UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
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)
C. David Messman
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: 800-643-9691
Date of fiscal year end: October 31, 2005
Date of reporting period: April 30, 2005
ITEM 1. REPORT TO SHAREHOLDERS
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WELLS ADVANTAGE
FARGO FUNDS
APRIL 30, 2005
[GRAPHIC OMITTED]
SEMI-ANNUAL REPORT
WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND
WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND
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TABLE OF CONTENTS
LETTER TO SHAREHOLDERS ................................................... 1
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PERFORMANCE HIGHLIGHTS
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C&B LARGE CAP VALUE FUND ............................................. 2
FUND EXPENSES ............................................................ 4
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PORTFOLIO OF INVESTMENTS
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C&B LARGE CAP VALUE FUND ............................................. 5
FINANCIAL STATEMENTS
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STATEMENT OF ASSETS AND LIABILITIES .................................. 6
STATEMENT OF OPERATIONS .............................................. 7
STATEMENTS OF CHANGES IN NET ASSETS .................................. 8
FINANCIAL HIGHLIGHTS ................................................. 10
NOTES TO FINANCIAL HIGHLIGHTS ............................................ 12
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NOTES TO FINANCIAL STATEMENTS ............................................ 13
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MASTER PORTFOLIOS
PORTFOLIO OF INVESTMENTS
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C&B LARGE CAP VALUE PORTFOLIO ........................................ 17
FINANCIAL STATEMENTS
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STATEMENT OF ASSETS AND LIABILITIES .................................. 20
STATEMENT OF OPERATIONS .............................................. 21
STATEMENTS OF CHANGES IN NET ASSETS .................................. 22
FINANCIAL HIGHLIGHTS ................................................. 23
NOTES TO FINANCIAL STATEMENTS ............................................ 24
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OTHER INFORMATION ........................................................ 26
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LIST OF ABBREVIATIONS .................................................... 31
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NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
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THIS PAGE IS INTENTIONALLY LEFT BLANK --
LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND
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DEAR VALUED SHAREHOLDER,
I am pleased to introduce you to WELLS FARGO ADVANTAGE FUNDS(SM). You now
have access to an expanded array of mutual funds, giving you the flexibility to
invest in a family of funds covering nearly every asset class and investment
style. To learn more about our funds and the talented team of money managers
behind them, please visit our new Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
You can also call one of our investment service representatives now available 24
hours a day, 7 days a week, or speak with your investment professional.
Following is your Wells Fargo Advantage C&B Large Cap Value Fund
semi-annual report for the six-month period ending April 30, 2005. In this
report, you will find a discussion of the Fund, including performance
highlights, the Fund managers' strategic outlook, and information about the
Fund's portfolio.
THE ECONOMY: MODERATE RECOVERY
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The U.S. economy continued to grow steadily, expanding by 4.4% in 2004.
During the first quarter of 2005, however, the economy grew by 3.1%, trailing
the 3.8% pace achieved during the last three months of 2004.
Part of that decline stemmed from the high cost of gasoline, which
continued to have a significant influence on consumer spending and the economy.
When the six-month period began, oil prices were declining from their recent
highs of $55 per barrel. After falling for two months, they rebounded sharply in
2005, setting new highs in April.
Higher energy prices were a key driver of inflation, which rose throughout
most of the period. "Core" inflation, which excludes volatile food and energy
prices, also trended upwards, but rose less quickly. With core inflation
manageable, the Federal Reserve Board (the Fed) continued its program of gradual
short-term interest rate increases. During the past six months, the Fed raised
rates four times, bringing the Federal funds rate from 1.75% at the beginning of
the period to 2.75% by April 30, 2005.
STOCKS: APRIL SHOWERS
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The stock market's performance was up and down. Stocks began the period in
the midst of a rally driven by falling oil prices. The outcome of the U.S.
presidential election continued this rally, which lasted through the rest of
2004. But stocks turned in more mixed results in the first four months of 2005.
April was a particularly volatile environment for investors, who were
increasingly uneasy about rising energy costs, further economic slowing, higher
potential inflation, and rising interest rates. Moderate corporate earnings
growth contributed to concerns, as did the increasing likelihood that General
Motors (GM), the world's largest automobile manufacturer, would see its credit
rating downgraded to "junk" status. Highlighting the market's April volatility,
the Dow Jones Industrial Average saw seven moves of greater than 100 points on
the way to its worst monthly decline since January 2003. The S&P 500 Index fell
nearly 2% in April, but rose 3.28% during the full six-month period.
BONDS: LOOKING LONG
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The U.S. Treasury and municipal yield curves generally flattened during
the period, indicating that short-term bond yields were rising in line with the
Fed's rate increases while long-term bond yields fell, somewhat surprisingly.
Longer bonds benefited from investors' increasing conviction that inflation
could continue to be manageable and that the Fed would not need to raise
interest rates more quickly.
Municipal bonds generally outperformed their taxable counterparts and, at
period end, were offering historically attractive yields relative to U.S.
Treasuries. For the first four months of the period, corporate high-yield bonds
continued their strong performance. It was a different story in March and April.
Investors worried about the potential negative impact that a credit-rating
downgrade of GM, and also Ford, would have on the high-yield market.
LOOKING AHEAD: LONG-TERM EXPANSION?
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Despite the economy's first quarter slowdown, we believe this represents a
temporary soft patch more than a permanent slowdown. As stock and bond investors
seek to determine where inflation, interest rates, and corporate earnings are
headed, we may see more unpredictable moves in the markets.
Uncertainty and risk will always be a part of investing. We believe an
important thing you can do to manage risk is to own a broadly diversified
portfolio. While diversification may not prevent losses in a downturn, it may
help reduce them and keep you on track to reach your financial goals.
Thank you for choosing WELLS FARGO ADVANTAGE FUNDS. We appreciate your
confidence in us. Through each market cycle, we are committed to helping you
meet your financial needs. If you have any questions about your investment,
please contact your investment professional, or call us at 1-800-222-8222. You
may also visit our enhanced Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND PERFORMANCE HIGHLIGHTS
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WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND
INVESTMENT OBJECTIVE
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The WELLS FARGO ADVANTAGE C&B Large Cap Value Fund (the Fund) seeks
maximum long-term total return, consistent with minimizing risk to principal.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Cooke & Bieler, L.P.
FUND MANAGERS INCEPTION DATE
Kermick S. Eck, CFA 5/15/1990
Michael M. Meyer, CFA
James R. Norris
Edward W. O'Connor, CFA
R. James O'Neil, CFA
Mehul Trivedi, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
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The Fund's Class A shares returned 2.88%(1) for the six-month period
ended April 30, 2005, excluding sales charges, underperforming the Russell
1000(R) Value Index(2), which returned 6.72%, and underperforming the S&P 500
Index(3), which returned 3.28%, during the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. 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. CURRENT MONTH-END PERFORMANCE IS AVAILABLE ON THE
FUNDS' WEB SITE AT WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 5.75%. FOR CLASS
B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 5.00%. FOR CLASS C
SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. PERFORMANCE
INCLUDING SALES CHARGES ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME
PERIOD. CLASS D, INSTITUTIONAL CLASS AND ADMINISTRATOR CLASS SHARES ARE SOLD
WITHOUT SALES CHARGES. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE
FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
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The Fund's underperformance for the period was caused by our limited
exposure in the portfolio to energy-related stocks as well as overall market
weakness. With regards to energy-related stocks, we believe that current
valuations appear to be unsustainably high and that this sector has moved ahead
of fundamentals. We feel that investment opportunities exist elsewhere in the
markets. The best performing stocks in the portfolio during the period included
HCA (health care), Wendy's International (consumer), Baxter International
(healthcare) and ExxonMobil (energy). The worst performing stocks during the
period included Manpower (media and services), Big Lots (retail), Molex
(technology), and MBIA (finance).
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
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A number of stocks that reached their price targets were sold during the
period. These included Motorola, Nike, PepsiAmericas, Gap, and Duke Energy. The
holdings were replaced by investments in Kohl's, Vodafone, Microsoft, Colgate,
and Anheuser-Busch--companies that we believe to be financially strong.
Additionally, two new positions in Nokia and Gannet were initiated because we
believe these are high-quality companies that are currently undervalued. We
added to existing holdings in Merck, Molex, and Allstate from the sale of
Boeing, Computer Sciences, and Aon--companies whose valuations declined.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
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We believe that the outlook for the economy is favorable, but we
acknowledge that oil prices are becoming more of a wildcard that could push
inflation to uncomfortably high levels, necessitating more aggressive tightening
by the Federal Reserve Board. Furthermore, it appears that the level of interest
rates is beginning to provide some competition for equities. Finally,
valuations, though not extreme in most sectors, are not as compelling as in the
past. We remain cautiously optimistic about the prospects for the U.S. stock
market. We continue to believe that stock selection will be an increasingly
important factor in determining investment performance, and the success of a
stock pick will ultimately be determined by a company's ability to generate
expected cash flows. Because the dependability and growth of cash flows are a
direct function of a company's competitive advantages and financial discipline,
we believe a focus on quality is more important than ever.
STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES
FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL
MARKET AND ECONOMIC CONDITIONS. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL
INFORMATION ON THESE AND OTHER RISKS.
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The views expressed are as of April 30, 2005, and are those of the Fund's
managers. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE C&B Large Cap Value Fund.
(1) The Fund's Adviser has committed through February 28, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Effective December 6, 2004, the Fund is a gateway feeder fund that invests
all of its assets in a single master portfolio of the Master Trust with a
substantially similar investment objective and substantially similar investment
strategies. References to the investment activities of the Fund are intended to
refer to the investment activities of the master portfolio in which it invests.
Prior to April 11, 2005, the WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE
FUND was named the Wells Fargo C&B Large Cap Value Fund. Performance shown for
the Class A, Class B, Class C, Class D, Institutional Class (formerly named the
Select Class) and Administrator Class (formerly named the Institutional Class)
shares of the WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND for periods prior
to July 26, 2004, reflects the performance of the unnamed share class of the C&B
Large Cap Value Portfolio, the predecessor fund, adjusted to reflect applicable
sales charges and expenses.
(2) The Russell 1000(R) Value Index measures performance of those Russell
1000 companies with lower price-to-book ratios and lower forecasted growth
values. You cannot invest directly in an index.
(3) The S&P 500 Index is an unmanaged index of 500 widely held common stocks
representing, among others, industrial, financial, utility and transportation
companies listed or traded on national exchanges or over-the-counter markets.
You cannot invest directly in an index.
(4) The ten largest equity holdings are calculated based on the market value
of the Master Trust portfolio securities allocable to the Fund divided by total
market value of the portfolio of investments of the Fund. See Notes to Financial
Statements for a discussion of the Master Trust.
(5) Sector distribution and portfolio characteristics are subject to change.
2
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND
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AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
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Including Sales Charge Excluding Sales Charge
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6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year
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C&B Large Cap Value Fund - Class A (2.99) (0.85) 8.43 12.17 2.88 5.14 9.71 12.84
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C&B Large Cap Value Fund - Class B (2.62) (0.67) 8.65 12.04 2.38 4.33 8.94 12.04
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C&B Large Cap Value Fund - Class C 1.39 3.34 8.94 12.05 2.39 4.34 8.94 12.05
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C&B Large Cap Value Fund - Class D 2.87 5.14 9.71 12.84
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C&B Large Cap Value Fund - Administrator Class 2.93 5.32 9.75 12.86
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C&B Large Cap Value Fund - Institutional Class 3.23 5.64 9.82 12.89
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Benchmarks
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Russell 1000(R) Value Index(2) 6.72 13.92 5.06 12.25
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S&P 500 Index(3) 3.28 6.33 (2.94) 10.26
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* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
TEN LARGEST EQUITY HOLDINGS(4) (AS OF APRIL 30, 2005)
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Exxon Mobil Corporation 3.21%
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Molex Incorporated Class A 2.94%
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State Street Corporation 2.92%
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General Dynamics Corporation 2.87%
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McDonald's Corporation 2.80%
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Dover Corporation 2.74%
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Wendy's International Incorporated 2.74%
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Berkshire Hathaway Incorporated 2.64%
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Vodafone Group plc ADR 2.63%
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Manpower Incorporated 2.62%
FUND CHARACTERISTICS(5) (AS OF APRIL 30, 2005)
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Beta** 0.80
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Price to Earnings (trailing 12 months) 15.70 x
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Price to Book Ratio 3.74 x
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Median Market Cap. ($B) $20.35
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Portfolio Turnover(6) 10%
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** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK
BETA IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(5) (AS OF APRIL 30, 2005)
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[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL]
Consumer Discretionary 27%
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Consumer Staples 7%
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Energy 6%
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Financials 21%
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Information Technology 7%
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Industrial 17%
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Health Care 11%
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Materials 1%
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Telecommunication Services 3%
GROWTH OF $10,000 INVESTMENT(7) (AS OF APRIL 30, 2005)
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[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL]
WELLS FARGO ADVANTAGE
WELLS FARGO C&B LARGE CAP
ADVANTAGE C&B LARGE VALUE FUND - RUSSELL 1000(R)
CAP VALUE FUND - CLASS A INSTITUTIONAL CLASS VALUE INDEX S&P 500 INDEX
4/30/1995 9,424 10,000 10,000 10,000
5/31/1995 9,685 10,277 10,420 10,399
6/30/1995 9,980 10,590 10,561 10,640
7/31/1995 10,222 10,848 10,929 10,993
8/31/1995 10,270 10,898 11,083 11,020
9/30/1995 10,647 11,299 11,484 11,485
10/31/1995 10,634 11,284 11,370 11,444
11/30/1995 11,075 11,752 11,946 11,946
12/31/1995 11,350 12,044 12,246 12,176
1/31/1996 11,671 12,385 12,628 12,590
2/29/1996 11,729 12,446 12,723 12,707
3/31/1996 11,993 12,726 12,940 12,829
4/30/1996 12,171 12,916 12,989 13,018
5/31/1996 12,401 13,159 13,152 13,354
6/30/1996 12,408 13,167 13,163 13,404
7/31/1996 11,794 12,516 12,665 12,813
8/31/1996 12,047 12,784 13,027 13,083
9/30/1996 12,661 13,435 13,545 13,819
10/31/1996 12,972 13,765 14,069 14,200
11/30/1996 13,806 14,650 15,089 15,272
12/31/1996 13,645 14,479 14,896 14,970
1/31/1997 14,066 14,926 15,619 15,905
2/28/1997 14,266 15,139 15,848 16,029
3/31/1997 13,956 14,809 15,278 15,372
4/30/1997 14,378 15,258 15,920 16,289
5/31/1997 15,544 16,495 16,809 17,280
6/30/1997 16,278 17,274 17,531 18,054
7/31/1997 17,508 18,579 18,849 19,489
8/31/1997 16,721 17,744 18,178 18,398
9/30/1997 17,629 18,707 19,277 19,405
10/31/1997 16,919 17,954 18,738 18,758
11/30/1997 17,314 18,373 19,566 19,626
12/31/1997 17,463 18,531 20,138 19,962
1/31/1998 17,305 18,364 19,853 20,183
2/28/1998 18,818 19,969 21,189 21,638
3/31/1998 19,554 20,750 22,485 22,745
4/30/1998 19,422 20,610 22,636 22,974
5/31/1998 19,000 20,162 22,300 22,579
6/30/1998 18,842 19,994 22,586 23,496
7/31/1998 17,915 19,011 22,187 23,246
8/31/1998 15,324 16,261 18,885 19,889
9/30/1998 16,236 17,229 19,969 21,163
10/31/1998 18,029 19,132 21,516 22,883
11/30/1998 18,573 19,710 22,519 24,269
12/31/1998 18,867 20,021 23,285 25,667
1/31/1999 18,134 19,243 23,471 26,740
2/28/1999 18,325 19,446 23,140 25,909
3/31/1999 18,915 20,072 23,619 26,945
4/30/1999 20,578 21,837 25,824 27,988
5/31/1999 20,354 21,599 25,541 27,329
6/30/1999 21,090 22,380 26,282 28,844
7/31/1999 20,721 21,988 25,513 27,945
8/31/1999 19,935 21,154 24,566 27,806
9/30/1999 19,278 20,457 23,707 27,045
10/31/1999 19,423 20,611 25,072 28,756
11/30/1999 19,359 20,543 24,876 29,340
12/31/1999 19,256 20,434 24,996 31,067
1/31/2000 18,570 19,706 24,180 29,506
2/29/2000 17,443 18,510 22,384 28,949
3/31/2000 19,617 20,817 25,115 31,779
4/30/2000 19,839 21,052 24,823 30,823
5/31/2000 20,675 21,939 25,085 30,192
6/30/2000 19,681 20,885 23,938 30,937
7/31/2000 19,878 21,094 24,238 30,453
8/31/2000 20,939 22,220 25,587 32,344
9/30/2000 21,216 22,514 25,821 30,637
10/31/2000 21,538 22,855 26,455 30,507
11/30/2000 21,513 22,829 25,473 28,103
12/31/2000 23,008 24,416 26,749 28,241
1/31/2001 23,447 24,881 26,852 29,243
2/28/2001 23,134 24,549 26,105 26,578
3/31/2001 22,532 23,910 25,183 24,895
4/30/2001 23,066 24,477 26,418 26,828
5/31/2001 24,103 25,578 27,011 27,008
6/30/2001 23,309 24,735 26,412 26,351
7/31/2001 23,782 25,237 26,356 26,092
8/31/2001 23,719 25,170 25,301 24,460
9/30/2001 22,381 23,750 23,520 22,485
10/31/2001 22,507 23,884 23,317 22,914
11/30/2001 23,896 25,358 24,673 24,671
12/31/2001 24,525 26,025 25,254 24,887
1/31/2002 24,492 25,990 25,060 24,524
2/28/2002 24,983 26,511 25,100 24,051
3/31/2002 26,231 27,836 26,287 24,956
4/30/2002 26,034 27,627 25,386 23,444
5/31/2002 26,329 27,940 25,513 23,271
6/30/2002 24,695 26,206 24,048 21,614
7/31/2002 22,758 24,150 21,813 19,930
8/31/2002 22,987 24,394 21,977 20,060
9/30/2002 20,363 21,609 19,534 17,882
10/31/2002 21,350 22,656 20,981 19,455
11/30/2002 22,929 24,332 22,303 20,599
12/31/2002 21,853 23,190 21,334 19,389
1/31/2003 21,119 22,410 20,817 18,882
2/28/2003 20,200 21,436 20,262 18,598
3/31/2003 20,455 21,706 20,296 18,777
4/30/2003 22,736 24,127 22,083 20,325
5/31/2003 24,355 25,844 23,508 21,394
6/30/2003 24,738 26,251 23,802 21,668
7/31/2003 25,180 26,720 24,156 22,050
8/31/2003 26,175 27,776 24,533 22,479
9/30/2003 25,518 27,079 24,293 22,241
10/31/2003 27,401 29,077 25,780 23,499
11/30/2003 27,808 29,509 26,130 23,705
12/31/2003 29,166 30,950 27,741 24,947
1/31/2004 29,610 31,421 28,228 25,405
2/29/2004 30,499 32,364 28,833 25,758
3/31/2004 30,329 32,184 28,581 25,370
4/30/2004 29,995 31,830 27,882 24,972
5/31/2004 30,329 32,184 28,167 25,314
6/30/2004 31,027 32,925 28,832 25,806
7/31/2004 30,100 31,941 28,426 24,952
8/31/2004 30,211 32,059 28,830 25,052
9/30/2004 30,545 32,453 29,277 25,323
10/31/2004 30,656 32,571 29,764 25,710
11/30/2004 31,472 33,476 31,269 26,750
12/31/2004 32,813 34,899 32,316 27,660
1/31/2005 31,951 33,983 31,742 26,986
2/28/2005 32,513 34,620 32,794 27,553
3/31/2005 32,176 34,262 32,344 27,066
4/30/2005 31,538 33,624 31,765 26,552
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(6) Portfolio turnover rate represents the activity from the Fund's investment
in a single Master Portfolio.
(7) The chart compares the performance of the WELLS FARGO ADVANTAGE C&B LARGE
CAP VALUE FUND Class A shares and Institutional Class shares for the most recent
ten years with the Russell 1000(R) Value Index and the S&P 500 Index. The chart
assumes a hypothetical investment of $10,000 in Class A shares and Institutional
Class shares and reflects all operating expenses and, for Class A shares,
assumes the maximum initial sales charge of 5.75%.
3
WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND FUND EXPENSES (UNAUDITED)
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As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchase payments,
redemption fees (if any) and exchange fees (if any); and (2) ongoing costs,
including management fees; distribution (12b-1) and/or shareholder service 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 period and held for the entire period (November 1, 2004 to April 30,
2005).
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), redemption fees, or exchange fees. 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 Ending
Account Account Expenses
Value Value Paid During Net Annual
11/1/2004 4/30/2005 the Period* Expense Ratio
C & B LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------------------------------------------
C&B Large Cap Value Fund - Class A
Actual $ 1,000.00 $ 1,028.80 $ 6.04 1.20%
- --------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,018.84 $ 6.01 1.20%
- --------------------------------------------------------------------------------------------------------------------
C&B Large Cap Value Fund - Class B
Actual $ 1,000.00 $ 1,023.80 $ 9.78 1.95%
- --------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.12 $ 9.74 1.95%
- --------------------------------------------------------------------------------------------------------------------
C&B Large Cap Value Fund - Class C
Actual $ 1,000.00 $ 1,023.90 $ 9.79 1.95%
- --------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.12 $ 9.74 1.95%
- --------------------------------------------------------------------------------------------------------------------
C&B Large Cap Value Fund - Class D
Actual $ 1,000.00 $ 1,028.70 $ 6.04 1.20%
- --------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,018.84 $ 6.01 1.20%
- --------------------------------------------------------------------------------------------------------------------
C&B Large Cap Value Fund - Administrator Class
Actual $ 1,000.00 $ 1,029.30 $ 4.78 0.95%
- --------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.08 $ 4.76 0.95%
- --------------------------------------------------------------------------------------------------------------------
C&B Large Cap Value Fund - Institutional Class
Actual $ 1,000.00 $ 1,032.30 $ 3.53 0.70%
- --------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.32 $ 3.51 0.70%
* EXPENSES ARE EQUAL TO THE FUND'S ANNAULIZED EXPENSES RATIO 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).
4
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
FACE/SHARE
AMOUNT SECURITY NAME VALUE
INVESTMENTS IN AFFILIATED MASTER PORTFOLIOS - 99.73%
N/A WELLS FARGO ADVANTAGE C&B Large Cap Value Portfolio $ 347,253,009
TOTAL INVESTMENTS IN AFFILIATED MASTER PORTFOLIOS (COST $348,160,292) 347,253,009
----------------
TOTAL INVESTMENTS IN SECURITIES
(COST $348,160,292) 99.73% $ 347,253,009
OTHER ASSETS AND LIABILITIES, NET 0.27 929,320
------ ----------------
TOTAL NET ASSETS 100.00% $ 348,182,329
====== ================
5
WELLS FARGO ADVANTAGE C&B LARGE STATEMENT OF ASSETS AND LIABILITIES --
CAP VALUE FUND APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
C&B
LARGE CAP
VALUE FUND
- ---------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
INVESTMENTS IN AFFILIATED MASTER PORTFOLIOS .................................. $ 347,253,009
---------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ............................ 347,253,009
---------------
RECEIVABLE FOR FUND SHARES ISSUED ............................................ 1,194,883
RECEIVABLES FOR DIVIDENDS AND INTEREST ....................................... 2,380
RECEIVABLE FROM INVESTMENT ADVISOR AND AFFILIATES ............................ 56,094
---------------
TOTAL ASSETS ................................................................... 348,506,366
---------------
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED ............................................. 185,119
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ...................................... 70,762
ACCRUED EXPENSES AND OTHER LIABILITIES ....................................... 68,156
---------------
TOTAL LIABILITIES .............................................................. 324,037
---------------
TOTAL NET ASSETS ............................................................... $ 348,182,329
===============
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
PAID-IN CAPITAL .............................................................. $ 345,990,322
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ................................... 485,663
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................ 2,613,627
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN
CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED
CURRENCIES ................................................................ (907,283)
---------------
TOTAL NET ASSETS ............................................................... $ 348,182,329
---------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- ---------------------------------------------------------------------------------------------------
NET ASSETS - CLASS A ......................................................... $ 39,889,626
SHARES OUTSTANDING - CLASS A ................................................. 4,743,272
NET ASSET VALUE PER SHARE - CLASS A .......................................... $ 8.41
MAXIMUM OFFERING PRICE PER SHARE - CLASS A(2) ................................ $ 8.92
NET ASSETS - CLASS B ......................................................... $ 19,360,248
SHARES OUTSTANDING - CLASS B ................................................. 2,311,674
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B ....................... $ 8.37
NET ASSETS - CLASS C ......................................................... $ 9,039,485
SHARES OUTSTANDING - CLASS C ................................................. 1,079,385
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C ....................... $ 8.37
NET ASSETS - CLASS D ......................................................... $ 128,992,032
SHARES OUTSTANDING - CLASS D ................................................. 15,340,676
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS D ....................... $ 8.41
NET ASSETS - ADMINISTRATOR CLASS ............................................. $ 114,983,907
SHARES OUTSTANDING - ADMINISTRATOR CLASS ..................................... 13,658,422
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS ........... $ 8.42
NET ASSETS - INSTITUTIONAL CLASS ............................................. $ 35,917,031
SHARES OUTSTANDING - INSTITUTIONAL CLASS ..................................... 4,255,809
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS ........... $ 8.44
---------------
INVESTMENTS AT COST ............................................................ $ 348,160,292
===============
(1) EACH 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.
6
STATEMENT OF OPERATIONS --
FOR THE SIX MONTHS ENDED
APRIL 30, 2005 (UNAUDITED) WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
C&B
LARGE CAP
VALUE FUND
- ---------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS .................................................................... $ 656,173
DIVIDENDS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS(1) ..................... 1,711,218
INTEREST ..................................................................... 3,178
INCOME FROM AFFILIATED SECURITIES ............................................ 30,467
SECURITIES LENDING INCOME, NET ............................................... 1,796
EXPENSES ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ......................... (807,357)
WAIVERS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .......................... 14,413
---------------
TOTAL INVESTMENT INCOME......................................................... 1,609,888
---------------
EXPENSES
ADVISORY FEES ................................................................ 94,886
ADMINISTRATION FEES
FUND LEVEL ................................................................. 58,940
CLASS A .................................................................... 37,519
CLASS B .................................................................... 18,283
CLASS C .................................................................... 8,944
CLASS D .................................................................... 124,397
ADMINISTRATOR CLASS ........................................................ 66,145
INSTITUTIONAL CLASS ........................................................ 13,570
CUSTODY FEES ................................................................. 2,530
SHAREHOLDER SERVICING FEES ................................................... 187,783
ACCOUNTING FEES .............................................................. 33,968
DISTRIBUTION FEES (NOTE 3)
CLASS B .................................................................... 48,974
CLASS C .................................................................... 23,956
AUDIT FEES ................................................................... 6,996
LEGAL FEES ................................................................... 249
REGISTRATION FEES ............................................................ 1,049
SHAREHOLDER REPORTS .......................................................... 1,247
TRUSTEES' FEES ............................................................... 3,383
OTHER FEES AND EXPENSES ...................................................... 1,133
---------------
TOTAL EXPENSES ................................................................. 733,952
---------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3).................................. (201,805)
NET EXPENSES ................................................................. 532,147
---------------
NET INVESTMENT INCOME (LOSS) ................................................... 1,077,741
---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ---------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .............. 350,352
SECURITIES TRANSACTIONS ALLOCATED FROM MASTER PORTFOLIOS ..................... 2,386,957
---------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ...................................... 2,737,309
---------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .............. (3,925,995)
SECURITIES TRANSACTIONS ALLOCATED FROM MASTER PORTFOLIOS ..................... (907,283)
---------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ............ (4,833,278)
===============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ......................... (2,095,969)
---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................ $ (1,018,228)
===============
(1) NET OF FOREIGN WITHHOLDING TAXES OF ...................................... $ 93,355
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
7
WELLS FARGO ADVANTAGE
C&B LARGE CAP VALUE FUND STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND
----------------------------------------
FOR THE SIX MONTHS
ENDED APRIL 30, 2005 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS...................................................................... $ 95,377,137 $ 20,418,564
OPERATIONS:
NET INVESTMENT INCOME (LOSS).............................................................. 1,077,741 131,947
NET REALIZED GAIN (LOSS) ON INVESTMENTS................................................... 2,737,309 1,641,376
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS....................... (4,833,278) 1,152,621
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................. (1,018,228) 2,925,944
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A ................................................................................ (68,720) 0
CLASS B ................................................................................ (24,136) 0
CLASS C ................................................................................ (12,175) 0
CLASS D ................................................................................ (256,921) (88,344)
ADMINISTRATOR CLASS .................................................................... (156,717) 0
INSTITUTIONAL CLASS .................................................................... (122,787) 0
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A ................................................................................ (146,170) 0
CLASS B ................................................................................ (78,997) 0
CLASS C ................................................................................ (38,313) 0
CLASS D ................................................................................ (564,190) 0
ADMINISTRATOR CLASS .................................................................... (302,387) 0
INSTITUTIONAL CLASS .................................................................... (167,766) 0
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ........................................................ (1,939,279) (88,344)
--------------- ---------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A ...................................................... 33,250,764 11,504,396
REINVESTMENT OF DISTRIBUTIONS - CLASS A .................................................. 203,320 0
COST OF SHARES REDEEMED - CLASS A ........................................................ (4,616,957) (225,395)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A .. 28,837,127 11,279,001
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS B ...................................................... 14,969,022 6,011,658
REINVESTMENT OF DISTRIBUTIONS - CLASS B .................................................. 99,110 0
COST OF SHARES REDEEMED - CLASS B ........................................................ (1,337,852) (270,318)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B .. 13,730,280 5,741,340
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS C ...................................................... 6,916,068 2,720,503
REINVESTMENT OF DISTRIBUTIONS - CLASS C .................................................. 49,753 0
COST OF SHARES REDEEMED - CLASS C ........................................................ (575,069) (11,332)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C .. 6,390,752 2,709,171
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS D ...................................................... 87,103,628 47,900,214
REINVESTMENT OF DISTRIBUTION - CLASS D ................................................... 802,914 82,043
COST OF SHARES REDEEMED - CLASS D ........................................................ (9,233,826) (19,799,697)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS D .. 78,672,716 28,182,560
--------------- ---------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ................................. 182,252,075 24,787,502
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ............................. 446,400 0
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ................................... (80,985,669) (9,899,934)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS ........................................................................ 101,712,806 14,897,568
--------------- ---------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) ................................. 28,635,495 9,311,383
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ............................. 283,524 0
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) ................................... (2,500,000) 0
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
INSTITUTIONAL CLASS ........................................................................ 26,419,019 9,311,383
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ............ 255,762,700 72,121,023
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS ...................................................... 252,805,192 74,958,573
=============== ===============
ENDING NET ASSETS .......................................................................... $ 348,182,329 $ 95,377,137
=============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
8
STATEMENTS OF CHANGES
IN NET ASSETS WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND
---------------------------------------
FOR THE SIX MONTHS
ENDED APRIL 30, 2005 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A .................................................................... 3,877,102 1,406,791
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................. 23,643 0
SHARES REDEEMED - CLASS A ................................................................ (536,822) (27,442)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .................................... 3,363,923 1,379,349
--------------- ---------------
SHARES SOLD - CLASS B .................................................................... 1,755,111 734,857
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................. 11,563 0
SHARES REDEEMED - CLASS B ................................................................ (156,305) (33,552)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .................................... 1,610,369 701,305
--------------- ---------------
SHARES SOLD - CLASS C .................................................................... 810,136 332,319
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................. 5,804 0
SHARES REDEEMED - CLASS C ................................................................ (67,485) (1,389)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .................................... 748,455 330,930
--------------- ---------------
SHARES SOLD - CLASS D .................................................................... 10,185,581 5,852,480
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS D ................................. 93,445 10,360
SHARES REDEEMED - CLASS D ................................................................ (1,080,337) (2,472,145)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS D .................................... 9,198,689 3,390,695
--------------- ---------------
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ............................................... 21,282,866 3,016,249
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ............ 51,886 0
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ........................................... (9,492,653) (1,199,926)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ........................ 11,842,099 1,816,323
--------------- ---------------
SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) ............................................... 3,348,778 1,162,463
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ............ 32,921 0
SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) ........................................... (288,353) 0
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ........................ 3,093,346 1,162,463
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS .... 29,856,881 8,781,065
=============== ===============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................... $ 485,663 $ 49,379
=============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
9
WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT REALIZED
SHARE (LOSS) INVESTMENTS INCOME GAINS
- ---------------------------------------------------------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... $ 8.27 0.01(4) 0.23 (0.03) (0.07)
JULY 26, 2004(3) TO OCTOBER 31, 2004 ............... $ 8.01 0.00 0.26 0.00 0.00
CLASS B
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... $ 8.26 (0.01)(4) 0.21 (0.02) (0.07)
JULY 26, 2004(3) TO OCTOBER 31, 2004 ............... $ 8.01 (0.01) 0.26 0.00 0.00
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... $ 8.26 (0.01)(4) 0.21 (0.02) (0.07)
JULY 26, 2004(3) TO OCTOBER 31, 2004 ............... $ 8.01 (0.01) 0.26 0.00 0.00
CLASS D
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... $ 8.27 0.02(4) 0.19 0.00 (0.07)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............... $ 7.42 0.03 0.85 (0.03) 0.00
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............... $ 6.49 0.05 1.61 (0.05) (0.68)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............... $ 7.13 0.05 (0.38) (0.05) (0.26)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............... $ 8.71 0.07 0.27 (0.11) (1.81)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............... $ 12.06 0.12 0.54 (0.09) (3.92)
ADMINISTRATOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... $ 8.27 0.02(4) 0.24 (0.04) (0.07)
JULY 26, 2004(3) TO OCTOBER 31, 2004 ............... $ 8.01 0.01 0.25 0.00 0.00
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED)...... $ 8.28 0.03(4) 0.20 0.00 (0.07)
JULY 26, 2004(3) TO OCTOBER 31, 2004 ............... $ 8.01 0.02 0.25 0.00 0.00
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
IN EXCESS OF NET ASSET -------------------------------------------------
REALIZED VALUE PER NET INVESTMENT GROSS EXPENSES NET
GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- ---------------------------------------------------------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... 0.00 $ 8.41 0.82% 1.38% (0.18)% 1.20%
JULY 26, 2004(3) TO OCTOBER 31, 2004 ............... 0.00 $ 8.27 0.18% 1.60% (0.40)% 1.20%
CLASS B
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... 0.00 $ 8.37 0.10% 2.14% (0.19)% 1.95%
JULY 26, 2004(3) TO OCTOBER 31, 2004 ............... 0.00 $ 8.26 (0.60)% 2.35% (0.40)% 1.95%
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... 0.00 $ 8.37 0.08% 2.14% (0.19)% 1.95%
JULY 26, 2004(3) TO OCTOBER 31, 2004 ............... 0.00 $ 8.26 (0.58)% 2.35% (0.40)% 1.95%
CLASS D
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... 0.00 $ 8.41 0.93% 1.38% (0.18)% 1.20%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............... 0.00 $ 8.27 0.40% 1.30% (0.14)% 1.16%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............... 0.00 $ 7.42 0.76% 1.20% (0.04)% 1.16%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............... 0.00 $ 6.49 0.59% 1.60% (0.46)% 1.14%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............... 0.00 $ 7.13 0.91% 1.00% 0.00% 1.00%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............... 0.00 $ 8.71 1.16% 1.00% 0.00% 1.00
ADMINISTRATOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... 0.00 $ 8.42 0.97% 1.08% (0.13)% 0.95%
JULY 26, 2004(3) TO OCTOBER 31, 2004 ............... 0.00 $ 8.27 0.47% 1.39% (0.44)% 0.95%
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... 0.00 $ 8.44 1.45% 0.94% (0.24)% 0.70%
JULY 26, 2004(3) TO OCTOBER 31, 2004 ............... 0.00 $ 8.28 0.91% 1.22% (0.52)% 0.70%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(6) (000'S OMITTED)
- ------------------------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND
- ------------------------------------------------------------------------------------------------
CLASS A
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... 2.88% 10%(5) $ 39,890
JULY 26, 2004(3) TO OCTOBER 31, 2004 ............... 3.25% 30% $ 11,408
CLASS B
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... 2.38% 10%(5) $ 19,360
JULY 26, 2004(3) TO OCTOBER 31, 2004 ............... 3.12% 30% $ 5,790
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... 2.39% 10%(5) $ 9,039
JULY 26, 2004(3) TO OCTOBER 31, 2004 ............... 3.12% 30% $ 2,732
CLASS D
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... 2.87% 10%(5) $ 128,992
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............... 11.88% 30% $ 50,790
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............... 28.34% 26% $ 20,419
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............... (5.14)% 39% $ 14,383
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............... 4.50% 41% $ 38,850
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............... 10.89% 48% $ 35,251
ADMINISTRATOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... 2.93% 10%(5) $ 114,984
JULY 26, 2004(3) TO OCTOBER 31, 2004 ............... 3.37% 30% $ 9,627
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ..... 3.23% 10%(5) $ 35,917
JULY 26, 2004(3) TO OCTOBER 31, 2004 ............... 3.37% 30% $ 15,030
11
WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS
(1) During each period, various fees and expenses were waived and reimbursed
as indicated. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio in the absence of any waivers and reimbursements (Note
3).
(2) Total return calculations do not include any sales charges, and would have
been lower had certain expenses not been waived or reimbursed during the
periods shown. Returns for periods less than one year are not annualized.
(3) Commencement of operations.
(4) Calculated based upon average shares outstandings.
(5) Portfolio turnover rate represents the activity from the Fund's investment
in a single Master Portfolio.
(6) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
12
NOTES TO FINANCIAL
STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
1. ORGANIZATION
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Trust commenced operations on November 8,
1999, and at April 30, 2005 was comprised of 108 separate series (each, a
"Fund", collectively, the "Funds"). These financial statements present the C&B
Large Cap Value Fund. The Fund is a diversified series of the Trust.
On February 3, 2004, the Board of Trustees of the Trust and on February
18, 2004, the Board of Trustees of The Advisors' Inner Circle Fund approved an
Agreement and Plan of Reorganization of the Cooke & Bieler Portfolios (C&B
Portfolios) into the Funds as defined above. Effective at the close of business
on July 23, 2004, the Wells Fargo C&B Large Cap Value Fund acquired all of the
net assets of the C&B Large Cap Value Portfolio. Effective April 11, 2005, the
Wells Fargo C&B Large Cap Value Fund changed its name to Wells Fargo Advantage
C&B Large Cap Value Fund. Also at this time, the Institutional Class changed its
name to Administrator Class and the Select Class changed its name to
Institutional Class.
The separate classes of shares offered by the Fund differ principally in
applicable sales charges, distribution, shareholder servicing and administration
fees. Shareholders of each class bear certain expenses that pertain to that
particular class. All shareholders bear the common expenses of a Fund, earn
income from the portfolio and are allocated unrealized gains and losses pro rata
based on the average daily net assets of each class, without distinction between
share classes. Dividends are determined separately for each class based on
income and expenses allocable to each class. Realized gains and losses are
allocated to each class pro rata based upon the net assets of each class on the
date realized. Differences in per share dividend rates generally result from the
relative weightings of pro rata income and realized gain allocations and from
differences in separate class expenses, including distribution, shareholder
servicing and administration fees.
The C&B Large Cap Value Fund seeks to achieve its investment objective by
investing all investable assets in one or more separate diversified portfolios
(each, a "Master Portfolio", collectively, the "Master Portfolios") of Wells
Fargo Master Trust, a registered open-end management investment company. Each
Master Portfolio directly acquires portfolio securities, and a Fund investing in
a Master Portfolio acquires an indirect interest in those securities. Each Fund
accounts for its investment in the Master Portfolios as partnership investments
and records daily its share of the Master Portfolio's income, expenses, and
realized and unrealized gains and losses. The financial statements of the Master
Portfolios are in this report and should be read in conjunction with each Fund's
financial statements. The ownership percentage of the Master Portfolio in which
the C&B Large Cap Value Fund invests is as follows:
C&B Large Cap Value Fund
- --------------------------------------------------------------------------------
C&B LARGE CAP PORTFOLIO 57.57%
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
The following significant accounting policies, which are consistently
followed in the preparation of the financial statements of the Trust, are in
conformity with accounting principles generally accepted in the United States of
America ("GAAP") for investment companies.
The preparation of financial statements in conformity with GAAP requires
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.
In the normal course of business, the Trust may enter into contracts that
provide certain indemnifications. The Trust's maximum exposure under these
arrangements is dependent on future claims that may be made against the Funds
and, therefore, cannot be estimated; however, based on experience, the risk of
loss from such claims is considered remote.
SECURITY VALUATION
Investments in the Master Portfolios are valued daily based upon each
fund's proportionate share of each Master Portfolio's net assets, which are also
valued daily. Securities held in the Master Portfolios are valued as discussed
in the Notes to Financial Statements of the Master Portfolios, which are
included elsewhere in this report.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded on a trade date basis. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
Interest income is accrued daily and bond discounts are accreted and premiums
are amortized daily.
Dividend income is recognized on the ex-dividend date, except for certain
dividends from foreign securities, which are recorded as soon as the Fund is
informed of 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
Net investment income, if any, is declared and distributed to shareholders
annually. Distributions to shareholders from net realized capital gains, if any,
are declared and distributed at least annually.
For federal income tax purposes, a Fund may designate as capital gains
dividends the earnings and profits distributed to shareholders on the redemption
of fund shares during the year.
Distributions are based on amounts calculated in accordance with the
applicable federal income tax regulations, which may differ from GAAP. The
timing and character of distributions made during the period from net investment
income or net realized gains may also differ from their ultimate
characterization for federal income tax purposes. To the extent that these
differences
13
WELLS FARGO ADVANTAGE C&B
LARGE CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
are permanent in nature, such amounts are reclassified within the capital
accounts based on their federal tax-basis treatment. Temporary differences do
not require reclassifications.
At October 31, 2004, as a result of permanent book-to-tax differences, the
following reclassification adjustments were made on the Statement of Assets and
Liabilities:
Undistributed Net Undistributed Net
Fund Investment Income Realized Gain/Loss Paid-in Capital
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND $ (7) $ 3 $ 4
- --------------------------------------------------------------------------------
FEDERAL INCOME TAXES
Each Fund is treated as a separate entity for federal income tax purposes.
It is the policy of each Fund of the Trust to continue to qualify as a regulated
investment company by complying with the provisions applicable to regulated
investment companies, as defined under subchapter M of the Internal Revenue Code
(the "Code"), and to make distributions of 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 at April 30, 2005.
3. EXPENSES
- --------------------------------------------------------------------------------
ADVISORY FEES
The Trust has entered into an advisory contract with Wells Fargo Funds
Management, LLC ("Funds Management"). The adviser is responsible for
implementing investment policies and guidelines and for supervising the
sub-adviser, who is responsible for day-to-day portfolio management.
For each Fund that invests all of its assets in a single Master Portfolio,
Funds Management does not currently receive investment advisory fees. Funds
Management acts as adviser to the Master Portfolios, and is entitled to receive
fees from the Master Portfolios for those services. Prior to December 6, 2004,
the C&B Large Cap Value Fund invested its assets directly in a portfolio of
securities. Accordingly, Funds Management was entitled to receive an advisory
fee for its services as adviser. Funds Management was paid a monthly fee at the
following annual rates:
Advisory Fees
Average Daily (% of
Fund Net Assets Daily Net Assets)
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND $ 0 - 499 million 0.750
- --------------------------------------------------------------------------------
$500 - 999 million 0.700
- --------------------------------------------------------------------------------
$ 1 - 2.99 billion 0.650
- --------------------------------------------------------------------------------
$ 3 - 4.99 billion 0.625
- --------------------------------------------------------------------------------
>$ 4.99 billion 0.600
- --------------------------------------------------------------------------------
Each Fund that invests its assets in one or more of the Master Portfolios
may withdraw its investments from its corresponding Master Portfolio(s) at any
time if the Board of Trustees determines that it is in the best interest of the
Fund to do so. Upon such redemption and subsequent direct investment in a
portfolio of securities, Funds Management (and the corresponding sub-adviser, if
any) may receive an investment advisory fee for the direct management of those
assets.
ADMINISTRATION AND TRANSFER AGENT FEES
The Trust has entered into an Administration Agreement with Funds
Management. Under this Agreement, for providing administrative services, which
includes paying fees and expenses for services provided by the transfer agent,
sub-transfer agents, omnibus account servicers and record-keepers, Funds
Management is entitled to receive the following annual fees:
Admin Fees
Average Daily (% of Average
Net Assets Daily Net Assets)
- --------------------------------------------------------------------------------
FUND LEVEL $0 - 4.99 billion 0.05
$5 - 9.99 billion 0.04
>$ 9.99 billion 0.03
- --------------------------------------------------------------------------------
CLASS A 0.28
- --------------------------------------------------------------------------------
CLASS B 0.28
- --------------------------------------------------------------------------------
CLASS C 0.28
- --------------------------------------------------------------------------------
CLASS D 0.28
- --------------------------------------------------------------------------------
ADMINISTRATOR CLASS* 0.10
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS** 0.08
- --------------------------------------------------------------------------------
* Prior to April 11, 2005 the class level fee was 0.20%.
** Prior to April 11, 2005 the class level fee was 0.10%.
14
NOTES TO FINANCIAL
STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
The Trust has entered into an agreement with Boston Financial Data
Services ("BFDS") as the transfer agent for the Trust. BFDS is entitled to
receive fees from the administrator for its services as transfer agent.
CUSTODY FEES
The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"),
whereby WFB is responsible for providing custody services. WFB does not receive
a custodial fee for any Fund that invests its assets solely in one or more
Master Portfolios or other investment companies.
Prior to December 6, 2004, the C&B Large Cap Value Fund invested its
assets in a portfolio of securities. Accordingly, WFB was entitled to certain
transaction charges plus a monthly fee for custody services at the following
annual rates:
% of Average
Fund Daily Net Assets
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND 0.02
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICING FEES
The Trust has entered into contracts with one or more shareholder
servicing agents, whereby each Fund is charged the following annual fees:
% of Average
Share Class Daily Net Assets
- --------------------------------------------------------------------------------
CLASS A, CLASS B, CLASS C, CLASS D, ADMINISTRATOR CLASS 0.25
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.00
For the six months ended April 30, 2005, shareholder servicing fees paid
were as follows:
Administrator
Fund Class A Class B Class C Class D Class
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND $ 33,608 $ 16,378 $ 8,015 $ 111,450 $ 18,332
- --------------------------------------------------------------------------------
DISTRIBUTION FEES
The Trust has adopted a Distribution Plan (the "Plan") for Class B and
Class C shares of the Fund pursuant to Rule 12b-1 under the 1940 Act.
Distribution fees are charged to the Class B and Class C shares and paid to
Wells Fargo Funds Distributor, LLC at an annual rate of 0.75% of average daily
net assets.
Prior to April 11, 2005, Stephens Inc. served as distributor to the Fund
and received distribution fees at an annual rate of 0.75% of average daily net
assets of the funds' Class B and Class C shares.
For the six months ended April 30, 2005, distribution fees paid are
disclosed on the Statement of Operations.
OTHER FEES
PFPC, Inc. ("PFPC") serves as fund accountant for the Trust and is
entitled to receive an annual asset based fee, and an annual fixed fee from each
Fund. PFPC is also entitled to be reimbursed for all out-of-pocket expenses
reasonably incurred in providing these services.
WAIVED FEES AND REIMBURSED EXPENSES
All amounts shown as waived fees or reimbursed expenses on the Statement
of Operations, for the six months ended April 30, 2005, were waived by Funds
Management proportionately from all classes, first from advisory fees, and then
from any class specific expenses, if applicable. The Fund's Adviser has
committed to waive fees and/or reimburse expenses to the extent necessary to
maintain a certain net operating expense ratio for the Fund. Net operating
expense ratios during the period were as follows:
Net Operating Expense Ratios
Administrator Institutional
Fund Class A Class B Class C Class D Class Class
- -------------------------------------------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND 1.20% 1.95% 1.95% 1.20% 0.95% 0.70%
- -------------------------------------------------------------------------------------------------------------------
15
WELLS FARGO ADVANTAGE
C&B LARGE CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
4. INVESTMENT PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date) for the six
months ended April 30, 2005, were as follows:
Purchases Sales
Fund at Cost Proceeds
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND* $ 307,818,255 $ 28,865,047
- --------------------------------------------------------------------------------
* Since December 6, 2004, the Fund seeks to achieve it's investment
objective by investing some or all of its investable assets in one or more
Master Portfolios. Purchases and sales related to these investments have been
calculated by aggregating the results of multiplying such Fund's ownership
percentage of the respective Master Portfolio by the corresponding Master
Portfolio's purchases and sales.
5. BANK BORROWINGS
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust and Wells Fargo Variable Trust (excluding the
money market funds) share in a revolving Credit Agreement with The Bank of New
York, whereby the Funds are permitted to use bank borrowings for temporary or
emergency purposes, such as to fund shareholder redemption requests. The
agreement permits borrowings of up to $150 million, collectively. Interest is
charged to each Fund based on its borrowing at a rate equal to the Federal Funds
Rate plus 0.40%. In addition, the Funds pay a quarterly commitment fee equal to
0.1% per annum of the credit line. For the six months ended April 30, 2005,
there were no borrowings under the agreement.
16
PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED) WELLS FARGO ADVANTAGE MASTER PORTFOLIOS
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE PORTFOLIO
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 93.81%
APPAREL & ACCESSORY STORES - 1.41%
179,000 KOHL'S CORPORATION+ $ 8,520,400
---------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 2.82%
255,000 JONES APPAREL GROUP INCORPORATED 7,764,750
163,700 VF CORPORATION 9,263,783
17,028,533
---------------
BUSINESS SERVICES - 8.20%
379,000 MANPOWER INCORPORATED 14,610,450
490,000 MICROSOFT CORPORATION 12,397,000
162,200 OMNICOM GROUP INCORPORATED 13,446,380
1,688,000 PARAMETRIC TECHNOLOGY CORPORATION+ 8,980,160
49,433,990
---------------
CHEMICALS & ALLIED PRODUCTS - 5.18%
277,000 BRISTOL-MYERS SQUIBB COMPANY 7,202,000
265,600 COLGATE PALMOLIVE COMPANY 13,224,224
319,900 MERCK & Company Incorporated 10,844,610
31,270,834
---------------
COMMUNICATIONS - 4.73%
436,700 COMCAST CORPORATION+ 13,856,491
561,000 VODAFONE GROUP PLC ADR 14,664,540
28,521,031
---------------
DEPOSITORY INSTITUTIONS - 6.38%
265,300 BANK OF AMERICA CORPORATION 11,949,112
283,900 JP MORGAN CHASE & Company 10,075,611
356,100 STATE STREET CORPORATION 16,462,503
38,487,226
---------------
EATING & DRINKING PLACES - 6.58%
357,900 ARAMARK CORPORATION CLASS B 8,772,129
534,000 MCDONALD'S CORPORATION 15,651,540
356,000 WENDY'S INTERNATIONAL INCORPORATED 15,283,080
39,706,749
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT - 5.42%
589,000 FLEXTRONICS INTERNATIONAL LIMITED+ 6,567,350
718,000 MOLEX INCORPORATED CLASS A 16,435,020
607,000 NOKIA OYJ ADR 9,699,860
32,702,230
---------------
FOOD & KINDRED PRODUCTS - 1.77%
228,100 ANHEUSER-BUSCH COMPANIES INCORPORATED 10,691,047
---------------
FURNITURE & FIXTURES - 2.11%
472,200 LEGGETT & PLATT INCORPORATED 12,730,512
---------------
17
PORTFOLIO OF INVESTMENTS
WELLS FARGO ADVANTAGE MASTER PORTFOLIOS -- APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE PORTFOLIO
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
GENERAL MERCHANDISE STORES - 1.38%
820,200 BIG LOTS INCORPORATED+ $ 8,349,636
---------------
HEALTH SERVICES - 2.11%
227,912 HCA INCORPORATED 12,726,606
---------------
HOLDING & OTHER INVESTMENT OFFICES - 2.44%
5,270 Berkshire Hathaway Incorporated+ 14,745,513
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 6.66%
420,900 DOVER CORPORATION 15,303,924
182,000 EATON CORPORATION 10,683,400
317,500 PITNEY BOWES INCORPORATED 14,198,600
40,185,924
---------------
INSURANCE CARRIERS - 6.46%
238,800 ALLSTATE CORPORATION 13,411,008
263,700 MBIA INCORPORATED 13,812,606
300,700 PRINCIPAL FINANCIAL GROUP INCORPORATED 11,751,356
38,974,970
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL &
OPTICAL GOODS - 4.70%
362,400 BAXTER INTERNATIONAL INCORPORATED 13,445,040
105,210 BECTON DICKINSON & Company 6,156,889
296,000 BOSTON SCIENTIFIC CORPORATION+ 8,755,680
28,357,609
---------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 2.25%
717,600 HASBRO INCORPORATED 13,576,992
---------------
MISCELLANEOUS RETAIL - 2.13%
474,900 ZALE CORPORATION+ 12,836,547
---------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 6.03%
346,000 AMERICAN EXPRESS COMPANY 18,234,200
260,299 COUNTRYWIDE FINANCIAL CORPORATION 9,420,221
141,600 FREDDIE MAC 8,711,232
36,365,653
---------------
PAPER & ALLIED PRODUCTS - 2.04%
196,700 KIMBERLY-CLARK CORPORATION 12,283,915
103 NEENAH PAPER INCORPORATED 3,099
12,287,014
---------------
PETROLEUM REFINING & RELATED INDUSTRIES - 4.84%
314,000 EXXONMOBIL CORPORATION 17,907,420
193,700 ROYAL DUTCH PETROLEUM COMPANY 11,283,025
29,190,445
---------------
18
PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED) WELLS FARGO ADVANTAGE MASTER PORTFOLIOS
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE PORTFOLIO
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
PRIMARY METAL INDUSTRIES - 2.27%
224,000 ENGELHARD CORPORATION $ 6,861,120
157,000 HUBBELL INCORPORATED CLASS B 6,821,650
13,682,770
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 1.97%
154,050 GANNETT COMPANY INCORPORATED 11,861,850
---------------
TRANSPORTATION EQUIPMENT - 2.68%
153,900 GENERAL DYNAMICS CORPORATION 16,167,195
---------------
WATER TRANSPORTATION - 1.25%
154,000 CARNIVAL CORPORATION 7,527,520
---------------
TOTAL COMMON STOCKS (COST $570,018,975) 565,928,796
---------------
SHORT-TERM INVESTMENTS - 7.03%
42,401,961 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 42,401,961
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $42,401,961) 42,401,961
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $612,420,936)* 100.84% $ 608,330,757
OTHER ASSETS AND LIABILITIES, NET (0.84) (5,074,299)
------ ---------------
TOTAL NET ASSETS 100.00% $ 603,256,458
====== ===============
+ NON-INCOME EARNING SECURITIES.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $42,401,961.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
19
STATEMENT OF ASSETS AND LIABILITIES --
WELLS FARGO ADVANTAGE MASTER PORTFOLIOS APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
C&B LARGE
CAP VALUE
PORTFOLIO
- -------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ........................... $ 565,928,796
INVESTMENTS IN AFFILIATES ................................ 42,401,961
---------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ........ 608,330,757
---------------
RECEIVABLE FOR INVESTMENTS SOLD .......................... 3,895,247
RECEIVABLES FOR DIVIDENDS AND INTEREST ................... 638,708
---------------
TOTAL ASSETS ............................................... 612,864,712
---------------
LIABILITIES
FOREIGN TAXES PAYABLE .................................... 163,110
PAYABLE FOR INVESTMENTS PURCHASED ........................ 9,058,041
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) .... 383,204
ACCRUED EXPENSES AND OTHER LIABILITIES ................... 3,899
---------------
TOTAL LIABILITIES .......................................... 9,608,254
---------------
TOTAL NET ASSETS ........................................... $ 603,256,458
===============
INVESTMENTS AT COST ........................................ $ 612,420,936
===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
20
STATEMENT OF OPERATIONS --
FOR THE PERIOD ENDED APRIL 30, 2005
(UNAUDITED) WELLS FARGO ADVANTAGE MASTER PORTFOLIOS
- -------------------------------------------------------------------------------
C&B LARGE
CAP VALUE
PORTFOLIO(2)
- -------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1) ............................................. $ 2,568,892
INTEREST ................................................. 97,697
INCOME FROM AFFILIATED SECURITIES ........................ 335,572
---------------
TOTAL INVESTMENT INCOME .................................... 3,002,161
---------------
EXPENSES
ADVISORY FEES ............................................ 1,358,882
CUSTODY FEES ............................................. 36,436
AUDIT FEES ............................................... 7,250
LEGAL FEES ............................................... 500
REGISTRATION FEES ........................................ 244
SHAREHOLDER REPORTS ...................................... 4,028
TRUSTEES' FEES ........................................... 2,413
OTHER FEES AND EXPENSES .................................. 1,129
---------------
TOTAL EXPENSES ............................................. 1,410,882
---------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ............. (14,965)
NET EXPENSES ............................................. 1,395,917
---------------
NET INVESTMENT INCOME (LOSS) ............................... 1,606,244
---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY
TRANSLATION .............................................. 2,261,994
---------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS .................. 2,261,994
---------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY
TRANSLATION .............................................. (4,090,179)
---------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS .............................................. (4,090,179)
===============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ..... (1,828,185)
---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS ............................................... $ (221,941)
===============
(1) NET OF FOREIGN WITHHOLDING TAXES OF .................. $ 163,110
(2) THIS PORTFOLIO COMMENCED OPERATIONS ON DECEMBER 6, 2004.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
21
WELLS FARGO ADVANTAGE MASTER PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
C&B LARGE CAP
VALUE PORTFOLIO(1)
-------------------
FOR THE PERIOD
ENDED APRIL 30, 2005
(UNAUDITED)
- ---------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS.......................................................... $ 0
OPERATIONS:
NET INVESTMENT INCOME (LOSS).................................................. 1,606,244
NET REALIZED GAIN (LOSS) ON INVESTMENTS....................................... 2,261,994
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS........... (4,090,179)
---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................. (221,941)
---------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
CONTRIBUTIONS................................................................. 614,030,251
WITHDRAWALS................................................................... (10,551,852)
---------------
NET INCREASE (DECREASE) FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS.... 603,478,399
---------------
NET INCREASE (DECREASE) IN NET ASSETS........................................... 603,256,458
===============
ENDING NET ASSETS............................................................... $ 603,256,458
---------------
(1) THIS PORTFOLIO COMMENCED OPERATIONS ON DECEMBER 6, 2004.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
22
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE MASTER PORTFOLIOS
- --------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
----------------------------------------------- PORTFOLIO
NET INVESTMENT GROSS EXPENSES NET TOTAL TURNOVER
INCOME (LOSS) EXPENSES WAIVED EXPENSES RETURN(2) RATE
- ------------------------------------------------------------------------------------------------------------------------
C&B LARGE CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------
DECEMBER 6, 2004(3) APRIL 30, 2005 (UNAUDITED)... 0.89% 0.78% (0.01)% 0.77% 2.78% 10%
(1) During each period, various fees and expenses were waived and reimbursed
as indicated. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio in the absence of any waivers and reimbursements (Note
3).
(2) Total return calculations do not include any sales charges, and would have
been lower had certain expenses not been waived or reimbursed during the
periods shown. Returns for periods less than year are not annualised.
(3) Commencement of operations
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
23
WELLS FARGO ADVANTAGE
MASTER PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
- --------------------------------------------------------------------------------
Wells Fargo Master Trust (the "Trust") is registered as an open-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Trust currently has 18 separate investment
portfolios (each, a "Fund" and collectively, the "Funds"). These financial
statements present the C&B Large Cap Value Portfolio.
Interests in the Funds are sold without any sales charge in private
placement transactions to qualified investors, including open-end management
investment companies.
2. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
The following significant accounting policies, which are consistently
followed in the preparation of the financial statements of the Trust, are in
conformity with accounting principles generally accepted in the United States of
America ("GAAP") for investment companies.
The preparation of financial statements in conformity with GAAP requires
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.
In the normal course of business, the Trust may enter into contracts that
provide certain indemnifications. The Trust's maximum exposure under these
arrangements is dependent on future claims that may be made against the Funds
and, therefore, cannot be estimated; however, based on experience, the risk of
loss from such claims is considered remote.
SECURITY VALUATION
Investments in securities are valued each business day as of the close of
regular trading on the New York Stock Exchange, which is usually 4:00 p.m.
(Eastern Time). Securities which are traded on a national or foreign securities
exchange are valued at the last reported sales price. Securities listed on The
Nasdaq Stock Market, Inc. are valued at the Nasdaq Official Closing Price
("NOCP"), and if no NOCP is available, then at the last reported sales price. In
the absence of any sale of such securities, and in the case of other securities,
including U.S. Government obligations, but excluding debt securities maturing in
60 days or less, the valuations are based on the latest quoted bid prices.
Debt securities maturing in 60 days or less generally are valued at
amortized cost. The amortized cost method involves valuing a security at its
cost, plus accretion of discount or minus amortization of premium over the
period until maturity, which approximates market value.
Investments which are not valued using any of the methods discussed above,
are valued at their fair value as determined by procedures approved by the Board
of Trustees.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded on a trade date basis. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
Interest income is accrued daily and bond discounts are accreted and premiums
are amortized daily.
Dividend income is recognized on the ex-dividend date, except for certain
dividends from foreign securities, which are recorded as soon as the Fund is
informed of the ex-dividend date. Dividend income from foreign securities is
recorded net of foreign taxes withheld where recovery of such taxes is not
assured.
FEDERAL INCOME TAXES
Each Fund of the Trust is treated as a separate entity for federal income
tax purposes. The Funds of the Trust are not required to pay federal income
taxes on their net investment income and net capital gain as they are treated as
partnerships for federal income tax purposes. All interest, dividends, gains and
losses of a Fund are deemed to have been "passed through" to the interestholders
in proportion to their holdings of the Fund regardless of whether such interest,
dividends, or gains have been distributed by the Fund.
24
NOTES TO FINANCIAL
STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE MASTER PORTFOLIOS
- --------------------------------------------------------------------------------
3. EXPENSES
- --------------------------------------------------------------------------------
ADVISORY FEES
The Trust has entered into an advisory contract with Wells Fargo Funds
Management, LLC ("Funds Management"). The adviser is responsible for
implementing investment policies and guidelines and for supervising the
sub-adviser, who is responsible for day-to-day portfolio management.
Pursuant to the contract, Funds Management is entitled to receive an
advisory fee for its services as adviser. Funds Management may retain the
services of certain investment sub-advisers to provide daily portfolio
management. The fees related to sub-advisory services are borne directly by the
adviser and do not increase the overall fees paid by a Fund to the adviser.
Funds Management and the investment sub-adviser(s) are entitled to be paid a
monthly fee at the following annual rates:
Advisory Fees Sub-Advisory Fees
Average Daily (% of Average Average Daily (% of Average
Portfolio Net Assets Daily Net Assets) Sub-Adviser Net Assets Daily Net Assets)
- ---------------------------------------------------------------------------------------------------------------------------
C&B LARGE CAP $0 - $499 million 0.750 COOKE & BIELER, LP $0 - $250 million 0.45
- ---------------------------------------------------------------------------------------------------------------------------
VALUE PORTFOLIO $500 - $999 million 0.700 $250 - $500 million 0.40
- ---------------------------------------------------------------------------------------------------------------------------
$1 - $2.99 billion 0.650 $500 - $750 million 0.35
- ---------------------------------------------------------------------------------------------------------------------------
$3 - $4.99 billion 0.625 >$750 million 0.30
- ---------------------------------------------------------------------------------------------------------------------------
>$4.99 billion 0.600
- ---------------------------------------------------------------------------------------------------------------------------
ADMINISTRATION AND TRANSFER AGENT FEES
Currently, there are no administration or transfer agency fees charged to
the Master Trust.
CUSTODY FEES
The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"),
whereby WFB is responsible for providing custody services. Pursuant to the
contract, WFB is entitled to certain transaction charges plus a monthly fee for
custody services at the following annual rate:
Portfolio % of Average Daily Net Assets
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE PORTFOLIO 0.02
- --------------------------------------------------------------------------------
OTHER FEES
PFPC Inc. ("PFPC") serves as fund accountant for the Trust. PFPC currently
does not receive a fee for its services, but is entitled to be reimbursed for
all out-of-pocket expenses reasonably incurred in providing these services.
WAIVED FEES AND REIMBURSED EXPENSES
All amounts shown as waived fees or reimbursed expenses on the Statement
of Operations, for the period ended April 30, 2005, were waived by Funds
Management, first from advisory fees, and then any remaining amount
consecutively from administration, custody and shareholder servicing fees
collected, if any.
4. INVESTMENT PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date) for the period
ended April 30, 2005, were as follows:
Portfolio Purchases at Cost Sales Proceeds
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE PORTFOLIO $ 534,685,175 $ 50,139,043
- --------------------------------------------------------------------------------
25
WELLS FARGO ADVANTAGE MASTER PORTFOLIOS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
PROXY VOTING INFORMATION
A description of the policies and procedures that the Fund(s) uses to
determine how to vote proxies relating to portfolio securities and information
regarding the results of such voting during the most recent 12-month period
ended June 30, is available without charge, upon request, by calling
1-800-222-8222, visiting our Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS or
visiting the SEC Web site at WWW.SEC.GOV.
PORTFOLIO HOLDINGS INFORMATION
The Fund(s) 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 without charge by visiting the SEC Web site at WWW.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 information about the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
BOARD OF TRUSTEES
The following table provides basic information about the Board of Trustees
("Trustees") of the Wells Fargo Master Trust (the "Trust"). This table
supplements, and should be read in conjunction with, the Prospectus and the
Statement of Additional Information* of each Fund. Each of the Trustees listed
below acts in identical capacities for each of the 138 funds comprising the
Trust, Wells Fargo Funds Trust and Wells Fargo Variable Trust (collectively the
"Fund Complex"). All of the non-interested Trustees are also members of the
Audit and Governance Committees of each Trust in the Fund Complex. The 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.
INTERESTED TRUSTEE **
- -------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- -------------------------------------------------------------------------------------------------------
J. Tucker Morse Trustee, Private Investor/Real Estate None
60 since 1987 Developer; Chairman of White
Point Capital, LLC.
- -------------------------------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES
- -------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- -------------------------------------------------------------------------------------------------------
Thomas S. Goho Trustee, Associate Professor of Finance, None
62 since 1987 Wake Forest University,
Calloway School of Business
and Accountancy.
- -------------------------------------------------------------------------------------------------------
Peter G. Gordon Trustee, Chairman, CEO, and Co- None
62 since 1998 Founder of Crystal Geyser
(Chairman, Water Company and President
since 2004) of Crystal Geyser Roxane Water
Company.
- -------------------------------------------------------------------------------------------------------
Richard M. Leach Trustee, Retired. Prior thereto, President None
71 since 1987 of Richard M. Leach Associates
(a financial consulting firm).
- -------------------------------------------------------------------------------------------------------
Timothy J. Penny Trustee, Senior Counselor to the public None
53 since 1996 relations firm of Himle-Horner
and Senior Fellow at the
Humphrey Institute,
Minneapolis, Minnesota (a pub-
lic policy organization).
- -------------------------------------------------------------------------------------------------------
Donald C. Willeke Trustee, Principal in the law firm of None
64 since 1996 Willeke & Daniels.
- -------------------------------------------------------------------------------------------------------
26
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE MASTER PORTFOLIOS
- --------------------------------------------------------------------------------
OFFICERS
- -------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE PAST FIVE YEARS OTHER DIRECTORSHIPS
- -------------------------------------------------------------------------------------------------------
Karla M. Rabusch President, since 2003 Executive Vice President of None
46 Wells Fargo Bank, N.A.
President of Wells Fargo Funds
Management, LLC. Senior Vice
President and Chief
Administrative Officer of Wells
Fargo Funds Management, LLC
from 2001 to 2003. Vice
President of Wells Fargo Bank,
N.A. from 1997 to 2000.
- -------------------------------------------------------------------------------------------------------
Stacie D. DeAngelo Treasurer, since 2003 Senior Vice President of Wells None
36 Fargo Bank, N.A. Senior Vice
President of Operations for
Wells Fargo Funds Management,
LLC. Prior there- to,
Operations Manager at Scudder
Weisel Capital, LLC (2000 to
2001), Director of Shareholder
Services at BISYS Fund Services
(1999 to 2000) and Assistant
Vice President of Operations
with Nicholas- Applegate
Capital Management (1993 to
1999).
- -------------------------------------------------------------------------------------------------------
C. David Messman Secretary, since 2000 Vice President and Managing None
45 Senior Counsel of Wells Fargo
Bank, N.A. Senior Vice
President and Secretary of Wells
Fargo Funds Management, LLC.
Vice President and Senior
Counsel of Wells Fargo Bank,
N.A. from 1996 to 2003.
- -------------------------------------------------------------------------------------------------------
* The Statement of Additional Information includes additional information
about the Funds' Trustees and is available, without charge, upon request,
by calling 1-800-222-8222.
** As of April 30, 2005, one of the six Trustees is considered an "interested
person" of the Trusts as defined in the Investment Company Act of 1940.
The interested Trustee, J. Tucker Morse, is affiliated with a government
securities dealer that is registered under the Securities Exchange Act of
1934, which is not itself affiliated with Wells Fargo Funds Management,
LLC. Robert C. Brown was an interested Trustee prior to his retirement on
April 5, 2005.
*** Length of service dates reflects a Trustee's commencement of service with
the Trust's predecessor entities.
27
WELLS FARGO ADVANTAGE MASTER PORTFOLIOS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY
AGREEMENTS:
C&B LARGE CAP VALUE FUND AND C&B LARGE CAP VALUE PORTFOLIO
- --------------------------------------------------------------------------------
Section 15(c) of the Investment Company Act of 1940 (the "1940 Act")
contemplates that the Boards of Trustees (each, a "Board" and collectively, the
"Boards") of Wells Fargo Funds Trust and Wells Fargo Master Trust (each, a
"Trust" and collectively, the "Trusts"), including a majority of the Trustees
who have no direct or indirect interest in the investment advisory and
sub-advisory agreements and are not "interested persons" of each Trust, as
defined in the 1940 Act (the "Independent Trustees"), will annually review and
consider the continuation of the investment advisory and sub-advisory
agreements. In this regard, the Boards reviewed and re-approved, during the six
months covered by this report: (i) an investment advisory agreement with Wells
Fargo Funds Management, LLC ("Funds Management") for the C&B Large Cap Value
Fund and C&B Large Cap Value Portfolio; and (ii) an investment sub-advisory
agreement with Cooke & Bieler, L.P. ("Cooke & Bieler") for the C&B Large Cap
Value Portfolio. The investment advisory agreements with Funds Management and
the investment sub-advisory agreement with Cooke & Bieler are collectively
referred to as the "Advisory Agreements." The fund and portfolio identified
above are collectively referred to as the "Funds."
More specifically, at meetings held on April 4, 2005, the Boards,
including the Independent Trustees advised by their independent legal counsel,
considered the factors and reached the conclusions described below relating to
the selection of Funds Management and Cooke & Bieler and the continuation of the
Advisory Agreements. Because the C&B Large Cap Value Fund is a gateway feeder
fund that invests all of its assets in the C&B Large Cap Value Portfolio, which
has a substantially similar investment objective and substantially similar
investment strategies as the fund, information provided to the Boards regarding
the C&B Large Cap Value Fund is also applicable to the C&B Large Cap Value
Portfolio.
NATURE, EXTENT AND QUALITY OF SERVICES
The Boards received and considered various data and information regarding
the nature, extent and quality of services provided to the Funds by Funds
Management and Cooke & Bieler under the Advisory Agreements. Responses of Funds
Management and Cooke & Bieler to a detailed set of requests submitted by the
Independent Trustees' independent legal counsel on behalf of such Trustees were
provided to the Boards. The Boards reviewed and considered the data and
information, which included, among other things, information about the
background and experience of the senior management and the expertise of the
investment personnel of Funds Management and Cooke & Bieler.
The Boards considered the ability of Funds Management and Cooke & Bieler,
based on their respective resources, reputations and other attributes, to
attract and retain highly qualified investment professionals, including
research, advisory, and supervisory personnel. In this connection, the Boards
considered information regarding each of Funds Management's and Cooke & Bieler's
compensation for its personnel involved in the management of the Funds. In
addition, the Boards considered the effects of certain personnel changes in
light of the acquisition of certain of the asset management arrangements of
Strong Capital Management, Inc. by Wells Fargo & Company.
The Boards further considered the compliance programs and compliance
records of Funds Management and Cooke & Bieler. In addition, the Boards took
into account the administrative services provided to the Funds by Funds
Management and its affiliates. In considering these matters, the Boards
considered not only the specific information presented in connection with the
meetings, but also the knowledge gained over the course of interacting with
Funds Management, including with respect to Funds Management's oversight of
service providers, such as the investment sub-adviser.
Based on the above factors, together with those referenced below, the
Boards concluded that it was generally satisfied with the nature, extent and
quality of the investment advisory services provided to the Funds by Funds
Management and Cooke & Bieler.
FUND PERFORMANCE AND EXPENSES
The Boards considered the performance results for the Funds over various
time periods. They also considered these results in comparison to the median
performance results of the group of funds that was determined to be the most
similar to the Funds (the "Peer Group") and to the median performance of a
broader universe of relevant funds (the "Universe"), as well as to the Funds'
benchmark index. Lipper Inc. ("Lipper"), an independent provider of investment
company data, determined the Peer Group and Universe for the Funds. The Boards
were provided with a description of the methodology used by Lipper to select the
mutual funds in the Funds' Peer Group and Universe.
The Boards noted that the performance of the Funds was better than the
median performance of the Peer Group for most time periods. The Boards also
noted that the Funds' one-year performance was lower than the median performance
of the Peer Group and required further review. Upon further review, the Board
noted the Funds' underweight position in energy stocks was the primary factor
contributing to the Fund's relative underperformance.
28
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE MASTER PORTFOLIOS
- --------------------------------------------------------------------------------
The Boards received and considered information regarding the Funds' net
operating expense ratios and their various components, including contractual
advisory fees, actual advisory fees, actual non-management fees, Rule 12b-1 and
non-Rule 12b-1 service fees, fee waivers/caps and/or expense reimbursements.
They also considered comparisons of these fees to the expense information for
the Funds' Peer Group and Universe, which comparative data was provided by
Lipper. The Boards noted that the net operating expense ratios of the Funds were
lower than, or equal to, the Funds' Peer Group's median net operating expense
ratios.
Management also discussed the Lipper data and rankings, and other relevant
information, for the Funds. Based on the above-referenced considerations and
other factors, the Boards concluded that the overall performance and expense
results supported the re-approval of the Advisory Agreements for the Funds.
INVESTMENT ADVISORY AND SUB-ADVISORY FEE RATES
The Boards reviewed and considered the contractual investment advisory fee
rates both on a stand-alone basis and on a combined basis with the Funds'
administration fee rates (the "Advisory Agreement Rates") payable by the Funds
to Funds Management for investment advisory services. The Board of Wells Fargo
Master Trust also reviewed and considered the contractual investment
sub-advisory fee rates (the "Sub-Advisory Agreement Rates") payable by Funds
Management to Cooke & Bieler for investment sub-advisory services. In addition,
the Boards reviewed and considered the existing fee waiver/cap arrangements
applicable to the Advisory Agreement Rates and considered the Advisory Agreement
Rates after taking the waivers/caps into account (the "Net Advisory Rates").
The Boards received and considered information comparing the Advisory
Agreement Rates and Net Advisory Rates with those of the other funds in the Peer
Group. The Boards noted that the Advisory Agreement Rates and the Net Advisory
Rates for the Funds were lower than, or not appreciably higher than, the median
rates of the Funds' Peer Group. In addition, the Boards concluded that the
combined investment advisory/administration fee rates for the Funds (before and
after waivers/caps and/or expense reimbursements) were each reasonable in
relation to the Funds' Peer Group, and reasonable in relation to the services
provided.
The Board of Wells Fargo Master Trust also reviewed and considered the
Sub-Advisory Agreement Rates and concluded that the Sub-Advisory Agreement Rates
were fair and equitable, based on its consideration of the factors described
above.
PROFITABILITY
The Boards received and considered a detailed profitability analysis of
Funds Management based on the Advisory Agreement Rates and the Net Advisory
Rates, as well as on other relationships between the Funds and Funds Management
and its affiliates. The Boards concluded that, in light of the costs of
providing investment management and other services to the Funds, the profits and
other ancillary benefits that Funds Management and its affiliates received with
regard to providing these services to the Funds were not unreasonable. The Board
of Wells Fargo Master Trust did not consider profitability information with
respect to Cooke & Bieler, which is not affiliated with Funds Management. The
Board considered that the sub-advisory fees paid to Cooke & Bieler had been
negotiated by Funds Management on an arms length basis and that Cooke & Bieler's
separate profitability from its relationship with the C&B Large Cap Value
Portfolio was not a material factor in determining whether to renew the
agreement.
ECONOMIES OF SCALE
The Boards received and considered general information regarding whether
there have been economies of scale with respect to the management of the Funds,
whether the Funds have appropriately benefited from any economies of scale, and
whether there is potential for realization of any further economies of scale.
The Boards acknowledged the inherent limitations of any analysis of an
investment adviser's economies of scale and of any attempt to correlate
breakpoints with such economies, stemming largely from the Boards' understanding
that economies of scale are realized, if at all, by an investment adviser across
a variety of products and services, not just in respect to a single fund. The
Boards concluded that any actual or potential economies of scale are, or will
be, shared reasonably with Fund shareholders/interestholders, including most
particularly through Advisory Agreement Rate breakpoints, which are applicable
to the Funds.
INFORMATION ABOUT SERVICES TO OTHER CLIENTS
The Board also received and considered information about the nature,
extent and quality of services and fee rates offered by Funds Management to
other similarly situated series within the Trusts, and those offered by Cooke &
Bieler to other clients, including other registered investment companies and
separate accounts. The Board concluded that the Advisory Agreement Rates, the
Sub-Advisory Agreement Rates and the Net Advisory Rates were within a reasonable
range of the fee rates offered to others by Funds Management and Cooke & Bieler,
giving effect to differences in services covered by such fee rates.
29
WELLS FARGO ADVANTAGE MASTER PORTFOLIOS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
OTHER BENEFITS TO FUNDS MANAGEMENT AND COOKE & BIELER
The Boards received and considered information regarding potential
"fall-out" or ancillary benefits received by Funds Management and its affiliates
and Cooke & Bieler as a result of their relationship with the Funds. Such
benefits could include, among others, benefits directly attributable to the
relationship of Funds Management and Cooke & Bieler with the Funds (such as
soft-dollar credits) and benefits potentially derived from an increase in the
business of Funds Management and Cooke & Bieler as a result of their
relationship with the Funds (such as the ability to market to
shareholders/interestholders other financial products offered by Funds
Management and its affiliates or Cooke & Bieler and its affiliates).
The Boards also considered the effectiveness of policies of the Funds in
achieving the best execution of portfolio transactions, whether and to what
extent soft dollar credits are sought and how any such credits are utilized,
potential benefits that may be realized by using an affiliated broker, and the
controls applicable to brokerage allocation procedures. The Boards also took
note of the policies of Cooke & Bieler regarding the allocation of portfolio
investment opportunities among the Funds and other clients.
OTHER FACTORS AND BROADER REVIEW
The Boards also considered the markets for distribution of the Funds,
including the principal channels through which the Funds' shares/interests are
offered and sold. The Boards noted that the Funds are now part of one of the few
fund families that have both direct-to-fund and intermediary distribution.
As discussed above, the Boards reviewed detailed materials received from
Funds Management and Cooke & Bieler annually as part of the re-approval process
under Section 15(c) of the 1940 Act. The Boards also regularly review and assess
the quality of the services that the Funds receive throughout the year. In this
regard, the Boards review reports of Funds Management and Cooke & Bieler at
least quarterly, which include, among other things, a detailed portfolio review,
and detailed fund performance reports. In addition, the Boards meet with the
portfolio managers of the Funds at various times throughout the year.
After considering the above-described factors and based on its
deliberations and its evaluation of the information described above, the Boards
concluded that approval of the continuation of the Advisory Agreements for the
Funds was in the best interest of the Funds and its
shareholders/interestholders. Accordingly, the Boards unanimously approved the
continuation of the Advisory Agreements.
30
LIST OF ABBREVIATIONS WELLS FARGO ADVANTAGE MASTER PORTFOLIOS
- --------------------------------------------------------------------------------
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
ABAG -- Association of Bay Area Governments
ADR -- American Depositary Receipt
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CMT -- Constant Maturity Treasury
COFI -- Cost of Funds Index
CONNIE LEE -- Connie Lee Insurance Company
COP -- Certificate of Participation
CP -- Commercial Paper
CTF -- Common Trust Fund
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
EDFA -- Education Finance Authority
FFCB -- Federal Farm Credit Bank
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FRN -- Floating Rate Notes
FSA -- Financial Security Assurance, Inc
GDR -- Global Depositary Receipt
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
IDA -- Industrial Development Authority
IDR -- Industrial Development Revenue
LIBOR -- London Interbank Offered Rate
LLC -- Limited Liability Corporation
LOC -- Letter of Credit
LP -- Limited Partnership
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MUD -- Municipal Utility District
MTN -- Medium Term Note
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PLC -- Private Placement
PSFG -- Public School Fund Guaranty
RAW -- Revenue Anticipation Warrants
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
R&D -- Research & Development
SFHR -- Single Family Housing Revenue
SFMR -- Single Family Mortgage Revenue
SLMA -- Student Loan Marketing Association
STEERS -- Structured Enhanced Return Trust
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
V/R -- Variable Rate
WEBS -- World Equity Benchmark Shares
XLCA -- XL Capital Assurance
31
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WELLS ADVANTAGE
FARGO FUNDS
MORE INFORMATION ABOUT WELLS FARGO ADVANTAGE FUNDS(SM) THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED
IS AVAILABLE FREE UPON REQUEST. TO OBTAIN LITERATURE, PLEASE HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE
WRITE, E-MAIL, OR CALL: SHAREHOLDERS OF THE WELLS FARGO ADVANTAGE FUNDS. IF THIS
REPORT IS USED FOR PROMOTIONAL PURPOSES, DISTRIBUTION OF
WELLS FARGO ADVANTAGE FUNDS THE REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT
P.O. BOX 8266 PROSPECTUS. FOR A PROSPECTUS CONTAINING MORE COMPLETE
BOSTON, MA 02266-8266 INFORMATION, INCLUDING CHARGES AND EXPENSES, CALL
1-800-222-8222. PLEASE CONSIDER THE INVESTMENT
E-MAIL: WFAF@WELLSFARGO.COM OBJECTIVE, RISKS, CHARGES AND EXPENSES OF THE INVESTMENT
RETAIL INVESTMENT PROFESSIONALS: 888-877-9275 CAREFULLY BEFORE INVESTING. THIS AND OTHER INFORMATION
INSTITUTIONAL INVESTMENT PROFESSIONALS: 866-765-0778 ABOUT WELLS FARGO ADVANTAGE FUNDS CAN BE FOUND IN THE
WEB: WWW.WELLSFARGO.COM/ADVANTAGEFUNDS CURRENT PROSPECTUS. READ THE PROSPECTUS CAREFULLY BEFORE
YOU INVEST OR SEND MONEY.
WELLS FARGO FUNDS MANAGEMENT, LLC, A WHOLLY-OWNED
SUBSIDIARY OF WELLS FARGO & COMPANY, PROVIDES
INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES FOR
THE WELLS FARGO ADVANTAGE FUNDS. OTHER AFFILIATES OF
WELLS FARGO & COMPANY PROVIDE SUB-ADVISORY AND OTHER
SERVICES FOR THE FUNDS. THE FUNDS ARE DISTRIBUTED BY
WELLS FARGO FUNDS DISTRIBUTOR, LLC, MEMBER
NASD/SIPC, AN AFFILIATE OF WELLS FARGO & COMPANY.
-----------------------------------------------------------
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
-----------------------------------------------------------
(c) 2005 Wells Fargo Advantage Funds, LLC. All rights reserved. www.wellsfargo.com/advantagefunds SM50925 06-05
SEGF/SAR125 04-05
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
- --------------------------------------------------------------------------------
APRIL 30, 2005
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED] SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND
WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS .................................................... 1
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
C&B MID CAP VALUE FUND ................................................. 2
FUND EXPENSES ............................................................. 4
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
C&B MID CAP VALUE FUND ................................................. 5
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES .................................... 8
STATEMENT OF OPERATIONS ................................................ 9
STATEMENTS OF CHANGES IN NET ASSETS .................................... 10
FINANCIAL HIGHLIGHTS ................................................... 12
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS ............................................. 14
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NOTES TO FINANCIAL STATEMENTS ............................................. 15
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OTHER INFORMATION ......................................................... 18
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LIST OF ABBREVIATIONS ..................................................... 23
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NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE
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LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND
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DEAR VALUED SHAREHOLDER,
I am pleased to introduce you to WELLS FARGO ADVANTAGE FUNDS(SM). You now
have access to an expanded array of mutual funds, giving you the flexibility to
invest in a family of funds covering nearly every asset class and investment
style. To learn more about our funds and the talented team of money managers
behind them, please visit our new Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
You can also call one of our investment service representatives now available 24
hours a day, 7 days a week, or speak with your investment professional.
Following is your WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND semi-annual
report for the six-month period ended April 30, 2005. On the following pages,
you will find a discussion of the Fund, including performance highlights, the
Fund managers' strategic outlook, and information about the Fund's portfolio.
THE ECONOMY: CONTINUED EXPANSION
- --------------------------------------------------------------------------------
The U.S. economy continued to grow steadily, expanding by 4.4% in 2004.
During the first quarter of 2005, however, the economy grew by 3.1%, trailing
the 3.8% pace achieved during the last three months of 2004.
Part of that decline stemmed from the high cost of gasoline, which
continued to have a significant influence on consumer spending and the economy.
When the six-month period began, oil prices were declining from their recent
highs of $55 per barrel. After falling for two months, they rebounded sharply in
2005, setting new highs in April.
Higher energy prices were a key driver of inflation, which rose throughout
most of the period. "Core" inflation, however, which excludes volatile food and
energy prices, also trended upwards, but rose less quickly. With core inflation
manageable, the Federal Reserve Board (the Fed) continued its program of gradual
short-term interest rate increases. During the past six months, the Fed raised
rates four times, bringing the Federal funds rate, the interest rate at which a
depository institution lends immediately available funds to another depository
institution overnight, from 1.75% at the beginning of the period to 2.75% by
April 30, 2005.
STOCKS: APRIL SHOWERS
- --------------------------------------------------------------------------------
The stock market's performance was up and down. Stocks began the period in
the midst of a rally driven by falling oil prices. The outcome of the U.S.
presidential election continued this rally, which lasted through the rest of
2004. But stocks turned in more mixed results in the first four months of 2005.
April was a particularly volatile environment for investors, who were
increasingly uneasy about rising energy costs, further economic slowing, higher
potential inflation, and rising interest rates. Moderate corporate earnings
growth contributed to concerns, as did the increasing likelihood that General
Motors (GM), the world's largest automobile manufacturer, would see its credit
rating downgraded to "junk" status. Highlighting the market's April volatility,
the Dow Jones Industrial Average saw seven moves of greater than 100 points on
the way to its worst monthly decline since January 2003. The S&P 500 Index fell
nearly 2% in April, but rose 3.28% during the full six-month period.
BONDS: LOOKING LONG
- --------------------------------------------------------------------------------
The U.S. Treasury and municipal yield curves generally flattened during
the period, indicating that short-term bond yields were rising in line with the
Fed's rate increases while long-term bond yields fell, somewhat surprisingly.
Longer bonds benefited from investors' increasing conviction that inflation
would continue to be manageable and that the Fed would not need to raise
interest rates more quickly.
Municipal bonds generally outperformed their taxable counterparts and, at
period end, were offering historically attractive yields relative to U.S.
Treasuries. For the first four months of the period, corporate high-yield bonds
continued their strong performance. It was a different story in March and April.
Investors worried about the potential negative impact that a credit-rating
downgrade of GM and Ford would have on the high-yield market.
LOOKING AHEAD: LONG-TERM EXPANSION?
- --------------------------------------------------------------------------------
Despite the economy's first quarter slowdown, we believe this represents a
temporary soft patch more than a continuing slowdown. As stock and bond
investors seek to determine where inflation, interest rates, and corporate
earnings are headed, we may see more unpredictable moves in the markets.
Uncertainty and risk will always be a part of investing. We believe an
important thing you can do to manage risk is to own a broadly diversified
portfolio with stocks, bonds, and cash that can help you weather unexpected
market shifts. While diversification may not prevent losses in a downturn, it
may help reduce them and keep you on track to reach your financial goals.
Thank you for choosing WELLS FARGO ADVANTAGE FUNDS. We appreciate your
confidence in us. Through each market cycle, we are committed to helping you
meet your financial needs. If you have any questions about your investment,
please contact your investment professional, or call us at 1-800-222-8222. You
may also visit our enhanced Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND (the Fund) seeks maximum
long-term total return, consistent with minimizing risk to principal.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Cooke & Bieler, L.P.
FUND MANAGERS INCEPTION DATE
Kermit S. Eck, CFA; Michael M. Meyer, CFA; 2/18/1998
James R. Norris; Edward W. O'Connor, CFA;
R. James O'Neil, CFA and Mehul Trivedi, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 5.17%(1) (excluding sales charges) for
the six-month period ended April 30, 2005, underperforming its broad-based
benchmark, the Russell Midcap Index(2), which returned 6.81%, and
underperforming the Russell Midcap Value Index(3), which returned 8.81% for the
same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF 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.
CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 5.75%. FOR CLASS
B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 5.00%. FOR CLASS C
SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. PERFORMANCE
INCLUDING SALES CHARGES ASSUMES THE SALES CHARGE FOR THE PERIOD SHOWN.
ADMINISTRATOR CLASS, INSTITUTIONAL CLASS AND CLASS D SHARES ARE SOLD WITHOUT A
FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND
EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S
CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
Despite its underperformance relative to its benchmark, we were reasonably
pleased with the Fund's performance. Generally speaking, the Fund's results
reflected the subdued tone of the broad investing landscape during the six-month
period.
The Fund benefited from owning many individual stocks with strong or
improving company fundamentals. Representing a diverse group of sectors, major
contributors included Medco Health Solutions, Haemonetics, Carlisle Companies,
Universal Health Services, Snap-On and UnumProvident.
Of course, not all stock picks performed well during the period. Fund
portfolio holdings that were disappointing during the period included Big Lots,
Superior Industries International, Federal Signal, and Jones Apparel Group.
The most significant drag on performance was the Fund's continued limited
exposure to the energy sector. We have avoided the sector because we believe
these stocks' fundamentals do not merit such high valuations. Based on our
research and experience, such high share prices are likely to be unsustainable,
and the stocks could be poised to fall at the first sign of fundamental trouble.
However, we realize that speculating on oil prices--or anything else in the
investment world--is extremely unpredictable in the short term. Oil prices and
energy stocks could continue to rise, detracting from the Fund's relative
performance.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
The precariousness of trying to forecast short-term trends is the primary
reason we stay focused on the long-term picture. We remain committed to
evaluating those variables that we believe are more straightforward to analyze
and predict, such as fundamentals and valuations.
Applying this approach, we added to existing holdings such as Big Lots and
Dover, which were out of favor. We also established new positions in a number of
companies we believed offered compelling values, including Hain Celestial,
Aramark, Itron, and Valspar. To make room for these opportunities, we sold the
Fund's stakes in Computer Sciences and Becton Dickinson because these stocks had
done well and were nearing our fair value targets. We also sold Aon Corporation
and Snap On Corporation due to fundamental concerns.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We believe the outlook for the economy is generally favorable but with
several caveats. First, oil prices are a wild card that could result in
uncomfortably high inflation and more aggressive interest rate hikes by the
Federal Reserve. Also, the current interest rate level has begun to increase
bonds' attractiveness relative to stocks. Finally, we believe equity valuations
are less compelling than they were several years ago, and the market's current
valuation does not allow much room for economic disappointment.
Given these factors, we are cautiously optimistic about the prospects for
the U.S. stock market. We continue to believe stock selection, rather than
sector selection, will be increasingly important in driving investment
performance. What's more, fundamentals, and ultimately a company's ability to
generate expected cash flow, a sign of its competitive advantage and financial
discipline, will play a significant role in determining a stock's success.
Against this backdrop, we believe an unwavering focus on owning high-quality
stocks is more important than ever.
STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES
FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL
MARKET AND ECONOMIC CONDITIONS. FUNDS THAT INVEST IN SMALLER COMPANIES INVOLVE
ADDITIONAL RISKS BECAUSE THESE COMPANIES OFTEN HAVE LIMITED FINANCIAL RESOURCES,
AND THEIR 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.
- --------------------------------------------------------------------------------
The views expressed are as of April 30, 2005, and are those of the Fund's
managers. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND.
(1) The Fund's Adviser has committed through February 28, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
2
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
----------------------------------------- ---------------------------------------
6-Months* 1-Year 5-Year Life of Fund 6-Months* 1-Year 5-Year Life of Fund
- -----------------------------------------------------------------------------------------------------------------------------------
C&B Mid Cap Value Fund - Class A
(incept. 2/18/1998) (0.86) (1.75) 15.03 11.69 5.17 4.23 16.41 12.61
- -----------------------------------------------------------------------------------------------------------------------------------
C&B Mid Cap Value Fund - Class B
(incept. 2/18/1998) (0.20) (1.48) 15.33 11.78 4.80 3.52 15.56 11.78
- -----------------------------------------------------------------------------------------------------------------------------------
C&B Mid Cap Value Fund - Class C
(incept. 2/18/1998) 3.80 2.52 15.56 11.78 4.80 3.52 15.56 11.78
- -----------------------------------------------------------------------------------------------------------------------------------
C&B Mid Cap Value Fund - Class D
(incept. 2/18/1998) 5.28 4.34 16.43 12.62
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C&B Mid Cap Value Fund - Administrator Class
(incept. 2/18/1998) 5.33 4.45 16.46 12.64
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C&B Mid Cap Value Fund - Institutional Class
(incept. 2/18/1998) 5.49 4.66 16.50 12.67
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Benchmarks
- -----------------------------------------------------------------------------------------------------------------------------------
Russell Midcap(R) Index(2) 6.81 14.62 5.83 7.80
- -----------------------------------------------------------------------------------------------------------------------------------
Russell Midcap(R) Value Index(3) 8.81 20.30 12.73 8.99
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
TEN LARGEST EQUITY HOLDINGS(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Mettler-Toledo International Incorporated 4.13%
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Big Lots Incorporated 4.09%
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Haemonetics Corporation 3.97%
- --------------------------------------------------------------------------------
Zale Corporation 3.96%
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Pall Corporation 3.88%
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CBRL Group Incorporated 3.75%
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Carlisle Companies Incorporated 3.72%
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Medco Health Solutions Incorporated 3.68%
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Hubbell Incorporated Class B 3.60%
- --------------------------------------------------------------------------------
Parametric Technology Corporation 3.50%
SECTOR DISTRIBUTION(5) (AS OF APRIL 30, 2005)
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FUND CHARACTERISTICS(5) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Beta** 0.91
- --------------------------------------------------------------------------------
Price to Earnings (trailing 12 months) 17.76
- --------------------------------------------------------------------------------
Price to Book Ratio 3.05
- --------------------------------------------------------------------------------
Median Market Cap. ($B) $ 1.99
- --------------------------------------------------------------------------------
Portfolio Turnover 13%
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK
BETA IS 1.00 BY DEFINITION.
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary (26%)
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Consumer Staples (4%)
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Financials (12%)
- --------------------------------------------------------------------------------
Health Care (14%)
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Industrials (22%)
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Information Technology (17%)
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Materials (5%)
GROWTH OF $10,000 INVESTMENT(6) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO
WELLS FARGO ADVANTAGE
ADVANTAGE C&B MID CAP RUSSELL
C&B MID CAP VALUE FUND - RUSSELL MIDCAP(R)
VALUE FUND INSTITUTIONAL MIDCAP(R) VALUE
- CLASS A CLASS INDEX INDEX
----------- ------------- ---------- ----------
2/18/1998 9,425.07 10,000.00 10,000 10,000
2/28/1998 9,632.42 10,220.00 10,254 10,186
3/31/1998 10,160.23 10,780.00 10,740 10,710
4/30/1998 10,018.64 10,629.78 10,767 10,651
5/31/1998 10,009.21 10,619.77 10,434 10,402
6/30/1998 9,509.22 10,089.28 10,578 10,435
7/31/1998 9,036.46 9,587.68 10,074 9,906
8/31/1998 7,741.48 8,213.71 8,463 8,513
9/30/1998 8,053.41 8,544.67 9,010 9,010
10/31/1998 9,170.11 9,729.49 9,625 9,593
11/30/1998 9,207.97 9,769.65 10,080 9,930
12/31/1998 9,484.39 10,062.93 10,671 10,232
1/31/1999 8,981.72 9,529.59 10,653 9,994
2/28/1999 8,640.28 9,167.33 10,299 9,774
3/31/1999 8,829.97 9,368.59 10,621 9,914
4/30/1999 9,466.83 10,044.30 11,406 10,853
5/31/1999 9,561.88 10,145.15 11,373 10,898
6/30/1999 10,664.44 11,314.97 11,775 11,022
7/31/1999 10,540.74 11,183.71 11,451 10,746
8/31/1999 9,713.08 10,305.57 11,155 10,375
9/30/1999 9,323.05 9,891.74 10,763 9,850
10/31/1999 9,370.66 9,942.26 11,273 10,140
11/30/1999 9,446.85 10,023.09 11,597 9,954
12/31/1999 9,466.79 10,044.24 12,617 10,221
1/31/2000 9,359.44 9,930.34 12,200 9,610
2/29/2000 9,086.17 9,640.40 13,137 9,208
3/31/2000 10,027.99 10,639.67 13,890 10,324
4/30/2000 10,360.30 10,992.25 13,232 10,365
5/31/2000 11,337.69 12,029.26 12,882 10,543
6/30/2000 11,373.54 12,067.30 13,263 10,150
7/31/2000 11,549.72 12,254.23 13,114 10,388
8/31/2000 12,097.84 12,835.79 14,371 11,025
9/30/2000 12,114.51 12,853.46 14,166 11,130
10/31/2000 12,536.31 13,300.99 13,947 11,342
11/30/2000 12,575.55 13,342.62 12,692 11,194
12/31/2000 13,350.88 14,165.25 13,658 12,181
1/31/2001 14,275.57 15,146.34 13,878 12,137
2/28/2001 14,618.43 15,510.12 13,033 12,086
3/31/2001 13,967.83 14,819.83 12,225 11,751
4/30/2001 14,394.57 15,272.59 13,270 12,397
5/31/2001 15,331.31 16,266.47 13,517 12,749
6/30/2001 15,251.51 16,181.80 13,390 12,579
7/31/2001 15,678.93 16,635.29 13,007 12,528
8/31/2001 15,491.28 16,436.20 12,507 12,300
9/30/2001 14,235.86 15,104.21 10,999 11,126
10/31/2001 14,809.89 15,713.25 11,434 11,185
11/30/2001 15,759.64 16,720.94 12,392 11,968
12/31/2001 16,710.45 17,729.74 12,890 12,464
1/31/2002 16,710.45 17,729.74 12,813 12,590
2/28/2002 17,018.89 18,056.99 12,677 12,795
3/31/2002 17,983.72 19,080.66 13,437 13,449
4/30/2002 18,182.19 19,291.24 13,177 13,440
5/31/2002 18,347.58 19,466.72 13,028 13,420
6/30/2002 17,630.88 18,706.30 12,154 12,821
7/31/2002 15,943.87 16,916.39 10,968 11,566
8/31/2002 15,635.14 16,588.83 11,028 11,700
9/30/2002 13,971.60 14,823.81 10,011 10,519
10/31/2002 14,500.91 15,385.41 10,517 10,853
11/30/2002 15,570.56 16,520.30 11,247 11,536
12/31/2002 15,123.79 16,046.28 10,804 11,262
1/31/2003 14,671.51 15,566.41 10,585 10,950
2/28/2003 14,086.86 14,946.10 10,445 10,769
3/31/2003 14,463.15 15,345.34 10,548 10,806
4/30/2003 15,788.02 16,751.02 11,314 11,627
5/31/2003 17,024.56 18,062.99 12,350 12,651
6/30/2003 17,390.68 18,451.42 12,474 12,739
7/31/2003 18,031.10 19,130.91 12,886 13,135
8/31/2003 18,870.27 20,021.26 13,445 13,601
9/30/2003 18,174.64 19,283.20 13,277 13,496
10/31/2003 19,830.89 21,040.48 14,290 14,486
11/30/2003 20,294.64 21,532.52 14,691 14,906
12/31/2003 21,020.71 22,302.87 15,131 15,550
1/31/2004 21,310.50 22,610.34 15,571 15,960
2/29/2004 21,611.43 22,929.63 15,906 16,355
3/31/2004 21,781.63 23,110.19 15,910 16,381
4/30/2004 21,246.56 22,542.49 15,325 15,688
5/31/2004 21,335.74 22,637.11 15,706 16,090
6/30/2004 22,127.19 23,476.83 16,140 16,664
7/31/2004 20,744.85 22,010.27 15,435 16,213
8/31/2004 20,755.99 22,033.92 15,501 16,474
9/30/2004 21,123.85 22,436.05 16,005 16,953
10/31/2004 21,056.97 22,365.08 16,446 17,346
11/30/2004 22,305.45 23,713.38 17,448 18,518
12/31/2004 23,316.73 24,798.50 18,191 19,236
1/31/2005 22,341.38 23,763.71 17,740 18,788
2/28/2005 23,098.71 24,579.37 18,288 19,443
3/31/2005 22,926.59 24,408.93 18,145 19,385
4/30/2005 22,146.31 23,593.27 17,566 18,873
- --------------------------------------------------------------------------------
Prior to April 11, 2005, the WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND
was named the Wells Fargo C&B Mid Cap Value Fund.
Performance shown for Class A, Class B, Class C, Class D, Administrator
Class (formerly named Institutional Class) and Institutional Class (formerly
named Select Class) shares of the WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND
for periods prior to July 26, 2004, reflects the performance of the unnamed
share class of the C&B Mid Cap Value Portfolio, the predecessor fund, adjusted
to reflect the sales charges and expenses applicable to each share class.
Predecessor fund information can be found in the Fund's prospectus, statement of
additional information or annual report.
(2) The Russell Midcap(R) Index measures the performance of the 800 smallest
companies in the Russell 1000 Index, which represent approximately 25% of the
total market capitalization of the Russell 1000 Index. You cannot invest
directly in an index.
(3) The Russell Midcap(R) Value Index measures the performance of those Russell
Midcap companies with lower price-to-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.
(4) The ten largest equity holdings are calculated based on the market value of
the securities divided by total market value of the Fund.
(5) Sector distribution and portfolio characteristics are subject to change.
(6) The chart compares the performance of the WELLS FARGO ADVANTAGE C&B MID CAP
VALUE FUND Class A shares and Institutional Class shares for the life of the
Fund with the Russell Midcap(R) Index and the Russell Midcap(R) Value Index. The
chart assumes a hypothetical investment of $10,000 in Class A shares and
Institutional Class shares and reflects all operating expenses and, for Class A
shares, assumes the maximum initial sales charge of 5.75%.
3
WELLS FARGO ADVANTAGE 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,
redemption fees (if any) and exchange fees (if any); and (2) ongoing costs,
including management fees; distribution (12b-1) and/or shareholder service 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 period and held for the entire period (November 1, 2004 to April 30,
2005).
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), redemption fees, or exchange fees. 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 Ending
Account Account Expenses
Value Value Paid During Net Annual
11/1/2004 4/30/2005 Period(1) Expense Ratio
C&B Mid Cap Value Fund
- --------------------------------------------------------------------------------------------------------------
C&B Mid Cap Value Fund - Class A
Actual $1,000.00 $1,051.70 $ 6.92 1.36%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,018.05 $ 6.80 1.36%
- --------------------------------------------------------------------------------------------------------------
C&B Mid Cap Value Fund - Class B
Actual $1,000.00 $1,048.00 $10.77 2.12%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.28 $10.59 2.12%
- --------------------------------------------------------------------------------------------------------------
C&B Mid Cap Value Fund - Class C
Actual $1,000.00 $1,048.00 $10.77 2.12%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.28 $10.59 2.12%
- --------------------------------------------------------------------------------------------------------------
C&B Mid Cap Value Fund - Class D
Actual $1,000.00 $1,052.80 $ 6.36 1.25%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,018.60 $ 6.26 1.25%
- --------------------------------------------------------------------------------------------------------------
C&B Mid Cap Value Fund - Administrator Class
Actual $1,000.00 $1,053.30 $ 5.29 1.04%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,019.64 $ 5.21 1.04%
- --------------------------------------------------------------------------------------------------------------
C&B Mid Cap Value Fund - Institutional Class
Actual $1,000.00 $1,054.90 $ 4.59 0.90%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,020.33 $ 4.51 0.90%
(1) EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO 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).
4
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
C&B MID CAP VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 95.58%
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 3.61%
381,300 JONES APPAREL GROUP INCORPORATED $ 11,610,585
1,127,200 TOMMY HILFIGER CORPORATION+ 12,331,568
23,942,153
-------------
BUSINESS SERVICES - 12.98%
460,200 CATALINA MARKETING CORPORATION 10,699,650
262,900 EQUIFAX INCORPORATED 8,846,585
736,250 IMS HEALTH INCORPORATED 17,655,275
1,086,500 MONEYGRAM INTERNATIONAL INCORPORATED 21,078,100
4,157,100 PARAMETRIC TECHNOLOGY CORPORATION+ 22,115,772
217,763 VIAD CORPORATION 5,607,397
86,002,779
-------------
CHEMICALS & ALLIED PRODUCTS - 4.64%
404,578 ALBEMARLE CORPORATION 14,811,600
385,220 VALSPAR CORPORATION<< 15,921,143
30,732,743
-------------
EATING & DRINKING PLACES - 7.23%
394,400 ARAMARK CORPORATION CLASS B<< 9,666,744
615,171 CBRL GROUP INCORPORATED<< 23,702,539
339,000 WENDY'S INTERNATIONAL INCORPORATED<< 14,553,270
47,922,553
-------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 4.97%
5,193,073 ADC TELECOMMUNICATIONS INCORPORATED+<< 11,788,276
556,376 AVX CORPORATION<< 6,058,934
1,182,765 MYKROLIS CORPORATION+ 15,080,254
32,927,464
-------------
FOOD & KINDRED PRODUCTS - 1.13%
301,900 PEPSIAMERICAS INCORPORATED 7,453,911
-------------
FURNITURE & FIXTURES - 2.09%
1,051,800 STEELCASE INCORPORATED<< 13,820,652
-------------
GENERAL MERCHANDISE STORES - 4.89%
2,538,700 BIG LOTS INCORPORATED+<< 25,843,966
320,983 DOLLAR GENERAL CORPORATION 6,532,004
32,375,970
-------------
HEALTH SERVICES - 3.10%
361,500 UNIVERSAL HEALTH SERVICES CLASS B 20,511,510
-------------
5
WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
C&B MID CAP VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 12.58%
327,487 CARLISLE COMPANIES INCORPORATED $ 23,520,116
440,000 DOVER CORPORATION 15,998,400
1,840,600 ENTEGRIS INCORPORATED+ 15,847,566
915,330 PALL CORPORATION<< 24,558,304
95,100 TENNANT COMPANY 3,379,854
83,304,240
-------------
INSURANCE AGENTS, BROKERS & SERVICE - 2.49%
986,014 UNUMPROVIDENT CORPORATION<< 16,486,154
-------------
INSURANCE CARRIERS - 5.39%
113,444 AMBAC FINANCIAL GROUP INCORPORATED 7,583,732
313,193 MBIA INCORPORATED<< 16,405,049
300,024 PRINCIPAL FINANCIAL GROUP INCORPORATED 11,724,938
35,713,719
-------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 9.56%
587,000 HAEMONETICS CORPORATION MASSACHUSETTS+ 25,105,990
335,849 ITRON INCORPORATED+<< 12,114,074
569,600 METTLER-TOLEDO INTERNATIONAL INCORPORATED+ 26,116,160
63,336,224
-------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 2.25%
788,858 HASBRO INCORPORATED<< 14,925,193
-------------
MISCELLANEOUS RETAIL - 3.78%
925,670 ZALE CORPORATION+<< 25,020,860
-------------
PRIMARY METAL INDUSTRIES - 3.43%
523,452 HUBBELL INCORPORATED CLASS B<< 22,743,989
-------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 1.68%
389,400 HARTE HANKS INCORPORATED 11,097,900
-------------
TRANSPORTATION EQUIPMENT - 3.59%
1,016,925 FEDERAL SIGNAL CORPORATION<< 14,267,458
469,000 SUPERIOR INDUSTRIES INTERNATIONAL INCORPORATED<< 9,534,770
23,802,228
-------------
WHOLESALE TRADE NON-DURABLE GOODS - 6.19%
998,000 HAIN CELESTIAL GROUP INCORPORATED+ 17,714,500
456,600 MEDCO HEALTH SOLUTIONS INCORPORATED+ 23,272,902
40,987,402
-------------
TOTAL COMMON STOCKS (COST $597,627,191) 633,107,644
-------------
6
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
C&B MID CAP VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COLLATERAL FOR SECURITIES LENDING - 13.51%
COLLATERAL INVESTED IN MONEY MARKET FUNDS - 0.53%
3,141,840 SCUDDER DAILY ASSETS MONEY MARKET FUND $ 3,141,840
362,801 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 362,801
3,504,641
-------------
PRINCIPAL INTEREST RATE MATURITY DATE
COLLATERAL INVESTED IN OTHER ASSETS - 12.98%
$23,000,000 BEAR STEARNS & COMPANY REPURCHASE AGREEMENT
(MATURITY VALUE $23,001,949) 3.05% 5/2/2005 23,000,000
63,000,000 DEUTSCHE BANK REPURCHASE AGREEMENT
(MATURITY VALUE $63,005,215) 2.98 5/2/2005 63,000,000
86,000,000
-------------
TOTAL COLLATERAL FOR SECURITIES LENDING (COST $89,504,641) 89,504,641
-------------
SHARES
SHORT-TERM INVESTMENTS - 4.94%
32,742,564 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 32,742,564
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $32,742,564) 32,742,564
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $719,874,396)* 114.03% $ 755,354,849
OTHER ASSETS AND LIABILITIES, NET (14.03) (92,948,814)
------ -------------
TOTAL NET ASSETS 100.00% $ 662,406,035
====== =============
+ NON-INCOME EARNING SECURITIES.
<< ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2)
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $32,742,564.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
7
WELLS FARGO ADVANTAGE C&B STATEMENT OF ASSETS AND LIABILITIES --
MID CAP VALUE FUND APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
C&B
MID CAP
VALUE FUND
- ---------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ........................................................ $633,107,644
COLLATERAL FOR SECURITIES LOANED (NOTE 2) ............................................. 89,504,641
INVESTMENTS IN AFFILIATES ............................................................. 32,742,564
------------
TOTAL INVESTMENT AT MARKET VALUE (SEE COST BELOW) ....................................... 755,354,849
------------
RECEIVABLE FOR FUND SHARES ISSUED ..................................................... 835,537
RECEIVABLE FOR INVESTMENTS SOLD ....................................................... 1,658,552
RECEIVABLES FOR DIVIDENDS AND INTEREST ................................................ 387,974
PREPAID EXPENSES AND OTHER ASSETS ..................................................... 226
------------
TOTAL ASSETS ............................................................................ 758,237,138
------------
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED ...................................................... 245,293
PAYABLE FOR INVESTMENTS PURCHASED ..................................................... 5,413,226
DIVIDENDS PAYABLE ..................................................................... 150
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ................................. 548,121
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ............................................... 119,672
PAYABLE FOR SECURITIES LOANED (NOTE 2) ................................................ 89,504,641
------------
TOTAL LIABILITIES ....................................................................... 95,831,103
------------
TOTAL NET ASSETS ........................................................................ $662,406,035
============
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ....................................................................... $607,540,155
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................................ (747,254)
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................. 20,132,681
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES
AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES ........ 35,480,453
------------
TOTAL NET ASSETS......................................................................... $662,406,035
------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- ---------------------------------------------------------------------------------------------------------
NET ASSETS - CLASS A .................................................................. $ 17,688,945
SHARES OUTSTANDING - CLASS A .......................................................... 916,383
NET ASSET VALUE PER SHARE - CLASS A ................................................... $ 19.30
MAXIMUM OFFERING PRICE PER SHARE - CLASS A(2) ......................................... $ 20.48
NET ASSETS - CLASS B .................................................................. $ 7,970,526
SHARES OUTSTANDING - CLASS B .......................................................... 415,183
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B ................................ $ 19.20
NET ASSETS - CLASS C .................................................................. $ 4,106,989
SHARES OUTSTANDING - CLASS C .......................................................... 213,892
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C ................................ $ 19.20
NET ASSETS - CLASS D .................................................................. $472,340,507
SHARES OUTSTANDING - CLASS D .......................................................... 24,447,721
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS D ................................ $ 19.32
NET ASSETS - ADMINISTRATOR CLASS ...................................................... $111,367,772
SHARES OUTSTANDING - ADMINISTRATOR CLASS .............................................. 5,757,233
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS .................... $ 19.34
NET ASSETS - INSTITUTIONAL CLASS ...................................................... $ 48,931,296
SHARES OUTSTANDING - INSTITUTIONAL CLASS .............................................. 2,525,405
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS .................... $ 19.38
------------
INVESTMENTS AT COST ..................................................................... $719,874,396
============
SECURITIES ON LOAN, AT MARKET VALUE ..................................................... $ 85,676,560
============
(1) EACH 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.
8
STATEMENT OF OPERATIONS -- WELLS FARGO ADVANTAGE C&B
FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) MID CAP VALUE FUND
- --------------------------------------------------------------------------------
C&B
MID CAP
VALUE FUND
- ---------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS ............................................................................. $ 2,978,422
INTEREST .............................................................................. 972
INCOME FROM AFFILIATED SECURITIES ..................................................... 302,484
SECURITIES LENDING INCOME, NET ........................................................ 49,910
------------
TOTAL INVESTMENT INCOME ................................................................. 3,331,788
------------
EXPENSES
ADVISORY FEES ......................................................................... 2,481,025
ADMINISTRATION FEES
FUND LEVEL ........................................................................... 168,312
CLASS A .............................................................................. 16,864
CLASS B .............................................................................. 7,687
CLASS C .............................................................................. 4,109
CLASS D .............................................................................. 715,937
ADMINISTRATOR CLASS .................................................................. 97,502
INSTITUTIONAL CLASS .................................................................. 18,151
CUSTODY FEES .......................................................................... 67,325
SHAREHOLDER SERVICING FEES ............................................................ 680,971
ACCOUNTING FEES ....................................................................... 43,734
DISTRIBUTION FEES (NOTE 3)
CLASS B .............................................................................. 20,590
CLASS C .............................................................................. 11,006
AUDIT FEES............................................................................. 1,993
LEGAL FEES ............................................................................ 3,241
REGISTRATION FEES ..................................................................... 249
SHAREHOLDER REPORTS ................................................................... 14,959
TRUSTEES' FEES ........................................................................ 3,383
OTHER FEES AND EXPENSES ............................................................... 4,907
------------
TOTAL EXPENSES .......................................................................... 4,361,945
------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) .......................................... (282,903)
NET EXPENSES .......................................................................... 4,079,042
------------
NET INVESTMENT INCOME (LOSS) ............................................................ (747,254)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ---------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ....................... 20,910,657
------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ............................................... 20,910,657
------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ....................... 10,851,288
------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..................... 10,851,288
============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .................................. 31,761,945
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ......................... $ 31,014,691
============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
9
WELLS FARGO ADVANTAGE C&B STATEMENTS OF CHANGES IN NET ASSETS
MID CAP VALUE FUND
- --------------------------------------------------------------------------------
C&B MID CAP VALUE FUND
----------------------------------
FOR THE SIX
MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .................................................................... $ 605,861,919 $ 301,512,899
OPERATIONS: ......
NET INVESTMENT INCOME (LOSS) ............................................................ (747,254) (334,814)
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................................. 20,910,657 34,633,113
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..................... 10,851,288 (18,313,305)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 31,014,691 15,984,994
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS D ............................................................................... 0 (71,509)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A ............................................................................... (250,025) 0
CLASS B ............................................................................... (118,813) 0
CLASS C ............................................................................... (60,039) 0
CLASS D ............................................................................... (15,663,152) (3,206,067)
ADMINISTRATIVE CLASS................................................................... (2,892,607) 0
INSTITUTIONAL CLASS.................................................................... (558,203) 0
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ........................................................ (19,542,839) (3,277,576)
------------- -------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A ..................................................... 14,263,619 5,110,743
REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................................. 240,321 0
COST OF SHARES REDEEMED - CLASS A ....................................................... (1,511,799) (205,346)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A .. 12,992,141 4,905,397
------------- -------------
PROCEEDS FROM SHARES SOLD - CLASS B ..................................................... 5,745,366 2,655,821
REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................................. 117,170 0
COST OF SHARES REDEEMED - CLASS B ........................................................ (390,102) (65,845)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B .. 5,472,434 2,589,976
------------- -------------
PROCEEDS FROM SHARES SOLD - CLASS C ..................................................... 3,292,662 1,084,568
REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................................. 59,328 0
COST OF SHARES REDEEMED - CLASS C ....................................................... (258,348) (6,867)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C .. 3,093,642 1,077,701
------------- -------------
PROCEEDS FROM SHARES SOLD - CLASS D ..................................................... 216,896,497 401,407,999
REINVESTMENT OF DISTRIBUTIONS - CLASS D ................................................. 15,441,248 3,170,770
COST OF SHARES REDEEMED - CLASS D ....................................................... (270,725,535) (220,155,503)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS D .. (38,387,790) 184,423,266
------------- -------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ................................ 52,586,761 178,233,439
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ............................ 2,590,070 0
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .................................. (25,747,234) (96,612,026)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS 29,429,597 81,621,413
------------- -------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) ................................ 91,854,442 17,023,849
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ............................ 558,203 0
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) .................................. (59,940,405) 0
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
INSTITUTIONAL CLASS 32,472,240 17,023,849
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ............ 45,072,264 291,641,602
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS ...................................................... 56,544,116 304,349,020
============= =============
ENDING NET ASSETS .......................................................................... $ 662,406,035 $ 605,861,919
============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE C&B
MID CAP VALUE FUND
- --------------------------------------------------------------------------------
C&B MID CAP VALUE FUND
-----------------------------------
FOR THE SIX
MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................................... 719,478 272,409
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................ 12,088 0
SHARES REDEEMED - CLASS A ............................................................... (76,602) (10,990)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .................................... 654,964 261,419
------------- -------------
SHARES SOLD - CLASS B ................................................................... 290,712 142,042
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................ 5,909 0
SHARES REDEEMED - CLASS B ............................................................... (19,986) (3,494)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .................................... 276,635 138,548
------------- -------------
SHARES SOLD - CLASS C ................................................................... 166,832 57,678
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................ 2,992 0
SHARES REDEEMED - CLASS C ............................................................... (13.244) (366)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C ..................................... 156,580 57,312
------------- -------------
SHARES SOLD - CLASS D ................................................................... 10,872,297 21,070,037
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS D ................................ 776,338 173,128
SHARES REDEEMED - CLASS D ............................................................... (13,590,785) (11,642,685)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS D .................................... (1,942,150) 9,600,480
------------- -------------
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .............................................. 2,617,375 9,334,372
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ........... 130,154 0
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .......................................... (1,287,691) (5,036,977)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ........................ 1,459,838 4,297,395
------------- -------------
SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) .............................................. 4,531,231 918,744
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ........... 28,022 0
SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) .......................................... (2,952,592) 0
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ........................ 1,606,661 918,744
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS .... 2,212,528 15,273,898
============= =============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................... $ (747,254) $ 0
============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT REALIZED
SHARE (LOSS) INVESTMENTS INCOME GAINS
- ------------------------------------------------------------------------------------------------------------------------------
C&B MID CAP VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ... $18.89 (0.04)(5) (0.13) 0.00 0.58
JULY 26, 2004(4) TO OCTOBER 31, 2004 ............. $18.52 (0.00) 0.37 0.00 0.00
CLASS B
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ... $18.86 (0.11)(5) (0.13) 0.00 0.58
JULY 26, 2004(4) TO OCTOBER 31, 2004 ............. $18.52 (0.02) 0.36 0.00 0.00
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED).... $18.86 (0.11)(5) (0.13) 0.00 0.58
JULY 26, 2004(4) TO OCTOBER 31, 2004 ............. $18.52 (0.02) 0.36 0.00 0.00
CLASS D
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ... $18.89 (0.03)(5) (0.12) 0.00 0.58
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............. $17.96 (0.01) 1.11 (0.00) (0.17)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............. $13.15 0.00 4.83 (0.02) 0.00
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............. $14.19 (0.01) (0.19) (0.04) (0.80)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............. $12.78 0.08 2.12 (0.09) (0.70)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............. $ 9.84 0.07 3.16 (0.08) (0.21)
ADMINISTRATOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ... $18.90 (0.01)(5) (0.13) 0.00 0.58
JULY 26, 2004(4) TO OCTOBER 31, 2004 ............. $18.52 0.00 0.38 0.00 0.00
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ... $18.91 (0.01)(5) (0.10) 0.00 0.58
JULY 26, 2004(4) TO OCTOBER 31, 2004 ............. $18.52 0.02 0.37 0.00 0.00
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND
- --------------------------------------------------------------------------------
DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
IN EXCESS OF NET ASSET ---------------------------------------------------
REALIZED VALUE PER NET INVESTMENT GROSS EXPENSES NET
GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- ---------------------------------------------------------------------------------------------------------------------------------
C&B MID CAP VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ... 0.00 $19.30 (0.38)% 1.37% (0.01)% 1.36%
JULY 26, 2004(4) TO OCTOBER 31, 2004 ............. 0.00 $18.89 (0.18)% 1.41% (0.01)% 1.40%
CLASS B
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ... 0.00 $19.20 (1.14)% 2.12% 0.00% 2.12%
JULY 26, 2004(4) TO OCTOBER 31, 2004 ............. 0.00 $18.86 (0.95)% 2.16% (0.01)% 2.15%
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ... 0.00 $19.20 (1.14)% 2.12% 0.00% 2.12%
JULY 26, 2004(4) TO OCTOBER 31, 2004 ............. 0.00 $18.86 (0.98)% 2.16% (0.01)% 2.15%
CLASS D
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ... 0.00 $19.32 (0.26)% 1.36% (0.11)% 1.25%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............. 0.00 $18.89 (0.08)% 1.19% (0.04)% 1.15%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............. 0.00 $17.96 0.01% 1.27% 0.00% 1.27%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............. 0.00 $13.15 (0.07)% 1.54% (0.17)% 1.37%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............. 0.00 $14.19 0.68% 1.00% 0.00% 1.00%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............. 0.00 $12.78 0.66% 1.00% 0.00% 1.00%
ADMINISTRATOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ... 0.00 $19.34 (0.06)% 1.05% (0.01)% 1.04%
JULY 26, 2004(4) TO OCTOBER 31, 2004 ............. 0.00 $18.90 0.03% 1.17% (0.02)% 1.15%
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ... 0.00 $19.38 0.07% 0.93% (0.03)% 0.90%
JULY 26, 2004(4) TO OCTOBER 31, 2004 ............. 0.00 $18.91 0.40% 0.96% (0.06)% 0.90%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- ------------------------------------------------------------------------------------------
C&B MID CAP VALUE FUND
- ------------------------------------------------------------------------------------------
CLASS A
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ... 5.17% 13% $ 17,689
JULY 26, 2004(4) TO OCTOBER 31, 2004 ............. 2.00% 31% $ 4,938
CLASS B
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ... 4.80% 13% $ 7,971
JULY 26, 2004(4) TO OCTOBER 31, 2004 ............. 1.84% 31% $ 2,613
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ... 4.80% 13% $ 4,107
JULY 26, 2004(4) TO OCTOBER 31, 2004.............. 1.84% 31% $ 1,081
CLASS D
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED).... 5.28% 13% $ 472,341
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............. 6.18% 31% $ 498,623
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............. 36.76% 18% $ 301,513
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............. (2.09)% 30% $ 81,390
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............. 18.14% 44% $ 5,934
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............. 33.78% 101% $ 1,520
ADMINISTRATOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ... 5.33% 13% $ 111,368
JULY 26, 2004(4) TO OCTOBER 31, 2004 ............. 2.05% 31% $ 81,232
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ... 5.49% 13% $ 48,931
JULY 26, 2004(4) TO OCTOBER 31, 2004 ............. 2.11% 31% $ 17,376
13
WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS
(1) During each period, various fees and expenses were waived and reimbursed
as indicated. The ratio of Gross Expenses to Average net Assets reflects
the expense ratio in the absence of any waivers and reimbursements (Note
3).
(2) Total return calculations do not include any sales charges, and would have
been lower had certain expenses not been waived or reimbursed during the
period shown. Returns for the periods less than one year are not
annualized.
(3) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(4) Commencement of operations.
(5) Calculated based upon average shares outstanding.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE C&B
MID CAP VALUE FUND
- --------------------------------------------------------------------------------
1. ORGANIZATION
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Trust commenced operations on November 8,
1999, and at April 30, 2005 was comprised of 108 separate series (each, a
"Fund", collectively, the "Funds"). These financial statements present the C&B
Mid Cap Value Fund. The Fund is a diversified series of the Trust.
On February 3, 2004, the Board of Trustees of the Trust and on February
18, 2004, the Board of Trustees of The Advisors' Inner Circle Fund approved an
Agreement and Plan of Reorganization of the Cooke & Bieler Portfolios (C&B
Portfolios) into certain of the Funds. Effective at the close of business on
July 23, 2004, the Wells Fargo C&B Mid Cap Value Fund acquired all of the net
assets of the C&B Mid Cap Value Portfolio.
Effective April 11, 2005, the Wells Fargo C&B Mid Cap Value Fund changed
its name to Wells Fargo Advantage C&B Mid Cap Value Fund. Also at this time, the
Institutional Class changed its name to Administrator Class and the Select Class
changed its name to Institutional Class.
The separate classes of shares offered by the Fund differ principally in
applicable sales charges, distribution, shareholder servicing and administration
fees. Shareholders of each class bear certain expenses that pertain to that
particular class. All shareholders bear the common expenses of a Fund, earn
income from the portfolio and are allocated unrealized gains and losses pro rata
based on the average daily net assets of each class, without distinction between
share classes. Dividends are determined separately for each class based on
income and expenses allocable to each class. Realized gains and losses are
allocated to each class pro rata based upon the net assets of each class on the
date realized. Differences in per share dividend rates generally result from the
relative weightings of pro rata income and realized gain allocations and from
differences in separate class expenses, including distribution, shareholder
servicing and administration fees.
2. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
The following significant accounting policies, which are consistently
followed in the preparation of the financial statements of the Trust, are in
conformity with accounting principles generally accepted in the United States of
America ("GAAP") for investment companies.
The preparation of financial statements in conformity with GAAP requires
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.
In the normal course of business, the Trust may enter into contracts that
provide certain indemnifications. 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; however, based on experience, the risk of
loss from such claims is considered remote.
SECURITY VALUATION
Investments in securities are valued each business day as of the close of
regular trading on the New York Stock Exchange, which is usually 4:00 p.m.
(Eastern Time). Securities which are traded on a national or foreign securities
exchange are valued at the last reported sales price. Securities listed on The
Nasdaq Stock Market, Inc. are valued at the Nasdaq Official Closing Price
("NOCP"), and if no NOCP is available, then at the last reported sales price. In
the absence of any sale of such securities, and in the case of other securities,
including U.S. Government obligations, but excluding debt securities maturing in
60 days or less, the valuations are based on the latest quoted bid prices.
Debt securities maturing in 60 days or less generally are valued at
amortized cost. The amortized cost method involves valuing a security at its
cost, plus accretion of discount or minus amortization of premium over the
period until maturity, which approximates market value.
Investments which are not valued using any of the methods discussed above,
are valued at their fair value as determined by procedures approved by the Board
of Trustees.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded on a trade date basis. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
Interest income is accrued daily and bond discounts are accreted and premiums
are amortized daily.
Dividend income is recognized on the ex-dividend date, except for certain
dividends from foreign securities, which are recorded as soon as the Fund is
informed of 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
Net investment income, if any, is declared and distributed to shareholders
annually. Distributions to shareholders from net realized capital gains, if any,
are declared and distributed at least annually.
For federal income tax purposes, a Fund may designate as capital gains
dividends the earnings and profits distributed to shareholders on the redemption
of fund shares during the year.
Distributions are based on amounts calculated in accordance with the
applicable federal income tax regulations, which may differ from GAAP. The
timing and character of distributions made during the period from net investment
income or net realized gains may also differ from their ultimate
characterization for federal income tax purposes. To the extent that these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment. Temporary
differences do not require reclassifications.
FEDERAL INCOME TAXES
The Fund is treated as a separate entity for federal income tax purposes.
It is the policy of the Fund of the Trust to continue to qualify as a regulated
investment company by complying with the provisions applicable to regulated
investment companies, as
15
WELLS FARGO ADVANTAGE C&B NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MID CAP VALUE FUND
- --------------------------------------------------------------------------------
defined under subchapter M of the Internal Revenue Code (the "Code"), and to
make distributions of 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 at
April 30, 2005.
SECURITY LOANS
The Fund may loan securities in return for securities, irrevocable letters
of credit or cash collateral, which is invested in various short-term fixed
income securities. A Fund may receive compensation for lending securities in the
form of fees or by retaining a portion of interest on the investment securities
or cash received as collateral. A Fund also continues to receive interest or
dividends on the securities loaned. Security loans are secured at all times by
collateral. The collateral is equal to at least 102% of the market value of the
securities loaned plus accrued interest when the transaction is entered into. If
the collateral falls to 100%, it will be brought back to 102%. Gain or loss in
the market price of the securities loaned that may occur during the term of the
loan are reflected in the value of the Fund. The risks from securities lending
are that the borrower may not provide additional collateral when required or
return the securities when due or when called for by the Fund. Wells Fargo Bank,
N.A., the Funds' custodian, acts as the securities lending agent for the Funds
and receives for its services 35% of the revenues earned on the securities
lending activities and incurs all expenses. The value of the securities on loan
and the value of the related collateral at April 30, 2005 are shown on the
Statement of Assets and Liabilities.
3. EXPENSES
- --------------------------------------------------------------------------------
ADVISORY FEES
The Trust has entered into an advisory contract with Wells Fargo Funds
Management, LLC ("Funds Management"). The adviser is responsible for
implementing investment policies and guidelines and for supervising the
sub-adviser, who is responsible for day-to-day portfolio management.
Pursuant to the contract, Funds Management is entitled to receive an
advisory fee for its services as adviser. Funds Management may retain the
services of certain investment sub-advisers to provide daily portfolio
management. The fees related to sub-advisory services are borne directly by the
adviser and do not increase the overall fees paid by a Fund to the adviser.
Funds Management and the investment sub-adviser(s) are entitled to be paid a
monthly fee at the following annual rates:
Sub-Advisory
Advisory Fees Fees (% of
Average Daily (% of Average Average Daily Average Daily
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Net Assets)
- -------------------------------------------------------------------------------------------------------------------------------
C&B MID CAP $0 - 499 million 0.750 Cooke & $0 - 250 million 0.55
VALUE FUND $500 - 999 million 0.700 Bieler, L.P. $250 - 500 million 0.50
$1 - 2.99 billion 0.650 $500 - 750 million 0.45
$3 - 4.99 billion 0.625 > $750 million 0.40
>$4.99 billion 0.600
- -------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATION AND TRANSFER AGENT FEES
The Trust has entered into an Administration Agreement with Funds
Management. Under this Agreement, for providing administrative services, which
includes paying fees and expenses for services provided by the transfer agent,
sub-transfer agents, omnibus account servicers and record-keepers, Funds
Management is entitled to receive the following annual fees:
Admin Fees
Average Daily (% of Average
Net Assets Daily Net Assets)
- -----------------------------------------------------------------------------------------------
FUND LEVEL $0 - 4.99 billion 0.05
$5 - 9.99 billion 0.04
> $9.99 billion 0.03
- -----------------------------------------------------------------------------------------------
CLASS A 0.28
- -----------------------------------------------------------------------------------------------
CLASS B 0.28
- -----------------------------------------------------------------------------------------------
CLASS C 0.28
- -----------------------------------------------------------------------------------------------
CLASS D 0.28
- -----------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS* 0.10
- -----------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS** 0.08
- -----------------------------------------------------------------------------------------------
The Trust has entered into an agreement with Boston Financial Data
Services ("BFDS") as the transfer agent for the Trust. BFDS is entitled to
receive fees from the administrator for its services as transfer agent.
* Prior to April 11, 2005, the Administrator Class fee was 0.20%.
** Prior to April 11, 2005, the Institutional Class fee was 0.10%.
16
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE C&B
MID CAP VALUE FUND
- --------------------------------------------------------------------------------
CUSTODY FEES
The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"),
whereby WFB is responsible for providing custody services. Pursuant to the
contract, WFB is entitled to certain transaction charges plus a monthly fee for
custody services at the following annual rates:
% of Average
Fund Daily Net Assets
- --------------------------------------------------------------------------------
C&B MID CAP VALUE FUND 0.02
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICING FEES
The Trust has entered into contracts with one or more shareholder
servicing agents, whereby the Fund is charged the following annual fees:
% of Average
Share Class Daily Net Assets
- --------------------------------------------------------------------------------
CLASS A, CLASS B, CLASS C, CLASS D, AND ADMINISTRATOR CLASS 0.25
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.00
For the six months ended April 30, 2005, shareholder servicing fees paid
were as follows:
Administrator Institutional
Fund Class A Class B Class C Class D Class Class
- ----------------------------------------------------------------------------------------------------------------
C&B MID CAP VALUE FUND $15,057 $6,863 $3,669 $639,229 $16,153 $0
- ----------------------------------------------------------------------------------------------------------------
DISTRIBUTION FEES
The Trust has adopted a Distribution Plan (the "Plan") for Class B and
Class C shares of the Fund pursuant to Rule 12b-1 under the 1940 Act.
Distribution fees are charged to the Class B and Class C shares and paid to
Wells Fargo Funds Distributor, LLC at an annual rate of 0.75% of average daily
net assets.
Prior to April 11, 2005, Stephens Inc. served as distributor to the Fund
and received distribution fees at an annual rate of 0.75% of average daily net
assets of the Fund's Class B and Class C shares.
For the six months ended April 30, 2005, distribution fees paid are
disclosed on the Statement of Operations.
OTHER FEES
PFPC Inc. ("PFPC") serves as fund accountant for the Trust and is entitled
to receive an annual asset based fee, and an annual fixed fee from each Fund.
PFPC is also entitled to be reimbursed for all out-of-pocket expenses reasonably
incurred in providing these services.
WAIVED FEES AND REIMBURSED EXPENSES
All amounts shown as waived fees or reimbursed expenses on the Statement
of Operations, for the six months ended April 30, 2005, were waived by Funds
Management proportionately from all classes, first from advisory fees, and then
from any class specific expenses, if applicable. The Fund's Adviser has
committed to waive fees and/or reimburse expenses to the extent necessary to
maintain a certain net operating expense ratio for the Fund. Net operating
expense ratios during the period were as follows:
Net Operating Expense Ratios
Administrator Institutional
Fund Class A Class B Class C Class D Class Class
- ----------------------------------------------------------------------------------------------------------------
C&B MID CAP VALUE FUND 1.40% 2.15% 2.15% 1.25% 1.15% 0.90%
- ----------------------------------------------------------------------------------------------------------------
4. INVESTMENT PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date) for the six
months ended April 30, 2005, were as follows:
Fund Purchases at Cost Sales Proceeds
- --------------------------------------------------------------------------------
C&B MID CAP VALUE FUND $110,641,338 $84,230,195
- --------------------------------------------------------------------------------
5. BANK BORROWINGS
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust and Wells Fargo Variable Trust (excluding the
money market funds) share in a revolving Credit Agreement with The Bank of New
York, whereby the Funds are permitted to use bank borrowings for temporary or
emergency purposes, such as to fund shareholder redemption requests. The
agreement permits borrowings of up to $150 million, collectively. Interest is
charged to each Fund based on its borrowing at a rate equal to the Federal Funds
Rate plus 0.40%. In addition, the Fund pays a quarterly commitment fee equal to
0.1% per annum of the credit line. For the six months ended April 30, 2005,
there were no borrowings under the agreement.
17
WELLS FARGO ADVANTAGE C&B OTHER INFORMATION (UNAUDITED)
MID CAP VALUE FUND
- --------------------------------------------------------------------------------
PROXY VOTING INFORMATION
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities and information
regarding the results of such voting during the most recent 12-month period
ended June 30, is available without charge, upon request, by calling
1-800-222-8222, visiting our Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS or
visiting the SEC Web site at WWW.SEC.GOV.
PORTFOLIO HOLDINGS INFORMATION
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 without charge by visiting the SEC Web site at WWW.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 information about the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
BOARD OF TRUSTEES
The following table provides basic information about the Board of Trustees
("Trustees") of the Wells Fargo Funds Trust (the "Trust"). This table
supplements, and should be read in conjunction with, the Prospectus and the
Statement of Additional Information* of each Fund. Each of the Trustees listed
below acts in identical capacities for each of the 138 funds comprising the
Trust, Wells Fargo Variable Trust and Wells Fargo Master Trust (collectively the
"Fund Complex"). All of the non-interested Trustees are also members of the
Audit and Governance Committees of each Trust in the Fund Complex. The 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.
INTERESTED TRUSTEE **
- ------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------
J. Tucker Morse Trustee, Private Investor/Real Estate None
60 since 1987 Developer; Chairman of White
Point Capital, LLC.
- ------------------------------------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES
- ------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------
Thomas S. Goho Trustee, Associate Professor of Finance, None
62 since 1987 Wake Forest University,
Calloway School of Business
and Accountancy.
- ------------------------------------------------------------------------------------------------------------
Peter G. Gordon Trustee, Chairman, CEO, and Co- None
62 since 1998 Founder of Crystal Geyser
(Chairman, since 2005) Water Company and President
of Crystal Geyser Roxane
Water Company.
- ------------------------------------------------------------------------------------------------------------
Richard M. Leach Trustee, Retired. Prior thereto, President None
71 since 1987 of Richard M. Leach Associates
(a financial consulting firm).
- ------------------------------------------------------------------------------------------------------------
Timothy J. Penny Trustee, Senior Counselor to the public None
53 since 1996 relations firm of Himle-Horner
and Senior Fellow at the
Humphrey Institute,
Minneapolis, Minnesota (a
public policy organization).
- ------------------------------------------------------------------------------------------------------------
Donald C. Willeke Trustee, Principal in the law firm of None
64 since 1996 Willeke & Daniels.
- ------------------------------------------------------------------------------------------------------------
18
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE C&B
MID CAP VALUE FUND
- --------------------------------------------------------------------------------
OFFICERS
- ------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE PAST FIVE YEARS OTHER DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------
Karla M. Rabusch President, Executive Vice President of None
46 since 2003 Wells Fargo Bank, N.A.
President of Wells Fargo Funds
Management, LLC. Senior Vice
President and Chief
Administrative Officer of Wells
Fargo Funds Management, LLC
from 2001 to 2003. Vice
President of Wells Fargo Bank,
N.A. from 1997 to 2000.
- ------------------------------------------------------------------------------------------------------------
Stacie D. DeAngelo Treasurer, Senior Vice President of Wells None
36 since 2003 Fargo Bank, N.A. Senior Vice
President of Operations for
Wells Fargo Funds Management,
LLC. Prior thereto, Operations
Manager at Scudder Weisel
Capital, LLC from 2000 to
2001, Director of Shareholder
Services at BISYS Fund Services
from 1999 to 2000 and
Assistant Vice President of
Operations with Nicholas-
Applegate Capital Management
from 1993 to 1999.
- ------------------------------------------------------------------------------------------------------------
C. David Messman Secretary, Senior Counsel of Wells Fargo None
45 since 2000 Bank, N.A. Senior Vice
President and Secretary of Wells
Fargo Funds Management, LLC.
Vice President and Senior
Counsel of Wells Fargo Bank,
N.A. from 1996 to 2003.
- ------------------------------------------------------------------------------------------------------------
* The Statement of Additional Information includes additional information
about the Funds' Trustees and is available, without charge, upon request,
by calling 1-800-222-8222.
** As of April 30, 2005, one of the six Trustees is considered an "interested
person" of the Trusts as defined in the Investment Company Act of 1940.
The interested Trustee, J. Tucker Morse, is affiliated with a government
securities dealer that is registered under the Securities Exchange Act of
1934, which is not itself affiliated with Wells Fargo Funds Management,
LLC. Robert C. Brown was an interested Trustee prior to his retirement on
April 5, 2005.
*** Length of service dates reflects a Trustee's commencement of service with
the Trust's predecessor entities.
19
WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
OTHER MATTERS
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY
AGREEMENTS:
C&B MID CAP VALUE FUND
- --------------------------------------------------------------------------------
Section 15(c) of the Investment Company Act of 1940 (the "1940 Act")
contemplates that the Board of Trustees (the "Board") of Wells Fargo Funds Trust
(the "Trust"), including a majority of the Trustees who have no direct or
indirect interest in the investment advisory and sub-advisory agreements and are
not "interested persons" of the Trust, as defined in the 1940 Act (the
"Independent Trustees"), will annually review and consider the continuation of
the investment advisory and sub-advisory agreements. In this regard, the Board
reviewed and re-approved, during the six months covered by this report: (i) an
investment advisory agreement with Wells Fargo Funds Management, LLC ("Funds
Management") for the C&B Mid Cap Value Fund (the "Fund"); and (ii) an investment
sub-advisory agreement with Cooke & Bieler, L.P. ("Cooke & Bieler") for the
Fund. The investment advisory agreement with Funds Management and the investment
sub-advisory agreement with Cooke & Bieler are collectively referred to as the
"Advisory Agreements."
More specifically, at a meeting held on April 4, 2005, the Board,
including the Independent Trustees advised by their independent legal counsel,
considered the factors and reached the conclusions described below relating to
the selection of Funds Management and Cooke & Bieler and the continuation of the
Advisory Agreements.
NATURE, EXTENT AND QUALITY OF SERVICES
The Board received and considered various data and information regarding
the nature, extent and quality of services provided to the Fund by Funds
Management and Cooke & Bieler under the Advisory Agreements. Responses of Funds
Management and Cooke & Bieler to a detailed set of requests submitted by the
Independent Trustees' independent legal counsel on behalf of such Trustees were
provided to the Board. The Board reviewed and considered the data and
information, which included, among other things, information about the
background and experience of the senior management and the expertise of the
investment personnel of Funds Management and Cooke & Bieler.
The Board considered the ability of Funds Management and Cooke & Bieler,
based on their respective resources, reputations and other attributes, to
attract and retain highly qualified investment professionals, including
research, advisory, and supervisory personnel. In this connection, the Board
considered information regarding each of Funds Management's and Cooke & Bieler's
compensation for its personnel involved in the management of the Fund. In
addition, the Board considered the effects of certain personnel changes in light
of the acquisition of certain of the asset management arrangements of Strong
Capital Management, Inc. by Wells Fargo & Company.
The Board further considered the compliance programs and compliance
records of Funds Management and Cooke & Bieler. In addition, the Board took into
account the administrative services provided to the Fund by Funds Management and
its affiliates. In considering these matters, the Board considered not only the
specific information presented in connection with the meeting, but also the
knowledge gained over the course of interacting with Funds Management, including
with respect to Funds Management's oversight of service providers, such as the
investment sub-adviser.
Based on the above factors, together with those referenced below, the
Board concluded that it was generally satisfied with the nature, extent and
quality of the investment advisory services provided to the Fund by Funds
Management and Cooke & Bieler.
FUND PERFORMANCE AND EXPENSES
The Board considered the performance results for the Fund over various
time periods. The Board also considered these results in comparison to the
median performance results of the group of funds that was determined to be the
most similar to the Fund (the "Peer Group") and to the median performance of a
broader universe of relevant funds (the "Universe"), as well as to the Fund's
benchmark index. Lipper Inc. ("Lipper"), an independent provider of investment
company data, determined the Peer Group and Universe for the Fund. The Board was
provided with a description of the methodology used by Lipper to select the
mutual funds in the Fund's Peer Group and Universe. The Board noted that the
Fund's performance was better than, or not appreciably below, the median
performance of its Peer Group for most time periods. The Board also noted that
the Fund's one-year performance was lower than the median performance of its
Peer Group. The Board asked for a continued report on the Fund's performance.
The Board received and considered information regarding the Fund's net
operating expense ratio and its various components, including contractual
advisory fees, actual advisory fees, actual non-management fees, Rule 12b-1 and
non-Rule 12b-1 service fees, fee waivers/caps and/or expense reimbursements. The
Board also considered comparisons of these fees to the expense information for
the Fund's Peer Group and Universe, which comparative data was provided by
Lipper. The Board noted that the net operating
20
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE C&B
MID CAP VALUE FUND
- --------------------------------------------------------------------------------
expense ratio of the Fund was lower than, or not appreciably higher than, the
Fund's Peer Group's median net operating expense ratio.
Management also discussed the Lipper data and rankings, and other relevant
information, for the Fund. Based on the above-referenced considerations and
other factors, the Board concluded that the overall performance and expense
results supported the re-approval of the Advisory Agreements for the Fund.
INVESTMENT ADVISORY AND SUB-ADVISORY FEE RATES
The Board reviewed and considered the contractual investment advisory fee
rates both on a stand-alone basis and on a combined basis with the Fund's
administration fee rates (the "Advisory Agreement Rates") payable by the Fund to
Funds Management for investment advisory services. The Board also reviewed and
considered the contractual investment sub-advisory fee rates (the "Sub-Advisory
Agreement Rates") payable by Funds Management to Cooke & Bieler for investment
sub-advisory services. In addition, the Board reviewed and considered the
existing fee waiver/cap arrangements applicable to the Advisory Agreement Rates
and considered the Advisory Agreement Rates after taking the waivers/caps into
account (the "Net Advisory Rates").
The Board received and considered information comparing the Advisory
Agreement Rates and Net Advisory Rates with those of the other funds in the Peer
Group. The Board noted that the Advisory Agreement Rates and the Net Advisory
Rates for the Fund were lower than, or not appreciably higher than, the median
rates of its Peer Group. In addition, the Board concluded that the combined
investment advisory/administration fee rates for the Fund (before and after
waivers/caps and/or expense reimbursements) were reasonable in relation to the
Fund's Peer Group, and reasonable in relation to the services provided.
The Board also reviewed and considered the Sub-Advisory Agreement Rates
and concluded that the Sub-Advisory Agreement Rates were fair and equitable,
based on its consideration of the factors described above.
PROFITABILITY
The Board received and considered a detailed profitability analysis of
Funds Management based on the Advisory Agreement Rates and the Net Advisory
Rates, as well as on other relationships between the Fund and Funds Management
and its affiliates. The Board concluded that, in light of the costs of providing
investment management and other services to the Fund, the profits and other
ancillary benefits that Funds Management and its affiliates received with regard
to providing these services to the Fund were not unreasonable. The Board did not
consider profitability information with respect to Cooke & Bieler, which is not
affiliated with Funds Management. The Board considered that the sub-advisory
fees paid to Cooke & Bieler had been negotiated by Funds Management on an arms
length basis and that Cooke & Bieler's separate profitability from its
relationship with the Fund was not a material factor in determining whether to
renew the agreement.
ECONOMIES OF SCALE
The Board received and considered general information regarding whether
there have been economies of scale with respect to the management of the Fund,
whether the Fund has appropriately benefited from any economies of scale, and
whether there is potential for realization of any further economies of scale.
The Board acknowledged the inherent limitations of any analysis of an investment
adviser's economies of scale and of any attempt to correlate breakpoints with
such economies, stemming largely from the Board's understanding that economies
of scale are realized, if at all, by an investment adviser across a variety of
products and services, not just with respect to a single fund. The Board
concluded that any actual or potential economies of scale are, or will be,
shared reasonably with Fund shareholders, including most particularly through
Advisory Agreement Rate breakpoints, which are applicable to the Fund.
INFORMATION ABOUT SERVICES TO OTHER CLIENTS
The Board also received and considered information about the nature,
extent and quality of services and fee rates offered by Funds Management to
other similarly situated series within the Trust, and those offered by Cooke &
Bieler to other clients, including other registered investment companies and
separate accounts. The Board concluded that the Advisory Agreement Rates, the
Sub-Advisory Agreement Rates and the Net Advisory Rates were within a reasonable
range of the fee rates offered to others by Funds Management and Cooke & Bieler,
giving effect to differences in services covered by such fee rates.
OTHER BENEFITS TO FUNDS MANAGEMENT AND COOKE & BIELER
The Board received and considered information regarding potential
"fall-out" or ancillary benefits received by Funds Management and its affiliates
and Cooke & Bieler as a result of their relationship with the Fund. Such
benefits could include, among others, benefits directly attributable to the
relationship of Funds Management and Cooke & Bieler with the Fund (such as
soft-dollar credits) and benefits potentially derived from an increase in the
business of Funds Management and Cooke & Bieler as a result
21
of their relationship with the Fund (such as the ability to market to
shareholders other financial products offered by Funds Management and its
affiliates or Cooke & Bieler and its affiliates).
The Board also considered the effectiveness of policies of the Fund in
achieving the best execution of portfolio transactions, whether and to what
extent soft dollar credits are sought and how any such credits are utilized,
potential benefits that may be realized by using an affiliated broker, and the
controls applicable to brokerage allocation procedures. The Board also took note
of the policies of Cooke & Bieler regarding the allocation of portfolio
investment opportunities among the Fund and other clients.
OTHER FACTORS AND BROADER REVIEW
The Board also considered the markets for distribution of the Fund,
including the principal channels through which the Fund's shares are offered and
sold. The Board noted that the Fund is now part of one of the few fund families
that have both direct-to-fund and intermediary distribution.
As discussed above, the Board reviewed detailed materials received from
Funds Management and Cooke & Bieler annually as part of the re-approval process
under Section 15(c) of the 1940 Act. The Board also regularly reviews and
assesses the quality of the services that the Fund receives throughout the year.
In this regard, the Board reviews reports of Funds Management and Cooke & Bieler
at least quarterly, which include, among other things, a detailed portfolio
review, and detailed fund performance reports. In addition, the Board meets with
the portfolio managers of the Fund at various times throughout the year.
After considering the above-described factors and based on its
deliberations and its evaluation of the information described above, the Board
concluded that approval of the continuation of the Advisory Agreements for the
Fund was in the best interest of the Fund and its shareholders. Accordingly, the
Board unanimously approved the continuation of the Advisory Agreements.
22
LIST OF ABBREVIATIONS WELLS FARGO ADVANTAGE C&B MID CAP VALUE FUND
- --------------------------------------------------------------------------------
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
ABAG -- Association of Bay Area Governments
ADR -- American Depositary Receipt
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CMT -- Constant Maturity Treasury
COFI -- Cost of Funds Index
Connie Lee -- Connie Lee Insurance Company
COP -- Certificate of Participation
CP -- Commercial Paper
CTF -- Common Trust Fund
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
EDFA -- Education Finance Authority
FFCB -- Federal Farm Credit Bank
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FRN -- Floating Rate Notes
FSA -- Financial Security Assurance, Inc
GDR -- Global Depositary Receipt
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
IDA -- Industrial Development Authority
IDR -- Industrial Development Revenue
LIBOR -- London Interbank Offered Rate
LLC -- Limited Liability Corporation
LOC -- Letter of Credit
LP -- Limited Partnership
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MUD -- Municipal Utility District
MTN -- Medium Term Note
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PLC -- Private Placement
PSFG -- Public School Fund Guaranty
RAW -- Revenue Anticipation Warrants
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
R&D -- Research & Development
SFHR -- Single Family Housing Revenue
SFMR -- Single Family Mortgage Revenue
SLMA -- Student Loan Marketing Association
STEERS -- Structured Enhanced Return Trust
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
V/R -- Variable Rate
WEBS -- World Equity Benchmark Shares
XLCA -- XL Capital Assurance
23
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WELLS ADVANTAGE
FARGO FUNDS
More information about wells fargo advantage funds(SM) This report and the financial statements contained
is available free upon request. To obtain literature, herein are submitted for the general information
please write, e-mail, or call: of the shareholders of the WELLS FARGO ADVANTAGE
FUNDS. If this report is used for promotional
WELLS FARGO ADVANTAGE FUNDS purposes, distribution of the report must be
P.O. Box 8266 accompanied or preceded by a current prospectus.
Boston, MA 02266-8266 For a prospectus containing more complete
information, including charges and expenses, call
E-mail: wfaf@wellsfargo.com 1-800-222-8222. Please consider the investment
Retail Investment Professionals: 888-877-9275 objective, risks, charges and expenses of the
Institutional Investment Professionals: 866-765-0778 investment carefully before investing. This and
Web: www.wellsfargo.com/advantagefundS other information about WELLS FARGO ADVANTAGE
FUNDS can be found in the current prospectus. Read
the prospectus carefully before you invest or send
money.
Wells Fargo Funds Management, LLC, a wholly-owned
subsidiary of Wells Fargo & Company, provides
investment advisory and administrative services
for the WELLS FARGO ADVANTAGE FUNDS. Other
affiliates of Wells Fargo & Company provide
sub-advisory and other services for the Funds. The
Funds are distributed by WELLS FARGO FUNDS
DISTRIBUTOR, LLC, Member NASD/SIPC, an affiliate
of Wells Fargo & Company.
-----------------------------------------------------
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
-----------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
(C) 2005 Wells Fargo Advantage Funds, LLC. All rights reserved. | www.wellsfargo.com/advantagefunds | SM50931 06-05
SSMDCAP/SAR127 04-05
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
APRIL 30, 2005
[GRAPHIC OMITTED]
SEMI-ANNUAL REPORT
WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND
WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS ................................................... 1
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
C&B TAX-MANAGED VALUE FUND ........................................... 2
FUND EXPENSES ............................................................ 4
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
C&B TAX-MANAGED VALUE FUND ........................................... 5
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES .................................. 8
STATEMENT OF OPERATIONS .............................................. 9
STATEMENTS OF CHANGES IN NET ASSETS .................................. 10
FINANCIAL HIGHLIGHTS ................................................. 12
NOTES TO FINANCIAL STATEMENTS ............................................ 14
- --------------------------------------------------------------------------------
OTHER INFORMATION ........................................................ 17
- --------------------------------------------------------------------------------
LIST OF ABBREVIATIONS .................................................... 22
- --------------------------------------------------------------------------------
-------------------------------------------------
NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE
-------------------------------------------------
THIS PAGE IS INTENTIONALLY LEFT BLANK --
LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND
- --------------------------------------------------------------------------------
DEAR VALUED SHAREHOLDER,
I am pleased to introduce you to WELLS FARGO ADVANTAGE FUNDS(SM). You now
have access to an expanded array of mutual funds, giving you the flexibility to
invest in a family of funds covering nearly every asset class and investment
style. To learn more about our funds and the talented team of money managers
behind them, please visit our new Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
You can also call one of our investment service representatives now available 24
hours a day, 7 days a week, or speak with your investment professional.
Following is your WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND
semi-annual report for the six-month period ended April 30, 2005. On the
following pages, you will find a discussion of the Fund, including performance
highlights, the Fund managers' strategic outlook, and information about the
Fund's portfolio.
THE ECONOMY: CONTINUED EXPANSION
- --------------------------------------------------------------------------------
The U.S. economy continued to grow steadily, expanding by 4.4% in 2004.
During the first quarter of 2005, however, the economy grew by 3.1%, trailing
the 3.8% pace achieved during the last three months of 2004. Part of that
decline stemmed from the high cost of gasoline, which continued to have a
significant influence on consumer spending and the economy. When the six-month
period began, oil prices were declining from their recent highs of $55 per
barrel. After falling for two months, they rebounded sharply in 2005, setting
new highs in April.
Higher energy prices were a key driver of inflation, which rose throughout
most of the period. "Core" inflation, however, which excludes volatile food and
energy prices, also trended upwards, but rose less quickly. With core inflation
manageable, the Federal Reserve Board (the Fed) continued its program of gradual
short-term interest rate increases. During the past six months, the Fed raised
rates four times, bringing the Federal funds rate, the interest rate at which a
depository institution lends immediately available funds to another depository
institution overnight, from 1.75% at the beginning of the period to 2.75% by
April 30, 2005.
STOCKS: APRIL SHOWERS
- --------------------------------------------------------------------------------
The stock market's performance was up and down. Stocks began the period in
the midst of a rally driven by falling oil prices. The outcome of the U.S.
presidential election continued this rally, which lasted through the rest of
2004. But stocks turned in more mixed results in the first four months of 2005.
April was a particularly volatile environment for investors, who were
increasingly uneasy about rising energy costs, further economic slowing, higher
potential inflation, and rising interest rates. Moderate corporate earnings
growth contributed to concerns, as did the increasing likelihood that General
Motors (GM), the world's largest automobile manufacturer, would see its credit
rating downgraded to "junk" status. Highlighting the market's April volatility,
the Dow Jones Industrial Average saw seven moves of greater than 100 points on
the way to its worst monthly decline since January 2003. The S&P 500 Index fell
nearly 2% in April, but rose 3.28% during the full six-month period.
BONDS: LOOKING LONG
- --------------------------------------------------------------------------------
The U.S. Treasury and municipal yield curves generally flattened during
the period, indicating that short-term bond yields were rising in line with the
Fed's rate increases while long-term bond yields fell, somewhat surprisingly.
Longer bonds benefited from investors' increasing conviction that inflation
could continue to be manageable and that the Fed would not need to raise
interest rates more quickly.
Municipal bonds generally outperformed their taxable counterparts and, at
period end, were offering historically attractive yields relative to U.S.
Treasuries. For the first four months of the period, corporate high-yield bonds
continued their strong performance. It was a different story in March and April.
Investors worried about the potential negative impact that a credit-rating
downgrade of GM and Ford would have on the high-yield market.
LOOKING AHEAD: LONG-TERM EXPANSION?
- --------------------------------------------------------------------------------
Despite the economy's first quarter slowdown, we believe this represents a
temporary soft patch more than a continuing slowdown. As stock and bond
investors seek to determine where inflation, interest rates, and corporate
earnings are headed, we may see more unpredictable moves in the markets.
Uncertainty and risk will always be a part of investing. We believe an
important thing you can do to manage risk is to own a broadly diversified
portfolio with stocks, bonds, and cash that can help you weather unexpected
market shifts. While diversification may not prevent losses in a downturn, it
may help reduce them and keep you on track to reach your financial goals.
Thank you for choosing WELLS FARGO ADVANTAGE FUNDS. We appreciate your
confidence in us. Through each market cycle, we are committed to helping you
meet your financial needs. If you have any questions about your investment,
please contact your investment professional, or call us at 1-800-222-8222. You
may also visit our enhanced Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND (the Fund) seeks
maximum long-term, after-tax total return, consistent with minimizing risk to
principal.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Cooke & Bieler, L.P.
FUND MANAGERS INCEPTION DATE
Kermit S. Eck, CFA Michael M. Meyer, CFA 2/12/1997
Edward W. O'Connor, CFA James R. Norris
Mehul Trivedi, CFA R. James O'Neil, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 3.23%(1) (excluding sales charges) for
the six-month period ended April 30, 2005, underperforming its benchmark, the
Russell 1000(R) Value Index(2), which returned 6.72%, and performing in line
with its other benchmark, the S&P 500 Index(3), which returned 3.28%, during the
same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF 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.
CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 5.75%. FOR CLASS
B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 5.00%. FOR CLASS C
SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE SHOWN IS 1.00%. PERFORMANCE
INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE PERIOD SHOWN.
ADMINISTRATOR CLASS SHARES AND CLASS D SHARES ARE SOLD WITHOUT A FRONT-END SALES
CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN
INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS.
THE FUND HAS A REDEMPTION FEE OF 1.00% DEDUCTED FROM THE NET PROCEEDS OF
SHARES REDEEMED OR EXCHANGED WITHIN ONE YEAR AFTER PURCHASE. PERFORMANCE DATA
DOES NOT REFLECT THE DEDUCTION OF THIS FEE, WHICH, IF REFLECTED, WOULD REDUCE
THE PERFORMANCE.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
Despite its underperformance relative to its benchmarks, we were
reasonably pleased with the Fund's performance. Generally speaking, the Fund's
results reflected the subdued tone of the broad investing landscape during the
six-month period. The Fund benefited from owning many individual stocks with
strong or improving company fundamentals. Representing a diverse group of
sectors, major contributors to the Fund's performance included HCA, Wendy's
International, Baxter International, and ExxonMobil. Of course, not all stock
picks were strong. Fund portfolio holdings that were disappointing during the
period included Manpower, Molex, MBIA, and Jones Apparel Group.
The most significant drag on performance was the Fund's continued limited
exposure to the energy sector. We have avoided the sector because we believe
these stocks' fundamentals do not merit such high valuations. Based on our
research and experience, such high share prices are likely to be unsustainable,
and the stocks could be poised to fall at the first sign of fundamental trouble.
However, we realize that speculating on oil prices--or anything else in the
investment world--is extremely unpredictable in the short term. Oil prices and
energy stocks could continue to rise, detracting from the Fund's relative
performance.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
The precariousness of trying to forecast short-term trends is the primary
reason we stay focused on the long-term picture. We remain committed to
evaluating those variables that we believe are more straightforward to analyze
and predict, such as fundamentals and valuations.
We established new positions in a number of companies we believe offered
compelling values, including Nokia, Gannett, and Allstate. To make room for
these opportunities, we sold the Fund's stakes in Boeing, Computer Sciences, and
Aon - companies that were sold due to valuation or fundamental concerns.
As a result, we believe potential investment opportunities are much better
elsewhere in the market. Over the past 6 months, we have added to the Fund's
existing holdings that were temporarily out of favor, we established new
positions in a number of companies, including Gannett (media/services), Allstate
(insurance), State Street (finance), Boston Scientific (healthcare), Nokia and
Flextronics International (technology). To make room for these opportunities in
the portfolio, we sold our stake in Bank of New York, Boeing, Computer Sciences,
and Steelcase.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We believe the outlook for the economy is generally favorable but with
several caveats. First, oil prices are a wild card that could result in
uncomfortably high inflation and more aggressive interest rate hikes by the
Federal Reserve. Also, the current interest rate level has begun to increase
bonds' attractiveness relative to stocks. Finally, we believe equity valuations
are less compelling than they were several years ago, and the market's current
valuation does not allow much room for economic disappointment.
Given these factors, we are cautiously optimistic about the prospects for
the U.S. stock market. We continue to believe stock selection, rather than
sector selection, will be increasingly important in driving investment
performance. What's more, fundamentals, and ultimately a company's ability to
generate expected cash flow, a sign of its competitive advantage and financial
discipline, will play a significant role in determining a stock's success.
Against this backdrop, we believe an unwavering focus on owning high-quality
stocks is more important than ever.
STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES
FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL
MARKET AND ECONOMIC CONDITIONS. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL
INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of April 30, 2005, and are those of the Fund's
managers. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND.
2
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
----------------------------------------- ---------------------------------------
6-Months* 1-Year 5-Year Life of Fund 6-Months* 1-Year 5-Year Life of Fund
- ------------------------------------------------------------------------------------------------------------------------------
C&B Tax-Managed Value Fund - Class A
(incept. 2/12/1997) (2.70) (0.22) 6.97 8.92 3.23 5.90 8.25 9.71
- ------------------------------------------------------------------------------------------------------------------------------
C&B Tax-Managed Value Fund - Class B
(incept. 2/12/1997) (2.13) (0.12) 7.14 8.91 2.87 4.88 7.44 8.91
- ------------------------------------------------------------------------------------------------------------------------------
C&B Tax-Managed Value Fund - Class C
(incept. 2/12/1997) 1.86 3.92 7.45 8.92 2.86 4.92 7.45 8.92
- ------------------------------------------------------------------------------------------------------------------------------
C&B Tax-Managed Value Fund - Class D
(incept. 2/12/1997) 3.23 5.71 8.21 9.69
- ------------------------------------------------------------------------------------------------------------------------------
C&B Tax-Managed Value Fund -
Administrator Class (incept. 2/12/1997) 3.34 5.89 8.25 9.71
- ------------------------------------------------------------------------------------------------------------------------------
Benchmarks
Russell 1000(R) Value Index(2) 6.72 13.92 5.06 8.99
- ------------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 3.28 6.33 (2.94) 6.41
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
TEN LARGEST EQUITY HOLDINGS(4),(5) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
American Express Company 3.11%
- --------------------------------------------------------------------------------
Exxon Mobil Corporation 3.05%
- --------------------------------------------------------------------------------
Molex Incorporated Class A 2.95%
- --------------------------------------------------------------------------------
State Street Corporation 2.92%
- --------------------------------------------------------------------------------
General Dynamics Corporation 2.87%
- --------------------------------------------------------------------------------
Berkshire Hathaway Incorporated 2.81%
- --------------------------------------------------------------------------------
McDonald's Corporation 2.78%
- --------------------------------------------------------------------------------
Wendy's International Incorporated 2.69%
- --------------------------------------------------------------------------------
Vodafone Group plc ADR 2.56%
- --------------------------------------------------------------------------------
Manpower Incorporated 2.56%
FUND CHARACTERISTICS(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Beta** 0.79
- --------------------------------------------------------------------------------
Price to Earnings (trailing 12 months) 15.67
- --------------------------------------------------------------------------------
Price to Book Ratio 3.73
- --------------------------------------------------------------------------------
Median Market Cap. ($B) $ 20.35
- --------------------------------------------------------------------------------
Portfolio Turnover 27%
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK
BETA IS 1.00 BY DEFINITION.
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL]
SECTOR DISTRIBUTION(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Consumer Discretionary 27%
- --------------------------------------------------------------------------------
Consumer Staples 7%
- --------------------------------------------------------------------------------
Energy 5%
- --------------------------------------------------------------------------------
Financials 22%
- --------------------------------------------------------------------------------
Health Care 11%
- --------------------------------------------------------------------------------
Industrials 17%
- --------------------------------------------------------------------------------
Information Technology 7%
- --------------------------------------------------------------------------------
Materials 1%
- --------------------------------------------------------------------------------
Telecommunication Services 3%
GROWTH OF $10,000 INVESTMENT(6) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE C&B
WELLS FARGO ADVANTAGE C&B TAX TAX-MANAGED VALUE FUND - ADMIN.
MANAGED VALUE FUND - CLASS A CLASS RUSSELL 1000(R) VALUE INDEX S&P 500 INDEX
2/18/1997 9,425.07 10,000.00 10,000 10,000
2/28/1997 9,311.97 9,880.00 10,147 10,079
3/31/1997 9,236.57 9,800.00 9,782 9,665
4/30/1997 9,388.10 9,960.77 10,193 10,242
5/31/1997 10,191.71 10,813.41 10,762 10,865
6/30/1997 10,702.24 11,355.08 11,224 11,351
7/31/1997 11,488.61 12,189.42 12,069 12,254
8/31/1997 10,985.81 11,655.94 11,639 11,568
9/30/1997 11,450.66 12,149.16 12,342 12,201
10/31/1997 10,889.28 11,553.52 11,997 11,794
11/30/1997 11,222.14 11,906.68 12,528 12,340
12/31/1997 11,307.99 11,997.77 12,893 12,551
1/31/1998 11,231.65 11,916.77 12,711 12,690
2/28/1998 12,128.66 12,868.49 13,567 13,605
3/31/1998 12,624.87 13,394.98 14,396 14,301
4/30/1998 12,509.66 13,272.73 14,493 14,445
5/31/1998 12,232.30 12,978.46 14,278 14,197
6/30/1998 12,098.41 12,836.40 14,461 14,773
7/31/1998 11,618.62 12,327.35 14,206 14,616
8/31/1998 9,845.15 10,445.70 12,092 12,505
9/30/1998 10,544.95 11,188.19 12,786 13,306
10/31/1998 11,778.00 12,496.46 13,776 14,388
11/30/1998 12,211.37 12,956.26 14,418 15,259
12/31/1998 12,368.83 13,123.31 14,908 16,138
1/31/1999 11,751.35 12,468.17 15,028 16,813
2/28/1999 11,867.13 12,591.01 14,815 16,290
3/31/1999 12,233.75 12,980.00 15,122 16,942
4/30/1999 13,210.11 14,015.90 16,534 17,598
5/31/1999 13,268.13 14,077.46 16,353 17,183
6/30/1999 13,645.29 14,477.62 16,827 18,136
7/31/1999 13,373.65 14,189.42 16,335 17,570
8/31/1999 12,908.48 13,695.88 15,729 17,483
9/30/1999 12,472.77 13,233.59 15,179 17,005
10/31/1999 12,511.66 13,274.85 16,053 18,080
11/30/1999 12,589.43 13,357.37 15,927 18,448
12/31/1999 13,055.29 13,851.63 16,004 19,533
1/31/2000 12,870.17 13,655.23 15,482 18,552
2/29/2000 11,827.70 12,549.17 14,332 18,201
3/31/2000 13,394.27 14,211.30 16,080 19,981
4/30/2000 13,570.00 14,397.75 15,893 19,380
5/31/2000 14,233.86 15,102.10 16,061 18,983
6/30/2000 13,795.12 14,636.61 15,327 19,451
7/31/2000 13,804.92 14,647.00 15,519 19,148
8/31/2000 14,421.73 15,301.44 16,382 20,336
9/30/2000 14,582.43 15,471.93 16,532 19,263
10/31/2000 15,053.78 15,972.04 16,938 19,181
11/30/2000 15,034.14 15,951.20 16,309 17,670
12/31/2000 15,899.63 16,869.49 17,127 17,757
1/31/2001 15,684.63 16,641.37 17,192 18,386
2/28/2001 15,329.87 16,264.97 16,714 16,711
3/31/2001 14,865.44 15,772.22 16,124 15,653
4/30/2001 15,059.48 15,978.09 16,914 16,868
5/31/2001 15,717.05 16,675.77 17,294 16,981
6/30/2001 15,215.59 16,143.73 16,911 16,568
7/31/2001 15,583.02 16,533.57 16,875 16,405
8/31/2001 15,528.98 16,476.24 16,199 15,379
9/30/2001 14,779.89 15,681.45 15,059 14,137
10/31/2001 14,758.24 15,658.47 14,929 14,407
11/30/2001 15,397.07 16,336.28 15,797 15,512
12/31/2001 15,744.84 16,705.26 16,169 15,648
1/31/2002 15,896.76 16,866.44 16,045 15,420
2/28/2002 16,243.99 17,234.86 16,070 15,122
3/31/2002 16,751.12 17,772.91 16,831 15,691
4/30/2002 16,414.36 17,415.60 16,253 14,740
5/31/2002 16,414.36 17,415.60 16,335 14,632
6/30/2002 15,503.96 16,449.68 15,397 13,590
7/31/2002 14,471.08 15,353.80 13,966 12,531
8/31/2002 14,590.68 15,480.69 14,071 12,613
9/30/2002 13,196.80 14,001.79 12,507 11,243
10/31/2002 14,101.29 14,961.45 13,433 12,232
11/30/2002 15,300.01 16,233.29 14,280 12,951
12/31/2002 14,599.23 15,489.75 13,659 12,191
1/31/2003 14,063.37 14,921.21 13,329 11,872
2/28/2003 13,374.42 14,190.24 12,973 11,694
3/31/2003 13,462.11 14,283.28 12,995 11,806
4/30/2003 14,842.28 15,747.63 14,139 12,779
5/31/2003 15,882.88 16,851.71 15,051 13,452
6/30/2003 16,101.32 17,083.48 15,240 13,624
7/31/2003 16,342.79 17,339.67 15,466 13,864
8/31/2003 17,023.28 18,061.67 15,707 14,134
9/30/2003 16,523.64 17,531.56 15,554 13,984
10/31/2003 17,545.38 18,615.62 16,506 14,775
11/30/2003 17,820.04 18,907.04 16,730 14,905
12/31/2003 18,701.06 19,841.79 17,761 15,686
1/31/2004 18,932.21 20,087.04 18,074 15,974
2/29/2004 19,471.56 20,659.28 18,461 16,196
3/31/2004 19,269.48 20,444.87 18,299 15,951
4/30/2004 19,049.25 20,211.21 17,852 15,701
5/31/2004 19,214.42 20,386.45 18,034 15,916
6/30/2004 19,662.46 20,861.81 18,460 16,226
7/31/2004 19,056.28 20,218.65 18,200 15,689
8/31/2004 19,199.56 20,358.98 18,459 15,752
9/30/2004 19,453.05 20,616.24 18,745 15,922
10/31/2004 19,541.23 20,709.79 19,057 16,165
11/30/2004 20,103.33 21,294.48 20,020 16,819
12/31/2004 20,972.50 22,227.73 20,691 17,391
1/31/2005 20,465.38 21,688.81 20,323 16,967
2/28/2005 20,814.73 22,072.04 20,997 17,324
3/31/2005 20,589.34 21,832.52 20,709 17,018
4/30/2005 20,172.37 21,401.38 20,338 16,694
- --------------------------------------------------------------------------------
(1) The Fund's Adviser has committed through February 28, 2007, to waive
fees and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Prior to April 11, 2005, the WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE
FUND was named the Wells Fargo C&B Tax-Managed Value Fund.
Performance shown for Class A, Class B, Class C, Class D and Administrator
Class (formerly named Institutional Class) shares of the WELLS FARGO ADVANTAGE
C&B TAX-MANAGED VALUE FUND for periods prior to July 26, 2004, reflects the
performance of the unnamed share class of the C&B Tax-Managed Value Portfolio,
the predecessor fund, adjusted to reflect the sales charges and expenses
applicable to each share class. Predecessor fund information can be found in the
Fund's prospectus, statement of additional information or annual report.
(2) The Russell 1000(R) Value Index measures performance of those Russell
1000 companies with lower price-to-book ratios and lower forecasted growth
values. You cannot invest directly in an index.
(3) The S&P 500 Index is an unmanaged index of 500 widely held common
stocks representing, among others, industrial, financial, utility and
transportation companies listed or traded on national exchanges or
over-the-counter markets. You cannot invest directly in an index.
(4) Portfolio holdings and characteristics are subject to change.
(5) The ten largest equity holdings are calculated based on the market
value of the securities divided by total market value of the Fund.
(6) The chart compares the performance of the WELLS FARGO ADVANTAGE C&B
TAX-MANAGED VALUE FUND Class A shares and Administrator Class shares for the
life of the Fund with the Russell 1000(R) Value Index and the S&P 500 Index. The
chart assumes a hypothetical investment of $10,000 in Class A shares and
Administrator Class shares and reflects all operating expenses and, for Class A
shares, assumes the maximum initial sales charge of 5.75%.
3
WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND FUND EXPENSES
- --------------------------------------------------------------------------------
As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchase payments,
redemption fees (if any) and exchange fees (if any); and (2) ongoing costs,
including management fees; distribution (12b-1) and/or shareholder service 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 period and held for the entire period (November 1, 2004 to April 30,
2005).
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), redemption fees, or exchange fees. 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 Ending
Account Account Expenses
Value Value Paid During Net Annual
11/1/2004 4/30/2005 the Period (1) Expense Ratio
C&B Tax Managed Value Fund
- ---------------------------------------------------------------------------------------------------------------------
C&B Tax Managed Value Fund - Class A
Actual $ 1,000.00 $ 1,032.30 $ 6.05 1.20%
- ---------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,018.84 $ 6.01 1.20%
- ---------------------------------------------------------------------------------------------------------------------
C&B Tax Managed Value Fund - Class B
Actual $ 1,000.00 $ 1,028.70 $ 9.81 1.95%
- ---------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.12 $ 9.74 1.95%
- ---------------------------------------------------------------------------------------------------------------------
C&B Tax Managed Value Fund - Class C
Actual $ 1,000.00 $ 1,028.60 $ 9.81 1.95%
- ---------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.12 $ 9.74 1.95%
- ---------------------------------------------------------------------------------------------------------------------
C&B Tax Managed Value Fund - Class D
Actual $ 1,000.00 $ 1,032.30 $ 6.05 1.20%
- ---------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,018.84 $ 6.01 1.20%
- ---------------------------------------------------------------------------------------------------------------------
C&B Tax Managed Value Fund - Administrator Class
Actual $ 1,000.00 $ 1,033.40 $ 4.79 0.95%
- ---------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.08 $ 4.76 0.95%
(1) EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO 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).
4
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
C&B TAX-MANAGED VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 93.95%
APPAREL & ACCESSORY STORES - 1.38%
8,400 KOHL'S CORPORATION+ $ 399,840
------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 2.77%
11,670 JONES APPAREL GROUP INCORPORATED 355,351
7,840 VF CORPORATION 443,666
799,017
------------
BUSINESS SERVICES - 8.17%
18,000 MANPOWER INCORPORATED 693,900
22,710 MICROSOFT CORPORATION 574,563
7,900 OMNICOM GROUP INCORPORATED 654,910
81,630 PARAMETRIC TECHNOLOGY CORPORATION+ 434,272
2,357,645
------------
CHEMICALS & ALLIED PRODUCTS - 5.23%
13,600 BRISTOL-MYERS SQUIBB COMPANY 353,600
12,800 COLGATE PALMOLIVE COMPANY 637,312
15,300 MERCK & COMPANY INCORPORATED 518,670
1,509,582
------------
COMMUNICATIONS - 4.71%
21,000 COMCAST CORPORATION+ 666,330
26,550 VODAFONE GROUP PLC ADR 694,017
1,360,347
------------
DEPOSITORY INSTITUTIONS - 6.43%
12,842 BANK OF AMERICA CORPORATION 578,404
13,760 JP MORGAN CHASE & COMPANY 488,342
17,100 STATE STREET CORPORATION 790,533
1,857,279
------------
EATING & DRINKING PLACES - 6.61%
17,400 ARAMARK CORPORATION CLASS B 426,474
25,680 MCDONALD'S CORPORATION 752,681
17,000 WENDY'S INTERNATIONAL INCORPORATED 729,810
1,908,965
------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 5.30%
27,000 FLEXTRONICS INTERNATIONAL LIMITED+ 301,050
34,900 MOLEX INCORPORATED CLASS A 798,861
27,000 NOKIA OYJ ADR 431,460
1,531,371
------------
FOOD & KINDRED PRODUCTS - 1.79%
11,020 ANHEUSER-BUSCH COMPANIES INCORPORATED 516,507
------------
5
WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
C&B TAX-MANAGED VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
FURNITURE & FIXTURES - 2.10%
22,490 LEGGETT & PLATT INCORPORATED $ 606,330
------------
GENERAL MERCHANDISE STORES - 1.51%
42,900 BIG LOTS INCORPORATED+ 436,722
------------
HEALTH SERVICES - 2.11%
10,900 HCA INCORPORATED 608,656
------------
HOLDING & OTHER INVESTMENT OFFICES - 2.64%
272 BERKSHIRE HATHAWAY INCORPORATED+ 761,059
------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 6.57%
20,300 DOVER CORPORATION 738,108
8,120 EATON CORPORATION 476,644
15,250 PITNEY BOWES INCORPORATED 681,980
1,896,732
------------
INSURANCE CARRIERS - 6.52%
11,600 ALLSTATE CORPORATION 651,456
12,670 MBIA INCORPORATED 663,655
14,500 PRINCIPAL FINANCIAL GROUP INCORPORATED 566,660
1,881,771
------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL &
OPTICAL GOODS - 4.71%
17,410 BAXTER INTERNATIONAL INCORPORATED 645,911
5,100 BECTON DICKINSON & COMPANY 298,452
14,000 BOSTON SCIENTIFIC CORPORATION+ 414,120
1,358,483
------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 2.26%
34,500 HASBRO INCORPORATED 652,740
------------
MISCELLANEOUS RETAIL - 2.23%
23,830 ZALE CORPORATION+ 644,125
------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 6.05%
16,600 AMERICAN EXPRESS COMPANY 874,820
12,200 COUNTRYWIDE FINANCIAL CORPORATION 441,518
7,000 FREDDIE MAC 430,640
1,746,978
------------
PAPER & ALLIED PRODUCTS - 2.06%
9,500 KIMBERLY-CLARK CORPORATION 593,275
------------
PETROLEUM REFINING & RELATED INDUSTRIES - 4.74%
14,500 EXXONMOBIL CORPORATION 826,935
9,280 ROYAL DUTCH PETROLEUM COMPANY 540,560
1,367,495
------------
6
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
C&B TAX-MANAGED VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
PRIMARY METAL INDUSTRIES - 2.20%
10,000 ENGELHARD CORPORATION $ 306,300
7,600 HUBBELL INCORPORATED CLASS B 330,220
636,520
------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 2.00%
7,500 GANNETT COMPANY INCORPORATED 577,500
------------
TRANSPORTATION EQUIPMENT - 2.69%
7,400 GENERAL DYNAMICS CORPORATION 777,370
------------
WATER TRANSPORTATION - 1.17%
6,900 CARNIVAL CORPORATION 337,272
------------
TOTAL COMMON STOCKS (COST $24,694,713) 27,123,581
------------
SHORT-TERM INVESTMENTS - 6.51%
1,878,775 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 1,878,775
------------
TOTAL SHORT-TERM INVESTMENTS (COST $1,878,775) 1,878,775
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $26,573,488)* 100.46% $ 29,002,356
OTHER ASSETS AND LIABILITIES, NET (0.46) (133,294
------ ------------
TOTAL NET ASSETS 100.00% $ 28,869,062
====== ============
+ NON-INCOME EARNING SECURITIES.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $1,878,775.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
7
WELLS FARGO ADVANTAGE STATEMENT OF ASSETS AND LIABILITIES
C&B TAX-MANAGED VALUE FUND -- APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
C&B
TAX-MANAGED
VALUE FUND
- ------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE................................................... $ 27,123,581
INVESTMENTS IN AFFILIATES........................................................ 1,878,775
------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW)................................ 29,002,356
------------
RECEIVABLE FOR FUND SHARES ISSUED................................................ 24,392
RECEIVABLE FOR INVESTMENTS SOLD.................................................. 161,987
RECEIVABLES FOR DIVIDENDS AND INTEREST........................................... 31,450
------------
TOTAL ASSETS....................................................................... 29,220,185
------------
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED................................................. 67,720
PAYABLE FOR INVESTMENTS PURCHASED................................................ 258,629
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3)............................ 17,983
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR.......................................... 5,912
ACCRUED EXPENSES AND OTHER LIABILITIES........................................... 879
------------
TOTAL LIABILITIES.................................................................. 351,123
------------
TOTAL NET ASSETS................................................................... $ 28,869,062
============
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL.................................................................. $ 26,279,237
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)....................................... 43,966
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS............................ 116,991
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND
TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES.......... 2,428,868
------------
TOTAL NET ASSETS................................................................... $ 28,869,062
------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- ------------------------------------------------------------------------------------------------------
NET ASSETS - CLASS A............................................................. $ 2,825,427
SHARES OUTSTANDING - CLASS A..................................................... 157,804
NET ASSET VALUE PER SHARE - CLASS A.............................................. $ 17.90
MAXIMUM OFFERING PRICE PER SHARE - CLASS A(2).................................... $ 18.99
NET ASSETS - CLASS B............................................................. $ 1,138,782
SHARES OUTSTANDING - CLASS B..................................................... 64,056
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B........................... $ 17.78
NET ASSETS - CLASS C............................................................. $ 581,862
SHARES OUTSTANDING - CLASS C..................................................... 32,701
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C........................... $ 17.79
NET ASSETS - CLASS D............................................................. $ 22,941,357
SHARES OUTSTANDING - CLASS D..................................................... 1,284,554
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS D........................... $ 17.86
NET ASSETS - ADMINISTRATOR CLASS................................................. $ 1,381,634
SHARES OUTSTANDING - ADMINISTRATOR CLASS......................................... 77,322
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS............... $ 17.87
------------
INVESTMENTS AT COST................................................................ $ 26,573,488
============
(1) EACH 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.
8
STATEMENT OF OPERATIONS -- WELLS FARGO ADVANTAGE C&B
FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) TAX-MANAGED VALUE FUND
- --------------------------------------------------------------------------------
C&B
TAX-MANAGED
VALUE FUND
- ------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1)..................................................................... $ 301,522
INTEREST......................................................................... 256
INCOME FROM AFFILIATED SECURITIES................................................ 19,646
SECURITIES LENDING INCOME, NET................................................... 374
------------
TOTAL INVESTMENT INCOME............................................................ 321,798
------------
EXPENSES
ADVISORY FEES.................................................................... 105,625
ADMINISTRATION FEES
FUND LEVEL..................................................................... 7,042
CLASS A........................................................................ 4,052
CLASS B........................................................................ 1,257
CLASS C........................................................................ 527
CLASS D........................................................................ 31,786
ADMINISTRATOR CLASS............................................................ 1,215
CUSTODY FEES..................................................................... 2,817
SHAREHOLDER SERVICING FEES....................................................... 33,786
ACCOUNTING FEES.................................................................. 22,724
DISTRIBUTION FEES (NOTE 3)
CLASS B........................................................................ 3,368
CLASS C........................................................................ 1,411
AUDIT FEES....................................................................... 8,478
LEGAL FEES....................................................................... 49
REGISTRATION FEES................................................................ 49
SHAREHOLDER REPORTS.............................................................. 1,247
TRUSTEES' FEES................................................................... 3,383
OTHER FEES AND EXPENSES.......................................................... 1,097
------------
TOTAL EXPENSES..................................................................... 229,913
------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3)..................................... (57,751)
NET EXPENSES..................................................................... 172,162
------------
NET INVESTMENT INCOME (LOSS)....................................................... 149,636
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION.................. 136,635
------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS.......................................... 136,635
------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION.................. 384,841
------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS................ 384,841
============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS............................. 521,476
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.................... $ 671,112
============
(1) NET OF FOREIGN WITHHOLDING TAXES OF......................................... $ 3,044
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
9
WELLS FARGO ADVANTAGE
C&B TAX-MANAGED VALUE FUND STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
C&B TAX-MANAGED VALUE FUND
---------------------------------------
FOR THE SIX MONTHS
ENDED APRIL 30, 2005 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ........................................................... $ 23,121,050 $ 9,147,073
OPERATIONS: .......................................................................
NET INVESTMENT INCOME (LOSS) ................................................... 149,636 59,629
NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................................ 136,635 549,417
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS............. 384,841 651,539
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.................... 671,112 1,260,585
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A ..................................................................... (11,248) 0
CLASS B ..................................................................... (2,383) 0
CLASS C ..................................................................... (624) 0
CLASS D ..................................................................... (104,526) (40,558)
ADMINISTRATOR CLASS ......................................................... (7,423) 0
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A ..................................................................... (40,535) 0
CLASS B ..................................................................... (14,557) 0
CLASS C ..................................................................... (3,919) 0
CLASS D ..................................................................... (392,202) 0
ADMINISTRATOR CLASS ......................................................... (22,849) 0
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ............................................... (600,266) (40,558)
------------ ------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A ............................................ 3,156,924 1,464,268
REINVESTMENTS OF DISTRIBUTIONS - CLASS A ....................................... 51,250 0
COST OF SHARES REDEEMED - CLASS A .............................................. (1,798,750) (43,459)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS A ......................................................................... 1,409,424 1,420,809
------------ ------------
PROCEEDS FROM SHARES SOLD - CLASS B ............................................ 791,568 398,606
REINVESTMENTS OF DISTRIBUTIONS - CLASS B ....................................... 15,398 0
COST OF SHARES REDEEMED - CLASS B .............................................. (49,025) (6,479)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS B .......................................................................... 757,941 392,127
------------ ------------
PROCEEDS FROM SHARES SOLD - CLASS C ............................................ 468,540 171,542
REINVESTMENTS OF DISTRIBUTIONS - CLASS C ....................................... 3,393 0
COST OF SHARES REDEEMED - CLASS C .............................................. (54,338) 0
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS C .......................................................................... 417,595 171,542
------------ ------------
PROCEEDS FROM SHARES SOLD - CLASS D ............................................ 6,923,898 12,580,545
REINVESTMENT OF DISTRIBUTIONS - CLASS D ........................................ 467,118 0
COST OF SHARES REDEEMED - CLASS D .............................................. (4,471,611) (2,968,697)
------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS D .......................................................................... 2,919,405 9,611,848
------------ ------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ....................... 171,972 1,167,257
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ......................... 829 (9,633)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS .............................................................. 172,801 1,157,624
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS.... 5,677,166 12,753,950
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS ............................................. 5,748,012 13,973,977
============ ============
ENDING NET ASSETS ................................................................. $ 28,869,062 $ 23,121,050
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE C&B
TAX-MANAGED VALUE FUND
- --------------------------------------------------------------------------------
C&B TAX-MANAGED VALUE FUND
--------------------------------------
FOR THE SIX MONTHS
ENDED APRIL 30, 2005 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A........................................................... 172,272 83,591
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A........................ 2,808 0
SHARES REDEEMED - CLASS A....................................................... (98,360) (2,507)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A............................ 76,720 81,084
------------ ------------
SHARES SOLD - CLASS B........................................................... 43,536 22,723
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B........................ 848 0
SHARES REDEEMED - CLASS B....................................................... (2,688) (363)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B............................ 41,696 22,360
------------ ------------
SHARES SOLD - CLASS C........................................................... 25,607 9,867
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C........................ 187 0
SHARES REDEEMED - CLASS C....................................................... (2,960) 0
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C............................ 22,834 9,867
------------ ------------
SHARES SOLD - CLASS D........................................................... 379,801 725,438
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS D........................ 25,666 0
SHARES REDEEMED - CLASS D....................................................... (246,049) (173,198)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS D............................ 159,418 552,240
------------ ------------
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1)...................................... 9,429 68,417
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1).................................. 46 (569)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS................ 9,475 67,848
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE
TRANSACTIONS ..................................................................... 310,143 733,399
============ ============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)....................... $ 43,966 $ 20,534
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT REALIZED
SHARE (LOSS) INVESTMENTS INCOME GAINS
- -----------------------------------------------------------------------------------------------------------------------------------
C&B TAX-MANAGED VALUE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............ $ 17.73 0.09 0.49 (0.08) (0.33)
JULY 26, 2004(4) TO OCTOBER 31, 2004 ...................... $ 17.06 0.01 0.66 0.00 0.00
CLASS B
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............ $ 17.65 0.03 0.48 (0.05) (0.33)
JULY 26, 2004(4) TO OCTOBER 31, 2004 ...................... $ 17.06 (0.01) 0.60 0.00 0.00
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............ $ 17.66 0.04 0.47 (0.05) (0.33)
JULY 26, 2004(4) TO OCTOBER 31, 2004 ...................... $ 17.06 0.00 0.60 0.00 0.00
CLASS D
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............ $ 17.70 0.10 0.48 (0.09) (0.33)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ...................... $ 15.97 0.07 1.72 (0.05) 0.00
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ...................... $ 12.94 0.09 3.05 (0.10) (0.01)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ...................... $ 13.63 0.09 (0.69) (0.09) 0.00
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ...................... $ 15.33 0.13 (0.39) (0.14) (1.30)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ...................... $ 12.87 0.15 2.45 (0.14) 0.00
ADMINISTRATOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............ $ 17.71 0.13 0.47 (0.11) (0.33)
JULY 26, 2004(4) TO OCTOBER 31, 2004 ...................... $ 17.06 0.03 0.62 0.00 0.00
(1) During each period, various fees and expenses were waived and reimbursed
as indicated. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio in the absence of any waivers and reimbursements (Note
3).
(2) Total return calculations do not include any sales charges, and would have
been lower had certain expenses not been waived or reimbursed during the
periods shown. Returns for less than one year are not annualized.
(3) Calculated on the basis of the fund as a whole without distinguishing
between the classes of shares issued.
(4) Commencement of operations.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND
- --------------------------------------------------------------------------------
DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
IN EXCESS OF NET ASSET ----------------------------------------------
REALIZED VALUE PER NET INVESTMENT GROSS EXPENSES NET
GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
C&B TAX-MANAGED VALUE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............ 0.00 $ 17.90 0.93% 1.61% (0.41)% 1.20%
JULY 26, 2004(4) TO OCTOBER 31, 2004 ...................... 0.00 $ 17.73 0.34% 2.03% (0.83)% 1.20%
CLASS B
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............ 0.00 $ 17.78 0.12% 2.37% (0.42)% 1.95%
JULY 26, 2004(4) TO OCTOBER 31, 2004 ...................... 0.00 $ 17.65 (0.49)% 2.78% (0.83)% 1.95%
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............ 0.00 $ 17.79 0.11% 2.36% (0.41)% 1.95%
JULY 26, 2004(4) TO OCTOBER 31, 2004 ...................... 0.00 $ 17.66 (0.33)% 2.86% (0.91)% 1.95%
CLASS D
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............ 0.00 $ 17.86 1.12% 1.61% (0.41)% 1.20%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ...................... 0.00 $ 17.70 0.39% 1.51% (0.29)% 1.22%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ...................... 0.00 $ 15.97 0.65% 1.76% (0.51)% 1.25%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ...................... 0.00 $ 12.94 0.66% 2.63% (1.44)% 1.19%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ...................... 0.00 $ 13.63 0.94% 1.00% 0.00% 1.00%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ...................... 0.00 $ 15.33 0.96% 1.00% 0.00% 1.00%
ADMINISTRATOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............ 0.00 $ 17.87 1.40% 1.30% (0.35)% 0.95%
JULY 26, 2004(4) TO OCTOBER 31, 2004 ...................... 0.00 $ 17.71 0.77% 1.80% (0.85)% 0.95%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- -----------------------------------------------------------------------------------------------------
C&B TAX-MANAGED VALUE FUND
- -----------------------------------------------------------------------------------------------------
CLASS A
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............ 3.23% 27% $ 2,825
JULY 26, 2004(4) TO OCTOBER 31, 2004 ...................... 3.93% 25% $ 1,438
CLASS B
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............ 2.87% 27% $ 1,138
JULY 26, 2004(4) TO OCTOBER 31, 2004 ...................... 3.46% 25% $ 395
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............ 2.86% 27% $ 582
JULY 26, 2004(4) TO OCTOBER 31, 2004 ...................... 3.52% 25% $ 174
CLASS D
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............ 3.23% 27% $ 22,941
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ...................... 11.19% 25% $ 19,913
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ...................... 24.42% 31% $ 9,147
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ...................... (4.45)% 32% $ 4,799
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ...................... (1.96)% 16% $ 2,623
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ...................... 20.32% 9% $ 2,253
ADMINISTRATOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............ 3.34% 27% $ 1,382
JULY 26, 2004(4) TO OCTOBER 31, 2004 ...................... 3.81% 25% $ 1,201
13
WELLS FARGO ADVANTAGE
C&B TAX-MANAGED VALUE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Trust commenced operations on November 8,
1999, and at April 30, 2005, was comprised of 108 separate series (each, a
"Fund", collectively, the "Funds"). These financial statements present the C&B
Tax-Managed Value Fund. The Fund is a diversified series of the Trust.
On February 3, 2004, the Board of Trustees of the Trust and on February
18, 2004, the Board of Trustees of The Advisors' Inner Circle Fund approved an
Agreement and Plan of Reorganization of the Cooke & Bieler Portfolios (C&B
Portfolios) into certain of the Funds. Effective at the close of business on
July 23, 2004, the Wells Fargo C&B Tax-Managed Value Fund acquired all of the
net assets of the C&B Tax-Managed Value Portfolio.
Effective April 11, 2005, the Wells Fargo C&B Tax-Managed Value Fund
changed its name to Wells Fargo Advantage C&B Tax-Managed Value Fund. Also at
this time, the Institutional Class changed its name to Administrator Class.
The separate classes of shares offered by the Fund differ principally in
applicable sales charges, distribution, shareholder servicing and administration
fees. Shareholders of each class bear certain expenses that pertain to that
particular class. All shareholders bear the common expenses of a Fund, earn
income from the portfolio and are allocated unrealized gains and losses pro rata
based on the average daily net assets of each class, without distinction between
share classes. Dividends are determined separately for each class based on
income and expenses allocable to each class. Realized gains and losses are
allocated to each class pro rata based upon the net assets of each class on the
date realized. Differences in per share dividend rates generally result from the
relative weightings of pro rata income and realized gain allocations and from
differences in separate class expenses, including distribution, shareholder
servicing and administration fees.
2. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
The following significant accounting policies, which are consistently
followed in the preparation of the financial statements of the Trust, are in
conformity with accounting principles generally accepted in the United States of
America ("GAAP") for investment companies.
The preparation of financial statements in conformity with GAAP requires
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.
In the normal course of business, the Trust may enter into contracts that
provide certain indemnifications. 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; however, based on experience, the risk of
loss from such claims is considered remote.
SECURITY VALUATION
Investments in securities are valued each business day as of the close of
regular trading on the New York Stock Exchange, which is usually 4:00 p.m.
(Eastern Time). Securities which are traded on a national or foreign securities
exchange are valued at the last reported sales price. Securities listed on The
Nasdaq Stock Market, Inc. are valued at the Nasdaq Official Closing Price
("NOCP"), and if no NOCP is available, then at the last reported sales price. In
the absence of any sale of such securities, and in the case of other securities,
including U.S. Government obligations, but excluding debt securities maturing in
60 days or less, the valuations are based on the latest quoted bid prices.
Debt securities maturing in 60 days or less generally are valued at
amortized cost. The amortized cost method involves valuing a security at its
cost, plus accretion of discount or minus amortization of premium over the
period until maturity, which approximates market value.
Investments which are not valued using any of the methods discussed above,
are valued at their fair value as determined by procedures approved by the Board
of Trustees.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded on a trade date basis. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
Interest income is accrued daily and bond discounts are accreted and premiums
are amortized daily.
Dividend income is recognized on the ex-dividend date, except for certain
dividends from foreign securities, which are recorded as soon as the Fund is
informed of 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
Net investment income, if any, is declared and distributed to shareholders
annually. Distributions to shareholders from net realized capital gains, if any,
are declared and distributed at least annually.
For federal income tax purposes, a Fund may designate as capital gains
dividends the earnings and profits distributed to shareholders on the redemption
of fund shares during the year.
Distributions are based on amounts calculated in accordance with the
applicable federal income tax regulations, which may differ from GAAP. The
timing and character of distributions made during the period from net investment
income or net realized gains may also differ from their ultimate
characterization for federal income tax purposes. To the extent that these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment. Temporary
differences do not require reclassifications.
14
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE C&B
TAX-MANAGED VALUE FUND
- --------------------------------------------------------------------------------
FEDERAL INCOME TAXES
The Fund is treated as a separate entity for federal income tax purposes.
It is the policy of the Fund to continue to qualify as a regulated investment
company by complying with the provisions applicable to regulated investment
companies, as defined under subchapter M of the Internal Revenue Code (the
"Code"), and to make distributions of 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 at April 30, 2005.
SECURITY LOANS
The Fund may loan securities in return for securities, irrevocable letters
of credit or cash collateral, which is invested in various short-term fixed
income securities. A Fund may receive compensation for lending securities in the
form of fees or by retaining a portion of interest on the investment securities
or cash received as collateral. A Fund also continues to receive interest or
dividends on the securities loaned. Security loans are secured at all times by
collateral. The collateral is equal to at least 102% of the market value of the
securities loaned plus accrued interest when the transaction is entered into. If
the collateral falls to 100%, it will be brought back to 102%. Gain or loss in
the market price of the securities loaned that may occur during the term of the
loan are reflected in the value of the Fund. The risks from securities lending
are that the borrower may not provide additional collateral when required or
return the securities when due or when called for by the Fund. Wells Fargo Bank,
N.A., the Funds' custodian, acts as the securities lending agent for the Fund
and receives for its services 35% of the revenues earned on the securities
lending activities and incurs all expenses. The value of the securities on loan
and the value of the related collateral at April 30, 2005 are shown on the
Statement of Assets and Liabilities.
3. EXPENSES
- --------------------------------------------------------------------------------
ADVISORY FEES
The Trust has entered into an advisory contract with Wells Fargo Funds
Management, LLC ("Funds Management"). The adviser is responsible for
implementing investment policies and guidelines and for supervising the
sub-adviser, who is responsible for day-to-day portfolio management.
Pursuant to the contract, Funds Management is entitled to receive an
advisory fee for its services as adviser. Funds Management may retain the
services of certain investment sub-advisers to provide daily portfolio
management. The fees related to sub-advisory services are borne directly by the
adviser and do not increase the overall fees paid by a Fund to the adviser.
Funds Management and the investment sub-adviser(s) are entitled to be paid a
monthly fee at the following annual rates:
Advisory Fees Sub-Advisory Fees
Average Daily (% of Average Average Daily (% of Average
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Daily Net Assets)
- --------------------------------------------------------------------------------------------------------------------
C&B TAX-MANAGED $ 0 - 499 million 0.750 Cooke & $ 0 - 250 million 0.45
VALUE FUND $ 500 - 999 million 0.700 Bieler, L.P. $ 250 - 500 million 0.40
$ 1 - 2.99 billion 0.650 $ 500 - 750 million 0.35
$ 3 - 4.99 billion 0.625 >$ 750 million 0.30
>$ 4.99 billion 0.600
- --------------------------------------------------------------------------------------------------------------------
ADMINISTRATION AND TRANSFER AGENT FEES
The Trust has entered into an Administration Agreement with Funds
Management. Under this Agreement, for providing administrative services, which
includes paying fees and expenses for services provided by the transfer agent,
sub-transfer agents, omnibus account servicers and record-keepers, Funds
Management is entitled to receive the following annual fees:
Admin Fees
Average Daily (% of Average
Net Assets Daily Net Assets)
- --------------------------------------------------------------------------------
FUND LEVEL $ 0 - 4.99 billion 0.05
- --------------------------------------------------------------------------------
$ 5 - 9.99 billion 0.04
- --------------------------------------------------------------------------------
> $ 9.99 billion 0.03
- --------------------------------------------------------------------------------
CLASS A 0.28
- --------------------------------------------------------------------------------
CLASS B 0.28
- --------------------------------------------------------------------------------
CLASS C 0.28
- --------------------------------------------------------------------------------
CLASS D 0.28
- --------------------------------------------------------------------------------
ADMINISTRATOR CLASS* 0.10
* Prior to April 11, 2005, the class level fee was 0.20%.
15
WELLS FARGO ADVANTAGE
C&B TAX-MANAGED VALUE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
The Trust has entered into an agreement with Boston Financial Data
Services ("BFDS") as the transfer agent for the Trust. BFDS is entitled to
receive fees from the administrator for its services as transfer agent.
CUSTODY FEES
The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"),
whereby WFB is responsible for providing custody services. Pursuant to the
contract, WFB is entitled to certain transaction charges plus a monthly fee for
custody services at the following annual rates:
% of Average
Fund Daily Net Assets
- --------------------------------------------------------------------------------
C&B TAX-MANAGED VALUE FUND 0.02
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICING FEES
The Trust has entered into contracts with one or more shareholder
servicing agents, whereby the Fund is charged the following annual fees:
% of Average
Share Class Daily Net Assets
- --------------------------------------------------------------------------------
CLASS A, CLASS B, CLASS C, CLASS D, AND ADMINISTRATOR CLASS 0.25
- --------------------------------------------------------------------------------
For the six months ended April 30, 2005, shareholder servicing fees paid
were as follows:
Fund Class A Class B Class C Class D Administrator Class
- ------------------------------------------------------------------------------------------
C&B TAX-MANAGED VALUE FUND $ 3,618 $ 1,123 $ 470 $ 28,381 $ 194
- ------------------------------------------------------------------------------------------
DISTRIBUTION FEES
The Trust has adopted a Distribution Plan (the "Plan") for Class B and
Class C shares of the applicable Funds pursuant to Rule 12b-1 under the 1940
Act. Distribution fees are charged to the Class B and Class C shares and paid to
Wells Fargo Funds Distributor, LLC at an annual rate of 0.75% of average daily
net assets.
Prior to April 11, 2005, Stephens Inc. served as distributor to the Fund
and received distribution fees at an annual rate of 0.75% of average daily net
assets of the Fund's Class B and Class C shares.
For the six months ended April 30, 2005, distribution fees paid are
disclosed on the Statement of Operations.
OTHER FEES
PFPC Inc. ("PFPC") serves as fund accountant for the Trust and is entitled
to receive an annual asset-based fee, and an annual fixed fee from the Fund.
PFPC is also entitled to be reimbursed for all out-of-pocket expenses reasonably
incurred in providing these services.
WAIVED FEES AND REIMBURSED EXPENSES
All amounts shown as waived fees or reimbursed expenses on the Statement
of Operations, for the six months ended April 30, 2005, were waived by Funds
Management proportionately from all classes, first from advisory fees, and then
from any class specific expenses, if applicable. The Fund's Adviser has
committed to waive fees and/or reimburse expenses to the extent necessary to
maintain a certain net operating expense ratio for the Fund. Net operating
expense ratios during the period were as follows:
Net Operating Expense Ratios
Administrator
Fund Class A Class B Class C Class D Class
- ----------------------------------------------------------------------------------
C&B TAX-MANAGED VALUE FUND 1.20% 1.95% 1.95% 1.20% 0.95%
- ----------------------------------------------------------------------------------
4. INVESTMENT PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date) for the six
months ended April 30, 2005, were as follows:
Fund Purchases at Cost Sales Proceeds
- --------------------------------------------------------------------------------
C&B TAX-MANAGED VALUE FUND $ 11,651,331 $ 7,093,076
- --------------------------------------------------------------------------------
5. BANK BORROWINGS
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust and Wells Fargo Variable Trust (excluding the
money market funds) share in a revolving Credit Agreement with The Bank of New
York, whereby the Funds are permitted to use bank borrowings for temporary or
emergency purposes, such as to fund shareholder redemption requests. The
agreement permits borrowings of up to $150 million, collectively. Interest is
charged to each Fund based on its borrowing at a rate equal to the Federal Funds
Rate plus 0.40%. In addition, the Fund pays a quarterly commitment fee equal to
0.1% per annum of the credit line. For the six months ended April 30, 2005,
there were no borrowings under the agreement.
16
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND
- --------------------------------------------------------------------------------
PROXY VOTING INFORMATION
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities and information
regarding the results of such voting during the most recent 12-month period
ended June 30, is available without charge, upon request, by calling
1-800-222-8222, visiting our Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS or
visiting the SEC Web site at WWW.SEC.GOV.
PORTFOLIO HOLDINGS INFORMATION
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 without charge by visiting the SEC Web site at WWW.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 information about the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
BOARD OF TRUSTEES
The following table provides basic information about the Board of Trustees
("Trustees") of the Wells Fargo Funds Trust (the "Trust"). This table
supplements, and should be read in conjunction with, the Prospectus and the
Statement of Additional Information* of each Fund. Each of the Trustees listed
below acts in identical capacities for each of the 138 funds comprising the
Trust, Wells Fargo Variable Trust and Wells Fargo Master Trust (collectively the
"Fund Complex"). All of the non-interested Trustees are also members of the
Audit and Governance Committees of each Trust in the Fund Complex. The 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.
INTERESTED TRUSTEE **
- -------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- -------------------------------------------------------------------------------------------------------
J. Tucker Morse Trustee, Private Investor/Real Estate None
60 since 1987 Developer; Chairman of White
Point Capital, LLC.
- -------------------------------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES
- -------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- -------------------------------------------------------------------------------------------------------
Thomas S. Goho Trustee, Associate Professor of Finance, None
62 since 1987 Wake Forest University,
Calloway School of Business
and Accountancy.
- -------------------------------------------------------------------------------------------------------
Peter G. Gordon Trustee, Chairman, CEO, and Co- None
62 since 1998 Founder of Crystal Geyser
(Chairman, since 2005) Water Company and President
of Crystal Geyser Roxane Water
Company.
- -------------------------------------------------------------------------------------------------------
Richard M. Leach Trustee, Retired. Prior thereto, President None
71 since 1987 of Richard M. Leach Associates
(a financial consulting firm).
- -------------------------------------------------------------------------------------------------------
Timothy J. Penny Trustee, Senior Counselor to the public None
53 since 1996 relations firm of Himle-Horner
and Senior Fellow at the
Humphrey Institute,
Minneapolis, Minnesota (a
public policy organization).
- -------------------------------------------------------------------------------------------------------
Donald C. Willeke Trustee, Principal in the law firm of None
64 since 1996 Willeke & Daniels.
- -------------------------------------------------------------------------------------------------------
17
WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
OFFICERS
- -------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE PAST FIVE YEARS OTHER DIRECTORSHIPS
- -------------------------------------------------------------------------------------------------------
Karla M. Rabusch President, Executive Vice President of None
46 since 2003 Wells Fargo Bank, N.A.
President of Wells Fargo Funds
Management, LLC. Senior Vice
President and Chief
Administrative Officer of Wells
Fargo Funds Management, LLC
from 2001 to 2003. Vice
President of Wells Fargo Bank,
N.A. from 1997 to 2000.
- -------------------------------------------------------------------------------------------------------
Stacie D. DeAngelo Treasurer, Senior Vice President of Wells None
36 since 2003 Fargo Bank, N.A. Senior Vice
President of Operations for
Wells Fargo Funds Management,
LLC. Prior thereto, Operations
Manager at Scudder Weisel
Capital, LLC from 2000 to
2001, Director of Shareholder
Services at BISYS Fund Services
from 1999 to 2000 and Assistant
Vice President of Operations
with Nicholas- Applegate
Capital Management from 1993 to
1999.
- -------------------------------------------------------------------------------------------------------
C. David Messman Secretary, Vice President and Managing None
45 since 2000 Senior Counsel of Wells Fargo
Bank, N.A. Senior Vice
President and Secretary of Wells
Fargo Funds Management, LLC.
Vice President and Senior
Counsel of Wells Fargo Bank,
N.A. from 1996 to 2003.
- -------------------------------------------------------------------------------------------------------
* The Statement of Additional Information includes additional information
about the Funds' Trustees and is available, without charge, upon request,
by calling 1-800-222-8222.
** As of April 30, 2005, one of the six Trustees is considered an "interested
person" of the Trusts as defined in the Investment Company Act of 1940.
The interested Trustee, J. Tucker Morse, is affiliated with a government
securities dealer that is registered under the Securities Exchange Act of
1934, which is not itself affiliated with Wells Fargo Funds Management,
LLC. Robert C. Brown was an interested Trustee prior to his retirement on
April 5, 2005.
*** Length of service dates reflects a Trustee's commencement of service with
the Trust's predecessor entities.
18
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND
- --------------------------------------------------------------------------------
OTHER MATTERS
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY
AGREEMENTS:
C&B TAX-MANAGED VALUE FUND
- --------------------------------------------------------------------------------
Section 15(c) of the Investment Company Act of 1940 (the "1940 Act")
contemplates that the Board of Trustees (the "Board") of Wells Fargo Funds Trust
(the "Trust"), including a majority of the Trustees who have no direct or
indirect interest in the investment advisory and sub-advisory agreements and are
not "interested persons" of the Trust, as defined in the 1940 Act (the
"Independent Trustees"), will annually review and consider the continuation of
the investment advisory and sub-advisory agreements. In this regard, the Board
reviewed and re-approved, during the six months covered by this report: (i) an
investment advisory agreement with Wells Fargo Funds Management, LLC ("Funds
Management") for the C&B Tax-Managed Value Fund (the "Fund"); and (ii) an
investment sub-advisory agreement with Cooke & Bieler, L.P. ("Cooke & Bieler")
for the Fund. The investment advisory agreement with Funds Management and the
investment sub-advisory agreement with Cooke & Bieler are collectively referred
to as the "Advisory Agreements."
More specifically, at a meeting held on April 4, 2005, the Board,
including the Independent Trustees advised by their independent legal counsel,
considered the factors and reached the conclusions described below relating to
the selection of Funds Management and Cooke & Bieler and the continuation of the
Advisory Agreements.
NATURE, EXTENT AND QUALITY OF SERVICES
The Board received and considered various data and information regarding
the nature, extent and quality of services provided to the Fund by Funds
Management and Cooke & Bieler under the Advisory Agreements. Responses of Funds
Management and Cooke & Bieler to a detailed set of requests submitted by the
Independent Trustees' independent legal counsel on behalf of such Trustees were
provided to the Board. The Board reviewed and considered the data and
information, which included, among other things, information about the
background and experience of the senior management and the expertise of the
investment personnel of Funds Management and Cooke & Bieler.
The Board considered the ability of Funds Management and Cooke & Bieler,
based on their respective resources, reputations and other attributes, to
attract and retain highly qualified investment professionals, including
research, advisory, and supervisory personnel. In this connection, the Board
considered information regarding each of Funds Management's and Cooke & Bieler's
compensation for its personnel involved in the management of the Fund. In
addition, the Board considered the effects of certain personnel changes in light
of the acquisition of certain of the asset management arrangements of Strong
Capital Management, Inc. by Wells Fargo & Company.
The Board further considered the compliance programs and compliance
records of Funds Management and Cooke & Bieler. In addition, the Board took into
account the administrative services provided to the Fund by Funds Management and
its affiliates. In considering these matters, the Board considered not only the
specific information presented in connection with the meeting, but also the
knowledge gained over the course of interacting with Funds Management, including
with respect to Funds Management's oversight of service providers, such as the
investment sub-adviser.
Based on the above factors, together with those referenced below, the
Board concluded that it was generally satisfied with the nature, extent and
quality of the investment advisory services provided to the Fund by Funds
Management and Cooke & Bieler.
FUND PERFORMANCE AND EXPENSES
The Board considered the performance results for the Fund over various
time periods. The Board also considered these results in comparison to the
median performance results of the group of funds that was determined to be the
most similar to the Fund (the "Peer Group") and to the median performance of a
broader universe of relevant funds (the "Universe"), as well as to the Fund's
benchmark index. Lipper Inc. ("Lipper"), an independent provider of investment
company data, determined the Peer Group and Universe for the Fund. The Board was
provided with a description of the methodology used by Lipper to select the
mutual funds in the Fund's Peer Group and Universe. The Board noted that the
Fund's performance was better than, or not appreciably below, the median
performance of its Peer Group for all time periods.
The Board received and considered information regarding the Fund's net
operating expense ratio and its various components, including contractual
advisory fees, actual advisory fees, actual non-management fees, Rule 12b-1 and
non-Rule 12b-1 service fees, fee waivers/caps and/or expense reimbursements. The
Board also considered comparisons of these fees to the expense information for
the Fund's Peer Group and Universe, which comparative data was provided by
Lipper. The Board noted that the net operating expense ratio of the Fund was
lower than the Fund's Peer Group's median net operating expense ratio.
Management also discussed the Lipper data and rankings, and other relevant
information, for the Fund. Based on the above-referenced considerations and
other factors, the Board concluded that the overall performance and expense
results supported the re-approval of the Advisory Agreements for the Fund.
19
WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY AND SUB-ADVISORY FEE RATES
The Board reviewed and considered the contractual investment advisory fee
rates both on a stand-alone basis and on a combined basis with the Fund's
administration fee rates (the "Advisory Agreement Rates") payable by the Fund to
Funds Management for investment advisory services. The Board also reviewed and
considered the contractual investment sub-advisory fee rates (the "Sub-Advisory
Agreement Rates") payable by Funds Management to Cooke & Bieler for investment
sub-advisory services. In addition, the Board reviewed and considered the
existing fee waiver/cap arrangements applicable to the Advisory Agreement Rates
and considered the Advisory Agreement Rates after taking the waivers/caps into
account (the "Net Advisory Rates").
The Board received and considered information comparing the Advisory
Agreement Rates and Net Advisory Rates with those of the other funds in the Peer
Group. The Board noted that the Advisory Agreement Rates and the Net Advisory
Rates for the Fund were lower than, or not appreciably higher than, the median
rates of its Peer Group. In addition, the Board concluded that the combined
investment advisory/administration fee rates for the Fund (before and after
waivers/caps and/or expense reimbursements) were each reasonable in relation to
the Fund's Peer Group, and reasonable in relation to the services provided.
The Board also reviewed and considered the Sub-Advisory Agreement Rates
and concluded that the Sub-Advisory Agreement Rates were fair and equitable,
based on its consideration of the factors described above.
PROFITABILITY
The Board received and considered a detailed profitability analysis of
Funds Management based on the Advisory Agreement Rates and the Net Advisory
Rates, as well as on other relationships between the Fund and Funds Management
and its affiliates. The Board concluded that, in light of the costs of providing
investment management and other services to the Fund, the profits and other
ancillary benefits that Funds Management and its affiliates received with regard
to providing these services to the Fund were not unreasonable. The Board did not
consider profitability information with respect to Cooke & Bieler, which is not
affiliated with Funds Management. The Board considered that the sub-advisory
fees paid to Cooke & Bieler had been negotiated by Funds Management on an arms
length basis and that Cooke & Bieler's separate profitability from its
relationship with the Fund was not a material factor in determining whether to
renew the agreement.
ECONOMIES OF SCALE
The Board received and considered general information regarding whether
there have been economies of scale with respect to the management of the Fund,
whether the Fund has appropriately benefited from any economies of scale, and
whether there is potential for realization of any further economies of scale.
The Board acknowledged the inherent limitations of any analysis of an investment
adviser's economies of scale and of any attempt to correlate breakpoints with
such economies, stemming largely from the Board's understanding that economies
of scale are realized, if at all, by an investment adviser across a variety of
products and services, not just with respect to a single fund. The Board
concluded that any actual or potential economies of scale are, or will be,
shared reasonably with Fund shareholders, including most particularly through
Advisory Agreement Rate breakpoints, which are applicable to the Fund.
INFORMATION ABOUT SERVICES TO OTHER CLIENTS
The Board also received and considered information about the nature,
extent and quality of services and fee rates offered by Funds Management to
other similarly situated series within the Trust, and those offered by Cooke &
Bieler to other clients, including other registered investment companies and
separate accounts. The Board concluded that the Advisory Agreement Rates, the
Sub-Advisory Agreement Rates and the Net Advisory Rates were within a reasonable
range of the fee rates offered to others by Funds Management and Cooke & Bieler,
giving effect to differences in services covered by such fee rates.
OTHER BENEFITS TO FUNDS MANAGEMENT AND COOKE & BIELER
The Board received and considered information regarding potential
"fall-out" or ancillary benefits received by Funds Management and its affiliates
and Cooke & Bieler as a result of their relationship with the Fund. Such
benefits could include, among others, benefits directly attributable to the
relationship of Funds Management and Cooke & Bieler with the Fund (such as
soft-dollar credits) and benefits potentially derived from an increase in the
business of Funds Management and Cooke & Bieler as a result of their
relationship with the Fund (such as the ability to market to shareholders other
financial products offered by Funds Management and its affiliates or Cooke &
Bieler and its affiliates).
The Board also considered the effectiveness of policies of the Fund in
achieving the best execution of portfolio transactions, whether and to what
extent soft dollar credits are sought and how any such credits are utilized,
potential benefits that may be realized by using an affiliated broker, and the
controls applicable to brokerage allocation procedures. The Board also took note
of the policies of Cooke & Bieler regarding the allocation of portfolio
investment opportunities among the Fund and other clients.
20
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND
- --------------------------------------------------------------------------------
OTHER FACTORS AND BROADER REVIEW
The Board also considered the markets for distribution of the Fund,
including the principal channels through which the Fund's shares are offered and
sold. The Board noted that the Fund is now part of one of the few fund families
that have both direct-to-fund and intermediary distribution.
As discussed above, the Board reviewed detailed materials received from
Funds Management and Cooke & Bieler annually as part of the re-approval process
under Section 15(c) of the 1940 Act. The Board also regularly reviews and
assesses the quality of the services that the Fund receives throughout the year.
In this regard, the Board reviews reports of Funds Management and Cooke & Bieler
at least quarterly, which include, among other things, a detailed portfolio
review, and detailed fund performance reports. In addition, the Board meets with
the portfolio managers of the Fund at various times throughout the year.
After considering the above-described factors and based on its
deliberations and its evaluation of the information described above, the Board
concluded that approval of the continuation of the Advisory Agreements for the
Fund was in the best interest of the Fund and its shareholders. Accordingly, the
Board unanimously approved the continuation of the Advisory Agreements.
21
WELLS FARGO ADVANTAGE C&B TAX-MANAGED VALUE FUND LIST OF ABBREVIATIONS
- --------------------------------------------------------------------------------
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
ABAG -- Association of Bay Area Governments
ADR -- American Depositary Receipt
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CMT -- Constant Maturity Treasury
COFI -- Cost of Funds Index
Connie Lee -- Connie Lee Insurance Company
COP -- Certificate of Participation
CP -- Commercial Paper
CTF -- Common Trust Fund
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
EDFA -- Education Finance Authority
FFCB -- Federal Farm Credit Bank
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FRN -- Floating Rate Notes
FSA -- Financial Security Assurance, Inc
GDR -- Global Depositary Receipt
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
IDA -- Industrial Development Authority
IDR -- Industrial Development Revenue
LIBOR -- London Interbank Offered Rate
LLC -- Limited Liability Corporation
LOC -- Letter of Credit
LP -- Limited Partnership
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MUD -- Municipal Utility District
MTN -- Medium Term Note
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PLC -- Private Placement
PSFG -- Public School Fund Guaranty
RAW -- Revenue Anticipation Warrants
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
R&D -- Research & Development
SFHR -- Single Family Housing Revenue
SFMR -- Single Family Mortgage Revenue
SLMA -- Student Loan Marketing Association
STEERS -- Structured Enhanced Return Trust
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
V/R -- Variable Rate
WEBS -- World Equity Benchmark Shares
XLCA -- XL Capital Assurance
22
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
MORE INFORMATION ABOUT WELLS FARGO ADVANTAGE FUNDS(SM) IS AVAILABLE FREE UPON
REQUEST. TO OBTAIN LITERATURE, PLEASE WRITE, E-MAIL, OR CALL:
WELLS FARGO ADVANTAGE FUNDS
P.O. BOX 8266
BOSTON, MA 02266-8266
E-MAIL: WFAF@WELLSFARGO.COM
RETAIL INVESTMENT PROFESSIONALS: 888-877-9275
INSTITUTIONAL INVESTMENT PROFESSIONALS: 866-765-0778
WEB: WWW.WELLSFARGO.COM/ADVANTAGEFUNDS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE
GENERAL INFORMATION OF THE SHAREHOLDERS OF THE WELLS FARGO ADVANTAGE FUNDS. IF
THIS REPORT IS USED FOR PROMOTIONAL PURPOSES, DISTRIBUTION OF THE REPORT MUST BE
ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS. FOR A PROSPECTUS CONTAINING
MORE COMPLETE INFORMATION, INCLUDING CHARGES AND EXPENSES, CALL 1-800-222-8222.
PLEASE CONSIDER THE INVESTMENT OBJECTIVE, RISKS, CHARGES AND EXPENSES OF THE
INVESTMENT CAREFULLY BEFORE INVESTING. THIS AND OTHER INFORMATION ABOUT WELLS
FARGO ADVANTAGE FUNDS CAN BE FOUND IN THE CURRENT PROSPECTUS. READ THE
PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
WELLS FARGO FUNDS MANAGEMENT, LLC, A WHOLLY-OWNED SUBSIDIARY OF WELLS FARGO &
COMPANY, PROVIDES INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES FOR THE WELLS
FARGO ADVANTAGE FUNDS. OTHER AFFILIATES OF WELLS FARGO & COMPANY PROVIDE
SUB-ADVISORY AND OTHER SERVICES FOR THE FUNDS. THE FUNDS ARE DISTRIBUTED BY
WELLS FARGO FUNDS DISTRIBUTOR, LLC, MEMBER NASD/SIPC, AN AFFILIATE OF WELLS
FARGO & COMPANY.
-----------------------------------------------------
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
-----------------------------------------------------
(C) 2005 Wells Fargo Advantage Funds, LLC. All rights reserved. www.wellsfargo.com/advantagefunds SM50930 06-05
SLCSF/SAR126 04-05
WELLS ADVANTAGE
FARGO FUNDS
- --------------------------------------------------------------------------------
APRIL 30, 2005
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED] SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE INCOME FUNDS
WELLS FARGO ADVANTAGE STRATEGIC INCOME FUND
WELLS FARGO ADVANTAGE ULTRA-SHORT DURATION BOND FUND
WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
PLEASE NOTE THAT THIS REPORT COVERS A SIX-MONTH PERIOD OF TIME, THE MAJORITY OF
WHICH REPRESENTS A TIME PRIOR TO THE APRIL 11, 2005, REORGANIZATION WITH THE
STRONG FUNDS. STRONG CAPITAL MANAGEMENT, INC. PROVIDED INVESTMENT MANAGEMENT
SERVICES TO THESE FUNDS FROM THE BEGINNING OF THE REPORTING PERIOD THROUGH
DECEMBER 31, 2004, AFTER WHICH TIME WELLS FARGO FUNDS MANAGEMENT, LLC TOOK OVER
MANAGEMENT RESPONSIBILITIES THROUGH THE END OF THE REPORTING PERIOD.
TABLE OF CONTENTS
Letter to Shareholders .................................................... 1
- --------------------------------------------------------------------------------
Performance Highlights
- --------------------------------------------------------------------------------
Strategic Income Fund .................................................. 2
Ultra-Short Duration Bond Fund ......................................... 4
- --------------------------------------------------------------------------------
Fund Expenses ............................................................. 6
- --------------------------------------------------------------------------------
Portfolio of Investments
Strategic Income Fund .................................................. 7
Ultra-Short Duration Bond Fund ......................................... 13
Financial Statements
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities .................................... 18
Statement of Operations ................................................ 19
Statements of Changes in Net Assets .................................... 20
Financial Highlights ................................................... 22
- --------------------------------------------------------------------------------
Notes to Financial Statements ............................................. 24
- --------------------------------------------------------------------------------
Other Information ......................................................... 30
- --------------------------------------------------------------------------------
List of Abbreviations ..................................................... 35
- --------------------------------------------------------------------------------
---------------------------------------------------
NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE
---------------------------------------------------
THIS PAGE IS INTENTIONALLY LEFT BLANK --
LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
DEAR VALUED SHAREHOLDER,
I am pleased to introduce you to WELLS FARGO ADVANTAGE FUNDS(SM). You now
have access to an expanded array of mutual funds, giving you the flexibility to
invest in a family of funds covering nearly every asset class and investment
style. To learn more about our funds and the talented team of money managers
behind them, please visit our new Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
You can also call one of our investment service representatives now available 24
hours a day, 7 days a week, or speak with your investment professional.
The following is your Wells Fargo Advantage Income Funds semi-annual
report for the six-month period ended April 30, 2005. In this report, you will
find a discussion of each Fund, including performance highlights, the Funds
managers' strategic outlook, and information about each Fund's portfolio.
THE ECONOMY: CONTINUED EXPANSION
- --------------------------------------------------------------------------------
The U.S. economy continued to grow steadily, expanding by 4.4% in 2004.
During the first quarter of 2005, however, the economy grew by 3.1%, trailing
the 3.8% pace achieved during the last three months of 2004.
Part of that decline stemmed from the high cost of gasoline, which
continued to have a significant influence on consumer spending and the economy.
When the six-month period began, oil prices were declining from their recent
highs of $55 per barrel. After falling for two months, they rebounded sharply in
2005, setting new highs in April.
Higher energy prices were a key driver of inflation, which rose throughout
most of the period. "Core" inflation, which excludes volatile food and energy
prices, also trended upwards, but rose less quickly. With core inflation
manageable, the Federal Reserve Board (the Fed) continued its program of gradual
short-term interest rate increases. During the past six months, the Fed raised
rates four times, bringing the Federal funds rate from 1.75% at the beginning of
the period to 2.75% by April 30, 2005.
STOCKS: APRIL SHOWERS
- --------------------------------------------------------------------------------
The stock market's performance was up and down. Stocks began the period in
the midst of a rally driven by falling oil prices. The outcome of the U.S.
presidential election continued this rally, which lasted through the rest of
2004. But stocks turned in more mixed results in the first four months of 2005.
April was a particularly volatile environment for investors, who were
increasingly uneasy about rising energy costs, further economic slowing, higher
potential inflation, and rising interest rates. Moderate corporate earnings
growth contributed to concerns, as did the increasing likelihood that General
Motors (GM), the world's largest automobile manufacturer, would see its credit
rating downgraded to "junk" status. Highlighting the market's April volatility,
the Dow Jones Industrial Average saw seven moves of greater than 100 points on
the way to its worst monthly decline since January 2003. The S&P 500 Index fell
nearly 2% in April, but rose 3.28% during the full six-month period.
BONDS: LOOKING LONG
- --------------------------------------------------------------------------------
The U.S. Treasury and municipal yield curves generally flattened during
the period, indicating that short-term bond yields were rising in line with the
Fed's rate increases while long-term bond yields fell, somewhat surprisingly.
Longer bonds benefited from investors' increasing conviction that inflation
could continue to be manageable and that the Fed would not need to raise
interest rates more quickly.
Municipal bonds generally outperformed their taxable counterparts and, at
period end, were offering historically attractive yields relative to U.S.
Treasuries. For the first four months of the period, corporate high-yield bonds
continued their strong performance. It was a different story in March and April.
Investors worried about the potential negative impact that a credit-rating
downgrade of GM, and also Ford, would have on the high-yield market.
LOOKING AHEAD: LONG-TERM EXPANSION?
- --------------------------------------------------------------------------------
Despite the economy's first quarter slowdown, we believe this represents a
temporary soft patch more than a permanent slowdown. As stock and bond investors
seek to determine where inflation, interest rates, and corporate earnings are
headed, we may see more unpredictable moves in the markets.
Uncertainty and risk will always be a part of investing. We believe an
important thing you can do to manage risk is to own a broadly diversified
portfolio. While diversification may not prevent losses in a downturn, it may
help reduce them and keep you on track to reach your financial goals.
Thank you for choosing WELLS FARGO ADVANTAGE FUNDS. We appreciate your
confidence in us. Through each market cycle, we are committed to helping you
meet your financial needs. If you have any questions about your investment,
please contact your investment professional, or call us at 1-800-222-8222. You
may also visit our new Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE STRATEGIC INCOME FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE STRATEGIC INCOME FUND (the Fund) seeks current
income while maintaining prospects for capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
Thomas M. Price, CFA 11/30/2000
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 0.57%(1) (excluding sales charges) for
the six-month period ended April 30, 2005, outperforming the 0.08% return of its
benchmark, the Lehman Brothers U.S. High Yield Index(2), for the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF 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.
CURRENT MONTH-END PERFORMANCE IS AVAILABLE ON THE FUNDS' WEB SITE AT
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 4.50%. FOR CLASS
B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE (CDSC) IS 5.00%. FOR
CLASS C SHARES, THE MAXIMUM CDSC IS 1.00%. PERFORMANCE INCLUDING SALES CHARGE
ASSUMES THE SALES CHARGE FOR THE PERIOD SHOWN. OTHER FEES AND EXPENSES APPLY TO
AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS.
THE FUND HAS A REDEMPTION FEE OF 2.00% DEDUCTED FROM THE NET PROCEEDS OF
SHARES REDEEMED OR EXCHANGED WITHIN 30 DAYS AFTER PURCHASE. PERFORMANCE DATA
DOES NOT REFLECT THE DEDUCTION OF THIS FEE, WHICH, IF REFLECTED, WOULD REDUCE
THE PERFORMANCE.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The high-yield market was strong through early March 2005, with spreads
narrowing to record levels relative to U.S. Treasuries. This strength was due to
solid economic growth, good corporate earnings, low default rates, and strong
demand from institutional investors looking for higher yields. Absolute returns
were limited, however, with the 10-year U.S. Treasury issue starting the period
at 4.03% before climbing to 4.52% on March 9, 2005, when spreads were tightest.
The last seven weeks of the period featured a reversal of the market
trends in evidence until then. The catalyst was General Motors, which announced
weaker than expected February sales in early March 2005, followed by lower
earnings guidance for all of 2005. The increasing possibility of GM debt being
downgraded to high-yield status, along with the realization that GM would
represent more than six percent of the benchmark if such a downgrade occurred,
caused lower bond prices for GM to carry over to the high-yield market. The
10-year U.S. Treasury did rally to 4.20%, but investors' concern about weaker
credit conditions drove high-yield prices lower despite higher U.S. Treasury
prices.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We became increasingly concerned that bond investors were overestimating
the strength in the economy. Quarterly economic growth was solid on an absolute
basis. However, we were concerned about the recent trend towards slower growth,
particularly during a period of high commodity prices and rising short-term
interest rates. We have gradually trimmed our exposure to some of the riskier
securities in the portfolio, but remain with an overall credit quality lower
than the benchmark index. We also increased our weighting in floating-rate
securities to approximately 9%, seeking to protect against further interest-rate
hikes. This exposure hindered performance until the market weakened at the end
of the period. Moreover, we sold several equity positions after prices reached
our target levels, which trimmed our equity exposure to 2.5% with an additional
0.7% in convertibles.
From an industry standpoint, we continued to maintain the Fund's
overweighting in several cyclical industries--including chemicals, metals, and
other industrials--seeking to benefit from current economic growth and higher
commodity prices. Conversely, we reduced our weightings in the automotive,
airline, technology, and utility industries.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Given our positive outlook for economic growth for the remainder of 2005,
and interest rates near historically low levels, we believe demand for
high-yield bonds could remain at reasonably healthy levels. However, a few
factors continue to weigh on the market. The biggest concern is that GM and Ford
might become high-yield credits and, given their size, drive bond prices lower.
Moreover, additional rate hikes from the Federal Reserve Board could lead to
weaker economic conditions and possibly discourage hedge fund investors, who
have been an important source of demand for high-yield securities. If sentiment
among this group were to deteriorate significantly, high-yield prices could
slide further.
We expect to continue on our recent path of allocating a portion of the
portfolio to floating-rate securities seeking to benefit from continued Fed
increases. Additionally, we anticipate repositioning the portfolio into
higher-quality securities and into industries that we expect to outperform in
the current difficult conditions.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC
CONDITIONS. INVESTMENT STRATEGIES THAT CONCENTRATE IN PARTICULAR MARKET SEGMENTS
OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE
TO THE BROADER MARKET). THIS FUND IS EXPOSED TO HIGH YIELD BOND RISK AND
INTERNATIONAL RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN
HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY
GENERATE HIGHER SHORT-TERM CAPITAL GAINS.
- --------------------------------------------------------------------------------
The views expressed are as of April 30, 2005, and are those of the Fund's
manager. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE STRATEGIC INCOME FUND.
2
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30 ,2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
------------------------------- ---------------------------------
6-Month* 1-Year Life of Fund 6-Month* 1-Year Life of Fund
- -------------------------------------------------------------------------------------------------------------------
Strategic Income Fund - Class A
(Incept. date 11/30/2000) (3.96) 1.20 9.05 0.57 5.97 10.20
- -------------------------------------------------------------------------------------------------------------------
Strategic Income Fund - Class B
(Incept. date 11/30/2000) (5.10) (0.30) 8.54 (0.10) 4.70 8.88
- -------------------------------------------------------------------------------------------------------------------
Strategic Income Fund - Class C
(Incept. date 11/30/2000) (0.94) 3.85 8.86 0.06 4.85 8.86
- -------------------------------------------------------------------------------------------------------------------
Benchmark
- -------------------------------------------------------------------------------------------------------------------
Lehman Brothers U.S. High Yield Index(2) 0.08 6.52 9.24
- -------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Portfolio Turnover 70%
- --------------------------------------------------------------------------------
Average Credit Quality(4) B3
- --------------------------------------------------------------------------------
Weighted Average Coupon 7.56%
- --------------------------------------------------------------------------------
Estimated Weighted Average Maturity 9.30 years
- --------------------------------------------------------------------------------
Estimated Average Duration 3.69 years
- --------------------------------------------------------------------------------
Net Asset Value (NAV) (Class A, B, C) $10.16, $10.16, $10.15
- --------------------------------------------------------------------------------
Distribution Rate(5) (Class A, B, C) 6.36%, 5.40%, 6.55%
- --------------------------------------------------------------------------------
30-Day SEC Yield(6) (Class A, B, C) 5.24%, 4.33%, 4.25%
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Corporate Bonds (88%)
Common Stocks (3%)
Cash Equivalents (9%)
GROWTH OF $10,000 INVESTMENT(7)(AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Wells Fargo Advantage
Strategic Income Fund - Lehman Brothers
Class A US High Yield Index
11/30/2000 9,550 10,000
12/31/2000 10,049 10,193
1/31/2001 11,374 10,957
2/28/2001 11,436 11,103
3/31/2001 10,938 10,841
4/30/2001 10,855 10,706
5/31/2001 11,094 10,899
6/30/2001 10,696 10,593
7/31/2001 10,739 10,749
8/31/2001 11,021 10,876
9/30/2001 10,040 10,145
10/31/2001 10,127 10,396
11/30/2001 10,645 10,775
12/31/2001 10,749 10,731
1/31/2002 10,853 10,806
2/28/2002 10,544 10,655
3/31/2002 10,839 10,912
4/30/2002 10,823 11,082
5/31/2002 10,657 11,025
6/30/2002 9,960 10,212
7/31/2002 9,450 9,766
8/31/2002 9,557 10,044
9/30/2002 9,465 9,912
10/31/2002 9,281 9,826
11/30/2002 10,009 10,434
12/31/2002 10,060 10,580
1/31/2003 10,236 10,933
2/28/2003 10,392 11,067
3/31/2003 10,758 11,386
4/30/2003 11,456 12,061
5/31/2003 11,540 12,186
6/30/2003 12,063 12,536
7/31/2003 12,108 12,398
8/31/2003 12,179 12,541
9/30/2003 12,612 12,884
10/31/2003 12,935 13,144
11/30/2003 13,071 13,343
12/31/2003 13,418 13,645
1/31/2004 13,860 13,906
2/29/2004 13,769 13,871
3/31/2004 13,866 13,965
4/30/2004 13,834 13,870
5/31/2004 13,615 13,635
6/30/2004 13,755 13,831
7/31/2004 13,920 14,019
8/31/2004 14,106 14,294
9/30/2004 14,320 14,501
10/31/2004 14,578 14,763
11/30/2004 14,819 14,941
12/31/2004 15,023 15,164
1/31/2005 15,035 15,144
2/28/2005 15,289 15,367
3/31/2005 14,896 14,920
4/30/2005 14,660 14,775
- --------------------------------------------------------------------------------
(1) The Fund's Adviser has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Performance shown for the Class A, Class B and Class C shares of the WELLS
FARGO ADVANTAGE STRATEGIC INCOME FUND for periods prior to April 11, 2005,
reflects the performance of the Class A, Class B, and Class C shares,
respectively, of the Strong Advisor Strategic Income Fund, its predecessor fund,
adjusted to reflect applicable sales charges. Effective at the close of business
on April 8, 2005, certain Strong Funds were reorganized into certain WELLS FARGO
ADVANTAGE FUNDS.
(2) The Lehman Brothers U.S. High Yield Index covers the universe of fixed rate,
non-investment grade debt. Pay-in-kind (PIK) bonds, Eurobonds, and debt issues
from countries designated as emerging markets (e.g. Argentina, Brazil,
Venezuela, etc.) are excluded, but Canadian and global bonds (SEC registered) of
issuers in non-EMG countries are included. Original issue zeroes, step-up coupon
structures, and 144As are also included. You cannot invest directly in an index.
(3) Portfolio holdings and characteristics are subject to change.
(4) The average credit quality is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(6) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses and the maximum
offering price, calculated on a 30-day month-end basis.
(7) The chart compares the performance of the WELLS FARGO ADVANTAGE STRATEGIC
INCOME FUND Class A shares for the life of the Fund with the Lehman Brothers
U.S. High Yield Index. The chart assumes a hypothetical investment of $10,000 in
Class A shares and reflects all operating expenses and assumes the maximum
initial sales charge of 4.50%.
3
WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ULTRA-SHORT DURATION BOND FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE ULTRA-SHORT DURATION BOND FUND (the Fund) seeks
current income consistent with capital preservation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Jay N. Mueller, CFA 3/31/1994
Thomas M. Price, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 0.66%(1) (excluding sales charges) for
the six-month period ended April 30, 2005, outperforming the Citigroup 1-Year
Treasury Benchmark-on-the-Run Index(2), which returned 0.56%, and
underperforming the Lehman Brothers Short Treasury 9-12 Month Index(3), which
returned 0.73% for the period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF 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
WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE ON THE FUNDS' WEB SITE AT
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 2.00%. FOR CLASS
B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE (CDSC) IS 1.50%. FOR
CLASS C SHARES, THE MAXIMUM CDSC IS 1.00%. PERFORMANCE INCLUDING SALES CHARGE
ASSUMES THE MAXIMUM SALES CHARGE FOR THE PERIOD SHOWN. CLASS Z SHARES ARE SOLD
WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES
AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S
CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The Federal Reserve Board boosted the Federal funds target rate by 0.25%
at each of four meetings of the Fed's Open Market Committee, amounting to a full
1.00% cumulative rise during the period. Market-based yields in the
short-maturity range rose in sympathy, as did intermediate-term yields, though
to a lesser extent. Somewhat surprisingly, long-term yields actually declined
during the period.
Since the Fund invests in securities with relatively short maturities, the
increase at the front end of the yield curve created a difficult environment,
while the positive performance turned in by long bonds was out of reach for the
Fund. Accordingly, we pursued a defensive approach, attempting to limit the
impact of higher short-term rates by investing in the shorter end of our
duration range.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
In addition to a defensive interest-rate strategy, we maintained the
Fund's substantial commitments to the mortgage-backed and corporate bond
sectors. Both categories experienced a modest degree of spread-widening relative
to U.S. Treasuries, but both generated income exceeding that offered by U.S.
government notes of comparable duration.
Some holdings in the corporate sector detracted from returns, including
the short-term obligations of U.S. automakers Ford and General Motors. Concern
over recent poor financial results and loss of market share in North America
exerted downward pressure on all the outstanding debt of these two companies.
While we were cognizant of the significant challenges facing the automakers, we
continued to believe the generous yield offered by their short-term securities
was attractive on a risk-adjusted basis.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We believe the U.S. economy will grow at or above its long-term trend rate
in coming quarters. This could permit a further gradual improvement in
employment conditions, which could, in turn, support stronger income,
consumption, and corporate profits. On the other hand, we are concerned about
the persistent upward creep in most measures of inflation. Commodity
prices--particularly energy costs--have moved dramatically higher. However, even
core inflation, which excludes energy and food prices, has ticked higher. Wages
and benefit expenses are also rising, producing the most significant jump in
unit labor costs since 2001.
Such a macroeconomic backdrop makes it likely that the Fed will stay on
its course of "measured" increases in the Federal funds target rate. In view of
the upward tug exerted by a higher Federal funds rate on the entire yield curve,
we expect to maintain the Fund's defensive duration positioning.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC
CONDITIONS. INVESTMENT STRATEGIES THAT CONCENTRATE IN PARTICULAR MARKET SEGMENTS
OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE
TO THE BROADER MARKET). THIS FUND IS EXPOSED TO HIGH YIELD BOND RISK AND
INTERNATIONAL RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN
HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY
GENERATE HIGHER SHORT-TERM CAPITAL GAINS.
- --------------------------------------------------------------------------------
The views expressed are as of April 30, 2005, and are those of the Fund's
managers. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE ULTRA-SHORT DURATION BOND FUND.
(1) The Fund's Adviser has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Performance shown for the Class A, Class B, Class C and Class Z shares of
the WELLS FARGO ADVANTAGE ULTRA-SHORT DURATION BOND FUND prior to April 11,
2005, reflects the performance of the Class A, Class B, Class C and Class Z
shares, respectively, of the Strong Advisor Short Duration Bond Fund, its
predecessor fund, adjusted to reflect applicable sales charges. Effective at the
close of business on April 8, 2005, certain Strong Funds were reorganized into
certain WELLS FARGO ADVANTAGE FUNDS. Performance shown for the Class A, Class B
and Class C shares for periods prior to November 30, 2000, reflects the
performance of the predecessor fund's Class Z shares, adjusted to reflect each
class's sales charges and expenses.
(2) The Citigroup 1-Year Treasury Benchmark-on-the-Run Index is an unmanaged
index generally representative of the average return on the one-year treasury
bills. You cannot invest directly in an index.
4
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
----------------------------------- -----------------------------------
6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year
- ------------------------------------------------------------------------------------------------------------------------
Ultra-Short Duration Bond Fund - Class A
(Incept. date 11/30/2000) (1.35) (0.78) 2.60 4.85 0.66 1.25 3.01 5.06
- ------------------------------------------------------------------------------------------------------------------------
Ultra-Short Duration Bond Fund - Class B
(Incept. date 11/30/2000) (1.16) (1.12) 2.07 4.30 0.34 0.38 2.07 4.30
- ------------------------------------------------------------------------------------------------------------------------
Ultra-Short Duration Bond Fund - Class C
(Incept. date 11/30/2000) (0.65) (0.60) 2.11 4.14 0.35 0.40 2.11 4.14
- ------------------------------------------------------------------------------------------------------------------------
Ultra-Short Duration Bond Fund - Class Z
(Incept. date 3/31/1994) 0.80 1.30 3.02 5.06
- ------------------------------------------------------------------------------------------------------------------------
Benchmarks
- ------------------------------------------------------------------------------------------------------------------------
Citigroup 1 - Year Treasury Benchmark-on-the-Run Index(2) 0.56 1.16 3.65 4.67
- ------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Short Treasury 9-12 Month Index(3) 0.73 1.35 3.46 4.62
- ------------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Portfolio Turnover 8%
- --------------------------------------------------------------------------------
Average Credit Quality(5) Aa3
- --------------------------------------------------------------------------------
Weighted Average Coupon 5.47%
- --------------------------------------------------------------------------------
Estimated Weighted Average Maturity 10.40 years
- --------------------------------------------------------------------------------
Estimated Average Duration 0.53 years
- --------------------------------------------------------------------------------
Net Asset Value (NAV) (Class A, B, C, Z) $9.63, $9.61, $9.63, $9.60
- --------------------------------------------------------------------------------
Distribution Rate(6) (Class A, B, C, Z) 3.02%, 2.30%, 2.30%, 4.59%
- --------------------------------------------------------------------------------
30-Day SEC Yield(7) (Class A, B, C, Z) 2.94%, 2.14%, 2.14%, 2.77%
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE GRAPH IN THE PRINTED MATERIAL.]
Collateralized Mortgage Securities (18%)
U.S. Government Securities (25%)
Corporate Bonds (28%)
Municipal Bonds (1%)
Asset-Backed Securities (25%)
Cash Equivalents (3%)
GROWTH OF $10,000 INVESTMENT(8) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Wells Fargo Advantage Wells Fargo Advantage Lehman Brothers
Ultra - Short Duration Bond Ultra - Short Duration Bond Citigroup 1-Year Treasury Short Treasury
Fund - Class A Fund - Class Z Benchmark-On-The-Run Index 9-12 Month Index
4/30/1995 9,800 10,000 10,000 10,000
5/31/1995 10,000 10,204 10,089 10,085
6/30/1995 10,040 10,245 10,148 10,144
7/31/1995 10,138 10,345 10,198 10,196
8/31/1995 10,225 10,434 10,247 10,246
9/30/1995 10,283 10,493 10,293 10,292
10/31/1995 10,373 10,584 10,350 10,351
11/30/1995 10,452 10,665 10,413 10,411
12/31/1995 10,559 10,775 10,474 10,474
1/31/1996 10,701 10,919 10,542 10,540
2/29/1996 10,683 10,901 10,554 10,559
3/31/1996 10,760 10,979 10,587 10,593
4/30/1996 10,895 11,117 10,624 10,631
5/31/1996 10,937 11,160 10,667 10,674
6/30/1996 11,015 11,240 10,726 10,733
7/31/1996 11,085 11,312 10,768 10,776
8/31/1996 11,163 11,391 10,820 10,830
9/30/1996 11,319 11,550 10,892 10,900
10/31/1996 11,454 11,688 10,975 10,979
11/30/1996 11,582 11,819 11,031 11,036
12/31/1996 11,617 11,854 11,069 11,075
1/31/1997 11,736 11,976 11,123 11,129
2/28/1997 11,779 12,020 11,164 11,171
3/31/1997 11,772 12,012 11,194 11,200
4/30/1997 11,905 12,148 11,262 11,269
5/31/1997 11,994 12,238 11,333 11,336
6/30/1997 12,120 12,367 11,400 11,401
7/31/1997 12,199 12,448 11,482 11,477
8/31/1997 12,245 12,495 11,523 11,517
9/30/1997 12,389 12,642 11,585 11,583
10/31/1997 12,231 12,480 11,650 11,646
11/30/1997 12,258 12,508 11,690 11,686
12/31/1997 12,392 12,645 11,745 11,748
1/31/1998 12,384 12,637 11,823 11,825
2/28/1998 12,493 12,748 11,855 11,858
3/31/1998 12,580 12,836 11,914 11,915
4/30/1998 12,622 12,880 11,969 11,972
5/31/1998 12,650 12,909 12,021 12,026
6/30/1998 12,676 12,934 12,078 12,085
7/31/1998 12,813 13,074 12,137 12,142
8/31/1998 12,597 12,854 12,235 12,231
9/30/1998 12,666 12,925 12,331 12,331
10/31/1998 12,694 12,953 12,397 12,395
11/30/1998 12,821 13,083 12,398 12,412
12/31/1998 12,898 13,161 12,437 12,461
1/31/1999 12,939 13,203 12,485 12,510
2/28/1999 12,958 13,222 12,499 12,526
3/31/1999 13,069 13,336 12,576 12,598
4/30/1999 13,220 13,490 12,622 12,643
5/31/1999 13,242 13,513 12,658 12,680
6/30/1999 13,327 13,599 12,718 12,729
7/31/1999 13,380 13,653 12,774 12,785
8/31/1999 13,382 13,655 12,811 12,826
9/30/1999 13,456 13,731 12,877 12,896
10/31/1999 13,541 13,817 12,911 12,940
11/30/1999 13,615 13,893 12,937 12,974
12/31/1999 13,642 13,920 12,967 13,010
1/31/2000 13,659 13,938 12,999 13,055
2/29/2000 13,721 14,001 13,063 13,122
3/31/2000 13,782 14,063 13,124 13,186
4/30/2000 13,840 14,122 13,200 13,251
5/31/2000 13,897 14,180 13,249 13,309
6/30/2000 14,008 14,294 13,352 13,411
7/31/2000 14,096 14,384 13,431 13,483
8/31/2000 14,170 14,459 13,512 13,527
9/30/2000 14,272 14,564 13,592 13,607
10/31/2000 14,331 14,623 13,659 13,670
11/30/2000 14,347 14,640 13,752 13,760
12/31/2000 14,526 14,824 13,887 13,889
1/31/2001 14,726 15,014 14,047 14,042
2/28/2001 14,806 15,109 14,118 14,102
3/31/2001 14,863 15,166 14,220 14,199
4/30/2001 14,900 15,206 14,285 14,264
5/31/2001 15,008 15,309 14,367 14,346
6/30/2001 14,973 15,273 14,406 14,388
7/31/2001 15,135 15,443 14,508 14,480
8/31/2001 15,268 15,562 14,571 14,520
9/30/2001 15,265 15,570 14,720 14,653
10/31/2001 15,338 15,623 14,814 14,740
11/30/2001 15,308 15,591 14,840 14,766
12/31/2001 15,272 15,567 14,870 14,801
1/31/2002 15,240 15,533 14,880 14,816
2/28/2002 15,258 15,550 14,926 14,850
3/31/2002 15,171 15,461 14,897 14,828
4/30/2002 15,256 15,548 14,999 14,917
5/31/2002 15,311 15,602 15,036 14,948
6/30/2002 15,327 15,617 15,116 15,021
7/31/2002 15,262 15,551 15,180 15,073
8/31/2002 15,316 15,605 15,193 15,091
9/30/2002 15,368 15,657 15,262 15,151
10/31/2002 15,361 15,646 15,297 15,180
11/30/2002 15,422 15,722 15,297 15,186
12/31/2002 15,469 15,767 15,360 15,240
1/31/2003 15,518 15,815 15,371 15,253
2/28/2003 15,594 15,893 15,397 15,273
3/31/2003 15,623 15,922 15,427 15,299
4/30/2003 15,697 15,984 15,445 15,314
5/31/2003 15,723 16,014 15,463 15,331
6/30/2003 15,727 16,034 15,493 15,361
7/31/2003 15,653 15,956 15,484 15,355
8/31/2003 15,687 15,974 15,499 15,370
9/30/2003 15,749 16,039 15,541 15,415
10/31/2003 15,737 16,056 15,537 15,409
11/30/2003 15,756 16,059 15,536 15,411
12/31/2003 15,803 16,124 15,586 15,458
1/31/2004 15,836 16,141 15,604 15,478
2/29/2004 15,884 16,190 15,633 15,506
3/31/2004 15,917 16,223 15,653 15,524
4/30/2004 15,857 16,177 15,610 15,495
5/31/2004 15,839 16,158 15,606 15,494
6/30/2004 15,841 16,159 15,602 15,493
7/31/2004 15,862 16,179 15,636 15,525
8/31/2004 15,929 16,229 15,681 15,567
9/30/2004 15,947 16,266 15,677 15,565
10/31/2004 15,950 16,256 15,704 15,590
11/30/2004 15,938 16,258 15,677 15,579
12/31/2004 15,963 16,280 15,702 15,603
1/31/2005 16,017 16,317 15,713 15,620
2/28/2005 16,040 16,337 15,712 15,626
3/31/2005 16,031 16,325 15,735 15,654
4/30/2005 16,055 16,387 15,791 15,706
- --------------------------------------------------------------------------------
(3) The Lehman Brothers Short Treasury 9-12 Month Index includes aged U.S.
Treasury bills, notes and bonds with a remaining maturity from 1 up to (but not
including) 12 months. It excludes zero coupon strips. You cannot invest directly
in an index.
(4) Portfolio holdings and characteristics are subject to change.
(5) The average credit quality is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses and the maximum
offering price, calculated on a 30-day month-end basis.
(8) The chart compares the performance of the WELLS FARGO ADVANTAGE ULTRA-SHORT
DURATION BOND FUND Class A shares and Class Z shares for the most recent ten
years with the Citigroup 1-Year Treasury Benchmark-on-the-Run Index and the
Lehman Brothers Short Treasury 9-12 Month Index. The chart assumes a
hypothetical investment of $10,000 in Class A shares and Class Z shares and
reflects all operating expenses and, for Class A shares, assumes the maximum
initial sales charge of 2.00%.
5
WELLS FARGO ADVANTAGE INCOME FUNDS 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,
redemption fees (if any) and exchange fees (if any); and (2) ongoing costs,
including management fees; distribution (12b-1) and/or shareholder service 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 period and held for the entire period (November 1, 2004 to April 30,
2005).
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), redemption fees, or exchange fees. 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 Ending
Account Account Expenses Net Annual
Value Value Paid During Expense
11/1/2004 4/30/2005 the Period(1) Ratio
Strategic Income Fund
- ----------------------------------------------------------------------------------------------------------------------
Strategic Income Fund - Class A
Actual $1,000.00 $ 1,005.70 $ 5.42 1.09%
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $ 1,019.39 $ 5.46 1.09%
- ----------------------------------------------------------------------------------------------------------------------
Strategic Income Fund - Class B
Actual $1,000.00 $ 999.00 $11.00 2.22%
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $ 1,013.79 $11.08 2.22%
- ----------------------------------------------------------------------------------------------------------------------
Strategic Income Fund - Class C
Actual $1,000.00 $ 1,000.60 $10.42 2.10%
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $ 1,014.38 $10.49 2.10%
Ultra-Short Duration Bond Fund
- ----------------------------------------------------------------------------------------------------------------------
Ultra-Short Duration Bond Fund - Class A
Actual $1,000.00 $ 1,006.60 $ 5.37 1.08%
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $ 1,019.44 $ 5.41 1.08%
- ----------------------------------------------------------------------------------------------------------------------
Ultra-Short Duration Bond Fund - Class B
Actual $1,000.00 $ 1,003.40 $ 9.64 1.94%
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $ 1,015.17 $ 9.69 1.94%
- ----------------------------------------------------------------------------------------------------------------------
Ultra-Short Duration Bond Fund - Class C
Actual $1,000.00 $ 1,003.50 $ 9.69 1.95%
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $ 1,015.12 $ 9.74 1.95%
- ----------------------------------------------------------------------------------------------------------------------
Ultra-Short Duration Bond Fund - Class Z
Actual $1,000.00 $ 1,008.00 $ 4.98 1.00%
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $ 1,019.84 $ 5.01 1.00%
(1) EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO 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).
6
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
STRATEGIC INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
CORPORATE BONDS & NOTES - 85.21%
AEROSPACE, DEFENSE - 0.77%
$ 200,000 ARMOR HOLDINGS INCORPORATED 8.25% 08/15/2013 $ 212,000
------------
AMUSEMENT & RECREATION SERVICES - 0.46%
125,000 TOWN SPORTS INTERNATIONAL 9.63 04/15/2011 128,281
------------
APPAREL & ACCESSORY STORES - 1.43%
360,000 FOOT LOCKER INCORPORATED 8.50 01/15/2022 394,200
------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 1.42%
356,000 WILLIAM CARTER COMPANY SERIES B 10.88 08/15/2011 391,600
------------
AUTOMOTIVE REPAIR, SERVICES & PARKING - 0.63%
185,000 UNITED RENTALS NORTH AMERICA INCORPORATED 7.75 11/15/2013 173,437
------------
BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 2.71%
200,000 DR HORTON INCORPORATED 6.88 05/01/2013 212,504
250,000 ERICO INTERNATIONAL CORPORATION 8.88 03/01/2012 252,500
140,000 K HOVNANIAN ENTERPRISES INCORPORATED 6.25 01/15/2015 135,450
150,000 KB HOME 5.88 01/15/2015 147,187
747,641
------------
BUSINESS SERVICES - 5.13%
110,000 IMCO RECYCLING ESCROW INCORPORATED++ 9.00 11/15/2014 112,200
200,000 NATIONAL WINE & SPIRITS INCORPORATED 10.13 01/15/2009 199,000
305,000 NATIONSRENT INCORPORATED 9.50 10/15/2010 329,400
160,000 RAINBOW NATIONAL SERVICES LIMITED LIABILITY CORPORATION++ 10.38 09/01/2014 180,800
300,000 RENT-WAY INCORPORATED 11.88 06/15/2010 328,500
119,000 WATERFORD GAMING LLC++ 8.63 09/15/2012 126,140
130,000 WILLIAMS SCOTSMAN INCORPORATED 10.00 08/15/2008 137,800
1,413,840
------------
CHEMICALS & ALLIED PRODUCTS - 6.51%
180,000 EQUISTAR CHEMICALS LP/EQUISTAR FUNDING CORPORATION 10.13 09/01/2008 198,000
160,000 HUNTSMAN INTERNATIONAL LLC++ 7.38 01/01/2015 159,600
135,000 IMC GLOBAL INCORPORATED 10.88 08/01/2013 159,300
420,000 JOHNSONDIVERSEY HOLDINGS INCORPORATED^ 10.63 05/15/2013 331,800
175,000 LYONDELL CHEMICAL COMPANY 10.50 06/01/2013 201,687
200,000 OM GROUP INCORPORATED 9.25 12/15/2011 202,000
200,000 POLYONE CORPORATION 10.63 05/15/2010 220,500
170,000 RESOLUTION PERFORMANCE PRODUCTS INCORPORATED 13.50 11/15/2010 184,025
130,000 RHODIA SA 10.25 06/01/2010 137,800
1,794,712
------------
COAL MINING - 1.63%
300,000 ARCH WESTERN FINANCE LLC 6.75 07/01/2013 300,750
145,000 FOUNDATION PA COAL COMPANY 7.25 08/01/2014 148,987
449,737
------------
7
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
STRATEGIC INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COMMUNICATIONS - 18.49%
$ 95,000 AIRGATE PCS INCORPORATED+++/- 6.89% 10/15/2011 $ 97,137
170,000 AT&T CORPORATION 9.75 11/15/2031 211,650
300,000 CCO HOLDINGS LIMITED LIABILITY COMPANY/CAPITAL CORPORATION+++/- 7.14 12/15/2010 288,750
145,000 CENTENNIAL COMMUNICATIONS CORPORATION CELLULAR OPERATING COMPANY LLC
PUERTO RICO OPERATIONS 8.13 02/01/2014 144,638
175,000 CHARTER COMMUNICATIONS HOLDINGS II LLC/CAPITAL CORPORATION 10.25 09/15/2010 174,781
245,000 CHARTER COMMUNICATIONS HOLDINGS LLC/CAPITAL CORPORATION+/- 9.92 04/01/2011 172,725
210,000 CINCINNATI BELL INCORPORATED++ 8.38 01/15/2014 200,025
440,000 CSC HOLDINGS INCORPORATED SERIES B 7.63 04/01/2011 446,600
210,000 DOBSON CELLULAR SYSTEMS++ 9.88 11/01/2012 212,100
165,000 HORIZON PCS INCORPORATED++ 11.38 07/15/2012 182,325
170,000 INTELSAT BERMUDA LIMITED+++/- 7.81 01/15/2012 170,425
270,000 INTELSAT BERMUDA LIMITED++ 8.63 01/15/2015 274,050
40,000 IWO ESCROW COMPANY+++/- 6.89 01/15/2012 40,000
100,000 IWO ESCROW COMPANY++^ 10.30 01/15/2015 63,000
200,000 MCI INCORPORATED 8.74 05/01/2014 216,500
90,000 NEWPAGE CORPORATION+++/- 9.43 05/01/2012 88,200
107,000 PANAMSAT CORPORATION 9.00 08/15/2014 111,280
375,000 PAXSON COMMUNICATIONS CORPORATION^ 11.53 01/15/2009 348,750
300,000 QWEST COMMUNICATIONS INTERNATIONAL+++/- 6.29 02/15/2009 297,750
300,000 QWEST CORPORATION++ 7.88 09/01/2011 304,500
250,000 QWEST SERVICES CORPORATION++ 14.50 12/15/2014 290,000
340,000 ROGERS CABLE INCORPORATED 6.75 03/15/2015 326,400
285,000 ROGERS WIRELESS COMMUNICATIONS INCORPORATED+/- 6.14 12/15/2010 292,838
165,000 VERTIS INCORPORATED SERIES B 10.88 06/15/2009 146,025
5,100,449
------------
DEPOSITORY INSTITUTIONS - 0.80%
210,000 DOLLAR FINANCIAL GROUP INCORPORATED 9.75 11/15/2011 220,500
------------
EATING & DRINKING PLACES - 1.97%
290,000 CARROLS CORPORATION++ 9.00 01/15/2013 297,250
240,000 DENNY'S CORPORATION HOLDINGS INCORPORATED++ 10.00 10/01/2012 246,000
543,250
------------
ELECTRIC, GAS & SANITARY SERVICES - 6.38%
150,000 ALLIED WASTE NORTH AMERICA 7.88 04/15/2013 145,875
250,000 CLEAN HARBORS INCORPORATED++ 11.25 07/15/2012 277,500
260,000 EL PASO NATURAL GAS COMPANY SERIES A 7.63 08/01/2010 271,655
300,000 INERGY LIMITED PARTNERSHIP/INERGY FINANCE CORPORATION++ 6.88 12/15/2014 285,000
120,000 NEVADA POWER COMPANY++ 5.88 01/15/2015 116,400
160,000 NORTHWESTERN CORPORATION++ 5.88 11/01/2014 162,581
175,000 SIERRA PACIFIC RESOURCES 8.63 03/15/2014 185,500
160,000 TEXAS GENCO LLC/TEXAS GENCO FINANCING CORPORATION++ 6.88 12/15/2014 156,800
165,000 TXU CORPORATION++ 5.55 11/15/2014 159,052
1,760,363
------------
8
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
STRATEGIC INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT
COMPUTER EQUIPMENT - 2.22%
$ 270,000 AMKOR TECHNOLOGY INCORPORATED 7.75% 05/15/2013 $ 211,612
142,000 GRAFTECH INTERNATIONAL LIMITED++ 1.63 01/15/2024 94,430
230,000 LUCENT TECHNOLOGIES INCORPORATED 6.45 03/15/2029 194,063
120,000 MAGNACHIP SEMICONDUCTOR/MAGNACHIP SEMICONDUCTOR FINANCE COMPANY+++/- 6.26 12/15/2011 112,200
612,305
------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 0.49%
130,000 US ONCOLOGY INCORPORATED 9.00 08/15/2012 135,850
------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 1.40%
125,000 FASTENTECH INCORPORATED 12.50 05/01/2011 134,375
120,000 MUELLER GROUP INCORPORATED+/- 7.96 11/01/2011 121,800
120,000 MUELLER GROUP INCORPORATED 10.00 05/01/2012 129,000
385,175
------------
FOOD STORES - 1.79%
300,000 AMERICAN SEAFOODS GROUP LLC 10.13 04/15/2010 321,000
165,000 DOANE PET CARE COMPANY 10.75 03/01/2010 173,250
494,250
------------
GENERAL MERCHANDISE STORES - 2.16%
170,000 ALH FINANCE LLC/ALH FINANCE CORPORATION 8.50 01/15/2013 163,200
200,000 JC PENNEY COMPANY INCORPORATED 8.00 03/01/2010 219,000
195,000 JC PENNEY COMPANY INCORPORATED 7.95 04/01/2017 214,988
597,188
------------
HEALTH SERVICES - 2.53%
45,000 DAVITA INCORPORATED++ 6.63 03/15/2013 44,550
45,000 DAVITA INCORPORATED++ 7.25 03/15/2015 43,762
135,000 HCA INCORPORATED 5.75 03/15/2014 130,243
250,000 HEALTHSOUTH CORPORATION 7.63 06/01/2012 240,000
245,000 SELECT MEDICAL CORPORATION++ 7.63 02/01/2015 240,713
699,268
------------
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 0.66%
163,000 TEMPUR-PEDIC 10.25 08/15/2010 181,745
------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 1.99%
600,000 ALADDIN GAMING/CAPITAL CORPORATION SERIES B^^ 13.50 03/01/2010 3,000
250,000 CHUMASH CASINO & RESORT ENTERPRISE++ 9.26 07/15/2010 267,500
15,000 HOLLYWOOD CASINO SHREVEPORT/SHREVEPORT CAPITAL CORPORATION^^ 13.00 08/01/2006 12,431
320,000 HOLLYWOOD CASINO SHREVEPORT/SHREVEPORT CAPITAL CORPORATION^^ 13.00 08/01/2006 265,200
548,131
------------
JUSTICE, PUBLIC ORDER & SAFETY - 0.56%
150,000 CORRECTIONS CORPORATION OF AMERICA 7.50 05/01/2011 154,688
------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL &
OPTICAL GOODS - 0.92%
250,000 XEROX CAPITAL TRUST I 8.00 02/01/2027 252,500
------------
9
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
STRATEGIC INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.97%
$ 250,000 JACUZZI BRANDS INCORPORATED 9.63% 07/01/2010 $ 267,500
267,500
------------
MISCELLANEOUS RETAIL - 0.66%
163,000 JAFRA COSMETICS INTERNATIONAL INCORPORATED/DISTRIBUIDORA
COMERICAL JAFRA SA DE CV 10.75 05/15/2011 183,375
------------
OIL & GAS EXTRACTION - 2.42%
130,000 FOREST OIL CORPORATION 8.00 12/15/2011 141,050
200,000 HILCORP ENERGY I LIMITED PARTNERSHIP/HILCORP FINANCE COMPANY++ 10.50 09/01/2010 221,000
165,000 PARKER DRILLING COMPANY+/- 7.66 09/01/2010 170,363
130,000 PRIDE INTERNATIONAL INCORPORATED 7.38 07/15/2014 136,500
668,913
------------
PAPER & ALLIED PRODUCTS - 2.11%
160,000 APPLETON PAPERS INCORPORATED 8.13 06/15/2011 161,600
105,000 BOISE CASCADE LLC+++/- 6.02 10/15/2012 103,950
155,000 GEORGIA-PACIFIC CORPORATION 8.88 02/01/2010 172,050
150,000 GRAHAM PACKAGING COMPANY++ 9.88 10/15/2014 143,250
580,850
------------
PRIMARY METAL INDUSTRIES - 2.41%
195,000 GENERAL CABLE CORPORATION 9.50 11/15/2010 206,700
100,000 IPSCO INCORPORATED 8.75 06/01/2013 111,000
170,000 NOVELIS INCORPORATED++ 7.25 02/15/2015 164,475
180,000 SUPERIOR ESSEX COMMUNICATIONS LLC/ESSEX GROUP INCORPORATED 9.00 04/15/2012 181,800
663,975
------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 7.76%
160,000 AMERICAN COMMERCIAL LINES FINANCE++ 9.50 02/15/2015 162,400
180,000 DEX MEDIA INCORPORATED 8.00 11/15/2013 185,400
140,000 HOUGHTON MIFFLIN COMPANY 7.20 03/15/2011 142,800
200,000 HOUGHTON MIFFLIN COMPANY^ 11.53 10/15/2013 133,000
340,000 JOSTENS IH CORPORATION 7.63 10/01/2012 340,000
240,000 PRIMEDIA INCORPORATED+/- 8.16 05/15/2010 252,000
207,000 READER'S DIGEST ASSOCIATION INCORPORATED 6.50 03/01/2011 205,447
175,000 RIDDELL BELL HOLDINGS++ 8.38 10/01/2012 176,313
200,000 UCAR FINANCE INCORPORATED 10.25 02/15/2012 209,000
335,000 VENOCO INCORPORATED++ 8.75 12/15/2011 335,000
2,141,360
------------
REAL ESTATE - 0.29%
72,000 CB RICHARD ELLIS SERVICES INCORPORATED 9.75 05/15/2010 80,280
------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS - 1.45%
150,000 ANCHOR GLASS CONTAINER CORPORATION 11.00 02/15/2013 121,500
275,000 BWAY CORPORATION 10.00 10/15/2010 277,750
399,250
------------
10
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
STRATEGIC INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
TEXTILE MILL PRODUCTS - 1.17%
$ 200,000 INTERFACE INCORPORATED 9.50% 02/01/2014 $ 200,000
120,000 PERRY ELLIS INTERNATIONAL INCORPORATED SERIES B 8.88 09/15/2013 121,800
321,800
------------
TOBACCO PRODUCTS - 1.23%
325,000 COMMONWEALTH BRANDS INCORPORATED++ 10.63 09/01/2008 339,625
------------
TRANSPORTATION EQUIPMENT - 0.51%
160,000 NAVISTAR INTERNATIONAL CORPORATION++ 6.25 03/01/2012 140,800
------------
WATER TRANSPORTATION - 0.67%
165,000 CP SHIPS LIMITED 10.38 07/15/2012 185,213
------------
WHOLESALE TRADE NON-DURABLE GOODS - 0.51%
130,000 AMERISOURCEBERGEN CORPORATION 7.25 11/15/2012 140,400
------------
TOTAL CORPORATE BONDS & NOTES (COST $23,722,745) 23,504,451
------------
TERM LOANS - 2.09%
460,000 GOODYEAR TIRE TERM LOAN B+++/- 5.89 04/08/2010 457,990
113,750 REVLON TERM LOAN+++/- 9.00 07/31/2010 117,921
TOTAL TERM LOANS (COST $573,750) 575,911
------------
SHARES
COMMON STOCKS - 2.98%
APPAREL & ACCESSORY STORES - 0.30%
2,200 CARTER'S INCORPORATED+ 82,984
------------
CHEMICALS & ALLIED PRODUCTS - 0.46%
65,000 RHODIA SA ADR+ 126,750
------------
COMMUNICATIONS - 0.67%
22,200 SPANISH BROADCASTING SYSTEMS INCORPORATED+ 185,370
------------
HOLDING & OTHER INVESTMENT OFFICES - 0.40%
1,306 WILLIAMS HOLDINGS OF DELAWARE++ 110,357
------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 0.51%
12,700 MTR GAMING GROUP INCORPORATED+ 139,827
------------
OIL & GAS EXTRACTION - 0.64%
9,200 CHESAPEAKE ENERGY CORPORATION 177,008
------------
TOTAL COMMON STOCKS (COST $675,765) 822,296
------------
PREFERRED STOCKS - 0.00%
350 ADELPHIA COMMUNICATIONS CORPORATION 1,050
TOTAL PREFERRED STOCKS (COST $32,550) 1,050
------------
11
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
STRATEGIC INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
SHORT-TERM INVESTMENTS - 8.68%
2,393,217 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~>> $ 2,393,217
------------
TOTAL SHORT-TERM INVESTMENTS (COST $2,393,217) 2,393,217
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $27,398,027)* 98.96% $ 27,296,925
OTHER ASSETS AND LIABILITIES, NET 1.04 285,805
------ ------------
TOTAL NET ASSETS 100.00% $ 27,582,730
====== ============
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE
SECURITIES ACT OF 1933, AS AMENDED.
+/- VARIABLE RATE SECURITIES.
^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO
MATURITY.
^^ THIS SECURITY IS CURRENTLY IN DEFAULT WITH REGARDS TO SCHEDULED INTEREST
OR PRINCIPAL PAYMENTS.
+ NON-INCOME EARNING SECURITIES.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
>> SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $2,393,217.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA-SHORT DURATION BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
AGENCY NOTES - INTEREST BEARING - 0.30%
$ 130,000 FHLB 3.38% 10/05/2007 $ 128,279
TOTAL AGENCY NOTES - INTEREST BEARING (COST $129,964) 128,279
------------
ASSET-BACKED SECURITIES - 24.33%
1,000,000 AAMES MORTGAGE TRUST SERIES 2003-1 CLASS M1+/- 3.70 10/25/2033 1,011,639
500,000 ACCREDITED MORTGAGE LOAN TRUST SERIES 2004-3 CLASS 1A2+/- 3.44 10/25/2034 494,326
500,000 BANK ONE ISSUANCE TRUST SERIES 2004-B1 CLASS B1+/- 3.27 03/15/2012 503,006
6,199,988 BEAR STEARNS ASSET BACKED SECURITIES INCORPORATED
SERIES 2003-ABF1 CLASS AIO(C) 4.00 03/25/2006 139,500
999,981 CDC MORTGAGE CAPITAL TRUST SERIES 2003-HE4 CLASS M1+/- 3.67 03/25/2034 1,003,963
1,000,000 CHASE FUNDING MORTGAGE LOAN ASSET-BACKED CERTIFICATES
SERIES 2003-5 CLASS 2M1+/- 3.62 05/25/2033 1,004,576
351,032 COUNTRYWIDE ASSET-BACKED CERTIFICATES SERIES 2004-7 CLASS AF1+/- 3.22 10/25/2022 351,150
272,187 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2002-C CLASS A+/- 3.19 05/15/2028 272,373
268,437 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2004-I CLASS A+/- 3.24 02/15/2034 269,263
458,611 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2004-Q CLASS 2A+/- 3.25 12/15/2033 459,703
500,000 DAIMLERCHRYSLER AUTO TRUST SERIES 2005-A CLASS M1 3.17 09/08/2007 498,529
1,486,110 DUKE FUNDING LIMITED SERIES 2000-1A CLASS A+/-++ 3.27 11/10/2030 1,463,818
500,000 FLEET COMMERCIAL LOAN MASTER LLC SERIES 2000-1A CLASS B2+/-++ 3.38 11/16/2007 500,000
246,315 RENAISSANCE HOME EQUITY LOAN TRUST SERIES 2004-3 CLASS AF1+/- 3.24 11/25/2034 246,340
118,657 RESIDENTIAL ASSET MORTGAGE PRODUCTS INCORPORATED
SERIES 2003-RZ5 CLASS A2 3.18 03/25/2027 118,331
77,061 RESIDENTIAL ASSET SECURITIES CORPORATION SERIES 2001-KS1 CLASS AII+/- 3.26 03/25/2032 77,130
1,000,000 RESIDENTIAL ASSET SECURITIES CORPORATION SERIES 2003-KS8 CLASS MII1+/- 3.65 10/25/2033 999,905
1,000,000 STRUCTURED ASSET INVESTMENT LOAN TRUST SERIES 2003-BC3 CLASS M1+/- 3.97 04/25/2033 1,006,690
2,857,143 STRUCTURED ASSET SECURITIES CORPORATION SERIES 2003-18XS CLASS AIO(C) 5.00 05/25/2005 711
129,692 TERWIN MORTGAGE TRUST SERIES 2004-21HE CLASS 1A1+/- 3.50 12/25/2034 130,016
TOTAL ASSET-BACKED SECURITIES (COST $10,562,125) 10,550,969
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 28.73%
230,212 ABN AMRO MORTGAGE CORPORATION SERIES 2002-1A CLASS 1A1+/- 5.85 06/25/2032 230,422
81,359 BANK OF AMERICA MORTGAGE SECURITIES SERIES 2002-K CLASS 3A1+/- 6.74 10/20/2032 82,913
4,961,549 COUNTRYWIDE ALTERNATIVE LOAN TRUST SERIES 2004-J9 CLASS 1AIO+/-(C) 1.40 03/25/2007 57,696
101,578 COUNTRYWIDE HOME LOAN MORTGAGE PASS THROUGH TRUST
SERIES 2001-HYB1 CLASS 2A1+/- 4.89 06/19/2031 102,758
107,239 COUNTRYWIDE HOME LOAN MORTGAGE PASS THROUGH TRUST
SERIES 2004-30 CLASS 3A1+/- 4.66 09/25/2034 110,769
289,222 DLJ COMMERCIAL MORTGAGE CORPORATION SERIES 2000-CF1 CLASS A1A 7.45 06/10/2033 295,700
183,226 DLJ MORTGAGE ACCEPTANCE CORPORATION SERIES 1990-2 CLASS A+/- 4.09 01/25/2022 182,752
172,482 DLJ MORTGAGE ACCEPTANCE CORPORATION SERIES 1991-3 CLASS A1+/- 3.83 02/20/2021 171,220
307,658 EQUIFIRST MORTGAGE LOAN TRUST SERIES 2003-2 3A3+/- 2.47 09/25/2033 307,513
2,473 FHLMC SERIES 161 CLASS F 9.50 06/15/2006 2,473
844,662 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-42 CLASS A6 9.50 02/25/2042 928,850
681,999 FNMA GRANTOR TRUST SERIES 2002-T1 CLASS A4 9.50 11/25/2031 738,248
407,163 FNMA SERIES 1990-77 CLASS D 9.00 06/25/2020 439,694
551,251 FNMA WHOLE LOAN SERIES 2002-W4 CLASS A6+/- 4.31 05/25/2042 563,827
193,072 FNMA WHOLE LOAN SERIES 2003-W10 CLASS 3A2A 2.20 07/25/2037 190,915
499,881 FNMA WHOLE LOAN SERIES 2003-W11 CLASS A1+/- 5.25 06/25/2033 509,790
243,349 FNMA WHOLE LOAN SERIES 2003-W3 CLASS 1A4+/- 4.24 08/25/2042 249,644
798,799 FNMA WHOLE LOAN SERIES 2003-W6 CLASS 6A+/- 4.19 08/25/2042 813,626
569,712 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2000-C2 CLASS A1 7.27 08/16/2033 597,122
366,152 GSMPS MORTGAGE LOAN TRUST SERIES 1998-1 CLASS A++ 8.00 09/19/2027 393,875
327,455 GSMPS MORTGAGE LOAN TRUST SERIES 2004-4 CLASS 1AF+/-++ 3.42 06/25/2034 328,995
13
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA-SHORT DURATION BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
$ 323,069 GSMPS MORTGAGE LOAN TRUST SERIES 2004-4 CLASS 2A1+/-++ 4.22% 06/25/2034 $ 331,602
483,829 GSR MORTGAGE LOAN TRUST SERIES 2004-1 CLASS 2A2+/- 5.22 04/25/2032 487,286
136,787 HOUSING SECURITIES INCORPORATED SERIES 1992-8 CLASS C+/- 3.52 06/25/2024 133,413
2,399,964 IMPAC CMB TRUST SERIES 2003-4 CLASS 3AIO(C) 6.00 09/25/2005 46,319
12,827,825 INDYMAC INDEX MORTGAGE LOAN TRUST SERIES 2004-AR8 CLASS AX1+/-(C) 0.80 11/25/2034 164,196
174,935 MASTER ADJUSTABLE RATE MORTGAGES TRUST SERIES 2002-3 CLASS 4A1+/- 6.16 10/25/2032 175,833
978,258 RESIDENTIAL FINANCE LIMITED PARTNERSHIP SERIES 2003-C CLASS B3+/-++ 4.31 09/10/2035 994,926
396,398 SALOMON BROTHERS MORTGAGE SECURITIES VII SERIES 1990-2 CLASS A+/- 4.31 11/25/2020 395,539
616,627 SEQUOIA MORTGAGE TRUST SERIES 8 CLASS 3A+/- 4.03 08/20/2032 624,890
344,777 STRUCTURED ASSET SECURITIES CORPORATION SERIES 1998-RF2 CLASS A+/-++ 8.56 07/15/2027 356,053
10,000,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2002-C2 CLASS IO3+/-(C)++ 1.59 11/15/2034 348,803
76,713 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR10 CLASS A6+/- 4.82 10/25/2032 76,223
119,024 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR15 CLASS A5+/- 4.38 12/25/2032 118,602
277,244 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR7 CLASS A6+/- 5.53 07/25/2032 277,334
268,000 WASHINGTON MUTUAL INCORPORATED SERIES 2003-AR7 CLASS A5+/- 3.07 08/25/2033 263,246
365,513 WILSHIRE FUNDING CORPORATION SERIES 1998-WFC2 CLASS M1+/- 5.24 12/28/2037 365,988
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $12,403,944) 12,459,055
------------
CORPORATE BONDS & NOTES - 27.82%
AMUSEMENT & RECREATION SERVICES - 0.16%
70,000 CAESARS ENTERTAINMENT INCORPORATED 7.88 12/15/2005 71,312
------------
AUTOMOTIVE REPAIR, SERVICES & PARKING - 0.80%
180,000 JOHNSON CONTROLS INCORPORATED 5.00 11/15/2006 181,996
165,000 LEAR CORPORATION SERIES B 7.96 05/15/2005 165,205
347,201
------------
BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 0.62%
180,000 LENNAR CORPORATION SERIES B 9.95 05/01/2010 188,955
75,000 SCHULER HOMES INCORPORATED 9.38 07/15/2009 78,497
267,452
------------
BUSINESS SERVICES - 0.77%
165,000 CENDANT CORPORATION 6.88 08/15/2006 170,600
165,000 ELECTRONIC DATA SYSTEMS CORPORATION++ 7.13 05/15/2005 165,109
335,709
------------
COMMUNICATIONS - 7.81%
110,000 ALLTEL CORPORATION 4.66 05/17/2007 110,935
180,000 CITIZENS COMMUNICATIONS COMPANY 7.60 06/01/2006 185,400
430,000 CLEAR CHANNEL COMMUNICATIONS INCORPORATED 6.00 11/01/2006 437,043
150,000 COX COMMUNICATIONS INCORPORATED 7.75 08/15/2006 156,328
175,000 DEUTSCHE TELEKOM INTERNATIONAL FINANCE BV 8.25 06/15/2005 175,982
320,000 FRANCE TELECOM 7.45 03/01/2006 329,260
210,000 LENFEST COMMUNICATIONS INCORPORATED 8.38 11/01/2005 214,315
110,000 LIBERTY MEDIA CORPORATION+/- 4.51 09/17/2006 111,305
235,000 TELE-COMMUNICATIONS-TCI GROUP 7.25 08/01/2005 236,887
210,000 TELECORP PCS INCORPORATED 10.63 07/15/2010 223,739
235,000 TELUS CORPORATION 7.50 06/01/2007 249,534
14
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA-SHORT DURATION BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COMMUNICATIONS (CONTINUED)
$ 450,000 TIME WARNER INCORPORATED 5.63% 05/01/2005 $ 450,000
260,000 UNIVISION COMMUNICATIONS INCORPORATED 2.88 10/15/2006 255,376
245,000 VERIZON WIRELESS CAPITAL LLC 5.38 12/15/2006 249,942
3,386,046
------------
DEPOSITORY INSTITUTIONS - 2.26%
600,000 BANK OF AMERICA CORPORATION 5.25 02/01/2007 612,611
350,000 BANK ONE NA 6.25 02/15/2008 368,612
981,223
------------
ELECTRIC, GAS & SANITARY SERVICES - 2.85%
200,000 CONECTIV INCORPORATED SERIES B 5.30 06/01/2005 200,239
200,000 ENTERGY GULF STATES INCORPORATED+/- 3.31 12/01/2009 200,378
50,000 FPL GROUP CAPITAL INCORPORATED 3.25 04/11/2006 49,763
310,000 GPU INCORPORATED SERIES A 7.70 12/01/2005 316,142
149,705 MIDLAND FUNDING II SERIES A 11.75 07/23/2005 151,891
225,000 NISOURCE FINANCE CORPORATION 7.63 11/15/2005 229,595
83,000 SOUTHERN CALIFORNIA EDISON 8.00 02/15/2007 88,382
1,236,390
------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.28%
120,000 BALL CORPORATION 7.75 08/01/2006 123,300
------------
FOOD & KINDRED PRODUCTS - 0.74%
165,000 CONAGRA FOODS INCORPORATED 9.88 11/15/2005 169,842
150,000 NABISCO INCORPORATED 6.85 06/15/2005 150,544
320,386
------------
HOLDING & OTHER INVESTMENT OFFICES - 2.78%
505,000 COUNTRYWIDE HOME LOANS INCORPORATED SERIES MTNK 5.63 05/15/2007 517,557
285,000 PREFERRED TERM SECURITIES XV+/-++ 4.62 09/26/2034 285,712
400,000 REGIONAL DIVERSIFIED FUNDING+/-++ 4.45 01/25/2036 400,000
1,203,269
------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 0.97%
155,000 CAESARS ENTERTAINMENT INCORPORATED 8.50 11/15/2006 163,525
250,000 HARRAH'S OPERATING COMPANY INCORPORATED 7.88 12/15/2005 255,625
419,150
------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 0.57%
250,000 JOHN DEERE CAPITAL CORPORATION 3.88 03/07/2007 249,083
------------
INSURANCE CARRIERS - 1.64%
500,000 PROTECTIVE LIFE US FUNDING TRUST++ 5.88 08/15/2006 510,441
200,000 PRUDENTIAL FINANCIAL INCORPORATED+/- 4.10 11/15/2006 201,231
711,672
------------
15
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA-SHORT DURATION BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
NON-DEPOSITORY CREDIT INSTITUTIONS - 3.35%
$ 260,000 CAPITAL ONE BANK SERIES BKNT 8.25% 06/15/2005 $ 261,395
300,000 FORD MOTOR CREDIT COMPANY 6.50 01/25/2007 299,970
355,000 GENERAL ELECTRIC CAPITAL CORPORATION 5.38 03/15/2007 363,311
120,000 GENERAL MOTORS ACCEPTANCE CORPORATION 6.75 01/15/2006 120,888
185,000 GENERAL MOTORS ACCEPTANCE CORPORATION+/- 4.10 07/16/2007 173,248
225,000 HSBC FINANCE CORPORATION 8.88 02/15/2006 233,327
1,452,139
------------
PIPELINES, EXCEPT NATURAL GAS - 0.41%
175,000 CENTERPOINT ENERGY RESOURCES CORPORATION SERIES B 8.13 07/15/2005 176,644
------------
TOBACCO PRODUCTS - 0.32%
135,000 ALTRIA GROUP INCORPORATED 6.38 02/01/2006 137,214
------------
TRANSPORTATION EQUIPMENT - 1.08%
175,000 DAIMLERCHRYSLER NA HOLDING CORPORATION 7.75 06/15/2005 175,684
295,000 DAIMLERCHRYSLER NA HOLDING CORPORATION+/- 3.20 03/07/2007 292,073
467,757
------------
WHOLESALE TRADE NON-DURABLE GOODS - 0.41%
175,000 BERGEN BRUNSWIG CORPORATION 7.25 06/01/2005 175,508
------------
TOTAL CORPORATE BONDS & NOTES (COST $12,098,874) 12,061,455
------------
MUNICIPAL BONDS & NOTES - 1.64%
NEW JERSEY - 0.95%
205,000 BAYONNE NJ REDEVELOPMENT AGENCY (PROPERTY TAX REVENUE LOC) 4.25 05/27/2005 204,922
205,000 BAYONNE NJ REDEVELOPMENT AGENCY SERIES B (OTHER REVENUE LOC) 5.43 04/13/2007 205,572
410,494
------------
OHIO - 0.69%
300,000 OHIO STATE WATER DEVELOPMENT AUTHORITY OHIO EDISON COMPANY SERIES B
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.35 06/01/2033 299,775
------------
TOTAL MUNICIPAL BONDS & NOTES (COST $710,118) 710,269
------------
AGENCY SECURITIES - 14.62%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 7.59%
79,341 FHLMC #1B0145+/- 6.03 10/01/2031 81,427
397,706 FHLMC #555514 9.00 10/01/2019 444,921
598,940 FHLMC #555519 9.00 12/01/2016 653,488
157,429 FHLMC #786823+/- 6.02 07/01/2029 164,809
192,275 FHLMC #788792+/- 6.15 01/01/2029 201,863
149,678 FHLMC #789272+/- 5.44 04/01/2032 154,830
175,857 FHLMC #789483+/- 5.68 06/01/2032 182,214
13,071 FHLMC #865456+/- 5.44 07/01/2010 13,101
106,209 FHLMC #A01734 9.00 08/01/2018 115,786
677 FHLMC #B00589 10.00 06/01/2005 682
526,293 FHLMC #G10747 7.50 10/01/2012 554,407
330,135 FHLMC #G11209 7.50 12/01/2011 347,889
358,223 FHLMC #G11391 7.50 06/01/2012 377,358
3,292,775
------------
16
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA-SHORT DURATION BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 5.15%
$ 458,548 FNMA #100254 8.00% 12/15/2024 $ 496,387
380,741 FNMA #100255 8.33 07/15/2020 423,494
458,333 FNMA #100259 7.50 12/15/2009 475,210
35,010 FNMA #149167 10.50 08/01/2020 40,438
69,184 FNMA #365418+/- 3.90 01/01/2023 70,080
69,088 FNMA #372179 11.00 04/01/2012 75,263
211,007 FNMA #545460+/- 5.81 11/01/2031 217,679
430,025 FNMA #675491+/- 5.35 04/01/2033 432,861
2,231,412
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.88%
332,295 GNMA #781540 7.00 05/15/2013 349,884
433,577 GNMA #781614 7.00 06/15/2033 464,069
------------
813,953
------------
TOTAL AGENCY SECURITIES (COST $6,098,769) 6,338,140
------------
SHORT-TERM INVESTMENTS - 1.79%
SHARES
MUTUAL FUND - 1.68%
726,382 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~>> 726,382
------------
PRINCIPAL
US TREASURY BILLS - 0.11%
50,000 US TREASURY BILL^# 2.82 07/28/2005 49,662
------------
TOTAL SHORT-TERM INVESTMENTS (COST $776,042) 776,044
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $42,779,836)* 99.23% $ 43,024,211
OTHER ASSETS AND LIABILITIES, NET 0.77 334,791
------- ------------
TOTAL NET ASSETS 100.00% $ 43,359,002
======= ============
+/- VARIABLE RATE SECURITIES.
(c) INTEREST-ONLY SECURITIES ENTITLE HOLDERS TO RECEIVE ONLY THE INTEREST
PAYMENTS ON THE UNDERLYING MORTGAGES. THE YIELD TO MATURITY OF AN
INTEREST-ONLY IS EXTREMELY SENSITIVE TO THE RATE OF PRINCIPAL PAYMENTS ON
THE UNDERLYING MORTGAGE ASSETS. A RAPID (SLOW) RATE OF PRINCIPAL
REPAYMENTS MAY HAVE ADVERSE (POSITIVE) EFFECT ON YIELD TO MATURITY. THE
PRINCIPAL AMOUNT SHOWN IS THE NOTIONAL AMOUNT OF THE UNDERLYING MORTGAGES.
INTEREST RATE DISCLOSED REPRESENTS THE YIELD BASED UPON THE ESTIMATED
TIMING OF FUTURE CASH FLOWS.
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE
SECURITIES ACT OF 1933, AS AMENDED.
@ THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
>> SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $726,382.
^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO
MATURITY.
# SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENT OF ASSETS AND LIABILITIES --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
STRATEGIC ULTRA-SHORT
INCOME DURATION
FUND BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE......................................................... $ 24,903,708 $ 42,297,829
INVESTMENTS IN AFFILIATES.............................................................. 2,393,217 726,382
------------ -------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW)...................................... 27,296,925 43,024,211
------------ -------------
VARIATION MARGIN RECEIVABLE ON FUTURES CONTRACTS....................................... 0 7,250
RECEIVABLE FOR FUND SHARES ISSUED...................................................... 31,479 11,540
RECEIVABLE FOR INVESTMENTS SOLD........................................................ 0 47,312
RECEIVABLES FOR DIVIDENDS AND INTEREST................................................. 501,208 458,387
PREPAID EXPENSES AND OTHER ASSETS...................................................... 7,489 0
------------ -------------
TOTAL ASSETS............................................................................. 27,837,101 43,548,700
------------ -------------
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED....................................................... 0 22,111
PAYABLE FOR INVESTMENTS PURCHASED...................................................... 90,000 0
DIVIDENDS PAYABLE...................................................................... 144,444 120,427
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3).................................. 4,082 23,004
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR................................................ 15,845 18,794
ACCRUED EXPENSES AND OTHER LIABILITIES................................................. 0 5,362
------------ -------------
TOTAL LIABILITIES........................................................................ 254,371 189,698
------------ -------------
TOTAL NET ASSETS......................................................................... $ 27,582,730 $ 43,359,002
============ =============
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL........................................................................ $ 27,235,491 $ 51,388,697
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)............................................. (8,221) (115,783)
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS.................................. 456,562 (8,153,476)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND
TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES............... (101,102) 244,375
NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES.................................. 0 (4,811)
------------ -------------
TOTAL NET ASSETS......................................................................... $ 27,582,730 $ 43,359,002
------------ -------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - CLASS A................................................................... $ 13,156,000 $ 15,253,616
SHARES OUTSTANDING - CLASS A........................................................... 1,294,761 1,583,891
NET ASSET VALUE PER SHARE - CLASS A.................................................... $ 10.16 $ 9.63
MAXIMUM OFFERING PRICE PER SHARE - CLASS A............................................. $ 10.64(2) $ 9.83(3)
NET ASSETS - CLASS B................................................................... $ 10,450,566 $ 8,774,669
SHARES OUTSTANDING - CLASS B........................................................... 1,028,206 913,110
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B................................. $ 10.16 $ 9.61
NET ASSETS - CLASS C................................................................... $ 3,976,164 $ 6,279,418
SHARES OUTSTANDING - CLASS C........................................................... 391,843 652,121
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C................................. $10.15 $9.63
NET ASSETS - CLASS Z................................................................... N/A $ 13,051,299
SHARES OUTSTANDING - CLASS Z........................................................... N/A 1,360,146
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS Z................................. N/A $ 9.60
------------ -------------
INVESTMENTS AT COST...................................................................... $27,398,027 $ 42,779,836
============ =============
(1) EACH 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.
(3) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/98.00 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.
18
STATEMENT OF OPERATIONS -- WELLS FARGO ADVANTAGE INCOME FUNDS
FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA-SHORT
STRATEGIC INCOME DURATION
FUND BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS............................................................................. $ 3,124 $ 0
INTEREST.............................................................................. 1,018,629 871,351
INCOME FROM AFFILIATED SECURITIES..................................................... 5,426 1,411
------------- -------------
TOTAL INVESTMENT INCOME.................................................................. 1,027,179 872,762
------------- -------------
EXPENSES
ADVISORY FEES......................................................................... 73,836 93,290
ADMINISTRATION FEES
FUND LEVEL.......................................................................... 806 1,259
CLASS A............................................................................. 31,596 37,858
CLASS B............................................................................. 23,871 21,912
CLASS C............................................................................. 9,516 18,716
CLASS Z............................................................................. N/A 35,173
CUSTODY FEES.......................................................................... 3,744 4,185
SHAREHOLDER SERVICING FEES............................................................ 4,028 6,295
ACCOUNTING FEES....................................................................... 1,949 2,352
DISTRIBUTION FEES (NOTE 3)
CLASS A............................................................................. 15,605 18,962
CLASS B............................................................................. 51,488 46,415
CLASS C............................................................................. 22,355 39,375
AUDIT FEES............................................................................ 12,621 7,092
REGISTRATION FEES..................................................................... 21,179 27,056
SHAREHOLDER REPORTS................................................................... 3,808 3,850
TRUSTEES' FEES........................................................................ 2,317 3,443
OTHER FEES AND EXPENSES............................................................... 4,918 10,691
------------- -------------
TOTAL EXPENSES........................................................................... 283,637 377,924
------------- -------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3).......................................... (40,771) (44,163)
NET EXPENSES.......................................................................... 242,866 333,761
------------- -------------
NET INVESTMENT INCOME (LOSS)............................................................. 784,313 539,001
------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION....................... 921,728 21,771
FUTURES TRANSACTIONS.................................................................. 0 44,249
------------- -------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS................................................ 921,728 66,020
------------- -------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION....................... (1,608,682) (341,333)
FUTURES TRANSACTIONS.................................................................. 0 15,976
------------- -------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS...................... (1,608,682) (325,357)
============= =============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................................... (686,954) (259,337)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.......................... $ 97,359 $ 279,664
============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
STRATEGIC INCOME FUND
----------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS................................................................... $ 28,696,705 $ 25,528,315
OPERATIONS:
NET INVESTMENT INCOME (LOSS)........................................................... 784,313 1,678,792
NET REALIZED GAIN (LOSS) ON INVESTMENTS................................................ 921,728 1,458,165
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS.................... (1,608,682) (121,717)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................... 97,359 3,015,240
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A............................................................................... (421,392) (826,616)
CLASS B............................................................................... (258,680) (543,945)
CLASS C............................................................................... (114,513) (311,074)
CLASS Z............................................................................... N/A N/A
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS....................................................... (794,585) (1,681,635)
------------ ------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A................................................... 3,500,072 4,817,413
REINVESTMENT OF DISTRIBUTIONS - CLASS A............................................... 377,066 754,775
COST OF SHARES REDEEMED - CLASS A..................................................... (4,173,111) (3,304,856)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A (295,973) 2,267,332
------------ ------------
PROCEEDS FROM SHARES SOLD - CLASS B................................................... 898,687 2,326,689
REINVESTMENT OF DISTRIBUTIONS - CLASS B............................................... 164,383 363,231
COST OF SHARES REDEEMED - CLASS B..................................................... (416,866) (1,660,133)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B 646,204 1,029,787
------------ ------------
PROCEEDS FROM SHARES SOLD - CLASS C................................................... 187,576 631,108
REINVESTMENT OF DISTRIBUTIONS - CLASS C............................................... 90,688 235,456
COST OF SHARES REDEEMED - CLASS C..................................................... (1,045,244) (2,328,898)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C (766,980) (1,462,334)
------------ ------------
PROCEEDS FROM SHARES SOLD - CLASS Z................................................... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS Z............................................... N/A N/A
COST OF SHARES REDEEMED - CLASS Z..................................................... N/A N/A
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS Z N/A N/A
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS........... (416,749) 1,834,785
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS..................................................... (1,113,975) 3,168,390
------------ ------------
ENDING NET ASSETS......................................................................... $ 27,582,730 $ 28,696,705
============ ============
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A................................................................. 331,361 472,766
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A.............................. 35,800 74,328
SHARES REDEEMED - CLASS A............................................................. (396,290) (326,035)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A................................... (29,129) 221,059
------------ ------------
SHARES SOLD - CLASS B................................................................. 84,934 229,656
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B.............................. 15,598 35,755
SHARES REDEEMED - CLASS B............................................................. (39,770) (163,763)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B................................... 60,762 101,648
------------ ------------
SHARES SOLD - CLASS C................................................................. 17,789 61,929
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C.............................. 8,618 23,230
SHARES REDEEMED - CLASS C............................................................. (99,459) (231,014)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C................................... (73,052) (145,855)
------------ ------------
SHARES SOLD - CLASS Z................................................................. N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS Z.............................. N/A N/A
SHARES REDEEMED - CLASS Z............................................................. N/A N/A
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS Z................................... N/A N/A
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS... (41,419) 176,852
------------ ------------
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME..................................... $ (8,221) $ 1,256
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
20
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
ULTRA-SHORT DURATION BOND FUND
----------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS................................................................... $ 55,046,784 $ 88,469,686
OPERATIONS:
NET INVESTMENT INCOME (LOSS)........................................................... 539,001 917,598
NET REALIZED GAIN (LOSS) ON INVESTMENTS................................................ 66,020 313,645
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS.................... (325,357) (533,725)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................... 279,664 697,518
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A............................................................................... (253,746) (569,578)
CLASS B............................................................................... (102,329) (198,266)
CLASS C............................................................................... (86,927) (221,764)
CLASS Z............................................................................... (217,246) (503,941)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS....................................................... (660,248) (1,493,549)
------------ ------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A................................................... 1,712,277 4,679,036
REINVESTMENT OF DISTRIBUTIONS - CLASS A............................................... 242,471 569,114
COST OF SHARES REDEEMED - CLASS A..................................................... (5,433,673) (17,610,055)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A (3,478,925) (12,361,905)
------------ ------------
PROCEEDS FROM SHARES SOLD - CLASS B................................................... 269,035 1,575,350
REINVESTMENT OF DISTRIBUTIONS - CLASS B............................................... 75,262 152,697
COST OF SHARES REDEEMED - CLASS B..................................................... (1,744,448) (5,156,873)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B (1,400,151) (3,428,826)
------------ ------------
PROCEEDS FROM SHARES SOLD - CLASS C................................................... 240,547 2,833,230
REINVESTMENT OF DISTRIBUTIONS - CLASS C............................................... 60,706 148,031
COST OF SHARES REDEEMED - CLASS C..................................................... (3,992,242) (8,927,040)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C (3,690,989) (5,945,779)
------------ ------------
PROCEEDS FROM SHARES SOLD - CLASS Z................................................... 461,494 1,960,209
REINVESTMENT OF DISTRIBUTIONS - CLASS Z............................................... 192,997 512,982
COST OF SHARES REDEEMED - CLASS Z..................................................... (3,391,624) (13,363,552)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS Z (2,737,133) (10,890,361)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS........... (11,307,198) (32,626,871)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS..................................................... (11,687,782) (33,422,902)
------------ ------------
ENDING NET ASSETS......................................................................... $ 43,359,002 $ 55,046,784
============ ============
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A................................................................. 177,346 478,644
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A.............................. 25,068 58,113
SHARES REDEEMED - CLASS A............................................................. (562,210) (1,796,414)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A................................... (359,796) (1,259,657)
------------ ------------
SHARES SOLD - CLASS B................................................................. 27,893 161,517
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B.............................. 7,797 15,633
SHARES REDEEMED - CLASS B............................................................. (180,868) (527,802)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B................................... (145,178) (350,652)
------------ ------------
SHARES SOLD - CLASS C................................................................. 24,807 288,769
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C.............................. 6,377 15,123
SHARES REDEEMED - CLASS C............................................................. (413,026) (911,753)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C................................... (381,842) (607,861)
------------ ------------
SHARES SOLD - CLASS Z................................................................. 48,001 200,502
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS Z.............................. 20,021 52,560
SHARES REDEEMED - CLASS Z............................................................. (352,117) (1,367,405)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS Z................................... (284,095) (1,114,343)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS... (1,170,911) (3,332,513)
------------ ------------
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME..................................... $ (115,783) $ 5,464
============ ============
21
WELLS FARGO ADVANTAGE INCOME FUNDS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT REALIZED
SHARE (LOSS) INVESTMENTS INCOME GAINS
- ----------------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME FUND
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............. $10.41 0.31 (0.25) (0.31) 0.00
NOVEMBER 1, 2003 TO OCTOBER 31, 2004........................ $ 9.90 0.71 0.51 (0.71) 0.00
NOVEMBER 1, 2002 TO OCTOBER 31, 2003........................ $ 7.67 0.70 2.22 (0.69) 0.00
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....................... $ 9.53 0.96 (1.64) (0.97) (0.21)
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ................... $10.00 1.14 (0.47) (1.14) 0.00
CLASS B
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............. $10.42 0.25 (0.26) (0.25) 0.00
NOVEMBER 1, 2003 TO OCTOBER 31, 2004........................ $ 9.90 0.59 0.52 (0.59) 0.00
NOVEMBER 1, 2002 TO OCTOBER 31, 2003........................ $ 7.68 0.59 2.21 (0.58) 0.00
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....................... $ 9.53 0.84 (1.63) (0.85) (0.21)
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ................... $10.00 1.02 (0.47) (1.02) 0.00
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............. $10.40 0.26 (0.25) (0.26) 0.00
NOVEMBER 1, 2003 TO OCTOBER 31, 2004........................ $ 9.89 0.59 0.56 (0.59) (0.05)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003........................ $ 7.66 0.59 2.22 (0.58) 0.00
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....................... $ 9.52 0.84 (1.63) (0.86) (0.21)
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ................... $10.00 1.02 (0.48) (1.02) 0.00
ULTRA-SHORT DURATION BOND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............. $ 9.71 0.11 (0.05) (0.14) 0.00
NOVEMBER 1, 2003 TO OCTOBER 31, 2004........................ $ 9.83 0.15 (0.02) (0.25) 0.00
NOVEMBER 1, 2002 TO OCTOBER 31, 2003........................ $ 9.90 0.18 0.06 (0.31) 0.00
NOVEMBER 1, 2001 TO OCTOBER 31, 2002........................ $10.24 0.35 (0.34) (0.35) 0.00
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001.................... $10.10 0.52 0.16 (0.54) 0.00
CLASS B
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............. $ 9.68 0.07 (0.04) (0.10) 0.00
NOVEMBER 1, 2003 TO OCTOBER 31, 2004........................ $ 9.81 0.07 (0.03) (0.17) 0.00
NOVEMBER 1, 2002 TO OCTOBER 31, 2003........................ $ 9.88 0.09 0.06 (0.22) 0.00
NOVEMBER 1, 2001 TO OCTOBER 31, 2002........................ $10.22 0.26 (0.34) (0.26) 0.00
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001.................... $10.10 0.44 0.14 (0.46) 0.00
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............. $ 9.70 0.07 (0.04) (0.10) 0.00
NOVEMBER 1, 2003 TO OCTOBER 31, 2004........................ $ 9.83 0.19 (0.02) (0.30) 0.00
NOVEMBER 1, 2002 TO OCTOBER 31, 2003........................ $ 9.90 0.10 0.05 (0.22) 0.00
NOVEMBER 1, 2001 TO OCTOBER 31, 2002........................ $10.23 0.26 (0.32) (0.27) 0.00
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001.................... $10.10 0.44 0.15 (0.46) 0.00
CLASS Z
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ............. $ 9.67 0.12 (0.04) (0.15) 0.00
NOVEMBER 1, 2003 TO OCTOBER 31, 2004........................ $ 9.80 0.15 (0.03) (0.25) 0.00
NOVEMBER 1, 2002 TO OCTOBER 31, 2003........................ $ 9.86 0.18 0.08 (0.32) 0.00
NOVEMBER 1, 2001 TO OCTOBER 31, 2002........................ $10.19 0.35 (0.34) (0.34) 0.00
NOVEMBER 1, 2000 TO OCTOBER 31, 2001........................ $10.14 0.54 0.14 (0.63) 0.00
NOVEMBER 1, 1999 TO OCTOBER 31, 2000........................ $10.21 0.56 0.02 (0.65) 0.00
(1) DURING EACH PERIOD, VARIOUS FEES AND EXPENSES WERE WAIVED AND REIMBURSED,
AS INDICATED. THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS
THE EXPENSE RATIO IN THE ABSENCE OF ANY WAIVERS AND REIMBURSEMENTS (NOTE
3).
(2) TOTAL RETURN CALCULATIONS DO NOT INCLUDE ANY SALES CHARGES, AND WOULD HAVE
BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN WAIVED OR REIMBURSED DURING THE
PERIODS SHOWN. RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(3) CALCULATED ON THE BASIS OF THE FUND AS A WHOLE WITHOUT DISTINGUISHING
BETWEEN THE CLASSES OF SHARES ISSUED.
(4) COMMENCEMENT OF OPERATIONS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
22
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
NET ASSET -----------------------------------------------------
VALUE PER NET INVESTMENT GROSS EXPENSES NET
SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- ----------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME FUND
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ......... $10.16 2.95% 1.58% (0.49)% 1.09%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004.................... $10.41 6.95% 1.52% (0.40)% 1.12%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003.................... $ 9.90 7.77% 1.58% (0.45)% 1.13%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ................... $ 7.67 10.56% 1.59% (0.51)% 1.08%
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ............... $ 9.53 12.11% 3.94% (2.81)% 1.13%
CLASS B
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ......... $10.16 2.40% 2.32% (0.10)% 2.22%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004.................... $10.42 5.82% 2.30% (0.04)% 2.26%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003.................... $ 9.90 6.44% 2.36% 0.00% 2.36%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ................... $ 7.68 9.05% 2.40% 0.00% 2.40%
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ............... $ 9.53 10.86% 4.04% (1.65)% 2.39%
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ......... $10.15 2.46% 2.19% (0.09)% 2.10%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004.................... $10.40 5.81% 2.34% (0.03)% 2.31%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003.................... $ 9.89 6.57% 2.38% 0.00% 2.38%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ................... $ 7.66 9.02% 2.38% (0.01)% 2.37%
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ............... $ 9.52 10.89% 4.10% (1.70)% 2.40%
ULTRA-SHORT DURATION BOND FUND
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ......... $ 9.63 1.24% 1.36% (0.28)% 1.08%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004.................... $ 9.71 1.71% 1.32% (0.20)% 1.12%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003.................... $ 9.83 1.76% 1.25% (0.12)% 1.13%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002.................... $ 9.90 3.49% 1.25% (0.13)% 1.12%
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001................ $10.24 4.59% 1.52% (0.40)% 1.12%
CLASS B
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ......... $ 9.61 0.81% 2.06% (0.12)% 1.94%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004.................... $ 9.68 0.83% 2.11% (0.12)% 1.99%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003.................... $ 9.81 0.93% 2.05% (0.05)% 2.00%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002.................... $ 9.88 2.47% 2.04% (0.04)% 2.00%
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001................ $10.22 3.60% 2.40% (0.21)% 2.19%
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ......... $ 9.63 0.83% 2.15% (0.20)% 1.95%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004.................... $ 9.70 0.84% 2.10% (0.11)% 1.99%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003.................... $ 9.83 0.87% 2.04% (0.04)% 2.00%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002.................... $ 9.90 2.54% 2.03% (0.03)% 2.00%
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001................ $10.23 3.60% 2.26% (0.21)% 2.05%
CLASS Z
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) ......... $ 9.60 1.28% 1.09% (0.09)% 1.00%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004.................... $ 9.67 1.69% 1.16% (0.04)% 1.12%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003.................... $ 9.80 1.87% 1.08% (0.01)% 1.07%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002.................... $ 9.86 3.55% 1.16% (0.01)% 1.15%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001.................... $10.19 5.30% 1.24% 0.00% 1.24%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000.................... $10.14 5.60% 1.15% 0.00% 1.15%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- -------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME FUND
- -------------------------------------------------------------------------------------------------------------------
CLASS A
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .................. 0.57% 70% $13,156
NOVEMBER 1, 2003 TO OCTOBER 31, 2004............................. 12.70% 141% $13,786
NOVEMBER 1, 2002 TO OCTOBER 31, 2003............................. 39.38% 155% $10,917
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............................ (8.35)% 235% $ 7,699
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ........................ 6.04% 424% $ 5,619
CLASS B
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .................. (0.10)% 70% $10,451
NOVEMBER 1, 2003 TO OCTOBER 31, 2004............................. 11.55% 141% $10,076
NOVEMBER 1, 2002 TO OCTOBER 31, 2003............................. 37.55% 155% $ 8,573
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............................ (9.44)% 235% $ 4,313
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ........................ 4.87% 424% $ 2,377
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .................. 0.06% 70% $ 3,976
NOVEMBER 1, 2003 TO OCTOBER 31, 2004............................. 11.40% 141% $ 4,834
NOVEMBER 1, 2002 TO OCTOBER 31, 2003............................. 37.73% 155% $ 6,038
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............................ (9.56)% 235% $ 4,928
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ........................ 4.77% 424% $ 2,312
ULTRA-SHORT DURATION BOND FUND
- -------------------------------------------------------------------------------------------------------------------
CLASS A
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .................. 0.66% 8% $15,254
NOVEMBER 1, 2003 TO OCTOBER 31, 2004............................. 1.35% 28% $18,865
NOVEMBER 1, 2002 TO OCTOBER 31, 2003............................. 2.45% 90% $31,490
NOVEMBER 1, 2001 TO OCTOBER 31, 2002............................. 0.15% 204% $22,230
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001......................... 6.90% 221% $ 9,522
CLASS B
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .................. 0.34% 8% $ 8,775
NOVEMBER 1, 2003 TO OCTOBER 31, 2004............................. 0.37% 28% $10,249
NOVEMBER 1, 2002 TO OCTOBER 31, 2003............................. 1.56% 90% $13,820
NOVEMBER 1, 2001 TO OCTOBER 31, 2002............................. (0.74)% 204% $13,419
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001......................... 5.82% 221% $ 3,869
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .................. 0.35% 8% $ 6,279
NOVEMBER 1, 2003 TO OCTOBER 31, 2004............................. 0.37% 28% $10,034
NOVEMBER 1, 2002 TO OCTOBER 31, 2003............................. 1.56% 90% $16,138
NOVEMBER 1, 2001 TO OCTOBER 31, 2002............................. (0.63)% 204% $ 8,947
NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001......................... 5.90% 221% $ 3,346
CLASS Z
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .................. 0.80% 8% $13,051
NOVEMBER 1, 2003 TO OCTOBER 31, 2004............................. 1.25% 28% $15,898
NOVEMBER 1, 2002 TO OCTOBER 31, 2003............................. 2.62% 90% $27,021
NOVEMBER 1, 2001 TO OCTOBER 31, 2002............................. 0.15% 204% $30,194
NOVEMBER 1, 2000 TO OCTOBER 31, 2001............................. 6.84% 221% $47,219
NOVEMBER 1, 1999 TO OCTOBER 31, 2000............................. 5.83% 59% $51,144
23
WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Trust commenced operations on November 8,
1999, and at April 30, 2005 was comprised of 108 separate series (each, a
"Fund", collectively, the "Funds"). These financial statements present the
Strategic Income Fund and Ultra-Short Duration Bond Fund.
In September 2004, the Board of Trustees of the Wells Fargo Funds Trust
and the Boards of Directors of the Strong Funds ("Strong Funds") approved an
Agreement and Plan of Reorganization providing for the reorganization of certain
Strong Funds into the Funds.
Effective at the close of business on April 8, 2005, the following
Acquiring Funds ("Acquiring Funds") acquired substantially all of the net assets
of the following Target Funds ("Target Funds") through a tax-free exchange under
section 368 of the Internal Revenue Code.
Acquiring Fund Target Fund
- -------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE STRATEGIC INCOME FUND CLASS A STRONG ADVISOR STRATEGIC INCOME FUND CLASS A
- -------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE STRATEGIC INCOME FUND CLASS B STRONG ADVISOR STRATEGIC INCOME FUND CLASS B
- -------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE STRATEGIC INCOME FUND CLASS C STRONG ADVISOR STRATEGIC INCOME FUND CLASS C
- -------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ULTRA-SHORT DURATION BOND FUND CLASS A STRONG ADVISOR SHORT DURATION BOND FUND CLASS A
- -------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ULTRA-SHORT DURATION BOND FUND CLASS B STRONG ADVISOR SHORT DURATION BOND FUND CLASS B
- -------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ULTRA-SHORT DURATION BOND FUND CLASS C STRONG ADVISOR SHORT DURATION BOND FUND CLASS C
- -------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ULTRA-SHORT DURATION BOND FUND CLASS Z STRONG ADVISOR SHORT DURATION BOND FUND CLASS Z
- -------------------------------------------------------------------------------------------------------------------
The separate classes of shares offered by each Fund differ principally in
applicable sales charges, distribution, shareholder servicing and administration
fees. Shareholders of each class bear certain expenses that pertain to that
particular class. All shareholders bear the common expenses of a Fund, earn
income from the portfolio and are allocated unrealized gains and losses pro rata
based on the average daily net assets of each class, without distinction between
share classes. Dividends are determined separately for each class based on
income and expenses allocable to each class. Realized gains and losses are
allocated to each class pro rata based upon the net assets of each class on the
date realized. Differences in per share dividend rates generally result from the
relative weightings of pro rata income and realized gain allocations and from
differences in separate class expenses, including distribution, shareholder
servicing and administration fees.
2. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
The following significant accounting policies, which are consistently
followed in the preparation of the financial statements of the Trust, are in
conformity with accounting principles generally accepted in the United States of
America ("GAAP") for investment companies.
The preparation of financial statements in conformity with GAAP requires
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.
In the normal course of business, the Trust may enter into contracts that
provide certain indemnifications. The Trust's maximum exposure under these
arrangements is dependent on future claims that may be made against the Funds
and, therefore, cannot be estimated; however, based on experience, the risk of
loss from such claims is considered remote.
SECURITY VALUATION
Investments in securities are valued each business day as of the close of
regular trading on the New York Stock Exchange, which is usually 4:00 p.m.
(Eastern Time). Securities which are traded on a national or foreign securities
exchange are valued at the last reported sales price. Securities listed on The
Nasdaq Stock Market, Inc. are valued at the Nasdaq Official Closing Price
("NOCP"), and if no NOCP is available, then at the last reported sales price. In
the absence of any sale of such securities, and in the case of other securities,
including U.S. Government obligations, but excluding debt securities maturing in
60 days or less, the valuations are based on the latest quoted bid prices. Prior
to April 1, 2005, the predecessor Strong Funds' valuations were based on the
mean of the bid and asked prices.
Certain fixed income securities with maturities exceeding 60 days are
valued by using a pricing service approved by the Trust's Board of Trustees. The
service uses market prices as quoted by an independent pricing service or by
dealers in these securities when, in the service's judgment, these prices are
readily available and are representative of the securities' market values. For
some securities, such prices are not readily available. These securities will
generally be fair valued using methods which may include consideration of yields
or prices of securities of comparable quality, coupon rate, maturity and type of
issue; indications as to values from dealers in securities, trading
characteristics and general market conditions.
24
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
Debt securities maturing in 60 days or less generally are valued at
amortized cost. The amortized cost method involves valuing a security at its
cost, plus accretion of discount or minus amortization of premium over the
period until maturity, which approximates market value.
Investments which are not valued using any of the methods discussed above,
are valued at their fair value as determined by procedures approved by the Board
of Trustees.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded on a trade date basis. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
Interest income is accrued daily and bond discounts are accreted and premiums
are amortized daily.
Debt obligations may be placed on non-accrual status and related
investment income may be reduced by ceasing current accruals and writing off
interest receivables when the collection of all or a portion of income has
become doubtful based on consistently applied procedures. A debt obligation is
removed from non-accrual status when the issuer resumes interest payments or
when collectibility of interest is reasonably assured.
Dividend income is recognized on the ex-dividend date, except for certain
dividends from foreign securities, which are recorded as soon as the Fund is
informed of the ex-dividend date. Dividend income from foreign securities is
recorded net of foreign taxes withheld where recovery of such taxes is not
assured.
FOREIGN CURRENCY TRANSLATION
The accounting records are maintained in U.S. dollars. Assets, including
investment securities, and liabilities denominated in foreign currency are
translated into U.S. dollars at the prevailing rates of exchange at the date of
valuation. Purchases and sales of securities, and income and expenses are
translated at the prevailing rate of exchange on the respective dates of such
transactions. Reported 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, at fiscal period-end,
resulting from changes in exchange rates.
The changes in net assets arising from changes in exchange rates and the
changes in net assets resulting from changes in market prices of securities at
fiscal period-end are not separately presented. Such changes are recorded with
net realized and unrealized gain from investments. Gains and losses from certain
foreign currency transactions are treated as ordinary income for U.S. federal
income tax purposes.
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, if any, is declared daily and distributed to
shareholders monthly. Distributions to shareholders from net realized capital
gains, if any, are declared and distributed at least annually.
For federal income tax purposes, a Fund may designate as capital gains
dividends the earnings and profits distributed to shareholders on the redemption
of fund shares during the year.
Distributions are based on amounts calculated in accordance with the
applicable federal income tax regulations, which may differ from GAAP. The
timing and character of distributions made during the period from net investment
income or net realized gains may also differ from their ultimate
characterization for federal income tax purposes. To the extent that these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment. Temporary
differences do not require reclassifications.
FEDERAL INCOME TAXES
Each Fund is treated as a separate entity for federal income tax purposes.
It is the policy of each Fund of the Trust to continue to qualify as a regulated
investment company by complying with the provisions applicable to regulated
investment companies, as defined under subchapter M of the Internal Revenue Code
(the "Code"), and to make distributions of 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 at April 30, 2005.
At October 31, 2004, estimated net capital loss carryforwards, which are
available to offset future net realized capital gains, were:
Capital Loss
Fund Year Expires Carryforwards
- ---------------------------------------------------------------------------
STRATEGIC INCOME FUND 2010 $ 370,721
- ---------------------------------------------------------------------------
ULTRA-SHORT DURATION BOND FUND 2006 3,548,671
- ---------------------------------------------------------------------------
2008 240,514
- ---------------------------------------------------------------------------
2010 3,205,247
- ---------------------------------------------------------------------------
2011 1,042,242
- ---------------------------------------------------------------------------
2012 203,609
25
WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
FUTURES CONTRACTS
The Fund(s) may purchase futures contracts to gain exposure to market
changes, which may be more efficient or cost effective than actually buying the
securities. A futures contract is an agreement between parties to buy or sell a
security at a set price on a future date. Upon entering into such a contract, a
Fund is required to pledge to the broker an amount of cash, U.S. Government
obligations or other high-quality debt securities equal to the minimum "initial
margin" requirements of the exchange on which the futures contract is traded.
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 the value of the contract.
Such receipts or payments are known as "variation margin" and are recorded by
the Fund as unrealized gains or losses. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission (the "SEC") for long futures positions, the Fund is required
to segregate highly liquid securities as permitted by the SEC in connection with
futures transactions in an amount generally equal to the entire value of the
underlying contracts. Risks of entering into futures contracts include the
possibility that there may be an illiquid market and that a change in the value
of the contract may not correlate with changes in the value of the underlying
securities. At April 30, 2005, the following Fund(s) held futures contracts:
Net Unrealized
Appreciation
Fund Contracts Type Expiration Date Notional Amount (Depreciation)
- ---------------------------------------------------------------------------------------------------------------------------
ULTRA-SHORT DURATION BOND FUND Short 16 US 2 YR Note Jun 05 June 2005 $ 3,320,932 $(2,493)
- ---------------------------------------------------------------------------------------------------------------------------
ULTRA-SHORT DURATION BOND FUND Short 13 US 5 YR Note Jun 05 June 2005 1,407,398 (2,318)
SECURITY LOANS
The Fund(s) may loan securities in return for securities, irrevocable
letters of credit or cash collateral, which is invested in various short-term
fixed income securities. A Fund may receive compensation for lending securities
in the form of fees or by retaining a portion of interest on the investment
securities or cash received as collateral. A Fund also continues to receive
interest or dividends on the securities loaned. Security loans are secured at
all times by collateral. The collateral is equal to at least 102% of the market
value of the securities loaned plus accrued interest when the transaction is
entered into. If the collateral falls to 100%, it will be brought back to 102%.
Gain or loss in the market price of the securities loaned that may occur during
the term of the loan are reflected in the value of the Fund. The risks from
securities lending are that the borrower may not provide additional collateral
when required or return the securities when due or when called for by the Fund.
Wells Fargo Bank, N.A., the Funds' custodian, acts as the securities lending
agent for the Funds and receives for its services 35% of the revenues earned on
the securities lending activities and incurs all expenses.
Prior to April 11, 2005, the predecessor Strong Funds had a securities
lending agreement with State Street Bank and Trust Co. ("State Street"). The
agreement required that loans be collateralized at all times by cash and cash
equivalents equal to at least 102% of the market value of the aggregate loaned
securities, plus accrued interest, and the collateral be marked-to-market daily.
Amounts earned as interest on investments of cash collateral, net of rebates and
other securities lending expenses, if any, are included in Securities Lending
Income on the Statement of Operations.
3. EXPENSES
- --------------------------------------------------------------------------------
ADVISORY FEES
The Trust has entered into an advisory contract with Wells Fargo Funds
Management, LLC ("Funds Management"). The adviser is responsible for
implementing investment policies and guidelines and for supervising the
sub-adviser, who is responsible for day-to-day portfolio management.
Pursuant to the contract, Funds Management is entitled to receive an
advisory fee for its services as adviser. Funds Management may retain the
services of certain investment sub-advisers to provide daily portfolio
management. The fees related to sub-advisory services are borne directly by the
adviser and do not increase the overall fees paid by a Fund to the adviser.
Funds Management and the investment sub-adviser(s) are entitled to be paid a
monthly fee at the following annual rates:
Sub-Advisory
Advisory Fees* Fees (% of
Average Daily (% of Average Average Daily Average Daily
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Net Assets)
- -----------------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME FUND $0 - $499 million 0.450 Wells Capital $0 - $400 million 0.200
$500 million - $999 million 0.400 Management $400 million - $800 million 0.175
$1 billion - $2.99 billion 0.350 Incorporated > $800 million 0.150
$3 billion - $4.99 billion 0.325
> $4.99 billion 0.300
- -----------------------------------------------------------------------------------------------------------------------------------
ULTRA-SHORT DURATION $0 - $499 million 0.450 Wells Capital $0 - $400 million 0.200
BOND FUND $500 million - $999 million 0.400 Management $400 million - $800 million 0.175
$1 billion - $2.99 billion 0.350 Incorporated > $800 million 0.150
$3 billion - $4.99 billion 0.325
> $4.99 billion 0.300
26
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
* Effective April 11, 2005. Prior to January 1, 2005, Strong Capital
Management, Inc. ("SCM") served as investment adviser to each of the predecessor
Strong Funds and was entitled to receive an annual fee at the following rates;
from January 1, 2005 through April 10, 2005, Funds Management served as interim
investment adviser and was entitled to receive an annual fee at the same rates.
Advisory Fees
(% of Average
Fund Average Daily Net Assets Daily Net Assets)
- -----------------------------------------------------------------------------------------
STRATEGIC INCOME FUND $0 - $4 billion 0.500
$4 billion - $6 billion 0.475
> $6 billion 0.450
- -----------------------------------------------------------------------------------------
ULTRA-SHORT DURATION BOND FUND $0 - $4 billion 0.375
$4 billion - $6 billion 0.350
> $6 billion 0.325
ADMINISTRATION AND TRANSFER AGENT FEES
The Trust has entered into an Administration Agreement with Funds
Management. Under this Agreement, for providing administrative services, which
includes paying fees and expenses for services provided by the transfer agent,
sub-transfer agents, omnibus account servicers and record-keepers, Funds
Management is entitled to receive the following annual fees:
Admin Fees**
(% of Average
Fund Average Daily Net Assets Daily Net Assets)
- ------------------------------------------------------------------------------------------
FUND LEVEL $0 - $4.99 billion 0.05
$5 billion - $9.99 billion 0.04
> $9.99 billion 0.03
- ------------------------------------------------------------------------------------------
CLASS A 0.28
- ------------------------------------------------------------------------------------------
CLASS B 0.28
- ------------------------------------------------------------------------------------------
CLASS C 0.28
- ------------------------------------------------------------------------------------------
CLASS Z 0.45
- ------------------------------------------------------------------------------------------
** Effective April 11, 2005. Prior to April 11, 2005, Strong Investor
Services, Inc. ("SISI") served as administrator to each of the predecessor
Strong Funds and was entitled to receive an annual fee at the following rates:
Admin Fees
(% of Average
Daily Net Assets)
- ------------------------------------------------------------------------------------------
CLASS A 0.28
- ------------------------------------------------------------------------------------------
CLASS B 0.28
- ------------------------------------------------------------------------------------------
CLASS C 0.28
- ------------------------------------------------------------------------------------------
CLASS Z 0.28
The Trust has entered into an agreement with Boston Financial Data
Services ("BFDS") as the transfer agent for the Trust effective March 14, 2005.
Prior to March 14, 2005, SISI served as transfer agent to each of the
predecessor Strong Funds.
For financial statement presentation, transfer agent fees for the period
from November 1, 2004 though April 11, 2005, as shown below, have been combined
with administration fees.
Transfer Agent Fees and Other Related Expenses
Fund Class A Class B Class C Class Z
- ---------------------------------------------------------------------------------------------
STRATEGIC INCOME FUND $11,964 $9,028 $3,094 N/A
- ---------------------------------------------------------------------------------------------
ULTRA-SHORT DURATION BOND FUND 14,154 8,556 7,432 13,989
CUSTODY FEES
The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"),
whereby WFB is responsible for providing custody services. Pursuant to the
contract, WFB is entitled to certain transaction charges plus a monthly fee for
custody services at the following annual rates:
% of Average
Daily Net Assets
- -----------------------------------------------------------------------------------------
STRATEGIC INCOME FUND, ULTRA-SHORT DURATION BOND FUND 0.02
- -----------------------------------------------------------------------------------------
27
WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
Prior to March 27, 2005, State Street served as custodian for the Strong
Advisor Strategic Income Fund. Prior to March 21, 2005, State Street served as
custodian for the Strong Advisor Short Duration Bond Fund. State Street was
entitled to receive a fee that was substantially transaction-based.
SHAREHOLDER SERVICING FEES
The Trust has entered into contracts with one or more shareholder
servicing agents, whereby each Fund is charged the following annual fees:
% of Average
Daily Net Assets
- -----------------------------------------------------------------------------------------
CLASS A, CLASS B, CLASS C, CLASS Z 0.25*
- -----------------------------------------------------------------------------------------
* Effective April 11, 2005. Prior to April 11, 2005, shareholder servicing
fees for the predecessor Strong Funds, if any, were included in the Strong
Funds' 12b-1 distribution and service plan. For the period April 11, 2005
through April 30, 2005, shareholder servicing fees paid were as follows:
Fund Class A Class B Class C Class Z
- ---------------------------------------------------------------------------------------------
STRATEGIC INCOME FUND $ 1,924 $1,523 $ 581 N/A
- ---------------------------------------------------------------------------------------------
ULTRA-SHORT DURATION BOND FUND 2,202 1,284 924 1,885
DISTRIBUTION FEES
The Trust has adopted a Distribution Plan (the "Plan") for Class B and
Class C shares of the applicable Funds pursuant to Rule 12b-1 under the 1940
Act. Effective April 11, 2005, distribution fees are charged to the Class B and
Class C shares and paid to Wells Fargo Funds Distributor, LLC at an annual rate
of 0.75% of average daily net assets.
Prior to April 11, 2005, the predecessor Strong Funds adopted a 12b-1
distribution and service plan under the 1940 Act on behalf of the Class A, B,
and C shares. Under the plan, Strong Investments, Inc. was paid an annual rate
of 0.25%, 1.00%, and 1.00%, respectively, of the average daily net assets of
Class A, B, and C shares.
For the six months ended April 30, 2005, distribution fees paid are
disclosed on the Statement of Operations.
OTHER FEES
PFPC, Inc. ("PFPC") serves as fund accountant for the Trust and is
entitled to receive an annual asset based fee, and an annual fixed fee from each
Fund. PFPC is also entitled to be reimbursed for all out-of-pocket expenses
reasonably incurred in providing these services.
Prior to March 27, 2005, State Street served as fund accountant for the
Strong Advisor Strategic Income Fund. Prior to March 21, 2005, State Street
served as fund accountant for the Strong Advisor Short Duration Bond Fund. Fund
accounting fees were paid by the Funds' administrator through April 10, 2005,
and not by the Funds.
WAIVED FEES AND REIMBURSED EXPENSES
Effective April 11, 2005, Funds Management waived fees or reimbursed
expenses proportionately from all classes, first from advisory fees, and then
from any Class specific expenses, if applicable. The Fund's Adviser has
committed to waive fees and/or reimburse expenses to the extent necessary to
maintain a certain net operating expense ratio for the Fund(s). Net operating
expense ratios in effect from April 11, 2005 through April 30, 2005 were as
follows:
Net Operating Expense Ratios
Fund Class A Class B Class C Class Z
- ---------------------------------------------------------------------------------------------
STRATEGIC INCOME FUND 1.10% 1.85% 1.85% N/A
- ---------------------------------------------------------------------------------------------
ULTRA-SHORT DURATION BOND FUND 0.80% 1.55% 1.55% 0.97%
Prior to April 11, 2005, the predecessor Strong Funds' adviser and/or
administrator could voluntarily waive or absorb certain expenses at their
discretion. Pursuant to the direction of the Strong Board of Directors and
certain regulatory settlements, SCM had contractually agreed to waive fees
and/or absorb expenses in the amount of 0.033% for the Strong Advisor Bond Fund
and Strong Advisor Strategic Income Fund from May 21, 2004 to May 21, 2005.
However, effective April 11, 2005, the Funds are subject to a different expense
structure. SISI also allocated to each Fund certain charges or credits resulting
from transfer agency banking activities based on each class' level subscription
and redemption activity. Transfer Agency Banking Credits allocated by SISI, if
any, served to reduce the transfer agency expenses incurred by the Funds. From
November 1, 2004 through April 10, 2005, the expense offsets that are included
in the waived fees and reimbursed expenses amount on the Statement of Operations
are as follows:
Waived Fees and Reimbursed Expenses
Fund Fund Level Class A Class B Class C
- ---------------------------------------------------------------------------------------------
STRATEGIC INCOME FUND $5,413 $27,804 $ 0 $ 0
- ---------------------------------------------------------------------------------------------
ULTRA-SHORT DURATION BOND FUND 8,388 15,186 1,037 4,532
28
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
4. INVESTMENT PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date) for the six
months ended April 30, 2005, were as follows:
Fund Purchases at Cost Sales Proceeds
- -----------------------------------------------------------------------------
STRATEGIC INCOME FUND $18,989,730 $18,386,792
- -----------------------------------------------------------------------------
ULTRA-SHORT DURATION BOND FUND 3,877,808 6,604,121
5. BANK BORROWINGS
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust and Wells Fargo Variable Trust (excluding the
money market funds) share in a revolving Credit Agreement with The Bank of New
York, whereby the Funds are permitted to use bank borrowings for temporary or
emergency purposes, such as to fund shareholder redemption requests. The
agreement permits borrowings of up to $150 million, collectively. Interest is
charged to each Fund based on its borrowing at a rate equal to the Federal Funds
Rate plus 0.40%. In addition, the Funds pay a quarterly commitment fee equal to
0.1% per annum of the credit line.
Prior to April 11, 2005, the predecessor Strong Funds had established a
line of credit agreement ("LOC") with certain financial institutions to be used
for temporary or emergency purposes. Combined borrowings among all participating
Strong Funds were subject to a $200 million cap on the total LOC. For an
individual fund, borrowings under the LOC were limited to either the lesser of
15% of the market value of the fund's total assets or any explicit borrowing
limits in the fund's registration statement. The principal amount of each
borrowing under the LOC was due not more than 45 days after the date of the
borrowing. Borrowings under the LOC accrued interest based on prevailing market
rates as defined in the LOC. A commitment fee of 0.09% per annum was incurred on
the unused portion of the LOC and was allocated to all participating Strong
Funds based on their net asset values.
For the six months ended April 30, 2005, there were no borrowings under
either agreement.
6. LEGAL AND REGULATORY MATTERS
- --------------------------------------------------------------------------------
In 2004, the predecessor Funds' investment adviser and affiliates
(collectively, "Strong") entered into agreements with certain regulators,
including the Securities and Exchange Commission and the New York Attorney
General ("NYAG"), to settle market-timing investigations. In the settlements,
Strong agreed to pay investor restoration and civil penalties. Although some
portion of these payments is likely to be distributed to predecessor fund
shareholders, no determination has yet been made as to the distribution of these
amounts, and the successor Funds are not expected to receive any portion of
these payments. The NYAG settlement also imposed fee reductions across the
predecessor fund complex (excluding money market funds and very short-term
income funds) totaling at least $7 million a year for five years. The current
Funds' adviser has agreed to honor these fee reductions for the benefit of
shareholders across the successor Funds. Although civil litigation against
Strong and certain predecessor Funds relating to these matters is continuing,
neither the current adviser nor the successor Funds is a party to any such suit.
29
WELLS FARGO ADVANTAGE INCOME FUNDS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
PROXY VOTING INFORMATION
A description of the policies and procedures that the Fund(s) uses to
determine how to vote proxies relating to portfolio securities and information
regarding the results of such voting during the most recent 12-month period
ended June 30, is available without charge, upon request, by calling
1-800-222-8222, visiting our Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS or
visiting the SEC Web site at WWW.SEC.GOV.
PORTFOLIO HOLDINGS INFORMATION
The Fund(s) 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 without charge by visiting the SEC Web site at WWW.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 information about the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
BOARD OF TRUSTEES
The following table provides basic information about the Board of Trustees
("Trustees") of the Wells Fargo Funds Trust (the "Trust"). This table
supplements, and should be read in conjunction with, the Prospectus and the
Statement of Additional Information* of each Fund. Each of the Trustees listed
below acts in identical capacities for each of the 138 funds comprising the
Trust, Wells Fargo Variable Trust and Wells Fargo Master Trust (collectively the
"Fund Complex"). All of the non-interested Trustees are also members of the
Audit and Governance Committees of each Trust in the Fund Complex. The 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.
INTERESTED TRUSTEE**
- ---------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- ---------------------------------------------------------------------------------------------------------------
J. Tucker Morse Trustee, Private Investor/Real Estate None
60 since 1987 Developer; Chairman of White
Point Capital, LLC.
- ---------------------------------------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES
- ---------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- ---------------------------------------------------------------------------------------------------------------
Thomas S. Goho Trustee, Associate Professor of Finance, None
62 since 1987 Wake Forest University,
Calloway School of Business
and Accountancy.
- ---------------------------------------------------------------------------------------------------------------
Peter G. Gordon Trustee, Chairman, CEO, and Co- None
62 since 1998 Founder of Crystal Geyser
(Chairman, since 2005) Water Company and President
of Crystal Geyser Roxane
Water Company.
- ---------------------------------------------------------------------------------------------------------------
Richard M. Leach Trustee, Retired. Prior thereto, President None
71 since 1987 of Richard M. Leach Associates
(a financial consulting firm).
- ---------------------------------------------------------------------------------------------------------------
Timothy J. Penny Trustee, Senior Counselor to the public None
53 since 1996 relations firm of Himle-Horner
and Senior Fellow at the
Humphrey Institute,
Minneapolis, Minnesota (a public
policy organization).
- ---------------------------------------------------------------------------------------------------------------
Donald C. Willeke Trustee, Principal in the law firm of None
64 since 1996 Willeke & Daniels.
- ---------------------------------------------------------------------------------------------------------------
30
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
OFFICERS
- ---------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE PAST FIVE YEARS OTHER DIRECTORSHIPS
- ---------------------------------------------------------------------------------------------------------------
Karla M. Rabusch President, since Executive Vice President of None
46 2003 Wells Fargo Bank, N.A.
President of Wells Fargo Funds
Management, LLC. Senior Vice
President and Chief
Administrative Officer of Wells
Fargo Funds Management, LLC
from 2001 to 2003. Vice
President of Wells Fargo Bank,
N.A. from 1997 to 2000.
- ---------------------------------------------------------------------------------------------------------------
Stacie D. DeAngelo Treasurer, since 2003 Senior Vice President of Wells None
36 Fargo Bank, N.A. Senior Vice
President of Operations for
Wells Fargo Funds Management,
LLC. Prior there-to, Operations
Manager at Scudder Weisel
Capital, LLC (2000 to 2001),
Director of Shareholder
Services at BISYS Fund
Services (1999 to 2000) and
Assistant Vice President of
Operations with Nicholas-
Applegate Capital Management
from 1993 to 1999.
- ---------------------------------------------------------------------------------------------------------------
C. David Messman Secretary, since 2000 Vice President and Managing None
45 Senior Counsel of Wells Fargo
Bank, N.A. Senior Vice
President and Secretary of Wells
Fargo Funds Management, LLC.
Vice President and Senior
Counsel of Wells Fargo Bank,
N.A. from 1996 to 2003.
- ---------------------------------------------------------------------------------------------------------------
* The Statement of Additional Information includes additional information
about the Funds' Trustees and is available, without charge, upon request,
by calling 1-800-222-8222.
** As of April 30, 2005, one of the six Trustees is considered an "interested
person" of the Trusts as defined in the Investment Company Act of 1940.
The interested Trustee, J. Tucker Morse, is affiliated with a government
securities dealer that is registered under the Securities Exchange Act of
1934, which is not itself affiliated with Wells Fargo Funds Management,
LLC.
*** Length of service dates reflects a Trustee's commencement of service with
the Trust's predecessor entities.
31
WELLS FARGO ADVANTAGE INCOME FUNDS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
OTHER MATTERS
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY
AGREEMENTS:
STRATEGIC INCOME FUND AND ULTRA-SHORT DURATION BOND FUND
- --------------------------------------------------------------------------------
Section 15(c) of the Investment Company Act of 1940 (the "1940 Act")
contemplates that the Board of Trustees (the "Board") of Wells Fargo Funds Trust
(the "Trust"), including a majority of the Trustees who have no direct or
indirect interest in the investment advisory and sub-advisory agreements and are
not "interested persons" of the Trust, as defined in the 1940 Act (the
"Independent Trustees"), will annually review and consider the continuation of
the investment advisory and sub-advisory agreements. In this regard, the Board
reviewed and re-approved, during the six months covered by this report: (i) an
investment advisory agreement with Wells Fargo Funds Management, LLC ("Funds
Management") for the Strategic Income Fund and Ultra-Short Duration Bond Fund
(the "Funds"); and (ii) an investment sub-advisory agreement with Wells Capital
Management Incorporated ("Wells Capital Management") for the Funds. The
investment advisory agreement with Funds Management and the investment
sub-advisory agreement with Wells Capital Management are collectively referred
to as the "Advisory Agreements."
More specifically, at a meeting held on April 4, 2005, the Board,
including the Independent Trustees advised by their independent legal counsel,
considered the factors and reached the conclusions described below relating to
the selection of Funds Management and Wells Capital Management and the
continuation of the Advisory Agreements. The Board initially approved the
Advisory Agreements for the Funds at a meeting held August 9-10, 2004 in
connection with its approval of the reorganization of the Strong Advisor
Strategic Income Fund (the accounting survivor) into the Wells Fargo Advantage
Strategic Income Fund and the Strong Advisor Short Duration Bond Fund (the
accounting survivor) into the Wells Fargo Ultra-Short Duration Bond Fund (the
"Reorganization"). The Reorganization was effective at the close of business on
April 8, 2005. The Funds commenced operations on April 11, 2005. Accordingly,
references to the Funds refer to either the predecessor funds or the Funds as
the context requires. Similarly, references to the various fee rates refer to
either the rates of the predecessor funds or those of the Funds as the context
requires.
NATURE, EXTENT AND QUALITY OF SERVICES
The Board received and considered various data and information regarding
the nature, extent and quality of services that would be provided to the Funds
by Funds Management and Wells Capital Management under the Advisory Agreements.
Responses of Funds Management and Wells Capital Management to a detailed set of
requests submitted by the Independent Trustees' independent legal counsel on
behalf of such Trustees were provided to the Board. The Board reviewed and
considered the data and information, which included, among other things,
information about the background and experience of the senior management and the
expertise of the investment personnel of Funds Management and Wells Capital
Management.
The Board also considered the ability of Funds Management and Wells
Capital Management, based on their respective resources, reputations and other
attributes, to attract and retain highly qualified investment professionals,
including research, advisory, and supervisory personnel. In this connection, the
Board considered information regarding each of Funds Management's and Wells
Capital Management's compensation for its personnel that would be involved in
the management of the Funds. In addition, the Board considered the effects of
certain personnel changes in light of the acquisition of certain of the asset
management arrangements of Strong Capital Management, Inc. ("Strong") by Wells
Fargo & Company.
The Board further considered the compliance programs and compliance
records of Funds Management and Wells Capital Management. In addition, the Board
took into account the administrative services anticipated to be provided to the
Funds by Funds Management and its affiliates. In considering these matters, the
Board considered not only the specific information presented in connection with
the meeting, but also the knowledge gained over the course of interacting with
Funds Management, including with respect to Funds Management's oversight of
service providers, such as the investment sub-adviser.
Based on the above factors, together with those referenced below, the
Board concluded that it was generally satisfied with the nature, extent and
quality of the investment advisory services anticipated to be provided to each
of the Funds by Funds Management and Wells Capital Management.
FUND PERFORMANCE AND EXPENSES
The Board considered the performance results for each of the Funds over
various time periods. The Board also considered these results in comparison to
the median performance results of the group of funds that was determined to be
the most similar to a given Fund (the "Peer Group") and to the median
performance of a broader universe of relevant funds (the "Universe"), as well as
to each Fund's benchmark index. Lipper Inc. ("Lipper"), an independent provider
of investment company data, determined the Peer Group and Universe for each
Fund. The Board was provided with a description of the methodology used by
Lipper to select the mutual funds in each Fund's Peer Group and Universe.
32
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS
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The Board noted that the Strategic Income Fund's performance was better
than the median performance of its Peer Group for all time periods. The Board
also noted that the Ultra Short Duration Bond Fund's performance was lower than
the median performance of its Peer Group for all time periods and required
further review. Upon further review, the Board noted that the Fund's
underperformance was explained, in part, by some credit issues experienced when
the Fund was managed by certain Strong portfolio managers. In addition, the
Board noted that there had been a portfolio manager change for the Fund during
the past year and asked for a continued report on the Fund's performance.
The Board received and considered information regarding each Fund's total
net operating expense ratio and its various components, including contractual
advisory fees, actual advisory fees, actual non-management fees, Rule 12b-1 and
non-Rule 12b-1 service fees, fee waivers/caps and/or expense reimbursements. The
Board also considered comparisons of these fees to the expense information for
each Fund's Peer Group and Universe, which comparative data was provided by
Lipper.
The Board noted that the net operating expense ratio of the Strategic
Income Fund was lower than the Fund's Peer Group's median net operating expense
ratio. The Board also noted that the net operating expense ratio of the Ultra
Short Duration Bond Fund was higher than the Fund's Peer Group's median net
operating expense ratio, but the Board further noted that the Advisory Agreement
Rates (as defined below) were within a reasonable range of the median rates of
the Fund's Peer Group.
Management also discussed the Lipper data and rankings, and other relevant
information, for the Funds. Based on the above-referenced considerations and
other factors, the Board concluded that the overall performance and expense
results supported the re-approval of the Advisory Agreements for the Funds.
INVESTMENT ADVISORY AND SUB-ADVISORY FEE RATES
The Board reviewed and considered the contractual investment advisory fee
rates both on a stand-alone basis and on a combined basis with the Fund's
administration fee rates (the "Advisory Agreement Rates") payable by the Funds
to Funds Management for investment advisory services. The Board also reviewed
and considered the contractual investment sub-advisory fee rates (the
"Sub-Advisory Agreement Rates") payable by Funds Management to Wells Capital
Management for investment sub-advisory services. In addition, the Board reviewed
and considered the existing fee waiver/cap arrangements applicable to the
Advisory Agreement Rates and considered the Advisory Agreement Rates after
taking the waivers/caps into account (the "Net Advisory Rates").
The Board received and considered information comparing the Advisory
Agreement Rates and Net Advisory Rates with those of the other funds in the Peer
Groups. The Board noted that the Advisory Agreement Rates and the Net Advisory
Rates for the Funds were lower than, or not appreciably higher than, the median
rates of each Fund's respective Peer Group. In addition, the Board concluded
that the combined investment advisory/administration fee rates for these Funds
(before and after waivers/caps and/or expense reimbursements) were each
reasonable in relation to each Fund's respective Peer Group, and reasonable in
relation to the services provided.
The Board also reviewed and considered the Sub-Advisory Agreement Rates
and concluded that the Sub-Advisory Agreement Rates were fair and equitable,
based on its consideration of the factors described above.
PROFITABILITY
Because the Funds had not yet commenced operations, the Board did not
consider the historical profitability with regard to Funds Management's
arrangements with the Funds. However, the Board received and considered a
detailed profitability analysis of Funds Management and its affiliates based on
similar advisory and other relationships between other series in the Trust and
Funds Management and its affiliates. The Board concluded that, in light of the
costs of providing investment management and other services to the other series,
the profits and other ancillary benefits that Funds Management and its
affiliates received with regard to providing these services to such series were
not unreasonable. The Board did not consider a separate profitability analysis
of Wells Capital Management as its separate profitability from its relationships
with the Funds was not a material factor in determining whether to renew the
agreements.
ECONOMIES OF SCALE
The Board received and considered information regarding the potential for
realization of any future economies of scale. However, the Board acknowledged
the inherent limitations of any analysis of an investment adviser's economies of
scale and of any attempt to correlate breakpoints with such economies, stemming
largely from the Board's understanding that economies of scale are realized, if
at all, by an investment adviser across a variety of products and services, not
just with respect to a single fund. The
33
Board concluded that any potential economies of scale will be shared reasonably
with Fund shareholders, including most particularly through Advisory Agreement
Rate breakpoints, which are applicable to the Funds.
INFORMATION ABOUT SERVICES TO OTHER CLIENTS
The Board also received and considered information about the nature,
extent and quality of services and fee rates offered by Funds Management to
other similarly situated series within the Trust, and those offered by Wells
Capital Management to other clients, including other registered investment
companies and separate accounts. The Board concluded that the Advisory Agreement
Rates, the Sub-Advisory Agreement Rates and the Net Advisory Rates were within a
reasonable range of the fee rates offered to others by Funds Management and
Wells Capital Management, giving effect to differences in services covered by
such fee rates.
OTHER BENEFITS TO FUNDS MANAGEMENT AND WELLS CAPITAL MANAGEMENT
The Board received and considered information regarding potential
"fall-out" or ancillary benefits received by Funds Management and its affiliates
(including Wells Capital Management) as a result of their relationship with the
Funds. Such benefits could include, among others, benefits directly attributable
to the relationship of Funds Management and Wells Capital Management with the
Funds (such as soft-dollar credits) and benefits potentially derived from an
increase in the business of Funds Management and Wells Capital Management as a
result of their relationship with the Funds (such as the ability to market to
shareholders other financial products offered by Funds Management and its
affiliates (including Wells Capital Management)).
The Board also considered the policies of the Funds in seeking the best
execution of portfolio transactions, whether and to what extent soft dollar
credits would be sought and how any such credits would be utilized, potential
benefits that may be realized by using an affiliated broker, and the controls
applicable to brokerage allocation procedures. The Board also took note of the
policies of Wells Capital Management regarding the anticipated allocation of
portfolio investment opportunities among the Funds and other clients.
OTHER FACTORS AND BROADER REVIEW
The Board also considered the markets for distribution of the Funds,
including the principal channels through which the Funds' shares would be
offered and sold. The Board noted that the Funds are now part of one of the few
fund families that have both direct-to-fund and intermediary distribution.
As discussed above, the Board reviewed detailed materials received from
Funds Management and Wells Capital Management in advance of the April 4, 2005
meeting as part of the re-approval process under Section 15 (c) of the 1940 Act.
The Board has also reviewed detailed materials from Funds Management and Wells
Capital Management, and met with various management representatives and
portfolio mangers, as part of its regular and special meeting cycle, and such
materials and meetings were also considered as part of the re-approval process.
After considering the above-described factors and based on its
deliberations and its evaluation of the information described above, the Board
concluded that approval of the continuation of the Advisory Agreements for each
of the Funds was in the best interest of the Funds and their shareholders.
Accordingly, the Board unanimously approved the continuation of the Advisory
Agreements.
34
LIST OF ABBREVIATIONS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
ABAG -- Association of Bay Area Governments
ADR -- American Depositary Receipt
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CMT -- Constant Maturity Treasury
COFI -- Cost of Funds Index
Connie Lee -- Connie Lee Insurance Company
COP -- Certificate of Participation
CP -- Commercial Paper
CTF -- Common Trust Fund
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
EDFA -- Education Finance Authority
FFCB -- Federal Farm Credit Bank
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FRN -- Floating Rate Notes
FSA -- Financial Security Assurance, Inc
GDR -- Global Depositary Receipt
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
IDA -- Industrial Development Authority
IDR -- Industrial Development Revenue
LIBOR -- London Interbank Offered Rate
LLC -- Limited Liability Corporation
LOC -- Letter of Credit
LP -- Limited Partnership
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MUD -- Municipal Utility District
MTN -- Medium Term Note
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PLC -- Private Placement
PSFG -- Public School Fund Guaranty
RAW -- Revenue Anticipation Warrants
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
R&D -- Research & Development
SFHR -- Single Family Housing Revenue
SFMR -- Single Family Mortgage Revenue
SLMA -- Student Loan Marketing Association
STEERS -- Structured Enhanced Return Trust
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
V/R -- Variable Rate
WEBS -- World Equity Benchmark Shares
XLCA -- XL Capital Assurance
35
THIS PAGE IS INTENTIONALLY LEFT BLANK --
THIS PAGE IS INTENTIONALLY LEFT BLANK --
THIS PAGE IS INTENTIONALLY LEFT BLANK --
WELLS ADVANTAGE
FARGO FUNDS
More information about Wells Fargo Advantage Funds (SM) This report and the financial statements contained
is available free upon request. To obtain literature, please herein are submitted for the general information
write, e-mail, or call: of the shareholders of the WELLS FARGO ADVANTAGE
FUNDS. If this report is used for promotional
WELLS FARGO ADVANTAGE FUNDS purposes, distribution of the report must be
P.O. Box 8266 accompanied or preceded by a current prospectus.
Boston, MA 02266-8266 For a prospectus containing more complete
information, including charges and expenses, call
E-mail: wfaf@wellsfargo.com 1-800-222-8222. Please consider the investment
Retail Investment Professionals: 888-877-9275 objective, risks, charges and expenses of the
Institutional Investment Professionals: 866-765-0778 investment carefully before investing. This and
Web: www.wellsfargo.com/advantagefunds other information about WELLS FARGO ADVANTAGE
FUNDS can be found in the current prospectus. Read
the prospectus carefully before you invest or send
money.
Wells Fargo Funds Management, LLC, a wholly- owned
subsidiary of Wells Fargo & Company, provides
investment advisory and administrative services
for the WELLS FARGO ADVANTAGE FUNDS. Other
affiliates of Wells Fargo & Company provide sub-
advisory and other services for the Funds. The
Funds are distributed by Wells Fargo Funds
Distributor, LLC, Member NASD/SIPC, an affiliate
of Wells Fargo & Company.
-----------------------------------------------------
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
-----------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
(c) 2005 Wells Fargo Advantage Funds, LLC. All rights reserved. | www.wellsfargo.com/advantagefunds | SM50926 06-05
SADVINC/WH2600 04-05
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
APRIL 30, 2005
SEMI-ANNUAL REPORT
WELLS FARGO ADVANTAGE INCOME FUNDS
Wells Fargo Advantage Corporate Bond Fund
Wells Fargo Advantage Government Securities Fund
Wells Fargo Advantage High Income Fund
Wells Fargo Advantage Short-Term Bond Fund
Wells Fargo Advantage Short-Term High Yield Bond Fund
Wells Fargo Advantage Ultra Short-Term Income Fund
WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
PLEASE NOTE THAT THIS REPORT COVERS A SIX-MONTH PERIOD OF TIME, THE MAJORITY OF
WHICH REPRESENTS A TIME PRIOR TO THE APRIL 11, 2005, REORGANIZATION WITH THE
STRONG FUNDS. STRONG CAPITAL MANAGEMENT, INC. PROVIDED INVESTMENT MANAGEMENT
SERVICES TO THESE FUNDS FROM THE BEGINNING OF THE REPORTING PERIOD THROUGH
DECEMBER 31, 2004, AFTER WHICH TIME WELLS FARGO FUNDS MANAGEMENT, LLC TOOK OVER
MANAGEMENT RESPONSIBILITIES THROUGH THE END OF THE REPORTING PERIOD.
TABLE OF CONTENTS
Letter to Shareholders.................................................... 1
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Performance Highlights
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Corporate Bond Fund.................................................... 2
Government Securities Fund............................................. 4
High Income Fund....................................................... 6
Short-Term Bond Fund................................................... 8
Short-Term High Yield Bond Fund........................................ 10
Ultra Short-Term Income Fund........................................... 12
Fund Expenses............................................................. 14
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Portfolio of Investments
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Corporate Bond Fund.................................................... 17
Government Securities Fund............................................. 23
High Income Fund....................................................... 30
Short-Term Bond Fund................................................... 35
Short-Term High Yield Bond Fund........................................ 44
Ultra Short-Term Income Fund........................................... 48
Financial Statements
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Statement of Assets and Liabilities.................................... 58
Statement of Operations................................................ 60
Statements of Changes in Net Assets.................................... 62
Financial Highlights................................................... 70
Notes to Financial Highlights............................................. 76
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Notes to Financial Statements............................................. 77
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Other Information......................................................... 87
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List of Abbreviations..................................................... 92
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NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE
-------------------------------------------------
THIS PAGE IS INTENTIONALLY LEFT BLANK --
LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
DEAR VALUED SHAREHOLDER,
I am pleased to introduce you to WELLS FARGO ADVANTAGE FUNDS(SM). You now
have access to an expanded array of mutual funds, giving you the flexibility to
invest in a family of funds covering nearly every asset class and investment
style. To learn more about our funds and the talented team of money managers
behind them, please visit our new Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
You can also call one of our investment service representatives now available 24
hours a day, 7 days a week, or speak with your investment professional.
Following is your WELLS FARGO ADVANTAGE INCOME FUNDS semi-annual report
for the six-month period ended April 30, 2005. On the following pages, you will
find a discussion of the Fund, including performance highlights, the Fund
managers' strategic outlook, and information about the Fund's portfolio.
THE ECONOMY: CONTINUED EXPANSION
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The U.S. economy continued to grow steadily, expanding by 4.4% in 2004.
During the first quarter of 2005, however, the economy grew by 3.1%, trailing
the 3.8% pace achieved during the last three months of 2004.
Part of that decline stemmed from the high cost of gasoline, which
continued to have a significant influence on consumer spending and the economy.
When the six-month period began, oil prices were declining from their recent
highs of $55 per barrel. After falling for two months, they rebounded sharply in
2005, setting new highs in April.
Higher energy prices were a key driver of inflation, which rose throughout
most of the period. "Core" inflation, however, which excludes volatile food and
energy prices, also trended upwards, but rose less quickly. With core inflation
manageable, the Federal Reserve Board (the Fed) continued its program of gradual
short-term interest rate increases. During the past six months, the Fed raised
rates four times, bringing the Federal funds rate, the interest rate at which a
depository institution lends immediately available funds to another depository
institution overnight, from 1.75% at the beginning of the period to 2.75% by
April 30, 2005.
STOCKS: APRIL SHOWERS
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The stock market's performance was up and down. Stocks began the period in
the midst of a rally driven by falling oil prices. The outcome of the U.S.
presidential election continued this rally, which lasted through the rest of
2004. But stocks turned in more mixed results in the first four months of 2005.
April was a particularly volatile environment for investors, who were
increasingly uneasy about rising energy costs, further economic slowing, higher
potential inflation, and rising interest rates. Moderate corporate earnings
growth contributed to concerns, as did the increasing likelihood that General
Motors (GM), the world's largest automobile manufacturer, would see its credit
rating downgraded to "junk" status. Highlighting the market's April volatility,
the Dow Jones Industrial Average saw seven moves of greater than 100 points on
the way to its worst monthly decline since January 2003. The S&P 500 Index fell
nearly 2% in April, but rose 3.28% during the full six-month period.
BONDS: LOOKING LONG
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The U.S. Treasury and municipal yield curves generally flattened during
the period, indicating that short-term bond yields were rising in line with the
Fed's rate increases while long-term bond yields fell, somewhat surprisingly.
Longer bonds benefited from investors' increasing conviction that inflation
could continue to be manageable and that the Fed would not need to raise
interest rates more quickly.
Municipal bonds generally outperformed their taxable counterparts and, at
period end, were offering historically attractive yields relative to U.S.
Treasuries. For the first four months of the period, corporate high-yield bonds
continued their strong performance. It was a different story in March and April.
Investors worried about the potential negative impact that a credit-rating
downgrade of GM and Ford would have on the high-yield market.
LOOKING AHEAD: LONG-TERM EXPANSION?
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Despite the economy's first quarter slowdown, we believe this represents a
temporary soft patch more than a continuing slowdown. As stock and bond
investors seek to determine where inflation, interest rates, and corporate
earnings are headed, we may see more unpredictable moves in the markets.
Uncertainty and risk will always be a part of investing. We believe an
important thing you can do to manage risk is to own a broadly diversified
portfolio with stocks, bonds, and cash that can help you weather unexpected
market shifts. While diversification may not prevent losses in a downturn, it
may help reduce them and keep you on track to reach your financial goals.
Thank you for choosing WELLS FARGO ADVANTAGE FUNDS. We appreciate your
confidence in us. Through each market cycle, we are committed to helping you
meet your financial needs. If you have any questions about your investment,
please contact your investment professional, or call us at 1-800-222-8222. You
may also visit our enhanced Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS
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WELLS FARGO ADVANTAGE CORPORATE BOND FUND
INVESTMENT OBJECTIVE
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The WELLS FARGO ADVANTAGE CORPORATE BOND FUND (the Fund) seeks current
income while maintaining prospects for capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
D. James Newton II, CFA, CPA 12/12/1985
Janet S. Rilling, CFA, CPA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
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The Fund's Investor Class shares returned 0.60%(1) for the six-month
period ended April 30, 2005, while its benchmarks, the Lehman Brothers U.S.
Aggregate Bond Index(2), returned 0.98%, and the Lehman Brothers U.S. Credit BAA
3% Issuer Capped Bond Index(3), returned (2.50)% during the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
ADVISOR CLASS, INSTITUTIONAL CLASS, AND INVESTOR CLASS SHARES ARE SOLD
WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES
AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S
CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
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The period started on a positive note, with improving balance sheets, good
corporate earnings, strong demand for corporate bonds, and a solid economy.
However, as 2005 unfolded, the pace of shareholder-friendly activity picked up.
This activity, which included share repurchases, stock buybacks, and leveraged
buyouts, was increasingly harmful to the interests of bondholders.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
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Four important management factors regularly affect the performance of the
Corporate Bond Fund: duration, yield curve positioning, industry weightings, and
security selection. During the past six months, yield curve positioning,
industry weightings, and security selection had the most significant influence
on the Fund's performance.
Our yield curve positioning had a positive impact on the Fund's
performance. During the period, we employed a curve flattener strategy, meaning
that we were underweight shorter maturity securities, as compared to the
benchmark, and overweight securities with longer maturities. This strategy
proved successful as the Federal Reserve Board's rate hikes caused short-term
rates to rise while long-term rates fell.
Our positioning in the auto sector--the worst-performing group during the
period--also added to performance relative to the benchmark. When the period
began, the portfolio was moderately overweight the sector. However, we reduced
our auto holdings during the period as the operating performance of General
Motors and Ford deteriorated at a quicker-than-anticipated pace. Our holdings in
the cable sector also benefited the portfolio as a result of their solid
operating results and strong cash flow generation.
Our holdings in the supermarket sector, on the other hand, had a negative
impact on performance. We held an overweight position in supermarket bonds
because we believed companies such as Safeway, Kroger, and Albertson's were
going to maintain solid credit quality in order to effectively compete with
Wal-Mart. During the period, however, bond investors became increasingly
concerned about the potential for leveraged buyouts in the sector.
Underweighting the airline sector also detracted from performance. We continued
to avoid this sector because of concerns about high fuel costs and the airline
companies' poor financial condition. But, the sector actually performed well
during the period. It benefited from Delta's ability to avert a bankruptcy
filing and from improving valuations on the airplanes that secure much of the
outstanding airline debt.
Of final note, the Fund also invested in fixed-income derivative
securities--primarily exchange-traded U.S. Treasury futures contracts and
exchange-traded Eurodollar futures contracts--to help manage the portfolio's
duration.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
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The outlook for the corporate bond market is generally mixed. Corporate
management teams are increasingly using leverage to help benefit shareholders, a
trend we are monitoring closely. The condition of auto companies, primarily
General Motors and Ford, is another headwind as the companies' credit ratings
migrate to the below investment-grade category. On a positive note, we expect
corporate earnings and cash flow to remain strong if the economy stays
supportive. We believe the modest supply of new corporate bonds is another
positive factor for the corporate bond market.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC
CONDITIONS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN HIGHER THAN
AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY GENERATE
HIGHER SHORT-TERM CAPITAL GAINS. INVESTMENT STRATEGIES THAT CONCENTRATE IN
PARTICULAR MARKET SEGMENTS OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK
OF AN INVESTMENT (RELATIVE TO THE BROADER MARKET). THIS FUND IS EXPOSED TO HIGH
YIELD BOND RISK AND INTERNATIONAL RISK. CONSULT THE FUND'S PROSPECTUS FOR
ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
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The views expressed are as of April 30, 2005, and are those of the Fund's
managers. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE CORPORATE BOND FUND.
2
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS
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AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
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Excluding Sales Charge
---------------------------------------
6-Month* 1-Year 5-Year 10-Year
------- ------ ------ -------
Corporate Bond Fund - Advisor Class 0.50 5.60 6.27 7.00
Corporate Bond Fund - Institutional Class 0.81 6.16 6.87 7.44
Corporate Bond Fund - Investor Class 0.60 5.77 6.42 7.19
Benchmarks
Lehman Brothers U.S. Aggregate Bond Index(2) 0.98 5.26 7.49 7.14
Lehman Brothers U.S. Credit BAA 3% Issuer Capped Bond Index(3) (2.50) 3.01 8.22 7.46
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(4) (AS OF APRIL 30, 2005)
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Portfolio Turnover 75%
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Average Credit Quality(5) BAA2
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Weighted Average Coupon 6.71%
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Estimated Weighted Average Life 11.72 Years
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Estimated Average Duration 6.17 Years
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Net Asset Value (NAV) (Adv, Inst, Inv Class) $10.48, $10.47, $10.49
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Distribution Rate(6) (Adv, Inst, Inv Class) 4.87%, 4.97%, 5.01%
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30-Day SEC Yield(7) (Adv, Inst, Inv Class) 4.69%, 5.00%, 4.70%
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PORTFOLIO ALLOCATION(4) (AS OF APRIL 30, 2005)
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[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
U.S. Treasury Bonds 2%
Municipal Bonds 1%
Corporate Bonds 91%
Collateralized Mortgage Securities 1%
Cash Management 2%
U.S. Treasury Notes 3%
GROWTH OF $10,000 INVESTMENT(8) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO LEHMAN BROTHERS
ADVANTAGE CORPORATE LEHMAN BROTHERS U.S. CREDIT BAA 3%
BOND FUND - U.S. AGGREGATE ISSUER CAPPED
INVESTOR CLASS BOND INDEX BOND INDEX
------------------- --------------- ------------------
4/30/1995 10,000 10,000 10,000
5/31/1995 10,461 10,387 10,480
6/30/1995 10,575 10,463 10,583
7/31/1995 10,567 10,440 10,553
8/31/1995 10,753 10,566 10,726
9/30/1995 10,885 10,668 10,860
10/31/1995 11,072 10,807 10,960
11/30/1995 11,246 10,969 11,167
12/31/1995 11,542 11,123 11,356
1/31/1996 11,619 11,197 11,421
2/29/1996 11,357 11,002 11,159
3/31/1996 11,275 10,926 11,074
4/30/1996 11,203 10,864 10,981
5/31/1996 11,186 10,842 10,977
6/30/1996 11,306 10,988 11,142
7/31/1996 11,392 11,018 11,171
8/31/1996 11,416 11,000 11,140
9/30/1996 11,650 11,191 11,385
10/31/1996 11,956 11,439 11,709
11/30/1996 12,253 11,635 11,976
12/31/1996 12,180 11,527 11,813
1/31/1997 12,284 11,562 11,843
2/28/1997 12,390 11,591 11,909
3/31/1997 12,177 11,462 11,723
4/30/1997 12,341 11,634 11,900
5/31/1997 12,517 11,744 12,044
6/30/1997 12,717 11,884 12,225
7/31/1997 13,186 12,204 12,691
8/31/1997 13,043 12,100 12,501
9/30/1997 13,247 12,278 12,731
10/31/1997 13,331 12,456 12,898
11/30/1997 13,434 12,514 12,967
12/31/1997 13,627 12,640 13,123
1/31/1998 13,838 12,802 13,246
2/28/1998 13,830 12,792 13,240
3/31/1998 13,877 12,836 13,284
4/30/1998 13,953 12,903 13,373
5/31/1998 14,179 13,026 13,531
6/30/1998 14,317 13,136 13,612
7/31/1998 14,309 13,164 13,592
8/31/1998 14,302 13,378 13,562
9/30/1998 14,549 13,692 13,975
10/31/1998 14,243 13,619 13,702
11/30/1998 14,484 13,697 13,984
12/31/1998 14,615 13,738 14,022
1/31/1999 14,814 13,836 14,207
2/28/1999 14,505 13,594 13,894
3/31/1999 14,675 13,670 14,037
4/30/1999 14,768 13,713 14,119
5/31/1999 14,535 13,593 13,922
6/30/1999 14,451 13,549 13,853
7/31/1999 14,451 13,492 13,785
8/31/1999 14,357 13,485 13,725
9/30/1999 14,499 13,642 13,875
10/31/1999 14,554 13,692 13,927
11/30/1999 14,591 13,691 13,956
12/31/1999 14,581 13,625 13,906
1/31/2000 14,579 13,580 13,871
2/29/2000 14,747 13,745 14,009
3/31/2000 14,821 13,925 14,082
4/30/2000 14,673 13,886 13,847
5/31/2000 14,503 13,879 13,784
6/30/2000 15,014 14,168 14,215
7/31/2000 15,211 14,297 14,395
8/31/2000 15,403 14,504 14,562
9/30/2000 15,427 14,596 14,598
10/31/2000 15,388 14,692 14,541
11/30/2000 15,435 14,933 14,699
12/31/2000 15,732 15,211 14,938
1/31/2001 16,258 15,460 15,387
2/28/2001 16,421 15,595 15,518
3/31/2001 16,519 15,673 15,602
4/30/2001 16,505 15,607 15,544
5/31/2001 16,662 15,700 15,721
6/30/2001 16,637 15,760 15,822
7/31/2001 17,138 16,113 16,252
8/31/2001 17,227 16,298 16,481
9/30/2001 16,828 16,489 16,285
10/31/2001 17,095 16,834 16,737
11/30/2001 16,952 16,601 16,570
12/31/2001 16,806 16,495 16,463
1/31/2002 16,703 16,629 16,596
2/28/2002 16,641 16,790 16,664
3/31/2002 16,299 16,511 16,393
4/30/2002 16,326 16,832 16,624
5/31/2002 16,427 16,975 16,834
6/30/2002 16,135 17,122 16,642
7/31/2002 15,612 17,328 16,271
8/31/2002 16,068 17,621 16,851
9/30/2002 16,274 17,906 17,091
10/31/2002 16,119 17,825 16,889
11/30/2002 16,486 17,820 17,314
12/31/2002 17,039 18,188 17,876
1/31/2003 17,119 18,203 17,973
2/28/2003 17,532 18,455 18,383
3/31/2003 17,657 18,441 18,483
4/30/2003 18,076 18,593 18,994
5/31/2003 18,692 18,939 19,701
6/30/2003 18,677 18,901 19,692
7/31/2003 17,827 18,266 18,807
8/31/2003 18,016 18,387 18,992
9/30/2003 18,706 18,874 19,745
10/31/2003 18,536 18,698 19,562
11/30/2003 18,685 18,743 19,687
12/31/2003 18,997 18,934 19,932
1/31/2004 19,217 19,086 20,166
2/29/2004 19,412 19,293 20,431
3/31/2004 19,581 19,438 20,632
4/30/2004 18,932 18,932 19,950
5/31/2004 18,748 18,857 19,795
6/30/2004 18,842 18,964 19,883
7/31/2004 19,103 19,152 20,170
8/31/2004 19,545 19,518 20,685
9/30/2004 19,674 19,570 20,843
10/31/2004 19,906 19,735 21,079
11/30/2004 19,777 19,577 20,887
12/31/2004 20,101 19,757 20,556
1/31/2005 20,286 19,881 20,758
2/28/2005 20,205 19,764 20,657
3/31/2005 19,848 19,663 20,308
4/30/2005 20,025 19,929 20,551
- --------------------------------------------------------------------------------
(1) The Fund's Adviser has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Performance shown for the Advisor Class, Institutional Class and Investor
Class shares, respectively, of the WELLS FARGO ADVANTAGE CORPORATE BOND FUND for
periods prior to April 11, 2005, reflects the performance of the Advisor Class,
Institutional Class and Investor Class shares of the Strong Corporate Bond Fund,
its predecessor fund. Effective at the close of business on April 8, 2005,
certain Strong Funds were reorganized into certain WELLS FARGO ADVANTAGE FUNDS.
Performance shown for the Advisor Class shares of the Fund for periods prior to
August 31, 1999, reflects the performance of the predecessor fund's Investor
Class shares, adjusted to reflect expenses of the Advisor Class. Performance
shown for the Institutional Class shares of the Fund for periods prior to August
31, 1999, reflects the performance of the predecessor fund's Investor Class
shares, and has not been adjusted for the lower expenses of the Institutional
Class.
(2) Lehman Brothers U.S. Aggregate Bond Index represents securities that are
SEC-registered, taxable, and dollar denominated. The index covers the U.S.
investment grade fixed rate bond market, with index components for government
and corporate securities, mortgage pass-through securities, and asset-backed
securities. These major sectors are subdivided into more specific indices that
are calculated and reported on a regular basis. You cannot invest directly in an
index.
(3) Lehman Brothers U.S. Credit BAA 3% Issuer Capped Bond Index is the BAA
component of the U.S. Credit index, which contains publicly issued U.S.
corporate and specified foreign debentures and secured notes that meet the
specified maturity, liquidity, and quality requirements. To qualify, bonds must
be SEC-registered. Each qualified issuer's exposure is then capped on a
market-weighted basis at 3%, and the residual is allocated on a pro-rata basis
to all remaining constituents. You cannot invest directly in an index.
(4) Portfolio holdings and characteristics are subject to change.
(5) The average credit quality is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(8) The chart compares the performance of the WELLS FARGO ADVANTAGE CORPORATE
BOND FUND Investor Class for the most recent ten years with the Lehman Brothers
U.S. Aggregate Bond Index and Lehman Brothers U.S. Credit BAA 3% Issuer Capped
Bond Index. The chart assumes a hypothetical investment of $10,000 in the
Investor Class shares and reflects all operating expenses.
3
WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND (the Fund) seeks
current income.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
W. Frank Koster 10/29/1986
Jay N. Mueller, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 1.07%(1) for the six-month
period ended April 30, 2005, outperforming its benchmark, the Lehman Brothers
Intermediate U.S. Government Index(2), which returned 0.09% and outperforming
the Lehman Brothers U.S. Aggregate Bond Index(3), which returned 0.98% for the
same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF 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
WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
FOR CLASS C SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%.
PERFORMANCE INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE
CORRESPONDING TIME PERIOD. ADMINISTRATOR CLASS, ADVISOR CLASS, INSTITUTIONAL
CLASS, AND INVESTOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR
CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT
IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The most pronounced feature of the market for U.S. government securities
over the past six months was the divergence between short-term and long-term
interest rates. Following the lead of the Federal Reserve Board, which
implemented four more increases of 0.25% each to the target federal funds rate,
three-month U.S. Treasury bill rates rose from just under 2% to nearly 3%.
Yields on two- and three-year U.S. Treasury notes climbed by a similar amount.
By contrast, the yield on the longest outstanding U.S. Treasury bond, due in
2031, actually declined by more than a quarter of a percent.
The Fund was reasonably well positioned for this period of yield curve
flattening, or the narrowing of spreads between the yields of securities with
different durations. Significant holdings in U.S. Treasuries with maturity dates
of 2023, 2026, and 2031 allowed us to participate in the gains at the long end
of the curve. Moreover, an overall average portfolio duration less than that of
our benchmark index gave the Fund a degree of relief from the price erosion
experienced in intermediate and short-term bonds.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
In addition to the yield-curve and average-duration positions noted above,
we achieved incremental return through sector allocation decisions and
individual issue selection. Relative to the broad-based benchmark, we
overweighted mortgage-backed securities (MBS) throughout the period, a decision
that was rewarded despite a modest widening of spreads for the mortgage market
as a whole. We also found several opportunities in floating-rate MBS that meshed
well with our views on the shape of the yield curve and overall direction of
interest rates.
Detracting from performance was our relative fewer holdings in the debt of
U.S. government-sponsored agencies such as Fannie Mae and Freddie Mac. We were
concerned about the potential for unfavorable legislative and regulatory events
for the agencies, as well as the potential stress on their balance sheets from
rising short-term interest rates. Though Fannie Mae and Freddie Mac drew some
negative headlines over the last six months, their debt securities actually
performed well.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We expect the economic climate to remain reasonably bright in the coming
months, with growth expected to be in the neighborhood of 3.5% and employment
conditions continuing to improve gradually. Our biggest concern is the
persistence of inflationary pressures, which may not be isolated to energy and
other commodity prices.
Against this backdrop, we believe the Federal Reserve will probably feel
compelled to raise its federal funds rate target several more times. Unless
inflation substantially worsens, the tightening of monetary policy should lead
to more flattening in the yield curve. If this scenario plays out as we expect,
our strategies for the Fund will be similar to those pursued over the last six
months: a shorter-than-benchmark duration, with a modest overweighting in
longer-maturity bonds.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC
CONDITIONS. THE U.S. GOVERNMENT GUARANTEE APPLIES TO CERTAIN UNDERLYING
SECURITIES AND NOT TO SHARES OF THE FUND. THE FUND'S INVESTMENT PROCESS MAY, AT
TIMES, RESULT IN HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING
EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM CAPITAL GAINS. CONSULT THE FUND'S
PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of April 30, 2005, and are those of the Fund's
managers. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND.
(1) The Fund's Adviser has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Performance shown for the Class C, Administrator Class, Advisor Class,
Institutional Class and Investor Class shares of the WELLS FARGO ADVANTAGE
GOVERNMENT SECURITIES FUND for periods prior to April 11, 2005, reflects the
performance of the Class C, Investor Class, Advisor Class, Institutional Class
and Investor Class shares, respectively, of the Strong Government Securities
Fund, its predecessor fund. Effective at the close of business on April 8, 2005,
certain Strong Funds were reorganized into certain WELLS FARGO ADVANTAGE FUNDS.
Performance shown for the Class C shares of the Fund for periods prior to
December 26, 2002, reflects the performance of the predecessor fund's Investor
Cass shares, adjusted to reflect the Class C shares sales charges and expenses.
Performance shown for the Administrator Class shares reflects the performance of
the predecessor fund's Investor Class shares, and includes expenses that are not
applicable to and are higher than those of the Administrator Class shares. The
Investor Class shares annual returns are substantially similar to what the
Administrator Class shares would be because the shares are invested in the same
portfolio of securities and the annual returns differ only to the extent the
Classes do not have the same expenses. Performance shown for the Advisor Class
shares of the Fund for periods prior to August 31, 1999, reflects the
performance of the predecessor fund's Investor Class shares, adjusted to reflect
the expenses of the Advisor Class. Performance shown for the Institutional Class
shares of the Fund for periods prior to August 31, 1999, reflects the
performance of the predecessor fund's Investor Class shares and has not been
adjusted for the lower expenses of the Institutional Class.
(2) The Lehman Brothers Intermediate U.S. Government Index is an unmanaged
index composed of U.S. Government securities with maturities in the one- to
ten-year range, including securities issued by the U.S. Treasury and U.S.
Government agencies. You cannot invest directly in an index.
4
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
------------------------------------ ------------------------------------
6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year
-------- ------ ------ ------- -------- ------ ------ -------
Government Securities Fund - Class C (0.61) 2.36 5.92 5.62 0.39 3.36 5.92 5.62
Government Securities Fund - Administrator Class 1.09 4.90 7.30 6.91
Government Securities Fund - Advisor Class 0.95 4.43 6.88 6.51
Government Securities Fund - Institutional Class 1.22 5.13 7.57 7.06
Government Securities Fund - Investor Class 1.07 4.63 7.08 6.77
Benchmarks
Lehman Brothers Intermediate U.S.
Government Index(2) 0.09 2.91 6.34 6.25
Lehman Brothers U.S. Aggregate Bond Index(3) 0.98 5.26 7.49 7.14
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Portfolio Turnover 111%
- --------------------------------------------------------------------------------
Average Credit Quality(5) AA1
- --------------------------------------------------------------------------------
Weighted Average Coupon 6.36%
- --------------------------------------------------------------------------------
Estimated Weighted Average Life 3.83 Years
- --------------------------------------------------------------------------------
Estimated Average Duration 3.62 Years
- --------------------------------------------------------------------------------
Net Asset Value (NAV)
(Class C, Admin, Adv, Inst, Inv) $10.71, $10.71, $10.71, $10.71, $10.72
- --------------------------------------------------------------------------------
Distribution Rate(6)
(Class C, Admin, Adv, Inst, Inv) 1.35%, N/A, 4.18%, 4.32%, 4.20%
- --------------------------------------------------------------------------------
30-Day SEC Yield(7)
(Class C, Admin, Adv, Inst, Inv) 2.55%, N/A, 3.45%, 3.83%, 3.41%
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Asset-Backed Securities 3%
Collateralized Mortgage Securities 7%
Cash Management 6%
U.S. Treasury Notes 2%
U.S. Treasury Bonds 14%
Corporate Bonds 1%
FHLB 1%
GNMA 3%
FNMA 48%
FHLMC 13%
Municipal Bonds 2%
GROWTH OF $10,000 INVESTMENT(8) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO
ADVANTAGE GOVERNMENT LEHMAN BROTHERS LEHMAN BROTHERS
SECURITIES FUND - U.S. AGGREGATE INTERMEDIATE
INVESTOR CLASS BOND INDEX GOVERNMENT INDEX
------------------- ---------------- -------------------
4/30/1995 10,000 10,000 10,000
5/31/1995 10,391 10,387 10,282
6/30/1995 10,475 10,463 10,347
7/31/1995 10,454 10,440 10,352
8/31/1995 10,600 10,566 10,438
9/30/1995 10,706 10,668 10,508
10/31/1995 10,845 10,807 10,623
11/30/1995 11,009 10,969 10,753
12/31/1995 11,187 11,123 10,859
1/31/1996 11,238 11,197 10,950
2/29/1996 11,007 11,002 10,835
3/31/1996 10,943 10,926 10,785
4/30/1996 10,870 10,864 10,754
5/31/1996 10,812 10,842 10,748
6/30/1996 10,895 10,988 10,857
7/31/1996 10,940 11,018 10,891
8/31/1996 10,935 11,000 10,903
9/30/1996 11,102 11,191 11,044
10/31/1996 11,343 11,439 11,225
11/30/1996 11,575 11,635 11,361
12/31/1996 11,502 11,527 11,300
1/31/1997 11,556 11,562 11,343
2/28/1997 11,603 11,591 11,362
3/31/1997 11,484 11,462 11,297
4/30/1997 11,603 11,634 11,424
5/31/1997 11,697 11,744 11,513
6/30/1997 11,835 11,884 11,612
7/31/1997 12,166 12,204 11,826
8/31/1997 12,068 12,100 11,781
9/30/1997 12,238 12,278 11,909
10/31/1997 12,370 12,456 12,048
11/30/1997 12,424 12,514 12,074
12/31/1997 12,543 12,640 12,172
1/31/1998 12,714 12,802 12,331
2/28/1998 12,700 12,792 12,318
3/31/1998 12,729 12,836 12,357
4/30/1998 12,797 12,903 12,415
5/31/1998 12,916 13,026 12,501
6/30/1998 13,033 13,136 12,585
7/31/1998 13,051 13,164 12,633
8/31/1998 13,288 13,378 12,872
9/30/1998 13,576 13,692 13,173
10/31/1998 13,489 13,619 13,195
11/30/1998 13,525 13,697 13,154
12/31/1998 13,563 13,738 13,205
1/31/1999 13,653 13,836 13,264
2/28/1999 13,404 13,594 13,082
3/31/1999 13,491 13,670 13,169
4/30/1999 13,524 13,713 13,205
5/31/1999 13,412 13,593 13,124
6/30/1999 13,385 13,549 13,143
7/31/1999 13,355 13,492 13,145
8/31/1999 13,328 13,485 13,163
9/30/1999 13,460 13,642 13,276
10/31/1999 13,483 13,692 13,302
11/30/1999 13,464 13,691 13,312
12/31/1999 13,416 13,625 13,270
1/31/2000 13,396 13,580 13,225
2/29/2000 13,545 13,745 13,335
3/31/2000 13,712 13,925 13,487
4/30/2000 13,680 13,886 13,481
5/31/2000 13,655 13,879 13,517
6/30/2000 13,916 14,168 13,732
7/31/2000 14,033 14,297 13,823
8/31/2000 14,212 14,504 13,978
9/30/2000 14,306 14,596 14,099
10/31/2000 14,425 14,692 14,197
11/30/2000 14,664 14,933 14,405
12/31/2000 14,935 15,211 14,659
1/31/2001 15,158 15,460 14,854
2/28/2001 15,295 15,595 14,991
3/31/2001 15,383 15,673 15,098
4/30/2001 15,292 15,607 15,050
5/31/2001 15,373 15,700 15,112
6/30/2001 15,426 15,760 15,160
7/31/2001 15,765 16,113 15,444
8/31/2001 15,952 16,298 15,581
9/30/2001 16,198 16,489 15,913
10/31/2001 16,571 16,834 16,161
11/30/2001 16,331 16,601 15,969
12/31/2001 16,242 16,495 15,892
1/31/2002 16,334 16,629 15,961
2/28/2002 16,485 16,790 16,092
3/31/2002 16,168 16,511 15,849
4/30/2002 16,535 16,832 16,145
5/31/2002 16,666 16,975 16,258
6/30/2002 16,849 17,122 16,461
7/31/2002 17,187 17,328 16,771
8/31/2002 17,466 17,621 16,963
9/30/2002 17,797 17,906 17,254
10/31/2002 17,726 17,825 17,243
11/30/2002 17,606 17,820 17,106
12/31/2002 17,940 18,188 17,422
1/31/2003 17,943 18,203 17,384
2/28/2003 18,179 18,455 17,580
3/31/2003 18,158 18,441 17,584
4/30/2003 18,253 18,593 17,633
5/31/2003 18,612 18,939 17,910
6/30/2003 18,526 18,901 17,881
7/31/2003 17,901 18,266 17,447
8/31/2003 17,999 18,387 17,478
9/30/2003 18,471 18,874 17,858
10/31/2003 18,255 18,698 17,683
11/30/2003 18,268 18,743 17,684
12/31/2003 18,442 18,934 17,822
1/31/2004 18,590 19,086 17,919
2/29/2004 18,806 19,293 18,089
3/31/2004 18,946 19,438 18,215
4/30/2004 18,405 18,932 17,807
5/31/2004 18,332 18,857 17,750
6/30/2004 18,418 18,964 17,795
7/31/2004 18,560 19,152 17,923
8/31/2004 18,887 19,518 18,188
9/30/2004 18,958 19,570 18,195
10/31/2004 19,054 19,735 18,306
11/30/2004 18,919 19,577 18,136
12/31/2004 19,050 19,757 18,234
1/31/2005 19,157 19,881 18,258
2/28/2005 19,057 19,764 18,156
3/31/2005 19,012 19,663 18,110
4/30/2005 19,257 19,929 18,322
- --------------------------------------------------------------------------------
(3) The Lehman Brothers U.S. Aggregate Bond Index represents securities that are
SEC-registered, taxable, and dollar denominated. The index covers the U.S.
investment grade fixed rate bond market, with components for government and
corporate securities, mortgage pass-through securities, and asset-backed
securities. These major sectors are subdivided into more specific indices that
are calculated and reported on a regular basis. You cannot invest directly in an
index.
(4) Portfolio holdings and characteristics are subject to change.
(5) The average credit quality is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(8) The chart compares the performance of the WELLS FARGO ADVANTAGE GOVERNMENT
SECURITIES FUND Investor Class shares for the most recent ten years with the
Lehman Brothers Intermediate U.S. Government Index and Lehman Brothers U.S.
Aggregate Bond Index. The chart assumes a hypothetical investment of $10,000 in
the Investor Class shares and reflects all operating expenses.
5
WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE HIGH INCOME FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE HIGH INCOME FUND (the Fund) seeks total return
with a high level of current income.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
Thomas M. Price, CFA 12/28/1995
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 0.10%(1) for the six-month
period ended April 30, 2005, outperforming its benchmark, the Lehman Brothers
U.S. High-Yield Index(2), which returned (0.18)%.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
ADVISOR CLASS, INSTITUTIONAL CLASS AND INVESTOR CLASS SHARES ARE SOLD
WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES
AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S
CURRENT PROSPECTUS.
THE FUND HAS A REDEMPTION FEE OF 2.00% DEDUCTED FROM THE NET PROCEEDS OF
SHARES REDEEMED OR EXCHANGED WITHIN 30 DAYS AFTER PURCHASE. PERFORMANCE DATA
DOES NOT REFLECT THE DEDUCTION OF THIS FEE, WHICH, IF REFLECTED, WOULD REDUCE
THE PERFORMANCE.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The high-yield market was strong through early March, with spreads
narrowing to record levels relative to U.S. Treasuries. The strength was due to
solid economic growth, good corporate earnings, and low default rates, as well
as strong demand from institutional investors looking for higher yields.
Absolute returns were limited, however, as the 10-year U.S. Treasury started the
period at 4.03% before climbing to 4.52% on March 9, 2005, when spreads were
tightest.
The last seven weeks of the period featured a reversal of the market
trends in evidence until then. Although we believed the market was becoming
overvalued, it was difficult to identify the catalyst that was going to drive
the market lower in the near-term. The catalyst was General Motors (GM), which
announced weaker-than-expected February sales in early March, followed by lower
earnings guidance for all of 2005. The increasing possibility of GM debt being
downgraded to high-yield status, along with the realization that GM would
represent more than 6 percent of the benchmark if such a downgrade occurred,
caused lower bond prices for GM to carry over to the high-yield market. The
10-year U.S. Treasury did rally to 4.20%, but investors' concern about weaker
credit conditions drove high-yield prices lower despite higher U.S. Treasury
prices.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
During the period, we became increasingly concerned that bond investors
were overestimating the strength in the economy. Quarterly economic growth was
solid on an absolute basis. However, we were concerned with the recent trend
toward slower growth, particularly during a period with high commodity prices
and rising short-term interest rates. Accordingly, we slowly increased the
Fund's credit quality but kept an overweighted position in B-rated securities
and underweighted higher-quality BB-rated bonds. We also increased the Fund's
weighting in floating-rate securities to approximately 15% to help protect
against higher rates. This exposure hindered performance until the market
weakened at the end of the period.
From an industry standpoint, we continued to maintain the Fund's
overweighting in several cyclical industries--including chemicals, metals, and
other industrials--to potentially benefit from current economic growth and
higher commodity prices. Conversely, we meaningfully underweighted the
automotive, airline, technology, and utility industries.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Given our positive outlook for economic growth for the remainder of 2005
and interest rates near historically low levels, we believe demand for
high-yield bonds could remain at reasonably healthy levels. However, a few
factors continue to weigh on the market. The biggest concern is that GM and
potentially Ford might become high-yield credits and, given their size, drive
bond prices lower. Moreover, additional rate hikes from the Federal Reserve
Board (the Fed) could lead to weaker economic conditions and possibly discourage
hedge fund investors, who have been an important source of demand for high-yield
securities. If demand from this group were to deteriorate significantly,
high-yield prices could slide further.
We expect to continue on our recent path of allocating a portion of the
portfolio to floating-rate securities to potentially benefit from continued Fed
tightening. Additionally, we anticipate repositioning the portfolio into
higher-quality securities and into industries that we expect may outperform in
the current difficult conditions.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC
CONDITIONS. INVESTMENT STRATEGIES THAT CONCENTRATE IN PARTICULAR MARKET SEGMENTS
OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE
TO THE BROADER MARKET). THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN
HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY
GENERATE HIGHER SHORT-TERM CAPITAL GAINS. THIS FUND IS EXPOSED TO HIGH YIELD
BOND RISK AND INTERNATIONAL RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL
INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of April 30, 2005, and are those of the Fund's
manager. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE HIGH INCOME FUND.
6
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Excluding Sales Charge
-----------------------------------------
6-Month* 1-Year 5-Year Life of Fund
------- ------ ------ ------------
High Income Fund - Advisor Class (incept. 12/28/1995) (0.10) 5.80 2.97 6.85
High Income Fund - Institutional Class (incept. 12/28/1995) 0.49 6.77 3.69 7.39
High Income Fund - Investor Class (incept. 12/28/1995) 0.10 5.90 3.21 7.13
Benchmark
Lehman Brothers U.S. High-Yield Index(2) 0.08 6.52 6.88 6.42
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Portfolio Turnover 48%
- --------------------------------------------------------------------------------
Average Credit Quality(4) B2
- --------------------------------------------------------------------------------
Weighted Average Coupon 7.76%
- --------------------------------------------------------------------------------
Estimated Weighted Average Life 5.12 Years
- --------------------------------------------------------------------------------
Estimated Average Duration 4.06 Years
- --------------------------------------------------------------------------------
Net Asset Value (NAV) (Adv, Inst, Inv Class) $7.58, $7.64, $7.61
- --------------------------------------------------------------------------------
Distribution Rate(5) (Adv, Inst, Inv Class) 6.99%, 7.43%, 7.11%
- --------------------------------------------------------------------------------
30-Day SEC Yield(6) (Adv, Inst, Inv Class) 6.80%, 7.29%, 6.87%
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Cash equivalents 8%
Cash Management 3%
Corporate Bonds 89%
GROWTH OF $10,000 INVESTMENT(7) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE HIGH LEHMAN BROTHERS U.S.
INCOME - INVESTOR CLASS HIGH-YIELD BOND INDEX
-------------------------- ---------------------
12/28/1995 10,000 10,000
12/31/1995 10,031 10,005
1/31/1996 10,444 10,181
2/29/1996 10,767 10,189
3/31/1996 10,850 10,182
4/30/1996 11,001 10,205
5/31/1996 11,271 10,266
6/30/1996 11,425 10,351
7/31/1996 11,496 10,399
8/31/1996 11,681 10,512
9/30/1996 12,076 10,765
10/31/1996 12,166 10,848
11/30/1996 12,447 11,062
12/31/1996 12,723 11,141
1/31/1997 12,944 11,250
2/28/1997 13,216 11,436
3/31/1997 12,917 11,265
4/30/1997 13,049 11,384
5/31/1997 13,379 11,628
6/30/1997 13,605 11,789
7/31/1997 13,954 12,113
8/31/1997 14,018 12,085
9/30/1997 14,358 12,325
10/31/1997 14,274 12,336
11/30/1997 14,482 12,453
12/31/1997 14,754 12,563
1/31/1998 15,100 12,789
2/28/1998 15,202 12,864
3/31/1998 15,406 12,985
4/30/1998 15,471 13,036
5/31/1998 15,577 13,081
6/30/1998 15,648 13,128
7/31/1998 15,812 13,203
8/31/1998 14,779 12,474
9/30/1998 14,816 12,531
10/31/1998 14,399 12,274
11/30/1998 15,258 12,783
12/31/1998 15,206 12,797
1/31/1999 15,569 12,987
2/28/1999 15,485 12,911
3/31/1999 15,757 13,034
4/30/1999 16,104 13,286
5/31/1999 15,855 13,107
6/30/1999 15,876 13,079
7/31/1999 15,890 13,131
8/31/1999 15,833 12,986
9/30/1999 15,734 12,893
10/31/1999 15,804 12,807
11/30/1999 16,068 12,958
12/31/1999 16,394 13,103
1/31/2000 16,429 13,047
2/29/2000 16,637 13,072
3/31/2000 16,158 12,797
4/30/2000 16,238 12,818
5/31/2000 16,125 12,686
6/30/2000 16,510 12,945
7/31/2000 16,548 13,043
8/31/2000 16,738 13,133
9/30/2000 16,631 13,018
10/31/2000 16,110 12,601
11/30/2000 14,733 12,102
12/31/2000 15,234 12,336
1/31/2001 16,812 13,260
2/28/2001 16,856 13,436
3/31/2001 16,247 13,120
4/30/2001 16,068 12,957
5/31/2001 16,137 13,190
6/30/2001 15,431 12,820
7/31/2001 15,521 13,009
8/31/2001 15,589 13,162
9/30/2001 14,225 12,277
10/31/2001 14,491 12,581
11/30/2001 15,144 13,040
12/31/2001 15,126 12,987
1/31/2002 15,330 13,077
2/28/2002 14,998 12,895
3/31/2002 15,163 13,205
4/30/2002 15,151 13,411
5/31/2002 14,849 13,342
6/30/2002 13,807 12,358
7/31/2002 13,206 11,818
8/31/2002 13,307 12,155
9/30/2002 13,188 11,996
10/31/2002 13,166 11,891
11/30/2002 13,986 12,628
12/31/2002 14,119 12,804
1/31/2003 14,406 13,230
2/28/2003 14,679 13,394
3/31/2003 15,055 13,779
4/30/2003 15,735 14,596
5/31/2003 15,768 14,747
6/30/2003 16,237 15,171
7/31/2003 16,073 15,005
8/31/2003 16,238 15,177
9/30/2003 16,643 15,592
10/31/2003 16,925 15,907
11/30/2003 17,185 16,148
12/31/2003 17,616 16,514
1/31/2004 17,879 16,829
2/29/2004 17,809 16,786
3/31/2004 17,945 16,900
4/30/2004 17,961 16,785
5/31/2004 17,710 16,501
6/30/2004 17,910 16,738
7/31/2004 18,188 16,965
8/31/2004 18,433 17,298
9/30/2004 18,677 17,549
10/31/2004 19,001 17,866
11/30/2004 19,201 18,082
12/31/2004 19,417 18,351
1/31/2005 19,445 18,327
2/28/2005 19,690 18,597
3/31/2005 19,208 18,056
4/30/2005 19,020 17,880
- --------------------------------------------------------------------------------
(1) The Fund's Adviser has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Performance shown for the Advisor Class, Institutional Class and Investor
Class shares of the WELLS FARGO ADVANTAGE HIGH INCOME Fund for periods prior to
April 11, 2005, reflects the performance of the Advisor Class, Institutional
Class and Investor Class shares, respectively, of the Strong High-Yield Bond
Fund, its predecessor fund. Effective at the close of business on April 8, 2005,
certain Strong Funds were reorganized into certain WELLS FARGO ADVANTAGE FUNDS.
Performance shown for the Advisor Class shares of the Fund for periods prior to
February 29, 2000, reflects the performance of the predecessor fund's Investor
Class shares, adjusted to reflect expenses of the Advisor Class. Performance
shown for the Institutional Class shares of the Fund for periods prior to July
31, 2001, reflects the performance of the predecessor fund's Investor Class
shares and has not been adjusted for the lower expenses of the Institutional
Class.
(2) Lehman Brothers U.S. High-Yield Index covers the universe of fixed rate,
non-investment grade debt. Pay-in-kind (PIK) bonds, Eurobonds, and debt issues
from countries designated as emerging markets (e.g., Argentina, Brazil,
Venezuela, etc.) are excluded, but Canadian and global bonds (SEC registered) of
issuers in non-EMG countries are included. Original issue zeroes, step-up coupon
structures, and 144-As are also included. You cannot invest directly in an
index.
(3) Portfolio holdings and characteristics are subject to change.
(4) The average credit quality is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(6) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(7) The chart compares the performance of the WELLS FARGO ADVANTAGE HIGH INCOME
FUND Investor Class for the life of the Fund with the Lehman Brothers U.S.
High-Yield Index. The chart assumes a hypothetical investment of $10,000 in the
Investor Class shares and reflects all operating expenses.
7
WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SHORT-TERM BOND FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE SHORT-TERM BOND FUND (the Fund) seeks current
income consistent with capital preservation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Thomas M. Price, CFA 8/31/1987
Jay N. Mueller, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 0.22%(1) for the six-month
period ended April 30, 2005, modestly outperforming its benchmark, the Lehman
Brothers U.S. 1-3 Year Government/Credit Index(2), which returned 0.04% during
the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
ADVISOR CLASS, INSTITUTIONAL CLASS, AND INVESTOR CLASS SHARES ARE SOLD
WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES
AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S
CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
Influenced by continuous rate hikes by the Federal Reserve Board, yields
on two-year U.S. Treasury notes climbed by more than 1.00% to 3.65%. Defying the
trend toward tighter monetary policy, however, the yield on the longest
outstanding U.S. Treasury bond, due in 2031, actually declined by more than a
quarter of a percent.
Because the Fund's holdings are typically in the one- to three-year
maturity range, the rise in short-term rates was a constant drag on Fund
performance. Anticipating this, we managed the Fund's duration--its sensitivity
to changes in interest rates--to be toward the lower end of its typical range in
order to diminish the effect of rising rates, which helped the Fund's
performance relative to the benchmark.
The Fund commonly invests most of its assets in mortgage-backed securities
(MBS) and corporate debt issues, leading to a heavier-than-benchmark weighting
in both sectors. For the past six months, the MBS emphasis was generally a net
positive for performance, while the overweighting in corporates detracted
modestly from relative performance.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
In addition to the duration and sector strategies described above, the
Fund was positioned to take advantage of a flattening yield curve, or the
narrowing of spreads between yields of securities with different maturities.
Though the Fund is designed to concentrate on short-term issues, we were able to
add relative value through exposure to the five-year segment of the maturity
spectrum. The five-year U.S. Treasury yield rose only half as much as the yield
in the two year-segment of the yield curve, helping performance.
Detracting from performance were certain short-term corporate bond
positions. The debt of U.S. automakers Ford and General Motors came under
considerable pressure due to concerns about intractable health and retirement
costs as well as declining market share in North America. An upswing in
merger-and-acquisition activity and higher visibility of leveraged buyout
targets contributed to widening spreads in some industries.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We remain optimistic on the general health of the U.S. economy, with
growth expected to be in the neighborhood of 3.5% and employment conditions
continuing to improve at a gradual pace. One area of concern is the possibility
of further increases in inflation. Mindful of this, we believe the Federal
Reserve Board will probably continue to raise interest rates. Consequently, we
expect to maintain the Fund's defensive duration posture. On the positive side,
while the process of shifting to a higher level of short-term rates can be
painful in the short run, in the long run it can improve the rate of return for
fixed-income investing.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC
CONDITIONS. INVESTMENT STRATEGIES THAT CONCENTRATE IN PARTICULAR MARKET SEGMENTS
OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE
TO THE BROADER MARKET). THIS FUND IS EXPOSED TO HIGH YIELD BOND RISK AND
INTERNATIONAL RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN
HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY
GENERATE HIGHER SHORT-TERM CAPITAL GAINS.
- --------------------------------------------------------------------------------
The views expressed are as of April 30, 2005, and are those of the Fund's
managers. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE SHORT-TERM BOND FUND.
(1) The Fund's Adviser has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Performance for the Advisor Class, Institutional Class and Investor Class
shares of the WELLS FARGO ADVANTAGE SHORT-TERM BOND FUND for periods prior to
April 11, 2005, reflects the performance of the Advisor Class, Institutional
Class and Investor Class shares, respectively, of the Strong Short-Term Bond
Fund, its predecessor fund. Effective at the close of business on April 8, 2005,
certain Strong Funds were reorganized into certain WELLS FARGO ADVANTAGE FUNDS.
Performance shown for the Advisor Class shares of the Fund for periods prior to
August 31, 1999, reflects the performance of the predecessor fund's Investor
Class shares, adjusted to reflect expenses of the Advisor Class. Performance
shown for the Institutional Class shares of the Fund for periods prior to August
31, 1999, reflects the performance of the predecessor fund's Investor Class
shares and has not been adjusted for the lower expenses of the Institutional
Class.
8
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Excluding Sales Charge
--------------------------------------
6-Month* 1-Year 5-Year 10-Year
------- ------ ------ -------
Short-Term Bond Fund - Advisor Class 0.14 1.53 3.16 4.64
Short-Term Bond Fund - Institutional Class 0.39 2.10 3.85 5.17
Short-Term Bond Fund - Investor Class 0.22 1.71 3.41 4.91
Benchmark
Lehman Brothers U.S. 1-3 Year Government/Credit Index(2) 0.04 1.43 5.16 5.56
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Portfolio Turnover 12%
- --------------------------------------------------------------------------------
Average Credit Quality(4) A1
- --------------------------------------------------------------------------------
Weighted Average Coupon 5.46%
- --------------------------------------------------------------------------------
Estimated Weighted Average Life 1.63 Years
- --------------------------------------------------------------------------------
Estimated Average Duration 1.33 Years
- --------------------------------------------------------------------------------
Net Asset Value (NAV) (Adv, Inst, Inv Class) $8.62, $8.63, $8.62
- --------------------------------------------------------------------------------
Distribution Rate(5) (Adv, Inst, Inv Class) 4.15%, 4.32%, 4.38%
- --------------------------------------------------------------------------------
30-Day SEC Yield(6) (Adv, Inst, Inv Class) 3.55%, 3.92%, 3.50%
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Asset-Backed Securities 14%
Collateralized Mortgage Securities 17%
Cash Equivalents 2%
U.S. Treasury Notes 1%
GNMA 2%
FNMA 10%
FHLMC 5%
Cash Management 2%
Corporate Bonds 47%
GROWTH OF $10,000 INVESTMENT(7) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE LEHMAN BROTHERS U.S.
SHORT-TERM BOND FUND - 1-3 YEAR GOVERNMENT/CREDIT
INVESTOR CLASS BOND INDEX
---------------------- --------------------------
4/30/1995 10,000 10,000
5/31/1995 10,208 10,173
6/30/1995 10,280 10,229
7/31/1995 10,327 10,269
8/31/1995 10,398 10,332
9/30/1995 10,481 10,383
10/31/1995 10,585 10,469
11/30/1995 10,656 10,559
12/31/1995 10,784 10,639
1/31/1996 10,896 10,730
2/29/1996 10,859 10,689
3/31/1996 10,823 10,681
4/30/1996 10,881 10,692
5/31/1996 10,917 10,717
6/30/1996 10,955 10,795
7/31/1996 11,038 10,837
8/31/1996 11,131 10,877
9/30/1996 11,226 10,977
10/31/1996 11,333 11,101
11/30/1996 11,437 11,184
12/31/1996 11,513 11,186
1/31/1997 11,597 11,240
2/28/1997 11,685 11,268
3/31/1997 11,659 11,259
4/30/1997 11,750 11,351
5/31/1997 11,844 11,431
6/30/1997 11,925 11,510
7/31/1997 12,075 11,638
8/31/1997 12,121 11,649
9/30/1997 12,189 11,739
10/31/1997 12,193 11,823
11/30/1997 12,258 11,853
12/31/1997 12,337 11,931
1/31/1998 12,440 12,046
2/28/1998 12,490 12,058
3/31/1998 12,537 12,105
4/30/1998 12,604 12,165
5/31/1998 12,689 12,232
6/30/1998 12,746 12,295
7/31/1998 12,818 12,352
8/31/1998 12,776 12,494
9/30/1998 12,823 12,662
10/31/1998 12,765 12,717
11/30/1998 12,872 12,715
12/31/1998 12,941 12,764
1/31/1999 13,016 12,818
2/28/1999 13,011 12,764
3/31/1999 13,129 12,855
4/30/1999 13,214 12,899
5/31/1999 13,218 12,888
6/30/1999 13,234 12,926
7/31/1999 13,252 12,963
8/31/1999 13,247 12,997
9/30/1999 13,337 13,085
10/31/1999 13,380 13,124
11/30/1999 13,434 13,153
12/31/1999 13,491 13,166
1/31/2000 13,502 13,166
2/29/2000 13,587 13,257
3/31/2000 13,633 13,333
4/30/2000 13,657 13,358
5/31/2000 13,672 13,406
6/30/2000 13,846 13,554
7/31/2000 13,932 13,646
8/31/2000 14,067 13,753
9/30/2000 14,152 13,866
10/31/2000 14,204 13,929
11/30/2000 14,313 14,058
12/31/2000 14,465 14,228
1/31/2001 14,684 14,430
2/28/2001 14,810 14,533
3/31/2001 14,953 14,651
4/30/2001 15,001 14,697
5/31/2001 15,106 14,788
6/30/2001 15,134 14,844
7/31/2001 15,314 15,031
8/31/2001 15,344 15,133
9/30/2001 15,154 15,359
10/31/2001 15,214 15,512
11/30/2001 15,193 15,471
12/31/2001 15,116 15,478
1/31/2002 14,959 15,523
2/28/2002 14,889 15,590
3/31/2002 14,826 15,489
4/30/2002 14,871 15,662
5/31/2002 14,955 15,745
6/30/2002 14,948 15,871
7/31/2002 14,839 16,028
8/31/2002 14,918 16,115
9/30/2002 15,039 16,255
10/31/2002 14,977 16,276
11/30/2002 14,998 16,276
12/31/2002 15,209 16,452
1/31/2003 15,231 16,472
2/28/2003 15,351 16,563
3/31/2003 15,399 16,598
4/30/2003 15,484 16,662
5/31/2003 15,605 16,757
6/30/2003 15,651 16,794
7/31/2003 15,472 16,684
8/31/2003 15,486 16,691
9/30/2003 15,690 16,875
10/31/2003 15,635 16,807
11/30/2003 15,664 16,808
12/31/2003 15,783 16,915
1/31/2004 15,865 16,961
2/29/2004 15,962 17,056
3/31/2004 16,062 17,116
4/30/2004 15,876 16,941
5/31/2004 15,844 16,917
6/30/2004 15,869 16,922
7/31/2004 15,916 16,993
8/31/2004 16,052 17,126
9/30/2004 16,079 17,117
10/31/2004 16,111 17,177
11/30/2004 16,070 17,093
12/31/2004 16,122 17,134
1/31/2005 16,114 17,131
2/28/2005 16,109 17,098
3/31/2005 16,088 17,084
4/30/2005 16,146 17,183
- --------------------------------------------------------------------------------
(2) Lehman Brothers U.S. 1-3 Year Government/Credit Index is the 1-3 year
component of the Government/Credit Index which includes securities in the
Government and Credit Indices. The Government Index includes treasuries (i.e.,
public obligations of the U.S. Treasury that have remaining maturities of more
than one year) and agencies (i.e., publicly issued debt of U.S. Government
agencies, quasi-federal corporations, and corporate or foreign debt guaranteed
by the U.S. Government). The Credit Index includes publicly issued U.S.
corporate and foreign debentures and secured notes that meet specified maturity,
liquidity, and quality requirements. You cannot invest directly in an index.
(3) Portfolio holdings and characteristics are subject to change.
(4) The average credit quality is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(6) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(7) The chart compares the performance of the WELLS FARGO ADVANTAGE SHORT-TERM
BOND FUND Investor Class for the most recent ten years with the Lehman Brothers
U.S. 1-3 Year Government/Credit Index. The chart assumes a hypothetical
investment of $10,000 in the Investor Class shares and reflects all operating
expenses.
9
WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SHORT-TERM HIGH YIELD BOND FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE SHORT-TERM HIGH YIELD BOND FUND (the Fund) seeks
total return with a high level of current income.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
Thomas M. Price, CFA 6/30/1997
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned (0.02)%(1) for the six-month
period ended April 30, 2005, underperforming its broad-based benchmark, the
Merrill Lynch High Yield BB 1-5 Year Index(2) which returned 0.64%.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
ADVISOR CLASS AND INVESTOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES
CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN
INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS.
THE FUND HAS A REDEMPTION FEE OF 2.00% DEDUCTED FROM THE NET PROCEEDS OF
SHARES REDEEMED OR EXCHANGED WITHIN 30 DAYS AFTER PURCHASE. PERFORMANCE DATA
DOES NOT REFLECT THE DEDUCTION OF THIS FEE, WHICH, IF REFLECTED, WOULD REDUCE
THE PERFORMANCE.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
-------------------------------------------------------------------------------
Overall, the high-yield market was strong through early March, with
spreads narrowing to record levels relative to U.S. Treasuries. The strength was
due to solid economic growth, good corporate earnings, and low default rates, as
well as strong demand from institutional investors looking for higher yields.
The last seven weeks of the period featured a reversal of the trend in
narrowing spreads in evidence until then. The catalyst was General Motors (GM),
which announced weaker-than-expected February sales in early March, followed by
lower earnings guidance for all of 2005. The possibility of GM debt being
downgraded to high-yield status, along with the realization that GM would
represent over 6 percent of the benchmark if such a downgrade occurred, caused
lower bond prices for GM to carry over to the high-yield market.
Given the short-term nature of the Fund's holdings, prices also were hurt
by actions taken by the Federal Reserve Board (the Fed). During the period, the
Fed increased the federal funds target rate from 1.75% to 2.75%, which caused
the 2-year U.S. Treasury yield to increase from 2.55% to 3.65%. Prices, which
move inversely to yields, fell accordingly.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
Our investments fall into three categories. The first is short-maturity
bonds that we expect to be repaid on the maturity date. The second is
high-coupon bonds that are likely to be refinanced, similar to a homeowner
refinancing a higher-rate mortgage. The third category consists of floating-rate
term loans. We have invested almost a quarter of the portfolio in this third
area for two reasons. The term loans are typically secured by the assets of the
issuing company, which provide greater protection in weaker credit conditions.
More importantly, in the current environment, the interest rate resets
quarterly, so the Fund earns greater income as interest rates increase in the
short end of the market.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Given our positive outlook for economic growth for the remainder of 2005
and interest rates near historically low levels, we believe demand for
high-yield bonds could remain at reasonably healthy levels. However, a few
factors continue to weigh on the market. The biggest concern is that GM and Ford
might become high-yield credits and, given their size, drive bond prices lower.
Moreover, additional rate hikes from the Fed could lead to weaker economic
conditions and possibly discourage hedge fund investors, who have been an
important source of demand for high-yield securities. If sentiment among this
group were to deteriorate significantly, high-yield prices could slide further.
We expect to continue on our recent path of allocating a portion of the
portfolio to floating-rate securities is seeking to benefit from continued Fed
tightening. Additionally, we will continue to be selective when buying new
securities, with the goal of positioning the portfolio to help generate
attractive returns in the current difficult conditions.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC
CONDITIONS. INVESTMENT STRATEGIES THAT CONCENTRATE IN PARTICULAR MARKET SEGMENTS
OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE
TO THE BROADER MARKET). THIS FUND IS EXPOSED TO HIGH YIELD BOND RISK AND
INTERNATIONAL RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN
HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY
GENERATE HIGHER SHORT-TERM CAPITAL GAINS.
- --------------------------------------------------------------------------------
The views expressed are as of April 30, 2005, and are those of the Fund's
manager. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE SHORT-TERM HIGH YIELD BOND FUND.
10
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Excluding Sales Charge
----------------------------------------
6-Month* 1-Year 5-Year Life of Fund
------- ------ ------ ------------
Short-Term High Yield Bond Fund - Advisor Class (incept. 6/30/1997) (0.04) 2.33 3.17 4.72
Short-Term High Yield Bond Fund - Investor Class (incept. 6/30/1997) (0.02) 2.35 3.35 4.95
Benchmarks
Merrill Lynch High Yield BB 1-5 Year Index(2) 0.08 4.08 6.71 5.70
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Portfolio Turnover 28%
- --------------------------------------------------------------------------------
Average Credit Quality(4) BA3
- --------------------------------------------------------------------------------
Weighted Average Coupon 8.20%
- --------------------------------------------------------------------------------
Estimated Weighted Average Life 2.03 Years
- --------------------------------------------------------------------------------
Estimated Average Duration 1.53 Years
- --------------------------------------------------------------------------------
Net Asset Value (NAV) (Adv, Inv Class) $8.50, $8.50
- --------------------------------------------------------------------------------
Distribution Rate(5) (Adv, Inv Class) 4.69%, 4.63%
- --------------------------------------------------------------------------------
30-Day SEC Yield(6) (Adv, Inv Class) 4.84%, 4.94%
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Cash equivalents 23%
Corporate Bonds 75%
Cash Management 2%
GROWTH OF $10,000 INVESTMENT(7) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
SHORT-TERM HIGH YIELD MERRILL LYNCH HIGH YIELD
BOND FUND - INVESTOR CLASS BB 1-5 YEAR INDEX
-------------------------- ------------------------
6/30/1997 10,000 10,000
7/31/1997 10,266 10,162
8/31/1997 10,368 10,175
9/30/1997 10,530 10,290
10/31/1997 10,487 10,362
11/30/1997 10,642 10,405
12/31/1997 10,777 10,484
1/31/1998 10,912 10,576
2/28/1998 11,024 10,599
3/31/1998 11,096 10,659
4/30/1998 11,169 10,720
5/31/1998 11,251 10,806
6/30/1998 11,324 10,863
7/31/1998 11,449 10,923
8/31/1998 11,255 10,821
9/30/1998 11,387 10,918
10/31/1998 11,293 10,797
11/30/1998 11,578 10,947
12/31/1998 11,679 11,050
1/31/1999 11,792 11,012
2/28/1999 11,857 11,007
3/31/1999 11,945 11,130
4/30/1999 12,093 11,235
5/31/1999 12,065 11,211
6/30/1999 12,074 11,240
7/31/1999 12,131 11,264
8/31/1999 12,134 11,252
9/30/1999 12,218 11,284
10/31/1999 12,254 11,253
11/30/1999 12,368 11,268
12/31/1999 12,300 11,336
1/31/2000 12,331 11,327
2/29/2000 12,392 11,319
3/31/2000 12,356 11,265
4/30/2000 12,384 11,154
5/31/2000 12,395 11,037
6/30/2000 12,571 11,285
7/31/2000 12,668 11,370
8/31/2000 12,783 11,424
9/30/2000 12,826 11,520
10/31/2000 12,856 11,200
11/30/2000 12,715 11,248
12/31/2000 12,919 11,397
1/31/2001 13,322 11,878
2/28/2001 13,450 12,054
3/31/2001 13,406 12,227
4/30/2001 13,402 12,343
5/31/2001 13,479 12,589
6/30/2001 13,164 12,610
7/31/2001 13,255 12,786
8/31/2001 13,307 13,005
9/30/2001 12,717 12,608
10/31/2001 12,645 12,849
11/30/2001 12,779 13,130
12/31/2001 12,865 13,149
1/31/2002 12,997 13,080
2/28/2002 12,910 13,138
3/31/2002 12,929 13,320
4/30/2002 12,770 13,539
5/31/2002 12,736 13,594
6/30/2002 12,478 12,362
7/31/2002 12,399 11,992
8/31/2002 12,447 12,184
9/30/2002 12,532 12,166
10/31/2002 12,593 12,145
11/30/2002 12,736 12,548
12/31/2002 12,848 12,687
1/31/2003 12,992 12,874
2/28/2003 13,068 13,000
3/31/2003 13,223 13,124
4/30/2003 13,438 13,492
5/31/2003 13,513 13,607
6/30/2003 13,616 13,814
7/31/2003 13,554 13,701
8/31/2003 13,644 13,823
9/30/2003 13,808 14,081
10/31/2003 13,900 14,276
11/30/2003 13,975 14,412
12/31/2003 14,071 14,588
1/31/2004 14,119 14,714
2/29/2004 14,189 14,804
3/31/2004 14,295 14,954
4/30/2004 14,268 14,828
5/31/2004 14,184 14,718
6/30/2004 14,272 14,825
7/31/2004 14,358 14,988
8/31/2004 14,457 15,181
9/30/2004 14,521 15,295
10/31/2004 14,606 15,421
11/30/2004 14,607 15,431
12/31/2004 14,698 15,534
1/31/2005 14,684 15,539
2/28/2005 14,749 15,611
3/31/2005 14,633 15,393
4/30/2005 14,603 15,433
- --------------------------------------------------------------------------------
(1) The Fund's Adviser has committed through April 30,2007, to waive fees and/or
reimburse expenses to the extent necessary to maintain a certain net operating
expense ratio for the Fund. Actual reductions of operating expenses can increase
total return to shareholders. Without these reductions, the Fund's returns would
have been lower.
Performance shown for the Advisor Class and Investor Class shares of the
WELLS FARGO ADVANTAGE SHORT-TERM HIGH YIELD BOND FUND for periods prior to April
11, 2005, reflects the performance of the Advisor Class and Investor Class
shares, respectively, of the Strong Short-Term High Yield Bond Fund, its
predecessor fund. Effective at the close of business on April 8, 2005, certain
Strong Funds were reorganized into certain WELLS FARGO ADVANTAGE FUNDS.
Performance shown for the Advisor Class shares of the Fund for periods prior to
February 29, 2000, reflects the performance of the predecessor fund's Investor
Class shares, adjusted to reflect expenses of the Advisor Class. Predecessor
fund information can be found in the Fund's prospectus, statement of additional
information or annual report.
(2) Merrill Lynch High Yield BB Rated, 1-5 Year Index is an unmanaged index that
generally tracks the performance of BB rated US dollar-denominated corporate
bonds publicly issued in the US domestic market with maturities of one to five
years. You cannot invest directly in an index.
(3) Portfolio holdings and characteristics are subject to change.
(4) The average credit quality is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5)The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(6) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(7) The chart compares the performance of the WELLS FARGO ADVANTAGE SHORT-TERM
HIGH YIELD BOND FUND Investor Class for the life of the Fund with the Merrill
Lynch High Yield BB 1-5 Year Index. The chart assumes a hypothetical investment
of $10,000 in the Investor Class shares and reflects all operating expenses.
11
WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND (the Fund) seeks
current income consistent with capital preservation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Thomas M. Price, CFA 11/25/1988
Jay N. Mueller, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 1.07%(1) for the six-month
period ended April 30, 2005, outperforming the 0.73% return generated by its
benchmark, the Lehman Brothers U.S. Short Treasury 9-12 Month Index(2) and
outperforming the 0.37% return generated by the Citigroup 1-Year Treasury
Benchmark-on-the-Run Index(3).
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
ADMINISTRATOR CLASS, ADVISOR CLASS, INSTITUTIONAL CLASS, AND INVESTOR
CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED
SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE
DESCRIBED IN THE FUND'S CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
During the last six months, the Federal Reserve Board (the Fed) raised its
overnight rate target four times for a cumulative increase of 1.00%. Yields on
short-maturity securities rose quickly, depressing market prices.
Intermediate-term rates rose more modestly, with the yield on the five-year U.S.
Treasury note climbing by about 0.50%. Long-term U.S. Treasury yields actually
declined over the period, leading to a much flatter yield curve, or narrowing
spreads between yields of securities with different maturities.
The majority of the Fund's assets were invested in corporate bonds and
mortgage-backed securities. Both of these market sectors came under pressure
during the period. The yield premium, or "spread," offered by both corporate
debt issues and the securitized sector, which includes mortgage-backed and
asset-backed securities, widened modestly. Widening spreads meant that corporate
and securitized issues performed slightly worse than U.S. Treasury obligations
of similar duration. However, both sectors continued to provide income greater
than that of U.S. government-backed debt.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
Anticipating the rise in short-term interest rates, we positioned the Fund
to have a relatively low effective duration, or sensitivity to changes in market
yields, which diminished the impact of the Fed-inspired weakness at the front
end of the yield curve and helped performance. The Fund's substantial allocation
to the mortgage-backed sector generated income above that available from the
U.S. Treasury and agency sectors. Likewise, our smaller but still significant
allocation to corporate debt was a source of incremental income.
Specific corporate holdings, which detracted from performance, included
the short-term obligations of U.S. automakers Ford and General Motors. Concern
over the recent poor financial performance and loss of market share in North
America prompted price weakness in even the very-short-maturity issues of these
two companies. While we believe the automakers' problems are real and
significant, we believe the generous yield offered by their short-term
securities is attractive on a risk-adjusted basis. As well, the Fund's modest
commitment to high-yield securities proved to be a slight drag on performance
during the period, after being a net benefit for most of 2004.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We believe there could be solid economic growth, improving employment
conditions, and continued profit growth for American businesses during the rest
of 2005. One area of concern is the small but steady upturn seen in most
measures of inflation. While much of the rise in prices has originated in raw
commodities, particularly oil, there are indications of broadening price
pressures. With growth firm and inflation threatening to re-emerge, we believe
that the Fed will probably stay on its path of "measured" interest-rate
increases. Accordingly, we are inclined to maintain the Fund's defensive
duration positioning.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC
CONDITIONS. INVESTMENT STRATEGIES THAT CONCENTRATE IN PARTICULAR MARKET SEGMENTS
OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE
TO THE BROADER MARKET). THIS FUND IS EXPOSED TO HIGH YIELD BOND RISK AND
INTERNATIONAL RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of April 30, 2005, and are those of the Fund's
managers. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND.
(1) The Fund's Adviser has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Performance shown for the Administrator Class, Advisor Class,
Institutional Class and Investor Class shares of the WELLS FARGO ADVANTAGE ULTRA
SHORT-TERM INCOME FUND for periods prior to April 11, 2005, reflects the
performance of the Investor Class, Advisor Class, Institutional Class and
Investor Class shares, respectively, of the Strong Ultra Short-Term Income Fund,
its predecessor fund. Effective at the close of business on April 8, 2005,
certain Strong Funds were reorganized into certain WELLS FARGO ADVANTAGE FUNDS.
Performance shown for the Administrator Class shares reflects the performance of
the predecessor fund's Investor Class shares, and includes expenses that are not
applicable to and are higher than those of the Administrator Class shares. The
Investor Class shares annual returns are substantially similar to what the
Administrator Class shares would be because the shares are invested in the same
portfolio of securities and the annual returns differ only to the extent the
Classes do not have the same expenses. Performance shown for the Advisor Class
shares of the Fund for periods prior to August 31, 1999, reflects the
performance of the predecessor fund's Investor Class shares, adjusted to reflect
the expenses of the Advisor Class. Performance shown for the Institutional Class
shares of the Fund for periods prior to August 31, 1999, reflects the
performance of the predecessor fund's Investor Class shares and is not adjusted
for the lower expenses of the Institutional Class.
12
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Excluding Sales Charge
--------------------------------------
6-Month* 1-Year 5-Year 10-Year
------- ------ ------ -------
Ultra Short-Term Income Fund - Administrator Class 1.16 1.99 3.20 4.61
Ultra Short-Term Income Fund - Advisor Class 0.98 1.56 2.69 4.15
Ultra Short-Term Income Fund - Institutional Class 1.29 2.24 3.45 4.76
Ultra Short-Term Income Fund - Investor Class 1.07 1.89 3.00 4.51
Benchmarks
Lehman Brothers U.S. Short Treasury 9-12 Month Index(2) 0.73 1.35 3.46 4.62
Citigroup 1-Year Treasury Benchmark-on-the-Run Index(3) 0.56 1.16 3.65 4.67
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Portfolio Turnover 16%
- --------------------------------------------------------------------------------
Average Credit Quality(5) AA3
- --------------------------------------------------------------------------------
Weighted Average Coupon 7.01%
- --------------------------------------------------------------------------------
Estimated Weighted Average Life 0.53 Years
- --------------------------------------------------------------------------------
Estimated Average Duration 0.43 Years
- --------------------------------------------------------------------------------
Net Asset Value (NAV) (Admin, Adv, Inst,
Inv Class) $9.15, $9.15, $9.15, $9.16
- --------------------------------------------------------------------------------
Distribution Rate(6) (Admin, Adv, Inst,
Inv Class) N/A, 3.85%, 4.02%, 3.91%
- --------------------------------------------------------------------------------
30-Day SEC Yield(7) (Admin, Adv, Inst,
Inv Class) N/A, 3.24%, 3.55%, 3.17%
- --------------------------------------------------------------------------------
PORTFOLIO ALLOCATION(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Asset-Backed Securities 22%
Collateralized Mortgage Securities 20%
Cash Equivalents 3%
GNMA 2%
FNMA 13%
FHLMC 3%
Corporate Bonds 34%
Municipal Bonds 1%
Cash Management 2%
GROWTH OF $10,000 INVESTMENT(8) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO CITIGROUP 1 YEAR LEHMAN BROTHERS
ADVANTAGE ULTRA TREASURY U.S. SHORT TREASURY
SHORT-TERM INCOME - BENCHMARK-ON- 9-12 MONTH
INVESTOR CLASS THE-RUN INDEX INDEX
------------------- ---------------- -------------------
4/30/1995 10,000 10,000 10,000
5/31/1995 10,087 10,089 10,085
6/30/1995 10,156 10,148 10,144
7/31/1995 10,224 10,198 10,196
8/31/1995 10,292 10,247 10,246
9/30/1995 10,351 10,293 10,292
10/31/1995 10,416 10,350 10,351
11/30/1995 10,451 10,413 10,411
12/31/1995 10,520 10,474 10,474
1/31/1996 10,586 10,542 10,540
2/29/1996 10,621 10,554 10,559
3/31/1996 10,665 10,587 10,593
4/30/1996 10,706 10,624 10,631
5/31/1996 10,758 10,667 10,674
6/30/1996 10,806 10,726 10,733
7/31/1996 10,863 10,768 10,776
8/31/1996 10,934 10,820 10,830
9/30/1996 11,009 10,892 10,900
10/31/1996 11,076 10,975 10,979
11/30/1996 11,141 11,031 11,036
12/31/1996 11,223 11,069 11,075
1/31/1997 11,294 11,123 11,129
2/28/1997 11,358 11,164 11,171
3/31/1997 11,380 11,194 11,200
4/30/1997 11,438 11,262 11,269
5/31/1997 11,522 11,333 11,336
6/30/1997 11,591 11,400 11,401
7/31/1997 11,664 11,482 11,477
8/31/1997 11,737 11,523 11,517
9/30/1997 11,795 11,585 11,583
10/31/1997 11,834 11,650 11,646
11/30/1997 11,890 11,690 11,686
12/31/1997 11,952 11,745 11,748
1/31/1998 12,014 11,823 11,825
2/28/1998 12,070 11,855 11,858
3/31/1998 12,129 11,914 11,915
4/30/1998 12,175 11,969 11,972
5/31/1998 12,261 12,021 12,026
6/30/1998 12,322 12,078 12,085
7/31/1998 12,387 12,137 12,142
8/31/1998 12,369 12,235 12,231
9/30/1998 12,439 12,331 12,331
10/31/1998 12,417 12,397 12,395
11/30/1998 12,478 12,398 12,412
12/31/1998 12,520 12,437 12,461
1/31/1999 12,576 12,485 12,510
2/28/1999 12,630 12,499 12,526
3/31/1999 12,705 12,576 12,598
4/30/1999 12,782 12,622 12,643
5/31/1999 12,827 12,658 12,680
6/30/1999 12,851 12,718 12,729
7/31/1999 12,898 12,774 12,785
8/31/1999 12,918 12,811 12,826
9/30/1999 12,999 12,877 12,896
10/31/1999 13,023 12,911 12,940
11/30/1999 13,100 12,937 12,974
12/31/1999 13,180 12,967 13,010
1/31/2000 13,231 12,999 13,055
2/29/2000 13,291 13,063 13,122
3/31/2000 13,357 13,124 13,186
4/30/2000 13,406 13,200 13,251
5/31/2000 13,477 13,249 13,309
6/30/2000 13,587 13,352 13,411
7/31/2000 13,669 13,431 13,483
8/31/2000 13,758 13,512 13,527
9/30/2000 13,867 13,592 13,607
10/31/2000 13,899 13,659 13,670
11/30/2000 13,988 13,752 13,760
12/31/2000 14,073 13,887 13,889
1/31/2001 14,178 14,047 14,042
2/28/2001 14,280 14,118 14,102
3/31/2001 14,366 14,220 14,199
4/30/2001 14,436 14,285 14,264
5/31/2001 14,534 14,367 14,346
6/30/2001 14,588 14,406 14,388
7/31/2001 14,696 14,508 14,480
8/31/2001 14,766 14,571 14,520
9/30/2001 14,584 14,720 14,653
10/31/2001 14,659 14,814 14,740
11/30/2001 14,706 14,840 14,766
12/31/2001 14,673 14,870 14,801
1/31/2002 14,592 14,880 14,816
2/28/2002 14,571 14,926 14,850
3/31/2002 14,566 14,897 14,828
4/30/2002 14,621 14,999 14,917
5/31/2002 14,677 15,036 14,948
6/30/2002 14,649 15,116 15,021
7/31/2002 14,623 15,180 15,073
8/31/2002 14,649 15,193 15,091
9/30/2002 14,687 15,262 15,151
10/31/2002 14,708 15,297 15,180
11/30/2002 14,728 15,297 15,186
12/31/2002 14,795 15,360 15,240
1/31/2003 14,831 15,371 15,253
2/28/2003 14,907 15,397 15,273
3/31/2003 14,920 15,427 15,299
4/30/2003 14,980 15,445 15,314
5/31/2003 15,025 15,463 15,331
6/30/2003 15,048 15,493 15,361
7/31/2003 15,041 15,484 15,355
8/31/2003 15,050 15,499 15,370
9/30/2003 15,106 15,541 15,415
10/31/2003 15,115 15,537 15,409
11/30/2003 15,137 15,536 15,411
12/31/2003 15,130 15,586 15,458
1/31/2004 15,172 15,604 15,478
2/29/2004 15,225 15,633 15,506
3/31/2004 15,278 15,653 15,524
4/30/2004 15,250 15,610 15,495
5/31/2004 15,251 15,606 15,494
6/30/2004 15,254 15,602 15,493
7/31/2004 15,292 15,636 15,525
8/31/2004 15,328 15,681 15,567
9/30/2004 15,367 15,677 15,565
10/31/2004 15,374 15,704 15,590
11/30/2004 15,382 15,677 15,579
12/31/2004 15,427 15,702 15,603
1/31/2005 15,468 15,713 15,620
2/28/2005 15,494 15,712 15,626
3/31/2005 15,506 15,735 15,654
4/30/2005 15,538 15,791 15,706
- --------------------------------------------------------------------------------
(2) Lehman Brothers U.S. Short Treasury 9-12 Month Index includes aged U.S.
Treasury bills, notes and bonds with a remaining maturity from 1 up to (but not
including) 12 months. It excludes zero coupon strips. You cannot invest directly
in an index.
(3) Citigroup 1-Year Treasury Benchmark-on-the-Run Index is the return of the
newly issued (on-the-run) one year treasuries each month (auctioned monthly). It
is determined by taking the 1-year T-bill at the beginning of each month and
calculating its return. This process is repeated each month with the new 1-year
T-Bill. You cannot invest directly in an index.
(4) Portfolio holdings and characteristics are subject to change.
(5) The average quality is compiled from ratings from Standard & Poor's and/or
Moody's Investors Service (together "rating agencies"). Standard & Poor's is a
trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(8) The chart compares the performance of the WELLS FARGO ADVANTAGE ULTRA
SHORT-TERM INCOME FUND Investor Class shares for the most recent ten years with
the Citigroup 1-Year Treasury Benchmark-on-the-Run Index and the Lehman Brothers
U.S. Short Treasury 9-12 Month Index. The chart assumes a hypothetical
investment of $10,000 in the Investor Class shares and reflects all operating
expenses.
13
WELLS FARGO ADVANTAGE INCOME FUNDS 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,
redemption fees (if any) and exchange fees (if any); and (2) ongoing costs,
including management fees; distribution (12b-1) and/or shareholder service 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 period and held for the entire period (November 1, 2004 to April 30,
2005).
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), redemption fees, or exchange fees. 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 Ending
Account Account Expenses Net Annual
Value Value Paid During Expense
11/1/2004 4/30/2005 the Period(1) Ratio
Corporate Bond Fund
- --------------------------------------------------------------------------------------------------------------
Corporate Bond Fund - Advisor Class
Actual $1,000.00 $1,005.00 $ 5.37 1.08%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,019.44 $ 5.41 1.08%
- --------------------------------------------------------------------------------------------------------------
Corporate Bond Fund - Institutional Class
Actual $1,000.00 $1,008.10 $ 3.04 0.61%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,021.77 $ 3.06 0.61%
- --------------------------------------------------------------------------------------------------------------
Corporate Bond Fund - Investor Class
Actual $1,000.00 $1,006.00 $ 5.17 1.04%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,019.64 $ 5.21 1.04%
- --------------------------------------------------------------------------------------------------------------
Government Securities Fund
- --------------------------------------------------------------------------------------------------------------
Government Securities Fund - Class C
Actual $1,000.00 $1,003.90 $11.63 2.34%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,013.19 $11.68 2.34%
- --------------------------------------------------------------------------------------------------------------
Government Securities Fund - Administrator Class
Actual(2) $1,000.00 $1,011.80 $ 0.39 0.71%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,002.27 $ 3.56 0.71%
- --------------------------------------------------------------------------------------------------------------
Government Securities Fund - Advisor Class
Actual $1,000.00 $1,009.50 $ 5.43 1.09%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,019.39 $ 5.46 1.09%
- --------------------------------------------------------------------------------------------------------------
Government Securities Fund - Institutional Class
Actual $1,000.00 $1,012.20 $ 2.69 0.54%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,022.12 $ 2.71 0.54%
- --------------------------------------------------------------------------------------------------------------
14
FUND EXPENSES (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Net Annual
Value Value Paid During Expense
11/1/2004 4/30/2005 the Period(1) Ratio
- --------------------------------------------------------------------------------------------------------------
Government Securities Fund - Investor Class
Actual $1,000.00 $1,010.70 $ 5.09 1.02%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,019.74 $ 5.11 1.02%
- --------------------------------------------------------------------------------------------------------------
High Income Fund
- --------------------------------------------------------------------------------------------------------------
High Income Fund - Advisor Class
Actual $1,000.00 $ 999.00 $ 5.35 1.08%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,019.44 $ 5.41 1.08%
- --------------------------------------------------------------------------------------------------------------
High Income Fund - Institutional Class
Actual $1,000.00 $1,004.90 $ 2.19 0.44%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,022.61 $ 2.21 0.44%
- --------------------------------------------------------------------------------------------------------------
High Income Fund - Investor Class
Actual $1,000.00 $1,001.00 $ 4.76 0.96%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,020.03 $ 4.81 0.96%
Short-Term Bond Fund
- --------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund - Advisor Class
Actual $1,000.00 $1,001.40 $ 5.31 1.07%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,019.49 $ 5.36 1.07%
- --------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund - Institutional Class
Actual $1,000.00 $1,003.90 $ 2.63 0.53%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,022.17 $ 2.66 0.53%
- --------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund - Investor Class
Actual $1,000.00 $1,002.20 $ 4.37 0.88%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,020.43 $ 4.41 0.88%
- --------------------------------------------------------------------------------------------------------------
Short-Term High Yield Bond Fund
- --------------------------------------------------------------------------------------------------------------
Short-Term High Yield Bond Fund - Advisor Class
Actual $1,000.00 $ 999.60 $ 5.40 1.09%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,019.39 $ 5.46 1.09%
- --------------------------------------------------------------------------------------------------------------
Short-Term High Yield Bond Fund - Investor Class
Actual $1,000.00 $ 999.80 $ 5.11 1.03%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,019.69 $ 5.16 1.03%
- --------------------------------------------------------------------------------------------------------------
Ultra Short-Term Income Fund
- --------------------------------------------------------------------------------------------------------------
Ultra Short-Term Income Fund - Administrator Class
Actual (2) $1,000.00 $1,001.10 $ 0.33 0.60%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,002.82 $ 3.01 0.60%
- --------------------------------------------------------------------------------------------------------------
Ultra Short-Term Income Fund - Advisor Class
Actual $1,000.00 $1,009.80 $ 5.33 1.07%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,019.49 $ 5.36 1.07%
- --------------------------------------------------------------------------------------------------------------
15
WELLS FARGO ADVANTAGE INCOME FUNDS FUND EXPENSES (UNAUDITED)
- --------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Net Annual
Value Value Paid During Expense
11/1/2004 4/30/2005 the Period(1) Ratio
- --------------------------------------------------------------------------------------------------------------
Ultra Short-Term Income Fund - Institutional Class
Actual $1,000.00 $1,012.90 $ 2.15 0.43%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,022.66 $ 2.16 0.43%
- --------------------------------------------------------------------------------------------------------------
Ultra Short-Term Income Fund - Investor Class
Actual $1,000.00 $1,010.70 $ 4.39 0.88%
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,020.43 $ 4.41 0.88%
- --------------------------------------------------------------------------------------------------------------
(1) EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO 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).
(2) THIS CLASS COMMENCED OPERATIONS ON APRIL 11, 2004. ACTUAL EXPENSES SHOWN
FOR THIS CLASS ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO MULTIPLIED BY THE
AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 20/365 (TO REFLECT
THE PERIOD FROM APRIL 11, 2005 TO APRIL 30, 2005).
16
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
CORPORATE BONDS & NOTES - 79.04%
APPAREL & ACCESSORY STORES - 0.55%
$ 2,230,000 MAY DEPARTMENT STORES COMPANY 6.70% 07/15/2034 $ 2,420,799
--------------
BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 1.04%
2,075,000 DR HORTON INCORPORATED 6.88 05/01/2013 2,204,735
2,435,000 KB HOME 5.75 02/01/2014 2,365,466
4,570,201
--------------
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS - 0.68%
2,805,000 AMERICAN STANDARD INCORPORATED 7.38 02/01/2008 3,010,878
--------------
BUSINESS SERVICES - 1.66%
3,087,000 BEAVER VALLEY II FUNDING CORPORATION 8.63 06/01/2007 3,226,964
2,829,000 CENDANT CORPORATION 6.25 03/15/2010 2,984,796
995,000 SB TREASURY COMPANY LLC+++/- 9.40 12/31/2049 1,124,020
7,335,780
--------------
CHEMICALS & ALLIED PRODUCTS - 0.48%
2,070,000 LUBRIZOL CORPORATION 5.50 10/01/2014 2,104,852
--------------
COMMUNICATIONS - 15.54%
2,230,000 AT&T CORPORATION 9.75 11/15/2031 2,776,350
2,175,000 CINGULAR WIRELESS SERVICES 8.13 05/01/2012 2,571,472
4,960,000 CINGULAR WIRELESS SERVICES 8.75 03/01/2031 6,764,220
1,690,000 CITIZENS COMMUNICATIONS COMPANY 7.60 06/01/2006 1,740,700
1,995,000 COMCAST CABLE COMMUNICATIONS 6.88 06/15/2009 2,165,866
2,430,000 COX COMMUNICATIONS INCORPORATED++ 4.63 01/15/2010 2,394,007
1,888,000 COX COMMUNICATIONS INCORPORATED 6.75 03/15/2011 2,039,686
4,115,000 HISTORIC TW INCORPORATED 6.63 05/15/2029 4,473,737
2,750,000 NEWS AMERICA HOLDINGS 8.25 08/10/2018 3,367,710
11,245,000 SPRINT CAPITAL CORPORATION 6.88 11/15/2028 12,539,097
11,655,000 TCI COMMUNICATIONS INCORPORATED 7.88 08/01/2013 13,751,758
6,800,000 TIME WARNER ENTERTAINMENT COMPANY LP 10.15 05/01/2012 8,773,748
2,395,000 TIME WARNER ENTERTAINMENT COMPANY LP 8.38 07/15/2033 3,116,257
2,010,000 WALT DISNEY COMPANY SERIES MTNB 5.88 12/15/2017 2,129,209
68,603,817
--------------
DEPOSITORY INSTITUTIONS - 1.52%
1,695,000 M&T BANK CORPORATION+++/- 3.85 04/01/2013 1,665,856
2,605,000 WASHINGTON MUTUAL CAPITAL I 8.38 06/01/2027 2,903,713
2,000,000 ZIONS BANCORPORATION 6.00 09/15/2015 2,131,256
6,700,825
--------------
EATING & DRINKING PLACES - 0.43%
1,570,000 YUM! BRANDS INCORPORATED 8.88 04/15/2011 1,895,912
--------------
17
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
ELECTRIC, GAS & SANITARY SERVICES - 10.13%
$ 2,250,000 CAROLINA POWER & LIGHT 5.15 04/01/2015 $ 2,275,488
1,125,000 CENTERPOINT ENERGY HOUSTON ELECTRIC LLC SERIES J2 5.70 03/15/2013 1,182,851
3,720,000 CILCORP INCORPORATED 8.70 10/15/2009 4,279,231
3,145,000 COLUMBUS SOUTHERN POWER COMPANY SERIES C 5.50 03/01/2013 3,265,570
1,300,000 CONSUMERS ENERGY COMPANY 5.50 08/15/2016 1,326,956
3,660,000 CONSUMERS ENERGY COMPANY SERIES B 5.38 04/15/2013 3,733,841
1,655,000 FPL ENERGY NATIONAL WIND++ 6.13 03/25/2019 1,604,374
1,360,000 INDIANA MICHIGAN POWER COMPANY SERIES F 5.05 11/15/2014 1,355,603
3,485,000 IPALCO ENTERPRISES INCORPORATED 8.38 11/14/2008 3,746,375
955,000 IPALCO ENTERPRISES INCORPORATED 8.63 11/14/2011 1,088,700
2,385,000 MONONGAHELA POWER COMPANY 6.70 06/15/2014 2,605,147
2,065,000 NEVADA POWER COMPANY++ 5.88 01/15/2015 2,003,050
1,150,000 PACIFIC GAS & ELECTRIC COMPANY 3.60 03/01/2009 1,118,436
1,740,000 PACIFIC GAS & ELECTRIC COMPANY 6.05 03/01/2034 1,859,268
770,000 POTOMAC EDISON COMPANY++ 5.35 11/15/2014 773,809
505,000 SOUTHERN CALIFORNIA EDISON COMPANY 8.00 02/15/2007 537,748
4,630,000 SOUTHERN CALIFORNIA EDISON COMPANY 4.65 04/01/2015 4,531,626
3,730,000 TXU CORPORATION++ 6.50 11/15/2024 3,681,626
3,490,000 WESTAR ENERGY INCORPORATED 6.00 07/01/2014 3,750,839
44,720,538
--------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS,
EXCEPT COMPUTER EQUIPMENT - 0.54%
2,595,000 FLEXTRONICS INTERNATIONAL SERIES 144A 6.25 11/15/2014 2,400,375
--------------
FOOD & KINDRED PRODUCTS - 3.01%
2,975,000 GENERAL MILLS INCORPORATED 5.13 02/15/2007 3,029,547
5,095,000 KRAFT FOODS INCORPORATED 5.25 10/01/2013 5,216,449
1,790,000 SMITHFIELD FOODS INCORPORATED 7.00 08/01/2011 1,830,275
3,100,000 TYSON FOODS INCORPORATED 7.25 10/01/2006 3,235,017
13,311,288
--------------
FOOD STORES - 2.89%
1,560,000 ALBERTSON'S INCORPORATED 7.45 08/01/2029 1,711,003
3,325,000 DELHAIZE AMERICA INCORPORATED 9.00 04/15/2031 3,917,601
1,520,000 KROGER COMPANY SERIES B 7.70 06/01/2029 1,798,786
1,840,000 SAFEWAY INCORPORATED 4.80 07/16/2007 1,850,799
3,485,000 SAFEWAY INCORPORATED 4.95 08/16/2010 3,467,802
12,745,991
--------------
FORESTRY - 1.55%
598,000 WEYERHAEUSER COMPANY 6.13 03/15/2007 618,230
4,023,000 WEYERHAEUSER COMPANY 5.95 11/01/2008 4,228,817
1,860,000 WEYERHAEUSER COMPANY 6.75 03/15/2012 1,985,622
6,832,669
--------------
GENERAL MERCHANDISE STORES - 0.55%
2,230,000 JC PENNEY COMPANY INCORPORATED 8.00% 03/01/2010 2,441,850
--------------
18
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
HEALTH SERVICES - 0.46%
$ 1,755,000 WASTE MANAGEMENT INCORPORATED 7.10% 08/01/2026 $ 2,012,813
--------------
HOLDING & OTHER INVESTMENT OFFICES - 3.15%
2,230,000 FARMERS EXCHANGE CAPITAL++ 7.05 07/15/2028 2,356,017
2,210,000 FUND AMERICAN COMPANIES INCORPORATED 5.88 05/15/2013 2,249,944
3,305,000 JP MORGAN CHASE & COMPANY 5.13 09/15/2014 3,335,386
3,075,000 OMX TIMBER FINANCE INVESTMENTS 1 LLC++ 5.42 01/29/2020 3,098,647
2,595,000 UFJ FINANCE ARUBA AEC 6.75 07/15/2013 2,860,419
13,900,413
--------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 0.45%
1,935,000 HARRAH'S OPERATING COMPANY INCORPORATED 5.50 07/01/2010 1,978,497
--------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 0.61%
2,750,000 COMPUTER ASSOCIATES INTERNATIONAL INCORPORATED++ 4.75 12/01/2009 2,711,041
--------------
INSURANCE CARRIERS - 1.21%
2,750,000 FIDELITY NATIONAL FINANCIAL INCORPORATED 7.30 08/15/2011 2,987,130
2,345,000 METLIFE INCORPORATED 3.91 05/15/2005 2,345,633
5,332,763
--------------
METAL MINING - 0.37%
1,350,000 PHELPS DODGE CORPORATION 8.75 06/01/2011 1,621,318
--------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 5.88%
2,250,000 CAPITAL ONE BANK 5.00 06/15/2009 2,275,576
2,880,000 CAPITAL ONE BANK 6.50 06/13/2013 3,115,322
2,250,000 COUNTRYWIDE HOME LOANS INCORPORATED SERIES MTNL 4.00 03/22/2011 2,154,726
2,780,000 FORD MOTOR CREDIT COMPANY 7.38 10/28/2009 2,674,338
11,800,000 GENERAL MOTORS ACCEPTANCE CORPORATION 6.88 08/28/2012 10,165,145
1,645,000 HSBC FINANCE CORPORATION 4.75 04/15/2010 1,654,352
1,325,000 INTERNATIONAL LEASE FINANCE CORPORATION 5.00 04/15/2010 1,331,629
2,525,000 MBNA CORPORATION SERIES MTN 5.63 11/30/2007 2,595,990
25,967,078
--------------
OIL & GAS EXTRACTION - 2.93%
4,040,000 DEVON FINANCING CORPORATION ULC 7.88 09/30/2031 5,094,339
2,780,000 PEMEX PROJECT FUNDING MASTER TRUST++ 8.85 09/15/2007 3,021,860
2,070,000 PEMEX PROJECT FUNDING MASTER TRUST 8.63 02/01/2022 2,396,025
920,000 PIONEER NATURAL RESOURCES COMPANY 5.88 07/15/2016 912,102
1,405,000 XTO ENERGY INCORPORATED 6.25 04/15/2013 1,524,461
12,948,787
--------------
PAPER & ALLIED PRODUCTS - 1.50%
2,660,000 GEORGIA-PACIFIC CORPORATION 8.88 02/01/2010 2,952,600
3,355,000 INTERNATIONAL PAPER COMPANY 6.75 09/01/2011 3,660,141
6,612,741
--------------
19
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
PETROLEUM REFINING & RELATED INDUSTRIES - 3.06%
$ 3,375,000 AMERADA HESS CORPORATION 7.13% 03/15/2033 $ 3,796,055
1,345,000 CONOCOPHILLIPS INCORPORATED 6.95 04/15/2029 1,639,835
2,680,000 ENTERPRISE PRODUCTS OPERATIONS SERIES B 5.60 10/15/2014 2,695,522
1,385,000 OCCIDENTAL PETROLEUM CORPORATION 8.45 02/15/2029 1,916,260
3,165,000 VALERO ENERGY CORPORATION 6.88 04/15/2012 3,479,519
13,527,191
--------------
PIPELINES, EXCEPT NATURAL GAS - 4.19%
3,065,000 CENTERPOINT ENERGY RESOURCES CORPORATION 7.75 02/15/2011 3,475,722
2,235,000 ENERGY TRANSFER PARTNERS LP++ 5.95 02/01/2015 2,242,883
1,725,000 KINDER MORGAN ENERGY PARTNERS 5.13 11/15/2014 1,714,062
1,565,000 KINDER MORGAN INCORPORATED 6.50 09/01/2012 1,709,861
4,425,000 KN CAPITAL TRUST I SERIES B 8.56 04/15/2027 4,860,256
2,155,000 PLAINS ALL AMERICAN PIPELINE LP 5.63 12/15/2013 2,226,874
1,910,000 TEXAS EASTERN TRANSMISSION LP 7.00 07/15/2032 2,259,874
18,489,532
--------------
RAILROAD TRANSPORTATION - 3.21%
1,240,000 BURLINGTON NORTHERN SANTA FE CORPORATION 8.13 04/15/2020 1,593,964
3,990,000 NORFOLK SOUTHERN CORPORATION 7.80 05/15/2027 5,122,913
4,480,000 UNION PACIFIC CORPORATION 5.75 10/15/2007 4,628,360
2,590,000 UNION PACIFIC CORPORATION 6.50 04/15/2012 2,841,618
14,186,855
--------------
REAL ESTATE - 4.17%
5,455,000 EOP OPERATING LP 6.75 02/15/2012 5,955,360
2,785,000 EQUITY ONE INCORPORATED 3.88 04/15/2009 2,679,961
2,075,000 ERP OPERATING LP 6.95 03/02/2011 2,295,328
2,660,000 HRPT PROPERTIES TRUST 5.75 02/15/2014 2,729,793
4,280,000 LIBERTY PROPERTY LP 7.25 03/15/2011 4,766,148
18,426,590
--------------
RUBBER & MISCELLANEOUS PLASTICS PRODUCTS - 0.42%
1,840,000 BEMIS COMPANY INCORPORATED++ 4.88 04/01/2012 1,858,076
--------------
TOBACCO PRODUCTS - 1.46%
2,480,000 ALTRIA GROUP INCORPORATED 7.65 07/01/2008 2,711,825
3,340,000 UST INCORPORATED 6.63 07/15/2012 3,737,083
6,448,908
--------------
TRANSPORTATION BY AIR - 2.35%
2,414,000 GOODRICH CORPORATION 6.45 12/15/2007 2,538,150
1,300,000 LOCKHEED MARTIN CORPORATION 8.50 12/01/2029 1,804,273
2,555,000 NORTHROP GRUMMAN CORPORATION 7.75 03/01/2016 3,110,467
2,437,000 RAYTHEON COMPANY 7.20 08/15/2027 2,922,555
10,375,445
--------------
20
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
TRANSPORTATION EQUIPMENT - 2.60%
$ 3,575,000 DAIMLERCHRYSLER NA HOLDING CORPORATION 6.50% 11/15/2013 $ 3,649,871
2,235,000 DAIMLERCHRYSLER NA HOLDING CORPORATION 8.50 01/18/2031 2,552,408
6,400,000 FORD MOTOR COMPANY 7.45 07/16/2031 5,259,149
11,461,428
--------------
WHOLESALE TRADE NON-DURABLE GOODS - 0.45%
2,010,000 HUGHES SUPPLY INCORPORATED++ 5.50 10/15/2014 1,980,873
--------------
TOTAL CORPORATE BONDS & NOTES (Cost $337,801,301) 348,936,124
--------------
FOREIGN CORPORATE BONDS - 5.79%
2,270,000 AMERICA MOVIL SA DE CV 5.50 03/01/2014 2,212,582
2,230,000 BT GROUP PLC 8.88 12/15/2030 3,045,161
6,400,000 DEUTSCHE TELEKOM INTERNATIONAL FINANCE BV 8.75 06/15/2030 8,576,057
2,180,000 GRUPO TELEVISA SA++ 6.63 03/18/2025 2,136,400
2,460,000 HUTCHISON WHAMPOA INTERNATIONAL LIMITED++ 6.25 01/24/2014 2,596,154
3,865,000 SHAW COMMUNICATIONS INCORPORATED 7.20 12/15/2011 4,096,900
2,710,000 TYCO INTERNATIONAL GROUP SA 6.00 11/15/2013 2,894,340
TOTAL FOREIGN CORPORATE BONDS (COST $24,919,591) 25,557,594
--------------
FOREIGN GOVERNMENT BONDS - 6.93%
1,920,000 ENCANA CORPORATION 6.50 08/15/2034 2,161,402
2,185,000 FRANCE TELECOM SA 8.75 03/01/2031 2,958,125
2,870,000 MEXICO GOVERNMENT INTERNATIONAL BOND 8.30 08/15/2031 3,361,487
2,275,000 ROGERS WIRELESS INCORPORATED 6.38 03/01/2014 2,178,312
2,590,000 TELECOM ITALIA CAPITAL SA++ 4.00 01/15/2010 2,501,948
3,235,000 TELECOM ITALIA CAPITAL SA++ 4.95 09/30/2014 3,151,123
4,580,000 UNITED MEXICAN STATES 7.50 01/14/2012 5,083,800
3,845,000 UNITED MEXICAN STATES 6.75 09/27/2034 3,829,620
4,750,000 WESTERN POWER DISTRIBUTION HOLDINGS LIMITED++ 7.38 12/15/2028 5,392,457
TOTAL FOREIGN GOVERNMENT BONDS (COST $28,221,581) 30,618,274
--------------
MUNICIPAL BONDS & NOTES - 0.64%
2,044,764 TOBACCO SETTLEMENT FINANCING CORPORATION LA (OTHER REVENUE LOC) 6.36 05/15/2025 2,049,630
765,000 YAVAPAI COUNTY AZ IDA (INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.45 06/01/2033 764,220
TOTAL MUNICIPAL BONDS & NOTES (Cost $2,749,966) 2,813,850
--------------
US GOVERNMENT AGENCY SECURITIES - 0.01%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.00%
1,659 FHLMC #170027 14.75 03/01/2010 1,875
4,736 FHLMC #170065 14.00 09/01/2012 5,480
7,355
--------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 0.00%
2,528 GNMA #45265 15.00 08/15/2011 2,923
1,569 GNMA #53809 15.00 02/15/2012 1,821
2,360 GNMA #54340 15.00 05/15/2012 2,739
7,483
--------------
21
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
SMALL BUSINESS ADMINISTRATION - 0.01%
$ 632,275 SBA #40013(C) 3.26% 09/30/2017 $ 15,807
--------------
TOTAL US GOVERNMENT AGENCY SECURITIES (COST $600,548) 30,645
--------------
US TREASURY SECURITIES - 5.11%
US TREASURY BILLS - 0.09%
30,000 US TREASURY BILL^# 2.73 06/30/2005 29,867
175,000 US TREASURY BILL^# 2.70 07/14/2005 174,022
220,000 US TREASURY BILL^# 2.82 07/28/2005 218,511
422,400
--------------
US TREASURY BONDS - 1.95%
7,620,000 US TREASURY BOND 5.38 02/15/2031 8,606,432
--------------
US TREASURY NOTES - 3.07%
370,000 US TREASURY NOTE 3.00 11/15/2007 363,843
7,525,000 US TREASURY NOTE 4.00 04/15/2010 7,559,683
5,725,000 US TREASURY NOTE 4.00 02/15/2015 5,632,192
13,555,718
--------------
TOTAL US TREASURY SECURITIES (COST $22,207,070) 22,584,550
--------------
SHARES
SHORT-TERM INVESTMENTS - 2.26%
9,983,949 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~>> 9,983,949
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $9,983,949) 9,983,949
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $426,484,006)* 99.78% $ 440,524,986
OTHER ASSETS AND LIABILITIES, NET 0.22 959,054
------ --------------
TOTAL NET ASSETS 100.00% $ 441,484,040
====== ==============
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE
SECURITIES ACT OF 1933, AS AMENDED.
+/- VARIABLE RATE SECURITIES.
(C) INTEREST-ONLY SECURITIES ENTITLE HOLDERS TO RECEIVE ONLY THE INTEREST
PAYMENTS ON THE UNDERLYING MORTGAGES. THE YIELD TO MATURITY OF AN
INTEREST-ONLY IS EXTREMELY SENSITIVE TO THE RATE OF PRINCIPAL PAYMENTS ON
THE UNDERLYING MORTGAGE ASSETS. A RAPID (SLOW) RATE OF PRINCIPAL
REPAYMENTS MAY HAVE ADVERSE (POSITIVE) EFFECT ON YIELD TO MATURITY. THE
PRINCIPAL AMOUNT SHOWN IS THE NOTIONAL AMOUNT OF THE UNDERLYING MORTGAGES.
INTEREST RATE DISCLOSED REPRESENTS THE YIELD BASED UPON THE ESTIMATED
TIMING OF FUTURE CASH FLOWS.
^ ZERO COUPON/STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO
MATURITY.
# SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
>> SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $9,983,949.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
22
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
AGENCY NOTES - INTEREST BEARING - 9.24%
$ 13,000,000 FHLB 4.13% 03/24/2008 $ 12,999,051
17,080,000 FHLMC 6.88 09/15/2010 19,171,480
11,200,000 FHLMC 5.63 03/15/2011 11,935,045
15,000,000 FHLMC 4.75 05/06/2013 14,707,335
28,885,000 FNMA 5.25 06/15/2006 29,372,434
10,000,000 FNMA 3.88 05/15/2007 9,993,950
17,400,000 FNMA 5.75 02/15/2008 18,197,964
5,000,000 FNMA 6.63 11/15/2030 6,164,435
TOTAL AGENCY NOTES - INTEREST BEARING (COST $123,337,073) 122,541,694
--------------
ASSET-BACKED SECURITIES - 2.71%
1,456,076 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES 15 CLASS A6+/- 3.26 11/25/2028 1,456,726
322,977 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES 2 CLASS A 7.00 01/25/2021 325,714
5,691,301 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES 23 CLASS A+/- 3.16 05/25/2030 5,691,856
1,563,572 FNMA GRANTOR TRUST SERIES 2002-T5 CLASS A1+/- 3.14 05/25/2032 1,565,606
3,725,904 FNMA GRANTOR TRUST SERIES 2003-T2 CLASS A1+/- 3.16 03/25/2033 3,726,358
23,069,688 FNMA GRANTOR TRUST SERIES 2004-T6 CLASS 1AV1+/- 3.17 01/25/2035 23,096,629
TOTAL ASSET-BACKED SECURITIES (COST $35,828,691) 35,862,889
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 24.67%
10,978,323 BANC OF AMERICA ALTERNATIVE LOAN TRUST SERIES 2004-8 CLASS 2CB1 6.00 09/25/2034 11,279,802
4,908,000 CITIBANK CREDIT CARD ISSUANCE TRUST SERIES 2003-A7 CLASS A7 4.15 07/07/2017 4,722,043
5,729,626 COUNTRYWIDE ALTERNATIVE LOAN TRUST SERIES J8 CLASS 4A1 6.00 02/25/2017 5,895,752
551,552 FEDERAL AGRICULTURAL MORTGAGE CORPORATION SERIES 1001 CLASS 1+/- 7.02 01/25/2008 551,552
426,559 FEDERAL AGRICULTURAL MORTGAGE CORPORATION SERIES 1002 CLASS 1+/- 6.71 07/25/2008 426,559
2,254,223 FHA INSURED PROJECT LOAN #956 2.93 11/01/2012 2,209,139
2,583,110 FHLMC SERIES 1582 CLASS A+/- 5.00 09/15/2008 2,612,340
171,248 FHLMC SERIES 16 CLASS D 10.00 10/15/2019 171,250
3,391,376 FHLMC SERIES T-35 CLASS A+/- 3.16 09/25/2031 3,392,505
5,432,038 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-42 CLASS A6 9.50 02/25/2042 5,973,457
30,025,000 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-53 CLASS S+/-(C) 6.50 06/25/2005 189,158
13,594,107 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-55 CLASS 1A1B 6.50 03/25/2043 13,962,312
5,597,916 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-55 CLASS 2A1+/- 4.18 03/25/2043 5,679,597
16,593,466 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-57 CLASS 2A1+/- 4.10 07/25/2043 17,085,449
5,488,463 FNMA GRANTOR TRUST SERIES 2000-T6 CLASS A2 9.50 06/25/2030 5,997,211
11,252,614 FNMA GRANTOR TRUST SERIES 2001-T10 CLASS A3 9.50 12/25/2041 12,399,799
2,919,410 FNMA GRANTOR TRUST SERIES 2001-T12 CLASS A3 9.50 08/25/2041 3,218,013
7,033,691 FNMA GRANTOR TRUST SERIES 2001-T8 CLASS A3+/- 4.74 07/25/2041 7,134,409
7,172,239 FNMA GRANTOR TRUST SERIES 2002-T12 CLASS A5+/- 4.34 10/25/2041 7,416,993
417,162 FNMA INTEREST STRIP SERIES 161 CLASS 2(C) 8.50 07/25/2022 82,703
1,225,052 FNMA INTEREST STRIP SERIES 265 CLASS 2 9.00 03/01/2024 1,305,745
335,706 FNMA INTEREST STRIP SERIES B CLASS 1 6.00 05/01/2009 340,054
306,628 FNMA INTEREST STRIP SERIES C CLASS 1 6.00 05/01/2009 307,442
632,792 FNMA INTEREST STRIP SERIES K CLASS 1 6.00 11/01/2008 636,951
519,261 FNMA SERIES 1988-2 CLASS Z 10.10 02/25/2018 577,429
226,837 FNMA SERIES 1988-7 CLASS Z 9.25 04/25/2018 244,566
1,248,321 FNMA SERIES 1989-10 CLASS Z 9.50 03/25/2019 1,372,281
1,068,266 FNMA SERIES 1989-100 CLASS Z 8.75 12/25/2019 1,151,701
23
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
$ 2,285,000 FNMA SERIES 1989-12 CLASS Y 10.00% 03/25/2019 $ 2,561,905
1,569,673 FNMA SERIES 1989-22 CLASS G 10.00 05/25/2019 1,747,420
367,515 FNMA SERIES 1989-63 CLASS Z 9.40 10/25/2019 396,723
555,437 FNMA SERIES 1989-98 CLASS E 9.20 12/25/2019 600,225
696,607 FNMA SERIES 1990-144 CLASS W 9.50 12/25/2020 767,770
686,126 FNMA SERIES 1990-75 CLASS Z 9.50 07/25/2020 758,196
291,866 FNMA SERIES 1990-84 CLASS Y 9.00 07/25/2020 316,150
1,431,442 FNMA SERIES 1990-96 CLASS Z 9.67 08/25/2020 1,586,145
503,865 FNMA SERIES 1991-5 CLASS Z 8.75 01/25/2021 546,484
1,896,433 FNMA SERIES 1991-85 CLASS Z 8.00 06/25/2021 1,985,745
1,319,814 FNMA SERIES 1992-45 CLASS Z 8.00 04/25/2022 1,368,224
8,440,000 FNMA SERIES 2003-W18 CLASS 1A5 4.61 08/25/2043 8,430,551
826,907 FNMA SERIES G-8 CLASS E 9.00 04/25/2021 903,672
2,486,586 FNMA SERIES G92-30 CLASS Z 7.00 06/25/2022 2,574,457
1,062,571 FNMA WHOLE LOAN SERIES 1999-W6 CLASS A+/- 9.41 09/25/2028 1,195,542
10,618,986 FNMA WHOLE LOAN SERIES 2003-W10 CLASS 3A2A 2.20 07/25/2037 10,500,302
3,466,387 FNMA WHOLE LOAN SERIES 2003-W11 CLASS A1+/- 5.25 06/25/2033 3,535,100
17,393,415 FNMA WHOLE LOAN SERIES 2003-W3 CLASS 1A4+/- 4.24 08/25/2042 17,843,328
5,759,372 FNMA WHOLE LOAN SERIES 2003-W5 CLASS A+/- 3.13 04/25/2033 5,779,572
13,313,317 FNMA WHOLE LOAN SERIES 2003-W6 CLASS 6A+/- 4.19 08/25/2042 13,560,432
12,850,565 FNMA WHOLE LOAN SERIES 2003-W6 CLASS PT4+/- 9.82 10/25/2042 14,273,470
5,000,000 FNMA WHOLE LOAN SERIES 2003-W8 CLASS 1A3 4.75 12/25/2042 4,973,731
6,777,081 FNMA WHOLE LOAN SERIES 2003-W8 CLASS PT1+/- 9.95 12/25/2042 7,431,530
2,163,005 FNMA WHOLE LOAN SERIES 2003-W9 CLASS A+/- 3.14 06/25/2033 2,162,456
13,369,731 FNMA WHOLE LOAN SERIES 2004-W15 CLASS 1A3 7.00 08/25/2044 14,172,176
20,000,000 GNMA SERIES 2004-100 CLASS B 4.60 02/16/2043 19,794,048
12,404,000 GNMA SERIES 2004-103 CLASS C+/- 4.70 12/16/2027 12,348,307
239,779,915 GNMA SERIES 2005-23 CLASS A+/-(C) 1.00 06/17/2045 15,186,964
157,721,500 GREENWICH CAPITAL COMMERCIAL FUNDING
CORPORATION SERIES 2002-C1 CLASS XPB+/-++(C) 1.99 01/11/2035 7,188,709
12,000,000 JP MORGAN MORTGAGE TRUST 5.15 05/25/2035 12,015,600
12,020,133 NOMURA ASSET ACCEPTANCE CORPORATION SERIES 2004-R2 CLASS A1+/-++ 6.50 10/25/2034 12,369,859
125,500,000 SALOMON BROTHERS MORTGAGE SECURITIES VII SERIES C2 CLASS X2+/-(C) 1.04 11/13/2011 3,807,118
51,175 USGI FHA INSURED PROJECT LOAN 3.03 11/01/2006 51,175
1,678,146 VENDEE MORTGAGE TRUST SERIES 1995-1 CLASS 4+/- 8.89 02/15/2025 1,817,869
2,691,270 VENDEE MORTGAGE TRUST SERIES 1995-2C CLASS 3A 8.79 06/15/2025 2,968,682
90,957,000 WACHOVIA BANK COMMERCIAL MORTGAGE
TRUST SERIES 2002-C2 CLASS IO3+/-++(C) 1.59 11/15/2034 3,172,607
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $324,531,519) 327,028,456
--------------
CORPORATE BONDS & NOTES - 1.49%
APPAREL & ACCESSORY STORES - 0.00%
172 SEARS ROEBUCK ACCEPTANCE 6.70 04/15/2012 178
--------------
DEPOSITORY INSTITUTIONS - 0.75%
10,000,000 INTERNATIONAL FINANCE CORPORATION 4.00 06/15/2010 9,944,800
--------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.74%
9,700,000 GENERAL ELECTRIC COMPANY 5.00 02/01/2013 9,871,923
--------------
TOTAL CORPORATE BONDS & NOTES (COST $19,610,052) 19,816,901
--------------
24
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MUNICIPAL BONDS & NOTES - 2.06%
$ 3,100,000 ARKANSAS DEVELOPMENT FINANCE AUTHORITY
(HOUSING REVENUE LOC) 9.75% 11/15/2014 $ 3,639,493
4,360,000 COLORADO HEALTH FACILITIES AUTHORITY
(OTHER REVENUE LOC)^ 4.90 07/15/2024 1,719,192
10,000,000 DAWSON RIDGE METROPOLITAN DISTRICT NO 1 CO
(PROPERTY TAX REVENUE LOC)^ 4.86 10/01/2022 4,329,600
2,260,000 KANAWHA MERCER NICHOLAS COUNTIES WV (HOUSING REVENUE LOC)^ 4.10 02/01/2014 1,424,049
5,405,000 RETAMA DEVELOPMENT CORPORATION TX (OTHER REVENUE LOC) 10.00 12/15/2020 8,179,062
10,000,000 SAVANNAH GA ECONOMIC DEVELOPMENT AUTHORITY
(HEALTHCARE FACILITIES REVENUE LOC)^ 4.81 12/01/2021 4,543,200
2,000,000 TAMPA FL SOLID WASTE SYSTEM (OTHER REVENUE LOC) 4.30 10/01/2007 2,063,220
1,350,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY
(HEALTHCARE FACILITIES REVENUE LOC)+/-@ 4.00 12/01/2022 1,367,469
TOTAL MUNICIPAL BONDS & NOTES (COST $26,065,074) 27,265,285
--------------
US GOVERNMENT AGENCY SECURITIES - 47.73%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 7.95%
86,659 FHLMC #160053 8.00 07/01/2008 90,488
48 FHLMC #170046 14.50 03/01/2011 54
187 FHLMC #170053 14.75 08/01/2011 212
6,122 FHLMC #170053 15.00 08/01/2011 6,984
403 FHLMC #170069 14.00 11/01/2012 468
130,355 FHLMC #170215 8.00 02/01/2017 141,715
141,953 FHLMC #170235 10.50 08/01/2019 162,967
1,397 FHLMC #181072 14.50 12/01/2011 1,591
146,035 FHLMC #181626 8.50 07/01/2007 151,063
54,476 FHLMC #182079 8.00 02/01/2010 57,828
46,982 FHLMC #182104 8.00 12/01/2010 49,873
120,509 FHLMC #1B0123+/- 6.14 09/01/2031 122,994
128,421 FHLMC #1B0128+/- 6.16 09/01/2031 130,986
3,158,265 FHLMC #1B0129+/- 6.09 09/01/2031 3,229,872
7,895 FHLMC #260694 8.00 04/01/2009 8,000
313,572 FHLMC #272877 8.00 08/01/2009 327,427
231,667 FHLMC #279063 9.00 08/01/2009 242,868
228,193 FHLMC #552435 10.50 08/01/2020 265,177
6,654 FHLMC #555108 7.25 07/01/2008 6,733
117,362 FHLMC #555158 8.50 05/01/2016 118,171
1,294,131 FHLMC #555503 9.00 04/01/2021 1,397,165
608,581 FHLMC #555515 8.50 10/01/2013 629,535
1,762,866 FHLMC #611023+/- 4.09 10/01/2026 1,824,042
376,476 FHLMC #786210+/- 6.29 01/01/2026 376,839
6,500,054 FHLMC #786823+/- 6.02 07/01/2029 6,804,739
2,276,653 FHLMC #789483+/- 5.68 06/01/2032 2,358,955
373,440 FHLMC #865496+/- 5.49 05/01/2026 383,128
253,910 FHLMC #884009 10.50 05/01/2020 296,406
91,628 FHLMC #A01434 9.00 06/01/2016 97,672
508,709 FHLMC #A01562 9.00 11/01/2018 548,252
528,060 FHLMC #A01607 8.50 06/01/2011 547,045
316,077 FHLMC #A01620 9.00 04/01/2017 340,647
428,157 FHLMC #A01860 8.50 06/01/2017 443,974
6,086 FHLMC #B00523 10.00 10/01/2005 6,131
25
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FEDERAL HOME LOAN MORTGAGE CORPORATION (CONTINUED)
$ 3,809,059 FHLMC #E79794 7.00% 10/01/2014 $ 4,007,085
661,134 FHLMC #G00319 9.50 04/01/2025 739,810
772,588 FHLMC #G01236 10.00 10/01/2021 857,647
5,906 FHLMC #G10444 9.50 04/01/2007 5,806
167,152 FHLMC #G10783 8.50 06/01/2012 177,482
1,920,990 FHLMC #G11136 6.50 05/01/2011 1,999,667
1,101,023 FHLMC #G11200 8.00 01/01/2012 1,161,682
15,933,693 FHLMC #G11209 7.50 12/01/2011 16,790,582
6,283,855 FHLMC #G11345 7.50 12/01/2011 6,620,758
9,206,371 FHLMC #G11368 7.50 12/01/2012 9,699,687
18,954,042 FHLMC #G18005 5.00 08/01/2019 19,111,956
2,918,906 FHLMC #G80106 10.00 08/17/2022 3,360,759
4,947,090 FHLMC #G80116 10.00 02/17/2025 5,576,569
6,058,935 FHLMC #G80193 9.50 09/17/2022 6,712,444
1,226,557 FHLMC #G90023 7.00 11/17/2013 1,289,473
71,662 FHLMC #N70012 10.50 08/01/2020 82,676
5,902,089 FHLMC #W20001 7.26 06/01/2006 6,029,574
105,393,658
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 37.87%
530,967 FNMA #100042 11.00 10/15/2020 594,756
722,958 FNMA #100285 9.50 12/15/2020 814,564
966,936 FNMA #103102+/- 3.61 03/01/2018 976,477
174,988 FNMA #109031 6.70 08/01/2005 175,042
1,213 FNMA #1376 15.50 10/01/2012 1,406
718,848 FNMA #190180 9.00 07/01/2021 787,658
410,049 FNMA #303548 8.50 02/01/2012 424,631
1,440,933 FNMA #313419 8.50 12/01/2026 1,591,117
638,888 FNMA #323013 9.00 10/01/2021 712,443
2,137,555 FNMA #323284 8.50 05/01/2017 2,316,638
10,802,666 FNMA #323756 6.20 05/01/2009 11,362,293
35,833,676 FNMA #323785 6.22 12/01/2008 37,672,138
2,188,296 FNMA #323859 5.00 07/01/2006 2,205,046
206 FNMA #3260 13.25 04/01/2012 222
800 FNMA #3318 14.50 01/01/2012 828
62,061 FNMA #364215 7.50 07/01/2015 64,277
45,281 FNMA #364217 7.00 09/01/2015 46,786
4,755,985 FNMA #368034 8.00 11/01/2026 5,268,822
157,464 FNMA #381149 5.60 11/01/2005 157,908
8,267,004 FNMA #398800 8.00 06/01/2012 8,734,423
700,136 FNMA #398805 8.50 11/01/2011 746,005
450,084 FNMA #426843 11.00 02/01/2019 505,785
538,783 FNMA #439935 8.00 04/01/2017 582,620
2,255,901 FNMA #457277+/- 7.03 10/01/2027 2,309,838
738,182 FNMA #458018 12.00 07/15/2014 870,384
1,309,767 FNMA #487758 8.50 05/01/2026 1,445,183
560,486 FNMA #487759 9.50 07/01/2028 626,070
590,136 FNMA #516051 9.50 01/01/2021 654,396
26
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FEDERAL NATIONAL MORTGAGE ASSOCIATION (CONTINUED)
$ 131,393 FNMA #52 8.50% 07/01/2010 $ 134,360
1,640,683 FNMA #534738+/- 4.25 05/01/2027 1,672,232
772,749 FNMA #535537 9.00 07/01/2028 846,912
2,671,537 FNMA #535573 8.00 11/01/2013 2,820,795
1,097,467 FNMA #535752 10.00 12/01/2020 1,260,463
2,333,242 FNMA #538435+/- 4.64 07/01/2026 2,364,347
267,255 FNMA #545016 9.00 11/01/2012 277,152
552,420 FNMA #545117+/- 6.65 12/01/2040 574,307
4,224,678 FNMA #545187+/- 5.93 09/01/2031 4,251,622
1,427,284 FNMA #545208+/- 5.80 09/01/2031 1,481,819
3,481,612 FNMA #545460+/- 5.81 11/01/2031 3,591,703
4,175,749 FNMA #54844+/- 3.77 09/01/2027 4,276,839
3,229,198 FNMA #555161 6.00 12/01/2013 3,351,050
15,448,278 FNMA #555569 6.00 05/01/2016 16,030,848
123,259 FNMA #62895 8.75 01/01/2010 129,918
3,087,406 FNMA #635726+/- 5.50 04/01/2032 3,171,559
1,385,441 FNMA #646643+/- 5.91 06/01/2032 1,405,937
3,351,809 FNMA #66414+/- 4.44 09/01/2028 3,407,925
10,050,031 FNMA #675479+/- 5.07 01/01/2033 10,280,828
6,450,368 FNMA #675491+/- 5.35 04/01/2033 6,492,908
679,302 FNMA #695514 8.50 10/01/2026 736,878
1,568,753 FNMA #695519 8.50 11/01/2026 1,754,350
2,469,615 FNMA #724438 8.50 06/01/2027 2,700,885
8,534,381 FNMA #724658+/- 4.84 07/01/2033 9,006,753
41,358,074 FNMA #725249 5.00 03/01/2034 41,072,266
46,083,203 FNMA #725414 4.50 05/01/2019 45,638,363
18,750,799 FNMA #725440 4.67 04/01/2014 18,824,378
10,177,920 FNMA #725638 5.00 12/01/2018 10,264,267
78,055,150 FNMA #735062 5.50 08/01/2033 78,893,997
48,650,000 FNMA TBA%% 5.00 05/01/2020 48,984,469
95,685,000 FNMA TBA%% 5.00 05/01/2035 94,728,150
502,076,036
--------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.87%
9,575 GNMA #126600 13.00 11/15/2014 11,113
7,001 GNMA #201 14.00 09/20/2014 8,048
7,148 GNMA #45629 13.00 02/15/2011 8,265
4,062 GNMA #46558 13.00 03/15/2011 4,579
1,953 GNMA #52207 15.00 06/15/2012 2,267
12,622 GNMA #52538 15.00 07/15/2012 14,648
65 GNMA #56900 15.00 07/15/2012 74
3,487 GNMA #57979 13.50 10/15/2012 3,971
22,721 GNMA #780051 9.00 12/15/2009 22,796
1,031,986 GNMA #780104 9.50 10/20/2019 1,138,498
551,597 GNMA #780110 12.50 04/15/2019 641,995
29,358 GNMA #780182 9.00 01/15/2008 29,758
27
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (CONTINUED)
$ 3,610,060 GNMA #780288 8.00% 12/15/2023 $ 3,973,590
85,872 GNMA #780416 9.00 12/15/2006 86,156
1,486,018 GNMA #780763 7.50 12/15/2010 1,544,774
2,927,273 GNMA #780867 8.35 04/15/2020 3,213,410
1,667,500 GNMA #780980 8.40 05/15/2020 1,859,012
1,366,913 GNMA #8678+/- 3.75 08/20/2020 1,386,895
840,706 GNMA #8714+/- 4.13 11/20/2020 856,812
4,628 GNMA #95643 15.00 09/15/2012 5,358
10,000,000 GNMA TBA %% 3.96 06/16/2012 9,900,000
24,712,019
--------------
SMALL BUSINESS ADMINISTRATION - 0.04%
5,946,315 SBA #440019(C) 6.08 02/28/2018 246,177
7,251,349 SBA SERIES 1992-6 CLASS A(C) 4.83 10/15/2017 300,206
546,383
--------------
TOTAL US GOVERNMENT AGENCY SECURITIES (COST $628,925,953) 632,728,096
--------------
US TREASURY SECURITIES - 17.73%
US TREASURY BILLS - 0.01%
66,000 US TREASURY BILL^ 2.48 05/12/2005 65,952
75,000 US TREASURY BILL^ 2.54 05/19/2005 74,906
50,000 US TREASURY BILL^# 2.82 07/28/2005 49,662
190,520
--------------
US TREASURY BONDS - 14.52%
20,000,000 US TREASURY BOND 12.75 11/15/2010 20,996,100
28,595,000 US TREASURY BOND 12.00 08/15/2013 35,801,827
13,560,000 US TREASURY BOND 7.25 05/15/2016 17,030,519
20,150,000 US TREASURY BOND 7.13 02/15/2023 26,306,772
14,925,000 US TREASURY BOND 6.25 08/15/2023 17,936,820
15,000,000 US TREASURY BOND 6.00 02/15/2026 17,748,630
18,500,000 US TREASURY BOND 5.38 02/15/2031 20,894,881
8,600,000 US TREASURY BOND 10.00 05/15/2010 8,621,835
19,050,000 US TREASURY BOND 9.25 02/15/2016 27,159,642
192,497,026
--------------
US TREASURY NOTES - 3.20%
11,570,000 US TREASURY NOTE 10.38 11/15/2012 13,413,969
5,305,000 US TREASURY NOTE 4.00 02/15/2015 5,219,001
23,610,000 US TREASURY NOTE 4.00 04/15/2010 23,718,818
42,351,788
--------------
TOTAL US TREASURY SECURITIES (COST $231,450,176) 235,039,334
--------------
28
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND
- -------------------------------------------------------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
SHORT-TERM INVESTMENTS - 6.77%
89,759,352 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~>> $ 89,759,352
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $89,759,352) 89,759,352
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $1,479,507,890)* 112.40% $1,490,042,007
OTHER ASSETS AND LIABILITIES, NET (12.40) (164,395,109)
------ --------------
TOTAL NET ASSETS 100.00% $1,325,646,898
====== ==============
+/- VARIABLE RATE SECURITIES.
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE
SECURITIES ACT OF 1933, AS AMENDED.
(C) INTEREST-ONLY SECURITIES ENTITLE HOLDERS TO RECEIVE ONLY THE INTEREST
PAYMENTS ON THE UNDERLYING MORTGAGES. THE YIELD TO MATURITY OF AN
INTEREST-ONLY IS EXTREMELY SENSITIVE TO THE RATE OF PRINCIPAL PAYMENTS ON
THE UNDERLYING MORTGAGE ASSETS. A RAPID (SLOW) RATE OF PRINCIPAL
REPAYMENTS MAY HAVE ADVERSE (POSITIVE) EFFECT ON YIELD TO MATURITY. THE
PRINCIPAL AMOUNT SHOWN IS THE NOTIONAL AMOUNT OF THE UNDERLYING MORTGAGES.
INTEREST RATE DISCLOSED REPRESENTS THE YIELD BASED UPON THE ESTIMATED
TIMING OF FUTURE CASH FLOWS.
%% SECURITIES ISSUED ON A WHEN-ISSUED (TBA) BASIS. (SEE NOTE 2)
@ THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
^ ZERO COUPON/STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO
MATURITY.
# SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
>> SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $89,759,352.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
29
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
HIGH INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
ASSET-BACKED SECURITIES - 0.02%
$ 4,154,632 AIRCRAFT LEASE PORTFOLIO SECURITIZATION
LIMITED SERIES 1996-1 CLASS DX^^ 12.75% 06/15/2006 $ 41,546
TOTAL ASSET-BACKED SECURITIES (COST $4,181,928) 41,546
--------------
CORPORATE BONDS & NOTES - 86.35%
AMUSEMENT & RECREATION SERVICES - 0.84%
2,240,000 TOWN SPORTS INTERNATIONAL 9.63 04/15/2011 2,298,800
--------------
APPAREL & ACCESSORY STORES - 1.30%
3,225,000 FOOT LOCKER INCORPORATED 8.50 01/15/2022 3,531,375
--------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 1.17%
2,890,000 WILLIAM CARTER COMPANY SERIES B 10.88 08/15/2011 3,179,000
--------------
BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 2.52%
1,940,000 DR HORTON INCORPORATED 6.88 05/01/2013 2,061,295
1,775,000 ERICO INTERNATIONAL CORPORATION 8.88 03/01/2012 1,792,750
1,505,000 K HOVNANIAN ENTERPRISES INCORPORATED 6.25 01/15/2015 1,456,087
1,590,000 KB HOME 5.88 01/15/2015 1,560,178
6,870,310
--------------
BUSINESS SERVICES - 4.15%
1,345,000 IMCO RECYCLING ESCROW INCORPORATED++ 9.00 11/15/2014 1,371,900
2,100,000 NATIONAL WINE & SPIRITS INCORPORATED 10.13 01/15/2009 2,089,500
2,230,000 NATIONSRENT INCORPORATED 9.50 10/15/2010 2,408,400
810,000 RAINBOW NATIONAL SERVICES LLC++ 10.38 09/01/2014 915,300
2,451,000 WATERFORD GAMING LLC++ 8.63 09/15/2012 2,598,060
1,810,000 WILLIAMS SCOTSMAN INCORPORATED 10.00 08/15/2008 1,918,600
11,301,760
--------------
CHEMICALS & ALLIED PRODUCTS - 6.18%
2,055,000 EQUISTAR CHEMICALS LP/EQUISTAR FUNDING CORPORATION 10.63 05/01/2011 2,291,325
1,775,000 HUNTSMAN INTERNATIONAL LLC++ 7.38 01/01/2015 1,770,562
1,825,000 IMC GLOBAL INCORPORATED 10.88 08/01/2013 2,153,500
2,070,000 JOHNSONDIVERSEY INCORPORATED SERIES B 9.63 05/15/2012 2,101,050
1,285,000 NALCO COMPANY 8.88 11/15/2013 1,317,125
1,515,000 OM GROUP INCORPORATED 9.25 12/15/2011 1,530,150
1,635,000 POLYONE CORPORATION 10.63 05/15/2010 1,802,587
1,765,000 RESOLUTION PERFORMANCE PRODUCTS INCORPORATED 13.50 11/15/2010 1,910,613
1,835,000 RHODIA SA 10.25 06/01/2010 1,945,100
16,822,012
--------------
COAL MINING - 1.09%
2,970,000 ARCH WESTERN FINANCE LLC 6.75 07/01/2013 2,977,425
--------------
COMMUNICATIONS - 17.04%
1,370,000 AIRGATE PCS INCORPORATED+/-++ 6.89 10/15/2011 1,400,825
1,765,000 AT&T CORPORATION 9.75 11/15/2031 2,197,425
4,830,000 CCO HOLDINGS LLC/CAPITAL CORPORATION+/-++ 7.14 12/15/2010 4,648,875
1,615,000 CENTENNIAL COMMUNICATIONS CORPORATION CELLULAR OPERATING COMPANY LLC
PUERTO RICO OPERATIONS 8.13 02/01/2014 1,610,962
30
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
HIGH INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COMMUNICATIONS (CONTINUED)
$ 1,740,000 CHARTER COMMUNICATIONS HOLDINGS II LLC/CAPITAL CORPORATION 10.25% 09/15/2010 $ 1,737,825
1,755,000 CINCINNATI BELL INCORPORATED++ 8.38 01/15/2014 1,671,637
2,845,000 CSC HOLDINGS INCORPORATED SERIES B 7.63 04/01/2011 2,887,675
2,210,000 DOBSON CELLULAR SYSTEMS++ 9.88 11/01/2012 2,232,100
1,770,000 HORIZON PCS INCORPORATED++ 11.38 07/15/2012 1,955,850
2,920,000 INTELSAT BERMUDA LIMITED++ 8.63 01/15/2015 2,963,800
445,000 IWO ESCROW COMPANY+/-++ 6.89 01/15/2012 445,000
1,110,000 IWO ESCROW COMPANY^++ 10.30 01/15/2015 699,300
1,350,000 MCI INCORPORATED 8.74 05/01/2014 1,461,375
875,000 NEWPAGE CORPORATION+/-++ 9.43 05/01/2012 857,500
2,535,000 PAXSON COMMUNICATIONS CORPORATION^ 11.53 01/15/2009 2,357,550
2,925,000 QWEST COMMUNICATIONS INTERNATIONAL+/-++ 6.29 02/15/2009 2,903,063
1,500,000 QWEST CORPORATION++ 7.88 09/01/2011 1,522,500
2,075,000 QWEST SERVICES CORPORATION++ 14.00 12/15/2010 2,334,375
1,600,000 QWEST SERVICES CORPORATION++ 14.50 12/15/2014 1,856,000
3,270,000 ROGERS CABLE INCORPORATED 6.75 03/15/2015 3,139,200
1,630,000 ROGERS WIRELESS INCORPORATED+/- 6.14 12/15/2010 1,674,825
1,790,000 RURAL CELLULAR CORPORATION 8.25 03/15/2012 1,812,375
2,315,000 VERTIS INCORPORATED SERIES B 10.88 06/15/2009 2,048,775
46,418,812
--------------
DEPOSITORY INSTITUTIONS - 0.36%
925,000 DOLLAR FINANCIAL GROUP INCORPORATED 9.75 11/15/2011 971,250
--------------
EATING & DRINKING PLACES - 0.68%
1,805,000 DENNY'S CORPORATION HOLDINGS INCORPORATED++ 10.00 10/01/2012 1,850,125
--------------
ELECTRIC, GAS & SANITARY SERVICES - 9.08%
1,430,000 ALLIED WASTE NORTH AMERICA SERIES B 8.88 04/01/2008 1,469,325
1,820,000 CLEAN HARBORS INCORPORATED++ 11.25 07/15/2012 2,020,200
1,840,000 EL PASO NATURAL GAS COMPANY SERIES A 7.63 08/01/2010 1,922,484
1,770,000 INERGY LP/INERGY FINANCE CORPORATION++ 6.88 12/15/2014 1,681,500
1,840,000 MIDWEST GENERATION LLC 8.75 05/01/2034 2,005,600
980,000 MISSION ENERGY HOLDING COMPANY 13.50 07/15/2008 1,149,050
1,335,000 NEVADA POWER COMPANY++ 5.88 01/15/2015 1,294,950
1,775,000 NORTHWESTERN CORPORATION++ 5.88 11/01/2014 1,803,629
3,000,000 SIERRA PACIFIC POWER COMPANY SERIES A 8.00 06/01/2008 3,165,000
1,780,000 SIERRA PACIFIC RESOURCES 8.63 03/15/2014 1,886,800
2,650,000 SOUTHERN NATURAL GAS COMPANY 8.88 03/15/2010 2,880,285
1,775,000 TEXAS GENCO LLC/TEXAS GENCO FINANCING CORPORATION++ 6.88 12/15/2014 1,739,500
1,770,000 TXU CORPORATION++ 5.55 11/15/2014 1,706,191
24,724,514
--------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS,
EXCEPT COMPUTER EQUIPMENT - 1.49%
1,765,000 AMKOR TECHNOLOGY INCORPORATED 7.75 05/15/2013 1,383,318
1,705,000 LUCENT TECHNOLOGIES INCORPORATED 6.45 03/15/2029 1,438,594
1,330,000 MAGNACHIP SEMICONDUCTOR/MAGNACHIP SEMICONDUCTOR FINANCE COMPANY+/-++ 6.26 12/15/2011 1,243,550
4,065,462
--------------
31
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
HIGH INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 0.70%
$ 1,815,000 US ONCOLOGY INCORPORATED 9.00% 08/15/2012 $ 1,896,675
--------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 1.24%
1,405,000 FASTENTECH INCORPORATED 12.50 05/01/2011 1,510,375
1,830,000 MUELLER GROUP INCORPORATED+/- 7.96 11/01/2011 1,857,450
3,367,825
--------------
FOOD & KINDRED PRODUCTS - 1.63%
1,830,000 AEARO COMPANY I 8.25 04/15/2012 1,839,150
2,320,000 REDDY ICE GROUP INCORPORATED 8.88 08/01/2011 2,601,346
4,440,496
--------------
FOOD STORES - 1.17%
1,765,000 AMERICAN SEAFOODS GROUP LLC 10.13 04/15/2010 1,888,550
1,250,000 DOANE PET CARE COMPANY 10.75 03/01/2010 1,312,500
3,201,050
--------------
GENERAL MERCHANDISE STORES - 1.83%
1,765,000 ALH FINANCE LLC/ALH FINANCE CORPORATION 8.50 01/15/2013 1,694,400
2,985,000 JC PENNEY COMPANY INCORPORATED 7.95 04/01/2017 3,290,963
4,985,363
--------------
HEALTH SERVICES - 3.74%
440,000 DAVITA INCORPORATED++ 6.63 03/15/2013 435,600
440,000 DAVITA INCORPORATED++ 7.25 03/15/2015 427,900
2,065,000 FRESENIUS MEDICAL CARE CAPITAL TRUST II 7.88 02/01/2008 2,147,600
1,925,000 HCA INCORPORATED 5.75 03/15/2014 1,857,167
2,840,000 HEALTHSOUTH CORPORATION 7.63 06/01/2012 2,726,400
2,655,000 SELECT MEDICAL CORPORATION++ 7.63 02/01/2015 2,608,537
10,203,204
--------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 2.92%
13,915,000 ALADDIN GAMING/CAPITAL CORPORATION SERIES B^^ 13.50 03/01/2010 69,575
1,645,000 CHUMASH CASINO & RESORT ENTERPRISE++ 9.26 07/15/2010 1,760,150
2,430,000 HOLLYWOOD CASINO SHREVEPORT/SHREVEPORT CAPITAL CORPORATION^^ 13.00 08/01/2006 2,013,862
1,970,000 MGM MIRAGE INCORPORATED 6.00 10/01/2009 1,942,913
2,110,000 TURNING STONE CASINO RESORT ENTERPRISE++ 9.13 12/15/2010 2,162,750
7,949,250
--------------
JUSTICE, PUBLIC ORDER & SAFETY - 0.37%
970,000 CORRECTIONS CORPORATION OF AMERICA 7.50 05/01/2011 1,000,313
--------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS:
PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 0.80%
2,170,000 XEROX CAPITAL TRUST I 8.00 02/01/2027 2,191,700
--------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.74%
4,850,000 GENTEK INCORPORATED^^ 11.00 08/01/2009 0
1,885,000 JACUZZI BRANDS INCORPORATED 9.63 07/01/2010 2,016,950
2,016,950
--------------
32
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
HIGH INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
OIL & GAS EXTRACTION - 3.92%
$ 1,815,000 FOREST OIL CORPORATION 8.00% 12/15/2011 $ 1,969,275
2,230,000 HILCORP ENERGY I LP/HILCORP FINANCE COMPANY++ 10.50 09/01/2010 2,464,150
2,265,000 PARKER DRILLING COMPANY+/- 7.66 09/01/2010 2,338,613
1,865,000 PREMCOR REFINING GROUP INCORPORATED 7.75 02/01/2012 2,004,875
1,815,000 PRIDE INTERNATIONAL INCORPORATED 7.38 07/15/2014 1,905,750
10,682,663
--------------
PAPER & ALLIED PRODUCTS - 3.41%
2,275,000 APPLETON PAPERS INCORPORATED 8.13 06/15/2011 2,297,750
1,350,000 BOISE CASCADE LLC+++/- 6.02 10/15/2012 1,336,500
3,410,000 GEORGIA-PACIFIC CORPORATION 8.88 02/01/2010 3,785,100
1,765,000 PLAYTEX PRODUCTS INCORPORATED 8.00 03/01/2011 1,884,138
9,303,488
--------------
PRIMARY METAL INDUSTRIES - 3.35%
2,000,000 GENERAL CABLE CORPORATION 9.50 11/15/2010 2,120,000
2,700,000 IPSCO INCORPORATED 8.75 06/01/2013 2,997,000
1,765,000 NOVELIS INCORPORATED++ 7.25 02/15/2015 1,707,638
2,270,000 SUPERIOR ESSEX COMMUNICATIONS LLC/ESSEX GROUP INCORPORATED 9.00 04/15/2012 2,292,700
9,117,338
--------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 7.38%
1,770,000 AMERICAN COMMERCIAL LINES FINANCE++ 9.50 02/15/2015 1,796,550
2,000,000 DEX MEDIA INCORPORATED 8.00 11/15/2013 2,060,000
1,055,000 HOUGHTON MIFFLIN COMPANY 7.20 03/15/2011 1,076,100
3,000,000 HOUGHTON MIFFLIN COMPANY^ 11.53 10/15/2013 1,995,000
2,160,000 JOSTENS IH CORPORATION 7.63 10/01/2012 2,160,000
1,690,000 PRIMEDIA INCORPORATED+/- 8.16 05/15/2010 1,774,500
2,379,000 READER'S DIGEST ASSOCIATION INCORPORATED 6.50 03/01/2011 2,361,158
2,260,000 RIDDELL BELL HOLDINGS++ 8.38 10/01/2012 2,276,950
1,900,000 UCAR FINANCE INCORPORATED 10.25 02/15/2012 1,985,500
2,620,000 VENOCO INCORPORATED++ 8.75 12/15/2011 2,620,000
20,105,758
--------------
REAL ESTATE - 0.75%
1,843,000 CB RICHARD ELLIS SERVICES INCORPORATED 9.75 05/15/2010 2,054,945
--------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS - 0.76%
2,040,000 BWAY CORPORATION 10.00 10/15/2010 2,060,400
--------------
TEXTILE MILL PRODUCTS - 1.80%
2,775,000 INTERFACE INCORPORATED 9.50 02/01/2014 2,775,000
2,095,000 PERRY ELLIS INTERNATIONAL INCORPORATED SERIES B 8.88 09/15/2013 2,126,425
4,901,425
--------------
TOBACCO PRODUCTS - 0.82%
2,130,000 COMMONWEALTH BRANDS INCORPORATED++ 10.63 09/01/2008 2,225,850
--------------
33
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
HIGH INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
TRANSPORTATION EQUIPMENT - 1.40%
$ 1,775,000 NAVISTAR INTERNATIONAL CORPORATION++ 6.25% 03/01/2012 $ 1,562,000
2,110,000 REXNORD CORPORATION 10.13 12/15/2012 2,257,700
3,819,700
--------------
WATER TRANSPORTATION - 1.00%
2,420,000 CP SHIPS LIMITED 10.38 07/15/2012 2,716,450
--------------
WHOLESALE TRADE NON-DURABLE GOODS - 0.72%
1,815,000 AMERISOURCEBERGEN CORPORATION 7.25 11/15/2012 1,960,200
--------------
TOTAL CORPORATE BONDS & NOTES (COST $241,801,869) 235,211,888
--------------
FOREIGN GOVERNMENT BONDS - 1.94%
2,490,000 CROWN EUROPEAN HOLDINGS SA 9.50 03/01/2011 2,689,200
1,463,000 ISPAT INLAND ULC 9.75 04/01/2014 1,671,477
890,000 ROGERS WIRELESS COMMUNICATIONS INCORPORATED 7.50 03/15/2015 913,363
TOTAL FOREIGN GOVERNMENT BONDS (COST $4,849,306) 5,274,040
--------------
TERM LOANS - 7.79%
2,480,000 EL PASO TERM LOAN B+/-++ 5.44 11/22/2009 2,504,800
3,230,000 GOODYEAR TIRE TERM LOAN B+/-++ 5.89 04/08/2010 3,215,885
2,000,000 GRAHAM PACKAGING COMPANY TERM LOAN C+/-++ 7.31 03/15/2012 2,047,500
1,929,647 INVIS TERM LOAN B+/-++ 5.31 04/30/2011 1,951,356
2,962,500 LEVI STRAUSS COMPANY TRADEMARK TERM LOAN+/-++ 9.65 08/01/2006 3,118,031
1,758,891 MIDWEST GENERATION TERM LOAN+/-++ 5.74 04/05/2011 1,777,588
1,980,000 NORTHWEST AIRLINES CORPORATION TRANCHE B+/-++ 9.83 11/03/2010 1,998,810
2,879,775 REGAL CINEMAL CORPORATION TERM LOAN B+/-++ 5.09 10/19/2010 2,914,217
1,636,250 REVLON TERM LOAN+/-++ 9.00 07/31/2010 1,696,251
TOTAL TERM LOANS (COST $21,001,879) 21,224,438
--------------
SHARES
SHORT-TERM INVESTMENTS - 3.03%
8,244,207 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~>> 8,244,207
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $8,244,207) 8,244,207
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $280,079,189)* 99.13% $ 269,996,119
OTHER ASSETS AND LIABILITIES, NET 0.87 2,381,565
------ --------------
TOTAL NET ASSETS 100.00% $ 272,377,684
====== ==============
^^ THIS SECURITY IS CURRENTLY IN DEFAULT WITH REGARDS TO SCHEDULED INTEREST
OR PRINCIPAL PAYMENTS.
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE
SECURITIES ACT OF 1933, AS AMENDED.
+/- VARIABLE RATE SECURITIES.
^ ZERO COUPON/STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO
MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
~ THIS WELLS ADVANTAGE FARGO FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
>> SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $8,244,207.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
34
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
AGENCY NOTES - INTEREST BEARING - 1.57%
$ 270,000 FHLB 2.00% 07/10/2006 $ 264,663
200,000 FHLB 3.38 10/05/2007 197,353
1,000,000 FHLB 4.13 03/24/2008 999,927
4,700,000 FHLMC 4.38 07/30/2009 4,671,091
500,000 FNMA 2.00 01/15/2006 494,866
500,000 FNMA 2.15 04/13/2006 493,151
750,000 FNMA 3.13 12/15/2007 734,213
645,000 FNMA 3.50 01/28/2008 636,440
500,000 FNMA 3.25 08/15/2008 487,254
TOTAL AGENCY NOTES - INTEREST BEARING (COST $9,085,453) 8,978,958
--------------
ASSET-BACKED SECURITIES - 12.64%
5,000,000 AAMES MORTGAGE TRUST SERIES 2003-1 CLASS M1+/- 3.70 10/25/2033 5,058,196
6,500,000 ACCREDITED MORTGAGE LOAN TRUST SERIES 2004-3 CLASS 1A2+/- 3.44 10/25/2034 6,426,243
3,900,000 BANK ONE ISSUANCE TRUST SERIES 2004-B1 CLASS B1+/- 3.27 03/15/2012 3,923,445
4,262,492 BEAR STEARNS ASSET BACKED SECURITIES INCORPORATED
SERIES 2003-ABF1 CLASS AIO(C) 4.00 03/25/2006 95,906
500,000 CAPITAL ONE PRIME AUTO RECEIVABLES TRUST SERIES 2004-3 CLASS A2 3.04 07/15/2007 498,110
499,991 CDC MORTGAGE CAPITAL TRUST SERIES 2003-HE4 CLASS M1+/- 3.67 03/25/2034 501,981
2,500,000 CHASE FUNDING MORTGAGE LOAN ASSET-BACKED CERTIFICATES
SERIES 2003-5 CLASS 2M1+/- 3.62 05/25/2033 2,511,441
9,906,396 CONTIMORTGAGE HOME EQUITY TRUST SERIES 1996-2 CLASS IO+/-(C) 0.54 07/15/2027 1,981
2,623,560 CONTIMORTGAGE NET INTEREST MARGIN NOTES SERIES 1997-A CLASS A (C) 7.23 07/16/2028 525
3,299,704 COUNTRYWIDE ASSET-BACKED CERTIFICATES SERIES 2004-7 CLASS AF1+/- 3.22 10/25/2022 3,300,807
3,142,636 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2002-C CLASS A+/- 3.19 05/15/2028 3,144,778
1,779,353 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2004-I CLASS A+/- 3.24 02/15/2034 1,784,826
5,311,146 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2004-Q CLASS 2A+/- 3.25 12/15/2033 5,323,801
500,000 DAIMLERCHRYSLER AUTO TRUST SERIES 2005-A CLASS M1 3.17 09/08/2007 498,529
59,572,916 EASTMAN HILL FUNDING LIMITED SERIES 1A CLASS A2(C) 0.83 09/29/2031 1,656,127
3,500,000 FLEET COMMERCIAL LOAN MASTER LLC SERIES 2000-1A CLASS B2+/-++ 3.38 11/16/2007 3,500,000
218,313 GREEN TREE HOME EQUITY LOAN TRUST SERIES 1999-C CLASS M1 7.77 07/15/2030 218,766
6,550,000 GREEN TREE HOME IMPROVEMENT LOAN TRUST SERIES 1998-E CLASS AV1 7.27 06/15/2028 6,632,149
2,781,354 GSAA TRUST SERIES 2004-7 CLASS AV1+/- 3.20 06/25/2034 2,781,087
3,000,000 HOME EQUITY ASSET TRUST SERIES 2003-6 CLASS M1+/- 3.72 02/25/2034 3,017,816
3,754,531 RAILCAR LEASING LLC SERIES 1 CLASS A1++ 6.75 07/15/2006 3,827,369
225,203 RENAISSANCE HOME EQUITY LOAN TRUST SERIES 2004-3 CLASS AF1+/- 3.24 11/25/2034 225,225
25,002,703 RESIDENTIAL ASSET MORTGAGE PRODUCTS INCORPORATED
SERIES 2002-RS7 CLASS AIO(C) 2.00 05/25/2005 2,500
9,133,858 RESIDENTIAL ASSET MORTGAGE PRODUCTS INCORPORATED
SERIES 2003-RZ2 CLASS AIO(C) 5.75 09/25/2005 151,622
2,109,454 RESIDENTIAL ASSET MORTGAGE PRODUCTS INCORPORATED
SERIES 2003-RZ5 CLASS A2 3.18 03/25/2027 2,103,663
868,915 RESIDENTIAL ASSET SECURITIES CORPORATION
SERIES 2001-KS1 CLASS AII+/- 3.26 03/25/2032 869,695
500,000 RESIDENTIAL ASSET SECURITIES CORPORATION
SERIES 2003-KS8 CLASS MII1+/- 3.65 10/25/2033 499,953
4,000,000 STRUCTURED ASSET INVESTMENT LOAN TRUST
SERIES 2003-BC10 CLASS M1+/- 3.77 10/25/2033 4,015,374
4,000,000 STRUCTURED ASSET INVESTMENT LOAN TRUST SERIES 2003-BC3 CLASS M1+/- 3.97 04/25/2033 4,026,761
1,428,571 STRUCTURED ASSET SECURITIES CORPORATION
SERIES 2003-18XS CLASS AIO(C) 5.00 05/25/2005 355
1,685,996 TERWIN MORTGAGE TRUST SERIES 2004-21HE CLASS 1A1+/- 3.50 12/25/2034 1,690,211
4,000,000 WILLIAM STREET FUNDING CORPORATION CLASS 2005-1 CLASS A+/-++ 3.04 01/23/2011 4,000,000
TOTAL ASSET-BACKED SECURITIES (COST $75,617,770) 72,289,242
--------------
35
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS - 25.20%
$ 7,844,196 ASSET SECURITIZATION CORPORATION SERIES 1995-MD4 CLASS A1 7.10% 08/13/2029 $ 7,991,221
37,000,000 BANC OF AMERICA COMMERCIAL MORTGAGE INCORPORATED SERIES 2001-PB1
CLASS XP+/-++(C) 1.77 05/11/2035 2,761,458
732,231 BANK OF AMERICA MORTGAGE SECURITIES SERIES 2002-K CLASS 3A1+/- 6.74 10/20/2032 746,215
3,346,472 CITIGROUP MORTGAGE LOAN TRUST INCORPORATED SERIES 2004-HYB4
CLASS AA+/- 3.35 12/25/2034 3,346,472
487,963 COLLATERALIZED MORTGAGE OBLIGATION TRUST SERIES 47 CLASS E^ 0.21 09/01/2018 485,040
739,611 COUNTRYWIDE ALTERNATIVE LOAN TRUST SERIES J8 CLASS 4A1 6.00 02/25/2017 761,055
1,972,644 COUNTRYWIDE HOME LOAN MORTGAGE PASS THROUGH TRUST SERIES
2001-HYB1 CLASS 2A1+/- 4.89 06/19/2031 1,995,561
1,206,441 COUNTRYWIDE HOME LOAN MORTGAGE PASS THROUGH TRUST SERIES
2004-30 CLASS 3A1+/- 4.66 09/25/2034 1,246,154
1,040,654 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES
1997-C2 CLASS A2 6.52 01/17/2035 1,056,964
43,014,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES
2001-CK6 CLASS ACP+/-(C) 0.93 08/15/2036 1,333,361
3,377,183 DLJ COMMERCIAL MORTGAGE CORPORATION SERIES 2000-CF1 CLASS A1A 7.45 06/10/2033 3,452,825
1,142,433 DREXEL BURNHAM LAMBERT CMO TRUST SERIES T CLASS 4 8.45 09/20/2019 1,146,635
6,768,485 EQUIFIRST MORTGAGE LOAN TRUST SERIES 2003-2 3A3+/- 2.47 09/25/2033 6,765,290
509,064 FHLMC SERIES 2198 CLASS SC+/- 9.00 06/15/2028 546,938
2,000,000 FHLMC SERIES MTN 2.75 10/06/2006 1,971,528
2,196,120 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-42 CLASS A6 9.50 02/25/2042 2,415,011
3,500,000 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-53 CLASS S+/-(C) 6.50 06/25/2005 22,050
127,868 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-57 CLASS 2A1+/- 4.10 07/25/2043 131,659
4,817,858 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-59 CLASS 2A1+/- 4.19 10/25/2043 4,941,870
423,149 FNMA GRANTOR TRUST SERIES 2002-T1 CLASS A4 9.50 11/25/2031 458,049
3,364,187 FNMA GRANTOR TRUST SERIES 2002-T12 CLASS A4 9.50 05/25/2042 3,701,306
568,048 FNMA PASS THRU 426832 8.50 07/01/2018 620,047
5,000,000 FNMA SERIES 1 3.00 11/09/2006 4,941,850
1,055,018 FNMA SERIES 1989-29 CLASS Z 10.00 06/25/2019 1,156,867
787,533 FNMA SERIES 1989-63 CLASS Z 9.40 10/25/2019 850,121
795,956 FNMA SERIES 1993-M1 CLASS N(C) 0.84 04/25/2020 239
1,162,625 FNMA SERIES G95-2 CLASS IO+/-(C) 10.00 05/25/2020 268,315
20,174 FNMA STRIP SERIES 107 CLASS 1^(C) 3.71 10/25/2006 19,883
2,509,942 FNMA WHOLE LOAN SERIES 2003-W10 CLASS 3A2A 2.20 07/25/2037 2,481,890
2,051,970 FNMA WHOLE LOAN SERIES 2003-W11 CLASS A1+/- 5.25 06/25/2033 2,092,645
6,390,392 FNMA WHOLE LOAN SERIES 2003-W6 CLASS 6A+/- 4.19 08/25/2042 6,509,008
584,796 FNMA WHOLE LOAN SERIES 2003-W6 CLASS PT4+/- 9.82 10/25/2042 649,549
5,000,000 FNMA WHOLE LOAN SERIES 2003-W8 CLASS 1A3 4.75 12/25/2042 4,973,731
100,000,000 GE CAPITAL COMMERCIAL MORTGAGE CORPORATION SERIES
2001-1 CLASS X2+/-++(C) 0.95 05/15/2033 2,686,650
75,000,000 GE CAPITAL COMMERCIAL MORTGAGE CORPORATION SERIES
2001-2 CLASS X2+/-++(C) 1.25 08/11/2033 2,661,382
5,931,266 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED
SERIES 2000-C2 CLASS A1 7.27 08/16/2033 6,216,627
67,720,000 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES
2001-C2 CLASS X2+/-++(C) 0.93 04/15/2034 1,631,883
209,953 GMBS CERTIFICATES SERIES 1990-1 CLASS Z 9.25 01/28/2020 209,480
728,837 GOLDEN NATIONAL MORTGAGE ASSET BACKED CERTIFICATES
SERIES 1998-GN1 CLASS M2 8.02 02/25/2027 727,098
6,000,000 GREENWICH CAPITAL COMMERCIAL FUNDING CORPORATION
SERIES 2002-C1 CLASS XPB+/-++(C) 1.99 01/11/2035 273,471
6,000,000 GREENWICH CAPITAL COMMERCIAL FUNDING CORPORATION
SERIES 2004-GG1 CLASS A2 3.84 06/10/2036 5,954,014
1,591,965 GSMPS MORTGAGE LOAN TRUST SERIES 1998-1 CLASS A++ 8.00 09/19/2027 1,712,500
4,051,714 GSMPS MORTGAGE LOAN TRUST SERIES 2004-4 CLASS 1AF+/-++ 3.42 06/25/2034 4,070,772
3,997,436 GSMPS MORTGAGE LOAN TRUST SERIES 2004-4 CLASS 2A1+/-++ 4.22 06/25/2034 4,103,021
1,935,314 GSR MORTGAGE LOAN TRUST SERIES 2004-1 CLASS 2A2+/- 5.22 04/25/2032 1,949,145
23,516,487 INDYMAC INDEX MORTGAGE LOAN TRUST SERIES 2004-AR14 CLASS AX1+/-(C) 0.80 01/25/2035 298,659
36
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
$154,610,900 INDYMAC INDEX MORTGAGE LOAN TRUST SERIES 2004-AR8 CLASS AX1+/-(C) 0.80% 11/25/2034 $ 1,979,020
125,000,000 JP MORGAN CHASE COMMERCIAL MORTGAGE SECURITIES
CORPORATION SERIES 2001-CIB2 CLASS X2+/-++(C) 1.00 04/15/2035 3,690,187
4,000,000 JP MORGAN MORTGAGE TRUST 5.15 05/25/2035 4,005,200
4,446,851 JP MORGAN MORTGAGE TRUST SERIES 2005-A2 CLASS 3A+/- 4.93 04/25/2035 4,463,749
87,467 MASTER ADJUSTABLE RATE MORTGAGES TRUST SERIES 2002-3 CLASS 4A1+/- 6.16 10/25/2032 87,916
75,362,520 MORGAN STANLEY CAPITAL I SERIES 1999-WF1 CLASS X+/-++(C) 0.97 11/15/2031 1,990,324
2,400,024 NOMURA ASSET ACCEPTANCE CORPORATION SERIES 2003-A3 CLASS AIO+/-(C) 5.15 03/25/2006 83,902
6,358,679 RESIDENTIAL FINANCE LP SERIES 2003-C CLASS B3+/-++ 4.31 09/10/2035 6,467,022
1,763,829 RURAL HOUSING TRUST 1987-1 7.33 04/01/2026 1,764,113
272,757 SALOMON BROTHERS MORTGAGE SECURITIES VI SERIES 1987-3 CLASS A^(C) 5.47 10/23/2017 249,291
5,559,523 STRUCTURED ASSET SECURITIES CORPORATION SERIES 1998-RF2 CLASS A+/-++ 8.56 07/15/2027 5,741,349
872,647 STRUCTURED ASSET SECURITIES CORPORATION SERIES 2002-8A CLASS 3A+/- 5.60 05/25/2032 874,801
12,984,899 STRUCTURED ASSET SECURITIES CORPORATION SERIES 2004-4XS
CLASS AIO+/-(C) 5.00 01/25/2006 285,377
21,937 STRUCTURED MORTGAGE ASSET RESIDENTIAL TRUST SERIES 1992-5B CLASS BO^ 1.91 06/25/2023 20,433
185,114 USGI FHA PROJECT LOAN 7.44 11/24/2019 185,281
1,595,630 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR10 CLASS A6+/- 4.82 10/25/2032 1,585,447
1,563,970 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR15 CLASS A5+/- 4.38 12/25/2032 1,558,426
184,829 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR7 CLASS A6+/- 5.53 07/25/2032 184,889
3,028,000 WASHINGTON MUTUAL INCORPORATED SERIES 2003-AR7 CLASS A5+/- 3.07 08/25/2033 2,974,289
689,299 WILSHIRE FUNDING CORPORATION SERIES 1996-3 CLASS M2+/- 6.17 08/25/2032 687,829
689,299 WILSHIRE FUNDING CORPORATION SERIES 1996-3 CLASS M3+/- 6.17 08/25/2032 687,809
219,308 WILSHIRE FUNDING CORPORATION SERIES 1998-WFC2 CLASS M1+/- 5.24 12/28/2037 219,593
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $141,646,448) 144,121,756
--------------
CORPORATE BONDS & NOTES - 44.98%
AMUSEMENT & RECREATION SERVICES - 0.87%
2,000,000 CAESARS ENTERTAINMENT INCORPORATED 7.88 12/15/2005 2,037,500
1,209,095 DISNEY CUSTOM REPACKAGED++ 7.20 01/10/2007 1,251,715
1,700,000 SAN MANUEL ENTERTAINMENT AUTHORITY SERIES 04-B+/-++ 3.71 12/01/2010 1,700,000
--------------
4,989,215
--------------
BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 0.72%
2,250,000 LENNAR CORPORATION SERIES B 9.95 05/01/2010 2,361,937
1,637,000 RYLAND GROUP INCORPORATED 9.75 09/01/2010 1,748,786
4,110,723
--------------
BUSINESS SERVICES - 1.04%
2,101,000 BEAVER VALLEY II FUNDING CORPORATION 8.63 06/01/2007 2,196,259
2,845,000 CENDANT CORPORATION 6.25 01/15/2008 2,965,389
750,000 GENERAL ELECTRIC CAPITAL CORPORATION SERIES MTNA 6.50 12/10/2007 792,311
5,953,959
--------------
COMMUNICATIONS - 10.16%
2,485,000 AMFM INCORPORATED 8.00 11/01/2008 2,684,819
2,500,000 AT&T CORPORATION SERIES MTNA 8.35 05/15/2025 2,625,000
3,450,000 BRITISH SKY BROADCASTING PLC 8.20 07/15/2009 3,905,307
2,500,000 CITIZENS COMMUNICATIONS COMPANY 7.60 06/01/2006 2,575,000
37
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COMMUNICATIONS (CONTINUED)
$ 1,800,000 CLEAR CHANNEL COMMUNICATIONS INCORPORATED 6.00% 11/01/2006 $ 1,829,484
515,000 CLEAR CHANNEL COMMUNICATIONS INCORPORATED 4.63 01/15/2008 508,743
3,230,000 COX COMMUNICATIONS INCORPORATED 7.75 08/15/2006 3,366,274
250,000 FRANCE TELECOM 7.45 03/01/2006 257,234
3,000,000 GTE HAWAIIAN TELEPHONE COMPANY SERIES A 7.00 02/01/2006 3,017,850
500,000 HISTORIC TW INCORPORATED 7.48 01/15/2008 539,510
3,425,000 LENFEST COMMUNICATIONS INCORPORATED 10.50 06/15/2006 3,645,960
4,850,000 LIBERTY MEDIA CORPORATION+/- 4.51 09/17/2006 4,907,521
460,000 NEW CINGULAR WIRELESS SERVICES INCORPORATED 7.35 03/01/2006 473,302
2,350,000 SBC COMMUNICATIONS INCORPORATED 4.13 09/15/2009 2,311,129
3,500,000 SPRINT CAPITAL CORPORATION 6.13 11/15/2008 3,678,332
2,899,000 TCI COMMUNICATIONS INCORPORATED 6.88 02/15/2006 3,004,845
3,000,000 TELUS CORPORATION 7.50 06/01/2007 3,185,544
5,100,000 TIME WARNER ENTERTAINMENT COMPANY LP 7.25 09/01/2008 5,523,943
2,910,000 UNIVISION COMMUNICATIONS INCORPORATED 2.88 10/15/2006 2,858,246
6,935,000 VERIZON GLOBAL FUNDING CORPORATION 4.00 01/15/2008 6,889,160
300,000 VERIZON WIRELESS CAPITAL LLC 5.38 12/15/2006 306,051
58,093,254
--------------
DEPOSITORY INSTITUTIONS - 5.12%
1,065,000 ABN AMRO BANK NV CHICAGO 7.25 05/31/2005 1,068,069
6,800,000 BANK OF AMERICA CORPORATION 5.25 02/01/2007 6,942,922
10,550,000 BANK ONE NA 6.25 02/15/2008 11,111,028
500,000 FIRST BANK NATIONAL ASSOCIATION 6.50 02/01/2008 529,040
5,000,000 HUNTINGTON CAPITAL TRUST I+/- 3.89 02/01/2027 4,698,405
5,000,000 STAR BANC CAPITAL TRUST I+/- 3.78 06/15/2027 4,951,495
29,300,959
--------------
ELECTRIC, GAS & SANITARY SERVICES - 3.62%
2,000,000 AMEREN CORPORATION 4.26 05/15/2007 1,999,794
306,000 CONSUMERS ENERGY COMPANY 6.25 09/15/2006 315,909
5,785,000 DOMINION RESOURCES INCORPORATED SERIES B 7.63 07/15/2005 5,831,968
2,485,000 KANSAS GAS & ELECTRIC 6.50 08/01/2005 2,499,676
2,409,052 MIDLAND FUNDING II SERIES A 11.75 07/23/2005 2,444,222
2,525,000 NISOURCE FINANCE CORPORATION 7.63 11/15/2005 2,576,566
818,000 SOUTHERN CALIFORNIA EDISON 8.00 02/15/2007 871,046
3,920,000 WASTE MANAGEMENT INCORPORATED 6.50 11/15/2008 4,173,146
20,712,327
--------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT
COMPUTER EQUIPMENT - 0.38%
2,000,000 AMETEK INCORPORATED 7.20 07/15/2008 2,147,016
--------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.22%
1,200,000 BALL CORPORATION 7.75 08/01/2006 1,233,000
--------------
FOOD & KINDRED PRODUCTS - 1.57%
4,700,000 GENERAL MILLS INCORPORATED 3.88 11/30/2007 4,656,629
4,300,000 NABISCO INCORPORATED 6.85 06/15/2005 4,315,600
8,972,229
--------------
38
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FOOD STORES - 0.98%
$ 2,750,000 KROGER COMPANY 7.63% 09/15/2006 $ 2,869,625
2,500,000 YUM! BRANDS INCORPORATED 7.65 05/15/2008 2,732,458
5,602,083
--------------
FORESTRY - 0.08%
460,000 WEYERHAEUSER COMPANY 6.00 08/01/2006 471,978
--------------
GENERAL MERCHANDISE STORES - 2.15%
1,004,801 WAL-MART CUSTOM REPACKAGED ASSET VEHICLE++ 7.35 07/17/2006 1,029,318
11,500,000 WAL-MART STORES INCORPORATED 3.38 10/01/2008 11,236,995
12,266,313
--------------
HEALTH SERVICES - 0.84%
2,000,000 FRESENIUS MEDICAL CARE CAPITAL TRUST II 7.88 02/01/2008 2,080,000
2,650,000 HCA INCORPORATED 7.13 06/01/2006 2,719,324
4,799,324
--------------
HOLDING & OTHER INVESTMENT OFFICES - 3.43%
1,000,000 CORE INVESTMENT GRADE TRUST 4.73 11/30/2007 1,008,870
4,810,000 COUNTRYWIDE HOME LOANS INCORPORATED SERIES MTNK 5.63 05/15/2007 4,929,601
3,170,000 PREFERRED TERM SECURITIES XV+/-++ 4.62 09/26/2034 3,177,925
5,000,000 PRINCIPAL LIFE GLOBAL FUNDING I++ 5.13 06/28/2007 5,084,620
5,000,000 PRINCIPAL LIFE GLOBAL FUNDING I++ 2.80 06/26/2008 4,804,900
600,000 REGIONAL DIVERSIFIED FUNDING+/-++ 4.45 01/25/2036 600,000
19,605,916
--------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 0.85%
2,750,000 HARRAH'S OPERATING COMPANY INCORPORATED 7.88 12/15/2005 2,811,875
2,000,000 MIRAGE RESORTS INCORPORATED 6.75 02/01/2008 2,050,000
4,861,875
--------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 0.56%
3,200,000 JOHN DEERE CAPITAL CORPORATION 3.88 03/07/2007 3,188,259
--------------
INSURANCE CARRIERS - 2.08%
130,000 METLIFE INCORPORATED 3.91 05/15/2005 130,035
7,000,000 PROTECTIVE LIFE US FUNDING TRUST++ 5.88 08/15/2006 7,146,174
1,800,000 PRUDENTIAL FINANCIAL INCORPORATED+/- 4.10 11/15/2006 1,811,081
2,750,000 WELLPOINT HEALTH NETWORKS 6.38 06/15/2006 2,818,604
11,905,894
--------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC,
MEDICAL & OPTICAL GOODS - 0.42%
2,300,000 BAUSCH & LOMB INCORPORATED 6.95 11/15/2007 2,425,267
--------------
MOTION PICTURES - 0.08%
460,000 NEWS AMERICA INCORPORATED 6.63 01/09/2008 484,350
--------------
39
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
NON-DEPOSITORY CREDIT INSTITUTIONS - 3.06%
$ 100,000 FORD MOTOR CREDIT COMPANY 5.70% 01/15/2010 $ 90,381
15,000 GENERAL ELECTRIC CAPITAL CORPORATION 5.38 03/15/2007 15,351
12,250,000 GENERAL ELECTRIC CAPITAL CORPORATION 3.50 05/01/2008 11,997,393
3,000,000 GENERAL MOTORS ACCEPTANCE CORPORATION 7.75 01/19/2010 2,827,638
2,500,000 HSBC FINANCE CORPORATION 8.88 02/15/2006 2,592,525
17,523,288
--------------
OIL & GAS EXTRACTION - 0.15%
764,000 PORT ARTHUR FINANCE CORPORATION SERIES 12.50 01/15/2009 863,320
--------------
PAPER & ALLIED PRODUCTS - 0.36%
2,000,000 GEORGIA-PACIFIC CORPORATION 7.50 05/15/2006 2,050,000
--------------
PIPELINES, EXCEPT NATURAL GAS - 0.31%
1,800,000 PLAINS ALL AMERICAN PIPELINE LP PAA FINANCE CORPORATION 4.75 08/15/2009 1,800,567
--------------
PRIMARY METAL INDUSTRIES - 0.20%
1,000,000 UNITED STATES STEEL LLC 10.75 08/01/2008 1,125,000
--------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 0.36%
2,000,000 MEDIA GENERAL INCORPORATED 6.95 09/01/2006 2,055,238
--------------
RAILROAD TRANSPORTATION - 1.25%
3,500,000 BURLINGTON NORTHERN SANTA FE CORPORATION 6.38 12/15/2005 3,555,657
460,000 CSX CORPORATION 6.25 10/15/2008 486,773
2,980,000 UNION PACIFIC CORPORATION 5.75 10/15/2007 3,078,686
7,121,116
--------------
REAL ESTATE - 0.36%
2,000,000 HIGHWOODS REALTY LP 7.00 12/01/2006 2,067,084
--------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 0.09%
540,000 JP MORGAN CHASE & COMPANY 4.00 02/01/2008 536,711
--------------
TOBACCO PRODUCTS - 0.37%
2,000,000 ALTRIA GROUP INCORPORATED 7.20 02/01/2007 2,092,244
--------------
TRANSPORTATION EQUIPMENT - 1.65%
5,800,000 DAIMLERCHRYSLER NA HOLDING CORPORATION 4.75 01/15/2008 5,721,584
3,125,000 RAYTHEON COMPANY 6.75 08/15/2007 3,285,769
400,000 TEXAS EASTERN TRANSMISSION LP 5.25 07/15/2007 407,369
9,414,722
--------------
WATER TRANSPORTATION - 0.49%
2,850,000 HERTZ CORPORATION 4.70 10/02/2006 2,805,514
--------------
WHOLESALE TRADE NON-DURABLE GOODS - 1.15%
2,500,000 BERGEN BRUNSWIG CORPORATION 7.25 06/01/2005 2,507,250
4,000,000 SAFEWAY INCORPORATED 6.15 03/01/2006 4,058,304
6,565,554
--------------
TOTAL CORPORATE BONDS & NOTES (COST $258,228,595) 257,144,299
--------------
40
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FOREIGN CORPORATE BONDS - 1.99%
$ 250,000 AMOCO ARGENTINA OIL COMPANY 6.63% 09/15/2005 $ 252,929
250,000 CHEVRON TEXACO CAPITAL COMPANY 3.50 09/17/2007 247,214
2,950,000 DEUTSCHE TELEKOM INTERNATIONAL FINANCE BV 3.88 07/22/2008 2,905,078
2,700,000 ENCANA CORPORATION 4.60 08/15/2009 2,707,525
5,360,000 KFW 3.50 03/14/2008 5,295,208
TOTAL FOREIGN CORPORATE BONDS (COST $11,480,980) 11,407,954
--------------
MUNICIPAL BONDS & NOTES - 1.74%
5,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY
(HOUSING REVENUE LOC)+/-@ 4.70 05/15/2029 5,300,000
3,015,000 CSUCI FINANCING AUTHORITY OF CALIFORNIA
(COLLEGE AND UNIVERSITY REVENUE LOC)+/-@ 3.79 08/01/2044 2,979,152
750,000 SANTA CRUZ COUNTY AZ IDA (INDUSTRIAL
DEVELOPMENT REVENUE LOC)+/-@ 4.75 08/01/2020 746,212
915,000 TOBACCO SETTLEMENT AUTHORITY OF IOWA (EXCISE TAX REVENUE LOC) 6.79 06/01/2010 909,437
TOTAL MUNICIPAL BONDS & NOTES (COST $9,982,164) 9,934,801
--------------
US GOVERNMENT AGENCY SECURITIES - 8.21%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 2.34%
8,175 FHLMC #160089 10.75 09/01/2009 8,841
24,630 FHLMC #170151 10.50 01/01/2016 28,057
6,794 FHLMC #183254 9.50 03/01/2011 7,340
14,779 FHLMC #185784 10.75 11/01/2010 15,821
90,382 FHLMC #1B0123+/- 6.14 09/01/2031 92,246
102,737 FHLMC #1B0128+/- 6.16 09/01/2031 104,789
63,951 FHLMC #255531 10.25 07/01/2009 68,016
19,840 FHLMC #257384 10.75 09/01/2010 21,487
25,827 FHLMC #259511 11.25 11/01/2009 28,401
5,242 FHLMC #360016 10.50 11/01/2017 6,060
3,847 FHLMC #360056 10.50 02/01/2019 4,471
4,173 FHLMC #360057 10.50 03/01/2019 4,775
3,775 FHLMC #360059 10.50 04/01/2019 4,396
2,291 FHLMC #360061 10.50 05/01/2019 2,662
46,837 FHLMC #360063 10.50 06/01/2019 54,280
7,402 FHLMC #360065 10.50 07/01/2019 8,613
1,380,064 FHLMC #555316 9.00 06/01/2019 1,499,062
1,015,364 FHLMC #555408 10.50 08/01/2018 1,174,305
970,687 FHLMC #555500 8.50 09/01/2017 1,049,957
959,602 FHLMC #555514 9.00 10/01/2019 1,073,525
157,429 FHLMC #786823+/- 6.01 07/01/2029 164,809
1,197,427 FHLMC #789272+/- 5.67 04/01/2032 1,238,641
674,982 FHLMC #865496+/- 5.49 05/01/2026 692,492
960,491 FHLMC #A01734 9.00 08/01/2018 1,047,105
1,698,412 FHLMC #G01126 9.50 12/01/2022 1,873,301
368,405 FHLMC #G10747 7.50 10/01/2012 388,085
1,899,372 FHLMC #G11150 7.50 12/01/2011 1,982,376
134,929 FHLMC #G11345 7.50 12/01/2011 142,163
179,111 FHLMC #G11391 7.50 06/01/2012 188,679
374,274 FHLMC #G90023 7.00 11/17/2013 393,472
13,368,227
--------------
41
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 4.07%
$ 8,450 FNMA #100001 9.00% 02/15/2020 $ 9,429
3,417,830 FNMA #100042 11.00 10/15/2020 3,828,442
939,937 FNMA #100202 9.50 02/15/2011 1,009,452
273,465 FNMA #100255 8.33 07/15/2020 304,173
1,300,312 FNMA #190075 8.50 02/01/2023 1,401,007
577,060 FNMA #302507 9.00 11/01/2024 636,006
152,483 FNMA #313617 8.00 09/01/2023 166,058
1,974,654 FNMA #323582 8.00 04/01/2017 2,147,709
345,109 FNMA #392645 8.00 12/01/2013 357,302
944,600 FNMA #426828 8.00 09/01/2019 1,028,999
2,329,410 FNMA #545131 8.00 03/01/2013 2,448,282
522,591 FNMA #545157 8.50 11/01/2012 551,135
1,160,537 FNMA #545460+/- 5.81 11/01/2031 1,197,234
3,268,759 FNMA #598559 6.50 08/01/2031 3,432,442
549,330 FNMA #70801 12.00 03/01/2017 627,756
4,015,366 FNMA #712107 6.00 03/01/2033 4,128,687
23,274,114
--------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.79%
14,934 GNMA #296662 9.75 09/15/2005 15,144
5,177 GNMA #296675 9.75 09/15/2005 5,250
16,456 GNMA #299736 9.75 11/15/2005 16,688
8,962 GNMA #299747 9.75 11/15/2005 9,088
194,525 GNMA #780029 9.00 11/15/2024 213,524
3,853,911 GNMA #780110 12.50 04/15/2019 4,485,507
118,039 GNMA #780134 8.50 05/15/2010 121,525
639,294 GNMA #780267 9.00 11/15/2017 704,371
277,302 GNMA #780288 8.00 12/15/2023 305,226
129,822 GNMA #780333 8.00 12/15/2008 133,505
427,301 GNMA #780434 7.50 12/15/2007 435,592
3,331,207 GNMA #781311 7.50 02/15/2013 3,482,451
265,835 GNMA #781540 7.00 05/15/2013 279,907
34,879 GNMA #927 10.00 02/20/2018 39,769
10,247,547
--------------
SMALL BUSINESS ADMINISTRATION - 0.01%
2,370,024 SBA #0191(C) 7.78 07/30/2018 67,308
--------------
TOTAL US GOVERNMENT AGENCY SECURITIES (COST $46,195,155) 46,957,196
--------------
US TREASURY SECURITIES - 1.09%
US TREASURY BILLS - 0.01%
53,000 US TREASURY BILL^# 2.76 06/02/2005 52,880
--------------
42
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
US TREASURY NOTES - 1.08%
$ 3,000,000 US TREASURY NOTE 1.88% 01/31/2006 $ 2,969,064
3,000,000 US TREASURY NOTE 3.00 02/15/2008 2,942,577
250,000 US TREASURY NOTE 2.63 05/15/2008 242,012
6,153,653
--------------
TOTAL US TREASURY SECURITIES (COST $6,234,258) 6,206,533
--------------
SHARES
SHORT-TERM INVESTMENTS - 2.43%
13,908,976 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~>> 13,908,976
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $13,908,976) 13,908,976
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $572,396,240)* 99.86% $ 570,949,715
OTHER ASSETS AND LIABILITIES, NET 0.14 793,091
------ --------------
TOTAL NET ASSETS 100.00% $ 571,742,806
====== ==============
+/- VARIABLE RATE SECURITIES.
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE
SECURITIES ACT OF 1933, AS AMENDED.
(C) INTEREST-ONLY SECURITIES ENTITLE HOLDERS TO RECEIVE ONLY THE INTEREST
PAYMENTS ON THE UNDERLYING MORTGAGES. THE YIELD TO MATURITY OF AN
INTEREST-ONLY IS EXTREMELY SENSITIVE TO THE RATE OF PRINCIPAL PAYMENTS ON
THE UNDERLYING MORTGAGE ASSETS. A RAPID (SLOW) RATE OF PRINCIPAL
REPAYMENTS MAY HAVE ADVERSE (POSITIVE) EFFECT ON YIELD TO MATURITY. THE
PRINCIPAL AMOUNT SHOWN IS THE NOTIONAL AMOUNT OF THE UNDERLYING MORTGAGES.
INTEREST RATE DISCLOSED REPRESENTS THE YIELD BASED UPON THE ESTIMATED
TIMING OF FUTURE CASH FLOWS.
^ ZERO COUPON/STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO
MATURITY.
@ THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
# SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
>> SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $13,908,976.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
43
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM HIGH YIELD BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.28%
$ 475,113 SALOMON BROTHERS MORTGAGE SECURITIES VII SERIES 1994-5 CLASS B2+/- 4.00% 04/25/2024 $ 478,126
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $456,202) 478,126
--------------
CORPORATE BONDS & NOTES - 71.45%
AMUSEMENT & RECREATION SERVICES - 0.65%
1,100,000 CAESARS ENTERTAINMENT INCORPORATED 7.88 12/15/2005 1,120,625
--------------
APPAREL & ACCESSORY STORES - 1.33%
2,000,000 GAP INCORPORATED 10.05 12/15/2008 2,311,222
--------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 1.52%
2,402,000 WILLIAM CARTER COMPANY SERIES B 10.88 08/15/2011 2,642,200
--------------
BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 3.83%
1,740,000 DR HORTON INCORPORATED 7.50 12/01/2007 1,841,934
2,835,000 RYLAND GROUP INCORPORATED 9.75 09/01/2010 3,028,594
1,750,000 STANDARD-PACIFIC CORPORATION 6.50 10/01/2008 1,767,500
6,638,028
--------------
BUSINESS SERVICES - 0.47%
725,000 BRICKMAN GROUP LIMITED SERIES B 11.75 12/15/2009 819,250
--------------
CHEMICALS & ALLIED PRODUCTS - 3.58%
1,915,000 FMC CORPORATION SERIES MTNA 7.00 05/15/2008 2,001,175
1,915,000 IMC GLOBAL INCORPORATED 10.88 06/01/2008 2,183,100
1,900,000 MILLENNIUM AMERICA INCORPORATED 9.25 06/15/2008 2,023,500
6,207,775
--------------
COMMUNICATIONS - 13.65%
2,500,000 AT&T CORPORATION SERIES MTNA 8.35 05/15/2025 2,625,000
2,550,000 BRITISH SKY BROADCASTING PLC 8.20 07/15/2009 2,886,531
2,495,000 CITIZENS COMMUNICATIONS COMPANY 7.60 06/01/2006 2,569,850
1,915,000 CSC HOLDINGS INCORPORATED 7.88 12/15/2007 1,958,087
2,970,000 LENFEST COMMUNICATIONS INCORPORATED 10.50 06/15/2006 3,161,607
1,000,000 MCI INCORPORATED 6.91 05/01/2007 1,015,000
2,000,000 NEXTMEDIA OPERATING INCORPORATED 10.75 07/01/2011 2,152,500
1,915,000 PANAMSAT CORPORATION 6.38 01/15/2008 1,919,788
2,000,000 PAXSON COMMUNICATION CORPORATION+/-++ 5.89 01/15/2010 1,980,000
2,000,000 ROGERS WIRELESS COMMUNICATIONS INCORPORATED+/- 6.14 12/15/2010 2,055,000
1,270,000 TELUS CORPORATION 7.50 06/01/2007 1,348,547
23,671,910
--------------
ELECTRIC, GAS & SANITARY SERVICES - 5.55%
1,475,000 ALLIED WASTE NORTH AMERICA SERIES B 8.88 04/01/2008 1,515,563
2,000,000 CMS ENERGY CORPORATION 7.50 01/15/2009 2,050,000
1,724,193 MIDLAND FUNDING II SERIES A 11.75 07/23/2005 1,749,364
2,490,000 SIERRA PACIFIC POWER COMPANY SERIES A 8.00 06/01/2008 2,626,950
1,615,000 TXU ENERGY COMPANY LLC 6.13 03/15/2008 1,677,639
9,619,516
--------------
44
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM HIGH YIELD BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT
COMPUTER EQUIPMENT - 3.01%
$ 3,500,000 AMETEK INCORPORATED 7.20% 07/15/2008 $ 3,757,278
1,435,000 FREESCALE SEMICONDUCTOR INCORPORATED+/- 5.89 07/15/2009 1,470,875
5,228,153
--------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 1.70%
1,915,000 BALL CORPORATION 7.75 08/01/2006 1,967,662
920,000 FASTENTECH INCORPORATED 11.50 05/01/2011 989,000
2,956,662
--------------
FOOD & KINDRED PRODUCTS - 0.86%
1,440,000 CONSTELLATION BRANDS INCORPORATED SERIES B 8.00 02/15/2008 1,497,600
--------------
HEALTH SERVICES - 4.35%
2,000,000 ALLIANCE IMAGING INCORPORATED OLD 10.38 04/15/2011 2,197,500
3,160,000 FRESENIUS MEDICAL CARE CAPITAL TRUST II 7.88 02/01/2008 3,286,400
1,915,000 MAGELLAN HEALTH SERVICES INCORPORATED SERIES A 9.38 11/15/2008 2,053,837
7,537,737
--------------
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 1.29%
2,000,000 TEMPUR-PEDIC/TEMPUR PRODUCT 10.25 08/15/2010 2,230,000
--------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 3.06%
2,185,000 AMERISTAR CASINOS INCORPORATED 10.75 02/15/2009 2,376,187
2,000,000 CHUMASH CASINO & RESORT ENTERPRISE++ 9.26 07/15/2010 2,140,000
779,000 HOST MARRIOTT CORPORATION SERIES B 7.88 08/01/2008 794,580
5,310,767
--------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 1.14%
1,885,000 AGCO CORPORATION 9.50 05/01/2008 1,974,538
--------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC,
MEDICAL & OPTICAL GOODS - 1.40%
2,300,000 BAUSCH & LOMB INCORPORATED 6.95 11/15/2007 2,425,267
--------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 2.69%
2,490,000 CROWN CORK & SEAL FINANCE PLC 7.00 12/15/2006 2,527,350
2,000,000 JACUZZI BRANDS INCORPORATED 9.63 07/01/2010 2,140,000
4,667,350
--------------
MISCELLANEOUS RETAIL - 2.37%
1,828,000 MICHAELS STORES INCORPORATED 9.25 07/01/2009 1,923,970
2,000,000 RITE AID CORPORATION 12.50 09/15/2006 2,180,000
4,103,970
--------------
OIL & GAS EXTRACTION - 3.40%
2,500,000 HANOVER EQUIPMENT TRUST SERIES B 8.75 09/01/2011 2,621,875
2,895,560 PORT ARTHUR FINANCE CORPORATION 12.50 01/15/2009 3,271,983
5,893,858
--------------
45
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM HIGH YIELD BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
PAPER & ALLIED PRODUCTS - 2.30%
$ 2,675,000 GEORGIA-PACIFIC CORPORATION 7.50% 05/15/2006 $ 2,741,875
1,220,000 SMURFIT-STONE CONTAINER ENTERPRISES INCORPORATED 9.25 02/01/2008 1,250,500
3,992,375
--------------
PERSONAL SERVICES - 1.05%
1,775,000 SERVICE CORPORATION INTERNATIONAL US 7.20 06/01/2006 1,814,938
--------------
PIPELINES, EXCEPT NATURAL GAS - 1.21%
2,105,000 PLAINS ALL AMERICAN PIPELINE LP PAA FINANCE CORPORATION 4.75 08/15/2009 2,105,663
--------------
PRIMARY METAL INDUSTRIES - 2.19%
2,000,000 JORGENSEN EARLE M. COMPANY 9.75 06/01/2012 2,120,000
1,500,000 UNITED STATES STEEL LLC 10.75 08/01/2008 1,687,500
3,807,500
--------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 3.08%
2,000,000 DEX MEDIA EAST LLC/DEX MEDIA EAST FINANCE COMPANY 9.88 11/15/2009 2,190,000
2,000,000 HUNTSMAN ADVANCED MATERIALS LLC+/-++ 10.89 07/15/2008 2,115,000
1,000,000 UCAR FINANCE INCORPORATED 10.25 02/15/2012 1,045,000
5,350,000
--------------
TRANSPORTATION EQUIPMENT - 3.48%
2,075,000 ARVINMERITOR INCORPORATED 6.63 06/15/2007 2,023,125
1,500,000 GENERAL MOTORS ACCEPTANCE CORPORATION+/- 3.70 03/20/2007 1,421,090
2,580,000 ITT CORPORATION 6.75 11/15/2005 2,586,450
6,030,665
--------------
WATER TRANSPORTATION - 0.65%
1,000,000 CP SHIPS LIMITED 10.38 07/15/2012 1,122,500
--------------
WHOLESALE TRADE NON-DURABLE GOODS - 1.64%
2,635,000 AMERISOURCEBERGEN CORPORATION 8.13 09/01/2008 2,849,094
--------------
TOTAL CORPORATE BONDS & NOTES (COST $124,706,673) 123,929,163
--------------
FOREIGN GOVERNMENT BONDS - 2.95%
2,030,000 NOVA CHEMICALS CORPORATION SERIES MTN 7.40 04/01/2009 2,126,425
3,000,000 SMURFIT CAPITAL FUNDING PLC 6.75 11/20/2005 3,000,000
TOTAL FOREIGN GOVERNMENT BONDS (COST $5,127,602) 5,126,425
--------------
TERM LOANS - 23.12%
977,500 ACCURIDE TERM LOAN+/-++ 5.30 01/06/2012 983,326
2,000,000 CHARTER COMMUNICATIONS OP TERM LOAN+/-++ 5.13 04/27/2010 1,982,500
1,836,066 CONSOLIDATED COMMUNICATIONS TERM LOAN+/-++ 5.10 03/18/2010 1,860,173
1,595,315 DEX MEDIA WEST TERM LOAN B+/-++ 4.63 09/10/2010 1,615,799
3,000,000 DIRECT TV TERM LOAN+/-++ 4.45 04/08/2013 3,008,040
,310,000 GOODYEAR TIRE TERM LOAN B+/-++ 5.89 04/08/2010 2,299,905
997,500 GRAHAM PACKAGING COMPANY LP TERM LOAN+/-++ 5.64 09/15/2011 1,021,191
1,447,235 INVIS TERM LOAN B+/-++ 5.31 04/30/2011 1,463,517
776,000 JOSTENS IH CORPORATION TERM LOAN B+/-++ 5.19 09/30/2011 781,820
3,000,000 LIFEPOINT TERM LOAN B+/-++ 4.58 04/15/2012 3,003,750
46
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM HIGH YIELD BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
TERM LOANS (CONTINUED)
$ 1,753,891 MIDWEST GERERATION TERM LOAN+/-++ 5.74% 04/05/2011 $ 1,772,535
1,887,244 MUELLER GROUP TERM LOAN+/-++ 5.68 03/24/2011 1,903,757
2,497,069 NALCO TERM LOAN B+/-++ 4.95 11/01/2010 2,533,352
2,000,000 NEW PAGE CORPORATION TERM LOAN B+/-++ 5.00 04/07/2011 2,012,500
806,870 NEW SKIES SATELLITES TERM LOAN+/-++ 5.62 05/04/2011 810,702
995,000 NORTEK HOLDINGS INCORPORATED TERM LOAN+/-++ 4.62 07/28/2011 1,005,577
935,000 POLYPORE TERM LOAN+/-++ 5.35 05/14/2010 944,350
3,575,000 QWEST TERM LOAN A+/-++ 7.39 06/30/2007 3,674,599
1,000,000 RAYOVAC TERM LOAN+/-++ 4.75 02/07/2012 1,016,250
2,399,812 REGAL CINEMAL CORPORATION TERM LOAN B+/-++ 5.09 10/19/2010 2,428,514
2,950,487 TRIAD HOSPITALS TERM LOAN B+/-++ 4.92 01/04/2008 2,989,817
990,000 WARNER MUSIC GROUP TERM LOAN+/-++ 5.15 03/18/2010 994,128
TOTAL TERM LOANS (COST $39,716,301) 40,106,102
--------------
SHARES
SHORT-TERM INVESTMENTS - 1.71%
2,962,186 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~>> 2,962,186
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $2,962,186) 2,962,186
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $172,968,964)* 99.51% $ 172,602,002
OTHER ASSETS AND LIABILITIES, NET 0.49 852,166
------ --------------
TOTAL NET ASSETS 100.00% $ 173,454,168
====== ==============
+/- VARIABLE RATE SECURITIES.
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE
SECURITIES ACT OF 1933, AS AMENDED.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
>> SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $2,962,186.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
47
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
AGENCY NOTES - INTEREST BEARING - 0.44%
$ 5,000,000 FHLB 4.13% 03/24/2008 $ 4,999,635
TOTAL AGENCY NOTES - INTEREST BEARING (COST $4,974,207) 4,999,635
--------------
ASSET-BACKED SECURITIES - 21.76%
8,700,000 AAMES MORTGAGE TRUST SERIES 2003-1 CLASS M1+/- 3.70 10/25/2033 8,801,261
10,958,000 ACCREDITED MORTGAGE LOAN TRUST SERIES 2004-3 CLASS 1A2+/- 3.44 10/25/2034 10,833,657
20,193,908 AIRPLANES PASS THROUGH TRUST SERIES 1R CLASS B+/-^^ 3.70 03/15/2019 3,029,086
9,140,401 ASSET BACKED SECURITIES CORPORATION HOME EQUITY
SERIES 2003-HE6 CLASS AIO(C) 4.00 11/25/2033 187,378
10,000,000 BANK ONE ISSUANCE TRUST SERIES 2004-B1 CLASS B1+/- 3.27 03/15/2012 10,060,115
6,300,000 CAPITAL ONE PRIME AUTO RECEIVABLES TRUST SERIES 2004-3 CLASS A2 3.04 07/15/2007 6,276,190
9,616,821 CDC MORTGAGE CAPITAL TRUST SERIES 2003-HE4 CLASS M1+/- 3.67 03/25/2034 9,655,113
7,400,000 CHASE FUNDING MORTGAGE LOAN ASSET-BACKED CERTIFICATES
SERIES 2003-5 CLASS 2M1+/- 3.62 05/25/2033 7,433,865
1,110,202 CLYDESDALE CBO I LIMITED SERIES 1A CLASS A1+/-++ 3.84 03/25/2011 1,111,645
5,247,121 CONTIMORTGAGE NET INTEREST MARGIN NOTES SERIES 1997-A CLASS A+(I) 7.23 07/16/2028 1,049
5,265,485 COUNTRYWIDE ASSET-BACKED CERTIFICATES SERIES 2004-7 CLASS AF1+/- 3.22 10/25/2022 5,267,245
7,160,074 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2002-C CLASS A+/- 3.19 05/15/2028 7,164,957
2,795,578 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2004-I CLASS A+/- 3.24 02/15/2034 2,804,176
11,954,447 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2004-Q CLASS 2A+/- 3.25 12/15/2033 11,982,930
18,500,000 DAIMLERCHRYSLER AUTO TRUST SERIES 2005-A CLASS M1 3.17 09/08/2007 18,445,571
18,328,690 DUKE FUNDING LIMITED SERIES 2000-1A CLASS A+/-++ 3.27 11/10/2030 18,053,759
156,279,616 EASTMAN HILL FUNDING LIMITED SERIES 1A CLASS A2(C) 0.83 09/29/2031 4,344,573
1,186,733 EDUCAP INCORPORATED SERIES 1993-A CLASS A3+/- 3.86 08/20/2008 1,187,374
4,843,438 EPIC TRUST SERIES 1996-1 CLASS B+/-++^^ 5.12 09/25/2009 96,869
1,314,960 EPIC TRUST SERIES 1996-1 CLASS C+/-++^^ 10.00 09/25/2009 13,150
2,365,280 FIRST FRANKLIN MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 2000-FF1 CLASS M1+/- 3.85 09/25/2030 2,366,240
5,500,000 FLEET COMMERCIAL LOAN MASTER LLC SERIES 2000-1A CLASS B2+/-++ 3.38 11/16/2007 5,500,000
363,855 GREEN TREE HOME EQUITY LOAN TRUST SERIES 1999-C CLASS M1 7.77 07/15/2030 364,610
6,500,000 GREEN TREE HOME IMPROVEMENT LOAN TRUST SERIES 1998-E CLASS AV1 7.27 06/15/2028 6,581,522
9,608,410 GREEN TREE HOME IMPROVEMENT LOAN TRUST SERIES 1998-E CLASS HEM1 6.93 07/15/2028 9,713,369
1,192,009 GSAA TRUST SERIES 2004-7 CLASS AV1+/- 3.20 06/25/2034 1,191,894
12,000,000 HOME EQUITY ASSET TRUST SERIES 2003-6 CLASS M1+/- 3.72 02/25/2034 12,071,266
8,200,000 HOME EQUITY ASSET TRUST SERIES 2003-7 CLASS M1+/- 3.67 03/25/2034 8,232,912
9,500,000 MORGAN STANLEY ABS CAPITAL I SERIES 2003-NC10 CLASS M1+/- 3.70 10/25/2033 9,545,762
3,013,007 OAKWOOD MORTGAGE INVESTORS INCORPORATED SERIES 1996-C CLASS A5 7.35 04/15/2027 3,088,796
2,162,884 PROVIDENT CBO I LIMITED SERIES 1A CLASS A1+/-++ 3.76 12/09/2010 2,168,291
17,582,677 RESIDENTIAL ASSET MORTGAGE PRODUCTS INCORPORATED
SERIES 2003-RZ2 CLASS AIO(C) 5.75 09/25/2005 291,873
2,430,266 RESIDENTIAL ASSET MORTGAGE PRODUCTS INCORPORATED
SERIES 2003-RZ5 CLASS A2 3.18 03/25/2027 2,423,595
2,011,985 RESIDENTIAL ASSET SECURITIES CORPORATION
SERIES 2001-KS1 CLASS AII+/- 3.26 03/25/2032 2,013,789
9,125,000 RESIDENTIAL ASSET SECURITIES CORPORATION
SERIES 2003-KS8 CLASS MII1+/- 3.65 10/25/2033 9,124,135
12,240,541 SOUTH STREET CBO LIMITED SERIES 2000-1 CLASS A2L+/-++ 3.08 05/30/2012 12,247,886
11,000,000 STRUCTURED ASSET INVESTMENT LOAN TRUST
SERIES 2003-BC10 CLASS M1+/- 3.77 10/25/2033 11,042,280
15,000,000 STRUCTURED ASSET INVESTMENT LOAN TRUST SERIES 2003-BC3 CLASS M1+/- 3.97 04/25/2033 15,100,353
3,420,411 TERWIN MORTGAGE TRUST SERIES 2004-21HE CLASS 1A1+/- 3.50 12/25/2034 3,428,962
6,000,000 WILLIAM STREET FUNDING CORPORATION CLASS 2005-1 CLASS A+/-++ 3.04 01/23/2011 6,000,000
TOTAL ASSET-BACKED SECURITIES (COST $272,834,508) 249,247,498
--------------
48
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS - 30.43%
$ 1,498,624 ASSET SECURITIZATION CORPORATION SERIES 1995-D1 CLASS A1 7.59% 07/11/2027 $ 1,553,708
6,225,441 ASSET SECURITIZATION CORPORATION SERIES 1995-MD4 CLASS A1 7.10 08/13/2029 6,342,126
37,285,294 BANC OF AMERICA COMMERCIAL MORTGAGE INCORPORATED
SERIES 2001-PB1 CLASS XP+/-++(C) 1.77 05/11/2035 2,782,751
5,016,201 BANC OF AMERICA LARGE LOAN SERIES 2003-BBA2 CLASS F+/-++ 3.85 11/15/2015 5,052,289
20,100,000 BEAR STEARNS ASSET BACKED SECURITIES INCORPORATED
SERIES 2003-AC2 CLASS AIO(C) 5.00 10/25/2005 404,271
751,556 CITICORP MORTGAGE SECURITIES INCORPORATED SERIES 1992-7 CLASS A+/- 4.13 03/25/2022 757,058
761,200 COLLATERALIZED MORTGAGE OBLIGATION TRUST SERIES 66 CLASS Z 8.00 09/20/2021 761,234
135,129,236 COUNTRYWIDE ALTERNATIVE LOAN TRUST SERIES 2004-J9 CLASS 1AIO+/-(C) 1.40 03/25/2007 1,571,364
2,599,889 COUNTRYWIDE ALTERNATIVE LOAN TRUST SERIES J8 CLASS 4A1 6.00 02/25/2017 2,675,270
1,582,585 COUNTRYWIDE HOME LOAN MORTGAGE PASS THROUGH TRUST
SERIES 2001-HYB1 CLASS 2A1+/- 4.89 06/19/2031 1,600,971
2,794,922 COUNTRYWIDE HOME LOAN MORTGAGE PASS THROUGH TRUST
SERIES 2004-30 CLASS 3A1+/- 4.66 09/25/2034 2,886,923
4,102,346 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 1997-C2 CLASS A2 6.52 01/17/2035 4,166,641
81,000,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 2001-CF2 CLASS AC9+/-++(C) 1.17 02/15/2034 2,592,640
115,383,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 2001-CK1 CLASS ACP+/-++(C) 1.03 12/16/2035 3,160,710
100,000,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 2001-CK6 CLASS ACP+/-(C) 0.93 08/15/2036 3,099,830
90,200,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 2001-CKN5 CLASS ACP+/-++(C) 1.94 09/15/2034 5,677,495
4,000,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 2003-TF2A CLASS E+/-++ 3.90 11/15/2014 4,017,882
3,000,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 2003-TF2A CLASS F+/-++ 4.05 11/15/2014 3,017,082
9,248,392 DEUTSCHE ALT-A SECURITIES INCORPORATED ALTERNATE
LOAN TRUST SERIES 2003-4XS CLASS AIO+/-(C) 3.00 11/25/2005 132,414
19,236,000 DEUTSCHE MORTGAGE SECURITIES INCORPORATED
SERIES 2004-2 CLASS AIO+/-(C) 3.50 02/25/2006 304,767
7,867,434 DLJ COMMERCIAL MORTGAGE CORPORATION SERIES 2000-CF1 CLASS A1A 7.45 06/10/2033 8,043,650
986,326 DLJ MORTGAGE ACCEPTANCE CORPORATION SERIES 1990-2 CLASS A+/- 4.09 01/25/2022 983,775
207,256 DLJ MORTGAGE ACCEPTANCE CORPORATION SERIES 1991-3 CLASS A1+/- 3.83 02/20/2021 205,740
7,506,866 EQUIFIRST MORTGAGE LOAN TRUST SERIES 2003-2 3A3+/- 2.47 09/25/2033 7,503,322
3,378,647 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-42 CLASS A6 9.50 02/25/2042 3,715,402
2,635,985 FNMA GRANTOR TRUST SERIES 2000-T6 CLASS A2 9.50 06/25/2030 2,880,325
7,390,811 FNMA GRANTOR TRUST SERIES 2001-T10 CLASS A3 9.50 12/25/2041 8,144,291
6,416,506 FNMA GRANTOR TRUST SERIES 2001-T12 CLASS A3 9.50 08/25/2041 7,072,798
13,271,859 FNMA GRANTOR TRUST SERIES 2001-T8 CLASS A3+/- 4.74 07/25/2041 13,461,902
7,212,076 FNMA GRANTOR TRUST SERIES 2002-T1 CLASS A4 9.50 11/25/2031 7,806,908
696,351 FNMA SERIES 1988-4 CLASS Z 9.25 03/25/2018 752,112
1,046,314 FNMA SERIES 1988-5 CLASS Z 9.20 03/25/2018 1,112,173
420,918 FNMA SERIES 1988-9 CLASS Z 9.45 04/25/2018 456,981
1,273,332 FNMA SERIES 1989-30 CLASS Z 9.50 06/25/2019 1,391,979
304,985 FNMA SERIES 1989-49 CLASS E 9.30 08/25/2019 329,784
284,796 FNMA SERIES 1990-111 CLASS Z 8.75 09/25/2020 301,188
645,662 FNMA SERIES 1990-119 CLASS J 9.00 10/25/2020 702,368
331,292 FNMA SERIES 1990-124 CLASS Z 9.00 10/25/2020 361,223
1,571,744 FNMA SERIES 1990-21 CLASS Z 9.00 03/25/2020 1,728,110
773,034 FNMA SERIES 1990-27 CLASS Z 9.00 03/25/2020 842,626
426,194 FNMA SERIES 1990-30 CLASS D 9.75 03/25/2020 472,579
1,819,553 FNMA SERIES 1991-132 CLASS Z 8.00 10/25/2021 1,946,608
705,723 FNMA SERIES 1992-71 CLASS X 8.25 05/25/2022 756,580
3,847,143 FNMA SERIES G-22 CLASS ZT 8.00 12/25/2016 4,105,176
5,702,144 FNMA WHOLE LOAN SERIES 2002-W4 CLASS A6+/- 4.31 05/25/2042 5,832,223
5,792,174 FNMA WHOLE LOAN SERIES 2003-W10 CLASS 3A2A 2.20 07/25/2037 5,727,438
4,790,533 FNMA WHOLE LOAN SERIES 2003-W11 CLASS A1+/- 5.25 06/25/2033 4,885,493
49
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
$ 16,774,780 FNMA WHOLE LOAN SERIES 2003-W6 CLASS 6A+/- 4.19% 08/25/2042 $ 17,086,145
140,073,600 GE CAPITAL COMMERCIAL MORTGAGE CORPORATION
SERIES 2001-1 CLASS X2+/-++(C) 0.95 05/15/2033 3,763,287
181,365,889 GE CAPITAL COMMERCIAL MORTGAGE CORPORATION
SERIES 2001-2 CLASS X2+/-++(C) 1.25 08/11/2033 6,435,787
7,160,713 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED
SERIES 2000-C2 CLASS A1 7.27 08/16/2033 7,505,224
131,400,000 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED
SERIES 2001-C2 CLASS X2+/-++(C) 0.93 04/15/2034 3,166,411
5,160,295 GREENWICH CAPITAL TRUST I CLASS A+/-++ 3.05 02/15/2021 5,274,337
9,312,829 GSMPS MORTGAGE LOAN TRUST SERIES 2004-4 CLASS 1AF+/-++ 3.42 06/25/2034 9,356,634
9,188,072 GSMPS MORTGAGE LOAN TRUST SERIES 2004-4 CLASS 2A1+/-++ 4.22 06/25/2034 9,430,759
9,676,570 GSR MORTGAGE LOAN TRUST SERIES 2004-1 CLASS 2A2+/- 5.22 04/25/2032 9,745,726
579,483 HOUSING SECURITIES INCORPORATED SERIES 1992-8 CLASS E+/- 3.79 06/25/2024 567,072
4,080,272 IMPAC CMB TRUST SERIES 2003-4 CLASS 3AIO(C) 6.00 09/25/2005 78,749
12,800,000 IMPAC SECURED ASSETS CMN OWNER TRUST SERIES 2003-3 CLASS AIO(C) 5.75 01/25/2006 392,634
14,986,063 IMPAC SECURED ASSETS CMN OWNER TRUST SERIES 2004-1 CLASS AIO+/-(C) 3.50 02/25/2006 248,430
611,900,168 INDYMAC INDEX MORTGAGE LOAN TRUST SERIES 2004-AR14 CLASS AX1+/-(C) 0.80 01/25/2035 7,771,132
331,689,469 INDYMAC INDEX MORTGAGE LOAN TRUST SERIES 2004-AR8 CLASS AX1+/-(C) 0.80 11/25/2034 4,245,625
248,861,000 JP MORGAN CHASE COMMERCIAL MORTGAGE SECURITIES
CORPORATION SERIES 2001- CIB CLASS X2+/-++(C) 1.00 04/15/2035 7,346,750
8,000,000 JP MORGAN MORTGAGE TRUST 5.15 05/25/2035 8,010,400
8,399,607 JP MORGAN MORTGAGE TRUST SERIES 2005-A2 CLASS 3A+/- 4.93 04/25/2035 8,431,525
1,449,774 MLCC MORTGAGE INVESTORS INCORPORATED SERIES 1995-A CLASS A5+/- 4.06 06/15/2020 1,458,617
3,233,443 MLCC SERIES 1996-C CLASS B+/-++ 3.84 09/15/2021 2,649,483
3,487 MORGAN STANLEY MORTGAGE TRUST SERIES 35 CLASS 2+/-(C) 11,073.50 04/20/2021 27,928
82,900 PRUDENTIAL HOME MORTGAGE SECURITIES SERIES 1988-1 CLASS A+/- 4.17 04/25/2018 83,645
81,558 PRUDENTIAL HOME MORTGAGE SECURITIES SERIES 1995-A CLASS 2B+/- 8.73 03/28/2025 81,558
189,866 RESECURITIZATION MORTGAGE TRUST SERIES 1998-B CLASS A+/-++ 3.28 04/26/2021 187,968
7,826,067 RESIDENTIAL FINANCE LP SERIES 2003-C CLASS B4+/-++ 4.51 09/10/2035 7,952,593
12,228,230 RESIDENTIAL FINANCE LP SERIES 2003-C CLASS B3+/-++ 4.31 09/10/2035 12,436,582
1,748,057 SALOMON BROTHERS MORTGAGE SECURITIES VII SERIES 1990-2 CLASS A+/- 4.31 11/25/2020 1,744,269
7,593,967 SEQUOIA MORTGAGE TRUST SERIES 8 CLASS 3A+/- 4.03 08/20/2032 7,695,727
14,320,800 STRUCTURED ASSET MORTGAGE INVESTMENTS INCORPORATED
SERIES 2001-4 CLASS A1 9.22 10/25/2024 15,394,233
2,409,076 STRUCTURED ASSET MORTGAGE INVESTMENTS INCORPORATED
SERIES 2001-4 CLASS A2 9.65 10/25/2024 2,499,957
37,413 STRUCTURED ASSET SECURITIES CORPORATION SERIES 1994-C1 CLASS A3+/- 3.70 08/25/2026 37,533
1,278,652 STRUCTURED ASSET SECURITIES CORPORATION SERIES 1998-2 CLASS A+/- 3.54 02/25/2028 1,278,652
7,737,422 STRUCTURED ASSET SECURITIES CORPORATION SERIES 1998-RF1 CLASS A+/-++ 8.73 04/15/2027 8,046,642
10,371,276 STRUCTURED ASSET SECURITIES CORPORATION SERIES 1998-RF2 CLASS A+/-++ 8.56 07/15/2027 10,710,472
1,371,904 STRUCTURED ASSET SECURITIES CORPORATION SERIES 2002-8A CLASS 3A+/- 5.60 05/25/2032 1,375,291
4,418,669 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR10 CLASS A6+/- 4.82 10/25/2032 4,390,469
3,618,317 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR15 CLASS A5+/- 4.38 12/25/2032 3,605,491
1,187,067 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR7 CLASS A6+/- 5.53 07/25/2032 1,187,451
6,952,000 WASHINGTON MUTUAL INCORPORATED SERIES 2003-AR7 CLASS A5+/- 3.07 08/25/2033 6,828,684
1,139,317 WILSHIRE FUNDING CORPORATION SERIES 1996-3 CLASS M2+/- 6.17 08/25/2032 1,136,886
1,004,411 WILSHIRE FUNDING CORPORATION SERIES 1996-3 CLASS M3+/- 6.17 08/25/2032 1,002,239
3,823,194 WILSHIRE FUNDING CORPORATION SERIES 1998-WFC2 CLASS M1+/- 5.24 12/28/2037 3,828,164
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $342,417,121) 348,577,341
--------------
50
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
CORPORATE BONDS & NOTES - 31.70%
AMUSEMENT & RECREATION SERVICES - 0.52%
$ 1,830,000 CAESARS ENTERTAINMENT INCORPORATED 7.88% 12/15/2005 $ 1,864,312
4,100,000 SAN MANUEL ENTERTAINMENT AUTHORITY SERIES 04-B+/-++ 3.71 12/01/2010 4,100,000
5,964,312
--------------
AUTOMOTIVE REPAIR, SERVICES & PARKING - 0.42%
4,835,000 LEAR CORPORATION SERIES B 7.96 05/15/2005 4,841,020
--------------
BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 0.71%
5,820,000 LENNAR CORPORATION SERIES B 9.95 05/01/2010 6,109,545
1,925,000 SCHULER HOMES INCORPORATED 9.38 07/15/2009 2,014,751
8,124,296
--------------
BUSINESS SERVICES - 0.80%
4,535,000 CENDANT CORPORATION 6.88 08/15/2006 4,688,927
4,485,000 ELECTRONIC DATA SYSTEMS CORPORATION++ 7.13 05/15/2005 4,487,965
9,176,892
--------------
COMMUNICATIONS - 7.33%
2,890,000 ALLTEL CORPORATION 4.66 05/17/2007 2,914,554
15,000 CITIZENS COMMUNICATIONS COMPANY 7.60 06/01/2006 15,450
11,270,000 CLEAR CHANNEL COMMUNICATIONS INCORPORATED 6.00 11/01/2006 11,454,603
3,850,000 COX COMMUNICATIONS INCORPORATED 7.75 08/15/2006 4,012,432
2,000,000 COX COMMUNICATIONS INCORPORATED+/-++ 3.55 12/14/2007 2,011,710
6,680,000 FRANCE TELECOM 7.45 03/01/2006 6,873,299
3,245,000 HISTORIC TW INCORPORATED 7.75 06/15/2005 3,260,897
5,775,000 LENFEST COMMUNICATIONS INCORPORATED 8.38 11/01/2005 5,893,676
1,000,000 LENFEST COMMUNICATIONS INCORPORATED 10.50 06/15/2006 1,064,514
2,890,000 LIBERTY MEDIA CORPORATION+/- 4.51 09/17/2006 2,924,275
3,590,000 QWEST CORPORATION 6.63 09/15/2005 3,607,950
5,533,000 TCI COMMUNICATIONS INCORPORATED 7.25 08/01/2005 5,577,441
5,790,000 TELECORP PCS INCORPORATED 10.63 07/15/2010 6,168,793
6,165,000 TELUS CORPORATION 7.50 06/01/2007 6,546,293
8,115,000 TIME WARNER INCORPORATED 5.63 05/01/2005 8,115,000
7,100,000 UNIVISION COMMUNICATIONS INCORPORATED 2.88 10/15/2006 6,973,727
6,455,000 VERIZON WIRELESS CAPITAL LLC 5.38 12/15/2006 6,585,197
83,999,811
--------------
DEPOSITORY INSTITUTIONS - 4.02%
5,000,000 ALLFIRST PREFERRED CAPITAL TRUST+/- 4.64 07/15/2029 5,058,400
7,500,000 CENTRAL FIDELITY CAPITAL I SERIES A+/- 4.14 04/15/2027 7,563,667
9,500,000 FIRST MARYLAND CAPITAL I+/- 4.14 01/15/2027 9,552,886
2,000,000 HUNTINGTON CAPITAL TRUST I+/- 3.89 02/01/2027 1,879,362
12,305,000 NTC CAPITAL TRUST II SERIES B+/- 3.73 04/15/2027 11,875,002
820,000 NTC CAPITAL TRUST SERIES A+/- 3.66 01/15/2027 785,579
5,000,000 STAR BANC CAPITAL TRUST I+/- 3.78 06/15/2027 4,951,495
4,500,000 SUNTRUST CAPITAL III+/- 3.66 03/15/2028 4,418,195
46,084,586
--------------
51
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
ELECTRIC, GAS & SANITARY SERVICES - 2.71%
$ 5,800,000 CONECTIV INCORPORATED SERIES B 5.30% 06/01/2005 $ 5,806,925
4,800,000 ENTERGY GULF STATES INCORPORATED+/- 3.31 12/01/2009 4,809,067
1,750,000 FPL GROUP CAPITAL INCORPORATED 3.25 04/11/2006 1,741,709
4,690,000 GPU INCORPORATED SERIES A 7.70 12/01/2005 4,782,923
3,980,098 MIDLAND FUNDING II SERIES A 11.75 07/23/2005 4,038,203
7,000,000 NISOURCE FINANCE CORPORATION 7.63 11/15/2005 7,142,954
2,573,000 SOUTHERN CALIFORNIA EDISON 8.00 02/15/2007 2,739,854
31,061,635
--------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.28%
3,100,000 BALL CORPORATION 7.75 08/01/2006 3,185,250
--------------
FOOD & KINDRED PRODUCTS - 0.89%
5,235,000 CONAGRA FOODS INCORPORATED 9.88 11/15/2005 5,388,605
4,800,000 NABISCO INCORPORATED 6.85 06/15/2005 4,817,415
10,206,020
--------------
HEALTH SERVICES - 0.45%
5,000,000 HCA INCORPORATED 7.13 06/01/2006 5,130,800
--------------
HOLDING & OTHER INVESTMENT OFFICES - 3.05%
3,300,000 MARTIN LUTHER KING FOUNDATION INCORPORATED SERIES 1998+/- 4.74 12/01/2028 3,300,000
13,196,006 MORGAN GUARANTY TRUST COMPANY OF NEW YORK SERIES C+/- 5.59 07/27/2005 4,618,602
10,500,000 MORGAN STANLEY 5.80 04/01/2007 10,796,835
7,245,000 PREFERRED TERM SECURITIES XV+/-++ 4.62 09/26/2034 7,263,113
9,000,000 REGIONAL DIVERSIFIED FUNDING+/-++ 4.45 01/25/2036 9,000,000
34,978,550
--------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 0.76%
3,845,000 CAESARS ENTERTAINMENT INCORPORATED 8.50 11/15/2006 4,056,475
4,500,000 HARRAH'S OPERATING COMPANY INCORPORATED 7.88 12/15/2005 4,601,250
8,657,725
--------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 0.57%
6,550,000 JOHN DEERE CAPITAL CORPORATION 3.88 03/07/2007 6,525,968
--------------
INSURANCE CARRIERS - 1.72%
9,000,000 HSB CAPITAL I SERIES B+/- 4.05 07/15/2027 8,972,811
6,675,000 METLIFE INCORPORATED 3.91 05/15/2005 6,676,802
4,000,000 PRUDENTIAL FINANCIAL INCORPORATED+/- 4.10 11/15/2006 4,024,624
19,674,237
--------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 4.06%
6,780,000 CAPITAL ONE BANK SERIES BANK NOTE 8.25 06/15/2005 6,816,368
6,850,000 FORD MOTOR CREDIT COMPANY 6.50 01/25/2007 6,849,315
19,135,000 GENERAL ELECTRIC CAPITAL CORPORATION 5.38 03/15/2007 19,582,989
2,270,000 GENERAL MOTORS ACCEPTANCE CORPORATION 6.75 01/15/2006 2,286,800
4,815,000 GENERAL MOTORS ACCEPTANCE CORPORATION+/- 4.10 07/16/2007 4,509,122
6,275,000 HSBC FINANCE CORPORATION 8.88 02/15/2006 6,507,238
46,551,832
--------------
52
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
OIL & GAS EXTRACTION - 0.61%
$ 6,700,000 PIONEER NATURAL RESOURCES COMPANY 6.50% 01/15/2008 $ 6,958,339
--------------
PIPELINES, EXCEPT NATURAL GAS - 0.43%
4,825,000 CENTERPOINT ENERGY RESOURCES CORPORATION SERIES B 8.13 07/15/2005 4,870,321
--------------
REAL ESTATE - 0.42%
4,600,000 HIGHWOODS REALTY LP 7.00 12/01/2006 4,754,293
--------------
TOBACCO PRODUCTS - 0.30%
3,378,000 ALTRIA GROUP INCORPORATED 6.38 02/01/2006 3,433,389
--------------
TRANSPORTATION BY AIR - 0.14%
1,619,000 RAYTHEON COMPANY 6.50 07/15/2005 1,628,304
--------------
TRANSPORTATION EQUIPMENT - 1.09%
4,825,000 DAIMLERCHRYSLER NA HOLDING CORPORATION 7.75 06/15/2005 4,843,856
7,705,000 DAIMLERCHRYSLER NA HOLDING CORPORATION+/- 3.20 03/07/2007 7,628,559
12,472,415
--------------
WHOLESALE TRADE NON-DURABLE GOODS - 0.42%
4,825,000 BERGEN BRUNSWIG CORPORATION 7.25 06/01/2005 4,838,992
--------------
TOTAL CORPORATE BONDS & NOTES (COST $372,850,429) 363,118,987
--------------
FOREIGN CORPORATE BONDS - 1.28%
7,000,000 COMMONWEALTH BANK OF AUSTRALIA SERIES B+/- 3.54 06/01/2010 6,999,685
5,221,000 DEUTSCHE TELEKOM INTERNATIONAL FINANCE BV 8.25 06/15/2005 5,250,300
2,411,450 PREFERRED TERM SECURITIES LIMITED/PREFERRED TERM
SECURITIES INCORPORATED+/-++ 5.63 08/07/2031 2,417,479
TOTAL FOREIGN CORPORATE BONDS (COST $14,671,089) 14,667,464
--------------
MUNICIPAL BONDS & NOTES - 1.96%
5,075,000 BAYONNE NJ REDEVELOPMENT AGENCY (PROPERTY TAX REVENUE LOC) 4.25 05/27/2005 5,073,072
3,075,000 BAYONNE NJ REDEVELOPMENT AGENCY SERIES B (OTHER REVENUE LOC) 5.43 04/13/2007 3,083,579
4,000,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY
(HOUSING REVENUE LOC)+/-SS. 4.70 05/15/2029 4,000,000
5,000,000 CITY OF CHICAGO IL (PROPERTY TAX REVENUE LOC)^ 3.16 12/01/2005 4,907,050
3,700,000 OHIO STATE WATER DEVELOPMENT AUTHORITY OHIO EDISON COMPANY SERIES B
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-SS. 3.35 06/01/2033 3,697,225
1,650,000 YELLOWWOOD ACRES SERIES 1998+/-SS. 4.74 12/01/2028 1,650,000
--------------
TOTAL MUNICIPAL BONDS & NOTES (COST $22,470,810) 22,410,926
--------------
US GOVERNMENT AGENCY SECURITIES - 10.03%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 2.81%
498,269 FHLMC #1B0128+/- 6.16 09/01/2031 508,222
91,523 FHLMC #1B0145+/- 6.03 10/01/2031 93,928
642,104 FHLMC #555243 9.00 11/01/2016 697,469
1,425,791 FHLMC #555427 9.50 09/01/2020 1,633,414
621,319 FHLMC #555490 9.50 12/01/2016 674,915
4,256,919 FHLMC #555519 9.00 12/01/2016 4,644,616
1,200,945 FHLMC #788792+/- 6.15 01/01/2029 1,260,833
53
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FEDERAL HOME LOAN MORTGAGE CORPORATION (CONTINUED)
$ 2,694,210 FHLMC #789272+/- 5.66% 04/01/2032 $ 2,786,943
330,506 FHLMC #846989+/- 5.64 06/01/2031 335,021
655,579 FHLMC #846990+/- 6.14 10/01/2031 673,426
1,481,223 FHLMC #884013 10.50 05/01/2020 1,687,739
960,491 FHLMC #A01734 9.00 08/01/2018 1,047,105
369,320 FHLMC #A01849 9.50 05/01/2020 420,763
2,314,713 FHLMC #C64637 7.00 06/01/2031 2,448,196
2,904,218 FHLMC #G01126 9.50 12/01/2022 3,203,271
2,119,162 FHLMC #G11150 7.50 12/01/2011 2,211,771
1,673,296 FHLMC #G11200 8.00 01/01/2012 1,765,484
1,797,978 FHLMC #G11229 8.00 01/01/2013 1,896,919
1,410,410 FHLMC #G11391 7.50 06/01/2012 1,485,751
1,809,439 FHLMC #G40362 5.00 05/01/2006 1,824,463
799,720 FHLMC #G80118 10.00 11/17/2021 924,124
32,224,373
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 5.51%
957,676 FNMA #100001 9.00 02/15/2020 1,068,677
866,820 FNMA #100256 9.00 10/15/2021 962,115
1,287,257 FNMA #100259 7.50 12/15/2009 1,334,657
396,507 FNMA #190722 9.50 03/01/2021 443,382
1,061,353 FNMA #190909 9.00 06/01/2024 1,185,495
1,682,482 FNMA #252870 7.00 11/01/2014 1,772,273
845,150 FNMA #310010 9.50 12/01/2020 971,468
233,110 FNMA #323069 9.00 11/01/2007 233,645
33,144 FNMA #323498 9.50 12/01/2009 33,964
3,323,513 FNMA #323534 9.00 12/01/2016 3,677,073
2,364,331 FNMA #340181 7.00 12/01/2010 2,486,896
931,665 FNMA #344890 10.25 09/01/2021 1,072,971
513,842 FNMA #379046 9.50 03/01/2010 536,737
966,067 FNMA #392647 9.00 10/01/2013 1,013,716
144,742 FNMA #426817 10.00 12/01/2009 146,523
714,501 FNMA #458004 10.00 03/20/2018 800,173
209,867 FNMA #522159+/- 7.10 02/01/2030 211,565
994,759 FNMA #523850 10.50 10/01/2014 1,085,917
2,260,253 FNMA #534738+/- 4.25 05/01/2027 2,303,715
1,912,392 FNMA #535807 10.50 04/01/2022 2,208,215
2,900,205 FNMA #545117+/- 6.65 12/01/2040 3,015,113
2,577,949 FNMA #545131 8.00 03/01/2013 2,709,504
700,439 FNMA #545157 8.50 11/01/2012 738,698
2,844,966 FNMA #545325 8.50 07/01/2017 3,083,373
1,457,029 FNMA #545460+/- 5.81 11/01/2031 1,503,101
54
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FEDERAL NATIONAL MORTGAGE ASSOCIATION (CONTINUED)
$ 696,617 FNMA #591199+/- 6.07% 08/01/2031 $ 710,150
5,259,042 FNMA #598559 6.50 08/01/2031 5,522,390
184,934 FNMA #604060+/- 6.01 09/01/2031 189,813
1,291,232 FNMA #604689+/- 6.40 10/01/2031 1,323,303
1,470,674 FNMA #635070+/- 5.15 05/01/2032 1,501,590
1,163,771 FNMA #646643+/- 5.91 06/01/2032 1,180,987
1,208,620 FNMA #660508 7.00 05/01/2013 1,272,970
15,494,750 FNMA #724657+/- 5.56 07/01/2033 16,088,478
668,233 FNMA #8243 10.00 01/01/2010 721,841
63,110,488
--------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.71%
272,188 GNMA #780253 9.50 11/15/2017 300,059
1,120,115 GNMA #780267 9.00 11/15/2017 1,234,137
984,433 GNMA #780664 10.00 10/20/2017 1,117,873
3,276,302 GNMA #781310 8.00 01/15/2013 3,434,618
3,519,401 GNMA #781311 7.50 02/15/2013 3,679,189
5,343,795 GNMA #781540 7.00 05/15/2013 5,626,661
3,902,192 GNMA #781614 7.00 06/15/2033 4,176,617
19,569,154
--------------
TOTAL US GOVERNMENT AGENCY SECURITIES (COST $110,439,698) 114,904,015
--------------
US TREASURY SECURITIES - 0.04%
US TREASURY BILLS - 0.04%
400,000 US TREASURY BILL^ 2.71 05/05/2005 399,918
50,000 US TREASURY BILL^# 2.71 06/16/2005 49,836
50,000 US TREASURY BILL^# 2.76 06/23/2005 49,803
499,557
--------------
TOTAL US TREASURY SECURITIES (COST $499,550) 499,557
--------------
SHARES
SHORT-TERM INVESTMENTS - 2.45%
28,104,731 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~>> 28,104,731
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $28,104,731) 28,104,731
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $1,175,262,144)* 100.09% $1,146,530,154
OTHER ASSETS AND LIABILITIES, NET (0.09) (1,067,409)
------ --------------
TOTAL NET ASSETS 100.00% $1,145,462,745
====== ==============
55
WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND
- --------------------------------------------------------------------------------
+/- VARIABLE RATE SECURITIES.
^^ THIS SECURITY IS CURRENTLY IN DEFAULT WITH REGARDS TO SCHEDULED INTEREST
OR PRINCIPAL PAYMENTS.
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE
SECURITIES ACT OF 1933, AS AMENDED.
(C) INTEREST-ONLY SECURITIES ENTITLE HOLDERS TO RECEIVE ONLY THE INTEREST
PAYMENTS ON THE UNDERLYING MORTGAGES. THE YIELD TO MATURITY OF AN
INTEREST-ONLY IS EXTREMELY SENSITIVE TO THE RATE OF PRINCIPAL PAYMENTS ON
THE UNDERLYING MORTGAGE ASSETS. A RAPID (SLOW) RATE OF PRINCIPAL
REPAYMENTS MAY HAVE ADVERSE (POSITIVE) EFFECT ON YIELD TO MATURITY. THE
PRINCIPAL AMOUNT SHOWN IS THE NOTIONAL AMOUNT OF THE UNDERLYING MORTGAGES.
INTEREST RATE DISCLOSED REPRESENTS THE YIELD BASED UPON THE ESTIMATED
TIMING OF FUTURE CASH FLOWS.
^ ZERO COUPON/STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO
MATURITY.
@ THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
# SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
>> SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $28,104,731.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
+ NON-INCOME EARNING SECURITY.
(I) ILLIQUID SECURITY.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
56
THIS PAGE IS INTENTIONALLY LEFT BLANK --
WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENT OF ASSETS AND LIABILITIES --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CORPORATE GOVERNMENT
BOND FUND SECURITIES FUND
- ---------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ................ $ 430,541,037 $ 1,400,282,655
INVESTMENT IN AFFILIATES ...................... 9,983,949 89,759,352
---------------- ----------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST
BELOW) ......................................... 440,524,986 1,490,042,007
---------------- ----------------
CASH .......................................... 0 0
VARIATION MARGIN RECEIVABLE ON FUTURES
CONTRACTS .................................... 55,250 56,250
RECEIVABLE FOR FUND SHARES ISSUED ............. 17,019 302,197
RECEIVABLE FOR INVESTMENTS SOLD ............... 2,286,790 940,066
RECEIVABLES FOR DIVIDENDS AND INTEREST ........ 6,845,638 60,977,574
---------------- ----------------
TOTAL ASSETS .................................... 449,729,683 1,552,318,094
---------------- ----------------
LIABILITIES
PAYABLE FOR DAILY VARIATION MARGIN ON FUTURES
CONTRACTS .................................... 0 0
PAYABLE FOR FUND SHARES REDEEMED .............. 250,837 510,762
PAYABLE FOR INVESTMENTS PURCHASED ............. 5,659,479 220,097,730
DIVIDENDS PAYABLE ............................. 1,879,220 4,733,211
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES
(NOTE 3) ..................................... 243,162 769,020
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ....... 54,846 184,974
ACCRUED EXPENSES AND OTHER LIABILITIES ........ 158,099 375,499
---------------- ----------------
TOTAL LIABILITIES ............................... 8,245,643 226,671,196
---------------- ----------------
TOTAL NET ASSETS ................................ $ 441,484,040 $ 1,325,646,898
================ ================
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------
PAID-IN CAPITAL ............................... $ 564,831,452 $ 1,313,752,523
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .... 759 (3,051,491)
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON
INVESTMENTS .................................. (136,661,287) 4,665,595
NET UNREALIZED APPRECIATION (DEPRECIATION)
OF I NVESTMENTS, FOREIGN CURRENCIES AND
TRANSLATION OF ASSETS AND LIABILITIES
DENOMINATED IN FOREIGN CURRENCIES .......... 14,040,980 10,534,052
NET UNREALIZED APPRECIATION (DEPRECIATION)
OF FUTURES ................................... (727,864) (253,781)
---------------- ----------------
TOTAL NET ASSETS ................................ $ 441,484,040 $ 1,325,646,898
---------------- ----------------
COMPUTATION OF NET ASSET VALUE AND OFFERING
PRICE PER SHARE(1)
- ---------------------------------------------------------------------------------------
NET ASSETS - CLASS C .......................... N/A $ 2,252,919
SHARES OUTSTANDING - CLASS C .................. N/A 210,353
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
CLASS C ...................................... N/A $ 10.71
NET ASSETS - ADMINISTRATOR CLASS .............. N/A $ 10,096
SHARES OUTSTANDING - ADMINISTRATOR CLASS ...... N/A 943
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
ADMINISTRATOR CLASS .......................... N/A $ 10.71
NET ASSETS - ADVISOR CLASS .................... $ 17,731,884 $ 69,080,901
SHARES OUTSTANDING - ADVISOR CLASS ............ 1,691,312 6,448,742
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
ADVISOR CLASS ................................ $ 10.48 $ 10.71
NET ASSETS - INSTITUTIONAL CLASS .............. $ 73,524,804 $ 90,554,422
SHARES OUTSTANDING - INSTITUTIONAL CLASS ...... 7,019,229 8,455,150
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
INSTITUTIONAL CLASS .......................... $ 10.47 $ 10.71
NET ASSETS - INVESTOR CLASS .................. $ 350,227,352 $ 1,163,748,560
SHARES OUTSTANDING - INVESTOR CLASS .......... 33,396,489 108,576,964
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
INVESTOR CLASS ............................... $ 10.49 $ 10.72
---------------- ----------------
INVESTMENTS AT COST ............................. $ 426,484,006 $ 1,479,507,890
================ ================
(1) EACH FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
58
STATEMENT OF ASSETS AND LIABILITIES -- WELLS FARGO ADVANTAGE INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
HIGH INCOME SHORT-TERM SHORT-TERM HIGH ULTRA SHORT-TERM
FUND BOND FUND YIELD BOND FUND INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ............... $ 261,751,912 $ 557,040,739 $ 169,639,816 $ 1,118,425,423
INVESTMENT IN AFFILIATES ..................... 8,244,207 13,908,976 2,962,186 28,104,731
---------------- ---------------- ---------------- ----------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST
BELOW) ........................................ 269,996,119 570,949,715 172,602,002 1,146,530,154
---------------- ---------------- ---------------- ----------------
CASH ......................................... 0 0 0 347,584
VARIATION MARGIN RECEIVABLE ON FUTURES
CONTRACTS ................................... 0 0 0 245,750
RECEIVABLE FOR FUND SHARES ISSUED ............ 27,273 8,459 86,710 210,993
RECEIVABLE FOR INVESTMENTS SOLD .............. 0 152,785 376,400 288,884
RECEIVABLES FOR DIVIDENDS AND INTEREST ....... 5,382,448 6,604,527 3,450,109 11,853,293
---------------- ---------------- ---------------- ----------------
TOTAL ASSETS ................................... 275,405,840 577,715,486 176,515,221 1,159,476,658
---------------- ---------------- ---------------- ----------------
LIABILITIES
PAYABLE FOR DAILY VARIATION MARGIN ON FUTURES
CONTRACTS ................................... 0 1,750 0 0
PAYABLE FOR FUND SHARES REDEEMED ............. 230,484 124,703 208,027 987,650
PAYABLE FOR INVESTMENTS PURCHASED ............ 875,000 4,063,473 2,000,000 8,128,090
DIVIDENDS PAYABLE ............................ 1,650,794 1,259,768 690,172 3,829,070
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES
(NOTE 3) .................................... 139,312 249,442 74,351 549,619
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ...... 41,405 80,622 28,832 163,557
ACCRUED EXPENSES AND OTHER LIABILITIES ....... 91,162 192,922 59,671 355,927
---------------- ---------------- ---------------- ----------------
TOTAL LIABILITIES .............................. 3,028,157 5,972,680 3,061,053 14,013,913
---------------- ---------------- ---------------- ----------------
TOTAL NET ASSETS ............................... $ 272,377,683 $ 571,742,806 $ 173,454,168 $ 1,145,462,745
================ ================ ================ ================
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL .............................. $ 681,900,132 $ 724,821,272 $ 245,855,520 $ 1,426,351,796
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ... 1,196 (509,113) (56,777) (2,417,957)
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON
INVESTMENTS ................................. (399,440,575) (151,122,236) (71,977,613) (249,574,539)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS, FOREIGN CURRENCIES AND
TRANSLATION OF ASSETS AND LIABILITIES
DENOMINATED IN FOREIGN CURRENCIES ......... (10,083,070) (1,446,540) (366,962) (28,732,018)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF
FUTURES ..................................... 0 (577) 0 (164,537)
---------------- ---------------- ---------------- ----------------
TOTAL NET ASSETS ............................... $ 272,377,683 $ 571,742,806 $ 173,454,168 $ 1,145,462,745
---------------- ---------------- ---------------- ----------------
COMPUTATION OF NET ASSET VALUE AND OFFERING
PRICE PER SHARE(1)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - CLASS C ......................... N/A N/A N/A N/A
SHARES OUTSTANDING - CLASS C ................. N/A N/A N/A N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
CLASS C ..................................... N/A N/A N/A N/A
NET ASSETS - ADMINISTRATOR CLASS ............. N/A N/A N/A $ 9,988
SHARES OUTSTANDING - ADMINISTRATOR CLASS ..... N/A N/A N/A 1,092
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
ADMINISTRATOR CLASS ......................... N/A N/A N/A $ 9.15
NET ASSETS - ADVISOR CLASS ................... $ 18,588,485 $ 8,389,609 $ 40,710,709 $ 61,503,345
SHARES OUTSTANDING - ADVISOR CLASS ........... 2,451,719 972,910 4,790,898 6,718,386
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
ADVISOR CLASS ............................... $ 7.58 $ 8.62 $ 8.50 $ 9.15
NET ASSETS - INSTITUTIONAL CLASS ............. $ 3,052,265 $ 51,462,479 N/A $ 57,054,228
SHARES OUTSTANDING - INSTITUTIONAL CLASS ..... 399,259 5,962,572 N/A 6,232,878
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
INSTITUTIONAL CLASS ......................... $ 7.64 $ 8.63 N/A $ 9.15
NET ASSETS - INVESTOR CLASS ................. $ 250,736,933 $ 511,890,718 $ 132,743,459 $ 1,026,895,184
SHARES OUTSTANDING - INVESTOR CLASS ......... 32,950,568 59,366,474 15,620,654 112,128,124
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
INVESTOR CLASS .............................. $ 7.61 $ 8.62 $ 8.50 $ 9.16
---------------- ---------------- ---------------- ----------------
INVESTMENTS AT COST ............................ $ 280,079,189 $ 572,396,240 $ 172,968,964 $ 1,175,262,144
================ ================ ================ ================
59
WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENT OF OPERATIONS -- FOR THE SIX
MONTHS ENDED APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CORPORATE GOVERNMENT
BOND FUND SECURITIES FUND
- ---------------------------------------------------------------------------------------
INVESTMENT INCOME
INTEREST ..................................... $ 13,328,109 $ 28,976,159
INCOME FROM AFFILIATED SECURITIES ............ 35,002 240,401
SECURITIES LENDING INCOME, NET ............... 16,114 36,660
---------------- ----------------
TOTAL INVESTMENT INCOME ......................... 13,379,225 29,253,220
---------------- ----------------
EXPENSES
ADVISORY FEES ................................ 903,918 2,384,717
ADMINISTRATION FEES
FUND LEVEL ................................ 12,738 38,194
CLASS C ................................... N/A 5,965
ADMINISTRATOR CLASS ....................... N/A 1
ADVISOR CLASS ............................. 44,713 168,096
INSTITUTIONAL CLASS ....................... 16,628 20,545
INVESTOR CLASS ............................ 1,073,443 3,390,762
CUSTODY FEES ................................. 23,376 58,065
SHAREHOLDER SERVICING FEES ................... 53,094 178,002
ACCOUNTING FEES .............................. 3,449 7,329
DISTRIBUTION FEES (NOTE 3)
CLASS C ................................... N/A 12,629
ADVISOR CLASS ............................. 21,055 80,093
AUDIT FEES ................................... 9,484 4,694
LEGAL FEES ................................... 11,580 36,341
REGISTRATION FEES ............................ 27,065 37,469
SHAREHOLDER REPORTS .......................... 119,719 229,875
TRUSTEES' FEES ............................... 23,232 51,610
OTHER FEES AND EXPENSES ...................... 114,526 268,755
---------------- ----------------
TOTAL EXPENSES .................................. 2,458,020 6,973,142
---------------- ----------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) . (149,313) (317,172)
NET EXPENSES ................................. 2,308,707 6,655,970
---------------- ----------------
NET INVESTMENT INCOME (LOSS) .................... 11,070,518 22,597,250
---------------- ----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
- ---------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN
CURRENCY TRANSLATION ........................ 9,656,125 4,945,176
FUTURES TRANSACTIONS ......................... (302,160) 796,457
OPTIONS, SWAP AGREEMENTS AND SHORT SALE
TRANSACTIONS ................................ 0 (179,422)
---------------- ----------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ....... 9,353,965 5,562,211
---------------- ----------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN
CURRENCY TRANSLATION ........................ (17,551,941) (16,589,951)
FUTURES TRANSACTIONS ......................... 648,107 1,844,774
---------------- ----------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS .................. (16,903,834) (14,745,177)
================ ================
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS .................................... (7,549,869) (9,182,966)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ................................ $ 3,520,649 $ 13,414,284
================ ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
60
STATEMENT OF OPERATIONS -- FOR THE SIX WELLS FARGO ADVANTAGE INCOME FUNDS
MONTHS ENDED APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
HIGH INCOME SHORT-TERM SHORT-TERM HIGH ULTRA SHORT-TERM
FUND BOND FUND YIELD BOND FUND INCOME FUND
---------------- ---------------- ---------------- ----------------
INVESTMENT INCOME
INTEREST ..................................... $ 11,704,390 $ 12,589,122 $ 5,378,623 $ 25,157,468
INCOME FROM AFFILIATED SECURITIES ............ 14,362 6,355 10,592 53,503
SECURITIES LENDING INCOME, NET ............... 0 3,516 0 4,513
---------------- ---------------- ---------------- ----------------
TOTAL INVESTMENT INCOME ......................... 11,718,752 12,598,993 5,389,215 25,215,484
---------------- ---------------- ---------------- ----------------
EXPENSES
ADVISORY FEES ................................ 601,797 1,052,286 393,369 1,990,136
ADMINISTRATION FEES
FUND LEVEL ................................ 7,969 16,544 5,058 33,206
CLASS C ................................... N/A N/A N/A N/A
ADMINISTRATOR CLASS ....................... N/A N/A N/A 1
ADVISOR CLASS ............................. 45,927 20,427 110,156 179,786
INSTITUTIONAL CLASS ....................... 744 10,567 N/A 11,087
INVESTOR CLASS ............................ 692,179 1,148,510 413,951 2,891,281
CUSTODY FEES ................................. 9,454 18,936 7,831 50,047
SHAREHOLDER SERVICING FEES ................... 39,401 75,326 25,288 158,051
ACCOUNTING FEES .............................. 2,869 18,567 2,158 6,402
DISTRIBUTION FEES (NOTE 3)
CLASS C ................................... N/A N/A N/A N/A
ADVISOR CLASS ............................. 24,251 10,278 56,260 83,093
AUDIT FEES ................................... 10,355 13,062 11,669 4,360
LEGAL FEES ................................... 7,438 13,013 5,143 36,317
REGISTRATION FEES ............................ 22,546 24,412 22,462 33,139
SHAREHOLDER REPORTS .......................... 48,677 0 36,395 155,693
TRUSTEES' FEES ............................... 12,284 27,963 12,255 67,426
OTHER FEES AND EXPENSES ...................... 74,610 117,495 49,073 341,214
---------------- ---------------- ---------------- ----------------
TOTAL EXPENSES .................................. 1,600,501 2,567,386 1,151,068 6,041,239
---------------- ---------------- ---------------- ----------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) . (125,576) (223,038) (102,351) (479,799)
NET EXPENSES ................................. 1,474,925 2,344,348 1,048,717 5,561,440
---------------- ---------------- ---------------- ----------------
NET INVESTMENT INCOME (LOSS) .................... 10,243,827 10,254,645 4,340,498 19,654,044
---------------- ---------------- ---------------- ----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
- -------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN
CURRENCY TRANSLATION ....................... 6,673,824 277,958 802,096 1,035,846
FUTURES TRANSACTIONS ......................... 0 99,814 0 1,605,669
OPTIONS, SWAP AGREEMENTS AND SHORT SALE
TRANSACTIONS ............................... 0 0 0 (358,844)
---------------- ---------------- ---------------- ----------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ....... 6,673,824 377,772 802,096 2,282,671
---------------- ---------------- ---------------- ----------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN
CURRENCY TRANSLATION ....................... (15,753,389) (9,044,722) (4,995,221) (8,534,326)
FUTURES TRANSACTIONS ......................... 0 (76,823) 0 487,633
---------------- ---------------- ---------------- ----------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS ................. (15,753,389) (9,121,545) (4,995,221) (8,046,693)
================ ================ ================ ================
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ................................ (9,079,565) (8,743,773) (4,193,125) (5,764,022)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ..................... $ 1,164,262 $ 1,510,872 $ 147,373 $ 13,890,022
================ ================ ================ ================
61
WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ......................... $ 524,054,516 $ 660,888,739
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ................. 11,070,518 27,923,256
NET REALIZED GAIN (LOSS) ON INVESTMENTS ...... 9,353,965 8,465,572
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS ............... (16,903,834) 3,961,636
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ............................... 3,520,649 40,350,464
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS C ................................... N/A N/A
ADMINISTRATOR CLASS ....................... N/A N/A
ADVISOR CLASS ............................. (436,680) (1,093,815)
INSTITUTIONAL CLASS ....................... (1,864,284) (4,135,937)
INVESTOR CLASS ............................ (8,771,555) (22,690,186)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS C ................................... N/A N/A
ADVISOR CLASS ............................. 0 0
INSTITUTIONAL CLASS ....................... 0 0
INVESTOR CLASS ............................ 0 0
---------------- ----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ............. (11,072,519) (27,919,938)
---------------- ----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS C .......... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS C ...... N/A N/A
COST OF SHARES REDEEMED - CLASS C ............ N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS C ..... N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS .......................... N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS .... 4,154,653 7,490,227
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS 433,175 1,116,082
COST OF SHARES REDEEMED - ADVISOR CLASS ...... (6,941,179) (17,434,217)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS -
ADVISOR CLASS .............................. (2,353,351) (8,827,908)
---------------- ----------------
PROCEEDS FROM SHARES SOLD -
INSTITUTIONAL CLASS ........................ 6,601,269 20,448,265
REINVESTMENT OF DISTRIBUTIONS -
INSTITUTIONAL CLASS ........................ 194,830 348,885
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS (3,051,168) (28,275,056)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS -
INSTITUTIONAL CLASS .......................... 3,744,931 (7,477,906)
---------------- ----------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ... 40,528,506 78,725,733
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS 7,962,749 20,297,730
COST OF SHARES REDEEMED - INVESTOR CLASS ..... (124,901,441) (231,982,398)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - INVESTOR CLASS (76,410,186) (132,958,935)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS ................ (75,018,606) (149,264,749)
================ ================
NET INCREASE (DECREASE) IN NET ASSETS ........... (82,570,476) (136,834,223)
================ ================
ENDING NET ASSETS ............................... $ 441,484,040 $ 524,054,516
================ ================
(1) PROCEDS FROM SHARES SOLD MAY INCLUDE REDEMPTION FEES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
62
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND HIGH INCOME FUND
------------------------------------ ------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 (UNAUDITED)(1) OCTOBER 31, 2004
- -------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ......................... $ 1,394,056,586 $ 2,255,692,540 $ 347,109,259 $ 513,408,673
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ................. 22,597,250 44,440,105 10,243,827 29,227,083
NET REALIZED GAIN (LOSS) ON INVESTMENTS ...... 5,562,211 34,517,596 6,673,824 2,764,928
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS ............... (14,745,177) (8,412,873) (15,753,389) 16,393,932
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ............................... 13,414,284 70,544,828 1,164,262 48,385,943
---------------- ---------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS C ................................... (34,752) (84,798) N/A N/A
ADMINISTRATOR CLASS ....................... (25) N/A N/A N/A
ADVISOR CLASS ............................. (1,424,177) (3,072,932) (710,098) (1,723,018)
INSTITUTIONAL CLASS ....................... (1,963,672) (3,808,490) (121,338) (3,161,517)
INVESTOR CLASS ............................ (23,524,385) (51,447,055) (9,411,195) (24,365,381)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS C ................................... (28,215) (58,583) N/A N/A
ADVISOR CLASS ............................. (752,236) (2,051,055) 0 0
INSTITUTIONAL CLASS ....................... (859,001) (2,160,849) 0 0
INVESTOR CLASS ............................ (12,017,941) (34,247,190) 0 0
---------------- ---------------- ---------------- ----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ............. (40,604,404) (96,930,952) (10,242,631) (29,249,916)
---------------- ---------------- ---------------- ----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS C .......... 139,472 1,751,552 N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS C ...... 54,077 109,986 N/A N/A
COST OF SHARES REDEEMED - CLASS C ............ (861,806) (1,764,801) N/A N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS C ..... (668,257) 96,737 N/A N/A
---------------- ---------------- ---------------- ----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS 10,000 N/A N/A N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS .......................... 10,000 N/A N/A N/A
---------------- ---------------- ---------------- ----------------
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS .... 10,152,225 22,304,220 2,286,686 3,790,722
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS 2,122,623 5,128,850 712,501 1,745,615
COST OF SHARES REDEEMED - ADVISOR CLASS ...... (17,983,004) (70,449,093) (6,092,597) (13,951,292)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS -
ADVISOR CLASS .............................. (5,708,156) (43,016,023) (3,093,410) (8,414,955)
---------------- ---------------- ---------------- ----------------
PROCEEDS FROM SHARES SOLD -
INSTITUTIONAL CLASS ........................ 10,803,822 22,478,473 1,283 6,724,352
REINVESTMENT OF DISTRIBUTIONS -
INSTITUTIONAL CLASS ........................ 449,829 1,417,953 313,435 3,175,687
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS (3,377,267) (59,882,417) (21,625,822) (29,148,508)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS -
INSTITUTIONAL CLASS .......................... 7,876,384 (35,985,991) (21,311,104) (19,248,469)
---------------- ---------------- ---------------- ----------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ... 152,366,694 273,331,124 17,152,584 47,287,659
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS 33,399,301 78,778,841 6,896,624 18,457,910
COST OF SHARES REDEEMED - INVESTOR CLASS ..... (228,495,534) (1,108,454,518) (65,297,901) (223,517,586)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - INVESTOR CLASS (42,729,539) (756,344,553) (41,248,693) (157,772,017)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS ................ (41,219,568) (835,249,830) (65,653,207) (185,435,441)
================ ================ ================ ================
NET INCREASE (DECREASE) IN NET ASSETS ........... (68,409,688) (861,635,954) (74,731,576) (166,299,414)
================ ================ ================ ================
ENDING NET ASSETS ............................... $ 1,325,646,898 $ 1,394,056,586 $ 272,377,683 $ 347,109,259
================ ================ ================ ================
63
WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS C ........................ N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS
- CLASS C .................................. N/A N/A
SHARES REDEEMED - CLASS C .................... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- CLASS C .................................. N/A N/A
---------------- ----------------
SHARES SOLD - ADMINISTRATOR CLASS ............ N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- ADMINISTRATOR CLASS ......................... N/A N/A
---------------- ----------------
SHARES SOLD - ADVISOR CLASS .................. 390,477 711,184
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS
- ADVISOR CLASS ............................ 40,779 106,236
SHARES REDEEMED - ADVISOR CLASS .............. (652,315) (1,656,411)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- ADVISOR CLASS ............................... (221,059) (838,991)
---------------- ----------------
SHARES SOLD - INSTITUTIONAL CLASS ............ 520,863 1,965,184
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS
- INSTITUTIONAL CLASS ...................... 118,362 33,269
SHARES REDEEMED - INSTITUTIONAL CLASS ........ (289,792) (2,691,685)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- INSTITUTIONAL CLASS ......................... 349,433 (693,232)
---------------- ----------------
SHARES SOLD - INVESTOR CLASS ................. 3,814,084 7,406,159
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS
- INVESTOR CLASS ........................... 749,184 1,932,271
SHARES REDEEMED - INVESTOR CLASS ............. (11,721,105) (22,098,555)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- INVESTOR CLASS ............................... (7,157,837) (12,760,125)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
RESULTING FROM CAPITAL SHARE TRANSACTIONS ..... (7,029,463) (14,292,348)
================ ================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) ................................. $ 759 $ 2,759
================ ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
64
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND HIGH INCOME FUND
------------------------------------ ------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
- -------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS C ........................ 15,189 160,431 N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS
- CLASS C .................................. 2,829 10,120 N/A N/A
SHARES REDEEMED - CLASS C .................... (80,314) (162,752) N/A N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- CLASS C .................................. (62,296) 7,799 N/A N/A
---------------- ---------------- ---------------- ----------------
SHARES SOLD - ADMINISTRATOR CLASS ............ 942 N/A N/A N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- ADMINISTRATOR CLASS ......................... 942 N/A N/A N/A
---------------- ---------------- ---------------- ----------------
SHARES SOLD - ADVISOR CLASS .................. 1,014,978 2,049,123 290,926 493,380
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS
- ADVISOR CLASS ............................ 128,326 471,234 90,675 228,581
SHARES REDEEMED - ADVISOR CLASS .............. (1,674,512) (6,470,140) (777,504) (1,826,262)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- ADVISOR CLASS ............................... (531,208) (3,949,783) (395,903) (1,104,301)
---------------- ---------------- ---------------- ----------------
SHARES SOLD - INSTITUTIONAL CLASS ............ 1,019,598 2,070,885 138 870,067
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS
- INSTITUTIONAL CLASS ...................... 28,507 130,186 39,719 413,474
SHARES REDEEMED - INSTITUTIONAL CLASS ........ (314,853) (5,501,897) (2,740,718) (3,745,985)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- INSTITUTIONAL CLASS ......................... 733,252 (3,300,826) (2,700,861) (2,462,444)
---------------- ---------------- ---------------- ----------------
SHARES SOLD - INVESTOR CLASS ................. 15,247,715 25,056,354 2,181,011 6,136,919
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS
- INVESTOR CLASS ........................... 2,045,654 7,234,657 875,664 2,409,240
SHARES REDEEMED - INVESTOR CLASS ............. (21,252,201) (101,610,878) (8,295,958) (29,173,307)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- INVESTOR CLASS ............................... (3,958,832) (69,319,867) (5,239,283) (20,627,148)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
RESULTING FROM CAPITAL SHARE TRANSACTIONS ..... (3,818,142) (76,562,677) (8,336,047) (24,193,893)
================ ================ ================ ================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) ................................. $ (3,051,491) $ 1,298,270 $ 1,196 $ 0
================ ================ ================ ================
65
WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED
(UNAUDITED)(1) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ......................... $ 576,286,031 $ 804,867,124
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ................. 10,254,645 20,775,628
NET REALIZED GAIN (LOSS) ON INVESTMENTS ...... 377,772 5,267,784
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS .............. (9,121,545) (5,681,655)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS .............................. 1,510,872 20,361,757
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS C ................................... N/A N/A
ADMINISTRATOR CLASS ....................... N/A N/A
ADVISOR CLASS ............................. (170,527) (381,676)
INSTITUTIONAL CLASS ....................... (1,079,910) (2,304,115)
INVESTOR CLASS ............................ (9,522,128) (20,423,374)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS C ................................... N/A N/A
ADVISOR CLASS ............................. 0 0
INSTITUTIONAL CLASS ....................... 0 0
INVESTOR CLASS ............................ 0 0
---------------- ----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ............. (10,772,565) (23,109,165)
---------------- ----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS C .......... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS C ...... N/A N/A
COST OF SHARES REDEEMED - CLASS C ............ N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS C ...... N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD
- ADMINISTRATOR CLASS ....................... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS .......................... N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS .... 742,995 2,100,910
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS 175,546 384,070
COST OF SHARES REDEEMED - ADVISOR CLASS ...... (2,607,829) (6,409,590)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - ADVISOR CLASS (1,689,288) (3,924,610)
---------------- ----------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS 3,597,109 13,404,577
REINVESTMENT OF DISTRIBUTIONS
- INSTITUTIONAL CLASS ........................ 239,382 760,227
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS . (1,447,114) (31,389,278)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS -
INSTITUTIONAL CLASS .......................... 2,389,377 (17,224,474)
---------------- ----------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ... 86,027,317 77,287,058
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS 8,515,819 17,388,445
COST OF SHARES REDEEMED - INVESTOR CLASS ..... (90,524,757) (299,360,104)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - INVESTOR CLASS 4,018,379 (204,684,601)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS ................ 4,718,468 (225,833,685)
================ ================
NET INCREASE (DECREASE) IN NET ASSETS ........... (4,543,225) (228,581,093)
================ ================
ENDING NET ASSETS ............................... $ 571,742,806 $ 576,286,031
================ ================
(1) PROCEEDS FROM SHARES SOLD MAY INCLUDE AMOUNTS RELATED TO FUND MERGERS AND
SHARE CLASS CONSOLIDATIONS (NOTE 1).
(2) PROCEEDS FROM SHARES SOLD MAY INCLUDE REDEMPTION FEES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
66
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
SHORT-TERM HIGH YIELD BOND FUND ULTRA SHORT-TERM INCOME FUND
------------------------------------ ------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED)(2) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
- -------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ......................... $ 220,480,649 $ 341,502,804 $ 1,425,161,780 $ 2,353,726,173
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ................. 4,340,498 11,850,811 19,654,044 43,671,673
NET REALIZED GAIN (LOSS) ON INVESTMENTS ...... 802,096 4,299,441 2,282,671 (4,384,288)
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS .............. (4,995,221) (3,586,270) (8,046,693) (9,265,183)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS .............................. 147,373 12,563,982 13,890,022 30,022,202
---------------- ---------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS C ................................... N/A N/A N/A N/A
ADMINISTRATOR CLASS ....................... N/A N/A (23) N/A
ADVISOR CLASS ............................. (1,085,799) (2,847,087) (1,207,829) (2,864,239)
INSTITUTIONAL CLASS ....................... N/A N/A (1,093,426) (3,704,000)
INVESTOR CLASS ............................ (3,318,135) (9,017,138) (19,776,169) (45,871,440)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS C ................................... N/A N/A N/A N/A
ADVISOR CLASS ............................. 0 0 0 0
INSTITUTIONAL CLASS ....................... N/A N/A 0 0
INVESTOR CLASS ............................ 0 0 0 0
---------------- ---------------- ---------------- ----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ............. (4,403,934) (11,864,225) (22,077,447) (52,439,679)
---------------- ---------------- ---------------- ----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS C .......... N/A N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS C ...... N/A N/A N/A N/A
COST OF SHARES REDEEMED - CLASS C ............ N/A N/A N/A N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS C ...... N/A N/A N/A N/A
---------------- ---------------- ---------------- ----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS N/A N/A 10,000 N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS .......................... N/A N/A 10,000 N/A
---------------- ---------------- ---------------- ----------------
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS .... 6,224,122 19,010,794 8,621,047 48,681,081
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS 967,463 2,608,558 1,181,661 2,919,288
COST OF SHARES REDEEMED - ADVISOR CLASS ...... (21,015,350) (39,708,587) (35,585,669) (108,288,542)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - ADVISOR CLASS (13,823,765) (18,089,235) (25,782,961) (56,688,173)
---------------- ---------------- ---------------- ----------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS N/A N/A 14,166,593 47,397,968
REINVESTMENT OF DISTRIBUTIONS
- INSTITUTIONAL CLASS ........................ N/A N/A 606,818 2,875,589
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS . N/A N/A (16,976,047) (202,979,335)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS -
INSTITUTIONAL CLASS .......................... N/A N/A (2,202,636) (152,705,777)
---------------- ---------------- ---------------- ----------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ... 19,629,988 118,852,995 153,596,571 503,267,324
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS 2,745,319 7,592,955 17,891,622 43,196,049
COST OF SHARES REDEEMED - INVESTOR CLASS ..... (51,321,462) (230,078,627) (415,024,206) (1,243,216,338)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - INVESTOR CLASS (28,946,155) (103,632,677) (243,536,013) (696,752,965)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS ................ (42,769,920) (121,721,912) (271,511,610) (906,146,916)
================ ================ ================ ================
NET INCREASE (DECREASE) IN NET ASSETS ........... (47,026,481) (121,022,155) (279,699,035) (928,564,393)
================ ================ ================ ================
ENDING NET ASSETS ............................... $ 173,454,168 $ 220,480,649 $ 1,145,462,745 $ 1,425,161,780
================ ================ ================ ================
67
WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED
(UNAUDITED(1) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS C ........................ N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS
- CLASS C ................................... N/A N/A
SHARES REDEEMED - CLASS C .................... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- CLASS C ...................................... N/A N/A
---------------- ----------------
SHARES SOLD - ADMINISTRATOR CLASS ............ N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- ADMINISTRATOR CLASS .......................... N/A N/A
---------------- ----------------
SHARES SOLD - ADVISOR CLASS .................. 85,364 238,892
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS
- ADVISOR CLASS ............................. 20,196 43,583
SHARES REDEEMED - ADVISOR CLASS .............. (299,938) (726,740)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- ADVISOR CLASS ................................ (194,378) (444,265)
---------------- ----------------
SHARES SOLD - INSTITUTIONAL CLASS ............ 413,196 1,518,809
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS
- INSTITUTIONAL CLASS ....................... 27,524 86,060
SHARES REDEEMED - INSTITUTIONAL CLASS ........ (166,474) (3,556,896)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- INSTITUTIONAL CLASS .......................... 274,246 (1,952,027)
---------------- ----------------
SHARES SOLD - INVESTOR CLASS ................. 9,968,237 8,763,819
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS
- INVESTOR CLASS ............................ 979,909 1,973,530
SHARES REDEEMED - INVESTOR CLASS ............. (10,424,680) (33,969,098)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- INVESTOR CLASS ............................... 523,466 (23,231,749)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
RESULTING FROM CAPITAL SHARE TRANSACTIONS ...... 603,334 (25,628,041)
================ ================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) .................................. $ (509,113) $ 8,806
================ ================
(1) SHARES SOLD MAY INCLUDE AMOUNTS RELATED TO FUND MERGERS AND SHARE CLASS
CONSOLIDATIONS (NOTE 1).
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
68
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
SHORT-TERM HIGH YIELD BOND FUND ULTRA SHORT-TERM INCOME FUND
------------------------------------ ------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
- -------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS C ........................ N/A N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS
- CLASS C ................................... N/A N/A N/A N/A
SHARES REDEEMED - CLASS C .................... N/A N/A N/A N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- CLASS C ...................................... N/A N/A N/A N/A
---------------- ---------------- ---------------- ----------------
SHARES SOLD - ADMINISTRATOR CLASS ............ N/A N/A 1,092 N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- ADMINISTRATOR CLASS .......................... N/A N/A 1,092 N/A
---------------- ---------------- ---------------- ----------------
SHARES SOLD - ADVISOR CLASS .................. 750,407 2,193,275 938,012 5,251,935
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS
- ADVISOR CLASS ............................. 81,899 301,064 128,577 314,398
SHARES REDEEMED - ADVISOR CLASS .............. (2,432,838) (4,589,075) (3,872,698) (11,660,062)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- ADVISOR CLASS ................................ (1,600,532) (2,094,736) (2,806,109) (6,093,729)
---------------- ---------------- ---------------- ----------------
SHARES SOLD - INSTITUTIONAL CLASS ............ N/A N/A 1,542,918 5,103,244
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS
- INSTITUTIONAL CLASS ....................... N/A N/A 66,031 309,449
SHARES REDEEMED - INSTITUTIONAL CLASS ........ N/A N/A (1,848,387) (21,836,888)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- INSTITUTIONAL CLASS .......................... N/A N/A (239,438) (16,424,195)
---------------- ---------------- ---------------- ----------------
SHARES SOLD - INVESTOR CLASS ................. 2,270,869 13,703,741 16,710,311 54,187,259
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS
- INVESTOR CLASS ............................ 317,539 876,274 1,945,480 4,650,565
SHARES REDEEMED - INVESTOR CLASS ............. (5,944,093) (26,550,751) (45,150,784) (133,789,575)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- INVESTOR CLASS ............................... (3,355,685) (11,970,736) (26,494,993) (74,951,751)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
RESULTING FROM CAPITAL SHARE TRANSACTIONS ...... (4,956,217) (14,065,472) (29,539,448) (97,469,675)
================ ================ ================ ================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) .................................. $ (56,777) $ 6,659 $ (2,417,957) $ 5,447
================ ================ ================ ================
69
WELLS FARGO ADVANTAGE INCOME FUNDS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT
SHARE (LOSS) INVESTMENTS INCOME
- -------------------------------------------------------------------------------------------------------------
CORPORATE BOND FUND
- -------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $10.67 0.24 (0.19) (0.24)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $10.42 0.49 0.25 (0.49)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 9.54 0.52 0.88 (0.52)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $10.80 0.63 (1.25) (0.64)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $10.42 0.74 0.38 (0.74)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ $10.59 0.73 (0.17) (0.73)
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $10.65 0.27 (0.18) (0.27)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $10.41 0.55 0.24 (0.55)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 9.53 0.57 0.88 (0.57)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $10.79 0.68 (1.25) (0.69)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $10.42 0.81 0.37 (0.81)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ $10.59 0.80 (0.17) (0.80)
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $10.67 0.24 (0.18) (0.24)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $10.42 0.50 0.25 (0.50)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 9.54 0.53 0.88 (0.53)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $10.80 0.65 (1.26) (0.65)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $10.43 0.76 0.37 (0.76)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ $10.60 0.77 (0.19) (0.75)
GOVERNMENT SECURITIES FUND
- -------------------------------------------------------------------------------------------------------------
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $10.92 0.09 (0.05) (0.13)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $11.05 0.15 0.20 (0.25)
DECEMBER 26, 2002(4) TO OCTOBER 31, 2003 ........ $11.14 0.19 (0.06) (0.22)
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . $10.61 0.02 0.11 (0.03)
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $10.93 0.17 (0.07) (0.20)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $11.05 0.25 0.21 (0.35)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $11.35 0.25 0.07 (0.36)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $11.25 0.42 0.30 (0.46)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $10.33 0.54 0.92 (0.54)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ $10.22 0.56 0.11 (0.56)
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $10.93 0.20 (0.07) (0.23)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $11.05 0.32 0.21 (0.42)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $11.36 0.34 0.05 (0.44)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $11.26 0.48 0.31 (0.53)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $10.34 0.60 0.93 (0.61)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ $10.22 0.64 0.12 (0.64)
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $10.93 0.17 (0.06) (0.20)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $11.05 0.26 0.21 (0.36)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $11.36 0.28 0.05 (0.38)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $11.26 0.43 0.31 (0.48)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $10.33 0.55 0.95 (0.57)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ $10.23 0.59 0.10 (0.59)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
70
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
FROM NET NET ASSET -------------------------------------------------
REALIZED VALUE PER NET INVESTMENT GROSS EXPENSE NET
GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- --------------------------------------------------------------------------------------------------------------------------------
CORPORATE BOND FUND
- --------------------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $10.48 4.59% 1.25% (0.17)% 1.08%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $10.67 4.70% 1.20% (0.08)% 1.12%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $10.42 5.10% 1.16% (0.03)% 1.13%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 9.54 6.40% 1.15% (0.03)% 1.12%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $10.80 6.72% 1.29% (0.14)% 1.15%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 0.00 $10.42 6.92% 1.15% (0.05)% 1.10%
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $10.47 5.07% 0.65% (0.04)% 0.61%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $10.65 5.23% 0.60% (0.03)% 0.57%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $10.41 5.59% 0.60% (0.01)% 0.59%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 9.53 7.00% 0.59% (0.01)% 0.58%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $10.79 7.42% 0.49% (0.00)% 0.49%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 0.00 $10.42 7.67% 0.44% (0.00)% 0.44%
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $10.49 4.62% 1.10% (0.06)% 1.04%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $10.67 4.78% 1.07% (0.03)% 1.04%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $10.42 5.20% 1.04% (0.01)% 1.03%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 9.54 6.60% 0.99% 0.00% 0.99%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $10.80 7.03% 0.95% 0.00% 0.95%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 0.00 $10.43 7.35% 0.92% 0.00% 0.92%
GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------------------------------------------------------
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. (0.12) $10.71 2.48% 2.38% (0.04)% 2.34%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ (0.23) $10.92 1.65% 2.10% (0.04)% 2.06%
DECEMBER 26, 2002(4) TO OCTOBER 31, 2003 ........ 0.00 $11.05 1.25% 2.17% (0.06)% 2.11%
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . 0.00 $10.71 4.61% 0.90% (0.19)% 0.71%
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. (0.12) $10.71 3.74% 1.19% (0.10)% 1.09%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ (0.23) $10.93 2.57% 1.18% (0.06)% 1.12%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ (0.26) $11.05 2.33% 1.12% (0.01)% 1.11%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (0.16) $11.35 3.68% 1.14% (0.04)% 1.10%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $11.25 4.50% 1.36% (0.22)% 1.14%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 0.00 $10.33 5.52% 1.93% (0.81)% 1.12%
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. (0.12) $10.71 4.30% 0.58% (0.04)% 0.54%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ (0.23) $10.93 3.19% 0.53% (0.03)% 0.50%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ (0.26) $11.05 2.96% 0.48% 0.00% 0.48%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (0.16) $11.36 4.50% 0.46% (0.01)% 0.45%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $11.26 5.43% 0.47% 0.00% 0.47%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 0.00 $10.34 6.21% 0.41% 0.00% 0.41%
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. (0.12) $10.72 3.81% 1.07% (0.05)% 1.02%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ (0.23) $10.93 2.66% 1.06% (0.03)% 1.03%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ (0.26) $11.05 2.55% 0.96% 0.00% 0.96%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (0.16) $11.36 3.85% 0.92% (0.01)% 0.91%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $11.26 5.08% 0.91% 0.00% 0.91%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 0.00 $10.33 5.76% 0.89% (0.01)% 0.88%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- ---------------------------------------------------------------------------------------------
CORPORATE BOND FUND
- ---------------------------------------------------------------------------------------------
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.50% 75% $ 17,732
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 7.29% 133% $ 20,396
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 14.89% 205% $ 28,663
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (5.84)% 412% $ 30,529
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 10.98% 341% $ 32,041
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 5.49% 294% $ 7,138
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.81% 75% $ 73,525
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 7.78% 133% $ 71,061
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 15.51% 205% $ 76,644
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (5.35)% 412% $ 43,487
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 11.62% 341% $ 31,997
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 6.22% 294% $ 6,530
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.60% 75% $ 350,227
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 7.39% 133% $ 432,598
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 15.00% 205% $ 555,582
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (5.71)% 412% $ 683,288
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 11.10% 341% $ 1,292,816
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 5.73% 294% $ 921,587
GOVERNMENT SECURITIES FUND
- ---------------------------------------------------------------------------------------------
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.39% 111% $ 2,253
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 3.20% 390% $ 2,979
DECEMBER 26, 2002(4) TO OCTOBER 31, 2003 ........ 1.18% 531% $ 2,925
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . 1.18% 111% $ 10
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.95% 111% $ 69,081
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 4.27% 390% $ 76,283
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 2.89% 531% $ 120,753
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 6.77% 519% $ 106,721
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 14.50% 552% $ 12,371
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 6.76% 373% $ 86
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 1.22% 111% $ 90,554
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 4.92% 390% $ 84,366
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 3.56% 531% $ 121,767
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 7.45% 519% $ 104,607
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 15.28% 552% $ 76,172
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 7.69% 373% $ 20,547
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 1.07% 111% $ 1,163,749
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 4.38% 390% $ 1,230,428
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 2.99% 531% $ 2,010,247
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 6.97% 519% $ 2,360,229
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 14.88% 552% $ 1,690,980
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 6.99% 373% $ 1,282,641
71
WELLS FARGO ADVANTAGE INCOME FUNDS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT
SHARE (LOSS) INVESTMENTS INCOME
- -------------------------------------------------------------------------------------------------------------
HIGH INCOME FUND
- -------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 7.84 0.26 (0.26) (0.26)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 7.49 0.53 0.35 (0.53)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 6.31 0.55 1.18 (0.55)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $ 7.74 0.77 (1.43) (0.77)
NOVEMBER 1, 2003 TO OCTOBER 31, 2001 ............ $ 9.67 1.01 (1.93) (1.01)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ $10.78 0.75 (1.11) (0.75)
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 7.88 0.28 (0.24) (0.28)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 7.53 0.58 0.35 (0.58)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 6.35 0.61 1.17 (0.60)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $ 7.75 0.82 (1.40) (0.82)
JULY 31, 2001(4) TO OCTOBER 31, 2001 ............ $ 8.56 0.26 (0.81) (0.26)
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 7.86 0.26 (0.25) (0.26)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 7.51 0.54 0.35 (0.54)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 6.33 0.57 1.18 (0.57)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $ 7.75 0.78 (1.42) (0.78)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $ 9.68 1.03 (1.93) (1.03)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ $10.60 1.14 (0.92) (1.14)
SHORT-TERM BOND FUND
- -------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 8.77 0.15 (0.14) (0.16)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 8.81 0.26 (0.01) (0.29)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 8.78 0.29 0.07 (0.33)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $ 9.40 0.42 (0.60) (0.44)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $ 9.34 0.58 0.06 (0.58)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ $ 9.41 0.60 (0.07) (0.60)
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 8.78 0.17 (0.14) (0.18)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 8.82 0.31 (0.01) (0.34)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 8.79 0.34 0.08 (0.39)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $ 9.40 0.48 (0.59) (0.50)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $ 9.35 0.64 0.05 (0.64)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ $ 9.42 0.67 (0.07) (0.67)
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 8.77 0.16 (0.14) (0.17)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 8.81 0.27 (0.01) (0.30)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 8.78 0.29 0.09 (0.35)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $ 9.39 0.44 (0.59) (0.46)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $ 9.34 0.60 0.05 (0.60)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ $ 9.41 0.63 (0.07) (0.63)
SHORT-TERM HIGH YIELD BOND FUND
- -------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 8.69 0.19 (0.19) (0.19)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 8.66 0.39 0.03 (0.39)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 8.28 0.46 0.38 (0.46)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $ 8.93 0.60 (0.65) (0.60)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001............. $ 9.88 0.79 (0.95) (0.79)
FEBRUARY 29, 2000(4) TO OCTOBER 31, 2000 ........ $10.05 0.51 (0.17) (0.51)
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 8.69 0.19 (0.19) (0.19)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 8.66 0.40 0.03 (0.40)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 8.29 0.47 0.37 (0.47)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $ 8.93 0.61 (0.64) (0.61)
NOVEMBER 1, 2003 TO OCTOBER 31, 2001 ............ $ 9.88 0.82 (0.95) (0.82)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ $10.21 0.81 (0.33) (0.81)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
72
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
FROM NET NET ASSET -------------------------------------------------
REALIZED VALUE PER NET INVESTMENT GROSS EXPENSE NET
GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- --------------------------------------------------------------------------------------------------------------------------------
HIGH INCOME FUND
- --------------------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 7.58 6.58% 1.20% (0.12)% 1.08%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 7.84 6.90% 1.20% (0.07)% 1.13%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $ 7.49 7.74% 1.15% (0.04)% 1.11%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 6.31 10.45% 1.20% (0.07)% 1.13%
NOVEMBER 1, 2003 TO OCTOBER 31, 2001 ............ 0.00 $ 7.74 11.31% 1.61% (0.48)% 1.13%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 0.00 $ 9.67 10.72% 1.17% (0.05)% 1.12%
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 7.64 6.95% 0.50% (0.06)% 0.44%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 7.88 7.58% 0.47% (0.03)% 0.44%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $ 7.53 8.60% 0.45% 0.00% 0.45%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 6.35 11.03% 0.46% 0.00% 0.46%
JULY 31, 2001(4) TO OCTOBER 31, 2001 ............ 0.00 $ 7.75 12.93% 0.49% 0.00% 0.49%
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 7.61 6.70% 1.04% (0.08)% 0.96%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 7.86 7.06% 1.00% (0.04)% 0.96%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $ 7.51 8.09% 0.94% 0.00% 0.94%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 6.33 10.62% 0.97% 0.00% 0.97%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $ 7.75 11.48% 0.90% 0.00% 0.90%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 0.00 $ 9.68 10.96% 0.86% 0.00% 0.86%
SHORT-TERM BOND FUND
- --------------------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 8.62 3.71% 1.20% (0.13)% 1.07%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 8.77 2.96% 1.19% (0.07)% 1.12%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $ 8.81 3.14% 1.15% (0.02)% 1.13%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 8.78 4.66% 1.16% (0.03)% 1.13%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $ 9.40 5.47% 1.34% (0.21)% 1.13%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 0.00 $ 9.34 6.51% 2.00% (0.89)% 1.11%
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 8.63 4.26% 0.59% (0.06)% 0.53%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 8.78 3.56% 0.54% (0.03)% 0.51%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $ 8.82 3.78% 0.51% 0.00% 0.51%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 8.79 5.35% 0.48% 0.00% 0.48%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $ 9.40 6.57% 0.44% 0.00% 0.44%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 0.00 $ 9.35 7.16% 0.43% 0.00% 0.43%
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 8.62 3.90% 0.96% (0.08)% 0.88%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 8.77 3.11% 0.99% (0.03)% 0.96%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $ 8.81 3.39% 0.94% (0.01)% 0.93%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 8.78 4.94% 0.90% 0.00% 0.90%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $ 9.39 6.23% 0.87% 0.00% 0.87%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 0.00 $ 9.34 6.74% 0.86% 0.00% 0.86%
SHORT-TERM HIGH YIELD BOND FUND
- --------------------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 8.50 4.34% 1.24% (0.15)% 1.09%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 8.69 4.54% 1.20% (0.08)% 1.12%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $ 8.66 5.23% 1.16% (0.04)% 1.12%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 8.28 6.82% 1.18% (0.06)% 1.12%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001............. 0.00 $ 8.93 7.95% 1.30% (0.17)% 1.13%
FEBRUARY 29, 2000(4) TO OCTOBER 31, 2000 ........ 0.00 $ 9.88 7.65% 1.16% (0.04)% 1.12%
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 8.50 4.41% 1.12% (0.09)% 1.03%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 8.69 4.68% 1.03% (0.04)% 0.99%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $ 8.66 5.48% 0.98% (0.01)% 0.97%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 8.29 7.18% 0.93% (0.01)% 0.92%
NOVEMBER 1, 2003 TO OCTOBER 31, 2001 ............ 0.00 $ 8.93 8.45% 0.84% 0.00% 0.84%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ (0.00)(5) $ 9.88 8.05% 0.82% 0.00% 0.82%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- ---------------------------------------------------------------------------------------------
HIGH INCOME FUND
- ---------------------------------------------------------------------------------------------
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. (0.10)% 48% $ 18,588
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 12.11% 133% $ 22,315
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 28.39% 172% $ 29,587
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (9.44)% 120% $ 17,257
NOVEMBER 1, 2003 TO OCTOBER 31, 2001 ............ (10.28)% 114% $ 14,821
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ (3.44)% 104% $ 123
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.49% 48% $ 3,052
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 12.85% 133% $ 24,436
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 29.11% 172% $ 41,891
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (8.38)% 120% $ 47,281
JULY 31, 2001(4) TO OCTOBER 31, 2001 ............ (6.52)% 114% $ 13,626
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.10% 48% $ 250,737
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 12.26% 133% $ 300,358
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 28.55% 172% $ 441,931
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (9.14)% 120% $ 438,858
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ (10.05)% 114% $ 846,866
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 1.94% 104% $ 716,601
SHORT-TERM BOND FUND
- ---------------------------------------------------------------------------------------------
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.14% 12% $ 8,390
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 2.87% 37% $ 10,240
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 4.19% 97% $ 14,203
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (1.89)% 154% $ 9,369
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 6.93% 129% $ 9,657
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 5.81% 94% $ 16
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.39% 12% $ 51,462
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 3.50% 37% $ 49,940
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 4.84% 97% $ 67,391
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (1.14)% 154% $ 55,474
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 7.57% 129% $ 71,474
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 6.60% 94% $ 24,800
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.22% 12% $ 511,891
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 3.05% 37% $ 516,105
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 4.40% 97% $ 723,273
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (1.56)% 154% $ 933,238
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 7.11% 129% $ 1,348,372
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 6.16% 94% $ 1,138,002
SHORT-TERM HIGH YIELD BOND FUND
- ---------------------------------------------------------------------------------------------
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. (0.04)% 28% $ 40,711
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 4.96% 71% $ 55,553
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 10.35% 117% $ 73,487
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (0.68)% 86% $ 27,751
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ (1.92)% 73% $ 17,544
FEBRUARY 29, 2000(4) TO OCTOBER 31, 2000 ........ 3.52% 67% $ 46
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. (0.02)% 28% $ 132,743
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 5.08% 71% $ 164,928
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 10.38% 117% $ 268,015
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (0.42)% 86% $ 200,429
NOVEMBER 1, 2003 TO OCTOBER 31, 2001 ............ (1.64)% 73% $ 348,277
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ (4.91)% 67% $ 286,274
73
WELLS FARGO ADVANTAGE INCOME FUNDS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT
SHARE (LOSS) INVESTMENTS INCOME
- -------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND
- -------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . $ 9.16 0.01 0.00(5) (0.02)
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 9.21 0.13 (0.04) (0.15)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 9.33 0.20 (0.07) (0.25)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 9.41 0.24 (0.01) (0.31)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $ 9.82 0.34 (0.35) (0.40)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $ 9.88 0.55 (0.05) (0.56)
MARCH 1, 2000(6) TO OCTOBER 31, 2000 ............ $ 9.87 0.41 0.01 (0.41)
AUGUST 31, 1999(4) TO FEBRUARY 29, 2000 ......... $ 9.89 0.27 (0.02) (0.27)
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 9.21 0.16 (0.04) (0.18)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 9.33 0.24 (0.04) (0.32)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 9.41 0.29 0.01 (0.38)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $ 9.82 0.36 (0.29) (0.48)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $ 9.87 0.62 (0.04) (0.63)
MARCH 1, 2000(6) TO OCTOBER 31, 2000 ............ $ 9.87 0.46 0.00 (0.46)
AUGUST 31, 1999(4) TO FEBRUARY 29, 2000 ......... $ 9.89 0.32 (0.02) (0.32)
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 9.22 0.14 (0.04) (0.16)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 9.34 0.22 (0.06) (0.28)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 9.42 0.25 0.01 (0.34)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $ 9.82 0.35 (0.32) (0.43)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $ 9.88 0.58 (0.05) (0.59)
MARCH 1, 2000(6) TO OCTOBER 31, 2000 ............ $ 9.87 0.43 0.01 (0.43)
MARCH 1, 1999 TO FEBRUARY 29, 2000 .............. $ 9.95 0.59 (0.08) (0.59)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
74
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
FROM NET NET ASSET -------------------------------------------------
REALIZED VALUE PER NET INVESTMENT GROSS EXPENSE NET
GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- --------------------------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND
- --------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . 0.00 $ 9.15 4.28% 0.91% (0.31)% 0.60%
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 9.15 3.26% 1.18% (0.10)% 1.09%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 9.21 2.25% 1.17% (0.05)% 1.12%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $ 9.33 2.37% 1.12% 0.00% 1.12%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 9.41 3.55% 1.11% (0.01)% 1.10%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $ 9.82 4.93% 1.16% (0.03)% 1.13%
MARCH 1, 2000(6) TO OCTOBER 31, 2000 ............ 0.00 $ 9.88 6.22% 1.12% (0.01)% 1.11%
AUGUST 31, 1999(4) TO FEBRUARY 29, 2000 ......... 0.00 $ 9.87 5.69% 1.08% 0.00% 1.08%
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 9.15 3.92% 0.49% (0.06)% 0.43%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 9.21 2.99% 0.41% (0.03)% 0.38%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $ 9.33 3.16% 0.37% 0.00% 0.37%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 9.41 4.36% 0.36% (0.01)% 0.35%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $ 9.82 6.09% 0.36% 0.00% 0.36%
MARCH 1, 2000(6) TO OCTOBER 31, 2000 ............ 0.00 $ 9.87 6.95% 0.38% 0.00% 0.38%
AUGUST 31, 1999(4) TO FEBRUARY 29, 2000 ......... 0.00 $ 9.87 6.51% 0.42% 0.00% 0.42%
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 9.16 3.45% 0.95% (0.07)% 0.88%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 9.22 2.49% 0.89% (0.03)% 0.86%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $ 9.34 2.70% 0.85% (0.01)% 0.84%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 9.42 3.87% 0.82% 0.00% 0.82%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $ 9.82 5.75% 0.79% 0.00% 0.79%
MARCH 1, 2000(6) TO OCTOBER 31, 2000 ............ 0.00 $ 9.88 6.52% 0.79% 0.00% 0.79%
MARCH 1, 1999 TO FEBRUARY 29, 2000 .............. 0.00 $ 9.87 5.89% 0.76% 0.00% 0.76%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- ---------------------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND
- ---------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . 0.11% 16% $ 10
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.98% 16% $ 61,503
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 1.45% 26% $ 87,760
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 2.49% 94% $ 145,769
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (0.06)% 50% $ 97,990
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 5.12% 70% $ 81,827
MARCH 1, 2000(6) TO OCTOBER 31, 2000 ............ 4.35% 38% $ 28
AUGUST 31, 1999(4) TO FEBRUARY 29, 2000 ......... 2.56% 48% $ 16
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 1.29% 16% $ 57,054
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 2.19% 26% $ 59,624
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 3.26% 94% $ 213,690
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.71% 50% $ 302,379
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 6.03% 70% $ 783,961
MARCH 1, 2000(6) TO OCTOBER 31, 2000 ............ 4.76% 38% $ 347,826
AUGUST 31, 1999(4) TO FEBRUARY 29, 2000 ......... 3.07% 48% $ 207,029
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 1.07% 16% $ 1,026,895
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 1.71% 26% $ 1,277,777
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 2.77% 94% $ 1,994,266
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.33% 50% $ 2,092,448
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 5.47% 70% $ 2,989,665
MARCH 1, 2000(6) TO OCTOBER 31, 2000 ............ 4.58% 38% $ 2,156,106
MARCH 1, 1999 TO FEBRUARY 29, 2000 .............. 5.24% 48% $ 2,207,887
75
WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(1) During each period, various fees and expenses were waived and reimbursed
as indicated. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio in the absence of any waivers and reimbursements (Note
3).
(2) Total return calculations do not include any sales charges, and would have
been lower had certain expenses not been waived or reimbursed during the
periods shown. Returns for periods less than one year are not annualized.
(3) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
(4) Commencement of operations.
(5) Amount calculated is less than $0.005.
(6) In 2000, the Fund changed its fiscal year-end from February to October.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
76
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
1. ORGANIZATION
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Trust commenced operations on November 8,
1999, and at April 30, 2005 was comprised of 108 separate series (each, a
"Fund", collectively, the "Funds"). These financial statements present the
Corporate Bond Fund, Government Securities Fund, High Income Fund, Short-Term
Bond Fund, Short-Term High Yield Bond Fund, and Ultra Short-Term Income Fund.
Each Fund is a diversified series of the Trust.
In September 2004, the Board of Trustees of the Trust and the Boards of
Directors of the Strong Funds ("Strong Funds") approved an Agreement and Plan of
Reorganization providing for the reorganization of certain Strong Funds into
certain Funds of the Trust
Effective at the close of business on April 8, 2005, the following
Acquiring Fund ("Acquiring Fund") acquired substantially all of the net assets
of the following Target Fund ("Target Fund") through a tax-free exchange under
section 368 of the Internal Revenue Code. The following is a summary of shares
outstanding and net assets immediately before and after the reorganization:
Before Reorganization After Reorganization
--------------------------------------- ---------------------
Target Fund Acquiring Fund*
- ---------------------------------------------------------------------------------------------------------
STRONG SHORT-TERM STRONG SHORT-TERM WELLS FARGO ADVANTAGE
FUND INCOME FUND BOND FUND SHORT-TERM BOND FUND
- ---------------------------------------------------------------------------------------------------------
Shares:
- ---------------------------------------------------------------------------------------------------------
ADVISOR CLASS -- 979,755 979,755
- ---------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS -- 5,941,048 5,941,048
- ---------------------------------------------------------------------------------------------------------
INVESTOR CLASS 6,002,996 53,271,531 60,148,795
- ---------------------------------------------------------------------------------------------------------
Net Assets:
- ---------------------------------------------------------------------------------------------------------
ADVISOR CLASS -- $ 8,432,342 $ 8,432,342
- ---------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS -- $ 51,177,795 $ 51,177,795
- ---------------------------------------------------------------------------------------------------------
INVESTOR CLASS $ 59,185,007 $ 458,449,144 $ 517,634,151
- ---------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) ($226,619) ($1,975,269) ($2,201,888)
- ---------------------------------------------------------------------------------------------------------
Accumulated net realized losses ($425,633) ($151,537,312) ($151,962,945)
- ---------------------------------------------------------------------------------------------------------
* Designates the accounting survivor.
Effective at the close of business on April 8, 2005, the following
Acquiring Funds ("Acquiring Funds") acquired substantially all of the net assets
of the following Target Funds ("Target Funds") through a tax-free exchange under
section 368 of the Internal Revenue Code.
Acquiring Funds Target Funds
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CORPORATE BOND FUND ADVISOR CLASS STRONG CORPORATE BOND FUND ADVISOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CORPORATE BOND FUND INSTITUTIONAL CLASS STRONG CORPORATE BOND FUND INSTITUTIONAL CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CORPORATE BOND FUND INVESTOR CLASS STRONG CORPORATE BOND FUND INVESTOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND CLASS C STRONG GOVERNMENT SECURITIES FUND CLASS C
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND ADMINISTRATOR CLASS NEW
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND ADVISOR CLASS STRONG GOVERNMENT SECURITIES FUND ADVISOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND INSTITUTIONAL CLASS STRONG GOVERNMENT SECURITIES FUND INSTITUTIONAL CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND INVESTOR CLASS STRONG GOVERNMENT SECURITIES FUND INVESTOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE HIGH INCOME FUND ADVISOR CLASS STRONG HIGH-YIELD BOND FUND ADVISOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE HIGH INCOME FUND INSTITUTIONAL CLASS STRONG HIGH-YIELD BOND FUND INSTITUTIONAL CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE HIGH INCOME FUND INVESTOR CLASS STRONG HIGH-YIELD BOND FUND INVESTOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SHORT-TERM HIGH YIELD BOND FUND ADVISOR CLASS STRONG SHORT-TERM HIGH YIELD BOND FUND ADVISOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SHORT-TERM HIGH YIELD BOND FUND INVESTOR CLASS STRONG SHORT-TERM HIGH YIELD BOND FUND INVESTOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND ADMINISTRATOR CLASS NEW
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND ADVISOR CLASS STRONG ULTRA SHORT-TERM INCOME FUND ADVISOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND INSTITUTIONAL CLASS STRONG ULTRA SHORT-TERM INCOME FUND INSTITUTIONAL CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND INVESTOR CLASS STRONG ULTRA SHORT-TERM INCOME FUND INVESTOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
77
WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
The separate classes of shares offered by each Fund differ principally in
applicable sales charges, distribution, shareholder servicing and administration
fees. Shareholders of each class bear certain expenses that pertain to that
particular class. All shareholders bear the common expenses of a Fund, earn
income from the portfolio and are allocated unrealized gains and losses pro rata
based on the average daily net assets of each class, without distinction between
share classes. Dividends are determined separately for each class based on
income and expenses allocable to each class. Realized gains and losses are
allocated to each class pro rata based upon the net assets of each class on the
date realized. Differences in per share dividend rates generally result from the
relative weightings of pro rata income and realized gain allocations and from
differences in separate class expenses, including distribution, shareholder
servicing and administration fees.
2. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
The following significant accounting policies, which are consistently
followed in the preparation of the financial statements of the Trust, are in
conformity with accounting principles generally accepted in the United States of
America ("GAAP") for investment companies.
The preparation of financial statements in conformity with GAAP requires
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.
In the normal course of business, the Trust may enter into contracts that
provide certain indemnifications. The Trust's maximum exposure under these
arrangements is dependent on future claims that may be made against the Funds
and, therefore, cannot be estimated; however, based on experience, the risk of
loss from such claims is considered remote.
SECURITY VALUATION
Investments in securities are valued each business day as of the close of
regular trading on the New York Stock Exchange, which is usually 4:00 p.m.
(Eastern Time). Securities which are traded on a national or foreign securities
exchange are valued at the last reported sales price. Securities listed on The
Nasdaq Stock Market, Inc. are valued at the Nasdaq Official Closing Price
("NOCP"), and if no NOCP is available, then at the last reported sales price. In
the absence of any sale of such securities, and in the case of other securities,
including U.S. Government obligations, but excluding debt securities maturing in
60 days or less, the valuations are based on the latest quoted bid prices. Prior
to April 1, 2005, the predecessor Strong Funds valuations were based on the mean
of the bid and asked prices.
Certain fixed income securities with maturities exceeding 60 days are
valued by using a pricing service approved by the Trust's Board of Trustees. The
service uses market prices as quoted by an independent pricing service or by
dealers in these securities when, in the service's judgment, these prices are
readily available and are representative of the securities' market values. For
some securities, such prices are not readily available. These securities will
generally be fair valued using methods which may include consideration of yields
or prices of securities of comparable quality, coupon rate, maturity and type of
issue; indications as to values from dealers in securities, trading
characteristics and general market conditions.
Debt securities maturing in 60 days or less generally are valued at
amortized cost. The amortized cost method involves valuing a security at its
cost, plus accretion of discount or minus amortization of premium over the
period until maturity, which approximates market value.
Investments which are not valued using any of the methods discussed above,
are valued at their fair value as determined by procedures approved by the Board
of Trustees.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded on a trade date basis. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
Interest income is accrued daily and bond discounts are accreted and premiums
are amortized daily.
Debt obligations may be placed on non-accrual status and related
investment income may be reduced by ceasing current accruals and writing off
interest receivables when the collection of all or a portion of income has
become doubtful based on consistently applied procedures. A debt obligation is
removed from non-accrual status when the issuer resumes interest payments or
when collectibility of interest is reasonably assured.
Dividend income is recognized on the ex-dividend date, except for certain
dividends from foreign securities which are recorded as soon as the fund is
informed of the ex-dividend date. Dividend income from foreign securities is
recorded net of foreign taxes withheld where recovery of such taxes is not
assured.
FOREIGN CURRENCY TRANSLATION
The accounting records are maintained in U.S. dollars. Assets, including
investment securities, and liabilities denominated in foreign currency are
translated into U.S. dollars at the prevailing rates of exchange at the date of
valuation. Purchases and sales of securities, and income and expenses are
translated at the prevailing rate of exchange on the respective dates of such
transactions. Reported 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, at fiscal period-end,
resulting from changes in exchange rates.
The changes in net assets arising from changes in exchange rates and the
changes in net assets resulting from changes in market prices of securities at
fiscal period-end are not separately presented. Such changes are recorded with
net realized and unrealized gain from investments. Gains and losses from certain
foreign currency transactions are treated as ordinary income for U.S. federal
income tax purposes.
78
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, if any, is declared daily and distributed to
shareholders monthly. Distributions to shareholders from net realized capital
gains, if any, are declared and distributed at least annually.
For federal income tax purposes, a Fund may designate as capital gains
dividends the earnings and profits distributed to shareholders on the redemption
of fund shares during the year.
Distributions are based on amounts calculated in accordance with the
applicable federal income tax regulations, which may differ from GAAP. The
timing and character of distributions made during the period from net investment
income or net realized gains may also differ from their ultimate
characterization for federal income tax purposes. To the extent that these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment. Temporary
differences do not require reclassifications.
FEDERAL INCOME TAXES
Each Fund is treated as a separate entity for federal income tax purposes.
It is the policy of each Fund of the Trust to continue to qualify as a regulated
investment company by complying with the provisions applicable to regulated
investment companies, as defined under subchapter M of the Internal Revenue Code
(the "Code"), and to make distributions of 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 at April 30, 2005.
At the Funds' most recent tax year end (October 31, 2004, for all Wells
Fargo Advantage Income Funds except Short-Term Bond Fund, which had a tax year
end of April 8, 2005) estimated net capital loss carryforwards, which are
available to offset future net realized capital gains, were:
Expiring in Varying Capital Loss
Fund Amounts Through Carryforwards
- --------------------------------------------------------------------------------
CORPORATE BOND FUND 2010 $146,890,632
- --------------------------------------------------------------------------------
HIGH INCOME FUND 2011 405,764,289
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND 2005 152,013,376
- --------------------------------------------------------------------------------
SHORT-TERM HIGH YIELD BOND FUND 2010 72,773,803
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND 2005 7,281,928
- --------------------------------------------------------------------------------
FUTURES CONTRACTS
The Fund(s) may purchase futures contracts to gain exposure to market
changes, which may be more efficient or cost effective than actually buying the
securities. A futures contract is an agreement between parties to buy or sell a
security at a set price on a future date. Upon entering into such a contract, a
Fund is required to pledge to the broker an amount of cash, U.S. Government
obligations or other high-quality debt securities equal to the minimum "initial
margin" requirements of the exchange on which the futures contract is traded.
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 the value of the contract.
Such receipts or payments are known as "variation margin" and are recorded by
the Fund as unrealized gains or losses. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission (the "SEC") for long futures positions, the Fund is required
to segregate highly liquid securities as permitted by the SEC in connection with
futures transactions in an amount generally equal to the entire value of the
underlying contracts. Risks of entering into futures contracts include the
possibility that there may be an illiquid market and that a change in the value
of the contract may not correlate with changes in the value of the underlying
securities. At April 30, 2005, the following Fund(s) held futures contracts:
Net Unrealized
Appreciation
Fund Contracts Type Expiration Date Notional Amount (Depreciation)
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE BOND FUND Long 123 US 2 YR Note Jun05 June, 2005 $ 25,530,710 $ 16,774
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE BOND FUND Short 36 US 5 YR Note Jun05 June, 2005 3,874,410 (29,903)
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE BOND FUND Short 119 US 10 YR Note Jun05 June, 2005 13,055,619 (203,584)
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE BOND FUND Short 252 US Long Bond Jun05 June, 2005 28,429,476 (511,149)
- -----------------------------------------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND Short 120 US 2 YR Note Jun05 June, 2005 24,933,318 8,943
- -----------------------------------------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND Long 75 US 5 YR Note Jun05 June, 2005 8,129,616 4,369
- -----------------------------------------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND Short 180 US 10 YR Note Jun05 June, 2005 19,788,844 (267,093)
- -----------------------------------------------------------------------------------------------------------------------------
SHORT-TERM BOND FUND Long 7 US 2 YR Note Jun05 June, 2005 1,454,499 (577)
- -----------------------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND Short 511 US 2YR Note Jun05 June, 2005 106,062,266 (74,031)
- -----------------------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND Short 472 US 5 YR Note Jun05 June, 2005 51,099,369 (90,506)
- -----------------------------------------------------------------------------------------------------------------------------
79
WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
MORTGAGE DOLLAR ROLL TRANSACTIONS
The Fund(s) may engage in mortgage dollar roll transactions with respect
to mortgage-backed securities issued by GNMA, FNMA and FHLMC. In a mortgage
dollar roll transaction, a Fund sells a mortgage-backed security to a financial
institution, such as a bank or broker-dealer and simultaneously agrees to
repurchase a substantially similar security from the institution at a later date
at an agreed upon price. The mortgage-backed securities that are repurchased
will bear the same interest rate as those sold, but generally will be
collateralized by different pools of mortgages with different pre-payment
histories.
WHEN-ISSUED TRANSACTIONS
Each Fund may purchase securities on a forward commitment or 'when-issued'
basis. A Fund records a when-issued transaction on the trade date and will
segregate with the custodian qualifying assets having a value sufficient to make
payment for the securities purchased. 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 LOANS
The Fund(s) may loan securities in return for securities, irrevocable
letters of credit or cash collateral, which is invested in various short-term
fixed income securities. A Fund may receive compensation for lending securities
in the form of fees or by retaining a portion of interest on the investment
securities or cash received as collateral. A Fund also continues to receive
interest or dividends on the securities loaned. Security loans are secured at
all times by collateral. The collateral is equal to at least 102% of the market
value of the securities loaned plus accrued interest when the transaction is
entered into. If the collateral falls to 100%, it will be brought back to 102%.
Gain or loss in the market price of the securities loaned that may occur during
the term of the loan are reflected in the value of the Fund. The risks from
securities lending are that the borrower may not provide additional collateral
when required or return the securities when due or when called for by the Fund.
Wells Fargo Bank, N.A., the Funds' custodian, acts as the securities lending
agent for the Funds and receives for its services 35% of the revenues earned on
the securities lending activities and incurs all expenses.
Prior to April 11, 2005, the predecessor Strong Funds had a securities
lending agreement with State Street Bank and Trust Co. ("State Street"). The
agreement required that loans be collateralized at all times by cash and cash
equivalents equal to at least 102% of the market value of the aggregate loaned
securities, plus accrued interest, and the collateral be marked-to-market daily.
Amounts earned as interest on investments of cash collateral, net of rebates and
other securities lending expenses, are included in Securities Lending Income on
the Statement of Operations.
3. EXPENSES
- --------------------------------------------------------------------------------
ADVISORY FEES
The Trust has entered into an advisory contract with Wells Fargo Funds
Management, LLC ("Funds Management"). The adviser is responsible for
implementing investment policies and guidelines and for supervising the
sub-adviser, who is responsible for day-to-day portfolio management.
Pursuant to the contract, Funds Management is entitled to receive an
advisory fee for its services as adviser. Funds Management may retain the
services of certain investment sub-advisers to provide daily portfolio
management. The fees related to sub-advisory services are borne directly by the
adviser and do not increase the overall fees paid by a Fund to the adviser.
Funds Management and the investment sub-adviser(s) are entitled to be paid a
monthly fee at the following annual rates:
Sub-Advisory
Advisory Fees* Fees (% of
Average Daily (% of Average Average Daily Average Daily
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Net Assets)
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE BOND FUND $0 - $499 million 0.450 Wells Capital $0 - 400 million 0.200
$500 - $999 million 0.400 Management $400 - 800 million 0.175
$1 - $2.99 billion 0.350 Incorporated > $800 million 0.150
$3 - $4.99 billion 0.325
> $4.99 billion 0.300
- -----------------------------------------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND $0 - $499 million 0.450 Wells Capital $0 - 400 million 0.200
$500 - $999 million 0.400 Management $400 - 800 million 0.175
$1 - $2.99 billion 0.350 Incorporated > $800 million 0.150
$3 - $4.99 billion 0.325
> $4.99 billion 0.300
- -----------------------------------------------------------------------------------------------------------------------------
HIGH INCOME FUND $0 - $499 million 0.550 Wells Capital $0 - 400 million 0.200
$500 - $999 million 0.500 Management $400 - 800 million 0.175
$1 - $2.99 billion 0.450 Incorporated > $800 million 0.150
$3 - $4.99 billion 0.425
> $4.99 billion 0.400
80
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
Sub-Advisory
Advisory Fees* Fees (% of
Average Daily (% of Average Average Daily Average Daily
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Net Assets)
SHORT-TERM BOND FUND $0 - $499 million 0.450 Wells Capital $0 - 400 million 0.200
$500 - $999 million 0.400 Management $400 - 800 million 0.175
$1 - $2.99 billion 0.350 Incorporated > $800 million 0.150
$3 - $4.99 billion 0.325
> $4.99 billion 0.300
- -----------------------------------------------------------------------------------------------------------------------------
SHORT-TERM HIGH YIELD BOND $0 - $499 million 0.550 Wells Capital $0 - 400 million 0.200
$500 - $999 million 0.500 Management $400 - 800 million 0.175
$1 - $2.99 billion 0.450 Incorporated > $800 million 0.150
$3 - $4.99 billion 0.425
> $4.99 billion 0.400
- -----------------------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND $0 - $499 million 0.450 Wells Capital $0 - 400 million 0.200
$500 - $999 million 0.400 Management $400 - 800 million 0.175
$1 - $2.99 billion 0.350 Incorporated > $800 million 0.150
$3 - $4.99 billion 0.325
> $4.99 billion 0.300
* Effective April 11, 2005. Prior to January 1, 2005, Strong Capital
Management, Inc. ("SCM") served as investment adviser to each of the predecessor
Strong Funds and was entitled to receive an annual fee at the following rate;
from January 1, 2005 through April 10, 2005, Funds Management served as interim
investment adviser and was entitled to receive an annual fee at the same rate.
Advisory Fees
(% of Average
Fund Average Daily Net Assets Daily Net Assets)
- --------------------------------------------------------------------------------
CORPORATE BOND FUND $0 - $4 billion 0.375
$4 billion - $6 billion 0.350
> $6 billion 0.325
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND $0 - $4 billion 0.350
$4 billion - $6 billion 0.325
> $6 billion 0.300
- --------------------------------------------------------------------------------
HIGH INCOME FUND $0 - $4 billion 0.375
$4 billion - $6 billion 0.350
> $6 billion 0.325
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND $0 - $4 billion 0.375
$4 billion - $6 billion 0.350
> $6 billion 0.325
- --------------------------------------------------------------------------------
SHORT-TERM HIGH YIELD BOND FUND $0 - $4 billion 0.375
$4 billion - $6 billion 0.350
> $6 billion 0.325
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND $0 - $4 billion 0.300
$4 billion - $6 billion 0.275
> $6 billion 0.250
- --------------------------------------------------------------------------------
ADMINISTRATION AND TRANSFER AGENT FEES
The Trust has entered into an Administration Agreement with Funds
Management. Under this Agreement, for providing administrative services, which
includes paying fees and expenses for services provided by the transfer agent,
sub-transfer agents,
81
WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
omnibus account servicers and record-keepers, Funds Management is entitled
to receive the following annual fees:
Admin Fees**
Average Daily (% of Average
Net Assets Daily Net Assets)
- --------------------------------------------------------------------------------
FUND LEVEL $0 - $4.99 billion 0.05
$5 - $9.99 billion 0.04
> $9.99 billion 0.03
- --------------------------------------------------------------------------------
CLASS C 0.28
- --------------------------------------------------------------------------------
ADMINISTRATOR 0.10
- --------------------------------------------------------------------------------
ADVISOR(1),(2) 0.28
- --------------------------------------------------------------------------------
INSTITUTIONAL(1) 0.08
- --------------------------------------------------------------------------------
INVESTOR(2) 0.45
(1) The administration fee is reduced by 0.05% at each breakpoint for the
Advisor Class and Institutional Class shares of the Short-Term High Yield Bond
Fund.
(2) The administration fee is reduced by 0.05% at each breakpoint for the
Advisor Class and Investor Class shares of the High Income Fund.
** Effective April 11, 2005. Prior to April 11, 2005, Strong Investor
Services, Inc. ("SISI") served as administrator to each of the predecessor
Strong Funds and was entitled to receive an annual fee at the following rates:
% of Average
Share Class Daily Net Assets
- --------------------------------------------------------------------------------
CLASS C 0.28%
- --------------------------------------------------------------------------------
ADVISOR CLASS 0.28%
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.02%
- --------------------------------------------------------------------------------
INVESTOR CLASS 0.28%
- --------------------------------------------------------------------------------
ON BEHALF OF THE ULTRA SHORT-TERM INCOME FUND:
- --------------------------------------------------------------------------------
ADVISOR CLASS 0.33%
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.02%
- --------------------------------------------------------------------------------
INVESTOR CLASS 0.33%
The Trust has entered into an agreement with Boston Financial Data
Services ("BFDS"). BFDS served as the transfer agent for the predecessor Strong
Funds effective March 14, 2005. Prior to March 14, 2005, SISI served as transfer
agent to each of the predecessor Strong Funds.
For financial statement presentation, transfer agent fees for the period
from November 1, 2004 though April 10, 2005, as shown below, have been combined
with administration fees.
Transfer Agent Fees
and Other Related
Expenses
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
ADVISOR CLASS $ 18,260
INSTITUTIONAL CLASS 6,717
INVESTOR CLASS 507,861
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND
CLASS C 2,338
ADVISOR CLASS 67,236
INSTITUTIONAL CLASS 8,691
INVESTOR CLASS 1,630,334
- --------------------------------------------------------------------------------
HIGH INCOME FUND
ADVISOR CLASS 16,248
INSTITUTIONAL CLASS 289
INVESTOR CLASS 281,179
- --------------------------------------------------------------------------------
82
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
Transfer Agent Fees
and Other Related
Expenses
SHORT-TERM BOND FUND
ADVISOR CLASS $ 16,248
INSTITUTIONAL CLASS 289
INVESTOR CLASS 281,179
- --------------------------------------------------------------------------------
SHORT-TERM HIGH YIELD BOND FUND
ADVISOR CLASS 41,689
INVESTOR CLASS 193,813
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND
ADVISOR CLASS 59,955
INSTITUTIONAL CLASS 3,594
INVESTOR CLASS 928,288
CUSTODY FEES
The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"),
whereby WFB is responsible for providing custody services. Pursuant to the
contract, WFB is entitled to certain transaction charges plus a monthly fee for
custody services at the following annual rates:
% of Average
Daily Net Assets
- --------------------------------------------------------------------------------
ALL INCOME FUNDS 0.02
- --------------------------------------------------------------------------------
Prior to March 21, 2005, State Street served as custodian for the Strong
Corporate Bond Fund, Strong Government Securities Fund and Strong Ultra
Short-Term Income Fund. Prior to March 28, 2005, State Street served as
custodian for the Strong High-Yield Bond Fund and Strong Short-Term High Yield
Bond Fund. Prior to April 25, 2005, State Street served as custodian for the
Strong Short-Term Bond Fund and, since the merger, the Acquiring Fund. State
Street was entitled to receive a substantially transaction based fee.
SHAREHOLDER SERVICING FEES
The Trust has entered into contracts with one or more shareholder
servicing agents, whereby each Fund is charged the following annual fees:
% of Average
Share Class Daily Net Assets***
- --------------------------------------------------------------------------------
CLASS C, ADMINISTRATOR CLASS, ADVISOR CLASS
AND INVESTOR CLASS 0.25
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.00
*** Effective April 11, 2005. Prior to April 11, 2005, shareholder
servicing fees for the predecessor Strong Funds, if any, were included in the
Strong Funds' 12b-1 distribution and service plan. For the period April 11, 2005
through April 30, 2005, shareholder servicing fees paid were as follows:
Fund Class C Advisor Administrator Investor
- --------------------------------------------------------------------------------
CORPORATE BOND FUND N/A $ 2,564 N/A $ 50,530
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND 325 9,960 1 167,716
- --------------------------------------------------------------------------------
HIGH INCOME FUND N/A 2,736 N/A 36,665
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND N/A 1,213 N/A 74,113
- --------------------------------------------------------------------------------
SHORT-TERM HIGH YIELD BOND FUND N/A 5,930 N/A 19,358
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND N/A 9,061 1 148,989
DISTRIBUTION FEES
The Trust has adopted a Distribution Plan (the "Plan") for Class B and
Class C shares of the applicable Funds pursuant to Rule 12b-1 under the 1940
Act. Effective April 11, 2005, distribution fees are charged to the Class B and
Class C shares and paid to Wells Fargo Funds Distributor, LLC at an annual rate
of 0.75% of average daily net assets.
Prior to April 11, 2005, the predecessor Strong Funds adopted a 12b-1
distribution and service plan under the 1940 Act on behalf of the Class C and
Advisor shares. Under this plan, Strong Investments, Inc. was paid an annual
rate of 1.00% of the average daily net assets of the Class C shares of the
Government Securities Fund and 0.25% of the average daily net assets of the
Advisor Class shares of the Government Securities Fund and Ultra Short-Term
Income Fund.
For the six months ended April 30, 2005, distribution fees paid are
disclosed on the Statement of Operations.
83
WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
OTHER FEES
PFPC, Inc. ("PFPC") serves as fund accountant for the Trust and is
entitled to receive an annual asset based fee, and an annual fixed fee from each
Fund. PFPC is also entitled to be reimbursed for all out-of-pocket expenses
reasonably incurred in providing these services.
Prior to March 21, 2005, State Street served as fund accountant for the
Strong Corporate Bond Fund, Strong Government Securities Fund and Strong Ultra
Short-Term Income Fund. Prior to March 28, 2005, State Street served as fund
accountant for the Strong High-Yield Bond Fund and Strong Short-Term High Yield
Bond Fund. Prior to April 25, 2005, State Street served as fund accountant for
the Strong Short-Term Bond Fund. Fund accounting fees were paid by the funds'
administrator through April 10, 2005, and not by the funds.
From April 11, 2005 to April 22, 2005, State Street served as interim fund
accountant for Short-Term Bond Fund and was entitled to receive an annual asset
based fee, a fixed fund accounting base fee, multiple class fee and certain
out-of-pocket expenses.
WAIVED FEES AND REIMBURSED EXPENSES
Effective April 11, 2005, Funds Management waived fees or reimbursed
expenses proportionately from all classes, first from advisory fees, and then
from any class specific expenses, if applicable. The Fund's adviser has
committed to waive fees and/or reimburse expenses to the extent necessary to
maintain a certain net operating expense ratio for the Fund(s). Net operating
expense ratios in effect from April 11, 2005 through April 30, 2005 were as
follows:
Net Operating Expense Ratios
Fund Class C Administrator Advisor Institutional Investor
- ---------------------------------------------------------------------------------------------------
CORPORATE BOND FUND N/A N/A 1.00% 0.61% 1.03%
- ---------------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND 1.70% 0.70% 0.95% 0.48% 1.05%
- ---------------------------------------------------------------------------------------------------
HIGH INCOME FUND N/A N/A 0.91% 0.43% 0.86%
- ---------------------------------------------------------------------------------------------------
SHORT-TERM BOND FUND N/A N/A 0.85% 0.48% 0.90%
- ---------------------------------------------------------------------------------------------------
SHORT-TERM HIGH YIELD BOND FUND N/A N/A 1.10% N/A 0.86%
- ---------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND N/A 0.60% 0.80% 0.35% 0.84%
Prior to April 11, 2005, the predecessor Strong Funds' adviser ("SCM")
and/or administrator ("SISI") could voluntarily waive or absorb certain expenses
at their discretion. Pursuant to the direction of the Strong Board of Directors
and certain regulatory settlements, SCM had contractually agreed to waive fees
and/or absorb expenses in the amount of 0.025% for Government Securities Fund
and High-Yield Bond Fund and 0.033% for Corporate Bond Fund, Short-Term Bond
Fund, Short-Term High Yield Bond Fund and Ultra Short-Term Income Fund from May
21, 2004 until May 21, 2005. However, effective April 11, 2005, the funds are
subject to a different expense structure. SISI also allocated to each fund
certain charges or credits resulting from transfer agency banking activities
based on each Class' level of subscription and redemption activity. Transfer
Agency Banking Credits allocated by SISI, if any, served to reduce the transfer
agency expenses incurred by the funds. From November 1, 2004 through April 10,
2005, the expense offsets that are included in the waived fees and reimbursed
expenses amount on the Statement of Operations are as follows:
Waived Fees and
Reimbursed Expenses
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
FUND LEVEL $84,524
ADVISOR CLASS 11,890
INSTITUTIONAL CLASS 0
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND
FUND LEVEL 176,819
CLASS C 0
ADVISOR CLASS 21,259
INSTITUTIONAL CLASS 0
INVESTOR CLASS 0
84
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
Waived Fees and
Reimbursed Expenses
- --------------------------------------------------------------------------------
HIGH INCOME FUND
FUND LEVEL $44,849
ADVISOR CLASS 7,313
INSTITUTIONAL CLASS 0
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND
FUND LEVEL 91,631
ADVISOR CLASS 3,050
INSTITUTIONAL CLASS 0
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
SHORT-TERM HIGH YIELD BOND FUND
FUND LEVEL 35,935
ADVISOR CLASS 25,598
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND
FUND LEVEL 220,611
ADVISOR CLASS 17,895
INSTITUTIONAL CLASS 0
INVESTOR CLASS 0
4. INVESTMENT PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date) for the six
months ended April 30, 2005, were as follows:
Fund Purchases at Cost Sales Proceeds
- --------------------------------------------------------------------------------
CORPORATE BOND FUND $ 340,440,229 $ 412,356,364
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND 1,630,405,482 1,674,521,175
- --------------------------------------------------------------------------------
HIGH INCOME FUND 144,320,088 187,889,969
- --------------------------------------------------------------------------------
SHORT-TERM BOND FUND 69,383,444 63,170,422
- --------------------------------------------------------------------------------
SHORT-TERM HIGH YIELD BOND FUND 54,676,087 87,518,147
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM INCOME FUND 190,768,667 252,444,419
5. BANK BORROWINGS
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust and Wells Fargo Variable Trust (excluding the
money market funds) share in a revolving Credit Agreement with The Bank of New
York, whereby the Funds are permitted to use bank borrowings for temporary or
emergency purposes, such as to fund shareholder redemption requests. The
agreement permits borrowings of up to $150 million, collectively. Interest is
charged to each Fund based on its borrowing at a rate equal to the Federal Funds
Rate plus 0.40%. In addition, the Funds pay a quarterly commitment fee equal to
0.1% per annum of the credit line. Prior to April 11, 2005, the predecessor
Strong Funds had established a line of credit agreement ("LOC") with certain
financial institutions to be used for temporary or emergency purposes. Combined
borrowings among all participating Strong Funds were subject to a $200 million
cap on the total LOC. For an individual fund, borrowings under the LOC were
limited to either the lesser of 15% of the market value of the fund's total
assets or any explicit borrowing limits in the fund's registration statement.
The principal amount of each borrowing under the LOC was due not more than 45
days after the date of the borrowing. Borrowings under the LOC accrued interest
based on prevailing market rates as defined in the LOC. A commitment fee of
0.09% per annum was incurred on the unused portion of the LOC and was allocated
to all participating Strong Funds based on their net asset values. For the six
months ended April 30, 2005, there were no borrowings under the agreement for
each Fund with the exception of High Income Fund, which had minimal borrowings.
85
WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
6. LEGAL AND REGULATORY MATTERS
- --------------------------------------------------------------------------------
In 2004, the predecessor funds' investment adviser and affiliates
(collectively, "Strong") entered into agreements with certain regulators,
including the Securities and Exchange Commission and the New York Attorney
General ("NYAG"), to settle market-timing investigations. In the settlements,
Strong agreed to pay investor restoration and civil penalties. Although some
portion of these payments is likely to be distributed to predecessor fund
shareholders, no determination has yet been made as to the distribution of these
amounts, and the successor funds are not expected to receive any portion of
these payments. The NYAG settlement also imposed fee reductions across the
predecessor fund complex (excluding money market funds and very short-term
income funds) totaling at least $7 million a year for five years. The current
Funds' adviser has agreed to honor these fee reductions for the benefit of
shareholders across the successor funds. Although civil litigation against
Strong and certain predecessor funds relating to these matters is continuing,
neither the current adviser nor the successor funds is a party to any such suit.
86
OTHER INFORMATION (UAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
PROXY VOTING INFORMATION
A description of the policies and procedures that the Fund(s) uses to
determine how to vote proxies relating to portfolio securities and information
regarding the results of such voting during the most recent 12-month period
ended June 30, is available without charge, upon request, by calling
1-800-222-8222, visiting our Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS or
visiting the SEC Web site at WWW.SEC.GOV.
PORTFOLIO HOLDINGS INFORMATION
The Fund(s) 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 without charge by visiting the SEC Web site at www.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 information about the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
BOARD OF TRUSTEES
The following table provides basic information about the Board of Trustees
("Trustees") of the Wells Fargo Funds Trust (the "Trust"). This table
supplements, and should be read in conjunction with, the Prospectus and the
Statement of Additional Information* of each Fund. Each of the Trustees listed
below acts in identical capacities for each of the 138 funds comprising the
Trust, Wells Fargo Variable Trust and Wells Fargo Master Trust (collectively the
"Fund Complex"). All of the non-interested Trustees are also members of the
Audit and Governance Committees of each Trust in the Fund Complex. The 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.
INTERESTED TRUSTEES**
- -----------------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------------------------
J. Tucker Morse Trustee, Private Investor/Real Estate None
60 since 1987 Developer; Chairman of White
Point Capital, LLC.
- -----------------------------------------------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES
- -----------------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------------------------
Thomas S. Goho Trustee, Associate Professor of Finance, None
62 since 1987 Wake Forest University,
Calloway School of Business
and Accountancy.
- -----------------------------------------------------------------------------------------------------------------------
Peter G. Gordon Trustee, Chairman, CEO, and Co- None
62 since 1998 Founder of Crystal Geyser
(Chairman, since 2005) Water Company and President
of Crystal Geyser Roxane Water
Company.
- -----------------------------------------------------------------------------------------------------------------------
Richard M. Leach Trustee, since 1987 Retired. Prior thereto, President None
71 of Richard M. Leach Associates
(a financial consulting firm).
- -----------------------------------------------------------------------------------------------------------------------
Timothy J. Penny Trustee, since 1996 Senior Counselor to the public None
53 relations firm of Himle-Horner
and Senior Fellow at the
Humphrey Institute,
Minneapolis, Minnesota (a
public policy organization).
- -----------------------------------------------------------------------------------------------------------------------
Donald C. Willeke Trustee, since 1996 Principal in the law firm of None
64 Willeke & Daniels.
- -----------------------------------------------------------------------------------------------------------------------
87
WELLS FARGO ADVANTAGE INCOME FUNDS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
OFFICERS
- -----------------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE PAST FIVE YEARS OTHER DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------------------------
Karla M. Rabusch President, Executive Vice President of None
46 since 2003 Wells Fargo Bank, N.A.
President of Wells Fargo Funds
Management, LLC. Senior Vice
President and Chief
Administrative Officer of Wells
Fargo Funds Management, LLC
from 2001 to 2003. Vice
President of Wells Fargo Bank,
N.A. from 1997 to 2000.
- -----------------------------------------------------------------------------------------------------------------------
Stacie D. DeAngelo Treasurer, Senior Vice President of Wells None
36 since 2003 Fargo Bank, N.A. Senior Vice
President of Operations for
Wells Fargo Funds Management,
LLC. Prior thereto, Operations
Manager at Scudder Weisel
Capital, LLC from 2000 to
2001, Director of Shareholder
Services at BISYS Fund
Services from 1999 to 2000 and
Assistant Vice President of
Operations with
Nicholas-Applegate Capital
Management from 1993 to 1999.
- -----------------------------------------------------------------------------------------------------------------------
C. David Messman Secretary, Vice President and Managing None
45 since 2000 Senior Counsel of Wells Fargo
Bank, N.A. Senior Vice
President and Secretary of Wells
Fargo Funds Management, LLC.
Vice President and Senior
Counsel of Wells Fargo Bank,
N.A. from 1996 to 2003.
- -----------------------------------------------------------------------------------------------------------------------
* The Statement of Additional Information includes additional information
about the Funds' Trustees and is available, without charge, upon request,
by calling 1-800-222-8222.
** As of April 30, 2005, one of the six Trustees is considered an "interested
person" of the Trusts as defined in the Investment Company Act of 1940.
The interested Trustee, J. Tucker Morse, is affiliated with a government
securities dealer that is registered under the Securities Exchange Act of
1934, which is not itself affiliated with Wells Fargo Funds Management,
LLC.
*** Length of service dates reflects a Trustee's commencement of service with
the Trust's predecessor entities.
88
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND
SUB-ADVISORY AGREEMENTS:
CORPORATE BOND FUND, GOVERNMENT SECURITIES FUND, HIGH INCOME FUND,
SHORT-TERM BOND FUND SHORT-TERM HIGH YIELD BOND FUND AND ULTRA
SHORT-TERM INCOME FUND
- --------------------------------------------------------------------------------
Section 15(c) of the Investment Company Act of 1940 (the "1940 Act")
contemplates that the Board of Trustees (the "Board") of Wells Fargo Funds Trust
(the "Trust"), including a majority of the Trustees who have no direct or
indirect interest in the investment advisory and sub-advisory agreements and are
not "interested persons" of the Trust, as defined in the 1940 Act (the
"Independent Trustees"), will annually review and consider the continuation of
the investment advisory and sub-advisory agreements. In this regard, the Board
reviewed and re-approved, during the six months covered by this report: (i) an
investment advisory agreement with Wells Fargo Funds Management, LLC ("Funds
Management") for the Corporate Bond Fund, Government Securities Fund, High
Income Fund, Short-Term Bond Fund, Short-Term High Yield Bond Fund and Ultra
Short-Term Income Fund (the "Funds"); and (ii) an investment sub-advisory
agreement with Wells Capital Management Incorporated ("Wells Capital
Management") for the Funds. The investment advisory agreement with Funds
Management and the investment sub-advisory agreement with Wells Capital
Management are collectively referred to as the "Advisory Agreements."
More specifically, at a meeting held on April 4, 2005, the Board,
including the Independent Trustees advised by their independent legal counsel,
considered the factors and reached the conclusions described below relating to
the selection of Funds Management and Wells Capital Management and the
continuation of the Advisory Agreements. The Board initially approved the
Advisory Agreements for the Funds at a meeting held August 9-10, 2004 in
connection with its approval of the reorganization of certain of the Strong
Funds into certain of the Wells Fargo Advantage Funds (the "Reorganization"), as
follows:
STRONG FUNDS WELLS FARGO ADVANTAGE FUNDS
- --------------------------------------------------------------------------------
Corporate Bond Fund* Corporate Bond Fund
- --------------------------------------------------------------------------------
Government Securities Fund* Government Securities Fund
- --------------------------------------------------------------------------------
High-Yield Bond Fund* High Income Fund
Short-Term Bond Fund*
- --------------------------------------------------------------------------------
Short-Term Income Fund Short-Term Bond Fund
- --------------------------------------------------------------------------------
Short-Term High Yield Bond Fund* Short-Term High Yield Bond Fund
- --------------------------------------------------------------------------------
Ultra Short-Term Income Fund* Ultra Short-Term Income Fund
- --------------------------------------------------------------------------------
* Accounting survivor.
The Reorganization was effective at the close of business on April 8,
2005. The Funds commenced operations on April 11, 2005. Accordingly, references
to the Funds refer to either the predecessor funds or the Funds as the context
requires. Similarly, references to the various fee rates refer to either the
rates of the predecessor funds or those of the Funds as the context requires.
NATURE, EXTENT AND QUALITY OF SERVICES
- --------------------------------------------------------------------------------
The Board received and considered various data and information regarding
the nature, extent and quality of services that would be provided to the Funds
by Funds Management and Wells Capital Management under the Advisory Agreements.
Responses of Funds Management and Wells Capital Management to a detailed set of
requests submitted by the Independent Trustees' independent legal counsel on
behalf of such Trustees were provided to the Board. The Board reviewed and
considered the data and information, which included, among other things,
information about the background and experience of the senior management and the
expertise of the investment personnel of Funds Management and Wells Capital
Management.
The Board also considered the ability of Funds Management and Wells
Capital Management, based on their respective resources, reputations and other
attributes, to attract and retain highly qualified investment professionals,
including research, advisory, and supervisory personnel. In this connection, the
Board considered information regarding each of Funds Management's and Wells
Capital Management's compensation for its personnel that would be involved in
the management of the Funds. In addition, the Board considered the effects of
certain personnel changes in light of the acquisition of certain of the asset
management arrangements of Strong Capital Management, Inc. ("Strong") by Wells
Fargo & Company.
The Board further considered the compliance programs and compliance
records of Funds Management and Wells Capital Management. In addition, the Board
took into account the administrative services anticipated to be provided to the
Funds by Funds Management and its affiliates. In considering these matters, the
Board considered not only the specific information presented in connection with
the meeting, but also the knowledge gained over the course of interacting with
Funds Management, including with respect to Funds Management's oversight of
service providers, such as the investment sub-adviser.
Based on the above factors, together with those referenced below, the
Board concluded that it was
89
WELLS FARGO ADVANTAGE INCOME FUNDS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
generally satisfied with the nature, extent and quality of the investment
advisory services anticipated to be provided to each of the Funds by Funds
Management and Wells Capital Management.
FUND PERFORMANCE AND EXPENSES
- --------------------------------------------------------------------------------
The Board considered the performance results for each of the Funds over
various time periods. The Board also considered these results in comparison to
the median performance results of the group of funds that was determined to be
the most similar to a given Fund (the "Peer Group") and to the median
performance of a broader universe of relevant funds (the "Universe"), as well as
to each Fund's benchmark index. Lipper Inc. ("Lipper"), an independent provider
of investment company data, determined the Peer Group and Universe for each
Fund. The Board was provided with a description of the methodology used by
Lipper to select the mutual funds in each Fund's Peer Group and Universe.
The Board noted that the performance of each Fund, except for the
Corporate Bond Fund, Short-Term Bond Fund and Short-Term High Yield Bond Fund,
was better than, or not appreciably below, the median performance of each Fund's
Peer Group for most time periods. The Board noted that the Corporate Bond
Fund's, Short-Term Bond Fund's and Short-Term High Yield Bond Fund's performance
was lower than the median performance of each Fund's Peer Group for most time
periods and required further review. Upon further review, the Board noted for
the Corporate Bond Fund and the Short-Term Bond Fund that each Fund's
underperformance was explained, in part, by some credit issues experienced when
the Fund was managed by certain Strong portfolio managers. In addition, the
Board noted that there had been a portfolio manager change for these Funds
during the past year. The Board also noted for the Short-Term High Yield Bond
Fund that the Fund's Peer Group includes funds that invest in high yield bonds
across a range of maturities, rather than emphasizing short-term high yield
bonds, and that this difference between the Fund and those in its Peer Group
also partly explained the Fund's relative underperformance.
The Board received and considered information regarding each Fund's net
operating expense ratio and its various components, including contractual
advisory fees, actual advisory fees, actual non-management fees, Rule 12b-1 and
non-Rule 12b-1 service fees, fee waivers/caps and/or expense reimbursements. The
Board also considered comparisons of these fees to the expense information for
each Fund's Peer Group and Universe, which comparative data was provided by
Lipper.
The Board noted that the net operating expense ratios of the High Income
Fund and Ultra Short-Term Income Fund were lower than, or not appreciably higher
than, each Fund's Peer Group's median net operating expense ratio. The Board
noted that the net operating expense ratios for certain classes of the Corporate
Bond Fund, Government Securities Fund, Short-Term Bond Fund and Short-Term High
Yield Bond Fund were higher than their Peer Group's median net operating expense
ratios, but the Board further noted that the Advisory Agreement Rates (as
defined below) were within a reasonable range of the median rates of each Fund's
Peer Group.
Management also discussed the Lipper data and rankings, and other relevant
information, for each Fund. Based on the above-referenced considerations and
other factors, the Board concluded that the overall performance and expense
results supported the re-approval of the Advisory Agreements for each Fund.
INVESTMENT ADVISORY AND SUB-ADVISORY FEE RATES
- --------------------------------------------------------------------------------
The Board reviewed and considered the contractual investment advisory fee
rates both on a stand-alone basis and on a combined basis with the Funds'
administration fee rates (the "Advisory Agreement Rates") payable by the Funds
to Funds Management for investment advisory services. The Board also reviewed
and considered the contractual investment sub-advisory fee rates (the
"Sub-Advisory Agreement Rates") payable by Funds Management to Wells Capital
Management for investment sub-advisory services. In addition, the Board reviewed
and considered the existing fee waiver/cap arrangements applicable to the
Advisory Agreement Rates and considered the Advisory Agreement Rates after
taking the waivers/caps into account (the "Net Advisory Rates").
The Board received and considered information comparing the Advisory
Agreement Rates and Net Advisory Rates with those of the other funds in the Peer
Group. The Board noted that the respective Advisory Agreement Rates and the Net
Advisory Rates for the Funds were lower than, or not appreciably higher than,
the median rates of each Fund's respective Peer Group. The Board also concluded
that the combined investment advisory/administration fee rates for these Funds
(before and after waivers/caps and/or expense reimbursements) were each
reasonable in relation to each Fund's respective Peer Group, and reasonable in
relation to the services anticipated to be provided.
The Board also reviewed the Sub-Advisory Agreement Rates and concluded
that the Sub-Advisory Agreement Rates were fair and equitable, based on its
consideration of the factors described above.
PROFITABILITY
- --------------------------------------------------------------------------------
Because the Funds had not yet commenced operations, the Board did not
consider the historical profitability with regard to Funds Management's
arrangements with the Funds. However, the Board received and considered a
detailed profitability analysis of Funds Management and its affiliates based on
similar advisory and other relationships between other series in the Trust and
Funds Management and its affiliates. The Board concluded that, in light of the
costs of providing investment management and other
90
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
services to the other series, the profits and other ancillary benefits that
Funds Management and its affiliates received with regard to providing these
services to such series were not unreasonable. The Board did not consider a
separate profitability analysis of Wells Capital Management, as its separate
profitability from its relationships with the Funds was not a material factor in
determining whether to renew the agreements.
ECONOMIES OF SCALE
- --------------------------------------------------------------------------------
The Board received and considered information regarding the potential for
realization of any future economies of scale. However, the Board acknowledged
the inherent limitations of any analysis of an investment adviser's economies of
scale and of any attempt to correlate breakpoints with such economies, stemming
largely from the Board's understanding that economies of scale are realized, if
at all, by an investment adviser across a variety of products and services, not
just with respect to a single fund. The Board concluded that any potential
economies of scale will be shared reasonably with Fund shareholders, including
most particularly through Advisory Agreement Rate breakpoints, which are
applicable to all of the Funds.
INFORMATION ABOUT SERVICES TO OTHER CLIENTS
- --------------------------------------------------------------------------------
The Board also received and considered information about the nature,
extent and quality of services and fee rates offered by Funds Management to
other similarly situated series within the Trust, and those offered by Wells
Capital Management to other clients, including other registered investment
companies and separate accounts. The Board concluded that the Advisory Agreement
Rates, the Sub-Advisory Agreement Rates and the Net Advisory Rates were within a
reasonable range of the fee rates offered to others by Funds Management and
Wells Capital Management, giving effect to differences in services covered by
such fee rates.
OTHER BENEFITS TO FUNDS MANAGEMENT AND WELLS CAPITAL MANAGEMENT
- --------------------------------------------------------------------------------
The Board received and considered information regarding potential
"fall-out" or ancillary benefits received by Funds Management and its affiliates
(including Wells Capital Management) as a result of their relationship with the
Funds. Such benefits could include, among others, benefits directly attributable
to the relationship of Funds Management and Wells Capital Management with the
Funds (such as soft-dollar credits) and benefits potentially derived from an
increase in the business of Funds Management and Wells Capital Management as a
result of their relationship with the Funds (such as the ability to market to
shareholders other financial products offered by Funds Management and its
affiliates (including Wells Capital Management)).
The Board also considered the effectiveness of policies of the Funds in
seeking the best execution of portfolio transactions, whether and to what extent
soft dollar credits would be sought and how any such credits would be utilized,
potential benefits that may be realized by using an affiliated broker, and the
controls applicable to brokerage allocation procedures. The Board also took note
of the policies of Wells Capital Management regarding the anticipated allocation
of portfolio investment opportunities among the Funds and other clients.
OTHER FACTORS AND BROADER REVIEW
- --------------------------------------------------------------------------------
The Board also considered the markets for distribution of the Funds,
including the principal channels through which the Funds' shares would be
offered and sold. The Board noted that the Funds are now part of one of the few
fund families that have both direct-to-fund and intermediary distribution.
As discussed above, the Board reviewed detailed materials received from
Funds Management and Wells Capital Management in advance of the April 4, 2005
meeting as part of the re-approval process under Section 15 (c) of the 1940 Act.
The Board has also reviewed detailed materials from Funds Management and Wells
Capital Management, and met with various management representatives and
portfolio mangers, as part of its regular and special meeting cycle, and such
materials and meetings were also considered as part of the re-approval process.
After considering the above-described factors and based on its
deliberations and its evaluation of the information described above, the Board
concluded that approval of the continuation of the Advisory Agreements for each
of the Funds was in the best interest of the Funds and their shareholders.
Accordingly, the Board unanimously approved the continuation of the Advisory
Agreements.
91
WELLS FARGO ADVANTAGE INCOME FUNDS LIST OF ABBREVIATIONS
- --------------------------------------------------------------------------------
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
ABAG -- Association of Bay Area Governments
ADR -- American Depositary Receipt
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CMT -- Constant Maturity Treasury
COFI -- Cost of Funds Index
Connie Lee -- Connie Lee Insurance Company
COP -- Certificate of Participation
CP -- Commercial Paper
CTF -- Common Trust Fund
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
EDFA -- Education Finance Authority
FFCB -- Federal Farm Credit Bank
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FRN -- Floating Rate Notes
FSA -- Financial Security Assurance, Inc
GDR -- Global Depositary Receipt
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
IDA -- Industrial Development Authority
IDR -- Industrial Development Revenue
LIBOR -- London Interbank Offered Rate
LLC -- Limited Liability Corporation
LOC -- Letter of Credit
LP -- Limited Partnership
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MUD -- Municipal Utility District
MTN -- Medium Term Note
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PLC -- Private Placement
PSFG -- Public School Fund Guaranty
RAW -- Revenue Anticipation Warrants
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
R&D -- Research & Development
SFHR -- Single Family Housing Revenue
SFMR -- Single Family Mortgage Revenue
SLMA -- Student Loan Marketing Association
STEERS -- Structured Enhanced Return Trust
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
V/R -- Variable Rate
WEBS -- World Equity Benchmark Shares
XLCA -- XL Capital Assurance
92
THIS PAGE IS INTENTIONALLY LEFT BLANK --
THIS PAGE IS INTENTIONALLY LEFT BLANK --
WELLS ADVANTAGE
FARGO FUNDS
More information about Wells Fargo Advantage Funds(SM)
is available free upon request. To obtain literature, please
write, e-mail, or call:
WELLS FARGO ADVANTAGE FUNDS
P.O. Box 8266
Boston, MA 02266-8266
E-mail: wfaf@wellsfargo.com
Retail Investment Professionals: 888-877-9275
Institutional Investment Professionals: 866-765-0778
Web: www.wellsfargo.com/advantagefunds
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the WELLS FARGO ADVANTAGE FUNDS. If
this report is used for promotional purposes, distribution of the report must be
accompanied or preceded by a current prospectus. For a prospectus containing
more complete information, including charges and expenses, call 1-800-222-8222.
Please consider the investment objective, risks, charges and expenses of the
investment carefully before investing. This and other information about WELLS
FARGO ADVANTAGE FUNDS can be found in the current prospectus. Read the
prospectus carefully before you invest or send money.
Wells Fargo Funds Management, LLC, a wholly-owned subsidiary of Wells Fargo &
Company, provides investment advisory and administrative services for the WELLS
FARGO ADVANTAGE FUNDS. Other affiliates of Wells Fargo & Company provide
sub-advisory and other services for the Funds. The Funds are distributed by
Wells Fargo Funds Distributor, LLC, Member NASD/SIPC, an affiliate of Wells
Fargo & Company.
-------------------------------------------------------
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
-------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
(c) 2005 Wells Fargo Advantage Funds, LLC. All rights reserved. | www.wellsfargo.com/advantagefunds | SM50928 06-05
SIFNL/SAR104 04-05
[GRAPHIC OMITTED]
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
APRIL 30, 2005
SEMI-ANNUAL REPORT
WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND(SM)
WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND
- --------------------------------------------------------------------------------
PLEASE NOTE THAT THIS REPORT COVERS A SIX-MONTH PERIOD OF TIME, THE MAJORITY OF
WHICH REPRESENTS A TIME PRIOR TO THE APRIL 11, 2005, REORGANIZATION WITH THE
STRONG FUNDS. STRONG CAPITAL MANAGEMENT, INC. PROVIDED INVESTMENT MANAGEMENT
SERVICES TO THESE FUNDS FROM THE BEGINNING OF THE REPORTING PERIOD THROUGH
DECEMBER 31, 2004, AFTER WHICH TIME WELLS FARGO FUNDS MANAGEMENT, LLC TOOK OVER
MANAGEMENT RESPONSIBILITIES THROUGH THE END OF THE REPORTING PERIOD.
TABLE OF CONTENTS
Letter to Shareholders................................................... 1
- --------------------------------------------------------------------------------
Performance Highlights
- --------------------------------------------------------------------------------
Heritage Money Market Fund........................................... 2
Fund Expenses............................................................ 4
- --------------------------------------------------------------------------------
Portfolio of Investments
- --------------------------------------------------------------------------------
Heritage Money Market Fund........................................... 5
Financial Statements
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities.................................. 7
Statement of Operations.............................................. 8
Statements of Changes in Net Assets.................................. 9
Financial Highlights................................................. 10
Notes to Financial Statements............................................ 12
- --------------------------------------------------------------------------------
Other Information ....................................................... 16
- --------------------------------------------------------------------------------
List of Abbreviations.................................................... 21
- --------------------------------------------------------------------------------
-------------------------------------------------------
NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE
-------------------------------------------------------
THIS PAGE IS INTENTIONALLY LEFT BLANK --
LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND
- --------------------------------------------------------------------------------
DEAR VALUED SHAREHOLDER,
I am pleased to introduce you to WELLS FARGO ADVANTAGE FUNDS(SM). You now
have access to an expanded array of mutual funds, giving you the flexibility to
invest in a family of funds covering nearly every asset class and investment
style. To learn more about our funds and the talented team of money managers
behind them, please visit our new Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
You can also call one of our investment service representatives now available 24
hours a day, 7 days a week, or speak with your investment professional.
THE ECONOMY: CONTINUED EXPANSION
- --------------------------------------------------------------------------------
The U.S. economy continued to grow steadily, expanding by 4.4% in 2004.
During the first quarter of 2005, however, the economy grew by 3.1%, trailing
the 3.8% pace achieved during the last three months of 2004.
Part of that decline stemmed from the high cost of gasoline, which
continued to have a significant influence on consumer spending and the economy.
When the six-month period began, oil prices were declining from their recent
highs of $55 per barrel. After falling for two months, they rebounded sharply in
2005, setting new highs in April.
Higher energy prices were a key driver of inflation, which rose throughout
most of the period. "Core" inflation, however, which excludes volatile food and
energy prices, also trended upwards, but rose less quickly. With core inflation
manageable, the Federal Reserve Board (the Fed) continued its program of gradual
short-term interest rate increases.
HIGHER RATES, HIGHER YIELDS
- --------------------------------------------------------------------------------
After remaining flat for a year, money markets rates rose steadily
throughout the fiscal year ending April 30, 2005. As the expectations for action
by the Fed increased, yields on money market funds began to rise, particularly
on securities at the longer end of the maturity spectrum. However, the yields on
these longer term securities did not accurately reflect the eventual actions of
the Fed, which raised rates four times, bringing the Federal funds rate, the
interest rate at which a depository institution lends immediately available
funds to another depository institution overnight, from 1.75% at the beginning
of the reporting period to 2.75% by April 30, 2005.
The moves were highly anticipated as the Fed prepared investors with its
commentary, therefore causing little market disruption. Common themes in the
Fed's statements were that monetary policy was too accommodative and that
tightening would take place by raising interest rates at a measured pace.
LOOKING AHEAD: LONG-TERM EXPANSION?
- --------------------------------------------------------------------------------
Despite the economy's first quarter slowdown, we believe this represents a
temporary soft patch more than a continuing slowdown. As stock and bond
investors seek to determine where inflation, interest rates, and corporate
earnings are headed, we may see more unpredictable moves in the markets.
Uncertainty and risk will always be a part of investing. We believe an
important thing you can do to manage risk is to own a broadly diversified
portfolio with stocks, bonds, and cash that can help you weather unexpected
market shifts. While diversification may not prevent losses in a downturn, it
may help reduce them and keep you on track to reach your financial goals.
Thank you for choosing WELLS FARGO ADVANTAGE FUNDS. We appreciate your
confidence in us. Through each market cycle, we are committed to helping you
meet your financial needs. If you have any questions about your investment,
please contact your investment professional, or call us at 1-800-222-8222. You
may also visit our enhanced Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND(SM) (the Fund) seeks
current income while preserving capital and liquidity.
FUND MANAGER INCEPTION DATE
David M. Sylvester 6/29/1995
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Administrator Class shares returned 0.97%(1) for the six-month
period ended April 30, 2005, underperforming the 1.01% return of the Citigroup
3-Month Treasury Bill Index(2) and outperforming the 0.94% return of the
iMoneyNet Government Institutional Money Fund Average(3).
PRIME MONEY MARKET SECURITIES
- --------------------------------------------------------------------------------
The money market yield curve shifted upwards over the 6-month reporting
period. At October 31, 2004, yields on one-year LIBOR (London Inter-Bank Offered
Rate) securities were 2.55%, versus 3.69% at the end of the period. Overnight
rates went from 1.75% to 2.80% over that same period. Although interest rates
generally rose, borrowers apparently still believed that the higher cost was
justified in comparison to their potential economic returns. Indeed, after
several years of decline, top-rated commercial paper outstanding increased 11.0%
since October 2004 to $1.35 trillion, a level not seen since 2001.
The credit picture looked brighter prior to this period, but grew murky
again in the last six months as merger and acquisition activity increased and
headlines about companies issuing profit warnings began to emerge. Still, the
yield advantage on commercial paper and other corporate credit versus U.S.
Treasury securities remained small, encouraging investors to either look for
longer maturities or dip down in credit quality to pick up yield. In this
environment, we remained cautious in our credit process.
U.S. GOVERNMENT AGENCY SECURITIES
- --------------------------------------------------------------------------------
A similar situation took place with U.S. Government agency securities,
despite credit quality concerns at the agencies. This was largely due to reduced
supply as rising interest rates slowed mortgage refinancing activity. The impact
of improper accounting by Federal National Mortgage Association (FNMA) forced
the mortgage giant to reduce the size of its mortgage portfolio, thus reducing
the agency's need for financing. Prospects for legislation creating a stronger
regulator for FNMA, the Federal Home Loan Mortgage Corporation (FHLMC), and the
Federal Home Loan Bank (FHLB) have improved dramatically, and now appear
certain.
U.S. TREASURY SECURITIES
- --------------------------------------------------------------------------------
U.S. Treasury bills were impacted as uncertainty with the U.S.
presidential election and terrorism fears caused cash to flow into them. For
example, as fears of election-related terrorism peaked in early October 2004,
the yield spread between three-month U.S. Treasury bills and three-month LIBOR
rates widened significantly. For the year, the average differential between
LIBOR and U.S. Treasury bills at the one-month, three-month, and six-month
maturities all widened significantly, suggesting a greater demand in high
quality securities.
STRATEGIC OUTLOOK
- --------------------------------------------------------------------------------
As the Federal Reserve Board continues to increase short-term interest
rates, we will seek to capture these increases in the yields of money market
instruments. We intend to emphasize floating rate and variable rate securities,
as long as rates are steady or rising.
AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH
THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
- --------------------------------------------------------------------------------
THE VIEWS EXPRESSED ARE AS OF APRIL 30, 2005, AND ARE THOSE OF THE FUND'S
MANAGER. THE VIEWS ARE SUBJECT TO CHANGE AT ANY TIME IN RESPONSE TO CHANGING
CIRCUMSTANCES IN THE MARKET AND ARE NOT INTENDED TO PREDICT OR GUARANTEE THE
FUTURE PERFORMANCE OF ANY INDIVIDUAL SECURITY, MARKET SECTOR OR THE MARKETS
GENERALLY, OR THE WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND.
2
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
6-months* 1-Year 5-Year Life of Fund
- --------------------------------------------------------------------------------------------------------------------
Heritage Money Market Fund - Administrator Class (incept. 6/29/1995) 0.97 1.49 2.47 3.97
- -------------------------------------------------------------------------------------------------------------------
Heritage Money Market Fund - Institutional Class (incept. 6/29/1995) 1.08 1.72 2.70 4.08
- -------------------------------------------------------------------------------------------------------------------
Benchmark
- -------------------------------------------------------------------------------------------------------------------
Citigroup 3-Month Treasury Bill Index(2) 1.01 1.58 2.64 3.85
- -------------------------------------------------------------------------------------------------------------------
iMoneyNet Government Institutional Money Fund Average(3) 0.94 1.39 2.31 3.66
- -------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. YIELDS WILL FLUCTUATE. THE FUND'S YIELD FIGURES MORE CLOSELY REFLECT
THE CURRENT EARNINGS OF THE FUND THAN THE TOTAL RETURN FIGURES. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
THE FUND IS SOLD WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED
SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE
DESCRIBED IN THE FUND'S CURRENT PROSPECTUS.
AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH
THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
FUND YIELD SUMMARY(1) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Administrator Institutional
Class Class
- --------------------------------------------------------------------------------
7-Day Current Yield 2.43% 2.63%
- --------------------------------------------------------------------------------
7-Day Compound Yield 2.46% 2.66%
- --------------------------------------------------------------------------------
30-Day Simple Yield 2.37% 2.58%
- --------------------------------------------------------------------------------
30-Day Compound Yield 2.40% 2.61%
- --------------------------------------------------------------------------------
FUND CHARACTERISTICS(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Weighted Average Maturity 31 days
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Commercial Paper 41%
Certificates of Deposit 11%
Floating/Variable Rate Bonds/Notes 2%
Municipal Demand Notes 11%
Repurchase Agreements 11%
Corporate Bonds 11%
FNMA 6%
FHLB 4%
Time Deposits 3%
MATURITY DISTRIBUTION(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
2-14 days 44%
15-29 days 37%
30-59 days 6%
60-89 days 4%
90-179 days 7%
270 + days 2%
- --------------------------------------------------------------------------------
(1) The Fund's Adviser has committed through April 30, 2007 to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
increased total return to shareholders. Without these reductions, the Fund's
7-day current yield would have been 2.40% for the Administrator Class shares and
2.52% for the Institutional Class shares.
Performance shown for the Administrator Class and Institutional Class
shares of the WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND for periods prior
to April 11, 2005, reflects the performance of the Investor and Institutional
Class shares, respectively, of the Strong Heritage Money Fund, its predecessor
fund. Effective at the close of business on April 8, 2005, certain of the Strong
Funds were reorganized into certain of the WELLS FARGO ADVANTAGE FUNDS.
Performance shown for the Institutional Class shares of the Fund for periods
prior to March 31, 2000, reflects the performance of the predecessor fund's
Investor Class shares, and has not been adjusted for the lower expense ratio of
the Institutional Class shares.
(2) The Citigroup 3-Month Treasury Bill Index is an unmanaged index that is
generally representative of the average of the last 3 month Treasury bill issues
(excluding the current month-end bills). You cannot invest directly in an index.
(3) The iMoneyNet Government Institutional Money Fund Average is an average
of governmental institutional funds that do not hold any second tier securities.
Portfolio holdings of first tier funds include U.S. Treasury securities,
repurchase agreements and government agency securities. You cannot invest
directly in an index.
(4) Portfolio holdings and characteristics are subject to change.
3
WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET 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,
redemption fees (if any) and exchange fees (if any); and (2) ongoing costs,
including management fees; distribution (12b-1) and/or shareholder service 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 period and held for the entire period (November 1, 2004 to April 30,
2005).
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), redemption fees, or exchange fees. 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 Ending
Account Account Expenses
Value Value Paid During Net Annual
11/1/2004 4/30/2005 the Period (1) Expense Ratio
Heritage Money Market Fund
- ----------------------------------------------------------------------------------------------------------------------
Heritage Money Market Fund - Administrator Class
- ----------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,009.70 $1.99 0.40%
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,022.81 $2.01 0.40%
- ----------------------------------------------------------------------------------------------------------------------
Heritage Money Market Fund - Institutional Class
- ----------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,010.80 $0.90 0.18%
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,023.90 $0.90 0.18%
(1) EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO 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).
4
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE
APRIL 30, 2005 (UNAUDITED) HERITAGE MONEY MARKET FUND
- --------------------------------------------------------------------------------
HERITAGE MONEY MARKET FUND
- --------------------------------------------------------------------------------
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
ASSET-BACKED SECURITIES - 1.23%
$ 5,000,000 HONDA AUTO RECEIVABLES OWNER TRUST SERIES 2005-2 3.18% 05/15/2006 $ 5,000,000
TOTAL ASSET-BACKED SECURITIES (COST $5,000,000) 5,000,000
---------------
AGENCY NOTES - INTEREST BEARING - 9.84%
4,000,000 FHLB 1.55 05/06/2005 4,000,000
5,000,000 FHLB 1.66 05/16/2005 5,000,000
6,000,000 FHLB 2.02 06/08/2005 6,000,000
4,000,000 FNMA 1.40 05/03/2005 4,000,000
5,000,000 FNMA 1.61 05/13/2005 5,000,000
10,000,000 FNMA 1.75 05/23/2005 10,000,000
6,000,000 FNMA 1.80 05/27/2005 6,000,000
TOTAL AGENCY NOTES - INTEREST BEARING (COST $40,000,000) 40,000,000
---------------
CERTIFICATES OF DEPOSIT - 10.58%
11,000,000 CALYON NY 2.95 05/10/2005 11,000,000
7,000,000 CREDIT SUISSE FIRST BOSTON NY 2.92 05/09/2005 7,000,000
10,000,000 CREDIT SUISSE FIRST BOSTON NY 2.91 05/16/2005 10,000,000
15,000,000 MORGAN STANLEY BANK 2.76 05/16/2005 15,000,000
TOTAL CERTIFICATES OF DEPOSIT (COST $43,000,000) 43,000,000
---------------
COMMERCIAL PAPER - 42.49%
7,000,000 ABBEY NATIONAL NORTH AMERICA LLC^ 2.92 05/09/2005 6,996,026
15,000,000 AQUINAS FUNDING LLC^ 2.94 08/16/2005 14,870,150
15,000,000 ATLANTIS ONE FUNDING^ 2.94 08/17/2005 14,868,925
14,000,000 ATOMIUM FUNDING CORPORATION^ 2.80 05/25/2005 13,974,956
2,000,000 BLUE SPICE LLC (ASSET BACKED SECURITIES LOC)^ 3.00 05/03/2005 1,999,833
15,000,000 BLUE SPICE LLC (ASSET BACKED SECURITIES LOC)^ 2.80 05/23/2005 14,975,500
15,000,000 CANCARA ASSET SECURITIZATION LLC (ASSET BACKED SECURITIES LOC)^ 2.95 05/20/2005 14,977,875
15,000,000 FIVE FINANCE INCORPORATED (ASSET BACKED SECURITIES LOC)^ 2.80 05/25/2005 14,973,167
15,000,000 GOVCO INCORPORATED (ASSET BACKED SECURITIES LOC)^ 2.79 05/23/2005 14,975,587
15,000,000 JUPITER SECURITIES CORPORATION^ 2.95 05/19/2005 14,979,104
15,000,000 LINKS FINANCE LLC (ASSET BACKED SECURITIES LOC)^ 2.84 06/22/2005 14,939,650
15,208,000 NIEUW AMSTERDAM RECEIVABLES^ 2.80 05/20/2005 15,186,709
15,000,000 SOLITAIRE FUNDING LLC^ 3.03 07/01/2005 14,924,250
TOTAL COMMERCIAL PAPER (COST $172,641,732) 172,641,732
---------------
CORPORATE BONDS & NOTES - 5.67%
4,855,000 CEI CAPITAL LLC+/-@ 3.06 03/01/2033 4,855,000
4,760,000 CONVENIENCE HOLDING COMPANY LLC SERIES A+/-@ 3.11 09/01/2042 4,760,000
5,000,000 LP PINEWOOD SPV LLC+/-@ 3.06 02/01/2018 5,000,000
2,000,000 MCDONALD'S CORPORATION+/-++ 4.49 03/07/2006 2,015,827
6,400,000 VANCOUVER CLINIC BUILDING WASHINGTON+/-@ 3.05 02/13/2023 6,400,000
TOTAL CORPORATE BONDS & NOTES (COST $23,030,827) 23,030,827
---------------
5
WELLS FARGO ADVANTAGE PORTFOLIO OF INVESTMENTS --
HERITAGE MONEY MARKET FUND APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
HERITAGE MONEY MARKET FUND
- --------------------------------------------------------------------------------
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
MUNICIPAL BONDS & NOTES - 11.19%
$ 4,970,000 ALASKA HOUSING FINANCE CORPORATION GOVERNMENTAL PURPOSE SERIES D
(HOUSING REVENUE LOC)+/-@ 3.00% 12/01/2032 $ 4,970,000
4,800,000 BOTSFORD GENERAL HOSPITAL MI SERIES A (HEALTHCARE FACILITIES
REVENUE LOC)+/-@ 3.05 02/15/2027 4,800,000
5,000,000 COLORADO HOUSING & FINANCE AUTHORITY SINGLE FAMILY MORTGAGE SERIES B
(HOUSING REVENUE LOC)+/-@ 3.04 11/01/2033 5,000,000
4,000,000 COLORADO HOUSING & FINANCE AUTHORITY SINGLE FAMILY MORTGAGE SERIES C
(HOUSING REVENUE LOC)+/-@ 3.04 11/01/2036 4,000,000
2,600,000 DENVER CITY & COUNTY AIRPORT REVENUE SERIES D (AIRPORT REVENUE
LOC)+/-@ 3.03 11/15/2005 2,600,000
5,000,000 HARRIS COUNTY TX HEALTH FACILITIES DEVELOPMENT CORPORATION
HOSPITAL REVENUE SERIES B-1 (HEALTHCARE FACILITIES REVENUE LOC)+/-SS. 3.04 10/01/2029 5,000,000
3,600,000 NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY MSNBC/CNBC SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 2.85 10/01/2021 3,600,000
7,420,000 NY STATE DORM AUTHORITY REVENUE MENTAL HEALTH FACILITIES
IMPROVEMENT +/-@ 2.98 02/15/2021 7,420,000
5,550,000 WAKE FOREST UNIVERSITY NC (OTHER REVENUE LOC)+/-@ 3.08 09/01/2013 5,550,000
2,550,000 WAUKESHA WI HEALTH SYSTEM INCORPORATED (HEALTHCARE FACILITIES
REVENUE LOC)+/-@ 3.05 08/15/2026 2,550,000
TOTAL MUNICIPAL BONDS & NOTES (COST $45,490,000) 45,490,000
---------------
EXTENDABLE BONDS - 1.23%
5,000,000 MORGAN STANLEY+/- 2.99 05/03/2006 5,000,000
TOTAL EXTENDABLE BONDS (COST $5,000,000) 5,000,000
---------------
MEDIUM TERM NOTES - 4.19%
2,000,000 MONUMENTAL GLOBAL FUNDING II+/-++ 3.35 04/10/2006 2,003,143
15,000,000 NORTHERN ROCK PLC+/-++ 3.00 01/13/2006 15,009,943
TOTAL MEDIUM TERM NOTES (COST $17,013,086) 17,013,086
---------------
REPURCHASE AGREEMENTS - 10.98%
6,000,000 BANK OF AMERICA NORTH AMERICA - 102% COLLATERALIZED BY US GOVERNMENT
SECURITIES
(MATURITY VALUE $6,001,490) 2.98 05/02/2005 6,000,000
3,607,000 GOLDMAN SACHS GROUP INCORPORATED - 102% COLLATERALIZED BY US GOVERNMENT
SECURITIES
(MATURITY VALUE $3,607,890) 2.96 05/02/2005 3,607,000
12,000,000 GOLDMAN SACHS GROUP INCORPORATED - 102% COLLATERALIZED BY US GOVERNMENT
SECURITIES
(MATURITY VALUE $12,002,990) 2.99 05/02/2005 12,000,000
23,000,000 JP MORGAN SECURITIES INCORPORATED - 102% COLLATERALIZED BY US GOVERNMENT
SECURITIES
(MATURITY VALUE $23,005,712) 2.98 05/02/2005 23,000,000
TOTAL REPURCHASE AGREEMENTS (COST $44,607,000) 44,607,000
---------------
TIME DEPOSITS - 2.71%
11,000,000 SOCIETE GENERALE CAYMAN 2.96 05/02/2005 11,000,000
TOTAL TIME DEPOSITS (COST $11,000,000) 11,000,000
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $406,782,645)* 100.11% $ 406,782,645
OTHER ASSETS AND LIABILITIES, NET (0.11) (449,167)
------- ---------------
TOTAL NET ASSETS 100.00% $ 406,333,478
======= ===============
^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO
MATURITY.
+/- VARIABLE RATE SECURITIES.
@ THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE
SECURITIES ACT OF 1933, AS AMENDED.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
6
STATEMENT OF ASSETS AND LIABILITIES -- WELLS FARGO ADVANTAGE
APRIL 30, 2005 (UNAUDITED) HERITAGE MONEY MARKET FUND
- --------------------------------------------------------------------------------
HERITAGE
MONEY MARKET
FUND
- ------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ............................................... $ 362,175,645
REPURCHASE AGREEMENTS ........................................................ 44,607,000
--------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ............................ 406,782,645
--------------
CASH ......................................................................... 1,097
RECEIVABLES FOR DIVIDENDS AND INTEREST ....................................... 563,532
--------------
TOTAL ASSETS ................................................................... 407,347,274
--------------
LIABILITIES
DIVIDENDS PAYABLE ............................................................ 845,800
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ........................ 47,517
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ...................................... 22,432
ACCRUED EXPENSES AND OTHER LIABILITIES ....................................... 98,047
--------------
TOTAL LIABILITIES .............................................................. 1,013,796
--------------
TOTAL NET ASSETS ............................................................... $ 406,333,478
--------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------
PAID-IN CAPITAL .............................................................. $ 406,333,478
--------------
TOTAL NET ASSETS ............................................................... $ 406,333,478
--------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- ------------------------------------------------------------------------------------------------
NET ASSETS - ADMINISTRATOR CLASS ............................................. $ 318,630,966
SHARES OUTSTANDING - ADMINISTRATOR CLASS ..................................... 318,631,278
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS ........... $ 1.00
NET ASSETS - INSTITUTIONAL CLASS ............................................. $ 87,702,512
SHARES OUTSTANDING - INSTITUTIONAL CLASS ..................................... 87,702,200
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS ........... $ 1.00
INVESTMENTS AT COST ............................................................ $ 406,782,645
--------------
(1) EACH FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
7
WELLS FARGO ADVANTAGE STATEMENT OF OPERATIONS --
HERITAGE MONEY MARKET FUND FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
HERITAGE
MONEY MARKET
FUND
- ------------------------------------------------------------------------------------------------
INVESTMENT INCOME
INTEREST..................................................................... $ 6,283,595
--------------
TOTAL INVESTMENT INCOME......................................................... 6,283,595
--------------
EXPENSES
ADVISORY FEES................................................................ 390,578
ADMINISTRATION FEES
FUND LEVEL................................................................ 13,645
ADMINISTRATOR CLASS....................................................... 853,937
INSTITUTIONAL CLASS....................................................... 19,401
CUSTODY FEES................................................................. 22,253
SHAREHOLDER SERVICING FEES................................................... 21,888
ACCOUNTING FEES.............................................................. 3,247
DISTRIBUTION FEES (NOTE 3)
ADMINISTRATOR CLASS....................................................... 128
AUDIT FEES................................................................... 6,730
LEGAL FEES................................................................... 14,285
REGISTRATION FEES............................................................ 36,378
SHAREHOLDER REPORTS.......................................................... 31,497
TRUSTEES' FEES............................................................... 30,988
OTHER FEES AND EXPENSES...................................................... 137,998
--------------
TOTAL EXPENSES.................................................................. 1,582,953
--------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3)................................. (636,639)
NET EXPENSES................................................................. 946,314
--------------
NET INVESTMENT INCOME (LOSS).................................................... 5,337,281
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS........................ 0
--------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................. $ 5,337,281
==============
8
WELLS FARGO ADVANTAGE
STATEMENTS OF CHANGES IN NET ASSETS HERITAGE MONEY MARKET FUND
- --------------------------------------------------------------------------------
HERITAGE MONEY MARKET FUND
-----------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED)(1) OCTOBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETs................................................................... $ 615,188,134 $ 982,385,016
OPERATIONS:
NET INVESTMENT INCOME (LOSS)........................................................... 5,337,281 6,802,315
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................... 5,337,281 6,802,315
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
ADMINISTRATOR CLASS (NOTE 1)........................................................ (4,113,813) (4,532,227)
ADVISOR CLASS (NOTE 1).............................................................. N/A (56,230)
INSTITUTIONAL CLASS................................................................. (1,223,468) (2,213,858)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS.................................................... (5,337,281) (6,802,315)
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1)............................... 148,566,681 371,600,174
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1)........................... 3,693,883 4,186,235
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1)................................. (286,399,535) (629,456,066)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS.................................................................... (134,138,971) (253,669,657)
--------------- ---------------
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS (NOTE 1)..................................... 0 45,493
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS (NOTE 1)................................. 594 844
COST OF SHARES REDEEMED - ADVISOR CLASS (NOTE 1)....................................... (138,216) (12,341,104)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADVISOR CLASS.......................................................................... (137,622) (12,294,767)
--------------- ---------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS........................................ 159,733,734 798,884,866
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS.................................... 979,452 1,842,908
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS.......................................... (235,291,249) (901,960,232)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
INSTITUTIONAL CLASS.................................................................... (74,578,063) (101,232,458)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS........... (208,854,656) (367,196,882)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS..................................................... (208,854,656) (367,196,882)
--------------- ---------------
ENDING NET ASSETS......................................................................... $ 406,333,478 $ 615,188,134
=============== ===============
SHARES ISSUED AND REDEEMED:
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1)............................................. 148,566,385 371,600,174
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1).......... 3,693,883 4,186,235
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1)......................................... (286,399,239) (629,456,066)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARE OUTSTANDING - ADMINISTRATOR CLASS....................... (134,138,971) (253,669,657)
--------------- ---------------
SHARES SOLD - ADVISOR CLASS (NOTE 1)................................................... 0 45,493
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS (NOTE 1)................ 594 844
SHARES REDEEMED - ADVISOR CLASS (NOTE 1)............................................... (138,216) (12,341,104)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARE OUTSTANDING - ADVISOR CLASS.............................. (137,622) (12,294,767)
--------------- ---------------
SHARES SOLD - INSTITUTIONAL CLASS...................................................... 159,733,734 798,884,866
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS................... 979,452 1,842,908
SHARES REDEEMED - INSTITUTIONAL CLASS.................................................. (235,291,249) (901,960,232)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARE OUTSTANDING - INSTITUTIONAL CLASS........................ (74,578,063) (101,232,458)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS... (208,854,656) (367,196,882)
--------------- ---------------
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS).............................. $ 0 $ 0
=============== ===============
(1) PROCEEDS FROM SHARES SOLD MAY INCLUDE AMOUNTS RELATED TO FUND MERGERS AND
SHARE CLASS CONVERSIONS (NOTE 1).
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
9
WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS DISTRIBUTIONS ENDING
NET ASSET INVESTMENT UNREALIZED FROM NET FROM NET NET ASSET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT REALIZED VALUE PER
SHARE (LOSS) INVESTMENTS INCOME GAINS SHARE
- ------------------------------------------------------------------------------------------------------------------------------------
HERITAGE MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED)..... $1.00 0.01 0.00 (0.01) 0.00 $1.00
NOVEMBER 1, 2003 TO OCTOBER 31, 2004............... $1.00 0.01 0.00 (0.01) 0.00 $1.00
NOVEMBER 1, 2002 TO OCTOBER 31, 2003............... $1.00 0.01 0.00 (0.01) 0.00 $1.00
NOVEMBER 1, 2001 TO OCTOBER 31, 2002............... $1.00 0.02 0.00 (0.02) 0.00 $1.00
NOVEMBER 1, 2000 TO OCTOBER 31, 2001............... $1.00 0.05 0.00 (0.05) 0.00 $1.00
MARCH 1, 2000(3) TO OCTOBER 31, 2000............... $1.00 0.04 0.00 (0.04) 0.00 $1.00
MARCH 1, 1999 TO FEBRUARY 29, 2000................. $1.00 0.05 0.00 (0.05) 0.00 $1.00
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED)..... $1.00 0.01 0.00 (0.01) 0.00 $1.00
NOVEMBER 1, 2003 TO OCTOBER 31, 2004............... $1.00 0.01 0.00 (0.01) 0.00 $1.00
NOVEMBER 1, 2002 TO OCTOBER 31, 2003............... $1.00 0.01 0.00 (0.01) 0.00 $1.00
NOVEMBER 1, 2001 TO OCTOBER 31, 2002............... $1.00 0.02 0.00 (0.02) 0.00 $1.00
NOVEMBER 1, 2000 TO OCTOBER 31, 2001............... $1.00 0.05 0.00 (0.05) 0.00 $1.00
MARCH 31, 2000(4) TO OCTOBER 31, 2000.............. $1.00 0.04 0.00 (0.04) 0.00 $1.00
(1) DURING EACH PERIOD, VARIOUS FEES AND EXPENSES WERE WAIVED AND REIMBURSED
AS INDICATED. THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS
THE EXPENSE RATIO IN THE ABSENCE OF ANY WAIVERS AND REIMBURSEMENTS (NOTE
3).
(2) TOTAL RETURN CALCULATIONS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN WAIVED OR REIMBURSED DURING THE PERIODS SHOWN. RETURNS FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(3) IN 2000, THE FUND CHANGED ITS FISCAL YEAR-END FROM FEBRUARY TO OCTOBER.
(4) COMMENCEMENT OF OPERATIONS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND
- --------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
------------------------------------------------
NET ASSETS AT
NET INVESTMENT GROSS EXPENSES NET TOTAL END OF PERIOD
INCOME (LOSS) EXPENSES WAIVED EXPENSES RETURN(2) (000'S OMITTED)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED)..... 1.94% 0.65% (0.25)% 0.40% 0.97% $ 318,631
NOVEMBER 1, 2003 TO OCTOBER 31, 2004............... 0.86% 0.68% (0.28)% 0.40% 0.88% $ 452,770
NOVEMBER 1, 2002 TO OCTOBER 31, 2003............... 0.95% 0.62% (0.22)% 0.40% 0.94% $ 706,440
NOVEMBER 1, 2001 TO OCTOBER 31, 2002............... 1.69% 0.60% (0.20)% 0.40% 1.69% $ 1,034,437
NOVEMBER 1, 2000 TO OCTOBER 31, 2001............... 4.68% 0.58% (0.18)% 0.40% 4.73% $ 1,343,523
MARCH 1, 2000(3) TO OCTOBER 31, 2000............... 6.10% 0.57% (0.17)% 0.40% 4.17% $ 1,438,355
MARCH 1, 1999 TO FEBRUARY 29, 2000................. 4.97% 0.56% (0.18)% 0.38% 5.12% $ 1,433,773
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED)..... 2.12% 0.26% (0.08)% 0.18% 1.08% $ 87,703
NOVEMBER 1, 2003 TO OCTOBER 31, 2004............... 1.07% 0.26% (0.08)% 0.18% 1.10% $ 162,280
NOVEMBER 1, 2002 TO OCTOBER 31, 2003............... 1.25% 0.22% (0.04)% 0.18% 1.16% $ 263,513
NOVEMBER 1, 2001 TO OCTOBER 31, 2002............... 1.86% 0.21% (0.03)% 0.18% 1.91% $ 1,079,326
NOVEMBER 1, 2000 TO OCTOBER 31, 2001............... 4.47% 0.24% (0.06)% 0.18% 4.96% $ 698,615
MARCH 31, 2000(4) TO OCTOBER 31, 2000.............. 6.48% 0.21% (0.03)% 0.18% 3.77% $ 235,365
11
WELLS FARGO ADVANTAGE
HERITAGE MONEY MARKET FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Trust commenced operations on November 8,
1999, and at April 30, 2005 was comprised of 108 separate series (each, a
"Fund", collectively, the "Funds"). These financial statements present the
Heritage Money Market Fund. The Fund is a diversified series of the Trust.
In September 2004, the Board of Trustees of the Trust and the Boards of
Directors of the Strong Funds ("Strong Funds") approved an Agreement and Plan of
Reorganization providing for the reorganization of certain Strong Funds into the
Funds.
Effective at the close of business on April 8, 2005, the following
Acquiring Fund ("Acquiring Fund") acquired substantially all of the net assets
of the following Target Fund ("Target Fund") through a tax-free exchange under
section 368 of the Internal Revenue Code.
Acquiring Fund Target Fund
- ----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND - ADMINISTRATOR CLASS STRONG HERITAGE MONEY FUND INVESTOR CLASS
- ----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND - ADMINISTRATOR CLASS STRONG HERITAGE MONEY FUND ADVISOR CLASS
- ----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND - INSTITUTIONAL CLASS STRONG HERITAGE MONEY FUND INSTITUTIONAL CLASS
- ----------------------------------------------------------------------------------------------------------------------------
The separate classes of shares offered by the Fund differ principally in
applicable sales charges, distribution, shareholder servicing and administration
fees. Shareholders of each class bear certain expenses that pertain to that
particular class. All shareholders bear the common expenses of a Fund, earn
income from the portfolio and are allocated unrealized gains and losses pro rata
based on the average daily net assets of each class, without distinction between
share classes. Dividends are determined separately for each class based on
income and expenses allocable to each class. Realized gains and losses are
allocated to each class pro rata based upon the net assets of each class on the
date realized. Differences in per share dividend rates generally result from the
relative weightings of pro rata income and realized gain allocations and from
differences in separate class expenses, including distribution, shareholder
servicing and administration fees.
2. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
The following significant accounting policies, which are consistently
followed in the preparation of the financial statements of the Trust, are in
conformity with accounting principles generally accepted in the United States of
America ("GAAP") for investment companies.
The preparation of financial statements in conformity with GAAP requires
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.
In the normal course of business, the Trust may enter into contracts that
provide certain indemnifications. The Trust's maximum exposure under these
arrangements is dependent on future claims that may be made against the Funds
and, therefore, cannot be estimated; however, based on experience, the risk of
loss from such claims is considered remote.
SECURITY VALUATION
The Fund invests only in securities with remaining maturities not
exceeding 397 days (13 months). Certain floating- and variable-rate instruments
in the portfolio may have maturities in excess of 397 days, but carry a demand
feature that permits the holder to tender the instruments back to the issuer at
par value prior to maturity.
The amortized cost method is used to value portfolio securities. The
amortized cost method involves valuing a security at its cost, plus accretion of
discount or minus amortization of premium over the period until maturity, which
approximates market value. The Fund seeks to maintain a constant net asset value
of $1.00 per share, although there is no assurance that it will be able to do
so.
Investments which are not valued using any of the methods discussed above,
are valued at their fair value as determined by procedures approved by the Board
of Trustees.
12
WELLS FARGO ADVANTAGE
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) HERITAGE MONEY MARKET FUND
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded on a trade date basis. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
Interest income is accrued daily and bond discounts are accreted and premiums
are amortized daily.
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, if any, is declared daily and distributed to
shareholders monthly. Distributions to shareholders from net realized capital
gains, if any, are declared and distributed at least annually.
For federal income tax purposes, the Fund may designate as capital gains
dividends the earnings and profits distributed to shareholders on the redemption
of fund shares during the year.
Distributions are based on amounts calculated in accordance with the
applicable federal income tax regulations, which may differ from GAAP. The
timing and character of distributions made during the period from net investment
income or net realized gains may also differ from their ultimate
characterization for federal income tax purposes. To the extent that these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment. Temporary
differences do not require reclassifications.
FEDERAL INCOME TAXES
The Fund is treated as a separate entity for federal income tax purposes.
It is the policy of each Fund of the Trust to continue to qualify as a regulated
investment company by complying with the provisions applicable to regulated
investment companies, as defined under subchapter M of the Internal Revenue Code
(the "Code"), and to make distributions of 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 at April 30, 2005.
REPURCHASE AGREEMENTS
The Fund may invest in repurchase agreements and may participate in pooled
repurchase agreement transactions with other funds advised by Wells Fargo Funds
Management, LLC. The repurchase agreements must be fully collateralized based on
values that are marked to market daily. The collateral may be held by an agent
bank under a tri-party agreement. It is the custodian's responsibility to value
collateral daily and to take action to obtain additional collateral as necessary
to maintain market value equal to or greater than the resale price. The
repurchase agreements are collateralized by instruments such as U.S. Treasury,
federal agency, or high-grade corporate obligations. There could be potential
loss to the Fund in the event that the Fund is delayed or prevented from
exercising its rights to dispose of the collateral, including the risk of a
possible decline in the value of the underlying obligations during the period in
which the Fund seeks to assert its rights.
3. EXPENSES
- --------------------------------------------------------------------------------
ADVISORY FEES
The Trust has entered into an advisory contract with Wells Fargo Funds
Management, LLC ("Funds Management"). The adviser is responsible for
implementing investment policies and guidelines and for supervising the
sub-adviser, who is responsible for day-to-day portfolio management.
Pursuant to the contract, Funds Management is entitled to receive an
advisory fee for its services as adviser. Funds Management may retain the
services of certain investment sub-advisers to provide daily portfolio
management. The fees related to sub-advisory services are borne directly by the
adviser and do not increase the overall fees paid by a Fund to the adviser.
Funds Management and the investment sub-adviser(s) are entitled to be paid a
monthly fee at the following annual rates:
Advisory Fees* Sub-Advisory Fees
(% of Average Daily Average Daily (% of Average Daily
Fund Net Assets) Sub-Adviser Net Assets Net Assets)
- ------------------------------------------------------------------------------------------------------
HERITAGE MONEY MARKET FUND 0.10 Wells Capital $0 - $1 billion 0.05
Management > $1 billion 0.04
Incorporated
- ------------------------------------------------------------------------------------------------------
* Effective April 11, 2005. Prior to January 1, 2005, Strong Capital
Management, Inc. ("SCM") served as investment adviser to the predecessor Strong
Fund and was entitled to receive an annual fee at the following rate; from
January 1, 2005 through April 10, 2005, Funds Management served as interim
investment adviser and was entitled to receive an annual fee at the same rate.
Advisory Fees (% of
Fund Average Daily Net Assets)
- -----------------------------------------------------------------------------------------------------
HERITAGE MONEY FUND 0.15
- -----------------------------------------------------------------------------------------------------
13
WELLS FARGO ADVANTAGE
HERITAGE MONEY MARKET FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
ADMINISTRATION AND TRANSFER AGENT FEES
The Trust has entered into an Administration Agreement with Funds
Management. Under this Agreement, for providing administrative services, which
includes paying fees and expenses for services provided by the transfer agent,
sub-transfer agents, omnibus account servicers and record-keepers, Funds
Management is entitled to receive the following annual fees:
Admin Fees**
Average Daily (% of Average
Net Assets Daily Net Assets)
- ------------------------------------------------------------------------------------------------------
FUND LEVEL $0 - $4.99 billion 0.05
$5 - $9.99 billion 0.04
> $9.99 billion 0.03
- ------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS 0.10
- ------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.08
- ------------------------------------------------------------------------------------------------------
** Effective April 11, 2005. Prior to April 11, 2005, Strong Investor
Services, Inc. ("SISI") served as administrator to the predecessor Strong Fund
and was entitled to receive an annual fee at the following rate:
% of Average
Daily Net Assets
- ------------------------------------------------------------------------------------------------------
ADVISOR CLASS 0.02
- ------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.02
- ------------------------------------------------------------------------------------------------------
INVESTOR CLASS 0.37
- ------------------------------------------------------------------------------------------------------
The Trust has entered into an agreement with Boston Financial Data
Services ("BFDS"). BFDS served as the transfer agent to the predecessor Strong
Fund effective March 14, 2005. Prior to March 14, 2005, SISI served as transfer
agent to each of the predecessor Strong Funds.
For financial statement presentation, transfer agent fees for the period
from November 1, 2004 though April 10, 2005, as shown below, have been combined
with administration fees.
Transfer Agent Fees and
Other Related Expenses
- ---------------------------------------------------------------------------------------------------------
HERITAGE MONEY FUND
- ---------------------------------------------------------------------------------------------------------
ADVISOR CLASS $ (250)
- ---------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS 4,631
- ---------------------------------------------------------------------------------------------------------
INVESTOR CLASS 129,670
- ---------------------------------------------------------------------------------------------------------
CUSTODY FEES
The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"),
whereby WFB is responsible for providing custody services. Pursuant to the
contract, WFB is entitled to certain transaction charges plus a monthly fee for
custody services at the following annual rates:
% of Average
Daily Net Assets
- ------------------------------------------------------------------------------------------------------
HERITAGE MONEY MARKET FUND 0.02
- ------------------------------------------------------------------------------------------------------
Prior to February 14, 2005, State Street Bank and Trust Co. ("State
Street") served as custodian for each of the predecessor Strong Funds. State
Street was entitled to receive a substantially transaction based fee.
SHAREHOLDER SERVICING FEES
The Trust has entered into contracts with one or more shareholder
servicing agents, whereby each Fund is charged the following annual fees:
% of Average
Daily Net Assets***
- ------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS 0.25
- ------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS N/A
*** Effective April 11, 2005. Prior to April 11, 2005, shareholder
servicing fees for the predecessor Strong Funds, if any, were included in the
Strong Funds' 12b-1 distribution and service plan. For the period April 11, 2005
through April 30, 2005, shareholder servicing fees paid by the fund are
disclosed on the Statement of Operations.
14
WELLS FARGO ADVANTAGE
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) HERITAGE MONEY MARKET FUND
- --------------------------------------------------------------------------------
OTHER FEES
PFPC, Inc. ("PFPC") serves as fund accountant for the Trust and is
entitled to receive an annual asset based fee and an annual fixed fee from each
Fund. PFPC is also entitled to be reimbursed for all out-of-pocket expenses
reasonably incurred in providing these services.
Prior to February 14, 2005, State Street served as fund accountant to the
predecessor Strong Fund. Fund accounting fees were paid by the fund's
administrator through April 10, 2005, and not by the fund.
WAIVED FEES AND REIMBURSED EXPENSES
Effective April 11, 2005, Funds Management waived fees or reimbursed
expenses proportionately from all classes, first from advisory fees, and then
from any class specific expenses, if applicable. The Fund's adviser has
committed to waive fees and/or reimburse expenses to the extent necessary to
maintain a certain net operating expense ratio for the Fund. Net operating
expense ratios in effect from April 11, 2005 through April 30, 2005 were as
follows:
Net Operating
Expense Ratios
Fund Administrator Institutional
- --------------------------------------------------------------------------------
HERITAGE MONEY MARKET FUND 0.38% 0.18%
- --------------------------------------------------------------------------------
Prior to April 11, 2005, the predecessor Strong Funds' adviser ("SCM")
and/or administrator ("SISI") could voluntarily waive or absorb certain expenses
at their discretion. SISI also allocated to each fund certain charges or credits
resulting from transfer agency banking activities based on each Class' level
subscription and redemption activity. Transfer Agency Banking Credits allocated
by SISI, if any, served to reduce the transfer agency expenses incurred by the
fund. From November 1, 2004 through April 10, 2005, the expense offsets that are
included in the waived fees and reimbursed expenses amount in the Statement of
Operations are as follows:
Waived Fees and
Reimbursed Expenses
- --------------------------------------------------------------------------------
HERITAGE MONEY FUND
- --------------------------------------------------------------------------------
FUND LEVEL $ 89,377
- --------------------------------------------------------------------------------
ADVISOR CLASS 300
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS 31,023
- --------------------------------------------------------------------------------
INVESTOR CLASS 502,152
- --------------------------------------------------------------------------------
4. LEGAL AND REGULATORY MATTERS
- --------------------------------------------------------------------------------
In 2004, the predecessor fund's investment adviser and affiliates
(collectively, "Strong") entered into agreements with certain regulators,
including the Securities and Exchange Commission and the New York Attorney
General ("NYAG"), to settle market-timing investigations. In the settlements,
Strong agreed to pay investor restoration and civil penalties. Although some
portion of these payments is likely to be distributed to predecessor fund
shareholders, no determination has yet been made as to the distribution of these
amounts, and the successor funds are not expected to receive any portion of
these payments. The NYAG settlement also imposed fee reductions across the
predecessor fund complex (excluding money market funds and very short-term
income funds) totaling at least $7 million a year for five years. The current
Funds' adviser has agreed to honor these fee reductions for the benefit of
shareholders across the successor funds. Although civil litigation against
Strong and certain predecessor funds relating to these matters is continuing,
neither the current adviser nor the successor funds is a party to any such suit.
15
WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
PROXY VOTING INFORMATION
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities and information
regarding the results of such voting during the most recent 12-month period
ended June 30, is available without charge, upon request, by calling
1-800-222-8222, visiting our Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS or
visiting the SEC Web site at WWW.SEC.GOV.
PORTFOLIO HOLDINGS INFORMATION
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 without charge by visiting the SEC Web site at WWW.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 information about the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
BOARD OF TRUSTEES
The following table provides basic information about the Board of Trustees
("Trustees") of the Wells Fargo Funds Trust (the "Trust"). This table
supplements, and should be read in conjunction with, the Prospectus and the
Statement of Additional Information* of each Fund. Each of the Trustees listed
below acts in identical capacities for each of the 138 funds comprising the
Trust, Wells Fargo Variable Trust and Wells Fargo Master Trust (collectively the
"Fund Complex"). All of the non-interested Trustees are also members of the
Audit and Governance Committees of each Trust in the Fund Complex. The 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.
- --------------------------------------------------------------------------------
INTERESTED TRUSTEE**
- --------------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- --------------------------------------------------------------------------------------------------------------------
J. Tucker Morse Trustee, since 1987 Private Investor/Real Estate None
60 Developer; Chairman of White
Point Capital, LLC.
- --------------------------------------------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES
- --------------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- --------------------------------------------------------------------------------------------------------------------
Thomas S. Goho Trustee, since 1987 Associate Professor of Finance, None
62 Wake Forest University,
Calloway School of Business
and Accountancy.
- --------------------------------------------------------------------------------------------------------------------
Peter G. Gordon Trustee, since 1998 Chairman, CEO, and Co- None
62 (Chairman, since 2005) Founder of Crystal Geyser
Water Company and President
of Crystal Geyser Roxane Water
Company.
16
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND
- --------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES
- --------------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- --------------------------------------------------------------------------------------------------------------------
Richard M. Leach Trustee, since 1987 Retired. Prior thereto, President None
71 of Richard M. Leach Associates
(a financial consulting firm).
- --------------------------------------------------------------------------------------------------------------------
Timothy J. Penny Trustee, since 1996 Senior Counselor to the public None
53 relations firm of Himle-Horner
and Senior Fellow at the
Humphrey Institute,
Minneapolis, Minnesota (a public
policy organization).
- --------------------------------------------------------------------------------------------------------------------
Donald C. Willeke Trustee, since 1996 Principal in the law firm of None
64 Willeke & Daniels.
- --------------------------------------------------------------------------------------------------------------------
OFFICERS
- --------------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE PAST FIVE YEARS OTHER DIRECTORSHIPS
- --------------------------------------------------------------------------------------------------------------------
Karla M. Rabusch President, since 2003 Executive Vice President of None
46 Wells Fargo Bank, N.A.
President of Wells Fargo Funds
Management, LLC. Senior Vice
President and Chief
Administrative Officer of Wells
Fargo Funds Management, LLC
from 2001 to 2003. Vice
President of Wells Fargo Bank,
N.A. from 1997 to 2000.
- --------------------------------------------------------------------------------------------------------------------
Stacie D. DeAngelo Treasurer, since 2003 Senior Vice President of Wells None
36 Fargo Bank, N.A. Senior Vice
President of Operations for
Wells Fargo Funds Management,
LLC. Prior thereto, Operations
Manager at Scudder Weisel
Capital, LLC from 2000 to 2001,
Director of Shareholder Services
at BISYS Fund Services from 1999
to 2000 and Assistant Vice
President of Operations with
Nicholas-Applegate Capital
Management from 1993 to 1999.
- --------------------------------------------------------------------------------------------------------------------
C. David Messman Secretary, since 2000 Vice President and Managing None
45 Senior Counsel of Wells Fargo
Bank, N.A. Senior Vice
President and Secretary of Wells
Fargo Funds Management, LLC.
Vice President and Senior
Counsel of Wells Fargo Bank,
N.A. from 1996 to 2003.
- --------------------------------------------------------------------------------------------------------------------
* The Statement of Additional Information includes additional information
about the Funds' Trustees and is available, without charge, upon request,
by calling 1-800-222-8222.
** As of April 30, 2005, one of the six Trustees is considered an "interested
person" of the Trusts as defined in the Investment Company Act of 1940.
The interested Trustee, J. Tucker Morse, is affiliated with a government
securities dealer that is registered under the Securities Exchange Act of
1934, which is not itself affiliated with Wells Fargo Funds Management,
LLC.
*** Length of service dates reflects a Trustee's commencement of service with
the Trust's predecessor entities.
17
WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY
AGREEMENTS:
HERITAGE MONEY MARKET FUND
- --------------------------------------------------------------------------------
Section 15(c) of the Investment Company Act of 1940 (the "1940 Act")
contemplates that the Board of Trustees (the "Board") of Wells Fargo Funds Trust
(the "Trust"), including a majority of the Trustees who have no direct or
indirect interest in the investment advisory and sub-advisory agreements and are
not "interested persons" of the Trust, as defined in the 1940 Act (the
"Independent Trustees"), will annually review and consider the continuation of
the investment advisory and sub-advisory agreements. In this regard, the Board
reviewed and re-approved, during the six months covered by this report: (i) an
investment advisory agreement with Wells Fargo Funds Management, LLC ("Funds
Management") for the Heritage Money Market Fund (the "Fund"); and (ii) an
investment sub-advisory agreement with Wells Capital Management Incorporated
("Wells Capital Management") for the Fund. The investment advisory agreement
with Funds Management and the investment sub-advisory agreement with Wells
Capital Management are collectively referred to as the "Advisory Agreements."
More specifically, at a meeting held on April 4, 2005, the Board,
including the Independent Trustees advised by their independent legal counsel,
considered the factors and reached the conclusions described below relating to
the selection of Funds Management and Wells Capital Management and the
continuation of the Advisory Agreements. The Board initially approved the
Advisory Agreements for the Fund at a meeting held August 9-10, 2004 in
connection with its approval of the reorganization of the Strong Heritage Money
Fund (the accounting survivor) into the Wells Fargo Advantage Heritage Money
Market Fund (the "Reorganization"). The Reorganization was effective at the
close of business on April 8, 2005. The Fund commenced operations on April 11,
2005. Accordingly, references to the Fund refer to either the predecessor fund
or the Fund as the context requires. Similarly, references to the various fee
rates refer to either the rates of the predecessor fund or those of the Fund as
the context requires.
NATURE, EXTENT AND QUALITY OF SERVICES
The Board received and considered various data and information regarding
the nature, extent and quality of services that would be provided to the Fund by
Funds Management and Wells Capital Management under the Advisory Agreements.
Responses of Funds Management and Wells Capital Management to a detailed set of
requests submitted by the Independent Trustees' independent legal counsel on
behalf of such Trustees were provided to the Board. The Board reviewed and
considered the data and information, which included, among other things,
information about the background and experience of the senior management and the
expertise of the investment personnel of Funds Management and Wells Capital
Management.
The Board also considered the ability of Funds Management and Wells
Capital Management, based on their respective resources, reputations and other
attributes, to attract and retain highly qualified investment professionals,
including research, advisory, and supervisory personnel. In this connection, the
Board considered information regarding each of Funds Management's and Wells
Capital Management's compensation for its personnel that would be involved in
the management of the Fund. In addition, the Board considered the effects of
certain personnel changes in light of the acquisition of certain of the asset
management arrangements of Strong Capital Management, Inc. by Wells Fargo &
Company.
The Board further considered the compliance programs and compliance
records of Funds Management and Wells Capital Management. In addition, the Board
took into account the administrative services anticipated to be provided to the
Fund by Funds Management and its affiliates. In considering these matters, the
Board considered not only the specific information presented in connection with
the meeting, but also the knowledge gained over the course of interacting with
Funds Management, including with respect to Funds Management's oversight of
service providers, such as the investment sub-adviser.
Based on the above factors, together with those referenced below, the
Board concluded that it was generally satisfied with the nature, extent and
quality of the investment advisory services anticipated to be provided to the
Fund by Funds Management and Wells Capital Management.
FUND PERFORMANCE AND EXPENSES
The Board considered the performance results for the Fund over various
time periods. The Board also considered these results, as applicable, in
comparison to the median performance results of the group of funds that was
determined to be the most similar to the Fund (the "Peer Group") and to the
median performance of a broader universe of relevant funds (the "Universe"), as
well as to the Fund's benchmark index. Lipper Inc. ("Lipper"), an independent
provider of investment company data, determined the Peer Group and Universe for
the Fund. The Board was provided with a description of the methodology used by
Lipper to select the mutual funds in the Fund's Peer Group and Universe. The
Board noted that the Fund's performance was better than the median performance
of its Peer Group for all time periods.
The Board received and considered information regarding the Fund's net
operating expense ratio and its various components, including contractual
advisory fees, actual advisory fees, actual non-management
18
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND
- --------------------------------------------------------------------------------
fees, Rule 12b-1 and non-Rule 12b-1 service fees, fee waivers/caps and/or
expense reimbursements. The Board also considered comparisons of these fees to
the expense information for the Fund's Peer Group and Universe, which
comparative data was provided by Lipper. The Board noted that the net operating
expense ratio of the Fund was lower than the Fund's Peer Group's median net
operating expense ratio.
Management also discussed the Lipper data and rankings, and other relevant
information, for the Fund. Based on the above-referenced considerations and
other factors, the Board concluded that the overall performance and expense
results supported the re-approval of the Advisory Agreements for the Fund.
INVESTMENT ADVISORY AND SUB-ADVISORY FEE RATES
The Board reviewed and considered the contractual investment advisory fee
rates both on a stand-alone basis and on a combined basis with the Fund's
administration fee rates (the "Advisory Agreement Rates") payable by the Fund to
Funds Management for investment advisory services. The Board also reviewed and
considered the contractual investment sub-advisory fee rates (the "Sub-Advisory
Agreement Rates") payable by Funds Management to Wells Capital Management for
investment sub-advisory services. In addition, the Board reviewed and considered
the existing fee waiver/cap arrangements applicable to the Advisory Agreement
Rates and considered the Advisory Agreement Rates after taking the waivers/caps
into account (the "Net Advisory Rates").
The Board received and considered information comparing the Advisory
Agreement Rates and Net Advisory Rates with those of the other funds in the Peer
Group. The Board noted that the Advisory Agreement Rates and the Net Advisory
Rates for the Fund were lower than the median rates of the Fund's Peer Group. In
addition, the Board concluded that the combined investment
advisory/administration fee rate for the Fund (before and after waivers/caps
and/or expense reimbursements) was reasonable in relation to the Fund's Peer
Group, and reasonable in relation to the services anticipated to be provided.
The Board also reviewed and considered the Sub-Advisory Agreement Rates
and concluded that the Sub-Advisory Agreement Rates were fair and equitable,
based on its consideration of the factors described above.
PROFITABILITY
Because the Fund had not yet commenced operations, the Board did not
consider the historical profitability with regard to Funds Management's
arrangements with the Fund. However, the Board received and considered a
detailed profitability analysis of Funds Management and its affiliates based on
similar advisory and other relationships between other series in the Trust and
Funds Management and its affiliates. The Board concluded that, in light of the
costs of providing investment management and other services to the other series,
the profits and other ancillary benefits that Funds Management and its
affiliates received with regard to providing these services to such series were
not unreasonable. The Board did not consider a separate profitability analysis
of Wells Capital Management, as its separate profitability from its relationship
with the Fund was not a material factor in determining whether to renew the
agreement.
ECONOMIES OF SCALE
The Board received and considered information regarding the potential for
realization of any future economies of scale. However, the Board acknowledged
the inherent limitations of any analysis of an investment adviser's economies of
scale and of any attempt to correlate breakpoints with such economies, stemming
largely from the Board's understanding that economies of scale are realized, if
at all, by an investment adviser across a variety of products and services, not
just with respect to a single fund. The Board concluded that any potential
economies of scale will be shared reasonably with Fund shareholders.
INFORMATION ABOUT SERVICES TO OTHER CLIENTS
The Board also received and considered information about the nature,
extent and quality of services and fee rates offered by Funds Management to
other similarly situated series within the Trust, and those offered by Wells
Capital Management to other clients, including other registered investment
companies and separate accounts. The Board concluded that the Advisory Agreement
Rates, the Sub-Advisory Agreement Rates and the Net Advisory Rates were within a
reasonable range of the fee rates offered to others by Funds Management and
Wells Capital Management, giving effect to differences in services covered by
such fee rates.
OTHER BENEFITS TO FUNDS MANAGEMENT AND WELLS CAPITAL MANAGEMENT
The Board received and considered information regarding potential
"fall-out" or ancillary benefits received by Funds Management and its affiliates
(including Wells Capital Management) as a result of their relationship with the
Fund. Such benefits could include, among others, benefits directly attributable
to the relationship of Funds Management and Wells Capital Management with the
Fund (such as soft-dollar credits) and benefits potentially derived from an
increase in the business of Funds Management and Wells
19
WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
Capital Management as a result of their relationship with the Fund (such as the
ability to market to shareholders other financial products offered by Funds
Management and its affiliates (including Wells Capital Management)).
The Board also considered the policies of the Fund in seeking the best
execution of portfolio transactions, whether and to what extent soft dollar
credits would be sought and how any such credits would be utilized, potential
benefits that may be realized by using an affiliated broker, and the controls
applicable to brokerage allocation procedures. The Board also took note of the
policies of Wells Capital Management regarding the anticipated allocation of
portfolio investment opportunities among the Fund and other clients.
OTHER FACTORS AND BROADER REVIEW
The Board also considered the markets for distribution of the Fund,
including the principal channels through which the Fund's shares would be
offered and sold. The Board noted that the Fund is now part of one of the few
fund families that have both direct-to-fund and intermediary distribution.
As discussed above, the Board reviewed detailed materials received from
Funds Management and Wells Capital Management in advance of the April 4, 2005
meeting as part of the re-approval process under Section 15 (c) of the 1940 Act.
The Board has also reviewed detailed materials from Funds Management and Wells
Capital Management, and met with various management representatives and
portfolio mangers, as part of its regular and special meeting cycle, and such
materials and meetings were also considered as part of the re-approval process.
After considering the above-described factors and based on its
deliberations and its evaluation of the information described above, the Board
concluded that approval of the continuation of the Advisory Agreements for the
Fund was in the best interest of the Fund and its shareholders. Accordingly, the
Board unanimously approved the continuation of the Advisory Agreements.
20
LIST OF ABBREVIATIONS WELLS FARGO ADVANTAGE HERITAGE MONEY MARKET FUND
- --------------------------------------------------------------------------------
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
ABAG -- Association of Bay Area Governments
ADR -- American Depositary Receipts
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CMT -- Constant Maturity Treasury
COFI -- Cost of Funds Index
Connie Lee -- Connie Lee Insurance Company
COP -- Certificate of Participation
CP -- Commercial Paper
CTF -- Common Trust Fund
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
EDFA -- Education Finance Authority
FFCB -- Federal Farm Credit Bank
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FRN -- Floating Rate Notes
FSA -- Financial Security Assurance, Inc
GDR -- Global Depositary Receipt
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
IDA -- Industrial Development Authority
IDR -- Industrial Development Revenue
LIBOR -- London Interbank Offered Rate
LLC -- Limited Liability Corporation
LOC -- Letter of Credit
LP -- Limited Partnership
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MUD -- Municipal Utility District
MTN -- Medium Term Note
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PLC -- Private Placement
PSFG -- Public School Fund Guaranty
RAW -- Revenue Anticipation Warrants
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
R&D -- Research & Development
SFHR -- Single Family Housing Revenue
SFMR -- Single Family Mortgage Revenue
SLMA -- Student Loan Marketing Association
STEERS -- Structured Enhanced Return Trust
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
V/R -- Variable Rate
WEBS -- World Equity Benchmark Shares
XLCA -- XL Capital Assurance
21
THIS PAGE IS INTENTIONALLY LEFT BLANK --
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
More information about Wells Fargo Advantage Funds(SM) is available free upon
request. To obtain literature, please write, e-mail, or call:
WELLS FARGO ADVANTAGE FUNDS
P.O. Box 8266
Boston, MA 02266-8266
E-mail: wfaf@wellsfargo.com
Retail Investment Professionals: 888-877-9275
Institutional Investment Professionals: 866-765-0778
Web: www.wellsfargo.com/advantagefunds
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the WELLS FARGO ADVANTAGE FUNDS. If
this report is used for promotional purposes, distribution of the report must be
accompanied or preceded by a current prospectus. For a prospectus containing
more complete information, including charges and expenses, call 1-800-222-8222.
Please consider the investment objective, risks, charges and expenses of the
investment carefully before investing. This and other information about WELLS
FARGO ADVANTAGE FUNDS can be found in the current prospectus. Read the
prospectus carefully before you invest or send money.
Wells Fargo Funds Management, LLC, a wholly-owned subsidiary of Wells Fargo &
Company, provides investment advisory and administrative services for the WELLS
FARGO ADVANTAGE FUNDS. Other affiliates of Wells Fargo & Company provide
sub-advisory and other services for the Funds. The Funds are distributed by
WELLS FARGO FUNDS DISTRIBUTOR, LLC, Member NASD/SIPC, an affiliate of Wells
Fargo & Company.
-------------------------------------------------------
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
-------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
(C) 2005 Wells Fargo Advantage Funds, LLC. All rights reserved. | www.wellsfargo.com/advantagefunds | SM50908 06-05
SCASH/WH2185 04-05
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
APRIL 30, 2005
[GRAPHIC OMITTED]
SEMI-ANNUAL REPORT
WELLS FARGO ADVANTAGE MUNICIPAL MONEY MARKET FUND
WELLS FARGO ADVANTAGE MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PLEASE NOTE THAT THIS REPORT COVERS A SIX-MONTH PERIOD OF TIME, THE MAJORITY OF
WHICH REPRESENTS A TIME PRIOR TO THE APRIL 11, 2005, REORGANIZATION WITH THE
STRONG FUNDS. STRONG CAPITAL MANAGEMENT, INC. PROVIDED INVESTMENT MANAGEMENT
SERVICES TO THESE FUNDS FROM THE BEGINNING OF THE REPORTING PERIOD THROUGH
DECEMBER 31, 2004, AFTER WHICH TIME WELLS FARGO FUNDS MANAGEMENT, LLC TOOK OVER
MANAGEMENT RESPONSIBILITIES THROUGH THE END OF THE REPORTING PERIOD.
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS .................................................. 1
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND ......................................... 2
FUND EXPENSES ........................................................... 4
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND ......................................... 5
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES ................................. 12
STATEMENT OF OPERATIONS ............................................. 13
STATEMENTS OF CHANGES IN NET ASSETS ................................. 14
FINANCIAL HIGHLIGHTS................................................. 16
NOTES TO FINANCIAL STATEMENTS ........................................... 18
- --------------------------------------------------------------------------------
OTHER INFORMATION ....................................................... 21
- --------------------------------------------------------------------------------
LIST OF ABBREVIATIONS ................................................... 26
- --------------------------------------------------------------------------------
-------------------------------------------------------
NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE
-------------------------------------------------------
THIS PAGE IS INTENTIONALLY LEFT BLANK --
LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
DEAR VALUED SHAREHOLDER,
I am pleased to introduce you to WELLS FARGO ADVANTAGE FUNDS(SM). You now
have access to an expanded array of mutual funds, giving you the flexibility to
invest in a family of funds covering nearly every asset class and investment
style. To learn more about our funds and the talented team of money managers
behind them, please visit our new Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
You can also call one of our investment service representatives now available 24
hours a day, 7 days a week, or speak with your investment professional.
Following is your Wells Fargo Advantage Municipal Money Market Fund
semi-annual report for the six-month period ended April 30, 2005. On the
following pages, you will find a discussion of the Fund, including performance
highlights, the Fund managers' strategic outlook, and information about the
Fund's portfolio.
THE ECONOMY: CONTINUED EXPANSION
- --------------------------------------------------------------------------------
The U.S. economy continued to grow steadily, expanding by 4.4% in 2004.
During the first quarter of 2005, however, the economy grew by 3.1%, trailing
the 3.8% pace achieved during the last three months of 2004.
Part of that decline stemmed from the high cost of gasoline, which
continued to have a significant influence on consumer spending and the economy.
When the six-month period began, oil prices were declining from their recent
highs of $55 per barrel. After falling for two months, they rebounded sharply in
2005, setting new highs in April.
Higher energy prices were a key driver of inflation, which rose throughout
most of the period. "Core" inflation, however, which excludes volatile food and
energy prices, also trended upwards, but rose less quickly. With core inflation
manageable, the Federal Reserve Board (the Fed) continued its program of gradual
short-term interest rate increases.
HIGHER RATES, HIGHER YIELDS
- --------------------------------------------------------------------------------
After remaining flat for a year, money markets rates rose steadily
throughout the fiscal year ending April 30, 2005. As the expectations for action
by the Fed increased, yields on money market funds began to rise, particularly
on securities at the longer end of the maturity spectrum. However, the yields on
these longer term securities did not accurately reflect the eventual actions of
the Fed, which raised rates four times, bringing the Federal funds rate, the
interest rate at which a depository institution lends immediately available
funds to another depository institution overnight, from 1.75% at the beginning
of the reporting period to 2.75% by April 30, 2005.
The moves were highly anticipated as the Fed prepared investors with its
commentary, therefore causing little market disruption. Common themes in the
Fed's statements were that monetary policy was too accommodative and that
tightening would take place by raising interest rates at a measured pace.
LOOKING AHEAD: LONG-TERM EXPANSION?
- --------------------------------------------------------------------------------
Despite the economy's first quarter slowdown, we believe this represents a
temporary soft patch more than a continuing slowdown. As stock and bond
investors seek to determine where inflation, interest rates, and corporate
earnings are headed, we may see more unpredictable moves in the markets.
Uncertainty and risk will always be a part of investing. We believe an
important thing you can do to manage risk is to own a broadly diversified
portfolio with stocks, bonds, and cash that can help you weather unexpected
market shifts. While diversification may not prevent losses in a downturn, it
may help reduce them and keep you on track to reach your financial goals.
Thank you for choosing WELLS FARGO ADVANTAGE FUNDS. We appreciate your
confidence in us. Through each market cycle, we are committed to helping you
meet your financial needs. If you have any questions about your investment,
please contact your investment professional, or call us at 1-800-222-8222. You
may also visit our enhanced Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE MUNICIPAL MONEY MARKET FUND PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MUNICIPAL MONEY MARKET FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE MUNICIPAL MONEY MARKET FUND (the Fund) seeks
current income exempt from federal income tax, while preserving capital and
liquidity.
FUND MANAGER INCEPTION DATE
David M. Sylvester 10/23/1986
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 0.68%(1) for the six-month
period ended April 30, 2005, underperforming the 1.01% return of the Citigroup
3-Month Treasury Bill Index(2) and outperforming the 0.64% return of the
iMoneyNet All Tax-Free Money Fund Average(3).
PRIME MONEY MARKET SECURITIES
- --------------------------------------------------------------------------------
The money market yield curve shifted upwards over the 6-month reporting
period. At October 31, 2004, yields on one-year LIBOR (London Inter-Bank Offered
Rate) securities were 2.55%, versus 3.69% at the end of the period. Overnight
rates went from 1.75% to 2.80% over that same period. Although interest rates
generally rose, borrowers apparently still believed that the higher cost was
justified in comparison to their potential economic returns. Indeed, after
several years of decline, top-rated commercial paper outstanding increased 11.0%
since October 2004 to $1.35 trillion, a level not seen since 2001.
The credit picture looked brighter prior to this period, but grew murky
again in the last six months as merger and acquisition activity increased and
headlines about companies issuing profit warnings began to emerge. Still, the
yield advantage on commercial paper and other corporate credit versus U.S.
Treasury securities remained small, encouraging investors to either look for
longer maturities or dip down in credit quality to pick up yield. In this
environment, we remained cautious in our credit process.
TAX-FREE SECURITIES
- --------------------------------------------------------------------------------
Yields on tax-exempt securities gained along with most other money market
securities over this period. Additionally, tax-exempt securities experienced a
spike in yields in the later half of April as investors needed to raise cash for
tax payments. The yield on one-week securities rose from 1.09% to 2.99% during
the six-months ending April 30, 2005, while the yield on one-year, triple-A
rated tax-exempts rose from 1.76% to 2.64%. Because the rates increased
frequently, the best performing securities were variable-rate demand notes.
With interest rates still near historic lows, municipal issuers continue
to tap the markets in order to refinance older issues. While some municipalities
are seeing increases in their credit ratings, the tax-exempt market continues to
face challenges in many localities. California's ratings were raised from
triple-B to single-A. Nevertheless, the state is still in a difficult financial
position. Despite the $700 million surplus over year-to-date revenue
projections, California is still facing a billion dollar structural deficit. New
York Transitional Finance Authority was raised to AAA/Aa1 from AA+/Aa2 by S&P
and Moody's. In spite of these upbeat notes, other issuers, such as the State of
Illinois and the City of San Diego, continue to face financial challenges
because of under-funded pension plans and diminished reserves. We continue to be
vigilant on these issues.
STRATEGIC OUTLOOK
- --------------------------------------------------------------------------------
As the Federal Reserve Board continues to increase short-term interest
rates, we will seek to capture these increases in the yields of money market
instruments. We intend to emphasize floating rate and variable rate securities,
as long as rates are steady or rising.
AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH
THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
- --------------------------------------------------------------------------------
THE VIEWS EXPRESSED ARE AS OF APRIL 30, 2005, AND ARE THOSE OF THE FUND'S
MANAGER. THE VIEWS ARE SUBJECT TO CHANGE AT ANY TIME IN RESPONSE TO CHANGING
CIRCUMSTANCES IN THE MARKET AND ARE NOT INTENDED TO PREDICT OR GUARANTEE THE
FUTURE PERFORMANCE OF ANY INDIVIDUAL SECURITY, MARKET SECTOR OR THE MARKETS
GENERALLY, OR THE WELLS FARGO ADVANTAGE MUNICIPAL MONEY MARKET FUND.
2
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
6-Months* 1-Year 5-Year 10-Year
- --------------------------------------------------------------------------------------------
Municipal Money Market Fund - Investor Class 0.68 1.14 1.87 2.74
- --------------------------------------------------------------------------------------------
Benchmark
- --------------------------------------------------------------------------------------------
Citigroup 3-Month Treasury Bill Index(2) 1.01 1.58 2.64 3.91
- --------------------------------------------------------------------------------------------
iMoneyNet All Tax-Free Money Fund Average(3) 0.64 0.97 1.48 2.23
- --------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. YIELDS WILL FLUCTUATE. THE FUND'S YIELD FIGURES MORE CLOSELY REFLECT
THE CURRENT EARNINGS OF THE FUND THAN THE TOTAL RETURN FIGURES. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
THE FUND IS SOLD WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES
CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE
DESCRIBED IN THE FUND'S CURRENT PROSPECTUS.
AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND
SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS
POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
FUND YIELD SUMMARY(1) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
7-Day Current Yield 2.19%
- --------------------------------------------------------------------------------
7-Day Compound Yield 2.21%
- --------------------------------------------------------------------------------
30-Day Simple Yield 1.75%
- --------------------------------------------------------------------------------
30-Day Compound Yield 1.76%
FUND CHARACTERISTICS(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Weighted Average Maturity 28 days
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Commercial Paper 7%
Municipal Demand Notes 90%
Municipal Bonds 3%
MATURITY DISTRIBUTION(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
2-14 days 89%
15-29 days 1%
30-59 days 3%
90-179 days 1%
270 + days 6%
(1) The Fund's Adviser has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
7-day current yield would have been 1.82%.
Performance shown for the Investor Class shares of the WELLS FARGO
ADVANTAGE MUNICIPAL MONEY MARKET FUND for periods prior to April 11, 2005,
reflects the performance of the Investor Class shares of the Strong Municipal
Money Market Fund, its predecessor fund. Effective at the close of business on
April 8, 2005, certain Strong Funds were reorganized into certain WELLS FARGO
ADVANTAGE FUNDS.
(2) The Citigroup 3-Month Treasury Bill Index is an unmanaged index that is
generally representative of the average of the last 3 month Treasury bill issues
(excluding the current month-end bills). You cannot invest directly in an index.
(3) The iMoneyNet All Tax-Free Money Fund Average includes tax-free and
municipal retail and institutional money funds. It is made up of funds in the
National Tax-Free Retail, National Tax-Free Institutional, State-Specific Retail
and State-Specific Institutional categories. You cannot invest directly in an
index.
(4) Portfolio holdings and characteristics are subject to change.
3
WELLS FARGO ADVANTAGE MUNICIPAL MONEY MARKET 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,
redemption fees (if any) and exchange fees (if any); and (2) ongoing costs,
including management fees; distribution (12b-1) and/or shareholder service 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 period and held for the entire period (November 1, 2004 to April 30,
2005).
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), redemption fees, or exchange fees. 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 Ending
Account Account Expenses Net Annual
Value Value Paid During Expense
11/1/04 4/30/05 the Period(1) Ratio
Municipal Money Market Fund
- ---------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,006.80 $3.33 0.67%
- ---------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,021.42 $3.36 0.67%
- ---------------------------------------------------------------------------------------------------
(1) EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO 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).
4
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE
APRIL 30, 2005 (UNAUDITED) MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
COMMERCIAL PAPER - 7.34%
$ 7,300,000 MASSACHUSETTS HEALTH & EDUCATION FACILITIES AUTHORITY^ 2.32% 05/17/2005 $ 7,300,000
4,000,000 PHOENIX CIVIC IMPROVEMENT CORPORATION (AIRPORT REVENUE LOC)^ 2.45 05/04/2005 4,000,000
7,500,000 ROCHESTER MN HEALTH CARE^ 2.07 05/04/2005 7,500,000
6,000,000 ROCHESTER MN HEALTH CARE^ 2.07 05/10/2005 6,000,000
1,835,000 ROCHESTER MN HEALTH CARE^ 2.07 05/10/2005 1,835,000
5,000,000 ROCHESTER MN HEALTH CARE^ 2.08 05/10/2005 5,000,000
8,100,000 ROCHESTER MN HEALTH CARE SERIES 92-C^ 2.07 05/10/2005 8,100,000
5,000,000 VENANGO PA IDA REVENUE SERIES 90 B (INDUSTRIAL DEVELOPMENT
REVENUE LOC)^ 2.07 05/05/2005 5,000,000
5,000,000 VENANGO PA IDA REVENUE SERIES 90 B (INDUSTRIAL DEVELOPMENT
REVENUE LOC)^ 2.09 05/10/2005 5,000,000
TOTAL COMMERCIAL PAPER (COST $49,735,000) 49,735,000
---------------
MUNICIPAL BONDS & NOTES - 92.55%
ALABAMA - 0.55%
3,700,000 DECATUR AL INDUSTRIAL DEVELOPMENT BOARD BP AMOCO CHEMICAL COMPANY
PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.07 11/01/2035 3,700,000
---------------
ARIZONA - 0.76%
5,130,000 PHOENIX AZ IDA TRUST SERIES C11 (HOUSING REVENUE LOC)+/-@ 1.80 12/01/2027 5,130,000
---------------
CALIFORNIA - 4.97%
1,300,000 CALIFORNIA EDUCATIONAL FACILITIES AUTHORITY REVENUE STANFORD
UNIVERSITY SERIES S-4 (COLLEGE AND UNIVERSITY REVENUE LOC)+/-@ 2.97 11/01/2049 1,300,000
600,000 CALIFORNIA HFA REVENUE HOME MORTGAGE SERIES M (HOUSING REVENUE
LOC)+/-@ 3.04 02/01/2025 600,000
6,000,000 CALIFORNIA POLLUTION CONTROL FINANCING AUTHORITY PCR PACIFIC GAS
& ELECTRIC COMPANY (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.04 11/01/2026 6,000,000
3,500,000 CALIFORNIA POLLUTION CONTROL FINANCING AUTHORITY PCR WADHAM ENERGY
(POLLUTION CONTROL REVENUE LOC)+/-@ 3.08 11/01/2017 3,500,000
2,900,000 GLENN CA IDA LAND O' LAKES INCORPORATED PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.10 09/01/2007 2,900,000
17,300,000 LONG BEACH CA HARBOR REVENUE SERIES A
(AIRPORT REVENUE LOC)+/-@ 3.03 05/15/2027 17,300,000
700,000 PITTSBURG CA REDEVELOPMENT AGENCY TAX ALLOCATION LOS MEDANOS
COMMUNITY SERIES A (TAX ALLOCATION REVENUE LOC)+/-@ 3.03 09/01/2035 700,000
1,385,000 SAN FRANCISCO CITY & COUNTY CA AIRPORTS COMMISSION MUNICIPAL
SECURITIES TRUST RECEIPTS (AIRPORT REVENUE LOC)+/-@ 3.03 05/01/2020 1,385,000
33,685,000
---------------
COLORADO - 3.23%
20,675,000 EL PASO COUNTY CO SFMR SERIES B+/-@ 3.04 02/25/2006 20,675,000
1,250,000 HUDSON CO SERIES A (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.20 11/01/2020 1,250,000
21,925,000
---------------
DISTRICT OF COLUMBIA - 1.61%
10,935,000 METROPOLITAN WASHINGTON DC AIRPORTS AUTHORITY VA GENERAL AIRPORT
REVENUE MT 108 (AIRPORT REVENUE LOC)+/-@ 3.08 10/01/2014 10,935,000
---------------
FLORIDA - 4.47%
1,000,000 BOYNTON BEACH COMMUNITY REDEVELOPMENT AGENCY FLORIDA TAX
INCREMENT REVENUE SERIES 657 (TAX REVENUE LOC)+/-@ 3.03 10/01/2012 1,000,000
500,000 BROWARD COUNTY FL HFA MFHR PROJECT 703 (HOUSING REVENUE LOC)+/-@ 3.01 09/01/2026 500,000
265,000 BROWARD COUNTY FL HFA MFHR SANCTUARY COVE APARTMENTS SERIES A
(HOUSING REVENUE LOC)+/-@ 3.04 06/15/2037 265,000
3,075,000 FLORIDA HOUSING FINANCE AGENCY ASHLEY LAKE II J (HOUSING REVENUE
LOC)+/-@ 2.97 12/01/2011 3,075,000
5
WELLS FARGO ADVANTAGE PORTFOLIO OF INVESTMENTS --
MUNICIPAL MONEY MARKET FUND APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
FLORIDA (CONTINUED)
$ 4,700,000 FLORIDA HOUSING FINANCE CORPORATION HEATHER GLENN APARTMENTS
SERIES H (HOUSING REVENUE LOC)+/-@ 2.97% 06/15/2036 $ 4,700,000
4,375,000 HILLSBOROUGH COUNTY FL PORT DISTRICT REVENUE PROJECT 2571
(AIRPORT REVENUE LOC)+/-@ 3.07 06/01/2020 4,375,000
2,870,000 HILLSBOROUGH COUNTY FL PORT DISTRICT REVENUE SERIES 1019
(AIRPORT REVENUE LOC)+/-@ 3.07 06/01/2018 2,870,000
3,675,000 JACKSONVILLE FL ECONOMIC DEVELOPMENT COMMISSION STI PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.05 12/01/2020 3,675,000
4,575,000 ORANGE COUNTY FL HFA HOMEOWNER REVENUE MT 118 (OTHER REVENUE
LOC)+/-@ 3.08 03/01/2034 4,575,000
5,250,000 SCA TAX EXEMPT TRUST PT 2517 LEE COUNTY HOUSING FINANCE
(HOUSING REVENUE LOC)+/-@ 3.08 01/01/2030 5,250,000
30,285,000
---------------
GEORGIA - 4.62%
4,130,000 ATHENS-CLARKE COUNTY GA UNIVERSITY GOVERNMENT DEVELOPMENT
AUTHORITY UNIVERSITY GA ATHLETIC ASSOCIATION PROJECT (COLLEGE AND
UNIVERSITY REVENUE LOC)+/-@ 3.05 08/01/2033 4,130,000
27,200,000 CRISP COUNTY GA SOLID WASTE MANAGEMENT AUTHORITY (OTHER REVENUE
LOC)+/-@ 3.42 01/01/2023 27,200,000
31,330,000
---------------
IDAHO - 0.53%
3,630,000 BONNEVILLE COUNTY ID INDUSTRIAL DEVELOPMENT YELLOWSTONE PLASTICS
PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.18 08/01/2014 3,630,000
---------------
ILLINOIS - 4.95%
1,500,000 CHICAGO IL ECONOMIC DEVELOPMENT REVENUE CRANE CARTON COMPANY
PROJECT BANKERS TRUST COMPANY LOC (ECONOMIC DEVELOPMENT
REVENUE LOC)+/-@ 3.10 06/01/2012 1,500,000
2,385,000 GENEVA IL CONTINENTAL ENVELOPE PROJECT (INDUSTRIAL DEVELOPMENT
REVENUE LOC)+/-@ 3.15 09/01/2006 2,385,000
600,000 ILLINOIS FINANCE AUTHORITY DIAMOND STAR MOTORS PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.06 12/01/2008 600,000
4,135,000 ILLINOIS FINANCE AUTHORITY MCL INCORPORATED PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.15 06/01/2017 4,135,000
1,300,000 ILLINOIS FINANCE AUTHORITY SURGIPATH MEDICAL INDUSTRY PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.18 06/01/2011 1,300,000
1,600,000 ILLINOIS HEALTH FACILITIES AUTHORITY REVENUE MEMORIAL MEDICAL
CENTER SERIES C KREDIETBANK NV LOC (HEALTHCARE FACILITIES
REVENUE LOC)+/-@ 3.00 01/01/2016 1,600,000
19,000,000 ILLINOIS HOUSING DEVELOPMENT AUTHORITY REVENUE HOMEOWNER
MORTGAGE A3 (HOUSING REVENUE LOC)+/-@ 3.03 08/01/2035 19,000,000
3,015,000 LAKE COUNTY IL BROWN PAPER GOODS PROJECT (INDUSTRIAL DEVELOPMENT
REVENUE LOC)+/-@ 3.35 10/01/2021 3,015,000
33,535,000
---------------
INDIANA - 0.81%
2,500,000 HAMMOND IN SCHOOL BUILDING CORPORATION SERIES 658 (LEASE REVENUE
LOC)+/-@ 3.03 07/15/2012 2,500,000
1,465,000 WHITING IN ENVIRONMENTAL FACILITIES REVENUE AMOCO OIL COMPANY
PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.07 07/01/2031 1,465,000
1,550,000 WHITING IN ENVIRONMENTAL FACILITIES REVENUE BP PRODUCTS PROJECT
SERIES C (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.07 07/01/2034 1,550,000
5,515,000
---------------
6
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE
APRIL 30, 2005 (UNAUDITED) MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
IOWA - 0.60%
$ 1,515,000 ELDRIDGE IA AMERICAN FINISHING RESOURCES INCORPORATED
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.40% 03/01/2015 $ 1,515,000
2,550,000 IOWA FINANCE AUTHORITY DIXIE BEDDING COMPANY PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.65 04/01/2015 2,550,000
4,065,000
---------------
KENTUCKY - 1.76%
4,155,000 DAVIESS COUNTY KY MULTIFAMILY PARK REGENCY (HOUSING REVENUE LOC)+/-@ 3.10 07/01/2020 4,155,000
4,920,000 KENTUCKY HOUSING CORPORATION SFMR SERIES 2003A (HOUSING REVENUE
LOC)+/-@ 3.08 12/01/2005 4,920,000
2,855,000 MADISONVILLE KY PERIOD INCORPORATED PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.18 05/01/2015 2,855,000
11,930,000
---------------
LOUISIANA - 2.99%
4,000,000 CALCASIEU PARISH LA INCORPORATED INDUSTRIAL DEVELOPMENT BOARD
ENVIRONMENTAL REVENUE CITGO PETROLEUM CORPORATION (INDUSTRIAL
DEVELOPMENT REVENUE LOC)+/-@ 3.10 07/01/2026 4,000,000
9,500,000 PORT NEW ORLEANS LA BOARD REVENUE (OTHER REVENUE LOC)+/-@ 3.06 06/01/2034 9,500,000
6,800,000 ST. CHARLES PARISH LA PCR SHELL OIL COMPANY NORCO PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.07 09/01/2023 6,800,000
20,300,000
---------------
MAINE - 1.33%
9,000,000 MAINE STATE HOUSING AUTHORITY MULTIFAMILY REVENUE PARK VILLAGE
(HOUSING REVENUE LOC)+/-@ 3.03 10/28/2032 9,000,000
---------------
MARYLAND - 0.09%
640,000 MARYLAND STATE HEALTH & HIGHER EDUCATIONAL FACILITIES AUTHORITY
REVENUE JOHNS HOPKINS UNIVERSITY SERIES A (COLLEGE AND UNIVERSITY
REVENUE LOC)+/-@ 3.00 07/01/2036 640,000
---------------
MASSACHUSETTS - 0.52%
3,500,000 MASSACHUSETTS BAY TRANSPORTATION AUTHORITY CTFS SERIES SG 156+/-@ 3.03 07/01/2030 3,500,000
---------------
MICHIGAN - 1.92%
2,700,000 MICHIGAN STATE GRANT ANTICIPATION NOTES SERIES D (TRANSPORTATION
REVENUE LOC)+/-@ 3.00 09/15/2009 2,700,000
10,320,000 WAYNE COUNTY MI AIRPORT AUTHORITY REVENUE (AIRPORT REVENUE
LOC)+/-@ 3.07 12/01/2024 10,320,000
13,020,000
---------------
MINNESOTA - 1.14%
2,140,000 MINNEAPOLIS & ST. PAUL MN METROPOLITAN AIRPORTS COMMISSION
AIRPORT REVENUE (AIRPORT REVENUE LOC)+/-@ 3.08 01/01/2013 2,140,000
4,500,000 ST. PAUL MN PORT AUTHORITY DISTRICT HEATING REVENUE SERIES 2005
4 SERIES I (OTHER REVENUE LOC)+/-@ 3.05 12/01/2025 4,500,000
1,100,000 ST. PAUL MN PORT AUTHORITY DISTRICT COOLING REVENUE SERIES R
DEXIA CREDIT LOCAL DE FRANCE LOC (TRANSPORTATION REVENUE LOC)+/-@ 3.15 03/01/2022 1,100,000
7,740,000
---------------
7
WELLS FARGO ADVANTAGE PORTFOLIO OF INVESTMENTS --
MUNICIPAL MONEY MARKET FUND APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
MISSISSIPPI - 0.31%
$ 1,000,000 MISSISSIPPI BUSINESS FINANCE CORPORATION ABT COMPANY
INCORPORATED PROJECT SERIES A +/- 3.15% 04/01/2022 $ 1,000,000
1,090,000 MISSISSIPPI BUSINESS FINANCE CORPORATION ARCH ALUMINUM &
GLASS PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.20 01/01/2014 1,090,000
2,090,000
---------------
MISSOURI - 0.49%
3,300,000 HANNIBAL MO IDA BUCKHORN RUBBER PRODUCTS PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.15 03/01/2010 3,300,000
---------------
NEVADA - 2.35%
10,900,000 CLARK COUNTY NV NEVADA COGENERATION ASSOCIATION II
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.07 12/01/2022 10,900,000
5,000,000 CLARK COUNTY NV PASSENGER FACILITIES CHARGE REVENUE MCCARRAN
INTERNATIONAL AIRPORT A2 (OTHER REVENUE LOC)+/-@ 3.03 07/01/2022 5,000,000
15,900,000
---------------
NEW YORK - 4.31%
4,600,000 NEW YORK CITY NY HOUSING DEVELOPMENT CORPORATION MULTIFAMILY RENT
HOUSING REVENUE SERIES A (HOUSING REVENUE LOC)+/-@ 3.00 11/15/2019 4,600,000
2,500,000 NEW YORK STATE HFA REVENUE 101 WEST (HOUSING REVENUE LOC)+/-@ 3.05 05/15/2031 2,500,000
22,100,000 NEW YORK STATE HFA REVENUE SERIES A (HOUSING REVENUE LOC)+/-@ 3.03 05/01/2029 22,100,000
29,200,000
---------------
NORTH CAROLINA - 1.26%
5,530,000 GUILFORD COUNTY NC INDUSTRIAL FACILITIES & POLLUTION CONTROL
FINANCING AUTHORITY INDUSTRIAL DEVELOPMENT CRESCENT SLEEP PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.65 09/01/2019 5,530,000
3,000,000 RALEIGH DURHAM NC AIRPORT AUTHORITY AIRPORT REVENUE PROJECT 2569
(AIRPORT REVENUE LOC)+/-@ 3.08 05/01/2015 3,000,000
8,530,000
---------------
OHIO - 1.78%
1,420,000 FRANKLIN COUNTY OH LIFELINE SHELTER SYSTEMS PROJECT (INDUSTRIAL
DEVELOPMENT REVENUE LOC)+/-@ 3.40 10/01/2021 1,420,000
2,925,000 MONTGOMERY COUNTY OH KROGER COMPANY PROJECT (INDUSTRIAL
DEVELOPMENT REVENUE LOC)+/-@ 3.45 03/01/2016 2,925,000
1,000,000 OHIO STATE SOLID WASTE REVENUE SOLID WASTE REVENUE BONDS BP
EXPLORATION & OIL INC. PROJECT (INDUSTRIAL DEVELOPMENT
REVENUE LOC)+/-@ 3.08 02/01/2033 1,000,000
6,700,000 RICHLAND COUNTY OH HEALTH CARE FACILITIES REVENUE SERIES A
(HEALTHCARE FACILITIES REVENUE LOC)+/-@ 3.02 11/01/2027 6,700,000
12,045,000
---------------
OREGON - 4.34%
20,000,000 OREGON STATE HOUSING & COMMUNITY SERVICES DEPARTMENT MORTGAGE
REVENUE SINGLE FAMILY MORTGAGE PROJECT SERIES P (HOUSING REVENUE LOC) 3.00 03/15/2006 20,093,968
9,300,000 PORT OF PORTLAND OR HORIZON AIR INDUSTRIES INCORPORATED PROJECT
(AIRPORT REVENUE LOC)+/-@ 3.02 06/15/2027 9,300,000
29,393,968
---------------
8
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE
APRIL 30, 2005 (UNAUDITED) MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
PENNSYLVANIA - 3.25%
$ 19,450,000 PENNSYLVANIA STATE HIGHER EDUCATIONAL ASSISTANCE AGENCY STUDENT
LOAN REVENUE SERIES C (OTHER REVENUE LOC)+/-@ 3.00% 07/01/2018 $ 19,450,000
1,125,000 PENNSYLVANIA STATE HIGHER EDUCATIONAL FACILITIES AUTHORITY
REVENUE HONEYSUCKLE STUDENT HOLDING SERIES A (COLLEGE AND
UNIVERSITY REVENUE LOC)+/-@ 3.01 07/01/2034 1,125,000
1,450,000 PHILADELPHIA PA WATER & WASTEWATER REVENUE SERIES B (WATER &
WASTEWATER AUTHORITY REVENUE LOC)+/-@ 2.98 08/01/2027 1,450,000
22,025,000
---------------
SOUTH CAROLINA - 4.06%
11,100,000 BERKELEY COUNTY SC EXEMPT FACILITIES INDUSTRIAL REVENUE AMOCO
CHEMICAL COMPANY PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.07 04/01/2028 11,100,000
2,500,000 FLORENCE COUNTY SC ROCHE CAROLINA INCORPORATED PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.09 04/01/2027 2,500,000
1,000,000 FLORENCE COUNTY SC ROCHE CAROLINA INCORPORATED PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.09 04/01/2028 1,000,000
2,900,000 SOUTH CAROLINA JOBS ECONOMIC DEVELOPMENT AUTHORITY ECONOMIC
DEVELOPMENT REVENUE PAXAR CORPORATION PROJECT (INDUSTRIAL
DEVELOPMENT REVENUE LOC)+/-@ 3.05 05/01/2011 2,900,000
5,000,000 SOUTH CAROLINA JOBS ECONOMIC DEVELOPMENT AUTHORITY ECONOMIC
DEVELOPMENT REVENUE SOUTH ATLANTIC CANNERS PROJECT (INDUSTRIAL
DEVELOPMENT REVENUE LOC)+/-@ 3.05 12/01/2021 5,000,000
5,000,000 SOUTH CAROLINA JOBS ECONOMIC DEVELOPMENT AUTHORITY ECONOMIC
DEVELOPMENT REVENUE WASTE MANAGEMENT (INDUSTRIAL DEVELOPMENT
REVENUE LOC)+/-@ 3.05 07/01/2024 5,000,000
27,500,000
---------------
SOUTH DAKOTA - 0.24%
1,600,000 LAWRENCE COUNTY SD SOLID WASTE DISPOSAL REVENUE HOMESTAKE MINING
COMPANY SERIES A CHASE MANHATTAN BANK LOC (INDUSTRIAL DEVELOPMENT
REVENUE LOC)+/-@ 3.06 07/01/2032 1,600,000
---------------
TENNESSEE - 3.76%
4,840,000 BROWNSVILLE TN INDUSTRIAL DEVELOPMENT BOARD DYNAMETAL
TECHNOLOGIES INCORPORATED PROJECT (INDUSTRIAL DEVELOPMENT
REVENUE LOC)+/-@ 2.05 06/01/2012 4,840,000
2,195,000 COFFEE COUNTY TN INDUSTRIAL BOARD INCORPORATED MCKEY PERFORATED
PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.18 06/01/2016 2,195,000
8,000,000 HUNTINGDON TN INDUSTRIAL DEVELOPMENT BOARD BEHLEN MANUFACTURING
COMPANY PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.22 05/01/2020 8,000,000
7,515,000 SCA TAX EXEMPT TRUST PT 2518 HAMILTON COUNTY FINANCE (HOUSING
REVENUE LOC)+/-@ 3.08 01/01/2030 7,515,000
2,950,000 SCA TAX EXEMPT TRUST PT 2520 MEMPHIS HEALTH EDUCATIONAL FINANCE
(HOUSING REVENUE LOC)+/-@ 3.08 01/01/2030 2,950,000
25,500,000
---------------
TEXAS - 8.96%
13,200,000 ARRANT COUNTY TX HOUSING FINANCE CORPORATION SERIES C+/-@ 1.80 12/15/2025 13,200,000
3,990,000 DALLAS FORT WORTH TX INTERNATIONAL AIRPORT REVENUE SERIES 778 Z
(AIRPORT REVENUE LOC)+/-@ 3.06 11/01/2011 3,990,000
1,700,000 GULF COAST TX INDUSTRIAL DEVELOPMENT AUTHORITY (UTILITIES REVENUE
LOC)+/-@ 3.07 04/01/2038 1,700,000
3,075,000 GULF COAST TX WASTE DISPOSAL AUTHORITY AMOCO OIL COMPANY PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.07 05/01/2024 3,075,000
9
WELLS FARGO ADVANTAGE PORTFOLIO OF INVESTMENTS --
MUNICIPAL MONEY MARKET FUND APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
TEXAS (CONTINUED)
$ 2,200,000 GULF COAST TX WASTE DISPOSAL AUTHORITY AMOCO OIL COMPANY PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.07% 01/01/2026 $ 2,200,000
5,800,000 GULF COAST TX WASTE DISPOSAL AUTHORITY AMOCO OIL COMPANY PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.07 04/01/2032 5,800,000
5,300,000 GULF COAST TX WASTE DISPOSAL AUTHORITY BP COMPANY CHEMICAL
PROJECT SERIES B (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.07 09/01/2038 5,300,000
5,800,000 GULF COAST TX WASTE DISPOSAL AUTHORITY BP COMPANY NORTH AMERICA
PROJECT (OTHER REVENUE LOC)+/-@ 3.07 07/01/2034 5,800,000
3,000,000 GULF COAST TX WASTE DISPOSAL AUTHORITY POLLUTION CONTROL REVENUE
BONDS AMOCO OIL COMPANY PROJECT (POLLUTION CONTROL REVENUE LOC)+/-@ 3.07 05/01/2023 3,000,000
830,000 HARRIS COUNTY TX HEALTH FACILITIES DEVELOPMENT AUTHORITY
(HEALTHCARE FACILITIES REVENUE LOC)+/-@ 3.33 07/01/2027 830,000
700,000 HARRIS COUNTY TX HEALTH FACILITIES DEVELOPMENT CORPORATION
HOSPITAL REVENUE SERIES B-1 (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 3.04 10/01/2029 700,000
2,500,000 LAREDO TX HOUSING DEVELOPMENT CORPORATION NUMBER 1 SERIES 618
(LEASE REVENUE LOC)+/-@ 3.03 02/01/2010 2,500,000
2,500,000 MONTGOMERY COUNTY TX IDA POROUS MEDIA LIMITED PROJECT (INDUSTRIAL
DEVELOPMENT REVENUE LOC)+/-@ 3.20 09/01/2015 2,500,000
8,425,000 TEXAS STATE TRAN 3.00 08/31/2005 8,433,187
1,700,000 WEST SIDE CALHOUN COUNTY TX NAVAL DISTRICT BP CHEMICALS
INCORPORATED PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.07 04/01/2031 1,700,000
60,728,187
---------------
UTAH - 3.81%
7,500,000 UTAH HOUSING CORPORATION TODD HOLLOW APARTMENTS SERIES A
(HOUSING REVENUE LOC)+/-@ 3.49 07/01/2038 7,500,000
18,355,000 UTAH STATE BOARD OF REGENTS STUDENT LOAN REVENUE SERIES 1997R
AMBAC INSURED (EDUCATIONAL FACILITIES REVENUE LOC)+/-@ 3.03 11/01/2031 18,355,000
25,855,000
---------------
VIRGINIA - 8.71%
6,400,000 CAPITAL REGION AIRPORT COMMISSION VA PASSENGER FACILITIES CHARGE
REVENUE SERIES A (OTHER REVENUE LOC)+/-@ 3.05 06/01/2035 6,400,000
5,400,000 KING GEORGE COUNTY VA IDA BIRCHWOOD POWER PARTNERS
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.21 03/01/2027 5,400,000
6,400,000 KING GEORGE COUNTY VA IDA BIRCHWOOD POWER PARTNERS SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.21 04/01/2026 6,400,000
8,500,000 KING GEORGE COUNTY VA IDA BIRCHWOOD POWER PARTNERS SERIES A
(SEWER REVENUE LOC)+/-@ 3.10 10/01/2024 8,500,000
5,815,000 KING GEORGE COUNTY VA IDA BIRCHWOOD POWER PARTNERS SERIES B
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.10 12/01/2024 5,815,000
3,000,000 KING GEORGE COUNTY VA IDA EXEMPT FACILITIES REVENUE BIRCHWOOD
POWER PARTNERS PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.21 11/01/2025 3,000,000
23,500,000 RICHMOND VA IDA COGENTRIX OF RICHMOND PROJECT SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.08 12/01/2017 23,500,000
59,015,000
---------------
WASHINGTON - 2.73%
3,700,000 PORT BELLINGHAM WA INDUSTRIAL DEVELOPMENT CORPORATION BP WEST
COAST PRODUCTS LLC PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.07 12/01/2033 3,700,000
2,450,000 PORT BELLINGHAM WA INDUSTRIAL DEVELOPMENT CORPORATION BP WEST
COAST PRODUCTS LLC PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.07 03/01/2038 2,450,000
10
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE
APRIL 30, 2005 (UNAUDITED) MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
WASHINGTON (CONTINUED)
$ 7,345,000 SCA TAX EXEMPT TRUST PT 2519 WASHINGTON STATE HOUSING FINANCE
(HOUSING REVENUE LOC)+/-@ 3.08% 01/01/2030 $ 7,345,000
5,000,000 WASHINGTON STATE HOUSING FINANCE COMMISSION MULTIFAMILY REVENUE
PARK VISTA RETIREMENT PROJECT A (HOUSING REVENUE LOC)+/-@ 3.10 03/01/2041 5,000,000
18,495,000
---------------
WISCONSIN - 1.92%
1,965,000 ASHWAUBENON WI VALLEY PACKAGING SUPPLY COMPANY PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.18 05/01/2020 1,965,000
1,285,000 MIDDLETON WI FRISTAM PUMPS INCORPORATED PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.18 05/01/2020 1,285,000
3,500,000 MILWAUKEE WI REDEVELOPMENT AUTHORITY HELWIG CARBON PRODUCTS
SERIES A (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@(b) 3.18 11/01/2028 3,500,000
3,490,000 NEW LONDON WI WOHLT CHEESE CORPORATION PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.18 07/01/2021 3,490,000
2,805,000 WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY HOUSING
REVENUE SERIES F (HOUSING REVENUE LOC)+/-@ 2.98 11/01/2033 2,805,000
13,045,000
---------------
MULTIPLE STATES - 3.42%
15,000 CLIPPER BRIGANTINE TAX EXEMPT TRUST CTFS+/-@++ 3.34 02/01/2030 15,000
23,163,000 CLIPPER TAX EXEMPT TRUST COP (OTHER REVENUE LOC)+/- 3.19 10/01/2005 23,163,000
23,178,000
---------------
TOTAL MUNICIPAL BONDS & NOTES (COST $627,265,155) 627,265,155
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $677,000,155)* 99.89% $ 677,000,155
OTHER ASSETS AND LIABILITIES, NET 0.11 760,338
------ ---------------
TOTAL NET ASSETS 100.00% $ 677,760,493
====== ===============
+/- VARIABLE RATE SECURITIES.
^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO
MATURITY.
@ THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE
SECURITIES ACT OF 1933, AS AMENDED.
(b) SECURITY WAS ACQUIRED THROUGH A PRIVATE PLACEMENT AND MAY NOT BE PUBLICLY
SOLD WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933. ADDITIONAL
INFORMATION ON THE SECURITY IS AS FOLLOWS:
SECURITY ACQUISITION DATE PRINCIPAL COST
MILWAUKEE WI REDEVELOPMENT AUTHORITY HELWIG CARBON PRODUCTS SERIES A 2/27/00 - 5/8/03 $3,500,000 $3,500,000
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
WELLS FARGO ADVANTAGE STATEMENT OF ASSETS AND LIABILITIES --
MUNICIPAL MONEY MARKET FUND APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL
MONEY MARKET
FUND
- -----------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE................................................ $ 677,000,155
-------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW).............................. 677,000,155
-------------
CASH.......................................................................... 124,431
RECEIVABLES FOR DIVIDENDS AND INTEREST........................................ 2,215,539
-------------
TOTAL ASSETS.................................................................... 679,340,125
-------------
LIABILITIES
DIVIDENDS PAYABLE............................................................. 1,034,079
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3)......................... 261,929
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR....................................... 104,676
ACCRUED EXPENSES AND OTHER LIABILITIES........................................ 178,948
-------------
TOTAL LIABILITIES............................................................... 1,579,632
-------------
TOTAL NET ASSETS................................................................ $ 677,760,493
=============
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------
PAID-IN CAPITAL............................................................... $ 677,814,648
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS......................... (54,155)
-------------
TOTAL NET ASSETS................................................................ $ 677,760,493
-------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- -----------------------------------------------------------------------------------------------
NET ASSETS - INVESTOR CLASS................................................... $ 677,760,493
SHARES OUTSTANDING - INVESTOR CLASS........................................... 677,814,640
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS................. $ 1.00
-------------
INVESTMENTS AT COST............................................................. $ 677,000,155
=============
(1) EACH FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
STATEMENT OF OPERATIONS -- WELLS FARGO ADVANTAGE
FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
MUNICIPAL
MONEY MARKET
FUND
- -----------------------------------------------------------------------------------------------
INVESTMENT INCOME
INTEREST..................................................................... $ 8,314,795
-------------
TOTAL INVESTMENT INCOME......................................................... 8,314,795
-------------
EXPENSES
ADVISORY FEES................................................................ 675,594
ADMINISTRATION FEES.......................................................... 1,787,160
CUSTODY FEES................................................................. 32,693
SHAREHOLDER SERVICING FEES................................................... 103,569
ACCOUNTING FEES.............................................................. 3,832
AUDIT FEES................................................................... 5,937
LEGAL FEES................................................................... 22,513
REGISTRATION FEES............................................................ 15,163
SHAREHOLDER REPORTS.......................................................... 51,368
TRUSTEES' FEES............................................................... 30,082
OTHER FEES AND EXPENSES...................................................... 204,474
-------------
TOTAL EXPENSES.................................................................. 2,932,385
-------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3)................................. (178,083)
NET EXPENSES................................................................. 2,754,302
-------------
NET INVESTMENT INCOME (LOSS).................................................... 5,560,493
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -----------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION.............. (54,155)
-------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS....................................... (54,155)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS.......................... (54,155)
-------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................. $ 5,506,338
=============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
WELLS FARGO ADVANTAGE
MUNICIPAL MONEY MARKET FUND STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND
---------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS................................................................. $ 875,447,446 $ 1,563,333,313
OPERATIONS:
NET INVESTMENT INCOME (LOSS)......................................................... 5,560,493 8,942,275
NET REALIZED GAIN (LOSS) ON INVESTMENTS.............................................. (54,155) 0
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS......................... 5,506,338 8,942,275
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME................................................................ (5,560,493) (8,942,275)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS..................................................... (5,560,493) (8,942,275)
--------------- ---------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD............................................................ 390,707,738 1,127,552,465
REINVESTMENT OF DISTRIBUTIONS........................................................ 5,448,744 8,528,232
COST OF SHARES REDEEMED.............................................................. (593,789,280) (1,823,966,564)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS......... (197,632,798) (687,885,867)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS................................................... (197,686,953) (687,885,867)
--------------- ---------------
ENDING NET ASSETS....................................................................... $ 677,760,493 $ 875,447,446
--------------- ---------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD.......................................................................... 390,707,738 1,127,552,464
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS....................................... 5,448,607 8,528,369
SHARES REDEEMED...................................................................... (593,789,290) (1,823,966,564)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS. (197,632,945) (687,885,731)
--------------- ---------------
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME................................... $ 0 $ 0
=============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
THIS PAGE IS INTENTIONALLY LEFT BLANK --
WELLS FARGO ADVANTAGE MUNICIPAL MONEY MARKET FUND FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT REALIZED
SHARE (LOSS) INVESTMENTS INCOME GAINS
- ------------------------------------------------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------------
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED).. $1.00 0.01 0.00(4) (0.01) 0.00
NOVEMBER 1, 2003 TO OCTOBER 31, 2004............ $1.00 0.01 0.00 (0.01) 0.00
NOVEMBER 1, 2002 TO OCTOBER 31, 2003............ $1.00 0.01 0.00 (0.01) 0.00
NOVEMBER 1, 2001 TO OCTOBER 31, 2002............ $1.00 0.01 0.00 (0.01) 0.00
NOVEMBER 1, 2000 TO OCTOBER 31, 2001............ $1.00 0.03 0.00 (0.03) 0.00
MARCH 1, 2000(3) TO OCTOBER 31, 2000............ $1.00 0.03 0.00 (0.03) 0.00
MARCH 1, 1999 TO FEBRUARY 29, 2000.............. $1.00 0.03 0.00 (0.03) 0.00
(1) During each period, various fees and expenses were waived and reimbursed
as indicated. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio in the absence of any waivers and reimbursements (Note
3).
(2) Total return calculations would have been lower had certain expenses not
been waived or reimbursed during the periods shown. Returns for periods of
less than one year are not annualized.
(3) In 2000, the Fund changed its fiscal year-end from February to October.
(4) Amount calculated is less than $0.005.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
ENDING -----------------------------------------------
NET ASSET NET INVESTMENT GROSS EXPENSES NET
VALUE PER INCOME (LOSS) EXPENSES WAIVED EXPENSES
SHARE
- -------------------------------------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND
- -------------------------------------------------------------------------------------------------------------
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED).. $1.00 1.36% 0.72% (0.05)% 0.67%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004............ $1.00 0.81% 0.65% (0.02)% 0.63%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003............ $1.00 0.94% 0.61% 0.00% 0.61%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002............ $1.00 1.42% 0.58% 0.00% 0.58%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001............ $1.00 3.29% 0.57% 0.00% 0.57%
MARCH 1, 2000(3) TO OCTOBER 31, 2000............ $1.00 4.18% 0.58% 0.00% 0.58%
MARCH 1, 1999 TO FEBRUARY 29, 2000.............. $1.00 3.41% 0.57% 0.00% 0.57%
NET ASSETS AT
TOTAL END OF PERIOD
RETURN(2) (000'S OMITTED)
- ----------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND
- ----------------------------------------------------------------------------
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED).. 0.68% $ 677,760
NOVEMBER 1, 2003 TO OCTOBER 31, 2004............ 0.83% $ 875,447
NOVEMBER 1, 2002 TO OCTOBER 31, 2003............ 0.92% $ 1,563,333
NOVEMBER 1, 2001 TO OCTOBER 31, 2002............ 1.42% $ 2,066,885
NOVEMBER 1, 2000 TO OCTOBER 31, 2001............ 3.35% $ 3,002,068
MARCH 1, 2000(3) TO OCTOBER 31, 2000............ 2.84% $ 2,745,510
MARCH 1, 1999 TO FEBRUARY 29, 2000.............. 3.47% $ 2,467,379
17
WELLS FARGO ADVANTAGE
MUNICIPAL MONEY MARKET FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Trust commenced operations on November 8,
1999, and at April 30, 2005 was comprised of 108 separate series (each, a
"Fund", collectively, the "Funds"). These financial statements present the
Municipal Money Market Fund. The Fund is a diversified series of the Trust.
In September 2004, the Board of Trustees of the Trust and the Boards of
Directors of the Strong Funds ("Strong Funds") approved an Agreement and Plan of
Reorganization providing for the reorganization of certain Strong Funds into the
Funds.
Effective at the close of business on April 8, 2005, the following
Acquiring Fund ("Acquiring Fund") acquired substantially all of the net assets
of the following Target Fund ("Target Fund") through a tax-free exchange under
section 368 of the Internal Revenue Code.
Acquiring Fund Target Fund
- -------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MUNICIPAL MONEY MARKET FUND - INVESTOR CLASS STRONG MUNICIPAL MONEY MARKET FUND INVESTOR CLASS
- -------------------------------------------------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
The following significant accounting policies, which are consistently
followed in the preparation of the financial statements of the Trust, are in
conformity with accounting principles generally accepted in the United States of
America ("GAAP") for investment companies.
The preparation of financial statements in conformity with GAAP requires
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.
In the normal course of business, the Trust may enter into contracts that
provide certain indemnifications. The Trust's maximum exposure under these
arrangements is dependent on future claims that may be made against the Funds
and, therefore, cannot be estimated; however, based on experience, the risk of
loss from such claims is considered remote.
SECURITY VALUATION
The Fund invests only in securities with remaining maturities not
exceeding 397 days (13 months). Certain floating- and variable-rate instruments
in the portfolio may have maturities in excess of 397 days, but carry a demand
feature that permits the holder to tender the instruments back to the issuer at
par value prior to maturity.
The amortized cost method is used to value portfolio securities. The
amortized cost method involves valuing a security at its cost, plus accretion of
discount or minus amortization of premium over the period until maturity, which
approximates market value. The Fund seeks to maintain a constant net asset value
of $1.00 per share, although there is no assurance that it will be able to do
so.
Investments which are not valued using any of the methods discussed above,
are valued at their fair value as determined by procedures approved by the Board
of Trustees.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded on a trade date basis. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
Interest income is accrued daily and bond discounts are accreted and premiums
are amortized daily.
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, if any, is declared daily and distributed to
shareholders monthly. Distributions to shareholders from net realized capital
gains, if any, are declared and distributed at least annually.
For federal income tax purposes, the Fund may designate as capital gains
dividends the earnings and profits distributed to shareholders on the redemption
of fund shares during the year.
Distributions are based on amounts calculated in accordance with the
applicable federal income tax regulations, which may differ from GAAP. The
timing and character of distributions made during the period from net investment
income or net realized gains may also differ from their ultimate
characterization for federal income tax purposes. To the extent that these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment. Temporary
differences do not require reclassifications.
FEDERAL INCOME TAXES
The Fund is treated as a separate entity for federal income tax purposes.
It is the policy of the Fund of the Trust to continue to qualify as a regulated
investment company by complying with the provisions applicable to regulated
investment companies, as defined under subchapter M of the Internal Revenue Code
(the "Code"), and to make distributions of 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 at April 30, 2005.
18
WELLS FARGO ADVANTAGE
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
3. EXPENSES
- --------------------------------------------------------------------------------
ADVISORY FEES
The Trust has entered into an advisory contract with Wells Fargo Funds
Management, LLC ("Funds Management"). The adviser is responsible for
implementing investment policies and guidelines and for supervising the
sub-adviser, who is responsible for day-to-day portfolio management.
Pursuant to the contract, Funds Management is entitled to receive an
advisory fee for its services as adviser. Funds Management may retain the
services of certain investment sub-advisers to provide daily portfolio
management. The fees related to sub-advisory services are borne directly by the
adviser and do not increase the overall fees paid by the Fund to the adviser.
Funds Management and the investment sub-adviser(s) are entitled to be paid a
monthly fee at the following annual rates:
Sub-Advisory
Advisory Fees* Fees (% of
Average Daily (% of Average Average Daily Average Daily
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Net Assets)
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND $0 - $999 million 0.300 Wells Capital $0 - $1 billion 0.05
$1 - $4.99 billion 0.275 Management > $1 billion 0.04
> $4.99 billion 0.250 Incorporated
- --------------------------------------------------------------------------------------------------------------------------------
* Effective April 11, 2005. Prior to January 1, 2005, Strong Capital
Management, Inc. ("SCM") served as investment adviser to the predecessor Strong
Fund and was entitled to receive an annual fee at the following rate; from
January 1, 2005 through April 10, 2005, Funds Management served as interim
adviser and was entitled to receive an annual fee at the same rate.
Advisory Fees
(% of Average
Fund Daily Net Assets)
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND 0.15
- --------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATION AND TRANSFER AGENT FEES
The Trust has entered into an Administration Agreement with Funds
Management. Under this Agreement, for providing administrative services, which
includes paying fees and expenses for services provided by the transfer agent,
sub-transfer agents, omnibus account servicers and record-keepers, Funds
Management is entitled to receive the following annual fees:
Admin Fees**
Average Daily (% of Average
Net Assets Daily Net Assets)
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND $0 - $4.99 billion 0.44
$5 - $9.99 billion 0.43
> $9.99 billion 0.42
- --------------------------------------------------------------------------------------------------------------------------------
** Effective April 11, 2005. Prior to April 11, 2005, Strong Investor
Services, Inc. ("SISI") served as administrator to the predecessor Strong Fund
and was entitled to receive an annual fee at the following rate:
% of Average
Daily Net Assets
- --------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS 0.37
- --------------------------------------------------------------------------------------------------------------------------------
The Trust has entered into an agreement with Boston Financial Data
Services ("BFDS"). BFDS served as the transfer agent to the predecessor Strong
Fund effective March 14, 2005. Prior to March 14, 2005, SISI served as transfer
agent to the predecessor Strong Fund.
For financial statement presentation, transfer agent fees for the period
from November 1, 2004 though April 10, 2005, as shown below, have been combined
with administration fees.
Transfer Agent Fees and
Other Related Expenses
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND $244,979
- --------------------------------------------------------------------------------------------------------------------------------
CUSTODY FEES
The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"),
whereby WFB is responsible for providing custody services. Pursuant to the
contract, WFB is entitled to certain transaction charges plus a monthly fee for
custody services at the following annual rates:
% of Average Daily Net Assets
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND 0.02
- --------------------------------------------------------------------------------------------------------------------------------
Prior to February 14, 2005, State Street Bank and Trust Co. ("State
Street") served as custodian for the predecessor Strong Fund. State Street was
entitled to receive a substantially transaction based fee.
19
WELLS FARGO ADVANTAGE
MUNICIPAL MONEY MARKET FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICING FEES
The Trust has entered into contracts with one or more shareholder
servicing agents, whereby the Fund is charged the following annual fees:
% of Average Net
Fund Daily Net Assets
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND 0.25
- --------------------------------------------------------------------------------------------------------------------------------
For the period April 11, 2005 through April 30, 2005, shareholder
servicing fees paid by the Fund are disclosed on the Statement of Operations.
OTHER FEES
PFPC, Inc. ("PFPC") serves as fund accountant for the Trust and is
entitled to receive an annual asset based fee and an annual fixed fee from each
Fund. PFPC is also entitled to be reimbursed for all out-of-pocket expenses
reasonably incurred in providing these services.
Prior to February 14, 2005, State Street served as fund accountant to the
predecessor Strong Fund. Fund accounting fees were paid by the fund's
administrator through April 10, 2005, and not by the fund.
WAIVED FEES AND REIMBURSED EXPENSES
Effective April 11, 2005, Funds Management waived fees or reimbursed
expenses proportionately from all classes, first from advisory fees, and then
from any class specific expenses, if applicable. The Fund's adviser has
committed to waive fees and/or reimburse expenses to the extent necessary to
maintain a certain net operating expense ratio for the Fund. Net operating
expense ratio in effect from April 11, 2005 through April 30, 2005 were as
follows:
Net Operating
Expense
Fund Ratio
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND 0.64%
- --------------------------------------------------------------------------------------------------------------------------------
Prior to April 11, 2005, the predecessor Strong Funds' adviser ("SCM")
and/or administrator ("SISI") could voluntarily waive or absorb certain expenses
at their discretion. SISI also allocated to each fund certain charges or credits
resulting from transfer agency banking activities based on each Class' level
subscription and redemption activity. Transfer Agency Banking Credits allocated
by SISI, if any, served to reduce the transfer agency expenses incurred by the
funds. From November 1, 2004 through April 10, 2005, the expense offsets that
are included in the waived fees and reimbursed expenses amount in the Statement
of Operations are as follows:
Waived Fees and
Reimbursed Expenses
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------------------------------------------------------
FUND LEVEL $ 2,740
- --------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS 12,192
- --------------------------------------------------------------------------------------------------------------------------------
4. LEGAL AND REGULATORY MATTERS
- --------------------------------------------------------------------------------
In 2004, the predecessor funds' investment adviser and affiliates
(collectively, "Strong") entered into agreements with certain regulators,
including the Securities and Exchange Commission and the New York Attorney
General ("NYAG"), to settle market-timing investigations. In the settlements,
Strong agreed to pay investor restoration and civil penalties. Although some
portion of these payments is likely to be distributed to predecessor fund
shareholders, no determination has yet been made as to the distribution of these
amounts, and the successor funds are not expected to receive any portion of
these payments. The NYAG settlement also imposed fee reductions across the
predecessor fund complex (excluding money market funds and very short-term
income funds) totaling at least $7 million a year for five years. The current
Funds' adviser has agreed to honor these fee reductions for the benefit of
shareholders across the successor funds. Although civil litigation against
Strong and certain predecessor funds relating to these matters is continuing,
neither the current adviser nor the successor funds is a party to any such suit.
20
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PROXY VOTING INFORMATION
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities and information
regarding the results of such voting during the most recent 12-month period
ended June 30, is available without charge, upon request, by calling
1-800-222-8222, visiting our Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS or
visiting the SEC Web site at WWW.SEC.GOV.
PORTFOLIO HOLDINGS INFORMATION
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 without charge by visiting the SEC Web site at WWW.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 information about the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
BOARD OF TRUSTEES
The following table provides basic information about the Board of Trustees
("Trustees") of the Wells Fargo Funds Trust (the "Trust"). This table
supplements, and should be read in conjunction with, the Prospectus and the
Statement of Additional Information* of each Fund. Each of the Trustees listed
below acts in identical capacities for each of the 138 funds comprising the
Trust, Wells Fargo Variable Trust and Wells Fargo Master Trust (collectively the
"Fund Complex"). All of the non-interested Trustees are also members of the
Audit and Governance Committees of each Trust in the Fund Complex. The 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.
INTERESTED TRUSTEE**
- ---------------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- ---------------------------------------------------------------------------------------------------------------------
J. Tucker Morse Trustee, since 1987 Private Investor/Real Estate None
60 Developer; Chairman of White
Point Capital, LLC.
- ---------------------------------------------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES
- ---------------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- ---------------------------------------------------------------------------------------------------------------------
Thomas S. Goho Trustee, since 1987 Associate Professor of Finance, None
62 Wake Forest University,
Calloway School of Business
and Accountancy.
- ---------------------------------------------------------------------------------------------------------------------
Peter G. Gordon Trustee, since 1998 Chairman, CEO, and Co- None
62 (Chairman, since 2005) Founder of Crystal Geyser
Water Company and President
of Crystal Geyser Roxane Water
Company.
- ---------------------------------------------------------------------------------------------------------------------
Richard M. Leach Trustee, since 1987 Retired. Prior thereto, President None
71 of Richard M. Leach Associates
(a financial consulting firm).
21
WELLS FARGO ADVANTAGE
MUNICIPAL MONEY MARKET FUND OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES
- ---------------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- ---------------------------------------------------------------------------------------------------------------------
Timothy J. Penny Trustee, since 1996 Senior Counselor to the public None
53 relations firm of Himle-Horner
and Senior Fellow at the
Humphrey Institute,
Minneapolis, Minnesota (a pub-
lic policy organization).
- ---------------------------------------------------------------------------------------------------------------------
Donald C. Willeke Trustee, since 1996 Principal in the law firm of None
64 Willeke & Daniels.
- ---------------------------------------------------------------------------------------------------------------------
OFFICERS
- ---------------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE PAST FIVE YEARS OTHER DIRECTORSHIPS
- ---------------------------------------------------------------------------------------------------------------------
Karla M. Rabusch President, since 2003 Executive Vice President of None
46 Wells Fargo Bank, N.A.
President of Wells Fargo Funds
Management, LLC. Senior Vice
President and Chief
Administrative Officer of Wells
Fargo Funds Management, LLC
from 2001 to 2003. Vice
President of Wells Fargo Bank,
N.A. from 1997 to 2000.
- ---------------------------------------------------------------------------------------------------------------------
Stacie D. DeAngelo Treasurer, since 2003 Senior Vice President of Wells None
36 Fargo Bank, N.A. Senior Vice
President of Operations for
Wells Fargo Funds Management, LLC.
Prior there- to, Operations
Manager at Scudder Weisel
Capital, LLC from 2000 to 2001,
Director of Shareholder
Services at BISYS Fund Services
from 1999 to 2000 and Assistant
Vice President of Operations with
Nicholas-Applegate Capital
Management from 1993 to 1999.
- ---------------------------------------------------------------------------------------------------------------------
C. David Messman Secretary, since 2000 Vice President and Managing None
45 Senior Counsel of Wells Fargo
Bank, N.A. Senior Vice
President and Secretary of Wells
Fargo Funds Management, LLC.
Vice President and Senior
Counsel of Wells Fargo Bank,
N.A. from 1996 to 2003.
* The Statement of Additional Information includes additional information
about the Funds' Trustees and is available, without charge, upon request,
by calling 1-800-222-8222.
** As of April 30, 2005, one of the six Trustees is considered an "interested
person" of the Trusts as defined in the Investment Company Act of 1940.
The interested Trustee, J. Tucker Morse, is affiliated with a government
securities dealer that is registered under the Securities Exchange Act of
1934, which is not itself affiliated with Wells Fargo Funds Management,
LLC.
*** Length of service dates reflects a Trustee's commencement of service with
the Trust's predecessor entities.
22
WELLS FARGO ADVANTAGE
OTHER INFORMATION (UNAUDITED) MUNICIPAL MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY
AGREEMENTS:
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
Section 15(c) of the Investment Company Act of 1940 (the "1940 Act")
contemplates that the Board of Trustees (the "Board") of Wells Fargo Funds Trust
(the "Trust"), including a majority of the Trustees who have no direct or
indirect interest in the investment advisory and sub-advisory agreements and are
not "interested persons" of the Trust, as defined in the 1940 Act (the
"Independent Trustees"), will annually review and consider the continuation of
the investment advisory and sub-advisory agreements. In this regard, the Board
reviewed and re-approved, during the six months covered by this report: (i) an
investment advisory agreement with Wells Fargo Funds Management, LLC ("Funds
Management") for the Municipal Money Market Fund ("the Fund"); and (ii) an
investment sub-advisory agreement with Wells Capital Management Incorporated
("Wells Capital Management") for the Fund. The investment advisory agreement
with Funds Management and the investment sub-advisory agreement with Wells
Capital Management are collectively referred to as the "Advisory Agreements."
More specifically, at a meeting held on April 4, 2005, the Board,
including the Independent Trustees advised by their independent legal counsel,
considered the factors and reached the conclusions described below relating to
the selection of Funds Management and Wells Capital Management and the
continuation of the Advisory Agreements. The Board initially approved the
Advisory Agreements for the Fund at a meeting held August 9-10, 2004 in
connection with its approval of the reorganization of the Strong Municipal Money
Market Fund (the accounting survivor) into the Wells Fargo Advantage Municipal
Money Market Fund (the "Reorganization"). The Reorganization was effective at
the close of business on April 8, 2005. The Fund commenced operations on April
11, 2005. Accordingly, references to the Fund refer to either the predecessor
fund or the Fund as the context requires. Similarly, references to the various
fee rates refer to either the rates of the predecessor fund or those of the Fund
as the context requires.
NATURE, EXTENT AND QUALITY OF SERVICES
The Board received and considered various data and information regarding
the nature, extent and quality of services that would be provided to the Fund by
Funds Management and Wells Capital Management under the Advisory Agreements.
Responses of Funds Management and Wells Capital Management to a detailed set of
requests submitted by the Independent Trustees' independent legal counsel on
behalf of such Trustees were provided to the Board. The Board reviewed and
considered the data and information, which included, among other things,
information about the background and experience of the senior management and the
expertise of the investment personnel of Funds Management and Wells Capital
Management.
The Board also considered the ability of Funds Management and Wells
Capital Management, based on their respective resources, reputations and other
attributes, to attract and retain highly qualified investment professionals,
including research, advisory, and supervisory personnel. In this connection, the
Board considered information regarding each of Funds Management's and Wells
Capital Management's compensation for its personnel that would be involved in
the management of the Fund. In addition, the Board considered the effects of
certain personnel changes in light of the acquisition of certain of the asset
management arrangements of Strong Capital Management, Inc. by Wells Fargo &
Company.
The Board further considered the compliance programs and compliance
records of Funds Management and Wells Capital Management. In addition, the Board
took into account the administrative services anticipated to be provided to the
Fund by Funds Management and its affiliates. In considering these matters, the
Board considered not only the specific information presented in connection with
the meeting, but also the knowledge gained over the course of interacting with
Funds Management, including with respect to Funds Management's oversight of
service providers, such as the investment sub-adviser.
Based on the above factors, together with those referenced below, the
Board concluded that it was generally satisfied with the nature, extent and
quality of the investment advisory services anticipated to be provided to the
Fund by Funds Management and Wells Capital Management.
FUND PERFORMANCE AND EXPENSES
The Board considered the performance results for the Fund over various
time periods. The Board also considered these results, as applicable, in
comparison to the median performance results of the group of funds that was
determined to be the most similar to the Fund (the "Peer Group") and to the
median performance of a broader universe of relevant funds (the "Universe"), as
well as to the Fund's benchmark index. Lipper Inc. ("Lipper"), an independent
provider of investment company data, determined the Peer Group and Universe for
the Fund. The Board was provided with a description of the methodology used by
Lipper to select the mutual funds in the Fund's Peer Group and Universe. The
Board noted that the Fund's performance was better than the median performance
of its Peer Group for all time periods.
The Board received and considered information regarding the Fund's net
operating expense ratio and its various components, including contractual
advisory fees, actual advisory fees, actual non-management
23
WELLS FARGO ADVANTAGE
MUNICIPAL MONEY MARKET FUND OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
fees, Rule 12b-1 and non-Rule 12b-1 service fees, fee waivers/caps and/or
expense reimbursements. The Board also considered comparisons of these fees to
the expense information for the Fund's Peer Group and Universe, which
comparative data was provided by Lipper. The Board noted that the net operating
expense ratio of the Fund was lower than the Fund's Peer Group's median net
operating expense ratio.
Management also discussed the Lipper data and rankings, and other relevant
information, for the Fund. Based on the above-referenced considerations and
other factors, the Board concluded that the overall performance and expense
results supported the re-approval of the Advisory Agreements for the Fund.
INVESTMENT ADVISORY AND SUB-ADVISORY FEE RATES
The Board reviewed and considered the contractual investment advisory fee
rates both on a stand-alone basis and on a combined basis with the Fund's
administration fee rates (the "Advisory Agreement Rates") payable by the Fund to
Funds Management for investment advisory services. The Board also reviewed and
considered the contractual investment sub-advisory fee rates (the "Sub-Advisory
Agreement Rates") payable by Funds Management to Wells Capital Management for
investment sub-advisory services. In addition, the Board reviewed and considered
the existing fee waiver/cap arrangements applicable to the Advisory Agreement
Rates and considered the Advisory Agreement Rates after taking the waivers/caps
into account (the "Net Advisory Rates").
The Board received and considered information comparing the Advisory
Agreement Rates and Net Advisory Rates with those of the other funds in the Peer
Group. The Board noted that the Advisory Agreement Rates and the Net Advisory
Rates for the Fund were lower than, or not appreciable higher than, the median
rates of its Peer Group. In addition, the Board concluded that the combined
investment advisory/administration fee rate for the Fund (before and after
waivers/caps and/or expense reimbursements) was reasonable in relation to the
Fund's Peer Group, and reasonable in relation to the services anticipated to be
provided.
The Board also reviewed and considered the Sub-Advisory Agreement Rates
and concluded that the Sub-Advisory Agreement Rates were fair and equitable,
based on its consideration of the factors described above.
PROFITABILITY
Because the Fund had not yet commenced operations, the Board did not
consider the historical profitability with regard to Funds Management's
arrangements with the Fund. However, the Board received and considered a
detailed profitability analysis of Funds Management and its affiliates based on
similar advisory and other relationships between other series in the Trust and
Funds Management and its affiliates. The Board concluded that, in light of the
costs of providing investment management and other services to the other series,
the profits and other ancillary benefits that Funds Management and its
affiliates received with regard to providing these services to such series were
not unreasonable. The Board did not consider a separate profitability analysis
of Wells Capital Management, as its separate profitability from its relationship
with the Fund was not a material factor in determining whether to renew the
agreement.
ECONOMIES OF SCALE
The Board received and considered information regarding the potential for
realization of any future economies of scale. However, the Board acknowledged
the inherent limitations of any analysis of an investment adviser's economies of
scale and of any attempt to correlate breakpoints with such economies, stemming
largely from the Board's understanding that economies of scale are realized, if
at all, by an investment adviser across a variety of products and services, not
just with respect to a single fund. The Board concluded that any potential
economies of scale will be shared reasonably with Fund shareholders, including
most particularly through Advisory Agreement Rate breakpoints, which are
applicable to the Fund.
INFORMATION ABOUT SERVICES TO OTHER CLIENTS
The Board also received and considered information about the nature,
extent and quality of services and fee rates offered by Funds Management to
other similarly situated series within the Trust, and those offered by Wells
Capital Management to other clients, including other registered investment
companies and separate accounts. The Board concluded that the Advisory Agreement
Rates, the Sub-Advisory Agreement Rates and the Net Advisory Rates were within a
reasonable range of the fee rates offered to others by Funds Management and
Wells Capital Management, giving effect to differences in services covered by
such fee rates.
OTHER BENEFITS TO FUNDS MANAGEMENT AND WELLS CAPITAL MANAGEMENT
The Board received and considered information regarding potential
"fall-out" or ancillary benefits received by Funds Management and its affiliates
(including Wells Capital Management) as a result of their relationship with the
Fund. Such benefits could include, among others, benefits directly attributable
to the relationship of Funds Management and Wells
24
WELLS FARGO ADVANTAGE
OTHER INFORMATION (UNAUDITED) MUNICIPAL MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
Capital Management with the Fund (such as soft-dollar credits) and benefits
potentially derived from an increase in the business of Funds Management and
Wells Capital Management as a result of their relationship with the Fund (such
as the ability to market to shareholders other financial products offered by
Funds Management and its affiliates (including Wells Capital Management)).
The Board also considered the policies of the Fund in seeking the best
execution of portfolio transactions, whether and to what extent soft dollar
credits would be sought and how any such credits would be utilized, potential
benefits that may be realized by using an affiliated broker, and the controls
applicable to brokerage allocation procedures. The Board also took note of the
policies of Wells Capital Management regarding the anticipated allocation of
portfolio investment opportunities among the Fund and other clients.
OTHER FACTORS AND BROADER REVIEW
The Board also considered the markets for distribution of the Fund,
including the principal channels through which the Fund's shares would be
offered and sold. The Board noted that the Fund is now part of one of the few
fund families that have both direct-to-fund and intermediary distribution.
As discussed above, the Board reviewed detailed materials received from
Funds Management and Wells Capital Management in advance of the April 4, 2005
meeting as part of the re-approval process under Section 15 (c) of the 1940 Act.
The Board has also reviewed detailed materials from Funds Management and Wells
Capital Management, and met with various management representatives and
portfolio mangers, as part of its regular and special meeting cycle, and such
materials and meetings were also considered as part of the re-approval process.
After considering the above-described factors and based on its
deliberations and its evaluation of the information described above, the Board
concluded that approval of the continuation of the Advisory Agreements for the
Fund was in the best interest of the Fund and its shareholders. Accordingly, the
Board unanimously approved the continuation of the Advisory Agreements.
25
WELLS FARGO ADVANTAGE MUNICIPAL MONEY MARKET FUND LIST OF ABBREVIATIONS
- --------------------------------------------------------------------------------
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
ABAG -- Association of Bay Area Governments
ADR -- American Depositary Receipts
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CMT -- Constant Maturity Treasury
COFI -- Cost of Funds Index
Connie Lee -- Connie Lee Insurance Company
COP -- Certificate of Participation
CP -- Commercial Paper
CTF -- Common Trust Fund
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
EDFA -- Education Finance Authority
FFCB -- Federal Farm Credit Bank
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FRN -- Floating Rate Notes
FSA -- Financial Security Assurance, Inc
GDR -- Global Depositary Receipt
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
IDA -- Industrial Development Authority
IDR -- Industrial Development Revenue
LIBOR -- London Interbank Offered Rate
LLC -- Limited Liability Corporation
LOC -- Letter of Credit
LP -- Limited Partnership
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MUD -- Municipal Utility District
MTN -- Medium Term Note
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PLC -- Private Placement
PSFG -- Public School Fund Guaranty
RAW -- Revenue Anticipation Warrants
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
R&D -- Research & Development
SFHR -- Single Family Housing Revenue
SFMR -- Single Family Mortgage Revenue
SLMA -- Student Loan Marketing Association
STEERS -- Structured Enhanced Return Trust
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
V/R -- Variable Rate
WEBS -- World Equity Benchmark Shares
XLCA -- XL Capital Assurance
26
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
More information about Wells Fargo Advantage Funds(SM) is available free upon
request. To obtain literature, please write, e-mail, or call:
WELLS FARGO ADVANTAGE FUNDS
P.O. Box 8266
Boston, MA 02266-8266
E-mail: wfaf@wellsfargo.com
Retail Investment Professionals: 888-877-9275
Institutional Investment Professionals: 866-765-0778
Web: www.wellsfargo.com/advantagefunds
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the WELLS FARGO ADVANTAGE FUNDS. If
this report is used for promotional purposes, distribution of the report must be
accompanied or preceded by a current prospectus. For a prospectus containing
more complete information, including charges and expenses, call 1-800-222-8222.
Please consider the investment objective, risks, charges and expenses of the
investment carefully before investing. This and other information about WELLS
FARGO ADVANTAGE FUNDS can be found in the current prospectus. Read the
prospectus carefully before you invest or send money.
Wells Fargo Funds Management, LLC, a wholly-owned subsidiary of Wells Fargo &
Company, provides investment advisory and administrative services for the WELLS
FARGO ADVANTAGE FUNDS. Other affiliates of Wells Fargo & Company provide
sub-advisory and other services for the Funds. The Funds are distributed by
WELLS FARGO FUNDS DISTRIBUTOR, LLC, Member NASD/SIPC, an affiliate of Wells
Fargo & Company.
-------------------------------------------------------
NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE
-------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
(c) 2005 Wells Fargo Advantage Funds, LLC. All rights reserved. www.wellsfargo.com/advantagefunds SM50909 06-05
SMMM/SAR128 04-05
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
APRIL 30, 2005
[GRAPHIC OMITTED] SEMI-ANNUAL REPORT
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
WELLS FARGO ADVANTAGE INTERMEDIATE TAX-FREE FUND
WELLS FARGO ADVANTAGE MUNICIPAL BOND FUND
WELLS FARGO ADVANTAGE SHORT-TERM MUNICIPAL BOND FUND
WELLS FARGO ADVANTAGE ULTRA SHORT-TERM MUNICIPAL INCOME FUND
WELLS FARGO ADVANTAGE WISCONSIN TAX-FREE FUND
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
PLEASE NOTE THAT THIS REPORT COVERS A SIX-MONTH PERIOD OF TIME, THE MAJORITY OF
WHICH REPRESENTS A TIME PRIOR TO THE APRIL 11, 2005, REORGANIZATION WITH THE
STRONG FUNDS. STRONG CAPITAL MANAGEMENT, INC. PROVIDED INVESTMENT MANAGEMENT
SERVICES TO THESE FUNDS FROM THE BEGINNING OF THE REPORTING PERIOD THROUGH
DECEMBER 31, 2004, AFTER WHICH TIME WELLS FARGO FUNDS MANAGEMENT, LLC TOOK OVER
MANAGEMENT RESPONSIBILITIES THROUGH THE END OF THE REPORTING PERIOD.
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS .................................................... 1
- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND ............................................ 2
MUNICIPAL BOND FUND ................................................... 4
SHORT-TERM MUNICIPAL BOND FUND ........................................ 6
ULTRA SHORT-TERM MUNICIPAL INCOME FUND ................................ 8
WISCONSIN TAX-FREE FUND ............................................... 10
FUND EXPENSES ............................................................. 12
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND ............................................ 14
MUNICIPAL BOND FUND ................................................... 21
SHORT-TERM MUNICIPAL BOND FUND ........................................ 32
ULTRA SHORT-TERM MUNICIPAL INCOME FUND ................................ 47
WISCONSIN TAX-FREE FUND ............................................... 57
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES ................................... 64
STATEMENT OF OPERATIONS ............................................... 66
STATEMENTS OF CHANGES IN NET ASSETS ................................... 68
FINANCIAL HIGHLIGHTS .................................................. 76
NOTES TO FINANCIAL HIGHLIGHTS ............................................. 80
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS ............................................. 81
- --------------------------------------------------------------------------------
OTHER INFORMATION ......................................................... 90
- --------------------------------------------------------------------------------
LIST OF ABBREVIATIONS ..................................................... 95
- --------------------------------------------------------------------------------
---------------------------------------------------
NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE
---------------------------------------------------
THIS PAGE IS INTENTIONALLY LEFT BLANK --
LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
DEAR VALUED SHAREHOLDER,
I am pleased to introduce you to WELLS FARGO ADVANTAGE FUNDS(SM)~. You now
have access to an expanded array of mutual funds, giving you the flexibility to
invest in a family of funds covering nearly every asset class and investment
style. To learn more about our funds and the talented team of money managers
behind them, please visit our new Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
You can also call one of our investment service representatives now available 24
hours a day, 7 days a week, or speak with your investment professional.
Following is your Wells Fargo Advantage Municipal Income Funds semi-annual
report for the six-month period ended April 30, 2005. On the following pages,
you will find a discussion of the Fund, including performance highlights, the
Fund managers' strategic outlook, and information about the Fund's portfolio.
THE ECONOMY: CONTINUED EXPANSION
- --------------------------------------------------------------------------------
The U.S. economy continued to grow steadily, expanding by 4.4% in 2004.
During the first quarter of 2005, however, the economy grew by 3.1%, trailing
the 3.8% pace achieved during the last three months of 2004.
Part of that decline stemmed from the high cost of gasoline, which
continued to have a significant influence on consumer spending and the economy.
When the six-month period began, oil prices were declining from their recent
highs of $55 per barrel. After falling for two months, they rebounded sharply in
2005, setting new highs in April.
Higher energy prices were a key driver of inflation, which rose throughout
most of the period. "Core" inflation, however, which excludes volatile food and
energy prices, also trended upwards, but rose less quickly. With core inflation
manageable, the Federal Reserve Board (the Fed) continued its program of gradual
short-term interest rate increases. During the past six months, the Fed raised
rates four times, bringing the Federal funds rate, the interest rate at which a
depository institution lends immediately available funds to another depository
institution overnight, from 1.75% at the beginning of the period to 2.75% by
April 30, 2005.
STOCKS: APRIL SHOWERS
- --------------------------------------------------------------------------------
The stock market's performance was up and down. Stocks began the period in
the midst of a rally driven by falling oil prices. The outcome of the U.S.
presidential election continued this rally, which lasted through the rest of
2004. But stocks turned in more mixed results in the first four months of 2005.
April was a particularly volatile environment for investors, who were
increasingly uneasy about rising energy costs, further economic slowing, higher
potential inflation, and rising interest rates. Moderate corporate earnings
growth contributed to concerns, as did the increasing likelihood that General
Motors (GM), the world's largest automobile manufacturer, would see its credit
rating downgraded to "junk" status. Highlighting the market's April volatility,
the Dow Jones Industrial Average saw seven moves of greater than 100 points on
the way to its worst monthly decline since January 2003. The S&P 500 Index fell
nearly 2% in April, but rose 3.28% during the full six-month period.
BONDS: LOOKING LONG
- --------------------------------------------------------------------------------
The U.S. Treasury and municipal yield curves generally flattened during
the period, indicating that short-term bond yields were rising in line with the
Fed's rate increases while long-term bond yields fell, somewhat surprisingly.
Longer bonds benefited from investors' increasing conviction that inflation
would continue to be manageable and that the Fed would not need to raise
interest rates more quickly.
Municipal bonds generally outperformed their taxable counterparts and, at
period end, were offering historically attractive yields relative to U.S.
Treasuries. For the first four months of the period, corporate high-yield bonds
continued their strong performance. It was a different story in March and April.
Investors worried about the potential negative impact that a credit-rating
downgrade of GM and Ford would have on the high-yield market.
LOOKING AHEAD: LONG-TERM EXPANSION?
- --------------------------------------------------------------------------------
Despite the economy's first quarter slowdown, we believe this represents a
temporary soft patch more than a continuing slowdown. As stock and bond
investors seek to determine where inflation, interest rates, and corporate
earnings are headed, we may see more unpredictable moves in the markets.
Uncertainty and risk will always be a part of investing. We believe an
important thing you can do to manage risk is to own a broadly diversified
portfolio with stocks, bonds, and cash that can help you weather unexpected
market shifts. While diversification may not prevent losses in a downturn, it
may help reduce them and keep you on track to reach your financial goals.
Thank you for choosing WELLS FARGO ADVANTAGE FUNDS. We appreciate your
confidence in us. Through each market cycle, we are committed to helping you
meet your financial needs. If you have any questions about your investment,
please contact your investment professional, or call us at 1-800-222-8222. You
may also visit our enhanced Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE INTERMEDIATE TAX-FREE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE INTERMEDIATE TAX-FREE FUND seeks current income
exempt from federal income tax.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Lyle J. Fitterer, CFA, CPA 7/31/2001
Duane A. McAllister, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 1.36%(1) for the six-month
period ended April 30, 2005, outperforming its benchmark, the Lehman Brothers
Municipal 7-Year Bond Index(2), which returned 0.84% during the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
INVESTOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR
CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT
IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
As expected, rising short-term interest rates lifted yields on short and
intermediate municipal bonds. Bonds with maturities of five years and fewer rose
the most. The Fund's modest barbell structure--emphasizing floating-rate cash
equivalents and intermediate bonds while underweighting bonds with two- to
five-year maturities--proved beneficial.
Demand for lower-quality credits remained strong, thanks to continued low
interest rates and favorable economic conditions. Despite upgrading the Fund's
credit quality during the period, the portfolio ended the six months still
overweighted in lower quality bonds. This strategy worked well as credit spreads
between lower- and higher-quality issues narrowed.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
In a climate of rising short-term interest rates, it helped the Fund's
performance to have a duration shorter than the benchmark. To maintain our
desired duration, we sold U.S. Treasury futures, rather than municipal bonds.
This strategy was based on historical trends--when interest rates are rising,
municipal securities have typically outperformed U.S. Treasuries. Although this
is not always the case, the past six months fit the historical pattern nicely.
We maintained exposure to zero-coupon bonds with longer maturities. These
bonds did not perform well during the period because their longer duration and
relatively high volatility made them vulnerable to rising rates. However, we
continued to maintain our position in these securities because of their
additional yield and because they have historically outperformed other types of
bonds with equivalent durations. They have also done very well during a period
when the yield curve flattens.
Lower-quality securities continued to benefit from improving credit
quality and strong demand. However, the additional yield offered by these
lower-tier credits has declined significantly. In those cases where we believed
the bonds no longer offered high-enough yields to compensate us for their risk,
we reduced our exposure accordingly. We began to become especially cautious
about corporate-backed and certain health care bonds. The net result was an
upgrade in credit quality for the Fund, which we believe makes it well
positioned if credit spreads begin to widen from historically tight levels.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We anticipate that the Fund's duration will remain relatively close to its
benchmark, unless there is a major movement in interest rates. Although the
Federal Reserve Board is expected to further increase short-term interest rates,
much of this expectation is already reflected in current yields.
During the next several months, we believe that some caution may be
warranted within the lower quality sectors. The additional yield that investors
earn for owning many of these credits is now at historically low levels.
Investors have already become cautious within the taxable corporate bond market,
and we believe it is only a matter of time before some of this caution spills
over into the municipal bond sector. If the yield curve continues to flatten, we
will likely sell some of our variable-rate cash equivalents and reinvest the
proceeds in longer-maturity securities. A flatter yield curve is generally an
indication that the economy may be slowing and therefore we would look to "lock
in" some higher yields.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC
CONDITIONS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN HIGHER THAN
AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY GENERATE
HIGHER SHORT-TERM CAPITAL GAINS. INVESTMENT STRATEGIES THAT CONCENTRATE IN
PARTICULAR MARKET SEGMENTS OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK
OF AN INVESTMENT (RELATIVE TO THE BROADER MARKET). THIS FUND IS EXPOSED TO HIGH
YIELD RISK, AND MUNICIPAL SECURITIES RISK. CONSULT THE FUND'S PROSPECTUS FOR
ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of April 30, 2005, and are those of the Fund's
managers. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE INTERMEDIATE TAX-FREE FUND.
A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT). Any capital gains
distributions may be taxable.
(1) The Fund's Adviser has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Performance shown for the Investor Class shares of the WELLS FARGO
ADVANTAGE INTERMEDIATE TAX-FREE FUND for periods prior to April 11, 2005,
reflects the performance of the Investor Class shares of the Strong Intermediate
Municipal Bond Fund, its predecessor fund. Effective at the close of business on
April 8, 2005, certain Strong Funds were reorganized into certain WELLS FARGO
ADVANTAGE FUNDS.
2
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Excluding Sales Charge
--------------------------------
6-Month* 1-Year Life of Fund
- -----------------------------------------------------------------------------------------------------
Intermediate Tax-Free Fund - Investor Class (incept. 7/31/2001) 1.36 5.82 6.78
- -----------------------------------------------------------------------------------------------------
Benchmark
- -----------------------------------------------------------------------------------------------------
Lehman Brothers Municipal 7-Year Bond Index(2) 0.84 5.15 5.34
- -----------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) AA
- --------------------------------------------------------------------------------
Weighted Average Coupon 4.51%
- --------------------------------------------------------------------------------
Weighted Average Life 6.0 years
- --------------------------------------------------------------------------------
Estimated Average Duration 4.9 years
- --------------------------------------------------------------------------------
Portfolio Turnover 40%
- --------------------------------------------------------------------------------
Net Asset Value (NAV) (Inv Class) $10.74
- --------------------------------------------------------------------------------
30-Day SEC Yield(5) (Inv Class) 3.23%
- --------------------------------------------------------------------------------
Distribution Rate(6) (Inv Class) 3.23%
- --------------------------------------------------------------------------------
30-Day Taxable Equivalent Yield(7) (Inv Class) 4.97%
- --------------------------------------------------------------------------------
Alternative Minimum Tax (AMT)(8) 0.00%
GROWTH OF $10,000 INVESTMENT(9) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE LEHMAN BROTHERS
INTERMEDIATE TAX-FREE FUND - 7-YEAR MUNICIPAL
INVESTOR CLASS BOND INDEX
-------------- ----------
7/31/2001 10,000 10,000
8/31/2001 10,217 10,151
9/30/2001 10,231 10,148
10/31/2001 10,360 10,250
11/30/2001 10,318 10,136
12/31/2001 10,264 10,053
1/31/2002 10,437 10,243
2/28/2002 10,561 10,378
3/31/2002 10,478 10,150
4/30/2002 10,625 10,400
5/31/2002 10,760 10,460
6/30/2002 10,880 10,584
7/31/2002 10,999 10,714
8/31/2002 11,113 10,848
9/30/2002 11,286 11,062
10/31/2002 11,095 10,893
11/30/2002 11,091 10,848
12/31/2002 11,279 11,094
1/31/2003 11,276 11,064
2/28/2003 11,426 11,227
3/31/2003 11,440 11,222
4/30/2003 11,509 11,297
5/31/2003 11,796 11,574
6/30/2003 11,808 11,520
7/31/2003 11,505 11,128
8/31/2003 11,585 11,229
9/30/2003 11,871 11,583
10/31/2003 11,854 11,519
11/30/2003 11,966 11,604
12/31/2003 12,056 11,698
1/31/2004 12,159 11,763
2/29/2004 12,325 11,953
3/31/2004 12,284 11,851
4/30/2004 12,086 11,560
5/31/2004 12,065 11,537
6/30/2004 12,102 11,577
7/31/2004 12,230 11,702
8/31/2004 12,451 11,938
9/30/2004 12,499 11,968
10/31/2004 12,617 12,053
11/30/2004 12,528 11,940
12/31/2004 12,650 12,067
1/31/2005 12,720 12,115
2/28/2005 12,684 12,045
3/31/2005 12,636 11,945
4/30/2005 12,789 12,156
CREDIT QUALITY(3),(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
AAA 44%
AA 24%
A 18%
BBB 14%
MATURITY DISTRIBUTION(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
0-1 Years 6%
2-5 Years 52%
6-10 Years 39%
11-20 Years 2%
21+ Years 1%
- --------------------------------------------------------------------------------
(2) Lehman Brothers Municipal 7-Year Bond Index is the 7-year (6-8) component of
the Municipal Bond index. The Lehman Brothers Municipal Bond Index is a
rules-based, market-value-weighted index engineered for the long-term tax-exempt
bond market. To be included in the index, bonds must have a minimum credit
rating of BAA. They must have an outstanding par value of at least $5 million
and be issued as part of a transaction of at least $50 million. The bonds must
have a dated-date after December 31, 1990 and must be at least one year from
their maturity date. Remarketed issues, taxable municipal bonds, bonds with
floating rates, and derivatives, are excluded from the benchmark.~ You cannot
invest directly in an index.
(3) Portfolio holdings and characteristics are subject to change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT). The Fund's taxable equivalent
yield is based on the combined federal and state income tax rate of 35.00%. Any
capital gains distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE INTERMEDIATE
TAX-FREE FUND Investor Class shares for the life of the Fund with the Lehman
Brothers 7-Year Municipal Bond Index. The chart assumes a hypothetical $10,000
investment in Investor Class shares and reflects all operating expenses.
3
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MUNICIPAL BOND FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE MUNICIPAL BOND FUND seeks current income exempt
from federal income tax.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Lyle J. Fitterer, CFA, CPA 10/23/1986
Duane A. McAllister, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 2.68%(1) for the six-month
period ended April 30, 2005, outperforming its benchmark, the Lehman Brothers
Municipal Bond Index(2), which returned 1.93% during the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF 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.
CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 4.50%. FOR CLASS B
SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 5.00%. FOR CLASS C
SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. PERFORMANCE
INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE PERIOD SHOWN.
ADMINISTRATOR CLASS AND INVESTOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES
CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN
INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
As expected, rising short-term interest rates lifted yields on short and
intermediate municipal bonds. Bonds with maturities of five years and fewer rose
the most. The Fund's modest barbell structure--emphasizing floating-rate cash
equivalents and intermediate bonds while underweighting bonds with two- to
five-year maturities--proved beneficial.
Demand for lower-quality credits remained strong thanks to continued low
interest rates and favorable economic conditions. Despite upgrading the Fund's
credit quality during the period, the portfolio ended the period still
overweighted in lower-quality bonds. This strategy worked well as credit spreads
between lower- and higher-quality issues narrowed.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
In a climate of rising short-term interest rates, it helped the Fund's
performance to have a duration shorter than the benchmark. To maintain our
desired duration, we sold U.S. Treasury futures, rather than municipal bonds.
This strategy was based on historical trends--when interest rates are rising,
municipal securities have typically outperformed U.S. Treasuries. Although this
is not always the case, the past six months fit the historical pattern nicely.
We maintained exposure to zero-coupon bonds with longer maturities. These
bonds did not perform well during the period because their longer duration and
relatively high volatility made them vulnerable to rising rates. However, we
continued to maintain our position in these securities because of their
additional yield and because they have historically outperformed other types of
bonds with equivalent durations. They have also done very well during a period
when the yield curve flattens.
Lower-quality securities continued to benefit from improving credit
quality and strong demand. However, the additional yield offered by these
lower-tier credits has declined significantly. In those cases where we believed
the bonds no longer offered high-enough yields to compensate us for their risk,
we reduced our exposure accordingly. We began to become especially cautious
about corporate-backed and certain health care bonds.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We anticipate that the Fund's duration will remain relatively close to its
benchmark, unless there is a major movement in interest rates. Although the
Federal Reserve Board is expected to further increase short-term interest rates,
much of this expectation is already reflected in current yields.
During the next several months, we believe that some caution may be
warranted within the lower quality sectors. The additional yield that investors
earn for owning many of these credits are now at historically low levels.
Investors have already become cautious within the taxable corporate bond market,
and we believe it is only a matter of time before some of this caution spills
over into the municipal bond sector. If the yield curve continues to flatten, we
will likely sell some of our variable-rate cash equivalents and reinvest the
proceeds in longer-maturity securities. A flatter yield curve is generally an
indication that the economy may be slowing and therefore we would look to "lock
in" some higher yields.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC
CONDITIONS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN HIGHER THAN
AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY GENERATE
HIGHER SHORT-TERM CAPITAL GAINS. INVESTMENT STRATEGIES THAT CONCENTRATE IN
PARTICULAR MARKET SEGMENTS OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK
OF AN INVESTMENT (RELATIVE TO THE BROADER MARKET). THIS FUND IS EXPOSED TO HIGH
YIELD BOND RISK AND MUNICIPAL SECURITIES RISK. CONSULT THE FUND'S PROSPECTUS FOR
ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of April 30, 2005, and are those of the Fund's
managers. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE MUNICIPAL BOND FUND.
A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT). Any capital gains
distributions may be taxable.
(1) The Fund's Adviser has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Performance shown for the Class A, Class B, Class C, Administrator Class,
and Investor Class shares of the WELLS FARGO ADVANTAGE MUNICIPAL BOND FUND for
periods prior to April 11, 2005, reflects the performance of the Investor Class
shares of the Strong Municipal Bond Fund, its predecessor fund, adjusted for the
Class A, Class B, and Class C shares to reflect the fees and expenses of each
Class. Effective at the close of business on April 8, 2005, certain Strong Funds
were reorganized into certain WELLS FARGO ADVANTAGE FUNDS. Performance shown for
the Administrator Class shares reflects the performance of the predecessor
fund's Investor Class shares, and includes expenses that are not applicable to
and are higher than those of the Administrator Class. The Investor Class shares
annual returns are substantially similar to what the Administrator Class shares
would be because the shares are invested in the same portfolio of securities and
the annual returns differ only to the extent the classes do not have the same
expenses.
4
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
------------------------------------ ------------------------------------
6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year
- -------------------------------------------------------------------------------------------------------------------------
Municipal Bond Fund - Class A (1.99) 6.89 5.50 4.72 2.63 11.92 6.48 5.20
- -------------------------------------------------------------------------------------------------------------------------
Municipal Bond Fund - Class B (2.74) 6.10 5.41 4.44 2.26 11.10 5.73 4.44
- -------------------------------------------------------------------------------------------------------------------------
Municipal Bond Fund - Class C 1.26 10.10 5.73 4.44 2.26 11.10 5.73 4.44
- -------------------------------------------------------------------------------------------------------------------------
Municipal Bond Fund
- Administrator Class 2.67 11.98 6.51 5.27
- -------------------------------------------------------------------------------------------------------------------------
Municipal Bond Fund
- Investor Class 2.68 11.98 6.51 5.27
- -------------------------------------------------------------------------------------------------------------------------
Benchmark
Lehman Brothers Municipal Bond Index(2) 1.93 6.81 7.04 6.48
- -------------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) A
- --------------------------------------------------------------------------------
Weighted Average Coupon 4.18%
- --------------------------------------------------------------------------------
Weighted Average Life 13.5 years
- --------------------------------------------------------------------------------
Estimated Average Duration 6.8 years
- --------------------------------------------------------------------------------
Portfolio Turnover 49%
- --------------------------------------------------------------------------------
Net Asset Value (NAV)
(Class A, B, C, Admin, Inv) $9.52, $9.52, $9.52, $9.52, $9.52
- --------------------------------------------------------------------------------
30-Day SEC Yield(5)
(Class A, B, C, Admin, Inv) 3.46%, 2.88%, 2.88%, 3.99%, 3.67%
- --------------------------------------------------------------------------------
Distribution Rate(6)
(Class A, B, C, Admin, Inv) 2.99%, 2.63%, 2.63%, 3.42%, 4.46%
- --------------------------------------------------------------------------------
30-Day Taxable Equivalent Yield(7)
(Class A, B, C, Admin, Inv) 5.32%, 4.43%, 4.43%, 6.14%, 5.65%
- --------------------------------------------------------------------------------
Alternative Minimum Tax (AMT)(8) 12.77%
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTMENT(9)(AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE MUNICIPAL LEHMAN BROTHERS
BOND FUND - INVESTOR CLASS MUNICIPAL BOND INDEX
-------------------------- --------------------
4/30/1995 10,000 10,000
5/31/1995 10,025 10,319
6/30/1995 9,977 10,229
7/31/1995 10,084 10,326
8/31/1995 10,088 10,457
9/30/1995 10,112 10,523
10/31/1995 10,254 10,676
11/30/1995 10,385 10,853
12/31/1995 10,555 10,957
1/31/1996 10,602 11,040
2/29/1996 10,440 10,966
3/31/1996 10,260 10,825
4/30/1996 10,200 10,795
5/31/1996 10,219 10,791
6/30/1996 10,290 10,908
7/31/1996 10,339 11,007
8/31/1996 10,332 11,004
9/30/1996 10,478 11,158
10/31/1996 10,619 11,285
11/30/1996 10,820 11,491
12/31/1996 10,812 11,443
1/31/1997 10,829 11,464
2/28/1997 10,935 11,569
3/31/1997 10,806 11,415
4/30/1997 10,904 11,511
5/31/1997 11,088 11,684
6/30/1997 11,280 11,808
7/31/1997 11,643 12,136
8/31/1997 11,550 12,022
9/30/1997 11,708 12,164
10/31/1997 11,812 12,243
11/30/1997 11,908 12,315
12/31/1997 12,122 12,494
1/31/1998 12,260 12,623
2/28/1998 12,284 12,627
3/31/1998 12,298 12,638
4/30/1998 12,276 12,581
5/31/1998 12,443 12,780
6/30/1998 12,497 12,831
7/31/1998 12,542 12,863
8/31/1998 12,721 13,062
9/30/1998 12,851 13,224
10/31/1998 12,819 13,224
11/30/1998 12,871 13,270
12/31/1998 12,932 13,304
1/31/1999 13,060 13,462
2/28/1999 13,032 13,403
3/31/1999 13,062 13,422
4/30/1999 13,120 13,455
5/31/1999 13,028 13,377
6/30/1999 12,791 13,185
7/31/1999 12,810 13,233
8/31/1999 12,598 13,127
9/30/1999 12,545 13,132
10/31/1999 12,237 12,990
11/30/1999 12,333 13,128
12/31/1999 12,094 13,030
1/31/2000 11,793 12,974
2/29/2000 11,942 13,124
3/31/2000 12,249 13,411
4/30/2000 12,190 13,332
5/31/2000 12,081 13,263
6/30/2000 12,310 13,614
7/31/2000 12,364 13,803
8/31/2000 12,489 14,016
9/30/2000 12,445 13,943
10/31/2000 12,313 14,095
11/30/2000 12,295 14,202
12/31/2000 12,496 14,553
1/31/2001 12,693 14,697
2/28/2001 12,699 14,744
3/31/2001 12,798 14,876
4/30/2001 12,717 14,715
5/31/2001 12,828 14,873
6/30/2001 12,937 14,973
7/31/2001 13,087 15,194
8/31/2001 13,256 15,445
9/30/2001 13,207 15,393
10/31/2001 13,374 15,576
11/30/2001 13,245 15,445
12/31/2001 13,083 15,299
1/31/2002 13,268 15,564
2/28/2002 13,406 15,752
3/31/2002 13,196 15,443
4/30/2002 13,366 15,745
5/31/2002 13,449 15,841
6/30/2002 13,584 16,008
7/31/2002 13,801 16,214
8/31/2002 13,880 16,409
9/30/2002 14,015 16,768
10/31/2002 13,700 16,490
11/30/2002 13,688 16,422
12/31/2002 13,929 16,768
1/31/2003 13,857 16,726
2/28/2003 14,047 16,960
3/31/2003 14,015 16,970
4/30/2003 14,162 17,082
5/31/2003 14,491 17,482
6/30/2003 14,492 17,407
7/31/2003 14,143 16,798
8/31/2003 14,232 16,924
9/30/2003 14,593 17,421
10/31/2003 14,594 17,333
11/30/2003 14,777 17,514
12/31/2003 14,865 17,659
1/31/2004 14,950 17,760
2/29/2004 15,234 18,028
3/31/2004 15,194 17,965
4/30/2004 14,922 17,539
5/31/2004 14,945 17,476
6/30/2004 15,022 17,539
7/31/2004 15,289 17,770
8/31/2004 15,570 18,126
9/30/2004 16,091 18,222
10/31/2004 16,275 18,379
11/30/2004 16,177 18,228
12/31/2004 16,395 18,450
1/31/2005 16,572 18,623
2/28/2005 16,555 18,561
3/31/2005 16,510 18,444
4/30/2005 16,711 18,735
CREDIT QUALITY(3),(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
AAA 0.44%
AA 0.24%
BBB 0.14%
A 0.18%
MATURITY DISTRIBUTION(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
0-1 Year 0.06%
2-5 Years 0.52%
6-10 Years 0.39%
11-20 Years 0.0@%
21+ Years 0.01%
- --------------------------------------------------------------------------------
(2) Lehman Brothers Municipal Bond Index is a rules-based, market-value-weighted
index engineered for the long-term tax-exempt bond market. To be included in the
index, bonds must have a minimum credit rating of BAA. They must have an
outstanding par value of at least $5 million and be issued as part of a
transaction of at least $50 million. The bonds must have a dated-date after
December 31, 1990 and must be at least one year from their maturity date.
Remarketed issues, taxable municipal bonds, bonds with floating rates, and
derivatives, are excluded from the benchmark. You cannot invest directly in an
index.
(3) Portfolio holdings and characteristics are subject to change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT). The Fund's taxable equivalent
yield is based on the combined federal and state income tax rate of 35.00%. Any
capital gains distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE MUNICIPAL
BOND FUND Class A and Investor Class shares for the most recent ten years with
the Lehman Brothers Municipal Bond Index. The chart assumes a hypothetical
$10,000 investment in Class A and Investor Class shares and reflects all
operating expenses and, for Class A shares, assumes the maximum initial sales
charge of 4.50%.
5
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SHORT-TERM MUNICIPAL BOND FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE SHORT-TERM MUNICIPAL BOND FUND (the Fund) seeks
current income exempt from federal income tax consistent with capital
preservation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
Lyle J. Fitterer, CFA, CPA 12/31/1991
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 1.11%(1) for the six-month
period ended April 30, 2005, outperforming its benchmark, the Lehman Brothers
Municipal 3-Year Bond Index(2), which returned (0.34)% during the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF 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.
CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
FOR CLASS C SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%.
PERFORMANCE INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE PERIOD
SHOWN. INVESTOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR
CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT
IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The Federal Reserve Board (the Fed) continued its "measured" pace of
interest rate hikes, which pushed short and intermediate municipal bond yields
higher. Bonds with maturities of five years and fewer rose the most. The Fund's
modest barbell structure--emphasizing floating-rate cash equivalents and bonds
with four- to six-year maturities while underweighting issues in the one- to
three-year range--proved beneficial. The Fund also benefited from its lower
overall sensitivity to interest rate movements, as measured by its shorter
duration relative to its benchmark index.
Better credit fundamentals and strong demand helped boost the Fund's
investments in lower-quality securities. As the economy strengthened, so too did
the creditworthiness of many lower-quality municipal bonds. Meanwhile, demand
for those lower-quality municipals remained robust as investors sought out
higher yields in a still-low interest rate environment. In particular, we saw
gains from our corporate-backed municipals and health care holdings.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
As lower-quality securities performed better, their yields declined to the
point where we believed that in some cases we weren't getting compensated for
taking on increased credit risk. That, coupled with corporations' apparent
interest in benefiting equity owners at the expense of improving their overall
credit quality, helps to explain why we sold some corporate-backed securities.
With that said, credit fundamentals within the overall municipal market probably
will continue to improve over the next six to 12 months as the impact of higher
tax revenues is felt. Furthermore, we've maintained a foothold, albeit a smaller
one, in the lower-quality tiers of the market.
We also reduced our exposure to New York and California bonds. Even though
the credit fundamentals of both states continue to improve, their bond yields
relative to those of other states have compressed, and we think there are better
investment opportunities elsewhere.
We began the process of upgrading the Fund's credit quality, which helped
offset the lower overall credit quality of the securities the Fund absorbed when
the Strong Short-Term High Yield Municipal Fund merged into it in April 2005.
The combined Fund's average credit quality is still "A" and we have less than
10% of the Fund invested in non-investment grade bonds. Over the next 6 months,
we expect to continue selling lower quality bonds and buying higher quality
bonds.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We expect the Fed to be successful in controlling inflation. Although
short-term interest rates may continue to rise in the near term, we are likely
to view that as an opportunity to increase the Fund's interest rate sensitivity.
We will continue to manage the Fund with an eye toward maximizing
long-term total return. It's possible that yields on lower-quality bonds may
stay at compressed levels for a while. But if we wait until credit fundamentals
begin to deteriorate, it may be too late to sell. So we'll be watching for
opportunities to upgrade the Fund's credit quality, selling lower-quality
holdings and locking in their recent strong performance, as we look elsewhere
for opportunities that we believe offer a more attractive balance between risk
and reward.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC
CONDITIONS. INVESTMENT STRATEGIES THAT CONCENTRATE IN PARTICULAR MARKET SEGMENTS
OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE
TO THE BROADER MARKET). THIS FUND IS EXPOSED TO HIGH YIELD BOND RISK AND
MUNICIPAL SECURITIES RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL
INFORMATION ON THESE AND OTHER RISKS. THE FUND'S INVESTMENT PROCESS MAY, AT
TIMES, RESULT IN HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING
EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM CAPITAL GAINS.
- --------------------------------------------------------------------------------
The views expressed are as of April 30, 2005, and are those of the Fund's
manager. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE SHORT-TERM MUNICIPAL BOND FUND.
A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT). Any capital gains
distributions may be taxable.
(1) The Fund's Adviser has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders.Without these reductions, the Fund's
returns would have been lower.
6
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
------------------------------------ ------------------------------------
6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year
- -------------------------------------------------------------------------------------------------------------------------
Short-Term Municipal Bond Fund -
Class C (0.45) 1.31 3.15 3.23 0.55 2.31 3.15 3.23
- -------------------------------------------------------------------------------------------------------------------------
Short-Term Municipal Bond Fund -
Investor Class 1.11 3.46 4.40 4.48
- -------------------------------------------------------------------------------------------------------------------------
Benchmark
Lehman Brothers Municipal 3-Year Bond Index(2) (0.34) 1.62 4.51 4.62
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) A
- --------------------------------------------------------------------------------
Weighted Average Coupon 4.32%
- --------------------------------------------------------------------------------
Weighted Average Life 1.8 years
- --------------------------------------------------------------------------------
Estimated Average Duration 1.6 years
- --------------------------------------------------------------------------------
Portfolio Turnover 53%
- --------------------------------------------------------------------------------
Net Asset Value (NAV) (Class C, Inv) $9.80, $9.81
- --------------------------------------------------------------------------------
30-Day SEC Yield(5) (Class C, Inv) 2.33%, 3.26%
- --------------------------------------------------------------------------------
Distribution Rate(6) (Class C, Inv) 1.99%, 2.99%
- --------------------------------------------------------------------------------
30-Day Taxable Equivalent Yield(7) (Class C, Inv) 3.58 %, 5.02%,
- --------------------------------------------------------------------------------
Alternative Minimum Tax (AMT)(8) 23.42%
GROWTH OF $10,0000 INVESTMENT(9) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE SHORT-TERM LEHMAN BROTHERS
MUNICIPAL BOND FUND - 3-YEAR MUNICIPAL
INVESTOR CLASS BOND INDEX
-------------- ----------
4/30/1995 10,000 10,000
5/31/1995 9,978 10,153
6/30/1995 9,938 10,178
7/31/1995 10,090 10,285
8/31/1995 10,152 10,365
9/30/1995 10,175 10,395
10/31/1995 10,206 10,444
11/30/1995 10,248 10,511
12/31/1995 10,314 10,554
1/31/1996 10,376 10,637
2/29/1996 10,365 10,639
3/31/1996 10,362 10,613
4/30/1996 10,376 10,626
5/31/1996 10,399 10,636
6/30/1996 10,458 10,699
7/31/1996 10,513 10,759
8/31/1996 10,562 10,774
9/30/1996 10,625 10,840
10/31/1996 10,703 10,915
11/30/1996 10,792 11,018
12/31/1996 10,816 11,023
1/31/1997 10,876 11,071
2/28/1997 10,939 11,125
3/31/1997 10,903 11,067
4/30/1997 10,971 11,115
5/31/1997 11,054 11,205
6/30/1997 11,131 11,271
7/31/1997 11,281 11,405
8/31/1997 11,271 11,383
9/30/1997 11,356 11,464
10/31/1997 11,405 11,515
11/30/1997 11,459 11,548
12/31/1997 11,566 11,627
1/31/1998 11,638 11,704
2/28/1998 11,670 11,728
3/31/1998 11,706 11,747
4/30/1998 11,718 11,731
5/31/1998 11,802 11,839
6/30/1998 11,851 11,879
7/31/1998 11,903 11,922
8/31/1998 11,985 12,038
9/30/1998 12,080 12,114
10/31/1998 12,107 12,173
11/30/1998 12,142 12,203
12/31/1998 12,208 12,232
1/31/1999 12,301 12,343
2/28/1999 12,333 12,357
3/31/1999 12,369 12,367
4/30/1999 12,419 12,405
5/31/1999 12,402 12,387
6/30/1999 12,274 12,313
7/31/1999 12,323 12,375
8/31/1999 12,319 12,390
9/30/1999 12,342 12,436
10/31/1999 12,314 12,438
11/30/1999 12,374 12,492
12/31/1999 12,351 12,472
1/31/2000 12,320 12,495
2/29/2000 12,379 12,534
3/31/2000 12,485 12,599
4/30/2000 12,492 12,600
5/31/2000 12,478 12,613
6/30/2000 12,596 12,773
7/31/2000 12,670 12,876
8/31/2000 12,765 12,974
9/30/2000 12,804 12,978
10/31/2000 12,843 13,050
11/30/2000 12,867 13,104
12/31/2000 12,974 13,250
1/31/2001 13,077 13,451
2/28/2001 13,099 13,503
3/31/2001 13,181 13,598
4/30/2001 13,191 13,578
5/31/2001 13,284 13,702
6/30/2001 13,350 13,763
7/31/2001 13,454 13,875
8/31/2001 13,574 14,019
9/30/2001 13,574 14,090
10/31/2001 13,662 14,180
11/30/2001 13,669 14,136
12/31/2001 13,645 14,123
1/31/2002 13,762 14,302
2/28/2002 13,864 14,410
3/31/2002 13,770 14,195
4/30/2002 13,906 14,403
5/31/2002 13,944 14,487
6/30/2002 14,045 14,612
7/31/2002 14,120 14,725
8/31/2002 14,198 14,820
9/30/2002 14,271 14,936
10/31/2002 14,143 14,855
11/30/2002 14,205 14,858
12/31/2002 14,338 15,072
1/31/2003 14,386 15,119
2/28/2003 14,473 15,217
3/31/2003 14,472 15,199
4/30/2003 14,531 15,241
5/31/2003 14,679 15,358
6/30/2003 14,734 15,334
7/31/2003 14,643 15,196
8/31/2003 14,700 15,273
9/30/2003 14,813 15,502
10/31/2003 14,825 15,429
11/30/2003 14,890 15,443
12/31/2003 14,915 15,476
1/31/2004 14,954 15,529
2/29/2004 15,020 15,662
3/31/2004 15,028 15,619
4/30/2004 14,976 15,462
5/31/2004 14,938 15,401
6/30/2004 14,994 15,428
7/31/2004 15,099 15,541
8/31/2004 15,215 15,705
9/30/2004 15,253 15,723
10/31/2004 15,324 15,767
11/30/2004 15,315 15,691
12/31/2004 15,393 15,752
1/31/2005 15,413 15,731
2/28/2005 15,449 15,685
3/31/2005 15,456 15,634
4/30/2005 15,494 15,713
CREDIT QUALITY(3),(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
AAA 0.44%
AA 0.10%
A 0.12%
BBB 0.25%
BB 0.07%
B 0.02%
MATURITY DISTRIBUTION(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
0-1 Years 0.09%
2-5 Years 0.27%
6-10 Years 0.41%
11-20 Years 0.16%
21+ Years 0.07%
- --------------------------------------------------------------------------------
Performance shown for the Class C and Investor Class shares of the WELLS FARGO
ADVANTAGE SHORT-TERM MUNICIPAL BOND FUND for periods prior to April 11, 2005,
reflects the performance of the Class C and Investor Class shares, respectively,
of the Strong Short-Term Municipal Bond Fund, its predecessor fund. Effective at
the close of business on April 8, 2005, certain Strong Funds were reorganized
into certain WELLS FARGO ADVANTAGE FUNDS. Performance shown for the Class C
shares of the Fund for periods prior to January 31, 2003, reflects the
performance of the predecessor fund's Investor Class shares adjusted to reflect
the contingent deferred sales charge and the different expenses of the Class C
shares.
(2) Lehman Brothers Municipal 3-Year Bond Index is the 3-year (2-4) component of
the Municipal Bond index. The Lehman Brothers Municipal Bond Index is a
rules-based, market-value-weighted index engineered for the long-term tax-exempt
bond market. To be included in the index, bonds must have a minimum credit
rating of Baa. They must have an outstanding par value of at least $5 million
and be issued as part of a transaction of at least $50 million. The bonds must
have a dated-date after December 31, 1990 and must be at least one year from
their maturity date. Remarketed issues, taxable municipal bonds, bonds with
floating rates, and derivatives, are excluded from the benchmark. You cannot
invest directly in an index.
(3) Portfolio holdings and characteristics are subject to change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT). The Fund's taxable equivalent
yield is based on the combined federal and state income tax rate of 35.00%. Any
capital gains distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE SHORT-TERM
MUNICIPAL BOND FUND Investor Class shares for the most recent ten years with the
Lehman Brothers 3-Year Municipal Bond Index. The chart assumes a hypothetical
$10,000 investment in Investor Class shares and reflects all operating expenses.
7
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ULTRA SHORT-TERM MUNICIPAL INCOME FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE ULTRA SHORT-TERM MUNICIPAL INCOME FUND (the
Fund) seeks current income exempt from federal income tax consistent with
capital preservation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
Lyle J. Fitterer, CFA, CPA 11/30/1995
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned (0.24)%(1) for the six-month
period ended April 30, 2005, underperforming its benchmark, the Lehman Brothers
Municipal 1-Year Bond Index(2), which returned 0.21% during the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
ADVISOR CLASS, INSTITUTIONAL CLASS AND INVESTOR CLASS SHARES ARE SOLD WITHOUT A
FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND
EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S
CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
Our decision to liquidate at a substantial loss one of our multi-family
housing bonds detracted from Fund performance and was the primary reason why it
lagged its benchmark. After a series of efforts to improve the performance of
the properties that supported these bonds, we recently determined that
significant, additional capital would need to be injected into the deal for
repairs and maintenance. Therefore, we believed the best course of action was to
sell our holding during a period in which strong demand for distressed housing
bonds helped to increase the liquidity of the bonds.
Apart from that isolated bond, most of the other strategies we pursued
worked favorably. The Federal Reserve Board (the Fed) continued its "measured"
pace of interest rate hikes, which pushed short and intermediate municipal bond
yields higher. Bonds with maturities of five years and fewer rose the most. The
Fund's modest barbell structure--emphasizing floating-rate cash equivalents and
bonds with three- to four-year maturities while underweighting issues in the
one- to two-year range--proved beneficial. The Fund also benefited from its
lower overall sensitivity to interest rate movements, as measured by its shorter
duration relative to its benchmark index.
Better credit fundamentals and strong demand helped boost the Fund's
investments in lower-quality securities. As the economy strengthened, so too did
the creditworthiness of many lower-quality municipal bonds. Meanwhile, demand
for those lower-quality municipals remained robust as investors sought out
higher yields in a still-low interest rate environment. In particular, we saw
gains from our corporate-backed municipals and health care holdings.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
As lower-quality securities performed better, their yields declined to the
point where we felt that in some cases we weren't getting compensated for taking
on increased credit risk. Furthermore, we are starting to see signs that some
corporations are starting to focus on enhancing their equity performance which
may lead to increased leverage--a concern of bondholders. For these reasons, we
sold some corporate-backed securities. We also reduced our exposure to New York
and California bonds, which, despite their improving credit fundamentals, have
become less attractive in our opinion as their yields have declined relative to
other sectors.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We expect the Fed to be successful in controlling inflation. Although
short-term interest rates may continue to rise in the near term, we are likely
to view that as an opportunity to increase the Fund's interest rate sensitivity.
We will continue to manage the Fund with an eye toward maximizing
long-term total return. It's possible that yields on lower-quality bonds may
stay at compressed levels for a while. But if we wait until credit fundamentals
begin to deteriorate, it may be too late to sell. So we'll be watching for
potential opportunities to upgrade the Fund's credit quality, selling
lower-quality holdings and locking in their recent strong performance, as we
look elsewhere for opportunities that we believe offer a more attractive balance
between risk and reward.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC
CONDITIONS. INVESTMENT STRATEGIES THAT CONCENTRATE IN PARTICULAR MARKET SEGMENTS
OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE
TO THE BROADER MARKET). THIS FUND IS EXPOSED TO HIGH YIELD BOND AND MUNICIPAL
SECURITIES RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN
HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY
GENERATE HIGHER SHORT-TERM CAPITAL GAINS.
- --------------------------------------------------------------------------------
The views expressed are as of April 30, 2005, and are those of the Fund's
manager. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE ULTRA SHORT-TERM MUNICIPAL INCOME FUND.
A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT). Any capital gains
distributions may be taxable.
(1) The Fund's Adviser has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Performance shown for the Advisor Class, Institutional Class and Investor
Class shares of the WELLS FARGO ADVANTAGE ULTRA SHORT-TERM MUNICIPAL INCOME FUND
prior to April 11, 2005, reflects the performance of the Advisor Class,
Institutional Class and Investor Class shares, respectively, of the Strong Ultra
Short-Term Municipal Income Fund, its predecessor fund. Effective at the close
of business on April 8, 2005, certain Strong Funds were reorganized into certain
WELLS FARGO ADVANTAGE FUNDS. Performances shown for the Advisor Class shares of
the Fund for periods prior to October 2, 2000, reflects the performance of the
predecessor fund's Investor Class shares, adjusted to reflect expenses of the
Advisor Class. Performance shown for the Institutional Class shares of the Fund
for periods prior to July 31, 2000, reflects the performance of the predecessor
fund's Investor Class shares and has not been restated for the lower expense
ratio of the Institutional Class shares.
8
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Excluding Sales Charge
-----------------------------------------
6-Month* 1-Year 5-Year Life of Fund
- ------------------------------------------------------------------------------------------------------------------------------
Ultra Short-Term Municipal Income Fund - Advisor Class (incept. 11/30/1995) (0.39) 0.30 1.94 2.83
- ------------------------------------------------------------------------------------------------------------------------------
Ultra Short-Term Municipal Income Fund - Institutional Class (incept. 11/30/1995) (0.07) 1.00 2.69 3.48
- ------------------------------------------------------------------------------------------------------------------------------
Ultra Short-Term Municipal Income Fund - Investor Class (incept. 11/30/1995) (0.24) 0.65 2.37 3.30
- ------------------------------------------------------------------------------------------------------------------------------
Benchmark
- ------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal 1-Year Bond Index(2) 0.21 0.90 3.29 3.70
- ------------------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) A
- --------------------------------------------------------------------------------
Weighted Average Coupon 3.96%
- --------------------------------------------------------------------------------
Weighted Average Life 0.6 years
- --------------------------------------------------------------------------------
Estimated Average Duration 0.5 years
- --------------------------------------------------------------------------------
Portfolio Turnover 25%
- --------------------------------------------------------------------------------
Net Asset Value (NAV) (Adv, Inst, Inv Class) $4.76, $4.76, $4.76
- --------------------------------------------------------------------------------
30-Day SEC Yield(5) (Adv, Inst, Inv Class) 2.84%, 3.26%, 2.94%
- --------------------------------------------------------------------------------
Distribution Rate(6) (Adv, Inst, Inv Class) 2.55%, 2.80%, 2.53%
- --------------------------------------------------------------------------------
30-Day Taxable Equivalent Yield(7)
(Adv, Inst, Inv Class) 4.37%, 5.02%, 4.52%
- --------------------------------------------------------------------------------
Alternative Minimum Tax (AMT)(8) 17.82%
GROWTH OF $10,000 INVESTMENT(9) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE ULTRA LEHMAN BROTHERS
SHORT-TERM MUNICIPAL INCOME FUND 1-YEAR MUNICIPAL
- INVESTOR CLASS BOND INDEX
---------------- ----------
11/30/1995 10,000 10,000
12/31/1995 10,086 10,038
1/31/1996 10,118 10,095
2/29/1996 10,141 10,120
3/31/1996 10,138 10,126
4/30/1996 10,173 10,150
5/31/1996 10,225 10,176
6/30/1996 10,272 10,226
7/31/1996 10,335 10,269
8/31/1996 10,382 10,289
9/30/1996 10,444 10,335
10/31/1996 10,488 10,388
11/30/1996 10,532 10,451
12/31/1996 10,577 10,473
1/31/1997 10,623 10,534
2/28/1997 10,663 10,568
3/31/1997 10,681 10,562
4/30/1997 10,702 10,605
5/31/1997 10,769 10,658
6/30/1997 10,831 10,701
7/31/1997 10,893 10,767
8/31/1997 10,913 10,780
9/30/1997 10,973 10,835
10/31/1997 11,016 10,877
11/30/1997 11,052 10,910
12/31/1997 11,117 10,959
1/31/1998 11,181 11,017
2/28/1998 11,195 11,055
3/31/1998 11,235 11,087
4/30/1998 11,255 11,100
5/31/1998 11,320 11,158
6/30/1998 11,360 11,199
7/31/1998 11,403 11,237
8/31/1998 11,462 11,305
9/30/1998 11,502 11,359
10/31/1998 11,544 11,413
11/30/1998 11,581 11,447
12/31/1998 11,626 11,479
1/31/1999 11,661 11,543
2/28/1999 11,695 11,585
3/31/1999 11,734 11,595
4/30/1999 11,776 11,621
5/31/1999 11,792 11,643
6/30/1999 11,809 11,633
7/31/1999 11,853 11,675
8/31/1999 11,870 11,703
9/30/1999 11,888 11,743
10/31/1999 11,907 11,768
11/30/1999 11,950 11,805
12/31/1999 11,974 11,814
1/31/2000 11,968 11,860
2/29/2000 12,011 11,895
3/31/2000 12,060 11,947
4/30/2000 12,078 11,976
5/31/2000 12,079 11,995
6/30/2000 12,153 12,093
7/31/2000 12,223 12,160
8/31/2000 12,270 12,223
9/30/2000 12,294 12,250
10/31/2000 12,368 12,308
11/30/2000 12,392 12,354
12/31/2000 12,444 12,446
1/31/2001 12,490 12,594
2/28/2001 12,532 12,635
3/31/2001 12,580 12,700
4/30/2001 12,625 12,724
5/31/2001 12,671 12,814
6/30/2001 12,715 12,865
7/31/2001 12,755 12,921
8/31/2001 12,772 13,000
9/30/2001 12,830 13,063
10/31/2001 12,866 13,120
11/30/2001 12,826 13,132
12/31/2001 12,836 13,165
1/31/2002 12,871 13,272
2/28/2002 12,904 13,319
3/31/2002 12,885 13,226
4/30/2002 12,918 13,327
5/31/2002 12,955 13,386
6/30/2002 13,013 13,451
7/31/2002 13,048 13,500
8/31/2002 13,086 13,546
9/30/2002 13,143 13,576
10/31/2002 13,122 13,557
11/30/2002 13,157 13,586
12/31/2002 13,189 13,672
1/31/2003 13,223 13,704
2/28/2003 13,280 13,738
3/31/2003 13,282 13,738
4/30/2003 13,312 13,754
5/31/2003 13,370 13,798
6/30/2003 13,394 13,816
7/31/2003 13,391 13,811
8/31/2003 13,417 13,829
9/30/2003 13,411 13,893
10/31/2003 13,434 13,878
11/30/2003 13,457 13,891
12/31/2003 13,481 13,907
1/31/2004 13,507 13,936
2/29/2004 13,499 13,986
3/31/2004 13,465 13,987
4/30/2004 13,489 13,954
5/31/2004 13,485 13,932
6/30/2004 13,510 13,945
7/31/2004 13,535 14,000
8/31/2004 13,586 14,059
9/30/2004 13,582 14,051
10/31/2004 13,609 14,051
11/30/2004 13,522 14,033
12/31/2004 13,580 14,054
1/31/2005 13,609 14,065
2/28/2005 13,608 14,063
3/31/2005 13,634 14,052
4/30/2005 13,577 14,080
CREDIT QUALITY(3)(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
AAA 0.14%
AA 0.19%
A 0.31%
BBB 0.29%
BB 0.05%
B 0.01%
Cash 0.01%
MATURITY DISTRIBUTION(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
0-1 Years 0.92%
2-5 Years 0.08%
- --------------------------------------------------------------------------------
(2) Lehman Brothers Municipal 1-Year Bond Index is the 1-year (1-2) component of
the Municipal Bond index. The Lehman Brothers Municipal Bond Index is a
rules-based, market-value-weighted index engineered for the long-term tax-exempt
bond market. To be included in the index, bonds must have a minimum credit
rating of Baa. They must have an outstanding par value of at least $5 million
and be issued as part of a transaction of at least $50 million. The bonds must
have a dated-date after December 31, 1990 and must be at least one year from
their maturity date. Remarketed issues, taxable municipal bonds, bonds with
floating rates, and derivatives, are excluded from the benchmark. You cannot
invest directly in an index.
(3) Portfolio holdings and characteristics are subject to change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT). The Fund's taxable equivalent
yield is based on the combined federal and state income tax rate of 35.00%. Any
capital gains distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE ULTRA
SHORT-TERM MUNICIPAL INCOME FUND Investor Class shares for the life of the Fund
with the Lehman Brothers Municipal 1-Year Bond Index. The chart assumes a
hypothetical $10,000 investment in Investor Class shares and reflects all
operating expenses.
9
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE WISCONSIN TAX-FREE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE WISCONSIN TAX-FREE FUND (the Fund) seeks a high
level of current income exempt from federal income tax and Wisconsin individual
income tax, without assuming undue risk.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
Lyle J. Fitterer, CFA, CPA 4/06/2001
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 1.97%(1) for the six-month
period ended April 30, 2005, outperforming its benchmark, the Lehman Brothers
Municipal Bond Index(2), which returned 1.93% during the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF 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
WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
FOR CLASS C SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%.
PERFORMANCE INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE
CORRESPONDING TIME PERIOD. INVESTOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END
SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY
TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
As expected, rising short-term interest rates lifted yields on short and
intermediate municipal bonds. Bonds with maturities of five years and fewer rose
the most. The Fund's modest barbell structure--emphasizing floating-rate cash
equivalents and intermediate bonds while underweighting bonds with two- to
five-year maturities--proved beneficial.
Demand for lower-quality credits remained strong, thanks to continued low
interest rates and favorable economic conditions at both the state and national
level. Rising home values in many areas of Wisconsin helped boost property tax
collections while economic strength bolstered income, corporate, and sales tax
revenue receipts. This trend helped to improve the credit quality of several of
our lower-quality holdings, managing to hold their prices steady or even rise.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
In a climate of rising short-term interest rates, it helped the Fund's
performance to have a duration shorter than the benchmark. To maintain our
desired duration, we sold U.S. Treasury futures, rather than municipal bonds.
This strategy was based on historical trends--when interest rates are rising,
municipal securities have typically outperformed U.S. Treasuries. Although this
is not always the case, the past six months fit the historical pattern nicely.
We maintained exposure to zero-coupon bonds with maturities of less than
20 years. These did not perform well during the period because their longer
duration and relatively high volatility made them vulnerable to rising rates.
However, we continued to maintain our position in these securities because of
their additional yield and because they have historically outperformed other
types of bonds with equivalent durations.
Lower-quality securities continued to benefit from improving credit
quality and strong demand. However, the additional yield offered by these
lower-tier credits has declined significantly. In those cases where we believed
the bonds no longer offered high-enough yields to compensate us for their risk,
we reduced our exposure accordingly.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We anticipate that the Fund's duration will remain relatively close to its
benchmark, unless there is a major movement in interest rates. Although the
Federal Reserve Board is expected to further increase short-term interest rates,
much of this expectation is already reflected in current yields.
During the next several months, we believe that some caution may be
warranted within the lower quality sectors. The additional yield that investors
earn for owning many of these credits are now at historically low levels.
Investors have already become cautious within the taxable corporate bond market,
and we believe it is only a matter of time before some of this caution spills
over into the municipal bond sector.
We will continue to seek opportunities, when available and priced
appropriately, in Wisconsin issuers rather than securities issued in U.S.
territories such as Puerto Rico, which are exempt from both state and federal
income taxes. If the yield curve continues to flatten, we will likely sell some
of our variable-rate cash equivalents and reinvest the proceeds in
longer-maturity securities. A flat yield curve has historically been a good
indicator that rates have actually peaked and we may want to "lock-in" some
higher yields by buying these longer securities.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC
CONDITIONS. INVESTMENT STRATEGIES THAT CONCENTRATE IN PARTICULAR MARKET SEGMENTS
OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE
TO THE BROADER MARKET). THIS FUND IS EXPOSED TO HIGH YIELD RISK, MUNICIPAL
SECURITIES RISK AND STATE OF WISCONSIN RISK. CONSULT THE FUND'S PROSPECTUS FOR
ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. THE FUND'S INVESTMENT PROCESS
MAY, AT TIMES, RESULT IN HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED
TRADING EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM CAPITAL GAINS.
- --------------------------------------------------------------------------------
The views expressed are as of April 30, 2005, and are those of the Fund's
manager. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE WISCONSIN TAX-FREE FUND.
A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT). Any capital gains
distributions may be taxable.
10
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
--------------------------- ---------------------------
Life of Life of
6-Month* 1-Year Fund 6-Month* 1-Year Fund
- ---------------------------------------------------------------------------------------------------------------------------
Wisconsin Tax Free Fund - Class C (incept. 4/06/2001) 0.43 4.40 5.13 1.43 5.40 5.13
- ---------------------------------------------------------------------------------------------------------------------------
Wisconsin Tax Free Fund - Investor Class (incept. 4/06/2001) 1.97 6.54 6.49
- ---------------------------------------------------------------------------------------------------------------------------
Benchmark
- ---------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index(2) 1.93 6.81 5.81
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) A
- --------------------------------------------------------------------------------
Weighted Average Coupon 4.32%
- --------------------------------------------------------------------------------
Weighted Average Life 6.3 years
- --------------------------------------------------------------------------------
Estimated Average Duration 6.7 years
- --------------------------------------------------------------------------------
Portfolio Turnover 16%
- --------------------------------------------------------------------------------
Net Asset Value (NAV) (Class C, Inv) $10.63, $10.63
- --------------------------------------------------------------------------------
30-Day SEC Yield(5) (Class C, Inv) 2.57%, 3.40%
- --------------------------------------------------------------------------------
Distribution Rate(6) (Class C, Inv) 3.05%, 3.91%
- --------------------------------------------------------------------------------
30-Day Taxable Equivalent Yield(7) (Class C, Inv) 4.41%, 5.84%
- --------------------------------------------------------------------------------
Alternative Minimum Tax (AMT)(8) 6.10%
GROWTH OF $10,000 INVESTMENT(9) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE WISCONSIN LEHMAN BROTHERS
TAX-FREE FUND - INVESTOR CLASS MUNICIPAL BOND INDEX
------------------------------ --------------------
4/6/2001 10,000 10,000
4/30/2001 9,975 9,892
5/31/2001 10,127 9,998
6/30/2001 10,219 10,065
7/31/2001 10,359 10,214
8/31/2001 10,515 10,382
9/30/2001 10,500 10,348
10/31/2001 10,636 10,471
11/30/2001 10,568 10,383
12/31/2001 10,494 10,284
1/31/2002 10,647 10,463
2/28/2002 10,778 10,589
3/31/2002 10,592 10,381
4/30/2002 10,834 10,584
5/31/2002 10,902 10,648
6/30/2002 11,016 10,761
7/31/2002 11,176 10,899
8/31/2002 11,304 11,031
9/30/2002 11,532 11,272
10/31/2002 11,360 11,085
11/30/2002 11,316 11,039
12/31/2002 11,542 11,272
1/31/2003 11,521 11,244
2/28/2003 11,679 11,401
3/31/2003 11,728 11,408
4/30/2003 11,824 11,483
5/31/2003 12,094 11,752
6/30/2003 12,053 11,702
7/31/2003 11,639 11,292
8/31/2003 11,713 11,377
9/30/2003 12,028 11,711
10/31/2003 11,980 11,652
11/30/2003 12,097 11,774
12/31/2003 12,192 11,871
1/31/2004 12,245 11,939
2/29/2004 12,385 12,119
3/31/2004 12,348 12,077
4/30/2004 12,119 11,791
5/31/2004 12,089 11,748
6/30/2004 12,130 11,791
7/31/2004 12,278 11,946
8/31/2004 12,482 12,185
9/30/2004 12,548 12,250
10/31/2004 12,662 12,355
11/30/2004 12,575 12,253
12/31/2004 12,718 12,403
1/31/2005 12,820 12,519
2/28/2005 12,776 12,477
3/31/2005 12,736 12,398
4/30/2005 12,911 12,594
CREDIT QUALITY(3),(4) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
AAA 41%
AA 4%
A 19%
BBB 30%
BB 6%
MATURITY DISTRIBUTION(3) (AS OF APRIL 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
0-1 Years 18%
2-5 Years 35%
6-10 Years 40%
11-20 Years 3%
21+ Years 4%
- --------------------------------------------------------------------------------
(1) The Fund's Adviser has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Performance shown for the Class C and Investor Class shares of the WELLS
FARGO ADVANTAGE WISCONSIN TAX-FREE FUND for the periods prior to April 11, 2005,
reflects the performance of the Class C and Investor Class shares, respectively,
of the Strong Wisconsin Tax-Free Fund, its predecessor fund. Effective at the
close of business on April 8, 2005, certain Strong Funds were reorganized into
certain WELLS FARGO ADVANTAGE FUNDS. Performance shown for the Class C shares of
the Fund for the period prior to December 26, 2002, reflects the performance of
the predecessor fund's Investor Class shares adjusted to reflect contingent
deferred sales charge and the different expenses of the Class C shares.
(2) Lehman Brothers Municipal Bond Index is a rules-based, market-value-weighted
index engineered for the long-term tax-exempt bond market. To be included in the
index, bonds must have a minimum credit rating of Baa. They must have an
outstanding par value of at least $5 million and be issued as part of a
transaction of at least $50 million. The bonds must have a dated-date after
December 31, 1990 and must be at least one year from their maturity date.
Remarketed issues, taxable municipal bonds, bonds with floating rates, and
derivatives, are excluded from the benchmark. You cannot invest directly in an
index.
(3) Portfolio holdings and characteristics are subject to change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT). The Fund's taxable equivalent
yield is based on the combined federal and state income tax rate of 41.75%. Any
capital gains distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE WISCONSIN
TAX-FREE FUND Investor Class shares for the life of the Fund with the Lehman
Brothers Municipal Bond Index. The chart assumes a hypothetical $10,000
investment in Investor Class shares and reflects all operating expenses.
11
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS 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,
redemption fees (if any) and exchange fees (if any); and (2) ongoing costs,
including management fees; distribution (12b-1) and/or shareholder service 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 period and held for the entire period (November 1, 2004 to April 30,
2005).
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), redemption fees, or exchange fees. 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 Ending
Account Account Expenses Net Annual
Value Value Paid During Expense
11/1/2004 4/30/2005 the Period(1) Ratio
Intermediate Tax-Free Fund
- -------------------------------------------------------------------------------------------------------------------------
Intermediate Tax-Free Fund - Investor Class
Actual $1,000.00 $1,013.60 $2.60 0.52%
- -------------------------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,022.22 $2.61 0.52%
Municipal Bond Fund
- -------------------------------------------------------------------------------------------------------------------------
Municipal Bond Fund - Class A
Actual(2) $1,000.00 $1,012.10 $0.50 0.90%
- -------------------------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,020.33 $4.51 0.90%
- -------------------------------------------------------------------------------------------------------------------------
Municipal Bond Fund - Class B
Actual(2) $1,000.00 $1,011.70 $0.93 1.69%
- -------------------------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,016.41 $8.45 1.69%
- -------------------------------------------------------------------------------------------------------------------------
Municipal Bond Fund - Class C
Actual(2) $1,000.00 $1,011.70 $0.93 1.69%
- -------------------------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,016.41 $8.45 1.69%
- -------------------------------------------------------------------------------------------------------------------------
Municipal Bond Fund - Administrator Class
Actual(2) $1,000.00 $1,022.41 $2.41 0.48%
- -------------------------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,002.48 $0.26 0.48%
- -------------------------------------------------------------------------------------------------------------------------
Municipal Bond Fund - Investor Class
Actual $1,000.00 $1,026.80 $4.02 0.80%
- -------------------------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,020.83 $4.01 0.80%
12
FUND EXPENSES (UNAUDITED) WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Net Annual
Value Value Paid During Expense
11/1/2004 4/30/2005 the Period(1) Ratio
Short-Term Municipal Bond Fund
- -------------------------------------------------------------------------------------------------------------------------
Short-Term Municipal Bond Fund - Class C
Actual $1,000.00 $1,005.50 $8.80 1.77%
- -------------------------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,016.02 $8.85 1.77%
- -------------------------------------------------------------------------------------------------------------------------
Short-Term Municipal Bond Fund - Investor Class
Actual $1,000.00 $1,011.10 $3.34 0.67%
- -------------------------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,021.47 $3.36 0.67%
Ultra Short-Term Municipal Income Fund
- -------------------------------------------------------------------------------------------------------------------------
Ultra Short-Term Municipal Income Fund - Advisor Class
Actual $1,000.00 $996.10 $5.39 1.09%
- -------------------------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,019.39 $5.46 1.09%
- -------------------------------------------------------------------------------------------------------------------------
Ultra Short-Term Municipal Income Fund - Institutional Class
Actual $1,000.00 $999.30 $2.03 0.41%
- -------------------------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,022.76 $2.06 0.41%
- -------------------------------------------------------------------------------------------------------------------------
Ultra Short-Term Municipal Income Fund - Investor Class
Actual $1,000.00 $997.60 $3.76 0.76%
Hypothetical
- -------------------------------------------------------------------------------------------------------------------------
(5% return before expenses) $1,000.00 $1,021.03 $3.81 0.76%
Wisconsin Tax-Free Fund
- -------------------------------------------------------------------------------------------------------------------------
Wisconsin Tax-Free Fund - Class C
Actual $1,000.00 $1,014.30 $7.44 1.49%
- -------------------------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,017.41 $7.45 1.49%
- -------------------------------------------------------------------------------------------------------------------------
Wisconsin Tax-Free Fund - Investor Class
Actual $1,000.00 $1,019.70 $2.15 0.43%
- -------------------------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,022.66 $2.16 0.43%
(1) EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO 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).
(2) THIS CLASS COMMENCED OPERATIONS ON APRIL 11, 2005. ACTUAL EXPENSES SHOWN FOR
THIS CLASS ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO MULTIPLIED BY THE AVERAGE
ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 20/365 (TO REFLECT THE PERIOD FROM
APRIL 11, 2005 TO APRIL 30, 2005).
13
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MUNICIPAL BONDS & NOTES - 100.21%
ALABAMA - 3.39%
$ 450,000 BIRMINGHAM AL SPECIAL CARE FACILITIES FINANCING AUTHORITY BAPTIST
MEDICAL CENTER HEALTH SYSTEM-A-1 (HEALTHCARE FACILITIES REVENUE LOC) 4.35% 11/15/2028 $ 452,538
835,000 JEFFERSON COUNTY AL SERIES A (SALES TAX REVENUE LOC) 5.25 01/01/2011 908,204
500,000 MONTGOMERY AL BMC SPECIAL CARE FACILITIES FINANCING AUTHORITY BAPTIST
HEALTH SERIES A (HEALTHCARE FACILITIES REVENUE LOC)^ 3.97 11/15/2012 474,660
500,000 MONTGOMERY AL BMC SPECIAL CARE FACILITIES FINANCING AUTHORITY BAPTIST
HEALTH SERIES A (HEALTHCARE FACILITIES REVENUE LOC)^ 4.03 11/15/2013 474,760
2,310,162
------------
ALASKA - 0.68%
350,000 ALASKA ENERGY AUTHORITY BRADLEY LAKE FOURTH SERIES (ELECTRIC REVENUE LOC) 6.00 07/01/2015 408,965
55,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK (OTHER REVENUE LOC) 4.80 06/01/2011 55,547
464,512
------------
ARIZONA - 0.60%
5,000 MARICOPA COUNTY AZ IDA SAMARITAN HEALTH SERVICES SERIES B (HEALTHCARE
FACILITIES REVENUE LOC) 7.15 12/01/2005 5,132
375,000 VERRADO AZ COMMUNITY FACILITIES DISTRICT NUMBER 1 (PROPERTY TAX
REVENUE LOC) 6.00 07/15/2013 404,681
409,813
------------
CALIFORNIA - 3.53%
265,000 ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS O'CONNER WOODS
OBLIGATION GROUP (HEALTHCARE FACILITIES REVENUE LOC) 5.40 11/01/2009 275,253
800,000 AGUA CALIENTE BAND OF CAHUILLA INDIANS (OTHER REVENUE LOC) 4.60 07/01/2008 803,112
125,000 CALIFORNIA STATE (GENERAL OBLIGATION - STATES, TERRITORIES LOC)@ 5.00 03/01/2010 137,634
125,000 CALIFORNIA STATE (GENERAL OBLIGATION - STATES, TERRITORIES LOC) 5.50 04/01/2011 139,325
290,000 GOLDEN STATE CA TOBACCO SECURITIZATION CORPORATION SERIES B (OTHER
REVENUE LOC) 5.50 06/01/2019 303,604
350,000 SANTA ROSA CA RANCHERIA TACHI YOKUT TRIBE ENTERPRISE (OTHER
REVENUE LOC) 5.50 03/01/2008 354,791
250,000 SOUTH ORANGE COUNTY CA PFA (OTHER REVENUE LOC) 5.10 09/02/2010 271,800
100,000 SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY (ELECTRIC REVENUE LOC) 6.75 07/01/2013 119,851
2,405,370
------------
COLORADO - 0.84%
245,000 NORTHWEST PARKWAY CO PUBLIC HIGHWAY AUTHORITY CAPITAL APPRECIATION
CONVERTIBLE (TOLL ROAD REVENUE LOC)^ 3.72 06/15/2012 197,764
450,000 NORTHWEST PARKWAY CO PUBLIC HIGHWAY AUTHORITY CAPITAL APPRECIATION
CONVERTIBLE (TOLL ROAD REVENUE LOC)^ 4.05 06/15/2016 372,110
569,874
------------
FLORIDA - 7.76%
1,250,000 BREVARD COUNTY FL HEALTH FACILITIES AUTHORITY RETIREMENT HOUSING
FUNDING (HEALTHCARE FACILITIES REVENUE LOC)+/- 5.00 12/01/2028 1,250,000
500,000 BROWARD COUNTY FL WHEELABRATOR SERIES A (INDUSTRIAL DEVELOPMENT
REVENUE LOC) 4.50 12/01/2011 519,615
500,000 CAPITAL PROJECTS FINANCE AUTHORITY CAPITAL PROJECTS (COLLEGE AND
UNIVERSITY REVENUE LOC)# 5.50 10/01/2014 546,005
600,000 CAPITAL TRUST AGENCY FL SEMINOLE TRIBE CONVENTION SERIES A (OTHER
REVENUE LOC) 10.00 10/01/2033 677,550
440,000 DADE COUNTY FL HEALTH FACILITIES AUTHORITY MIAMI CHILDREN'S HOSPITAL
PROJECT (HEALTHCARE FACILITIES REVENUE LOC)@ 5.00 02/01/2010 470,246
14
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FLORIDA (CONTINUED)
$ 1,000,000 GULF BREEZE FL MIAMI BEACH LOCAL GOVERNMENT SERIES B
(OTHER REVENUE LOC)+/- 4.75% 12/01/2015 $ 1,060,870
665,000 ST LUCIE COUNTY FL (UTILITIES REVENUE LOC) 5.50 10/01/2016 760,979
5,285,265
------------
GEORGIA - 0.43%
255,000 COBB-MARIETTA GA COLISEUM & EXHIBIT HALL AUTHORITY (OTHER
REVENUE LOC) 5.50 10/01/2018 293,273
------------
IDAHO - 1.63%
1,000,000 BOISE CITY ID URBAN RENEWAL AGENCY URBAN RENEWAL COUNTY COURTS
(LEASE REVENUE LOC)@ 6.00 08/15/2023 1,111,670
------------
ILLINOIS - 8.27%
350,000 AURORA IL SERIES B (TAX REVENUE LOC) 4.90 12/30/2011 354,245
300,000 CHICAGO IL BOARD OF EDUCATION CHICAGO SCHOOL REFORM (PROPERTY TAX
REVENUE LOC) 6.25 12/01/2011 348,621
1,000,000 CHICAGO IL GAS SUPPLY REVENUE PEOPLES GAS LIGHT & COKE SERIES B
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 4.75 03/01/2030 1,040,440
550,000 CHICAGO IL HOUSING AUTHORITY (HOUSING REVENUE LOC) 5.38 07/01/2013 598,862
355,000 GRUNDY COUNTY IL SCHOOL DISTRICT NUMBER 054 MORRIS (GENERAL
OBLIGATION - SCHOOL DISTRICTS LOC) 8.75 12/01/2016 448,496
250,000 ILLINOIS EDUCATIONAL FACILITIES AUTHORITY MEDIUM TERM NORTHWESTERN
UNIVERSITY (COLLEGE AND UNIVERSITY REVENUE LOC)+/-@ 5.10 11/01/2032 269,473
750,000 ILLINOIS EDUCATIONAL FACILITIES AUTHORITY MEDIUM TERM NORTHWESTERN
UNIVERSITY (COLLEGE AND UNIVERSITY REVENUE LOC)+/-@ 5.15 11/01/2032 808,470
390,000 ILLINOIS FINANCE AUTHORITY CHICAGO CHARTER SCHOOL FOUNDATION PROJECT
SERIES A (LEASE REVENUE LOC) 5.25 12/01/2012 401,033
330,000 ILLINOIS FINANCE AUTHORITY COMMUNITY REHABILITATION PROVIDERS
FACILITIES SERIES A (INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.70 07/01/2012 342,748
200,000 ILLINOIS FINANCE AUTHORITY COMMUNITY REHABILITATION PROVIDERS SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.50 07/01/2012 208,418
1,000,000 MCHENRY & KANE COUNTIES IL COMMUNITY CONSOLIDATED SCHOOL DISTRICT 158
CAPITAL APPRECIATION SCHOOL BUILDING (PROPERTY TAX REVENUE LOC)^ 3.79 01/01/2011 809,080
5,629,886
------------
INDIANA - 0.97%
350,000 INDIANA BOND BANK REVOLVING FUNDING PROGRAM SERIES A
(OTHER REVENUE LOC) 4.80 02/01/2013 363,892
275,000 INDIANA BOND BANK SPECIAL PROGRAM SERIES A (OTHER REVENUE LOC) 5.60 02/01/2009 296,417
660,309
------------
IOWA - 0.18%
120,000 TOBACCO SETTLEMENT AUTHORITY OF IOWA SERIES B (EXCISE TAX REVENUE LOC) 5.50 06/01/2012 125,431
------------
KANSAS - 2.47%
160,000 KANSAS DEVELOPMENT FINANCE AUTHORITY HEALTH FACILITIES HARTFORD
(HEALTHCARE FACILITIES REVENUE LOC) 6.13 04/01/2012 180,840
500,000 MANHATTAN KS COMMERCIAL DEVELOPMENT REVENUE HOLIDAY INN SUBSERIES B
(LEASE REVENUE LOC) 11.00 07/01/2016 806,695
680,000 MANHATTAN KS TRANSPORTATION DEVELOPMENT DISTRICT (SALES TAX
REVENUE LOC) 4.15 08/01/2015 696,504
1,684,039
------------
15
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MICHIGAN - 2.92%
$ 350,000 MICHIGAN STATE HOSPITAL FINANCE AUTHORITY ST JOHN HOSPITAL & MEDICAL
CENTER (HEALTHCARE FACILITIES REVENUE LOC) 6.00% 05/15/2010 $ 393,162
500,000 MICHIGAN STATE STRATEGIC FUND LIMITED PORTER HILLS RADIAN INSURED
(HEALTHCARE FACILITIES REVENUE LOC)+/-@ 3.05 07/01/2028 500,000
1,000,000 ROMEO MI COMMUNITY SCHOOL DISTRICT (EDUCATIONAL FACILITIES REVENUE LOC) 5.00 05/01/2012 1,096,640
1,989,802
------------
MINNESOTA - 0.62%
270,000 MINNEAPOLIS MN SAINT MARYS HOSPITAL & REHABILITATION (HEALTHCARE
FACILITIES REVENUE LOC) 10.00 06/01/2013 342,422
75,000 ROSEVILLE MN INDEPENDENT SCHOOL DISTRICT NUMBER 623 SCHOOL DISTRICT
CREDIT ENHANCEMENT PROGRAM SERIES A (PROPERTY TAX REVENUE LOC) 5.00 02/01/2017 80,157
422,579
------------
MISSISSIPPI - 0.45%
280,000 MISSISSIPPI DEVELOPMENT BANK SPECIAL OBLIGATION GULFPORT WATER & SEWER
SYSTEMS PROJECT FSA INSURED (GENERAL OBLIGATION - BOND BANK LOC) 5.25 07/01/2011 308,445
------------
MISSOURI - 1.50%
100,000 CAPE GIRARDEAU COUNTY MO IDA SOUTHEAST HOSPITAL ASSOCIATION
(HEALTHCARE FACILITIES REVENUE LOC) 3.63 06/01/2007 100,273
360,000 CHESTERFIELD MO REFUNDING & IMPROVEMENTS CHESTERFIELD VALLEY PROJECT
(TAX REVENUE LOC) 4.50 04/15/2016 360,500
550,000 SAINT CHARLES COUNTY MO IDA HOUSING VANDERBILT APARTMENTS (HOUSING
REVENUE LOC)+/-@ 5.00 02/01/2029 562,958
1,023,731
------------
MONTANA - 0.01%
5,000 BILLINGS MT (TAX REVENUE LOC) 3.80 03/01/2008 5,012
------------
NEBRASKA - 1.67%
1,000,000 OMAHA NE PUBLIC POWER DISTRICT SERIES B (ELECTRIC REVENUE LOC) 6.15 02/01/2012 1,133,750
------------
NEW HAMPSHIRE - 0.52%
1,085,000 MANCHESTER NH HOUSING & REDEVELOPMENT AUTHORITY CAPITAL APPRECIATION
SERIES B (OTHER REVENUE LOC)^ 5.75 01/01/2025 355,717
------------
NEW JERSEY - 1.10%
750,000 NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY WANAQUE CONVALESCENT CENTER
PROJECT A (HEALTHCARE FACILITIES REVENUE LOC) 3.75 02/15/2012 748,395
------------
NEW MEXICO - 1.45%
920,000 UNIVERSITY OF NEW MEXICO HOSPITAL MORTGAGE (HEALTHCARE FACILITIES
REVENUE LOC) 5.00 01/01/2016 986,350
------------
NEW YORK - 15.86%
100,000 NASSAU COUNTY NY IDA (INDUSTRIAL DEVELOPMENT REVENUE LOC) 6.88 07/01/2010 105,899
800,000 NEW YORK NY IDA NEW YORK INSTITUTION OF TECHNOLOGY PROJECT (COLLEGE
AND UNIVERSITY REVENUE LOC) 5.25 03/01/2018 877,960
550,000 NEW YORK NY SERIES A (PROPERTY TAX REVENUE LOC) 5.25 08/01/2009 594,044
500,000 NEW YORK NY SERIES B (PROPERTY TAX REVENUE LOC) 5.75 08/01/2015 556,260
500,000 NEW YORK NY SERIES C (PROPERTY TAX REVENUE LOC) 5.25 08/01/2009 540,040
16
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
NEW YORK (CONTINUED)
$ 700,000 NEW YORK NY SUBSERIES C-3 CIFG INSURED (GENERAL OBLIGATION - STATES,
TERRITORIES LOC)+/-@ 3.00% 08/15/2029 $ 700,000
400,000 NEW YORK NY TRANSITIONAL FINANCE AUTHORITY FUTURE TAX
(TAX REVENUE LOC)+/- 5.25 02/01/2029 434,444
1,000,000 NEW YORK STATE DORMITORY AUTHORITY AIDS LONG TERM HEALTH CARE
FACILITIES (GENERAL OBLIGATION - STATES, TERRITORIES LOC) 5.00 11/01/2011 1,065,910
750,000 NEW YORK STATE DORMITORY AUTHORITY CITY UNIVERSITY SYSTEM SERIES C
(COLLEGE AND UNIVERSITY REVENUE LOC) 7.50 07/01/2010 831,382
500,000 NEW YORK STATE DORMITORY AUTHORITY HOSPITAL SERIES A (HEALTHCARE
FACILITIES REVENUE LOC) 6.00 08/15/2015 564,380
500,000 NEW YORK STATE DORMITORY AUTHORITY SERIES B (COLLEGE AND
UNIVERSITY REVENUE LOC)+/-@ 5.25 11/15/2023 546,690
500,000 NEW YORK STATE URBAN DEVELOPMENT CORPORATION SERIES C
(OTHER REVENUE LOC) 4.00 01/01/2020 511,705
100,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES B
(OTHER REVENUE LOC) 4.00 06/01/2012 105,010
500,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES B
(OTHER REVENUE LOC) 5.25 06/01/2013 535,075
110,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES C1
(OTHER REVENUE LOC) 5.00 06/01/2011 112,694
750,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES C1
(OTHER REVENUE LOC) 5.25 06/01/2013 796,898
1,500,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES C1
(OTHER REVENUE LOC) 5.50 06/01/2015 1,635,030
250,000 TRIBOROUGH NY BRIDGE & TUNNEL AUTHORITY SERIES Y
(TOLL ROAD REVENUE LOC) 5.50 01/01/2017 287,340
10,800,761
------------
NORTH CAROLINA - 0.67%
360,000 NORTH CAROLINA MEDICAL CARE COMMISSION HEALTH CARE HOUSING PROJECT
SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 4.65 10/01/2014 355,878
95,000 NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 1 CATAWBA ELECTRIC
REVENUE (ELECTRIC REVENUE LOC) 7.25 01/01/2007 101,322
457,200
------------
NORTH DAKOTA - 0.62%
350,000 MERCER COUNTY ND ANTELOPE VALLEY STATION (ELECTRIC REVENUE LOC) 7.20 06/30/2013 421,435
------------
OHIO - 3.16%
410,000 LAKEWOOD OH LAKEWOOD HOSPITAL ASSOCIATION (HEALTHCARE FACILITIES
REVENUE LOC) 5.50 02/15/2012 447,216
195,000 OHIO STATE HIGHER EDUCATIONAL FACILITY COMMISSION CAPITAL APPRECIATION
SERIES D (LEASE REVENUE LOC) 6.25 07/01/2010 222,633
500,000 OHIO STATE REFUNDING & IMPROVEMENTS (TAX REVENUE LOC) 6.00 08/01/2010 567,770
855,000 ROCKY RIVER OH PUBLIC LIBRARY DISTRICT LIBRARY REVENUE (PROPERTY TAX
REVENUE LOC) 5.00 12/01/2014 914,910
2,152,529
------------
OKLAHOMA - 2.99%
505,000 LANGSTON OK ECONOMIC DEVELOPMENT (ECONOMIC DEVELOPMENT REVENUE LOC) 4.25 05/01/2012 511,939
50,000 OKLAHOMA DEVELOPMENT FINANCE AUTHORITY COMANCHE COUNTY HOSPITAL
PROJECT SERIES B (HEALTHCARE FACILITIES REVENUE LOC) 5.35 07/01/2008 52,483
1,250,000 TULSA OK INDUSTRIAL AUTHORITY UNIVERSITY OF TULSA SERIES A (COLLEGE
AND UNIVERSITY REVENUE LOC) 6.00 10/01/2016 1,475,100
2,039,522
------------
PENNSYLVANIA - 5.26%
500,000 ALLEGHENY COUNTY PA RDA PITTSBURGH MILLS PROJECT (TAX REVENUE LOC)+/-@ 5.10 07/01/2014 520,745
965,000 DELAWARE VALLEY PA REGIONAL FINANCIAL AUTHORITY SERIES A
(OTHER REVENUE LOC)+/-@ 3.89 07/01/2027 990,534
17
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
PENNSYLVANIA (CONTINUED)
$ 600,000 PENNSYLVANIA CONVENTION CENTER AUTHORITY SERIES A (OTHER REVENUE LOC) 6.70% 09/01/2016 $ 728,292
650,000 PENNSYLVANIA STATE HIGHER EDUCATIONAL FACILITIES AUTHORITY ALLEGHENY
DELAWARE VALLEY SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 5.70 11/15/2011 725,738
520,000 PITTSBURGH PA URBAN RDA SERIES A (WATER REVENUE LOC) 6.50 09/01/2013 617,692
3,583,001
------------
PUERTO RICO - 1.19%
250,000 CHILDREN'S TRUST FUND (OTHER REVENUE LOC) 5.00 05/15/2008 257,022
260,000 CHILDREN'S TRUST FUND PUERTO RICO (SPECIAL TAX REVENUE LOC)@ 5.75 07/01/2010 276,019
250,000 PUERTO RICO PUBLIC FINANCE CORPORATION COMMONWEALTH SERIES A
(LEASE REVENUE LOC)+/-@ 5.75 08/01/2027 278,238
811,279
------------
SOUTH CAROLINA - 2.81%
250,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B
(TOLL ROAD REVENUE LOC)^ 8.43 01/01/2032 27,670
1,750,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B
(TOLL ROAD REVENUE LOC)^ 8.08 01/01/2037 142,607
2,000,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B
(TOLL ROAD REVENUE LOC)^ 8.03 01/01/2038 152,960
500,000 GREENVILLE SC HOSPITAL SYSTEM BOARD SERIES A (HEALTHCARE FACILITIES
REVENUE LOC) 5.25 05/01/2014 551,710
250,000 RICHLAND COUNTY SC INTERNATIONAL PAPER COMPANY PROJECTS SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 4.25 10/01/2007 255,773
700,000 SOUTH CAROLINA EDUCATIONAL FACILITIES AUTHORITY BENEDICT COLLEGE
(COLLEGE AND UNIVERSITY REVENUE LOC) 5.75 07/01/2017 780,171
1,910,891
------------
SOUTH DAKOTA - 1.75%
600,000 HEARTLAND SD CONSUMERS POWER DISTRICT (ELECTRIC REVENUE LOC) 6.00 01/01/2012 682,560
500,000 SOUTH DAKOTA HEALTH & EDUCATIONAL FACILITIES AUTHORITY SIOUX VALLEY
HOSPITALS & HEALTH SERIES C (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 4.85 11/01/2019 508,375
1,190,935
------------
TENNESSEE - 1.53%
1,000,000 SHELBY COUNTY TN HEALTH EDUCATIONAL & HOUSING FACILITIES BOARD FLOAT
BAPTIST MEMORIAL HEALTHCARE (HEALTHCARE FACILITIES REVENUE LOC)+/- 5.00 09/01/2020 1,044,840
------------
TEXAS - 10.89%
1,405,000 BEXAR COUNTY TX REVENUE PROJECT (OTHER REVENUE LOC) 5.75 08/15/2022 1,510,895
100,000 BRAZOS TX RIVER HARBOR NAVIGATION DISTRICT DOW CHEMICAL PROJECT
SERIES B3 (OTHER REVENUE LOC)+/-@ 5.15 05/15/2033 106,579
1,000,000 CYPRESS FAIRBANKS TX INDEPENDENT SCHOOL DISTRICT (PROPERTY TAX REVENUE
LOC)+/-@ 5.00 02/15/2022 1,076,380
715,000 DENTON COUNTY TX (GENERAL OBLIGATION - BOND BANK LOC) 5.00 07/15/2016 778,292
1,000,000 EL PASO COUNTY TX CAPITAL ACCUMULATION (HOUSING REVENUE LOC)^ 4.20 09/01/2015 650,680
1,000,000 HIDALGO COUNTY TX (PROPERTY TAX REVENUE LOC)%% 5.00 08/15/2011 1,087,270
500,000 LUBBOCK TX HEALTH FACILITIES DEVELOPMENT CORPORATION SAINT JOSEPH
HEALTH SYSTEM (HEALTHCARE FACILITIES REVENUE LOC) 5.25 07/01/2012 527,420
750,000 LUBBOCK TX HOUSING FINANCE CORPORATION CAPITAL APPRECIATION^ 4.20 10/01/2015 486,323
250,000 MIDTOWN TX RDA (TAX REVENUE LOC) 5.00 01/01/2009 263,865
195,000 SAM RAYBURN TX MUNICIPAL POWER AGENCY (OTHER REVENUE LOC) 5.00 10/01/2009 207,047
18
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
TEXAS (CONTINUED)
$ 625,000 SPRING TX INDEPENDENT SCHOOL DISTRICT (GENERAL OBLIGATION - SCHOOL
DISTRICTS LOC) 5.20% 02/15/2017 $ 656,850
60,000 WESLACO HEALTH FACILITIES DEVELOPMENT CORPORATION KNAPP MEDICAL CENTER
PROJECT (HEALTHCARE FACILITIES REVENUE LOC) 5.00 06/01/2007 61,799
7,413,400
------------
VIRGIN ISLANDS - 0.73%
555,000 TOBACCO SETTLEMENT FINANCING CORPORATION VIRGIN ISLANDS^ 4.47 05/15/2011 497,824
------------
VIRGINIA - 1.98%
45,000 DINWIDDIE COUNTY VA IDA SCHOOL FACILITIES PROJECT A (LEASE REVENUE LOC) 5.30 02/01/2008 47,272
305,000 DINWIDDIE COUNTY VA IDA SCHOOL FACILITIES PROJECT A (LEASE REVENUE LOC) 5.55 02/01/2012 318,341
800,000 GREATER RICHMOND VA CONVENTION CENTER AUTHORITY CONVENTION CENTER
EXPANSION PROJECT (PROPERTY TAX REVENUE LOC) 5.50 06/15/2010 875,456
100,000 VIRGINIA HOUSING DEVELOPMENT AUTHORITY SERIES D SUBSERIES D 1
(HOUSING REVENUE LOC) 4.50 07/01/2010 105,100
1,346,169
------------
WASHINGTON - 4.73%
600,000 CHELAN COUNTY WA PUBLIC UTILITY DISTRICT NUMBER 1 WACHELAN HYDRO
SERIES A (ELECTRIC REVENUE LOC)^ 4.65 06/01/2018 328,992
310,000 GRANT COUNTY WA PUBLIC UTILITY DISTRICT NO 2 SERIES G
(ELECTRIC REVENUE LOC) 5.25 01/01/2012 345,139
400,000 SNOHOMISH COUNTY WA PUBLIC HOSPITAL DISTRICT NUMBER 3 SERIES A
(PROPERTY TAX REVENUE LOC) 6.00 06/01/2010 414,292
500,000 SPOKANE COUNTY WA SCHOOL DISTRICT NUMBER 81 (PROPERTY TAX REVENUE LOC)^ 3.93 12/01/2012 451,885
500,000 SPOKANE COUNTY WASHINGTON SCHOOL DISTRICT NUMBER 081 SPOKANE
CONVERTABLE DEFERRED INTEREST MBIA INSURED (PROPERTY TAX REVENUE LOC)^ 3.68 12/01/2010 441,350
300,000 SPOKANE WA SERIES B (PROPERTY TAX REVENUE LOC) 5.40 01/01/2010 315,423
100,000 VANCOUVER WA (WATER REVENUE LOC)@ 4.90 06/01/2010 103,650
75,000 WASHINGTON STATE HOUSING FINANCE COMMISSION CRISTA MINISTRIES PROJECT A
(OTHER REVENUE LOC) 5.35 07/01/2014 76,775
610,000 WASHINGTON STATE SERIES B (PROPERTY TAX REVENUE LOC) 6.40 06/01/2017 742,022
3,219,528
------------
WISCONSIN - 5.05%
415,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION (OTHER REVENUE LOC) 5.00 06/01/2008 425,595
435,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION (OTHER REVENUE LOC) 5.00 06/01/2009 447,028
545,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION (OTHER REVENUE LOC) 6.00 06/01/2017 553,475
70,000 ST. CROIX FALLS WI CDA (LEASE REVENUE LOC) 3.95 12/01/2008 70,941
70,000 ST. CROIX FALLS WI CDA (LEASE REVENUE LOC) 4.20 12/01/2009 71,650
75,000 ST. CROIX FALLS WI CDA (LEASE REVENUE LOC) 4.40 12/01/2010 77,500
500,000 WESTON WI CDA COMMUNITY DEVELOPMENT SERIES A (LEASE REVENUE LOC) 4.25 10/01/2017 499,505
890,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY BELL TOWER
RESIDENCE PROJECT (HEALTHCARE FACILITIES REVENUE LOC) 4.75 07/01/2015 918,222
230,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY DIVINE SAVIOR
HEALTHCARE (HEALTHCARE FACILITIES REVENUE LOC) 4.70 05/01/2008 238,208
124,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY MARSHFIELD
CLINIC SERIES B (HEALTHCARE FACILITIES REVENUE LOC) 6.25 02/15/2010 135,816
3,437,940
------------
TOTAL MUNICIPAL BONDS & NOTES (COST $67,594,449) 68,250,639
------------
19
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
CONTRACTS SECURITY NAME VALUE
SWAP OPTIONS - 0.00%
900 5 YEAR 4.87% INTEREST RATE SWAP, EXPIRES 7/14/05 $ 1,665
TOTAL SWAP OPTIONS (COST $18,720) 1,665
-------------
SHORT-TERM INVESTMENTS - 1.03%
SHARES
MUTUAL FUND - 1.03%
702,706 WELLS FARGO ADVANTAGE NATIONAL TAX-FREE MONEY MARKET TRUST~++ 702,706
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $702,706) 702,706
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $68,315,875)* 101.24% $ 68,955,010
OTHER ASSETS AND LIABILITIES, NET (1.24) (845,891)
------ -------------
TOTAL NET ASSETS 100.00% $ 68,109,119
====== =============
^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO
MATURITY.
+/- VARIABLE RATE SECURITIES.
@ THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
# SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS.
%% SECURITIES ISSUED ON A WHEN-ISSUED (TBA) BASIS. (SEE NOTE 2)
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $702,706.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
20
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MUNICIPAL BONDS & NOTES - 100.41%
ALABAMA - 1.73%
$ 2,750,000 BIRMINGHAM AL SPECIAL CARE FACILITIES FINANCING AUTHORITY BAPTIST
MEDICAL CENTER HEALTH SYSTEM-A-1 (HEALTHCARE FACILITIES REVENUE LOC) 4.35% 11/15/2028 $ 2,765,510
1,690,000 BIRMINGHAM AL SPECIAL CARE FACILITIES FINANCING AUTHORITY BAPTIST MEDICAL
CENTERS HEALTH SYSTEM SERIES A1 (HEALTHCARE FACILITIES REVENUE LOC) 4.35 11/15/2028 1,696,101
1,000,000 JEFFERSON COUNTY AL SERIES A (SALES TAX REVENUE LOC) 5.25 01/01/2015 1,091,550
1,105,000 MONTGOMERY AL BMC SPECIAL CARE FACILITIES FINANCING AUTHORITY BAPTIST
HEALTH SERIES A2 (HEALTHCARE FACILITIES REVENUE LOC)^ 3.80 11/15/2011 1,048,070
6,601,231
------------
ALASKA - 0.53%
210,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK (EXCISE TAX REVENUE LOC) 5.60 06/01/2009 219,687
745,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK (EXCISE TAX REVENUE LOC) 5.70 06/01/2011 781,431
1,000,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK (EXCISE TAX REVENUE LOC) 6.20 06/01/2022 1,015,150
2,016,268
------------
ARIZONA - 2.08%
25,000 ARIZONA HEALTH FACILITIES AUTHORITY PHOENIX CHILDREN'S HOSPITAL SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 5.30 11/15/2008 24,549
30,000 ARIZONA HEALTH FACILITIES AUTHORITY PHOENIX CHILDREN'S HOSPITAL SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 5.50 11/15/2010 29,480
290,000 ARIZONA HEALTH FACILITIES AUTHORITY PHOENIX CHILDREN'S HOSPITAL SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 5.38 02/15/2018 277,182
140,000 ARIZONA HEALTH FACILITIES AUTHORITY PHOENIX CHILDREN'S HOSPITAL SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 6.13 11/15/2022 141,401
75,000 ARIZONA HEALTH FACILITIES AUTHORITY PHOENIX CHILDREN'S HOSPITAL SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 5.88 02/15/2027 75,016
100,000 ARIZONA HEALTH FACILITIES AUTHORITY PHOENIX CHILDREN'S HOSPITAL SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 6.25 11/15/2029 101,493
1,250,000 MARICOPA COUNTY AZ IDA SAMARITAN HEALTH SERVICES SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 7.00 12/01/2016 1,559,887
3,425,000 VERRADO AZ COMMUNITY FACILITIES DISTRICT NUMBER 1
(PROPERTY TAX REVENUE LOC) 6.00 07/15/2013 3,696,089
2,025,000 YAVAPAI COUNTY AZ IDA (INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.45 06/01/2033 2,025,851
7,930,948
------------
CALIFORNIA - 9.99%
810,000 AGUA CALIENTE BAND OF CAHUILLA INDIANS (OTHER REVENUE LOC) 4.60 07/01/2008 813,151
2,005,000 ALAMEDA CA CORRIDOR TRANSPORTATION AUTHORITY SERIES A (TRANSPORTATION
REVENUE LOC)^ 5.12 10/01/2030 554,563
10,300,000 BAKERSFIELD CA CTFS (LEASE REVENUE LOC)^ 4.66 04/15/2021 4,937,614
2,450,000 CALIFORNIA POLLUTION CONTROL FINANCING AUTHORITY SAN DIEGO
GAS & ELECTRIC COMPANY SERIES A (INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.90 06/01/2014 2,750,468
600,000 CALIFORNIA POLLUTION CONTROL FINANCING AUTHORITY SAN DIEGO
GAS & ELECTRIC COMPANY SERIES A (INDUSTRIAL DEVELOPMENT REVENUE LOC) 6.80 06/01/2015 712,338
3,275,000 CALIFORNIA STATE SERIES D - 1 (GENERAL OBLIGATION - STATES,
TERRITORIES LOC)+/-@ 3.05 05/01/2033 3,275,000
3,000,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY SANTEE COURT
APARTMENTS SERIES Z-S (HOUSING REVENUE LOC) 7.50 11/20/2036 3,087,630
5,000,000 FOOTHILL CA EASTERN TRANSPORTATION CORRIDOR AGENCY CAPITAL APPRECIATION
SENIOR LIEN SERIES A (TOLL ROAD REVENUE LOC)^ 4.36 01/01/2019 2,772,450
21
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
CALIFORNIA (CONTINUED)
$ 10,000,000 FOOTHILL CA EASTERN TRANSPORTATION CORRIDOR AGENCY CAPITAL APPRECIATION
SENIOR LIEN SERIES A (TOLL ROAD REVENUE LOC)^ 5.70% 01/15/2030 $ 2,345,600
1,445,000 FOOTHILL EASTERN CORRIDOR AGENCY CALIFORNIA TOLL REVENUE CONSERVATION
CAPITAL APPRECIATION SENIOR LIEN SERVICE A (TOLL ROAD REVENUE LOC) 7.05 01/01/2010 1,696,907
1,500,000 GOLDEN STATE TOBACCO SECURITIZATION CORPORATION CA SERIES A4
(EXCISE TAX REVENUE LOC) 7.80 06/01/2042 1,731,195
4,000,000 GOLDEN STATE TOBACCO SECURITIZATION CORPORATION CA SERIES B
(EXCISE TAX REVENUE LOC) 5.63 06/01/2038 4,327,480
1,000,000 GOLDEN STATE TOBACCO SECURITIZATION CORPORATION CA TOBACCO SETTLEMENT
ENHANCED ASSET BACKED SERIES B (OTHER REVENUE LOC) 5.50 06/01/2033 1,076,970
1,000,000 MADERA COUNTY CA VALLEY CHILDRENS HOSPITAL (HEALTHCARE FACILITIES
REVENUE LOC) 6.50 03/15/2015 1,200,400
1,800,000 PORT HUENEME CA REDEVELOPMENT AGENCY CENTRAL COMMUNITY PROJECT
(TAX INCREMENTAL REVENUE LOC) 5.50 05/01/2014 2,055,564
1,000,000 ROSEVILLE CA JOINT UNION HIGH SCHOOL DISTRICT SERIES B
(PROPERTY TAX REVENUE LOC)^ 3.93 08/01/2015 647,450
1,000,000 SANTA CLARA COUNTY CA FINANCING AUTHORITY FACILITY REPLACEMENT
PROJECT A (LEASE REVENUE LOC) 7.75 11/15/2008 1,159,480
3,000,000 SANTA ROSA CA RANCHERIA TACHI YOKUT TRIBE ENTERPRISE (OTHER REVENUE LOC) 5.50 03/01/2008 3,041,070
38,185,330
------------
COLORADO - 3.45%
3,000,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY BROMLEY EAST
PROJECT SERIES A (LEASE REVENUE LOC) 7.25 09/15/2030 3,139,500
1,000,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY COLORADO LUTHERAN
HIGH SCHOOL ASSOCIATION PROJECT SERIES A (OTHER REVENUE LOC) 7.63 06/01/2034 1,060,170
500,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY DENVER ACADEMY
SERIES A (EDUCATIONAL FACILITIES REVENUE LOC) 7.13 11/01/2028 534,300
1,000,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY DENVER ARTS
SCHOOL PROJECT (EDUCATIONAL FACILITIES REVENUE LOC) 8.00 05/01/2034 1,038,660
1,000,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY HERITAGE CHRISTIAN
SCHOOL SERIES A (OTHER REVENUE LOC) 7.50 06/01/2034 1,107,900
1,000,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY LEADERSHIP PREP
ACADEMY (LEASE REVENUE LOC) 7.88 05/01/2027 898,250
500,000 COLORADO HEALTH FACILITIES AUTHORITY VAIL VALLEY MEDICAL CENTER PROJECT
(HEALTHCARE FACILITIES REVENUE LOC) 5.00 01/15/2010 523,565
5,000,000 E-470 PUBLIC HIGHWAY AUTHORITY CAPITAL APPRECIATION SENIOR LIEN SERIES B
(TOLL ROAD REVENUE LOC)^ 4.44 09/01/2016 3,038,900
2,240,000 NORTHWEST PARKWAY CO PUBLIC HIGHWAY AUTHORITY CAPITAL APPRECIATION
CONVERTIBLE (TOLL ROAD REVENUE LOC)^ 4.05 06/15/2016 1,852,278
13,193,523
------------
CONNECTICUT - 0.47%
1,500,000 CONNECTICUT TRANSPORTATION INFRASTRUCTURE SERIES B (FUEL SALES TAX
REVENUE LOC) 6.50 10/01/2012 1,790,235
------------
DISTRICT OF COLUMBIA - 0.12%
270,000 DISTRICT OF COLUMBIA TOBACCO SETTLEMENT FINANCING CORPORATION
(EXCISE TAX REVENUE LOC) 5.38 05/15/2010 280,797
175,000 DISTRICT OF COLUMBIA TOBACCO SETTLEMENT FINANCING CORPORATION
(EXCISE TAX REVENUE LOC) 5.70 05/15/2012 184,958
465,755
------------
22
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FLORIDA - 3.33%
$ 1,500,000 BREVARD COUNTY FL HEALTH FACILITIES AUTHORITY RETIREMENT HOUSING
FUNDING (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 5.00% 12/01/2028 $ 1,500,000
420,000 BROWARD COUNTY FL WHEELABRATOR SERIES A (INDUSTRIAL DEVELOPMENT
REVENUE LOC) 4.50 06/01/2011 436,619
1,400,000 CAPITAL TRUST AGENCY FL SEMINOLE TRIBE CONVENTION SERIES A
(OTHER REVENUE LOC) 8.95 10/01/2033 1,572,802
2,000,000 CAPITAL TRUST AGENCY FL SEMINOLE TRIBE CONVENTION SERIES A
(OTHER REVENUE LOC) 10.00 10/01/2033 2,258,500
315,000 GULF BREEZE FL MIAMI BEACH LOCAL GOVERNMENT SERIES B
(OTHER REVENUE LOC)+/- 4.75 12/01/2015 334,174
5,000,000 ORLANDO FL UTILITIES COMMISSION SUBSERIES D (UTILITIES REVENUE LOC) 6.75 10/01/2017 6,189,900
430,000 PINELLAS COUNTY FL HFA MULTI COUNTY PROGRAM SUBSERIES A-4
(HOUSING REVENUE LOC) 5.50 03/01/2036 436,545
12,728,540
------------
GEORGIA - 9.96%
4,930,000 ATLANTA GA RAPID TRANSIT AUTHORITY SERIES P (SALES TAX REVENUE LOC) 6.25 07/01/2020 5,976,097
3,000,000 ATLANTA GA SERIES A (AIRPORT REVENUE LOC)@ 5.50 01/01/2010 3,339,540
3,070,000 ATLANTA GA SERIES C (AIRPORT REVENUE LOC) 6.25 01/01/2014 3,431,554
280,000 ATLANTA URBAN RESIDENTIAL FINANCE AUTHORITY EVERGREEN VILLAGE ESTATES
PROJECT SERIES A (HOUSING REVENUE LOC) 5.88 05/01/2007 272,678
1,675,000 ATLANTA URBAN RESIDENTIAL FINANCE AUTHORITY EVERGREEN VILLAGE ESTATES
PROJECT SERIES A (HOUSING REVENUE LOC) 6.38 05/01/2017 1,492,291
2,965,000 ATLANTA URBAN RESIDENTIAL FINANCE AUTHORITY EVERGREEN VILLAGE ESTATES
PROJECT SERIES A (HOUSING REVENUE LOC) 6.50 05/01/2027 2,510,673
2,995,000 COLQUITT COUNTY GA DEVELOPMENT AUTHORITY ZERO COUPON SERIES A
(HEALTHCARE FACILITIES REVENUE LOC)^ 4.73 12/01/2021 1,379,078
4,595,000 COLQUITT COUNTY GA DEVELOPMENT AUTHORITY ZERO COUPON SUBSERIES C
(HEALTHCARE FACILITIES REVENUE LOC)^ 4.73 12/01/2021 2,115,814
1,320,000 FAYETTE COUNTY GA SCHOOL DISTRICT (PROPERTY TAX REVENUE LOC)^ 4.28 03/01/2017 1,061,583
2,365,000 FAYETTE COUNTY GA SCHOOL DISTRICT (PROPERTY TAX REVENUE LOC)^ 4.35 03/01/2018 1,900,940
1,340,000 FAYETTE COUNTY GA SCHOOL DISTRICT (PROPERTY TAX REVENUE LOC)^ 4.42 03/01/2019 1,075,162
4,300,000 GEORGIA STATE SERIES B (TAX INCREMENTAL REVENUE LOC) 6.25 03/01/2011 4,988,258
1,000,000 GEORGIA STATE SERIES E (TAX INCREMENTAL REVENUE LOC)# 6.75 12/01/2012 1,220,740
2,000,000 MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA PROJECT ONE SUBSERIES A
(UTILITIES REVENUE LOC) 5.25 01/01/2014 2,234,380
11,000,000 WASHINGTON GA WILKES PAYROLL DEVELOPMENT AUTHORITY ZERO COUPON
SUBSERIES C (HEALTHCARE FACILITIES REVENUE LOC)^ 4.73 12/01/2021 5,065,060
38,063,848
------------
IDAHO - 1.16%
4,000,000 BOISE CITY ID URBAN RENEWAL AGENCY URBAN RENEWAL COUNTY COURTS
(LEASE REVENUE LOC)@ 6.00 08/15/2009 4,446,680
------------
ILLINOIS - 4.42%
2,740,000 AURORA IL SERIES B (TAX INCREMENTAL REVENUE LOC) 5.85 12/30/2013 2,779,730
500,000 CHICAGO IL HOUSING AUTHORITY (HOUSING REVENUE LOC) 5.38 07/01/2013 544,420
2,000,000 COOK COUNTY IL COMMUNITY CONSOLIDATED SCHOOL DISTRICT NUMBER 15
PALATINE CAPITAL APPRECIATION (PROPERTY TAX REVENUE LOC)^ 4.68 12/01/2019 1,018,420
1,340,000 COOK COUNTY IL SCHOOL DISTRICT NUMBER 159 MATTESON-RICHTON PARK CAPITAL
APPRECIATION (PROPERTY TAX REVENUE LOC)^ 5.09 12/01/2028 409,437
455,000 GRUNDY COUNTY IL SCHOOL DISTRICT NUMBER 054 MORRIS (GENERAL OBLIGATION -
SCHOOL DISTRICTS LOC) 8.75 12/01/2017 577,245
23
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
ILLINOIS (CONTINUED)
$ 545,000 GRUNDY COUNTY IL SCHOOL DISTRICT NUMBER 054 MORRIS (GENERAL OBLIGATION -
SCHOOL DISTRICTS LOC) 8.70% 12/01/2018 $ 693,823
570,000 GRUNDY COUNTY IL SCHOOL DISTRICT NUMBER 054 MORRIS (GENERAL OBLIGATION -
SCHOOL DISTRICTS LOC) 8.50 12/01/2019 722,025
1,670,000 ILLINOIS FINANCE AUTHORITY ADVENTIST HEALTH SYSTEM SUNBELT OBLIGATED
GROUP (HEALTHCARE FACILITIES REVENUE LOC) 5.50 11/15/2029 1,726,563
410,000 ILLINOIS FINANCE AUTHORITY CHICAGO CHARTER SCHOOL FOUNDATION PROJECT
SERIES A (LEASE REVENUE LOC) 5.25 12/01/2012 421,599
2,330,000 ILLINOIS FINANCE AUTHORITY CHICAGO CHARTER SCHOOL FOUNDATION PROJECT
SERIES A (LEASE REVENUE LOC) 6.13 12/01/2022 2,486,156
450,000 ILLINOIS HEALTH FACILITIES AUTHORITY CONDELL MEDICAL CENTER
(HEALTHCARE FACILITIES REVENUE LOC) 7.00 05/15/2022 495,508
1,290,000 ILLINOIS HOUSING DEVELOPMENT AUTHORITY MFHR (HOUSING REVENUE LOC) 5.00 07/01/2025 1,290,168
215,000 MADISON & BOND COUNTIES IL COMMUNITY UNIT SCHOOL DISTRICT NUMBER 5
SERIES A (PROPERTY TAX REVENUE LOC) 4.13 02/01/2016 216,477
1,240,000 MADISON & BOND COUNTIES IL COMMUNITY UNIT SCHOOL DISTRICT NUMBER 5
SERIES A (PROPERTY TAX REVENUE LOC) 5.00 02/01/2018 1,349,914
1,980,000 MADISON & BOND COUNTIES IL COMMUNITY UNIT SCHOOL DISTRICT NUMBER 5
SERIES A (PROPERTY TAX REVENUE LOC) 5.00 02/01/2019 2,161,447
16,892,932
------------
IOWA - 0.65%
750,000 IOWA FINANCE AUTHORITY (HEALTHCARE FACILITIES REVENUE LOC) 6.75 02/15/2013 841,477
830,000 TOBACCO SETTLEMENT AUTHORITY OF IOWA SERIES B (EXCISE TAX REVENUE LOC) 5.50 06/01/2012 867,566
755,000 TOBACCO SETTLEMENT AUTHORITY OF IOWA SERIES B (EXCISE TAX REVENUE LOC) 5.50 06/01/2014 781,365
2,490,408
------------
KANSAS - 1.40%
470,000 KANSAS DEVELOPMENT FINANCE AUTHORITY HEALTH FACILITIES HARTFORD
(HEALTHCARE FACILITIES REVENUE LOC) 6.13 04/01/2012 531,218
2,735,000 KANSAS DEVELOPMENT FINANCE AUTHORITY KS HOUSING DEVELOPMENT SERIES B1
(HOUSING REVENUE LOC) 5.60 05/20/2034 2,923,961
500,000 MANHATTAN KS COMMERCIAL DEVELOPMENT REVENUE HOLIDAY INN SUBSERIES B
(LEASE REVENUE LOC) 11.00 07/01/2016 812,495
1,000,000 SEDGWICK & SHAWNEE COUNTIES KS MORTGAGE BACKED SECURITIES SERIES A-5
(HOUSING REVENUE LOC)+/- 4.00 12/01/2036 1,075,730
5,343,404
------------
KENTUCKY - 0.27%
1,000,000 MUHLENBERG COUNTY KY MUHLENBERG COMMUNITY HOSPITAL PROJECT
(HEALTHCARE FACILITIES REVENUE LOC) 6.75 07/01/2010 1,035,230
------------
LOUISIANA - 2.67%
900,000 CALCASIEU PARISH LA INDUSTRIAL DEVELOPMENT BOARD ENTERGY GULF STATES
INCORPORATED (INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.45 07/01/2010 911,160
6,550,000 CLAIBORNE PARISH LA LAW ENFORCEMENT DISTRICT CLAIBORNE CORRECTIONAL
FACILITIES PROJECT (OTHER REVENUE LOC) 6.25 03/01/2019 6,784,752
3,400,000 LOUISIANA PUBLIC FACILITIES AUTHORITY SERIES B
(STATE & LOCAL GOVERNMENTS LOC)^ 4.78 12/01/2019 1,706,800
1,300,000 NEW ORLEANS LA CAPITAL APPRECIATION (PROPERTY TAX REVENUE LOC)^ 4.41 09/01/2016 792,753
10,195,465
------------
24
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MASSACHUSETTS - 4.66%
$ 3,000,000 COMMONWEALTH OF MASSACHUSETTS CONSUMER LOAN SERIES B
(OTHER REVENUE LOC)@ 5.25% 06/01/2010 $ 3,272,790
3,385,000 MASSACHUSETTS BAY TRANSPORTATION AUTHORITY GENERAL TRANSPORTATION
SYSTEM SERIES A (TRANSPORTATION REVENUE LOC) 7.00 03/01/2014 4,157,592
4,160,000 MASSACHUSETTS DEVELOPMENT FINANCE AGENCY AYER LIMITED PARTNERSHIP
SERIES A (HOUSING REVENUE LOC) 6.20 02/20/2046 4,583,738
2,000,000 MASSACHUSETTS DEVELOPMENT FINANCE AGENCY WGBH EDUCATIONAL FOUNDATION
SERIES A (OTHER REVENUE LOC) 5.38 01/01/2042 2,162,680
3,000,000 MASSACHUSETTS STATE WATER POLLUTION ABATEMENT MWRA PROGRAM SUBSERIES A
(WATER REVENUE LOC) 6.00 08/01/2017 3,621,990
17,798,790
------------
MICHIGAN - 0.57%
1,350,000 DICKINSON COUNTY MI (HEALTHCARE FACILITIES REVENUE LOC) 5.50 11/01/2013 1,450,966
650,000 MICHIGAN STATE HOSPITAL FINANCE AUTHORITY ST JOHN HOSPITAL & MEDICAL
CENTER (HEALTHCARE FACILITIES REVENUE LOC) 6.00 05/15/2010 730,158
2,181,124
------------
MINNESOTA - 0.55%
500,000 MINNEAPOLIS & ST PAUL MN METROPOLITAN AIRPORTS COMMISSION SERIES B
(AIRPORT REVENUE LOC) 6.00 01/01/2011 553,790
1,500,000 WOODBURY MN MATH SCIENCE ACADEMY PROJECT SERIES A (OTHER REVENUE LOC) 7.50 12/01/2031 1,556,910
2,110,700
------------
MISSOURI - 1.59%
2,000,000 MISSOURI STATE ENVIRONMENTAL IMPROVEMENT & ENERGY RESOURCES AUTHORITY
REVOLVING FUND PROGRAM SERIES B (WATER REVENUE LOC) 5.50 07/01/2016 2,303,120
3,700,000 SAINT CHARLES COUNTY MO IDA HOUSING VANDERBILT APARTMENTS
(HOUSING REVENUE LOC)+/-@ 5.00 02/01/2029 3,787,172
6,090,292
------------
MONTANA - 0.20%
250,000 MONTANA FACILITY FINANCE AUTHORITY MASTER LIEN PROGRAM CHILDREN'S HOME
SERIES B (HEALTHCARE FACILITIES REVENUE LOC) 4.75 01/01/2024 249,985
500,000 MONTANA FACILITY FINANCE AUTHORITY MASTER LIEN PROGRAM MARIAS MEDICAL
CENTER SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 5.00 01/01/2028 498,890
748,875
------------
NEVADA - 1.34%
5,000,000 NEVADA MUNICIPAL BOND BOOK PROJECT NUMBERS 49 & 50
(PROPERTY TAX REVENUE LOC) 5.50 11/01/2025 5,104,100
------------
NEW HAMPSHIRE - 0.86%
430,000 MANCHESTER NH HOUSING & REDEVELOPMENT AUTHORITY CAPITAL APPRECIATION
SERIES B (OTHER REVENUE LOC)^ 5.40 01/01/2019 207,531
1,200,000 MANCHESTER NH HOUSING & REDEVELOPMENT AUTHORITY CAPITAL APPRECIATION
SERIES B (OTHER REVENUE LOC)^ 5.75 01/01/2025 393,420
1,465,000 MANCHESTER NH HOUSING & REDEVELOPMENT AUTHORITY CAPITAL APPRECIATION
SERIES B (OTHER REVENUE LOC)^ 5.78 01/01/2026 451,103
1,040,000 MANCHESTER NH HOUSING & REDEVELOPMENT AUTHORITY CAPITAL APPRECIATION
SERIES B (OTHER REVENUE LOC)^ 5.81 01/01/2027 300,591
25
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
NEW HAMPSHIRE (CONTINUED)
$ 2,195,000 MANCHESTER NH HOUSING & REDEVELOPMENT AUTHORITY CAPITAL APPRECIATION
SERIES B (OTHER REVENUE LOC)^ 5.83% 01/01/2028 $ 596,469
1,360,000 NEW HAMPSHIRE BUSINESS FINANCE AUTHORITY (OTHER REVENUE LOC)+/-@ 3.50 07/01/2027 1,327,319
3,276,433
------------
NEW JERSEY - 3.92%
2,000,000 MIDDLESEX COUNTY NJ IMPROVEMENT AUTHORITY HELDRICH CENTER HOTEL
SUBSERIES B (TAX INCREMENTAL REVENUE LOC) 6.25 01/01/2037 1,965,660
1,000,000 NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY CIGARETTE TAX
(EXCISE TAX REVENUE LOC) 5.75 06/15/2029 1,071,780
2,000,000 NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY CIGARETTE TAX
(EXCISE TAX REVENUE LOC) 5.75 06/15/2034 2,135,920
1,475,000 NEW JERSEY HEALTH CARE FACILITIES FINANCING AUTHORITY CAPITAL HEALTH
SYSTEM OBLIGATED GROUP (HEALTHCARE FACILITIES REVENUE LOC) 5.13 07/01/2012 1,528,911
5,000,000 NEW JERSEY TRANSPORTATION TRUST FUND AUTHORITY TRANSPORTATION SYSTEM
SERIES B (FUEL SALES TAX REVENUE LOC)@ 5.00 06/15/2007 5,311,700
1,000,000 NEW JERSEY TRANSPORTATION TRUST FUND AUTHORITY TRANSPORTATION SYSTEM
SERIES B (TRANSPORTATION REVENUE LOC)@ 6.00 12/15/2011 1,159,640
275,000 TOBACCO SETTLEMENT FINANCING CORPORATION NEW JERSEY (EXCISE TAX
REVENUE LOC) 5.50 06/01/2011 287,854
1,400,000 UNION COUNTY NJ POLLUTION CONTROL FINANCING AUTHORITY AMERICAN
CYANAMID COMPANY (INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.80 09/01/2009 1,508,052
14,969,517
------------
NEW MEXICO - 0.56%
2,000,000 UNIVERSITY OF NEW MEXICO HOSPITAL MORTGAGE (HEALTHCARE FACILITIES
REVENUE LOC) 5.00 01/01/2016 2,144,240
------------
NEW YORK - 10.65%
1,000,000 NASSAU COUNTY NY COMB SEWER DISTRICTS SERIES G
(PROPERTY TAX REVENUE LOC) 5.45 01/15/2015 1,137,940
260,000 NASSAU COUNTY NY IDA (INDUSTRIAL DEVELOPMENT REVENUE LOC) 6.88 07/01/2010 275,337
2,000,000 NEW YORK NY IDA NEW YORK INSTITUTION OF TECHNOLOGY PROJECT
(COLLEGE AND UNIVERSITY REVENUE LOC) 5.25 03/01/2018 2,194,900
1,230,000 NEW YORK NY IDA SPECIAL NEEDS POOLED SERIES A-1
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 6.88 07/01/2010 1,263,825
2,025,000 NEW YORK NY MUNICIPAL WATER FINANCE AUTHORITY PREREFUNDED SERIES B
(WATER REVENUE LOC)@ 6.00 06/15/2010 2,324,781
375,000 NEW YORK NY SERIES A (PROPERTY TAX REVENUE LOC) 5.25 08/01/2009 405,030
1,500,000 NEW YORK NY SERIES B (PROPERTY TAX REVENUE LOC) 5.75 08/01/2015 1,668,780
1,000,000 NEW YORK NY SERIES C (PROPERTY TAX REVENUE LOC) 5.50 09/15/2019 1,095,400
1,020,000 NEW YORK NY SERIES H (PROPERTY TAX REVENUE LOC) 5.75 03/15/2013 1,138,096
350,000 NEW YORK NY TRANSITIONAL FINANCE AUTHORITY FUTURE TAX
(TAX REVENUE LOC)+/- 5.25 02/01/2029 380,138
1,000,000 NEW YORK NY TRANSITIONAL FINANCE AUTHORITY FUTURE TAX SECURED SERIES C
(SALES TAX REVENUE LOC)@ 5.88 11/01/2017 1,140,520
1,475,000 NEW YORK NY UNREFUNDED BALANCE SERIES H (PROPERTY TAX REVENUE LOC) 6.00 08/01/2017 1,571,834
1,000,000 NEW YORK STATE DORMITORY AUTHORITY AIDS LONG TERM HEALTH CARE
FACILITIES (COLLEGE AND UNIVERSITY REVENUE LOC) 5.00 11/01/2014 1,065,400
1,000,000 NEW YORK STATE DORMITORY AUTHORITY CITY UNIVERSITY SYSTEM SERIES A
(OTHER REVENUE LOC) 5.63 07/01/2016 1,149,770
2,800,000 NEW YORK STATE DORMITORY AUTHORITY MENTAL HEALTH SERVICES FACILITIES
IMPROVEMENT SERIES B (HEALTHCARE FACILITIES REVENUE LOC) 6.00 08/15/2016 3,273,004
1,000,000 NEW YORK STATE DORMITORY AUTHORITY STATE UNIVERSITY ACTIVITIES OF DAILY
LIVING FACILITIES SERIES C (LEASE REVENUE LOC) 5.75 05/15/2016 1,174,530
26
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
NEW YORK (CONTINUED)
$ 2,500,000 NEW YORK STATE DORMITORY AUTHORITY STATE UNIVERSITY EDUCATIONAL
FACILITIES SERIES A (OTHER REVENUE LOC) 5.50% 05/15/2019 $ 2,863,150
2,810,000 NEW YORK STATE DORMITORY AUTHORITY UNREFUNDED BALANCE DEPARTMENT HEALTH
(HEALTHCARE FACILITIES REVENUE LOC)@ 5.75 07/01/2006 2,960,897
5,350,000 NEW YORK STATE LOCAL GOVERNMENT ASSISTANCE CORPORATION SERIES E
(SALES TAX REVENUE LOC) 6.00 04/01/2014 6,264,315
1,000,000 NEW YORK STATE THRUWAY AUTHORITY NY HIGHWAY & BRIDGE LOC MBIA IBC
(OTHER REVENUE LOC)@ 5.75 04/01/2009 1,111,490
200,000 NEW YORK STATE URBAN DEVELOPMENT CORPORATION SERIES C
(OTHER REVENUE LOC) 4.00 01/01/2020 204,682
1,000,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES A1
(EXCISE TAX REVENUE LOC) 5.25 06/01/2014 1,075,180
3,500,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES C1
(OTHER REVENUE LOC) 5.50 06/01/2015 3,815,070
1,000,000 TOMPKINS COUNTY NY IDA CIVIC FACILITIES CORNELL UNIVERSITY LAKE
(LEASE REVENUE LOC)@ 5.63 07/01/2010 1,129,830
40,683,899
------------
NORTH CAROLINA - 0.72%
1,750,000 NORTH CAROLINA MEDICAL CARE COMMISSION ARC PROJECTS SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 5.80 10/01/2034 1,771,472
1,000,000 NORTH CAROLINA MEDICAL CARE COMMISSION HEALTH CARE HOUSING PROJECT
SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 4.65 10/01/2014 988,550
2,760,022
------------
NORTH DAKOTA - 0.79%
1,505,000 NORTH DAKOTA STATE HFA REVENUE (HOUSING REVENUE LOC)%% 4.40 01/01/2013 1,510,569
1,515,000 THREE AFFILIATED TRIBES OF THE FORT BERTHOLD RESERVATION ND
(RECREATIONAL FACILITIES REVENUE LOC) 6.30 11/15/2010 1,515,227
3,025,796
------------
OHIO - 3.75%
1,325,000 CARROLL OH WATER & SEWER DISTRICT (PROPERTY TAX REVENUE LOC) 6.25 12/01/2010 1,415,921
3,800,000 MEDINA COUNTY OH CAMELOT PLACE LIMITED SERIES A (HOUSING REVENUE LOC) 8.38 10/01/2023 3,833,706
2,500,000 MIAMI COUNTY OH UPPER VALLEY MEDICAL CENTER SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 6.25 05/15/2016 2,598,675
7,455,000 TOLEDO OH COMMODORE PERRY APARTMENTS (HOUSING REVENUE LOC) 7.00 12/01/2028 6,499,344
14,347,646
------------
OKLAHOMA - 0.27%
1,000,000 ELLIS COUNTY OK INDUSTRIAL AUTHORITY W. B. JOHNSTON GRAIN SHATTUCK
PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC) 7.10 08/01/2023 1,024,430
------------
PENNSYLVANIA - 2.37%
1,120,000 ALLEGHENY COUNTY PA IDA PROPEL SCHOOLS HOMESTEAD PROJECT SERIES A
(LEASE REVENUE LOC) 7.75 12/15/2029 1,093,198
1,125,000 ALLEGHENY COUNTY PA RDA PITTSBURGH MILLS PROJECT (TAX REVENUE LOC)+/-@ 5.10 07/01/2014 1,171,676
500,000 LEHIGH COUNTY PA GENERAL PURPOSE AUTHORITY KIDSPEACE OBLIGATED GROUP
(HEALTHCARE FACILITIES REVENUE LOC) 5.80 11/01/2012 486,680
1,160,000 PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY AMTRAK PROJECT
SERIES A (LEASE REVENUE LOC) 6.00 11/01/2011 1,217,188
1,880,000 PENNSYLVANIA STATE HIGHER EDUCATIONAL FACILITIES AUTHORITY ALLEGHENY
DELAWARE VALLEY SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 5.70 11/15/2011 2,099,058
27
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
PENNSYLVANIA (CONTINUED)
$ 1,825,000 PHILADELPHIA PA HOSPITALS & HIGHER EDUCATION FACILITIES AUTHORITY
TEMPLE UNIVERSITY HOSPITAL SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 6.50% 11/15/2008 $ 1,966,456
2,000,000 PITTSBURGH PA REDEVELOPMENT AGENCY LOS MEDANOS COMMUNITY DEVELOPMENT
PROJECT (PROPERTY TAX REVENUE LOC)^ 4.62 08/01/2019 1,042,640
9,076,896
------------
PUERTO RICO - 4.33%
1,000,000 COMMONWEALTH OF PUERTO RICO (FUEL SALES TAX REVENUE LOC) 5.65 07/01/2015 1,162,510
1,000,000 COMMONWEALTH OF PUERTO RICO CAPITAL APPRECIATION (OTHER REVENUE LOC)^ 4.15 07/01/2017 606,540
1,000,000 COMMONWEALTH OF PUERTO RICO PUBIC IMPROVEMENT
(STATE & LOCAL GOVERNMENTS LOC) 5.25 07/01/2012 1,104,100
2,000,000 COMMONWEALTH OF PUERTO RICO PUBIC IMPROVEMENT
(STATE & LOCAL GOVERNMENTS LOC) 5.25 07/01/2017 2,234,860
1,525,000 PUERTO RICO AQUEDUCT & SEWER AUTHORITY (WATER REVENUE LOC) 6.25 07/01/2012 1,776,259
400,000 PUERTO RICO HFA CAPITAL FEDERAL PROGRAM (HOUSING REVENUE LOC) 5.00 12/01/2017 428,368
1,500,000 PUERTO RICO HIGHWAY & TRANSPORTATION AUTHORITY SERIES B
(TOLL ROAD REVENUE LOC) 5.75 07/01/2019 1,684,500
1,765,000 PUERTO RICO HIGHWAY & TRANSPORTATION AUTHORITY ZERO COUPON SERIES A
(FUEL SALES TAX REVENUE LOC)^ 4.10 07/01/2016 1,121,569
750,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY
(COLLEGE AND UNIVERSITY REVENUE LOC) 5.00 02/01/2009 786,885
1,015,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY
(COLLEGE AND UNIVERSITY REVENUE LOC) 5.00 02/01/2010 1,068,562
1,000,000 PUERTO RICO INFRASTRUCTURE FINANCING AUTHORITY SERIES A
(STATE & LOCAL GOVERNMENTS LOC) 5.50 10/01/2017 1,114,720
400,000 PUERTO RICO PUBLIC BUILDINGS AUTHORITY GOVERNMENT FACILITIES SERIES C
(LEASE REVENUE LOC) 5.50 07/01/2016 452,452
2,700,000 PUERTO RICO PUBLIC FINANCE CORPORATION COMMONWEALTH SERIES A
(LEASE REVENUE LOC)+/-@ 5.75 08/01/2027 3,004,965
16,546,290
------------
SOUTH CAROLINA - 3.90%
4,560,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B
(TOLL ROAD REVENUE LOC)^ 9.93 01/01/2014 1,967,686
1,000,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B
(TOLL ROAD REVENUE LOC)^ 9.54 01/01/2015 405,960
5,000,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B
(TOLL ROAD REVENUE LOC)^ 8.53 01/01/2027 818,000
400,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B
(TOLL ROAD REVENUE LOC)^ 8.53 01/01/2028 60,196
10,350,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B
(TOLL ROAD REVENUE LOC)^ 8.43 01/01/2032 1,145,538
2,500,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B
(TOLL ROAD REVENUE LOC)^ 9.88 01/01/2038 191,200
3,000,000 GREENVILLE COUNTY SC SCHOOL DISTRICT BUILDING EQUITY SOONER TOMORROW
(LEASE REVENUE LOC) 6.00 12/01/2021 3,419,940
1,000,000 SOUTH CAROLINA EDUCATIONAL FACILITIES AUTHORITY BENEDICT COLLEGE
(COLLEGE AND UNIVERSITY REVENUE LOC) 5.75 07/01/2017 1,114,530
2,000,000 SOUTH CAROLINA JOBS ECONOMIC DEVELOPMENT AUTHORITY PALMETTO HEALTH
SERIES C (HEALTHCARE FACILITIES REVENUE LOC) 6.88 08/01/2027 2,263,760
2,400,000 SOUTH CAROLINA STATE PORTS AUTHORITY (AIRPORT REVENUE LOC)# 7.80 07/01/2009 2,586,048
900,000 YORK SC BOWATER INCORPORATED PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC) 7.63 03/01/2006 921,204
14,894,062
------------
28
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
SOUTH DAKOTA - 1.15%
$ 605,000 SISSETON-WAHPETON SD SIOUX TRIBE LAKE TRAVERSE RESERVATION <> 7.00% 11/01/2013 $ 647,810
1,290,000 SISSETON-WAHPETON SD SIOUX TRIBE LAKE TRAVERSE RESERVATION <> 7.00 11/01/2023 1,373,901
275,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY POOLED LOAN
PROGRAM ANGUS INCORPORATED PROJECT SERIES A (UTILITIES REVENUE LOC) 4.75 04/01/2010 283,134
285,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY POOLED LOAN
PROGRAM ANGUS INCORPORATED PROJECT SERIES A (UTILITIES REVENUE LOC) 5.00 04/01/2011 296,155
300,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY POOLED LOAN
PROGRAM ANGUS INCORPORATED PROJECT SERIES A (UTILITIES REVENUE LOC) 5.25 04/01/2012 315,303
320,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY POOLED LOAN
PROGRAM ANGUS INCORPORATED PROJECT SERIES A (UTILITIES REVENUE LOC) 5.25 04/01/2013 335,898
420,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY POOLED LOAN
PROGRAM MCELEEG PROJECT SERIES B (INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.00 04/01/2014 432,722
685,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY POOLED LOAN PROGRAM
MIDSTATES PRINT SERIES A (INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.50 04/01/2018 713,551
4,398,474
------------
TEXAS - 7.64%
1,750,000 BRAZOS TX RIVER AUTHORITY TEXAS UTILITIES ELECTRIC COMPANY SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 5.40 04/01/2030 1,792,438
1,000,000 GRAND PRAIRIE TX INDEPENDENT SCHOOL DISTRICT (PROPERTY TAX REVENUE LOC)^ 4.19 02/15/2014 693,220
1,100,000 HARRIS COUNTY TX MUNICIPAL UTILITY DISTRICT NUMBER 368
(PROPERTY TAX REVENUE LOC) 6.13 09/01/2029 1,273,063
1,000,000 HIDALGO COUNTY TX (PROPERTY TAX REVENUE LOC)%% 5.00 08/15/2011 1,087,270
3,000,000 LA JOYA TX INDEPENDENT SCHOOL DISTRICT (PROPERTY TAX REVENUE LOC) 5.50 02/15/2025 3,224,160
13,440,000 LEANDER TX INDEPENDENT SCHOOL DISTRICT GO (PROPERTY TAX REVENUE LOC)^%% 5.16 08/15/2022 5,582,842
1,150,000 LUBBOCK TX HEALTH FACILITIES DEVELOPMENT CORPORATION SAINT JOSEPH
HEALTH SYSTEM (HEALTHCARE FACILITIES REVENUE LOC) 5.25 07/01/2012 1,213,066
8,415,000 LUBBOCK TX HOUSING FINANCE CORPORATION CAPITAL APPRECIATION^ 4.20 10/01/2015 5,456,538
500,000 RED RIVER TX HOECHST CELANESE CORPORATION PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.20 05/01/2007 503,920
1,055,000 SAN ANTONIO TX SUB LIEN PASSENGER FACILITY (AIRPORT REVENUE LOC) 5.75 07/01/2017 1,166,292
4,000,000 SPRING TX INDEPENDENT SCHOOL DISTRICT (GENERAL OBLIGATION - SCHOOL
DISTRICTS LOC) 5.20 02/15/2017 4,203,840
1,000,000 TEXAS WATER DEVELOPMENT BOARD STATE REVOLVING FUND SENIOR LIEN
SERIES A (OTHER REVENUE LOC) 4.75 07/15/2020 1,024,150
1,735,000 TRAVIS COUNTY TX LIMITED TAX (PROPERTY TAX REVENUE LOC) 5.50 03/01/2016 1,986,644
29,207,443
------------
UTAH - 0.12%
470,000 EAGLE MOUNTAIN UT (OTHER REVENUE LOC) 5.90 12/15/2007 470,475
------------
VIRGINIA - 0.90%
3,350,000 PITTSYLVANIA COUNTY VA IDA EXEMPT FACILITIES SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 7.55 01/01/2019 3,434,052
------------
WASHINGTON - 2.23%
1,200,000 OKANOGAN COUNTY WA IRRIGATION DISTRICT (WATER REVENUE LOC) 4.75 12/01/2013 1,248,648
945,000 SEATTLE WA HOUSING AUTHORITY HILLTOP & SPRING PROJECTS
(HOUSING REVENUE LOC) 5.38 10/20/2018 1,016,234
1,545,000 SEATTLE WA HOUSING AUTHORITY HILLTOP & SPRING PROJECTS
(HOUSING REVENUE LOC) 5.88 10/20/2028 1,693,073
2,502,500 SPOKANE COUNTY WA SCHOOL DISTRICT NUMBER 81 DEFERRED INTEREST
(PROPERTY TAX REVENUE LOC)^ 4.86 06/01/2024 2,136,034
29
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WASHINGTON (CONTINUED)
$ 1,250,000 SPOKANE COUNTY WASHINGTON SCHOOL DISTRICT NUMBER 081 SPOKANE
CONVERTIBLE DEFERRED INTEREST (PROPERTY TAX REVENUE LOC)^ 4.87% 12/01/2024 $ 1,066,950
690,000 TOBACCO SETTLEMENT AUTHORITY OF WASHINGTON (EXCISE TAX REVENUE LOC) 5.50 06/01/2012 721,229
615,000 WASHINGTON STATE HOUSING FINANCE COMMISSION CRISTA MINISTRIES
PROJECT A (OTHER REVENUE LOC) 5.35 07/01/2014 629,557
8,511,725
------------
WISCONSIN - 4.58%
6,960,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION (OTHER REVENUE LOC) 6.00 06/01/2017 7,068,228
445,000 GREEN BAY WI HOUSING AUTHORITY HOUSING REVENUE UNIVERSITY VILLAGE
HOUSING INCORPORATED (HOUSING REVENUE LOC) 5.00 04/01/2016 483,034
520,000 OSHKOSH WI DON EVANS INCORPORATED PROJECT (INDUSTRIAL DEVELOPMENT
REVENUE LOC) 5.35 12/01/2010 535,870
390,000 OSHKOSH WI DON EVANS INCORPORATED PROJECT (INDUSTRIAL DEVELOPMENT
REVENUE LOC) 5.50 12/01/2011 402,862
2,800,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT SERIES A
(SALES TAX REVENUE LOC) 5.50 12/15/2016 3,218,292
70,000 WATERFORD WI GRADED JOINT SCHOOL DISTRICT NUMBER 1 (PROPERTY TAX
REVENUE LOC)@ 5.25 04/01/2010 76,853
500,000 WESTON WI CDA COMMUNITY DEVELOPMENT SERIES A (LEASE REVENUE LOC) 4.25 10/01/2017 499,505
1,125,000 WESTON WI CDA COMMUNITY DEVELOPMENT SERIES A (LEASE REVENUE LOC) 4.50 10/01/2019 1,133,348
1,600,000 WESTON WI CDA COMMUNITY DEVELOPMENT SERIES A (LEASE REVENUE LOC) 5.25 10/01/2020 1,752,784
645,000 WESTON WI CDA COMMUNITY DEVELOPMENT SERIES A (LEASE REVENUE LOC) 4.70 10/01/2021 652,721
205,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY AGNESIAN
HEALTHCARE INCORPORATED (HEALTHCARE FACILITIES REVENUE LOC) 5.10 07/01/2008 215,291
500,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY BLOOD CENTER
SOUTHEASTERN PROJECT (HEALTHCARE FACILITIES REVENUE LOC) 5.75 06/01/2034 524,380
866,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY MARSHFIELD CLINIC
SERIES B (HEALTHCARE FACILITIES REVENUE LOC) 6.25 02/15/2010 948,521
17,511,689
------------
MULTIPLE STATES - 0.53%
1,000,000 GMAC MUNICIPAL MORTGAGE TRUST++ 5.30 10/31/2039 1,010,090
1,000,000 GMAC MUNICIPAL MORTGAGE TRUST++ 4.80 10/31/2040 1,010,360
2,020,450
------------
TOTAL MUNICIPAL BONDS & NOTES (COST $363,750,546) 383,717,217
------------
CONTRACTS
SWAP OPTIONS - 0.00%
9,200 5 YEAR 4.87% INTEREST RATE SWAP, EXPIRES 7/14/05 17,020
TOTAL SWAP OPTIONS (COST $191,360) 17,020
------------
SHORT-TERM INVESTMENTS - 1.50%
SHARES
MUTUAL FUND - 1.50%
5,713,129 WELLS FARGO ADVANTAGE NATIONAL TAX-FREE MONEY MARKET TRUST~>> 5,713,129
------------
TOTAL SHORT-TERM INVESTMENTS (COST $5,713,129) 5,713,129
------------
30
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
VALUE
TOTAL INVESTMENTS IN SECURITIES
(COST $369,655,035)* 101.91% $ 389,447,366
OTHER ASSETS AND LIABILITIES, NET (1.91) (7,311,878)
------ -------------
TOTAL NET ASSETS 100.00% $ 382,135,488
====== =============
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE
SECURITIES ACT OF 1933, AS AMENDED.
+/- VARIABLE RATE SECURITIES.
^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO
MATURITY.
# SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS.
%% SECURITIES ISSUED ON A WHEN-ISSUED (TBA) BASIS. (SEE NOTE 2)
@ THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
< > RESTRICTED SECURITY THAT CANNOT BE RESOLD TO THE GENERAL PUBLIC WITHOUT
PRIOR REGISTRATION UNDER THE SECURITIES ACT OF 1933. ADDITIONAL
INFORMATION ON THE SECURITY IS AS FOLLOWS:
SECURITY ACQUISITION DATE PRINCIPAL COST
SISSETON-WAHPETON SD SIOUX TRIBE LAKE TRAVERSE RESERVATION 11/24/98 $ 605,000 $ 613,086
SISSETON-WAHPETON SD SIOUX TRIBE LAKE TRAVERSE RESERVATION 11/24/98 $1,290,000 $1,310,536
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
>> SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $5,713,129.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
31
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MUNICIPAL BONDS & NOTES - 100.06%
ALABAMA - 2.03%
$ 75,000 ALABAMA 21ST CENTURY AUTHORITY (EXCISE TAX REVENUE LOC) 5.00% 12/01/2007 $ 77,234
350,000 BIRMINGHAM AL BAPTIST MEDICAL CENTERS SPECIAL CARE FACILITIES
FINANCING AUTHORITY BAPTIST HEALTH SYSTEM SERIES C (HEALTHCARE
FACILITIES REVENUE LOC)+/-@ 4.35 11/15/2016 351,911
2,500,000 BIRMINGHAM AL SPECIAL CARE FACILITIES FINANCING AUTHORITY BAPTIST
MEDICAL CENTER HEALTH SYSTEM-A-1 (HEALTHCARE FACILITIES REVENUE LOC) 4.35 11/15/2028 2,514,100
7,265,000 BIRMINGHAM AL SPECIAL CARE FACILITIES FINANCING AUTHORITY BAPTIST
MEDICAL CENTERS HEALTH SYSTEM SERIES A1 (HEALTHCARE FACILITIES
REVENUE LOC) 4.35 11/15/2028 7,291,227
50,000 CHATOM AL INDUSTRIAL DEVELOPMENT BOARD ELECTRIC COOP SERIES C
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 2.55 12/01/2024 50,000
2,305,000 COUNTY OF CHOCTAW AL SCHOOL (LEASE REVENUE LOC) 3.63 03/01/2009 2,312,722
1,000,000 MOBILE AL (PROPERTY TAX REVENUE LOC) 6.20 02/15/2007 1,056,160
13,653,354
------------
ALASKA - 0.79%
460,000 ALASKA INDUSTRIAL DEVELOPMENT & EXPORT AUTHORITY (UTILITIES REVENUE LOC) 6.00 01/01/2015 501,998
255,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK (EXCISE TAX REVENUE LOC) 4.50 06/01/2008 257,111
1,300,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK (EXCISE TAX REVENUE LOC) 5.60 06/01/2009 1,359,969
1,675,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK (EXCISE TAX REVENUE LOC) 5.60 06/01/2010 1,759,453
465,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK (EXCISE TAX REVENUE LOC) 4.75 06/01/2015 465,884
985,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK (EXCISE TAX REVENUE LOC) 6.20 06/01/2022 999,923
5,344,338
------------
ARIZONA - 2.31%
1,215,000 MARICOPA COUNTY AZ IDA CITIZENS UTILITY COMPANY PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 4.75 08/01/2020 1,216,093
6,000,000 MARICOPA COUNTY AZ POLLUTION CONTROL CORPORATION EL PASO ELECTRIC
COMPANY PROJECT SERIES A (UTILITIES REVENUE LOC)+/-@ 6.25 05/01/2037 6,049,740
1,095,000 PHOENIX AZ (PROPERTY TAX REVENUE LOC) 7.00 07/01/2009 1,235,697
1,265,000 SANTA CRUZ COUNTY AZ IDA (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 4.75 08/01/2020 1,258,612
3,540,673 WHITE MOUNTAIN AZ APACHE TRIBE FORT APACHE INDIAN RESERVATION FORT
APACHE TIMBER EQUIPMENT LEASE 6.25 03/04/2012 3,690,231
2,105,000 YAVAPAI COUNTY AZ IDA (INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.45 06/01/2033 2,105,884
15,556,257
------------
CALIFORNIA - 4.05%
350,000 ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS CA ARCHSTONE REDWOOD
SERIES A (HOUSING REVENUE LOC)+/-@ 5.30 10/01/2008 369,701
2,670,000 ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS SAN DIEGO CA HOSPITAL
ASSOCIATION SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 6.00 08/15/2005 2,693,229
500,000 ABAG FINANCIAL AUTHORITY FOR NONPROFIT CORPORATIONS SAN DIEGO
ASSOCIATES- SERIES C (HEALTHCARE FACILITIES REVENUE LOC) 4.00 03/01/2008 508,335
1,000,000 AGUA CALIENTE BAND OF CAHUILLA INDIANS CA (OTHER REVENUE LOC) 4.00 07/01/2006 1,008,280
3,585,000 CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY SERIES A
(HOUSING REVENUE LOC)+/- 6.63 06/01/2033 3,696,816
250,000 CALIFORNIA STATE DWR SERIES A (UTILITIES REVENUE LOC) 5.50 05/01/2007 262,360
675,000 CALIFORNIA STATEWIDE CDA IRVINE APARTMENT COMMUNITIES SERIES A-4
(HOUSING REVENUE LOC)+/-@ 5.25 05/15/2025 699,908
7,400,000 CALIFORNIA STATEWIDE COMMUNITY DEVELOPMENT AUTHORITY CERTIFICATE
PARTICIPATION OBLIGATED GROUP ACA INSURED (HOSPITAL REVENUE LOC)+/-@ 4.70 12/01/2028 7,400,000
32
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
CALIFORNIA (CONTINUED)
$ 5,000,000 FULLERTON CA REDEVELOPMENT AGENCY SOUTHERN CA COLLEGE OF OPTOMETRY
(LEASE REVENUE LOC)+/-@ 5.00% 04/01/2034 $ 5,184,350
750,000 GOLDEN STATE CA TOBACCO SECURITIZATION CORPORATION SERIES B
(OTHER REVENUE LOC) 5.50 06/01/2019 785,183
2,425,244 PASADENA CA (HEALTHCARE FACILITIES REVENUE LOC) 4.50 12/19/2006 2,432,641
218,351 PASADENA CA (HEALTHCARE FACILITIES REVENUE LOC) 5.27 12/19/2006 218,351
320,000 SANTA ROSA CA RANCHERIA TACHI YOKUT TRIBE ENTERPRISE (OTHER REVENUE LOC) 5.00 03/01/2006 321,357
1,650,000 SANTA ROSA CA RANCHERIA TACHI YOKUT TRIBE ENTERPRISE (OTHER REVENUE LOC) 5.50 03/01/2008 1,672,589
27,253,100
------------
COLORADO - 1.63%
1,145,000 BEACON POINT CO 4.38 12/01/2015 1,140,157
645,000 BLACK HAWK CO BUSINESS IMPROVEMENT REVENUE DISTRICT #97-1 PROJECT
(SPECIAL TAX REVENUE LOC) 6.00 12/01/2009 645,935
460,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY CHARTER SCHOOL
DENVER ARTS SCHOOL PROJECT (EDUCATIONAL FACILITIES REVENUE LOC) 7.00 05/01/2011 471,859
2,125,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY DENVER ACADEMY
SERIES A (EDUCATIONAL FACILITIES REVENUE LOC) 5.00 05/01/2008 2,149,969
1,270,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY LUTHERAN HIGH
SCHOOL ASSOCIATION PROJECT A (OTHER REVENUE LOC) 7.00 06/01/2012 1,277,975
630,000 COLORADO HEALTH FACILITIES AUTHORITY PARKVIEW MEDICAL CENTER PROJECT
(HEALTHCARE FACILITIES REVENUE LOC) 5.50 09/01/2005 634,353
85,000 COLORADO HEALTH FACILITIES AUTHORITY STEAMBOAT SPRINGS HEALTH PROJECT
(HEALTHCARE FACILITIES REVENUE LOC) 4.70 09/15/2005 85,176
20,000 COLORADO HEALTH FACILITIES AUTHORITY STEAMBOAT SPRINGS HEALTH PROJECT
(HEALTHCARE FACILITIES REVENUE LOC) 4.90 09/15/2007 20,198
2,010,000 COLORADO HFA SERIES A2 (HOUSING REVENUE LOC) 6.60 05/01/2028 2,071,245
835,000 GARFIELD COUNTY CO VALLEY VIEW HOSPITAL ASSOCIATION PROJECT SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 4.00 05/15/2009 855,073
1,000,000 HIGH PLAINS CO METROPOLITAN DISTRICT (OTHER REVENUE LOC) 4.38 12/01/2015 995,770
580,000 HIGHLANDS COUNTY RANCH METROPOLITAN DISTRICT NUMBER 3 SERIES A
(PROPERTY TAX REVENUE LOC) 5.00 12/01/2006 595,335
10,943,045
------------
CONNECTICUT - 0.76%
1,115,000 CONNECTICUT STATE HEALTH & EDUCATIONAL FACILITY AUTHORITY NEW
OPPORTUNITIES FOR WATERBURY SERIES A (LEASE REVENUE LOC) 6.75 07/01/2013 1,172,032
500,000 MASHANTUCKET CT WESTERN PEQUOT TRIBE SERIES A (SPECIAL REVENUE LOC)++ 6.40 09/01/2011 527,170
2,400,000 MASHANTUCKET CT WESTERN PEQUOT TRIBE SERIES B
(SPECIAL REVENUE LOC)++ 5.70 09/01/2012 2,553,312
850,000 MOHEGAN TRIBE CT (OTHER REVENUE LOC) 5.50 01/01/2006 862,606
5,115,120
------------
DISTRICT OF COLUMBIA - 0.09%
580,000 DISTRICT OF COLUMBIA TOBACCO SETTLEMENT FINANCING CORPORATION
(EXCISE TAX REVENUE LOC) 5.38 05/15/2010 603,194
------------
FLORIDA - 9.19%
4,300,000 BREVARD COUNTY FL HEALTH FACILITIES AUTHORITY RETIREMENT HOUSING
FUNDING (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 5.00 12/01/2028 4,300,000
258,000 BREVARD COUNTY FL HFA SERIES B (HOUSING REVENUE LOC) 6.50 09/01/2022 260,335
33
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FLORIDA (CONTINUED)
$ 1,280,000 BROWARD COUNTY FL WHEELABRATOR SERIES A (INDUSTRIAL DEVELOPMENT
REVENUE LOC) 5.00% 12/01/2007 $ 1,337,971
1,950,000 BROWARD COUNTY FL WHEELABRATOR SERIES A (INDUSTRIAL DEVELOPMENT
REVENUE LOC) 5.38 12/01/2009 2,098,161
4,000,000 BROWARD COUNTY FL WHEELABRATOR SERIES A (INDUSTRIAL DEVELOPMENT
REVENUE LOC) 5.38 12/01/2010 4,274,480
3,375,000 BROWARD COUNTY FL WHEELABRATOR SERIES A (INDUSTRIAL DEVELOPMENT
REVENUE LOC) 4.50 12/01/2011 3,507,401
1,500,000 CAPITAL TRUST AGENCY FL SEMINOLE TRIBE CONVENTION SERIES A
(OTHER REVENUE LOC) 8.95 10/01/2033 1,685,145
500,000 CAPITAL TRUST AGENCY FL SEMINOLE TRIBE CONVENTION SERIES A
(OTHER REVENUE LOC) 10.00 10/01/2033 564,625
1,955,000 DADE COUNTY FL HEALTH FACILITIES AUTHORITY MIAMI CHILDREN'S HOSPITAL
PROJECT (HEALTHCARE FACILITIES REVENUE LOC)@ 5.00 02/01/2010 2,089,387
1,360,000 DUVAL COUNTY FL HFA LINDSAY TERRACE APARTMENTS PROJECT
(HOUSING REVENUE LOC) 5.00 01/01/2012 1,413,026
1,655,000 ESCAMBIA COUNTY FL HFA MULTICOUNTY SERIES A-2 (HOUSING REVENUE LOC) 6.95 04/01/2024 1,720,108
2,485,000 FLORIDA STATE BOARD OF EDUCATION PUBLIC EDUCATION (PROPERTY TAX
REVENUE LOC) 6.20 05/01/2006 2,539,943
4,400,000 HIGHLANDS COUNTY FL HEALTH FACILITIES AUTHORITY ADVENTIST HEALTH
SYSTEMS (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 3.10 11/15/2034 4,400,000
1,415,000 HILLSBOROUGH COUNTY FL IDA HEALTH FACILITIES PROJECT UNIVERSITY
COMMUNITY HOSPITAL SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 4.90 08/15/2007 1,429,730
2,500,000 HILLSBOROUGH COUNTY FL IDA MFHR OAKS AT RIVERVIEW PROJECT SERIES B
(HOUSING REVENUE LOC) 2.13 01/01/2007 2,444,975
1,600,000 HILLSBOROUGH COUNTY FL IDA TAMPA ELECTRIC COMPANY (OTHER REVENUE LOC) 4.25 11/01/2020 1,613,040
1,000,000 HILLSBOROUGH COUNTY FL IDA TAMPA GENERAL HOSPITAL PROJECT SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 5.00 10/01/2007 1,040,420
750,000 HILLSBOROUGH COUNTY FL IDA TAMPA GENERAL HOSPITAL PROJECT SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 5.00 10/01/2008 789,105
455,000 JACKSONVILLE FL ECONOMIC DEVELOPMENT COMMISSION MET PACKAGING
SOLUTIONS PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC) 3.63 10/01/2008 454,627
605,000 JACKSONVILLE FL ECONOMIC DEVELOPMENT COMMISSION MET PACKAGING
SOLUTIONS PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC) 3.80 10/01/2009 605,720
500,000 JACKSONVILLE FL ECONOMIC DEVELOPMENT COMMISSION MET PACKAGING
SOLUTIONS PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC) 4.00 10/01/2010 502,895
420,000 MANATEE COUNTY FL HFA SINGLE FAMILY SUBSERIES 2 (HOUSING REVENUE LOC) 6.50 11/01/2023 425,746
1,500,000 MIAMI BEACH FL HEALTH FACILITIES AUTHORITY MOUNT SINAI MEDICAL CENTER
(HEALTHCARE FACILITIES REVENUE LOC) 5.75 11/15/2006 1,531,740
1,400,000 MIAMI BEACH FL HEALTH FACILITIES AUTHORITY MOUNT SINAI MEDICAL CENTER
(HEALTHCARE FACILITIES REVENUE LOC) 6.00 11/15/2007 1,451,114
595,000 NORTH BROWARD FL HOSPITAL DISTRICT (HEALTHCARE FACILITIES REVENUE LOC) 4.70 01/15/2006 600,052
1,305,000 OCEAN HIGHWAY & PORT AUTHORITY FL SOLID WASTE JEFFERSON
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 6.50 11/01/2006 1,342,662
8,150,000 ORANGE COUNTY FL HEALTH FACILITIES AUTHORITY ORLANDO REGIONAL SERIES A
(HEALTHCARE FACILITIES REVENUE LOC)+/-@ 3.05 10/08/2026 8,150,000
3,000,000 PINELLAS COUNTY FL HOUSING FINANCIAL AUTHORITY SINGLE FAMILY
HOUSING REVENUE AMOUNT MULTI COUNTY PROGRAM SERIES A-1 GNMA INSURED
(HOUSING REVENUE LOC) 5.50 09/01/2035 3,203,820
1,500,000 TAX EXEMPT MUNICIPAL INFRASTRUCTURE TRUST CTFS FL SERIES
2004 C CLASS A ++ 4.05 11/01/2008 1,492,245
745,000 VOLUSIA COUNTY FL EDFA EMBRY RIDDLE AERONAUTICAL
(COLLEGE AND UNIVERSITY REVENUE LOC) 2.50 10/15/2006 738,004
3,800,000 VOLUSIA COUNTY FL IDA ACA INSURED (HEALTHCARE FACILITIES
REVENUE LOC)+/-@ 4.70 12/01/2028 3,800,000
61,806,477
------------
GEORGIA - 1.77%
1,000,000 ATLANTA GA SERIES A (WATER REVENUE LOC) 5.50 11/01/2011 1,120,770
280,000 ATLANTA GA URBAN RESIDENTIAL FINANCE AUTHORITY PARK PLACE APARTMENTS
SERIES A (HOUSING REVENUE LOC) 6.00 09/01/2006 180,600
34
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
GEORGIA (CONTINUED)
$ 2,050,000 BIBB COUNTY GA DEVELOPMENT AUTHORITY SERIES IR-1
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-%% 4.85% 12/01/2009 $ 2,114,452
110,000 BURKE COUNTY FL DEVELOPMENT AUTHORITY VOGTLE PROJECT
(OTHER REVENUE LOC)+/-@ 2.50 10/01/2032 110,000
2,963,483 DALTON GA SCHOOL DISTRICT EQUIPMENT LEASE PURCHASE 4.20 08/01/2013 2,976,018
1,097,799 DALTON GA SCHOOL DISTRICT LEASE NUMBER 996-021203 SERIES B 4.20 08/01/2013 1,097,876
290,000 DE KALB COUNTY GA KINGS BRIDGE SERIES A (HEALTHCARE FACILITIES
REVENUE LOC) 8.00 07/01/2006 294,826
2,500,000 FULTON COUNTY GA HOUSING AUTHORITY ORCHARD SPRINGS APARTMENTS
(HOUSING REVENUE LOC)+/-@ 2.25 12/01/2037 2,500,000
943,843 GAINESVILLE GA SCHOOL DISTRICT EQUIPMENT LEASE PURCHASE
(LEASE REVENUE LOC) 4.20 03/01/2013 944,315
556,517 PUTNAM COUNTY GA SCHOOL DISTRICT EQUIPMENT LEASE PURCHASE 4.20 03/01/2013 556,662
11,895,519
------------
HAWAII - 0.03%
200,000 HAWAII STATE DEPARTMENT OF BUDGET & FINANCE WILCOX MEMORIAL HOSPITAL
PROJECTS (HEALTHCARE FACILITIES REVENUE LOC) 4.90 07/01/2005 200,670
------------
IDAHO - 1.41%
6,715,000 BOISE CITY ID URBAN RENEWAL AGENCY URBAN RENEWAL COUNTY COURTS
(LEASE REVENUE LOC)@ 6.00 08/15/2009 7,464,864
2,000,000 POST FALLS ID LOCAL IMPROVEMENT DISTRICT NUMBER 2004-1 3.25 01/15/2007 1,998,040
9,462,904
------------
ILLINOIS - 5.05%
840,000 ALTON IL ST. ANTHONY'S HEALTH CENTER (HEALTHCARE FACILITIES
REVENUE LOC) 5.50 09/01/2006 838,614
4,050,000 AURORA IL SERIES B (TAX REVENUE LOC) 4.90 12/30/2011 4,099,126
5,910,000 CHICAGO IL TRANSIT AUTHORITY SERIES B DOUGLAS BRANCH RECONSTRUCTION 4.25 06/01/2008 5,917,210
340,000 GODLEY PARK DISTRICT IL (PROPERTY TAX REVENUE LOC) 3.65 12/01/2005 340,918
1,000,000 ILLINOIS FINANCE AUTHORITY CITIZENS UTILITY COMPANY PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 4.80 08/01/2025 1,000,900
620,000 ILLINOIS FINANCE AUTHORITY COMMUNITY REHAB PROVIDERS SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 5.38 07/01/2009 635,525
145,000 ILLINOIS FINANCE AUTHORITY COMMUNITY REHAB PROVIDERS SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 4.90 07/01/2007 146,567
200,000 ILLINOIS FINANCE AUTHORITY COMMUNITY REHABILITATION PROVIDERS SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.50 07/01/2012 208,418
5,300,000 ILLINOIS FINANCE AUTHORITY POWER PROJECT SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 2.50 04/01/2032 5,300,000
345,000 ILLINOIS FINANCE AUTHORITY PRIMARY HEALTH CARE CENTERS
(HEALTHCARE FACILITIES REVENUE LOC) 4.63 07/01/2008 343,672
100,000 ILLINOIS FINANCE AUTHORITY SECTION 8 GALESBURG TOWERS SERIES A
(HOUSING REVENUE LOC) 5.80 03/01/2006 99,878
2,210,000 ILLINOIS FINANCE AUTHORITY SERIES B-1 (OTHER REVENUE LOC) 5.00 06/01/2028 2,258,178
630,000 ILLINOIS HEALTH FACILITIES AUTHORITY ADVOCATE HEALTH CARE SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 5.30 08/15/2007 658,029
670,000 ILLINOIS HEALTH FACILITIES AUTHORITY DECATUR MEMORIAL HOSPITAL
(HEALTHCARE FACILITIES REVENUE LOC) 4.20 10/01/2005 673,142
5,500,000 ILLINOIS HEALTH FACILITIES AUTHORITY HOSPITAL SISTERS SERVICES
INCORPORATED SERIES A (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 4.00 12/01/2022 5,582,280
625,000 ILLINOIS HEALTH FACILITIES AUTHORITY MEMORIAL MEDICAL CENTER SYSTEMS
PROJECT (HEALTHCARE FACILITIES REVENUE LOC) 5.25 10/01/2009 665,506
35
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
ILLINOIS (CONTINUED)
$ 552,575 KANE COOK & DUE PAGE COUNTIES IL SCHOOL DISTRICT NUMBER 46 6.07% 06/21/2005 $ 555,089
635,000 MATTESON IL (TAX INCREMENTAL REVENUE LOC) 3.00 12/01/2005 636,556
1,625,000 SALEM IL AMERICANA BUILDING PRODUCTS (INDUSTRIAL DEVELOPMENT
REVENUE LOC)+/-@ 3.71 04/01/2017 1,625,000
1,740,000 UNIVERSITY OF ILLINOIS UTILITY INFRASTRUCTURE PROJECTS
(LEASE REVENUE LOC) 5.00 08/15/2009 1,866,098
450,000 UPPER ILLINOIS RIVER VALLEY DEVELOPMENT AUTHORITY MORRIS HOSPITAL
(HEALTHCARE FACILITIES REVENUE LOC) 6.05 12/01/2011 486,095
33,936,801
------------
INDIANA - 0.09%
600,000 CLARKSVILLE IN (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 4.70 12/01/2025 600,000
------------
IOWA - 0.69%
750,000 CEDAR RAPIDS IA COTTAGE GROVE SERIES B (HEALTHCARE FACILITIES
REVENUE LOC)+/-@ 5.63 07/01/2028 744,007
2,350,000 CORALVILLE IA SERIES K%% 5.00 06/01/2007 2,427,527
500,000 IOWA HIGHER EDUCATION LOAN AUTHORITY REVENUE ANTICIPATION NOTES
WALDORF CLASS H (COLLEGE AND UNIVERSITY REVENUE LOC) 4.13 05/24/2005 500,070
915,000 TOBACCO SETTLEMENT AUTHORITY OF IOWA SERIES B (EXCISE TAX REVENUE LOC) 5.50 06/01/2011 957,767
4,629,371
------------
KANSAS - 0.41%
1,600,000 KANSAS INDEPENDENT COLLEGE FINANCE AUTHORITY OTTAWA UNIVERSITY
SERIES D (COLLEGE AND UNIVERSITY REVENUE LOC) 3.90 05/02/2005 1,599,920
1,145,000 MANHATTAN KS TRANSPORTATION DEVELOPMENT DISTRICT (SALES TAX REVENUE LOC) 4.15 08/01/2015 1,172,789
2,772,709
------------
KENTUCKY - 0.62%
220,000 KENTON COUNTY KY AIRPORT BOARD MESA AVIATION INCORPORATED PROJECT
SERIES A (AIRPORT REVENUE LOC) 6.00 07/01/2005 219,890
700,000 KENTUCKY ECONOMIC DEVELOPMENT FINANCE AUTHORITY RETIREMENT HOUSING
FOUNDATION (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 5.00 12/01/2028 700,000
3,150,000 MUHLENBERG COUNTY KY MUHLENBERG COMMUNITY HOSPITAL PROJECT
(HEALTHCARE FACILITIES REVENUE LOC) 6.75 07/01/2010 3,260,975
4,180,865
------------
LOUISIANA - 1.70%
950,000 CALCASIEU PARISH LA INDUSTRIAL DEVELOPMENT BOARD ENTERGY GULF STATES
INCORPORATED (INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.45 07/01/2010 961,780
5,500,000 LOUISIANA LOCAL GOVERNMENT ENVIRONMENTAL FACILITIES & COMMUNITY
DEVELOPMENT AUTHORITY CADDO-BOSSIER PARISHES (OTHER REVENUE LOC)+/-@ 3.26 11/01/2034 5,500,000
1,000,000 LOUISIANA OFFSHORE TERMINAL AUTHORITY LOOP LOC PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.65 10/01/2021 998,470
100,000 PLAQUEMINES LA PORT HARBOR & TERMINAL DISTRICT SERIES A
(AIRPORT REVENUE LOC) 5.00 09/01/2007 100,785
900,000 PLAQUEMINES LA PORT HARBOR & TERMINAL DISTRICT SERIES D
(AIRPORT REVENUE LOC) 5.00 09/01/2007 907,065
2,920,000 VILLAGE OF EPPS LA (LEASE REVENUE LOC) 7.25 06/01/2009 2,986,897
11,454,997
------------
MAINE - 0.07%
500,000 BAILEYVILLE ME GEORGIA PACIFIC CORPORATION PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/- 4.75 06/01/2005 500,520
------------
36
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MARYLAND - 0.11%
$ 765,000 NORTHEAST MD WASTE DISPOSAL AUTHORITY MONTGOMERY COUNTY RESOURCE
RECOVERY PROJECT A (OTHER REVENUE LOC) 5.90% 07/01/2005 $ 768,251
------------
MASSACHUSETTS - 3.10%
1,000,000 BOSTON MA INDUSTRIAL DEVELOPMENT FINANCING AUTHORITY PILOT SEAFOOD
PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 5.88 04/01/2030 1,028,910
410,000 MASSACHUSETTS DEVELOPMENT FINANCE AGENCY DEVELOPMENTAL DISABILITIES
INCORPORATED 6.25 06/01/2008 416,905
2,750,000 MASSACHUSETTS HEALTH & EDUCATIONAL FACILITIES AUTHORITY CARITAS
CHRISTI OBLIGATION GROUP SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 5.25 07/01/2006 2,791,030
775,000 MASSACHUSETTS HEALTH & EDUCATIONAL FACILITIES AUTHORITY EYE & EAR
INFIRMARY SERIES B (HEALTHCARE FACILITIES REVENUE LOC) 5.25 07/01/2009 820,128
2,400,000 MASSACHUSETTS HFA SERIES B (HOUSING REVENUE LOC) 3.15 06/01/2008 2,369,208
500,000 MASSACHUSETTS INDUSTRIAL FINANCE AGENCY OGDEN SERIES A
(OTHER REVENUE LOC)+/- 4.95 12/01/2006 507,840
2,355,000 MASSACHUSETTS INDUSTRIAL FINANCE AGENCY REFUSETECH INCORPORATED
PROJECT SERIES A (OTHER REVENUE LOC) 6.30 07/01/2005 2,365,032
5,000,000 MASSACHUSETTS STATE TURNPIKE AUTHORITY SERIES A (TOLL ROAD REVENUE LOC) 5.00 01/01/2011 5,220,750
4,000,000 MONTACHUSETT MA REGIONAL TRANSIT AUTHORITY REVENUE ANTICIPATION NOTES
(PROPERTY TAX REVENUE LOC) 3.00 06/17/2005 3,996,640
1,335,000 PITTSFIELD MA ANTICIPATION NOTES (PROPERTY TAX REVENUE LOC) 3.00 10/21/2005 1,336,268
20,852,711
------------
MICHIGAN - 1.71%
615,000 FLINT MI HOSPITAL BUILDING AUTHORITY HURLEY MEDICAL CENTER SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 4.80 07/01/2005 615,572
510,000 FLINT MI HOSPITAL BUILDING AUTHORITY HURLEY MEDICAL CENTER SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 6.00 07/01/2005 511,535
6,350,000 GRAND RAPIDS MI CHARTER TOWNSHIP PORTER HILLS OBLIGATION GROUP PROJECT
(HEALTHCARE FACILITIES REVENUE LOC)+/-@ 2.90 07/01/2033 6,350,000
3,000,000 MICHIGAN STRATEGIC LIMITED OBLIGATION WASTE MANAGEMENT
(OTHER REVENUE LOC)+/-@ 3.15 12/01/2013 2,986,950
850,000 MICHIGAN STRATEGIC WASTE MANAGEMENTS INCORPORATED PROJECT
(SEWER REVENUE LOC)+/-@ 4.20 12/01/2012 852,890
215,000 PONTIAC MI TAX INCREMENT FINANCE AUTHORITY TAX INCREMENT DEVELOPMENT
AREA NUMBER 3 (TAX INCREMENTAL REVENUE LOC) 4.00 06/01/2005 215,179
11,532,126
------------
MINNESOTA - 2.60%
9,948,000 BURNSVILLE MN PROVENCE LLC PROJECT SERIES A (HOUSING REVENUE LOC)+/-@ 3.26 01/01/2045 9,948,000
3,075,000 CANBY MN COMMUNITY HOSPITAL DISTRICT NUMBER 1 SIOUX VALLEY HOSPITALS &
HEALTH (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 3.30 11/01/2026 3,075,000
500,000 MINNESOTA DULUTH APARTMENT LEASE REVENUE SERIES 95C
(AIRPORT REVENUE LOC) 6.25 08/01/2014 504,010
2,150,000 MINNESOTA HFA RESIDENTIAL HOUSING FINANCE SERIES B (HOUSING REVENUE LOC) 5.00 07/01/2034 2,239,655
125,000 MINNESOTA HIGHER EDUCATION FACILITIES AUTHORITY HAMLINE UNIVERSITY
SERIES 4I (COLLEGE AND UNIVERSITY REVENUE LOC) 5.65 10/01/2007 128,729
1,578,943 MINNESOTA STATE (LEASE REVENUE LOC) 3.50 06/30/2007 1,578,943
17,474,337
------------
MISSISSIPPI - 3.32%
8,000,000 BILOXI MS HOUSING AUTHORITY BAYVIEW PLACE ESTATES (HOUSING REVENUE LOC)# 4.50 09/01/2005 8,009,520
7,800,000 MISSISSIPPI REGIONAL HOUSING AUTHORITY NUMBER II HOUSING-LAUREL PARK
APARTMENTS PROJECT (HOUSING REVENUE LOC)+/-@ 2.05 06/01/2030 7,791,888
37
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MISSISSIPPI (CONTINUED)
$ 6,500,000 MISSISSIPPI REGIONAL HOUSING AUTHORITY NUMBER II TERRACE PARK
APARTMENTS PROJECT (HOUSING REVENUE LOC)+/-@ 1.75% 05/01/2030 $ 6,500,000
22,301,408
------------
MISSOURI - 2.71%
2,955,000 CHESTERFIELD MO REFUNDING & IMPROVEMENTS CHESTERFIELD VALLEY PROJECT
(TAX REVENUE LOC) 4.50 04/15/2016 2,959,107
125,000 ELLISVILLE MO IDA GAMBRILL GARDENS PROJECT (HEALTHCARE FACILITIES
REVENUE LOC) 5.10 06/01/2005 125,072
135,000 ELLISVILLE MO IDA GAMBRILL GARDENS PROJECT (HEALTHCARE FACILITIES
REVENUE LOC) 5.20 06/01/2006 135,695
7,000,000 HAZELWOOD MO IDA BOTTOM ROAD DEVELOPMENT PROJECT
(TAX INCREMENTAL REVENUE LOC) 3.88 08/01/2018 6,915,370
100,000 I-470 & 350 TRANSPORTATION DEVELOPMENT DISTRICT MO (TRANSPORTATION
REVENUE LOC) 5.00 05/01/2005 100,006
375,000 I-470 & 350 TRANSPORTATION DEVELOPMENT DISTRICT MO (TRANSPORTATION
REVENUE LOC) 5.20 05/01/2006 379,553
800,000 MISSOURI STATE ENVIRONMENTAL IMPROVEMENT & ENERGY RESOURCES AUTHORITY
AMERICAN CYANAMID COMPANY (INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.80 09/01/2009 859,528
5,000,000 MISSOURI STATE HEALTH & EDUCATIONAL FACILITIES AUTHORITY ST LOUIS CITY
SCHOOL DISTRICT SERIES H (OTHER REVENUE LOC) 3.25 11/14/2005 5,003,650
915,000 NEVADA MO NEVADA REGIONAL MEDICAL CENTER (HEALTHCARE FACILITIES
REVENUE LOC) 6.00 10/01/2007 930,162
775,000 SPRINGFIELD MO LAND CLEARANCE REDEVELOPMENT AUTHORITY UNIVERSITY PLAZA
PROJECT (OTHER REVENUE LOC) 6.30 10/01/2006 794,375
18,202,518
------------
MONTANA - 0.53%
1,260,000 BILLINGS MT (TAX INCREMENTAL REVENUE LOC) 2.96 03/01/2006 1,255,011
1,300,000 BILLINGS MT (TAX INCREMENTAL REVENUE LOC) 3.38 03/01/2007 1,294,917
995,000 BILLINGS MT (TAX REVENUE LOC) 3.80 03/01/2008 997,358
3,547,286
------------
NEVADA - 0.32%
625,000 CLARK COUNTY NV IMPROVEMENT DISTRICT 108 & 124 SERIES B
(OTHER REVENUE LOC) 4.10 02/01/2008 623,838
1,500,000 LAS VEGAS NV PAINTER TRIBE SERIES A (OTHER REVENUE LOC) 4.65 11/01/2005 1,509,375
2,133,213
------------
NEW HAMPSHIRE - 2.08%
1,140,000 MANCHESTER NH HOUSING & REDEVELOPMENT AUTHORITY SERIES A
(OTHER REVENUE LOC) 5.80 01/01/2009 1,206,873
4,000,000 MERRIMACK COUNTY NH TAX ANTICIPATION NOTES (PROPERTY TAX REVENUE LOC) 3.35 12/28/2005 4,005,920
7,000,000 NEW HAMPSHIRE BUSINESS FINANCE AUTHORITY (OTHER REVENUE LOC)+/-@ 3.50 07/01/2027 6,831,790
490,000 NEW HAMPSHIRE HEALTH & EDUCATION FACILITIES AUTHORITY NEW HAMPSHIRE
MEDICAL CENTER SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 3.00 10/01/2006 490,431
1,420,000 NEW HAMPSHIRE HEALTH & EDUCATION FACILITIES AUTHORITY NEW HAMPSHIRE
MEDICAL CENTER SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 4.00 10/01/2007 1,442,592
13,977,606
------------
NEW JERSEY - 3.52%
1,500,000 BAYONNE NJ PARKING AUTHORITY PARKING PROJECT (PARKING FACILITIES
REVENUE LOC) 5.00 03/15/2007 1,525,020
4,000,000 BAYONNE NJ TAX ANTICIPATION NOTES SERIES B (PROPERTY TAX REVENUE LOC) 5.00 11/15/2005 4,026,720
1,490,000 NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY CIGARETTE TAX REVENUE
(OTHER REVENUE LOC) 5.63 06/15/2017 1,549,034
400,000 NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY FIRST MORTGAGE WINCHESTER
SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 2.60 11/01/2005 398,104
38
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
NEW JERSEY (CONTINUED)
$ 7,500,000 NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY SCHOOL FACILITIES+/-@ 2.75% 03/01/2025 $ 7,495,725
1,215,000 NEW JERSEY HFFA JERSEY CITY MEDICAL CENTER (HEALTHCARE FACILITIES
REVENUE LOC) 4.80 08/01/2021 1,235,667
4,885,000 NEW JERSEY HFFA ST. JOSEPH'S HOSPITAL & MEDICAL CENTER SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 5.60 07/01/2007 5,105,167
290,000 TOBACCO SETTLEMENT FINANCING CORPORATION NEW JERSEY
(EXCISE TAX REVENUE LOC) 5.00 06/01/2009 296,925
1,500,000 TOBACCO SETTLEMENT FINANCING CORPORATION NEW JERSEY
(EXCISE TAX REVENUE LOC) 4.38 06/01/2019 1,501,470
500,000 UNION COUNTY NJ POLLUTION CONTROL FINANCING AUTHORITY AMERICAN CYANAMID
COMPANY (INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.80 09/01/2009 538,590
23,672,422
------------
NEW MEXICO - 0.71%
755,000 ALBUQUERQUE NM MCT INDUSTRIES INCORPORATED PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 3.75 04/01/2010 768,771
175,000 NEW MEXICO EDUCATIONAL ASSISTANCE FOUNDATION SERIES II C
(EDUCATIONAL FACILITIES REVENUE LOC) 6.00 12/01/2008 177,833
360,000 NEW MEXICO EDUCATIONAL ASSISTANCE FOUNDATION SERIES IV A1
(EDUCATIONAL FACILITIES REVENUE LOC) 7.05 03/01/2010 360,069
935,000 NEW MEXICO MORTGAGE FINANCE AUTHORITY SFMR SERIES A2
(HOUSING REVENUE LOC) 7.10 09/01/2030 965,406
1,750,000 NEW MEXICO MORTGAGE FINANCE AUTHORITY SFMR SERIES D2
(HOUSING REVENUE LOC) 6.75 09/01/2029 1,857,730
620,000 NEW MEXICO MORTGAGE FINANCE AUTHORITY SFMR SERIES F2
(HOUSING REVENUE LOC) 6.80 03/01/2031 658,211
4,788,020
------------
NEW YORK - 5.78%
5,000,000 MONROE COUNTY NY ANTICIPATION NOTES (PROPERTY TAX REVENUE LOC) 4.00 07/28/2005 5,008,950
715,000 NASSAU COUNTY NY IDA NORTH SHORE HEALTH SYSTEMS PROJECTS C
(HEALTHCARE FACILITIES REVENUE LOC) 5.63 11/01/2010 769,926
65,000 NASSAU COUNTY NY IDA SPECIAL NEEDS FACILITIES PROGRAM-B-1
(HEALTHCARE FACILITIES REVENUE LOC) 5.60 07/01/2005 65,079
375,000 NASSAU COUNTY NY IDA SPECIAL NEEDS SERIES B-1
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 6.50 07/01/2006 382,174
6,250,000 NEW YORK CONVENTION CENTER OPERATING CORPORATION CAPITAL APPRECIATION
YALE BUILDING PROJECT (OTHER REVENUE LOC)^ 4.24 06/01/2008 5,491,312
530,000 NEW YORK MORTGAGE AGENCY HOMEOWNER MORTGAGE SERIES 103
(HOUSING REVENUE LOC)+/-@ 2.95 10/01/2017 530,053
435,000 NEW YORK NY IDA POLYTECHNIC UNIVERSITY PROGRAM (LEASE REVENUE LOC) 5.13 11/01/2006 436,214
825,000 NEW YORK NY IDA SPECIAL NEEDS FACILITIES PROGRAM A1
(HEALTHCARE FACILITIES REVENUE LOC) 5.60 07/01/2005 824,505
1,200,000 NEW YORK NY IDA SPECIAL NEEDS FACILITIES PROGRAM A1
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 6.50 07/01/2006 1,200,576
1,000,000 NEW YORK NY IDA SPECIAL NEEDS FACILITIES PROGRAM A1
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 3.05 07/01/2009 979,200
220,000 NEW YORK NY SERIES A (PROPERTY TAX REVENUE LOC) 6.13 08/01/2006 228,813
700,000 NEW YORK NY SERIES B (PROPERTY TAX REVENUE LOC) 8.25 06/01/2006 741,342
1,000,000 NEW YORK STATE DORMITORY AUTHORITY AIDS LONG TERM HEALTH CARE FACILITIES
(GENERAL OBLIGATION - STATES, TERRITORIES LOC) 5.00 11/01/2011 1,065,910
9,125,000 NEW YORK STATE DORMITORY AUTHORITY CITY UNIVERSITY SYSTEM SERIES C
(COLLEGE AND UNIVERSITY REVENUE LOC) 7.50 07/01/2010 10,115,154
1,000,000 SCHENECTADY NY (TAX REVENUE LOC) 5.90 12/30/2005 999,070
205,000 SUFFOLK COUNTY NY (OTHER REVENUE LOC) 6.50 07/01/2006 208,922
165,000 SUFFOLK COUNTY NY IDA SPECIAL NEEDS POOLED SERIES C-1 (OTHER REVENUE LOC) 6.88 07/01/2010 174,733
39
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
NEW YORK (CONTINUED)
$ 1,505,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES A1
(EXCISE TAX REVENUE LOC) 5.00% 06/01/2009 $ 1,507,995
6,500,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES A1
(EXCISE TAX REVENUE LOC) 5.00 06/01/2010 6,513,845
530,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES C1
(OTHER REVENUE LOC) 5.25 06/01/2013 563,141
1,035,000 UNITED NATIONS DEVELOPMENT CORPORATION NY SERIES A (OTHER REVENUE LOC) 4.00 07/01/2007 1,060,523
38,867,437
------------
NORTH CAROLINA - 0.39%
790,000 NORTH CAROLINA EASTERN MUNICIPAL POWER AGENCY SERIES B
(UTILITIES REVENUE LOC) 6.00 01/01/2006 805,081
1,600,000 NORTH CAROLINA EASTERN MUNICIPAL POWER AGENCY SERIES D
(UTILITIES REVENUE LOC) 6.00 01/01/2009 1,674,672
115,000 NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 1 CATAWBA ELECTRIC REVENUE
(ELECTRIC REVENUE LOC) 7.25 01/01/2007 122,653
2,602,406
------------
NORTH DAKOTA - 0.62%
1,060,000 NORTH DAKOTA STATE HOUSING (HOUSING REVENUE LOC)%% 4.20 07/01/2011 1,065,395
1,580,000 NORTH DAKOTA STATE HOUSING (HOUSING REVENUE LOC)%% 3.70 01/01/2009 1,587,284
1,480,000 NORTH DAKOTA STATE HOUSING (HOUSING REVENUE LOC)%% 4.10 01/01/2011 1,484,396
4,137,075
------------
OHIO - 3.02%
2,070,000 BEAVERCREEK CITY OH SCHOOL DISTRICT TAX ANTICIPATION NOTES
(TAX INCREMENTAL REVENUE LOC) 4.00 12/01/2005 2,079,294
775,000 CARROLL OH WATER & SEWER DISTRICT (PROPERTY TAX REVENUE LOC) 6.25 12/01/2010 828,180
300,000 CLEVELAND OH CONTINENTAL AIRLINES INCORPORATED (AIRPORT REVENUE LOC) 5.50 12/01/2008 285,012
820,000 COUNTY OF ATHENS OH O'BLENESS SERIES A (HEALTHCARE FACILITIES
REVENUE LOC) 5.00 11/15/2008 833,382
60,158 CUYAHOGA COUNTY OH PARKLANE APARTMENTS SERIES A1
(HOUSING REVENUE LOC)+/- 6.00 10/01/2037 40,449
104,374 CUYAHOGA COUNTY OH PARKLANE APARTMENTS SERIES A2 (HOUSING REVENUE LOC)+ 5.46 10/01/2037 104
4,000,000 FIELD OH LOCAL SCHOOL DISTRICT BOARD ANTICIPATION NOTES SCHOOL
IMPROVEMENTS (PROPERTY TAX REVENUE LOC) 3.20 06/28/2005 3,998,800
1,330,000 FRANKLIN COUNTY OH CAPITOL SOUTH COMMUNITY URBAN (LEASE REVENUE LOC) 4.85 06/01/2006 1,350,775
700,000 LAKEWOOD OH LAKEWOOD HOSPITAL ASSOCIATION (HEALTHCARE FACILITIES
REVENUE LOC) 5.50 02/15/2008 738,948
2,450,000 LORAIN OH (PROPERTY TAX REVENUE LOC) 4.00 10/06/2005 2,454,876
265,000 MEDINA COUNTY OH CAMELOT PLACE LIMITED SERIES A (HOUSING REVENUE LOC) 8.10 10/01/2013 266,640
500,000 MONTGOMERY COUNTY OH KETTERING MEDICAL CENTER (HEALTHCARE FACILITIES
REVENUE LOC) 6.00 04/01/2008 533,315
2,850,000 OHIO AIR QUALITY DEVELOPMENT AUTHORITY PCR TOLEDO SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.10 09/01/2033 2,850,200
950,000 OHIO STATE WATER DEVELOPMENT AUTHORITY OHIO EDISON COMPANY SERIES B
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.35 06/01/2033 951,549
3,065,000 UNIVERSITY OF CINCINNATI SERIES U (COLLEGE AND UNIVERSITY REVENUE LOC) 5.60 06/01/2014 3,103,129
20,314,653
------------
OKLAHOMA - 1.13%
240,000 CITIZEN POTAWATOMI NATION OK SERIES A (OTHER REVENUE LOC) 3.40 09/01/2005 239,842
305,000 CITIZEN POTAWATOMI NATION OK SERIES A (OTHER REVENUE LOC) 4.15 09/01/2006 305,253
1,000,000 KINGFISHER OK SPECIAL PROJECTS AUTHORITY KINGFISHER PUBLIC SCHOOLS
PROJECT (LEASE REVENUE LOC) 4.10 09/01/2009 1,006,400
2,005,000 OKARCHE OK ECONOMIC DEVELOPMENT AUTHORITY CHICKASHA PUBLIC SCHOOLS
PROJECT (UTILITIES REVENUE LOC) 4.50 09/01/2008 2,088,528
1,275,000 OKLAHOMA DEVELOPMENT FINANCE AUTHORITY COMANCHE COUNTY HOSPITAL PROJECT
SERIES B (HEALTHCARE FACILITIES REVENUE LOC) 5.35 07/01/2008 1,338,329
40
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
OKLAHOMA (CONTINUED)
$ 1,325,000 OKLAHOMA STATE INDUSTRIAL AUTHORITY REVENUE SERIES A 6.25% 08/15/2015 $ 1,481,854
1,120,000 POTTAWATOMIE COUNTY OK FACILITIES AUTHORITY HARRAH PUBLIC SCHOOLS
PROJECT (LEASE REVENUE LOC) 3.35 09/01/2008 1,108,654
7,568,860
------------
OREGON - 1.74%
3,000,000 GILLIAM COUNTY OR WASTE MANAGEMENT PROJECT (OTHER REVENUE LOC)+/-@ 3.63 07/01/2029 3,000,000
4,000,000 MEDFORD OR HOSPITAL FACILITIES AUTHORITY ROGUE VALLEY MANOR PROJECT
(HEALTHCARE FACILITIES REVENUE LOC)+/-@ 2.65 08/15/2032 4,000,000
4,485,000 PORT OF PORTLAND OR PORTLAND INTERNATIONAL AIRPORT SERIES 11
(AIRPORT REVENUE LOC) 5.60 07/01/2012 4,690,368
11,690,368
------------
PENNSYLVANIA - 5.83%
4,250,000 ALLEGHENY COUNTY PA (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 3.25 09/01/2032 4,250,000
1,875,000 CHESTER PA TRAN (PROPERTY TAX REVENUE LOC) 4.50 06/15/2005 1,874,119
3,750,000 DELAWARE RIVER PORT AUTHORITY PA & N J (TOLL ROAD REVENUE LOC) 5.45 01/01/2012 3,889,687
660,000 GROVE CITY PA AREA HOSPITAL AUTHORITY UNITED COMMUNITY HOSPITAL PROJECT
(HEALTHCARE FACILITIES REVENUE LOC) 4.75 07/01/2006 663,472
500,000 LEHIGH COUNTY PA GENERAL PURPOSE AUTHORITY KIDSPEACE OBLIGATED GROUP
(HEALTHCARE FACILITIES REVENUE LOC) 5.80 11/01/2012 486,680
500,000 ONTELAUNEE TOWNSHIP PA MUNICIPAL AUTHORITY (SEWER REVENUE LOC) 4.25 11/15/2005 499,790
920,000 PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY AMTRAK PROJECT
SERIES A (LEASE REVENUE LOC) 6.00 11/01/2007 949,670
1,095,000 PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY AMTRAK PROJECT
SERIES A (LEASE REVENUE LOC) 6.00 11/01/2010 1,146,060
3,295,000 PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY NORTHWESTERN
HUMAN SERVICES SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 4.88 06/01/2008 3,342,448
3,923,077 PENNSYLVANIA HFA SINGLE FAMILY MORTGAGE REVENUE (HOUSING REVENUE LOC)+/- 3.45 06/01/2008 3,923,077
1,500,000 PENNSYLVANIA HIGHER EDUCATIONAL FACILITIES AUTHORITY SUBSERIES C2
(COLLEGE AND UNIVERSITY REVENUE LOC)+/-@ 2.90 12/01/2022 1,500,000
4,000,000 PENNSYLVANIA STATE HIGHER EDUCATIONAL FACILITIES AUTHORITY UNIVERSITY
OF PENNSYLVANIA HEALTH SERVICES SERIES A (HEALTHCARE FACILITIES
REVENUE LOC)@ 5.60 01/01/2006 4,114,800
750,000 PENNSYLVANIA STATE HIGHER EDUCATIONAL FACILITIES AUTHORITY UNIVERSITY
OF PENNSYLVANIA SERIES B (HEALTHCARE FACILITIES REVENUE LOC) 5.60 01/01/2010 769,845
1,715,000 PHILADELPHIA PA HOSPITALS & HIGHER EDUCATION FACILITIES AUTHORITY
JEANES HEALTH SYSTEMS PROJECT (HEALTHCARE FACILITIES REVENUE LOC) 6.60 07/01/2010 1,838,874
5,630,000 PHILADELPHIA PA HOSPITALS & HIGHER EDUCATION FACILITIES AUTHORITY
JEFFERSON HEALTH SYSTEMS SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 5.25 05/15/2010 5,956,878
850,000 SUSQUEHANNA PA AREA REGIONAL AIRPORT AUTHORITY AERO HARRISBURG LLC
PROJECT (AIRPORT REVENUE LOC) 5.25 01/01/2009 833,705
3,175,000 WASHINGTON COUNTY PA IDA CHILDREN'S HOME PITTSBURGH PROJECT
(HOUSING REVENUE LOC) 4.00 06/15/2008 3,157,093
39,196,198
------------
PUERTO RICO - 1.84%
105,000 CHILDREN'S TRUST FUND (EXCISE TAX REVENUE LOC) 4.00 05/15/2010 103,677
440,000 CHILDREN'S TRUST FUND PUERTO RICO (SPECIAL TAX REVENUE LOC)@ 5.75 07/01/2010 467,109
340,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CENTRAL FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY
(COLLEGE AND UNIVERSITY REVENUE LOC) 4.50 12/01/2005 342,846
355,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CENTRAL FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY
(COLLEGE AND UNIVERSITY REVENUE LOC) 4.50 12/01/2006 361,990
41
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
PUERTO RICO (CONTINUED)
$ 300,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CENTRAL FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY
(COLLEGE AND UNIVERSITY REVENUE LOC) 5.00% 02/01/2007 $ 308,253
925,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CENTRAL FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY
(COLLEGE AND UNIVERSITY REVENUE LOC) 5.00 02/01/2008 961,269
390,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CENTRAL FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY
(COLLEGE AND UNIVERSITY REVENUE LOC) 5.00 12/01/2008 410,268
9,400,000 PUERTO RICO INFRASTRUCTURE FINANCING AUTHORITY SERIES B
(STATE & LOCAL GOVERNMENTS LOC)+/- 3.64 10/01/2040 9,400,000
12,355,412
------------
SOUTH CAROLINA - 2.70%
1,500,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B
(TOLL ROAD REVENUE LOC)^ 8.53 01/01/2027 245,400
2,835,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B
(TOLL ROAD REVENUE LOC)^ 8.53 01/01/2028 426,639
18,250,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B
(TOLL ROAD REVENUE LOC)^ 8.08 01/01/2037 1,487,192
14,500,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B
(TOLL ROAD REVENUE LOC)^ 9.88 01/01/2038 1,108,960
355,000 GREENVILLE COUNTY SC DONALDSON INDUSTRIAL AIR PARK PROJECT A
(AIRPORT REVENUE LOC) 5.50 04/01/2011 356,246
6,300,000 SOUTH CAROLINA JOBS ECONOMIC DEVELOPMENT AUTHORITY CONCO MEDICAL
PRODUCTS PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.28 09/01/2010 6,300,000
235,000 SOUTH CAROLINA JOBS ECONOMIC DEVELOPMENT AUTHORITY PALMETTO
HEALTH ALLIANCE SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 4.50 08/01/2006 237,961
760,000 SOUTH CAROLINA JOBS ECONOMIC DEVELOPMENT AUTHORITY PALMETTO
HEALTH ALLIANCE SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 5.00 08/01/2008 790,142
1,000,000 SOUTH CAROLINA JOBS ECONOMIC DEVELOPMENT AUTHORITY PALMETTO
HEALTH SERIES C (HEALTHCARE FACILITIES REVENUE LOC) 4.75 08/01/2007 1,022,900
1,475,000 SOUTH CAROLINA STATE PORTS AUTHORITY (AIRPORT REVENUE LOC) 7.60 07/01/2005 1,485,767
1,205,000 SOUTH CAROLINA STATE PORTS AUTHORITY (AIRPORT REVENUE LOC) 7.70 07/01/2006 1,234,788
2,255,000 SOUTH CAROLINA STATE PORTS AUTHORITY (AIRPORT REVENUE LOC)# 7.80 07/01/2009 2,429,808
1,000,000 YORK SC BOWATER INCORPORATED PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC) 7.63 03/01/2006 1,023,560
18,149,363
------------
SOUTH DAKOTA - 1.33%
4,000,000 GRANT COUNTY SD OTTER TAIL POWER COMPANY PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.39 12/01/2012 4,000,000
225,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY ANGUS INCORPORATED
PROJECT A (UTILITIES REVENUE LOC) 4.25 04/01/2008 227,273
260,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY ANGUS INCORPORATED
PROJECT A (UTILITIES REVENUE LOC) 4.50 04/01/2009 265,047
665,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY MCFLEEG PROJECT B
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 4.38 04/01/2011 674,682
345,000 SOUTH DAKOTA HEALTH & EDUCATIONAL FACILITIES AUTHORITY SIOUX VALLEY
HOSPITALS & HEALTH SERIES E (HEALTHCARE FACILITIES REVENUE LOC) 5.00 11/01/2005 348,498
3,260,000 SOUTH DAKOTA STATE BUILDING AUTHORITY SERIES A (LEASE REVENUE LOC) 5.35 12/01/2012 3,438,257
8,953,757
------------
42
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
TENNESSEE - 2.19%
$ 335,000 CITIZENS TN GAS UTILITY DISTRICT (UTILITIES REVENUE LOC) 5.15% 01/01/2009 $ 339,050
1,200,000 METROPOLITAN GOVERNMENT NASHVILLE & DAVIDSON COUNTY TN INDUSTRIAL
DEVELOPMENT BOARD EASTER SEAL PROJECT (OTHER REVENUE LOC)+/-@ 2.75 08/01/2019 1,195,476
2,500,000 SHELBY COUNTY TN HEALTH EDUCATIONAL & HOUSING FACILITIES BOARD BAPTIST
MEMORIAL HEALTHCARE SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 5.00 09/01/2007 2,590,000
8,650,000 SHELBY COUNTY TN HEALTH EDUCATIONAL & HOUSING FACILITIES BOARD FLOAT
BAPTIST MEMORIAL HEALTHCARE (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 5.00 09/01/2020 9,037,866
1,585,000 TENNESSEE HOUSING DEVELOPMENT AGENCY HOMEOWNERSHIP PROGRAM ISSUE 3A
(HOUSING REVENUE LOC)^ 3.68 07/01/2005 1,575,173
14,737,565
------------
TEXAS - 6.53%
630,000 ANSON TX EDUCATION FACILITIES CORPORATION UNIVERSITY OF TEXAS WATERVIEW
PARK PROJECT (HOUSING REVENUE LOC) 4.00 01/01/2008 639,557
1,110,000 AUSTIN TX SERIES A (UTILITIES REVENUE LOC) 5.38 11/15/2005 1,112,320
9,000,000 BEXAR COUNTY TX REVENUE PROJECT (OTHER REVENUE LOC) 5.75 08/15/2022 9,678,330
2,750,000 BRAZOS TX RIVER AUTHORITY TEXAS UTILITIES ELECTRIC COMPANY SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 5.40 04/01/2030 2,816,688
1,440,000 BRAZOS TX RIVER AUTHORITY TEXAS UTILITIES ELECTRIC COMPANY SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 5.05 06/01/2030 1,461,902
145,000 DECATUR TX HOSPITAL AUTHORITY WISE REGIONAL HEALTH SYSTEMS SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 3.38 09/01/2005 144,978
200,000 DECATUR TX HOSPITAL AUTHORITY WISE REGIONAL HEALTH SYSTEMS SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 3.63 09/01/2006 199,894
1,132,573 DESOTO TX IDA WINTERGREEN COMMERCIAL REMARKETED 2-1-94
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/- 7.00 01/01/2017 1,080,508
970,000 GATEWAY TX PUBLIC FACILITY CORPORATION STONEGATE VILLAS APARTMENTS
PROJECT (HOUSING REVENUE LOC) 3.88 01/01/2010 991,185
245,000 HIDALGO COUNTY TX HEALTH SERVICES CORPORATION MISSION HOSPITAL
INCORPORATED PROJECT (HEALTHCARE FACILITIES REVENUE LOC) 4.00 02/15/2006 245,568
2,695,000 HOUSTON TX SPECIAL FACILITIES PEOPLE MOVER SERIES A (AIRPORT REVENUE LOC) 5.38 07/15/2009 2,802,692
2,596,841 LANCASTER TX HOUSING FINANCE CORPORATION MFHR PLEASANT CREEK
CORNERS PROJECT+/- 3.60 06/15/2006 2,199,836
327,333 LANCASTER TX HOUSING FINANCE CORPORATION MFHR PLEASANT CREEK
CORNERS PROJECT+/- 4.57 06/15/2006 277,284
800,000 METRO TX HEALTH FACILITIES DEVELOPMENT CORPORATION WILSON N. JONES
MEMORIAL HOSPITAL PROJECT (HEALTHCARE FACILITIES REVENUE LOC) 6.38 01/01/2007 810,072
5,165,000 MUNIMAE TRUST SERIES 2001-9 CLASS A (HOUSING REVENUE LOC) 4.40 08/24/2009 5,165,000
2,455,000 ODESSA TX HOUSING AUTHORITY SECTION 8 ASSISTANCE PROJECT SERIES B
(HOUSING REVENUE LOC) 6.38 10/01/2011 2,377,766
290,000 SABINE RIVER TX AUTHORITY TXU ELECTRIC COMPANY PROJECT SERIES B
(OTHER REVENUE LOC)+/-@ 5.75 05/01/2030 314,000
100,000 SAN ANGELO TX INDEPENDENT SCHOOL DISTRICT (PROPERTY TAX REVENUE LOC)^ 2.90 02/15/2006 97,720
7,075,000 TEXAS WATER DEVELOPMENT (OTHER REVENUE LOC) 5.70 07/15/2013 7,316,682
875,000 TOM GREEN COUNTY TX HEALTH FACILITIES DEVELOPMENT CORPORATION SHANNON
HEALTH SYSTEMS PROJECT (HEALTHCARE FACILITIES REVENUE LOC) 5.60 05/15/2006 886,349
2,355,000 TRINITY RIVER TX AUTHORITY ELECTRIC COMPANY PROJECT SERIES A
(OTHER REVENUE LOC)+/-@ 5.00 05/01/2027 2,426,098
845,000 WESLACO HEALTH FACILITIES DEVELOPMENT CORPORATION KNAPP MEDICAL CENTER
PROJECT (HEALTHCARE FACILITIES REVENUE LOC) 5.00 06/01/2007 870,342
43,914,771
------------
43
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
UTAH - 0.60%
$ 2,040,034 DAVIS COUNTY UT SCHOOL DISTRICT (LEASE PURCHASE REVENUE LOC) 3.00% 09/07/2008 $ 2,034,159
2,000,000 MOUNTAIN UT REGIONAL WATER SPECIAL SERVICE DISTRICT DISTRICT NUMBER
2002-1 (OTHER REVENUE LOC) 6.25 12/01/2008 1,999,860
4,034,019
------------
VERMONT - 0.11%
360,000 VERMONT EDUCATIONAL & HEALTH BUILDINGS FINANCING AGENCY COUNCIL
DEVELOPMENT MENTAL HEALTH CLASS A (HEALTHCARE FACILITIES REVENUE LOC) 6.20 12/15/2005 365,771
455,000 VERMONT EDUCATIONAL & HEALTH BUILDINGS FINANCING AGENCY HEALTH CARE
FACILITIES COPLEY MANOR PROJECT (HEALTHCARE FACILITIES REVENUE LOC)^^ 5.40 04/01/2006 361,347
727,118
------------
VIRGIN ISLANDS - 1.51%
730,000 TOBACCO SETTLEMENT FINANCING CORPORATION VIRGIN ISLANDS^ 4.47 05/15/2009 658,110
1,100,000 TOBACCO SETTLEMENT FINANCING CORPORATION VIRGIN ISLANDS^ 4.37 05/15/2010 987,943
3,315,000 VIRGIN ISLANDS PUBLIC FINANCE AUTHORITY SERIES C (OTHER REVENUE LOC) 5.50 10/01/2006 3,430,859
1,695,000 VIRGIN ISLANDS PUBLIC FINANCE AUTHORITY SERIES D (OTHER REVENUE LOC) 6.00 10/01/2005 1,711,865
1,500,000 VIRGIN ISLANDS PUBLIC FINANCE AUTHORITY SERIES D (OTHER REVENUE LOC) 6.00 10/01/2006 1,548,630
1,750,000 VIRGIN ISLANDS PUBLIC FINANCE AUTHORITY SERIES D (OTHER REVENUE LOC) 6.00 10/01/2007 1,840,003
10,177,410
------------
VIRGINIA - 1.20%
1,000,000 AMELIA COUNTY VA IDA WASTE MANAGEMENT PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 4.05 04/01/2027 998,690
6,500,000 PITTSYLVANIA COUNTY VA IDA EXEMPT FACILITIES SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 7.50 01/01/2014 6,663,085
380,000 SOUTHEASTERN WA PUBLIC SERVICE AUTHORITY SUBSERIES 2 (OTHER REVENUE LOC) 4.40 07/01/2005 380,384
8,042,159
------------
WASHINGTON - 4.14%
5,000,000 CHELAN COUNTY WA PUBLIC UTILITY DISTRICT NUMBER 1 CHELAN HYDRO SERIES A
(UTILITIES REVENUE LOC)+/-@ 6.55 12/31/2049 5,017,400
3,795,000 CLARK COUNTY NV INDUSTRIAL REVENUE CAMAS POWER BOILER LIMITED PROJECT
SERIES A (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/- 3.38 08/01/2007 3,795,645
1,500,000 PORT LONGVIEW WA INDUSTRIAL DEVELOPMENT CORPORATION WEYERHAEUSER
COMPANY PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC) 6.88 10/01/2008 1,658,565
590,000 QUINCY WA (WATER REVENUE LOC) 4.50 11/01/2008 602,402
575,000 QUINCY WA (WATER REVENUE LOC) 4.75 11/01/2009 593,981
1,390,000 SKAGIT COUNTY WA PUBLIC HOSPITAL DISTRICT NUMBER 1 (OTHER REVENUE LOC) 4.00 12/01/2006 1,397,659
205,000 SNOHOMISH COUNTY WA PUBLIC HOSPITAL DISTRICT NUMBER 3 SERIES A
(PROPERTY TAX REVENUE LOC) 6.00 06/01/2010 212,324
3,555,000 SPOKANE COUNTY WA SCHOOL DISTRICT NUMBER 81 (PROPERTY TAX REVENUE LOC)^ 3.37 06/01/2009 3,161,035
3,100,000 SPOKANE COUNTY WA SCHOOL DISTRICT NUMBER 81 (PROPERTY TAX REVENUE LOC)^ 3.58 06/01/2010 2,745,918
610,000 SPOKANE COUNTY WASHINGTON SCHOOL DISTRICT NUMBER 081 SPOKANE
CONVERTABLE DEFERRED INTEREST MBIA INSURED (PROPERTY TAX REVENUE LOC)^ 3.68 12/01/2010 538,447
200,000 TOBACCO SETTLEMENT AUTHORITY OF WASHINGTON (EXCISE TAX REVENUE LOC) 5.25 06/01/2009 206,630
915,000 WALLA WALLA WA HOUSING AUTHORITY WILBUR MANOR PROJECT
(HOUSING REVENUE LOC) 6.25 12/01/2011 901,394
5,000,000 WASHINGTON STATE HEALTH (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 2.75 01/01/2029 5,000,000
44
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WASHINGTON (CONTINUED)
$ 2,000,000 YAKIMA WA HOUSING AUTHORITY KLICKITAT VALLEY HOSPITAL PROJECT
(HEALTHCARE FACILITIES REVENUE LOC)+/-@ 4.00% 10/01/2023 $ 2,000,000
27,831,400
------------
WEST VIRGINIA - 0.75%
360,000 OHIO COUNTY WV BUILDING COMMISSION MEDICAL CENTER
(HEALTHCARE FACILITIES REVENUE LOC) 7.00 10/01/2010 396,986
3,000,000 PUTNAM COUNTY WV APPALACHIAN POWER COMPANY PROJECT E
(OTHER REVENUE LOC)+/-@ 2.80 05/01/2019 2,960,040
535,000 WEIRTON WV MUNICIPAL HOSPITAL BUILDING COMMISSION WEIRTON MEDICAL
CENTER SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 4.50 12/01/2005 536,086
1,170,000 WEST VIRGINIA PUBLIC ENERGY AUTHORITY MORGANTOWN ASSOCIATION PROJECT A
(UTILITIES REVENUE LOC)+/- 5.05 07/01/2008 1,173,054
5,066,166
------------
WISCONSIN - 3.78%
2,900,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION (EXCISE TAX REVENUE LOC) 5.50 06/01/2010 3,046,595
40,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION (EXCISE TAX REVENUE LOC) 5.75 06/01/2011 42,614
325,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION (OTHER REVENUE LOC) 5.00 06/01/2008 333,297
830,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION (OTHER REVENUE LOC) 5.00 06/01/2009 852,949
500,000 FRANKLIN WI SOLID WASTE DISPOSAL REVENUE+/- 3.63 04/01/2016 500,000
570,000 OSHKOSH WI DON EVANS INCORPORATED PROJECT (INDUSTRIAL DEVELOPMENT
REVENUE LOC) 4.85 12/01/2007 582,711
605,000 OSHKOSH WI DON EVANS INCORPORATED PROJECT (INDUSTRIAL DEVELOPMENT
REVENUE LOC) 5.05 12/01/2008 620,349
650,000 OSHKOSH WI DON EVANS INCORPORATED PROJECT (INDUSTRIAL DEVELOPMENT
REVENUE LOC) 5.20 12/01/2009 665,912
3,935,000 PLEASANT PRAIRIE WI ANTICIPATION NOTES (WATER REVENUE LOC)@ 4.00 10/01/2006 4,001,974
2,200,000 RICHLAND COUNTY WI SCHOOL DISTRICT TRAN 3.25 10/26/2005 2,203,498
25,000 STEVENS POINT WI CDA SECTION 8 (HOUSING REVENUE LOC) 6.50 09/01/2009 28,208
1,050,000 VILLAGE OF RANDOLPH WI PROMISSORY NOTES (PROPERTY TAX REVENUE LOC) 4.38 09/01/2006 1,061,046
300,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY BEAVER DAM
COMMUNITIES HOSPITALS INCORPORATED CLASS A (HEALTHCARE FACILITIES
REVENUE LOC) 4.25 08/15/2008 297,546
200,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY BEAVER DAM
COMMUNITIES HOSPITALS INCORPORATED CLASS A (HEALTHCARE FACILITIES
REVENUE LOC) 4.50 08/15/2009 198,364
1,855,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY BELLIN MEMORIAL
HOSPITAL INCORPORATED (HEALTHCARE FACILITIES REVENUE LOC) 5.00 02/15/2009 1,876,963
175,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY DIVINE SAVIOR
HEALTHCARE SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 4.45 05/01/2007 178,806
25,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY DIVINE SAVIOR
HOSPITAL INCORPORATED PROJECT (HEALTHCARE FACILITIES REVENUE LOC) 4.80 06/01/2006 25,082
30,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY LUTHERAN HOME FOR
THE AGING (HEALTHCARE FACILITIES REVENUE LOC) 7.00 09/01/2025 30,003
200,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY MARSHFIELD CLINIC
SERIES B (HEALTHCARE FACILITIES REVENUE LOC) 4.50 02/15/2006 201,520
350,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY MARSHFIELD CLINIC
SERIES B (HEALTHCARE FACILITIES REVENUE LOC) 5.75 02/15/2007 362,880
1,500,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY THREE PILLARS
COMMUNITIES (HEALTHCARE FACILITIES REVENUE LOC) 5.00 08/15/2010 1,583,145
100,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY TOMAH MEMORIAL
HOSPITAL INCORPORATED PROJECT (HEALTHCARE FACILITIES REVENUE LOC) 3.25 07/01/2005 99,875
100,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY TOMAH MEMORIAL
HOSPITAL INCORPORATED PROJECT (HEALTHCARE FACILITIES REVENUE LOC) 3.88 07/01/2006 99,582
130,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY TOMAH MEMORIAL
HOSPITAL INCORPORATED PROJECT (HEALTHCARE FACILITIES REVENUE LOC) 4.13 07/01/2007 129,048
45
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WISCONSIN (CONTINUED)
$ 2,905,000 WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY SERIES E
(HOUSING REVENUE LOC) 5.80% 09/01/2017 $ 2,957,348
3,370,000 WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY SERIES F
(HOUSING REVENUE LOC) 5.20 07/01/2018 3,404,408
25,383,723
------------
WYOMING - 0.58%
2,855,000 GILLETTE WY BLACK HILLS POWER & LIGHT COMPANY PROJECT SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.45 06/01/2024 2,855,000
1,050,000 TETON COUNTY WY HOSPITAL DISTRICT REVENUE ST. JOHN'S MEDICAL CENTER
(HEALTHCARE FACILITIES REVENUE LOC) 5.25 12/01/2007 1,069,509
3,924,509
------------
MULTIPLE STATES - 0.89%
2,000,000 GMAC MUNICIPAL MORTGAGE TRUST++ 4.15 10/31/2039 1,993,500
4,000,000 MMA FINANCIAL CDD SENIOR SECURITIZATION TRUST BEACON LAKES PASSTHRU
CTFS C (OTHER REVENUE LOC)+/- 3.38 11/01/2008 4,017,760
6,011,260
------------
TOTAL MUNICIPAL BONDS & NOTES (COST $672,143,603) 672,844,768
------------
CONTRACTS
SWAP OPTIONS - 0.00%
7,400 5 YEAR 4.87% INTEREST RATE SWAP, EXPIRES 7/14/05 13,690
TOTAL SWAP OPTIONS (COST $153,920) 13,690
------------
SHORT-TERM INVESTMENTS - 0.80%
SHARES
MUTUAL FUND - 0.80%
5,371,483 WELLS FARGO ADVANTAGE NATIONAL TAX-FREE MONEY MARKET TRUST~>> 5,371,483
------------
TOTAL SHORT-TERM INVESTMENTS (COST $5,371,483) 5,371,483
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $677,669,006)* 100.86% $678,229,941
OTHER ASSETS AND LIABILITIES, NET (0.86) (5,759,311)
------ ------------
TOTAL NET ASSETS 100.00% $672,470,630
====== ============
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE
SECURITIES ACT OF 1933, AS AMENDED.
+/- VARIABLE RATE SECURITIES.
^^ THIS SECURITY IS CURRENTLY IN DEFAULT WITH REGARDS TO SCHEDULED INTEREST
OR PRINCIPAL PAYMENTS.
^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO
MATURITY.
# SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS.
%% SECURITIES ISSUED ON A WHEN-ISSUED (TBA) BASIS. (SEE NOTE 2)
+ NON-INCOME EARNING SECURITIES.
@ THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
>> SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $5,371,483.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
46
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MUNICIPAL BONDS & NOTES - 99.61%
ALABAMA - 2.54%
$ 225,000 ALABAMA 21ST CENTURY AUTHORITY (OTHER REVENUE LOC) 5.13% 12/01/2005 $ 226,739
1,000,000 ALABAMA 21ST CENTURY AUTHORITY (OTHER REVENUE LOC) 5.25 12/01/2006 1,023,200
17,815,000 BIRMINGHAM AL BAPTIST MEDICAL CENTERS SPECIAL CARE FACILITIES
FINANCING AUTHORITY BAPTIST HEALTH SYSTEM SERIES C (HEALTHCARE
FACILITIES REVENUE LOC)+/-@ 4.35 11/15/2016 17,912,270
1,305,000 SHELBY COUNTY AL BOARD OF EDUCATION (LEASE REVENUE LOC) 2.40 05/15/2006 1,293,673
20,455,882
------------
ARIZONA - 1.55%
8,300,000 MARICOPA COUNTY AZ POLLUTION CONTROL CORPORATION EL PASO ELECTRIC
COMPANY PROJECT SERIES A (UTILITIES REVENUE LOC)+/-@ 6.25 05/01/2037 8,368,807
1,825,000 MOHAVE COUNTY AZ IDA CITIZENS UTILITY COMPANY PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/- 4.75 08/01/2020 1,826,642
1,250,000 PASCUA YAQUI TRIBE AZ GOVERNMENT FACILITIES (OTHER REVENUE LOC) 5.20 01/01/2006 1,266,350
1,000,000 SANTA CRUZ COUNTY AZ IDA (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 4.75 08/01/2020 994,950
12,456,749
------------
ARKANSAS - 0.90%
2,500,000 ARKANSAS DEVELOPMENT FINANCE AUTHORITY WASTE MANAGEMENT
(OTHER REVENUE LOC)+/-@ 2.85 08/01/2021 2,495,050
2,120,000 LITTLE ROCK AR (AIRPORT REVENUE LOC) 3.50 11/01/2008 2,145,673
1,695,000 LITTLE ROCK AR LEXICON INCORPORATED PROJECT (INDUSTRIAL DEVELOPMENT
REVENUE LOC) 6.48 07/01/2006 1,687,695
360,000 NORTHWEST AR REGIONAL AIRPORT AUTHORITY (AIRPORT REVENUE LOC) 4.00 02/01/2006 362,279
525,000 POPE COUNTY AR ENTERGY ARKANSAS INCORPORATED PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 5.05 09/01/2028 528,612
7,219,309
------------
CALIFORNIA - 8.19%
2,505,000 BAY AREA CA GOVERNMENTS ASSOCIATION BART SAN FRANCISCO EXTENSION FTA
CAPITAL GRANT SERIES A AMBAC INSURED (STATE & LOCAL GOVERNMENTS LOC) 4.88 06/15/2009 2,509,409
1,045,000 CALIFORNIA HFA HOME MORTGAGE SERIES F (HOUSING REVENUE LOC) 4.70 08/01/2016 1,053,684
9,000,000 CALIFORNIA SERIES D5 (OTHER REVENUE LOC)+/-@ 1.95 05/01/2033 8,996,580
6,650,000 CALIFORNIA STATEWIDE CDA ESKATON PROPERTIES INCORPORATED+/-@ 4.88 05/15/2029 6,650,000
8,900,000 CALIFORNIA STATEWIDE CDA ESKATON PROPERTIES INCORPORATED
(HEALTHCARE FACILITIES REVENUE LOC)+/-@ 4.88 05/15/2029 8,900,000
1,550,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY
(HOUSING REVENUE LOC)+/-@ 4.70 05/15/2029 1,550,000
9,050,000 CALIFORNIA STATEWIDE COMMUNITY DEVELOPMENT AUTHORITY CERTIFICATE
PARTICIPATION OBLIGATED GROUP ACA INSURED (HOSPITAL REVENUE LOC)+/-@ 4.70 12/01/2028 9,050,000
345,000 GOLDEN STATE CA TOBACCO SECURITIZATION CORPORATION SERIES B
(OTHER REVENUE LOC) 5.13 06/01/2014 345,700
12,455,000 GOLDEN STATE CA TOBACCO SECURITIZATION CORPORATION SERIES B
(OTHER REVENUE LOC) 5.25 06/01/2015 12,483,522
9,320,000 GOLDEN STATE CA TOBACCO SECURITIZATION CORPORATION SERIES B
(OTHER REVENUE LOC) 5.25 06/01/2016 9,341,343
1,554,785 PASADENA CA (HEALTHCARE FACILITIES REVENUE LOC) 4.25 12/19/2006 1,554,816
1,280,000 SANTA ROSA CA RANCHERIA TACHI YOKUT TRIBE ENTERPRISE (OTHER REVENUE LOC) 5.00 03/01/2006 1,285,427
500,000 TOBACCO SECURITIZATION AUTHORITY OF SOUTHERN CALIFORNIA SERIES A
(OTHER REVENUE LOC) 4.00 06/01/2005 499,955
1,590,000 TOBACCO SECURITIZATION AUTHORITY OF SOUTHERN CALIFORNIA SERIES A
(OTHER REVENUE LOC) 5.00 06/01/2007 1,618,954
65,839,390
------------
47
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COLORADO - 1.18%
$ 3,300,000 ADAMS COUNTY CO BRITTANY STATION PROJECT SERIES A
(HOUSING REVENUE LOC)+/-@ 5.40% 09/01/2025 $ 3,324,321
209,581 ARAPAHOE COUNTY CO IDK PARTNERS I TRUST SERIES A CLASS A
(HOUSING REVENUE LOC) 5.25 11/01/2019 211,213
1,000,000 COLORADO HEALTH FACILITIES AUTHORITY EVANGELICAL LUTHERAN
(HEALTHCARE FACILITIES REVENUE LOC) 3.05 10/01/2005 999,410
2,245,000 COLORADO HFA SERIES A2 (HOUSING REVENUE LOC) 6.60 05/01/2028 2,313,405
725,000 GARFIELD COUNTY CO VALLEY VIEW HOSPITAL ASSOCIATION PROJECT SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 2.50 05/15/2005 724,899
1,930,000 TOWER METROPOLITAN DISTRICT CO REFUNDING & IMPROVEMENT
(PROPERTY TAX REVENUE LOC)+/-@ 4.00 12/01/2030 1,939,264
9,512,512
------------
FLORIDA - 5.30%
4,400,000 BREVARD COUNTY FL HEALTH FACILITIES AUTHORITY RETIREMENT HOUSING
FUNDING (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 5.00 12/01/2028 4,400,000
20,200,000 CAPITAL TRUST AGENCY FL SEMINOLE TRIBE RESORT SERIES B
(TAX REVENUE LOC)+/-@ 3.06 10/01/2033 20,200,000
2,000,000 HIGHLANDS COUNTY FL HEALTH FACILITIES AUTHORITY ADVENTIST HEALTH
SYSTEMS (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 3.10 11/15/2034 2,000,000
3,170,000 HILLSBOROUGH COUNTY FL AVIATION AUTHORITY TAMPA INTERNATIONAL AIRPORT
SERIES A (AIRPORT REVENUE LOC) 5.75 10/01/2007 3,317,627
345,000 JACKSONVILLE FL ECONOMIC DEVELOPMENT COMMISSION MET PACKAGE SOLUTIONS
PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC) 3.25 10/01/2006 344,137
250,000 JACKSONVILLE FL ECONOMIC DEVELOPMENT COMMISSION MET PACKAGE SOLUTIONS
PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC) 3.50 10/01/2007 249,650
2,030,000 MIAMI BEACH FL HEALTH FACILITIES AUTHORITY MOUNT SINAI MEDICAL CENTER
(HEALTHCARE FACILITIES REVENUE LOC) 5.50 11/15/2005 2,045,022
1,000,000 PASCO COUNTY FL (OTHER REVENUE LOC) 5.75 04/01/2006 1,023,610
1,000,000 ST JOHNS FL RIVER WATER MANAGEMENT DISTRICT
(WATER & WASTEWATER AUTHORITY REVENUE LOC) 5.10 07/01/2009 1,003,960
8,000,000 VOLUSIA COUNTY FL IDA ACA INSURED (HEALTHCARE FACILITIES
REVENUE LOC)+/-@ 4.70 12/01/2028 8,000,000
42,584,006
------------
GEORGIA - 1.37%
11,000,000 FULTON COUNTY GA HOUSING AUTHORITY ORCHARD SPRINGS APARTMENTS
(HOUSING REVENUE LOC)+/-@ 2.25 12/01/2037 11,000,000
------------
IDAHO - 0.14%
1,145,000 POST FALLS ID LOCAL IMPROVEMENT DISTRICT NUMBER 2004-1 3.25 01/15/2007 1,143,878
------------
ILLINOIS - 4.36%
11,000,000 AURORA IL COVEY FOX VALLEY APARTMENTS PROJECT (HOUSING REVENUE LOC)+/-@ 5.30 11/01/2027 11,187,330
380,000 CHICAGO IL CHATHAM RIDGE (TAX ALLOCATION REVENUE LOC) 4.05 12/15/2005 380,300
645,000 CHICAGO IL O'HARE INTERNATIONAL AIRPORT SENIOR LIEN SERIES A
(AIRPORT REVENUE LOC) 4.90 01/01/2006 652,495
1,400,000 COLES-CLARK COUNTIES IL COMMUNITY COLLEGE DISTRICT NUMBER 517 LAKE LAND
COMMUNITY COLLEGE (PROPERTY TAX REVENUE LOC) 3.55 12/01/2005 1,398,754
300,000 COLES-CLARK COUNTIES IL COMMUNITY COLLEGE DISTRICT NUMBER 517 LAKE LAND
COMMUNITY COLLEGE (PROPERTY TAX REVENUE LOC) 3.55 12/01/2006 298,560
3,330,000 EUREKA IL EUREKA COLLEGE PROJECT SERIES B (EDUCATIONAL FACILITIES
REVENUE LOC) 7.00 01/01/2019 3,337,393
2,600,000 HOFFMAN ESTATES IL CAPITAL APPRECIATION HOFFMAN ESTATES
(TAX REVENUE LOC)^ 4.40 05/15/2005 2,595,216
2,435,000 ILLINOIS DEVELOPMENT FINANCE AUTHORITY PCR ILLINOIS POWER PROJECT AMBAC
INSURED (POLLUTION CONTROL REVENUE LOC)+/-@ 2.70 11/01/2028 2,435,000
48
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
ILLINOIS (CONTINUED)
$ 75,000 ILLINOIS FINANCE AUTHORITY CITIZENS UTILITY COMPANY PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/- 4.80% 08/01/2025 $ 75,067
12,000,000 ILLINOIS HEALTH FACILITIES AUTHORITY HOSPITAL SISTERS SERVICES
INCORPORATED SERIES A (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 4.00 12/01/2022 12,179,520
545,000 NORTHERN COOK COUNTY IL SOLID WASTE AGENCY PREREFUNDED SERIES A
(OTHER REVENUE LOC) 5.15 05/01/2006 556,467
35,096,102
------------
INDIANA - 2.66%
8,080,000 ANDERSON IN CROSS LAKES APARTMENTS SERIES A (HOUSING REVENUE LOC)+/-@ 5.63 07/01/2033 7,576,131
3,050,000 CLARKSVILLE IN (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 4.70 12/01/2025 3,050,000
2,000,000 INDIANA DEVELOPMENT FINANCE AUTHORITY WASTE MANAGEMENT INCORPORATED
PROJECT (OTHER REVENUE LOC)+/-@ 2.70 10/01/2031 1,992,280
9,365,000 INDIANAPOLIS IN COVERED BRIDGE SERIES A (HOUSING REVENUE LOC)+/-@ 5.50 04/01/2030 8,760,677
21,379,088
------------
IOWA - 0.39%
500,000 AMES IA MARY GREELEY MEDICAL CENTER (HOSPITAL REVENUE LOC) 3.00 06/15/2005 500,235
145,000 CEDAR RAPIDS IA FIRST MORTGAGE COTTAGE GROVE SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 5.30 07/01/2005 144,396
2,475,000 IOWA HIGHER EDUCATION LOAN AUTHORITY REVENUE ANTICIPATION NOTES CLARKE
COLLEGE SERIES B (COLLEGE AND UNIVERSITY REVENUE LOC) 3.65 05/24/2005 2,475,074
3,119,705
------------
KANSAS - 1.40%
6,250,000 BURLINGTON KS KC POWER & LIGHT COMPANY PROJECT SERIES C
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 2.38 10/01/2017 6,233,875
2,000,000 KANSAS INDEPENDENT COLLEGE FINANCE AUTHORITY REVENUE ANTICIPATION
NOTES BAKER UNIVERSITY SERIES A (COLLEGE AND UNIVERSITY REVENUE LOC) 3.90 05/02/2005 1,999,980
1,500,000 KANSAS INDEPENDENT COLLEGE FINANCE AUTHORITY REVENUE ANTICIPATION
NOTES BENEDICTINE UNIVERSITY SERIES B
(COLLEGE AND UNIVERSITY REVENUE LOC) 3.90 05/02/2005 1,499,925
700,000 KANSAS INDEPENDENT COLLEGE FINANCE AUTHORITY REVENUE ANTICIPATION
NOTES BETHEL UNIVERSITY SERIES C (COLLEGE AND UNIVERSITY REVENUE LOC) 3.90 05/02/2005 699,965
800,000 KANSAS INDEPENDENT COLLEGE FINANCE AUTHORITY REVENUE ANTICIPATION NOTES
SOUTHWESTERN UNIVERSITY SERIES E (COLLEGE AND UNIVERSITY REVENUE LOC) 3.90 05/02/2005 799,960
11,233,705
------------
KENTUCKY - 0.66%
140,000 COVINGTON KY ALLEN & ALLEN (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 4.25 09/01/2016 139,844
1,500,000 KENTUCKY ECONOMIC DEVELOPMENT FINANCE AUTHORITY RETIREMENT HOUSING
FOUNDATION (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 5.00 12/01/2028 1,500,000
3,525,000 MUHLENBERG COUNTY KY MUHLENBERG COMMUNITY HOSPITAL PROJECT
(HEALTHCARE FACILITIES REVENUE LOC) 6.75 07/01/2010 3,649,186
5,289,030
------------
LOUISIANA - 5.56%
9,825,000 CALCASIEU PARISH LA MEMORIAL HOSPITAL SERVICE DISTRICT LAKE CHARLES
MEMORIAL HOSPITAL PROJECT (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 3.05 12/01/2018 9,825,000
33,890,000 LOUISIANA PUBLIC FACILITIES AUTHORITY MFHR WHITTEN FOUNDATION
SERIES A+/-@ 4.00 08/01/2032 23,723,000
18,995,000 LOUISIANA PUBLIC FACILITIES AUTHORITY MFHR WHITTEN FOUNDATION
SERIES B+/-@^^ 5.65 08/01/2032 949,750
49
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
LOUISIANA (CONTINUED)
$ 6,075,000 ORLEANS PARISH LA SCHOOL BOARD MUNICIPAL LEASE (LEASE REVENUE LOC) 5.71% 08/20/2007 $ 6,168,859
4,000,000 ST. CHARLES PARISH LA SERIES A (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 4.90 06/01/2030 4,006,760
44,673,369
------------
MARYLAND - 1.26%
5,125,000 MARYLAND CDA DEPARTMENT OF HOUSING & COMMUNITY DEVELOPMENT SINGLE FAMILY
PROGRAM (HOUSING REVENUE LOC)+/- 6.05 04/01/2014 5,223,041
4,865,000 MARYLAND CDA DEPARTMENT OF HOUSING & COMMUNITY DEVELOPMENT SINGLE FAMILY
PROGRAM 1ST SERIES (HOUSING REVENUE LOC) 5.80 04/01/2009 4,922,115
10,145,156
------------
MASSACHUSETTS - 6.49%
3,195,000 BERKSHIRE MA REGIONAL TRANSIT AUTHORITY REVENUE ANTICIPATION NOTES
(TRANSPORTATION REVENUE LOC) 3.00 09/16/2005 3,195,958
3,780,000 BOSTON MA INDUSTRIAL DEVELOPMENT FINANCING AUTHORITY PILOT SEAFOOD
PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 5.88 04/01/2030 3,889,280
435,000 MASSACHUSETTS HEALTH & EDUCATIONAL FACILITIES AUTHORITY BERKSHIRE
HEALTH SYSTEMS SERIES E (HEALTHCARE FACILITIES REVENUE LOC) 4.50 10/01/2005 435,653
4,930,000 MASSACHUSETTS HEALTH & EDUCATIONAL FACILITIES AUTHORITY CARITAS CHRISTI
OBLIGATION GROUP SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 5.25 07/01/2005 4,942,621
3,650,000 MASSACHUSETTS HEALTH & EDUCATIONAL FACILITIES AUTHORITY CARITAS CHRISTI
OBLIGATION GROUP SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 5.25 07/01/2006 3,704,458
2,000,000 MASSACHUSETTS HFA SINGLE FAMILY NOTES SERIES U (HOUSING REVENUE LOC) 2.65 01/31/2006 1,996,300
500,000 MASSACHUSETTS INDUSTRIAL FINANCE AGENCY OGDEN SERIES A
(OTHER REVENUE LOC)+/- 4.95 12/01/2006 507,840
4,205,000 MASSACHUSETTS INDUSTRIAL FINANCE AGENCY REFUSETECH INCORPORATED PROJECT
SERIES A (OTHER REVENUE LOC) 6.30 07/01/2005 4,222,913
7,200,000 MONTACHUSETT MA REGIONAL TRANSIT AUTHORITY REVENUE ANTICIPATION NOTES
(PROPERTY TAX REVENUE LOC) 3.00 06/17/2005 7,193,952
9,500,000 PIONEER MA VALLEY TRANSIT AUTHORITY REVENUE ANTICIPATION NOTES
(OTHER REVENUE LOC) 3.50 08/05/2005 9,502,660
12,600,000 WORCESTER MA REGIONAL TRANSIT AUTHORITY REVENUE ANTICIPATION NOTES
(OTHER REVENUE LOC) 3.00 06/30/2005 12,587,526
52,179,161
------------
MICHIGAN - 0.92%
7,300,790 SUBURBAN MI MOBILITY AUTHORITY 4.90 08/15/2007 7,361,314
------------
MINNESOTA - 0.01%
45,000 CANBY MN COMMUNITY HOSPITAL DISTRICT NUMBER 1 SIOUX VALLEY HOSPITALS &
HEALTH (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 3.30 11/01/2026 45,000
------------
MISSISSIPPI - 3.61%
2,350,000 ADAMS COUNTY MS INTERNATIONAL PAPER COMPANY PROJECT SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.63 11/15/2006 2,356,674
2,000,000 BILOXI MS HOUSING AUTHORITY BAYVIEW PLACE ESTATES (HOUSING REVENUE LOC) 4.50 09/01/2005 2,002,380
10,000,000 MISSISSIPPI HOSPITAL EQUIPMENT & FACILITIES AUTHORITY BAPTIST MEMORIAL
HEALTH SERIES B2 (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 3.00 09/01/2018 9,996,400
4,500,000 MISSISSIPPI HOSPITAL EQUIPMENT & FACILITIES AUTHORITY BAPTIST MEMORIAL
HEALTH SERIES B2 (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 3.50 09/01/2022 4,511,565
6,200,000 MISSISSIPPI REGIONAL HOUSING AUTHORITY NUMBER 8 MAGNOLIA PARK APARTMENTS
(HOUSING REVENUE LOC)+/-@ 2.15 03/01/2030 6,200,372
50
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MISSISSIPPI (CONTINUED)
$ 4,000,000 MISSISSIPPI REGIONAL HOUSING AUTHORITY NUMBER II TERRACE PARK APARTMENTS
PROJECT (HOUSING REVENUE LOC)+/-@ 1.75% 05/01/2030 $ 4,000,000
29,067,391
------------
MISSOURI - 5.46%
6,660,000 HAZELWOOD MO IDA BOTTOM ROAD DEVELOPMENT PROJECT
(TAX INCREMENTAL REVENUE LOC) 3.00 08/01/2013 6,632,694
5,200,000 HAZELWOOD MO IDA BOTTOM ROAD DEVELOPMENT PROJECT
(TAX INCREMENTAL REVENUE LOC) 3.88 08/01/2018 5,137,132
1,425,000 MISSOURI HIGHER EDUCATION LOAN AUTHORITY SUB LIEN
(COLLEGE AND UNIVERSITY REVENUE LOC) 6.50 02/15/2006 1,440,647
800,000 MISSOURI ST HEALTH & EDUCATIONAL FACILITIES AUTHORITY FACILITIES
REVENUE STARS-MERCY HEALTH SYSTEMS-SERIES C AMBAC INSURED
(HEALTHCARE FACILITIES REVENUE LOC)+/-@ 2.75 06/01/2031 800,000
3,500,000 MISSOURI ST HEALTH AND EDUCATIONAL FACILITIES AUTHORITY REVENUE
PRIVADE EDUCATION - REVENUE ANTICIPATION NOTES
(HEALTH FACILITIES FINANCING AUTHORITY REVENUE LOC) 4.75 04/25/2006 3,532,760
6,979,218 MISSOURI STATE HEALTH & EDUCATIONAL FACILITIES AUTHORITY LEASE-SUBLEASE
PURCHASE (LEASE REVENUE LOC) 3.09 07/15/2008 6,995,759
14,000,000 MISSOURI STATE HEALTH & EDUCATIONAL FACILITIES AUTHORITY ST LOUIS CITY
SCHOOL DISTRICT SERIES H (OTHER REVENUE LOC) 3.25 11/14/2005 14,010,220
2,490,000 RICHMOND HEIGHTS MO BOARD ANTICIPATION NOTES MANHASSETT VILLAGE PROJECT 3.35 10/01/2006 2,484,497
2,000,000 ST JOSEPH MO IDA ALBAUGH INCORPORATED PROJECT SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.36 11/01/2019 2,000,000
850,000 ST. CHARLES SCHOOL DISTRICT MO CAPITAL APPRECIATION SERIES A
(PROPERTY TAX REVENUE LOC)^ 3.14 03/01/2006 828,104
43,861,813
------------
NEBRASKA - 0.32%
1,079,326 ENERGY AMERICA NE PUBLIC GAS AGENCY PROJECT SERIES B (B) 5.10 10/15/2005 1,066,331
1,510,000 OMAHA NE TRIBE PUBLIC IMPROVEMENTS AUTHORITY (OTHER REVENUE LOC) 7.50 06/01/2009 1,510,770
2,577,101
------------
NEVADA - 0.51%
4,000,000 CLARK COUNTY NV MACARRAN INTERNATIONAL AIRPORT SERIES A
(AIRPORT REVENUE LOC)@ 6.00 07/01/2017 4,101,240
------------
NEW HAMPSHIRE - 0.78%
2,000,000 NEW HAMPSHIRE HEALTH & EDUCATIONAL FACILITIES SERIES B
(HEALTH FACILITIES FINANCING AUTHORITY REVENUE LOC) 4.00 04/26/2006 2,014,700
1,600,000 NEW HAMPSHIRE HEALTH & EDUCATIONAL FACILITIES SERIES G
(HEALTH FACILITIES FINANCING AUTHORITY REVENUE LOC) 4.00 04/26/2006 1,611,760
2,645,000 NEW HAMPSHIRE HEALTH & EDUCATIONAL FACILITIES SERIES H
(HEALTH FACILITIES FINANCING AUTHORITY REVENUE LOC) 4.00 04/26/2006 2,664,441
6,290,901
------------
NEW JERSEY - 1.85%
5,493,000 BAYONNE NJ BOARD ANTICIPATION NOTES (PROPERTY TAX REVENUE LOC) 3.00 07/01/2005 5,487,012
2,800,000 BAYONNE NJ PARKING AUTHORITY PACKAGE PROJECT (AIRPORT REVENUE LOC) 2.50 05/12/2005 2,799,356
6,000,000 BAYONNE NJ REDEVELOPMENT AGENCY (PROPERTY TAX REVENUE LOC) 4.25 05/27/2005 6,003,960
555,000 TOBACCO SETTLEMENT FINANCING CORPORATION NEW JERSEY
(EXCISE TAX REVENUE LOC) 4.38 06/01/2019 555,544
14,845,872
------------
51
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
NEW MEXICO - 2.46%
$ 3,045,000 ALAMOGORDO NM GERALD CHAMPION MEMORIAL HOSPITAL PROJECT
(HEALTHCARE FACILITIES REVENUE LOC) 5.00% 01/01/2008 $ 3,167,531
16,635,000 PUEBLO OF SANDIA NM+/-@%% 4.94 03/01/2015 16,635,000
19,802,531
------------
NEW YORK - 7.83%
7,000,000 ALBANY NY SCHOOL DISTRICT BOARD ANTICIPATION NOTES
(PROPERTY TAX REVENUE LOC) 3.00 08/26/2005 6,987,330
1,055,000 DUTCHESS COUNTY NY IDA MARIST COLLEGE SERIES A
(COLLEGE AND UNIVERSITY REVENUE LOC) 2.75 07/01/2005 1,054,789
2,055,000 MONROE NY NEWPOWER CORPORATION (ELECTRIC REVENUE LOC) 3.30 01/01/2009 2,038,786
8,750,000 NEW YORK CONVENTION CENTER OPERATING CORPORATION CAPITAL APPRECIATION
YALE BUILDING PROJECT (OTHER REVENUE LOC)^ 4.24 06/01/2008 7,687,837
1,000,000 NEW YORK CONVENTION CENTER OPERATING CORPORATION YALE BUILDING
ACQUISITION PROJECT (OTHER REVENUE LOC) 5.25 06/01/2008 1,031,440
1,000,000 NEW YORK NY IDA POLYTECHNIC UNIVERSITY PROGRAM (LEASE REVENUE LOC) 5.13 11/01/2006 1,002,790
1,035,000 SYRACUSE NY BOARD ANTICIPATION NOTES AIRPORT SERIES A
(AIRPORT REVENUE LOC) 3.75 04/13/2006 1,041,375
7,530,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES A1
(EXCISE TAX REVENUE LOC) 5.00 06/01/2009 7,544,985
26,745,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES A1
(EXCISE TAX REVENUE LOC) 5.00 06/01/2010 26,801,967
3,000,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES C1
(OTHER REVENUE LOC) 5.50 06/01/2010 3,007,710
4,660,000 TSASC INCORPORATED NY SERIES 1 (OTHER REVENUE LOC) 5.25 07/15/2010 4,743,088
62,942,097
------------
NORTH DAKOTA - 0.08%
620,000 NORTH DAKOTA STATE HFA HOUSING FINANCE HOME MORTGAGE FINANCE SERIES A
(HOUSING REVENUE LOC) 4.60 01/01/2023 620,843
------------
OHIO - 4.02%
2,000,000 FIELD OH LOCAL SCHOOL DISTRICT BOARD ANTICIPATION NOTES
(PROPERTY TAX REVENUE LOC) 3.25 06/28/2005 1,999,920
8,000,000 FIELD OH LOCAL SCHOOL DISTRICT BOARD ANTICIPATION NOTES SCHOOL
IMPROVEMENTS (PROPERTY TAX REVENUE LOC) 3.20 06/28/2005 7,997,600
6,020,000 GATEWAY OH ECONOMIC DEVELOPMENT CORPORATION (EXCISE TAX REVENUE LOC) 2.75 09/01/2005 6,020,722
1,000,000 GATEWAY OH ECONOMIC DEVELOPMENT CORPORATION SERIES B (STADIUM
REVENUE LOC)+/- 3.49 09/15/2014 1,000,000
825,000 LAKEWOOD OH LAKEWOOD HOSPITAL ASSOCIATION (HEALTHCARE FACILITIES
REVENUE LOC) 5.00 02/15/2006 837,136
2,500,000 MONROE OH BOARD ANTICIPATION NOTES (PROPERTY TAX REVENUE LOC) 2.50 08/24/2005 2,494,750
1,500,000 OHIO AIR QUALITY DEVELOPMENT AUTHORITY PCR PA POWER COMPANY PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.38 01/01/2029 1,496,970
2,850,000 OHIO AIR QUALITY DEVELOPMENT AUTHORITY PCR TOLEDO SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.10 09/01/2033 2,850,200
7,600,000 OHIO STATE WATER DEVELOPMENT AUTHORITY OHIO EDISON COMPANY SERIES B
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.35 06/01/2033 7,612,388
32,309,686
------------
OKLAHOMA - 0.92%
1,000,000 ELLIS COUNTY OK INDUSTRIAL AUTHORITY WB JOHNSTON GRAIN SHATTUCK PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.00 08/01/2008 994,320
650,000 ELLIS COUNTY OK INDUSTRIAL AUTHORITY WB JOHNSTON GRAIN SHATTUCK PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 7.00 08/01/2013 686,725
5,740,000 TULSA OK INDUSTRIAL AUTHORITY ST JOHNS PHYSICIANS
(HEALTHCARE FACILITIES REVENUE LOC)+/-@ 1.90 11/01/2014 5,740,000
7,421,045
------------
52
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
OREGON - 3.17%
$ 3,000,000 GILLIAM COUNTY OR WASTE MANAGEMENT PROJECT (OTHER REVENUE LOC)+/-@ 2.50% 07/01/2029 $ 3,000,000
12,450,000 MEDFORD OR HOSPITAL FACILITIES AUTHORITY ROGUE VALLEY MANOR PROJECT
(HEALTHCARE FACILITIES REVENUE LOC)+/-@ 2.65 08/15/2032 12,450,000
6,000,000 OREGON ECONOMIC DEVELOPMENT REVENUE TOYO TANSO USA SERIES CXLVII
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 5.41 02/01/2012 6,000,000
1,500,000 PORT OF PORTLAND OR UNION PACIFIC RAILROAD COMPANY PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.20 12/01/2006 1,494,795
2,460,000 WESTERN LANE OR HOSPITAL DISTRICT HOSPITAL FACILITY AUTHORITY SISTERS
OF ST. JOSEPH PEACE PROJECT (HEALTHCARE FACILITIES REVENUE LOC) 5.63 08/01/2007 2,514,538
25,459,333
------------
PENNSYLVANIA - 3.70%
1,110,000 BERKS COUNTY PA MUNICIPAL AUTHORITY ALBRIGHT COLLEGE PROJECT NOTES
(COLLEGE AND UNIVERSITY REVENUE LOC) 2.75 10/01/2005 1,108,069
2,000,000 DAUPHIN COUNTY PA GENERAL AUTHORITY POOLED FINANCING SERIES C2
(OTHER REVENUE LOC)+/-@ 1.80 06/01/2026 1,997,900
535,000 LEBANON COUNTY PA HEALTH FACILITIES AUTHORITY GOOD SAMARITAN HOSPITAL
PROJECT (HEALTHCARE FACILITIES REVENUE LOC) 3.50 11/15/2007 531,838
11,769,231 PENNSYLVANIA HFA SINGLE FAMILY MORTGAGE REVENUE (HOUSING REVENUE LOC)+/- 3.45 06/01/2008 11,769,231
8,000,000 PENNSYLVANIA HIGHER EDUCATIONAL FACILITIES AUTHORITY UPMC SUBSERIES C1
(COLLEGE AND UNIVERSITY REVENUE LOC)+/-@ 3.20 12/01/2033 8,000,000
1,000,000 PHILADELPHIA PA IDA ASHLAND OIL INCORPORATED PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 5.70 06/01/2005 1,002,570
1,000,000 SAYRE PA HEALTH CARE FACILITIES AUTHORITY GUTHRIE HEALTH SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 5.50 12/01/2005 1,012,920
1,500,000 SAYRE PA HEALTH CARE FACILITIES AUTHORITY GUTHRIE HEALTH SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 5.50 12/01/2006 1,546,905
2,825,000 WASHINGTON COUNTY PA IDA CHILDREN'S HOME PITTSBURGH PROJECT
(HOUSING REVENUE LOC) 4.00 06/15/2008 2,809,067
29,778,500
------------
PUERTO RICO - 1.94%
15,625,000 PUERTO RICO INFRASTRUCTURE FINANCING AUTHORITY SERIES B
(STATE & LOCAL GOVERNMENTS LOC)+/-# 3.64 10/01/2040 15,625,000
------------
RHODE ISLAND - 0.25%
2,000,000 RHODE ISLAND INDUSTRIAL FACILITIES CORPORATION WASTE MANAGEMENT
INCORPORATED PROJECT SERIES A (OTHER REVENUE LOC)+/-@ 2.75 04/01/2016 1,981,460
------------
SOUTH CAROLINA - 1.04%
2,790,000 CHARLESTON COUNTY SC MEDICAL SOCIETY HEALTH PROJECT
(HEALTHCARE FACILITIES REVENUE LOC) 5.50 10/01/2005 2,824,010
3,080,000 GREENVILLE SC HOSPITAL SYSTEM BOARD SERIES A (HEALTHCARE FACILITIES
REVENUE LOC) 5.10 05/01/2005 3,080,401
1,405,415 TOBACCO SETTLEMENT REVENUE MANAGEMENT AUTHORITY SC SERIES A
(OTHER REVENUE LOC) 7.67 05/15/2016 1,406,286
1,000,000 YORK SC BOWATER INCORPORATED PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC) 7.63 03/01/2006 1,023,560
8,334,257
------------
53
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
SOUTH DAKOTA - 3.61%
$ 2,725,000 ABERDEEN SD TENDER OPTION (COLLEGE AND UNIVERSITY REVENUE LOC)+/- 2.35% 05/01/2029 $ 2,725,000
6,400,000 GRANT COUNTY SD OTTER TAIL POWER COMPANY PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.39 12/01/2012 6,400,000
235,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY POOLED LOAN
PROGRAM ANGUS INCORPORATED PROJECT SERIES A (ELECTRIC REVENUE LOC) 3.25 04/01/2006 234,234
245,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY POOLED LOAN
PROGRAM ANGUS INCORPORATED PROJECT SERIES A (ELECTRIC REVENUE LOC) 3.75 04/01/2007 245,083
4,470,000 SOUTH DAKOTA HEALTH & EDUCATIONAL FACILITIES AUTHORITY SIOUX VALLEY
HOSPITALS & HEALTH (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 3.30 11/01/2025 4,470,000
10,970,000 SOUTH DAKOTA HEALTH & EDUCATIONAL FACILITIES AUTHORITY SIOUX VALLEY
HOSPITALS & HEALTH (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 3.30 11/01/2027 10,970,000
3,975,000 SOUTH DAKOTA HEALTH & EDUCATIONAL FACILITIES AUTHORITY SIOUX VALLEY
HOSPITALS & HEALTH SERIES B (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 3.30 11/01/2020 3,975,000
29,019,317
------------
TENNESSEE - 0.84%
1,000,000 JACKSON TN REFUNDING & IMPROVEMENTS (HEALTHCARE FACILITIES REVENUE LOC) 5.30 04/01/2006 1,020,560
1,000,000 METROPOLITAN GOVERNMENT NASHVILLE & DAVIDSON COUNTY TN INDUSTRIAL
DEVELOPMENT BOARD EASTER SEAL PROJECT (OTHER REVENUE LOC)+/-@ 2.75 08/01/2019 996,230
3,000,000 SHELBY COUNTY TN HEALTH EDUCATIONAL & HOUSING FACILITIES BOARD FLOAT
BAPTIST MEMORIAL HEALTHCARE (HEALTHCARE FACILITIES REVENUE LOC)+/-@ 5.00 09/01/2020 3,134,520
1,605,000 SULLIVAN COUNTY TENNESSEE HEALTH EDUCATIONAL AND HOUSING FACILITIES BOARD
REVENUE - WELLMONT HEALTH SYSTEM SERIES PJ (HEALTH FACILITIES FINANCING
AUTHORITY REVENUE LOC) 4.50 09/01/2006 1,619,605
6,770,915
------------
TEXAS - 3.27%
5,000,000 BRAZOS TX RIVER AUTHORITY TEXAS UTILITIES ELECTRIC COMPANY SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.00 05/01/2029 5,000,050
1,000,000 BRAZOS TX RIVER AUTHORITY TEXAS UTILITIES ELECTRIC COMPANY SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 5.40 04/01/2030 1,024,250
3,390,000 BRAZOS TX RIVER AUTHORITY TEXAS UTILITIES ELECTRIC COMPANY SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/- 5.05 06/01/2030 3,441,562
1,890,000 NORTHSIDE TX INDEPENDENT SCHOOL DISTRICT (PROPERTY TAX
REVENUE LOC)+/-@ 2.50 06/15/2033 1,890,038
4,145,000 TEXARKANA TX HOUSING FINANCE CORPORATION TANGLEWOOD TERRACE APARTMENTS
SERIES A (HOUSING REVENUE LOC)+/-@ ** 5.50 06/01/2029 1,658,000
3,360,000 TEXAS DEPARTMENT OF HOUSING & COMMUNITY AFFAIRS SERIES E
(HOUSING REVENUE LOC) 6.00 09/01/2016 3,506,126
3,690,000 TEXAS WATER DEVELOPMENT BOARD REVENUE STATE REVOLVING SERIES A
(WATER & WASTEWATER AUTHORITY REVENUE LOC) 5.60 07/15/2012 3,811,180
6,000,000 WALLER COUNTY TX INDUSTRIAL DEVELOPMENT CORPORATION MCKESSON WATER
PRODUCTS PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.50 10/30/2026 6,000,000
26,331,206
------------
UTAH - 0.97%
1,879,000 EAGLE MOUNTAIN UT SPECIAL IMPROVEMENT DISTRICT NUMBER 98-3
(OTHER REVENUE LOC) 5.50 12/15/2008 1,880,221
147,804 GRANITE UT SCHOOL DISTRICT SALT LAKE COUNTY (PROPERTY TAX REVENUE LOC) 4.60 08/15/2005 148,011
4,265,000 OGDEN UT NEIGHBORHOOD DEVELOPMENT AGENCY CAPITAL APPRECIATION 25TH
STREET PROJECT SERIES A (TAX REVENUE LOC)^ 3.25 12/30/2005 4,174,028
54
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
UTAH (CONTINUED)
$ 815,000 OGDEN UT NEIGHBORHOOD DEVELOPMENT AGENCY CAPITAL APPRECIATION WASHINGTON
BOULEVARD PROJECT SERIES B (TAX REVENUE LOC)^ 3.25% 12/30/2005 $ 797,616
770,000 UTAH HFA SINGLE FAMILY MORTGAGE (HOUSING REVENUE LOC) 6.00 01/01/2031 772,441
7,772,317
------------
VERMONT - 0.04%
335,000 VERMONT HFA HOUSING SERIES 16A (HOUSING REVENUE LOC) 4.00 05/01/2006 335,342
------------
VIRGIN ISLANDS - 0.14%
1,140,000 VIRGIN ISLANDS PUBLIC FINANCE AUTHORITY SERIES D (OTHER REVENUE LOC) 6.00 10/01/2005 1,151,343
------------
VIRGINIA - 2.15%
4,000,000 LUNENBURG COUNTY VA NOTES (PROPERTY TAX REVENUE LOC) 3.50 02/01/2006 4,002,240
1,500,000 LYNCHBURG VA BOARD ANTICIPATION NOTES PUBLIC IMPROVEMENT
(PROPERTY TAX REVENUE LOC) 3.00 06/01/2006 1,496,145
3,800,000 PITTSYLVANIA COUNTY VA IDA EXEMPT FACILITIES SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 7.45 01/01/2009 3,895,266
7,700,000 PITTSYLVANIA COUNTY VA IDA EXEMPT FACILITIES SERIES A
(INDUSTRIAL DEVELOPMENT REVENUE LOC) 7.50 01/01/2014 7,893,193
17,286,844
------------
WASHINGTON - 1.24%
5,000,000 CHELAN COUNTY WA PUBLIC UTILITY DISTRICT NUMBER 1 CHELAN HYDRO SERIES A
(UTILITIES REVENUE LOC)+/-@ 6.55 12/31/2049 5,017,400
3,000,000 CHELAN COUNTY WA PUBLIC UTILITY DISTRICT NUMBER 1 WACHELAN HYDRO
SERIES A (ELECTRIC REVENUE LOC)+/-@ 6.25 12/31/2049 3,009,570
750,000 WASHINGTON PUBLIC POWER SUPPLY SYSTEM PROJECT NUMBER 3 CAPITAL
APPRECIATION SERIES A (ELECTRIC REVENUE LOC)^ 2.88 07/01/2006 725,280
1,215,000 YAKIMA WA HOUSING AUTHORITY KLICKITAT VALLEY HOSPITAL PROJECT
(HEALTHCARE FACILITIES REVENUE LOC)+/-@ 4.00 10/01/2023 1,215,000
9,967,250
------------
WEST VIRGINIA - 1.29%
10,500,000 PUTNAM COUNTY WV APPALACHIAN POWER COMPANY PROJECT E
(OTHER REVENUE LOC)+/-@ 2.80 05/01/2019 10,360,140
------------
WISCONSIN - 2.52%
2,000,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION (OTHER REVENUE LOC) 5.50 06/01/2005 2,002,440
680,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION (OTHER REVENUE LOC) 5.50 06/01/2006 690,880
600,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION (OTHER REVENUE LOC) 5.25 06/01/2007 614,502
1,500,000 FRANKLIN WI SOLID WASTE DISPOSAL REVENUE+/-@ 3.25 04/01/2016 1,500,000
4,275,000 MILWAUKEE WI AIR WISCONSIN AIRLINES CORPORATION PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 2.50 11/01/2033 4,233,746
850,000 MILWAUKEE WI RDA UNIVERSITY WISCONSIN KENILWORTH PROJECT
(COLLEGE AND UNIVERSITY REVENUE LOC)+/-@ 3.00 09/01/2040 850,000
4,650,000 MONROE WI SCHOOL DISTRICT TRAN 3.00 10/28/2005 4,653,673
1,900,000 SPARTA WI AREA SCHOOL DISTRICT TRAN (PROPERTY TAX REVENUE LOC) 3.00 10/14/2005 1,900,817
755,000 WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY SERIES A
(HOUSING REVENUE LOC) 3.60 05/01/2005 755,008
3,000,000 WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY SERIES E
(HOUSING REVENUE LOC) 5.80 09/01/2017 3,054,060
20,255,126
------------
55
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WYOMING - 0.10%
$ 850,000 ALBANY COUNTY WY UNION PACIFIC RAILROAD COMPANY PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 2.55% 12/01/2015 $ 847,297
------------
MULTIPLE STATES - 0.62%
5,000,000 MMA FINANCIAL CDD SENIOR SECURITIZATION TRUST BEACON LAKES PASSTHRU
CTFS C (OTHER REVENUE LOC)+/- 3.38 11/01/2008 5,022,200
------------
TOTAL MUNICIPAL BONDS & NOTES (COST $831,382,693) 800,871,723
------------
CONTRACTS
SWAP OPTIONS - 0.00%
15,000 5 YEAR 4.87% INTEREST RATE SWAP, EXPIRES 7/14/05 27,750
TOTAL SWAP OPTIONS (COST $312,000) 27,750
------------
SHORT-TERM INVESTMENTS - 0.20%
SHARES
MUTUAL FUND - 0.20%
1,581,453 WELLS FARGO ADVANTAGE NATIONAL TAX-FREE MONEY MARKET TRUST~++ 1,581,453
------------
TOTAL SHORT-TERM INVESTMENTS (COST $1,581,453) 1,581,453
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $833,276,146)* 99.81% $802,480,926
OTHER ASSETS AND LIABILITIES, NET 0.19 1,492,215
------ ------------
TOTAL NET ASSETS 100.00% $803,973,141
====== ============
@ THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
%% SECURITIES ISSUED ON A WHEN-ISSUED (TBA) BASIS. (SEE NOTE 2)
^^ THIS SECURITY IS CURRENTLY IN DEFAULT WITH REGARDS TO SCHEDULED INTEREST
OR PRINCIPAL PAYMENTS.
+/- VARIABLE RATE SECURITIES.
^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO
MATURITY.
(B) SECURITY WAS ACQUIRED THROUGH A PRIVATE PLACEMENT AND MAY NOT BE PUBLICLY
SOLD WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933. ADDITIONAL
INFORMATION ON THE SECURITY IS AS FOLLOWS:
SECURITY ACQUISITION DATE PRINCIPAL COST
ENERGY AMERICA NE PUBLIC GAS AGENCY PROJECT SERIES B 3/19/98 $1,079,326 $1,079,326
# SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS.
** SECURITY WHEREBY INTEREST IS BEING ACCRUED OR COLLECTED AT A REDUCED RATE.
++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $1,581,453.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
56
PORTFOLIO OF INVESTMENTS WELLS FARGO ADVANTAGE
- -- APRIL 30, 2005 (UNAUDITED) MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MUNICIPAL BONDS & NOTES - 101.03%
ARIZONA - 3.40%
$ 2,570,000 MARICOPA COUNTY AZ IDA CAPITAL APPRECIATION SERIES 1983A
(OTHER REVENUE LOC)^ 4.11% 12/31/2014 $ 1,734,159
------------
GUAM - 0.46%
195,000 GUAM POWER AUTHORITY SERIES A (ELECTRIC REVENUE LOC) 5.25 10/01/2013 195,388
5,000 GUAM POWER AUTHORITY SERIES A (ELECTRIC REVENUE LOC) 5.25 10/01/2013 5,458
20,000 TERRITORY OF GUAM INFRASTRUCTURE IMPROVEMENT SERIES A
(SALES TAX REVENUE LOC) 5.50 11/01/2008 21,586
10,000 TERRITORY OF GUAM SERIES A (TAX REVENUE LOC) 5.20 11/15/2008 9,981
232,413
------------
INDIANA - 0.42%
200,000 INDIANAPOLIS IN NEW PUBLIC HOUSING AUTHORITY (HOUSING REVENUE LOC) 5.25 04/01/2009 214,242
------------
NORTHERN MARIANA ISLANDS - 1.17%
440,000 COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS SERIES A (OTHER REVENUE LOC) 5.00 06/01/2005 440,739
150,000 COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS SERIES A (OTHER REVENUE LOC) 5.50 06/01/2007 156,018
596,757
------------
PUERTO RICO - 25.12%
750,000 CHILDREN'S TRUST FUND (OTHER REVENUE LOC) 5.00 05/15/2008 771,067
250,000 CHILDREN'S TRUST FUND (OTHER REVENUE LOC) 5.00 05/15/2009 257,812
720,000 CHILDREN'S TRUST FUND PUERTO RICO (SPECIAL TAX REVENUE LOC)@ 5.75 07/01/2010 764,359
480,000 CHILDRENS TRUST FUND PUERTO RICO TOBACCO SETTLEMENT
(OTHER REVENUE LOC)@ 6.00 07/01/2010 542,597
5,000 COMMONWEALTH OF PUERTO RICO (FUEL SALES TAX REVENUE LOC)^ 2.92 07/01/2006 4,833
100,000 COMMONWEALTH OF PUERTO RICO PUBLIC IMPROVEMENT (OTHER REVENUE LOC) 5.25 07/01/2011 109,808
200,000 COMMONWEALTH OF PUERTO RICO PUBLIC IMPROVEMENT SERIES A
(FUEL SALES TAX REVENUE LOC) 5.50 07/01/2016 231,894
25,000 PUERTO RICO AQUEDUCT & SEWER AUTHORITY PUERTO RICO
(WATER & WASTEWATER AUTHORITY REVENUE LOC) 6.25 07/01/2012 29,639
395,000 PUERTO RICO COMMONWEALTH AQUEDUCT & SEWER AUTHORITY (SEWER REVENUE LOC) 10.25 07/01/2009 462,197
355,000 PUERTO RICO ELECTRIC POWER AUTHORITY CAPITAL APPRECIATION SERIES O
(ELECTRIC REVENUE LOC)^ 4.21 07/01/2017 213,788
770,000 PUERTO RICO ELECTRIC POWER AUTHORITY SERIES HH (ELECTRIC REVENUE LOC) 5.25 07/01/2029 829,121
675,000 PUERTO RICO ELECTRIC POWER AUTHORITY SERIES II (ELECTRIC REVENUE LOC) 5.25 07/01/2022 738,207
100,000 PUERTO RICO ELECTRIC POWER AUTHORITY SERIES KK (ELECTRIC REVENUE LOC) 5.00 07/01/2011 109,770
600,000 PUERTO RICO HFA CAPITAL FEDERAL PROGRAM (HOUSING REVENUE LOC) 5.00 12/01/2017 642,552
200,000 PUERTO RICO HIGHWAY & TRANSPORTATION AUTHORITY SERIES A
(FUEL SALES TAX REVENUE LOC) 5.50 07/01/2013 229,738
1,490,000 PUERTO RICO HOUSING FINANCE CORPORATION HOMEOWNER MORTGAGE GNMA SERIES A
(HOUSING REVENUE LOC) 5.20 12/01/2032 1,545,428
50,000 PUERTO RICO INDUSTRIAL MEDICAL & ENVIRONMENTAL POLLUTION CONTROL
FACILITIES FINANCING AUTHORITY PEPSICO INCORPORATED PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE LOC)+/- 6.25 11/15/2013 52,400
120,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY
(COLLEGE AND UNIVERSITY REVENUE LOC) 5.00 02/01/2009 125,902
405,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY SYSTEM
PROJECT (COLLEGE AND UNIVERSITY REVENUE LOC) 5.00 12/01/2009 429,247
430,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY SYSTEM
PROJECT (COLLEGE AND UNIVERSITY REVENUE LOC) 5.00 12/01/2010 457,933
57
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
PUERTO RICO (CONTINUED)
$ 35,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY SYSTEM
PROJECT (COLLEGE AND UNIVERSITY REVENUE LOC) 5.38% 02/01/2029 $ 36,035
70,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY FHA INSURED DR PILA HOSPITAL
PROJECT A (HEALTHCARE FACILITIES REVENUE LOC) 5.88 08/01/2012 71,556
215,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY FHA INSURED DR PILA HOSPITAL
PROJECT A (HEALTHCARE FACILITIES REVENUE LOC) 5.50 07/01/2017 228,766
25,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY FHA INSURED DR PILA HOSPITAL
PROJECT A (HEALTHCARE FACILITIES REVENUE LOC) 6.50 11/15/2020 28,616
1,605,000 PUERTO RICO INFRASTRUCTURE FINANCING AUTHORITY SERIES B
(STATE & LOCAL GOVERNMENTS LOC)+/- 3.64 10/01/2040 1,605,000
250,000 PUERTO RICO MEDICAL SERVICES ADMINISTRATION (LEASE REVENUE LOC) 3.75 06/01/2005 249,993
255,000 PUERTO RICO MEDICAL SERVICES ADMINISTRATION (LEASE REVENUE LOC) 3.90 12/01/2005 255,013
265,000 PUERTO RICO MEDICAL SERVICES ADMINISTRATION (LEASE REVENUE LOC) 4.00 06/01/2006 264,995
270,000 PUERTO RICO MEDICAL SERVICES ADMINISTRATION (LEASE REVENUE LOC) 4.15 12/01/2006 270,022
275,000 PUERTO RICO MEDICAL SERVICES ADMINISTRATION (LEASE REVENUE LOC) 4.25 06/01/2007 275,030
500,000 PUERTO RICO MUNICIPAL FINANCE AGENCY SERIES A (OTHER REVENUE LOC) 5.25 08/01/2021 545,900
300,000 PUERTO RICO MUNICIPAL FINANCE AGENCY SERIES A (PROPERTY TAX REVENUE LOC) 5.75 08/01/2013 333,447
20,000 PUERTO RICO MUNICIPAL FINANCE AGENCY SERIES B (OTHER REVENUE LOC) 5.00 07/01/2008 21,194
25,000 PUERTO RICO MUNICIPAL FINANCE AGENCY SERIES B (PROPERTY TAX REVENUE LOC) 5.63 08/01/2010 27,664
10,000 PUERTO RICO PUBLIC BUILDINGS AUTHORITY GOVERNMENT FACILITIES SERIES B
(LEASE REVENUE LOC) 5.00 07/01/2013 10,577
25,000 PUERTO RICO PUBLIC BUILDINGS AUTHORITY SERIES M (LEASE REVENUE LOC) 5.60 07/01/2008 26,803
12,798,903
------------
VIRGIN ISLANDS - 7.46%
200,000 TOBACCO SETTLEMENT FINANCING CORPORATION VIRGIN ISLANDS^ 4.21 05/15/2009 180,304
500,000 TOBACCO SETTLEMENT FINANCING CORPORATION VIRGIN ISLANDS^ 4.47 05/15/2011 448,490
110,000 TOBACCO SETTLEMENT FINANCING CORPORATION VIRGIN ISLANDS^ 4.79 05/15/2013 97,742
45,000 UNIVERSITY OF THE VIRGIN ISLANDS SERIES A (COLLEGE AND UNIVERSITY
REVENUE LOC) 5.30 12/01/2008 47,884
150,000 UNIVERSITY OF THE VIRGIN ISLANDS SERIES A (COLLEGE AND UNIVERSITY
REVENUE LOC) 5.85 12/01/2014 163,317
500,000 UNIVERSITY OF THE VIRGIN ISLANDS SERIES A (PROPERTY TAX REVENUE LOC) 5.38 06/01/2034 527,210
425,000 VIRGIN ISLANDS PFA SENIOR LIEN (OTHER REVENUE LOC) 5.50 10/01/2008 456,293
150,000 VIRGIN ISLANDS PFA SENIOR LIEN SERIES A (OTHER REVENUE LOC) 5.20 10/01/2009 159,285
1,665,000 VIRGIN ISLANDS PFA SUB LIEN SERIES E (OTHER REVENUE LOC) 5.88 10/01/2018 1,718,996
3,799,521
------------
WASHINGTON - 0.61%
300,000 SEATTLE WA HOUSING AUTHORITY (HOUSING REVENUE LOC) 4.88 08/01/2007 312,315
------------
WISCONSIN - 62.39%
20,000 ASHWAUBENON WI CDA ARENA PROJECT (LEASE REVENUE LOC) 4.80 06/01/2016 21,245
100,000 ASHWAUBENON WI CDA ARENA PROJECT (LEASE REVENUE LOC) 5.05 06/01/2019 108,230
790,000 ASHWAUBENON WI CDA ARENA PROJECT (LEASE REVENUE LOC) 5.10 06/01/2020 850,727
185,000 ASHWAUBENON WI CDA ARENA PROJECT SERIES A (LEASE REVENUE LOC)@ 5.80 06/01/2009 204,660
75,000 BARABOO WI CDA (HOUSING REVENUE LOC) 4.00 03/01/2006 75,606
65,000 BARABOO WI CDA (HOUSING REVENUE LOC) 4.50 03/01/2008 67,155
95,000 BARABOO WI CDA (HOUSING REVENUE LOC) 4.70 03/01/2010 100,147
58
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WISCONSIN (CONTINUED)
$ 80,000 BARABOO WI CDA (HOUSING REVENUE LOC) 4.80% 03/01/2011 $ 84,855
800,000 BELOIT WI CDA SERIES A (LEASE REVENUE LOC) 5.50 03/01/2020 847,080
495,000 BRISTOL WI CDA (LEASE REVENUE LOC) 6.13 03/01/2012 509,058
80,000 BROWN COUNTY WI HOUSING AUTHORITY UNIVERSITY VILLAGE HOUSING
INCORPORATED PROJECT SERIES B (COLLEGE AND UNIVERSITY REVENUE LOC) 5.25 04/01/2011 82,009
50,000 BROWN COUNTY WI HOUSING AUTHORITY UNIVERSITY VILLAGE HOUSING
INCORPORATED PROJECT SERIES B (COLLEGE AND UNIVERSITY REVENUE LOC) 4.20 04/01/2012 51,424
100,000 BROWN COUNTY WI HOUSING AUTHORITY UNIVERSITY VILLAGE HOUSING
INCORPORATED PROJECT SERIES B (COLLEGE AND UNIVERSITY REVENUE LOC) 4.50 04/01/2014 103,009
105,000 BROWN COUNTY WI HOUSING AUTHORITY UNIVERSITY VILLAGE HOUSING
INCORPORATED PROJECT SERIES B (COLLEGE AND UNIVERSITY REVENUE LOC) 5.40 04/01/2017 106,582
50,000 BROWN COUNTY WI HOUSING AUTHORITY UNIVERSITY VILLAGE HOUSING
INCORPORATED PROJECT SERIES B (COLLEGE AND UNIVERSITY REVENUE LOC) 5.13 04/01/2021 52,294
175,000 CUDAHY WI CDA (LEASE REVENUE LOC) 4.70 06/01/2009 186,037
25,000 CUDAHY WI CDA (LEASE REVENUE LOC) 5.00 06/01/2014 26,573
600,000 FRANKLIN WI CDA SERIES B (LEASE REVENUE LOC) 4.80 04/01/2009 612,330
35,000 GERMANTOWN WISCONSIN INDUSTRIAL DEVELOPMENT REVENUE QUARTERS-BANNER
WELDER INC PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/- 5.13 02/01/2011 35,203
500,000 GLENDALE WI CDA COMMUNITY DEVELOPMENT BAYSHORE PUBLIC PARKING A
(PARKING FACILITIES REVENUE LOC) 4.75 10/01/2020 523,580
45,000 GLENDALE WI CDA COMMUNITY DEVELOPMENT TAX INCREMENT 6 (LEASE REVENUE LOC) 5.00 10/01/2019 48,289
100,000 GRANT COUNTY WI HOUSING AUTHORITY ORCHARD MANOR
(HEALTHCARE FACILITIES REVENUE LOC) 4.90 07/01/2010 103,686
60,000 GREEN BAY BROWN COUNTY WI PROFESSIONAL FOOTBALL STADIUM DISTRICT
LAMBEAU FIELD RENOVATION PROJECT A (SALES TAX REVENUE LOC) 4.15 02/01/2008 62,137
5,000 GREEN BAY BROWN COUNTY WI PROFESSIONAL FOOTBALL STADIUM DISTRICT
LAMBEAU FIELD RENOVATION PROJECT A (SALES TAX REVENUE LOC) 4.35 02/01/2010 5,290
10,000 GREEN BAY BROWN COUNTY WI PROFESSIONAL FOOTBALL STADIUM DISTRICT
LAMBEAU FIELD RENOVATION PROJECT A (SALES TAX REVENUE LOC) 4.45 02/01/2011 10,684
175,000 GREEN BAY BROWN COUNTY WI PROFESSIONAL FOOTBALL STADIUM DISTRICT
LAMBEAU FIELD RENOVATION PROJECT A (SALES TAX REVENUE LOC)# 4.75 02/01/2014 186,371
140,000 GREEN BAY BROWN COUNTY WI PROFESSIONAL FOOTBALL STADIUM DISTRICT
LAMBEAU FIELD RENOVATION PROJECT A (SALES TAX REVENUE LOC) 5.00 02/01/2019 149,477
20,000 GREEN BAY WI HOUSING AUTHORITY FHA INSURED MORAINE LIMITED SERIES A
(HOUSING REVENUE LOC) 6.15 12/01/2030 21,050
1,000,000 GREEN BAY WI HOUSING AUTHORITY HOUSING REVENUE UNIVERSITY VILLAGE
HOUSING INCORPORATED (HOUSING REVENUE LOC) 5.00 04/01/2016 1,085,470
100,000 GREEN BAY WI RDA PINE STREET PARKING RAMP PROJECT (LEASE REVENUE LOC) 5.15 04/01/2013 107,501
500,000 GREENFIELD WISCONSIN COMMUNITY DEVELOPMENT AUTHORITY HOUSING REVENUE
LAYTON TERRACE PROJECT (HOUSING REVENUE LOC) 4.75 09/01/2033 501,085
245,000 JOHNSON CREEK WI CDA (LEASE REVENUE LOC) 4.65 12/01/2012 258,495
200,000 KENOSHA WI GNMA COLLATERALIZED VILLA CIERA SERIES A (HOUSING REVENUE LOC) 6.00 11/20/2041 208,952
180,000 LIBERTY LAKE WI HOUSING PROJECT GNMA COLLATERALIZED WOODLAND PARK
(HOUSING REVENUE LOC) 5.40 02/20/2043 185,488
40,000 MADISON WI CDA HOUSING NICHOLS STATION II PROJECT (HOUSING REVENUE LOC) 4.95 12/01/2007 39,548
40,000 MADISON WI CDA REDEVELOPMENT MERITER RETIREMENT SERVICES
(HEALTHCARE FACILITIES REVENUE LOC) 5.90 12/01/2008 40,320
475,000 MADISON WI CDA STUDENT HOUSING EDGEWOOD COLLEGE
(COLLEGE AND UNIVERSITY REVENUE LOC) 6.25 04/01/2014 475,532
1,000,000 MILWAUKEE WI HOUSING AUTHORITY VETERANS HOUSING PROJECT
(HOUSING REVENUE LOC) 5.10 07/01/2022 1,071,160
59
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WISCONSIN (CONTINUED)
$ 470,000 MILWAUKEE WI RDA MILWAUKEE SCHOOL ENGINEERING PROJECT SERIES B
(COLLEGE AND UNIVERSITY REVENUE LOC) 5.05% 07/01/2019 $ 493,053
470,000 MILWAUKEE WI RDA MILWAUKEE SCHOOL ENGINEERING PROJECT SERIES B
(COLLEGE AND UNIVERSITY REVENUE LOC) 5.15 07/01/2020 494,807
470,000 MILWAUKEE WI RDA MILWAUKEE SCHOOL ENGINEERING PROJECT SERIES B
(COLLEGE AND UNIVERSITY REVENUE LOC) 5.20 07/01/2021 495,812
470,000 MILWAUKEE WI RDA MILWAUKEE SCHOOL ENGINEERING PROJECT SERIES B
(COLLEGE AND UNIVERSITY REVENUE LOC) 5.30 07/01/2022 498,017
470,000 MILWAUKEE WI RDA MILWAUKEE SCHOOL ENGINEERING PROJECT SERIES B
(COLLEGE AND UNIVERSITY REVENUE LOC) 5.35 07/01/2023 498,223
100,000 MILWAUKEE WI RDA SCHOOL ENGINEERING PROJECT SERIES A
(COLLEGE AND UNIVERSITY REVENUE LOC) 4.20 10/01/2010 104,294
95,000 MILWAUKEE WI RDA SUMMERFEST PROJECT (LEASE REVENUE LOC) 4.20 08/01/2011 99,153
150,000 MILWAUKEE WI RDA UNIVERSITY WISCONSIN KENILWORTH PROJECT
(COLLEGE AND UNIVERSITY REVENUE LOC)+/-@ 3.00 09/01/2040 150,000
40,000 MILWAUKEE WI RDA YMCA METROPOLITAN MILWAUKEE INCORPORATED PROJECT
(OTHER REVENUE LOC) 5.00 12/01/2018 40,554
40,000 MILWAUKEE WI RDA YWCA GREATER MILWAUKEE SERIES A (OTHER REVENUE LOC) 4.70 06/01/2009 40,812
1,000,000 NEENAH WI CDA SERIES A (LEASE REVENUE LOC) 5.13 12/01/2023 1,074,650
70,000 NEW BERLIN WI HOUSING AUTHORITY CAPITAL APPRECIATION HOUSING APPLE
GLEN SERIES A^ 5.94 05/01/2005 69,977
65,000 NEW BERLIN WI HOUSING AUTHORITY CAPITAL APPRECIATION HOUSING APPLE
GLEN SERIES A^ 5.98 11/01/2005 63,101
70,000 NEW BERLIN WI HOUSING AUTHORITY CAPITAL APPRECIATION HOUSING APPLE
GLEN SERIES A^ 6.12 05/01/2006 65,896
65,000 NEW BERLIN WI HOUSING AUTHORITY CAPITAL APPRECIATION HOUSING APPLE
GLEN SERIES A^ 6.11 11/01/2006 59,378
30,000 OAKFIELD WI CDA (LEASE REVENUE LOC) 4.10 12/01/2005 30,192
45,000 OAKFIELD WI CDA (LEASE REVENUE LOC) 4.20 12/01/2006 45,724
50,000 OAKFIELD WI CDA (LEASE REVENUE LOC) 4.40 12/01/2008 51,679
350,000 OAKFIELD WI CDA (LEASE REVENUE LOC) 5.40 12/01/2021 368,427
100,000 OCONTO FALLS WI CDA (LEASE REVENUE LOC) 4.15 06/01/2007 102,514
150,000 OCONTO FALLS WI CDA (LEASE REVENUE LOC) 4.15 06/01/2008 155,094
150,000 OCONTO FALLS WI CDA (LEASE REVENUE LOC) 4.05 06/01/2009 155,505
135,000 OCONTO FALLS WI CDA (LEASE REVENUE LOC) 4.60 06/01/2014 139,505
175,000 OCONTO FALLS WI CDA (LEASE REVENUE LOC) 4.65 06/01/2015 180,365
200,000 OCONTO FALLS WI CDA (LEASE REVENUE LOC) 4.90 06/01/2018 210,988
210,000 ONALASKA WI CDA (LEASE REVENUE LOC) 5.30 06/01/2015 217,560
200,000 OSCEOLA WI RDA (LEASE REVENUE LOC) 4.65 12/01/2010 209,682
325,000 OSCEOLA WI RDA (LEASE REVENUE LOC) 4.75 12/01/2011 341,637
350,000 OSCEOLA WI RDA (LEASE REVENUE LOC) 5.15 12/01/2015 367,392
430,000 OSCEOLA WI RDA (LEASE REVENUE LOC) 5.38 12/01/2020 451,229
50,000 OSHKOSH WI ELDERLY HOUSING AUTHORITY FHA VILLA ST. THERESA A
(HOUSING REVENUE LOC) 5.90 06/01/2024 51,338
105,000 ST. CROIX FALLS WI CDA (LEASE REVENUE LOC) 3.50 12/01/2005 105,471
35,000 ST. CROIX FALLS WI CDA (LEASE REVENUE LOC) 3.65 12/01/2007 35,197
20,000 ST. CROIX FALLS WI CDA (LEASE REVENUE LOC) 4.00 12/01/2007 20,523
135,000 ST. CROIX FALLS WI CDA (LEASE REVENUE LOC) 4.13 12/01/2008 139,975
120,000 ST. CROIX FALLS WI CDA (LEASE REVENUE LOC) 4.40 12/01/2011 126,940
80,000 ST. CROIX FALLS WI CDA (LEASE REVENUE LOC) 4.50 12/01/2011 82,706
160,000 ST. CROIX FALLS WI CDA (LEASE REVENUE LOC) 4.50 12/01/2012 169,115
90,000 ST. CROIX FALLS WI CDA (LEASE REVENUE LOC) 4.85 12/01/2014 93,480
10,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT
(SALES TAX REVENUE LOC)+/-@ 5.65 03/13/2007 10,600
60
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WISCONSIN (CONTINUED)
$ 100,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT CAPITAL
APPRECIATION (LEASE REVENUE LOC)^ 3.71% 12/15/2011 $ 78,398
90,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT CAPITAL
APPRECIATION (LEASE REVENUE LOC)^# 4.00 12/15/2013 63,977
50,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT CAPITAL
APPRECIATION (LEASE REVENUE LOC)^ 4.29 12/15/2016 30,523
15,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT JUNIOR LIEN
SERIES B (SALES TAX REVENUE LOC) 5.00 12/15/2006 15,513
250,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT JUNIOR LIEN
SERIES B (SALES TAX REVENUE LOC) 5.50 12/15/2009 275,333
1,545,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT JUNIOR LIEN
SERIES B (SALES TAX REVENUE LOC) 5.50 12/15/2015 1,732,640
1,635,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT JUNIOR LIEN
SERIES B (SALES TAX REVENUE LOC) 5.50 12/15/2016 1,833,571
50,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT SERIES A
(SALES TAX REVENUE LOC) 5.50 12/15/2015 57,425
260,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT SERIES A
(SALES TAX REVENUE LOC) 5.50 12/15/2018 301,249
170,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT SERIES A
(SALES TAX REVENUE LOC) 5.50 12/15/2021 198,705
110,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT SERIES A
(SALES TAX REVENUE LOC) 5.50 12/15/2026 128,949
50,000 STURTEVANT WI CDA (LEASE REVENUE LOC) 3.55 12/01/2009 50,555
75,000 STURTEVANT WI CDA (LEASE REVENUE LOC) 4.60 12/01/2010 77,673
110,000 STURTEVANT WI CDA (LEASE REVENUE LOC) 4.80 12/01/2012 113,528
300,000 STURTEVANT WI CDA (LEASE REVENUE LOC) 4.40 12/01/2015 306,531
25,000 SUN PRAIRIE WI CDA SERIES B (LEASE REVENUE LOC) 5.00 02/01/2012 26,633
95,000 SUN PRAIRIE WI CDA SERIES B (LEASE REVENUE LOC) 5.10 02/01/2013 101,104
105,000 SUN PRAIRIE WI CDA SERIES B (LEASE REVENUE LOC) 5.20 02/01/2014 111,602
750,000 VERONA WI CDA (LEASE REVENUE LOC) 5.38 12/01/2022 790,778
50,000 WATERFORD WI CDA (LEASE REVENUE LOC)@ 5.35 10/01/2014 54,712
95,000 WATERFORD WI CDA (LEASE REVENUE LOC)@ 5.80 10/01/2023 106,051
240,000 WATERTOWN WI CDA SERIES A (LEASE REVENUE LOC) 5.00 05/01/2018 246,475
50,000 WATERTOWN WI CDA SERIES B (LEASE REVENUE LOC) 4.25 05/01/2008 51,445
500,000 WAUKESHA COUNTY WI HOUSING AUTHORITY BROOKFIELD WOODS PROJECT
(HOUSING REVENUE LOC)+/-@ 4.80 03/01/2034 502,105
55,000 WAUKESHA COUNTY WI HOUSING AUTHORITY MFHR (HOUSING REVENUE LOC) 5.80 04/01/2025 55,174
200,000 WAUKESHA COUNTY WI HOUSING AUTHORITY STEEPLE VIEW INCORPORATED PROJECT
(HOUSING REVENUE LOC)+/-@ 3.05 12/01/2034 200,000
115,000 WAUKESHA COUNTY WI HOUSING AUTHORITY THE ARBORETUM PROJECT
(HOUSING REVENUE LOC)+/- 5.25 12/01/2021 115,117
300,000 WAUKESHA WI RDA AVALON SQUARE INCORPORATED PROJECT SUBSERIES B
(HEALTHCARE FACILITIES REVENUE LOC) 8.00 06/20/2043 302,400
410,000 WAUKESHA WI RDA GNMA COLLATERALIZED AVALON SQUARE PROJECT SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 5.00 06/20/2021 433,522
10,000 WAUKESHA WI RDA SENIOR HOUSING PRESBYTERIAN HOMES PROJECT
(HEALTHCARE FACILITIES REVENUE LOC) 7.25 06/01/2020 10,639
100,000 WAUKESHA WI RDA SENIOR HOUSING PRESBYTERIAN HOMES PROJECT
(HEALTHCARE FACILITIES REVENUE LOC) 7.50 06/01/2035 105,587
100,000 WAUWATOSA WI HOUSING AUTHORITY CAPITAL APPRECIATION HOUSING HAWTHORNE
SERIES A (HOUSING REVENUE LOC)^ 5.61 11/01/2006 92,021
61
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PORTFOLIO OF INVESTMENTS --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WISCONSIN (CONTINUED)
$ 105,000 WAUWATOSA WI HOUSING AUTHORITY CAPITAL APPRECIATION HOUSING HAWTHORNE
SERIES A (HOUSING REVENUE LOC)^ 5.76% 05/01/2007 $ 93,716
100,000 WAUWATOSA WI HOUSING AUTHORITY CAPITAL APPRECIATION HOUSING HAWTHORNE
SERIES A (HOUSING REVENUE LOC)^ 5.76 11/01/2007 86,759
1,200,000 WAUWATOSA WI HOUSING AUTHORITY HAWTHORNE TERRACE PROJECT A
(HOUSING REVENUE LOC) 6.70 11/01/2015 1,201,812
350,000 WAUWATOSA WI HOUSING AUTHORITY SENIOR HOUSING SAN CAMILLO SERIES A
(HOUSING REVENUE LOC) 3.00 08/01/2005 350,161
45,000 WAUWATOSA WI REDEVELOPMENT AUTHORITY (LEASE REVENUE LOC) 5.65 12/01/2016 47,942
85,000 WEST ALLIS WISCONSIN COMMUNITY DEVELOPMENT AUTHORITY MFHR VETERANS
PARK PROJECT (RECREATIONAL FACILITIES REVENUE LOC)+/- 4.00 11/01/2009 84,791
65,000 WEST ALLIS WISCONSIN COMMUNITY DEVELOPMENT AUTHORITY MFHR VETERANS
PARK PROJECT (RECREATIONAL FACILITIES REVENUE LOC)+/- 4.30 11/01/2010 65,350
220,000 WESTON WI CDA (LEASE REVENUE LOC) 4.25 10/01/2013 228,336
720,000 WESTON WI CDA COMMUNITY DEVELOPMENT SERIES A (LEASE REVENUE LOC) 5.25 10/01/2020 788,753
250,000 WISCONSIN CENTER DISTRICT CAPITAL APPRECIATION BONDS (TAX REVENUE LOC)^ 4.94 12/15/2029 75,160
3,360,000 WISCONSIN CENTER DISTRICT CAPITAL APPRECIATION BONDS (TAX REVENUE LOC)^ 4.95 12/15/2030 959,650
1,000,000 WISCONSIN CENTER DISTRICT CAPITAL APPRECIATION BONDS (TAX REVENUE LOC)^ 4.96 12/15/2031 271,340
100,000 WISCONSIN CENTER DISTRICT CAPITAL APPRECIATION SENIOR DEDICATED SERIES A
(TAX REVENUE LOC)^ 4.62 12/15/2021 46,792
25,000 WISCONSIN CENTER DISTRICT JUNIOR DEDICATED (TAX REVENUE LOC) 5.25 12/15/2013 28,021
180,000 WISCONSIN CENTER DISTRICT JUNIOR DEDICATED (TAX REVENUE LOC) 5.25 12/15/2015 203,143
465,000 WISCONSIN CENTER DISTRICT JUNIOR DEDICATED (TAX REVENUE LOC) 5.25 12/15/2016 526,473
210,000 WISCONSIN CENTER DISTRICT JUNIOR DEDICATED (TAX REVENUE LOC) 5.25 12/15/2018 238,785
105,000 WISCONSIN CENTER DISTRICT JUNIOR DEDICATED (TAX REVENUE LOC) 5.25 12/15/2019 119,549
40,000 WISCONSIN CENTER DISTRICT JUNIOR DEDICATED SERIES B (TAX REVENUE LOC)@ 5.70 12/15/2006 42,212
65,000 WISCONSIN DELLS CDA SERIES A (LEASE REVENUE LOC) 4.65 09/01/2014 67,194
70,000 WISCONSIN DELLS CDA SERIES A (LEASE REVENUE LOC) 4.80 09/01/2015 72,577
75,000 WISCONSIN DELLS CDA SERIES A (LEASE REVENUE LOC) 4.90 09/01/2016 77,951
80,000 WISCONSIN DELLS CDA SERIES A (LEASE REVENUE LOC) 5.00 09/01/2017 83,344
130,000 WISCONSIN HFA REVENUE (HOUSING REVENUE LOC)@ 6.10 12/01/2017 146,510
31,795,160
------------
TOTAL MUNICIPAL BONDS & NOTES (COST $49,762,516) 51,483,470
------------
CONTRACTS
SWAP OPTIONS - 0.00%
1,200 5 YEAR 4.87% INTEREST RATE SWAP, EXPIRES 7/14/05 2,220
TOTAL SWAP OPTIONS (COST $24,960) 2,220
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $49,787,476)* 101.03% $ 51,485,690
====== ============
OTHER ASSETS AND LIABILITIES, NET (1.03) (525,852)
------ ------------
TOTAL NET ASSETS 100.00% $ 50,959,838
====== ============
+/- VARIABLE RATE SECURITIES.
^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO
MATURITY.
@ THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
# SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
62
THIS PAGE IS INTENTIONALLY LEFT BLANK --
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS STATEMENT OF ASSETS
AND LIABILITIES --
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERMEDIATE
TAX-FREE
FUND
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ............................................................................ $ 68,252,304
INVESTMENTS IN AFFILIATES ................................................................................. 702,706
----------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ......................................................... 68,955,010
================
CASH ...................................................................................................... 0
VARIATION MARGIN RECEIVABLE ON FUTURES CONTRACTS .......................................................... 18,750
RECEIVABLE FOR FUND SHARES ISSUED ......................................................................... 435,455
RECEIVABLE FOR INVESTMENTS SOLD ........................................................................... 1,610,645
RECEIVABLES FOR DIVIDENDS AND INTEREST .................................................................... 847,567
RECEIVABLE FROM INVESTMENT ADVISOR AND AFFILIATES ......................................................... 7,278
----------------
TOTAL ASSETS ................................................................................................ 71,874,705
================
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED .......................................................................... 770
PAYABLE FOR INVESTMENTS PURCHASED ......................................................................... 3,550,755
DIVIDENDS PAYABLE ......................................................................................... 181,624
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ..................................................... 0
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ................................................................... 14,433
PAYABLE FOR INTEREST RATE SWAPS/SPREAD LOCKS .............................................................. 0
ACCRUED EXPENSES AND OTHER LIABILITIES .................................................................... 18,004
----------------
TOTAL LIABILITIES ........................................................................................... 3,765,586
----------------
TOTAL NET ASSETS ............................................................................................ $ 68,109,119
================
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ........................................................................................... $ 67,326,621
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ................................................................ 0
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ..................................................... 184,935
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF ASSETS AND
LIABILITIES DENOMINATED IN FOREIGN CURRENCIES ........................................................... 656,190
NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES ..................................................... (41,572)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF OPTIONS, SWAP AGREEMENTS, AND SHORT SALES ................... (17,055)
----------------
TOTAL NET ASSETS ............................................................................................ $ 68,109,119
================
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - CLASS A ...................................................................................... N/A
SHARES OUTSTANDING - CLASS A .............................................................................. N/A
NET ASSET VALUE PER SHARE - CLASS A ....................................................................... N/A
MAXIMUM OFFERING PRICE PER SHARE - CLASS A(2) ............................................................. N/A
NET ASSETS - CLASS B ...................................................................................... N/A
SHARES OUTSTANDING - CLASS B .............................................................................. N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B .................................................... N/A
NET ASSETS - CLASS C ...................................................................................... N/A
SHARES OUTSTANDING - CLASS C .............................................................................. N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C .................................................... N/A
NET ASSETS - ADMINISTRATOR CLASS .......................................................................... N/A
SHARES OUTSTANDING - ADMINISTRATOR CLASS .................................................................. N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS ........................................ N/A
NET ASSETS - ADVISOR CLASS ................................................................................ N/A
SHARES OUTSTANDING - ADVISOR CLASS ........................................................................ N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADVISOR CLASS .............................................. N/A
NET ASSETS - INSTITUTIONAL CLASS .......................................................................... N/A
SHARES OUTSTANDING - INSTITUTIONAL CLASS .................................................................. N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS ........................................ N/A
NET ASSETS - INVESTOR CLASS .............................................................................. $ 68,109,119
SHARES OUTSTANDING - INVESTOR CLASS ...................................................................... 6,342,910
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS ............................................. $ 10.74
----------------
INVESTMENTS AT COST ......................................................................................... $ 68,315,875
================
(1) EACH 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.
64
STATEMENT OF ASSETS AND LIABILITIES -- WELLS FARGO ADVANTAGE
APRIL 30, 2005 (UNAUDITED) MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
SHORT-TERM ULTRA SHORT-TERM WISCONSIN
MUNICIPAL MUNICIPAL MUNICIPAL TAX-FREE
BOND FUND BOND FUND INCOME FUND FUND
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ................ $ 383,734,237 $ 672,858,458 $ 800,899,473 $ 51,485,690
INVESTMENTS IN AFFILIATES ..................... 5,713,129 5,371,483 1,581,453 0
---------------- ---------------- ---------------- ----------------
TOTAL INVESTMENTS AT MARKET VALUE
(SEE COST BELOW) .............................. 389,447,366 678,229,941 802,480,926 51,485,690
================ ================ ================ ================
CASH .......................................... 0 0 0 41,118
VARIATION MARGIN RECEIVABLE ON FUTURES
CONTRACTS .................................... 79,687 43,822 37,500 3,750
RECEIVABLE FOR FUND SHARES ISSUED ............. 161,915 953,642 176,744 16,450
RECEIVABLE FOR INVESTMENTS SOLD ............... 11,125,032 392,804 1,920,288 0
RECEIVABLES FOR DIVIDENDS AND INTEREST ........ 5,467,885 8,157,286 10,018,656 702,166
RECEIVABLE FROM INVESTMENT ADVISOR AND
AFFILIATES .................................. 0 0 0 828
---------------- ---------------- ---------------- ----------------
TOTAL ASSETS .................................... 406,281,885 687,777,495 814,634,114 52,250,002
================ ================ ================ ================
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED .............. 97,622 196,203 1,503,178 0
PAYABLE FOR INVESTMENTS PURCHASED ............. 22,662,643 13,424,753 6,665,243 1,102,730
DIVIDENDS PAYABLE ............................. 1,028,598 1,219,150 1,787,699 165,813
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES
(NOTE 3) ..................................... 159,688 225,464 334,639 0
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ....... 83,386 103,106 97,119 12,718
PAYABLE FOR INTEREST RATE SWAPS/SPREAD LOCKS .. 0 15,079 39,279 0
ACCRUED EXPENSES AND OTHER LIABILITIES ........ 114,460 123,110 233,816 8,903
---------------- ---------------- ---------------- ----------------
TOTAL LIABILITIES ............................... 24,146,397 15,306,865 10,660,973 1,290,164
---------------- ---------------- ---------------- ----------------
TOTAL NET ASSETS ................................ $ 382,135,488 $ 672,470,630 $ 803,973,141 $ 50,959,838
================ ================ ================ ================
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ............................... $ 381,928,411 $ 673,921,796 $ 885,171,395 $ 49,216,057
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .... 18,652 (10,446) 7,790 0
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON
INVESTMENTS .................................. (18,977,442) (2,024,770) (50,395,107) 50,904
NET UNREALIZED APPRECIATION (DEPRECIATION)
OF INVESTMENTS, FOREIGN CURRENCIES AND
TRANSLATION OF ASSETS AND LIABILITIES
DENOMINATED IN FOREIGN CURRENCIES ......... 19,966,671 701,165 (30,510,974) 1,720,954
NET UNREALIZED APPRECIATION (DEPRECIATION)
OF FUTURES ................................... (626,464) 38,194 23,566 (5,337)
NET UNREALIZED APPRECIATION (DEPRECIATION)
OF OPTIONS, SWAP AGREEMENTS, AND SHORT SALES . (174,340) (155,309) (323,529) (22,740)
---------------- ---------------- ---------------- ----------------
TOTAL NET ASSETS ................................ $ 382,135,488 $ 672,470,630 $ 803,973,141 $ 50,959,838
================ ================ ================ ================
COMPUTATION OF NET ASSET VALUE AND OFFERING
PRICE PER SHARE(1)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - CLASS A .......................... $ 142,381,205 N/A N/A N/A
SHARES OUTSTANDING - CLASS A .................. 14,953,217 N/A N/A N/A
NET ASSET VALUE PER SHARE - CLASS A ........... $ 9.52 N/A N/A N/A
MAXIMUM OFFERING PRICE PER SHARE - CLASS A(2) . $ 9.97 N/A N/A N/A
NET ASSETS - CLASS B .......................... $ 23,561,152 N/A N/A N/A
SHARES OUTSTANDING - CLASS B .................. 2,475,387 N/A N/A N/A
NET ASSET VALUE AND OFFERING PRICE
PER SHARE - CLASS B .......................... $ 9.52 N/A N/A N/A
NET ASSETS - CLASS C .......................... $ 2,005,805 $ 8,151,904 N/A $ 2,430,877
SHARES OUTSTANDING - CLASS C .................. 210,734 831,691 N/A 228,743
NET ASSET VALUE AND OFFERING PRICE
PER SHARE - CLASS C .......................... $ 9.52 $ 9.80 N/A $ 10.63
NET ASSETS - ADMINISTRATOR CLASS .............. $ 18,048,774 N/A N/A N/A
SHARES OUTSTANDING - ADMINISTRATOR CLASS ...... 1,896,241 N/A N/A N/A
NET ASSET VALUE AND OFFERING PRICE PER
SHARE - ADMINISTRATOR CLASS .................. $ 9.52 N/A N/A N/A
NET ASSETS - ADVISOR CLASS .................... N/A N/A $ 23,196,711 N/A
SHARES OUTSTANDING - ADVISOR CLASS ............ N/A N/A 4,868,386 N/A
NET ASSET VALUE AND OFFERING PRICE PER
SHARE - ADVISOR CLASS ........................ N/A N/A $ 4.76 N/A
NET ASSETS - INSTITUTIONAL CLASS .............. N/A N/A $ 160,759,262 N/A
SHARES OUTSTANDING - INSTITUTIONAL CLASS ...... N/A N/A 33,740,804 N/A
NET ASSET VALUE AND OFFERING PRICE PER
SHARE - INSTITUTIONAL CLASS .................. N/A N/A $ 4.76 N/A
NET ASSETS - INVESTOR CLASS .................. $ 196,138,552 $ 664,318,726 $ 620,017,168 $ 48,528,961
SHARES OUTSTANDING - INVESTOR CLASS .......... 20,606,772 67,724,056 130,126,484 4,566,502
NET ASSET VALUE AND OFFERING PRICE PER
SHARE - INVESTOR CLASS ....................... $ 9.52 $ 9.81 $ 4.76 $ 10.63
---------------- ---------------- ---------------- ----------------
INVESTMENTS AT COST ............................. $ 369,655,035 $ 677,669,006 $ 833,276,146 $ 49,787,476
================ ================ ================ ================
65
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS STATEMENT OF OPERATIONS --
FOR THE SIX MONTHS ENDED
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERMEDIATE
TAX-FREE
FUND
- --------------------------------------------------------------------------------------------
INVESTMENT INCOME
INTEREST .............................................................. 1,082,412
INCOME FROM AFFILIATED SECURITIES ..................................... 16,452
---------------
TOTAL INVESTMENT INCOME .................................................. 1,098,864
---------------
EXPENSES
ADVISORY FEES ......................................................... 104,638
ADMINISTRATION FEES
FUND LEVEL ......................................................... 19,089
CLASS A ............................................................ N/A
CLASS B ............................................................ N/A
CLASS C ............................................................ N/A
ADMINISTRATOR CLASS ................................................ N/A
ADVISOR CLASS ...................................................... N/A
INSTITUTIONAL CLASS ................................................ N/A
INVESTOR CLASS ..................................................... 84,897
CUSTODY FEES .......................................................... 4,905
SHAREHOLDER SERVICING FEES ............................................ 9,545
ACCOUNTING FEES ....................................................... 1,392
DISTRIBUTION FEES (NOTE 3)
CLASS B ............................................................ N/A
CLASS C ............................................................ N/A
ADVISOR CLASS ...................................................... N/A
INVESTOR CLASS ..................................................... 60,383
AUDIT FEES ............................................................ 12,928
LEGAL FEES ............................................................ 1,145
REGISTRATION FEES ..................................................... 9,788
SHAREHOLDER REPORTS ................................................... 8,367
TRUSTEES' FEES ........................................................ 2,643
OTHER FEES AND EXPENSES ............................................... 10,053
---------------
TOTAL EXPENSES ........................................................... 329,773
---------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) .......................... (184,385)
NET EXPENSES .......................................................... 145,388
---------------
NET INVESTMENT INCOME (LOSS) ............................................. 953,476
---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
- --------------------------------------------------------------------------------------------
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ....... 109,512
FUTURES TRANSACTIONS .................................................. 79,443
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS .................. 0
---------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ................................ 188,955
---------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
- --------------------------------------------------------------------------------------------
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ....... (288,079)
FUTURES TRANSACTIONS .................................................. (45,592)
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS .................. (4,185)
---------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ...... (337,856)
===============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ................... (148,901)
---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .......... $ 804,575
===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
66
STATEMENT OF OPERATIONS -- WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
FOR THE SIX MONTHS ENDED
APRIL 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM ULTRA SHORT-TERM WISCONSIN
MUNICIPAL MUNICIPAL MUNICIPAL TAX-FREE
BOND FUND BOND FUND INCOME FUND FUND
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
INTEREST .............................................. 5,357,889 9,545,965 15,449,772 1,133,309
INCOME FROM AFFILIATED SECURITIES ..................... 55,410 59,563 87,593 0
-------------- -------------- -------------- --------------
TOTAL INVESTMENT INCOME .................................. 5,413,299 9,605,528 15,537,365 1,133,309
-------------- -------------- -------------- --------------
EXPENSES
ADVISORY FEES ......................................... 380,216 715,594 1,488,890 94,138
ADMINISTRATION FEES
FUND LEVEL ......................................... 10,967 19,436 23,659 1,457
CLASS A ............................................ 22,910 N/A N/A N/A
CLASS B ............................................ 3,825 N/A N/A N/A
CLASS C ............................................ 322 16,649 N/A 5,203
ADMINISTRATOR CLASS ................................ 1,260 N/A N/A N/A
ADVISOR CLASS ...................................... N/A N/A 75,717 N/A
INSTITUTIONAL CLASS ................................ N/A N/A 40,971 N/A
INVESTOR CLASS ..................................... 366,053 916,133 1,396,867 85,462
CUSTODY FEES .......................................... 11,305 19,898 19,536 4,634
SHAREHOLDER SERVICING FEES ............................ 54,956 97,180 94,479 7,285
ACCOUNTING FEES ....................................... 18,607 18,448 4,869 1,683
DISTRIBUTION FEES (NOTE 3)
CLASS B ............................................ 10,245 N/A N/A N/A
CLASS C ............................................ 863 36,887 N/A 11,192
ADVISOR CLASS ...................................... N/A N/A 35,203 N/A
INVESTOR CLASS ..................................... 0 0 0 53,193
AUDIT FEES ............................................ 10,578 8,541 5,860 11,106
LEGAL FEES ............................................ 6,489 13,953 146,065 0
REGISTRATION FEES ..................................... 15,913 31,035 (24,792) 10,133
SHAREHOLDER REPORTS ................................... 19,455 48,346 28,201 9,935
TRUSTEES' FEES ........................................ 8,174 25,971 56,155 3,422
OTHER FEES AND EXPENSES ............................... 33,792 69,070 254,179 11,050
-------------- -------------- -------------- --------------
TOTAL EXPENSES ........................................... 975,930 2,037,141 3,645,859 309,893
-------------- -------------- -------------- --------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) .......... (124,245) (237,038) (267,323) (189,368)
NET EXPENSES .......................................... 851,685 1,800,103 3,378,536 120,525
-------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) ............................. 4,561,614 7,805,425 12,158,829 1,012,784
-------------- -------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
- --------------------------------------------------------------------------------------------------------------------------------
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY
TRANSLATION .......................................... (11,140) (1,923,432) 407,972 41,380
FUTURES TRANSACTIONS .................................. 622,653 100,960 95,189 19,082
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS .. 0 (4,574) (16,986) 0
-------------- -------------- -------------- --------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ................ 611,513 (1,827,046) 486,175 60,462
-------------- -------------- -------------- --------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
- --------------------------------------------------------------------------------------------------------------------------------
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY
TRANSLATION .......................................... 2,792,411 249,832 (15,242,958) (78,694)
FUTURES TRANSACTIONS .................................. (629,873) 36,205 23,566 (5,337)
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS .. (112,850) (65,647) (75,490) (5,580)
-------------- -------------- -------------- --------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
OF INVESTMENTS .......................................... 2,049,688 220,390 (15,294,882) (89,611)
============== ============== ============== ==============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ... 2,661,201 (1,606,656) (14,808,707) (29,149)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS ............................................. $ 7,222,815 $ 6,198,769 $ (2,649,878) $ 983,635
============== ============== ============== ==============
67
WELLS FARGO ADVANTAGE STATEMENTS OF CHANGES IN NET ASSETS
MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ........................ $ 41,936,160 $ 50,889,570
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ................ 953,476 1,460,085
NET REALIZED GAIN (LOSS) ON INVESTMENTS ..... 188,955 980,438
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS .............. (337,856) 27,973
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .................... 804,575 2,468,496
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A .................................. N/A N/A
CLASS B .................................. N/A N/A
CLASS C .................................. N/A N/A
ADMINISTRATOR CLASS ...................... N/A N/A
ADVISOR CLASS ............................ N/A N/A
INSTITUTIONAL CLASS ...................... N/A N/A
INVESTOR CLASS ........................... (953,476) (1,460,085)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS C .................................. N/A N/A
INVESTOR CLASS ........................... (989,146) (189,998)
---------------- ----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ............ (1,942,622) (1,650,083)
---------------- ----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A (NOTE 1) N/A N/A
COST OF SHARES REDEEMED - CLASS A (NOTE 1) .. N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS
- CLASS A ..................................... N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS B (NOTE 1) N/A N/A
COST OF SHARES REDEEMED - CLASS B (NOTE 1) .. N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS
- CLASS B ................................... N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS C (NOTE 1) N/A N/A
REINVESTMENT OF DISTRIBUTIONS
- CLASS C (NOTE 1) ........................ N/A N/A
COST OF SHARES REDEEMED - CLASS C (NOTE 1) .. N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C ...................... N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR
CLASS (NOTE 1) ............................ N/A N/A
COST OF SHARES REDEEMED - ADMINISTRATOR
CLASS (NOTE 1) ............................ N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS ......................... N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ... N/A N/A
REINVESTMENT OF DISTRIBUTIONS
- ADVISOR CLASS ........................... N/A N/A
COST OF SHARES REDEEMED - ADVISOR CLASS ..... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS
- ADVISOR CLASS ............................ N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL
CLASS ..................................... N/A N/A
REINVESTMENT OF DISTRIBUTIONS
- INSTITUTIONAL CLASS ..................... N/A N/A
COST OF SHARES REDEEMED
- INSTITUTIONAL CLASS ..................... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS -
INSTITUTIONAL CLASS ......................... N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS .. 38,342,622 20,110,367
REINVESTMENT OF DISTRIBUTIONS
- INVESTOR CLASS .......................... 1,588,962 1,288,342
COST OF SHARES REDEEMED - INVESTOR CLASS .... (12,620,578) (31,170,532)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS ............... 27,311,006 (9,771,823)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS .... 27,311,006 (9,771,823)
================ ================
NET INCREASE (DECREASE) IN NET ASSETS .......... 26,172,959 (8,953,410)
================ ================
ENDING NET ASSETS .............................. $ 68,109,119 $ 41,936,160
================ ================
(1) PROCEEDS FROM SHARES SOLD MAY INCLUDE AMOUNTS RELATED TO FUND MERGERS AND
SHARE CLASS CONVERSIONS (NOTE 1).
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
68
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE
MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND SHORT-TERM MUNICIPAL BOND FUND
------------------------------------ ------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED)(1) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
- -------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ........................ $ 185,717,499 $ 209,152,456 $ 491,431,831 $ 647,193,229
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ................ 4,561,614 8,886,421 7,805,425 15,948,281
NET REALIZED GAIN (LOSS) ON INVESTMENTS ..... 611,513 6,653,844 (1,827,046) 4,341,410
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS .............. 2,049,688 4,818,132 220,390 (4,000,667)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .................... 7,222,815 20,358,397 6,198,769 16,289,024
---------------- ---------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A .................................. (384,835) N/A N/A N/A
CLASS B .................................. (53,998) N/A N/A N/A
CLASS C .................................. (4,549) N/A (70,328) (86,856)
ADMINISTRATOR CLASS ...................... (53,326) N/A N/A N/A
ADVISOR CLASS ............................ N/A N/A N/A N/A
INSTITUTIONAL CLASS ...................... N/A N/A N/A N/A
INVESTOR CLASS ........................... (4,046,254) (8,646,383) (7,745,543) (15,820,021)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS C .................................. N/A N/A (3,105) N/A
INVESTOR CLASS ........................... 0 0 (203,063) 0
---------------- ---------------- ---------------- ----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ............ (4,542,962) (8,646,383) (8,022,039) (15,906,877)
---------------- ---------------- ---------------- ----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A (NOTE 1) 142,499,118 N/A N/A N/A
COST OF SHARES REDEEMED - CLASS A (NOTE 1) .. (1,419,157) N/A N/A N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS
- CLASS A ................................... 141,079,961 N/A N/A N/A
---------------- ---------------- ---------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS B (NOTE 1) 23,960,996 N/A N/A N/A
COST OF SHARES REDEEMED - CLASS B (NOTE 1) .. (617,581) N/A N/A N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS
- CLASS B ................................... 23,343,415 N/A N/A N/A
---------------- ---------------- ---------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS C (NOTE 1) 1,998,690 N/A 1,471,611 4,888,466
REINVESTMENT OF DISTRIBUTIONS
- CLASS C (NOTE 1) ........................ N/A N/A 8,580 14,624
COST OF SHARES REDEEMED - CLASS C (NOTE 1) .. (11,210) N/A (282,415) (811,705)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C ...................... 1,987,480 N/A 1,197,776 4,091,385
---------------- ---------------- ---------------- ----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR
CLASS (NOTE 1) ............................ 18,065,674 N/A N/A N/A
COST OF SHARES REDEEMED - ADMINISTRATOR
CLASS (NOTE 1) ............................ (181,829) N/A N/A N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS ......................... 17,883,845 N/A N/A N/A
---------------- ---------------- ---------------- ----------------
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ... N/A N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS
- ADVISOR CLASS ........................... N/A N/A N/A N/A
COST OF SHARES REDEEMED - ADVISOR CLASS ..... N/A N/A N/A N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS
- ADVISOR CLASS ............................ N/A N/A N/A N/A
---------------- ---------------- ---------------- ----------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL
CLASS ..................................... N/A N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS
- INSTITUTIONAL CLASS ..................... N/A N/A N/A N/A
COST OF SHARES REDEEMED
- INSTITUTIONAL CLASS ..................... N/A N/A N/A N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS -
INSTITUTIONAL CLASS ......................... N/A N/A N/A N/A
---------------- ---------------- ---------------- ----------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS .. 29,413,106 33,068,570 279,651,040 180,544,333
REINVESTMENT OF DISTRIBUTIONS
- INVESTOR CLASS .......................... 3,336,151 6,941,940 6,198,102 12,329,519
COST OF SHARES REDEEMED - INVESTOR CLASS .... (23,305,822) (75,157,481) (104,184,849) (353,108,782)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS ............... 9,443,435 (35,146,971) 181,664,293 (160,234,930)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS .... 193,738,136 (35,146,971) 182,862,069 (156,143,545)
================ ================ ================ ================
NET INCREASE (DECREASE) IN NET ASSETS .......... 196,417,989 (23,434,957) 181,038,799 (155,761,398)
================ ================ ================ ================
ENDING NET ASSETS .............................. $ 382,135,488 $ 185,717,499 $ 672,470,630 $ 491,431,831
================ ================ ================ ================
69
WELLS FARGO ADVANTAGE STATEMENTS OF CHANGES IN NET ASSETS
MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A (NOTE 1) .............. N/A N/A
SHARES REDEEMED - CLASS A (NOTE 1) .......... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- CLASS A ..................................... N/A N/A
---------------- ----------------
SHARES SOLD - CLASS B (NOTE 1) .............. N/A N/A
SHARES REDEEMED - CLASS B (NOTE 1) .......... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- CLASS B ..................................... N/A N/A
---------------- ----------------
SHARES SOLD - CLASS C (NOTE 1) .............. N/A N/A
SHARES ISSUED IN REINVESTMENT OF
DISTRIBUTIONS - CLASS C (NOTE 1) .......... N/A N/A
SHARES REDEEMED - CLASS C (NOTE 1) .......... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- CLASS C ..................................... N/A N/A
---------------- ----------------
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .. N/A N/A
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- ADMINISTRATOR CLASS ......................... N/A N/A
---------------- ----------------
SHARES-SOLD - ADVISOR CLASS ................. N/A N/A
SHARES ISSUED IN REINVESTMENT OF
DISTRIBUTIONS - ADVISOR CLASS .............. N/A N/A
SHARES REDEEMED - ADVISOR CLASS ............. N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- ADVISOR CLASS ............................... N/A N/A
---------------- ----------------
SHARES SOLD - INSTITUTIONAL CLASS ........... N/A N/A
SHARES ISSUED IN REINVESTMENT OF
DISTRIBUTIONS - INSTITUTIONAL CLASS ....... N/A N/A
SHARES REDEEMED - INSTITUTIONAL CLASS ....... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- INSTITUTIONAL CLASS ......................... N/A N/A
---------------- ----------------
SHARES SOLD - INVESTOR CLASS ................ 3,562,150 1,842,637
SHARES ISSUED IN REINVESTMENT OF
DISTRIBUTIONS - INVESTOR CLASS ............ 147,924 118,832
SHARES REDEEMED - INVESTOR CLASS ............ (1,172,704) (2,875,997)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- INVESTOR CLASS .............................. 2,537,370 (914,528)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
RESULTING FROM CAPITAL SHARE TRANSACTIONS .... 2,537,370 (914,528)
================ ================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) ................................ $ 0 $ 0
================ ================
(1) SHARES SOLD MAY INCLUDE AMOUNTS RELATED TO FUND MERGERS AND SHARE CLASS
CONVERSIONS (NOTE 1).
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
70
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE
MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND SHORT-TERM MUNICIPAL BOND FUND
------------------------------------ ------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED)(1) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
---------------- ---------------- ---------------- ----------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A (NOTE 1) .............. 15,096,506 N/A N/A N/A
SHARES REDEEMED - CLASS A (NOTE 1) .......... (143,289) N/A N/A N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- CLASS A ..................................... 14,953,217 N/A N/A N/A
---------------- ---------------- ---------------- ----------------
SHARES SOLD - CLASS B (NOTE 1) .............. 2,539,611 N/A N/A N/A
SHARES REDEEMED - CLASS B (NOTE 1) .......... (64,224) N/A N/A N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- CLASS B ..................................... 2,475,387 N/A N/A N/A
---------------- ---------------- ---------------- ----------------
SHARES SOLD - CLASS C (NOTE 1) .............. 211,841 N/A 149,926 499,022
SHARES ISSUED IN REINVESTMENT OF
DISTRIBUTIONS - CLASS C (NOTE 1) .......... 0 N/A 874 1,492
SHARES REDEEMED - CLASS C (NOTE 1) .......... (1,107) N/A (28,740) (82,897)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- CLASS C ..................................... 210,734 N/A 122,060 417,617
---------------- ---------------- ---------------- ----------------
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .. 1,914,773 N/A N/A N/A
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) (18,532) N/A N/A N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- ADMINISTRATOR CLASS ......................... 1,896,241 N/A N/A N/A
---------------- ---------------- ---------------- ----------------
SHARES-SOLD - ADVISOR CLASS ................. N/A N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF
DISTRIBUTIONS - ADVISOR CLASS .............. N/A N/A N/A N/A
SHARES REDEEMED - ADVISOR CLASS ............. N/A N/A N/A N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- ADVISOR CLASS ............................... N/A N/A N/A N/A
---------------- ---------------- ---------------- ----------------
SHARES SOLD - INSTITUTIONAL CLASS ........... N/A N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF
DISTRIBUTIONS - INSTITUTIONAL CLASS ....... N/A N/A N/A N/A
SHARES REDEEMED - INSTITUTIONAL CLASS ....... N/A N/A N/A N/A
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- INSTITUTIONAL CLASS ......................... N/A N/A N/A N/A
---------------- ---------------- ---------------- ----------------
SHARES SOLD - INVESTOR CLASS ................ 3,101,524 3,647,332 28,500,178 18,382,476
SHARES ISSUED IN REINVESTMENT OF
DISTRIBUTIONS - INVESTOR CLASS ............ 352,522 770,158 630,157 1,256,394
SHARES REDEEMED - INVESTOR CLASS ............ (2,455,123) (8,348,482) (10,606,231) (35,958,466)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
- INVESTOR CLASS .............................. 998,923 (3,930,992) 18,524,104 (16,319,596)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
RESULTING FROM CAPITAL SHARE TRANSACTIONS .... 20,534,502 (3,930,992) 18,646,164 (15,901,979)
================ ================ ================ ================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) ................................ $ 18,652 $ 0 $ (10,446) $ 0
================ ================ ================ ================
71
WELLS FARGO ADVANTAGE STATEMENTS OF CHANGES IN NET ASSETS
MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM
MUNICIPAL INCOME FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- -------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ............................................................... $ 1,210,601,847 $ 2,048,130,859
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ....................................................... 12,158,829 32,001,829
NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................................ 486,175 610,471
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ................ (15,294,882) (12,696,177)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ....................... (2,649,878) 19,916,123
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A ......................................................................... N/A N/A
CLASS B ......................................................................... N/A N/A
CLASS C ......................................................................... N/A N/A
ADMINISTRATOR CLASS ............................................................. N/A N/A
ADVISOR CLASS ................................................................... (330,267) (859,393)
INSTITUTIONAL CLASS ............................................................. (2,894,261) (9,053,087)
INVESTOR CLASS .................................................................. (8,931,026) (22,051,052)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS C ......................................................................... N/A N/A
INVESTOR CLASS .................................................................. 0 0
---------------- ----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................................................... (12,155,554) (31,963,532)
---------------- ----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A ................................................ N/A N/A
COST OF SHARES REDEEMED - CLASS A .................................................. N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A .............................................................. N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS B ................................................ N/A N/A
COST OF SHARES REDEEMED - CLASS B .................................................. N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B ............................................................... N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS C ................................................ N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS C ............................................ N/A N/A
COST OF SHARES REDEEMED - CLASS C .................................................. N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C ............................................................... N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS .................................... N/A N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ...................................... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADMINISTRATOR CLASS ................................................. N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS .......................................... 3,018,366 30,807,808
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ...................................... 336,837 876,357
COST OF SHARES REDEEMED - ADVISOR CLASS ............................................ (19,309,317) (61,187,608)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADVISOR CLASS .......................................................... (15,954,114) (29,503,443)
---------------- ----------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS .................................... 60,594,283 207,187,383
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ................................ 2,946,622 8,894,453
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS ...................................... (189,111,742) (500,840,530)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS ................................................. (125,570,837) (284,758,694)
---------------- ----------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ......................................... 139,305,517 566,058,985
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ..................................... 8,267,277 20,055,808
COST OF SHARES REDEEMED - INVESTOR CLASS ........................................... (397,871,117) (1,097,334,259)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS ........................................................ (250,298,323) (511,219,466)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL
SHARE TRANSACTIONS .................................................................. (391,823,274) (825,481,603)
================ ================
NET INCREASE (DECREASE) IN NET ASSETS ................................................. (406,628,706) (837,529,012)
================ ================
ENDING NET ASSETS ..................................................................... $ 803,973,141 $ 1,210,601,847
================ ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
72
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE
MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- -------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ............................................................... $ 50,489,182 $ 70,197,973
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ....................................................... 1,012,784 2,254,019
NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................................ 60,462 776,143
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ................ (89,611) (75,581)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ....................... 983,635 2,954,581
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A ......................................................................... N/A N/A
CLASS B ......................................................................... N/A N/A
CLASS C ......................................................................... (34,679) (75,049)
ADMINISTRATOR CLASS ............................................................. N/A N/A
ADVISOR CLASS ................................................................... N/A N/A
INSTITUTIONAL CLASS ............................................................. N/A N/A
INVESTOR CLASS .................................................................. (978,105) (2,178,971)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS C ......................................................................... (35,234) (11,364)
INVESTOR CLASS .................................................................. (732,292) (262,140)
---------------- ----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................................................... (1,780,310) (2,527,524)
---------------- ----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A ................................................ N/A N/A
COST OF SHARES REDEEMED - CLASS A .................................................. N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A .............................................................. N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS B ................................................ N/A N/A
COST OF SHARES REDEEMED - CLASS B .................................................. N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B ............................................................... N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS C ................................................ 204,107 122,115
REINVESTMENT OF DISTRIBUTIONS - CLASS C ............................................ 62,936 75,131
COST OF SHARES REDEEMED - CLASS C .................................................. (179,707) (541,756)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C ............................................................... 87,336 (344,510)
---------------- ----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS .................................... N/A N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ...................................... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADMINISTRATOR CLASS ................................................. N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS .......................................... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ...................................... N/A N/A
COST OF SHARES REDEEMED - ADVISOR CLASS ............................................ N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADVISOR CLASS .......................................................... N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS .................................... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ................................ N/A N/A
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS ...................................... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS ................................................. N/A N/A
---------------- ----------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ......................................... 9,266,916 14,623,995
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ..................................... 1,488,325 2,176,655
COST OF SHARES REDEEMED - INVESTOR CLASS ........................................... (9,575,246) (36,591,988)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS ........................................................ 1,179,995 19,791,338)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL
SHARE TRANSACTIONS .................................................................. 1,267,331 (20,135,848)
================ ================
NET INCREASE (DECREASE) IN NET ASSETS ................................................. 470,656 (19,708,791)
================ ================
ENDING NET ASSETS ..................................................................... $ 50,959,838 $ 50,489,182
================ ================
73
WELLS FARGO ADVANTAGE STATEMENTS OF CHANGES IN NET ASSETS
MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM
MUNICIPAL INCOME FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- -------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A .............................................................. N/A N/A
SHARES REDEEMED - CLASS A .......................................................... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A ............................... N/A N/A
---------------- ----------------
SHARES SOLD - CLASS B .............................................................. N/A N/A
SHARES REDEEMED - CLASS B .......................................................... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B ............................... N/A N/A
---------------- ----------------
SHARES SOLD - CLASS C .............................................................. N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ........................... N/A N/A
SHARES REDEEMED - CLASS C .......................................................... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C ............................... N/A N/A
---------------- ----------------
SHARES SOLD - ADMINISTRATOR CLASS .................................................. N/A N/A
SHARES REDEEMED - ADMINISTRATOR CLASS .............................................. N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ................... N/A N/A
---------------- ----------------
SHARES SOLD - ADVISOR CLASS ........................................................ 629,170 6,340,604
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ..................... 70,159 180,648
SHARES REDEEMED - ADVISOR CLASS .................................................... (4,028,575) (12,599,184)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR CLASS ......................... (3,329,246) (6,077,932)
---------------- ----------------
SHARES SOLD - INSTITUTIONAL CLASS .................................................. 12,649,435 42,671,557
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ............... 614,039 1,833,356
SHARES REDEEMED -INSTITUTIONAL CLASS ............................................... (39,475,599) (103,146,865)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ................... (26,212,125) (58,641,952)
---------------- ----------------
SHARES SOLD - INVESTOR CLASS ....................................................... 29,068,574 116,681,323
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .................... 1,721,917 4,134,818
SHARES REDEEMED - INVESTOR CLASS ................................................... (83,020,278) (226,110,703)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS ........................ (52,229,787) (105,294,562)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS (81,771,158) (170,014,446)
================ ================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .......................... $ 7,790 $ 0
================ ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
74
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE
MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- -------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A .............................................................. N/A N/A
SHARES REDEEMED - CLASS A .......................................................... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A ............................... N/A N/A
---------------- ----------------
SHARES SOLD - CLASS B .............................................................. N/A N/A
SHARES REDEEMED - CLASS B .......................................................... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B ............................... N/A N/A
---------------- ----------------
SHARES SOLD - CLASS C .............................................................. 19,286 11,389
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ........................... 5,928 7,032
SHARES REDEEMED - CLASS C .......................................................... (16,871) (50,936)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C ............................... 8,343 (32,515)
---------------- ----------------
SHARES SOLD - ADMINISTRATOR CLASS .................................................. N/A N/A
SHARES REDEEMED - ADMINISTRATOR CLASS .............................................. N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ................... N/A N/A
---------------- ----------------
SHARES SOLD - ADVISOR CLASS ........................................................ N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ..................... N/A N/A
SHARES REDEEMED - ADVISOR CLASS .................................................... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR CLASS ......................... N/A N/A
---------------- ----------------
SHARES SOLD - INSTITUTIONAL CLASS .................................................. N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ............... N/A N/A
SHARES REDEEMED -INSTITUTIONAL CLASS ............................................... N/A N/A
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ................... N/A N/A
---------------- ----------------
SHARES SOLD - INVESTOR CLASS ....................................................... 872,278 1,365,743
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .................... 140,151 203,625
SHARES REDEEMED - INVESTOR CLASS ................................................... (901,155) (3,427,293)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS ........................ 111,274 (1,857,925)
---------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS 119,617 (1,890,440)
================ ================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .......................... $ 0 $ 0
================ ================
75
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT
SHARE (LOSS) INVESTMENTS INCOME
- -------------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- -------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $11.02 0.18 (0.04) (0.18)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $10.78 0.39 0.29 (0.39)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $10.48 0.41 0.30 (0.41)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $10.25 0.45 0.26 (0.45)
JULY 31, 2001(4) TO OCTOBER 31, 2001 ............ $10.00 0.11 0.25 (0.11)
MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------
CLASS A
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . $ 9.43 0.02 0.09 (0.02)
CLASS B
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . $ 9.43 0.02 0.09 (0.02)
CLASS C
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . $ 9.43 0.02 0.09 (0.02)
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . $ 9.43 0.03 0.09 (0.03)
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 9.47 0.20 0.05 (0.20)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 8.89 0.42 0.58 (0.42)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 8.73 0.39 0.17 (0.40)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $ 8.89 0.37 (0.16) (0.37)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $ 8.58 0.41 0.31 (0.41)
SEPTEMBER 1, 2000(6) TO OCTOBER 31, 2000 ........ $ 8.78 0.08 (0.20) (0.08)
SEPTEMBER 1, 1999 TO AUGUST 31, 2000 ............ $ 9.37 0.50 (0.59) (0.50)
SHORT-TERM MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 9.84 0.09 (0.04) (0.09)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 9.83 0.19 0.01 (0.19)
JANUARY 31, 2003(4) TO OCTOBER 31, 2003 ......... $ 9.79 0.16 0.04 (0.16)
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 9.85 0.14 (0.04) (0.14)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 9.83 0.31 0.02 (0.31)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 9.72 0.35 0.11 (0.35)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $ 9.78 0.40 (0.06) (0.40)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $ 9.62 0.44 0.16 (0.44)
SEPTEMBER 1, 2000(6) TO OCTOBER 31, 2000 ........ $ 9.64 0.08 (0.02) (0.08)
SEPTEMBER 1, 1999 TO AUGUST 31, 2000 ............ $ 9.76 0.46 (0.12) (0.46)
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- -------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 4.83 0.05 (0.07) (0.05)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 4.87 0.53 (0.04) (0.53)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 4.88 0.10 (0.01) (0.10)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $ 4.94 0.14 (0.06) (0.14)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $ 4.94 0.18 (0.00)(5) (0.18)
OCTOBER 2, 2000(4) TO OCTOBER 31, 2000 .......... $ 4.94 0.02 0.00 (0.02)
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 4.83 0.07 (0.07) (0.07)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 4.87 0.58 (0.04) (0.58)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 4.87 0.13 0.01 (0.14)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $ 4.94 0.17 (0.07) (0.17)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $ 4.95 0.22 (0.01) (0.22)
JULY 31, 2000(4) TO OCTOBER 31, 2000 ............ $ 4.95 0.06 0.00 (0.06)
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $ 4.83 0.06 (0.07) (0.06)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $ 4.87 0.10 (0.04) (0.10)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $ 4.88 0.12 0.00 (0.13)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $ 4.94 0.15 (0.06) (0.15)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ $ 4.95 0.21 (0.01) (0.21)
MARCH 1, 2000(6) TO OCTOBER 31, 2000 ............ $ 4.96 0.16 (0.01) (0.16)
MARCH 1, 1999 TO FEBRUARY 29, 2000 .............. $ 5.04 0.21 (0.08) (0.21)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
76
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
FROM NET NET ASSET -------------------------------------------------
REALIZED VALUE PER NET INVESTMENT GROSS EXPENSE NET
GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- --------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. (0.24) $10.74 3.41% 1.18% (0.66)% 0.52%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ (0.05) $11.02 3.60% 1.15% (0.66)% 0.49%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $10.78 3.76% 1.16% (0.73)% 0.43%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (0.03) $10.48 4.20% 1.43% (1.36)% 0.07%
JULY 31, 2001(4) TO OCTOBER 31, 2001 ............ 0.00 $10.25 4.30% 4.51% (4.50)% 0.01%
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------------------------------------------------------
CLASS A
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . 0.00 $ 9.52 5.07% 1.20% (0.30)% 0.90%
CLASS B
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . 0.00 $ 9.52 4.28% 1.99% (0.30)% 1.69%
CLASS C
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . 0.00 $ 9.52 4.29% 1.99% (0.30)% 1.69%
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . 0.00 $ 9.52 5.54% 1.05% (0.62)% 0.43%
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 9.52 4.28% 0.90% (0.10)% 0.80%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 9.47 4.72% 0.84% (0.03)% 0.81%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $ 8.89 4.40% 0.81% 0.00% 0.81%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 8.73 4.23% 1.08% 0.00% 1.08%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $ 8.89 4.80% 0.95% (0.03)% 0.92%
SEPTEMBER 1, 2000(6) TO OCTOBER 31, 2000 ........ 0.00 $ 8.58 5.24% 0.76% 0.00% 0.76%
SEPTEMBER 1, 1999 TO AUGUST 31, 2000 ............ 0.00 $ 8.78 5.61% 0.76% 0.00% 0.76%
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------------------------------------------------------
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 9.80 1.85% 1.81% (0.04)% 1.77%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 9.84 1.96% 1.82% (0.03)% 1.79%
JANUARY 31, 2003(4) TO OCTOBER 31, 2003 ......... 0.00 $ 9.83 2.05% 1.91% (0.03)% 1.88%
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 9.81 2.98% 0.76% (0.09)% 0.67%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 9.85 3.12% 0.69% (0.03)% 0.66%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $ 9.83 3.57% 0.64% 0.00% 0.64%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 9.72 4.07% 0.61% 0.00% 0.61%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $ 9.78 4.54% 0.62% 0.00% 0.62%
SEPTEMBER 1, 2000(6) TO OCTOBER 31, 2000 ........ 0.00 $ 9.62 4.89% 0.60% 0.00% 0.60%
SEPTEMBER 1, 1999 TO AUGUST 31, 2000 ............ 0.00 $ 9.64 4.78% 0.60% 0.00% 0.60%
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 4.76 2.12% 1.17% (0.08)% 1.09%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 4.83 1.72% 1.17% (0.05)% 1.12%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $ 4.87 1.90% 1.11% 0.00% 1.11%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 4.88 2.71% 1.11% 0.00% 1.11%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $ 4.94 3.15% 1.11% (0.01)% 1.10%
OCTOBER 2, 2000(4) TO OCTOBER 31, 2000 .......... 0.00 $ 4.94 4.39% 1.06% (0.05)% 1.01%
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 4.76 2.78% 0.45% (0.04)% 0.41%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 4.83 2.45% 0.40% (0.02)% 0.38%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $ 4.87 2.69% 0.37% 0.00% 0.37%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 4.87 3.45% 0.36% 0.00% 0.36%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $ 4.94 4.46% 0.34% 0.00% 0.34%
JULY 31, 2000(4) TO OCTOBER 31, 2000 ............ 0.00 $ 4.95 4.98% 0.31% (0.01)% 0.30%
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.00 $ 4.76 2.45% 0.82% (0.06)% 0.76%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.00 $ 4.83 2.11% 0.75% (0.02)% 0.73%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $ 4.87 2.39% 0.70% 0.00% 0.70%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 0.00 $ 4.88 3.12% 0.69% 0.00% 0.69%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 0.00 $ 4.94 4.15% 0.66% 0.00% 0.66%
MARCH 1, 2000(6) TO OCTOBER 31, 2000 ............ 0.00 $ 4.95 4.67% 0.62% (0.05)% 0.57%
MARCH 1, 1999 TO FEBRUARY 29, 2000 .............. 0.00 $ 4.96 4.26% 0.63% (0.05)% 0.58%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- ---------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- ---------------------------------------------------------------------------------------------
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 1.36% 40% $ 68,109
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 6.44% 95% $ 41,936
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 6.84% 190% $ 50,890
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 7.10% 225% $ 33,654
JULY 31, 2001(4) TO OCTOBER 31, 2001 ............ 3.60% 115% $ 2,005
MUNICIPAL BOND FUND
- ---------------------------------------------------------------------------------------------
CLASS A
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . 1.21% 49% $ 142,381
CLASS B
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . 1.17% 49% $ 23,561
CLASS C
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . 1.17% 49% $ 2,006
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO APRIL 30, 2005 (UNAUDITED) . 1.24% 49% $ 18,049
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) . 2.68% 49% $ 196,139
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 11.52% 100% $ 185,717
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 6.52% 121% $ 209,152
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 2.44% 95% $ 243,289
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 8.62% 118% $ 261,010
SEPTEMBER 1, 2000(6) TO OCTOBER 31, 2000 ........ (1.41)% 7% $ 259,376
SEPTEMBER 1, 1999 TO AUGUST 31, 2000 ............ (0.86)% 19% $ 273,650
SHORT-TERM MUNICIPAL BOND FUND
- ---------------------------------------------------------------------------------------------
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 0.55% 53% $ 8,152
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 2.08% 69% $ 6,982
JANUARY 31, 2003(4) TO OCTOBER 31, 2003 ......... 2.10% 84% $ 2,869
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 1.11% 53% $ 664,319
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 3.37% 69% $ 484,450
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 4.82% 84% $ 644,324
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 3.52% 68% $ 592,996
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 6.38% 74% $ 504,661
SEPTEMBER 1, 2000(6) TO OCTOBER 31, 2000 ........ 0.61% 9% $ 316,963
SEPTEMBER 1, 1999 TO AUGUST 31, 2000 ............ 3.61% 49% $ 307,282
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- ---------------------------------------------------------------------------------------------
ADVISOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. (0.39)% 25% $ 23,197
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 0.90% 72% $ 39,623
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 1.96% 128% $ 69,527
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 1.57% 76% $ 28,006
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 3.74% 71% $ 8,218
OCTOBER 2, 2000(4) TO OCTOBER 31, 2000 .......... 0.35% 37% $ 109
INSTITUTIONAL CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. (0.07)% 25% $ 160,759
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 1.65% 72% $ 289,641
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 2.94% 128% $ 577,522
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 2.13% 76% $ 360,335
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 4.36% 71% $ 425,300
JULY 31, 2000(4) TO OCTOBER 31, 2000 ............ 1.26% 37% $ 421,613
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. (0.24)% 25% $ 620,017
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 1.30% 72% $ 881,337
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 2.38% 128% $ 1,401,082
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 1.99% 76% $ 1,256,332
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............ 4.03% 71% $ 1,274,877
MARCH 1, 2000(6) TO OCTOBER 31, 2000 ............ 2.97% 37% $ 1,193,425
MARCH 1, 1999 TO FEBRUARY 29, 2000 .............. 2.70% 35% $ 1,792,172
77
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT
SHARE (LOSS) INVESTMENTS INCOME
- -------------------------------------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
- -------------------------------------------------------------------------------------------------------------
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $10.80 0.16 (0.01) (0.16)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $10.69 0.32 0.16 (0.32)
DECEMBER 26, 2002(4) TO OCTOBER 31, 2003 ........ $10.60 0.26 0.09 (0.26)
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. $10.80 0.21 (0.01) (0.21)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ $10.69 0.44 0.16 (0.44)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ $10.56 0.44 0.13 (0.44)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ $10.36 0.48 0.21 (0.48)
APRIL 6, 2001(4) TO OCTOBER 31, 2001 ............ $10.00 0.27 0.36 (0.27)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
78
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
FROM NET NET ASSET -------------------------------------------------
REALIZED VALUE PER NET INVESTMENT GROSS EXPENSE NET
GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- --------------------------------------------------------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
- --------------------------------------------------------------------------------------------------------------------------------
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. (0.16) $10.63 3.01% 2.13% (0.64)% 1.49%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ (0.05) $10.80 3.00% 2.10% (0.60)% 1.50%
DECEMBER 26, 2002(4) TO OCTOBER 31, 2003 ........ 0.00 $10.69 2.71% 2.08% (0.58)% 1.50%
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. (0.16) $10.63 4.07% 1.19% (0.76)% 0.43%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ (0.05) $10.80 4.09% 1.17% (0.77)% 0.40%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 0.00 $10.69 4.08% 1.13% (0.82)% 0.31%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ (0.01) $10.56 4.54% 1.14% (1.09)% 0.05%
APRIL 6, 2001(4) TO OCTOBER 31, 2001 ............ 0.00 $10.36 4.71% 1.88% (1.88)% 0.00%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- ---------------------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
- ---------------------------------------------------------------------------------------------
CLASS C
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 1.43% 16% $ 2,431
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 4.54% 17% $ 2,380
DECEMBER 26, 2002(4) TO OCTOBER 31, 2003 ........ 3.28% 54% $ 2,704
INVESTOR CLASS
NOVEMBER 1, 2004 TO APRIL 30, 2005 (UNAUDITED) .. 1.97% 16% $ 48,529
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............ 5.69% 17% $ 48,109
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............ 5.45% 54% $ 67,494
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............ 6.80% 95% $ 65,477
APRIL 6, 2001(4) TO OCTOBER 31, 2001 ............ 6.36% 54% $ 27,790
79
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(1) DURING EACH PERIOD, VARIOUS FEES AND EXPENSES WERE WAIVED AND REIMBURSED
AS INDICATED. THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS
THE EXPENSE RATIO IN THE ABSENCE OF ANY WAIVERS AND REIMBURSEMENTS (NOTE
3).
(2) TOTAL RETURN CALCULATIONS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN WAIVED OR REIMBURSED DURING THE PERIODS SHOWN. RETURNS FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(3) CALCULATED ON THE BASIS OF THE FUND AS A WHOLE WITHOUT DISTINGUISHING
BETWEEN THE CLASSES OF SHARES ISSUED
(4) COMMENCEMENT OF OPERATIONS.
(5) AMOUNT CALCULATED IS LESS THAN $0.005.
(6) IN 2000, THE FUND CHANGED ITS FISCAL YEAR END.
80
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE MUNICIPAL
INCOME FUNDS
- --------------------------------------------------------------------------------
1. ORGANIZATION
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Trust commenced operations on November 8,
1999, and at April 30, 2005 was comprised of 108 separate series (each, a
"Fund", collectively, the "Funds"). These financial statements present the
Intermediate Tax-Free Fund, Municipal Bond Fund, Short-Term Municipal Bond Fund,
Ultra Short-Term Municipal Income Fund, and Wisconsin Tax-Free Fund. Each Fund
is a diversified series of the Trust.
In September 2004, the Board of Trustees of the Trust and the Boards of
Directors of the Strong Funds ("Strong Funds") approved an Agreement and Plan of
Reorganization providing for the reorganization of certain Strong Funds into
certain Funds of the Trust.
Effective at the close of business on April 8, 2005, the following
Acquiring Funds ("Acquiring Funds") acquired substantially all of the net assets
of the following Target Funds ("Target Funds") through a tax-free exchange under
section 368 of the Internal Revenue Code. The following is a summary of shares
outstanding and net assets immediately before and after the reorganization:
Before Reorganization After Reorganization
----------------------------------------------- ---------------------
Target Fund Acquiring Fund*
- -----------------------------------------------------------------------------------------------------------------------------
STRONG ADVISOR STRONG MUNICIPAL WELLS FARGO ADVANTAGE
Fund MUNICIPAL BOND FUND BOND FUND MUNICIPAL BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------
Shares:
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A 17,359,479 -- 15,075,673
- -----------------------------------------------------------------------------------------------------------------------------
CLASS B 2,939,303 -- 2,538,733
- -----------------------------------------------------------------------------------------------------------------------------
CLASS C 244,140 -- 211,801
- -----------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS -- -- 1,914,770
- -----------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS 2,212,401 -- --
- -----------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS -- 20,630,262 20,630,262
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets:
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A $142,237,416 -- $142,237,416
- -----------------------------------------------------------------------------------------------------------------------------
CLASS B $ 23,952,688 -- $ 23,952,688
- -----------------------------------------------------------------------------------------------------------------------------
CLASS C $ 1,998,317 -- $ 1,998,317
- -----------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS -- -- $ 18,065,655
- -----------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS $ 18,065,655 -- --
- -----------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS -- $194,644,390 $194,644,390
- -----------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) $ 15,977,592 $14,379 $ 15,991,971
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated net realized losses ($220,001) ($ 19,085,401) ($ 19,305,402)
- -----------------------------------------------------------------------------------------------------------------------------
* Designates the accounting survivor.
Before Reorganization After Reorganization
--------------------------------------------------- ---------------------
Target Fund Acquiring Fund*
- -----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE
STRONG SHORT-TERM HIGH STRONG SHORT-TERM SHORT-TERM
Fund YIELD MUNICIPAL BOND FUND MUNICIPAL BOND FUND MUNICIPAL BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------
Shares:
- -----------------------------------------------------------------------------------------------------------------------------
CLASS C -- 816,728 816,728
- -----------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS 14,793,422 54,049,649 68,311,827
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets:
- -----------------------------------------------------------------------------------------------------------------------------
CLASS C -- $ 7,995,461 $ 7,995,461
- -----------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS $139,729,863 $529,536,943 $669,266,806
- -----------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) $ 546,423 ($ 781,435) ($ 235,012)
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated net realized losses ($ 11,463,489) ($ 2,018,191) ($ 13,481,680)
- -----------------------------------------------------------------------------------------------------------------------------
* Designates the accounting survivor.
81
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS NOTES TO FINANCIAL
STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
Effective at the close of business on April 8, 2005, the following
Acquiring Funds ("Acquiring Funds") acquired substantially all of the net assets
of the following Target Funds ("Target Funds") through a tax-free exchange under
section 368 of the Internal Revenue Code.
Acquiring Funds Target Funds
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE INTERMEDIATE TAX-FREE FUND - INVESTOR CLASS STRONG INTERMEDIATE MUNICIPAL BOND FUND INVESTOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE STRONG ULTRA SHORT-TERM
ULTRA SHORT-TERM MUNICIPAL INCOME FUND - ADVISOR CLASS MUNICIPAL INCOME FUND ADVISOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE STRONG ULTRA SHORT-TERM
ULTRA SHORT-TERM MUNICIPAL INCOME FUND - INSTITUTIONAL CLASS MUNICIPAL INCOME FUND INSTITUTIONAL CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE STRONG ULTRA SHORT-TERM
ULTRA SHORT-TERM MUNICIPAL INCOME FUND - INVESTOR CLASS MUNICIPAL INCOME FUND INVESTOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE WISCONSIN TAX-FREE FUND - CLASS C STRONG WISCONSIN TAX-FREE FUND CLASS C
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE WISCONSIN TAX-FREE FUND - INVESTOR CLASS STRONG WISCONSIN TAX-FREE FUND INVESTOR CLASS
The separate classes of shares offered by each Fund differ principally in
applicable sales charges, distribution, shareholder servicing and administration
fees. Shareholders of each class bear certain expenses that pertain to that
particular class. All shareholders bear the common expenses of a Fund, earn
income from the portfolio and are allocated unrealized gains and losses pro rata
based on the average daily net assets of each class, without distinction between
share classes. Dividends are determined separately for each class based on
income and expenses allocable to each class. Realized gains and losses are
allocated to each class pro rata based upon the net assets of each class on the
date realized. Differences in per share dividend rates generally result from the
relative weightings of pro rata income and realized gain allocations and from
differences in separate class expenses, including distribution, shareholder
servicing and administration fees.
2. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
The following significant accounting policies, which are consistently
followed in the preparation of the financial statements of the Trust, are in
conformity with accounting principles generally accepted in the United States of
America ("GAAP") for investment companies.
The preparation of financial statements in conformity with GAAP requires
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.
In the normal course of business, the Trust may enter into contracts that
provide certain indemnifications. The Trust's maximum exposure under these
arrangements is dependent on future claims that may be made against the Funds
and, therefore, cannot be estimated; however, based on experience, the risk of
loss from such claims is considered remote.
SECURITY VALUATION
Investments in securities are valued each business day as of the close of
regular trading on the New York Stock Exchange, which is usually 4:00 p.m.
(Eastern Time). Securities which are traded on a national or foreign securities
exchange are valued at the last reported sales price. Securities listed on The
Nasdaq Stock Market, Inc. are valued at the Nasdaq Official Closing Price
("NOCP"), and if no NOCP is available, then at the last reported sales price. In
the absence of any sale of such securities, and in the case of other securities,
including U.S. Government obligations, but excluding debt securities maturing in
60 days or less, the valuations are based on the latest quoted bid prices. Prior
to April 1, 2005, the predecessor Strong Funds valuations were based on the mean
of the bid and asked prices.
Certain fixed income securities with maturities exceeding 60 days are
valued by using a pricing service approved by the Trust's Board of Trustees. The
service uses market prices as quoted by an independent pricing service or by
dealers in these securities when, in the service's judgment, these prices are
readily available and are representative of the securities' market values. For
some securities, such prices are not readily available. These securities will
generally be fair valued using methods which may include consideration of yields
or prices of securities of comparable quality, coupon rate, maturity and type of
issue; indications as to values from dealers in securities, trading
characteristics and general market conditions.
Debt securities maturing in 60 days or less generally are valued at
amortized cost. The amortized cost method involves valuing a security at its
cost, plus accretion of discount or minus amortization of premium over the
period until maturity, which approximates market value.
Investments which are not valued using any of the methods discussed above,
are valued at their fair value as determined by procedures approved by the Board
of Trustees.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded on a trade date basis. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
Interest income is accrued daily and bond discounts are accreted and premiums
are amortized daily.
Debt obligations may be placed on non-accrual status and related
investment income may be reduced by ceasing current accruals and writing off
interest receivables when the collection of all or a portion of income has
become doubtful based on consistently applied procedures. A debt obligation is
removed from non-accrual status when the issuer resumes interest payments or
when collectibility of interest is reasonably assured.
Dividend income is recognized on the ex-dividend date, except for certain
dividends from foreign securities, which are
82
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE
MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
recorded as soon as the Fund is informed of 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
Net investment income, if any, is declared daily and distributed to
shareholders monthly. Distributions to shareholders from net realized capital
gains, if any, are declared and distributed at least annually.
Distributions are based on amounts calculated in accordance with the
applicable federal income tax regulations, which may differ from GAAP. The
timing and character of distributions made during the period from net investment
income or net realized gains may also differ from their ultimate
characterization for federal income tax purposes. To the extent that these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment. Temporary
differences do not require reclassifications.
FEDERAL INCOME TAXES
Each Fund is treated as a separate entity for federal income tax purposes.
It is the policy of each Fund of the Trust to continue to qualify as a regulated
investment company by complying with the provisions applicable to regulated
investment companies, as defined under subchapter M of the Internal Revenue Code
(the "Code"), and to make distributions of 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 at April 30, 2005.
At the Fund's most recent tax year end (October 31, 2004, for Ultra
Short-Term Municipal Income Fund and April 8, 2005, for Municipal Bond Fund and
Short-Term Municipal Bond Fund), estimated net capital loss carryforwards, which
are available to offset future net realized capital gains, were:
Expiring in Varying Capital Loss
Fund Amounts Through Carryforwards
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND 2011 $19,032,473
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND 2011 13,216,171
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND 2011 50,105,980
- --------------------------------------------------------------------------------
FUTURES CONTRACTS
The Fund(s) may purchase futures contracts to gain exposure to market
changes, which may be more efficient or cost effective than actually buying the
securities. A futures contract is an agreement between parties to buy or sell a
security at a set price on a future date. Upon entering into such a contract, a
Fund is required to pledge to the broker an amount of cash, U.S. Government
obligations or other high-quality debt securities equal to the minimum "initial
margin" requirements of the exchange on which the futures contract is traded.
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 the value of the contract.
Such receipts or payments are known as "variation margin" and are recorded by
the Fund as unrealized gains or losses. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission (the "SEC") for long futures positions, the Fund is required
to segregate highly liquid securities as permitted by the SEC in connection with
futures transactions in an amount generally equal to the entire value of the
underlying contracts. Risks of entering into futures contracts include the
possibility that there may be an illiquid market and that a change in the value
of the contract may not correlate with changes in the value of the underlying
securities. At April 30, 2005, the following Fund(s) held futures contracts:
Net Unrealized
Notional Appreciation
Fund Contracts Type Expiration Date Amount (Depreciation)
- --------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND Short 15 US 2 YR Note June 05 June, 2005 $3,118,061 $ 2,514
- --------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND Short 60 US 10 YR Note June 05 June, 2005 6,641,226 (44,086)
- --------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BOND FUND Short 50 US 2 YR Note June 05 June, 2005 10,377,913 (7,244)
- --------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BOND FUND Short 30 US 5 YR Note June 05 June, 2005 3,247,841 (5,752)
- --------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BOND FUND Short 70 US 10 YR Note June 05 June, 2005 7,697,281 (102,251)
- --------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BOND FUND Short 225 US Long Bond June 05 June, 2005 25,328,627 (511,217)
- --------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND Short 175 US 2 YR Note June 05 June, 2005 36,384,394 36,347
- --------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND Short 25 US 5 YR Note June 05 June, 2005 2,713,175 1,847
- --------------------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL
INCOME FUND Short 150 US 2 YR Note June 05 June, 2005 31,179,035 23,566
- --------------------------------------------------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND Short 15 US 10 YR Note June 05 June, 2005 1,665,991 (5,337)
83
WELLS FARGO ADVANTAGE NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
WHEN-ISSUED TRANSACTIONS
Each Fund may purchase securities on a forward commitment or `when-issued'
basis. A Fund records a when-issued transaction on the trade date and will
segregate with the custodian qualifying assets having a value sufficient to make
payment for the securities purchased. 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.
SWAP CONTRACTS
The Funds may enter into various hedging transactions, such as interest
rate swaps to preserve a return or spread on a particular investment or portion
of its portfolio, to create synthetic adjustable-rate mortgage securities or for
other purposes. Swaps involve the exchange of commitments to make or receive
payments, e.g., an exchange of floating-rate payments for fixed rate payments.
The Funds record as an increase or decrease to realized gain/loss, the amount
due or owed by the Funds at termination or settlement. Swaps are valued based on
prices quoted by independent brokers. These valuations represent the net present
value of all future cash settlement amounts based on implied forward interest
rates or index values.
As of April 30, 2005 the following Funds had open swap contracts:
Swap Counter Notional Annual Credit Protection Maturity Net Unrealized
Fund Party Principal Premium Paid Purchased Date Gain/(Loss)
- -----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL JP Morgan Chase December 20,
BOND FUND Credit Protection* $2,000,000 0.48% $2,000,000 2006 $(10,053)
- -----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL JP Morgan Chase December 20,
BOND FUND Credit Protection* $1,000,000 0.48% $1,000,000 2006 (5,026)
- -----------------------------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM JP Morgan Chase July 14,
MUNICIPAL INCOME FUND Credit Protection* $7,000,000 0.48% $7,000,000 2005 (39,279)
- -----------------------------------------------------------------------------------------------------------------------------------
* Protection against credit rating decline of American Electric Power
Company, Inc.
3. EXPENSES
- --------------------------------------------------------------------------------
ADVISORY FEES
The Trust has entered into an advisory contract with Wells Fargo Funds
Management, LLC ("Funds Management"). The adviser is responsible for
implementing investment policies and guidelines and for supervising the
sub-adviser, who is responsible for day-to-day portfolio management.
Pursuant to the contract, Funds Management is entitled to receive an
advisory fee for its services as adviser. Funds Management may retain the
services of certain investment sub-advisers to provide daily portfolio
management. The fees related to sub-advisory services are borne directly by the
adviser and do not increase the overall fees paid by a Fund to the adviser.
Funds Management and the investment sub-adviser(s) are entitled to be paid a
monthly fee at the following annual rates:
Sub-Advisory
Advisory Fees* Fees (% of
Average Daily (% of Average Average Daily Average Daily
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Net Assets)
- -----------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND $0 - $499 million 0.400 Wells Capital $0 - 400 million 0.200
$500 - $999 million 0.350 Management $400 - 800 million 0.175
$1 - $2.99 billion 0.300 Incorporated > $800 million 0.150
$3 - $4.99 billion 0.275
> $4.99 billion 0.250
- -----------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BOND FUND $0 - $499 million 0.400 Wells Capital $0 - 400 million 0.200
$500 - $999 million 0.350 Management $400 - 800 million 0.175
$1 - $2.99 billion 0.300 Incorporated > $800 million 0.150
$3 - $4.99 billion 0.275
> $4.99 billion 0.250
- -----------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL $0 - $499 million 0.400 Wells Capital $0 - 400 million 0.200
BOND FUND $500 - $999 million 0.350 Management $400 - 800 million 0.175
$1 - $2.99 billion 0.300 Incorporated > $800 million 0.150
$3 - $4.99 billion 0.275
> $4.99 billion 0.250
- -----------------------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM $0 - $499 million 0.400 Wells Capital $0 - 400 million 0.200
MUNICIPAL INCOME FUND $500 - $999 million 0.350 Management $400 - 800 million 0.175
$1 - $2.99 billion 0.300 Incorporated > $800 million 0.150
$3 - $4.99 billion 0.275
> $4.99 billion 0.250
84
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE
MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
Sub-Advisory
Advisory Fees* Fees (% of
Average Daily (% of Average Average Daily Average Daily
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Net Assets)
- -----------------------------------------------------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND $0 - $499 million 0.400 Wells Capital $0 - 400 million 0.200
$500 - $999 million 0.350 Management $400 - 800 million 0.175
$1 - $2.99 billion 0.300 Incorporated > $800 million 0.150
$3 - $4.99 billion 0.275
> $4.99 billion 0.250
- -----------------------------------------------------------------------------------------------------------------------------
* Effective April 11, 2005. Prior to January 1, 2005, Strong Capital
Management, Inc. ("SCM") served as investment adviser to each of the
predecessor Strong Funds and was entitled to receive an annual fee at the
following rates; from January 1, 2005 through April 10, 2005, Funds
Management served as interim investment adviser and was entitled to
receive an annual fee at the same rate.
Advisory Fees
Average Daily (% of Average
Fund Net Assets Daily Net Assets)
- --------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND $0 - $4 billion 0.370
$4 billion - $6 billion 0.345
> $6 billion 0.320
- --------------------------------------------------------------------------------------------
MUNICIPAL BOND FUND $0 - $4 billion 0.350
$4 billion - $6 billion 0.325
> $6 billion 0.300
- --------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND $0 - $4 billion 0.250
$4 billion - $6 billion 0.225
> $6 billion 0.200
- --------------------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND $0 - $4 billion 0.300
$4 billion - $6 billion 0.275
> $6 billion 0.250
- --------------------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND $0 - $4 billion 0.370
$4 billion - $6 billion 0.345
> $6 billion 0.320
ADMINISTRATION AND TRANSFER AGENT FEES
The Trust has entered into an Administration Agreement with Funds
Management. Under this Agreement, for providing administrative services, which
includes paying fees and expenses for services provided by the transfer agent,
sub-transfer agents, omnibus account servicers and record-keepers, Funds
Management is entitled to receive the following annual fees:
Admin Fees**
Average Daily (% of Average
Net Assets Daily Net Assets)
- --------------------------------------------------------------------------------------------
FUND LEVEL $0 - $4.99 billion 0.05
$5 - $9.99 billion 0.04
> $9.99 billion 0.03
- --------------------------------------------------------------------------------------------
CLASS A 0.28
- --------------------------------------------------------------------------------------------
CLASS B 0.28
- --------------------------------------------------------------------------------------------
CLASS C 0.28
- --------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS 0.10
- --------------------------------------------------------------------------------------------
ADVISOR CLASS 0.28
- --------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.08
- --------------------------------------------------------------------------------------------
INVESTOR CLASS 0.45
- --------------------------------------------------------------------------------------------
On behalf of the Short-Term Municipal Bond Fund:
- --------------------------------------------------------------------------------------------
CLASS C 0.23
- --------------------------------------------------------------------------------------------
INVESTOR CLASS 0.40
- --------------------------------------------------------------------------------------------
85
WELLS FARGO ADVANTAGE NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
** Effective April 11, 2005. Prior to April 11, 2005, Strong Investor
Services, Inc. ("SISI") served as administrator to each of the predecessor
Strong Funds and was entitled to receive an annual fee at the following
rates:
% of Average
Daily Net Assets
- --------------------------------------------------------------------------------
CLASS C 0.28
- --------------------------------------------------------------------------------
INVESTOR CLASS 0.28
- --------------------------------------------------------------------------------
On behalf of the Ultra Short-Term Municipal Income Fund:
- --------------------------------------------------------------------------------
ADVISOR CLASS 0.33
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.02
- --------------------------------------------------------------------------------
INVESTOR CLASS 0.33
The Trust has entered into an agreement with Boston Financial Data
Services ("BFDS"). BFDS served as the transfer agent to the predecessor Strong
Funds, effective March 14, 2005. Prior to March 14, 2005, SISI served as
transfer agent to each of the predecessor Strong Funds.
For financial statement presentation, transfer agent fees for the period
from November 1, 2004 though April 10, 2005, as shown below, have been combined
with administration fees.
Transfer Agent
Fees and Other
Related Expenses
- --------------------------------------------------------------------------------
INTERMEDIATE MUNICIPAL BOND FUND
INVESTOR CLASS $ 17,268
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
INVESTOR CLASS 81,697
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
CLASS C 6,228
INVESTOR CLASS 138,967
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
ADVISOR CLASS 25,431
INVESTOR CLASS 14,513
INSTITUTIONAL CLASS 150,440
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
CLASS C 1,973
INVESTOR CLASS 13,396
- --------------------------------------------------------------------------------
CUSTODY FEES
The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"),
whereby WFB is responsible for providing custody services. Pursuant to the
contract, WFB is entitled to certain transaction charges plus a monthly fee for
custody services at the following annual rates:
% Of Average
Daily Net Assets
- --------------------------------------------------------------------------------
ALL MUNICIPAL INCOME FUNDS 0.02
- --------------------------------------------------------------------------------
Prior to March 21, 2005, State Street Bank and Trust Co. ("State Street")
served as custodian for the Strong Intermediate Municipal Bond Fund. Prior to
March 28, 2005, State Street served as custodian for the Strong Ultra Short-Term
Municipal Income Fund and Strong Wisconsin Tax-Free Fund. Prior to April 25,
2005, State Street served as custodian for the Strong Municipal Bond Fund and
Strong Short-Term Municipal Bond Fund and, since the merger, the respective
Acquiring Funds. State Street was entitled to receive a substantially
transaction based fee.
SHAREHOLDER SERVICING FEES
The Trust has entered into contracts with one or more shareholder
servicing agents, whereby each Fund is charged the following annual fees:
% of Average
Share Class Daily Net Assets***
- --------------------------------------------------------------------------------
CLASS A, CLASS B, CLASS C, ADMINISTRATOR CLASS,
ADVISOR CLASS, INVESTOR CLASS 0.25
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.00
86
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE
MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
*** Effective April 11, 2005. Prior to April 11, 2005, shareholder servicing
fees for the predecessor Strong Funds, if any, were included in the Strong
Funds' 12b-1 distribution and service plan. For the period April 11, 2005
through April 30, 2005, shareholder servicing fees paid were as follows:
Fund Class A Class B Class C Administrator Advisor Investor
- ----------------------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND N/A N/A N/A N/A N/A $ 9,545
- ----------------------------------------------------------------------------------------------------------------------
MUNICIPAL BOND FUND 20,455 3,415 287 2,717 N/A 28,082
- ----------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND N/A N/A 1,163 N/A N/A 96,017
- ----------------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND N/A N/A N/A N/A 3,409 91,070
- ----------------------------------------------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND N/A N/A 346 N/A N/A 6,939
- ----------------------------------------------------------------------------------------------------------------------
DISTRIBUTION FEES
The Trust has adopted a Distribution Plan (the "Plan") for Class B and
Class C shares of the applicable Funds pursuant to Rule 12b-1 under the 1940
Act. Effective April 11, 2005, distribution fees are charged to the Class B and
Class C shares and paid to Wells Fargo Funds Distributor, LLC at an annual rate
of 0.75% of average daily net assets.
Prior to April 11, 2005, the predecessor Strong Funds adopted a 12b-1
distribution and service plan under the 1940 Act on behalf of the Class C,
Advisor Class and certain Investor Class shares. Under this plan, Strong
Investments, Inc. was paid an annual rate of 1.00% of the average daily net
assets of the Class C shares of the Short-Term Municipal Bond Fund and Wisconsin
Tax-Free Fund, 0.25% of the average daily net assets of the Advisor Class shares
of the Ultra Short-Term Municipal Income Fund and 0.25% of the average daily net
assets of the Investor Class shares of the Intermediate Municipal Bond Fund and
Wisconsin Tax-Free Fund.
For the six months ended April 30, 2005, distribution fees paid are
disclosed on the Statement of Operations.
OTHER FEES
PFPC, Inc. ("PFPC") serves as fund accountant for the Trust and is
entitled to receive an annual asset based fee and an annual fixed fee from each
Fund. PFPC is also entitled to be reimbursed for all out-of-pocket expenses
reasonably incurred in providing these services.
Prior to March 21, 2005, State Street served as fund accountant for the
Strong Intermediate Municipal Bond Fund. Prior to March 28, 2005, State Street
served as fund accountant for the Strong Ultra Short-Term Municipal Income Fund
and Strong Wisconsin Tax-Free Fund. Prior to April 25, 2005, State Street served
as fund accountant for the Strong Municipal Bond Fund and Strong Short-Term
Municipal Bond Fund. Fund accounting fees were paid by the funds' administrator
through April 10, 2005, and not by the funds.
From April 11, 2005 to April 22, 2005, State Street served as interim fund
accountant for the Strong Municipal Bond Fund and Strong Short-Term Municipal
Bond Fund and was entitled to receive an annual asset based fee, a fixed fund
accounting base fee, multiple class fee and certain out-of-pocket expenses.
WAIVED FEES AND REIMBURSED EXPENSES
Effective April 11, 2005, Funds Management waived fees or reimbursed
expenses proportionately from all classes, first from advisory fees, and then
from any class specific expenses, if applicable. The Fund's adviser has
committed to waive fees and/or reimburse expenses to the extent necessary to
maintain a certain net operating expense ratio for the Fund(s). Net operating
expense ratios in effect from April 11, 2005 through April 30, 2005 were as
follows:
Net Operating Expense Ratios
Fund Class A Class B Class C Administrator Advisor Institutional Investor
- --------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND N/A N/A N/A N/A N/A N/A 0.75%
- --------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BOND FUND 0.85% 1.60% 1.60% 0.48% N/A N/A 0.80%
- --------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND N/A N/A 1.60% N/A N/A N/A 0.66%
- --------------------------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND N/A N/A N/A N/A 0.80% 0.37% 0.72%
- --------------------------------------------------------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND N/A N/A 1.49% N/A N/A N/A 0.75%
- --------------------------------------------------------------------------------------------------------------------------------
Prior to April 11, 2005, the predecessor Strong Funds' adviser ("SCM")
and/or administrator ("SISI") could voluntarily waive or absorb certain expenses
at their discretion. Pursuant to the direction of the Strong Board of Directors
and certain regulatory settlements, SCM had contractually agreed to waive fees
and/or absorb expenses in the amount of 0.010% for Intermediate Municipal Bond
Fund, Short-Term Municpal Bond Fund, Ultra Short-Term Municipal Income Fund, and
Wisconsin Tax-Free Fund and 0.033% for Municipal Bond Fund from May 21, 2004
until May 21, 2005. However, effective April 11, 2005, the funds are subject to
a different expense structure. SCM and/or SISI had contractually agreed to wiave
its fees and/or absorb expenses for Class C shares of the Wisconsin Tax-Free
Fund until March 1, 2006, to keep annual operating expenses at no more 0.75%.
SISI also allocated to each fund certain charges or credits resulting from
transfer agency banking activities based on each Class' level subscription and
redemption activity. Transfer Agency Banking Credits allocated by SISI, if any,
served to reduce the transfer agency expenses incurred by the funds. From
November 1, 2004 through April 10, 2005, the expense offsets that are
87
WELLS FARGO ADVANTAGE NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
included in the waived fees and reimbursed expenses amount on the Statement of
Operations are as follows:
Waived Fees and
Reimbursed Expenses
- --------------------------------------------------------------------------------
INTERMEDIATE MUNICIPAL BOND FUND
FUND LEVEL $ 5,333
INVESTOR CLASS 158,163
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
FUND LEVEL 36,732
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
FUND LEVEL 39,762
CLASS C 0
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
FUND LEVEL 72,964
ADVISOR CLASS 6,962
INSTITUTIONAL CLASS 0
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
FUND LEVEL 17,936
CLASS C 6,014
INVESTOR CLASS 148,662
- --------------------------------------------------------------------------------
4. INVESTMENT PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date) for the six
months ended April 30, 2005, were as follows:
Fund Purchases at Cost Sales Proceeds
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND $ 47,314,302 $ 22,059,304
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND 112,433,078 103,699,014
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND 241,852,505 230,855,171
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND 186,097,015 463,231,526
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND 9,992,421 7,666,679
- --------------------------------------------------------------------------------
5. BANK BORROWINGS
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust and Wells Fargo Variable Trust (excluding the
money market funds) share in a revolving Credit Agreement with The Bank of New
York, whereby the Funds are permitted to use bank borrowings for temporary or
emergency purposes, such as to fund shareholder redemption requests. The
agreement permits borrowings of up to $150 million, collectively. Interest is
charged to each Fund based on its borrowing at a rate equal to the Federal Funds
Rate plus 0.40%. In addition, the Funds pay a quarterly commitment fee equal to
0.1% per annum of the credit line. Prior to April 11, 2005, the predecessor
Strong Funds had established a line of credit agreement ("LOC") with certain
financial institutions to be used for temporary or emergency purposes. Combined
borrowings among all participating Strong Funds were subject to a $200 million
cap on the total LOC. For an individual fund, borrowings under the LOC were
limited to either the lesser of 15% of the market value of the fund's total
assets or any explicit borrowing limits in the fund's registration statement.
The principal amount of each borrowing under the LOC was due not more than 45
days after the date of the borrowing. Borrowings under the LOC accrued interest
based on prevailing market rates as defined in the LOC. A commitment fee of
0.09% per annum was incurred on the unused portion of the LOC and was allocated
to all participating Strong Funds based on their net asset values. For the six
months ended April 30, 2005, there were no borrowings under either agreement.
88
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE
MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
6. LEGAL AND REGULATORY MATTERS
- --------------------------------------------------------------------------------
In 2004, the predecessor funds' investment adviser and affiliates
(collectively, "Strong") entered into agreements with certain regulators,
including the Securities and Exchange Commission and the New York Attorney
General ("NYAG"), to settle market-timing investigations. In the settlements,
Strong agreed to pay investor restoration and civil penalties. Although some
portion of these payments is likely to be distributed to predecessor fund
shareholders, no determination has yet been made as to the distribution of these
amounts, and the successor funds are not expected to receive any portion of
these payments. The NYAG settlement also imposed fee reductions across the
predecessor fund complex (excluding money market funds and very short-term
income funds) totaling at least $7 million a year for five years. The current
Funds' adviser has agreed to honor these fee reductions for the benefit of
shareholders across the successor funds. Although civil litigation against
Strong and certain predecessor funds relating to these matters is continuing,
neither the current adviser nor the successor Funds is a party to any such suit.
89
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
PROXY VOTING INFORMATION
A description of the policies and procedures that the Fund(s) uses to
determine how to vote proxies relating to portfolio securities and information
regarding the results of such voting during the most recent 12-month period
ended June 30, is available without charge, upon request, by calling
1-800-222-8222, visiting our Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS or
visiting the SEC Web site at WWW.SEC.GOV.
PORTFOLIO HOLDINGS INFORMATION
The Fund(s) 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 without charge by visiting the SEC Web site at WWW.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 information about the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
BOARD OF TRUSTEES
The following table provides basic information about the Board of Trustees
("Trustees") of the Wells Fargo Funds Trust (the "Trust"). This table
supplements, and should be read in conjunction with, the Prospectus and the
Statement of Additional Information* of each Fund. Each of the Trustees listed
below acts in identical capacities for each of the 138 funds comprising the
Trust, Wells Fargo Variable Trust and Wells Fargo Master Trust (collectively the
"Fund Complex"). All of the non-interested Trustees are also members of the
Audit and Governance Committees of each Trust in the Fund Complex. The 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.
INTERESTED TRUSTEES**
- ----------------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- ----------------------------------------------------------------------------------------------------------------------
J. Tucker Morse Trustee, Private Investor/Real Estate None
60 since 1987 Developer; Chairman of White
Point Capital, LLC.
- ----------------------------------------------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES
- ----------------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- ----------------------------------------------------------------------------------------------------------------------
Thomas S. Goho Trustee, Associate Professor of Finance, None
62 since 1987 Wake Forest University,
Calloway School of Business
and Accountancy.
- ----------------------------------------------------------------------------------------------------------------------
Peter G. Gordon Trustee, Chairman, CEO, and Co- None
62 since 1998 Founder of Crystal Geyser
(Chairman, since 2005) Water Company and President
of Crystal Geyser Roxane Water
Company.
- ----------------------------------------------------------------------------------------------------------------------
Richard M. Leach Trustee, since 1987 Retired. Prior thereto, President None
71 of Richard M. Leach Associates
(a financial consulting firm).
- ----------------------------------------------------------------------------------------------------------------------
Timothy J. Penny Trustee, since 1996 Senior Counselor to the public None
53 relations firm of Himle-Horner
and Senior Fellow at the
Humphrey Institute,
Minneapolis, Minnesota (a
public policy organization).
- ----------------------------------------------------------------------------------------------------------------------
Donald C. Willeke Trustee, since 1996 Principal in the law firm of None
64 Willeke & Daniels.
- ----------------------------------------------------------------------------------------------------------------------
90
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS
- --------------------------------------------------------------------------------
OFFICERS
- ----------------------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE PAST FIVE YEARS OTHER DIRECTORSHIPS
- ----------------------------------------------------------------------------------------------------------------------
Karla M. Rabusch President, Executive Vice President of None
46 since 2003 Wells Fargo Bank, N.A.
President of Wells Fargo Funds
Management, LLC. Senior Vice
President and Chief
Administrative Officer of Wells
Fargo Funds Management, LLC
from 2001 to 2003. Vice
President of Wells Fargo Bank,
N.A. from 1997 to 2000.
- ----------------------------------------------------------------------------------------------------------------------
Stacie D. DeAngelo Treasurer, Senior Vice President of Wells None
36 since 2003 Fargo Bank, N.A. Senior Vice
President of Operations for
Wells Fargo Funds Management,
LLC. Prior thereto, Operations
Manager at Scudder Weisel
Capital, LLC from 2000 to
2001, Director of Shareholder
Services at BISYS Fund
Services from 1999 to 2000 and
Assistant Vice President of
Operations with
Nicholas-Applegate Capital
Management from 1993 to 1999.
- ----------------------------------------------------------------------------------------------------------------------
C. David Messman Secretary, Vice President and Managing None
45 since 2000 Senior Counsel of Wells Fargo
Bank, N.A. Senior Vice
President and Secretary of Wells
Fargo Funds Management, LLC.
Vice President and Senior
Counsel of Wells Fargo Bank,
N.A. from 1996 to 2003.
- ----------------------------------------------------------------------------------------------------------------------
* The Statement of Additional Information includes additional information
about the Funds' Trustees and is available, without charge, upon request,
by calling 1-800-222-8222.
** As of April 30, 2005, one of the six Trustees is considered an "interested
person" of the Trusts as defined in the Investment Company Act of 1940.
The interested Trustee, J. Tucker Morse, is affiliated with a government
securities dealer that is registered under the Securities Exchange Act of
1934, which is not itself affiliated with Wells Fargo Funds Management,
LLC.
*** Length of service dates reflects a Trustee's commencement of service with
the Trust's predecessor entities.
91
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
OTHER MATTERS
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY
AGREEMENTS:
INTERMEDIATE TAX-FREE FUND, MUNICIPAL BOND FUND, SHORT-TERM MUNICIPAL BOND FUND,
ULTRA SHORT-TERM MUNICIPAL INCOME FUND AND WISCONSIN TAX-FREE FUND
- --------------------------------------------------------------------------------
Section 15(c) of the Investment Company Act of 1940 (the "1940 Act")
contemplates that the Board of Trustees (the "Board") of Wells Fargo Funds Trust
(the "Trust"), including a majority of the Trustees who have no direct or
indirect interest in the investment advisory and sub-advisory agreements and are
not "interested persons" of the Trust, as defined in the 1940 Act (the
"Independent Trustees"), will annually review and consider the continuation of
the investment advisory and sub-advisory agreements. In this regard, the Board
reviewed and re-approved, during the six months covered by this report: (i) an
investment advisory agreement with Wells Fargo Funds Management, LLC ("Funds
Management") for the Intermediate Tax-Free Fund, Municipal Bond Fund, Short-Term
Municipal Bond Fund, Ultra Short-Term Municipal Income Fund and Wisconsin
Tax-Free Fund (the "Funds"); and (ii) an investment sub-advisory agreement with
Wells Capital Management Incorporated ("Wells Capital Management") for the
Funds. The investment advisory agreement with Funds Management and the
investment sub-advisory agreement with Wells Capital Management are collectively
referred to as the "Advisory Agreements."
More specifically, at a meeting held on April 4, 2005, the Board,
including the Independent Trustees advised by their independent legal counsel,
considered the factors and reached the conclusions described below relating to
the selection of Funds Management and Wells Capital Management and the
continuation of the Advisory Agreements. The Board initially approved the
Advisory Agreements for the Funds at a meeting held August 9-10, 2004 in
connection with its approval of the reorganization of certain of the Strong
Funds into certain of the Wells Fargo Advantage Funds (the "Reorganization"), as
follows:
STRONG FUNDS WELLS FARGO ADVANTAGE FUNDS
- --------------------------------------------------------------------------------
Intermediate Municipal Bond Fund* Intermediate Tax-Free Fund
- --------------------------------------------------------------------------------
Municipal Bond Fund*
Advisor Municipal Bond Fund Municipal Bond Fund
- --------------------------------------------------------------------------------
Short-Term Municipal Bond Fund*
Short-Term High Yield Municipal Fund Short-Term Municipal Bond Fund
- --------------------------------------------------------------------------------
Ultra Short-Term Municipal Income Fund* Ultra Short-Term Municipal Income Fund
- --------------------------------------------------------------------------------
Wisconsin Tax-Free Fund* Wisconsin Tax-Free Fund
- --------------------------------------------------------------------------------
* Accounting survivor.
The Reorganization was effective at the close of business on April 8,
2005. The Funds commenced operations on April 11, 2005. Accordingly, references
to the Funds refer to either the predecessor funds or the Funds as the context
requires. Similarly, references to the various fee rates refer to either the
rates of the predecessor funds or those of the Funds as the context requires.
NATURE, EXTENT AND QUALITY OF SERVICES
The Board received and considered various data and information regarding
the nature, extent and quality of services that would be provided to the Funds
by Funds Management and Wells Capital Management under the Advisory Agreements.
Responses of Funds Management and Wells Capital Management to a detailed set of
requests submitted by the Independent Trustees' independent legal counsel on
behalf of such Trustees were provided to the Board. The Board reviewed and
considered the data and information, which included, among other things,
information about the background and experience of the senior management and the
expertise of the investment personnel of Funds Management and Wells Capital
Management.
The Board also considered the ability of Funds Management and Wells
Capital Management, based on their respective resources, reputations and other
attributes, to attract and retain highly qualified investment professionals,
including research, advisory, and supervisory personnel. In this connection, the
Board considered information regarding each of Funds Management's and Wells
Capital Management's compensation for its personnel that would be involved in
the management of the Funds. In addition, the Board considered the effects of
certain personnel changes in light of the acquisition of certain of the asset
management arrangements of Strong Capital Management, Inc. by Wells Fargo &
Company.
The Board further considered the compliance programs and compliance
records of Funds Management and Wells Capital Management. In addition, the Board
took into account the administrative services anticipated to be provided to the
Funds by Funds Management and its affiliates. In considering these matters, the
Board considered not only the specific information presented in connection with
the meeting, but also the knowledge gained over the course of interacting with
Funds Management, including with respect to Funds Management's oversight of
service providers, such as the investment sub-adviser.
92
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
Based on the above factors, together with those referenced below, the
Board concluded that it was generally satisfied with the nature, extent and
quality of the investment advisory services anticipated to be provided to each
of the Funds by Funds Management and Wells Capital Management.
FUND PERFORMANCE AND EXPENSES
The Board considered the performance results for each of the Funds over
various time periods. The Board also considered these results in comparison to
the median performance results of the group of funds that was determined to be
the most similar to a given Fund (the "Peer Group") and to the median
performance of a broader universe of relevant funds (the "Universe"), as well as
to each Fund's benchmark index. Lipper Inc. ("Lipper"), an independent provider
of investment company data, determined the Peer Group and Universe for each
Fund. The Board was provided with a description of the methodology used by
Lipper to select the mutual funds in each Fund's Peer Group and Universe.
The Board noted that the performance results of each Fund, except the
Ultra Short-Term Municipal Income Fund, were better than, or not appreciably
below, the median performance of its Peer Group for all time periods. The Board
noted that the Ultra Short-Term Municipal Income Fund's performance was lower
than the median performance of its Peer Group for all time periods and required
further review. Upon further review, the Board noted that the Fund's Peer Group
includes funds that invest in long-term, rather than ultra short-term, municipal
bonds, and that this difference between the Fund and those in its Peer Group
explained the Fund's relative underperformance.
The Board received and considered information regarding each Fund's net
operating expense ratio and its various components, including contractual
advisory fees, actual advisory fees, actual non-management fees, Rule 12b-1 and
non-Rule 12b-1 service fees, fee waivers/caps and/or expense reimbursements. The
Board also considered comparisons of these fees to the expense information for
each Fund's Peer Group and Universe, which comparative data was provided by
Lipper.
The Board noted that the net operating expense ratios for the Municipal
Bond Fund and Wisconsin Tax-Free Fund, were lower than, or not appreciably
higher than, each Fund's Peer Group's median net operating expense ratio. The
Board noted that the net operating expense ratios for the Intermediate Tax-Free
Fund and for certain classes of the Short-Term Municipal Bond Fund and Ultra
Short-Term Municipal Income Fund were higher than each Fund's Peer Group's
median net operating expense ratio, but the Board further noted that the
Advisory Agreement Rates (as defined below) were within a reasonable range of
the median rates of each Fund's Peer Group.
Management also discussed the Lipper data and rankings, and other relevant
information, for the Funds. Based on the above-referenced considerations and
other factors, the Board concluded that the overall performance and expense
results supported the re-approval of the Advisory Agreements for the Funds.
INVESTMENT ADVISORY AND SUB-ADVISORY FEE RATES
The Board reviewed and considered the contractual investment advisory fee
rates both on a stand-alone basis and on a combined basis with the Funds'
administration fee rates (the "Advisory Agreement Rates") payable by the Funds
to Funds Management for investment advisory services. The Board also reviewed
and considered the contractual investment sub-advisory fee rates (the
"Sub-Advisory Agreement Rates") payable by Funds Management to Wells Capital
Management for investment sub-advisory services. In addition, the Board reviewed
and considered the existing fee waiver/cap arrangements applicable to the
Advisory Agreement Rates and considered the Advisory Agreement Rates after
taking the waivers/caps into account (the "Net Advisory Rates").
The Board received and considered information comparing the Advisory
Agreement Rates and Net Advisory Rates with those of the other funds in the Peer
Group. The Board noted that the Advisory Agreement Rates and the Net Advisory
Rates for the Funds were lower than, or not appreciably higher than, the median
rates of each respective Fund's Peer Group. In addition, the Board concluded
that the combined investment advisory/administration fee rates for these Funds
(before and after waivers/caps and/or expense reimbursements) were each
reasonable in relation to each Fund's respective Peer Group, and reasonable in
relation to the services anticipated to be provided.
The Board also reviewed the Sub-Advisory Agreement Rates and concluded
that the Sub-Advisory Agreement Rates were fair and equitable, based on its
consideration of the factors described above.
PROFITABILITY
Because the Fund had not yet commenced operations, the Board did not
consider the historical profitability with regard to Funds Management's
arrangements with the Fund. However, the Board received and considered a
detailed profitability analysis of Funds Management and its affiliates based on
similar advisory and other relationships between other series in the Trust and
Funds Management and its affiliates. The Board concluded that, in light of the
costs of providing investment management and other services to the other series,
the profits and other ancillary benefits that Funds Management and its
affiliates received with regard to providing these services to such series were
not unreasonable. The Board did not consider a separate profitability analysis
of Wells Capital Management, as its separate profitability from its relationship
with the Fund was not a material factor in determining whether to renew the
agreement.
93
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
ECONOMIES OF SCALE
The Board received and considered information regarding the potential for
realization of any future economies of scale. However, the Board acknowledged
the inherent limitations of any analysis of an investment adviser's economies of
scale and of any attempt to correlate breakpoints with such economies, stemming
largely from the Board's understanding that economies of scale are realized, if
at all, by an investment adviser across a variety of products and services, not
just with respect to a single fund. The Board concluded that any actual or
potential economies of scale will be shared reasonably with Fund shareholders,
including most particularly through Advisory Agreement Rate breakpoints, which
are applicable to the Funds.
INFORMATION ABOUT SERVICES TO OTHER CLIENTS
The Board also received and considered information about the nature,
extent and quality of services and fee rates offered by Funds Management to
other similarly situated series within the Trust, and those offered by Wells
Capital Management to other clients, including other registered investment
companies and separate accounts. The Board concluded that the Advisory Agreement
Rates, the Sub-Advisory Agreement Rates and the Net Advisory Rates were within a
reasonable range of the fee rates offered to others by Funds Management and
Wells Capital Management, giving effect to differences in services covered by
such fee rates.
OTHER BENEFITS TO FUNDS MANAGEMENT AND WELLS CAPITAL MANAGEMENT
The Board received and considered information regarding potential
"fall-out" or ancillary benefits received by Funds Management and its affiliates
(including Wells Capital Management) as a result of their relationship with the
Funds. Such benefits could include, among others, benefits directly attributable
to the relationship of Funds Management and Wells Capital Management with the
Funds (such as soft-dollar credits) and benefits potentially derived from an
increase in the business of Funds Management and Wells Capital Management as a
result of their relationship with the Funds (such as the ability to market to
shareholders other financial products offered by Funds Management and its
affiliates (including Wells Capital Management)).
The Board also considered the policies of the Funds in seeking the best
execution of portfolio transactions, whether and to what extent soft dollar
credits would be sought and how any such credits would be utilized, potential
benefits that may be realized by using an affiliated broker, and the controls
applicable to brokerage allocation procedures. The Board also took note of the
policies of Wells Capital Management regarding the allocation of portfolio
investment opportunities among the Funds and other clients.
OTHER FACTORS AND BROADER REVIEW
The Board also considered the markets for distribution of the Funds,
including the principal channels through which the Funds' shares would be
offered and sold. The Board noted that the Funds are now part of one of the few
fund families that have both direct-to-fund and intermediary distribution.
As discussed above, the Board reviewed detailed materials received from
Funds Management and Wells Capital Management in advance of the April 4, 2005
meeting as part of the re-approval process under Section 15 (c) of the 1940 Act.
The Board has also reviewed detailed materials from Funds Management and Wells
Capital Management, and met with various management representatives and
portfolio mangers, as part of its regular and special meeting cycle, and such
materials and meetings were also considered as part of the re-approval process.
After considering the above-described factors and based on its
deliberations and its evaluation of the information described above, the Board
concluded that approval of the continuation of the Advisory Agreements for each
of the Funds was in the best interest of the Funds and their shareholders.
Accordingly, the Board unanimously approved the continuation of the Advisory
Agreements.
94
LIST OF ABBREVIATIONS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
ABAG -- Association of Bay Area Governments
ADR -- American Depositary Receipt
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CMT -- Constant Maturity Treasury
COFI -- Cost of Funds Index
Connie Lee -- Connie Lee Insurance Company
COP -- Certificate of Participation
CP -- Commercial Paper
CTF -- Common Trust Fund
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
EDFA -- Education Finance Authority
FFCB -- Federal Farm Credit Bank
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FRN -- Floating Rate Notes
FSA -- Financial Security Assurance, Inc
GDR -- Global Depositary Receipt
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
IDA -- Industrial Development Authority
IDR -- Industrial Development Revenue
LIBOR -- London Interbank Offered Rate
LLC -- Limited Liability Corporation
LOC -- Letter of Credit
LP -- Limited Partnership
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MUD -- Municipal Utility District
MTN -- Medium Term Note
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PLC -- Private Placement
PSFG -- Public School Fund Guaranty
RAW -- Revenue Anticipation Warrants
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
R&D -- Research & Development
SFHR -- Single Family Housing Revenue
SFMR -- Single Family Mortgage Revenue
SLMA -- Student Loan Marketing Association
STEERS -- Structured Enhanced Return Trust
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
V/R -- Variable Rate
WEBS -- World Equity Benchmark Shares
XLCA -- XL Capital Assurance
95
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WELLS ADVANTAGE
FARGO FUNDS
More information about Wells Fargo Advantage Funds(SM) is available free upon
request. To obtain literature, please write, e-mail, or call:
WELLS FARGO ADVANTAGE FUNDS
P.O. Box 8266
Boston, MA 02266-8266
E-mail: wfaf@wellsfargo.com
Retail Investment Professionals: 888-877-9275
Institutional Investment Professionals: 866-765-0778
Web: www.wellsfargo.com/advantagefunds
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the WELLS FARGO ADVANTAGE FUNDS. If
this report is used for promotional purposes, distribution of the report must be
accompanied or preceded by a current prospectus. For a prospectus containing
more complete information, including charges and expenses, call 1-800-222-8222.
Please consider the investment objective, risks, charges and expenses of the
investment carefully before investing. This and other information about WELLS
FARGO ADVANTAGE FUNDS can be found in the current prospectus. Read the
prospectus carefully before you invest or send money.
Wells Fargo Funds Management, LLC, a wholly-owned subsidiary of Wells Fargo &
Company, provides investment advisory and administrative services for the WELLS
FARGO ADVANTAGE FUNDS. Other affiliates of Wells Fargo & Company provide
sub-advisory and other services for the Funds. The Funds are distributed by
WELLS FARGO FUNDS DISTRIBUTOR, LLC, Member NASD/SIPC, an affiliate of Wells
Fargo & Company.
-------------------------------------------------------
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
-------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
(c) 2005 Wells Fargo Advantage Funds, LLC. All rights reserved. | www.wellsfargo.com/advantagefunds | SM50929 06-05
SMIF/SAR106 04-05
ITEM 2. CODE OF ETHICS
=======================
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
=========================================
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
======================
Not applicable.
ITEMS 5-6. [RESERVED]
======================
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES
===============================================================
Not applicable.
ITEM 8. [RESERVED]
===================
ITEM 9. CONTROLS AND PROCEDURES
================================
(a)(i) The President and Treasurer have concluded that the Wells Fargo Funds
Trust (the "Trust") disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940) provide reasonable assurances
that material information relating to the Trust 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.
(a)(ii) There were no significant changes in the Trust's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of the evaluation referenced in (a)(i) above.
ITEM 10. EXHIBITS
=================
(a) Not applicable.
(a)(2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant.
Wells Fargo Funds Trust
By: /s/Karla M. Rabusch
Karla M. Rabusch
President
By: /s/ Stacie D. DeAngelo
Stacie D. DeAngelo
Treasurer
Date: June 20, 2005