Business, Stanford University. Prior thereto, Ernst & Young Professor of Accounting at The Wharton School, University of Pennsylvania from 1985 to 2005. | N/A | |||
Olivia S. Mitchell (Born 1953) | Trustee, since 2006; Nominating and Governance Committee Chairman, since 2018 | International Foundation of Employee Benefit Plans Professor, Wharton School of the University of Pennsylvania since 1993. Director of Wharton’s Pension Research Council and Boettner Center on Pensions & Retirement Research, and Research Associate at the National Bureau of Economic Research. Previously, Cornell University Professor from 1978 to 1993. | N/A | |||
Timothy J. Penny (Born 1951) | Trustee, since 1996; Chairman, since 2018 | President and Chief Executive Officer of Southern Minnesota Initiative Foundation, a non-profit organization, since 2007. Member of the Board of Trustees of NorthStar Education Finance, Inc., a non-profit organization, since 2007. | N/A | |||
James G. Polisson (Born 1959) | Trustee, since 2018 | Retired. Chief Marketing Officer, Source (ETF) UK Services, Ltd, from 2015 to 2017. From 2012 to 2015, Principal of The Polisson Group, LLC, a management consulting, corporate advisory and principal investing company. Chief Executive Officer and Managing Director at Russell Investments, Global Exchange Traded Funds from 2010 to 2012. Managing Director of Barclays Global Investors from 1998 to 2010 and Global Chief Marketing Officer for iShares and Barclays Global Investors from 2000 to 2010. Trustee of the San Francisco Mechanics’ Institute, a non-profit organization, from 2013 to 2015. Board member of the Russell Exchange Traded Fund Trust from 2011 to 2012. Director of Barclays Global Investors Holdings Deutschland GmbH from 2006 to 2009. Mr. Polisson is an attorney and has a retired status with the Massachusetts and District of Columbia Bar Associations. | N/A | |||
Pamela Wheelock (Born 1959) | Trustee, since 2018 | Board member of the Destination Medical Center Economic Development Agency, Rochester, Minnesota since 2019. Chief Operating Officer, Twin Cities Habitat for Humanity from 2017 to 2019. Vice President of University Services, University of Minnesota from 2012 to 2016. Prior thereto, on the Board of Directors, Governance Committee and Finance Committee for the Minnesota Philanthropy Partners (Saint Paul Foundation) from 2012 to 2018, Interim Chief Executive Officer of Blue Cross Blue Shield of Minnesota from 2011 to 2012, Chairman of the Board from 2009 to 2012 and Board Director from 2003 to 2015. Vice President, Leadership and Community Engagement, Bush Foundation, Saint Paul, Minnesota (a private foundation) from 2009 to 2011. Executive Vice President and Chief Financial Officer, Minnesota Sports and Entertainment from 2004 to 2009 and Senior Vice President from 2002 to 2004. Executive Vice President of the Minnesota Wild Foundation from 2004 to 2008. Commissioner of Finance, State of Minnesota, from 1999 to 2002. Currently Board Chair of the Minnesota Wild Foundation since 2010. | N/A |
* | Length of service dates reflect the Trustee’s commencement of service with the Trust’s predecessor entities, where applicable. |
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28 | Wells Fargo Common Stock Fund | Other information (unaudited) |
Officers
Name and year of birth | Position held and length of service | Principal occupations during past five years or longer | ||||
Andrew Owen (Born 1960) | President, since 2017 | Executive Vice President of Wells Fargo & Company and Head of Affiliated Managers, Wells Fargo Asset Management, since 2014. In addition, Mr. Owen is currently President, Chief Executive Officer and Director of Wells Fargo Funds Management, LLC since 2017. Prior thereto, Executive Vice President responsible for marketing, investments and product development for Wells Fargo Funds Management, LLC, from 2009 to 2014. | ||||
Nancy Wiser1 (Born 1967) | Treasurer, since 2012 | Executive Vice President of Wells Fargo Funds Management, LLC since 2011. Chief Operating Officer and Chief Compliance Officer at LightBox Capital Management LLC, from 2008 to 2011. | ||||
Alexander Kymn (Born 1973) | Secretary and Chief Legal Officer, since 2018 | Senior Company Counsel of Wells Fargo Bank, N.A. since 2018 (previously Senior Counsel from 2007 to 2018). Vice President of Wells Fargo Funds Management, LLC from 2008 to 2014. | ||||
Michael H. Whitaker (Born 1967) | Chief Compliance Officer, since 2016 | Senior Vice President and Chief Compliance Officer since 2016. Senior Vice President and Chief Compliance Officer for Fidelity Investments from 2007 to 2016. | ||||
David Berardi (Born 1975) | Assistant Treasurer, since 2009 | Vice President of Wells Fargo Funds Management, LLC since 2009. Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010. Manager of Fund Reporting and Control for Evergreen Investment Management Company, LLC from 2004 to 2010. | ||||
Jeremy DePalma1 (Born 1974) | Assistant Treasurer, since 2009 | Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010 and head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010. |
1 | Nancy Wiser acts as Treasurer of 65 funds in the Fund Complex. Jeremy DePalma acts as Treasurer of 86 funds and Assistant Treasurer of 65 funds in the Fund Complex. |
2 | The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request, by calling1-800-222-8222 or by visiting the website atwfam.com. |
3 | Mr. Harris became Chairman of the Audit Committee effective January 1, 2019. |
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Appendix A (unaudited) | Wells Fargo Common Stock Fund | 29 |
SALES CHARGE REDUCTIONS AND WAIVERS FOR CERTAIN INTERMEDIARIES
Raymond James & Associates, Inc., Raymond James Financial Services & Raymond James affiliates (“Raymond James”)
Effective on or about March 1, 2019, shareholders purchasing Fund shares through a Raymond James platform or account will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in the Fund’s Prospectus or SAI.
Front-end Sales Load Waivers on Class A shares Available at Raymond James
• | Shares purchased in an investment advisory program. |
• | Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family). |
• | Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James. |
• | Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement). |
• | A shareholder in the fund’s Class C shares will have their shares automatically exchanged at net asset value to Class A shares (or the appropriate share class) of the fund if the shares are no longer subject to a CDSC and the exchange is in line with the policies and procedures of Raymond James. |
CDSC Waivers on Class A and C Shares Available at Raymond James
• | Death or disability of the shareholder. |
• | Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus. |
• | Return of excess contributions from an IRA Account. |
• | Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70½ as described in the Fund’s prospectus. |
• | Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James. |
• | Shares acquired through a right of reinstatement. |
Front-end Load Discounts Available at Raymond James: Breakpoints, and/or Rights of Accumulation
• | Breakpoints as described in the Fund’s Prospectus. |
• | Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets. |
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For more information
More information about Wells Fargo Funds is available free upon request. To obtain literature, please write, visit the Fund’s website, or call:
Wells Fargo Funds
P.O. Box 219967
Kansas City, MO 64121-9967
Website: wfam.com
Individual investors: 1-800-222-8222
Retail investment professionals: 1-888-877-9275
Institutional investment professionals:1-866-765-0778
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. Before investing, please consider the investment objectives, risks, charges, and expenses of the investment. For a current prospectus and, if available, a summary prospectus, containing this information, call1-800-222-8222 or visit the Fund’s website atwfam.com. Read the prospectus carefully before you invest or send money.
Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management firms owned by Wells Fargo & Company. These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by Wells Fargo Funds Distributor, LLC (a broker-dealer and Member FINRA).
This material is for general informational and educational purposes only and is NOT intended to provide investment advice or a recommendation of any kind—including a recommendation for any specific investment, strategy, or plan.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
© 2019 Wells Fargo Funds Management, LLC. All rights reserved.
![]() | 401609 05-19 SA229/SAR229 03-19 |
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Semi-Annual Report
March 31, 2019
Wells Fargo Discovery Fund
Beginning on January 1, 2021, as permitted by new regulations adopted by the Securities and Exchange Commission, paper copies of the Wells Fargo Funds’ annual and semi-annual shareholder reports issued after this date will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website, and you will be notified by mail each time a report is posted and provided with a website address to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-222-8222 or by enrolling at wellsfargo.com/advantagedelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports; if you invest directly with the Fund, you can call 1-800-222-8222. Your election to receive reports in paper will apply to all Wells Fargo Funds held in your account with your financial intermediary or, if you are a direct investor, to all Wells Fargo Funds that you hold.
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Financial statements | ||||
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The views expressed and any forward-looking statements are as of March 31, 2019, unless otherwise noted, and are those of the Fund managers and/or Wells Fargo Asset Management. Discussions of individual securities, or the markets generally, or any Wells Fargo Fund are not intended as individual recommendations. Future events or results may vary significantly from those expressed in any forward-looking statements. The views expressed are subject to change at any time in response to changing circumstances in the market. Wells Fargo and the Fund disclaim any obligation to publicly update or revise any views expressed or forward-looking statements.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
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2 | Wells Fargo Discovery Fund | Letter to shareholders (unaudited) |
Andrew Owen
President
Wells Fargo Funds
December’s S&P 500 Index performance was the worst since 1931.
Dear Shareholder:
We are pleased to offer you this semi-annual report for the Wells Fargo Discovery Fund for the six-month period that ended March 31, 2019. Concerns about interest rate increases in the U.S., trade tensions, and geopolitical events drove equity losses and restrained bond returns during the fourth quarter of 2018. Investor sentiment improved during the first quarter of 2019 thanks to a shift in U.S. Federal Reserve (Fed) policy and consistent, if not spectacular, economic and business growth metrics.
For the period, U.S. stocks, as measured by the S&P 500 Index,1 lost 1.72% and international stocks, as measured by the MSCI ACWI ex USA Index (Net),2 fell 2.33%. Based on the MSCI EM Index (Net),3 emerging market stocks added 1.71%. For bond investors, the Bloomberg Barclays U.S. Aggregate Bond Index4 added 4.63% while the Bloomberg Barclays Global Aggregate ex-USD Index5 added 2.44%. The Bloomberg Barclays Municipal Bond Index6 added 4.63%, and the ICE BofAML U.S. High Yield Index7 gained 2.39%.
Conflicting data unsettled markets during the fourth quarter.
November’s U.S. midterm elections shifted control of the House of Representatives from Republicans to Democrats, presaging potential partisan clashes. Third-quarter U.S. gross domestic product was announced at an annualized 3.4% rate, lower than the second-quarter rate. Brexit efforts stalled ahead of the March 2019 deadline. The People’s Bank of China cut reserve requirement ratios, accelerated infrastructure spending, and cut taxes even as the value of the yuan declined to low levels last seen in 2008.
December’s S&P 500 Index performance was the worst since 1931. Globally, fixed-income investments fared better than stocks during the last two months of the year. The Fed increased the federal funds rate by 25 bps in December 2018 to a target range of between 2.25% and 2.50% and softened its outlook for 2019 rate increases.
The market climbs a wall of worry.
Investors entered 2019 with reasons to be concerned. A partial U.S. government shutdown driven by partisan spending and immigration policy disputes extended into January. Investors expected high levels of stock market volatility to continue based on the VIX8.
1 | The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index with each stock’s weight in the index proportionate to its market value. You cannot invest directly in an index. |
2 | The Morgan Stanley Capital International (MSCI) All Country World Index (ACWI) ex USA Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. You cannot invest directly in an index. |
3 | The MSCI Emerging Markets (EM) Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure large- and mid-cap equity market performance of emerging markets. The MSCI EM Index (Net) consists of the following 24 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and the United Arab Emirates. You cannot invest directly in an index. |
4 | The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid adjustable-rate mortgage pass-throughs), asset-backed securities, and commercial mortgage-backed securities. You cannot invest directly in an index. |
5 | The Bloomberg Barclays Global Aggregate ex-USD Index is an unmanaged index that provides a broad-based measure of the global investment-grade fixed-income markets excluding the U.S. dollar-denominated debt market. You cannot invest directly in an index. |
6 | The Bloomberg Barclays Municipal Bond Index is an unmanaged index composed of long-term tax-exempt bonds with a minimum credit rating of Baa. You cannot invest directly in an index. |
7 | The ICE BofAML U.S. High Yield Index is a market-capitalization-weighted index of domestic and Yankee high-yield bonds. The index tracks the performance of high-yield securities traded in the U.S. bond market. You cannot invest directly in an index. Copyright 2019. ICE Data Indices, LLC. All rights reserved. |
8 | The Chicago Board Options Exchange Market Volatility Index (VIX) is a popular measure of the implied volatility of S&P 500 Index options. It represents one measure of the market’s expectation of stock market volatility over the next 30-day period. You cannot invest directly in an index. |
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Letter to shareholders (unaudited) | Wells Fargo Discovery Fund | 3 |
January’s returns tended to support the investing adage that markets climb a wall of worry. The S&P 500 Index gained 8.01% for the month that ended January 31, 2019, its best monthly performance in 30 years. Returns for the MSCI ACWI ex USA Index (Net), the Bloomberg Barclays U.S. Aggregate Bond Index, and the Bloomberg Barclays Global Aggregate ex-USD Index also were positive. The Fed indicated that it would pause its program of regular rate increases during 2019 as inflation remained low. Businesses and investors responded positively to the shift in policy.
In February, concerns over slowing global growth reemerged. The Bureau of Economic Analysis announced fourth-quarter 2018 gross domestic product grew at an annualized 2.2% rate, down from the 4.2% annualized rate for the second quarter and the 3.4% annualized rate for the third quarter. Analysts attributed the lower growth rate to a slowing housing market and larger trade deficit. The U.S. Department of Labor said that the economy created just 20,000 jobs in February 2019. In a February report, the Bank of England forecast the slowest growth since the financial crisis for 2019. China and the U.S., while putting future tariffs on hold for the time being, continued to wrangle over trade issues.
By the end of March 2019, the combination of dovish Fed sentiment and consistent, if not spectacular, economic and business metrics reinforced investors’ enthusiasm for equity investing. Monthly job creation data regained its momentum. Corporate profits, while lower than 2018’s lofty levels, remained consistent. Inflation rates were relatively low in the U.S., Europe, and Japan. China announced a roughly $300 billion stimulus package through tax and fee cuts intended to reinvigorate economic growth.
Don’t let short-term uncertainty derail long-term investment goals.
Periods of investment uncertainty can present challenges, but experience has taught us that maintaining long-term investment goals can be an effective way to plan for the future. To help you create a sound strategy based on your personal goals and risk tolerance, Wells Fargo Funds offers more than 100 mutual funds spanning a wide range of asset classes and investment styles. Although diversification cannot guarantee an investment profit or prevent losses, we believe it can be an effective way to manage investment risk and potentially smooth out overall portfolio performance. We encourage investors to know their investments and to understand that appropriate levels of risk-taking may unlock opportunities.
Thank you for choosing to invest with Wells Fargo Funds. We appreciate your confidence in us and remain committed to helping you meet your financial needs.
Sincerely,
Andrew Owen
President
Wells Fargo Funds
January’s returns tended to support the investing adage that markets climb a wall of worry.
For further information about your Fund, contact your investment professional, visit our website atwfam.com, or call us directly at1-800-222-8222.
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4 | Wells Fargo Discovery Fund | Performance highlights (unaudited) |
Investment objective
The Fund seeks long-term capital appreciation.
Manager
Wells Fargo Funds Management, LLC
Subadviser
Wells Capital Management Incorporated
Portfolio managers
Michael T. Smith, CFA®‡
Christopher J. Warner, CFA®‡
Average annual total returns (%) as of March 31, 2019
Including sales charge | Excluding sales charge | Expense ratios1 (%) | ||||||||||||||||||||||||||||||||
Inception date | 1 year | 5 year | 10 year | 1 year | 5 year | 10 year | Gross | Net2 | ||||||||||||||||||||||||||
Class A (WFDAX) | 7-31-2007 | 4.51 | 8.42 | 16.85 | 10.88 | 9.71 | 17.54 | 1.21 | 1.21 | |||||||||||||||||||||||||
Class C (WDSCX) | 7-31-2007 | 9.05 | 8.89 | 16.66 | 10.05 | 8.89 | 16.66 | 1.96 | 1.96 | |||||||||||||||||||||||||
Class R6 (WFDRX)3 | 6-28-2013 | – | – | – | 11.36 | 10.18 | 18.03 | 0.78 | 0.78 | |||||||||||||||||||||||||
Administrator Class (WFDDX) | 4-8-2005 | – | – | – | 10.99 | 9.81 | 17.68 | 1.13 | 1.13 | |||||||||||||||||||||||||
Institutional Class (WFDSX) | 8-31-2006 | – | – | – | 11.28 | 10.09 | 17.97 | 0.88 | 0.88 | |||||||||||||||||||||||||
Russell 2500TM Growth Index4 | – | – | – | – | 7.54 | 9.72 | 17.50 | – | – |
Figures quoted represent past performance, which is no guarantee of future results, and do not reflect taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance shown without sales charges would be lower if sales charges were reflected. Current performance may be lower or higher than the performance data quoted, which assumes the reinvestment of dividends and capital gains. Current month-end performance is available on the Fund’s website, wfam.com.
Index returns do not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses, or any taxes. It is not possible to invest directly in an index.
For Class A shares, the maximum front-end sales charge is 5.75%. For Class C shares, the maximum contingent deferred sales charge is 1.00%. Performance including a contingent deferred sales charge assumes the sales charge for the corresponding time period. Class R6, Administrator Class, and Institutional Class shares are sold without a front-end sales charge or contingent deferred sales charge.
Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. Smaller-company stocks tend to be more volatile and less liquid than those of larger companies. Certain investment strategies tend to increase the total risk of an investment (relative to the broader market). The Fund is exposed to foreign investment risk. Consult the Fund’s prospectus for additional information on these and other risks.
Please see footnotes on page 5.
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Performance highlights (unaudited) | Wells Fargo Discovery Fund | 5 |
Ten largest holdings (%) as of March 31, 20195 | ||||
Waste Connections Incorporated | 2.95 | |||
WEX Incorporated | 2.17 | |||
Veeva Systems Incorporated Class A | 2.10 | |||
Shopify Incorporated Class A | 2.10 | |||
Black Knight Incorporated | 2.05 | |||
Booz Allen Hamilton Holding Corporation | 1.94 | |||
Zebra Technologies Corporation Class A | 1.88 | |||
EPAM Systems Incorporated | 1.88 | |||
Bright Horizons Family Solutions Incorporated | 1.85 | |||
Exact Sciences Corporation | 1.83 |
Sector distribution as of March 31, 20196 |
|
‡ | CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute. |
1 | Reflects the expense ratios as stated in the most recent prospectuses, which include the impact of 0.01% in acquired fund fees and expenses. The expense ratios shown are subject to change and may differ from the annualized expense ratios shown in the financial highlights of this report, which do not include acquired fund fees and expenses. |
2 | The manager has contractually committed through January 31, 2020, to waive fees and/or reimburse expenses to the extent necessary to cap the expenses of each class after fee waivers at 1.22% for Class A, 1.97% for Class C, 0.84% for Class R6, 1.15% for Administrator Class, and 0.89% for Institutional Class. Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the expense cap. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. Without this cap, the Fund’s returns would have been lower. The expense ratio paid by an investor is the net expense ratio (the total annual fund operating expenses after fee waivers) as stated in the prospectuses. |
3 | Historical performance shown for Class R6 shares prior to their inception reflects the performance of Institutional Class shares, and includes the higher expenses applicable to Institutional Class shares. If these expenses had not been included, the returns for Class R6 shares would be higher. |
4 | The Russell 2500™ Growth Index measures the performance of those Russell 2500 companies with higher price/book ratios and higher forecasted growth values. You cannot invest directly in an index. |
5 | The ten largest holdings, excluding cash, cash equivalents and any money market funds, are calculated based on the value of the investments divided by total net assets of the Fund. Holdings are subject to change and may have changed since the date specified. |
6 | Amounts are calculated based on the total long-term investments of the Fund. These amounts are subject to change and may have changed since the date specified. |
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6 | Wells Fargo Discovery Fund | Fund expenses (unaudited) |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (if any) on redemptions and (2) ongoing costs, including management fees, distribution (12b-1) and/or shareholder servicing fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period from October 1, 2018 to March 31, 2019.
Actual expenses
The “Actual” line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the “Actual” line under the heading entitled “Expenses paid during period” for your applicable class of shares to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The “Hypothetical” line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and contingent deferred sales charges. Therefore, the “Hypothetical” line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 10-1-2018 | Ending account value 3-31-2019 | Expenses paid during the period¹ | Annualized net expense ratio | |||||||||||||
Class A | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 979.66 | $ | 5.97 | 1.21 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,018.90 | $ | 6.09 | 1.21 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 975.85 | $ | 9.61 | 1.95 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,015.21 | $ | 9.80 | 1.95 | % | ||||||||
Class R6 | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 981.66 | $ | 3.85 | 0.78 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.04 | $ | 3.93 | 0.78 | % | ||||||||
Administrator Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 980.14 | $ | 5.58 | 1.13 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,019.30 | $ | 5.69 | 1.13 | % | ||||||||
Institutional Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 981.33 | $ | 4.30 | 0.87 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.59 | $ | 4.38 | 0.87 | % |
1 | Expenses paid is equal to the annualized net expense ratio of each class multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year (to reflect the one-half-year period). |
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Discovery Fund | 7 |
Security name | Shares | Value | ||||||||||||||
Common Stocks: 97.61% | ||||||||||||||||
Communication Services: 4.34% | ||||||||||||||||
Entertainment: 2.96% | ||||||||||||||||
Take-Two Interactive Software Incorporated † | 346,000 | $ | 32,652,020 | |||||||||||||
World Wrestling Entertainment Incorporated Class A « | 526,300 | 45,672,314 | ||||||||||||||
78,324,334 | ||||||||||||||||
|
| |||||||||||||||
Interactive Media & Services: 1.38% | ||||||||||||||||
Match Group Incorporated « | 645,000 | 36,513,450 | ||||||||||||||
|
| |||||||||||||||
Consumer Discretionary: 15.01% | ||||||||||||||||
Diversified Consumer Services: 3.10% | ||||||||||||||||
Adtalem Global Education Incorporated † | 712,800 | 33,016,896 | ||||||||||||||
Bright Horizons Family Solutions Incorporated † | 385,740 | 49,031,411 | ||||||||||||||
82,048,307 | ||||||||||||||||
|
| |||||||||||||||
Hotels, Restaurants & Leisure: 6.51% | ||||||||||||||||
Chipotle Mexican Grill Incorporated † | 61,000 | 43,328,910 | ||||||||||||||
Domino’s Pizza Incorporated | 144,500 | 37,295,450 | ||||||||||||||
Eldorado Resorts Incorporated † | 943,100 | 44,033,339 | ||||||||||||||
Vail Resorts Incorporated | 218,614 | 47,504,822 | ||||||||||||||
172,162,521 | ||||||||||||||||
|
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Household Durables: 0.96% | ||||||||||||||||
Skyline Champion Corporation | 1,337,300 | 25,408,700 | ||||||||||||||
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Internet & Direct Marketing Retail: 2.82% | ||||||||||||||||
MercadoLibre Incorporated † | 90,910 | 46,157,734 | ||||||||||||||
Wayfair Incorporated Class A †« | 192,125 | 28,520,956 | ||||||||||||||
74,678,690 | ||||||||||||||||
|
| |||||||||||||||
Specialty Retail: 1.62% | ||||||||||||||||
Burlington Stores Incorporated † | 272,865 | 42,752,488 | ||||||||||||||
|
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Consumer Staples: 1.00% | ||||||||||||||||
Food Products: 1.00% | ||||||||||||||||
Lamb Weston Holdings Incorporated | 351,500 | 26,341,410 | ||||||||||||||
|
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Financials: 1.94% | ||||||||||||||||
Capital Markets: 0.94% | ||||||||||||||||
MarketAxess Holdings Incorporated | 100,500 | 24,731,040 | ||||||||||||||
|
| |||||||||||||||
Consumer Finance: 1.00% | ||||||||||||||||
SLM Corporation | 2,670,300 | 26,462,673 | ||||||||||||||
|
| |||||||||||||||
Health Care: 21.84% | ||||||||||||||||
Biotechnology: 6.58% | ||||||||||||||||
AnaptysBio Incorporated † | 166,135 | 12,136,162 | ||||||||||||||
Array BioPharma Incorporated † | 1,007,079 | 24,552,586 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
8 | Wells Fargo Discovery Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Biotechnology(continued) | ||||||||||||||||
CRISPR Therapeutics AG †« | 293,471 | $ | 10,482,784 | |||||||||||||
Exact Sciences Corporation † | 559,800 | 48,489,876 | ||||||||||||||
Immunomedics Incorporated †« | 751,300 | 14,432,473 | ||||||||||||||
Invitae Corporation † | 669,398 | 15,677,301 | ||||||||||||||
Mirati Therapeutics Incorporated † | 205,300 | 15,048,490 | ||||||||||||||
Precision BioSciences Incorporated † | 360,366 | 6,468,570 | ||||||||||||||
Sarepta Therapeutics Incorporated †« | 146,335 | 17,441,669 | ||||||||||||||
Zai Lab Limited ADR † | 312,100 | 9,210,071 | ||||||||||||||
173,939,982 | ||||||||||||||||
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Health Care Equipment & Supplies: 7.09% | ||||||||||||||||
Avanos Medical Incorporated † | 575,300 | 24,553,804 | ||||||||||||||
DexCom Incorporated † | 131,600 | 15,673,560 | ||||||||||||||
Haemonetics Corporation † | 334,100 | 29,227,068 | ||||||||||||||
ICU Medical Incorporated † | 156,961 | 37,565,476 | ||||||||||||||
Insulet Corporation †« | 329,395 | 31,322,171 | ||||||||||||||
iRhythm Technologies Incorporated † | 389,714 | 29,212,961 | ||||||||||||||
Penumbra Incorporated †« | 135,600 | 19,934,556 | ||||||||||||||
187,489,596 | ||||||||||||||||
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Health Care Providers & Services: 2.13% | ||||||||||||||||
HealthEquity Incorporated † | 386,900 | 28,622,862 | ||||||||||||||
WellCare Health Plans Incorporated † | 103,000 | 27,784,250 | ||||||||||||||
56,407,112 | ||||||||||||||||
|
| |||||||||||||||
Health Care Technology: 2.10% | ||||||||||||||||
Veeva Systems Incorporated Class A † | 438,700 | 55,653,482 | ||||||||||||||
|
| |||||||||||||||
Life Sciences Tools & Services: 1.39% | ||||||||||||||||
Bio-Rad Laboratories Incorporated Class A † | 119,800 | 36,620,464 | ||||||||||||||
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Pharmaceuticals: 2.55% | ||||||||||||||||
Elanco Animal Health Incorporated † | 1,307,318 | 41,925,688 | ||||||||||||||
GW Pharmaceuticals plc ADR †« | 99,900 | 16,840,143 | ||||||||||||||
Wave Life Sciences Limited †« | 222,800 | 8,655,780 | ||||||||||||||
67,421,611 | ||||||||||||||||
|
| |||||||||||||||
Industrials: 18.04% | ||||||||||||||||
Aerospace & Defense: 2.86% | ||||||||||||||||
Mercury Computer Systems Incorporated † | 556,919 | 35,687,370 | ||||||||||||||
Teledyne Technologies Incorporated † | 168,600 | 39,959,886 | ||||||||||||||
75,647,256 | ||||||||||||||||
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Building Products: 1.34% | ||||||||||||||||
A.O. Smith Corporation | 666,900 | 35,559,108 | ||||||||||||||
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Commercial Services & Supplies: 7.04% | ||||||||||||||||
Casella Waste Systems Incorporated Class A † | 990,974 | 35,239,035 | ||||||||||||||
Cintas Corporation | 198,500 | 40,118,835 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Discovery Fund | 9 |
Security name | Shares | Value | ||||||||||||||
Commercial Services & Supplies(continued) | ||||||||||||||||
The Brink’s Company | 434,800 | $ | 32,788,268 | |||||||||||||
Waste Connections Incorporated | 880,029 | 77,961,769 | ||||||||||||||
186,107,907 | ||||||||||||||||
|
| |||||||||||||||
Construction & Engineering: 0.95% | ||||||||||||||||
WillScot Corporation † | 2,278,250 | 25,265,793 | ||||||||||||||
|
| |||||||||||||||
Machinery: 2.72% | ||||||||||||||||
The Middleby Corporation † | 291,600 | 37,916,748 | ||||||||||||||
Woodward Governor Company | 359,300 | 34,093,977 | ||||||||||||||
72,010,725 | ||||||||||||||||
|
| |||||||||||||||
Road & Rail: 1.13% | ||||||||||||||||
Saia Incorporated † | 488,100 | 29,822,910 | ||||||||||||||
|
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Trading Companies & Distributors: 2.00% | ||||||||||||||||
SiteOne Landscape Supply Incorporated † | 376,943 | 21,542,292 | ||||||||||||||
Univar Incorporated † | 1,409,541 | 31,235,429 | ||||||||||||||
52,777,721 | ||||||||||||||||
|
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Information Technology: 33.87% | ||||||||||||||||
Communications Equipment: 1.63% | ||||||||||||||||
Motorola Solutions Incorporated | 307,100 | 43,122,982 | ||||||||||||||
|
| |||||||||||||||
Electronic Equipment, Instruments & Components: 5.29% | ||||||||||||||||
Littelfuse Incorporated | 162,824 | 29,712,124 | ||||||||||||||
Novanta Incorporated † | 325,040 | 27,540,639 | ||||||||||||||
Rogers Corporation † | 208,399 | 33,110,433 | ||||||||||||||
Zebra Technologies Corporation Class A † | 236,800 | 49,616,704 | ||||||||||||||
139,979,900 | ||||||||||||||||
|
| |||||||||||||||
IT Services: 18.15% | ||||||||||||||||
Black Knight Incorporated † | 994,419 | 54,195,836 | ||||||||||||||
Booz Allen Hamilton Holding Corporation | 880,600 | 51,198,084 | ||||||||||||||
EPAM Systems Incorporated † | 293,179 | 49,585,364 | ||||||||||||||
Euronet Worldwide Incorporated † | 304,172 | 43,371,885 | ||||||||||||||
Gartner Incorporated † | 193,100 | 29,289,408 | ||||||||||||||
InterXion Holding NV † | 143,900 | 9,602,447 | ||||||||||||||
PagSeguro Digital Limited Class A †« | 1,103,100 | 32,927,535 | ||||||||||||||
Shopify Incorporated Class A † | 268,500 | 55,477,470 | ||||||||||||||
Total System Services Incorporated | 402,100 | 38,203,521 | ||||||||||||||
Twilio Incorporated Class A † | 270,700 | 34,969,026 | ||||||||||||||
WEX Incorporated † | 299,500 | 57,501,005 | ||||||||||||||
WNS Holdings Limited ADR † | 445,500 | 23,731,785 | ||||||||||||||
480,053,366 | ||||||||||||||||
|
| |||||||||||||||
Semiconductors & Semiconductor Equipment: 1.10% | ||||||||||||||||
Advanced Micro Devices Incorporated †« | 1,135,800 | 28,985,616 | ||||||||||||||
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The accompanying notes are an integral part of these financial statements.
Table of Contents
10 | Wells Fargo Discovery Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Software: 6.84% | ||||||||||||||||
2U Incorporated † | 415,200 | $ | 29,416,920 | |||||||||||||
DocuSign Incorporated † | 568,100 | 29,450,304 | ||||||||||||||
Envestnet Incorporated † | 461,925 | 30,205,276 | ||||||||||||||
Globant SA † | 442,600 | 31,601,640 | ||||||||||||||
Pluralsight Incorporated Class A † | 879,811 | 27,925,201 | ||||||||||||||
Zendesk Incorporated † | 378,900 | 32,206,500 | ||||||||||||||
180,805,841 | ||||||||||||||||
|
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Technology Hardware, Storage & Peripherals: 0.86% | ||||||||||||||||
NCR Corporation † | 831,900 | 22,702,551 | ||||||||||||||
|
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Materials: 1.57% | ||||||||||||||||
Chemicals: 1.57% | ||||||||||||||||
Ingevity Corporation † | 392,800 | 41,483,609 | ||||||||||||||
|
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Total Common Stocks (Cost $1,964,694,628) | 2,581,281,145 | |||||||||||||||
|
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Yield | ||||||||||||||||
Short-Term Investments: 10.22% | ||||||||||||||||
Investment Companies: 10.22% | ||||||||||||||||
Securities Lending Cash Investments LLC (l)(r)(u) | 2.55 | % | 188,330,667 | 188,349,500 | ||||||||||||
Wells Fargo Government Money Market Fund Select Class (l)(u) | 2.38 | 81,820,557 | 81,820,557 | |||||||||||||
Total Short-Term Investments (Cost $270,167,069) | 270,170,057 | |||||||||||||||
|
|
Total investments in securities (Cost $2,234,861,697) | 107.83 | % | 2,851,451,202 | |||||
Other assets and liabilities, net | (7.83 | ) | (207,022,326 | ) | ||||
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Total net assets | 100.00 | % | $ | 2,644,428,876 | ||||
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† | Non-income-earning security |
« | All or a portion of this security is on loan. |
(l) | The issuer of the security is an affiliated person of the Fund as defined in the Investment Company Act of 1940. |
(r) | The investment is a non-registered investment company purchased with cash collateral received from securities on loan. |
(u) | The rate represents the 7-day annualized yield at period end. |
Abbreviations:
ADR | American depositary receipt |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Discovery Fund | 11 |
Investments in Affiliates
An affiliated investment is an investment in which the Fund owns at least 5% of the outstanding voting shares of the issuer or as a result of other relationships, such as the Fund and the issuer having the same investment manager. Transactions with issuers that were either affiliated persons of the Fund at the beginning of the period or the end of the period were as follows:
Shares, beginning of period | Shares purchased | Shares sold | Shares, end of period | Net realized gains (losses) | Net change in unrealized gains (losses) | Income from affiliated securities | Value, end of period | % of net assets | ||||||||||||||||||||||||||||
Short-Term Investments | ||||||||||||||||||||||||||||||||||||
Investment Companies | ||||||||||||||||||||||||||||||||||||
Securities Lending Cash Investments LLC | 224,067,768 | 597,247,694 | 632,984,795 | 188,330,667 | $ | 0 | $ | 0 | $ | 1,918,056 | $ | 188,349,500 | ||||||||||||||||||||||||
Wells Fargo Government Money Market Fund Select Class | 32,383,204 | 429,550,400 | 380,113,047 | 81,820,557 | 0 | 0 | 564,089 | 81,820,557 | ||||||||||||||||||||||||||||
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$ | 0 | $ | 0 | $ | 2,482,145 | $ | 270,170,057 | 10.22 | % | |||||||||||||||||||||||||||
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The accompanying notes are an integral part of these financial statements.
Table of Contents
12 | Wells Fargo Discovery Fund | Statement of assets and liabilities—March 31, 2019 (unaudited) |
Assets | ||||
Investments in unaffiliated securities (including $184,274,173 of securities loaned), at value (cost $1,964,694,628) | $ | 2,581,281,145 | ||
Investments in affiliated securities, at value (cost $270,167,069) | 270,170,057 | |||
Receivable for investments sold | 3,973,482 | |||
Receivable for Fund shares sold | 3,341,031 | |||
Receivable for dividends | 687,387 | |||
Receivable for securities lending income | 83,898 | |||
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Total assets | 2,859,537,000 | |||
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Liabilities | ||||
Payable upon receipt of securities loaned | 188,364,251 | |||
Payable for investments purchased | 22,443,325 | |||
Payable for Fund shares redeemed | 1,664,271 | |||
Management fee payable | 1,609,653 | |||
Administration fees payable | 291,639 | |||
Distribution fee payable | 20,150 | |||
Trustees’ fees and expenses payable | 1,467 | |||
Accrued expenses and other liabilities | 713,368 | |||
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Total liabilities | 215,108,124 | |||
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Total net assets | $ | 2,644,428,876 | ||
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NET ASSETS CONSIST OF | ||||
Paid-in capital | $ | 1,994,579,705 | ||
Total distributable earnings | 649,849,171 | |||
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Total net assets | $ | 2,644,428,876 | ||
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COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE | ||||
Net assets – Class A | $ | 626,313,008 | ||
Shares outstanding – Class A1 | 19,965,663 | |||
Net asset value per share – Class A | $31.37 | |||
Maximum offering price per share – Class A2 | $33.28 | |||
Net assets – Class C | $ | 31,614,515 | ||
Shares outstanding – Class C1 | 1,180,405 | |||
Net asset value per share – Class C | $26.78 | |||
Net assets – Class R6 | $ | 502,961,022 | ||
Shares outstanding – Class R61 | 14,530,253 | |||
Net asset value per share – Class R6 | $34.61 | |||
Net assets – Administrator Class | $ | 328,111,998 | ||
Shares outstanding – Administrator Class1 | 10,066,187 | |||
Net asset value per share – Administrator Class | $32.60 | |||
Net assets – Institutional Class | $ | 1,155,428,333 | ||
Shares outstanding – Institutional Class1 | 33,602,050 | |||
Net asset value per share – Institutional Class | $34.39 |
1 | The Fund has an unlimited number of authorized shares. |
2 | Maximum offering price is computed as 100/94.25 of net asset value. On investments of $50,000 or more, the offering price is reduced. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of operations—six months ended March 31, 2019 (unaudited) | Wells Fargo Discovery Fund | 13 |
Investment income | ||||
Dividends (net of foreign withholding taxes of $44,633) | $ | 6,981,719 | ||
Income from affiliated securities | 564,089 | |||
Securities lending income from affiliates, net | 451,779 | |||
|
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Total investment income | 7,997,587 | |||
|
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Expenses | ||||
Management fee | 9,097,020 | |||
Administration fees | ||||
Class A | 612,876 | |||
Class C | 34,516 | |||
Class R6 | 69,694 | |||
Administrator Class | 198,907 | |||
Institutional Class | 730,299 | |||
Shareholder servicing fees | ||||
Class A | 729,615 | |||
Class C | 41,090 | |||
Administrator Class | 382,513 | |||
Distribution fee | ||||
Class C | 123,270 | |||
Custody and accounting fees | 72,992 | |||
Professional fees | 22,397 | |||
Registration fees | 28,438 | |||
Shareholder report expenses | 96,642 | |||
Trustees’ fees and expenses | 10,969 | |||
Other fees and expenses | 25,825 | |||
|
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Total expenses | 12,277,063 | |||
Less: Fee waivers and/or expense reimbursements | (2,175 | ) | ||
|
| |||
Net expenses | 12,274,888 | |||
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Net investment loss | (4,277,301 | ) | ||
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REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | ||||
Net realized gains on investments | 60,698,082 | |||
Net change in unrealized gains (losses) on investments | (151,746,180 | ) | ||
|
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Net realized and unrealized gains (losses) on investments | (91,048,098 | ) | ||
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Net decrease in net assets resulting from operations | $ | (95,325,399 | ) | |
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The accompanying notes are an integral part of these financial statements.
Table of Contents
14 | Wells Fargo Discovery Fund | Statement of changes in net assets |
Six months ended (unaudited) | Year ended September 30, 2018 | |||||||||||||||
Operations | ||||||||||||||||
Net investment loss | $ | (4,277,301 | ) | $ | (12,786,673 | ) | ||||||||||
Net realized gains on investments | 60,698,082 | 373,064,864 | ||||||||||||||
Net change in unrealized gains (losses) on investments | (151,746,180 | ) | 224,747,286 | |||||||||||||
|
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Net increase (decrease) in net assets resulting from operations | (95,325,399 | ) | 585,025,477 | |||||||||||||
|
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Distributions to shareholders from net investment income and net realized gains | ||||||||||||||||
Class A | (88,695,435 | ) | (99,511,453 | ) | ||||||||||||
Class C | (5,933,378 | ) | (7,025,882 | ) | ||||||||||||
Class R6 | (63,357,174 | ) | (54,328,520 | ) | ||||||||||||
Administrator Class | (44,501,716 | ) | (51,960,260 | ) | ||||||||||||
Institutional Class | (163,733,298 | ) | (179,090,110 | ) | ||||||||||||
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Total distributions to shareholders | (366,221,001 | ) | (391,916,225 | ) | ||||||||||||
|
| |||||||||||||||
Capital share transactions | Shares | Shares | ||||||||||||||
Proceeds from shares sold | ||||||||||||||||
Class A | 930,621 | 27,984,547 | 1,452,010 | 51,353,312 | ||||||||||||
Class C | 73,058 | 1,816,652 | 112,021 | 3,424,044 | ||||||||||||
Class R6 | 1,010,712 | 33,688,160 | 4,113,741 | 158,001,613 | ||||||||||||
Administrator Class | 495,259 | 15,558,276 | 918,595 | 33,383,569 | ||||||||||||
Institutional Class | 2,957,459 | 96,867,453 | 6,492,817 | 245,683,308 | ||||||||||||
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| |||||||||||||||
175,915,088 | 491,845,846 | |||||||||||||||
|
| |||||||||||||||
Reinvestment of distributions | ||||||||||||||||
Class A | 3,194,495 | 86,155,536 | 3,004,879 | 96,516,712 | ||||||||||||
Class C | 234,117 | 5,403,420 | 221,675 | 6,302,232 | ||||||||||||
Class R6 | 2,119,233 | 62,983,596 | 1,557,379 | 54,087,762 | ||||||||||||
Administrator Class | 1,575,742 | 44,136,530 | 1,557,195 | 51,621,001 | ||||||||||||
Institutional Class | 5,074,483 | 149,849,493 | 4,841,719 | 167,426,637 | ||||||||||||
|
| |||||||||||||||
348,528,575 | 375,954,344 | |||||||||||||||
|
| |||||||||||||||
Payment for shares redeemed | ||||||||||||||||
Class A | (1,958,871 | ) | (58,006,505 | ) | (3,309,751 | ) | (116,123,418 | ) | ||||||||
Class C | (347,922 | ) | (8,691,535 | ) | (327,097 | ) | (10,270,806 | ) | ||||||||
Class R6 | (1,465,345 | ) | (49,567,693 | ) | (1,827,978 | ) | (69,640,517 | ) | ||||||||
Administrator Class | (995,013 | ) | (31,458,909 | ) | (2,456,379 | ) | (87,966,732 | ) | ||||||||
Institutional Class | (7,366,520 | ) | (224,482,232 | ) | (8,225,567 | ) | (314,872,170 | ) | ||||||||
|
| |||||||||||||||
(372,206,874 | ) | (598,873,643 | ) | |||||||||||||
|
| |||||||||||||||
Net increase in net assets resulting from capital share transactions | 152,236,789 | 268,926,547 | ||||||||||||||
|
| |||||||||||||||
Total increase (decrease) in net assets | (309,309,611 | ) | 462,035,799 | |||||||||||||
|
| |||||||||||||||
Net assets | ||||||||||||||||
Beginning of period | 2,953,738,487 | 2,491,702,688 | ||||||||||||||
|
| |||||||||||||||
End of period | $ | 2,644,428,876 | $ | 2,953,738,487 | ||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
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Financial highlights | Wells Fargo Discovery Fund | 15 |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS A | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $38.03 | $36.47 | $29.94 | $30.48 | $32.35 | $33.50 | ||||||||||||||||||
Net investment loss | (0.09 | ) | (0.26 | ) | (0.23 | ) | (0.18 | )1 | (0.24 | ) | (0.30 | ) | ||||||||||||
Net realized and unrealized gains (losses) on investments | (1.51 | ) | 7.85 | 7.17 | 2.23 | 0.96 | 1.36 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (1.60 | ) | 7.59 | 6.94 | 2.05 | 0.72 | 1.06 | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net realized gains | (5.06 | ) | (6.03 | ) | (0.41 | ) | (2.59 | ) | (2.59 | ) | (2.21 | ) | ||||||||||||
Net asset value, end of period | $31.37 | $38.03 | $36.47 | $29.94 | $30.48 | $32.35 | ||||||||||||||||||
Total return2 | (2.03 | )% | 23.86 | % | 23.42 | % | 7.33 | % | 2.09 | % | 3.15 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.21 | % | 1.20 | % | 1.21 | % | 1.20 | % | 1.23 | % | 1.25 | % | ||||||||||||
Net expenses | 1.21 | % | 1.20 | % | 1.21 | % | 1.20 | % | 1.21 | % | 1.22 | % | ||||||||||||
Net investment loss | (0.57 | )% | (0.69 | )% | (0.70 | )% | (0.64 | )% | (0.64 | )% | (0.95 | )% | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 32 | % | 67 | % | 73 | % | 78 | % | 87 | % | 84 | % | ||||||||||||
Net assets, end of period (000s omitted) | $626,313 | $676,930 | $607,318 | $641,786 | $294,661 | $335,221 |
1 | Calculated based upon average shares outstanding |
2 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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16 | Wells Fargo Discovery Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS C | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $33.46 | $32.99 | $27.32 | $28.24 | $30.37 | $31.81 | ||||||||||||||||||
Net investment loss | (0.17 | )1 | (0.46 | ) | (0.42 | )1 | (0.37 | )1 | (0.43 | )1 | (0.35 | ) | ||||||||||||
Net realized and unrealized gains (losses) on investments | (1.45 | ) | 6.96 | 6.50 | 2.04 | 0.89 | 1.12 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (1.62 | ) | 6.50 | 6.08 | 1.67 | 0.46 | 0.77 | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net realized gains | (5.06 | ) | (6.03 | ) | (0.41 | ) | (2.59 | ) | (2.59 | ) | (2.21 | ) | ||||||||||||
Net asset value, end of period | $26.78 | $33.46 | $32.99 | $27.32 | $28.24 | $30.37 | ||||||||||||||||||
Total return2 | (2.41 | )% | 22.94 | % | 22.51 | % | 6.51 | % | 1.35 | % | 2.33 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.95 | % | 1.95 | % | 1.96 | % | 1.95 | % | 1.98 | % | 2.00 | % | ||||||||||||
Net expenses | 1.95 | % | 1.95 | % | 1.96 | % | 1.95 | % | 1.96 | % | 1.97 | % | ||||||||||||
Net investment loss | (1.31 | )% | (1.45 | )% | (1.45 | )% | (1.41 | )% | (1.39 | )% | (1.70 | )% | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 32 | % | 67 | % | 73 | % | 78 | % | 87 | % | 84 | % | ||||||||||||
Net assets, end of period (000s omitted) | $31,615 | $40,860 | $40,070 | $49,538 | $66,772 | $84,585 |
1 | Calculated based upon average shares outstanding |
2 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Discovery Fund | 17 |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS R6 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $41.26 | $38.93 | $31.80 | $32.08 | $33.78 | $34.73 | ||||||||||||||||||
Net investment loss | (0.02 | )1 | (0.10 | )1 | (0.08 | ) | (0.07 | ) | (0.07 | ) | (0.17 | ) | ||||||||||||
Net realized and unrealized gains (losses) on investments | (1.57 | ) | 8.46 | 7.62 | 2.38 | 0.96 | 1.43 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (1.59 | ) | 8.36 | 7.54 | 2.31 | 0.89 | 1.26 | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net realized gains | (5.06 | ) | (6.03 | ) | (0.41 | ) | (2.59 | ) | (2.59 | ) | (2.21 | ) | ||||||||||||
Net asset value, end of period | $34.61 | $41.26 | $38.93 | $31.80 | $32.08 | $33.78 | ||||||||||||||||||
Total return2 | (1.83 | )% | 24.39 | % | 23.98 | % | 7.77 | % | 2.53 | % | 3.60 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 0.78 | % | 0.78 | % | 0.78 | % | 0.77 | % | 0.76 | % | 0.77 | % | ||||||||||||
Net expenses | 0.78 | % | 0.78 | % | 0.78 | % | 0.77 | % | 0.76 | % | 0.77 | % | ||||||||||||
Net investment loss | (0.15 | )% | (0.26 | )% | (0.27 | )% | (0.22 | )% | (0.21 | )% | (0.45 | )% | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 32 | % | 67 | % | 73 | % | 78 | % | 87 | % | 84 | % | ||||||||||||
Net assets, end of period (000s omitted) | $502,961 | $530,879 | $351,268 | $300,118 | $273,941 | $221,043 |
1 | Calculated based upon average shares outstanding |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
18 | Wells Fargo Discovery Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | |||||||||||||||||||||||
ADMINISTRATOR CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $39.27 | $37.44 | $30.70 | $31.17 | $32.99 | $34.08 | ||||||||||||||||||
Net investment loss | (0.08 | )1 | (0.23 | ) | (0.20 | )1 | (0.17 | )1 | (0.20 | ) | (0.27 | )1 | ||||||||||||
Net realized and unrealized gains (losses) on investments | (1.53 | ) | 8.09 | 7.35 | 2.29 | 0.97 | 1.39 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (1.61 | ) | 7.86 | 7.15 | 2.12 | 0.77 | 1.12 | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net realized gains | (5.06 | ) | (6.03 | ) | (0.41 | ) | (2.59 | ) | (2.59 | ) | (2.21 | ) | ||||||||||||
Net asset value, end of period | $32.60 | $39.27 | $37.44 | $30.70 | $31.17 | $32.99 | ||||||||||||||||||
Total return2 | (1.99 | )% | 23.97 | % | 23.52 | % | 7.40 | % | 2.24 | % | 3.25 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.13 | % | 1.12 | % | 1.13 | % | 1.12 | % | 1.09 | % | 1.08 | % | ||||||||||||
Net expenses | 1.13 | % | 1.12 | % | 1.13 | % | 1.12 | % | 1.09 | % | 1.08 | % | ||||||||||||
Net investment loss | (0.49 | )% | (0.62 | )% | (0.62 | )% | (0.58 | )% | (0.52 | )% | (0.81 | )% | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 32 | % | 67 | % | 73 | % | 78 | % | 87 | % | 84 | % | ||||||||||||
Net assets, end of period (000s omitted) | $328,112 | $353,042 | $335,898 | $400,997 | $575,568 | $687,537 |
1 | Calculated based upon average shares outstanding |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Discovery Fund | 19 |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | |||||||||||||||||||||||
INSTITUTIONAL CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $41.05 | $38.79 | $31.72 | $32.04 | $33.76 | $34.74 | ||||||||||||||||||
Net investment loss | (0.05 | ) | (0.18 | ) | (0.13 | )1 | (0.10 | ) | (0.09 | ) | (0.20 | ) | ||||||||||||
Net realized and unrealized gains (losses) on investments | (1.55 | ) | 8.47 | 7.61 | 2.37 | 0.96 | 1.43 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (1.60 | ) | 8.29 | 7.48 | 2.27 | 0.87 | 1.23 | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net realized gains | (5.06 | ) | (6.03 | ) | (0.41 | ) | (2.59 | ) | (2.59 | ) | (2.21 | ) | ||||||||||||
Net asset value, end of period | $34.39 | $41.05 | $38.79 | $31.72 | $32.04 | $33.76 | ||||||||||||||||||
Total return2 | (1.87 | )% | 24.25 | % | 23.88 | % | 7.68 | % | 2.47 | % | 3.51 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 0.87 | % | 0.87 | % | 0.88 | % | 0.87 | % | 0.82 | % | 0.82 | % | ||||||||||||
Net expenses | 0.87 | % | 0.87 | % | 0.88 | % | 0.87 | % | 0.82 | % | 0.82 | % | ||||||||||||
Net investment loss | (0.23 | )% | (0.36 | )% | (0.37 | )% | (0.32 | )% | (0.26 | )% | (0.54 | )% | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 32 | % | 67 | % | 73 | % | 78 | % | 87 | % | 84 | % | ||||||||||||
Net assets, end of period (000s omitted) | $1,155,428 | $1,352,027 | $1,157,148 | $1,316,107 | $1,436,125 | $1,396,603 |
1 | Calculated based upon average shares outstanding |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
20 | Wells Fargo Discovery Fund | Notes to financial statements (unaudited) |
1. ORGANIZATION
Wells Fargo Funds Trust (the “Trust”), a Delaware statutory trust organized on March 10, 1999, is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As an investment company, the Trust follows the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946, Financial Services – Investment Companies. These financial statements report on the Wells Fargo Discovery Fund (the “Fund”) which is a diversified series of the Trust.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Fund, are in conformity with U.S. generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Securities valuation
All investments are valued each business day as of the close of regular trading on the New York Stock Exchange (generally 4 p.m. Eastern Time), although the Fund may deviate from this calculation time under unusual or unexpected circumstances.
Equity securities that are listed on a foreign or domestic exchange or market are valued at the official closing price or, if none, the last sales price. If no sale occurs on the principal exchange or market that day, a fair value price will be determined in accordance with the Fund’s Valuation Procedures.
Investments in registered open-end investment companies are valued at net asset value. Interests in non-registered investment companies that are redeemable at net asset value are fair valued normally at net asset value.
Investments which are not valued using any of the methods discussed above are valued at their fair value, as determined in good faith by the Board of Trustees of the Fund. The Board of Trustees has established a Valuation Committee comprised of the Trustees and has delegated to it the authority to take any actions regarding the valuation of portfolio securities that the Valuation Committee deems necessary or appropriate, including determining the fair value of portfolio securities, unless the determination has been delegated to the Wells Fargo Asset Management Pricing Committee at Wells Fargo Funds Management, LLC (“Funds Management”). The Board of Trustees retains the authority to make or ratify any valuation decisions or approve any changes to the Valuation Procedures as it deems appropriate. On a quarterly basis, the Board of Trustees receives reports on any valuation actions taken by the Valuation Committee or the Wells Fargo Asset Management Pricing Committee which may include items for ratification.
Foreign currency translation
The accounting records of the Fund are maintained in U.S. dollars. The values of other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at rates provided by an independent foreign currency pricing source at a time each business day specified by the Wells Fargo Asset Management Pricing Committee. Purchases and sales of securities, and income and expenses are converted at the rate of exchange on the respective dates of such transactions. Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded and the U.S. dollar equivalent of the amounts actually paid or received. Net unrealized foreign exchange gains and losses arise from changes in the fair value of assets and liabilities other than investments in securities resulting from changes in exchange rates. The changes in net assets arising from changes in exchange rates of securities and the changes in net assets resulting from changes in market prices of securities are not separately presented. Such changes are included in net realized and unrealized gains or losses from investments.
Securities lending
The Fund may lend its securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The Fund continues to receive interest or dividends on the securities loaned. The Fund receives collateral in the form of cash or securities with a value at least equal to the value of the securities on loan. The value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. In a securities lending transaction, the net asset value of the Fund will be affected by an increase or decrease in the value of the securities loaned and by an increase or decrease in the value of the instrument in which collateral is invested. The amount of securities lending activity undertaken by the Fund fluctuates from time to time. In the event of default or bankruptcy by the borrower, the Fund may be prevented from recovering the loaned securities or gaining access to the collateral or
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Notes to financial statements (unaudited) | Wells Fargo Discovery Fund | 21 |
may experience delays or costs in doing so. In addition, the investment of any cash collateral received may lose all or part of its value. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.
The Fund lends its securities through an unaffiliated securities lending agent. Cash collateral received in connection with its securities lending transactions is invested in Securities Lending Cash Investments, LLC (the “Securities Lending Fund”). The Securities Lending Fund is exempt from registration under Section 3(c)(7) of the 1940 Act and is managed by Funds Management and is subadvised by Wells Capital Management Incorporated (“WellsCap”), an affiliate of Funds Management and an indirect wholly owned subsidiary of Wells Fargo & Company (“Wells Fargo”). Funds Management receives an advisory fee starting at 0.05% and declining to 0.01% as the average daily net assets of the Securities Lending Fund increase. All of the fees received by Funds Management are paid to WellsCap for its services as subadviser. The Securities Lending Fund seeks to provide a positive return compared to the daily Fed Funds Open Rate by investing in high-quality, U.S. dollar-denominated short-term money market instruments. Securities Lending Fund investments are valued at the evaluated bid price provided by an independent pricing service. Income earned from investment in the Securities Lending Fund, if any, is included in securities lending income from affiliates (net of fees and rebates) on the Statement of Operations.
Security transactions and income recognition
Securities transactions are recorded on a trade date basis. Realized gains or losses are recorded on the basis of identified cost.
Dividend income is recognized on the ex-dividend date. Dividend income is recorded net of foreign taxes withheld where recovery of such taxes is not assured.
Distributions to shareholders
Distributions to shareholders from net investment income and any net realized gains are recorded on the ex-dividend date and paid at least annually. Such distributions are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles. Dividend sources are estimated at the time of declaration. The tax character of distributions is determined as of the Fund’s fiscal year end. Therefore, a portion of the Fund’s distributions made prior to the Fund’s fiscal year end may be categorized as a tax return of capital at year end.
Federal and other taxes
The Fund intends to continue to qualify as a regulated investment company by distributing substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required.
The Fund’s income and federal excise tax returns and all financial records supporting those returns for the prior three fiscal years are subject to examination by the federal and Delaware revenue authorities. Management has analyzed the Fund’s tax positions taken on federal, state, and foreign tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability.
As of March 31, 2019, the aggregate cost of all investments for federal income tax purposes was $2,232,475,122 and the unrealized gains (losses) consisted of:
Gross unrealized gains | $ | 685,798,747 | ||
Gross unrealized losses | (66,822,667 | ) | ||
Net unrealized gains | $ | 618,976,080 |
Class allocations
The separate classes of shares offered by the Fund differ principally in applicable sales charges, distribution, shareholder servicing, and administration fees. Class specific expenses are charged directly to that share class. Investment income, common expenses, and realized and unrealized gains (losses) on investments are allocated daily to each class of shares based on the relative proportion of net assets of each class.
3. FAIR VALUATION MEASUREMENTS
Fair value measurements of investments are determined within a framework that has established a fair value hierarchy based upon the various data inputs utilized in determining the value of the Fund’s investments. The three-level hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority
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22 | Wells Fargo Discovery Fund | Notes to financial statements (unaudited) |
to unobservable inputs (Level 3). The Fund’s investments are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The inputs are summarized into three broad levels as follows:
∎ | Level 1 – quoted prices in active markets for identical securities |
∎ | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
∎ | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
The inputs or methodologies used for valuing investments in securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used in valuing the Fund’s assets and liabilities as of March 31, 2019:
Quoted prices (Level 1) | Other significant observable inputs (Level 2) | Significant (Level 3) | Total | |||||||||||||
Assets | ||||||||||||||||
Investments in: | ||||||||||||||||
Common stocks | ||||||||||||||||
Communication services | $ | 114,837,784 | $ | 0 | $ | 0 | $ | 114,837,784 | ||||||||
Consumer discretionary | 397,050,706 | 0 | 0 | 397,050,706 | ||||||||||||
Consumer staples | 26,341,410 | 0 | 0 | 26,341,410 | ||||||||||||
Financials | 51,193,713 | 0 | 0 | 51,193,713 | ||||||||||||
Health care | 577,532,247 | 0 | 0 | 577,532,247 | ||||||||||||
Industrials | 477,191,420 | 0 | 0 | 477,191,420 | ||||||||||||
Information technology | 895,650,256 | 0 | 0 | 895,650,256 | ||||||||||||
Materials | 41,483,609 | 0 | 0 | 41,483,609 | ||||||||||||
Short-term investments | ||||||||||||||||
Investment companies | 81,820,557 | 188,349,500 | 0 | 270,170,057 | ||||||||||||
Total assets | $ | 2,663,101,702 | $ | 188,349,500 | $ | 0 | $ | 2,851,451,202 |
Additional sector, industry or geographic detail is included in the Portfolio of Investments.
At March 31, 2019, the Fund did not have any transfers into/out of Level 3.
4. TRANSACTIONS WITH AFFILIATES
Management fee
Funds Management, an indirect wholly owned subsidiary of Wells Fargo, is the manager of the Fund and provides advisory and fund-level administrative services under an investment management agreement. Under the investment management agreement, Funds Management is responsible for, among other services, implementing the investment objectives and strategies of the Fund, supervising the subadviser and providing fund-level administrative services in connection with the Fund’s operations. As compensation for its services under the investment management agreement, Funds Management is entitled to receive a management fee at the following annual rate based on the Fund’s average daily net assets:
Average daily net assets | Management fee | |||
First $500 million | 0.800 | % | ||
Next $500 million | 0.750 | |||
Next $1 billion | 0.700 | |||
Next $2 billion | 0.675 | |||
Next $1 billion | 0.650 | |||
Next $5 billion | 0.640 | |||
Over $10 billion | 0.630 |
Table of Contents
Notes to financial statements (unaudited) | Wells Fargo Discovery Fund | 23 |
For the six months ended March 31, 2019, the management fee was equivalent to an annual rate of 0.72% of the Fund’s average daily net assets.
Funds Management has retained the services of a subadviser to provide daily portfolio management to the Fund. The fee for subadvisory services is borne by Funds Management. WellsCap is the subadviser to the Fund and is entitled to receive a fee from Funds Management at an annual rate starting at 0.45% and declining to 0.35% as the average daily net assets of the Fund increase.
Administration fees
Under a class-level administration agreement, Funds Management provides class-level administrative services to the Fund, which includes paying fees and expenses for services provided by the transfer agent, sub-transfer agents, omnibus account servicers and record-keepers. As compensation for its services under the class-level administration agreement, Funds Management receives an annual fee which is calculated based on the average daily net assets of each class as follows:
Class-level administration fee | ||||
Class A, Class C | 0.21 | % | ||
Class R6 | 0.03 | |||
Administrator Class, Institutional Class | 0.13 |
Funds Management has contractually waived and/or reimbursed management and administration fees to the extent necessary to maintain certain net operating expense ratios for the Fund. When each class of the Fund has exceeded its expense cap, Funds Management has waived fees and/or reimbursed expenses from fund level expenses on a proportionate basis and then from class specific expenses. When only certain classes exceed their expense caps, waivers and/or reimbursements are applied against class specific expenses before fund level expenses. Funds Management has committed through January 31, 2020 to waive fees and/or reimburse expenses to the extent necessary to cap the Fund’s expenses at 1.22% for Class A shares, 1.97% for Class C shares, 0.84% for Class R6 shares, 1.15% for Administrator Class shares, and 0.89% for Institutional Class shares. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees.
Distribution fee
The Trust has adopted a distribution plan for Class C shares of the Fund pursuant to Rule 12b-1 under the 1940 Act. A distribution fee is charged to Class C shares and paid to Wells Fargo Funds Distributor, LLC (“Funds Distributor”), the principal underwriter, at an annual rate of 0.75% of the average daily net assets of Class C shares.
In addition, Funds Distributor is entitled to receive the front-end sales charge from the purchase of Class A shares and a contingent deferred sales charge on the redemption of certain Class A shares. Funds Distributor is also entitled to receive the contingent deferred sales charges from redemptions of Class C shares. For the six months ended March 31, 2019, Funds Distributor received $2,668 from the sale of Class A shares. No contingent deferred sales charges were incurred by Class A and Class C shares for the six months ended March 31, 2019.
Shareholder servicing fees
The Trust has entered into contracts with one or more shareholder servicing agents, whereby Class A, Class C, and Administrator Class of the Fund are charged a fee at an annual rate of 0.25% of the average daily net assets of each respective class. A portion of these total shareholder servicing fees were paid to affiliates of Wells Fargo.
Interfund transactions
The Fund may purchase or sell portfolio investment securities to certain other Wells Fargo affiliates pursuant toRule 17a-7 under the 1940 Act and under procedures adopted by the Board of Trustees. The procedures have been designed to ensure that these interfund transactions, which do not incur broker commissions, are effected at current market prices.
5. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, excluding U.S. government obligations (if any) and short-term securities, for the six months ended March 31, 2019 were $799,753,920 and $1,032,103,455, respectively.
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24 | Wells Fargo Discovery Fund | Notes to financial statements (unaudited) |
6. BANK BORROWINGS
The Trust (excluding the money market funds), Wells Fargo Master Trust and Wells Fargo Variable Trust are parties to a $280,000,000 revolving credit agreement whereby the Fund is permitted to use bank borrowings for temporary or emergency purposes, such as to fund shareholder redemption requests. Interest under the credit agreement is charged to the Fund based on a borrowing rate equal to the higher of the Federal Funds rate in effect on that day plus 1.25% or the overnight LIBOR rate in effect on that day plus 1.25%. In addition, an annual commitment fee equal to 0.25% of the unused balance is allocated to each participating fund.
For the six months ended March 31, 2019, there were no borrowings by the Fund under the agreement.
7. CONCENTRATION RISK
Concentration risks result from exposure to a limited number of sectors. A fund that invests a substantial portion of its assets in any sector may be more affected by changes in that sector than would be a fund whose investments are not heavily weighted in any sector.
8. INDEMNIFICATION
Under the Trust’s organizational documents, the officers and Trustees have been granted certain indemnification rights against certain liabilities that may arise out of performance of their duties to the Trust. Additionally, in the normal course of business, the Trust may enter into contracts with service providers that contain a variety of indemnification clauses. The Trust’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated.
9. NEW ACCOUNTING PRONOUNCEMENT
In August 2018, FASB issued Accounting Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820)Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 updates the disclosure requirements for fair value measurements by modifying or removing certain disclosures and adding certain new disclosures. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management has adopted the removal and modification of disclosures early, as permitted, and will adopt the additional new disclosures at the effective date.
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Other information (unaudited) | Wells Fargo Discovery Fund | 25 |
PROXY VOTING INFORMATION
A description of the policies and procedures used to determine how to vote proxies relating to portfolio securities is available, upon request, by calling1-800-222-8222, visiting our website atwfam.com, or visiting the SEC website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent12-month period ended June 30 is available on the Fund’s website atwfam.comor by visiting the SEC website at sec.gov.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for the Fund are publicly available monthly on the Fund’s website (wfam.com), on a one-month delayed basis. In addition, top ten holdings information (excluding derivative positions) for the Fund is publicly available on the Fund’s website on a monthly, seven-day or more delayed basis. The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which is available by visiting the SEC website at sec.gov. In addition, the Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330.
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26 | Wells Fargo Discovery Fund | Other information (unaudited) |
BOARD OF TRUSTEES AND OFFICERS
Each of the Trustees and Officers1 listed in the table below acts in identical capacities for each fund in the Wells Fargo family of funds, which consists of 151 mutual funds comprising the Wells Fargo Funds Trust, Wells Fargo Variable Trust, Wells Fargo Master Trust and four closed-end funds (collectively the “Fund Complex”). This table should be read in conjunction with the Prospectus and the Statement of Additional Information2. The mailing address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, however, each Trustee serves such term until reaching the mandatory retirement age established by the Trustees.
Independent Trustees
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company directorships | |||
William R. Ebsworth (Born 1957) | Trustee, since 2015 | Retired. From 1984 to 2013, equities analyst, portfolio manager, research director and chief investment officer at Fidelity Management and Research Company in Boston, Tokyo, and Hong Kong, and retired in 2013 as Chief Investment Officer of Fidelity Strategic Advisers, Inc. where he led a team of investment professionals managing client assets. Prior thereto, Board member of Hong Kong Securities Clearing Co., Hong Kong Options Clearing Corp., the Thailand International Fund, Ltd., Fidelity Investments Life Insurance Company, and Empire Fidelity Investments Life Insurance Company. Audit Committee Chair and Investment Committee Chair of the Vincent Memorial Hospital Endowment (non-profit organization). Mr. Ebsworth is a CFA® charterholder. | N/A | |||
Jane A. Freeman (Born 1953) | Trustee, since 2015; Chair Liaison, since 2018 | Retired. From 2012 to 2014 and 1999 to 2008, Chief Financial Officer of Scientific Learning Corporation. From 2008 to 2012, Ms. Freeman provided consulting services related to strategic business projects. Prior to 1999, Portfolio Manager at Rockefeller & Co. and Scudder, Stevens & Clark. Board member of the Harding Loevner Funds from 1996 to 2014, serving as both Lead Independent Director and chair of the Audit Committee. Board member of the Russell Exchange Traded Funds Trust from 2011 to 2012 and the chair of the Audit Committee. Ms. Freeman is a Board Member of The Ruth Bancroft Garden (non-profit organization). She is also an inactive Chartered Financial Analyst. | N/A | |||
Isaiah Harris, Jr.3 (Born 1952) | Trustee, since 2009; Audit Committee Chairman, since 2019 | Retired. Chairman of the Board of CIGNA Corporation since 2009, and Director since 2005. From 2003 to 2011, Director of Deluxe Corporation. Prior thereto, President and CEO of BellSouth Advertising and Publishing Corp. from 2005 to 2007, President and CEO of BellSouth Enterprises from 2004 to 2005 and President of BellSouth Consumer Services from 2000 to 2003. Emeritus member of the Iowa State University Foundation Board of Governors. Emeritus Member of the Advisory Board of Iowa State University School of Business. Advisory Board Member, Palm Harbor Academy (private school). Advisory Board Member, Child Evangelism Fellowship (non-profit). Mr. Harris is a certified public accountant (inactive status). | CIGNA Corporation | |||
Judith M. Johnson (Born 1949) | Trustee, since 2008; Audit Committee Chairman, from 2009 to 2018 | Retired. Prior thereto, Chief Executive Officer and Chief Investment Officer of Minneapolis Employees Retirement Fund from 1996 to 2008. Ms. Johnson is an attorney, certified public accountant and a certified managerial accountant. | N/A |
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Other information (unaudited) | Wells Fargo Discovery Fund | 27 |
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company directorships | |||
David F. Larcker (Born 1950) | Trustee, since 2009 | James Irvin Miller Professor of Accounting at the Graduate School of Business, Stanford University, Director of the Corporate Governance Research Initiative and Senior Faculty of The Rock Center for Corporate Governance since 2006. From 2005 to 2008, Professor of Accounting at the Graduate School of Business, Stanford University. Prior thereto, Ernst & Young Professor of Accounting at The Wharton School, University of Pennsylvania from 1985 to 2005. | N/A | |||
Olivia S. Mitchell (Born 1953) | Trustee, since 2006; Nominating and Governance Committee Chairman, since 2018 | International Foundation of Employee Benefit Plans Professor, Wharton School of the University of Pennsylvania since 1993. Director of Wharton’s Pension Research Council and Boettner Center on Pensions & Retirement Research, and Research Associate at the National Bureau of Economic Research. Previously, Cornell University Professor from 1978 to 1993. | N/A | |||
Timothy J. Penny (Born 1951) | Trustee, since 1996; Chairman, since 2018 | President and Chief Executive Officer of Southern Minnesota Initiative Foundation, a non-profit organization, since 2007. Member of the Board of Trustees of NorthStar Education Finance, Inc., a non-profit organization, since 2007. | N/A | |||
James G. Polisson (Born 1959) | Trustee, since 2018 | Retired. Chief Marketing Officer, Source (ETF) UK Services, Ltd, from 2015 to 2017. From 2012 to 2015, Principal of The Polisson Group, LLC, a management consulting, corporate advisory and principal investing company. Chief Executive Officer and Managing Director at Russell Investments, Global Exchange Traded Funds from 2010 to 2012. Managing Director of Barclays Global Investors from 1998 to 2010 and Global Chief Marketing Officer for iShares and Barclays Global Investors from 2000 to 2010. Trustee of the San Francisco Mechanics’ Institute, a non-profit organization, from 2013 to 2015. Board member of the Russell Exchange Traded Fund Trust from 2011 to 2012. Director of Barclays Global Investors Holdings Deutschland GmbH from 2006 to 2009. Mr. Polisson is an attorney and has a retired status with the Massachusetts and District of Columbia Bar Associations. | N/A | |||
Pamela Wheelock (Born 1959) | Trustee, since 2018 | Board member of the Destination Medical Center Economic Development Agency, Rochester, Minnesota since 2019. Chief Operating Officer, Twin Cities Habitat for Humanity from 2017 to 2019. Vice President of University Services, University of Minnesota from 2012 to 2016. Prior thereto, on the Board of Directors, Governance Committee and Finance Committee for the Minnesota Philanthropy Partners (Saint Paul Foundation) from 2012 to 2018, Interim Chief Executive Officer of Blue Cross Blue Shield of Minnesota from 2011 to 2012, Chairman of the Board from 2009 to 2012 and Board Director from 2003 to 2015. Vice President, Leadership and Community Engagement, Bush Foundation, Saint Paul, Minnesota (a private foundation) from 2009 to 2011. Executive Vice President and Chief Financial Officer, Minnesota Sports and Entertainment from 2004 to 2009 and Senior Vice President from 2002 to 2004. Executive Vice President of the Minnesota Wild Foundation from 2004 to 2008. Commissioner of Finance, State of Minnesota, from 1999 to 2002. Currently Board Chair of the Minnesota Wild Foundation since 2010. | N/A |
* | Length of service dates reflect the Trustee’s commencement of service with the Trust’s predecessor entities, where applicable. |
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28 | Wells Fargo Discovery Fund | Other information (unaudited) |
Officers
Name and year of birth | Position held and length of service | Principal occupations during past five years or longer | ||||
Andrew Owen (Born 1960) | President, since 2017 | Executive Vice President of Wells Fargo & Company and Head of Affiliated Managers, Wells Fargo Asset Management, since 2014. In addition, Mr. Owen is currently President, Chief Executive Officer and Director of Wells Fargo Funds Management, LLC since 2017. Prior thereto, Executive Vice President responsible for marketing, investments and product development for Wells Fargo Funds Management, LLC, from 2009 to 2014. | ||||
Nancy Wiser1 (Born 1967) | Treasurer, since 2012 | Executive Vice President of Wells Fargo Funds Management, LLC since 2011. Chief Operating Officer and Chief Compliance Officer at LightBox Capital Management LLC, from 2008 to 2011. | ||||
Alexander Kymn (Born 1973) | Secretary and Chief Legal Officer, since 2018 | Senior Company Counsel of Wells Fargo Bank, N.A. since 2018 (previously Senior Counsel from 2007 to 2018). Vice President of Wells Fargo Funds Management, LLC from 2008 to 2014. | ||||
Michael H. Whitaker (Born 1967) | Chief Compliance Officer, since 2016 | Senior Vice President and Chief Compliance Officer since 2016. Senior Vice President and Chief Compliance Officer for Fidelity Investments from 2007 to 2016. | ||||
David Berardi (Born 1975) | Assistant Treasurer, since 2009 | Vice President of Wells Fargo Funds Management, LLC since 2009. Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010. Manager of Fund Reporting and Control for Evergreen Investment Management Company, LLC from 2004 to 2010. | ||||
Jeremy DePalma1 (Born 1974) | Assistant Treasurer, since 2009 | Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010 and head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010. |
1 | Nancy Wiser acts as Treasurer of 65 funds in the Fund Complex. Jeremy DePalma acts as Treasurer of 86 funds and Assistant Treasurer of 65 funds in the Fund Complex. |
2 | The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request, by calling1-800-222-8222 or by visiting the website atwfam.com. |
3 | Mr. Harris became Chairman of the Audit Committee effective January 1, 2019. |
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Appendix A (unaudited) | Wells Fargo Discovery Fund | 29 |
SALES CHARGE REDUCTIONS AND WAIVERS FOR CERTAIN INTERMEDIARIES
Raymond James & Associates, Inc., Raymond James Financial Services & Raymond James affiliates (“Raymond James”)
Effective on or about March 1, 2019, shareholders purchasing Fund shares through a Raymond James platform or account will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in the Fund’s Prospectus or SAI.
Front-end Sales Load Waivers on Class A shares Available at Raymond James
• | Shares purchased in an investment advisory program. |
• | Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family). |
• | Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James. |
• | Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement). |
• | A shareholder in the fund’s Class C shares will have their shares automatically exchanged at net asset value to Class A shares (or the appropriate share class) of the fund if the shares are no longer subject to a CDSC and the exchange is in line with the policies and procedures of Raymond James. |
CDSC Waivers on Class A and C Shares Available at Raymond James
• | Death or disability of the shareholder. |
• | Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus. |
• | Return of excess contributions from an IRA Account. |
• | Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70½ as described in the Fund’s prospectus. |
• | Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James. |
• | Shares acquired through a right of reinstatement. |
Front-end Load Discounts Available at Raymond James: Breakpoints, and/or Rights of Accumulation
• | Breakpoints as described in the Fund’s Prospectus. |
• | Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets. |
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For more information
More information about Wells Fargo Funds is available free upon request. To obtain literature, please write, visit the Fund’s website, or call:
Wells Fargo Funds
P.O. Box 219967
Kansas City, MO 64121-9967
Website: wfam.com
Individual investors: 1-800-222-8222
Retail investment professionals: 1-888-877-9275
Institutional investment professionals:1-866-765-0778
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. Before investing, please consider the investment objectives, risks, charges, and expenses of the investment. For a current prospectus and, if available, a summary prospectus, containing this information, call1-800-222-8222 or visit the Fund’s website atwfam.com. Read the prospectus carefully before you invest or send money.
Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management firms owned by Wells Fargo & Company. These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by Wells Fargo Funds Distributor, LLC (a broker-dealer and Member FINRA).
This material is for general informational and educational purposes only and is NOT intended to provide investment advice or a recommendation of any kind—including a recommendation for any specific investment, strategy, or plan.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
© 2019 Wells Fargo Funds Management, LLC. All rights reserved.
![]() | 401610 05-19 SA230/SAR230 03-19 |
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Semi-Annual Report
March 31, 2019
Wells Fargo Enterprise Fund
Beginning on January 1, 2021, as permitted by new regulations adopted by the Securities and Exchange Commission, paper copies of the Wells Fargo Funds’ annual and semi-annual shareholder reports issued after this date will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website, and you will be notified by mail each time a report is posted and provided with a website address to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-222-8222 or by enrolling at wellsfargo.com/advantagedelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports; if you invest directly with the Fund, you can call 1-800-222-8222. Your election to receive reports in paper will apply to all Wells Fargo Funds held in your account with your financial intermediary or, if you are a direct investor, to all Wells Fargo Funds that you hold.
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4 | ||||
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7 | ||||
Financial statements | ||||
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12 | ||||
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The views expressed and any forward-looking statements are as of March 31, 2019, unless otherwise noted, and are those of the Fund managers and/or Wells Fargo Asset Management. Discussions of individual securities, or the markets generally, or any Wells Fargo Fund are not intended as individual recommendations. Future events or results may vary significantly from those expressed in any forward-looking statements. The views expressed are subject to change at any time in response to changing circumstances in the market. Wells Fargo and the Fund disclaim any obligation to publicly update or revise any views expressed or forward-looking statements.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
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2 | Wells Fargo Enterprise Fund | Letter to shareholders (unaudited) |
Andrew Owen
President
Wells Fargo Funds
December’s S&P 500 Index performance was the worst since 1931.
Dear Shareholder:
We are pleased to offer you this semi-annual report for the Wells Fargo Enterprise Fund for thesix-month period that ended March 31, 2019. Concerns about interest rate increases in the U.S., trade tensions, and geopolitical events drove equity losses and restrained bond returns during the fourth quarter of 2018. Investor sentiment improved during the first quarter of 2019 thanks to a shift in U.S. Federal Reserve (Fed) policy and consistent, if not spectacular, economic and business growth metrics.
For the period, U.S. stocks, as measured by the S&P 500 Index,1 lost 1.72% and international stocks, as measured by the MSCI ACWI ex USA Index (Net),2 fell 2.33%. Based on the MSCI EM Index (Net),3 emerging market stocks added 1.71%. For bond investors, the Bloomberg Barclays U.S. Aggregate Bond Index4 added 4.63% while the Bloomberg Barclays Global Aggregateex-USD Index5 added 2.44%. The Bloomberg Barclays Municipal Bond Index6 added 4.63%, and the ICE BofAML U.S. High Yield Index7 gained 2.39%.
Conflicting data unsettled markets during the fourth quarter.
November’s U.S. midterm elections shifted control of the House of Representatives from Republicans to Democrats, presaging potential partisan clashes. Third-quarter U.S. gross domestic product was announced at an annualized 3.4% rate, lower than the second-quarter rate. Brexit efforts stalled ahead of the March 2019 deadline. The People’s Bank of China cut reserve requirement ratios, accelerated infrastructure spending, and cut taxes even as the value of the yuan declined to low levels last seen in 2008.
December’s S&P 500 Index performance was the worst since 1931. Globally, fixed-income investments fared better than stocks during the last two months of the year. The Fed increased the federal funds rate by 25 bps in December 2018 to a target range of between 2.25% and 2.50% and softened its outlook for 2019 rate increases.
The market climbs a wall of worry.
Investors entered 2019 with reasons to be concerned. A partial U.S. government shutdown driven by partisan spending and immigration policy disputes extended into January. Investors expected high levels of stock market volatility to continue based on the VIX8.
1 | The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index with each stock’s weight in the index proportionate to its market value. You cannot invest directly in an index. |
2 | The Morgan Stanley Capital International (MSCI) All Country World Index (ACWI) ex USA Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. You cannot invest directly in an index. |
3 | The MSCI Emerging Markets (EM) Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure large- andmid-cap equity market performance of emerging markets. The MSCI EM Index (Net) consists of the following 24 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and the United Arab Emirates. You cannot invest directly in an index. |
4 | The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid adjustable-rate mortgage pass-throughs), asset-backed securities, and commercial mortgage-backed securities. You cannot invest directly in an index. |
5 | The Bloomberg Barclays Global Aggregateex-USD Index is an unmanaged index that provides a broad-based measure of the global investment-grade fixed-income markets excluding the U.S. dollar-denominated debt market. You cannot invest directly in an index. |
6 | The Bloomberg Barclays Municipal Bond Index is an unmanaged index composed of long-termtax-exempt bonds with a minimum credit rating of Baa. You cannot invest directly in an index. |
7 | The ICE BofAML U.S. High Yield Index is a market-capitalization-weighted index of domestic and Yankee high-yield bonds. The index tracks the performance of high-yield securities traded in the U.S. bond market. You cannot invest directly in an index. Copyright 2019. ICE Data Indices, LLC. All rights reserved. |
8 | The Chicago Board Options Exchange Market Volatility Index (VIX) is a popular measure of the implied volatility of S&P 500 Index options. It represents one measure of the market’s expectation of stock market volatility over the next30-day period. You cannot invest directly in an index. |
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Letter to shareholders (unaudited) | Wells Fargo Enterprise Fund | 3 |
January’s returns tended to support the investing adage that markets climb a wall of worry. The S&P 500 Index gained 8.01% for the month that ended January 31, 2019, its best monthly performance in 30 years. Returns for the MSCI ACWI ex USA Index (Net), the Bloomberg Barclays U.S. Aggregate Bond Index, and the Bloomberg Barclays Global Aggregate ex-USD Index also were positive. The Fed indicated that it would pause its program of regular rate increases during 2019 as inflation remained low. Businesses and investors responded positively to the shift in policy.
In February, concerns over slowing global growth reemerged. The Bureau of Economic Analysis announced fourth-quarter 2018 gross domestic product grew at an annualized 2.2% rate, down from the 4.2% annualized rate for the second quarter and the 3.4% annualized rate for the third quarter. Analysts attributed the lower growth rate to a slowing housing market and larger trade deficit. The U.S. Department of Labor said that the economy created just 20,000 jobs in February 2019. In a February report, the Bank of England forecast the slowest growth since the financial crisis for 2019. China and the U.S., while putting future tariffs on hold for the time being, continued to wrangle over trade issues.
By the end of March 2019, the combination of dovish Fed sentiment and consistent, if not spectacular, economic and business metrics reinforced investors’ enthusiasm for equity investing. Monthly job creation data regained its momentum. Corporate profits, while lower than 2018’s lofty levels, remained consistent. Inflation rates were relatively low in the U.S., Europe, and Japan. China announced a roughly $300 billion stimulus package through tax and fee cuts intended to reinvigorate economic growth.
Don’t let short-term uncertainty derail long-term investment goals.
Periods of investment uncertainty can present challenges, but experience has taught us that maintaining long-term investment goals can be an effective way to plan for the future. To help you create a sound strategy based on your personal goals and risk tolerance, Wells Fargo Funds offers more than 100 mutual funds spanning a wide range of asset classes and investment styles. Although diversification cannot guarantee an investment profit or prevent losses, we believe it can be an effective way to manage investment risk and potentially smooth out overall portfolio performance. We encourage investors to know their investments and to understand that appropriate levels of risk-taking may unlock opportunities.
Thank you for choosing to invest with Wells Fargo Funds. We appreciate your confidence in us and remain committed to helping you meet your financial needs.
Sincerely,
Andrew Owen
President
Wells Fargo Funds
January’s returns tended to support the investing adage that markets climb a wall of worry.
For further information about your Fund, contact your investment professional, visit our website atwfam.com, or call us directly at1-800-222-8222.
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4 | Wells Fargo Enterprise Fund | Performance highlights (unaudited) |
Investment objective
The Fund seeks long-term capital appreciation.
Manager
Wells Fargo Funds Management, LLC
Subadviser
Wells Capital Management Incorporated
Portfolio managers
Michael T. Smith, CFA®‡
Christopher J. Warner, CFA®‡
Average annual total returns (%) as of March 31, 2019
Including sales charge | Excluding sales charge | Expense ratios1 (%) | ||||||||||||||||||||||||||||||||
Inception date | 1 year | 5 year | 10 year | 1 year | 5 year | �� | 10 year | Gross | Net2 | |||||||||||||||||||||||||
Class A (SENAX) | 2-24-2000 | 5.77 | 8.06 | 15.18 | 12.22 | 9.35 | 15.86 | 1.25 | 1.18 | |||||||||||||||||||||||||
Class C (WENCX) | 3-31-2008 | 10.37 | 8.54 | 15.00 | 11.37 | 8.54 | 15.00 | 2.00 | 1.93 | |||||||||||||||||||||||||
Class R6 (WENRX)3 | 10-31-2014 | – | – | – | 12.65 | 9.77 | 16.31 | 0.82 | 0.80 | |||||||||||||||||||||||||
Administrator Class (SEPKX) | 8-30-2002 | – | – | – | 12.32 | 9.48 | 16.00 | 1.17 | 1.10 | |||||||||||||||||||||||||
Institutional Class (WFEIX) | 6-30-2003 | – | – | – | 12.60 | 9.72 | 16.28 | 0.92 | 0.85 | |||||||||||||||||||||||||
Russell Midcap® Growth Index4 | – | – | – | – | 11.51 | 10.89 | 17.60 | – | – |
Figures quoted represent past performance, which is no guarantee of future results, and do not reflect taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance shown without sales charges would be lower if sales charges were reflected. Current performance may be lower or higher than the performance data quoted, which assumes the reinvestment of dividends and capital gains. Current month-end performance is available on the Fund’s website,wfam.com.
Index returns do not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses, or any taxes. It is not possible to invest directly in an index.
For Class A shares, the maximum front-end sales charge is 5.75%. For Class C shares, the maximum contingent deferred sales charge is 1.00%. Performance including a contingent deferred sales charge assumes the sales charge for the corresponding time period. Class R6, Administrator Class, and Institutional Class shares are sold without a front-end sales charge or contingent deferred sales charge.
Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. Smaller-company stocks tend to be more volatile and less liquid than those of larger companies. Certain investment strategies tend to increase the total risk of an investment (relative to the broader market). The Fund is exposed to foreign investment risk. Consult the Fund’s prospectus for additional information on these and other risks.
Please see footnotes on page 5.
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Performance highlights (unaudited) | Wells Fargo Enterprise Fund | 5 |
Ten largest holdings (%) as of March 31, 20195 | ||||
Waste Connections Incorporated | 2.90 | |||
ServiceNow Incorporated | 2.89 | |||
First Data Corporation Class A | 2.41 | |||
Cintas Corporation | 2.23 | |||
Chipotle Mexican Grill Incorporated | 2.19 | |||
WEX Incorporated | 2.07 | |||
Align Technology Incorporated | 2.04 | |||
Edwards Lifesciences Corporation | 2.01 | |||
Autodesk Incorporated | 1.98 | |||
Shopify Incorporated Class A | 1.97 |
Sector distribution as of March 31, 20196 |
|
‡ | CFA® and Chartered Financial Analyst®are trademarks owned by CFA Institute. |
1 | Reflects the expense ratios as stated in the most recent prospectuses. The expense ratios shown are subject to change and may differ from the annualized expense ratios shown in the financial highlights of this report. |
2 | The manager has contractually committed through January 31, 2020, to waive fees and/or reimburse expenses to the extent necessary to cap the expenses of each class after fee waivers at the amounts shown. Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the expense cap. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. Without this cap, the Fund’s returns would have been lower. The expense ratio paid by an investor is the net expense ratio (the total annual fund operating expenses after fee waivers) as stated in the prospectuses. |
3 | Historical performance shown for Class R6 shares prior to their inception reflects the performance of the Institutional Class shares, and is not adjusted to reflect the expenses of Class R6. If these expenses had been included, returns for Class R6 shares would be higher. |
4 | The Russell Midcap® Growth Index measures the performance of those Russell Midcap companies with higher price/book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000® Growth index. You cannot invest directly in an index. |
5 | The ten largest holdings, excluding cash, cash equivalents and any money market funds, are calculated based on the value of the investments divided by total net assets of the Fund. Holdings are subject to change and may have changed since the date specified. |
6 | Amounts are calculated based on the total long-term investments of the Fund. These amounts are subject to change and may have changed since the date specified. |
Table of Contents
6 | Wells Fargo Enterprise Fund | Fund expenses (unaudited) |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (if any) on redemptions and (2) ongoing costs, including management fees, distribution(12b-1) and/or shareholder servicing fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of thesix-month period and held for the entire period from October 1, 2018 to March 31, 2019.
Actual expenses
The “Actual” line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the “Actual” line under the heading entitled “Expenses paid during period” for your applicable class of shares to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The “Hypothetical” line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and contingent deferred sales charges. Therefore, the “Hypothetical” line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 10-1-2018 | Ending account value 3-31-2019 | Expenses paid during the period¹ | Annualized net expense ratio | |||||||||||||
Class A | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,004.80 | $ | 5.90 | 1.18 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,019.05 | $ | 5.94 | 1.18 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,001.04 | $ | 9.63 | 1.93 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,015.31 | $ | 9.70 | 1.93 | % | ||||||||
Class R6 | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,006.70 | $ | 4.00 | 0.80 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.94 | $ | 4.03 | 0.80 | % | ||||||||
Administrator Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,005.12 | $ | 5.50 | 1.10 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,019.45 | $ | 5.54 | 1.10 | % | ||||||||
Institutional Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,006.55 | $ | 4.25 | 0.85 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.69 | $ | 4.28 | 0.85 | % |
1 | Expenses paid is equal to the annualized net expense ratio of each class multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year (to reflect theone-half-year period). |
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Enterprise Fund | 7 |
Security name | Shares | Value | ||||||||||||||
Common Stocks: 99.25% | ||||||||||||||||
Communication Services: 5.27% | ||||||||||||||||
Entertainment: 3.93% | ||||||||||||||||
Nintendo Company Limited ADR « | 229,500 | $ | 8,232,165 | |||||||||||||
Take-Two Interactive Software Incorporated † | 110,100 | 10,390,137 | ||||||||||||||
World Wrestling Entertainment Incorporated Class A | 114,800 | 9,962,344 | ||||||||||||||
28,584,646 | ||||||||||||||||
|
| |||||||||||||||
Interactive Media & Services: 1.34% | ||||||||||||||||
Match Group Incorporated « | 171,600 | 9,714,276 | ||||||||||||||
|
| |||||||||||||||
Consumer Discretionary: 17.73% | ||||||||||||||||
Auto Components: 1.62% | ||||||||||||||||
Aptiv plc | 147,885 | 11,755,379 | ||||||||||||||
|
| |||||||||||||||
Automobiles: 1.25% | ||||||||||||||||
Ferrari NV | 67,700 | 9,058,260 | ||||||||||||||
|
| |||||||||||||||
Diversified Consumer Services: 2.93% | ||||||||||||||||
Adtalem Global Education Incorporated † | 187,100 | 8,666,472 | ||||||||||||||
Bright Horizons Family Solutions Incorporated † | 99,100 | 12,596,601 | ||||||||||||||
21,263,073 | ||||||||||||||||
|
| |||||||||||||||
Hotels, Restaurants & Leisure: 7.57% | ||||||||||||||||
Chipotle Mexican Grill Incorporated † | 22,400 | 15,910,944 | ||||||||||||||
Domino’s Pizza Incorporated | 39,400 | 10,169,140 | ||||||||||||||
Eldorado Resorts Incorporated † | 214,600 | 10,019,674 | ||||||||||||||
Royal Caribbean Cruises Limited | 59,200 | 6,785,504 | ||||||||||||||
Vail Resorts Incorporated | 55,817 | 12,129,034 | ||||||||||||||
55,014,296 | ||||||||||||||||
|
| |||||||||||||||
Internet & Direct Marketing Retail: 2.59% | ||||||||||||||||
MercadoLibre Incorporated † | 24,700 | 12,540,931 | ||||||||||||||
Wayfair Incorporated Class A † | 42,369 | 6,289,678 | ||||||||||||||
18,830,609 | ||||||||||||||||
|
| |||||||||||||||
Specialty Retail: 1.77% | ||||||||||||||||
Burlington Stores Incorporated † | 82,100 | 12,863,428 | ||||||||||||||
|
| |||||||||||||||
Consumer Staples: 1.08% | ||||||||||||||||
Food Products: 1.08% | ||||||||||||||||
Lamb Weston Holdings Incorporated | 105,100 | 7,876,194 | ||||||||||||||
|
| |||||||||||||||
Financials: 2.93% | ||||||||||||||||
Capital Markets: 2.93% | ||||||||||||||||
Intercontinental Exchange Incorporated | 157,225 | 11,971,112 | ||||||||||||||
Raymond James Financial Incorporated | 115,700 | 9,303,437 | ||||||||||||||
21,274,549 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
8 | Wells Fargo Enterprise Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Health Care: 15.85% |
| |||||||||||||||
Biotechnology: 1.67% |
| |||||||||||||||
Exact Sciences Corporation † | 139,700 | $ | 12,100,814 | |||||||||||||
|
| |||||||||||||||
Health Care Equipment & Supplies: 6.16% |
| |||||||||||||||
Align Technology Incorporated † | 52,100 | 14,813,593 | ||||||||||||||
DexCom Incorporated † | 61,900 | 7,372,290 | ||||||||||||||
Edwards Lifesciences Corporation † | 76,200 | 14,579,346 | ||||||||||||||
Insulet Corporation †« | 84,200 | 8,006,578 | ||||||||||||||
44,771,807 | ||||||||||||||||
|
| |||||||||||||||
Health Care Providers & Services: 1.69% |
| |||||||||||||||
WellCare Health Plans Incorporated † | 45,500 | 12,273,625 | ||||||||||||||
|
| |||||||||||||||
Health Care Technology: 1.93% |
| |||||||||||||||
Veeva Systems Incorporated Class A † | 110,300 | 13,992,658 | ||||||||||||||
|
| |||||||||||||||
Life Sciences Tools & Services: 2.30% |
| |||||||||||||||
Bio-Rad Laboratories Incorporated Class A † | 34,100 | 10,423,688 | ||||||||||||||
Illumina Incorporated † | 20,300 | 6,307,007 | ||||||||||||||
16,730,695 | ||||||||||||||||
|
| |||||||||||||||
Pharmaceuticals: 2.10% |
| |||||||||||||||
Elanco Animal Health Incorporated † | 362,587 | 11,628,165 | ||||||||||||||
GW Pharmaceuticals plc ADR †« | 21,600 | 3,641,112 | ||||||||||||||
15,269,277 | ||||||||||||||||
|
| |||||||||||||||
Industrials: 15.64% |
| |||||||||||||||
Aerospace & Defense: 1.50% |
| |||||||||||||||
Teledyne Technologies Incorporated † | 45,900 | 10,878,759 | ||||||||||||||
|
| |||||||||||||||
Building Products: 1.14% |
| |||||||||||||||
A.O. Smith Corporation | 155,500 | 8,291,260 | ||||||||||||||
|
| |||||||||||||||
Commercial Services & Supplies: 6.17% |
| |||||||||||||||
Cintas Corporation | 80,000 | 16,168,800 | ||||||||||||||
The Brink’s Company | 100,600 | 7,586,246 | ||||||||||||||
Waste Connections Incorporated | 237,539 | 21,043,580 | ||||||||||||||
44,798,626 | ||||||||||||||||
|
| |||||||||||||||
Electrical Equipment: 1.92% |
| |||||||||||||||
Rockwell Automation Incorporated | 79,300 | 13,913,978 | ||||||||||||||
|
| |||||||||||||||
Machinery: 2.70% |
| |||||||||||||||
The Middleby Corporation † | 79,500 | 10,337,385 | ||||||||||||||
Woodward Governor Company | 98,000 | 9,299,220 | ||||||||||||||
19,636,605 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Enterprise Fund | 9 |
Security name | Shares | Value | ||||||||||||||
Road & Rail: 1.01% |
| |||||||||||||||
Lyft Incorporated Class A † | 14,625 | $ | 1,144,991 | |||||||||||||
Saia Incorporated † | 101,800 | 6,219,980 | ||||||||||||||
7,364,971 | ||||||||||||||||
|
| |||||||||||||||
Trading Companies & Distributors: 1.20% |
| |||||||||||||||
Univar Incorporated † | 395,046 | 8,754,219 | ||||||||||||||
|
| |||||||||||||||
Information Technology: 33.80% | ||||||||||||||||
Communications Equipment: 1.70% | ||||||||||||||||
Motorola Solutions Incorporated | 88,100 | 12,371,002 | ||||||||||||||
|
| |||||||||||||||
Electronic Equipment, Instruments & Components: 2.53% | ||||||||||||||||
Littelfuse Incorporated | 33,400 | 6,094,832 | ||||||||||||||
Zebra Technologies Corporation Class A † | 58,500 | 12,257,505 | ||||||||||||||
18,352,337 | ||||||||||||||||
|
| |||||||||||||||
IT Services: 19.54% | ||||||||||||||||
Black Knight Incorporated † | 257,300 | 14,022,850 | ||||||||||||||
Booz Allen Hamilton Holding Corporation | 231,600 | 13,465,224 | ||||||||||||||
EPAM Systems Incorporated † | 72,254 | 12,220,319 | ||||||||||||||
First Data Corporation Class A † | 665,800 | 17,490,566 | ||||||||||||||
FleetCor Technologies Incorporated † | 54,800 | 13,513,132 | ||||||||||||||
Gartner Incorporated † | 69,000 | 10,465,920 | ||||||||||||||
PagSeguro Digital Limited Class A †« | 348,200 | 10,393,770 | ||||||||||||||
Shopify Incorporated Class A † | 69,100 | 14,277,442 | ||||||||||||||
Total System Services Incorporated | 134,000 | 12,731,340 | ||||||||||||||
Twilio Incorporated Class A † | 64,600 | 8,345,028 | ||||||||||||||
WEX Incorporated † | 78,500 | 15,071,215 | ||||||||||||||
141,996,806 | ||||||||||||||||
|
| |||||||||||||||
Semiconductors & Semiconductor Equipment: 4.04% | ||||||||||||||||
Advanced Micro Devices Incorporated † | 261,500 | 6,673,480 | ||||||||||||||
Infineon Technologies AG ADR | 434,500 | 8,618,308 | ||||||||||||||
Xilinx Incorporated | 111,100 | 14,086,369 | ||||||||||||||
29,378,157 | ||||||||||||||||
|
| |||||||||||||||
Software: 5.99% | ||||||||||||||||
Autodesk Incorporated † | 92,500 | 14,413,350 | ||||||||||||||
ServiceNow Incorporated † | 85,250 | 21,013,273 | ||||||||||||||
SS&C Technologies Holdings Incorporated | 126,600 | 8,063,154 | ||||||||||||||
43,489,777 | ||||||||||||||||
|
| |||||||||||||||
Materials: 5.76% | ||||||||||||||||
Chemicals: 4.31% | ||||||||||||||||
Air Products & Chemicals Incorporated | 53,700 | 10,254,552 | ||||||||||||||
Ingevity Corporation † | 92,300 | 9,747,803 | ||||||||||||||
The Sherwin-Williams Company | 26,200 | 11,284,602 | ||||||||||||||
31,286,957 | ||||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
10 | Wells Fargo Enterprise Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Construction Materials: 1.45% | ||||||||||||||||
Vulcan Materials Company | 89,100 | $ | 10,549,440 | |||||||||||||
|
| |||||||||||||||
Real Estate: 1.19% | ||||||||||||||||
Equity REITs: 1.19% | ||||||||||||||||
SBA Communications Corporation † | 43,100 | 8,605,345 | ||||||||||||||
|
| |||||||||||||||
Total Common Stocks (Cost $529,240,936) | 721,041,825 | |||||||||||||||
|
| |||||||||||||||
Yield | ||||||||||||||||
Short-Term Investments: 4.37% | ||||||||||||||||
Investment Companies: 4.37% | ||||||||||||||||
Securities Lending Cash Investments LLC (l)(r)(u) | 2.55 | % | 23,701,832 | 23,704,202 | ||||||||||||
Wells Fargo Government Money Market Fund Select Class (l)(u) | 2.38 | 8,039,289 | 8,039,289 | |||||||||||||
Total Short-Term Investments (Cost $31,743,491) | 31,743,491 | |||||||||||||||
|
|
Total investments in securities (Cost $560,984,427) | 103.62 | % | 752,785,316 | |||||
Other assets and liabilities, net | (3.62 | ) | (26,278,766 | ) | ||||
|
|
|
| |||||
Total net assets | 100.00 | % | $ | 726,506,550 | ||||
|
|
|
|
« | All or a portion of this security is on loan. |
† | Non-income-earning security |
(l) | The issuer of the security is an affiliated person of the Fund as defined in the Investment Company Act of 1940. |
(r) | The investment is anon-registered investment company purchased with cash collateral received from securities on loan. |
(u) | The rate represents the7-day annualized yield at period end. |
Abbreviations:
ADR | American depositary receipt |
REIT | Real estate investment trust |
Investments in Affiliates
An affiliated investment is an investment in which the Fund owns at least 5% of the outstanding voting shares of the issuer or as a result of other relationships, such as the Fund and the issuer having the same investment manager. Transactions with issuers that were either affiliated persons of the Fund at the beginning of the period or the end of the period were as follows:
Shares, beginning of period | Shares purchased | Shares sold | Shares, end of period | Net realized losses | Net change in unrealized gains (losses) | Income from affiliated securities | Value, end of period | % of net assets | ||||||||||||||||||||||||||||
Short-Term Investments | ||||||||||||||||||||||||||||||||||||
Investment Companies | ||||||||||||||||||||||||||||||||||||
Securities Lending Cash Investments LLC | 33,993,921 | 196,174,736 | 206,466,825 | 23,701,832 | $ | 0 | $ | 0 | $ | 480,928 | $ | 23,704,202 | ||||||||||||||||||||||||
Wells Fargo Government Money Market Fund Select Class | 4,785,042 | 90,239,551 | 86,985,304 | 8,039,289 | 0 | 0 | 86,614 | 8,039,289 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
$ | 0 | $ | 0 | $ | 567,542 | $ | 31,743,491 | 4.37 | % | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of assets and liabilities—March 31, 2019 (unaudited) | Wells Fargo Enterprise Fund | 11 |
Assets | ||||
Investments in unaffiliated securities (including $23,104,242 of securities loaned), at value (cost $529,240,936) | $ | 721,041,825 | ||
Investments in affiliated securities, at value (cost $31,743,491) | 31,743,491 | |||
Receivable for investments sold | 1,055,300 | |||
Receivable for Fund shares sold | 60,143 | |||
Receivable for dividends | 330,254 | |||
Receivable for securities lending income | 17,952 | |||
Prepaid expenses and other assets | 43,842 | |||
|
| |||
Total assets | 754,292,807 | |||
|
| |||
Liabilities | ||||
Payable upon receipt of securities loaned | 23,706,570 | |||
Payable for investments purchased | 2,937,787 | |||
Management fee payable | 412,075 | |||
Payable for Fund shares redeemed | 333,727 | |||
Administration fees payable | 117,088 | |||
Distribution fee payable | 1,890 | |||
Trustees’ fees and expenses payable | 1,003 | |||
Accrued expenses and other liabilities | 276,117 | |||
|
| |||
Total liabilities | 27,786,257 | |||
|
| |||
Total net assets | $ | 726,506,550 | ||
|
| |||
NET ASSETS CONSIST OF | ||||
Paid-in capital | $ | 531,436,373 | ||
Total distributable earnings | 195,070,177 | |||
|
| |||
Total net assets | $ | 726,506,550 | ||
|
| |||
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE | ||||
Net assets – Class A | $ | 625,133,481 | ||
Shares outstanding – Class A1 | 13,441,033 | |||
Net asset value per share – Class A | $46.51 | |||
Maximum offering price per share – Class A2 | $49.35 | |||
Net assets – Class C | $ | 2,960,595 | ||
Shares outstanding – Class C1 | 73,834 | |||
Net asset value per share – Class C | $40.10 | |||
Net assets – Class R6 | $ | 49,123,880 | ||
Shares outstanding – Class R61 | 941,972 | |||
Net asset value per share – Class R6 | $52.15 | |||
Net assets – Administrator Class | $ | 3,256,574 | ||
Shares outstanding – Administrator Class1 | 65,924 | |||
Net asset value per share – Administrator Class | $49.40 | |||
Net assets – Institutional Class | $ | 46,032,020 | ||
Shares outstanding – Institutional Class1 | 885,315 | |||
Net asset value per share – Institutional Class | $52.00 |
1 | The Fund has an unlimited number of authorized shares. |
2 | Maximum offering price is computed as 100/94.25 of net asset value. On investments of $50,000 or more, the offering price is reduced. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
12 | Wells Fargo Enterprise Fund | Statement of operations—six months ended March 31, 2019 (unaudited) |
Investment income | ||||
Dividends (net of foreign withholding taxes of $34,054) | $ | 2,333,420 | ||
Income from affiliated securities | 200,505 | |||
|
| |||
Total investment income | 2,533,925 | |||
|
| |||
Expenses | ||||
Management fee | 2,502,058 | |||
Administration fees | ||||
Class A | 607,487 | |||
Class C | 5,275 | |||
Class R6 | 6,579 | |||
Administrator Class | 2,015 | |||
Institutional Class | 27,616 | |||
Shareholder servicing fees |
| |||
Class A | 723,199 | |||
Class C | 6,280 | |||
Administrator Class | 3,665 | |||
Distribution fee |
| |||
Class C | 18,840 | |||
Custody and accounting fees | 31,255 | |||
Professional fees | 21,077 | |||
Registration fees | 53,492 | |||
Shareholder report expenses | 37,918 | |||
Trustees’ fees and expenses | 10,969 | |||
Other fees and expenses | 7,011 | |||
|
| |||
Total expenses | 4,064,736 | |||
Less: Fee waivers and/or expense reimbursements | (229,761 | ) | ||
|
| |||
Net expenses | 3,834,975 | |||
|
| |||
Net investment loss | (1,301,050 | ) | ||
|
| |||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | ||||
Net realized gains on investments | 5,537,993 | |||
Net change in unrealized gains (losses) on investments | (5,130,198 | ) | ||
|
| |||
Net realized and unrealized gains (losses) on investments | 407,795 | |||
|
| |||
Net decrease in net assets resulting from operations | $ | (893,255 | ) | |
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of changes in net assets | Wells Fargo Enterprise Fund | 13 |
Six months ended March 31, 2019 (unaudited) | Year ended September 30, 2018 | |||||||||||||||
Operations | ||||||||||||||||
Net investment loss | $ | (1,301,050 | ) | $ | (4,200,615 | ) | ||||||||||
Net realized gains on investments | 5,537,993 | 90,687,674 | ||||||||||||||
Net change in unrealized gains (losses) on investments | (5,130,198 | ) | 51,811,573 | |||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (893,255 | ) | 138,298,632 | |||||||||||||
|
| |||||||||||||||
Distributions to shareholders from net investment income and net realized gains | ||||||||||||||||
Class A | (70,134,961 | ) | (61,896,652 | ) | ||||||||||||
Class C | (816,461 | ) | (1,047,354 | ) | ||||||||||||
Class R6 | (4,758,791 | ) | (4,095,973 | ) | ||||||||||||
Administrator Class | (354,534 | ) | (378,790 | ) | ||||||||||||
Institutional Class | (4,789,876 | ) | (4,654,368 | ) | ||||||||||||
|
| |||||||||||||||
Total distributions to shareholders | (80,854,623 | ) | (72,073,137 | ) | ||||||||||||
|
| |||||||||||||||
Capital share transactions | Shares | Shares | ||||||||||||||
Proceeds from shares sold | ||||||||||||||||
Class A | 160,294 | 6,832,203 | 185,378 | 9,099,671 | ||||||||||||
Class C | 4,196 | 152,334 | 4,536 | 198,917 | ||||||||||||
Class R6 | 53,029 | 2,683,429 | 178,922 | 9,819,356 | ||||||||||||
Administrator Class | 2,214 | 107,239 | 12,688 | 658,208 | ||||||||||||
Institutional Class | 127,400 | 6,062,409 | 132,493 | 7,163,466 | ||||||||||||
|
| |||||||||||||||
15,837,614 | 26,939,618 | |||||||||||||||
|
| |||||||||||||||
Reinvestment of distributions |
| |||||||||||||||
Class A | 1,674,293 | 66,553,136 | 1,280,198 | 58,530,640 | ||||||||||||
Class C | 23,540 | 808,616 | 25,557 | 1,037,343 | ||||||||||||
Class R6 | 106,813 | 4,755,337 | 81,337 | 4,092,854 | ||||||||||||
Administrator Class | 8,166 | 344,706 | 7,722 | 371,790 | ||||||||||||
Institutional Class | 102,725 | 4,559,989 | 89,154 | 4,477,339 | ||||||||||||
|
| |||||||||||||||
77,021,784 | 68,509,966 | |||||||||||||||
|
| |||||||||||||||
Payment for shares redeemed | ||||||||||||||||
Class A | (767,089 | ) | (32,897,159 | ) | (1,203,590 | ) | (59,203,661 | ) | ||||||||
Class C | (117,114 | ) | (4,406,180 | ) | (69,340 | ) | (3,062,717 | ) | ||||||||
Class R6 | (44,986 | ) | (2,194,545 | ) | (108,785 | ) | (6,087,430 | ) | ||||||||
Administrator Class | (10,516 | ) | (498,335 | ) | (26,820 | ) | (1,379,035 | ) | ||||||||
Institutional Class | (175,321 | ) | (8,071,953 | ) | (425,040 | ) | (22,883,844 | ) | ||||||||
|
| |||||||||||||||
(48,068,172 | ) | (92,616,687 | ) | |||||||||||||
|
| |||||||||||||||
Net increase in net assets resulting from capital share transactions | 44,791,226 | 2,832,897 | ||||||||||||||
|
| |||||||||||||||
Total increase (decrease) in net assets | (36,956,652 | ) | 69,058,392 | |||||||||||||
|
| |||||||||||||||
Net assets | ||||||||||||||||
Beginning of period | 763,463,202 | 694,404,810 | ||||||||||||||
|
| |||||||||||||||
End of period | $ | 726,506,550 | $ | 763,463,202 | ||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
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14 | Wells Fargo Enterprise Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS A | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $52.96 | $48.80 | $41.94 | $41.90 | $47.93 | $49.54 | ||||||||||||||||||
Net investment loss | (0.10 | ) | (0.31 | ) | (0.25 | ) | (0.21 | )1 | (0.29 | ) | (0.43 | )1 | ||||||||||||
Net realized and unrealized gains (losses) on investments | (0.61 | ) | 9.66 | 8.94 | 3.61 | 0.18 | 3.00 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (0.71 | ) | 9.35 | 8.69 | 3.40 | (0.11 | ) | 2.57 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net realized gains | (5.74 | ) | (5.19 | ) | (1.83 | ) | (3.36 | ) | (5.92 | ) | (4.18 | ) | ||||||||||||
Net asset value, end of period | $46.51 | $52.96 | $48.80 | $41.94 | $41.90 | $47.93 | ||||||||||||||||||
Total return2 | 0.48 | % | 20.83 | % | 21.55 | % | 8.63 | % | (0.67 | )% | 5.27 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.25 | % | 1.25 | % | 1.26 | % | 1.26 | % | 1.29 | % | 1.29 | % | ||||||||||||
Net expenses | 1.18 | % | 1.18 | % | 1.18 | % | 1.18 | % | 1.18 | % | 1.18 | % | ||||||||||||
Net investment loss | (0.43 | )% | (0.61 | )% | (0.55 | )% | (0.52 | )% | (0.60 | )% | (0.87 | )% | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 26 | % | 62 | % | 75 | % | 99 | % | 101 | % | 98 | % | ||||||||||||
Net assets, end of period (000s omitted) | $625,133 | $655,338 | $591,002 | $542,077 | $370,743 | $417,971 |
1 | Calculated based upon average shares outstanding |
2 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Enterprise Fund | 15 |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS C | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $46.74 | $43.95 | $38.23 | $38.75 | $45.07 | $47.14 | ||||||||||||||||||
Net investment loss | (0.23 | )1 | (0.60 | )1 | (0.85 | ) | (0.47 | )1 | (0.59 | )1 | (0.75 | )1 | ||||||||||||
Net realized and unrealized gains (losses) on investments | (0.67 | ) | 8.58 | 8.40 | 3.31 | 0.19 | 2.86 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (0.90 | ) | 7.98 | 7.55 | 2.84 | (0.40 | ) | 2.11 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net realized gains | (5.74 | ) | (5.19 | ) | (1.83 | ) | (3.36 | ) | (5.92 | ) | (4.18 | ) | ||||||||||||
Net asset value, end of period | $40.10 | $46.74 | $43.95 | $38.23 | $38.75 | $45.07 | ||||||||||||||||||
Total return2 | 0.10 | % | 19.93 | % | 20.66 | % | 7.80 | % | (1.41 | )% | 4.49 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 2.00 | % | 2.00 | % | 2.01 | % | 2.01 | % | 2.04 | % | 2.04 | % | ||||||||||||
Net expenses | 1.93 | % | 1.93 | % | 1.93 | % | 1.93 | % | 1.93 | % | 1.93 | % | ||||||||||||
Net investment loss | (1.18 | )% | (1.37 | )% | (1.13 | )% | (1.28 | )% | (1.36 | )% | (1.62 | )% | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 26 | % | 62 | % | 75 | % | 99 | % | 101 | % | 98 | % | ||||||||||||
Net assets, end of period (000s omitted) | $2,961 | $7,629 | $8,898 | $9,181 | $9,399 | $9,658 |
1 | Calculated based upon average shares outstanding |
2 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
16 | Wells Fargo Enterprise Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||
CLASS R6 | 2018 | 2017 | 2016 | 20151 | ||||||||||||||||
Net asset value, beginning of period | $58.47 | $53.17 | $45.37 | $44.89 | $52.65 | |||||||||||||||
Net investment loss | (0.01 | )2 | (0.13 | )2 | (0.08 | ) | (0.06 | )2 | (0.08 | ) | ||||||||||
Net realized and unrealized gains (losses) on investments | (0.57 | ) | 10.62 | 9.71 | 3.90 | (1.76 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | (0.58 | ) | 10.49 | 9.63 | 3.84 | (1.84 | ) | |||||||||||||
Distributions to shareholders from | ||||||||||||||||||||
Net realized gains | (5.74 | ) | (5.19 | ) | (1.83 | ) | (3.36 | ) | (5.92 | ) | ||||||||||
Net asset value, end of period | $52.15 | $58.47 | $53.17 | $45.37 | $44.89 | |||||||||||||||
Total return3 | 0.67 | % | 21.30 | % | 22.01 | % | 9.06 | % | (3.84 | )% | ||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||
Gross expenses | 0.82 | % | 0.82 | % | 0.82 | % | 0.83 | % | 0.81 | % | ||||||||||
Net expenses | 0.80 | % | 0.80 | % | 0.80 | % | 0.80 | % | 0.80 | % | ||||||||||
Net investment loss | (0.05 | )% | (0.23 | )% | (0.17 | )% | (0.14 | )% | (0.19 | )% | ||||||||||
Supplemental data | ||||||||||||||||||||
Portfolio turnover rate | 26 | % | 62 | % | 75 | % | 99 | % | 101 | % | ||||||||||
Net assets, end of period (000s omitted) | $49,124 | $48,363 | $35,923 | $29,861 | $24 |
1 | For the period from October 31, 2014 (commencement of class operations) to September 30, 2015 |
2 | Calculated based upon average shares outstanding |
3 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Enterprise Fund | 17 |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
ADMINISTRATOR CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $55.82 | $51.12 | $43.81 | $43.58 | $49.54 | $51.03 | ||||||||||||||||||
Net investment loss | (0.08 | ) | (0.28 | )1 | (0.20 | )1 | (0.18 | )1 | (0.23 | )1 | (0.37 | )1 | ||||||||||||
Net realized and unrealized gains (losses) on investments | (0.60 | ) | 10.17 | 9.34 | 3.77 | 0.19 | 3.06 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (0.68 | ) | 9.89 | 9.14 | 3.59 | (0.04 | ) | 2.69 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net realized gains | (5.74 | ) | (5.19 | ) | (1.83 | ) | (3.36 | ) | (5.92 | ) | (4.18 | ) | ||||||||||||
Net asset value, end of period | $49.40 | $55.82 | $51.12 | $43.81 | $43.58 | $49.54 | ||||||||||||||||||
Total return2 | 0.51 | % | 20.95 | % | 21.66 | % | 8.74 | % | (0.46 | )% | 5.33 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.16 | % | 1.16 | % | 1.18 | % | 1.15 | % | 1.09 | % | 1.12 | % | ||||||||||||
Net expenses | 1.10 | % | 1.10 | % | 1.10 | % | 1.07 | % | 1.07 | % | 1.09 | % | ||||||||||||
Net investment loss | (0.35 | )% | (0.53 | )% | (0.44 | )% | (0.41 | )% | (0.47 | )% | (0.74 | )% | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 26 | % | 62 | % | 75 | % | 99 | % | 101 | % | 98 | % | ||||||||||||
Net assets, end of period (000s omitted) | $3,257 | $3,687 | $3,705 | $4,693 | $3,542 | $44,760 |
1 | Calculated based upon average shares outstanding |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
18 | Wells Fargo Enterprise Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
INSTITUTIONAL CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $58.33 | $53.08 | $45.32 | $44.87 | $50.77 | $52.07 | ||||||||||||||||||
Net investment loss | (0.02 | )1 | (0.15 | )1 | (0.09 | )1 | (0.09 | )1 | (0.13 | )1 | (0.28 | )1 | ||||||||||||
Net realized and unrealized gains (losses) on investments | (0.57 | ) | 10.59 | 9.68 | 3.90 | 0.15 | 3.16 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (0.59 | ) | 10.44 | 9.59 | 3.81 | 0.02 | 2.88 | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net realized gains | (5.74 | ) | (5.19 | ) | (1.83 | ) | (3.36 | ) | (5.92 | ) | (4.18 | ) | ||||||||||||
Net asset value, end of period | $52.00 | $58.33 | $53.08 | $45.32 | $44.87 | $50.77 | ||||||||||||||||||
Total return2 | 0.66 | % | 21.24 | % | 21.97 | % | 8.97 | % | (0.32 | )% | 5.61 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 0.92 | % | 0.92 | % | 0.93 | % | 0.93 | % | 0.88 | % | 0.86 | % | ||||||||||||
Net expenses | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | ||||||||||||
Net investment loss | (0.09 | )% | (0.29 | )% | (0.19 | )% | (0.21 | )% | (0.27 | )% | (0.54 | )% | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 26 | % | 62 | % | 75 | % | 99 | % | 101 | % | 98 | % | ||||||||||||
Net assets, end of period (000s omitted) | $46,032 | $48,446 | $54,877 | $61,563 | $87,279 | $76,790 |
1 | Calculated based upon average shares outstanding |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Notes to financial statements (unaudited) | Wells Fargo Enterprise Fund | 19 |
1. ORGANIZATION
Wells Fargo Funds Trust (the “Trust”), a Delaware statutory trust organized on March 10, 1999, is anopen-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As an investment company, the Trust follows the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”)Accounting Standards Codification Topic 946, Financial Services – Investment Companies. These financial statements report on the Wells Fargo Enterprise Fund (the “Fund”) which is a diversified series of the Trust.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Fund, are in conformity with U.S. generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Securities valuation
All investments are valued each business day as of the close of regular trading on the New York Stock Exchange (generally 4 p.m. Eastern Time), although the Fund may deviate from this calculation time under unusual or unexpected circumstances.
Equity securities that are listed on a foreign or domestic exchange or market are valued at the official closing price or, if none, the last sales price. If no sale occurs on the principal exchange or market that day, a fair value price will be determined in accordance with the Fund’s Valuation Procedures.
Investments in registeredopen-end investment companies are valued at net asset value. Interests innon-registered investment companies that are redeemable at net asset value are fair valued normally at net asset value.
Investments which are not valued using any of the methods discussed above are valued at their fair value, as determined in good faith by the Board of Trustees of the Fund. The Board of Trustees has established a Valuation Committee comprised of the Trustees and has delegated to it the authority to take any actions regarding the valuation of portfolio securities that the Valuation Committee deems necessary or appropriate, including determining the fair value of portfolio securities, unless the determination has been delegated to the Wells Fargo Asset Management Pricing Committee at Wells Fargo Funds Management, LLC (“Funds Management”). The Board of Trustees retains the authority to make or ratify any valuation decisions or approve any changes to the Valuation Procedures as it deems appropriate. On a quarterly basis, the Board of Trustees receives reports on any valuation actions taken by the Valuation Committee or the Wells Fargo Asset Management Pricing Committee which may include items for ratification.
Securities lending
The Fund may lend its securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The Fund continues to receive interest or dividends on the securities loaned. The Fund receives collateral in the form of cash or securities with a value at least equal to the value of the securities on loan. The value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. In a securities lending transaction, the net asset value of the Fund will be affected by an increase or decrease in the value of the securities loaned and by an increase or decrease in the value of the instrument in which collateral is invested. The amount of securities lending activity undertaken by the Fund fluctuates from time to time. In the event of default or bankruptcy by the borrower, the Fund may be prevented from recovering the loaned securities or gaining access to the collateral or may experience delays or costs in doing so. In addition, the investment of any cash collateral received may lose all or part of its value. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.
The Fund lends its securities through an unaffiliated securities lending agent. Cash collateral received in connection with its securities lending transactions is invested in Securities Lending Cash Investments, LLC (the “Securities Lending Fund”). The Securities Lending Fund is exempt from registration under Section 3(c)(7) of the 1940 Act and is managed by Funds Management and is subadvised by Wells Capital Management Incorporated (“WellsCap”), an affiliate of Funds Management and an indirect wholly owned subsidiary of Wells Fargo & Company (“Wells Fargo”). Funds Management receives an advisory fee starting at 0.05% and declining to 0.01% as the average daily net assets of the Securities Lending Fund increase. All of the fees received by Funds Management are paid to WellsCap for its services as subadviser. The Securities Lending Fund seeks to provide a positive return compared to the daily Fed Funds Open Rate by investing in high-quality, U.S. dollar-denominated short-term money market instruments. Securities Lending Fund investments are
Table of Contents
20 | Wells Fargo Enterprise Fund | Notes to financial statements (unaudited) |
valued at the evaluated bid price provided by an independent pricing service. Income earned from investment in the Securities Lending Fund (net of fees and rebates), if any, is included in income from affiliated securities on the Statement of Operations.
Security transactions and income recognition
Securities transactions are recorded on a trade date basis. Realized gains or losses are recorded on the basis of identified cost.
Dividend income is recognized on theex-dividend date. Dividend income is recorded net of foreign taxes withheld where recovery of such taxes is not assured.
Distributions to shareholders
Distributions to shareholders from net investment income and any net realized gains are recorded on theex-dividend date and paid at least annually. Such distributions are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles. Dividend sources are estimated at the time of declaration. The tax character of distributions is determined as of the Fund’s fiscal year end. Therefore, a portion of the Fund’s distributions made prior to the Fund’s fiscal year end may be categorized as a tax return of capital at year end.
Federal and other taxes
The Fund intends to continue to qualify as a regulated investment company by distributing substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required.
The Fund’s income and federal excise tax returns and all financial records supporting those returns for the prior three fiscal years are subject to examination by the federal and Delaware revenue authorities. Management has analyzed the Fund’s tax positions taken on federal, state, and foreign tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability.
As of March 31, 2019, the aggregate cost of all investments for federal income tax purposes was $561,039,149 and the unrealized gains (losses) consisted of:
Gross unrealized gains | $ | 201,002,408 | ||
Gross unrealized losses | (9,256,241 | ) | ||
Net unrealized gains | $ | 191,746,167 |
Class allocations
The separate classes of shares offered by the Fund differ principally in applicable sales charges, distribution, shareholder servicing, and administration fees. Class specific expenses are charged directly to that share class. Investment income, common expenses, and realized and unrealized gains (losses) on investments are allocated daily to each class of shares based on the relative proportion of net assets of each class.
3. FAIR VALUATION MEASUREMENTS
Fair value measurements of investments are determined within a framework that has established a fair value hierarchy based upon the various data inputs utilized in determining the value of the Fund’s investments. The three-level hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Fund’s investments are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The inputs are summarized into three broad levels as follows:
∎ | Level 1 – quoted prices in active markets for identical securities |
∎ | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
∎ | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
The inputs or methodologies used for valuing investments in securities are not necessarily an indication of the risk associated with investing in those securities.
Table of Contents
Notes to financial statements (unaudited) | Wells Fargo Enterprise Fund | 21 |
The following is a summary of the inputs used in valuing the Fund’s assets and liabilities as of March 31, 2019:
Quoted prices (Level 1) | Other significant observable inputs (Level 2) | Significant (Level 3) | Total | |||||||||||||
Assets | ||||||||||||||||
Investments in: | ||||||||||||||||
Common stocks | ||||||||||||||||
Communication services | $ | 38,298,922 | $ | 0 | $ | 0 | $ | 38,298,922 | ||||||||
Consumer discretionary | 128,785,045 | 0 | 0 | 128,785,045 | ||||||||||||
Consumer staple | 7,876,194 | 0 | 0 | 7,876,194 | ||||||||||||
Financials | 21,274,549 | 0 | 0 | 21,274,549 | ||||||||||||
Health care | 115,138,876 | 0 | 0 | 115,138,876 | ||||||||||||
Industrials | 113,638,418 | 0 | 0 | 113,638,418 | ||||||||||||
Information technology | 245,588,079 | 0 | 0 | 245,588,079 | ||||||||||||
Materials | 41,836,397 | 0 | 0 | 41,836,397 | ||||||||||||
Real estate | 8,605,345 | 0 | 0 | 8,605,345 | ||||||||||||
Short-term investments | ||||||||||||||||
Investment companies | 8,039,289 | 23,704,202 | 0 | 31,743,491 | ||||||||||||
Total assets | $ | 729,081,114 | $ | 23,704,202 | $ | 0 | $ | 752,785,316 |
Additional sector, industry or geographic detail is included in the Portfolio of Investments.
At March 31, 2019, the Fund did not have any transfers into/out of Level 3.
4. TRANSACTIONS WITH AFFILIATES
Management fee
Funds Management, an indirect wholly owned subsidiary of Wells Fargo, is the manager of the Fund and provides advisory and fund-level administrative services under an investment management agreement. Under the investment management agreement, Funds Management is responsible for, among other services, implementing the investment objectives and strategies of the Fund, supervising the subadviser and providing fund-level administrative services in connection with the Fund’s operations. As compensation for its services under the investment management agreement, Funds Management is entitled to receive a management fee at the following annual rate based on the Fund’s average daily net assets:
Average daily net assets | Management fee | |||
First $500 million | 0.750 | % | ||
Next $500 million | 0.725 | |||
Next $1 billion | 0.700 | |||
Next $2 billion | 0.675 | |||
Next $1 billion | 0.650 | |||
Next $5 billion | 0.640 | |||
Next $2 billion | 0.630 | |||
Next $4 billion | �� | 0.620 | ||
Over $16 billion | 0.610 |
Table of Contents
22 | Wells Fargo Enterprise Fund | Notes to financial statements (unaudited) |
Prior to January 31, 2019, the management fee rate was as follows:
Average daily net assets | Management fee | |||
First $500 million | 0.750 | % | ||
Next $500 million | 0.725 | |||
Next $1 billion | 0.700 | |||
Next $2 billion | 0.675 | |||
Next $1 billion | 0.650 | |||
Next $5 billion | 0.640 | |||
Over $10 billion | 0.630 |
For the six months ended March 31, 2019, the management fee was equivalent to an annual rate of 0.74% of the Fund’s average daily net assets.
Funds Management has retained the services of a subadviser to provide daily portfolio management to the Fund. The fee for subadvisory services is borne by Funds Management. WellsCap is the subadviser to the Fund and is entitled to receive a fee from Funds Management at an annual rate starting at 045% and declining to 0.30% as the average daily net assets of the Fund increase.
Administration fees
Under a class-level administration agreement, Funds Management provides class-level administrative services to the Fund, which includes paying fees and expenses for services provided by the transfer agent,sub-transfer agents, omnibus account servicers and record-keepers. As compensation for its services under the class-level administration agreement, Funds Management receives an annual fee which is calculated based on the average daily net assets of each class as follows:
Class-level administration fee | ||||
Class A, Class C | 0.21 | % | ||
Class R6 | 0.03 | |||
Administrator Class, Institutional Class | 0.13 |
Funds Management has contractually waived and/or reimbursed management and administration fees to the extent necessary to maintain certain net operating expense ratios for the Fund. When each class of the Fund has exceeded its expense cap, Funds Management has waived fees and/or reimbursed expenses from fund level expenses on a proportionate basis and then from class specific expenses. When only certain classes exceed their expense caps, waivers and/or reimbursements are applied against class specific expenses before fund level expenses. Funds Management has committed through January 31, 2020 to waive fees and/or reimburse expenses to the extent necessary to cap the Fund’s expenses at 1.18% for Class A shares, 1.93% for Class C shares, 0.80% for Class R6 shares, 1.10% for Administrator Class shares, and 0.85% for Institutional Class shares. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees.
Distribution fee
The Trust has adopted a distribution plan for Class C shares of the Fund pursuant to Rule12b-1 under the 1940 Act. A distribution fee is charged to Class C shares and paid to Wells Fargo Funds Distributor, LLC (“Funds Distributor”), the principal underwriter, at an annual rate of 0.75% of the average daily net assets of Class C shares.
In addition, Funds Distributor is entitled to receive thefront-end sales charge from the purchase of Class A shares and a contingent deferred sales charge on the redemption of certain Class A shares. Funds Distributor is also entitled to receive the contingent deferred sales charges from redemptions of Class C shares. For the six months ended March 31 2019, Funds Distributor received $2,498 from the sale of Class A shares. No contingent deferred sales charges were incurred by Class A and Class C shares for the six months ended March 31, 2019.
Shareholder servicing fees
The Trust has entered into contracts with one or more shareholder servicing agents, whereby Class A, Class C, and Administrator Class of the Fund are charged a fee at an annual rate of 0.25% of the average daily net assets of each respective class. A portion of these total shareholder servicing fees were paid to affiliates of Wells Fargo.
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Notes to financial statements (unaudited) | Wells Fargo Enterprise Fund | 23 |
Interfund transactions
The Fund may purchase or sell portfolio investment securities to certain other Wells Fargo affiliates pursuant toRule 17a-7 under the 1940 Act and under procedures adopted by the Board of Trustees. The procedures have been designed to ensure that these interfund transactions, which do not incur broker commissions, are effected at current market prices.
5. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, excluding U.S. government obligations (if any) and short-term securities, for the six months ended March 31, 2019 were $179,558,372 and $220,278,516, respectively.
6. BANK BORROWINGS
The Trust (excluding the money market funds), Wells Fargo Master Trust and Wells Fargo Variable Trust are parties to a $280,000,000 revolving credit agreement whereby the Fund is permitted to use bank borrowings for temporary or emergency purposes, such as to fund shareholder redemption requests. Interest under the credit agreement is charged to the Fund based on a borrowing rate equal to the higher of the Federal Funds rate in effect on that day plus 1.25% or the overnight LIBOR rate in effect on that day plus 1.25%. In addition, an annual commitment fee equal to 0.25% of the unused balance is allocated to each participating fund.
For the six months ended March 31, 2019, there were no borrowings by the Fund under the agreement.
7. CONCENTRATION RISK
Concentration risk result from exposure to a limited number of sectors. A fund that invests a substantial portion of its assets in any sector may be more affected by changes in that sector than would be a fund whose investments are not heavily weighted in any sector.
8. INDEMNIFICATION
Under the Trust’s organizational documents, the officers and Trustees have been granted certain indemnification rights against certain liabilities that may arise out of performance of their duties to the Trust. Additionally, in the normal course of business, the Trust may enter into contracts with service providers that contain a variety of indemnification clauses. The Trust’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated.
9. NEW ACCOUNTING PRONOUNCEMENT
In August 2018, FASB issued Accounting Standards Update (“ASU”)No. 2018-13, Fair Value Measurement (Topic 820)Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU2018-13 updates the disclosure requirements for fair value measurements by modifying or removing certain disclosures and adding certain new disclosures. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management has adopted the removal and modification of disclosures early, as permitted, and will adopt the additional new disclosures at the effective date.
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24 | Wells Fargo Enterprise Fund | Other information (unaudited) |
PROXY VOTING INFORMATION
A description of the policies and procedures used to determine how to vote proxies relating to portfolio securities is available, upon request, by calling1-800-222-8222, visiting our website atwfam.com, or visiting the SEC website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent12-month period ended June 30 is available on the Fund’s website atwfam.comor by visiting the SEC website at sec.gov.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for the Fund are publicly available monthly on the Fund’s website (wfam.com), on aone-month delayed basis. In addition, top ten holdings information (excluding derivative positions) for the Fund is publicly available on the Fund’s website on a monthly,seven-day or more delayed basis. The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on FormN-Q, which is available by visiting the SEC website at sec.gov. In addition, the Fund’s FormN-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling1-800-SEC-0330.
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Other information (unaudited) | Wells Fargo Enterprise Fund | 25 |
BOARD OF TRUSTEES AND OFFICERS
Each of the Trustees and Officers1 listed in the table below acts in identical capacities for each fund in the Wells Fargo family of funds, which consists of 151 mutual funds comprising the Wells Fargo Funds Trust, Wells Fargo Variable Trust, Wells Fargo Master Trust and fourclosed-end funds (collectively the “Fund Complex”). This table should be read in conjunction with the Prospectus and the Statement of Additional Information2. The mailing address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, however, each Trustee serves such term until reaching the mandatory retirement age established by the Trustees.
Independent Trustees
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or | |||
William R. Ebsworth (Born 1957) | Trustee, since 2015 | Retired. From 1984 to 2013, equities analyst, portfolio manager, research director and chief investment officer at Fidelity Management and Research Company in Boston, Tokyo, and Hong Kong, and retired in 2013 as Chief Investment Officer of Fidelity Strategic Advisers, Inc. where he led a team of investment professionals managing client assets. Prior thereto, Board member of Hong Kong Securities Clearing Co., Hong Kong Options Clearing Corp., the Thailand International Fund, Ltd., Fidelity Investments Life Insurance Company, and Empire Fidelity Investments Life Insurance Company. Audit Committee Chair and Investment Committee Chair of the Vincent Memorial Hospital Endowment(non-profit organization). Mr. Ebsworth is a CFA® charterholder. | N/A | |||
Jane A. Freeman (Born 1953) | Trustee, since 2015; Chair Liaison, since 2018 | Retired. From 2012 to 2014 and 1999 to 2008, Chief Financial Officer of Scientific Learning Corporation. From 2008 to 2012, Ms. Freeman provided consulting services related to strategic business projects. Prior to 1999, Portfolio Manager at Rockefeller & Co. and Scudder, Stevens & Clark. Board member of the Harding Loevner Funds from 1996 to 2014, serving as both Lead Independent Director and chair of the Audit Committee. Board member of the Russell Exchange Traded Funds Trust from 2011 to 2012 and the chair of the Audit Committee. Ms. Freeman is a Board Member of The Ruth Bancroft Garden(non-profit organization). She is also an inactive Chartered Financial Analyst. | N/A | |||
Isaiah Harris, Jr.3 (Born 1952) | Trustee, since 2009; Audit Committee Chairman, since 2019 | Retired. Chairman of the Board of CIGNA Corporation since 2009, and Director since 2005. From 2003 to 2011, Director of Deluxe Corporation. Prior thereto, President and CEO of BellSouth Advertising and Publishing Corp. from 2005 to 2007, President and CEO of BellSouth Enterprises from 2004 to 2005 and President of BellSouth Consumer Services from 2000 to 2003. Emeritus member of the Iowa State University Foundation Board of Governors. Emeritus Member of the Advisory Board of Iowa State University School of Business. Advisory Board Member, Palm Harbor Academy (private school). Advisory Board Member, Child Evangelism Fellowship(non-profit). Mr. Harris is a certified public accountant (inactive status). | CIGNA Corporation | |||
Judith M. Johnson (Born 1949) | Trustee, since 2008; Audit Committee Chairman, from 2009 to 2018 | Retired. Prior thereto, Chief Executive Officer and Chief Investment Officer of Minneapolis Employees Retirement Fund from 1996 to 2008. Ms. Johnson is an attorney, certified public accountant and a certified managerial accountant. | N/A |
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26 | Wells Fargo Enterprise Fund | Other information (unaudited) |
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or | |||
David F. Larcker (Born 1950) | Trustee, since 2009 | James Irvin Miller Professor of Accounting at the Graduate School of Business, Stanford University, Director of the Corporate Governance Research Initiative and Senior Faculty of The Rock Center for Corporate Governance since 2006. From 2005 to 2008, Professor of Accounting at the Graduate School of Business, Stanford University. Prior thereto, Ernst & Young Professor of Accounting at The Wharton School, University of Pennsylvania from 1985 to 2005. | N/A | |||
Olivia S. Mitchell (Born 1953) | Trustee, since 2006; Nominating and Governance Committee Chairman, since 2018 | International Foundation of Employee Benefit Plans Professor, Wharton School of the University of Pennsylvania since 1993. Director of Wharton’s Pension Research Council and Boettner Center on Pensions & Retirement Research, and Research Associate at the National Bureau of Economic Research. Previously, Cornell University Professor from 1978 to 1993. | N/A | |||
Timothy J. Penny (Born 1951) | Trustee, since 1996; Chairman, since 2018 | President and Chief Executive Officer of Southern Minnesota Initiative Foundation, anon-profit organization, since 2007. Member of the Board of Trustees of NorthStar Education Finance, Inc., anon-profit organization, since 2007. | N/A | |||
James G. Polisson (Born 1959) | Trustee, since 2018 | Retired. Chief Marketing Officer, Source (ETF) UK Services, Ltd, from 2015 to 2017. From 2012 to 2015, Principal of The Polisson Group, LLC, a management consulting, corporate advisory and principal investing company. Chief Executive Officer and Managing Director at Russell Investments, Global Exchange Traded Funds from 2010 to 2012. Managing Director of Barclays Global Investors from 1998 to 2010 and Global Chief Marketing Officer for iShares and Barclays Global Investors from 2000 to 2010. Trustee of the San Francisco Mechanics’ Institute, anon-profit organization, from 2013 to 2015. Board member of the Russell Exchange Traded Fund Trust from 2011 to 2012. Director of Barclays Global Investors Holdings Deutschland GmbH from 2006 to 2009. Mr. Polisson is an attorney and has a retired status with the Massachusetts and District of Columbia Bar Associations. | N/A | |||
Pamela Wheelock (Born 1959) | Trustee, since 2018 | Board member of the Destination Medical Center Economic Development Agency, Rochester, Minnesota since 2019. Chief Operating Officer, Twin Cities Habitat for Humanity from 2017 to 2019. Vice President of University Services, University of Minnesota from 2012 to 2016. Prior thereto, on the Board of Directors, Governance Committee and Finance Committee for the Minnesota Philanthropy Partners (Saint Paul Foundation) from 2012 to 2018, Interim Chief Executive Officer of Blue Cross Blue Shield of Minnesota from 2011 to 2012, Chairman of the Board from 2009 to 2012 and Board Director from 2003 to 2015. Vice President, Leadership and Community Engagement, Bush Foundation, Saint Paul, Minnesota (a private foundation) from 2009 to 2011. Executive Vice President and Chief Financial Officer, Minnesota Sports and Entertainment from 2004 to 2009 and Senior Vice President from 2002 to 2004. Executive Vice President of the Minnesota Wild Foundation from 2004 to 2008. Commissioner of Finance, State of Minnesota, from 1999 to 2002. Currently Board Chair of the Minnesota Wild Foundation since 2010. | N/A |
* | Length of service dates reflect the Trustee’s commencement of service with the Trust’s predecessor entities, where applicable. |
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Other information (unaudited) | Wells Fargo Enterprise Fund | 27 |
Officers
Name and year of birth | Position held and length of service | Principal occupations during past five years or longer | ||||
Andrew Owen (Born 1960) | President, since 2017 | Executive Vice President of Wells Fargo & Company and Head of Affiliated Managers, Wells Fargo Asset Management, since 2014. In addition, Mr. Owen is currently President, Chief Executive Officer and Director of Wells Fargo Funds Management, LLC since 2017. Prior thereto, Executive Vice President responsible for marketing, investments and product development for Wells Fargo Funds Management, LLC, from 2009 to 2014. | ||||
Nancy Wiser1 (Born 1967) | Treasurer, since 2012 | Executive Vice President of Wells Fargo Funds Management, LLC since 2011. Chief Operating Officer and Chief Compliance Officer at LightBox Capital Management LLC, from 2008 to 2011. | ||||
Alexander Kymn (Born 1973) | Secretary and Chief Legal Officer, since 2018 | Senior Company Counsel of Wells Fargo Bank, N.A. since 2018 (previously Senior Counsel from 2007 to 2018). Vice President of Wells Fargo Funds Management, LLC from 2008 to 2014. | ||||
Michael H. Whitaker (Born 1967) | Chief Compliance Officer, since 2016 | Senior Vice President and Chief Compliance Officer since 2016. Senior Vice President and Chief Compliance Officer for Fidelity Investments from 2007 to 2016. | ||||
David Berardi (Born 1975) | Assistant Treasurer, since 2009 | Vice President of Wells Fargo Funds Management, LLC since 2009. Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010. Manager of Fund Reporting and Control for Evergreen Investment Management Company, LLC from 2004 to 2010. | ||||
Jeremy DePalma1 (Born 1974) | Assistant Treasurer, since 2009 | Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010 and head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010. |
1 | Nancy Wiser acts as Treasurer of 65 funds in the Fund Complex. Jeremy DePalma acts as Treasurer of 86 funds and Assistant Treasurer of 65 funds in the Fund Complex. |
2 | The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request, by calling1-800-222-8222 or by visiting the website atwfam.com. |
3 | Mr. Harris became Chairman of the Audit Committee effective January 1, 2019. |
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28 | Wells Fargo Enterprise Fund | Appendix A (unaudited) |
SALES CHARGE REDUCTIONS AND WAIVERS FOR CERTAIN INTERMEDIARIES
Raymond James & Associates, Inc., Raymond James Financial Services & Raymond James affiliates (“Raymond James”)
Effective on or about March 1, 2019, shareholders purchasing Fund shares through a Raymond James platform or account will be eligible only for the following load waivers(front-end sales charge waivers and contingent deferred, orback-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in the Fund’s Prospectus or SAI.
Front-end Sales Load Waivers on Class A shares Available at Raymond James
• | Shares purchased in an investment advisory program. |
• | Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family). |
• | Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James. |
• | Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to afront-end or deferred sales load (known as Rights of Reinstatement). |
• | A shareholder in the fund’s Class C shares will have their shares automatically exchanged at net asset value to Class A shares (or the appropriate share class) of the fund if the shares are no longer subject to a CDSC and the exchange is in line with the policies and procedures of Raymond James. |
CDSC Waivers on Class A and C Shares Available at Raymond James
• | Death or disability of the shareholder. |
• | Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus. |
• | Return of excess contributions from an IRA Account. |
• | Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70½ as described in the Fund’s prospectus. |
• | Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James. |
• | Shares acquired through a right of reinstatement. |
Front-end Load Discounts Available at Raymond James: Breakpoints, and/or Rights of Accumulation
• | Breakpoints as described in the Fund’s Prospectus. |
• | Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets. |
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For more information
More information about Wells Fargo Funds is available free upon request. To obtain literature, please write, visit the Fund’s website, or call:
Wells Fargo Funds
P.O. Box 219967
Kansas City, MO 64121-9967
Website: wfam.com
Individual investors: 1-800-222-8222
Retail investment professionals: 1-888-877-9275
Institutional investment professionals:1-866-765-0778
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. Before investing, please consider the investment objectives, risks, charges, and expenses of the investment. For a current prospectus and, if available, a summary prospectus, containing this information, call1-800-222-8222 or visit the Fund’s website atwfam.com. Read the prospectus carefully before you invest or send money.
Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management firms owned by Wells Fargo & Company. These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by Wells Fargo Funds Distributor, LLC (a broker-dealer and Member FINRA).
This material is for general informational and educational purposes only and is NOT intended to provide investment advice or a recommendation of any kind—including a recommendation for any specific investment, strategy, or plan.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
© 2019 Wells Fargo Funds Management, LLC. All rights reserved.
![]() | 401611 05-19 SA231/SAR231 03-19 |
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Semi-Annual Report
March 31, 2019
Wells Fargo Opportunity Fund
Beginning on January 1, 2021, as permitted by new regulations adopted by the Securities and Exchange Commission, paper copies of the Wells Fargo Funds’ annual and semi-annual shareholder reports issued after this date will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website, and you will be notified by mail each time a report is posted and provided with a website address to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-222-8222 or by enrolling at wellsfargo.com/advantagedelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports; if you invest directly with the Fund, you can call 1-800-222-8222. Your election to receive reports in paper will apply to all Wells Fargo Funds held in your account with your financial intermediary or, if you are a direct investor, to all Wells Fargo Funds that you hold.
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4 | ||||
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7 | ||||
Financial statements | ||||
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27 |
The views expressed and any forward-looking statements are as of March 31, 2019, unless otherwise noted, and are those of the Fund managers and/or Wells Fargo Asset Management. Discussions of individual securities, or the markets generally, or any Wells Fargo Fund are not intended as individual recommendations. Future events or results may vary significantly from those expressed in any forward-looking statements. The views expressed are subject to change at any time in response to changing circumstances in the market. Wells Fargo and the Fund disclaim any obligation to publicly update or revise any views expressed or forward-looking statements.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
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2 | Wells Fargo Opportunity Fund | Letter to shareholders (unaudited) |
Andrew Owen
President
Wells Fargo Funds
December’s S&P 500 Index performance was the worst since 1931.
Dear Shareholder:
We are pleased to offer you this semi-annual report for the Wells Fargo Opportunity Fund for the six-month period that ended March 31, 2019. Concerns about interest rate increases in the U.S., trade tensions, and geopolitical events drove equity losses and restrained bond returns during the fourth quarter of 2018. Investor sentiment improved during the first quarter of 2019 thanks to a shift in U.S. Federal Reserve (Fed) policy and consistent, if not spectacular, economic and business growth metrics.
For the period, U.S. stocks, as measured by the S&P 500 Index,1 lost 1.72% and international stocks, as measured by the MSCI ACWI ex USA Index (Net),2 fell 2.33%. Based on the MSCI EM Index (Net),3 emerging market stocks added 1.71%. For bond investors, the Bloomberg Barclays U.S. Aggregate Bond Index4 added 4.63% while the Bloomberg Barclays Global Aggregate ex-USD Index5 added 2.44%. The Bloomberg Barclays Municipal Bond Index6 added 4.63%, and the ICE BofAML U.S. High Yield Index7 gained 2.39%.
Conflicting data unsettled markets during the fourth quarter.
November’s U.S. midterm elections shifted control of the House of Representatives from Republicans to Democrats, presaging potential partisan clashes. Third-quarter U.S. gross domestic product was announced at an annualized 3.4% rate, lower than the second-quarter rate. Brexit efforts stalled ahead of the March 2019 deadline. The People’s Bank of China cut reserve requirement ratios, accelerated infrastructure spending, and cut taxes even as the value of the yuan declined to low levels last seen in 2008.
December’s S&P 500 Index performance was the worst since 1931. Globally, fixed-income investments fared better than stocks during the last two months of the year. The Fed increased the federal funds rate by 25 bps in December 2018 to a target range of between 2.25% and 2.50% and softened its outlook for 2019 rate increases.
The market climbs a wall of worry.
Investors entered 2019 with reasons to be concerned. A partial U.S. government shutdown driven by partisan spending and immigration policy disputes extended into January. Investors expected high levels of stock market volatility to continue based on the VIX8.
1 | The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index with each stock’s weight in the index proportionate to its market value. You cannot invest directly in an index. |
2 | The Morgan Stanley Capital International (MSCI) All Country World Index (ACWI) ex USA Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. You cannot invest directly in an index. |
3 | The MSCI Emerging Markets (EM) Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure large- and mid-cap equity market performance of emerging markets. The MSCI EM Index (Net) consists of the following 24 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and the United Arab Emirates. You cannot invest directly in an index. |
4 | The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid adjustable-rate mortgage pass-throughs), asset-backed securities, and commercial mortgage-backed securities. You cannot invest directly in an index. |
5 | The Bloomberg Barclays Global Aggregate ex-USD Index is an unmanaged index that provides a broad-based measure of the global investment-grade fixed-income markets excluding the U.S. dollar-denominated debt market. You cannot invest directly in an index. |
6 | The Bloomberg Barclays Municipal Bond Index is an unmanaged index composed of long-term tax-exempt bonds with a minimum credit rating of Baa. You cannot invest directly in an index. |
7 | The ICE BofAML U.S. High Yield Index is a market-capitalization-weighted index of domestic and Yankee high-yield bonds. The index tracks the performance of high-yield securities traded in the U.S. bond market. You cannot invest directly in an index. Copyright 2019. ICE Data Indices, LLC. All rights reserved. |
8 | The Chicago Board Options Exchange Market Volatility Index (VIX) is a popular measure of the implied volatility of S&P 500 Index options. It represents one measure of the market’s expectation of stock market volatility over the next 30-day period. You cannot invest directly in an index. |
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Letter to shareholders (unaudited) | Wells Fargo Opportunity Fund | 3 |
January’s returns tended to support the investing adage that markets climb a wall of worry. The S&P 500 Index gained 8.01% for the month that ended January 31, 2019, its best monthly performance in 30 years. Returns for the MSCI ACWI ex USA Index (Net), the Bloomberg Barclays U.S. Aggregate Bond Index, and the Bloomberg Barclays Global Aggregate ex-USD Index also were positive. The Fed indicated that it would pause its program of regular rate increases during 2019 as inflation remained low. Businesses and investors responded positively to the shift in policy.
In February, concerns over slowing global growth reemerged. The Bureau of Economic Analysis announced fourth-quarter 2018 gross domestic product grew at an annualized 2.2% rate, down from the 4.2% annualized rate for the second quarter and the 3.4% annualized rate for the third quarter. Analysts attributed the lower growth rate to a slowing housing market and larger trade deficit. The U.S. Department of Labor said that the economy created just 20,000 jobs in February 2019. In a February report, the Bank of England forecast the slowest growth since the financial crisis for 2019. China and the U.S., while putting future tariffs on hold for the time being, continued to wrangle over trade issues.
By the end of March 2019, the combination of dovish Fed sentiment and consistent, if not spectacular, economic and business metrics reinforced investors’ enthusiasm for equity investing. Monthly job creation data regained its momentum. Corporate profits, while lower than 2018’s lofty levels, remained consistent. Inflation rates were relatively low in the U.S., Europe, and Japan. China announced a roughly $300 billion stimulus package through tax and fee cuts intended to reinvigorate economic growth.
Don’t let short-term uncertainty derail long-term investment goals.
Periods of investment uncertainty can present challenges, but experience has taught us that maintaining long-term investment goals can be an effective way to plan for the future. To help you create a sound strategy based on your personal goals and risk tolerance, Wells Fargo Funds offers more than 100 mutual funds spanning a wide range of asset classes and investment styles. Although diversification cannot guarantee an investment profit or prevent losses, we believe it can be an effective way to manage investment risk and potentially smooth out overall portfolio performance. We encourage investors to know their investments and to understand that appropriate levels of risk-taking may unlock opportunities.
Thank you for choosing to invest with Wells Fargo Funds. We appreciate your confidence in us and remain committed to helping you meet your financial needs.
Sincerely,
Andrew Owen
President
Wells Fargo Funds
January’s returns tended to support the investing adage that markets climb a wall of worry.
For further information about your Fund, contact your investment professional, visit our website atwfam.com, or call us directly at1-800-222-8222.
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4 | Wells Fargo Opportunity Fund | Performance highlights (unaudited) |
Investment objective
The Fund seeks long-term capital appreciation.
Manager
Wells Fargo Funds Management, LLC
Subadviser
Wells Capital Management Incorporated
Portfolio managers
Ann M. Miletti
Christopher G. Miller, CFA®‡
Average annual total returns (%) as of March 31, 2019
Including sales charge | Excluding sales charge | Expense ratios1 (%) | ||||||||||||||||||||||||||||||||
Inception date | 1 year | 5 year | 10 year | 1 year | 5 year | 10 year | Gross | Net2 | ||||||||||||||||||||||||||
Class A (SOPVX) | 2-24-2000 | 0.97 | 6.91 | 13.89 | 7.13 | 8.19 | 14.57 | 1.20 | 1.18 | |||||||||||||||||||||||||
Class C (WFOPX) | 3-31-2008 | 5.35 | 7.38 | 13.72 | 6.35 | 7.38 | 13.72 | 1.95 | 1.93 | |||||||||||||||||||||||||
Administrator Class (WOFDX) | 8-30-2002 | – | – | – | 7.37 | 8.41 | 14.82 | 1.12 | 1.00 | |||||||||||||||||||||||||
Institutional Class (WOFNX)3 | 7-30-2010 | – | – | – | 7.65 | 8.69 | 15.06 | 0.87 | 0.75 | |||||||||||||||||||||||||
Russell 3000® Index4 | – | – | – | – | 8.77 | 10.36 | 16.00 | – | – |
Figures quoted represent past performance, which is no guarantee of future results, and do not reflect taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance shown without sales charges would be lower if sales charges were reflected. Current performance may be lower or higher than the performance data quoted, which assumes the reinvestment of dividends and capital gains. Current month-end performance is available on the Fund’s website,wfam.com.
Index returns do not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses, or any taxes. It is not possible to invest directly in an index.
For Class A shares, the maximum front-end sales charge is 5.75%. For Class C shares, the maximum contingent deferred sales charge is 1.00%. Performance including a contingent deferred sales charge assumes the sales charge for the corresponding time period. Administrator Class and Institutional Class shares are sold without a front-end sales charge or contingent deferred sales charge.
Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. Smaller-company stocks tend to be more volatile and less liquid than those of larger companies. Certain investment strategies tend to increase the total risk of an investment (relative to the broader market). The Fund is exposed to foreign investment risk. Consult the Fund’s prospectus for additional information on these and other risks.
Please see footnotes on page 5.
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Performance highlights (unaudited) | Wells Fargo Opportunity Fund | 5 |
Ten largest holdings (%) as of March 31, 20195 | ||||
Alphabet Incorporated Class C | 3.88 | |||
Salesforce.com Incorporated | 3.24 | |||
LivaNova plc | 2.94 | |||
MasterCard Incorporated Class A | 2.87 | |||
Airbus SE | 2.61 | |||
Novartis AG ADR | 2.53 | |||
E*TRADE Financial Corporation | 2.42 | |||
Texas Instruments Incorporated | 2.18 | |||
General Motors Company | 2.17 | |||
Amazon.com Incorporated | 2.12 |
Sector distribution as of March 31, 20196 |
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‡ | CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute. |
1 | Reflects the expense ratios as stated in the most recent prospectuses. The expense ratios shown are subject to change and may differ from the annualized expense ratios shown in the financial highlights of this report. |
2 | The manager has contractually committed through January 31, 2020, to waive fees and/or reimburse expenses to the extent necessary to cap the expenses of each class after fee waivers at the amounts shown. Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the expense cap. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. Without this cap, the Fund’s returns would have been lower. The expense ratio paid by an investor is the net expense ratio (the total annual fund operating expenses after fee waivers) as stated in the prospectuses. |
3 | Historical performance shown for Institutional Class shares prior to their inception reflects the performance of Administrator Class shares, and includes the higher expenses applicable to Administrator Class shares. If these expenses had not been included, returns for Institutional Class shares would be higher. |
4 | The Russell 3000® Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. You cannot invest directly in an index. |
5 | The ten largest holdings, excluding cash, cash equivalents and any money market funds, are calculated based on the value of the investments divided by total net assets of the Fund. Holdings are subject to change and may have changed since the date specified. |
6 | Amounts are calculated based on the total long-term investments of the Fund. These amounts are subject to change and may have changed since the date specified. |
Table of Contents
6 | Wells Fargo Opportunity Fund | Fund expenses (unaudited) |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (if any) on redemptions and (2) ongoing costs, including management fees, distribution (12b-1) and/or shareholder servicing fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period from October 1, 2018 to March 31, 2019.
Actual expenses
The “Actual” line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the “Actual” line under the heading entitled “Expenses paid during period” for your applicable class of shares to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The “Hypothetical” line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and contingent deferred sales charges. Therefore, the “Hypothetical” line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 10-1-2018 | Ending account value 3-31-2019 | Expenses paid during the period¹ | Annualized net expense ratio | |||||||||||||
Class A | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 986.85 | $ | 5.94 | 1.20 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,018.95 | $ | 6.04 | 1.20 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 983.20 | $ | 9.69 | 1.96 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,015.16 | $ | 9.85 | 1.96 | % | ||||||||
Administrator Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 987.83 | $ | 4.96 | 1.00 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,019.95 | $ | 5.04 | 1.00 | % | ||||||||
Institutional Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 989.09 | $ | 3.72 | 0.75 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.19 | $ | 3.78 | 0.75 | % |
1 | Expenses paid is equal to the annualized net expense ratio of each class multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year (to reflect the one-half-year period). |
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Opportunity Fund | 7 |
Security name | Shares | Value | ||||||||||||||
Common Stocks: 97.56% | ||||||||||||||||
Communication Services: 7.87% | ||||||||||||||||
Interactive Media & Services: 5.88% | ||||||||||||||||
Alphabet Incorporated Class C † | 56,120 | $ | 65,846,153 | |||||||||||||
Facebook Incorporated Class A † | 204,313 | 34,056,934 | ||||||||||||||
99,903,087 | ||||||||||||||||
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Media: 1.99% | ||||||||||||||||
Comcast Corporation Class A | 843,479 | 33,722,290 | ||||||||||||||
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Consumer Discretionary: 8.51% | ||||||||||||||||
Automobiles: 2.17% | ||||||||||||||||
General Motors Company | 991,201 | 36,773,557 | ||||||||||||||
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Hotels, Restaurants & Leisure: 2.05% | ||||||||||||||||
Starbucks Corporation | 469,156 | 34,877,057 | ||||||||||||||
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Internet & Direct Marketing Retail: 2.12% | ||||||||||||||||
Amazon.com Incorporated † | 20,217 | 36,001,423 | ||||||||||||||
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Multiline Retail: 1.51% | ||||||||||||||||
Dollar General Corporation | 214,545 | 25,595,219 | ||||||||||||||
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Specialty Retail: 0.66% | ||||||||||||||||
L Brands Incorporated | 409,675 | 11,298,837 | ||||||||||||||
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Consumer Staples: 2.84% | ||||||||||||||||
Beverages: 1.21% | ||||||||||||||||
Molson Coors Brewing Company Class B | 344,557 | 20,552,825 | ||||||||||||||
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Household Products: 1.63% | ||||||||||||||||
Church & Dwight Company Incorporated | 388,707 | 27,687,600 | ||||||||||||||
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Energy: 6.69% | ||||||||||||||||
Oil, Gas & Consumable Fuels: 6.69% | ||||||||||||||||
Anadarko Petroleum Corporation | 394,293 | 17,932,446 | ||||||||||||||
BP plc | 459,772 | 20,101,232 | ||||||||||||||
Concho Resources Incorporated | 180,636 | 20,043,371 | ||||||||||||||
EOG Resources Incorporated | 377,131 | 35,895,329 | ||||||||||||||
Noble Energy Incorporated | 796,010 | 19,685,327 | ||||||||||||||
113,657,705 | ||||||||||||||||
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Financials: 16.57% | ||||||||||||||||
Banks: 5.28% | ||||||||||||||||
Pinnacle Financial Partners Incorporated | 464,458 | 25,405,853 | ||||||||||||||
PNC Financial Services Group Incorporated | 280,825 | 34,445,995 | ||||||||||||||
Webster Financial Corporation | 587,091 | 29,747,901 | ||||||||||||||
89,599,749 | ||||||||||||||||
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The accompanying notes are an integral part of these financial statements.
Table of Contents
8 | Wells Fargo Opportunity Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Capital Markets: 6.11% | ||||||||||||||||
E*TRADE Financial Corporation | 884,631 | $ | 41,073,417 | |||||||||||||
Intercontinental Exchange Incorporated | 433,928 | 33,039,278 | ||||||||||||||
S&P Global Incorporated | 140,410 | 29,563,326 | ||||||||||||||
103,676,021 | ||||||||||||||||
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Insurance: 5.18% | ||||||||||||||||
Chubb Limited | 227,615 | 31,884,309 | ||||||||||||||
Marsh & McLennan Companies Incorporated | 282,139 | 26,492,852 | ||||||||||||||
Willis Towers Watson plc | 168,930 | 29,672,555 | ||||||||||||||
88,049,716 | ||||||||||||||||
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Health Care: 18.03% | ||||||||||||||||
Biotechnology: 2.26% | ||||||||||||||||
Alexion Pharmaceuticals Incorporated † | 101,290 | 13,692,382 | ||||||||||||||
Celgene Corporation † | 262,114 | 24,727,835 | ||||||||||||||
38,420,217 | ||||||||||||||||
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Health Care Equipment & Supplies: 5.73% | ||||||||||||||||
LivaNova plc † | 512,810 | 49,870,773 | ||||||||||||||
Medtronic plc | 289,454 | 26,363,470 | ||||||||||||||
Zimmer Biomet Holdings Incorporated | 164,557 | 21,013,929 | ||||||||||||||
97,248,172 | ||||||||||||||||
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Health Care Providers & Services: 1.12% | ||||||||||||||||
Cigna Corporation | 117,750 | 18,936,555 | ||||||||||||||
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Life Sciences Tools & Services: 5.28% | ||||||||||||||||
Agilent Technologies Incorporated | 320,396 | 25,753,430 | ||||||||||||||
Bio-Rad Laboratories Incorporated Class A † | 111,939 | 34,217,514 | ||||||||||||||
Thermo Fisher Scientific Incorporated | 108,649 | 29,739,404 | ||||||||||||||
89,710,348 | ||||||||||||||||
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Pharmaceuticals: 3.64% | ||||||||||||||||
Mylan NV † | 660,731 | 18,725,117 | ||||||||||||||
Novartis AG ADR | 447,325 | 43,005,826 | ||||||||||||||
61,730,943 | ||||||||||||||||
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Industrials: 11.40% | ||||||||||||||||
Aerospace & Defense: 4.25% | ||||||||||||||||
Airbus SE | 335,122 | 44,321,345 | ||||||||||||||
Safran SA | 203,303 | 27,879,748 | ||||||||||||||
72,201,093 | ||||||||||||||||
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Airlines: 1.75% | ||||||||||||||||
Alaska Air Group Incorporated | 229,818 | 12,897,386 | ||||||||||||||
Delta Air Lines Incorporated | 324,008 | 16,735,013 | ||||||||||||||
29,632,399 | ||||||||||||||||
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The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Opportunity Fund | 9 |
Security name | Shares | Value | ||||||||||||||
Building Products: 1.47% | ||||||||||||||||
Fortune Brands Home & Security Incorporated | 524,129 | $ | 24,953,782 | |||||||||||||
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Commercial Services & Supplies: 1.33% | ||||||||||||||||
Republic Services Incorporated | 281,214 | 22,603,981 | ||||||||||||||
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Machinery: 2.60% | ||||||||||||||||
Gardner Denver Holdings Incorporated † | 807,512 | 22,456,909 | ||||||||||||||
ITT Incorporated | 374,584 | 21,725,872 | ||||||||||||||
44,182,781 | ||||||||||||||||
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Information Technology: 18.08% | ||||||||||||||||
Electronic Equipment, Instruments & Components: 1.69% | ||||||||||||||||
Amphenol Corporation Class A | 303,094 | 28,624,197 | ||||||||||||||
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IT Services: 4.44% | ||||||||||||||||
Fidelity National Information Services Incorporated | 235,920 | 26,682,552 | ||||||||||||||
MasterCard Incorporated Class A | 206,804 | 48,692,002 | ||||||||||||||
75,374,554 | ||||||||||||||||
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Semiconductors & Semiconductor Equipment: 3.67% | ||||||||||||||||
Marvell Technology Group Limited | 1,271,335 | 25,286,853 | ||||||||||||||
Texas Instruments Incorporated | 349,273 | 37,047,387 | ||||||||||||||
62,334,240 | ||||||||||||||||
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Software: 6.28% | ||||||||||||||||
Oracle Corporation | 648,262 | 34,818,152 | ||||||||||||||
Proofpoint Incorporated † | 139,232 | 16,906,942 | ||||||||||||||
Salesforce.com Incorporated † | 347,287 | 54,999,842 | ||||||||||||||
106,724,936 | ||||||||||||||||
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Technology Hardware, Storage & Peripherals: 2.00% | ||||||||||||||||
Apple Incorporated | 178,460 | 33,898,477 | ||||||||||||||
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Materials: 4.13% | ||||||||||||||||
Chemicals: 1.84% | ||||||||||||||||
The Sherwin-Williams Company | 72,422 | 31,192,880 | ||||||||||||||
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Metals & Mining: 2.29% | ||||||||||||||||
Royal Gold Incorporated | 189,576 | 17,238,146 | ||||||||||||||
Steel Dynamics Incorporated | 616,762 | 21,753,196 | ||||||||||||||
38,991,342 | ||||||||||||||||
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Real Estate: 3.44% | ||||||||||||||||
Equity REITs: 3.44% | ||||||||||||||||
American Tower Corporation | 147,982 | 29,161,333 | ||||||||||||||
Equinix Incorporated | 64,562 | 29,256,916 | ||||||||||||||
58,418,249 | ||||||||||||||||
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Total Common Stocks (Cost $1,181,856,867) | 1,656,574,232 | |||||||||||||||
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The accompanying notes are an integral part of these financial statements.
Table of Contents
10 | Wells Fargo Opportunity Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Yield | Shares | Value | |||||||||||||
Short-Term Investments: 2.48% | ||||||||||||||||
Investment Companies: 2.48% | ||||||||||||||||
Wells Fargo Government Money Market Fund Select Class (l)(u) | 2.38 | % | 42,049,586 | $ | 42,049,586 | |||||||||||
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Total Short-Term Investments (Cost $42,049,586) | 42,049,586 | |||||||||||||||
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Total investments in securities (Cost $1,223,906,453) | 100.04 | % | 1,698,623,818 | |||||
Other assets and liabilities, net | (0.04 | ) | (723,563 | ) | ||||
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Total net assets | 100.00 | % | $ | 1,697,900,255 | ||||
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† | Non-income-earning security |
(l) | The issuer of the security is an affiliated person of the Fund as defined in the Investment Company Act of 1940. |
(u) | The rate represents the 7-day annualized yield at period end. |
Abbreviations:
ADR | American depositary receipt |
REIT | Real estate investment trust |
Investments in Affiliates
An affiliated investment is an investment in which the Fund owns at least 5% of the outstanding voting shares of the issuer or as a result of other relationships, such as the Fund and the issuer having the same investment manager. Transactions with issuers that were either affiliated persons of the Fund at the beginning of the period or the end of the period were as follows:
Shares, beginning of period | Shares purchased | Shares sold | Shares, end of period | Net realized gains (losses) | Net unrealized gains | Income from affiliated securities | Value, end of period | % of assets | ||||||||||||||||||||||||||||
Short-Term Investments | ||||||||||||||||||||||||||||||||||||
Investment Companies | ||||||||||||||||||||||||||||||||||||
Securities Lending Cash Investments LLC* | 0 | 9,971,753 | 9,971,753 | 0 | $ | 0 | $ | 0 | $ | 2,731 | $ | 0 | ||||||||||||||||||||||||
Wells Fargo Government Money Market Fund Select Class | 15,041,392 | 201,393,964 | 174,385,770 | 42,049,586 | 0 | 0 | 271,217 | 42,049,586 | ||||||||||||||||||||||||||||
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$ | 0 | $ | 0 | $ | 273,948 | $ | 42,049,586 | 2.48 | % | |||||||||||||||||||||||||||
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* | No longer held at the end of the period. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of assets and liabilities—March 31, 2019 (unaudited) | Wells Fargo Opportunity Fund | 11 |
Assets | ||||
Investments in unaffiliated securities, at value (cost $1,181,856,867) | $ | 1,656,574,232 | ||
Investments in affiliated securities, at value (cost $42,049,586) | 42,049,586 | |||
Receivable for investments sold | 11,781,979 | |||
Receivable for Fund shares sold | 81,113 | |||
Receivable for dividends | 1,657,406 | |||
Prepaid expenses and other assets | 36,787 | |||
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Total assets | 1,712,181,103 | |||
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Liabilities | ||||
Payable for investments purchased | 11,580,615 | |||
Management fee payable | 969,544 | |||
Payable for Fund shares redeemed | 853,276 | |||
Administration fees payable | 283,426 | |||
Distribution fee payable | 2,942 | |||
Trustees’ fees and expenses payable | 1,044 | |||
Accrued expenses and other liabilities | 590,001 | |||
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Total liabilities | 14,280,848 | |||
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Total net assets | $ | 1,697,900,255 | ||
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NET ASSETS CONSIST OF | ||||
Paid-in capital | $ | 1,180,585,217 | ||
Total distributable earnings | 517,315,038 | |||
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Total net assets | $ | 1,697,900,255 | ||
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COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE | ||||
Net assets – Class A | $ | 1,443,779,406 | ||
Shares outstanding – Class A1 | 35,472,982 | |||
Net asset value per share – Class A | $40.70 | |||
Maximum offering price per share – Class A2 | $43.18 | |||
Net assets – Class C | $ | 4,565,629 | ||
Shares outstanding – Class C1 | 121,099 | |||
Net asset value per share – Class C | $37.70 | |||
Net assets – Administrator Class | $ | 224,850,739 | ||
Shares outstanding – Administrator Class1 | 5,011,149 | |||
Net asset value per share – Administrator Class | $44.87 | |||
Net assets – Institutional Class | $ | 24,704,481 | ||
Shares outstanding – Institutional Class1 | 539,570 | |||
Net asset value per share – Institutional Class | $45.79 |
1 | The Fund has an unlimited number of authorized shares. |
2 | Maximum offering price is computed as 100/94.25 of net asset value. On investments of $50,000 or more, the offering price is reduced. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
12 | Wells Fargo Opportunity Fund | Statement of operations—six months ended March 31, 2019 (unaudited) |
Investment income | ||||
Dividends (net of foreign withholding taxes of $192,526) | $ | 10,924,664 | ||
Income from affiliated securities | 271,718 | |||
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Total investment income | 11,196,382 | |||
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Expenses | ||||
Management fee | 5,977,193 | |||
Administration fees | ||||
Class A | 1,457,392 | |||
Class C | 21,892 | |||
Administrator Class | 142,614 | |||
Institutional Class | 16,963 | |||
Shareholder servicing fees | ||||
Class A | 1,734,991 | |||
Class C | 26,061 | |||
Administrator Class | 272,826 | |||
Distribution fee | ||||
Class C | 78,185 | |||
Custody and accounting fees | 47,420 | |||
Professional fees | 25,839 | |||
Registration fees | 44,727 | |||
Shareholder report expenses | 78,424 | |||
Trustees’ fees and expenses | 10,969 | |||
Other fees and expenses | 19,622 | |||
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Total expenses | 9,955,118 | |||
Less: Fee waivers and/or expense reimbursements | (233,129 | ) | ||
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Net expenses | 9,721,989 | |||
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Net investment income | 1,474,393 | |||
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REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | ||||
Net realized gains on investments | 44,027,010 | |||
Net change in unrealized gains (losses) on investments | (76,376,870 | ) | ||
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Net realized and unrealized gains (losses) on investments | (32,349,860 | ) | ||
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Net decrease in net assets resulting from operations | $ | (30,875,467 | ) | |
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The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of changes in net assets | Wells Fargo Opportunity Fund | 13 |
Six months ended (unaudited) | Year ended September 30, 2018 | |||||||||||||||
Operations | ||||||||||||||||
Net investment income | $ | 1,474,393 | $ | 167,228 | ||||||||||||
Net realized gains on investments | 44,027,010 | 178,981,131 | ||||||||||||||
Net change in unrealized gains (losses) on investments | (76,376,870 | ) | 78,123,312 | |||||||||||||
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Net increase (decrease) in net assets resulting from operations | (30,875,467 | ) | 257,271,671 | |||||||||||||
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Distributions to shareholders from net investment income and net realized gains | ||||||||||||||||
Class A | (148,689,321 | ) | (187,514,177 | ) | ||||||||||||
Class C | (3,194,912 | ) | (4,256,830 | ) | ||||||||||||
Administrator Class | (21,792,735 | ) | (27,907,658 | ) | ||||||||||||
Institutional Class | (2,724,775 | ) | (3,553,387 | ) | ||||||||||||
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Total distributions to shareholders | (176,401,743 | ) | (223,232,052 | ) | ||||||||||||
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Capital share transactions | Shares | Shares | ||||||||||||||
Proceeds from shares sold | ||||||||||||||||
Class A | 795,444 | 31,441,780 | 321,107 | 14,237,392 | ||||||||||||
Class C | 8,893 | 329,946 | 7,752 | 322,067 | ||||||||||||
Administrator Class | 29,206 | 1,297,360 | 81,574 | 3,929,312 | ||||||||||||
Institutional Class | 89,963 | 4,058,454 | 160,930 | 7,973,373 | ||||||||||||
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37,127,540 | 26,462,144 | |||||||||||||||
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Reinvestment of distributions | ||||||||||||||||
Class A | 3,891,147 | 144,750,656 | 4,280,718 | 182,109,847 | ||||||||||||
Class C | 91,007 | 3,143,382 | 104,852 | 4,191,994 | ||||||||||||
Administrator Class | 504,265 | 20,669,150 | 566,744 | 26,279,904 | ||||||||||||
Institutional Class | 58,962 | 2,469,867 | 69,002 | 3,263,351 | ||||||||||||
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171,033,055 | 215,845,096 | |||||||||||||||
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Payment for shares redeemed | ||||||||||||||||
Class A | (2,224,574 | ) | (87,813,530 | ) | (3,871,565 | ) | (173,423,798 | ) | ||||||||
Class C | (701,354 | ) | (25,495,961 | ) | (150,655 | ) | (6,331,672 | ) | ||||||||
Administrator Class | (356,101 | ) | (15,467,498 | ) | (614,100 | ) | (29,945,551 | ) | ||||||||
Institutional Class | (183,403 | ) | (8,111,208 | ) | (246,531 | ) | (12,279,582 | ) | ||||||||
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(136,888,197 | ) | (221,980,603 | ) | |||||||||||||
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Net increase in net assets resulting from capital share transactions | 71,272,398 | 20,326,637 | ||||||||||||||
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Total increase (decrease) in net assets | (136,004,812 | ) | 54,366,256 | |||||||||||||
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Net assets | ||||||||||||||||
Beginning of period | 1,833,905,067 | 1,779,538,811 | ||||||||||||||
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End of period | $ | 1,697,900,255 | $ | 1,833,905,067 | ||||||||||||
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The accompanying notes are an integral part of these financial statements.
Table of Contents
14 | Wells Fargo Opportunity Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS A | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $46.31 | $45.83 | $41.86 | $43.35 | $49.56 | $46.23 | ||||||||||||||||||
Net investment income (loss) | 0.03 | (0.01 | )1 | 0.04 | 0.13 | 1 | 0.64 | (0.07 | ) | |||||||||||||||
Net realized and unrealized gains (losses) on investments | (1.06 | ) | 6.41 | 6.60 | 4.72 | (1.52 | ) | 6.46 | ||||||||||||||||
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Total from investment operations | (1.03 | ) | 6.40 | 6.64 | 4.85 | (0.88 | ) | 6.39 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | 0.00 | (0.17 | ) | (0.13 | ) | (0.57 | ) | 0.00 | 0.00 | |||||||||||||||
Net realized gains | (4.58 | ) | (5.75 | ) | (2.54 | ) | (5.77 | ) | (5.33 | ) | (3.06 | ) | ||||||||||||
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Total distributions to shareholders | (4.58 | ) | (5.92 | ) | (2.67 | ) | (6.34 | ) | (5.33 | ) | (3.06 | ) | ||||||||||||
Net asset value, end of period | $40.70 | $46.31 | $45.83 | $41.86 | $43.35 | $49.56 | ||||||||||||||||||
Total return2 | (1.31 | )% | 15.16 | % | 16.49 | % | 12.46 | % | (2.27 | )% | 14.35 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.21 | % | 1.20 | % | 1.21 | % | 1.21 | % | 1.24 | % | 1.26 | % | ||||||||||||
Net expenses | 1.20 | % | 1.20 | % | 1.21 | % | 1.21 | % | 1.22 | % | 1.22 | % | ||||||||||||
Net investment income (loss) | 0.16 | % | (0.01 | )% | 0.11 | % | 0.33 | % | 1.30 | % | (0.13 | )% | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 13 | % | 30 | % | 43 | % | 34 | % | 42 | % | 32 | % | ||||||||||||
Net assets, end of period (000s omitted) | $1,443,779 | $1,528,852 | $1,479,457 | $1,418,614 | $390,154 | $442,840 |
1 | Calculated based upon average shares outstanding |
2 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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Financial highlights | Wells Fargo Opportunity Fund | 15 |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS C | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $43.43 | $43.46 | $39.99 | $41.60 | $48.10 | $45.27 | ||||||||||||||||||
Net investment income (loss) | (0.14 | )1 | (0.43 | ) | (0.26 | )1 | (0.16 | )1 | 0.26 | (0.42 | )1 | |||||||||||||
Net realized and unrealized gains (losses) on investments | (1.01 | ) | 6.15 | 6.27 | 4.51 | (1.43 | ) | 6.31 | ||||||||||||||||
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Total from investment operations | (1.15 | ) | 5.72 | 6.01 | 4.35 | (1.17 | ) | 5.89 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | 0.00 | 0.00 | 0.00 | (0.19 | ) | 0.00 | 0.00 | |||||||||||||||||
Net realized gains | (4.58 | ) | (5.75 | ) | (2.54 | ) | (5.77 | ) | (5.33 | ) | (3.06 | ) | ||||||||||||
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Total distributions to shareholders | (4.58 | ) | (5.75 | ) | (2.54 | ) | (5.96 | ) | (5.33 | ) | (3.06 | ) | ||||||||||||
Net asset value, end of period | $37.70 | $43.43 | $43.46 | $39.99 | $41.60 | $48.10 | ||||||||||||||||||
Total return2 | (1.68 | )% | 14.31 | % | 15.62 | % | 11.62 | % | (3.01 | )% | 13.48 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.96 | % | 1.95 | % | 1.96 | % | 1.96 | % | 1.99 | % | 2.01 | % | ||||||||||||
Net expenses | 1.96 | % | 1.95 | % | 1.96 | % | 1.96 | % | 1.97 | % | 1.97 | % | ||||||||||||
Net investment income (loss) | (0.74 | )% | (0.76 | )% | (0.64 | )% | (0.40 | )% | 0.55 | % | (0.88 | )% | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 13 | % | 30 | % | 43 | % | 34 | % | 42 | % | 32 | % | ||||||||||||
Net assets, end of period (000s omitted) | $4,566 | $31,381 | $33,057 | $34,721 | $37,196 | $42,940 |
1 | Calculated based upon average shares outstanding |
2 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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16 | Wells Fargo Opportunity Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
ADMINISTRATOR CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $50.50 | $49.45 | $44.93 | $46.11 | $52.27 | $48.50 | ||||||||||||||||||
Net investment income | 0.08 | 1 | 0.07 | 0.15 | 1 | 0.24 | 1 | 0.79 | 0.08 | |||||||||||||||
Net realized and unrealized gains (losses) on investments | (1.12 | ) | 6.97 | 7.09 | 5.04 | (1.62 | ) | 6.75 | ||||||||||||||||
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Total from investment operations | (1.04 | ) | 7.04 | 7.24 | 5.28 | (0.83 | ) | 6.83 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.01 | ) | (0.24 | ) | (0.18 | ) | (0.69 | ) | 0.00 | 0.00 | ||||||||||||||
Net realized gains | (4.58 | ) | (5.75 | ) | (2.54 | ) | (5.77 | ) | (5.33 | ) | (3.06 | ) | ||||||||||||
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Total distributions to shareholders | (4.59 | ) | (5.99 | ) | (2.72 | ) | (6.46 | ) | (5.33 | ) | (3.06 | ) | ||||||||||||
Net asset value, end of period | $44.87 | $50.50 | $49.45 | $44.93 | $46.11 | $52.27 | ||||||||||||||||||
Total return2 | (1.22 | )% | 15.38 | % | 16.74 | % | 12.68 | % | (2.04 | )% | 14.60 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.13 | % | 1.12 | % | 1.13 | % | 1.13 | % | 1.10 | % | 1.10 | % | ||||||||||||
Net expenses | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||
Net investment income | 0.35 | % | 0.19 | % | 0.31 | % | 0.56 | % | 1.52 | % | 0.09 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 13 | % | 30 | % | 43 | % | 34 | % | 42 | % | 32 | % | ||||||||||||
Net assets, end of period (000s omitted) | $224,851 | $244,110 | $237,315 | $226,140 | $223,281 | $253,121 |
1 | Calculated based upon average shares outstanding |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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Financial highlights | Wells Fargo Opportunity Fund | 17 |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||||||
INSTITUTIONAL CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $51.50 | $50.30 | $45.63 | $46.76 | $52.82 | $48.86 | ||||||||||||||||||
Net investment income | 0.13 | 1 | 0.22 | 0.22 | 1 | 0.35 | 1 | 0.92 | 1 | 0.19 | 1 | |||||||||||||
Net realized and unrealized gains (losses) on investments | (1.14 | ) | 7.08 | 7.25 | 5.12 | (1.65 | ) | 6.83 | ||||||||||||||||
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Total from investment operations | (1.01 | ) | 7.30 | 7.47 | 5.47 | (0.73 | ) | 7.02 | ||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.12 | ) | (0.35 | ) | (0.26 | ) | (0.83 | ) | 0.00 | 0.00 | ||||||||||||||
Net realized gains | (4.58 | ) | (5.75 | ) | (2.54 | ) | (5.77 | ) | (5.33 | ) | (3.06 | ) | ||||||||||||
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Total distributions to shareholders | (4.70 | ) | (6.10 | ) | (2.80 | ) | (6.60 | ) | (5.33 | ) | (3.06 | ) | ||||||||||||
Net asset value, end of period | $45.79 | $51.50 | $50.30 | $45.63 | $46.76 | $52.82 | ||||||||||||||||||
Total return2 | (1.09 | )% | 15.69 | % | 17.02 | % | 12.97 | % | (1.81 | )% | 14.89 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 0.88 | % | 0.87 | % | 0.88 | % | 0.88 | % | 0.83 | % | 0.83 | % | ||||||||||||
Net expenses | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | ||||||||||||
Net investment income | 0.59 | % | 0.44 | % | 0.47 | % | 0.79 | % | 1.79 | % | 0.36 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 13 | % | 30 | % | 43 | % | 34 | % | 42 | % | 32 | % | ||||||||||||
Net assets, end of period (000s omitted) | $24,704 | $29,562 | $29,709 | $17,222 | $11,906 | $29,335 |
1 | Calculated based upon average shares outstanding |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
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18 | Wells Fargo Opportunity Fund | Notes to financial statements (unaudited) |
1. ORGANIZATION
Wells Fargo Funds Trust (the “Trust”), a Delaware statutory trust organized on March 10, 1999, is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As an investment company, the Trust follows the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946, Financial Services – Investment Companies. These financial statements report on the Wells Fargo Opportunity Fund (the “Fund”) which is a diversified series of the Trust.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Fund, are in conformity with U.S. generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Securities valuation
All investments are valued each business day as of the close of regular trading on the New York Stock Exchange (generally 4 p.m. Eastern Time), although the Fund may deviate from this calculation time under unusual or unexpected circumstances.
Equity securities that are listed on a foreign or domestic exchange or market are valued at the official closing price or, if none, the last sales price. If no sale occurs on the principal exchange or market that day, a fair value price will be determined in accordance with the Fund’s Valuation Procedures.
The values of securities denominated in foreign currencies are translated into U.S. dollars at rates provided by an independent foreign currency pricing source at a time each business day specified by the Wells Fargo Asset Management Pricing Committee at Wells Fargo Funds Management, LLC (“Funds Management”).
Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore may not fully reflect trading or events that occur after the close of the principal exchange in which the foreign securities are traded, but before the close of the New York Stock Exchange. If such trading or events are expected to materially affect the value of such securities, then fair value pricing procedures approved by the Board of Trustees of the Fund are applied. These procedures take into account multiple factors including movements in U.S. securities markets after foreign exchanges close. Foreign securities that are fair valued under these procedures are categorized as Level 2 and the application of these procedures may result in transfers between Level 1 and Level 2. Depending on market activity, such fair valuations may be frequent. Such fair value pricing may result in net asset values that are higher or lower than net asset values based on the last reported sales price or latest quoted bid price. On March 31, 2019, such fair value pricing was not used in pricing foreign securities.
Investments in registered open-end investment companies are valued at net asset value. Interests in non-registered investment companies that are redeemable at net asset value are fair valued normally at net asset value.
Investments which are not valued using any of the methods discussed above are valued at their fair value, as determined in good faith by the Board of Trustees. The Board of Trustees has established a Valuation Committee comprised of the Trustees and has delegated to it the authority to take any actions regarding the valuation of portfolio securities that the Valuation Committee deems necessary or appropriate, including determining the fair value of portfolio securities, unless the determination has been delegated to the Wells Fargo Asset Management Pricing Committee. The Board of Trustees retains the authority to make or ratify any valuation decisions or approve any changes to the Valuation Procedures as it deems appropriate. On a quarterly basis, the Board of Trustees receives reports on any valuation actions taken by the Valuation Committee or the Wells Fargo Asset Management Pricing Committee which may include items for ratification.
Foreign currency translation
The accounting records of the Fund are maintained in U.S. dollars. The values of other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at rates provided by an independent foreign currency pricing source at a time each business day specified by the Wells Fargo Asset Management Pricing Committee. Purchases and sales of securities, and income and expenses are converted at the rate of exchange on the respective dates of such transactions. Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded and the U.S. dollar equivalent of the amounts actually paid or received. Net unrealized foreign exchange gains and losses arise from changes in the fair value of assets and liabilities other than investments in
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Notes to financial statements (unaudited) | Wells Fargo Opportunity Fund | 19 |
securities resulting from changes in exchange rates. The changes in net assets arising from changes in exchange rates of securities and the changes in net assets resulting from changes in market prices of securities are not separately presented. Such changes are included in net realized and unrealized gains or losses from investments.
Securities lending
The Fund may lend its securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The Fund continues to receive interest or dividends on the securities loaned. The Fund receives collateral in the form of cash or securities with a value at least equal to the value of the securities on loan. The value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. In a securities lending transaction, the net asset value of the Fund will be affected by an increase or decrease in the value of the securities loaned and by an increase or decrease in the value of the instrument in which collateral is invested. The amount of securities lending activity undertaken by the Fund fluctuates from time to time. In the event of default or bankruptcy by the borrower, the Fund may be prevented from recovering the loaned securities or gaining access to the collateral or may experience delays or costs in doing so. In addition, the investment of any cash collateral received may lose all or part of its value. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.
The Fund lends its securities through an unaffiliated securities lending agent. Cash collateral received in connection with its securities lending transactions is invested in Securities Lending Cash Investments, LLC (the “Securities Lending Fund”). The Securities Lending Fund is exempt from registration under Section 3(c)(7) of the 1940 Act and is managed by Funds Management and is subadvised by Wells Capital Management Incorporated (“WellsCap”), an affiliate of Funds Management and an indirect wholly owned subsidiary of Wells Fargo & Company (“Wells Fargo”). Funds Management receives an advisory fee starting at 0.05% and declining to 0.01% as the average daily net assets of the Securities Lending Fund increase. All of the fees received by Funds Management are paid to WellsCap for its services as subadviser. The Securities Lending Fund seeks to provide a positive return compared to the daily Fed Funds Open Rate by investing in high-quality, U.S. dollar-denominated short-term money market instruments. Securities Lending Fund investments are valued at the evaluated bid price provided by an independent pricing service. Income earned from investment in the Securities Lending Fund (net of fees and rebates), if any, is included in income from affiliated securities on the Statement of Operations.
Security transactions and income recognition
Securities transactions are recorded on a trade date basis. Realized gains or losses are recorded on the basis of identified cost.
Dividend income is recognized on the ex-dividend date, except for certain dividends from foreign securities, which are recorded as soon as the custodian verifies the ex-dividend date. Dividend income from foreign securities is recorded net of foreign taxes withheld where recovery of such taxes is not assured.
Distributions to shareholders
Distributions to shareholders from net investment income and any net realized gains are recorded on the ex-dividend date and paid at least annually. Such distributions are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles. Dividend sources are estimated at the time of declaration. The tax character of distributions is determined as of the Fund’s fiscal year end. Therefore, a portion of the Fund’s distributions made prior to the Fund’s fiscal year end may be categorized as a tax return of capital at year end.
Federal and other taxes
The Fund intends to continue to qualify as a regulated investment company by distributing substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required.
The Fund’s income and federal excise tax returns and all financial records supporting those returns for the prior three fiscal years are subject to examination by the federal and Delaware revenue authorities. Management has analyzed the Fund’s tax positions taken on federal, state, and foreign tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability.
As of March 31, 2019, the aggregate cost of all investments for federal income tax purposes was $1,222,435,014 and the unrealized gains (losses) consisted of:
Gross unrealized gains | $ | 525,707,749 | ||
Gross unrealized losses | (49,518,945 | ) | ||
Net unrealized gains | $ | 476,188,804 |
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20 | Wells Fargo Opportunity Fund | Notes to financial statements (unaudited) |
Class allocations
The separate classes of shares offered by the Fund differ principally in applicable sales charges, distribution, shareholder servicing, and administration fees. Class specific expenses are charged directly to that share class. Investment income, common expenses, and realized and unrealized gains (losses) on investments are allocated daily to each class of shares based on the relative proportion of net assets of each class.
3. FAIR VALUATION MEASUREMENTS
Fair value measurements of investments are determined within a framework that has established a fair value hierarchy based upon the various data inputs utilized in determining the value of the Fund’s investments. The three-level hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Fund’s investments are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The inputs are summarized into three broad levels as follows:
∎ | Level 1 – quoted prices in active markets for identical securities |
∎ | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
∎ | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
The inputs or methodologies used for valuing investments in securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used in valuing the Fund’s assets and liabilities as of March 31, 2019:
Quoted prices (Level 1) | Other significant observable inputs (Level 2) | Significant (Level 3) | Total | |||||||||||||
Assets | ||||||||||||||||
Investments in: | ||||||||||||||||
Common stocks | ||||||||||||||||
Communication services | $ | 133,625,377 | $ | 0 | $ | 0 | $ | 133,625,377 | ||||||||
Consumer discretionary | 144,546,093 | 0 | 0 | 144,546,093 | ||||||||||||
Consumer staple | 48,240,425 | 0 | 0 | 48,240,425 | ||||||||||||
Energy | 113,657,705 | 0 | 0 | 113,657,705 | ||||||||||||
Financials | 281,325,486 | 0 | 0 | 281,325,486 | ||||||||||||
Health care | 306,046,235 | 0 | 0 | 306,046,235 | ||||||||||||
Industrials | 193,574,036 | 0 | 0 | 193,574,036 | ||||||||||||
Information technology | 306,956,404 | 0 | 0 | 306,956,404 | ||||||||||||
Materials | 70,184,222 | 0 | 0 | 70,184,222 | ||||||||||||
Real estate | 58,418,249 | 0 | 0 | 58,418,249 | ||||||||||||
Short-term investments | ||||||||||||||||
Investment companies | 42,049,586 | 0 | 0 | 42,049,586 | ||||||||||||
Total assets | $ | 1,698,623,818 | $ | 0 | $ | 0 | $ | 1,698,623,818 |
Additional sector, industry or geographic detail is included in the Portfolio of Investments.
At March 31, 2019, the Fund did not have any transfers into/out of Level 3.
4. TRANSACTIONS WITH AFFILIATES
Management fee
Funds Management, an indirect wholly owned subsidiary of Wells Fargo, is the manager of the Fund and provides advisory and fund-level administrative services under an investment management agreement. Under the investment management agreement, Funds Management is responsible for, among other services, implementing the investment objectives and strategies of the Fund, supervising the subadviser and providing fund-level administrative services in
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Notes to financial statements (unaudited) | Wells Fargo Opportunity Fund | 21 |
connection with the Fund’s operations. As compensation for its services under the investment management agreement, Funds Management is entitled to receive a management fee at the following annual rate based on the Fund’s average daily net assets:
Average daily net assets | Management fee | |||
First $500 million | 0.750 | % | ||
Next $500 million | 0.725 | |||
Next $1 billion | 0.700 | |||
Next $2 billion | 0.675 | |||
Next $1 billion | 0.650 | |||
Next $5 billion | 0.640 | |||
Next $2 billion | 0.630 | |||
Next $4 billion | 0.620 | |||
Over $16 billion | 0.610 |
Prior to January 31, 2019, the management fee rate was as follows:
Average daily net assets | Management fee | |||
First $500 million | 0.750 | % | ||
Next $500 million | 0.725 | |||
Next $1 billion | 0.700 | |||
Next $2 billion | 0.675 | |||
Next $1 billion | 0.650 | |||
Next $5 billion | 0.640 | |||
Over $10 billion | 0.630 |
For the six months ended March 31, 2019, the management fee was equivalent to an annual rate of 0.72% of the Fund’s average daily net assets.
Funds Management has retained the services of a subadviser to provide daily portfolio management to the Fund. The fee for subadvisory services is borne by Funds Management. WellsCap is the subadviser to the Fund and is entitled to receive a fee from Funds Management at an annual rate starting at 0.45% and declining to 0.30% as the average daily net assets of the Fund increase.
Administration fees
Under a class-level administration agreement, Funds Management provides class-level administrative services to the Fund, which includes paying fees and expenses for services provided by the transfer agent, sub-transfer agents, omnibus account servicers and record-keepers. As compensation for its services under the class-level administration agreement, Funds Management receives an annual fee which is calculated based on the average daily net assets of each class as follows:
Class-level administration fee | ||||
Class A, Class C | 0.21 | % | ||
Administrator Class, Institutional Class | 0.13 |
Funds Management has contractually waived and/or reimbursed management and administration fees to the extent necessary to maintain certain net operating expense ratios for the Fund. When each class of the Fund has exceeded its expense cap, Funds Management has waived fees and/or reimbursed expenses from fund level expenses on a proportionate basis and then from class specific expenses. When only certain classes exceed their expense caps, waivers and/or reimbursements are applied against class specific expenses before fund level expenses. Funds Management has committed through January 31, 2020 to waive fees and/or reimburse expenses to the extent necessary to cap the Fund’s expenses at 1.18% for Class A shares, 1.93% for Class C shares, 1.00% for Administrator Class shares, and 0.75% for Institutional Class shares. Prior to or after the commitment
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22 | Wells Fargo Opportunity Fund | Notes to financial statements (unaudited) |
expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. Prior to February 1, 2019, the Fund’s expenses were capped at 1.21% for Class A shares and 1.96% for Class C shares.
Distribution fee
The Trust has adopted a distribution plan for Class C shares of the Fund pursuant to Rule 12b-1 under the 1940 Act. A distribution fee is charged to Class C shares and paid to Wells Fargo Funds Distributor, LLC (“Funds Distributor”), the principal underwriter, at an annual rate of 0.75% of the average daily net assets of Class C shares.
In addition, Funds Distributor is entitled to receive the front-end sales charge from the purchase of Class A shares and a contingent deferred sales charge on the redemption of certain Class A shares. Funds Distributor is also entitled to receive the contingent deferred sales charges from redemptions of Class C shares. For the six months ended March 31, 2019, Funds Distributor received $2,113 from the sale of Class A shares. No contingent deferred sales charges were incurred by Class A and Class C shares for the six months ended March 31, 2019.
Shareholder servicing fees
The Trust has entered into contracts with one or more shareholder servicing agents, whereby Class A, Class C, and Administrator Class of the Fund are charged a fee at an annual rate of 0.25% of the average daily net assets of each respective class. A portion of these total shareholder servicing fees were paid to affiliates of Wells Fargo.
Interfund transactions
The Fund may purchase or sell portfolio investment securities to certain other Wells Fargo affiliates pursuant to Rule 17a-7 under the 1940 Act and under procedures adopted by the Board of Trustees. The procedures have been designed to ensure that these interfund transactions, which do not incur broker commissions, are effected at current market prices.
5. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, excluding U.S. government obligations (if any) and short-term securities, for the six months ended March 31, 2019 were $215,823,976 and $347,823,790, respectively.
6. BANK BORROWINGS
The Trust (excluding the money market funds), Wells Fargo Master Trust and Wells Fargo Variable Trust are parties to a $280,000,000 revolving credit agreement whereby the Fund is permitted to use bank borrowings for temporary or emergency purposes, such as to fund shareholder redemption requests. Interest under the credit agreement is charged to the Fund based on a borrowing rate equal to the higher of the Federal Funds rate in effect on that day plus 1.25% or the overnight LIBOR rate in effect on that day plus 1.25%. In addition, an annual commitment fee equal to 0.25% of the unused balance is allocated to each participating fund.
For the six months ended March 31, 2019, there were no borrowings by the Fund under the agreement.
7. INDEMNIFICATION
Under the Trust’s organizational documents, the officers and Trustees have been granted certain indemnification rights against certain liabilities that may arise out of performance of their duties to the Trust. Additionally, in the normal course of business, the Trust may enter into contracts with service providers that contain a variety of indemnification clauses. The Trust’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated.
8. NEW ACCOUNTING PRONOUNCEMENT
In August 2018, FASB issued Accounting Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820)Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 updates the disclosure requirements for fair value measurements by modifying or removing certain disclosures and adding certain new disclosures. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management has adopted the removal and modification of disclosures early, as permitted, and will adopt the additional new disclosures at the effective date.
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Other information (unaudited) | Wells Fargo Opportunity Fund | 23 |
PROXY VOTING INFORMATION
A description of the policies and procedures used to determine how to vote proxies relating to portfolio securities is available, upon request, by calling1-800-222-8222, visiting our website atwfam.com, or visiting the SEC website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website atwfam.comor by visiting the SEC website at sec.gov.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for the Fund are publicly available monthly on the Fund’s website (wfam.com), on a one-month delayed basis. In addition, top ten holdings information (excluding derivative positions) for the Fund is publicly available on the Fund’s website on a monthly, seven-day or more delayed basis. The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which is available by visiting the SEC website at sec.gov. In addition, the Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330.
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24 | Wells Fargo Opportunity Fund | Other information (unaudited) |
BOARD OF TRUSTEES AND OFFICERS
Each of the Trustees and Officers1 listed in the table below acts in identical capacities for each fund in the Wells Fargo family of funds, which consists of 151 mutual funds comprising the Wells Fargo Funds Trust, Wells Fargo Variable Trust, Wells Fargo Master Trust and four closed-end funds (collectively the “Fund Complex”). This table should be read in conjunction with the Prospectus and the Statement of Additional Information2. The mailing address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, however, each Trustee serves such term until reaching the mandatory retirement age established by the Trustees.
Independent Trustees
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company | |||
William R. Ebsworth (Born 1957) | Trustee, since 2015 | Retired. From 1984 to 2013, equities analyst, portfolio manager, research director and chief investment officer at Fidelity Management and Research Company in Boston, Tokyo, and Hong Kong, and retired in 2013 as Chief Investment Officer of Fidelity Strategic Advisers, Inc. where he led a team of investment professionals managing client assets. Prior thereto, Board member of Hong Kong Securities Clearing Co., Hong Kong Options Clearing Corp., the Thailand International Fund, Ltd., Fidelity Investments Life Insurance Company, and Empire Fidelity Investments Life Insurance Company. Audit Committee Chair and Investment Committee Chair of the Vincent Memorial Hospital Endowment (non-profit organization). Mr. Ebsworth is a CFA® charterholder. | N/A | |||
Jane A. Freeman (Born 1953) | Trustee, since 2015; Chair Liaison, since 2018 | Retired. From 2012 to 2014 and 1999 to 2008, Chief Financial Officer of Scientific Learning Corporation. From 2008 to 2012, Ms. Freeman provided consulting services related to strategic business projects. Prior to 1999, Portfolio Manager at Rockefeller & Co. and Scudder, Stevens & Clark. Board member of the Harding Loevner Funds from 1996 to 2014, serving as both Lead Independent Director and chair of the Audit Committee. Board member of the Russell Exchange Traded Funds Trust from 2011 to 2012 and the chair of the Audit Committee. Ms. Freeman is a Board Member of The Ruth Bancroft Garden (non-profit organization). She is also an inactive Chartered Financial Analyst. | N/A | |||
Isaiah Harris, Jr.3 (Born 1952) | Trustee, since 2009; Audit Committee Chairman, since 2019 | Retired. Chairman of the Board of CIGNA Corporation since 2009, and Director since 2005. From 2003 to 2011, Director of Deluxe Corporation. Prior thereto, President and CEO of BellSouth Advertising and Publishing Corp. from 2005 to 2007, President and CEO of BellSouth Enterprises from 2004 to 2005 and President of BellSouth Consumer Services from 2000 to 2003. Emeritus member of the Iowa State University Foundation Board of Governors. Emeritus Member of the Advisory Board of Iowa State University School of Business. Advisory Board Member, Palm Harbor Academy (private school). Advisory Board Member, Child Evangelism Fellowship (non-profit). Mr. Harris is a certified public accountant (inactive status). | CIGNA Corporation | |||
Judith M. Johnson (Born 1949) | Trustee, since 2008; Audit Committee Chairman, from 2009 to 2018 | Retired. Prior thereto, Chief Executive Officer and Chief Investment Officer of Minneapolis Employees Retirement Fund from 1996 to 2008. Ms. Johnson is an attorney, certified public accountant and a certified managerial accountant. | N/A |
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Other information (unaudited) | Wells Fargo Opportunity Fund | 25 |
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company | |||
David F. Larcker (Born 1950) | Trustee, since 2009 | James Irvin Miller Professor of Accounting at the Graduate School of Business, Stanford University, Director of the Corporate Governance Research Initiative and Senior Faculty of The Rock Center for Corporate Governance since 2006. From 2005 to 2008, Professor of Accounting at the Graduate School of Business, Stanford University. Prior thereto, Ernst & Young Professor of Accounting at The Wharton School, University of Pennsylvania from 1985 to 2005. | N/A | |||
Olivia S. Mitchell (Born 1953) | Trustee, since 2006; Nominating and Governance Committee Chairman, since 2018 | International Foundation of Employee Benefit Plans Professor, Wharton School of the University of Pennsylvania since 1993. Director of Wharton’s Pension Research Council and Boettner Center on Pensions & Retirement Research, and Research Associate at the National Bureau of Economic Research. Previously, Cornell University Professor from 1978 to 1993. | N/A | |||
Timothy J. Penny (Born 1951) | Trustee, since 1996; Chairman, since 2018 | President and Chief Executive Officer of Southern Minnesota Initiative Foundation, a non-profit organization, since 2007. Member of the Board of Trustees of NorthStar Education Finance, Inc., a non-profit organization, since 2007. | N/A | |||
James G. Polisson (Born 1959) | Trustee, since 2018 | Retired. Chief Marketing Officer, Source (ETF) UK Services, Ltd, from 2015 to 2017. From 2012 to 2015, Principal of The Polisson Group, LLC, a management consulting, corporate advisory and principal investing company. Chief Executive Officer and Managing Director at Russell Investments, Global Exchange Traded Funds from 2010 to 2012. Managing Director of Barclays Global Investors from 1998 to 2010 and Global Chief Marketing Officer for iShares and Barclays Global Investors from 2000 to 2010. Trustee of the San Francisco Mechanics’ Institute, a non-profit organization, from 2013 to 2015. Board member of the Russell Exchange Traded Fund Trust from 2011 to 2012. Director of Barclays Global Investors Holdings Deutschland GmbH from 2006 to 2009. Mr. Polisson is an attorney and has a retired status with the Massachusetts and District of Columbia Bar Associations. | N/A | |||
Pamela Wheelock (Born 1959) | Trustee, since 2018 | Board member of the Destination Medical Center Economic Development Agency, Rochester, Minnesota since 2019. Chief Operating Officer, Twin Cities Habitat for Humanity from 2017 to 2019. Vice President of University Services, University of Minnesota from 2012 to 2016. Prior thereto, on the Board of Directors, Governance Committee and Finance Committee for the Minnesota Philanthropy Partners (Saint Paul Foundation) from 2012 to 2018, Interim Chief Executive Officer of Blue Cross Blue Shield of Minnesota from 2011 to 2012, Chairman of the Board from 2009 to 2012 and Board Director from 2003 to 2015. Vice President, Leadership and Community Engagement, Bush Foundation, Saint Paul, Minnesota (a private foundation) from 2009 to 2011. Executive Vice President and Chief Financial Officer, Minnesota Sports and Entertainment from 2004 to 2009 and Senior Vice President from 2002 to 2004. Executive Vice President of the Minnesota Wild Foundation from 2004 to 2008. Commissioner of Finance, State of Minnesota, from 1999 to 2002. Currently Board Chair of the Minnesota Wild Foundation since 2010. | N/A |
* | Length of service dates reflect the Trustee’s commencement of service with the Trust’s predecessor entities, where applicable. |
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26 | Wells Fargo Opportunity Fund | Other information (unaudited) |
Officers
Name and year of birth | Position held and length of service | Principal occupations during past five years or longer | ||||
Andrew Owen (Born 1960) | President, since 2017 | Executive Vice President of Wells Fargo & Company and Head of Affiliated Managers, Wells Fargo Asset Management, since 2014. In addition, Mr. Owen is currently President, Chief Executive Officer and Director of Wells Fargo Funds Management, LLC since 2017. Prior thereto, Executive Vice President responsible for marketing, investments and product development for Wells Fargo Funds Management, LLC, from 2009 to 2014. | ||||
Nancy Wiser1 (Born 1967) | Treasurer, since 2012 | Executive Vice President of Wells Fargo Funds Management, LLC since 2011. Chief Operating Officer and Chief Compliance Officer at LightBox Capital Management LLC, from 2008 to 2011. | ||||
Alexander Kymn (Born 1973) | Secretary and Chief Legal Officer, since 2018 | Senior Company Counsel of Wells Fargo Bank, N.A. since 2018 (previously Senior Counsel from 2007 to 2018). Vice President of Wells Fargo Funds Management, LLC from 2008 to 2014. | ||||
Michael H. Whitaker (Born 1967) | Chief Compliance Officer, since 2016 | Senior Vice President and Chief Compliance Officer since 2016. Senior Vice President and Chief Compliance Officer for Fidelity Investments from 2007 to 2016. | ||||
David Berardi (Born 1975) | Assistant Treasurer, since 2009 | Vice President of Wells Fargo Funds Management, LLC since 2009. Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010. Manager of Fund Reporting and Control for Evergreen Investment Management Company, LLC from 2004 to 2010. | ||||
Jeremy DePalma1 (Born 1974) | Assistant Treasurer, since 2009 | Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010 and head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010. |
1 | Nancy Wiser acts as Treasurer of 65 funds in the Fund Complex. Jeremy DePalma acts as Treasurer of 86 funds and Assistant Treasurer of 65 funds in the Fund Complex. |
2 | The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request, by calling 1-800-222-8222 or by visiting the website atwfam.com. |
3 | Mr. Harris became Chairman of the Audit Committee effective January 1, 2019. |
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Appendix A (unaudited) | Wells Fargo Opportunity Fund | 27 |
SALES CHARGE REDUCTIONS AND WAIVERS FOR CERTAIN INTERMEDIARIES
Raymond James & Associates, Inc., Raymond James Financial Services & Raymond James affiliates (“Raymond James”)
Effective on or about March 1, 2019, shareholders purchasing Fund shares through a Raymond James platform or account will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in the Fund’s Prospectus or SAI.
Front-end Sales Load Waivers on Class A shares Available at Raymond James
• | Shares purchased in an investment advisory program. |
• | Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family). |
• | Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James. |
• | Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement). |
• | A shareholder in the fund’s Class C shares will have their shares automatically exchanged at net asset value to Class A shares (or the appropriate share class) of the fund if the shares are no longer subject to a CDSC and the exchange is in line with the policies and procedures of Raymond James. |
CDSC Waivers on Class A and C Shares Available at Raymond James
• | Death or disability of the shareholder. |
• | Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus. |
• | Return of excess contributions from an IRA Account. |
• | Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70½ as described in the Fund’s prospectus. |
• | Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James. |
• | Shares acquired through a right of reinstatement. |
Front-end Load Discounts Available at Raymond James: Breakpoints, and/or Rights of Accumulation
• | Breakpoints as described in the Fund’s Prospectus. |
• | Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets. |
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For more information
More information about Wells Fargo Funds is available free upon request. To obtain literature, please write, visit the Fund’s website, or call:
Wells Fargo Funds
P.O. Box 219967
Kansas City, MO 64121-9967
Website: wfam.com
Individual investors: 1-800-222-8222
Retail investment professionals: 1-888-877-9275
Institutional investment professionals:1-866-765-0778
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. Before investing, please consider the investment objectives, risks, charges, and expenses of the investment. For a current prospectus and, if available, a summary prospectus, containing this information, call1-800-222-8222 or visit the Fund’s website atwfam.com. Read the prospectus carefully before you invest or send money.
Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management firms owned by Wells Fargo & Company. These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by Wells Fargo Funds Distributor, LLC (a broker-dealer and Member FINRA).
This material is for general informational and educational purposes only and is NOT intended to provide investment advice or a recommendation of any kind—including a recommendation for any specific investment, strategy, or plan.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
© 2019 Wells Fargo Funds Management, LLC. All rights reserved.
![]() | 401612 05-19 SA232/SAR232 03-19 |
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Semi-Annual Report
March 31, 2019
Wells Fargo Special Mid Cap Value Fund
Beginning on January 1, 2021, as permitted by new regulations adopted by the Securities and Exchange Commission, paper copies of the Wells Fargo Funds’ annual and semi-annual shareholder reports issued after this date will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website, and you will be notified by mail each time a report is posted and provided with a website address to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-222-8222 or by enrolling at wellsfargo.com/advantagedelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports; if you invest directly with the Fund, you can call 1-800-222-8222. Your election to receive reports in paper will apply to all Wells Fargo Funds held in your account with your financial intermediary or, if you are a direct investor, to all Wells Fargo Funds that you hold.
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Financial statements | ||||
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The views expressed and any forward-looking statements are as of March 31, 2019, unless otherwise noted, and are those of the Fund managers and/or Wells Fargo Asset Management. Discussions of individual securities, or the markets generally, or any Wells Fargo Fund are not intended as individual recommendations. Future events or results may vary significantly from those expressed in any forward-looking statements. The views expressed are subject to change at any time in response to changing circumstances in the market. Wells Fargo and the Fund disclaim any obligation to publicly update or revise any views expressed or forward-looking statements.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
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2 | Wells Fargo Special Mid Cap Value Fund | Letter to shareholders (unaudited) |
Andrew Owen
President
Wells Fargo Funds
December’s S&P 500 Index performance was the worst since 1931.
Dear Shareholder:
We are pleased to offer you this semi-annual report for the Wells Fargo Special Mid Cap Value Fund for the six-month period that ended March 31, 2019. Concerns about interest rate increases in the U.S., trade tensions, and geopolitical events drove equity losses and restrained bond returns during the fourth quarter of 2018. Investor sentiment improved during the first quarter of 2019 thanks to a shift in U.S. Federal Reserve (Fed) policy and consistent, if not spectacular, economic and business growth metrics.
For the period, U.S. stocks, as measured by the S&P 500 Index,1 lost 1.72% and international stocks, as measured by the MSCI ACWI ex USA Index (Net),2 fell 2.33%. Based on the MSCI EM Index (Net),3 emerging market stocks added 1.71%. For bond investors, the Bloomberg Barclays U.S. Aggregate Bond Index4 added 4.63% while the Bloomberg Barclays Global Aggregate ex-USD Index5 added 2.44%. The Bloomberg Barclays Municipal Bond Index6 added 4.63%, and the ICE BofAML U.S. High Yield Index7 gained 2.39%.
Conflicting data unsettled markets during the fourth quarter.
November’s U.S. midterm elections shifted control of the House of Representatives from Republicans to Democrats, presaging potential partisan clashes. Third-quarter U.S. gross domestic product was announced at an annualized 3.4% rate, lower than the second-quarter rate. Brexit efforts stalled ahead of the March 2019 deadline. The People’s Bank of China cut reserve requirement ratios, accelerated infrastructure spending, and cut taxes even as the value of the yuan declined to low levels last seen in 2008.
December’s S&P 500 Index performance was the worst since 1931. Globally, fixed-income investments fared better than stocks during the last two months of the year. The Fed increased the federal funds rate by 25 bps in December 2018 to a target range of between 2.25% and 2.50% and softened its outlook for 2019 rate increases.
The market climbs a wall of worry.
Investors entered 2019 with reasons to be concerned. A partial U.S. government shutdown driven by partisan spending and immigration policy disputes extended into January. Investors expected high levels of stock market volatility to continue based on the VIX8.
1 | The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index with each stock’s weight in the index proportionate to its market value. You cannot invest directly in an index. |
2 | The Morgan Stanley Capital International (MSCI) All Country World Index (ACWI) ex USA Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. You cannot invest directly in an index. |
3 | The MSCI Emerging Markets (EM) Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure large- and mid-cap equity market performance of emerging markets. The MSCI EM Index (Net) consists of the following 24 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and the United Arab Emirates. You cannot invest directly in an index. |
4 | The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid adjustable-rate mortgage pass-throughs), asset-backed securities, and commercial mortgage-backed securities. You cannot invest directly in an index. |
5 | The Bloomberg Barclays Global Aggregate ex-USD Index is an unmanaged index that provides a broad-based measure of the global investment-grade fixed-income markets excluding the U.S. dollar-denominated debt market. You cannot invest directly in an index. |
6 | The Bloomberg Barclays Municipal Bond Index is an unmanaged index composed of long-term tax-exempt bonds with a minimum credit rating of Baa. You cannot invest directly in an index. |
7 | The ICE BofAML U.S. High Yield Index is a market-capitalization-weighted index of domestic and Yankee high-yield bonds. The index tracks the performance of high-yield securities traded in the U.S. bond market. You cannot invest directly in an index. Copyright 2019. ICE Data Indices, LLC. All rights reserved. |
8 | The Chicago Board Options Exchange Market Volatility Index (VIX) is a popular measure of the implied volatility of S&P 500 Index options. It represents one measure of the market’s expectation of stock market volatility over the next 30-day period. You cannot invest directly in an index. |
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Letter to shareholders (unaudited) | Wells Fargo Special Mid Cap Value Fund | 3 |
January’s returns tended to support the investing adage that markets climb a wall of worry. The S&P 500 Index gained 8.01% for the month that ended January 31, 2019, its best monthly performance in 30 years. Returns for the MSCI ACWI ex USA Index (Net), the Bloomberg Barclays U.S. Aggregate Bond Index, and the Bloomberg Barclays Global Aggregate ex-USD Index also were positive. The Fed indicated that it would pause its program of regular rate increases during 2019 as inflation remained low. Businesses and investors responded positively to the shift in policy.
In February, concerns over slowing global growth reemerged. The Bureau of Economic Analysis announced fourth-quarter 2018 gross domestic product grew at an annualized 2.2% rate, down from the 4.2% annualized rate for the second quarter and the 3.4% annualized rate for the third quarter. Analysts attributed the lower growth rate to a slowing housing market and larger trade deficit. The U.S. Department of Labor said that the economy created just 20,000 jobs in February 2019. In a February report, the Bank of England forecast the slowest growth since the financial crisis for 2019. China and the U.S., while putting future tariffs on hold for the time being, continued to wrangle over trade issues.
By the end of March 2019, the combination of dovish Fed sentiment and consistent, if not spectacular, economic and business metrics reinforced investors’ enthusiasm for equity investing. Monthly job creation data regained its momentum. Corporate profits, while lower than 2018’s lofty levels, remained consistent. Inflation rates were relatively low in the U.S., Europe, and Japan. China announced a roughly $300 billion stimulus package through tax and fee cuts intended to reinvigorate economic growth.
Don’t let short-term uncertainty derail long-term investment goals.
Periods of investment uncertainty can present challenges, but experience has taught us that maintaining long-term investment goals can be an effective way to plan for the future. To help you create a sound strategy based on your personal goals and risk tolerance, Wells Fargo Funds offers more than 100 mutual funds spanning a wide range of asset classes and investment styles. Although diversification cannot guarantee an investment profit or prevent losses, we believe it can be an effective way to manage investment risk and potentially smooth out overall portfolio performance. We encourage investors to know their investments and to understand that appropriate levels of risk-taking may unlock opportunities.
Thank you for choosing to invest with Wells Fargo Funds. We appreciate your confidence in us and remain committed to helping you meet your financial needs.
Sincerely,
Andrew Owen
President
Wells Fargo Funds
January’s returns tended to support the investing adage that markets climb a wall of worry.
For further information about your Fund, contact your investment professional, visit our website atwfam.com, or call us directly at1-800-222-8222.
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4 | Wells Fargo Special Mid Cap Value Fund | Performance highlights (unaudited) |
Investment objective
The Fund seeks long-term capital appreciation.
Manager
Wells Fargo Funds Management, LLC
Subadviser
Wells Capital Management Incorporated
Portfolio managers
James M. Tringas, CFA®‡
Bryant VanCronkhite, CFA®‡, CPA
Shane Zweck, CFA®‡*
Average annual total returns (%) as of March 31, 2019
Including sales charge | Excluding sales charge | Expense ratios1 (%) | ||||||||||||||||||||||||||||||||
Inception date | 1 year | 5 year | 10 year | 1 year | 5 year | 10 year | Gross | Net2 | ||||||||||||||||||||||||||
Class A (WFPAX) | 7-31-2007 | -2.67 | 5.85 | 14.47 | 3.27 | 7.11 | 15.15 | 1.16 | 1.16 | |||||||||||||||||||||||||
Class C (WFPCX) | 7-31-2007 | 1.49 | 6.31 | 14.30 | 2.49 | 6.31 | 14.30 | 1.91 | 1.91 | |||||||||||||||||||||||||
Class R (WFHHX)3 | 9-30-2015 | – | – | – | 3.01 | 6.84 | 14.89 | 1.41 | 1.41 | |||||||||||||||||||||||||
Class R6 (WFPRX)4 | 6-28-2013 | – | – | – | 3.72 | 7.58 | 15.65 | 0.73 | 0.73 | |||||||||||||||||||||||||
Administrator Class (WFMDX) | 4-8-2005 | – | – | – | 3.34 | 7.22 | 15.28 | 1.08 | 1.08 | |||||||||||||||||||||||||
Institutional Class (WFMIX) | 4-8-2005 | – | – | – | 3.61 | 7.49 | 15.59 | 0.83 | 0.83 | |||||||||||||||||||||||||
Russell Midcap® Value Index5 | – | – | – | – | 2.89 | 7.22 | 16.39 | – | – |
Figures quoted represent past performance, which is no guarantee of future results,and do not reflect taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance shown without sales charges would be lower if sales charges were reflected. Current performance may be lower or higher than the performance data quoted, which assumes the reinvestment of dividends and capital gains. Current month-end performance is available on the Fund’s website,wfam.com.
Index returns do not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses, or any taxes. It is not possible to invest directly in an index.
For Class A shares, the maximum front-end sales charge is 5.75%. For Class C shares, the maximum contingent deferred sales charge is 1.00%. Performance including a contingent deferred salescharge assumes the sales charge for the corresponding time period. Class R, Class R6, Administrator Class, and Institutional Class shares are sold without a front-end sales charge or contingent deferred sales charge.
Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. Smaller-company stocks tend to be more volatile and less liquid than those of larger companies. Consult the Fund’s prospectus for additional information on these and other risks.
Please see footnotes on page 5.
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Performance highlights (unaudited) | Wells Fargo Special Mid Cap Value Fund | 5 |
Ten largest holdings (%) as of March 31, 20196 | ||||
Ameren Corporation | 2.95 | |||
Jacobs Engineering Group Incorporated | 2.79 | |||
American Electric Power Company Incorporated | 2.74 | |||
Kansas City Southern | 2.74 | |||
Brown & Brown Incorporated | 2.71 | |||
American Water Works Company Incorporated | 2.69 | |||
Molson Coors Brewing Company Class B | 2.45 | |||
Fidelity National Information Services Incorporated | 2.43 | |||
Republic Services Incorporated | 2.41 | |||
Sealed Air Corporation | 2.22 |
Sector distribution as of March 31, 20197 |
|
* | Mr. Zweck became a portfolio manager of the Fund on February 1, 2019. |
1 | Reflects the expense ratios as stated in the most recent prospectuses, which include the impact of 0.01% in acquired fund fees and expenses. The expense ratios shown are subject to change and may differ from the annualized expense ratios shown in the financial highlights of this report, which do not include acquired fund fees and expenses. |
2 | The manager has contractually committed through January 31, 2020, to waive fees and/or reimburse expenses to the extent necessary to cap the expenses of each class after fee waivers at the amounts shown. Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the expense cap. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. Without this cap, the Fund’s returns would have been lower. The expense ratio paid by an investor is the net expense ratio (the total annual fund operating expenses after fee waivers) as stated in the prospectuses. |
3 | Historical performance shown for the Class R shares prior to their inception reflects the performance of the Institutional Class shares, adjusted to reflect the higher expenses applicable to Class R shares. |
4 | Historical performance shown for Class R6 shares prior to their inception reflects the performance of Institutional Class shares, and includes the higher expenses applicable to Institutional Class shares. If these expenses had not been included, the returns for Class R6 shares would be higher. |
5 | The Russell Midcap® Value Index measures the performance of those Russell Midcap companies with lower price/book ratios and lower forecasted growth values. The stocks are also members of the Russell 1000® Value Index. You cannot invest directly in an index. |
6 | The ten largest holdings, excluding cash, cash equivalents and any money market funds, are calculated based on the value of the investments divided by total net assets of the Fund. Holdings are subject to change and may have changed since the date specified. |
7 | Amounts are calculated based on the total long-term investments of the Fund. These amounts are subject to change and may have changed since the date specified. |
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6 | Wells Fargo Special Mid Cap Value Fund | Fund expenses (unaudited) |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and contingent deferred sales charges (if any) on redemptions and (2) ongoing costs, including management fees, distribution (12b-1) and/or shareholder servicing fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period from October 1, 2018 to March 31, 2019.
Actual expenses
The “Actual” line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the “Actual” line under the heading entitled “Expenses paid during period” for your applicable class of shares to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The “Hypothetical” line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and contingent deferred sales charges. Therefore, the “Hypothetical” line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 10-1-2018 | Ending account value 3-31-2019 | Expenses paid during the period¹ | Annualized net expense ratio | |||||||||||||
Class A | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 998.90 | $ | 5.73 | 1.15 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,019.20 | $ | 5.79 | 1.15 | % | ||||||||
Class C | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 995.06 | $ | 9.45 | 1.90 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,015.46 | $ | 9.55 | 1.90 | % | ||||||||
Class R | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 997.65 | $ | 6.97 | 1.40 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,017.95 | $ | 7.04 | 1.40 | % | ||||||||
Class R6 | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,000.96 | $ | 3.59 | 0.72 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.34 | $ | 3.63 | 0.72 | % | ||||||||
Administrator Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 999.11 | $ | 5.33 | 1.07 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,019.60 | $ | 5.39 | 1.07 | % | ||||||||
Institutional Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,000.63 | $ | 4.09 | 0.82 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.84 | $ | 4.13 | 0.82 | % |
1 | Expenses paid is equal to the annualized net expense ratio of each class multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year (to reflect the one-half-year period). |
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Special Mid Cap Value Fund | 7 |
Security name | Shares | Value | ||||||||||||||
Common Stocks: 96.18% | ||||||||||||||||
Consumer Discretionary: 6.60% | ||||||||||||||||
Auto Components: 1.04% | ||||||||||||||||
Aptiv plc | 1,042,700 | $ | 82,884,223 | |||||||||||||
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Hotels, Restaurants & Leisure: 1.90% | ||||||||||||||||
The Wendy’s Company | 5,983,200 | 107,039,448 | ||||||||||||||
Vail Resorts Incorporated | 207,900 | 45,176,670 | ||||||||||||||
152,216,118 | ||||||||||||||||
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Household Durables: 2.12% | ||||||||||||||||
D.R. Horton Incorporated | 1,491,900 | 61,734,822 | ||||||||||||||
Mohawk Industries Incorporated † | 859,400 | 108,413,310 | ||||||||||||||
170,148,132 | ||||||||||||||||
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Multiline Retail: 1.54% | ||||||||||||||||
Kohl’s Corporation | 1,799,400 | 123,744,738 | ||||||||||||||
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Consumer Staples: 3.58% | ||||||||||||||||
Beverages: 2.45% | ||||||||||||||||
Molson Coors Brewing Company Class B | 3,294,076 | 196,491,633 | ||||||||||||||
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Household Products: 1.13% | ||||||||||||||||
Church & Dwight Company Incorporated | 530,000 | 37,751,900 | ||||||||||||||
Spectrum Brands Holdings Incorporated | 954,840 | 52,306,135 | ||||||||||||||
90,058,035 | ||||||||||||||||
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Energy: 6.21% | ||||||||||||||||
Energy Equipment & Services: 2.02% | ||||||||||||||||
Baker Hughes Incorporated | 1,660,200 | 46,020,744 | ||||||||||||||
National Oilwell Varco Incorporated | 2,062,500 | 54,945,000 | ||||||||||||||
Patterson-UTI Energy Incorporated | 4,312,900 | 60,466,858 | ||||||||||||||
161,432,602 | ||||||||||||||||
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Oil, Gas & Consumable Fuels: 4.19% | ||||||||||||||||
Anadarko Petroleum Corporation | 2,047,500 | 93,120,300 | ||||||||||||||
Cimarex Energy Company | 1,514,400 | 105,856,560 | ||||||||||||||
Hess Corporation | 1,446,300 | 87,110,649 | ||||||||||||||
Valero Energy Corporation | 195,500 | 16,584,265 | ||||||||||||||
WPX Energy Incorporated † | 2,547,900 | 33,402,969 | ||||||||||||||
336,074,743 | ||||||||||||||||
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Financials: 18.08% | ||||||||||||||||
Banks: 4.04% | ||||||||||||||||
Fifth Third Bancorp | 3,250,200 | 81,970,044 | ||||||||||||||
PacWest Bancorp | 2,669,007 | 100,381,353 | ||||||||||||||
Regions Financial Corporation | 5,535,300 | 78,324,495 | ||||||||||||||
Zions Bancorporation | 1,390,900 | 63,160,769 | ||||||||||||||
323,836,661 | ||||||||||||||||
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The accompanying notes are an integral part of these financial statements.
Table of Contents
8 | Wells Fargo Special Mid Cap Value Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Capital Markets: 1.05% | ||||||||||||||||
Northern Trust Corporation | 934,300 | $ | 84,470,063 | |||||||||||||
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Insurance: 11.74% | ||||||||||||||||
Arch Capital Group Limited † | 5,227,108 | 168,940,131 | ||||||||||||||
Brown & Brown Incorporated | 7,347,300 | 216,818,823 | ||||||||||||||
Fidelity National Financial Incorporated | 4,197,714 | 153,426,447 | ||||||||||||||
Loews Corporation | 3,358,000 | 160,948,940 | ||||||||||||||
The Allstate Corporation | 1,737,900 | 163,675,422 | ||||||||||||||
Willis Towers Watson plc | 437,300 | 76,811,745 | ||||||||||||||
940,621,508 | ||||||||||||||||
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Mortgage REITs: 1.25% | ||||||||||||||||
Annaly Capital Management Incorporated | 10,019,900 | 100,098,801 | ||||||||||||||
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Health Care: 8.91% | ||||||||||||||||
Health Care Equipment & Supplies: 4.51% | ||||||||||||||||
Steris plc | 641,900 | 82,182,457 | ||||||||||||||
Varian Medical Systems Incorporated † | 1,043,700 | 147,913,164 | ||||||||||||||
Zimmer Biomet Holdings Incorporated | 1,030,000 | 131,531,000 | ||||||||||||||
361,626,621 | ||||||||||||||||
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Health Care Providers & Services: 3.14% | ||||||||||||||||
AmerisourceBergen Corporation | 593,500 | 47,195,120 | ||||||||||||||
Humana Incorporated | 508,900 | 135,367,400 | ||||||||||||||
Universal Health Services Incorporated Class B | 512,100 | 68,503,617 | ||||||||||||||
251,066,137 | ||||||||||||||||
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Life Sciences Tools & Services: 1.26% | ||||||||||||||||
Charles River Laboratories International Incorporated † | 696,200 | 101,123,050 | ||||||||||||||
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Industrials: 17.35% | ||||||||||||||||
Aerospace & Defense: 1.88% | ||||||||||||||||
Harris Corporation | 943,200 | 150,638,472 | ||||||||||||||
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Building Products: 1.44% | ||||||||||||||||
Owens Corning Incorporated | 2,450,230 | 115,454,838 | ||||||||||||||
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Commercial Services & Supplies: 3.41% | ||||||||||||||||
Republic Services Incorporated | 2,405,475 | 193,352,081 | ||||||||||||||
Stericycle Incorporated † | 1,472,100 | 80,111,682 | ||||||||||||||
273,463,763 | ||||||||||||||||
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Construction & Engineering: 2.79% | ||||||||||||||||
Jacobs Engineering Group Incorporated | 2,977,943 | 223,911,534 | ||||||||||||||
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Electrical Equipment: 0.64% | ||||||||||||||||
Acuity Brands Incorporated | 427,100 | 51,256,271 | ||||||||||||||
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The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Special Mid Cap Value Fund | 9 |
Security name | Shares | Value | ||||||||||||||
Industrial Conglomerates: 1.65% | ||||||||||||||||
Carlisle Companies Incorporated | 1,076,800 | $ | 132,037,216 | |||||||||||||
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Machinery: 2.41% | ||||||||||||||||
Cummins Incorporated | 589,900 | 93,127,513 | ||||||||||||||
Stanley Black & Decker Incorporated | 736,100 | 100,234,737 | ||||||||||||||
193,362,250 | ||||||||||||||||
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Road & Rail: 2.74% | ||||||||||||||||
Kansas City Southern | 1,889,600 | 219,155,808 | ||||||||||||||
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Trading Companies & Distributors: 0.39% | ||||||||||||||||
AerCap Holdings NV † | 663,400 | 30,874,636 | ||||||||||||||
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Information Technology: 9.97% | ||||||||||||||||
IT Services: 7.13% | ||||||||||||||||
Amdocs Limited | 3,273,700 | 177,139,907 | ||||||||||||||
Euronet Worldwide Incorporated † | 1,038,100 | 148,022,679 | ||||||||||||||
Fidelity National Information Services Incorporated | 1,725,100 | 195,108,810 | ||||||||||||||
Leidos Holdings Incorporated | 795,800 | 51,002,822 | ||||||||||||||
571,274,218 | ||||||||||||||||
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Semiconductors & Semiconductor Equipment: 0.62% | ||||||||||||||||
Analog Devices Incorporated | 472,000 | 49,687,440 | ||||||||||||||
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Software: 0.72% | ||||||||||||||||
Check Point Software Technologies Limited † | 456,400 | 57,730,036 | ||||||||||||||
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Technology Hardware, Storage & Peripherals: 1.50% | ||||||||||||||||
NCR Corporation † | 4,403,820 | 120,180,248 | ||||||||||||||
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Materials: 8.90% | ||||||||||||||||
Chemicals: 2.04% | ||||||||||||||||
PPG Industries Incorporated | 1,447,100 | 163,334,177 | ||||||||||||||
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Construction Materials: 1.40% | ||||||||||||||||
Eagle Materials Incorporated | 1,328,200 | 111,967,260 | ||||||||||||||
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Containers & Packaging: 5.46% | ||||||||||||||||
International Paper Company | 2,521,200 | 116,655,924 | ||||||||||||||
Packaging Corporation of America | 1,440,913 | 143,197,934 | ||||||||||||||
Sealed Air Corporation | 3,864,800 | 178,012,688 | ||||||||||||||
437,866,546 | ||||||||||||||||
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Real Estate: 7.05% | ||||||||||||||||
Equity REITs: 4.87% | ||||||||||||||||
American Campus Communities Incorporated | 3,002,985 | 142,882,026 | ||||||||||||||
Invitation Homes Incorporated | 5,615,428 | 136,623,363 | ||||||||||||||
Mid-America Apartment Communities Incorporated | 1,009,700 | 110,390,501 | ||||||||||||||
389,895,890 | ||||||||||||||||
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The accompanying notes are an integral part of these financial statements.
Table of Contents
10 | Wells Fargo Special Mid Cap Value Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Shares | Value | ||||||||||||||
Real Estate Management & Development: 2.18% | ||||||||||||||||
CBRE Group Incorporated Class A † | 3,541,700 | $ | 175,137,065 | |||||||||||||
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Utilities: 9.53% | ||||||||||||||||
Electric Utilities: 3.89% | ||||||||||||||||
American Electric Power Company Incorporated | 2,619,960 | 219,421,650 | ||||||||||||||
FirstEnergy Corporation | 2,206,900 | 91,829,109 | ||||||||||||||
311,250,759 | ||||||||||||||||
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Multi-Utilities: 2.95% | ||||||||||||||||
Ameren Corporation | 3,217,950 | 236,680,223 | ||||||||||||||
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Water Utilities: 2.69% | ||||||||||||||||
American Water Works Company Incorporated | 2,070,300 | 215,849,478 | ||||||||||||||
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Total Common Stocks (Cost $6,608,174,485) | 7,706,901,193 | |||||||||||||||
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Yield | ||||||||||||||||
Short-Term Investments: 3.45% | ||||||||||||||||
Investment Companies: 3.45% | ||||||||||||||||
Wells Fargo Government Money Market Fund Select Class (l)(u) | 2.38 | % | 276,076,123 | 276,076,123 | ||||||||||||
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Total Short-Term Investments (Cost $276,076,123) |
| 276,076,123 | ||||||||||||||
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Total investments in securities (Cost $6,884,250,608) | 99.63 | % | 7,982,977,316 | |||||
Other assets and liabilities, net | 0.37 | 30,027,769 | ||||||
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Total net assets | 100.00 | % | $ | 8,013,005,085 | ||||
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† | Non-income-earning security |
(l) | The issuer of the security is an affiliated person of the Fund as defined in the Investment Company Act of 1940. |
(u) | The rate represents the 7-day annualized yield at period end. |
Abbreviations:
REIT | Real estate investment trust |
Investments in Affiliates
An affiliated investment is an investment in which the Fund owns at least 5% of the outstanding voting shares of the issuer or as a result of other relationships, such as the Fund and the issuer having the same investment manager. Transactions with issuers that were either affiliates of the Fund at the beginning of the period or the end of the period were as follows:
Shares, beginning of period | Shares purchased | Shares sold | Shares, end of period | Net realized gains (losses) | Net change in unrealized gains (losses) | Income from affiliated securities | Value, end of period | % of net assets | ||||||||||||||||||||||||||||
Short-Term Investments | ||||||||||||||||||||||||||||||||||||
Investment Companies | ||||||||||||||||||||||||||||||||||||
Wells Fargo Government Money Market Fund Select Class | 183,466,427 | 905,487,518 | 812,877,822 | 276,076,123 | $ | 0 | $ | 0 | $ | 2,714,804 | $ | 276,076,123 | 3.45 | % | ||||||||||||||||||||||
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The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of assets and liabilities—March 31, 2019 (unaudited) | Wells Fargo Special Mid Cap Value Fund | 11 |
Assets | ||||
Investments in unaffiliated securities, at value (cost $6,608,174,485) | $ | 7,706,901,193 | ||
Investments in affiliated securities, at value (cost $276,076,123) | 276,076,123 | |||
Receivable for investments sold | 29,370,882 | |||
Receivable for Fund shares sold | 11,672,477 | |||
Receivable for dividends | 13,083,503 | |||
Prepaid expenses and other assets | 4,340 | |||
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Total assets | 8,037,108,518 | |||
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Liabilities | ||||
Payable for Fund shares redeemed | 8,703,639 | |||
Payable for investments purchased | 8,548,804 | |||
Management fee payable | 4,529,927 | |||
Administration fees payable | 822,970 | |||
Distribution fees payable | 99,509 | |||
Trustees’ fees and expenses payable | 2,137 | |||
Accrued expenses and other liabilities | 1,396,447 | |||
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Total liabilities | 24,103,433 | |||
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Total net assets | $ | 8,013,005,085 | ||
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NET ASSETS CONSIST OF | ||||
Paid-in capital | $ | 6,888,770,612 | ||
Total distributable earnings | 1,124,234,473 | |||
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Total net assets | $ | 8,013,005,085 | ||
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COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE | ||||
Net assets – Class A | $ | 955,779,868 | ||
Shares outstanding – Class A1 | 26,031,566 | |||
Net asset value per share – Class A | $36.72 | |||
Maximum offering price per share – Class A² | $38.96 | |||
Net assets – Class C | $ | 146,602,802 | ||
Shares outstanding – Class C1 | 4,164,613 | |||
Net asset value per share – Class C | $35.20 | |||
Net assets – Class R | $ | 28,421,215 | ||
Shares outstanding – Class R1 | 764,063 | |||
Net asset value per share – Class R | $37.20 | |||
Net assets – Class R6 | $ | 1,595,319,806 | ||
Shares outstanding – Class R61 | 42,337,005 | |||
Net asset value per share – Class R6 | $37.68 | |||
Net assets – Administrator Class | $ | 672,846,056 | ||
Shares outstanding – Administrator Class1 | 18,003,229 | |||
Net asset value per share – Administrator Class | $37.37 | |||
Net assets – Institutional Class | $ | 4,614,035,338 | ||
Shares outstanding – Institutional Class1 | 122,558,230 | |||
Net asset value per share – Institutional Class | $37.65 |
1 | The Fund has an unlimited number of authorized shares. |
2 | Maximum offering price is computed as 100/94.25 of net asset value. On investments of $50,000 or more, the offering price is reduced. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
12 | Wells Fargo Special Mid Cap Value Fund | Statement of operations—six months ended March 31, 2019 (unaudited) |
Investment income | ||||
Dividends | $ | 71,664,712 | ||
Income from affiliated securities | 2,714,804 | |||
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Total investment income | 74,379,516 | |||
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Expenses | ||||
Management fee | 26,340,888 | |||
Administration fees | ||||
Class A | 987,713 | |||
Class C | 158,739 | |||
Class R | 27,445 | |||
Class R6 | 216,349 | |||
Administrator Class | 504,556 | |||
Institutional Class | 2,941,178 | |||
Shareholder servicing fees | ||||
Class A | 1,175,849 | |||
Class C | 188,975 | |||
Class R | 32,672 | |||
Administrator Class | 968,541 | |||
Distribution fees | ||||
Class C | 566,925 | |||
Class R | 32,672 | |||
Custody and accounting fees | 132,689 | |||
Professional fees | 22,433 | |||
Registration fees | 236,986 | |||
Shareholder report expenses | 467,100 | |||
Trustees’ fees and expenses | 10,969 | |||
Other fees and expenses | 44,877 | |||
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Total expenses | 35,057,556 | |||
Less: Fee waivers and/or expense reimbursements | (564 | ) | ||
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Net expenses | 35,056,992 | |||
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Net investment income | 39,322,524 | |||
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REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | ||||
Net realized gains on investments | 20,919,574 | |||
Net change in unrealized gains (losses) on investments | (107,983,286 | ) | ||
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Net realized and unrealized gains (losses) on investments | (87,063,712 | ) | ||
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Net decrease in net assets resulting from operations | $ | (47,741,188 | ) | |
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The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of changes in net assets | Wells Fargo Special Mid Cap Value Fund | 13 |
Six months ended (unaudited) | Year ended September 30, 2018 | |||||||||||||||
Operations | ||||||||||||||||
Net investment income | $ | 39,322,524 | $ | 55,406,539 | ||||||||||||
Net realized gains on investments | 20,919,574 | 170,032,209 | ||||||||||||||
Net change in unrealized gains (losses) on investments | (107,983,286 | ) | 160,007,260 | |||||||||||||
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Net increase (decrease) in net assets resulting from operations | (47,741,188 | ) | 385,446,008 | |||||||||||||
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Distributions to shareholders from net investment income and net realized gains | ||||||||||||||||
Class A | (20,592,515 | ) | (44,792,710 | ) | ||||||||||||
Class C | (2,703,167 | ) | (7,147,489 | ) | ||||||||||||
Class R | (562,316 | ) | (758,370 | ) | ||||||||||||
Class R6 | (36,838,837 | ) | (46,138,407 | ) | ||||||||||||
Administrator Class | (17,454,931 | ) | (48,230,988 | ) | ||||||||||||
Institutional Class | (114,026,310 | ) | (209,509,970 | ) | ||||||||||||
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Total distributions to shareholders | (192,178,076 | ) | (356,577,934 | ) | ||||||||||||
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Capital share transactions | Shares | Shares | ||||||||||||||
Proceeds from shares sold | ||||||||||||||||
Class A | 2,939,979 | 101,560,667 | 8,052,054 | 299,880,019 | ||||||||||||
Class C | 218,238 | 7,231,179 | 955,547 | 34,325,290 | ||||||||||||
Class R | 205,779 | 7,323,421 | 449,380 | 17,074,096 | ||||||||||||
Class R6 | 7,166,460 | 255,623,165 | 21,764,043 | 834,124,233 | ||||||||||||
Administrator Class | 1,582,297 | 55,435,671 | 9,533,075 | 364,176,209 | ||||||||||||
Institutional Class | 19,753,494 | 707,959,593 | 44,252,567 | 1,696,256,312 | ||||||||||||
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1,135,133,696 | 3,245,836,159 | |||||||||||||||
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Reinvestment of distributions | ||||||||||||||||
Class A | 578,559 | 19,307,072 | 1,134,296 | 42,153,674 | ||||||||||||
Class C | 79,941 | 2,563,693 | 190,448 | 6,787,622 | ||||||||||||
Class R | 16,602 | 561,690 | 20,056 | 757,010 | ||||||||||||
Class R6 | 1,023,710 | 35,011,870 | 1,188,583 | 45,410,964 | ||||||||||||
Administrator Class | 512,565 | 17,408,508 | 1,273,292 | 48,143,405 | ||||||||||||
Institutional Class | 3,085,272 | 105,464,480 | 5,050,159 | 192,715,031 | ||||||||||||
|
| |||||||||||||||
180,317,313 | 335,967,706 | |||||||||||||||
|
| |||||||||||||||
Payment for shares redeemed | ||||||||||||||||
Class A | (5,120,798 | ) | (177,454,762 | ) | (10,111,787 | ) | (376,581,084 | ) | ||||||||
Class C | (987,925 | ) | (32,620,885 | ) | (1,618,894 | ) | (57,851,833 | ) | ||||||||
Class R | (103,578 | ) | (3,633,745 | ) | (205,099 | ) | (7,778,102 | ) | ||||||||
Class R6 | (4,485,740 | ) | (158,801,474 | ) | (7,858,969 | ) | (300,909,538 | ) | ||||||||
Administrator Class | (9,679,939 | ) | (339,289,832 | ) | (15,565,814 | ) | (589,131,375 | ) | ||||||||
Institutional Class | (28,174,434 | ) | (999,079,050 | ) | (40,848,909 | ) | (1,566,068,850 | ) | ||||||||
|
| |||||||||||||||
(1,710,879,748 | ) | (2,898,320,782 | ) | |||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from capital share transactions | (395,428,739 | ) | 683,483,083 | |||||||||||||
|
| |||||||||||||||
Total increase (decrease) in net assets | (635,348,003 | ) | 712,351,157 | |||||||||||||
|
| |||||||||||||||
Net assets | ||||||||||||||||
Beginning of period | 8,648,353,088 | 7,936,001,931 | ||||||||||||||
|
| |||||||||||||||
End of period | $ | 8,013,005,085 | $ | 8,648,353,088 | ||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
14 | Wells Fargo Special Mid Cap Value Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS A | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $37.59 | $37.49 | $33.12 | $29.91 | $32.68 | $30.36 | ||||||||||||||||||
Net investment income | 0.14 | 0.15 | 0.33 | 0.19 | 0.25 | 0.12 | 1 | |||||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.26 | ) | 1.50 | 4.42 | 4.23 | 0.07 | 4.47 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (0.12 | ) | 1.65 | 4.75 | 4.42 | 0.32 | 4.59 | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.17 | ) | (0.23 | ) | (0.19 | ) | (0.08 | ) | (0.18 | ) | (0.09 | ) | ||||||||||||
Net realized gains | (0.58 | ) | (1.32 | ) | (0.19 | ) | (1.13 | ) | (2.91 | ) | (2.18 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total distributions to shareholders | (0.75 | ) | (1.55 | ) | (0.38 | ) | (1.21 | ) | (3.09 | ) | (2.27 | ) | ||||||||||||
Net asset value, end of period | $36.72 | $37.59 | $37.49 | $33.12 | $29.91 | $32.68 | ||||||||||||||||||
Total return2 | (0.11 | )% | 4.50 | % | 14.41 | % | 15.34 | % | 0.69 | % | 15.70 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.15 | % | 1.15 | % | 1.18 | % | 1.19 | % | 1.25 | % | 1.28 | % | ||||||||||||
Net expenses | 1.15 | % | 1.15 | % | 1.18 | % | 1.19 | % | 1.24 | % | 1.25 | % | ||||||||||||
Net investment income | 0.74 | % | 0.40 | % | 0.78 | % | 0.82 | % | 0.85 | % | 0.38 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 12 | % | 37 | % | 46 | % | 30 | % | 58 | % | 58 | % | ||||||||||||
Net assets, end of period (000s omitted) | $955,780 | $1,038,883 | $1,070,690 | $1,363,213 | $509,386 | $110,219 |
1 | Calculated based upon average shares outstanding |
2 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Special Mid Cap Value Fund | 15 |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS C | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $36.02 | $36.03 | $31.91 | $29.00 | $31.82 | $29.73 | ||||||||||||||||||
Net investment income (loss) | (0.03 | ) | (0.14 | ) | 0.06 | 0.03 | 0.02 | 1 | (0.04 | ) | ||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.21 | ) | 1.46 | 4.26 | 4.02 | 0.07 | 4.31 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (0.24 | ) | 1.32 | 4.32 | 4.05 | 0.09 | 4.27 | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | 0.00 | (0.01 | ) | (0.01 | ) | (0.01 | ) | 0.00 | 0.00 | |||||||||||||||
Net realized gains | (0.58 | ) | (1.32 | ) | (0.19 | ) | (1.13 | ) | (2.91 | ) | (2.18 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total distributions to shareholders | (0.58 | ) | (1.33 | ) | (0.20 | ) | (1.14 | ) | (2.91 | ) | (2.18 | ) | ||||||||||||
Net asset value, end of period | $35.20 | $36.02 | $36.03 | $31.91 | $29.00 | $31.82 | ||||||||||||||||||
Total return2 | (0.49 | )% | 3.72 | % | 13.56 | % | 14.47 | % | (0.05 | )% | 14.86 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.90 | % | 1.90 | % | 1.92 | % | 1.94 | % | 2.00 | % | 2.03 | % | ||||||||||||
Net expenses | 1.90 | % | 1.90 | % | 1.92 | % | 1.94 | % | 1.99 | % | 2.00 | % | ||||||||||||
Net investment income (loss) | (0.03 | )% | (0.35 | )% | 0.14 | % | 0.03 | % | 0.08 | % | (0.38 | )% | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 12 | % | 37 | % | 46 | % | 30 | % | 58 | % | 58 | % | ||||||||||||
Net assets, end of period (000s omitted) | $146,603 | $174,839 | $191,954 | $116,022 | $63,431 | $29,217 |
1 | Calculated based upon average shares outstanding |
2 | Total return calculations do not include any sales charges. Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
16 | Wells Fargo Special Mid Cap Value Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended (unaudited) | Year ended September 30 | |||||||||||||||||||
CLASS R | 2018 | 2017 | 2016 | 2015¹ | ||||||||||||||||
Net asset value, beginning of period | $38.09 | $38.08 | $33.78 | $30.70 | $30.70 | |||||||||||||||
Net investment income | 0.10 | 0.09 | 0.32 | 0.12 | 2 | 0.00 | ||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.27 | ) | 1.49 | 4.43 | 4.32 | 0.00 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | (0.17 | ) | 1.58 | 4.75 | 4.44 | 0.00 | ||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||
Net investment income | (0.14 | ) | (0.25 | ) | (0.26 | ) | (0.23 | ) | 0.00 | |||||||||||
Net realized gains | (0.58 | ) | (1.32 | ) | (0.19 | ) | (1.13 | ) | 0.00 | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total distributions to shareholders | (0.72 | ) | (1.57 | ) | (0.45 | ) | (1.36 | ) | 0.00 | |||||||||||
Net asset value, end of period | $37.20 | $38.09 | $38.08 | $33.78 | $30.70 | |||||||||||||||
Total return3 | (0.23 | )% | 4.23 | % | 14.13 | % | 15.05 | % | 0.00 | % | ||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||
Gross expenses | 1.41 | % | 1.40 | % | 1.42 | % | 1.44 | % | 0.00 | % | ||||||||||
Net expenses | 1.40 | % | 1.40 | % | 1.42 | % | 1.44 | % | 0.00 | % | ||||||||||
Net investment income | 0.53 | % | 0.18 | % | 0.77 | % | 0.37 | % | 0.00 | % | ||||||||||
Supplemental data | ||||||||||||||||||||
Portfolio turnover rate | 12 | % | 37 | % | 46 | % | 30 | % | 58 | % | ||||||||||
Net assets, end of period (000s omitted) | $28,421 | $24,575 | $14,505 | $1,778 | $25 |
1 | The class commenced operations on September 30, 2015. Information represents activity for the one day of operation. |
2 | Calculated based upon average shares outstanding |
3 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Special Mid Cap Value Fund | 17 |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | |||||||||||||||||||||||
CLASS R6 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $38.67 | $38.52 | $34.03 | $30.71 | $33.39 | $30.90 | ||||||||||||||||||
Net investment income | 0.21 | 0.32 | 1 | 0.50 | 1 | 0.38 | 1 | 0.41 | 1 | 0.41 | 1 | |||||||||||||
Net realized and unrealized gains (losses) on investments | (0.28 | ) | 1.55 | 4.53 | 4.30 | 0.05 | 4.43 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (0.07 | ) | 1.87 | 5.03 | 4.68 | 0.46 | 4.84 | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.34 | ) | (0.40 | ) | (0.35 | ) | (0.23 | ) | (0.23 | ) | (0.17 | ) | ||||||||||||
Net realized gains | (0.58 | ) | (1.32 | ) | (0.19 | ) | (1.13 | ) | (2.91 | ) | (2.18 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total distributions to shareholders | (0.92 | ) | (1.72 | ) | (0.54 | ) | (1.36 | ) | (3.14 | ) | (2.35 | ) | ||||||||||||
Net asset value, end of period | $37.68 | $38.67 | $38.52 | $34.03 | $30.71 | $33.39 | ||||||||||||||||||
Total return2 | 0.10 | % | 4.95 | % | 14.88 | % | 15.84 | % | 1.14 | % | 16.29 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 0.72 | % | 0.72 | % | 0.74 | % | 0.76 | % | 0.79 | % | 0.80 | % | ||||||||||||
Net expenses | 0.72 | % | 0.72 | % | 0.74 | % | 0.76 | % | 0.79 | % | 0.80 | % | ||||||||||||
Net investment income | 1.19 | % | 0.85 | % | 1.37 | % | 1.21 | % | 1.26 | % | 1.22 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 12 | % | 37 | % | 46 | % | 30 | % | 58 | % | 58 | % | ||||||||||||
Net assets, end of period (000s omitted) | $1,595,320 | $1,493,787 | $906,784 | $374,557 | $105,973 | $4,013 |
1 | Calculated based upon average shares outstanding |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
18 | Wells Fargo Special Mid Cap Value Fund | Financial highlights |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | |||||||||||||||||||||||
ADMINISTRATOR CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $38.23 | $38.12 | $33.67 | $30.45 | $33.14 | $30.71 | ||||||||||||||||||
Net investment income | 0.14 | 1 | 0.18 | 1 | 0.34 | 1 | 0.26 | 0.31 | 1 | 0.15 | ||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.25 | ) | 1.52 | 4.52 | 4.26 | 0.05 | 4.55 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (0.11 | ) | 1.70 | 4.86 | 4.52 | 0.36 | 4.70 | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.17 | ) | (0.27 | ) | (0.22 | ) | (0.17 | ) | (0.14 | ) | (0.09 | ) | ||||||||||||
Net realized gains | (0.58 | ) | (1.32 | ) | (0.19 | ) | (1.13 | ) | (2.91 | ) | (2.18 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total distributions to shareholders | (0.75 | ) | (1.59 | ) | (0.41 | ) | (1.30 | ) | (3.05 | ) | (2.27 | ) | ||||||||||||
Net asset value, end of period | $37.37 | $38.23 | $38.12 | $33.67 | $30.45 | $33.14 | ||||||||||||||||||
Total return2 | (0.09 | )% | 4.58 | % | 14.50 | % | 15.42 | % | 0.84 | % | 15.89 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 1.07 | % | 1.07 | % | 1.09 | % | 1.10 | % | 1.12 | % | 1.12 | % | ||||||||||||
Net expenses | 1.07 | % | 1.07 | % | 1.09 | % | 1.10 | % | 1.11 | % | 1.12 | % | ||||||||||||
Net investment income | 0.77 | % | 0.47 | % | 0.95 | % | 0.88 | % | 0.95 | % | 0.48 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 12 | % | 37 | % | 46 | % | 30 | % | 58 | % | 58 | % | ||||||||||||
Net assets, end of period (000s omitted) | $672,846 | $978,368 | $1,156,796 | $834,134 | $394,188 | $187,968 |
1 | Calculated based upon average shares outstanding |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Special Mid Cap Value Fund | 19 |
(For a share outstanding throughout each period)
Six months ended March 31, 2019 (unaudited) | Year ended September 30 | |||||||||||||||||||||||
INSTITUTIONAL CLASS | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||
Net asset value, beginning of period | $38.61 | $38.47 | $34.00 | $30.70 | $33.38 | $30.91 | ||||||||||||||||||
Net investment income | 0.19 | 0.26 | 0.41 | 0.35 | 1 | 0.41 | 1 | 0.24 | ||||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.27 | ) | 1.56 | 4.58 | 4.29 | 0.04 | 4.57 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (0.08 | ) | 1.82 | 4.99 | 4.64 | 0.45 | 4.81 | |||||||||||||||||
Distributions to shareholders from | ||||||||||||||||||||||||
Net investment income | (0.30 | ) | (0.36 | ) | (0.33 | ) | (0.21 | ) | (0.22 | ) | (0.16 | ) | ||||||||||||
Net realized gains | (0.58 | ) | (1.32 | ) | (0.19 | ) | (1.13 | ) | (2.91 | ) | (2.18 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total distributions to shareholders | (0.88 | ) | (1.68 | ) | (0.52 | ) | (1.34 | ) | (3.13 | ) | (2.34 | ) | ||||||||||||
Net asset value, end of period | $37.65 | $38.61 | $38.47 | $34.00 | $30.70 | $33.38 | ||||||||||||||||||
Total return2 | 0.06 | % | 4.84 | % | 14.76 | % | 15.73 | % | 1.10 | % | 16.17 | % | ||||||||||||
Ratios to average net assets (annualized) | ||||||||||||||||||||||||
Gross expenses | 0.82 | % | 0.82 | % | 0.84 | % | 0.86 | % | 0.85 | % | 0.85 | % | ||||||||||||
Net expenses | 0.82 | % | 0.82 | % | 0.84 | % | 0.86 | % | 0.85 | % | 0.85 | % | ||||||||||||
Net investment income | 1.07 | % | 0.73 | % | 1.24 | % | 1.07 | % | 1.23 | % | 0.81 | % | ||||||||||||
Supplemental data | ||||||||||||||||||||||||
Portfolio turnover rate | 12 | % | 37 | % | 46 | % | 30 | % | 58 | % | 58 | % | ||||||||||||
Net assets, end of period (000s omitted) | $4,614,035 | $4,937,901 | $4,595,274 | $2,325,777 | $411,919 | $174,989 |
1 | Calculated based upon average shares outstanding |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
20 | Wells Fargo Special Mid Cap Value Fund | Notes to financial statements (unaudited) |
1. ORGANIZATION
Wells Fargo Funds Trust (the “Trust”), a Delaware statutory trust organized on March 10, 1999, is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As an investment company, the Trust follows the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946, Financial Services – Investment Companies. These financial statements report on the Wells Fargo Special Mid Cap Value Fund (the “Fund”) which is a diversified series of the Trust.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Fund, are in conformity with U.S. generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Securities valuation
All investments are valued each business day as of the close of regular trading on the New York Stock Exchange (generally 4 p.m. Eastern Time), although the Fund may deviate from this calculation time under unusual or unexpected circumstances.
Equity securities that are listed on a foreign or domestic exchange or market are valued at the official closing price or, if none, the last sales price. If no sale occurs on the principal exchange or market that day, a fair value price will be determined in accordance with the Fund’s Valuation Procedures.
Investments in registered open-end investment companies are valued at net asset value. Interests in non-registered investment companies that are redeemable at net asset value are fair valued normally at net asset value.
Investments which are not valued using any of the methods discussed above are valued at their fair value, as determined in good faith by the Board of Trustees of the Fund. The Board of Trustees has established a Valuation Committee comprised of the Trustees and has delegated to it the authority to take any actions regarding the valuation of portfolio securities that the Valuation Committee deems necessary or appropriate, including determining the fair value of portfolio securities, unless the determination has been delegated to the Wells Fargo Asset Management Pricing Committee at Wells Fargo Funds Management, LLC (“Funds Management”). The Board of Trustees retains the authority to make or ratify any valuation decisions or approve any changes to the Valuation Procedures as it deems appropriate. On a quarterly basis, the Board of Trustees receives reports on any valuation actions taken by the Valuation Committee or the Wells Fargo Asset Management Pricing Committee which may include items for ratification.
Securities lending
The Fund may lend its securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The Fund continues to receive interest or dividends on the securities loaned. The Fund receives collateral in the form of cash or securities with a value at least equal to the value of the securities on loan. The value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. In a securities lending transaction, the net asset value of the Fund will be affected by an increase or decrease in the value of the securities loaned and by an increase or decrease in the value of the instrument in which collateral is invested. The amount of securities lending activity undertaken by the Fund fluctuates from time to time. In the event of default or bankruptcy by the borrower, the Fund may be prevented from recovering the loaned securities or gaining access to the collateral or may experience delays or costs in doing so. In addition, the investment of any cash collateral received may lose all or part of its value. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.
The Fund lends its securities through an unaffiliated securities lending agent. Cash collateral received in connection with its securities lending transactions is invested in Securities Lending Cash Investments, LLC (the “Securities Lending Fund”). The Securities Lending Fund is exempt from registration under Section 3(c)(7) of the 1940 Act and is managed by Funds Management and is subadvised by Wells Capital Management Incorporated (“WellsCap”), an affiliate of Funds Management and an indirect wholly owned subsidiary of Wells Fargo & Company (“Wells Fargo”). Funds Management receives an advisory fee starting at 0.05% and declining to 0.01% as the average daily net assets of the Securities Lending Fund increase. All of the fees received by Funds Management are paid to WellsCap for its services as subadviser. The Securities Lending Fund seeks to provide a positive return compared to the daily Fed Funds Open Rate by investing in high-quality, U.S. dollar-denominated short-term money market instruments. Securities Lending Fund investments are valued at the evaluated bid price provided
Table of Contents
Notes to financial statements (unaudited) | Wells Fargo Special Mid Cap Value Fund | 21 |
by an independent pricing service. Income earned from investment in the Securities Lending Fund (net of fees and rebates), if any, is included in income from affiliated securities on the Statement of Operations.
Security transactions and income recognition
Securities transactions are recorded on a trade date basis. Realized gains or losses are recorded on the basis of identified cost.
Dividend income is recognized on the ex-dividend date.
Distributions to shareholders
Distributions to shareholders from net investment income and any net realized gains are recorded on the ex-dividend date and paid at least annually. Such distributions are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles. Dividend sources are estimated at the time of declaration. The tax character of distributions is determined as of the Fund’s fiscal year end. Therefore, a portion of the Fund’s distributions made prior to the Fund’s fiscal year end may be categorized as a tax return of capital at year end.
Federal and other taxes
The Fund intends to continue to qualify as a regulated investment company by distributing substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required.
The Fund’s income and federal excise tax returns and all financial records supporting those returns for the prior three fiscal years are subject to examination by the federal and Delaware revenue authorities. Management has analyzed the Fund’s tax positions taken on federal, state, and foreign tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability.
As of March 31, 2019, the aggregate cost of all investments for federal income tax purposes was $6,895,208,242 and the unrealized gains (losses) consisted of:
Gross unrealized gains | $ | 1,560,584,339 | ||
Gross unrealized losses | (472,815,265 | ) | ||
Net unrealized gains | $ | 1,087,769,074 |
Class allocations
The separate classes of shares offered by the Fund differ principally in applicable sales charges, distribution, shareholder servicing, and administration fees. Class specific expenses are charged directly to that share class. Investment income, common expenses, and realized and unrealized gains (losses) on investments are allocated daily to each class of shares based on the relative proportion of net assets of each class.
3. FAIR VALUATION MEASUREMENTS
Fair value measurements of investments are determined within a framework that has established a fair value hierarchy based upon the various data inputs utilized in determining the value of the Fund’s investments. The three-level hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Fund’s investments are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The inputs are summarized into three broad levels as follows:
∎ | Level 1 – quoted prices in active markets for identical securities |
∎ | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
∎ | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
The inputs or methodologies used for valuing investments in securities are not necessarily an indication of the risk associated with investing in those securities.
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22 | Wells Fargo Special Mid Cap Value Fund | Notes to financial statements (unaudited) |
The following is a summary of the inputs used in valuing the Fund’s assets and liabilities as of March 31, 2019:
Quoted prices (Level 1) | Other significant observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total | |||||||||||||
Assets | ||||||||||||||||
Investments in: | ||||||||||||||||
Common stocks | ||||||||||||||||
Consumer discretionary | $ | 528,993,211 | $ | 0 | $ | 0 | $ | 528,993,211 | ||||||||
Consumer staples | 286,549,668 | 0 | 0 | 286,549,668 | ||||||||||||
Energy | 497,507,345 | 0 | 0 | 497,507,345 | ||||||||||||
Financials | 1,449,027,033 | 0 | 0 | 1,449,027,033 | ||||||||||||
Health care | 713,815,808 | 0 | 0 | 713,815,808 | ||||||||||||
Industrials | 1,390,154,788 | 0 | 0 | 1,390,154,788 | ||||||||||||
Information technology | 798,871,942 | 0 | 0 | 798,871,942 | ||||||||||||
Materials | 713,167,983 | 0 | 0 | 713,167,983 | ||||||||||||
Real estate | 565,032,955 | 0 | 0 | 565,032,955 | ||||||||||||
Utilities | 763,780,460 | 0 | 0 | 763,780,460 | ||||||||||||
Short-term investments | ||||||||||||||||
Investment companies | 276,076,123 | 0 | 0 | 276,076,123 | ||||||||||||
Total assets | $ | 7,982,977,316 | $ | 0 | $ | 0 | $ | 7,982,977,316 |
Additional sector, industry or geographic detail is included in the Portfolio of Investments.
At March 31, 2019, the Fund did not have any transfers into/out of Level 3.
4. TRANSACTIONS WITH AFFILIATES
Management fee
Funds Management, an indirect wholly owned subsidiary of Wells Fargo, is the manager of the Fund and provides advisory and fund-level administrative services under an investment management agreement. Under the investment management agreement, Funds Management is responsible for, among other services, implementing the investment objectives and strategies of the Fund, supervising the subadviser and providing fund-level administrative services in connection with the Fund’s operations. As compensation for its services under the investment management agreement, Funds Management is entitled to receive a management fee at the following annual rate based on the Fund’s average daily net assets:
Average daily net assets | Management fee | |||
First $500 million | 0.750 | % | ||
Next $500 million | 0.725 | |||
Next $1 billion | 0.700 | |||
Next $2 billion | 0.675 | |||
Next $1 billion | 0.650 | |||
Next $5 billion | 0.640 | |||
Next $2 billion | 0.630 | |||
Next $4 billion | 0.620 | |||
Over $16 billion | 0.610 |
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Notes to financial statements (unaudited) | Wells Fargo Special Mid Cap Value Fund | 23 |
Prior to January 31, 2019, the management fee rate was as follows:
Average daily net assets | Management fee | |||
First $500 million | 0.750 | % | ||
Next $500 million | 0.725 | |||
Next $1 billion | 0.700 | |||
Next $2 billion | 0.675 | |||
Next $1 billion | 0.650 | |||
Next $5 billion | 0.640 | |||
Over $10 billion | 0.630 |
For the six month ended March 31, 2019, the management fee was equivalent to an annual rate of 0.67% of the Fund’s average daily net assets.
Funds Management has retained the services of a subadviser to provide daily portfolio management to the Fund. The fee for subadvisory services is borne by Funds Management. WellsCap is the subadviser to the Fund and is entitled to receive a fee from Funds Management at an annual rate starting at 0.45% and declining to 0.30% as the average daily net assets of the Fund increase.
Administration fees
Under a class-level administration agreement, Funds Management provides class-level administrative services to the Fund, which includes paying fees and expenses for services provided by the transfer agent, sub-transfer agents, omnibus account servicers and record-keepers. As compensation for its services under the class-level administration agreement, Funds Management receives an annual fee which is calculated based on the average daily net assets of each class as follows:
Class-level administration fee | ||||
Class A, Class C, Class R | 0.21 | % | ||
Class R6 | 0.03 | |||
Administrator Class, Institutional Class | 0.13 |
Funds Management has contractually waived and/or reimbursed management and administration fees to the extent necessary to maintain certain net operating expense ratios for the Fund. When each class of the Fund has exceeded its expense cap, Funds Management has waived fees and/or reimbursed expenses from fund level expenses on a proportionate basis and then from class specific expenses. When only certain classes exceed their expense caps, waivers and/or reimbursements are applied against class specific expenses before fund level expenses. Funds Management has committed through January 31, 2020 to waive fees and/or reimburse expenses to the extent necessary to cap the Fund’s expenses at 1.16% for Class A shares, 1.91% for Class C shares, 1.41% for Class R shares, 0.73% for Class R6 shares, 1.08% for Administrator Class shares, and 0.83% for Institutional Class shares. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. Prior to February 1, 2019, the Fund’s expenses were capped at 1.19% for Class A shares, 1.94% for Class C shares, 1.44% for Class R shares, 0.76% for Class R6 shares, 1.11% for Administrator Class shares, and 0.85% for Institutional Class shares.
Distribution fees
The Trust has adopted a distribution plan for Class C and Class R shares of the Fund pursuant to Rule 12b-1 under the 1940 Act. Distribution fees are charged to Class C and Class R shares and paid to Wells Fargo Funds Distributor, LLC (“Funds Distributor”), the principal underwriter, at an annual rate of 0.75% of the average daily net assets of Class C shares and 0.25% of the average daily net assets of Class R shares.
In addition, Funds Distributor is entitled to receive the front-end sales charge from the purchase of Class A shares and a contingent deferred sales charge on the redemption of certain Class A shares. Funds Distributor is also entitled to receive the contingent deferred sales charges from redemptions of Class C shares. For the six months ended March 31, 2019, Funds Distributor received $22,731 from the sale of Class A shares and $157 in contingent deferred sales charges from redemptions of Class C shares. No contingent deferred sales charges were incurred by Class A shares for the six months ended March 31, 2019.
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24 | Wells Fargo Special Mid Cap Value Fund | Notes to financial statements (unaudited) |
Shareholder servicing fees
The Trust has entered into contracts with one or more shareholder servicing agents, whereby Class A, Class C, Class R, and Administrator Class of the Fund are charged a fee at an annual rate of 0.25% of the average daily net assets of each respective class. A portion of these total shareholder servicing fees were paid to affiliates of Wells Fargo.
Interfund transactions
The Fund may purchase or sell portfolio investment securities to certain other Wells Fargo affiliates pursuant to Rule 17a-7 under the 1940 Act and under procedures adopted by the Board of Trustees. The procedures have been designed to ensure that these interfund transactions, which do not incur broker commissions, are effected at current market prices.
5. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, excluding U.S. government obligations (if any) and short-term securities, for the six months ended March 31, 2019 were $900,675,500 and $1,526,869,843, respectively.
6. BANK BORROWINGS
The Trust (excluding the money market funds), Wells Fargo Master Trust and Wells Fargo Variable Trust are parties to a $280,000,000 revolving credit agreement whereby the Fund is permitted to use bank borrowings for temporary or emergency purposes, such as to fund shareholder redemption requests. Interest under the credit agreement is charged to the Fund based on a borrowing rate equal to the higher of the Federal Funds rate in effect on that day plus 1.25% or the overnight LIBOR rate in effect on that day plus 1.25%. In addition, an annual commitment fee equal to 0.25% of the unused balance is allocated to each participating fund.
For the six months ended March 31, 2019, there were no borrowings by the Fund under the agreement.
7. INDEMNIFICATION
Under the Trust’s organizational documents, the officers and Trustees have been granted certain indemnification rights against certain liabilities that may arise out of performance of their duties to the Trust. Additionally, in the normal course of business, the Trust may enter into contracts with service providers that contain a variety of indemnification clauses. The Trust’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated.
8. NEW ACCOUNTING PRONOUNCEMENT
In August 2018, FASB issued Accounting Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820)Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 updates the disclosure requirements for fair value measurements by modifying or removing certain disclosures and adding certain new disclosures. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management has adopted the removal and modification of disclosures early, as permitted, and will adopt the additional new disclosures at the effective date.
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Other information (unaudited) | Wells Fargo Special Mid Cap Value Fund | 25 |
PROXY VOTING INFORMATION
A description of the policies and procedures used to determine how to vote proxies relating to portfolio securities is available, upon request, by calling1-800-222-8222, visiting our website at wfam.com, or visiting the SEC website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent12-month period ended June 30 is available on the Fund’s website atwfam.comor by visiting the SEC website at sec.gov.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for the Fund are publicly available monthly on the Fund’s website (wfam.com), on a one-month delayed basis. In addition, top ten holdings information (excluding derivative positions) for the Fund is publicly available on the Fund’s website on a monthly, seven-day or more delayed basis. The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which is available by visiting the SEC website at sec.gov. In addition, the Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330.
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26 | Wells Fargo Special Mid Cap Value Fund | Other information (unaudited) |
BOARD OF TRUSTEES AND OFFICERS
Each of the Trustees and Officers1 listed in the table below acts in identical capacities for each fund in the Wells Fargo family of funds, which consists of 151 mutual funds comprising the Wells Fargo Funds Trust, Wells Fargo Variable Trust, Wells Fargo Master Trust and four closed-end funds (collectively the “Fund Complex”). This table should be read in conjunction with the Prospectus and the Statement of Additional Information2. The mailing address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, however, each Trustee serves such term until reaching the mandatory retirement age established by the Trustees.
Independent Trustees
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company directorships | |||
William R. Ebsworth (Born 1957) | Trustee, since 2015 | Retired. From 1984 to 2013, equities analyst, portfolio manager, research director and chief investment officer at Fidelity Management and Research Company in Boston, Tokyo, and Hong Kong, and retired in 2013 as Chief Investment Officer of Fidelity Strategic Advisers, Inc. where he led a team of investment professionals managing client assets. Prior thereto, Board member of Hong Kong Securities Clearing Co., Hong Kong Options Clearing Corp., the Thailand International Fund, Ltd., Fidelity Investments Life Insurance Company, and Empire Fidelity Investments Life Insurance Company. Audit Committee Chair and Investment Committee Chair of the Vincent Memorial Hospital Endowment (non-profit organization). Mr. Ebsworth is a CFA® charterholder. | N/A | |||
Jane A. Freeman (Born 1953) | Trustee, since 2015; Chair Liaison, since 2018 | Retired. From 2012 to 2014 and 1999 to 2008, Chief Financial Officer of Scientific Learning Corporation. From 2008 to 2012, Ms. Freeman provided consulting services related to strategic business projects. Prior to 1999, Portfolio Manager at Rockefeller & Co. and Scudder, Stevens & Clark. Board member of the Harding Loevner Funds from 1996 to 2014, serving as both Lead Independent Director and chair of the Audit Committee. Board member of the Russell Exchange Traded Funds Trust from 2011 to 2012 and the chair of the Audit Committee. Ms. Freeman is a Board Member of The Ruth Bancroft Garden (non-profit organization). She is also an inactive Chartered Financial Analyst. | N/A | |||
Isaiah Harris, Jr.3 (Born 1952) | Trustee, since 2009; Audit Committee Chairman, since 2019 | Retired. Chairman of the Board of CIGNA Corporation since 2009, and Director since 2005. From 2003 to 2011, Director of Deluxe Corporation. Prior thereto, President and CEO of BellSouth Advertising and Publishing Corp. from 2005 to 2007, President and CEO of BellSouth Enterprises from 2004 to 2005 and President of BellSouth Consumer Services from 2000 to 2003. Emeritus member of the Iowa State University Foundation Board of Governors. Emeritus Member of the Advisory Board of Iowa State University School of Business. Advisory Board Member, Palm Harbor Academy (private school). Advisory Board Member, Child Evangelism Fellowship (non-profit). Mr. Harris is a certified public accountant (inactive status). | CIGNA Corporation | |||
Judith M. Johnson (Born 1949) | Trustee, since 2008; Audit Committee Chairman, from 2009 to 2018 | Retired. Prior thereto, Chief Executive Officer and Chief Investment Officer of Minneapolis Employees Retirement Fund from 1996 to 2008. Ms. Johnson is an attorney, certified public accountant and a certified managerial accountant. | N/A |
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Other information (unaudited) | Wells Fargo Special Mid Cap Value Fund | 27 |
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company directorships | |||
David F. Larcker (Born 1950) | Trustee, since 2009 | James Irvin Miller Professor of Accounting at the Graduate School of Business, Stanford University, Director of the Corporate Governance Research Initiative and Senior Faculty of The Rock Center for Corporate Governance since 2006. From 2005 to 2008, Professor of Accounting at the Graduate School of Business, Stanford University. Prior thereto, Ernst & Young Professor of Accounting at The Wharton School, University of Pennsylvania from 1985 to 2005. | N/A | |||
Olivia S. Mitchell (Born 1953) | Trustee, since 2006; Nominating and Governance Committee Chairman, since 2018 | International Foundation of Employee Benefit Plans Professor, Wharton School of the University of Pennsylvania since 1993. Director of Wharton’s Pension Research Council and Boettner Center on Pensions & Retirement Research, and Research Associate at the National Bureau of Economic Research. Previously, Cornell University Professor from 1978 to 1993. | N/A | |||
Timothy J. Penny (Born 1951) | Trustee, since 1996; Chairman, since 2018 | President and Chief Executive Officer of Southern Minnesota Initiative Foundation, a non-profit organization, since 2007. Member of the Board of Trustees of NorthStar Education Finance, Inc., a non-profit organization, since 2007. | N/A | |||
James G. Polisson (Born 1959) | Trustee, since 2018 | Retired. Chief Marketing Officer, Source (ETF) UK Services, Ltd, from 2015 to 2017. From 2012 to 2015, Principal of The Polisson Group, LLC, a management consulting, corporate advisory and principal investing company. Chief Executive Officer and Managing Director at Russell Investments, Global Exchange Traded Funds from 2010 to 2012. Managing Director of Barclays Global Investors from 1998 to 2010 and Global Chief Marketing Officer for iShares and Barclays Global Investors from 2000 to 2010. Trustee of the San Francisco Mechanics’ Institute, a non-profit organization, from 2013 to 2015. Board member of the Russell Exchange Traded Fund Trust from 2011 to 2012. Director of Barclays Global Investors Holdings Deutschland GmbH from 2006 to 2009. Mr. Polisson is an attorney and has a retired status with the Massachusetts and District of Columbia Bar Associations. | N/A | |||
Pamela Wheelock (Born 1959) | Trustee, since 2018 | Board member of the Destination Medical Center Economic Development Agency, Rochester, Minnesota since 2019. Chief Operating Officer, Twin Cities Habitat for Humanity from 2017 to 2019. Vice President of University Services, University of Minnesota from 2012 to 2016. Prior thereto, on the Board of Directors, Governance Committee and Finance Committee for the Minnesota Philanthropy Partners (Saint Paul Foundation) from 2012 to 2018, Interim Chief Executive Officer of Blue Cross Blue Shield of Minnesota from 2011 to 2012, Chairman of the Board from 2009 to 2012 and Board Director from 2003 to 2015. Vice President, Leadership and Community Engagement, Bush Foundation, Saint Paul, Minnesota (a private foundation) from 2009 to 2011. Executive Vice President and Chief Financial Officer, Minnesota Sports and Entertainment from 2004 to 2009 and Senior Vice President from 2002 to 2004. Executive Vice President of the Minnesota Wild Foundation from 2004 to 2008. Commissioner of Finance, State of Minnesota, from 1999 to 2002. Currently Board Chair of the Minnesota Wild Foundation since 2010. | N/A |
* | Length of service dates reflect the Trustee’s commencement of service with the Trust’s predecessor entities, where applicable. |
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28 | Wells Fargo Special Mid Cap Value Fund | Other information (unaudited) |
Officers
Name and year of birth | Position held and length of service | Principal occupations during past five years or longer | ||||
Andrew Owen (Born 1960) | President, since 2017 | Executive Vice President of Wells Fargo & Company and Head of Affiliated Managers, Wells Fargo Asset Management, since 2014. In addition, Mr. Owen is currently President, Chief Executive Officer and Director of Wells Fargo Funds Management, LLC since 2017. Prior thereto, Executive Vice President responsible for marketing, investments and product development for Wells Fargo Funds Management, LLC, from 2009 to 2014. | ||||
Nancy Wiser1 (Born 1967) | Treasurer, since 2012 | Executive Vice President of Wells Fargo Funds Management, LLC since 2011. Chief Operating Officer and Chief Compliance Officer at LightBox Capital Management LLC, from 2008 to 2011. | ||||
Alexander Kymn (Born 1973) | Secretary and Chief Legal Officer, since 2018 | Senior Company Counsel of Wells Fargo Bank, N.A. since 2018 (previously Senior Counsel from 2007 to 2018). Vice President of Wells Fargo Funds Management, LLC from 2008 to 2014. | ||||
Michael H. Whitaker (Born 1967) | Chief Compliance Officer, since 2016 | Senior Vice President and Chief Compliance Officer since 2016. Senior Vice President and Chief Compliance Officer for Fidelity Investments from 2007 to 2016. | ||||
David Berardi (Born 1975) | Assistant Treasurer, since 2009 | Vice President of Wells Fargo Funds Management, LLC since 2009. Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010. Manager of Fund Reporting and Control for Evergreen Investment Management Company, LLC from 2004 to 2010. | ||||
Jeremy DePalma1 (Born 1974) | Assistant Treasurer, since 2009 | Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010 and head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010. |
1 | Nancy Wiser acts as Treasurer of 65 funds in the Fund Complex. Jeremy DePalma acts as Treasurer of 86 funds and Assistant Treasurer of 65 funds in the Fund Complex. |
2 | The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request, by calling1-800-222-8222 or by visiting the website atwfam.com. |
3 | Mr. Harris became Chairman of the Audit Committee effective January 1, 2019. |
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Appendix A (unaudited) | Wells Fargo Special Mid Cap Value Fund | 29 |
SALES CHARGE REDUCTIONS AND WAIVERS FOR CERTAIN INTERMEDIARIES
Raymond James & Associates, Inc., Raymond James Financial Services & Raymond James affiliates (“Raymond James”)
Effective on or about March 1, 2019, shareholders purchasing Fund shares through a Raymond James platform or account will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in the Fund’s Prospectus or SAI.
Front-end Sales Load Waivers on Class A shares Available at Raymond James
• | Shares purchased in an investment advisory program. |
• | Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family). |
• | Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James. |
• | Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement). |
• | A shareholder in the fund’s Class C shares will have their shares automatically exchanged at net asset value to Class A shares (or the appropriate share class) of the fund if the shares are no longer subject to a CDSC and the exchange is in line with the policies and procedures of Raymond James. |
CDSC Waivers on Class A and C Shares Available at Raymond James
• | Death or disability of the shareholder. |
• | Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus. |
• | Return of excess contributions from an IRA Account. |
• | Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70½ as described in the Fund’s prospectus. |
• | Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James. |
• | Shares acquired through a right of reinstatement. |
Front-end Load Discounts Available at Raymond James: Breakpoints, and/or Rights of Accumulation
• | Breakpoints as described in the Fund’s Prospectus. |
• | Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets. |
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For more information
More information about Wells Fargo Funds is available free upon request. To obtain literature, please write, visit the Fund’s website, or call:
Wells Fargo Funds
P.O. Box 219967
Kansas City, MO 64121-9967
Website: wfam.com
Individual investors: 1-800-222-8222
Retail investment professionals: 1-888-877-9275
Institutional investment professionals:
1-866-765-0778
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. Before investing, please consider the investment objectives, risks, charges, and expenses of the investment. For a current prospectus and, if available, a summary prospectus, containing this information, call1-800-222-8222 or visit the Fund’s website atwfam.com. Read the prospectus carefully before you invest or send money.
Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management firms owned by Wells Fargo & Company. These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by Wells Fargo Funds Distributor, LLC (a broker-dealer and Member FINRA).
This material is for general informational and educational purposes only and is NOT intended to provide investment advice or a recommendation of any kind—including a recommendation for any specific investment, strategy, or plan.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
© 2019 Wells Fargo Funds Management, LLC. All rights reserved.
![]() | 401613 05-19 SA234/SAR234 03-19 |
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Semi-Annual Report
March 31, 2019
Wells Fargo
Global Investment Grade Credit Fund
Beginning on January 1, 2021, as permitted by new regulations adopted by the Securities and Exchange Commission, paper copies of the Wells Fargo Funds’ annual and semi-annual shareholder reports issued after this date will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website, and you will be notified by mail each time a report is posted and provided with a website address to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-222-8222 or by enrolling at wellsfargo.com/advantagedelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports; if you invest directly with the Fund, you can call 1-800-222-8222. Your election to receive reports in paper will apply to all Wells Fargo Funds held in your account with your financial intermediary or, if you are a direct investor, to all Wells Fargo Funds that you hold.
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Reduce clutter. Save trees.
Sign up for electronic delivery of prospectuses and shareholder reports atwellsfargo.com/advantagedelivery
2 | ||||
4 | ||||
5 | ||||
Financial statements | ||||
14 | ||||
15 | ||||
16 | ||||
17 | ||||
19 | ||||
24 |
The views expressed and any forward-looking statements are as of March 31, 2019, unless otherwise noted, and are those of the Fund managers and/or Wells Fargo Asset Management. Discussions of individual securities, or the markets generally, or any Wells Fargo Fund are not intended as individual recommendations. Future events or results may vary significantly from those expressed in any forward-looking statements. The views expressed are subject to change at any time in response to changing circumstances in the market. Wells Fargo and the Fund disclaim any obligation to publicly update or revise any views expressed or forward-looking statements.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
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2 | Wells Fargo Global Investment Grade Credit Fund | Performance highlights (unaudited) |
The Fund is currently closed to new investors.+
Investment objective
The Fund seeks total return, consisting of income and capital appreciation.
Manager
Wells Fargo Funds Management, LLC
Subadviser
Wells Capital Management Incorporated
Wells Fargo Asset Management (International) Limited
Portfolio managers
Henrietta Paquement, CFA®‡
Scott M. Smith, CFA®‡
Alex Temple
Jonathan Terry, CFA®‡
Average annual total returns (%) as of March 31, 2019
Expense ratios1 (%) | ||||||||||||||
Inception date | Since inception | Gross | Net2 | |||||||||||
Class R6 (WGCRX) | 2-28-2019 | 1.90 | 0.63 | 0.45 | ||||||||||
Institutional Class (WGCIX) | 2-28-2019 | 1.90 | 0.68 | 0.50 | ||||||||||
Bloomberg Barclays Global Aggregate Credit Index Hedged (USD)3 | – | 2.10 | * | – | – |
* | Return is based on Fund’s inception date. |
Figures quoted represent past performance, which is no guarantee of future results, and do not reflect taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted, which assumes the reinvestment of dividends and capital gains. Current month-end performance is available on the Fund’s website,wfam.com.
Index returns do not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses, or any taxes. It is not possible to invest directly in an index.
Class R6 and Institutional Class shares are sold without a front-end sales charge or contingent deferred sales charge.
Bond values fluctuate in response to the financial condition of individual issuers, general market and economic conditions, and changes in interest rates. Changes in market conditions and government policies may lead to periods of heightened volatility in the bond market and reduced liquidity for certain bonds held by the fund. In general, when interest rates rise, bond values fall and investors may lose principal value. Interest rate changes and their impact on the fund and its share price can be sudden and unpredictable. Foreign investments are especially volatile and can rise or fall dramatically due to differences in the political and economic conditions of the host country. These risks are generally intensified in emerging markets. The use of derivatives may reduce returns and/or increase volatility. Securities issued by U.S. government agencies or government-sponsored entities may not be guaranteed by the U.S. Treasury. Certain investment strategies tend to increase the total risk of an investment (relative to the broader market). The Fund is exposed to municipal securities risk, high-yield securities risk, and mortgage- and asset-backed securities risk. Consult the Fund’s prospectus for additional information on these and other risks.
Please see footnotes on page 3.
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Performance highlights (unaudited) | Wells Fargo Global Investment Grade Credit Fund | 3 |
Ten largest holdings (%) as of March 31, 20194 | ||||
Morgan Stanley, 3.70%, 10-23-2024 | 1.84 | |||
Comcast Corporation, 3.38%, 8-15-2025 | 1.66 | |||
Charter Communications Operating LLC, 4.91%,7-23-2025 | 1.60 | |||
Goldman Sachs Group Incorporated, 3.63%, | �� | 1.60 | ||
AT&T Incorporated, 4.25%, 3-1-2027 | 1.48 | |||
Fox Corporation, 4.71%, 1-25-2029 | 1.41 | |||
JPMorgan Chase & Company, 2.30%, 8-15-2021 | 1.40 | |||
Citigroup Incorporated, 3.30%, 4-27-2025 | 1.35 | |||
Macquarie Group Limited, 6.00%, 1-14-2020 | 1.27 | |||
Bank of America Corporation 4.13%, 1-22-2024 | 1.27 |
Portfolio composition as of March 31, 20195 |
|
+ | Please see the Fund’s prospectus for more information. |
‡ | CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute. |
1 | Reflects the expense ratios as stated in the most recent prospectuses. The expense ratios shown are subject to change and may differ from the annualized expense ratios shown in the financial highlights of this report. |
2 | The manager has contractually committed through March 31, 2020, to waive fees and/or reimburse expenses to the extent necessary to cap the expenses of each class after fee waivers at the amounts shown. Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the expense cap. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. Without this cap, the Fund’s returns would have been lower. The expense ratio paid by an investor is the net expense ratio (the total annual fund operating expenses after fee waivers) as stated in the prospectuses. |
3 | Bloomberg Barclays Global Aggregate Credit Index Hedged (USD) measures the credit sector of the global investment grade fixed-rate bond market, including corporate, government and agency securities, hedged in USD. You cannot invest directly in an index. |
4 | The ten largest holdings, excluding cash, cash equivalents and any money market funds, are calculated based on the value of the investments divided by total net assets of the Fund. Holdings are subject to change and may have changed since the date specified. |
5 | Amounts are calculated based on the total long-term investments of the Fund. These amounts are subject to change and may have changed since the date specified. |
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4 | Wells Fargo Global Investment Grade Credit Fund | Fund expenses (unaudited) |
As a shareholder of the Fund, you incur ongoing costs, including management fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period from October 1, 2018 to March 31, 2019.
Actual expenses
The “Actual” line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the “Actual” line under the heading entitled “Expenses paid during period” for your applicable class of shares to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The “Hypothetical” line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the “Hypothetical” line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds.
Beginning account value 10-1-2018 | Ending account value 3-31-2019 | Expenses paid during the period¹ | Annualized net expense ratio | |||||||||||||
Class R6 | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,019.00 | $ | 0.39 | 0.45 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,003.86 | $ | 0.38 | 0.45 | % | ||||||||
Institutional Class | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,019.00 | $ | 0.43 | 0.50 | % | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,003.82 | $ | 0.43 | 0.50 | % |
1 | Expenses paid is equal to the annualized net expense ratio of each class multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year (to reflect the one-half-year period). |
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Global Investment Grade Credit Fund | 5 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Asset-Backed Securities: 1.79% | ||||||||||||||||
American Airlines Series 2014-1 Class A Pass-Through Trust | 3.70 | % | 4-1-2028 | $ | 311,098 | $ | 311,752 | |||||||||
Delta Air Lines Series 2019-1 Class AA Pass-Through Trust | 3.20 | 10-25-2025 | 500,000 | 507,750 | ||||||||||||
Total Asset-Backed Securities (Cost $809,641) | 819,502 | |||||||||||||||
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| |||||||||||||||
Corporate Bonds and Notes: 51.16% | ||||||||||||||||
Communication Services: 8.81% | ||||||||||||||||
Diversified Telecommunication Services: 2.44% | ||||||||||||||||
AT&T Incorporated | 4.25 | 3-1-2027 | 660,000 | 679,333 | ||||||||||||
Verizon Communications Incorporated | 2.88 | 1-15-2038 | 100,000 | 123,466 | ||||||||||||
Verizon Communications Incorporated | 4.13 | 8-15-2046 | 325,000 | 315,519 | ||||||||||||
1,118,318 | ||||||||||||||||
|
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Media: 6.37% | ||||||||||||||||
CBS Corporation | 3.50 | 1-15-2025 | 205,000 | 204,226 | ||||||||||||
Charter Communications Operating LLC | 4.91 | 7-23-2025 | 695,000 | 732,880 | ||||||||||||
Comcast Corporation | 3.38 | 8-15-2025 | 750,000 | 760,310 | ||||||||||||
Cox Communications Incorporated 144A | 4.60 | 8-15-2047 | 430,000 | 411,017 | ||||||||||||
Fox Corporation 144A | 4.71 | 1-25-2029 | 605,000 | 647,736 | ||||||||||||
Interpublic Group of Companies | 5.40 | 10-1-2048 | 165,000 | 167,767 | ||||||||||||
2,923,936 | ||||||||||||||||
|
| |||||||||||||||
Consumer Discretionary: 0.99% | ||||||||||||||||
Hotels, Restaurants & Leisure: 0.85% | ||||||||||||||||
Darden Restaurants Incorporated | 4.55 | 2-15-2048 | 405,000 | 389,390 | ||||||||||||
|
| |||||||||||||||
Internet & Direct Marketing Retail: 0.14% | ||||||||||||||||
Amazon.com Incorporated | 4.25 | 8-22-2057 | 60,000 | 64,675 | ||||||||||||
|
| |||||||||||||||
Consumer Staples: 2.95% | ||||||||||||||||
Beverages: 1.21% | ||||||||||||||||
Anheuser-Busch InBev Finance Incorporated | 3.65 | 2-1-2026 | 550,000 | 555,434 | ||||||||||||
|
| |||||||||||||||
Food & Staples Retailing: 0.71% | ||||||||||||||||
Walmart Incorporated | 3.70 | 6-26-2028 | 310,000 | 326,382 | ||||||||||||
|
| |||||||||||||||
Food Products: 0.53% | ||||||||||||||||
Mars Incorporated 144A | 3.95 | 4-1-2049 | 240,000 | 243,393 | ||||||||||||
|
| |||||||||||||||
Tobacco: 0.50% | ||||||||||||||||
BAT Capital Corporation | 4.54 | 8-15-2047 | 260,000 | 228,051 | ||||||||||||
|
| |||||||||||||||
Energy: 5.68% | ||||||||||||||||
Energy Equipment & Services: 0.80% | ||||||||||||||||
Baker Hughes LLC | 3.34 | 12-15-2027 | 375,000 | 364,936 | ||||||||||||
|
| |||||||||||||||
Oil, Gas & Consumable Fuels: 4.88% | ||||||||||||||||
BP Capital Markets America Incorporated | 2.75 | 5-10-2023 | 195,000 | 194,321 | ||||||||||||
Energy Transfer Operating Partners LP | 6.25 | 4-15-2049 | 385,000 | 431,506 | ||||||||||||
Kinder Morgan Energy Partners LP | 5.40 | 9-1-2044 | 250,000 | 265,202 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
6 | Wells Fargo Global Investment Grade Credit Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Oil, Gas & Consumable Fuels(continued) | ||||||||||||||||
Marathon Petroleum Corporation 144A | 3.80 | % | 4-1-2028 | $ | 195,000 | $ | 193,242 | |||||||||
Midwest Connector Capital Company 144A | 3.90 | 4-1-2024 | 400,000 | 406,661 | ||||||||||||
MPLX LP | 4.00 | 3-15-2028 | 315,000 | 313,182 | ||||||||||||
Sabine Pass Liquefaction LLC | 5.75 | 5-15-2024 | 395,000 | 435,521 | ||||||||||||
2,239,635 | ||||||||||||||||
|
| |||||||||||||||
Financials: 17.19% | ||||||||||||||||
Banks: 6.90% | ||||||||||||||||
Bank of America Corporation | 2.63 | 10-19-2020 | 195,000 | 194,539 | ||||||||||||
Bank of America Corporation | 4.13 | 1-22-2024 | 555,000 | 581,605 | ||||||||||||
Citigroup Incorporated (3 Month EURIBOR +1.07%) ± | 1.50 | 7-24-2026 | 100,000 | 115,477 | ||||||||||||
Citigroup Incorporated | 3.30 | 4-27-2025 | 620,000 | 619,548 | ||||||||||||
Huntington Bancshares Incorporated | 3.15 | 3-14-2021 | 290,000 | 292,455 | ||||||||||||
JPMorgan Chase & Company | 0.63 | 1-25-2024 | 100,000 | 113,185 | ||||||||||||
JPMorgan Chase & Company | 2.30 | 8-15-2021 | 650,000 | 642,582 | ||||||||||||
JPMorgan Chase & Company (3 Month LIBOR +0.70%) ± | 3.21 | 4-1-2023 | 200,000 | 201,290 | ||||||||||||
JPMorgan Chase & Company (3 Month LIBOR +1.34%) ± | 3.78 | 2-1-2028 | 200,000 | 203,911 | ||||||||||||
Santander Holdings USA Incorporated | 4.40 | 7-13-2027 | 200,000 | 198,393 | ||||||||||||
3,162,985 | ||||||||||||||||
|
| |||||||||||||||
Capital Markets: 7.06% | ||||||||||||||||
Five Corners Funding Trust 144A | 4.42 | 11-15-2023 | 110,000 | 116,183 | ||||||||||||
Goldman Sachs Group Incorporated | 3.63 | 1-22-2023 | 720,000 | 732,700 | ||||||||||||
Goldman Sachs Group Incorporated | 4.25 | 1-29-2026 | 100,000 | 143,602 | ||||||||||||
Morgan Stanley | 3.13 | 7-27-2026 | 565,000 | 550,745 | ||||||||||||
Morgan Stanley | 3.70 | 10-23-2024 | 830,000 | 844,945 | ||||||||||||
Nuveen LLC 144A | 4.00 | 11-1-2028 | 275,000 | 293,642 | ||||||||||||
Raymond James Financial Services Incorporated | 4.95 | 7-15-2046 | 525,000 | 556,266 | ||||||||||||
3,238,083 | ||||||||||||||||
|
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Consumer Finance: 0.62% | ||||||||||||||||
American Express Credit Corporation | 3.30 | 5-3-2027 | 280,000 | 283,860 | ||||||||||||
|
| |||||||||||||||
Diversified Financial Services: 1.13% | ||||||||||||||||
Intercontinental Exchange Incorporated | 3.75 | 12-1-2025 | 500,000 | 519,584 | ||||||||||||
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Insurance: 1.48% | ||||||||||||||||
American International Group Incorporated | 4.75 | 4-1-2048 | 445,000 | 443,421 | ||||||||||||
Brighthouse Financial Incorporated | 4.70 | 6-22-2047 | 295,000 | 234,930 | ||||||||||||
678,351 | ||||||||||||||||
|
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Health Care: 4.16% | ||||||||||||||||
Biotechnology: 0.48% | ||||||||||||||||
Celgene Corporation | 4.55 | 2-20-2048 | 215,000 | 218,925 | ||||||||||||
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Health Care Equipment & Supplies: 0.25% | ||||||||||||||||
Baxter International Incorporated | 1.30 | 5-30-2025 | 100,000 | 116,433 | ||||||||||||
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The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Global Investment Grade Credit Fund | 7 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Health Care Providers & Services: 2.75% | ||||||||||||||||
Anthem Incorporated | 4.10 | % | 3-1-2028 | $ | 340,000 | $ | 350,287 | |||||||||
CVS Health Corporation | 3.70 | 3-9-2023 | 545,000 | 553,709 | ||||||||||||
CVS Health Corporation | 4.30 | 3-25-2028 | 155,000 | 157,200 | ||||||||||||
Halfmoon Parent Incorporated 144A | 4.38 | 10-15-2028 | 195,000 | 202,112 | ||||||||||||
1,263,308 | ||||||||||||||||
|
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Pharmaceuticals: 0.68% | ||||||||||||||||
GlaxoSmithKline Capital Incorporated | 3.88 | 5-15-2028 | 295,000 | 309,568 | ||||||||||||
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Industrials: 3.16% | ||||||||||||||||
Aerospace & Defense: 1.20% | ||||||||||||||||
General Dynamics Corporation | 3.38 | 5-15-2023 | 260,000 | 267,293 | ||||||||||||
United Technologies Corporation | 4.13 | 11-16-2028 | 270,000 | 281,394 | ||||||||||||
548,687 | ||||||||||||||||
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Air Freight & Logistics: 0.87% |
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FedEx Corporation | 4.95 | 10-17-2048 | 385,000 | 396,833 | ||||||||||||
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Airlines: 0.87% | ||||||||||||||||
Aviation Capital Group Corporation 144A | 2.88 | 1-20-2022 | 230,000 | 226,566 | ||||||||||||
US Airways Group Incorporated | 4.63 | 12-3-2026 | 166,607 | 173,815 | ||||||||||||
400,381 | ||||||||||||||||
|
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Industrial Conglomerates: 0.22% | ||||||||||||||||
General Electric Company | 2.13 | 5-17-2037 | 100,000 | 101,595 | ||||||||||||
|
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Information Technology: 5.72% | ||||||||||||||||
Communications Equipment: 0.77% | ||||||||||||||||
Motorola Solutions Incorporated | 4.60 | 2-23-2028 | 350,000 | 353,167 | ||||||||||||
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IT Services: 0.62% | ||||||||||||||||
Western Union Company | 4.25 | 6-9-2023 | 275,000 | 284,000 | ||||||||||||
|
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Semiconductors��& Semiconductor Equipment: 2.46% | ||||||||||||||||
Broadcom Corporation | 3.88 | 1-15-2027 | 310,000 | 296,356 | ||||||||||||
Broadcom Incorporated %%144A | 4.75 | 4-15-2029 | 300,000 | 298,575 | ||||||||||||
Intel Corporation (3 Month LIBOR +0.08%) ± | 2.78 | 5-11-2020 | 225,000 | 225,200 | ||||||||||||
Qualcomm Incorporated | 3.25 | 5-20-2027 | 315,000 | 307,730 | ||||||||||||
1,127,861 | ||||||||||||||||
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Technology Hardware, Storage & Peripherals: 1.87% | ||||||||||||||||
Apple Incorporated | 3.20 | 5-11-2027 | 295,000 | 297,701 | ||||||||||||
Apple Incorporated | 3.60 | 7-31-2042 | 100,000 | 158,803 | ||||||||||||
Dell International LLC / EMC Corporation 144A | 5.45 | 6-15-2023 | 375,000 | 399,636 | ||||||||||||
856,140 | ||||||||||||||||
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Materials: 0.50% | ||||||||||||||||
Chemicals: 0.50% | ||||||||||||||||
Celanese US Holdings LLC | 1.13 | 9-26-2023 | 100,000 | 113,131 | ||||||||||||
Ecolab Incorporated | 1.00 | 1-15-2024 | 100,000 | 115,845 | ||||||||||||
228,976 | ||||||||||||||||
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The accompanying notes are an integral part of these financial statements.
Table of Contents
8 | Wells Fargo Global Investment Grade Credit Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Real Estate: 0.25% | ||||||||||||||||
Equity REITs: 0.25% | ||||||||||||||||
American Tower Corporation | 1.95 | % | 5-22-2026 | $ | 100,000 | $ | 115,451 | |||||||||
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Utilities: 1.75% | ||||||||||||||||
Electric Utilities: 1.75% | ||||||||||||||||
New York State Electric & Gas Corporation 144A | 3.25 | 12-1-2026 | 300,000 | 299,618 | ||||||||||||
Pacificorp | 3.50 | 6-15-2029 | 295,000 | 301,763 | ||||||||||||
Union Electric Company | 3.50 | 3-15-2029 | 195,000 | 200,101 | ||||||||||||
801,482 | ||||||||||||||||
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Total Corporate Bonds and Notes (Cost $22,994,248) |
| 23,459,820 | ||||||||||||||
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Foreign Corporate Bonds and Notes @: 29.17% |
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Communication Services: 2.22% | ||||||||||||||||
Diversified Telecommunication Services: 1.28% | ||||||||||||||||
British Telecommunication plc (GBP) | 3.63 | 11-21-2047 | 100,000 | 132,015 | ||||||||||||
Deutsche Telekom AG (EUR) | 0.88 | 3-25-2026 | 100,000 | 113,178 | ||||||||||||
Global Switch Holdings Limited (EUR) | 1.50 | 1-31-2024 | 200,000 | 224,683 | ||||||||||||
Telefonica Emisiones SAU (EUR) | 1.46 | 4-13-2026 | 100,000 | 115,790 | ||||||||||||
585,666 | ||||||||||||||||
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Wireless Telecommunication Services: 0.94% | ||||||||||||||||
Rogers Communications Incorporated (CAD) | 5.34 | 3-22-2021 | 400,000 | 317,016 | ||||||||||||
Tele2 AB (EUR) | 2.13 | 5-15-2028 | 100,000 | 116,463 | ||||||||||||
433,479 | ||||||||||||||||
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Consumer Discretionary: 0.27% | ||||||||||||||||
Internet & Direct Marketing Retail: 0.27% | ||||||||||||||||
Priceline Group Incorporated (EUR) | 2.38 | 9-23-2024 | 100,000 | 122,931 | ||||||||||||
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Consumer Staples: 1.49% | ||||||||||||||||
Beverages: 0.77% | ||||||||||||||||
Coca-Cola European Partners plc (EUR) | 1.50 | 11-8-2027 | 100,000 | 116,987 | ||||||||||||
Heineken NV (EUR) | 1.75 | 3-17-2031 | 200,000 | 236,653 | ||||||||||||
353,640 | ||||||||||||||||
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Food Products: 0.24% | ||||||||||||||||
Danone SA (EUR) (5 Year EUR Swap +1.43%) ± | 1.75 | 12-31-2099 | 100,000 | 109,808 | ||||||||||||
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Tobacco: 0.48% | ||||||||||||||||
Swedish Match AB (EUR) | 0.88 | 9-23-2024 | 200,000 | 220,896 | ||||||||||||
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Energy: 0.81% | ||||||||||||||||
Oil, Gas & Consumable Fuels: 0.81% | ||||||||||||||||
Eni SpA (EUR) | 1.00 | 3-14-2025 | 100,000 | 114,809 | ||||||||||||
Equinor ASA (EUR) | 2.88 | 9-10-2025 | 100,000 | 129,857 | ||||||||||||
Total Capital SA (EUR) | 3.13 | 9-16-2022 | 100,000 | 124,470 | ||||||||||||
369,136 | ||||||||||||||||
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The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Global Investment Grade Credit Fund | 9 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Financials: 14.91% | ||||||||||||||||
Banks: 8.87% | ||||||||||||||||
ABN AMRO Bank NV (EUR) | 0.50 | % | 7-17-2023 | 100,000 | $ | 113,566 | ||||||||||
Achmea Bank NV (EUR) | 2.75 | 2-18-2021 | 100,000 | 117,919 | ||||||||||||
Argenta Spaarbank NV (EUR) (5 Year EUR Swap +3.95%) ± | 3.88 | 5-24-2026 | 100,000 | 117,908 | ||||||||||||
Bankinter SA (EUR) | 0.88 | 3-5-2024 | 100,000 | 113,807 | ||||||||||||
Banque Federative du Credit Mutuel (EUR) %% | 0.75 | 6-8-2026 | 100,000 | 112,121 | ||||||||||||
Banque Federative du Credit Mutuel (EUR) | 3.00 | 5-21-2024 | 100,000 | 122,084 | ||||||||||||
Barclays plc (GBP) (British Pound Swap Curve +1.32%) ± | 2.38 | 10-6-2023 | 100,000 | 129,485 | ||||||||||||
Bawag Group AG (EUR) (5 Year EUR Swap +2.30%) ± | 2.38 | 3-26-2029 | 100,000 | 111,642 | ||||||||||||
BNP Paribas (EUR) | 1.25 | 3-19-2025 | 100,000 | 113,689 | ||||||||||||
Commerzbank AG (EUR) | 0.50 | 8-28-2023 | 100,000 | 111,805 | ||||||||||||
Cooperatieve Rabobank UA (EUR) | 0.63 | 2-27-2024 | 100,000 | 112,814 | ||||||||||||
Credit Agricole London (EUR) | 1.38 | 3-13-2025 | 100,000 | 115,332 | ||||||||||||
Credit Mutuel Arkea (EUR) | 3.38 | 3-11-2031 | 100,000 | 115,045 | ||||||||||||
Credit Suisse (EUR) (5 Year EUR Swap +4.00%) ± | 5.75 | 9-18-2025 | 100,000 | 120,196 | ||||||||||||
DBS Group Holdings Limited (EUR) (5 Year EUR Swap +1.20%) ± | 1.50 | 4-11-2028 | 100,000 | 111,946 | ||||||||||||
De Volksbank NV (EUR) | 0.75 | 6-25-2023 | 100,000 | 113,797 | ||||||||||||
FCA Bank SpA (GBP) | 1.63 | 9-29-2021 | 100,000 | 127,201 | ||||||||||||
ING Bank NV (EUR) (5 Year EUR Swap +2.25%) ± | 3.63 | 2-25-2026 | 100,000 | 118,341 | ||||||||||||
Intesa Sanpaolo SpA (EUR) | 1.13 | 3-4-2022 | 100,000 | 113,323 | ||||||||||||
Jyske Bank AS (EUR) (5 Year EUR Swap +1.90%) ± | 2.25 | 4-5-2029 | 100,000 | 112,074 | ||||||||||||
KBC Group NV (EUR) | 0.75 | 3-1-2022 | 100,000 | 113,907 | ||||||||||||
Landesbank Baden-Wuerttemberg (EUR) (5 Year EUR Swap +1.77%) ± | 2.88 | 5-27-2026 | 100,000 | 115,260 | ||||||||||||
Landsbankinn HF (EUR) | 1.38 | 3-14-2022 | 100,000 | 112,867 | ||||||||||||
Lloyds Banking Group plc (GBP) | 2.25 | 10-16-2024 | 100,000 | 128,881 | ||||||||||||
NIBC Bank NV (EUR) | 1.50 | 1-31-2022 | 200,000 | 228,047 | ||||||||||||
Nordea Bank Abp (EUR) | 0.88 | 6-26-2023 | 100,000 | 112,757 | ||||||||||||
Royal Bank of Canada (CAD) | 1.97 | 3-2-2022 | 400,000 | 297,638 | ||||||||||||
Royal Bank of Scotlnd Group plc (GBP) (British Pound Swap Curve +1.49%) ± | 2.88 | 9-19-2026 | 100,000 | 130,748 | ||||||||||||
Toronto Dominion Bank (CAD) | 3.23 | 7-24-2024 | 500,000 | 390,440 | ||||||||||||
Volkswagen Bank GmbH (EUR) | 0.63 | 9-8-2021 | 100,000 | 112,706 | ||||||||||||
4,067,346 | ||||||||||||||||
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Consumer Finance: 1.88% | ||||||||||||||||
CPUK Finance Limited (GBP) | 7.24 | 2-28-2024 | 100,000 | 158,645 | ||||||||||||
Deutsche Telekom International Finance BV (EUR) | 0.63 | 12-1-2022 | 100,000 | 114,073 | ||||||||||||
LeasePlan Corporation NV (EUR) | 1.38 | 3-7-2024 | 100,000 | 113,352 | ||||||||||||
RCI Banque SA (EUR) | 1.00 | 5-17-2023 | 100,000 | 113,185 | ||||||||||||
Toyota Financial Services Australia (GBP) | 1.63 | 7-11-2022 | 100,000 | 131,851 | ||||||||||||
Transurban Finance Company (EUR) | 1.75 | 3-29-2028 | 200,000 | 231,755 | ||||||||||||
862,861 | ||||||||||||||||
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Diversified Financial Services: 1.24% | ||||||||||||||||
Bevco Lux Sarl (EUR) | 1.75 | 2-9-2023 | 100,000 | 114,091 | ||||||||||||
EDP Finance BV (EUR) | 1.63 | 1-26-2026 | 100,000 | 115,508 | ||||||||||||
FCE Bank plc (EUR) | 1.88 | 6-24-2021 | 100,000 | 113,141 | ||||||||||||
Nykredit Realkredit AS (EUR) | 0.88 | 1-17-2024 | 100,000 | 112,109 | ||||||||||||
Selp Finance Sarl (EUR) | 1.50 | 11-20-2025 | 100,000 | 111,878 | ||||||||||||
566,727 | ||||||||||||||||
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The accompanying notes are an integral part of these financial statements.
Table of Contents
10 | Wells Fargo Global Investment Grade Credit Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Insurance: 2.41% | ||||||||||||||||
Allianz Finance II BV Company (GBP) | 4.50 | % | 3-13-2043 | 100,000 | $ | 183,560 | ||||||||||
Aviva plc (EUR) (5 Year EUR Swap +5.13%) ± | 6.13 | 7-5-2043 | 100,000 | 129,418 | ||||||||||||
Aviva plc (GBP) (ICE LIBOR GBP 6 Month +4.14%) ± | 6.63 | 6-3-2041 | 100,000 | 141,714 | ||||||||||||
Legal & General Group plc (GBP) (UK Government Bond 5 Year Note Generic Bid Yield +9.33%) ± | 10.00 | 7-23-2041 | 100,000 | 153,314 | ||||||||||||
Munich Re Group (GBP) (ICE LIBOR GBP 3 Month +4.95%) ± | 6.63 | 5-26-2042 | 100,000 | 148,105 | ||||||||||||
NN Group NV (EUR) (3 Month EURIBOR +3.90%) ± | 4.38 | 6-29-2049 | 100,000 | 118,346 | ||||||||||||
Sampo Oyj (EUR) | 1.63 | 2-21-2028 | 100,000 | 116,585 | ||||||||||||
Swiss Re Finance (Luxembourg) SA (EUR) (EURIBOR ICE Swap Rate 11:00am +2.85%) ± | 2.53 | 4-30-2050 | 100,000 | 113,726 | ||||||||||||
1,104,768 | ||||||||||||||||
|
| |||||||||||||||
Mortgage REITs: 0.26% | ||||||||||||||||
Digital Euro Finco LLC (EUR) | 2.63 | 4-15-2024 | 100,000 | 119,547 | ||||||||||||
|
| |||||||||||||||
Thrifts & Mortgage Finance: 0.25% | ||||||||||||||||
Aareal Bank AG (EUR) (5 Year EUR Swap +2.90%) ± | 4.25 | 3-18-2026 | 100,000 | 115,638 | ||||||||||||
|
| |||||||||||||||
Health Care: 1.25% | ||||||||||||||||
Health Care Providers & Services: 0.26% | ||||||||||||||||
Abbott Ireland Financing Company (EUR) | 1.50 | 9-27-2026 | 100,000 | 117,829 | ||||||||||||
|
| |||||||||||||||
Life Sciences Tools & Services: 0.25% |
| |||||||||||||||
Thermo Fisher Scientific Company (EUR) | 1.40 | 1-23-2026 | 100,000 | 116,616 | ||||||||||||
|
| |||||||||||||||
Pharmaceuticals: 0.74% | ||||||||||||||||
Bayer Capital Corporation BV (EUR) | 1.50 | 6-26-2026 | 100,000 | 113,272 | ||||||||||||
Sanofi SA (EUR) | 1.25 | 3-21-2034 | 100,000 | 111,550 | ||||||||||||
Takeda Pharmaceutical Company (EUR) | 1.13 | 11-21-2022 | 100,000 | 115,097 | ||||||||||||
339,919 | ||||||||||||||||
|
| |||||||||||||||
Industrials: 2.00% | ||||||||||||||||
Building Products: 0.24% | ||||||||||||||||
HeidelbergCement Finance Luxembourg SA (EUR) | 0.50 | 8-9-2022 | 100,000 | 112,486 | ||||||||||||
|
| |||||||||||||||
Commercial Services & Supplies: 0.50% | ||||||||||||||||
Babcock International Group plc (EUR) | 1.75 | 10-6-2022 | 100,000 | 114,144 | ||||||||||||
Edenred (EUR) | 1.88 | 3-6-2026 | 100,000 | 116,660 | ||||||||||||
230,804 | ||||||||||||||||
|
| |||||||||||||||
Construction & Engineering: 0.26% | ||||||||||||||||
Vinci SA (EUR) | 1.75 | 9-26-2030 | 100,000 | 118,205 | ||||||||||||
|
| |||||||||||||||
Containers & Packaging: 0.25% | ||||||||||||||||
Brambles Finance plc (EUR) | 1.50 | 10-4-2027 | 100,000 | 114,100 | ||||||||||||
|
| |||||||||||||||
Industrial Conglomerates: 0.25% | ||||||||||||||||
Siemens Financieringsmat NV (EUR) | 0.90 | 2-28-2028 | 100,000 | 113,820 | ||||||||||||
|
| |||||||||||||||
Machinery: 0.25% | ||||||||||||||||
CNH Industrial Finance Europe SA (EUR) | 1.88 | 1-19-2026 | 100,000 | 114,970 | ||||||||||||
|
| |||||||||||||||
Road & Rail: 0.25% | ||||||||||||||||
ALD SA (EUR) | 1.25 | 10-11-2022 | 100,000 | 114,255 | ||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Global Investment Grade Credit Fund | 11 |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Information Technology: 0.51% | ||||||||||||||||
IT Services: 0.25% | ||||||||||||||||
Capgemini SE (EUR) | 1.00 | % | 10-18-2024 | 100,000 | $ | 114,500 | ||||||||||
|
| |||||||||||||||
Semiconductors & Semiconductor Equipment: 0.26% | ||||||||||||||||
ASML Holding NV (EUR) | 1.63 | 5-28-2027 | 100,000 | 118,888 | ||||||||||||
|
| |||||||||||||||
Materials: 1.28% | ||||||||||||||||
Chemicals: 0.77% | ||||||||||||||||
Arkema Company (EUR) | 1.50 | 4-20-2027 | 200,000 | 232,269 | ||||||||||||
Solvay SA (EUR) (5 Year EUR Swap +3.92%) ± | 4.25 | 12-31-2099 | 100,000 | 120,215 | ||||||||||||
352,484 | ||||||||||||||||
|
| |||||||||||||||
Containers & Packaging: 0.26% | ||||||||||||||||
DS Smith plc (EUR) | 2.25 | 9-16-2022 | 100,000 | 117,842 | ||||||||||||
|
| |||||||||||||||
Paper & Forest Products: 0.25% | ||||||||||||||||
Mondi Finance plc (EUR) | 1.63 | 4-27-2026 | 100,000 | 115,272 | ||||||||||||
|
| |||||||||||||||
Real Estate: 0.73% | ||||||||||||||||
Equity REITs: 0.49% | ||||||||||||||||
Inmobiliaria Colonial SA (EUR) | 1.45 | 10-28-2024 | 200,000 | 225,825 | ||||||||||||
|
| |||||||||||||||
Real Estate Management & Development: 0.24% |
| |||||||||||||||
Adler Real Estate AG (EUR) | 1.88 | 4-27-2023 | 100,000 | 110,543 | ||||||||||||
|
| |||||||||||||||
Utilities: 3.70% | ||||||||||||||||
Electric Utilities: 3.22% | ||||||||||||||||
Electricite de France SA (GBP) | 5.50 | 10-17-2041 | 100,000 | 177,611 | ||||||||||||
Eurogrid GmbH (EUR) | 1.88 | 6-10-2025 | 100,000 | 119,940 | ||||||||||||
Fortum Oyj (EUR) | 0.88 | 2-27-2023 | 200,000 | 225,506 | ||||||||||||
Iberdrola International BV (EUR) | 1.13 | 4-21-2026 | 100,000 | 116,550 | ||||||||||||
Innogy Finance BV (EUR) | 1.50 | 7-31-2029 | 150,000 | 171,960 | ||||||||||||
Orsted AS (GBP) | 5.75 | 4-9-2040 | 100,000 | 192,491 | ||||||||||||
Reseau de Transport d’Electricite (EUR) | 1.88 | 10-23-2037 | 200,000 | 240,400 | ||||||||||||
Statkraft AS (EUR) | 1.13 | 3-20-2025 | 100,000 | 116,068 | ||||||||||||
Tennet Holding BV (EUR) | 2.13 | 11-1-2020 | 100,000 | 116,160 | ||||||||||||
1,476,686 | ||||||||||||||||
|
| |||||||||||||||
Multi-Utilities: 0.23% | ||||||||||||||||
EP Infrastructure AS (EUR) | 1.66 | 4-26-2024 | 100,000 | 107,365 | ||||||||||||
|
| |||||||||||||||
Water Utilities: 0.25% | ||||||||||||||||
FCC Aqualia SA (EUR) | 1.41 | 6-8-2022 | 100,000 | 114,205 | ||||||||||||
|
| |||||||||||||||
Total Foreign Corporate Bonds and Notes (Cost $13,402,688) |
| 13,379,057 | ||||||||||||||
|
| |||||||||||||||
U.S. Treasury Securities: 0.16% | ||||||||||||||||
U.S. Treasury Bond | 3.38 | 11-15-2048 | $ | 65,000 | 72,508 | |||||||||||
|
| |||||||||||||||
Total U.S. Treasury Securities (Cost $72,495) |
| 72,508 | ||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
12 | Wells Fargo Global Investment Grade Credit Fund | Portfolio of investments—March 31, 2019 (unaudited) |
Security name | Interest rate | Maturity date | Principal | Value | ||||||||||||
Yankee Corporate Bonds and Notes: 14.72% | ||||||||||||||||
Communication Services: 2.38% | ||||||||||||||||
Interactive Media & Services: 0.90% | ||||||||||||||||
Tencent Holdings Limited 144A | 3.60 | % | 1-19-2028 | $ | 420,000 | $ | 414,766 | |||||||||
|
| |||||||||||||||
Wireless Telecommunication Services: 1.48% | ||||||||||||||||
Vodafone Group plc | 4.38 | 5-30-2028 | 325,000 | 330,644 | ||||||||||||
Vodafone Group plc (5 Year USD Swap +4.87%) %%± | 7.00 | 4-4-2079 | 340,000 | 345,582 | ||||||||||||
676,226 | ||||||||||||||||
|
| |||||||||||||||
Consumer Staples: 0.76% | ||||||||||||||||
Household Products: 0.76% | ||||||||||||||||
Reckitt Benckiser Treasury Services plc 144A | 2.75 | 6-26-2024 | 355,000 | 349,058 | ||||||||||||
|
| |||||||||||||||
Financials: 11.58% | ||||||||||||||||
Banks: 6.81% | ||||||||||||||||
Banco Santander SA (3 Month LIBOR +1.56%) ± | 4.36 | 4-11-2022 | 400,000 | 403,309 | ||||||||||||
Bank of Tokyo-Mitsubishi UFJ Limited 144A | 2.30 | 3-5-2020 | 325,000 | 323,709 | ||||||||||||
Credit Suisse New York | 3.63 | 9-9-2024 | 390,000 | 397,170 | ||||||||||||
HSBC Holdings plc | 4.30 | 3-8-2026 | 295,000 | 306,325 | ||||||||||||
ING Groep NV (3 Month LIBOR +1.15%) ± | 3.75 | 3-29-2022 | 230,000 | 230,975 | ||||||||||||
Royal Bank of Scotland Group plc | 3.88 | 9-12-2023 | 325,000 | 326,467 | ||||||||||||
Sumitomo Mitsui Financial Group | 2.06 | 7-14-2021 | 200,000 | 196,580 | ||||||||||||
Sumitomo Mitsui Financial Group (3 Month LIBOR +0.74%) ± | 3.52 | 10-18-2022 | 240,000 | 239,791 | ||||||||||||
Svenska Handelsbanken AB (3 Month LIBOR +0.36%) ± | 2.95 | 9-8-2020 | 260,000 | 260,181 | ||||||||||||
UBS Group AG (3 Month LIBOR +1.22%) ±144A | 3.87 | 5-23-2023 | 435,000 | 437,827 | ||||||||||||
3,122,334 | ||||||||||||||||
|
| |||||||||||||||
Capital Markets: 1.27% | ||||||||||||||||
Macquarie Group Limited 144A | 6.00 | 1-14-2020 | 570,000 | 582,902 | ||||||||||||
|
| |||||||||||||||
Diversified Financial Services: 2.39% | ||||||||||||||||
GE Capital International Funding Company | 4.42 | 11-15-2035 | 225,000 | 208,497 | ||||||||||||
Invesco Finance plc | 3.13 | 11-30-2022 | 310,000 | 310,152 | ||||||||||||
Siemens Financieringsmat Company 144A | 2.35 | 10-15-2026 | 295,000 | 278,940 | ||||||||||||
WPP Finance 2010 | 3.75 | 9-19-2024 | 150,000 | 148,014 | ||||||||||||
WPP Finance 2010 | 5.63 | 11-15-2043 | 150,000 | 148,536 | ||||||||||||
1,094,139 | ||||||||||||||||
|
| |||||||||||||||
Insurance: 1.11% | ||||||||||||||||
Allied World Assurance Company Holdings Limited | 4.35 | 10-29-2025 | 216,000 | 215,233 | ||||||||||||
AXIS Specialty Finance plc | 4.00 | 12-6-2027 | 295,000 | 293,784 | ||||||||||||
509,017 | ||||||||||||||||
|
| |||||||||||||||
Total Yankee Corporate Bonds and Notes (Cost $6,680,180) |
| 6,748,442 | ||||||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
Table of Contents
Portfolio of investments—March 31, 2019 (unaudited) | Wells Fargo Global Investment Grade Credit Fund | 13 |
Security name | Yield | Shares | Value | |||||||||||||
Short-Term Investments: 1.69% | ||||||||||||||||
Investment Companies: 1.69% | ||||||||||||||||
Wells Fargo Government Money Market Fund Select Class (l)(u)## | 2.38 | % | 776,370 | $ | 776,370 | |||||||||||
|
| |||||||||||||||
Total Short-Term Investments (Cost $776,370) |
| 776,370 | ||||||||||||||
|
|
Total investments in securities (Cost $44,735,622) | 98.69 | % | 45,255,699 | |||||
Other assets and liabilities, net | 1.31 | 599,099 | ||||||
|
|
|
| |||||
Total net assets | 100.00 | % | $ | 45,854,798 | ||||
|
|
|
|
144A | The security may be resold in transactions exempt from registration, normally to qualified institutional buyers, pursuant to Rule 144A under the Securities Act of 1933. |
± | Variable rate investment. The rate shown is the rate in effect at period end. |
%% | The security is issued on a when-issued basis. |
@ | Foreign bond principal is denominated in the local currency of the issuer. |
(l) | The issuer of the security is an affiliated person of the Fund as defined in the Investment Company Act of 1940. |
(u) | The rate represents the 7-day annualized yield at period end. |
## | All or a portion of this security is segregated for when-issued securities. |
Abbreviations:
CAD | Canadian dollar |
EUR | Euro |
EURIBOR | Euro Interbank Offer Rate |
GBP | Great British pound |
LIBOR | London Interbank Offered Rate |
REIT | Real estate investment trust |
Forward Foreign Currency Contracts
Currency to be received | Currency to be delivered | Counterparty | Settlement date | Unrealized gains | Unrealized losses | |||||||||
1,006,651 USD | 1,350,000 CAD | State Street Bank | 5-22-2019 | $ | 0 | $ | (4,826 | ) | ||||||
11,487,334 USD | 10,100,000 EUR | State Street Bank | 5-22-2019 | 109,952 | 0 | |||||||||
2,321,386 USD | 1,750,000 GBP | State Street Bank | 5-22-2019 | 36,433 | 0 | |||||||||
|
|
|
| |||||||||||
$ | 146,385 | $ | (4,826 | ) | ||||||||||
|
|
|
|
Investments in Affiliates
An affiliated investment is an investment in which the Fund owns at least 5% of the outstanding voting shares of the issuer or as a result of other relationships, such as the Fund and the issuer having the same investment manager. Transactions with issuers that were either affiliated persons of the Fund at the beginning of the period or the end of the period were as follows:
Shares, beginning of period | Shares purchased | Shares sold | Shares, end of period | Net realized gains (losses) | Net change in unrealized gains (losses) | Income from affiliated securities | Value, end of period | % of net assets | ||||||||||||||||||||||||||||
Short-Term Investments | ||||||||||||||||||||||||||||||||||||
Investment Companies | ||||||||||||||||||||||||||||||||||||
Wells Fargo Government Money Market Fund Select Class | 0 | 45,626,767 | 44,850,397 | 776,370 | $ | 0 | $ | 0 | $ | 14,730 | $ | 776,370 | 1.69 | % |
The accompanying notes are an integral part of these financial statements.
Table of Contents
14 | Wells Fargo Global Investment Grade Credit Fund | Statement of assets and liabilities—March 31, 2019 (unaudited) |
Assets | ||||
Investments in unaffiliated securities, at value (cost $43,959,252) | $ | 44,479,329 | ||
Investments in affiliated securities, at value (cost $776,370) | 776,370 | |||
Foreign currency, at value (cost $94,755) | 93,994 | |||
Receivable for investments sold | 760,673 | |||
Receivable for interest | 401,398 | |||
Receivable from manager | 7,704 | |||
Unrealized gains on forward foreign currency contracts | 146,385 | |||
Prepaid expenses and other assets | 33,840 | |||
|
| |||
Total assets | 46,699,693 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 824,027 | |||
Unrealized losses on forward foreign currency contracts | 4,826 | |||
Trustees’ fees and expenses payable | 1,783 | |||
Administration fees payable | 1,155 | |||
Accrued expenses and other liabilities | 13,104 | |||
|
| |||
Total liabilities | 844,895 | |||
|
| |||
Total net assets | $ | 45,854,798 | ||
|
| |||
NET ASSETS CONSIST OF | ||||
Paid-in capital | $ | 45,000,000 | ||
Total distributable earnings | 854,798 | |||
|
| |||
Total net assets | $ | 45,854,798 | ||
|
| |||
COMPUTATION OF NET ASSET VALUE PER SHARE | ||||
Net assets – Class R6 | $ | 45,829,324 | ||
Shares outstanding – Class R61 | 4,497,500 | |||
Net asset value per share – Class R6 | $10.19 | |||
Net assets – Institutional Class | $ | 25,474 | ||
Shares outstanding – Institutional Class1 | 2,500 | |||
Net asset value per share – Institutional Class | $10.19 |
1 | The Fund has an unlimited number of authorized shares. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Statement of operations—Period ended March 31, 20191 (unaudited) | Wells Fargo Global Investment Grade Credit Fund | 15 |
Investment income | ||||
Interest | $ | 100,244 | ||
Income from affiliated securities | 14,730 | |||
|
| |||
Total investment income | 114,974 | |||
|
| |||
Expenses | ||||
Management fee | 15,386 | |||
Administration fees | ||||
Class R6 | 1,153 | |||
Institutional Class | 2 | |||
Custody and accounting fees | 3,058 | |||
Professional fees | 7,323 | |||
Registration fees | 5,368 | |||
Shareholder report expenses | 3,780 | |||
Trustees’ fees and expenses | 1,783 | |||
Other fees and expenses | 2,548 | |||
|
| |||
Total expenses | 40,401 | |||
Less: Fee waivers and/or expense reimbursements | (23,091 | ) | ||
|
| |||
Net expenses | 17,310 | |||
|
| |||
Net investment income | 97,664 | |||
|
| |||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | ||||
Net realized gains (losses) on: | ||||
Unaffiliated securities | (71,757 | ) | ||
Forward foreign currency contracts | 169,516 | |||
|
| |||
Net realized gains on investments | 97,759 | |||
|
| |||
Net change in unrealized gains (losses) on: | ||||
Unaffiliated securities | 517,816 | |||
Forward foreign currency contracts | 141,559 | |||
|
| |||
Net change in unrealized gains (losses) on investments | 659,375 | |||
|
| |||
Net realized and unrealized gains (losses) on investments | 757,134 | |||
|
| |||
Net increase in net assets resulting from operations | $ | 854,798 | ||
|
|
1 | For the period from February 28, 2019 (commencement of operations) to March 31, 2019 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
16 | Wells Fargo Global Investment Grade Credit Fund | Statement of changes in net assets |
Period ended March 31, 20191 (unaudited) | ||||||||
Operations | ||||||||
Net investment income | $ | 97,664 | ||||||
Net realized gains on investments | 97,759 | |||||||
Net change in unrealized gains (losses) on investments | 659,375 | |||||||
|
| |||||||
Net increase (decrease) in net assets resulting from operations | 854,798 | |||||||
|
| |||||||
Capital share transactions | Shares | |||||||
Proceeds from shares sold | ||||||||
Class R6 | 4,497,500 | 44,975,000 | ||||||
Institutional Class | 2,500 | 25,000 | ||||||
|
| |||||||
Net increase in net assets resulting from capital share transactions | 45,000,000 | |||||||
|
| |||||||
Total increase in net assets | 45,854,798 | |||||||
|
| |||||||
Net assets | ||||||||
Beginning of period | 0 | |||||||
|
| |||||||
End of period | $ | 45,854,798 | ||||||
|
|
1 | For the period from February 28, 2019 (commencement of operations) to March 31, 2019 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Financial highlights | Wells Fargo Global Investment Grade Credit Fund | 17 |
(For a share outstanding throughout the period)
CLASS R6 | Period ended March 31, 20191 (unaudited) | |||
Net asset value, beginning of period | $10.00 | |||
Net investment income | 0.02 | |||
Net realized and unrealized gains (losses) on investments | 0.17 | |||
|
| |||
Total from investment operations | 0.19 | |||
Net asset value, end of period | $10.19 | |||
Total return2 | 1.90 | % | ||
Ratios to average net assets (annualized) | ||||
Gross expenses | 1.05 | % | ||
Net expenses | 0.45 | % | ||
Net investment income | 2.54 | % | ||
Supplemental data | ||||
Portfolio turnover rate | 4 | % | ||
Net assets, end of period (000s omitted) | $45,829 |
1 | For the period from February 28, 2019 (commencement of class operations) to March 31, 2019 |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
18 | Wells Fargo Global Investment Grade Credit Fund | Financial highlights |
(For a share outstanding throughout the period)
INSTITUTIONAL CLASS | Period ended March 31, 20191 (unaudited) | |||
Net asset value, beginning of period | $10.00 | |||
Net investment income | 0.02 | |||
Net realized and unrealized gains (losses) on investments | 0.17 | |||
|
| |||
Total from investment operations | 0.19 | |||
Net asset value, end of period | $10.19 | |||
Total return2 | 1.90 | % | ||
Ratios to average net assets (annualized) | ||||
Gross expenses | 1.09 | % | ||
Net expenses | 0.50 | % | ||
Net investment income | 2.49 | % | ||
Supplemental data | ||||
Portfolio turnover rate | 4 | % | ||
Net assets, end of period (000s omitted) | $25 |
1 | For the period from February 28, 2019 (commencement of class operations) to March 31, 2019 |
2 | Returns for periods of less than one year are not annualized. |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Notes to financial statements (unaudited) | Wells Fargo Global Investment Grade Credit Fund | 19 |
1. ORGANIZATION
Wells Fargo Funds Trust (the “Trust”), a Delaware statutory trust organized on March 10, 1999, is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As an investment company, the Trust follows the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946, Financial Services – Investment Companies. These financial statements report on the Wells Fargo Global Investment Grade Credit Fund (the “Fund”) which is a diversified series of the Trust.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Fund, are in conformity with U.S. generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Securities valuation
All investments are valued each business day as of the close of regular trading on the New York Stock Exchange (generally 4 p.m. Eastern Time), although the Fund may deviate from this calculation time under unusual or unexpected circumstances.
Debt securities are valued at the evaluated bid price provided by an independent pricing service (e.g. taking into account various factors, including yields, maturities, or credit ratings) or, if a reliable price is not available, the quoted bid price from an independent broker-dealer.
The values of securities denominated in foreign currencies are translated into U.S. dollars at rates provided by an independent foreign currency pricing source at a time each business day specified by the Wells Fargo Asset Management Pricing Committee at Wells Fargo Funds Management, LLC (“Funds Management”).
Investments in registered open-end investment companies are valued at net asset value.
Investments which are not valued using any of the methods discussed above are valued at their fair value, as determined in good faith by the Board of Trustees of the Fund. The Board of Trustees has established a Valuation Committee comprised of the Trustees and has delegated to it the authority to take any actions regarding the valuation of portfolio securities that the Valuation Committee deems necessary or appropriate, including determining the fair value of portfolio securities, unless the determination has been delegated to the Wells Fargo Asset Management Pricing Committee. The Board of Trustees retains the authority to make or ratify any valuation decisions or approve any changes to the Valuation Procedures as it deems appropriate. On a quarterly basis, the Board of Trustees receives reports on any valuation actions taken by the Valuation Committee or the Wells Fargo Asset Management Pricing Committee which may include items for ratification.
Foreign currency translation
The accounting records of the Fund are maintained in U.S. dollars. The values of other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at rates provided by an independent foreign currency pricing source at a time each business day specified by the Wells Fargo Asset Management Pricing Committee. Purchases and sales of securities, and income and expenses are converted at the rate of exchange on the respective dates of such transactions. Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded and the U.S. dollar equivalent of the amounts actually paid or received. Net unrealized foreign exchange gains and losses arise from changes in the fair value of assets and liabilities other than investments in securities resulting from changes in exchange rates. The changes in net assets arising from changes in exchange rates of securities and the changes in net assets resulting from changes in market prices of securities are not separately presented. Such changes are included in net realized and unrealized gains or losses from investments.
Forward foreign currency contracts
The Fund is subject to foreign currency risk in the normal course of pursuing its investment objectives. A forward foreign currency contract is an agreement between two parties to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund enters into forward foreign currency contracts to facilitate transactions in foreign-denominated securities and to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies.
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20 | Wells Fargo Global Investment Grade Credit Fund | Notes to financial statements (unaudited) |
Forward foreign currency contracts are recorded at the forward rate and marked-to-market daily. When the contracts are closed, realized gains and losses arising from such transactions are recorded as realized gains or losses on forward foreign currency contracts. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. The Fund’s maximum risk of loss from counterparty credit risk is the unrealized gains on the contracts. This risk may be mitigated if there is a master netting arrangement between the Fund and the counterparty.
Security transactions and income recognition
Securities transactions are recorded on a trade date basis. Realized gains or losses are recorded on the basis of identified cost.
Interest income is accrued daily and bond discounts are accreted and premiums are amortized daily. To the extent debt obligations are placed on non-accrual status, any related interest income may be reduced by writing off interest receivables when the collection of all or a portion of interest has been determined to be doubtful based on consistently applied procedures and the fair value has decreased. If the issuer subsequently resumes interest payments or when the collectability of interest is reasonably assured, the debt obligation is removed from non-accrual status.
Distributions to shareholders
Distributions to shareholders are recorded on the ex-dividend date and paid from net investment income monthly and any net realized gains are paid at least annually. Such distributions are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles. Dividend sources are estimated at the time of declaration. The tax character of distributions is determined as of the Fund’s fiscal year end. Therefore, a portion of the Fund’s distributions made prior to the Fund’s fiscal year end may be categorized as a tax return of capital at year end.
Federal and other taxes
The Fund intends to qualify as a regulated investment company by distributing substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required.
The Fund’s income and federal excise tax returns and all financial records supporting those returns for the fiscal year since commencement of operations will be subject to examination by the federal and Delaware revenue authorities.
As of March 31, 2019, the aggregate cost of all investments for federal income tax purposes was $44,735,622 and the unrealized gains (losses) consisted of:
Gross unrealized gains | $ | 592,615 | ||
Gross unrealized losses | (72,538 | ) | ||
Net unrealized gains | $ | 520,077 |
Class allocations
The separate classes of shares offered by the Fund differ principally in administration fees. Class specific expenses are charged directly to that share class. Investment income, common expenses, and realized and unrealized gains (losses) on investments are allocated daily to each class of shares based on the relative proportion of net assets of each class.
3. FAIR VALUATION MEASUREMENTS
Fair value measurements of investments are determined within a framework that has established a fair value hierarchy based upon the various data inputs utilized in determining the value of the Fund’s investments. The three-level hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Fund’s investments are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The inputs are summarized into three broad levels as follows:
∎ | Level 1 – quoted prices in active markets for identical securities |
∎ | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
∎ | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
The inputs or methodologies used for valuing investments in securities are not necessarily an indication of the risk associated with investing in those securities.
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Notes to financial statements (unaudited) | Wells Fargo Global Investment Grade Credit Fund | 21 |
The following is a summary of the inputs used in valuing the Fund’s assets and liabilities as of March 31, 2019:
Quoted prices (Level 1) | Other significant observable inputs (Level 2) | Significant (Level 3) | Total | |||||||||||||
Assets | ||||||||||||||||
Investments in: | ||||||||||||||||
Asset-backed securities | $ | 0 | $ | 819,502 | $ | 0 | $ | 819,502 | ||||||||
Corporate bonds and notes | 0 | 23,459,820 | 0 | 23,459,820 | ||||||||||||
Foreign corporate bonds and notes | 0 | 13,379,057 | 0 | 13,379,057 | ||||||||||||
U.S. Treasury securities | 72,508 | 0 | 0 | 72,508 | ||||||||||||
Yankee corporate bonds and notes | 0 | 6,748,442 | 0 | 6,748,442 | ||||||||||||
Short-term investments | ||||||||||||||||
Investment companies | 776,370 | 0 | 0 | 776,370 | ||||||||||||
848,878 | 44,406,821 | 0 | 45,255,699 | |||||||||||||
Forward foreign currency contracts | 0 | 146,385 | 0 | 146,385 | ||||||||||||
Total assets | $ | 848,878 | $ | 44,553,206 | $ | 0 | $ | 45,402,084 | ||||||||
Liabilities | ||||||||||||||||
Forward foreign currency contracts | $ | 0 | $ | 4,826 | $ | 0 | $ | 4,826 | ||||||||
Total liabilities | $ | 0 | $ | 4,826 | $ | 0 | $ | 4,826 |
Additional sector, industry or geographic detail is included in the Portfolio of Investments.
Forward foreign currency contracts are reported at their cumulative unrealized gains (losses) at measurement date as reported in the table following the Portfolio of Investments. All other assets and liabilities are reported at their market value at measurement date.
At March 31, 2019, the Fund did not have any transfers into/out of Level 3.
4. TRANSACTIONS WITH AFFILIATES
Management fee
Funds Management, an indirect wholly owned subsidiary of Wells Fargo & Company (“Wells Fargo”), is the manager of the Fund and provides advisory and fund-level administrative services under an investment management agreement. Under the investment management agreement, Funds Management is responsible for, among other services, implementing the investment objectives and strategies of the Fund, supervising the subadviser and providing fund-level administrative services in connection with the Fund’s operations. As compensation for its services under the investment management agreement, Funds Management is entitled to receive a management fee at the following annual rate based on the Fund’s average daily net assets:
Average daily net assets | Management fee | |||
First $500 million | 0.400 | % | ||
Next $500 million | 0.375 | |||
Next $2 billion | 0.350 | |||
Next $2 billion | 0.325 | |||
Next $5 billion | 0.290 | |||
Over $10 billion | 0.280 |
For the period from February 28, 2019 to March 31, 2019, the management fee was equivalent to an annual rate of 0.40% of the Fund’s average daily net assets.
Funds Management has retained the services of subadvisers to provide daily portfolio management to the Fund. The fee for subadvisory services is borne by Funds Management. Wells Capital Management Incorporated and Wells Fargo Asset Management (International) Limited, each an affiliate of Funds Management and an indirect wholly owned subsidiary of Wells Fargo, serve as subadvisers to the Fund and are each entitled to receive a fee from Funds Management at an annual rate starting at 0.10% and declining to 0.05% as the average daily net assets of the Fund increase.
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22 | Wells Fargo Global Investment Grade Credit Fund | Notes to financial statements (unaudited) |
Administration fees
Under a class-level administration agreement, Funds Management provides class-level administrative services to the Fund, which includes paying fees and expenses for services provided by the transfer agent, sub-transfer agents, omnibus account servicers and record-keepers. As compensation for its services under the class-level administration agreement, Funds Management receives an annual fee which is calculated based on the average daily net assets of each class as follows:
Class-level administration fee | ||||
Class R6 | 0.03 | % | ||
Institutional Class | 0.08 |
Funds Management has contractually waived and/or reimbursed management and administration fees to the extent necessary to maintain certain net operating expense ratios for the Fund. When each class of the Fund has exceeded its expense cap, Funds Management has waived fees and/or reimbursed expenses from fund level expenses on a proportionate basis and then from class specific expenses. When only certain classes exceed their expense caps, waivers and/or reimbursements are applied against class specific expenses before fund level expenses. Funds Management has committed through March 31, 2020 to waive fees and/or reimburse expenses to the extent necessary to cap the Fund’s expenses at 0.45% for Class R6 and 0.50% for Institutional Class shares. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees.
Interfund transactions
The Fund may purchase or sell portfolio investment securities to certain other Wells Fargo affiliates pursuant to Rule 17a-7 under the 1940 Act and under procedures adopted by the Board of Trustees. The procedures have been designed to ensure that these interfund transactions, which do not incur broker commissions, are effected at current market prices.
5. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the period from February 28, 2019 to March 31, 2019 were as follows:
Purchases at cost | Sales proceeds | |||||
U.S. government | Non-U.S. government | U.S. government | Non-U.S. government | |||
$72,495 | $45,663,772 | $0 | $1,803,857 |
6. DERIVATIVE TRANSACTIONS
For the period from February 28, 2019 to March 31, 2019, the Fund entered into forward foreign currency contracts for hedging purposes. The Fund had average contract amounts of $27,487 and $2,524,656 in forward foreign currency contracts to buy and forward foreign currency contracts to sell, respectively, during the period from February 28, 2019 to March 31, 2019.
The fair value, realized gains or losses and change in unrealized gains or losses, if any, on derivative instruments are reflected in the corresponding financial statement captions.
For certain types of derivative transactions, the Fund has entered into International Swaps and Derivatives Association, Inc. master agreements (“ISDA Master Agreements”) or similar agreements with approved counterparties. The ISDA Master Agreements or similar agreements may have requirements to deliver/deposit securities or cash to/with an exchange or broker-dealer as collateral and allows the Fund to offset, with each counterparty, certain derivative financial instrument’s assets and/or liabilities with collateral held or pledged. Collateral requirements differ by type of derivative. Collateral or margin requirements are set by the broker or exchange clearinghouse for exchange traded derivatives while collateral terms are contract specific for over-the-counter traded derivatives. Cash collateral that has been pledged to cover obligations of the Fund under ISDA Master Agreements or similar agreements, if any, are reported separately in the Statement of Assets and Liabilities. Securities pledged as collateral, if any, are noted in the Portfolio of Investments. With respect to balance sheet offsetting, absent an event of default by the counterparty or a termination of the agreement, the reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities are not offset across
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Notes to financial statements (unaudited) | Wells Fargo Global Investment Grade Credit Fund | 23 |
transactions between the Fund and the applicable counterparty. A reconciliation of the gross amounts on the Statement of Assets and Liabilities to the net amounts by counterparty, including any collateral exposure, is as follows:
Counterparty | Gross amounts of assets in the Statement of Assets and Liabilities | Amounts subject to netting agreements | Collateral received | Net amount of assets | ||||||||
State Street Bank | $146,385 | $(4,826) | $ | 0 | $ | 141,559 | ||||||
Counterparty | Gross amounts of liabilities in the Statement of Assets and Liabilities | Amounts subject to netting agreements | Collateral pledged | Net amount of liabilities | ||||||||
State Street Bank | $4,826 | $(4,826) | $ | 0 | $ | 0 |
7. CONCENTRATION RISK
Concentration risk result from exposure to a limited number of sectors. A fund that invests a substantial portion of its assets in any sector may be more affected by changes in that sector than would be a fund whose investments are not heavily weighted in any sector.
8. INDEMNIFICATION
Under the Trust’s organizational documents, the officers and Trustees have been granted certain indemnification rights against certain liabilities that may arise out of performance of their duties to the Trust. Additionally, in the normal course of business, the Trust may enter into contracts with service providers that contain a variety of indemnification clauses. The Trust’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated.
9. NEW ACCOUNTING PRONOUNCEMENTS
In August 2018, FASB issued Accounting Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820)Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 updates the disclosure requirements for fair value measurements by modifying or removing certain disclosures and adding certain new disclosures. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management has adopted the removal and modification of disclosures early, as permitted, and will adopt the additional new disclosures at the effective date.
In March 2017, FASB issued ASU No. 2017-08,Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium. The amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 is effective for fiscal years beginning after December 15, 2018 and for interim periods within those fiscal years. Management is currently evaluating the potential impact of this new guidance to the financial statements.
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24 | Wells Fargo Global Investment Grade Credit Fund | Other information (unaudited) |
PROXY VOTING INFORMATION
A description of the policies and procedures used to determine how to vote proxies relating to portfolio securities is available, upon request, by calling1-800-222-8222, visiting our website atwfam.com, or visiting the SEC website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent12-month period ended June 30 is available on the Fund’s website atwfam.comor by visiting the SEC website at sec.gov.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for the Fund are publicly available monthly on the Fund’s website (wfam.com), on a one-month delayed basis. In addition, top ten holdings information (excluding derivative positions) for the Fund is publicly available on the Fund’s website on a monthly, seven-day or more delayed basis. The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which is available by visiting the SEC website at sec.gov. In addition, the Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330.
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Other information (unaudited) | Wells Fargo Global Investment Grade Credit Fund | 25 |
BOARD OF TRUSTEES AND OFFICERS
Each of the Trustees and Officers1 listed in the table below acts in identical capacities for each fund in the Wells Fargo family of funds, which consists of 151 mutual funds comprising the Wells Fargo Funds Trust, Wells Fargo Variable Trust, Wells Fargo Master Trust and four closed-end funds (collectively the “Fund Complex”). This table should be read in conjunction with the Prospectus and the Statement of Additional Information2. The mailing address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, however, each Trustee serves such term until reaching the mandatory retirement age established by the Trustees.
Independent Trustees
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company directorships | |||
William R. Ebsworth (Born 1957) | Trustee, since 2015 | Retired. From 1984 to 2013, equities analyst, portfolio manager, research director and chief investment officer at Fidelity Management and Research Company in Boston, Tokyo, and Hong Kong, and retired in 2013 as Chief Investment Officer of Fidelity Strategic Advisers, Inc. where he led a team of investment professionals managing client assets. Prior thereto, Board member of Hong Kong Securities Clearing Co., Hong Kong Options Clearing Corp., the Thailand International Fund, Ltd., Fidelity Investments Life Insurance Company, and Empire Fidelity Investments Life Insurance Company. Audit Committee Chair and Investment Committee Chair of the Vincent Memorial Hospital Endowment (non-profit organization). Mr. Ebsworth is a CFA® charterholder. | N/A | |||
Jane A. Freeman (Born 1953) | Trustee, since 2015; Chair Liaison, since 2018 | Retired. From 2012 to 2014 and 1999 to 2008, Chief Financial Officer of Scientific Learning Corporation. From 2008 to 2012, Ms. Freeman provided consulting services related to strategic business projects. Prior to 1999, Portfolio Manager at Rockefeller & Co. and Scudder, Stevens & Clark. Board member of the Harding Loevner Funds from 1996 to 2014, serving as both Lead Independent Director and chair of the Audit Committee. Board member of the Russell Exchange Traded Funds Trust from 2011 to 2012 and the chair of the Audit Committee. Ms. Freeman is a Board Member of The Ruth Bancroft Garden (non-profit organization). She is also an inactive Chartered Financial Analyst. | N/A | |||
Isaiah Harris, Jr.3 (Born 1952) | Trustee, since 2009; Audit Committee Chairman, since 2019 | Retired. Chairman of the Board of CIGNA Corporation since 2009, and Director since 2005. From 2003 to 2011, Director of Deluxe Corporation. Prior thereto, President and CEO of BellSouth Advertising and Publishing Corp. from 2005 to 2007, President and CEO of BellSouth Enterprises from 2004 to 2005 and President of BellSouth Consumer Services from 2000 to 2003. Emeritus member of the Iowa State University Foundation Board of Governors. Emeritus Member of the Advisory Board of Iowa State University School of Business. Advisory Board Member, Palm Harbor Academy (private school). Advisory Board Member, Child Evangelism Fellowship (non-profit). Mr. Harris is a certified public accountant (inactive status). | CIGNA Corporation | |||
Judith M. Johnson (Born 1949) | Trustee, since 2008; Audit Committee Chairman, from 2009 to 2018 | Retired. Prior thereto, Chief Executive Officer and Chief Investment Officer of Minneapolis Employees Retirement Fund from 1996 to 2008. Ms. Johnson is an attorney, certified public accountant and a certified managerial accountant. | N/A |
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26 | Wells Fargo Global Investment Grade Credit Fund | Other information (unaudited) |
Name and year of birth | Position held and length of service* | Principal occupations during past five years or longer | Current other public company or investment company directorships | |||
David F. Larcker (Born 1950) | Trustee, since 2009 | James Irvin Miller Professor of Accounting at the Graduate School of Business, Stanford University, Director of the Corporate Governance Research Initiative and Senior Faculty of The Rock Center for Corporate Governance since 2006. From 2005 to 2008, Professor of Accounting at the Graduate School of Business, Stanford University. Prior thereto, Ernst & Young Professor of Accounting at The Wharton School, University of Pennsylvania from 1985 to 2005. | N/A | |||
Olivia S. Mitchell (Born 1953) | Trustee, since 2006; Nominating and Governance Committee Chairman, since 2018 | International Foundation of Employee Benefit Plans Professor, Wharton School of the University of Pennsylvania since 1993. Director of Wharton’s Pension Research Council and Boettner Center on Pensions & Retirement Research, and Research Associate at the National Bureau of Economic Research. Previously, Cornell University Professor from 1978 to 1993. | N/A | |||
Timothy J. Penny (Born 1951) | Trustee, since 1996; Chairman, since 2018 | President and Chief Executive Officer of Southern Minnesota Initiative Foundation, a non-profit organization, since 2007. Member of the Board of Trustees of NorthStar Education Finance, Inc., a non-profit organization, since 2007. | N/A | |||
James G. Polisson (Born 1959) | Trustee, since 2018 | Retired. Chief Marketing Officer, Source (ETF) UK Services, Ltd, from 2015 to 2017. From 2012 to 2015, Principal of The Polisson Group, LLC, a management consulting, corporate advisory and principal investing company. Chief Executive Officer and Managing Director at Russell Investments, Global Exchange Traded Funds from 2010 to 2012. Managing Director of Barclays Global Investors from 1998 to 2010 and Global Chief Marketing Officer for iShares and Barclays Global Investors from 2000 to 2010. Trustee of the San Francisco Mechanics’ Institute, a non-profit organization, from 2013 to 2015. Board member of the Russell Exchange Traded Fund Trust from 2011 to 2012. Director of Barclays Global Investors Holdings Deutschland GmbH from 2006 to 2009. Mr. Polisson is an attorney and has a retired status with the Massachusetts and District of Columbia Bar Associations. | N/A | |||
Pamela Wheelock (Born 1959) | Trustee, since 2018 | Board member of the Destination Medical Center Economic Development Agency, Rochester, Minnesota since 2019. Chief Operating Officer, Twin Cities Habitat for Humanity from 2017 to 2019. Vice President of University Services, University of Minnesota from 2012 to 2016. Prior thereto, on the Board of Directors, Governance Committee and Finance Committee for the Minnesota Philanthropy Partners (Saint Paul Foundation) from 2012 to 2018, Interim Chief Executive Officer of Blue Cross Blue Shield of Minnesota from 2011 to 2012, Chairman of the Board from 2009 to 2012 and Board Director from 2003 to 2015. Vice President, Leadership and Community Engagement, Bush Foundation, Saint Paul, Minnesota (a private foundation) from 2009 to 2011. Executive Vice President and Chief Financial Officer, Minnesota Sports and Entertainment from 2004 to 2009 and Senior Vice President from 2002 to 2004. Executive Vice President of the Minnesota Wild Foundation from 2004 to 2008. Commissioner of Finance, State of Minnesota, from 1999 to 2002. Currently Board Chair of the Minnesota Wild Foundation since 2010. | N/A |
* | Length of service dates reflect the Trustee’s commencement of service with the Trust’s predecessor entities, where applicable. |
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Other information (unaudited) | Wells Fargo Global Investment Grade Credit Fund | 27 |
Officers
Name and year of birth | Position held and length of service | Principal occupations during past five years or longer | ||||
Andrew Owen (Born 1960) | President, since 2017 | Executive Vice President of Wells Fargo & Company and Head of Affiliated Managers, Wells Fargo Asset Management, since 2014. In addition, Mr. Owen is currently President, Chief Executive Officer and Director of Wells Fargo Funds Management, LLC since 2017. Prior thereto, Executive Vice President responsible for marketing, investments and product development for Wells Fargo Funds Management, LLC, from 2009 to 2014. | ||||
Jeremy DePalma1 (Born 1974) | Treasurer, since 2012 | Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010 and head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010. | ||||
Alexander Kymn (Born 1973) | Secretary and Chief Legal Officer, since 2018 | Senior Company Counsel of Wells Fargo Bank, N.A. since 2018 (previously Senior Counsel from 2007 to 2018). Vice President of Wells Fargo Funds Management, LLC from 2008 to 2014. | ||||
Michael H. Whitaker (Born 1967) | Chief Compliance Officer, since 2016 | Senior Vice President and Chief Compliance Officer since 2016. Senior Vice President and Chief Compliance Officer for Fidelity Investments from 2007 to 2016. | ||||
David Berardi (Born 1975) | Assistant Treasurer, since 2009 | Vice President of Wells Fargo Funds Management, LLC since 2009. Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010. Manager of Fund Reporting and Control for Evergreen Investment Management Company, LLC from 2004 to 2010. |
1 | Jeremy DePalma acts as Treasurer of 86 funds and Assistant Treasurer of 65 funds in the Fund Complex. |
2 | The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request, by calling1-800-222-8222 or by visiting the website atwfam.com. |
3 | Mr. Harris became Chairman of the Audit Committee effective January 1, 2019. |
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For more information
More information about Wells Fargo Funds is available free upon request. To obtain literature, please write, visit the Fund’s website, or call:
Wells Fargo Funds
P.O. Box 219967
Kansas City, MO 64121-9967
Website: wfam.com
Individual investors: 1-800-222-8222
Retail investment professionals: 1-888-877-9275
Institutional investment professionals:1-866-765-0778
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. Before investing, please consider the investment objectives, risks, charges, and expenses of the investment. For a current prospectus and, if available, a summary prospectus, containing this information, call1-800-222-8222 or visit the Fund’s website atwfam.com. Read the prospectus carefully before you invest or send money.
Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management firms owned by Wells Fargo & Company. These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by Wells Fargo Funds Distributor, LLC (a broker-dealer and Member FINRA).
This material is for general informational and educational purposes only and is NOT intended to provide investment advice or a recommendation of any kind—including a recommendation for any specific investment, strategy, or plan.
INVESTMENT PRODUCTS: NOT FDIC INSURED ◾ NO BANK GUARANTEE ◾ MAY LOSE VALUE
© 2019 Wells Fargo Funds Management, LLC. All rights reserved.
![]() | 401606 05-19 SA294/SAR294 03-19 |
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ITEM 2. | CODE OF ETHICS |
Not applicable.
ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT |
Not applicable.
ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Not applicable.
ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS |
Not applicable.
ITEM 6. | INVESTMENTS |
A Portfolio of Investments for each series of Wells Fargo Funds Trust is included as part of the report to shareholders filed under Item 1 of this Form.
ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FORCLOSED-END MANAGEMENT INVESTMENT COMPANIES |
Not applicable.
ITEM 8. | PORTFOLIO MANAGERS OFCLOSED-END MANAGEMENT INVESTMENT COMPANIES |
Not applicable.
ITEM 9. | PURCHASES OF EQUITY SECURITIES BYCLOSED-END MANAGEMEENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS |
Not applicable.
ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s Board of Trustees that have been implemented since the registrant’s last provided disclosure in response to the requirements of this Item.
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ITEM 11. | CONTROLS AND PROCEDURES |
(a) The President and Treasurer have concluded that the Wells Fargo Funds Trust disclosure controls and procedures (as defined inRule 30a-3(c) under the Investment Company Act of 1940) provide reasonable assurances that material information relating to the registrant is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing of this report.
(b) There were no significant changes in the registrant’s internal controls over financial reporting (as defined in Rule30a-3(d) under the Investment Company Act of 1940) that occurred during the most recent fiscal quarter of the period covered by this report that materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
ITEM 12. | DISCLOSURES OF SECURITIES LENDING ACTIVITES FORCLOSED-END MANAGEMENT INVESTMENT COMPANIES |
Not applicable.
ITEM 13. | EXHIBITS |
(a)(1) Not applicable.
(a)(2) Certification pursuant to Rule30a-2(a) under the Investment Company Act of 1940 (17 CFR270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.
(b) Certification pursuant to Rule30a-2(b) under the Investment Company Act of 1940 (17 CFR270.30a-2(b)) is filed and attached hereto as Exhibit 99.906CERT.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Wells Fargo Funds Trust | ||
By: | ||
/s/ Andrew Owen | ||
Andrew Owen | ||
President | ||
Date: | May 24, 2019 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
Wells Fargo Funds Trust | ||
By: | ||
/s/ Andrew Owen | ||
Andrew Owen | ||
President | ||
Date: | May 24, 2019 | |
By: | ||
/s/ Nancy Wiser | ||
Nancy Wiser | ||
Treasurer | ||
Date: | May 24, 2019 | |
By: | ||
/s/ Jeremy DePalma | ||
Jeremy DePalma | ||
Treasurer | ||
Date: | May 24, 2019 |